Exhibit 10.1

LICENSE, SERVICES AND DEVELOPMENT AGREEMENT

BETWEEN

MARRIOTT INTERNATIONAL, INC. AND MARRIOTT WORLDWIDE CORPORATION

AND

MARRIOTT VACATIONS WORLDWIDE CORPORATION

FOR

MARRIOTT PROJECTS

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TABLE OF CONTENTS

 

             Page  

1.

  LICENSE      2   

2.

  NONCOMPETITION AGREEMENT; EXCLUSIVITY AND RESERVED RIGHTS      3     

2.1

  Noncompetition Agreement      3     

2.2

  Exclusivity; Use of “Horizons” and “Grand Residences” Names      3     

2.3

  Licensor’s Reserved Rights      4     

2.4

  Licensee’s Reserved Rights      5     

2.5

  Similar Lines of Businesses      6   

3.

 

FEES

     7     

3.1

  Royalty Fees      7     

3.2

  Usage Fees and Reimbursable Expenses; Maintenance Costs      10     

3.3

  Other Charges; Changes to Fees, Expenses and Charges; Other Costs      10     

3.4

  Travel Expenses and Reimbursement      11     

3.5

  Marketing and Sales Fees and Charges      11     

3.6

  Making of Payments; Delegation of Duties and Performance of Services      12
    

3.7

  Interest on Late Payments      12     

3.8

  Currency and Taxes      12   

4.

 

TERM

     13     

4.1

  Initial Term      13     

4.2

  Extension Term; Tail Period      13   

5.

 

EXISTING PROJECTS; DEVELOPMENT RIGHTS AND RESTRICTIONS

     14     

5.1

  Designation of Projects; Existing Projects      14     

5.2

  New Projects      14     

5.3

  Undeveloped Parcels Pre-Approved; Right of First Refusal for Undeveloped
Parcels      16     

5.4

  Projects Located at Hotels other than Licensor Lodging Facilities      17     

5.5

  Prohibitions To Be Included in Future Franchise and Management Agreements     
18     

5.6

  Destination Club Projects at Third-Party Owned Licensor Lodging Facilities   
  19     

5.7

  Limitations on Licensed Business; Compliance with Contractual Restrictions   
  19     

5.8

  Delegation of Certain Functions; Sublicensing of Marketing Functions      20
  

6.

 

SOURCING; DESIGN REVIEW; CONSTRUCTION, CONVERSION AND RENOVATION

     21     

6.1

  Furniture, Fixtures, Equipment, Supplies, and Signage      21     

6.2

  Design Review      21     

6.3

  Site Inspection      21     

6.4

  Construction/Conversion/Renovation      22   

7.

 

SYSTEM AND STANDARDS

     22     

7.1

  Brand Standards      22     

7.2

  Modification of Brand Standards      22   

8.

 

OPERATIONS

     25   

 

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             Page     8.1   Operating the Projects and the Licensed Business   
  25     

8.2

  Employees      26     

8.3

  Management and Operation of the Projects.      26     

8.4

  Customer Satisfaction System and Quality Assurance Audit System      26     

8.5

  Projects Controlled by Non-Controlled Property Owners’ Association      27   

9.

 

RESTRICTIONS AND LIMITATIONS ON CONDUCT OF LICENSED BUSINESS

     28     

9.1

  Offers and Sales of Destination Club Units and Residential Units; Use of
Licensed Business Customer Information      28     

9.2

  Transient Rentals of Licensed Destination Club Units and Licensed Residential
Units      30     

9.3

  No Affiliation with Other Brands/Businesses      31     

9.4

  Destination Club Businesses and Whole Ownership Residential Businesses
Operating Under Other Brands      32     

9.5

  Services and Products Made Available to Members and Marketing and Exchange
Arrangements      33     

9.6

  Changes in Programs, Services or Benefits      34   

10.

 

ELECTRONIC SYSTEMS

     34     

10.1

  Systems Installation      34     

10.2

  Reservation System      34     

10.3

  Electronic Systems Provided Under License      35   

11.

 

LICENSOR SERVICES AND SUPPORT

     36     

11.1

  Training      36     

11.2

  Other Services      36   

12.

 

REPAIRS AND MAINTENANCE

     38   

13.

 

PROPRIETARY MARKS AND INTELLECTUAL PROPERTY

     39     

13.1

  Licensor’s and Licensee’s Representations and Responsibility Regarding the
Licensed Marks      39     

13.2

  Licensee’s Use of System and Licensor Intellectual Property      41     

13.3

  Licensee’s Use of Other Marks      45     

13.4

  Licensee Website      45     

13.5

  Credit and Debit Cards      46     

13.6

  Use of Licensee Marks      47     

13.7

  Assignment of Certain Intellectual Property to Licensee      48   

14.

 

CONFIDENTIAL INFORMATION; DATA PROTECTION LAWS

     49     

14.1

  Confidential Information      49     

14.2

  Data Protection Laws; Data Security      50   

15.

 

ACCOUNTING AND REPORTS

     50     

15.1

  Books, Records, and Accounts      50     

15.2

  Reports      50     

15.3

  Licensor Examination and Audit of Licensee’s Records      51   

16.

 

INDEMNIFICATION; CONTRIBUTION IN LIEU OF INDEMNIFICATION; AND INSURANCE

     52     

16.1

  Indemnification      52   

 

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             Page    

16.2

  Insurance Requirements of Licensee      56     

16.4

  Obligation to Maintain Insurance      58     

16.5

  Contribution      58   

17.

 

TRANSFERABILITY OF INTERESTS

     58     

17.1

  Transfers by Licensee      58     

17.2

  Transfers by Licensor      59     

17.3

  Proposed Transfers to Lodging Competitors      59     

17.4

  Comfort Letter and Security Interests in This Agreement      59   

18.

 

BREACH, DEFAULT, AND REMEDIES

     60     

18.1

  Licensee Project-, Sales Facility-, and Member Service Center-Level Breaches,
Defaults, and Remedies      60     

18.2

  Licensee Agreement-Level Defaults      63     

18.3

  Licensor Defaults      67     

18.4

  Other Breaches      70     

18.5

  Extraordinary Events      70   

19.

 

POST-TERMINATION OBLIGATIONS; DE-IDENTIFICATION

     71     

19.1

  Project De-Identification and Post-Termination Obligations      71     

19.2

  Agreement De-Identification and Post-Termination Obligations      73   

20.

 

COMPLIANCE WITH LAWS; LEGAL ACTIONS

     75     

20.1

  Compliance with Laws      75     

20.2

  Notice Regarding Legal Actions      75     

20.3

  Block Exemption      75   

21.

 

RELATIONSHIP OF PARTIES

     76     

21.1

  Reasonable Business Judgment      76     

21.2

  Independent Contractor      76   

22.

 

GOVERNING LAW; INJUNCTIVE RELIEF; COSTS OF ENFORCEMENT; ARBITRATION; AND EXPERT
RESOLUTION

     76     

22.1

  Governing Law; Venue      76     

22.2

  Injunctive Relief      76     

22.3

  Costs of Enforcement      77     

22.4

  Arbitration      77     

22.5.

  Expert Resolution      78     

22.6

  Waiver of Jury Trial and Punitive Damages      79   

23.

 

NOTICES

     80     

23.1

  Notices      80   

24.

 

CONSTRUCTION AND SEVERABILITY; APPROVALS, CONSENTS AND WAIVERS; ENTIRE AGREEMENT

     81     

24.1

  Construction and Severability      81     

24.2

  Approvals, Consents and Waivers      81     

24.3

  Entire Agreement      82     

24.4

  Amendments      82   

25.

 

REPRESENTATIONS, WARRANTIES AND COVENANTS

     82   

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             Page    

25.1

  Existence and Power; Authorization; Contravention      82     

25.2

  Acknowledgements and Representations Regarding Territorial Restrictions in
Existing Contracts      83   

26.

 

MISCELLANEOUS

     83     

26.1

  Translations      83     

26.2

  Multiple Counterparts      83     

26.3

  Failure to Close the Spin-Off Transaction      83   

27.

 

LICENSOR MANAGED PROJECTS

     83     

27.1

  Provisions of this Agreement That Do Not Apply to Licensor Managed Projects   
  83     

27.2

  Provisions of this Agreement That Are Modified With Respect to the Licensor
Managed Projects      84     

27.3

  Provisions of this Agreement Applicable to Non-Licensor Managed Projects and
Licensor Managed Projects      85   

28.

 

GUARANTY

     86     

28.1

  Guaranty      86     

28.2

  Guarantor Waivers      86     

28.3

  Maximum Liability of Guarantors      86   

 

EXHIBIT  A – DEFINITIONS

 

EXHIBIT  B – EXISTING PROJECTS

 

EXHIBIT  B-1 – UNDEVELOPED PARCELS

 

EXHIBIT  B-2 – UNDEVELOPED PARCELS SUBJECT TO RIGHT OF FIRST OFFER AND RIGHT OF
FIRST REFUSAL

 

EXHIBIT  B-3 – MEMORANDUM OF RIGHT OF FIRST REFUSAL

 

EXHIBIT  C – MANAGEMENT COMPANY ACKNOWLEDGMENT

 

EXHIBIT  D – FORM OF OPERATING STATEMENT

 

EXHIBIT  E – AFFILIATE SUBLICENSE AGREEMENT

 

EXHIBIT  F – PROVISIONS TO BE INCLUDED IN SUBLICENSE AGREEMENT WITH
NON-AFFILIATES FOR SALES, MARKETING AND RELATED SERVICES

 

EXHIBIT  G – DESIGN REVIEW ADDENDUM

 

EXHIBIT  H – EXISTING PROJECTS AT WHICH LICENSEE HAS NOT ENGAGED IN TRANSIENT
RENTAL

 

EXHIBIT  I – EXISTING GOLF FACILITIES

 

EXHIBIT  J – PERMITTED LICENSEE AFFILIATE NAMES

 

EXHIBIT  K – NEW PROJECT APPLICATION

 

EXHIBIT  L – PURCHASER DISCLOSURE STATEMENT

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LICENSE, SERVICES, AND DEVELOPMENT AGREEMENT

This License, Services, and Development Agreement (“License Agreement” or
“Agreement”) is executed on the 17th day of November, 2011, to be effective as
of 12:01 am New York City time on the 19th day of November 2011 (“Effective
Date”) by Marriott International, Inc., a Delaware corporation (“MII”), and
Marriott Worldwide Corporation, a Maryland corporation (“MWC”) (MII and MWC are
referred to collectively herein as “Licensor”), and Marriott Vacations Worldwide
Corporation, a Delaware corporation (“Licensee”).

RECITALS

A. Licensor owns, or has the right to use and sublicense, the Licensed Marks and
the System.

B. Prior to the Spin-Off Transaction (defined below), Licensee was a
wholly-owned subsidiary of MII and through affiliates has been operating the
Destination Club Business and Whole Ownership Residential Business by
developing, selling, marketing, operating and financing Destination Club
Projects and Residential Projects under the Licensed Marks and the System since
1984 pursuant to an inter-company arrangement between Licensor and/or its
Affiliates and Licensee.

C. As a result of the planned spin-off of Licensee pursuant to the Separation
and Distribution Agreement (the “Spin-Off Transaction”), Licensee will no longer
be a wholly-owned subsidiary of MII and will be a separate entity.

D. Licensee desires to continue operating the Licensed Business, including
operating the Existing Projects and developing and operating New Projects, under
the Licensed Marks and the System and wishes to obtain a license to use the
System and the Licensed Marks for these purposes.

E. Licensee or its Affiliates have or may engage Licensor or its Affiliates to
manage the Licensor Managed Projects under separate Licensor Management
Agreements. Certain provisions of this Agreement will not apply, or may apply in
a different manner, to Licensor Managed Projects, as contemplated in Section 27.

F. Licensor or its Affiliates will provide certain services to Licensee and its
Affiliates with respect to the Licensed Business in accordance with the terms
hereof.

G. Contemporaneously with the execution of this Agreement, The Ritz-Carlton
Hotel Company, LLC and Licensee are entering into a License, Services, and
Development Agreement (the “Ritz-Carlton License Agreement”) under which, among
other things, Licensee will be granted the right to the develop and operate
Destination Club Projects and Residential Projects under the Ritz-Carlton name
and trademarks. Licensee acknowledges and agrees that the Ritz-Carlton License
Agreement shall govern the relationship between Ritz-Carlton and Licensee with
respect to such matters, and, except for the indemnity in Section 16.1.A, this
Agreement shall not apply to such relationship.

H. All capitalized terms used in this Agreement shall have the meanings ascribed
to such terms in Exhibit A.

NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are acknowledged, Licensee and Licensor agree
as follows:

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1. LICENSE

A. Subject to all of the reservations of rights and exceptions to and
limitations on exclusivity set forth in this Agreement and the Noncompetition
Agreement, Licensor hereby grants to Licensee within the Territory, and Licensee
accepts, under the terms hereof:

(i) (x) a limited, exclusive license during the Term to use the Licensed Marks
and the System for the activities described in (i) through (vi) of the
definition of Destination Club Business, (y) a limited, exclusive license during
the Term to use the names and marks described in (i) through (iv) of the
definition of Licensed Marks for the activities described in (vii) of the
definition of Destination Club Business, and (z) a limited, non-exclusive
license during the Term to use the names and marks described in (v) and (vi) of
the definition of Licensed Marks and the System for the activities described in
(vii) of the definition of Destination Club Business, all in connection with the
operation of the Licensed Destination Club Business, including the operation of
Existing Projects and the development and operation of New Projects, in
accordance with the System and this Agreement; and

(ii) (x) a limited, exclusive license during the Term to use the mark “Grand
Residences by Marriott” and the Licensed Project Names for the Whole Ownership
Residential Business, and (y) a limited, non-exclusive license during the Term
to use the System and other Licensed Marks for the Whole Ownership Residential
Business, all in connection with the operation of the Licensed Whole Ownership
Residential Business, including the operation of Existing Projects and the
development and operation of New Projects, in accordance with the System and
this Agreement;

provided, however,

(a) Licensee shall have no right (subject to Section 13.1.E.) to use the
Licensed Marks or the System in the Excluded Area and shall not have the right
to any indemnity under Section 16.1.B. with respect to third-party claims
resulting from Licensee’s or its Affiliates’ use of the Licensed Marks or the
System in the Excluded Area, and any third-party claim related to the use of the
Licensed Marks or the System in the Excluded Area shall be subject to
indemnification by Licensee pursuant to Section 16.1.A); and

(b) Licensee shall have no right under this Agreement to develop, own, operate,
or manage, any Licensed Destination Club Products other than as Leisure/Vacation
Products.

Such limited license grant also includes any nonexclusive uses of Licensor
Intellectual Property permitted during the “tail period” as set forth in
Section 4.2. Except for the rights granted exclusively in this Agreement, the
rights granted in this Agreement are non-exclusive.

B. The limited license grant herein also includes the non-exclusive right by
Licensee to use the name and mark “Marriott” as part of “Marriott Golf” (but not
the name “Marriott” used by itself or with other words, terms, designs or other
elements) in connection with the operation of Faldo Golf Facilities and other
Existing Golf Facilities under the “Marriott Golf” name and in connection with
the development and operation of future golf facilities that are located at or
in the general vicinity of New Projects and that have been approved in writing
by Licensor in accordance with the terms and conditions of this Agreement. All
such golf facilities shall be developed and operated in accordance with the
Brand Standards, and all Faldo Golf Facilities shall be developed and operated
to a standard consistent with the quality standard of the Faldo Golf Facilities
that are existing as of the Effective Date. Effective as of the date of the
Spin-Off Transaction, Licensor shall cause the applicable Licensor that owns the
trademark registrations for marks containing the Faldo name and Faldo logo to
assign to Licensee all of such party’s rights in such Faldo Marks pursuant to an
assignment agreement in the form agreed to by the parties.

 

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Licensee agrees that if Licensor in the future decides to offer golf courses,
facilities or services branded under the Faldo Marks in connection with Licensor
Lodging Facilities or Licensor’s golf or other activities (“Licensor Faldo
Services”) within any territory in which Licensee has rights, Licensee will seek
to include such Licensor Faldo Services under Licensee’s then-current contract
with Faldo Enterprises and Sir Nick Faldo (“Faldo Contract”), in which case
Licensor shall pay all fees, costs and expenses directly attributable to the
Licensor Faldo Services as well as a proportionate share (as reasonably
determined by Licensee) of fees, costs and expenses due under the Faldo Contract
(such as the base fee) for services that are not directly attributable either to
the Licensor Faldo Services or to golf courses, facilities or services provided
solely by Licensee under the Faldo Marks. If Licensor or its Affiliates provide
support or services to Licensee or its Affiliates in connection with Faldo Golf
Facilities or Existing Golf Facilities or other golf facilities operating under
the “Marriott Golf” name, Licensee shall pay the applicable fees to Licensor or
its Affiliates for such services and/or support. Such fees will be fair,
commercially reasonable, and, if applicable, consistent with fees charged to
third parties for similar services and support related to such facilities. All
Licensor Faldo Services shall be developed and operated in accordance with the
Brand Standards and the Faldo Contract, and all Licensor Faldo Services shall be
developed and operated to a standard consistent with the quality standard of the
Faldo Golf Facilities that are existing as of the Effective Date.

C. Licensee shall have no right to use the Licensed Marks or Branded Elements in
connection with the development or sales or the marketing, operating, managing
or financing of units in a Condominium Hotel.

 

  2. NONCOMPETITION AGREEMENT; EXCLUSIVITY AND RESERVED RIGHTS

 

  2.1 Noncompetition Agreement.

In partial consideration for the parties’ agreement to enter into this
Agreement, Licensor and Licensee have entered into a Noncompetition Agreement
(“Noncompetition Agreement”) contemporaneously herewith under which Licensor and
Licensee have agreed to certain noncompetition covenants, and the parties hereby
agree to comply with the terms of the Noncompetition Agreement.

 

  2.2 Exclusivity; Use of “Horizons” and “Grand Residences” Names.

A. Subject to the Noncompetition Agreement and Sections 2.3, 2.5, and 8.3.B.
during the Term, neither Licensor nor its Affiliates will within the Territory:

(i) use, or license any third party to use, the Licensed Marks or the name and
mark “Marriott” (other than as part of one or more corporate names of Licensor
or its Affiliates) or the Branded Elements in connection with (u) developing or
operating Destination Club Projects; (v) developing, selling, marketing,
managing, operating, or financing Destination Club Products or Destination Club
Units; (w) developing, selling, marketing, or operating Exchange Programs;
(x) managing rental programs associated with Destination Club Products;
(y) establishing or operating sales facilities for Destination Club Products; or
(z) managing member services related to Destination Club Products;

(ii) use, or license any third party to use, the “Grand Residences by Marriott”
trademark or the Licensed Project Names in connection with (v) developing or
operating Residential Projects; (w) developing, selling, marketing, managing,
operating, or financing Residential Units; (x) managing rental programs
associated with Residential Projects; (y) establishing and operating sales
facilities for Residential Units; or (z) managing owner services related to
Residential Units;

 

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(iii) use, or license any third party to use, the marks identified in
(i) through (iv) of the definition of the Licensed Marks in connection with
managing any businesses or services that are ancillary to the Destination Club
Business or Lodging Business, such as travel insurance, or amenities of a
Destination Club Project, Residential Project, or Licensor Lodging Facility,
such as country clubs, spas, golf courses, food and beverage outlets, gift and
sundry shops, but, for the avoidance of doubt, this provision does not prohibit
Licensor from engaging in such businesses or providing such services under
“Marriott” or other names or marks not contained within (i) through (iv) of the
definition of the Licensed Marks; or

(iv) use, or license any third party to use, the Licensed Business Customer
Information in connection with the marketing or selling of interests in
Destination Club Units; provided, however, that to the extent that Customer
Information concerning Licensor’s Lodging Business includes Licensed Business
Customer Information, such Customer Information may be used in such marketing or
selling so long as such customers’ ownership of Licensed Destination Club
Products is not used specifically to target such customers in connection with
such marketing and sales activities.

B. Neither Licensor nor its Affiliates will use the words “Horizons”, “Grand
Residences” (in such exact order and form), or the Licensed Project Names in
connection with any Destination Club Project, Residential Project, or as the
primary brand name for a Licensor Lodging Facility; provided, however, that
Licensor and its Affiliates have no obligation to prohibit or otherwise restrict
third-party owners, developers, managers, licensees or franchisees of Licensor
Lodging Facilities from using such words in connection with a Destination Club
Project or Residential Project if such words are already in use or established
prior to Licensor’s involvement with the Project, whether it is a part of, or
adjacent to, any such Licensor Lodging Facility or otherwise.

 

  2.3 Licensor’s Reserved Rights.

A. Licensee agrees that, except as set forth in Section 2.2, in the Ritz-Carlton
License Agreement, and in the Noncompetition Agreement, Licensor and its
Affiliates expressly retain the right to (i) engage in any Destination Club
Business under existing brands and brands that Licensor or its Affiliates may
develop or acquire in the future, without restriction of any kind, and to use
and sublicense the use of the Licensor Intellectual Property in connection
therewith; (ii) engage in any Whole Ownership Residential Business under
existing brands and brands that Licensor or its Affiliates may develop or
acquire in the future, without restriction of any kind, and to use and
sublicense the use of the Licensor Intellectual Property in connection
therewith; (iii) accept advance deposits or payments for stays at Licensor
Lodging Facilities; or (iv) accept multi-year advanced bookings for stays at
Licensor Lodging Facilities (provided that any such multi-year advance bookings
relate to specific, identified Licensor Lodging Facilities and not on a
systemwide basis); all provided that, unless Licensee otherwise agrees in
writing, no such activities above may involve or utilize in any way the Licensee
Intellectual Property.

B. For avoidance of doubt, Licensor and its Affiliates expressly retain the
right to use the name and mark “Marriott” (but not the names and marks “Marriott
Vacation Club” or “Grand Residences by Marriott”, in such exact order and form)
in connection with branding a passenger ship or cruise line or lodging
facilities on a passenger ship or cruise line, provided, that Licensor and its
Affiliates shall not use the Branded Elements for developing, selling,
marketing, managing, operating, or financing Destination Club Products or
Destination Club Units on a passenger ship or cruise line.

 

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C. Licensee agrees that Licensor and its Affiliates expressly retain the right
to (i) engage in the Lodging Business and any other business operations except
the exclusively licensed aspects of the Destination Club Business, subject to
the Noncompetition Agreement, the Ritz-Carlton License Agreement, and Sections
2.2 and 2.5; (ii) allow other Licensor Lodging Facilities operated, licensed, or
franchised by Licensor or its Affiliates to use various components of the System
(including the Reservation System) that are not used exclusively in connection
with the Destination Club Business; and (iii) use the name and mark “Marriott”
(but not the names and marks “Marriott Vacation Club” or “Grand Residences by
Marriott”, in such exact order and form) and Branded Elements in connection with
developing, selling, marketing, managing, operating, and financing units in a
Condominium Hotel; all provided that, unless Licensee otherwise agrees in
writing, no such activities above may involve or utilize in any way the Licensee
Intellectual Property.

D. Licensor reserves all rights in the Licensor Intellectual Property not
expressly and exclusively granted to Licensee in this Agreement, including
without limitation any individual elements or components thereof.

E. Licensee acknowledges and agrees that, notwithstanding anything in this
Agreement to the contrary, Licensor shall not be restricted in any manner from
using the terms “vacation”, “resort”, “club”, “lodge”, “villa”, “destination”,
or similar terms in connection with the development, promotion, or operation of
any of Licensor’s businesses or any geographic or locational aspect or
designation that is part of a Licensed Project Name, for example, Licensor and
its Affiliates would not be prohibited from using the term “St. Kitts” or the
term “Beach”, even though “St. Kitts Beach Club” is a Licensed Project Name.

 

  2.4 Licensee’s Reserved Rights.

A. Licensor agrees that, except as set forth in the Noncompetition Agreement and
the Ritz-Carlton License Agreement, Licensee and its Affiliates expressly retain
the right to engage in the Lodging Business; all subject to Section 9.3.B. and
provided that, unless Licensor otherwise agrees in writing, no such activities
above may involve or utilize in any way the Licensor Intellectual Property or
the Branded Elements.

B. Licensor agrees that, except with respect to such limitations as are set
forth in this Agreement solely with respect to the Licensed Business and in the
Ritz-Carlton License Agreement, Licensee and its Affiliates expressly retain the
right to (i) engage in any Destination Club Business, including under existing
Licensee brands (including under the “Horizons” and “Grand Residences” names
without use or reference to the name “Marriott”) and brands that Licensee or its
Affiliates may develop or acquire in the future, without restriction of any
kind, and to use and sublicense the use of the Licensee Intellectual Property in
connection therewith; and (ii) engage in any Whole Ownership Residential
Business, including under existing Licensee brands (including under the
“Horizons” and “Grand Residences” names without use or reference to the name
“Marriott”) and brands that Licensee or its Affiliates may develop or acquire in
the future, without restriction of any kind, and to use and sublicense the use
of the Licensee Intellectual Property in connection therewith; all provided
that, unless Licensor otherwise agrees in writing, no such activities above may
involve or utilize in any way the Licensor Intellectual Property or the Branded
Elements, other than in connection with the Licensed Business.

C. Licensee reserves all rights in the Licensee Intellectual Property, including
without limitation any individual elements or components thereof.

 

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D. Licensor acknowledges and agrees that, other than as set forth in
Section 2.5.B, Licensee shall not be restricted in any manner from using the
terms “hotel”, “inn”, or similar terms in connection with the development,
promotion, or operation of any of Licensee’s businesses.

 

  2.5 Similar Lines of Businesses.

A. Subject to the Permitted Territorial Restrictions, nothing in this Agreement
or in the Noncompetition Agreement is intended to prevent Licensor or its
Affiliates from remaining competitive in its core Lodging Business due to the
evolution of such business over time. Licensee agrees that Licensor and its
Affiliates shall have the right to develop, offer, operate, market and promote
products, benefits, services and rewards under any of the Proprietary Marks
(other than the names and marks “Marriott Vacation Club” or “Grand Residences by
Marriott”, in such exact order and form) and using the Branded Elements that
fall within the definition of “Licensed Destination Club Business”, but only to
the extent that such products, benefits, services and rewards are substantially
similar to the products, benefits, services and rewards that are not currently,
but may in the future be, provided by other international hotel operators or
franchisors as part of their hotel business (and not as a separate line of
business). Licensor must give prior notice to Licensee if it intends to offer
such products, benefits, services or rewards at least thirty (30) days prior to
offering such products, benefits, services or rewards. Licensor and its
Affiliates shall not call or refer to any of its properties (or any such
products, benefits, services or rewards) as “timeshare”, “fractional” “vacation
club”, or “destination club” or similar terms commonly used for Destination Club
Projects.

B. (i) Subject to the Permitted Territorial Restrictions, nothing in this
Agreement or in the Noncompetition Agreement is intended to prevent Licensee or
its Affiliates from remaining competitive in its core Destination Club Business
due to the evolution of such business over time. Licensor agrees that Licensee
and its Affiliates shall have the right to develop, offer, operate, market and
promote products, benefits, services and rewards under the Licensed Marks that
do not fall within the definition of Licensed Destination Club Business, but
only to the extent that that such products, benefits, services and rewards are
substantially similar to the products, benefits, services and rewards that are
not currently, but may in the future be, provided by other developers or
operators in the Destination Club Business at a quality level equivalent to the
Upscale Brand Segment or the Upper-Upscale Brand Segment, as part of their
Destination Club Business (and not as a separate line of business). Licensee
must give prior notice to Licensor if it intends to offer such products,
benefits, services or rewards at least thirty (30) days prior to offering such
products, benefits, services or rewards. Licensee and its Affiliates shall not
(i) operate, manage, license, or franchise properties that are primarily
operated as hotels (i.e., facilities containing dedicated rooms for transient
rental, except as specifically provided in Section 9.2) as part of the Licensed
Business, (ii) call or refer to any Licensed Destination Club Projects or
Licensed Residential Projects as “hotels”, “inns” or similar terms commonly used
for hotels, except as specifically approved in writing by Licensor or as
referred to on Licensor’s or its Affiliates’ websites or in collateral or
Marketing Content prepared by Licensor and its Affiliates; provided, however,
that the foregoing shall not be construed to impact classification of Licensed
Destination Club Projects for zoning, licensing or other regulatory purposes,
even if such use is characterized as “hotel use” or “transient use” for such
purposes (Licensor acknowledges that the foregoing shall not restrict Licensee
from using any of the following terms commonly used for Destination Club
Projects: “resort”, “club”, “villa”, “chateau”, “house”, “manor”, “tower”,
“lodge”, “residence” or similar terms), or (iii) engage in activities that would
breach any Permitted Territorial Restrictions. To the extent that Licensee
dedicates some units for transient rentals under this provision (other than as
specifically provided in Section 9.2), then Licensee must enter into a franchise
agreement for such units under terms of Licensor’s or its Affiliate’s
then-current standard franchise agreement with such changes thereto that are
mutually agreed to by the parties.

 

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(ii) Licensee acknowledges and agrees that nothing in this Agreement is intended
to, or shall, in any way modify any franchise agreement or license agreement
that may be issued by Licensor or its Affiliates to Licensee or its Affiliates
with respect to transient rentals of units or Licensor Lodging Facilities.

C. In the event that Licensor’s or its Affiliates’ exercise of their rights
under Section 2.5.A. has a material adverse effect on the Licensed Destination
Club Business, or Licensee’s or its Affiliates’ exercise of their rights under
Section 2.5.B(i) has a material adverse effect on Licensor’s or its Affiliates’
hotel business (or either party notifies the other that the exercise of such
rights has the potential to have a material adverse effect on the other party’s
business), then the parties shall meet to discuss alternative approaches to
mitigating such effect, or agree to some other arrangement acceptable to both
parties. In the event the parties are unable to agree on such an arrangement,
then either party shall have the right to have the matter decided by a panel of
three (3) Experts pursuant to Section 22.5; provided, that any remedy shall be
limited to a reduction or increase, as applicable, in the Royalty Fees payable
hereunder from and after the date of the resolution by the Experts (and not
retroactively for fees already paid or due).

 

  3. FEES

 

  3.1 Royalty Fees.

A. Licensee shall pay to Licensor a Destination Club Royalty Fee in an amount
equal to:

(i) the Base Royalty, plus

(ii) (a) two percent (2%) of the Gross Sales Price with respect to initial sales
of interests held by Licensee, its Affiliates, or entities in which Licensee or
its Affiliates hold an Ownership Interest, in Licensed Destination Club Units,
whether directly or through the issuance of beneficial interests, other
ownership interests, use rights, or other entitlements (whether the value of
which is denominated as points, weeks, or any other currency), including
interests in a land trust or similar real estate vehicle, and (b) one percent
(1%) of the Gross Sales Price with respect to re-sales of such interests held by
Licensee, its Affiliates, or entities in which Licensee or its Affiliates hold
an Ownership Interest, in Licensed Destination Club Units, plus

(iii) (a) two percent (2%) of the Gross Commissions with respect to initial
sales by Licensee or its Affiliates on behalf of unrelated third parties of
interests held by such unrelated third parties in Licensed Destination Club
Units, whether directly or through the issuance of beneficial interests, other
ownership interests, use rights, or other entitlements (whether the value of
which is denominated as points, weeks, or any other currency), including
interests in a land trust or similar real estate vehicle (and Licensee or its
Affiliates have no ownership or other beneficial interest in the interest
conveyed and are making such sales only on a commission basis) and (b) one
percent (1%) of the Gross Commissions with respect to re-sales by Licensee or
its Affiliates on behalf of unrelated third parties of such interests held by
such unrelated third parties in Licensed Destination Club Units (and Licensee or
its Affiliates have no ownership or other beneficial interest in the interest
conveyed and are making such sales only on a commission basis).

For purposes of clarification, any sale or re-sale that is subject to a royalty
pursuant to Section 3.1.A(ii) shall not be subject to a royalty pursuant to
Section 3.1.A(iii).

 

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B. Licensee shall pay to Licensor a Residential Royalty Fee in an amount equal
to:

(i) (a) two percent (2%) of the Gross Sales Price with respect to initial sales
of interests held by Licensee, its Affiliates, or entities in which Licensee or
its Affiliates hold an Ownership Interest, in Licensed Residential Units,
whether directly or through the issuance of beneficial interests, or other
ownership interests, in a land trust or similar real estate vehicle, and (b) one
percent (1%) of the Gross Sales Price with respect to re-sales of interests held
by Licensee, its Affiliates, or entities in which Licensee or its Affiliates
hold an Ownership Interest, in Licensed Residential Units, plus

(ii) (a) two percent (2%) of the Gross Commissions with respect to initial sales
by Licensee or its Affiliates on behalf of unrelated third parties of interests
held by such unrelated third parties in Licensed Residential Units (and Licensee
or its Affiliates have no ownership or other beneficial interest in such
Licensed Residential Units and are making such sales only on a commission basis)
and (b) one percent (1%) of the Gross Commissions with respect to re-sales by
Licensee or its Affiliates on behalf of unrelated third parties of interests
held by such unrelated third parties in Licensed Residential Units (and Licensee
or its Affiliates have no ownership or other beneficial interest in such
Licensed Residential Units and are making such sales only on a commission
basis).

For purposes of clarification, any sale or re-sale that is subject to a royalty
pursuant to Section 3.1.B(i) shall not be subject to a royalty pursuant to
Section 3.1.B(ii).

C. (i) The sale of interests that were previously sold to end-user customers and
are subsequently repurposed as other types of interests (for example, interests
that are initially sold in the form of a weeks-based Destination Club Product
and are subsequently repurposed in the form of a trust-based beneficial interest
Destination Club Product or interests that are initially sold as interests in
Residential Units and are subsequently repurposed as interests in Destination
Club Units) shall be considered a re-sale for purposes of Section 3.1.A and
3.1.B.

(ii) A sale occurs with respect to the initial sale or re-sale of an interest in
Licensed Destination Club Units or Licensed Residential Units when all of the
following conditions have been satisfied:

(a) A written agreement (“Purchase Contract”) is executed by a purchaser and has
been accepted by Licensee or its Affiliates pursuant to which such purchaser
contractually commits to acquire such interest;

(b) With respect to purchase money financing provided by or through Licensee or
its Affiliates, if any, such purchaser has duly executed all applicable sales
and purchase money financing documents in respect of such Purchase Contract;

(c) Such purchaser has duly tendered payment of the full purchase price in
respect of such Purchase Contract (or full installment thereof in the case of
purchase money financing, as applicable) by cash, by check which has cleared, or
by credit card which has been duly processed) to either (x) Licensee or its
Affiliates or (y) a fiduciary, escrow agent, trustee or other independent
third-party designated by Licensee or its Affiliates, as may be required by law;

(d) All rescission periods applicable to such Purchase Contract have expired,
without any such right of rescission having been exercised; and

 

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(e) All pre-conditions set forth in such Purchase Contract and any legal
requirements under Applicable Law in order to close the transaction which is the
subject of the Purchase Contract as set forth in such Purchase Contract shall
have been duly satisfied, without the purchaser having exercised any right of
cancellation afforded such purchaser under the terms of such Purchase Contract
or under Applicable Law.

(iii) The conversion of interests that were previously sold to end-user
customers on an equivalent value basis into other types of interests that derive
their value from the interests being converted (for example, interests that are
initially sold in the form of a weeks-based Destination Club Product and are
subsequently converted to a trust-based beneficial interest Destination Club
Product) shall not be considered an initial sale or a re-sale for purposes of
Section 3.1.A.

(iv) The exchange of interests that were previously sold to end-user customers
for initial developer inventory (whether weeks-based, points-based, or
otherwise) shall be considered an initial sale of such initial developer
inventory for purposes of Section 3.1.A.

(v) The exchange of interests that were previously sold to end-user customers
for inventory that had been previously sold to an end-user customer (whether
weeks-based, points-based, or otherwise) shall be considered a re-sale of such
inventory for purposes of Section 3.1.A.

D. The Gross Sales Price shall, for purposes of calculating the Royalty Fees
under Sections 3.1.A and 3.1.B, include the amount of any newly-created initial
or ongoing, recurring, or installment fees or charges that may be imposed by
Licensee or its Affiliates after the Effective Date that are currently included,
free of separate charge, for the rights, benefits and services currently
obtained by purchasers of interests in Licensed Destination Club Units and
Licensed Residential Units, respectively, upon payment of the purchase price
thereof (other than promotional or trial features for which separate fees or
charges may be contemplated), or the amount by which any other fees existing as
of the Effective Date are increased after the Effective Date, as a direct or
indirect offset to any decrease in the purchase price of an interest in a
Licensed Destination Club Unit. In the event any such new or changed fee or
charge is implemented, the Royalty Fee shall be restructured such that the
amount of the Royalty Fee Licensor receives is not reduced as a result of the
implementation of such new or changed fee or charge, which restructuring may, by
agreement of the parties, include adding to the Gross Sales Price the net
present value of fees or charges that are paid on an ongoing, recurring, or
installment basis discounted by discount rate of ten percent (10%).

E. The Gross Sales Price shall, for purposes of calculating the Royalty Fees
under Sections 3.1.A and 3.1.B, exclude the amount attributable to a gross up
for imputed interest associated with a zero percent (0%) or below market
interest rate program used in relation to financing a purchaser’s acquisition of
interests in Licensed Destination Club Units or Licensed Residential Units, but
only where the Gross Sales Price is offered at different amounts to the
customers on a programatic basis, depending on the financing or payment terms
selected by the customer.

F. The Royalty Fees shall be earned as and when a contract for the sale of an
interest in a Licensed Destination Club Unit or a Licensed Residential Unit, as
applicable, is closed, regardless of when, or whether, any part of the Gross
Sales Price or Gross Commissions, as applicable, are actually paid to, or
received by or on behalf of, Licensee and/or its Affiliates. For the avoidance
of doubt, the Royalty Fees shall not be due for any interests in Licensed
Destination Club Units or Licensed Residential Units for which the sales
contracts were signed prior to 12:01 am Eastern Standard Time on December 3,
2011, regardless of when such sales contracts actually close.

 

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  3.2 Usage Fees and Reimbursable Expenses; Maintenance Costs.

A. Licensee shall pay to Licensor or its Affiliates the Licensor Usage Fees for
ongoing services provided by Licensor and/or its Affiliates, including the use
of certain Electronic Systems and other systems, copyrights, and other materials
owned by Licensor or its Affiliates, as applicable, under this Agreement and the
related reimbursable expenses in accordance with the practices of the parties as
of the date of the Spin-Off Transaction, to be documented by the parties. If
Licensee fails to pay to Licensor or its Affiliates any Licensor Usage Fees or
related reimbursable expenses, Licensor may provide notice to Licensee of
Licensor’s intention to offset any amounts that Licensor may owe to Licensee
hereunder by the amount of the Licensor Usage Fees or reimbursable expenses owed
by Licensee or its Affiliates. If Licensee notifies Licensor in writing that it
disputes that such amounts are due within ten (10) business days following the
date on which Licensor provided the notice of its intention to offset such
amounts, Licensor will not offset such amounts until such dispute is resolved.
If Licensee does not dispute that such amounts are owed within such timeframe,
Licensor may offset such amounts. Licensor’s offset of such amounts shall be
deemed a waiver by Licensor and its Affiliates of damages and extra-contractual
remedies arising out of or related to Licensee’s failure to pay such amounts. If
Licensor elects to offset such amounts, and Licensee requests supporting
documentation in writing, Licensor will provide Licensee with documentation
evidencing in reasonable detail the amount of, and the manner of calculating,
such offset.

B. With respect to any systems and materials that Licensee owns and licenses to
Licensor, Licensor will pay to Licensee the applicable usage fee as determined
by Licensee on a fair, commercially reasonable and non-discriminatory basis.
Licensor will have the right to offset any amounts that Licensor may owe to
Licensee under this Section 3.2.B against amounts that Licensee owes to Licensor
under this Agreement, in which case Licensor shall provide notice to Licensee of
Licensor’s election to offset such amounts not less than fifteen (15) business
days prior to the date on which the payment from Licensee to be offset is due.
If Licensor fails to pay to Licensee or its Affiliates (or provide an offset as
contemplated in the immediately preceding sentence for) any amounts owed under
this Section 3.2.B, Licensee may provide notice to Licensor of Licensee’s
intention to offset any amounts that Licensee may owe to Licensor hereunder by
the amount owed by Licensor or its Affiliates to Licensee or its Affiliates
under this Section 3.2.B. If Licensor notifies Licensee in writing that it
disputes that such amounts are due within ten (10) business days following the
date on which Licensee provided the notice of its intention to offset such
amounts, Licensee will not offset such amounts until such dispute is resolved.
If Licensor does not dispute that such amounts are owed within such timeframe,
Licensee may offset such amounts. Licensee’s offset of such amounts shall be
deemed a waiver by Licensee and its Affiliates of damages and extra-contractual
remedies arising out of or related to Licensor’s failure to pay such amounts. If
Licensee elects to offset such amounts, and Licensor requests supporting
documentation in writing, Licensee will provide Licensor with documentation
evidencing in reasonable detail the amount of, and the manner of calculating,
such offset.

 

  3.3 Other Charges; Changes to Fees, Expenses and Charges; Other Costs.

A. Licensee must pay to Licensor or its Affiliates an amount specified by
Licensor for (i) any training (including tuition, supplies, and Travel Expenses
and allocations of internal costs and overhead of Licensor and its Affiliates)
in which Licensee participates, (ii) purchasing, staging, programming,
installing, interfacing and upgrading of Hardware and Software for Electronic
Systems as set forth in Section 10.1, (iii) any goods or services purchased,
leased or licensed by Licensee from Licensor or an Affiliate of Licensor, and
(iv) any programs of Licensor or its Affiliates in which Licensee participates.

 

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B. Charges for items described in Sections 3.2 and 3.3.A. will be calculated as
follows: (i) where participation is mandatory or necessary for the operation of
the Licensed Business such charges will be determined on a fair and commercially
reasonable basis and in a manner consistent with the manner in which such
charges are made with respect to the Licensor Lodging Facilities receiving the
services or participating in the programs and systems to which such fees,
expenses or costs are applicable and, where appropriate, shall take into account
the manner and extent to which such services, programs, or systems are used by
the Licensed Business; and (ii) where such participation is optional or is not
necessary for the operation of the Licensed Business, such charges will be
determined in a manner consistent with the manner in which such charges are made
with respect to the Licensor Lodging Facilities receiving the services or
participating in the programs or systems to which such fees, expenses, or costs
are applicable. Licensor may change the fees, expenses, and costs payable under
Sections 3.2 or 3.3.A. for services that Licensee receives and programs and
Electronic Systems in which Licensee participates to reflect the following:
(i) any increase or decrease in the costs and expenses of providing the relevant
service; (ii) any change in the method Licensor uses to determine allocation of
the applicable payments; or (iii) any change as a result of competition in the
business which is the subject of the Licensed Business, including changes to the
basis for charging for the Usage Fees for Electronic Systems. Licensor will
notify Licensee of any such change in the ordinary course of business.

 

  3.4 Travel Expenses and Reimbursement.

Licensee must pay to Licensor all Travel Expenses for: (i) individuals who
provide initial, ongoing, and remedial training under this Agreement; and
(ii) Licensor’s and its Affiliates’ corporate and regional representatives
visiting any of the Projects or Licensee’s corporate offices for re-inspections
following any failed inspection conducted under the Quality Assurance Program.
In addition to such Travel Expenses, Licensee must reimburse Licensor, or such
other Person designated by Licensor, for the salary and other compensation of
any individuals providing training with respect to any Project or the Licensed
Business or conducting re-inspections, and arrange for lodging at the Project
(or, if space is unavailable at the Project, at another lodging facility of
comparable quality) for any inspector on official duty for such time as may be
reasonably necessary and to Licensor’s representatives or independent auditors
while conducting and completing audits pursuant to Section 15.3. Licensee shall
not be obligated to provide accommodations or pay Travel Expenses in excess of
what would be required under Licensor’s internal travel reimbursement policies;
provided, however, that such reimbursements shall not include first class air
travel.

 

  3.5 Marketing and Sales Fees and Charges.

A. Licensor may propose marketing or sales programs in which Licensee may elect
to participate. If Licensee elects to participate in any such program, Licensee
shall pay the applicable fees and charges for Licensee’s participation in such
program. The determination of the fees and charges for Licensee’s participation
in such programs shall, where appropriate, take into account the relevant
differences between the Licensed Business and the other participants in such
programs.

B. Licensee may propose marketing or sales programs in which Licensor may elect
to participate. If Licensor elects to participate in any such program, Licensor
shall pay the applicable fees and charges for Licensor’s participation in such
program. Licensee acknowledges that the funds Licensor uses to pay any such fees
or charges for participation in any such program may be derived from Licensor
Lodging Facilities or marketing fund(s) to which Licensor Lodging Facilities
contribute. The determination of the fees and charges for Licensor’s
participation in such programs shall, where appropriate, take into account the
relevant differences between the Licensor’s Lodging Business and the other
participants in such programs.

 

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  3.6 Making of Payments; Delegation of Duties and Performance of Services.

A. The Royalty Fees payable under Section 3.1 shall be paid within fifteen
(15) days following the end of each calendar quarter, as applicable, during the
Term (and, with respect to the Royalty Fees payable as a percentage of Gross
Sales Price and Gross Commissions under Sections 3.1.A(ii) and (iii) and 3.1.B,
during the tail period contemplated in Section 4.2.B, it being acknowledged that
no Base Royalty shall be payable during such tail period) for the immediately
preceding quarter (preceding calendar quarter in the case of the Base Royalty
and preceding Accounting Period quarter in the case of Royalty Fees payable as a
percentage of Gross Sales Price and Gross Commissions under Sections 3.1.A(ii)
and (iii) and 3.1.B) along with any reports required under Section 15.2. The
Base Royalty payable under Section 3.1.A(i) shall be paid in installments each
calendar quarter within each calendar year, with the amount to be paid each
calendar quarter equal to one-fourth of the amount to be paid for such calendar
year (such amount shall be prorated for any partial calendar quarter occurring
at the beginning or end of the Term); provided, however, that the parties
acknowledge and agree that, notwithstanding the fact this Agreement is effective
as of the Effective Date, the Base Royalty shall begin to accrue at 12:01 am
Eastern Standard Time on December 3, 2011. All other payments required by this
Agreement, whether payable by Licensee or its Affiliates to Licensor or its
Affiliates or by Licensor or its Affiliates to Licensee or its Affiliates, will
be made within thirty (30) days after receipt by Licensee or its Affiliate or
Licensor or its Affiliate, as the case may be, of each statement for such
payment. Payments due to either party or their respective Affiliates, unless
otherwise agreed, will be paid by wire transfer of immediately available funds
by Licensee to Licensor or by Licensor to Licensee, as applicable, in the United
States to the accounts designated by the receiving party.

B. Licensor has the right to have any service or obligation of Licensor under
this Agreement be performed by an Affiliate of Licensor, and Licensee agrees to
accept performance by such Affiliate. Licensor may designate that payment be
made to one of its Affiliates instead of Licensor, and Licensee and its
Affiliates must make such payments as designated; provided, however, that
Licensee and its Affiliates shall have no obligation to pay more than it
otherwise would have paid had Licensor not made such designation.

C. To the extent that Licensee has the right under this Agreement to have any
service or obligation of Licensee under this Agreement be performed by an
Affiliate of Licensee, Licensor agrees to accept performance by such Affiliate.
Licensee may designate that payment be made to one of its Affiliates instead of
Licensee, and Licensor and its Affiliates must make such payments as designated;
provided, however, that Licensor and its Affiliates shall have no obligation to
pay more than it otherwise would have paid had Licensee not made such
designation.

 

  3.7 Interest on Late Payments.

If any payment due under this Agreement is not received by the party to which
such payment is due on or before its due date, such payment will be deemed
overdue, and paying party must pay to the receiving party, in addition to the
overdue amount, interest on such overdue amount which will accrue at a rate per
annum equal to the Interest Rate from the date such overdue amount was due until
paid. Interest is not in lieu of any other remedies the receiving party may
have.

 

  3.8 Currency and Taxes.

A. All amounts payable to Licensor or Licensee or their respective Affiliates
under this Agreement, the Electronic Systems License Agreement, and the Design
Review Addendum and, except as expressly otherwise agreed to by the parties, any
other payments required for services provided to Licensee or its Affiliates by
Licensor or its Affiliates pursuant to this Agreement, including those provided
under Section 11.2 (including any judgment or arbitral award) must be paid in
United States Dollars (collectively, “Payment Obligations”).

 

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B. Licensee and its Affiliates must promptly pay when due all Taxes levied or
assessed against Licensee and its Affiliates by any Tax authority relating to
the Projects and the Licensed Business, Licensee, its Affiliates, this
Agreement, the Payment Obligations or in connection with the operation of the
Projects or the Licensed Business.

C. Subject to Section 3.8.D., Licensor and its Affiliates must promptly pay when
due all Taxes levied or assessed against Licensor and its Affiliates by any Tax
authority relating to the Projects and the Licensed Business, Licensor, its
Affiliates, this Agreement, the Payment Obligations or in connection with the
operation of the Projects or the Licensed Business.

D. Except with respect to the Royalty Fees required to be paid under
Section 3.1, any amount to be paid or reimbursed under this Agreement to
Licensor or Licensee or their respective Affiliates, for reimbursable expenses,
including Travel Expenses, shall be made free and clear and without deduction
for any Taxes so that the amount actually received in respect of such payment
(after payment of Taxes) equals the full amount stated to be payable in respect
of such payment. To the extent any Applicable Law requires or allows deduction,
payment or withholding of Taxes to be paid by the paying party directly to a
governmental authority, the paying party must account for and pay such amounts
promptly and provide to the receiving party receipts or other proof of such
payment promptly upon receipt.

 

  4. TERM

 

  4.1 Initial Term.

The initial term of this Agreement begins on the Effective Date and expires
December 31, 2090 (the “Initial Term”).

 

  4.2 Extension Term; Tail Period.

A. Licensee shall have the right to obtain two (2) additional extension terms of
thirty (30) years each (each, an “Extension Term”). Licensee must meet the
following conditions in order to obtain each Extension Term: (i) Licensee must
provide Licensor with notice of its desire to obtain the applicable Extension
Term not earlier than January 1, 2050 or later than December 31, 2080 for the
first Extension Term and not earlier than January 1, 2080 or later than
December 31, 2110 for the second Extension Term; and (ii) the sale of interests
in Licensed Destination Club Units and Licensed Residential Units during the
twelve (12) months immediately preceding the date of such notice must have
generated six hundred fifty million dollars ($650,000,000) or more in revenues
from the Gross Sales Prices.

B. For a “tail period” of thirty (30) years following the end of the Initial
Term (if Licensee does not exercise its right to obtain an Extension Term), the
first Extension Term (if Licensee does not exercise its right to obtain a second
Extension Term), or the second Extension Term, as applicable (but not following
any termination of this Agreement under Section 18), Licensee shall be entitled
(but not required) to continue to operate the then-existing Licensed Destination
Club Projects and Licensed Residential Projects (including any New Projects
under development as contemplated in (ii) below) in the Territory (provided,
however, Licensee shall have no right (subject to Section 13.1.E.) to use the
Licensed Marks or the System in the Excluded Area and shall not have the right
to any indemnity under Section 16.1.B. with respect to third-party claims
resulting from Licensee’s or its Affiliates’ use of the Licensed Marks or the
System in the Excluded Area, and any third-party claim related to the use of

 

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the Licensed Marks or the System in the Excluded Area shall be subject to
indemnification by Licensee pursuant to Section 16.1.A.), provided that such
operation is in compliance with the terms and conditions of this Agreement. The
parties agree that (i) the exclusivity granted in Section 1.A. and the
restrictions and limitations on Licensor and its Affiliates in Section 2.2 shall
immediately cease and be of no further force or effect as of the first day of
the tail period; (ii) Licensee shall have no right to propose New Projects
during the tail period (but will have the right to continue and complete the
development of any New Projects that have been approved by Licensor pursuant to
this Agreement prior to the commencement of the tail period); and (iii) Licensee
shall not be required to pay any Base Royalty during the tail period. All other
applicable terms and conditions of this Agreement, including, without
limitation, the requirement to pay all portions of the Royalty Fees other than
the Base Royalty and other amounts under Sections 3 and 11, shall remain in
place and be applicable during the tail period.

 

  5. EXISTING PROJECTS; DEVELOPMENT RIGHTS AND RESTRICTIONS

 

  5.1 Designation of Projects; Existing Projects.

A. Prior to the Effective Date, the parties have designated each Existing
Project as corresponding to either the Upscale Brand Segment or Upper-Upscale
Brand Segment based on the physical characteristics and quality of each such
Project, and each New Project will be designated as corresponding to either the
Upscale Brand Segment or Upper-Upscale Brand Segment based on the physical
characteristics and quality of each such New Project at the time the New Project
Application is submitted for such New Project in accordance with Section 5.2, as
agreed by the parties.

B. The Existing Projects are listed on Exhibit B to this Agreement. Licensee may
continue to operate the Existing Projects under the System and Brand Standards
in accordance with the terms and conditions of this Agreement. Each Existing
Project may operate only under the applicable Project name set forth in Exhibit
B, which Project name may be changed only in accordance with the naming protocol
set forth in the Brand Standards.

C. In the event that Licensee delegates (or prior to the Effective Date has
delegated) the authority to operate an Existing Project to an Affiliate,
Licensee shall sublicense to such Affiliate the right to operate the applicable
Existing Project under the form of sublicense agreement attached as Exhibit E,
under which such Affiliate will be required to operate the Existing Project in
accordance with the sublicense agreement and the terms and conditions of this
Agreement, and such Affiliate will agree to be bound by the same
responsibilities, limitations, and duties of Licensee under this Agreement with
respect to such Existing Project. Licensee shall provide Licensor with a
fully-executed copy of each sublicense agreement entered into hereunder promptly
following its execution and will notify Licensor in writing upon the termination
or expiration of any sublicense agreement. Except to the extent required by
Applicable Law, Licensee shall not amend or otherwise modify any such sublicense
agreement without Licensor’s prior written approval.

 

  5.2 New Projects.

A. Licensee shall provide Licensor with an application (“New Project
Application”) in the form attached hereto as Exhibit K for each proposed New
Project. The form of New Project Application may be modified by Licensor as
required for compliance with Applicable Law or as mutually agreed by the parties
hereto.

 

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B. Licensor may reject a proposed New Project only if:

(i) Licensor determines that the proposed New Project does not meet the
applicable Brand Standards related to construction and design or that the
location of the proposed New Project does not meet applicable Brand Standards or
is otherwise not appropriate for the proposed New Project;

(ii) Licensor determines that the development of the proposed New Project would
breach, or be reasonably likely to breach, any Permitted Territorial
Restrictions or restrictions imposed by Applicable Law on Licensor and its
Affiliates; or

(iii) the proposed New Project will involve a co-investor with Licensee and such
co-investor is (a) a Lodging Competitor of Licensor, (b) is known in the
community as being of bad moral character, (c) has been convicted in any court
of a felony or other offense that could result in imprisonment for one (1) year
or more or a fine or penalty of one million dollars ($1,000,000) (as adjusted
annually after the Effective Date by the GDP Deflator) or more (or is in control
of or controlled by Persons who have been convicted in any court of felonies or
such offenses), or (d) is, or has an Affiliate that is, a Specially Designated
National or Blocked Person.

If Licensor does not approve the proposed New Project under Sections 5.2.B(i),
(ii), or (iii) above and Licensee disagrees with such determination, then
Licensee may refer the matter for Expert resolution pursuant to Section 22.5.
The Expert shall make its determination based upon whether Licensor’s rejection
was reasonable, given the market positioning and Brand Standards applicable to
the proposed New Project. Additionally, if Licensor did not approve the proposed
New Project based on its determination that the location of the proposed New
Project did not meet applicable Brand Standards or was otherwise not appropriate
for the proposed New Project, the Expert shall determine whether the proposed
location would be appropriate for Licensor Lodging Facilities in the Upscale
Brand Segment or Upper-Upscale Brand Segment, as applicable, based on the market
positioning and brand standards applicable to such Licensor Lodging Facilities,
and if the Expert determines that the proposed location would be so appropriate,
then the proposed location shall be deemed appropriate for the proposed New
Project.

C. Each New Project may operate only under the applicable Project name agreed to
by the parties in accordance with the naming protocol set forth in the Brand
Standards, which Project name may be changed only in accordance with the naming
protocol set forth in the Brand Standards.

D. (1) In the event that Licensee delegates the authority to develop a New
Project to an Affiliate, Licensee shall sublicense to such Affiliate the right
to develop such New Project under the form of sublicense agreement attached as
Exhibit E, under which such Affiliate will be required to develop the New
Project in accordance with the sublicense agreement and the terms and conditions
of this Agreement, and such Affiliate will agree to be bound by the same
responsibilities, limitations, and duties of Licensee under this Agreement with
respect to such New Project.

    (2) In the event that Licensee delegates the authority to operate a New
Project to an Affiliate, Licensee shall sublicense to such Affiliate the right
to operate such New Project under the form of sublicense agreement attached as
Exhibit E, under which such Affiliate will be required to operate the New
Project in accordance with the sublicense agreement and the terms and conditions
of this Agreement, and such Affiliate will agree to be bound by the same
responsibilities, limitations, and duties of Licensee under this Agreement with
respect to such New Project.

 

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(3) Licensee shall provide Licensor with a fully-executed copy of each
sublicense agreement entered into hereunder promptly following its execution and
will notify Licensor in writing upon the termination or expiration of any
sublicense agreement. Except to the extent required by Applicable Law, Licensee
shall not amend or otherwise modify any such sublicense agreement without
Licensor’s prior written approval.

E. If the offer or execution of the sublicense agreement for any Existing
Project or proposed New Project (including any New Project that is to be
developed through a third party) results in a requirement for Licensee to comply
with regulatory requirements, including, without limitation, the preparation and
provision to the Project developer of a disclosure document or filing of the
disclosure document or other documents with regulatory authorities, Licensee
shall comply with such regulatory requirements at its sole cost and expense and
provide Licensor with evidence satisfactory to Licensor of Licensee’s compliance
therewith within the timeframe required by the applicable regulations. If
Licensor determines that Licensor is required to comply with such regulatory
requirements in connection with any Existing Project or proposed New Project,
Licensee will fully cooperate with Licensor with respect to Licensor’s
compliance requirements, and Licensor will not charge Licensee any amounts for
costs incurred by Licensor in connection with Licensor’s compliance
requirements.

F. All New Projects that are added to Licensed Non-Site Specific Destination
Club Programs must initially be operated under the Licensed Marks in accordance
with the System and this Agreement, it being acknowledged that such New Projects
are subject to being Deflagged in accordance with the terms of this Agreement.
At Licensor’s request, Licensee’s rights to include a Non-Site Specific
Destination Club Ownership Vehicle as part of a Licensed Non-Site Specific
Destination Club Program shall be discontinued if at any time the aggregate
interests in Licensed Destination Club Units that are held by such Non-Site
Specific Destination Club Ownership Vehicle is less than one-half (1/2) of the
aggregate interests in all Destination Club Units that are held by such Non-Site
Specific Destination Club Ownership Vehicle.

G. Licensee shall have the right to include inventory of Destination Club Units
or Residential Units in Existing Projects (as defined in the Ritz-Carlton
License Agreement) as part of Licensed Destination Club Products under this
Agreement, provided, that Licensee provide prior notice to Licensor thereof.

 

  5.3 Undeveloped Parcels Pre-Approved; Right of First Refusal for Undeveloped
Parcels.

A. Parcels owned by Licensee or its Affiliates but which have not been developed
as of the Effective Date are listed on Exhibit B-1 (“Undeveloped Parcels”).
Licensor hereby approves the Undeveloped Parcels as sites for Projects;
provided, however, that Projects developed on any such Undeveloped Parcel must
be developed and operated in accordance with the terms and conditions of this
Agreement, including, without limitation, Section 6.3 and the then-current Brand
Standards related to construction and design for New Projects.

B. Prior to negotiating a sale of any of the Undeveloped Parcels (or any part
thereof) listed on Exhibit B-2 (or a Controlling interest in the owner(s) of
such Undeveloped Parcels), Licensee will give Licensor written notice of its
decision to sell the Undeveloped Parcel or interest, as applicable, and, during
the period of thirty (30) day period after such notice Licensee negotiate in
good faith with Licensor for a mutually satisfactory agreement for the purchase
of the Undeveloped Parcel. If, after the expiration of thirty (30) days
following the date of Licensee’s notice of its desire to sell the Undeveloped
Parcel, Licensee and Licensor have not entered into a mutually acceptable
agreement for the purchase of the Undeveloped Parcel, subject to Section 5.3.C,
Licensee shall be free to enter within a period of two

 

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hundred seventy (270) days thereafter into a binding contract to sell the
Undeveloped Parcel to a third-party so long as the price to such third-party is
no more favorable to such third-party than 95% of the price that Licensee
offered to sell the Undeveloped Parcel to Licensor. Licensee shall promptly
provide Licensor with the name of the prospective purchaser, the price, and the
terms and conditions of such proposed sale of the Undeveloped Parcel, together
with all other information reasonably requested by Licensor in order for
Licensor to confirm that the requirements of this Section 5.3.B have been met.

C. If Licensee or its Affiliates wish to sell any of the Undeveloped Parcels (or
any part thereof) listed on Exhibit B-2 (or a Controlling interest in the
owner(s) of such Undeveloped Parcels) to a Lodging Competitor, Licensor shall
have a right of first refusal to purchase such Undeveloped Parcels (or a
Controlling interest in the owner(s) of such Undeveloped Parcels), on the same
terms set forth in a bona fide third party offer made to Licensee, exercisable
within thirty (30) days after notice is given of such offer. If the third party
offer provides for payment of consideration other than cash, Licensor may elect
to purchase the Undeveloped Parcel or the interest for the reasonable cash
equivalent. If the parties cannot agree within a reasonable time on the
reasonable cash equivalent, then that amount shall be determined by two
(2) appraisers. Each party shall select one (1) appraiser and the average of the
appraisers’ determinations shall be binding. Each party shall bear its own legal
and other costs, including appraisal fees.

D. Licensor acknowledges that if an Undeveloped Parcel is listed on Exhibit B-1
but is not listed on Exhibit B-2, then Licensor shall have neither a right of
first negotiation pursuant to Section 5.2.B nor a right of first refusal
pursuant to Section 5.2.C to purchase such Undeveloped Parcel, and Licensee
shall have the right to sell such Undeveloped Parcel without restriction.

E. Licensee acknowledges that Licensor’s rights under Section 5.3.C are real
estate rights with respect to the Undeveloped Parcels listed on Exhibit
B-2. Licensor is entitled to file at Licensor’s cost a record of such interest
in and among the appropriate real estate records of the jurisdiction in which
the applicable Undeveloped Parcel is located, and Licensee will cooperate as
requested by Licensor in such filing. Licensee will execute a Memorandum of
Right of First Refusal in form attached hereto at Exhibit B-3. Licensee agrees
that damages are not an adequate remedy if Licensee breaches its obligations
under such Section 5.3.C and that Licensor will be entitled to injunctive relief
to prevent or remedy such breach without the necessity of proving the inadequacy
of money damages as a remedy and without the necessity of posting a bond. If
this Agreement is terminated and Licensor’s rights under Sections 5.3.C are no
longer in effect, at the request of Licensee or the transferee, Licensor will
deliver upon request an instrument in recordable form to terminate any such
recording of interest in real estate, or if a Project or a non-lodging facility
is developed by Licensee or one of its Affiliates on any Undeveloped Parcel
listed on Exhibit B-2, at the request of Licensee, Licensor will deliver upon
request an instrument in recordable form to terminate such recording of interest
in real estate as to the affected Undeveloped Parcel.

 

  5.4 Projects Located at Hotels other than Licensor Lodging Facilities.

A. Licensee will not develop any New Projects that are located in, co-located in
conjunction with, or are otherwise a part of a hotel (“Co-Located Hotel”) that
is not a Licensor Lodging Facility without using commercially reasonable efforts
to secure for Licensor a right to negotiate with the owner of the Co-Located
Hotel for (i) the management of the Co-Located Hotel by Licensor or its
Affiliate (if Licensee does not intend to manage the Co-Located Hotel) or
(ii) the franchising of the Co-Located Hotel by Licensor or its Affiliate,
whether Licensee intends to manage the Co-Located Hotel or not. Additionally, if
Licensee or one of its Affiliates is the owner of the Co-Located Hotel, Licensee
or its Affiliate will negotiate with Licensor in a commercially reasonable
manner to enter into (i) a management agreement with Licensor or its Affiliate
(if Licensee does not intend to manage the Co-Located Hotel) or

 

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(ii) a franchise agreement with Licensor or its Affiliate, whether Licensee
intends to manage the Co-Located Hotel or not, on Licensor’s or its Affiliate’s
then-current form of management agreement or franchise agreement, as applicable,
in each case with such changes as Licensee and Licensor or its Affiliate agree.
Licensee shall provide Licensor with notice (the “Negotiation Opportunity
Notice”) of any such proposed New Project and the opportunity for Licensor to
negotiate for the management or franchise, as applicable, of the Co-Located
Hotel.

B. Notwithstanding the foregoing, subject to Licensor’s approval of the New
Project pursuant to Section 5.2, Licensee shall have the right to develop any
New Project that is located in, co-located with, or are otherwise a part of
(i) a Co-Located Hotel that is subject to a hotel management, franchise or other
agreement which would preclude Licensor and its Affiliates from managing or
franchising such Co-Located Hotel; (ii) a Co-Located Hotel with respect to which
Licensor does not wish to enter into a management agreement or franchise
agreement; or (iii) a Co-Located Hotel with respect to which Licensor and the
hotel owner cannot agree on the terms of a management agreement or franchise
agreement, as applicable, within sixty (60) days after the date on which
Licensor receives the Negotiation Opportunity Notice. In such event, Licensor
may require that Licensee and the hotel owner agree to reasonable restrictions
on the sharing of entrances, signage, facilities and services to ensure a level
of brand separation sufficient to avoid customer confusion as to the
relationship between the Project and the Co-Located Hotel as determined by
Licensor in its reasonable business judgment having regard to (x) what
restrictions are practicable and feasible based on the physical configuration of
the Project, the Co-Located Hotel, the development in which they are situated,
and any applicable ingress and egress constraints and (y) exceptions to such
restrictions then in effect that Licensor customarily has agreed to in previous
similar situations.

C. The provisions of Sections 5.4.A and 5.4.B shall not apply to any Co-Located
Hotel that is or has been Deflagged as a Licensor Lodging Facility. Upon the
Deflagging as a Licensor Lodging Facility of a Co-Located Hotel, Licensor and
Licensee will use good faith efforts to agree to reasonable parameters for
providing appropriate brand separation to the extent commercially feasible.

D. Any disputes regarding this Section 5.4 shall be subject to Expert resolution
pursuant to Section 22.5.

 

  5.5 Prohibitions To Be Included in Future Franchise and Management Agreements.

A. Licensor will include in the initial draft of future Licensor Lodging
Facility management, operating, and franchise agreements with third-party hotel
owners and franchisees and in future license and development agreements for
Residential Projects to be operated under the Proprietary Marks, prohibitions on
the operation, promotion and sale of interests in Destination Club Projects,
other than Licensed Destination Club Projects, at the applicable hotel or
Residential Project and attempt to persuade such third-party hotel owners or
franchisees to agree to retain such prohibitions in the applicable agreements.
However, Licensor will not be required to offer any concessions to such
third-party hotel owners or franchisees in order to retain such prohibitions in
the applicable agreements.

B. Licensee acknowledges and agrees that, provided Licensor meets the
requirements of Section 5.5.A. as expressly set forth therein, neither Licensor
nor its Affiliates will have any liability under this Agreement for failure to
obtain such prohibitions in such agreements under this Section 5.5. This
Section 5.5 shall not affect any other obligations of Licensor and its
Affiliates hereunder.

 

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  5.6 Destination Club Projects at Third-Party Owned Licensor Lodging
Facilities.

If a third-party developer of a Licensor Lodging Facility desires to have a
Destination Club Project as a component of or adjacent to such Licensor Lodging
Facility project (the “Co-Located Licensor Lodging Facility”), Licensor will use
commercially reasonable efforts to secure for Licensee a right to negotiate with
such developer regarding Licensee’s involvement in such Destination Club
Project. Licensor shall provide Licensee with notice (the “Negotiation
Opportunity Notice”) of any opportunity for Licensee to negotiate regarding
Licensee’s involvement in such Destination Club Project. If Licensee declines to
participate or cannot reach agreement with such developer and Licensor regarding
Licensee’s involvement in such Destination Club Project within sixty
(60) business after the date on which Licensee receives the Negotiation
Opportunity Notice, then Licensor will have the right to proceed (and permit
such developer to proceed) with such Destination Club Project without Licensee’s
involvement. Licensor shall not use or permit the use of any of the Licensed
Marks or Branded Elements in connection with such Destination Club Project;
provided, however, that (x) the marketing, offering, and selling of units in any
such Destination Club Project at the Co-Located Licensor Lodging Facility to any
Person, including guests of the Co-Located Licensor Lodging Facility, whether or
not such guest is a member of any Brand Loyalty Program, provided, that such
Destination Club Project is not affiliated with a Destination Club Competitor
(y) the placing of overflow guests of the Co-Located Licensor Lodging Facility
in such Destination Club Project on a transient basis, and (z) the offering of
potential customers of such Destination Club Project stays at the Co-Located
Licensor Lodging Facility in connection with the marketing and sale of the units
of such adjacent Destination Club Project, shall not be deemed to be a violation
hereof.

 

  5.7 Limitations on Licensed Business; Compliance with Contractual
Restrictions.

A. Licensor shall not enter into any contract or agreement that purports to
limit or restrict Licensee’s or its Affiliates’ right to engage in the Licensed
Destination Club Business or the Licensed Whole Ownership Residential Business.
Provided, that the Agreed Territorial Protections (defined below) contain an
express carve-out for the Licensed Destination Club Business and the Licensed
Whole Ownership Residential Business, (i) nothing in this Section 5.7.A will
restrict or limit Licensor’s or its Affiliates’ ability to grant territorial
protections (“Agreed Territorial Protections”) solely with respect to hotels,
resorts and other lodging facilities to owners, developers, operators, lessees,
licensees, or franchisees of any Licensor Lodging Facilities, and (ii) Licensor
will not be in breach of this Agreement as a result of the grant of such Agreed
Territorial Protections or the enforcement or the attempted enforcement of such
Agreed Territorial Protections against Licensee or its Affiliates by such
owners, developers, operators, lessees, licensees, or franchisees.

B. Licensee agrees to abide by (i) all territorial and other contractual
restrictions applicable to Licensor and/or its Affiliates relating to the
Licensed Destination Club Business and Licensed Whole Ownership Residential
Business that are in effect as of the Effective Date and (ii) all territorial
and other contractual restrictions that are agreed to after the Effective Date
with Licensee’s consent (the restrictions described in clauses (i) and
(ii) above are referred to as “Permitted Territorial Restrictions”). Licensor
will exclude Licensed Residential Projects from any territorial or other
contractual restrictions in future residential license and development
agreements relating to Residential Projects. Neither Licensor nor its Affiliates
will agree to an extension of the duration, or a broadening of the scope, of any
Permitted Territorial Restriction without Licensee’s consent; provided, however,
that nothing herein shall prohibit Licensor or its Affiliates from extending or
renewing agreements containing such Permitted Territorial Restrictions in
accordance with the terms of such agreements, even if such extension or renewal
has the effect of extending the duration of any such Permitted Territorial
Restriction.

 

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C. Licensee shall not enter into any contract or agreement that purports to
limit or restrict Licensor’s or its Affiliates’ right to develop, operate, sell,
market, license, or franchise Licensor Lodging Facilities or Residential Units
(other than Licensed Residential Units), except as otherwise provided hereunder,
or any other activity or business of Licensor or its Affiliates, other than as
set forth in any hotel management or franchise agreement entered into between
Licensee and Licensor, or their respective Affiliates.

 

  5.8 Delegation of Certain Functions; Sublicensing of Marketing Functions.

A. Licensee may delegate property-level, non-management functions of the
Licensed Business, such as housekeeping, security, and recreational activities,
that do not involve the sales or marketing of Licensed Destination Club Products
or Licensed Residential Units to vendors without Licensor’s consent, provided,
that (i) the delegated or subcontracted functions are conducted in accordance
with the Brand Standards and this Agreement; (ii) the delegated or subcontracted
functions are covered by insurance policies that satisfy the applicable
requirements of Sections 16.2 and 16.4 ; and (iii) any party to which such
function has been delegated or subcontracted and that will have access to any
Licensor Confidential Information agrees to keep such Licensor Confidential
Information confidential in accordance with this Agreement.

B. Licensee may delegate non-management functions of the Licensed Business
involving regional and/or local sales and marketing (including brokerage
arrangements) of Licensed Destination Club Products and Licensed Residential
Units for Licensed Residential Projects to any Affiliate or unrelated third
party, provided, that (i) Licensee must ensure such functions are conducted in
accordance with the Brand Standards and this Agreement; (ii) such functions are
covered by insurance policies that satisfy the applicable requirements of
Sections 16.2 and 16.4; (iii) any party to which such function has been
delegated or subcontracted and that will have access to any Licensor
Confidential Information agrees to keep such Licensor Confidential Information
confidential in accordance with this Agreement; (iv) any Affiliate to which such
function has been delegated or subcontracted will agree to be bound by the same
responsibilities, limitations, and duties of Licensee hereunder that have been
delegated to such party, and any third party to which such function has been
delegated will agree to be bound by certain terms and conditions as set forth in
the applicable sublicense and undertaking; and (v) where the sublicense of the
right to use the Licensed Marks and System is required in Licensor’s judgment,
(i) if the sublicensee is an Affiliate of Licensee, Licensee shall sublicense to
such Affiliate the right to use the Licensed Marks and the System, as necessary
to fulfill such function(s) under a sublicense agreement in a form substantially
similar to the form attached hereto as Exhibit E and (ii) if the sublicensee is
an unrelated third party, Licensee shall sublicense to such third party the
right to use the Licensed Marks, as necessary to fulfill such function(s) under
an undertaking and sublicense that contains provisions in a form substantially
similar to the provisions set forth in Exhibit F. Such delegation shall not
result in a novation of any of Licensee’s obligations under this Agreement.
Licensee shall provide Licensor with a fully-executed copy of each sublicense
agreement and undertaking entered into hereunder promptly following their
execution and will notify Licensor in writing upon the termination or expiration
of any sublicense agreement or undertaking. Licensee shall not, without
Licensor’s prior consent in Licensor’s sole discretion, delegate such functions
to an unrelated third party who is known in the community as being of bad moral
character; has been convicted in any court of a felony or other offense that
could result in imprisonment for one (1) year or more or a fine or penalty of
one million dollars ($1,000,000) (as adjusted annually after the Effective Date
by the GDP Deflator) or more (or is in control of or controlled by Persons who
have been convicted in any court of felonies or such offenses); is a Specially
Designated National or Blocked Person; or is a Lodging Competitor.

 

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C. Notwithstanding Sections 5.8.A. and B., subject to Section 8.3.B(iv),
Licensee may not delegate to any person who is not a Related Party any of the
key functions of the Licensed Business, including Member services, senior
management of any Project, brand-level marketing, and substantially all of the
consumer financing servicing function of the notes for which Licensor or any of
its Affiliates is a guarantor, without Licensor’s consent in Licensor’s
reasonable business judgment. For avoidance of doubt, Licensee shall be
permitted to delegate any of the functions of the Licensed Business to a Related
Party without Licensor’s consent, subject in each case to execution of a
sublicense agreement in accordance with Section 5.1, 5.2, and 5.8 hereof to the
extent required thereunder. For purposes of this Section 5.8.C, “Related Party”
means (i) any wholly-owned subsidiary of Licensee or (ii) any Affiliate of
Licensee in which an unrelated third-party holds a passive, minority interest in
such Affiliate and such unrelated third-party will not be involved in the
performance of any of the key functions of the Licensed Business that are
delegated to such Affiliate.

 

  6. SOURCING; DESIGN REVIEW; CONSTRUCTION, CONVERSION AND RENOVATION

 

  6.1 Furniture, Fixtures, Equipment, Supplies, and Signage.

Licensee will use at the Projects only such signs, supplies, fixtures and other
items that conform to the Brand Standards. If Licensor or its Affiliates have
contracts in effect as of the Effective Date with any supplier under which
developers, owners, managers, franchisees, or licensees of Licensor or its
Affiliates must purchase particular items, Licensee must purchase such item(s)
from such supplier(s). However, Licensee will not be obligated to participate in
any such purchasing or supply arrangements which are initiated following the
Effective Date.

 

  6.2 Design Review.

The plans and specifications for each New Project shall be subject to Licensor’s
review and, upon reasonable notice, inspection to ensure that they are in
compliance with Brand Standards (subject to Project-specific variations to the
Brand Standards that may be agreed to by the parties) and with Licensee’s
obligations hereunder in accordance with the Design Review Addendum, the form of
which is attached hereto as Exhibit G, and each such Project shall be submitted
to Licensor’s design review process for review, comment, and approval. Licensee
shall pay (or cause to be paid) to Licensor or its Affiliate a fixed fee for
such review activities in accordance with the Design Review Addendum. Licensee
agrees that, as between Licensee and its Affiliates on the one hand and Licensor
and its Affiliates on the other hand, Licensee and its Affiliates (and not
Licensor and its Affiliates) are responsible for: (i) ensuring that any design,
construction documents, specifications, and any work related to the Projects
complies with all Applicable Laws, including any requirements relating to
disabled persons; (ii) any errors or omissions; or (iii) discrepancies of any
nature in any drawings or specifications. Licensee further acknowledges and
agrees that: (a) any review by Licensor or its Affiliates of plans for any
Project is limited solely to determining whether the plans comply with the Brand
Standards; and (b) Licensor and its Affiliates will have no liability or
obligation with respect to the construction, conversion, renovation, upgrading
or furnishing of the Projects other than as set forth in the Design Review
Addendum.

 

  6.3 Site Inspection.

For each New Project that Licensor approves, Licensor will have the right to
visit (at Licensor’s cost) the job site in order to observe and inspect the work
solely to ensure compliance with the Brand Standards and this Agreement.

 

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6.4 Construction/Conversion/Renovation.

Licensee shall construct, convert or renovate (or cause to be constructed,
converted or renovated), as the case may be, each New Project in accordance with
the Design Review Addendum, the Brand Standards, and this Agreement, and such
construction, conversion, or renovation shall not be at Licensor’s or its
Affiliates’ cost or expense.

7. SYSTEM AND STANDARDS

7.1 Brand Standards.

A. Licensee shall comply with the Brand Standards in all matters with respect to
the operation of the Licensed Business, including, without limitation, the
following to the extent each relates to the Licensed Business: the use of the
Licensed Marks; the provision of Member services; employee training; the
development, construction, equipping, maintaining, and operating of all Licensed
Destination Club Projects and Licensed Residential Projects; and all sales and
marketing activities.

B. Without limiting the foregoing, all usage of the Licensed Marks shall be in
strict accordance with the then-current Brand Style and Communications Standards
to the extent such use is described in the Brand Style and Communications
Standards; provided, however, nothing in this sentence shall limit Licensor’s
right to modify the Licensed Marks in accordance with Section 13.2(B)(3).
Otherwise, such usage shall be in strict accordance with the Brand Standards
related to the Licensed Marks, which shall be subject to modification in
Licensor’s sole discretion. Licensor shall make available to Licensee the Brand
Standards related to the Licensed Marks as well as any modifications thereto.
Licensee shall have a reasonable period of time determined by Licensor to
implement any modifications made by Licensor to the Brand Standards related to
the Licensed Marks, such as being permitted to exhaust current supplies of
collateral, taking into consideration Licensee’s contractual commitments and the
applicable MHR Hotel implementation schedule with respect to such modifications.

C. Licensor shall have the right to review (on a periodic basis) Marketing
Content and other communications using Licensed Marks and to review significant
changes in such programs implemented throughout the Licensed Business and
significant changes in templates that are widely-used in the Licensed Business,
all of which must be in compliance with the Brand Standards at all times. The
distribution, marketing and advertising channels for all Projects shall be
consistent with the positioning of the Licensed Business and Licensor Lodging
Facilities in the Upscale Brand Segment and Upper-Upscale Brand Segment. The
parties agree to conduct reviews of such channels no less often than annually at
the annual meeting contemplated in Section 11.2.E.

D. Licensee will (i) house on its system the Brand Standards described in the
definition of “Brand Standards” to be housed by Licensee and (ii) provide
Licensor with access to such Brand Standards at all times. Licensor will
(i) house on its system the Brand Standards described in the definition of
“Brand Standards” to be housed by Licensor and (ii) provide Licensee with access
to such Brand Standards at all times.

7.2 Modification of Brand Standards.

A. Licensor and Licensee recognize that they are each leaders in the Lodging
Business and the Destination Club and Whole Ownership Residential Businesses,
respectively, and that the Brand Standards should reflect the parties’ expertise
in their respective businesses.

 

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B. (i) Licensor expressly reserves the right to modify the Brand Standards to
make appropriate changes consistent with changes to Licensor’s brand standards
for the Upscale Brand Segment and Upper-Upscale Brand Segment of Licensor
Lodging Facilities, but only to the extent applicable to the Licensed Business
and with appropriate modifications to reflect appropriate differences between
hotel service levels and service levels applicable to the Licensed Destination
Club Business and the License Whole Ownership Residential Business. Licensor
shall provide notice to Licensee of any such modifications proposed by Licensor.

(ii) Prior to any such modifications to the Brand Standards taking effect, such
modifications shall be subject to Licensee’s prior written consent, which shall
not be unreasonably withheld; provided, however, that Licensee shall have no
right to consent to modifications: (1) in fire and life safety components of the
Brand Standards (although Licensee may request that Licensor’s life safety
committee consider such exceptions as Licensee may propose); (2) to Brand
Standards related to food safety, and global safety and security; (3) in the
Electronic Systems Standards, subject, however, to Section 10.1.B (provided that
such modifications do not conflict with Data Protection Laws that apply to the
Licensed Business, and if such conflicts would result from the modification, the
parties will seek to resolve such conflict, and Licensee will comply with a
standard that does not conflict with Licensee’s obligations under Data
Protections Laws that most closely addresses the requirements of the modified
Brand Standard); (4) to the cross-selling standards and protocols applicable to
all Licensor Lodging Facilities as such standards and protocols apply to
inventory in the Reservation System; (5) the Brand Standards related to any of
the Licensed Marks described in (vi) of the definition of Licensed Marks and/or
the appearance, including the color, font, stylization, script, or format, of
the word “Marriott” used as part of the Licensed Marks, subject in each case to
the requirements of Section 13.2.B(3); or (6) that are required by Applicable
Law. Licensor agrees that if Licensor changes the cross-sell standards or
protocol, Licensor will do so only if there is a bona fide commercial basis for
such change that is consistent with Licensor’s reasonable business judgment as
set forth in Section 21.1 and is not motivated by a desire to reallocate or
shift business away from Licensee, even though such effect might result from
such change. For the avoidance of doubt, if Licensor or its Affiliates acquires
or develops a Licensor Lodging Facility brand or changes the segment or brand
positioning of an existing Licensor Lodging Facility brand, Licensor may place
such new, or existing but repositioned, Licensor Lodging Facility brand in a
higher priority in the cross-sell protocol than it is as of the Effective Date
relative to the positioning of the Projects.

(iii) With respect to modifications for which Licensee’s prior written consent
is not required pursuant to Section 7.2.B(ii), such modifications shall take
effect within a reasonable period of time after Licensee’s receipt of Licensor’s
notice pursuant to section 7.2.B.(i), taking into account applicable factors and
circumstances, such as the importance of the modifications to safety and
security, whether such modifications are required or restricted by Applicable
Law, the need to obtain approval and/or funding from Property Owners’
Associations, the sequencing of such modifications into the renovation and
refurbishment schedules of existing Projects, and the applicable MHR Hotel
implementation schedule with respect to such modifications.

(iv) With respect to modifications that are subject to Licensee’s prior written
consent pursuant to Section 7.2.B(ii), Licensee shall notify Licensor within
thirty (30) days of receipt of Licensor’s notice pursuant to Section 7.2.B(i) of
Licensee’s consent or objection to any such modifications. With respect to
modifications for which Licensee has provided its written consent, such
modifications shall take effect within a reasonable period of time agreed to by
the parties after Licensee has provided its written consent, taking into account
applicable factors and circumstances, such as whether such modifications are
required or restricted by Applicable Law, the need to obtain approval and/or
funding from Property Owners’ Associations, the sequencing of such modifications
into the renovation and refurbishment schedules of existing Projects, and the
applicable MHR Hotel

 

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implementation schedule with respect to such modifications. If the parties
cannot agree to a timeline for implementation of the modification within thirty
(30) days following receipt of Licensor’s notice pursuant to Section 7.2.B(i),
then Licensee may object to the proposed modification on that basis. If Licensee
does not consent or object to such proposed modifications to the Brand Standards
within thirty (30) days following receipt of Licensor’s notice pursuant to
Section 7.2.B(i), such proposed modifications shall be deemed consented to by
Licensee and will take effect as set forth in the immediately preceding
sentence.

C. Licensee may from time to time propose modifications to the Brand Standards
with respect to any aspect of the Licensed Business. Licensee shall provide
notice to Licensor of any such modifications proposed by Licensee. Prior to any
such modifications to the Brand Standards taking effect, such modifications
shall be subject to Licensor’s prior written consent, which (i) in the case of
modifications to the Brand Standards described in Section 7.2.B(ii)(1) through
(6), may be granted or withheld in Licensor’s sole discretion and (ii) in the
case of modifications to all other Brand Standards, including those that are
part of the Operational Brand Standards, the Design Guide, the Brand Style and
Communication Standards (except if the proposed change conflicts with the Brand
Standards related to the Licensed Marks that Licensor may modify without
Licensee’s consent in accordance with Section 7.2.B(ii)(5)), and the Quality
Assurance Program (including the Customer Satisfaction System and the Quality
Assurance Audit System), shall not be unreasonably withheld. Licensor shall
notify Licensee within thirty (30) days of receipt of Licensee’s notice pursuant
to this Section 7.2.C of Licensor’s consent or objection to any such
modifications. With respect to modifications for which Licensor has provided its
written consent, such modifications shall take effect within a reasonable period
of time agreed to by the parties after Licensor has provided its written
consent, taking into account applicable factors and circumstances, such as
whether such modifications are required or restricted by Applicable Law, the
need to obtain approval and/or funding from Property Owners’ Associations and
the sequencing of such modifications into the renovation and refurbishment
schedules of existing Projects. If the parties cannot agree to a timeline for
implementation of the modification within thirty (30) days following receipt of
Licensee’s notice pursuant to this Section 7.2.C, then Licensor may object to
the proposed modification on that basis. If Licensor does not consent or object
to such proposed modifications to the Brand Standards within thirty (30) days
following receipt of Licensee’s notice pursuant to this Section 7.2.C, such
proposed modifications shall be deemed consented to by Licensor and will take
effect as set forth in the immediately preceding sentence.

D. Except as provided in Section 7.2.E, in the event of a dispute regarding
proposed modifications to any aspect of the Brand Standards with respect to
which either party has consent rights under Section 7.2.B or 7.2.C (other than
consents that may be granted or withheld in Licensor’s sole discretion), either
party may refer the matter to an Expert for resolution pursuant to Section 22.5.

(i) For modifications regarding physical aspects of the Brand Standards proposed
by Licensor, the Expert will determine whether Licensor’s proposed modifications
are consistent with changes to the applicable lodging brand segment(s) and
otherwise applicable to, and appropriate for, the Licensed Business.

(ii) For modifications proposed by Licensee, the Expert will determine whether
Licensor’s objection to Licensee’s proposed modifications is reasonable, taking
into account Licensor’s brand standards for the Upscale Brand Segment and
Upper-Upscale Brand Segment of Licensor Lodging Facilities, the applicability of
such standards to Licensed Destination Club Projects and Licensed Residential
Projects, the appropriate differences between hotel service levels and service
levels applicable to the Licensed Destination Club Business and the Licensed
Whole Ownership Residential Business, and whether the failure to implement such
modifications will or may adversely affect the Upscale Brand Segment and
Upper-Upscale Brand Segment of Licensor Lodging Facilities that bear the
Marriott name.

 

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If the Expert determines that any such proposed modifications are appropriate,
such modifications shall take effect within a reasonable period of time after
the Expert’s determination, taking into account applicable factors and
circumstances, such as whether such modifications are required or restricted by
Applicable Law, the need to obtain approval and/or funding from Property Owners’
Associations, the sequencing of such modifications into the renovation and
refurbishment schedules of existing Projects, and the applicable MHR Hotel
implementation schedule with respect to such modifications. If the Expert
determines that such proposed modifications are not appropriate, then the Brand
Standards will not be modified to reflect such modifications with respect to the
Licensed Business.

E. In the event that Licensee does not consent to modifications to any service
aspect of the Brand Standards proposed by Licensor with respect to which
Licensee has consent rights under Section 7.2.B, and customer satisfaction
levels at the Projects decrease greater than five (5) percentage points during
the twelve (12) month period immediately following the date on which such change
was to have been implemented, the parties shall investigate the reason(s) for
the decrease. If the failure to implement one or more proposed modifications to
any service aspect of the Brand Standards is determined to be a material reason
for any such decrease, then Licensee shall promptly implement such
modifications, taking into account applicable factors and circumstances, such as
whether such modifications are required or restricted by Applicable Law, the
need to obtain approval and/or funding from Property Owners’ Associations, the
sequencing of such modifications into the renovation and refurbishment schedules
of existing Projects, and the applicable MHR Hotel implementation schedule with
respect to such modifications.

F. For the avoidance of doubt, nothing herein shall limit in any manner
Licensor’s or its Affiliates’ ability to modify or change any standards
applicable to Licensor’s Lodging Business or Whole Ownership Residential
Business, or any other business or activity in which Licensor or its Affiliates
may engage from time to time, other than the Licensed Destination Club Business
or the Licensed Whole Ownership Residential Business.

8. OPERATIONS

8.1 Operating the Projects and the Licensed Business.

Licensee will operate the Projects and the Licensed Business in compliance with
this Agreement, the System, and the Brand Standards, subject to Applicable Law
and the rights and duties of the applicable Property Owners’ Associations, and
Licensee will:

(1) permit the duly authorized representatives of Licensor to: (i) enter
facilities utilized by Licensee in the Licensed Business (including the Projects
and Sales Facilities) and inspect such facilities at all reasonable times to
confirm that Licensee is complying with the terms of this Agreement, the System,
and the Brand Standards; and (ii) test any and all equipment, food products, and
supplies located at the Projects. Licensor has no duty or obligation to conduct
ongoing inspections of the Projects or other facilities utilized by Licensee in
the Licensed Business;

(2) not knowingly permit gambling to take place at any Project (except for a
limited number of reputable charitable events permitted by Applicable Law) or
use any Project for any casino, lottery, or other type of gaming activities, or
otherwise directly or indirectly associate with any gaming activity, unless such
activities are approved in writing by Licensor’s Casino Oversight Committee;

(3) provide all food and beverage service in the Projects in conformity with the
Brand Standards and Applicable Law; and

 

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(4) with respect to transient rentals for overnight accommodation at Projects
offered or made through the Reservation System, participate in travel agent
programs, Brand Loyalty Programs, and any complaint resolution programs as
Licensor may establish in its discretion, all to the extent applicable to the
Licensed Business.

 

  8.2 Employees.

Licensee will employ suitably qualified individuals sufficient to staff all
positions at the Projects and with respect to the Licensed Business. Licensee
will use its best efforts to ensure that Licensee’s employees at all times
comply with the Brand Standards.

 

  8.3 Management and Operation of the Projects.

A. Except as provided in Section 8.3.B, all Projects must be operated by
Licensee or one of its Affiliates unless Licensor has consented in writing to a
third-party management company that is not an Affiliate of Licensee (“Management
Company”) to operate a particular Project, which consent may be granted or
withheld in Licensor’s sole discretion and withdrawn at any time if Licensor
determines that such Management Company is no longer qualified to manage the
particular Project. Any Management Company approved by Licensor must execute and
deliver to Licensor a Management Company Acknowledgment in the form required by
Licensor, the current form of which is attached hereto as Exhibit C.

B. Notwithstanding Section 8.3.A, Licensor acknowledges that (i) certain
functions of Projects may be delegated or subcontracted to third-parties in
accordance with Section 5.8; (ii) Licensor or its Affiliates may operate certain
Projects (“Licensor Managed Projects”) under separate management agreements
(“Licensor Management Agreements”); (iii) certain aspects of certain Projects
may be subject to shared service and integrated facility arrangements with
co-located lodging properties and other facilities; and (iv) Licensee may
delegate to Licensee’s Affiliates the authority to operate certain Projects in
accordance with Sections 5.1.C. and 5.2.D.

8.4 Customer Satisfaction System and Quality Assurance Audit System.

A. Licensee has provided to Licensor, and Licensor has reviewed and consented
to, the form of Customer Satisfaction System. Licensee shall administer the
Customer Satisfaction System, using Licensee’s Customer Satisfaction System as
of the Effective Date, as it may be subsequently modified in accordance with
Sections 7.2.B, C, D or F. The results of the Customer Satisfaction System
surveys shall be provided to Licensor on a periodic basis, but not less than
once every three (3) months. Licensee shall pay all costs for such Customer
Satisfaction System.

B. Licensee has provided to Licensor, and Licensor has reviewed and consented
to, the form of Quality Assurance Audit System. Licensee shall administer the
Quality Assurance Audit System, using Licensee’s Quality Assurance System as of
the Effective Date, as it may be subsequently modified in accordance with
Sections 7.2.B, C, D or F. Licensee shall conduct audits of each Project under
the Quality Assurance Audit System no less than annually, unless Licensor
consents to a longer period in writing. Licensee shall pay all costs for such
Quality Assurance Audit System.

C. Licensor has the right to periodically audit Licensee’s Customer Satisfaction
System and Quality Assurance Audit System process and results in order to
confirm the reliability of the process and results, that Licensee’s Customer
Satisfaction System is sufficient to accurately measure customer satisfaction,
and that Licensee’s Quality Assurance Audit System is sufficient to accurately
measure compliance with the Brand Standards at the Projects. Audits of the
Customer Satisfaction

 

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System or the Quality Assurance Audit System shall be at Licensor’s expense,
unless such audit reveals a material deficiency in the Customer Satisfaction
System or the Quality Assurance Audit System that adversely affects the
reliability of the process or results or the accuracy of measuring customer
satisfaction or compliance with Brand Standards at the Projects, as applicable
(in either case, a “Deficiency”), in which case the audit expense shall be borne
by Licensee.

D. If Licensor determines that there is a Deficiency in the Customer
Satisfaction System or the Quality Assurance Audit System, Licensor will notify
Licensee of the Deficiency, provide Licensee with reasonable detail regarding
the Deficiency, and the parties will work together to identify potential
resolutions for, and agree on the measures that Licensee will take to resolve,
such Deficiency. If the parties fail to agree on a process to resolve the
Deficiency within sixty (60) days following such notice, or, if the Deficiency
is not resolved within one hundred eighty (180) days following such notice,
Licensor has the right to require that Licensee implement a customer/guest
satisfaction program or quality assurance system designed or approved by
Licensor, in which event, Licensee will (i) provide Licensor with all Customer
Satisfaction System or the Quality Assurance Audit System material that is not
included in the documentation to which Licensor has been provided access,
including, without limitation, underlying Brand Standards that are referred to
but are not included in Quality Assurance Audit System questionnaires and forms
and (ii) be required to pay the fees and charges applicable to such program. If
Licensee fails to implement such customer/guest satisfaction program or quality
assurance system designed or approved by Licensor, such failure shall be deemed
a default and Licensor may terminate this Agreement immediately upon notice to
Licensee under Sections 18.2.A.(v) and 18.2.A(vi), as applicable.

E. The parties will discuss changes that Licensor has made to the customer/guest
satisfaction program or quality assurance system that Licensor uses for Licensor
Lodging Facilities no less often than annually at the annual meeting
contemplated in Section 11.2.E.

F. Licensor acknowledges that Licensee may include questions as part of the
Customer Satisfaction System survey process that are not intended to measure
customer satisfaction but instead intended to capture customer preference, gauge
customer interest, and other market research functions and that such questions
shall not be considered for purposes of measuring customer satisfaction
hereunder.

8.5 Projects Controlled by Non-Controlled Property Owners’ Association.

If any Project that is controlled by a Non-Controlled Property Owners’
Association fails to develop, operate, maintain, or renovate the Project in
compliance with this Agreement, the System, or the Brand Standards (whether by
failure to provide adequate funds to comply therewith or otherwise), Licensee
shall promptly request that the Non-Controlled Property Owners’ Association cure
the failure (i) for Existing Projects, within the applicable cure periods set
forth in the agreements governing such Existing Project (or any longer period
required by Applicable Law) or (ii) for New Projects, within the shorter of
(x) the applicable cure periods set forth in Section 18 or (y) the applicable
cure periods set forth in the agreements governing such New Project (or any
longer period required by Applicable Law), after notice of the failure,
provided, that if the failure is not susceptible of being cured within the
applicable period, Licensee shall have the right to extend such period for such
additional period as is reasonable under the circumstances if cure is being
diligently pursued, and, in no event, will such additional period be more than
three hundred sixty five (365) days. If the Non-Controlled Property Owners’
Association does not cure such failure within the applicable cure period,
Licensee shall promptly issue default notices to the Non-Controlled Property
Owners’ Association and promptly take such actions as are required to Deflag the
Project in accordance with the agreements governing such Project or as otherwise
required by Applicable Law. If the Non-Controlled Property Owners’ Association
cures such failure prior to Deflagging in accordance with any cure rights
provided in the agreements governing such Project or Applicable Law, Licensee
will have the right to cease Deflagging the Project and maintain the Project as
part of the Licensed Business.

 

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9. RESTRICTIONS AND LIMITATIONS ON CONDUCT OF LICENSED BUSINESS

9.1 Offers and Sales of Destination Club Units and Residential Units; Use of
Licensed Business Customer Information.

A. Licensee must comply with the System, Brand Standards, and Applicable Law in
connection with the offer and sale of interests in Destination Club Units and
Residential Units as part of the Licensed Business. Without limiting the
foregoing, Licensee shall be required to (i) comply with appropriate and
commercially reasonable procedures and processes established by, or acceptable
to, Licensor to prevent Licensee from doing business with prospective customers,
Members, purchasers or other persons in contravention of Applicable Law;
(ii) comply in all material respects with applicable existing and future
condominium, association and trust agreements, CC&Rs, zoning and land use
restrictions, and property management agreements; (iii) comply with Permitted
Territorial Restrictions relating to or associated with hotels, resorts, lodging
facilities and Residential Projects operated under brands owned or controlled by
Licensor or its Affiliates that are in place as of the Effective Date; and
(iv) comply in all material respects with Licensor’s applicable customer and
data privacy and security standards and protocols that Licensor uses in the
conduct of its business as such standards and protocols apply to the Licensed
Business.

B. The applicable condominium and/or timeshare documentation, including the
condominium declaration, public offering statement, form of purchase and sale
agreement, condominium association formation documents, rules and regulations,
and all related documents and instruments (collectively, the “Offering
Documents”), shall be subject to Licensor’s review upon reasonable notice (on a
periodic audit basis) for the purpose of ensuring that the Offering Documents
properly reflect the relationship between Licensor and Licensee and Licensee’s
rights to use the Licensed Marks hereunder. If the Offering Documents do not
properly reflect the relationship between Licensor and Licensee and Licensee’s
rights to use the Licensed Marks hereunder, Licensor will provide notice to
Licensee thereof, which notice shall identify the deficiencies in the Offering
Documents. Licensee shall promptly make changes to the Offering Documents to
address such deficiencies and provide the revised Offering Documents to Licensor
for Licensor’s review and approval of the changes. Licensee shall not use the
revised Offering Documents (or permit the revised Offering Documents to be used)
until such changes have been approved by Licensor (for purposes of
clarification, the foregoing shall not prohibit Licensee from using the existing
Offering Documents until the revised Offering Documents are approved by Licensor
and applicable governmental authorities).

C. Licensee shall, as part of the sales process, provide disclosure to each
prospective purchaser in the form attached as Exhibit L, subject to
modifications required by governmental authorities for the subject jurisdiction
or that are necessary to properly describe the subject Project, and have each
purchaser acknowledge receipt of such disclosure in writing, which, among other
things, discloses to prospective purchasers that (i) the Licensed Business is
owned and managed by Licensee; (ii) neither Licensor nor any of its Affiliates
is the seller of the interests in the Licensed Destination Club Units or
Licensed Residential Units, as applicable; and (iii) that the Marriott name is
used by Licensee pursuant to a license, and that if such license is revoked,
terminated, or expires, Licensee shall no longer have the right to use the
Licensed Marks in connection with the Licensed Business or the relevant Project.
Licensee shall be permitted to incorporate such disclosure with other
disclosures Licensee makes to prospective purchasers. Licensee will communicate
the license arrangement to existing Members of the Existing Projects either
within the disclosure circular or in a supplementary disclosure in a form
acceptable to Licensor.

 

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D. All Licensed Business Customer Information, whether acquired, obtained or
developed prior to or after the Effective Date, shall be used solely for
engaging in the Licensed Business or the Ritz-Carlton Licensed Business, and for
no other use or purpose whatsoever. Other than as permitted under this
Agreement, Licensee will not have, claim, or assert any right against or to such
Licensed Business Customer Information. Within sixty (60) days after the end of
each calendar year during the Term, Licensee shall provide Licensor with a
written certification (in the form required by Licensor) signed by Licensee’s
chief executive officer and chief information officer, that Licensee and its
Affiliates have maintained, in all material respects, effective internal control
over the maintenance and security of Licensed Business Customer Information in
accordance with the terms of this Agreement related to the treatment and use of
Licensed Business Customer Information during the immediately preceding calendar
year. After the expiration of the Term or termination of this Agreement, all
Licensed Business Customer Information shall be used only as set forth in
Section 19.2(7). Licensor acknowledges that Property Owners’ Associations,
boards, and Members have certain rights to Licensed Business Customer
Information for their respective Projects and that Licensed Business Customer
Information is in the public record in some jurisdictions and may be compiled or
derived by third parties. Without limitation of the forgoing, Licensee shall not
sell any Licensed Business Customer Information to third parties, and Licensee
shall not disclose or otherwise provide any Licensed Business Customer
Information to any third-parties other than in connection with the operation of
the Licensed Business and in accordance with this Agreement. Licensor
acknowledges that Licensed Business Customer Information may be used by Licensee
in connection with the Ritz-Carlton Licensed Business pursuant to the terms and
conditions of the Ritz-Carlton License Agreement.

E. If Licensee acquires a third-party customer list (“Third-Party List”)
following the Effective Date, Licensee may use such list in connection with,
and/or transfer such list to, the Licensed Business and/or Licensee’s other
business(es). Such list can be used independently in connection with the
Licensed Business and/or any of Licensee’s other business(es), but if the
information in the Third-Party List evolves based on, or otherwise becomes
supplemented with, Licensed Business Customer Information as a result of its
transfer to, or use by, the Licensed Business (the “Modified Third-Party List”),
then the Modified Third-Party List may not thereafter be used for, or
transferred to, (i) any of Licensee’s or its Affiliates’ other businesses or
(ii) any other third party for use other than solely for engaging in the
Licensed Business. Licensee and its Affiliates shall not be permitted or
required to cross-check any Customer Information or customer list of any of
Licensee’s or its Affiliates’ other businesses with the Licensed Business
Customer Information. Any Customer Information obtained by Licensee on or after
the date of the Spin-Off Transaction in connection with Licensee’s other
businesses unrelated to the Licensed Business that is not used in, or in
connection with, the Licensed Business may be used by Licensee and its
Affiliates for any purpose, including (i) and (ii) above.

F. Licensee will be permitted to sell interests in Licensed Destination Club
Units or Licensed Residential Units to vacation/destination/timeshare clubs or
other travel programs (“Competing Entities”) without Licensor’s prior written
consent, provided, that Licensee shall take all commercially reasonable actions
required by Licensor to ensure that such Competing Entities will be prohibited
to the maximum extent legally permissible from using any of the Licensor
Intellectual Property in connection with the marketing, sales, rental, or other
use of such units. Licensor hereby consents to arrangements that Licensee has in
place as of the Effective Date with respect to the foregoing and Licensee may
continue such arrangements after the Effective Date with respect to the Projects
covered thereby; provided, however, that Licensee shall not enter into any new
or additional such arrangements that do not meet the requirements of this
Section 9.1.F, and Licensor does not waive any claims Licensor may have against
such Competing Entities with respect to the improper use of Licensor
Intellectual Property.

 

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G. Licensee will be permitted to use the Licensed Marks on logoed collateral
merchandise, such as golf shirts, other apparel and promotional items
(collectively, “Logoed Merchandise”) that is provided solely to promote the
Projects and solely through gift or retail shops located at Projects or Sales
Facilities or through Licensee’s Website, all in a manner that is consistent
with Licensee’s or its Affiliates’ use of the Licensed Marks in such respect as
of the Effective Date and with an overall level of quality of Logoed Merchandise
that is consistent with the Upscale Brand Segment and Upper-Upscale Brand
Segment. Licensee acknowledges and agrees that (i) Licensor has not applied for
and does not maintain registrations for the Licensed Marks covering some or all
of the Logoed Merchandise in any jurisdiction and has no obligation to apply for
or maintain such registrations in the future; (ii) Licensor makes no
representations or warranties regarding Licensee’s ability to use the Licensed
Marks on Logoed Merchandise in any jurisdiction or that Licensee’s use of the
Licensed Marks on Logoed Merchandise in any jurisdiction will not infringe,
dilute or otherwise violate the trademark or other rights of any third party;
(iii) Licensee’s use of the Licensed Marks on Logoed Merchandise shall be at
Licensee’s sole risk and without recourse against Licensor or its Affiliates;
(iv) Licensee shall not knowingly engage in any act or omission which may
diminish, impair or damage the goodwill, name or reputation of Licensor or its
Affiliates or the Licensed Marks, including without limitation by utilizing any
facility which manufactures or assembles Logoed Merchandise in violation of the
laws of the country in which such facility is located (“Illegal Facilities”);
(v) Licensee will comply, at its sole expense, with all Applicable Laws in
connection with the manufacture, sale, marketing, and promotion of the Logoed
Merchandise in the countries where such activities take place, including without
limitation any prohibitions against Illegal Facilities; (vi) at Licensor’s
request, Licensee will promptly provide to Licensor representative samples of
then-current Logoed Merchandise and any associated packaging and displays;
(vii) at Licensor’s request, Licensee will promptly make any changes to its
Logoed Merchandise or its uses of the Licensed Marks on Logoed Merchandise that
do not comply with this Section 9.1.G.; (viii) Licensee will use the Licensed
Marks on Logoed Merchandise in accordance with the then-current Brand Standards;
and (ix) Licensee shall promptly cease use, distribution, promotion, marketing
and sale of Logoed Merchandise bearing the Licensed Marks in any jurisdiction
where Licensor requests such use to cease as a result of a claim or challenge
raised by a third party or if Licensor in its sole discretion believes such use
diminishes, impairs or damages the goodwill, name or reputation of Licensor or
its Affiliates or the Licensed Marks.

9.2 Transient Rentals of Licensed Destination Club Units and Licensed
Residential Units.

A. Subject to Section 10.2, Licensee shall have the right to engage in the
transient rental of inventory of Licensed Destination Club Units and Licensed
Residential Units, respectively, (i) that is held for development and sale and
owned by Licensee, its Affiliates, a Property Owners’ Association or a third
party with which Licensee or its Affiliates has entered into a development
agreement; (ii) that is controlled by Licensee or its Affiliates as a result of
Member participation in programmatic elements of Licensed Destination Club
Products (e.g., exchange, banking, borrowing, Brand Loyalty Program trade, and
similar programs); and (iii) that is controlled by Licensee, its Affiliates or a
Property Owners’ Association as a result of Member default (e.g., maintenance
fee defaults or financing defaults) pending foreclosure or cure in the ordinary
course of business, in each case so long as such transient rental would not
violate any then-existing Permitted Territorial Restriction.

B. With respect to Existing Projects at which Licensee has not engaged in
transient rental and for which Licensee has not notified Licensor prior to the
Effective Date of Licensee’s intention to engage in transient rentals (each of
which is identified in Exhibit H), prior to engaging in any transient rental
activity, Licensee shall give notice of Licensee’s intent to engage in transient
rental activity to Licensor. If Licensor determines that any transient rental
activity would violate any then-existing Permitted Territorial Restriction, then
Licensor shall so notify Licensee, and Licensee shall not be permitted to engage
in such transient rental activity to the extent such transient rental activity
would violate such Permitted Territorial Restriction and for so long as such
Permitted Territorial Restriction remains in effect.

 

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C. With respect to New Projects, Licensor will evaluate the territorial or other
contractual or legal restrictions applicable to Licensor or its Affiliate in
connection with the New Project Application process described in Section 5.2. If
Licensor determines that any transient rental activity at a New Project would
violate any then-existing Permitted Territorial Restriction, then Licensor shall
so notify Licensee, and Licensee shall not be permitted to engage in such
transient rental activity to the extent such transient rental activity would
violate such Permitted Territorial Restriction and for so long as such Permitted
Territorial Restriction remains in effect.

9.3 No Affiliation with Other Brands/Businesses.

A. Licensee shall not affiliate with or use the Licensor Intellectual Property
in conjunction, or association, with any brand, trademark, product, service, or
business other than the Licensed Business which is the subject of this
Agreement, or use the Licensor Intellectual Property in a way that could
reasonably be interpreted as endorsing, or suggesting affiliation with, any
other brand, mark, product, service or business, other than marketing alliances
and exchange affiliations that are consistent with the practice of Licensee and
its Affiliates during the period from January 1, 2005 until the Effective Date,
as reasonably demonstrated by Licensee, and other marketing alliances, exchange
affiliations and similar arrangements permitted under Section 9.5.

B. (i) Subject to the Noncompetition Agreement, nothing in this Agreement is
intended to prevent Licensee or its Affiliates from creating, developing,
operating, licensing, or managing its own brand or system for (1) Destination
Club Projects or Destination Club Products or (2) a Lodging Business; provided,
however, that as set forth in this Agreement, Licensee shall not use Licensor
Confidential Information, the Branded Elements, or the Licensed Business
Customer Information in connection with any business other than the Licensed
Business, and nothing in this Agreement will require Licensor to license or
franchise any lodging project to Licensee if Licensee creates, develops,
operates, licenses, or manages a brand or system for a Lodging Business (a
“Licensee Competitive Lodging Brand”), unless Licensor and Licensee have agreed
on a separation plan pursuant to which Licensee agrees to restrictions to ensure
appropriate separation of the Licensee Competitive Lodging Brand from Licensee’s
Lodging Business related to Licensor Lodging Facilities (the “Separation Plan”).

(ii) Licensor has entered into such plans in the past to address the actual
factual issues raised by the licensee business structure to protect against
misuse of licensor’s confidential information and against inappropriate sharing
or discussion of pricing and other sensitive information. A Separation Plan in
this instance would require, among other things, that Licensee’s business
related to the Licensee Competitive Lodging Brand, on one hand, and the Licensed
Business and Licensee’s Lodging Business related to Licensor Lodging Facilities,
on the other hand, be operated by different individuals who are located in
geographically separate facilities, and enough other separation to ensure
separate day-to-day operating teams with different employees and separate books
and records. The goal of the Separation Plan is to prevent Licensee from using,
sharing or discussing confidential information, pricing and other sensitive
information with or for the benefit of the Licensee Competitive Lodging Brand
and to maintain the confidentiality of such information, whether this is
accomplished by physical separation or by Licensor not providing such
information. The confidential information, pricing and other sensitive
information covered by the Separation Plan would include Licensor Confidential
Information, any pricing data, market data, marketing plans, customer lists,
marketing participation information, revenue or inventory management systems,
personal guest profiles and information regarding guest preferences, marketing
or brand initiatives, or other similar non-public information or materials
related to

 

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ownership, management and operation of Licensor Lodging Facilities. In
furtherance of the foregoing the Separation Plan will likely need to provide
that (a) Licensor may limit Licensee and its Affiliates from access in
connection with Licensee’s Lodging Business to certain information that Licensor
reasonably determines is highly sensitive or confidential, such as pricing,
market strategy, customer lists, and other similar information with respect to
Licensor Lodging Facilities, and Licensor may restrict such access by limiting
or prohibiting participation in programs, meetings, and other shared services
arrangements even if other franchisees or owners of Licensor Lodging Facilities
are allowed access to such programs, meetings and other shared services;
(b) Licensor shall have the right to limit or exclude Licensee and its
employees, officers, directors and Affiliates from participating in or holding
an officer position on any franchise advisory council or similar entity for
Licensor Lodging Facilities, and (c) no Licensor Lodging Facility may be
advertised or marketed in any manner or in connection with the Licensee
Competitive Lodging Brand. For purposes of clarification, the foregoing is not
intended to affect access by Licensee and its Affiliates to information with
respect to the Licensed Business pursuant to this Agreement.

C. Licensee shall not establish or operate a Sales Facility at any hotel or
resort owned, operated, or franchised by a Lodging Competitor without Licensor’s
prior written consent. In the event that a Licensor Lodging Facility in which a
Sales Facility is located is Deflagged and becomes a hotel or resort operated
under a Lodging Competitor Brand, Licensee may continue to operate such Sales
Facility in such hotel or resort until the expiration or termination of the
arrangement under which the Sales Facility is operating; provided, however, that
Licensee shall not renew, extend, or enter into any new arrangement with respect
to such Sales Facility at such hotel or resort without Licensor’s prior consent.

9.4 Destination Club Businesses and Whole Ownership Residential Businesses
Operating Under Other Brands.

Subject to Sections 9.3 and 13.2.A(4), Licensee may engage in a Destination Club
Business and a Whole Ownership Residential Business under or in connection with
brands other than the Licensed Marks, provided that no Existing Projects may be
operated by Licensee or its Affiliates under another brand unless: (i) such
Existing Project is removed from the System by Licensee in good faith for
failure of a Non-Controlled Property Owners’ Association to comply with the
management agreement (whether by failure to provide adequate funds to maintain
the Brand Standards or otherwise), or if Licensee makes a commercially
reasonable determination (and Licensor agrees with such determination) that such
project no longer adequately represents the then-current Licensed Destination
Club Project or Licensed Residential Project, as applicable, brand positioning;
(ii) a Non-Controlled Property Owners’ Association terminates its management
agreement with Licensee or refuses to renew the management agreement on the
then-current terms and conditions; or (iii) Licensor terminates Licensee’s right
to operate such Existing Project in accordance with this Agreement. A Project is
removed from the System for purposes of this Section 9.4 when no customer-facing
sales assets or facilities that contain or display any of the Licensor
Intellectual Property are used by Licensee at or for such Project (including
phone numbers, websites, domain names, screen names, social networking names,
email addresses, and customer information) and no Branded Elements or Licensor
Intellectual Property (including any corporate name containing the word
“Marriott”) are used to promote, market or sell any other product or service at
or for the Project. Licensee’s failure to comply with subsections 9.4(i) through
(iii) shall be a default under this Agreement and will result in Licensee
failing to have met the conditions precedent to converting the Project to
another brand.

 

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9.5 Services and Products Made Available to Members and Marketing and Exchange
Arrangements.

A. Licensee may only enter into marketing arrangements with respect to the
Licensed Business with third parties, and may only make available to Members
those products and services (including Exchange Programs), (i) that are
consistent with the brand positioning of the Licensed Business and, with respect
to such marketing arrangements, are in compliance with the Brand Standards or
(ii) that are in place as of the Effective Date or that are consistent with
Licensee’s practice during the period from January 1, 2005 until the Effective
Date, as reasonably demonstrated by Licensee. Licensor may object if Licensor
becomes aware of any such practice that Licensor believes is inconsistent with
the Brand Standards. Licensor will notify Licensee of such objection, and the
parties will engage in discussions and attempt to agree on modifications to such
practice(s) so that such practice(s) will be in compliance with the Brand
Standards. For local marketing alliances, the positioning of the Project in the
local market shall be the governing standard.

B. Licensee shall have the right to seek prior written confirmation from
Licensor on a confidential basis that any proposed program or arrangement is
consistent with applicable Brand Standards and will not result in a breach of
Licensee’s obligations under this Agreement. With respect to programs or
arrangements undertaken by Licensee with respect to the Licensed Business and
for which Licensee has not received Licensor’s prior written confirmation (“New
Licensee Program”), Licensor shall have the right to object to any such program
or arrangement in the event Licensor believes that such program or arrangement
is inconsistent with applicable Brand Standards. In the event Licensee and
Licensor are not able to come to agreement on the issue, then either party may
refer the matter for Expert resolution pursuant to Section 22.5, or if Licensee
initiates a New Licensee Program without first seeking confirmation that the New
Licensee Program is consistent with the Brand Standards and Licensor determines
that such New Licensee Program is not consistent with the Brand Standards, then
Licensor may refer the matter for Expert resolution pursuant to Section 22.5. In
either case, if the Expert finds in favor of Licensor, then Licensor’s prior
written consent shall be required for each New Licensee Program that is
implemented on a system-wide or region-wide (e.g., throughout the United States,
Europe, the Middle East, Latin America, Asia Pacific or a substantial portion
thereof) basis for the twenty-four (24) month period following any such
determination.

C. Licensee shall not allow its Members of any Project to exchange their right
to use and occupy Licensed Destination Club Units for stays (or other benefits)
at luxury or upscale hotels other than those operated or franchised by Licensor
or its Affiliates, except through general Exchange Programs or through tour
operator arrangements that are in compliance with Licensor’s Brand Standards
related to approved distribution channels; provided that Licensee shall be
permitted to include hotels that are neither Licensor Lodging Facilities nor a
part of a Lodging Competitor’s hotel system in its Explorer, Club Connections,
or similar program in locations where a Licensor Lodging Facility of the same
brand segment and of a suitable experience type (e.g., resort) is not available.
Licensor will not object to the Exchange Program and tour operator arrangements
that Licensee has in place as of the Effective Date as not being in compliance
with Brand Standards, and Licensee may continue such arrangements after the
Effective Date with respect to the Projects covered thereby; provided, however,
that Licensee shall not enter into any new or additional such arrangements that
do not meet the Brand Standards, and Licensor does not waive any claims related
to misuses of the Licensed Marks. Licensee shall have the right to operate its
own Exchange Programs. Licensee may use the Licensed Marks as part of a branded
Exchange Program name approved in writing by Licensor. Branded Exchange Programs
operated by Licensee or its Affiliates in which both Licensed Destination Club
Units and other Destination Club Units participate shall be subject to
commercially reasonable safeguards to be agreed by Licensor and Licensee, such
as a prohibition on prominently featuring or marketing products under brands
other than the Licensed Marks in such a way as to imply endorsement of such
other brands by, or affiliation with,

 

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Licensor, and limits on the right of Licensee to use the Licensed Business
Customer Information to benefit such Exchange Programs. At Licensor’s request,
use of the Licensed Marks as part of a branded Exchange Program name shall be
discontinued if (i) at any time the aggregate number of Licensed Destination
Club Units that participate in such branded Exchange Program is less than
one-half (1/2) of the total number of all Destination Club Units that
participate in such branded Exchange Program or (ii) Licensee permits
Destination Club Units operated under any Hilton Brand or Starwood Brand to
participate in such Exchange Program, provided that if clause (ii) is
implicated, Licensee shall, in no event, be required to discontinue such use
until the fifth (5th) anniversary of the Effective Date.

D. Licensee shall not list, promote, rent or sell any Licensed Destination Club
Unit or Licensed Residential Unit inventory for transient rental that is
controlled or owned by Licensee or its Affiliates through any distribution
channels of a Lodging Competitor.

E. Licensee shall comply with all restrictions and requirements set forth in
Licensor’s then-existing promotional, marketing or other alliance programs in
place as of the Effective Date to the extent they apply to Licensee following
the Effective Date.

9.6 Changes in Programs, Services or Benefits.

Prior to making any significant systemic changes in the Licensed Destination
Club Business or the Licensed Whole Ownership Residential Business (for example,
conversion to a points program), Licensee shall have the right to seek prior
written confirmation from Licensor, on a confidential basis, that any such
change is consistent with the Brand Standards and will not result in a breach of
Licensee’s obligations under this Agreement. In the event of a dispute regarding
whether any such change is inconsistent with the Brand Standards or would result
in a breach (whether or not Licensee sought prior confirmation that the proposed
change is consistent with the Brand Standards), the dispute will be referred for
Expert resolution pursuant to Section 22.5.

10. ELECTRONIC SYSTEMS

10.1 Systems Installation.

A. Licensee will, as a cost of the Licensed Business, arrange for the purchase
or lease, installation, maintenance, and use at the Projects of all Electronic
Systems that Licensor reasonably requires or that Licensee chooses to use in
connection with the Licensed Business, in accordance with the Brand Standards
and specifications provided by or on behalf of Licensor and may not use such
Electronic Systems for anything not specifically related to the Projects and the
Licensed Business.

B. Notwithstanding the foregoing, Licensee may use any electronic system that,
in Licensor’s judgment, is comparable to a particular required Electronic System
and performs the same functions as such Electronic System and is compatible, and
interfaces, with Licensor’s Electronic Systems.

10.2 Reservation System.

A. Licensor will make the Reservation System available to Licensee in connection
with the Licensed Business, including for reservations relating to Member usage,
marketing usage, transient rental usage, and other usages of Licensed
Destination Club Units and Licensed Residential Units. All Licensed Destination
Club Units and Licensed Residential Units inventory made available by Licensee
for transient rental stays of thirty (30) days or less must be listed in the
Reservation System, but such inventory shall not be included in Lodging
Competitors’ distribution channels, provided that for the

 

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purposes hereof, any distribution channels included within Licensor’s channel
standards or otherwise approved by Licensor shall not be deemed Lodging
Competitors’ distribution channels. Licensee will comply with all Brand
Standards applicable to the Licensed Business related to participation in the
Reservation System, including, without limitation, the prohibitions on the
inclusion of transient rental inventory other than inventory in Licensor Lodging
Facilities or in Projects in elements of the Reservation System visible by
customers, travel agents, and other members of the public. For purposes of the
foregoing, Licensor and Licensee acknowledge that the seasonal nature of the
Licensed Destination Club Business and Member use patterns (including increased
Member use in high demand seasons) and leisure-based use patterns (including
higher weekend occupancy and lower weekday occupancy) create transient rental
inventory availability patterns that may differ from those for Licensor Lodging
Facilities. As such, certain Brand Standards relating to participation in the
Reservation System may not be suitable for the Licensed Destination Club
Business (such as minimum room availability requirements for Brand Loyalty
Program redemptions or the “50% Off Associate Rate” winter offer).

B. If Licensee is in material breach of this Agreement and does not cure the
breach as required by Licensor’s notice of breach, Licensor may, in addition to
any other remedies it may have and in accordance with Section 18.4, suspend
Licensee’s right to use the Reservation System at one (1) or more of the
Projects (or a part of any Project) with respect to transient rentals of
Licensed Destination Club Units and/or Licensed Residential Units until the
breach is cured. In the event such breach relates to one (1) or more Projects,
Licensor may exercise its right to suspend Licensee from the Reservation System
under this Section 10.2.B. with respect to the applicable Project(s). In the
event such breach relates to the Licensed Business apart from specific
individual Projects or to all or substantially all of the Projects, Licensor may
suspend the entire Licensed Business and all of the Projects from the
Reservation System under this Section 10.2.B. Licensee covenants not to bring
any damages claims against Licensor and its Affiliates arising from Licensee’s
suspension from the Reservation System under Section 18.4, other than claims
that Licensee is not in breach of this Agreement.

C. Licensee will have the right to make proposals regarding the Reservation
System to Licensor’s Reservation Users Group. The parties will agree on a
reasonable process for keeping Licensee apprised of initiatives of Licensor’s
Reservation Users Group that will affect the Licensed Business.

10.3 Electronic Systems Provided Under License.

A. The Electronic Systems not purchased by Licensee will remain the sole
property of Licensor or any third party vendors, as applicable. Licensee will at
all times treat the Electronic Systems as confidential. As a condition to using
the Electronic Systems, Licensee must execute the Electronic Systems License
Agreement.

B. Licensee acknowledges that the Electronic Systems will be modified, enhanced,
replaced, or become obsolete, and that new Electronic Systems may be created to
meet the needs of the System and the continual changes in technology and that
any such new Electronic Systems will be subject to the terms of the Electronic
Systems License Agreement.

C. Licensee will have the right to make proposals regarding the Electronic
Systems to the appropriate group within Licensor’s organization that is
responsible for strategic initiatives related to Electronic Systems. The parties
will agree on a reasonable process for keeping Licensee apprised of initiatives
regarding the Electronic Systems that will affect the Licensed Business.

 

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10.4 Proposed Enhancements.

Licensor will reasonably consider changes to the Electronic Systems proposed by
Licensee which address issues specifically relevant to the Licensed Business
(including any enhancements to the Electronic Systems needed to implement such
changes). Licensor shall respond to such requests within one hundred twenty
(120) days following Licensor’s receipt of the written request. Licensor may
condition its consent to changes to the Electronic Systems suggested by Licensee
based on factors such as: Licensee’s payment of the costs related to such
implementation, including, without limitation, incremental internal or
out-of-pocket design costs and operating costs (and the allocation thereof on a
fair and commercially reasonable basis to other users of the applicable
Electronic Systems who benefit from the change); the difficulties of designing
or administering such changes; the impact of such changes on the Electronic
Systems generally; third party consent requirements; the prioritization of other
Electronic Systems projects; the general feasibility of implementing and
maintaining such changes over time; and considerations relating to owners and
franchisees associated with Licensor Lodging Facilities.

11. LICENSOR SERVICES AND SUPPORT

11.1 Training.

A. Licensor will provide Licensee’s personnel that are designated by Licensee
(and approved by Licensor as being qualified to provide training programs)
training on certain aspects of the System, including the Electronic Systems,
that Licensee elects to participate in, as necessary to comply with the Brand
Standards. Licensor will also provide training material to such personnel to
facilitate the provision of such training by such personnel to other personnel
of Licensee and its Affiliates. Licensee shall deliver such programs in
accordance with the terms and conditions, and within the time frame, established
by Licensor.

B. Licensee must conduct such training for Licensee’s employees as is required
for them to properly operate, administer and manage the Projects in accordance
with the Brand Standards.

C. Licensor may offer, and Licensee may elect to participate in, optional
training courses for personnel engaged in operating or managing the Projects.

D. Licensor will have the right to charge tuition, fees or reimbursements
described in Section 3.3 for all training programs that Licensor offers, which
must be paid before receiving training materials or attending training. For all
programs and activities under this Section 11, Licensee will be responsible for
paying all Travel Expenses and the salary and other compensation for individuals
attending such training. Licensor reserves the right to require that employees
of Licensee or its Affiliates and other individuals receiving training execute
confidentiality agreements in form and substance satisfactory to Licensor.

11.2 Other Services.

A. Licensor or its Affiliates will provide certain services to, and cooperate
with, and provide access to certain systems, to Licensee and its Affiliates in
connection with the Licensed Business substantially in accordance with practice
of Licensor or its Affiliates as of the date of the Spin-Off Transaction, as set
forth in the Services Manual and subject to the provisions, terms, conditions,
restrictions and costs as set forth in the Services Manual. Those services and
systems include services and systems relating to: (i) sales services, including
global incentives and gift cards, the centralized travel agent commission
program, the TMC/consortia program, travel agency and intermediary training
programs, wholesale sales programs, and national group sales; (ii) marketing
services, including global

 

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partnerships and alliances, global promotions, portfolio brand strategy
services, facilitation of marketing opportunities at Licensor Lodging
Facilities, brand programs and customer research; (iii) data access services,
including Licensed Business Customer Information; (iv) global engineering
services, including energy management and training; (v) data communications,
reservations, telecommunications support, and IMS system access;
(vi) operational audit systems; (vii) food and beverage training, procedures and
specifications; (viii) e-commerce and information resources services (as set
forth in the exhibit to the Electronic Systems License Agreement); and (ix) real
estate tax appeals services in certain jurisdictions. The Services Manual may
not be amended, modified or supplemented except as expressly permitted herein,
including in Section 11.2.C. Licensor and its Affiliates will provide such
services in accordance with the applicable standard for the provision of such
services as set forth in the Services Manual.

B. Licensor or its Affiliates will also provide Licensee or its Affiliates with
the following:

(i) Access to Brand Loyalty Programs, including the Marriott Rewards program
pursuant to this Agreement and the Rewards Agreement between Licensor and
Licensee;

(ii) The opportunity to participate in supply procurement programs to the extent
they are generally available to Licensor Lodging Facility franchisees and
licensees and are relevant to the Licensed Business; and

(iii) The opportunity to participate in credit card payment processing
arrangements to the extent they are generally available to Licensor Lodging
Facility franchisees and licensees and are relevant to the Licensed Business.

C. The parties acknowledge and agree that future changes in and/or replacements
of Licensor and its Affiliates’ and/or Licensee’s and its Affiliates’
technologies, systems, business processes, programs and/or business partners
over the Term of this Agreement (“Business Changes”), including changes required
by Applicable Law or the interpretation or enforcement thereof, could make it
more difficult, costly, commercially impractical, or even impossible to continue
to provide one or more services provided by Licensor or its Affiliates or
Licensee or its Affiliates hereunder (the “Affected Services”), or could
otherwise necessitate changes to the Affected Services. In the event of such a
Business Change, Licensee and Licensor agree to discuss, in good faith, making
commercially reasonable changes to the Affected Services, including changes to
the manner, method, scope, delivery, timing and cost of the Affected Services,
or substitution of a similar service that accomplishes the principal underlying
purpose or function of the Affected Service, in order to permit the Affected
Services to continue on a commercially reasonable basis (such changes, “Service
Modifications”). The parties understand and agree that the party receiving an
Affected Service shall bear the reasonable incremental expense of any Service
Modification, including any increased costs required for the providing party to
continue to provide the Affected Service as so modified. If the parties cannot
agree upon commercially reasonable Service Modifications, taking into
consideration any offer made by the party receiving such service to pay the
incremental costs of any Service Modification, then the provider of the Affected
Service shall no longer be obligated to provide the Affected Service.
Notwithstanding the foregoing, in the event that Licensor or its Affiliates
generally discontinue any Affected Service that Licensor or its Affiliates had
previously offered or provided in connection with Licensor’s and its Affiliates’
Lodging Business, to Licensor Lodging Facility franchisees or to other third
parties, Licensor and its Affiliates shall no longer be required to provide that
Affected Service to Licensee or its Affiliates, and in such case Licensor or
itsAffiliates shall, at Licensee’s request, cooperate with Licensee and its
Affiliates to transition any such Affected Service to another service provider
or to Licensee or its Affiliates, such transition costs to be at Licensee’s
expense.

 

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D. Following the closing of the Spin-Off Transaction, Licensor and Licensee will
each designate, and notify each other in writing of, an individual within their
respective organizations at the vice president level or above (“Contact Person”)
that will serve as the key contact person for the other party. Although neither
party will be obligated to communicate with the other party exclusively through
the other party’s Contact Person, each such Contact Person will have the
authority to communicate on behalf of their organization. Either party may
change the individual designated as its Contact Person at any time upon notice
to the other party.

E. Licensor and Licensee shall hold an annual meeting not later than April 1 of
each calendar year to discuss compliance, customer satisfaction, development
issues, sales and marketing and cooperation issues, and any significant systemic
program or system changes proposed by Licensee. Either party may request
additional meetings if desired, and the other party shall reasonably consider
such request.

F. The parties acknowledge that Licensor is currently providing and may continue
to provide at specific Projects management services and/or shared services with
respect to those Projects under separate Licensor Management Agreements or
shared services agreements, as applicable, related to those Projects.

12. REPAIRS AND MAINTENANCE

A. Licensee will (or, as applicable, will request that Property Owners’
Associations) maintain the Projects in good repair and first-class condition and
in conformity with Applicable Law and the Brand Standards. Licensee or its
Affiliates must fund the cost of all repairs and alterations at the Projects
(or, as applicable, request that Property Owners’ Associations fund such costs).
Any significant alterations, renewals, replacements, or additions to any
Project, including those that affect the design, character, appearance or fire
and life safety elements of any Project, will be carried out in accordance with
the process set forth in the Design Review Addendum. However, repairs and
maintenance that are conducted in the ordinary course of business shall not be
subject to process set forth in the Design Review Addendum.

B. Licensee will (and, as applicable, will request that Property Owners’
Associations) give reasonable consideration to implementing the following
guidelines for significant renovation of Licensed Destination Club Units,
corridors and Public Facilities of Projects: (i) replacement of Soft Goods at
least every five (5) to six (6) years after the date such Soft Goods were
installed and (ii) replacement of Case Goods at least every ten (10) to twelve
(12) years after the date such Case Goods were installed; provided, however,
that earlier or more frequent renovations or replacements may be necessary to
maintain the quality level of the Projects in compliance with the Brand
Standards and to comply with the Quality Assurance Program. In connection with
replacements in the immediately preceding sentence, the replacement of all Soft
Goods or all Case Goods, as the case may be, will be done at the same time for
each phase of a Project rather than being done in a piecemeal fashion.

C. In connection with any replacement of Soft Goods or Case Goods for each phase
of a Project, Licensor has the right to require Licensee (and, if applicable, to
require Licensee to request Non-Controlled Property Owners’ Associations) to
upgrade the rest of the particular phase of the Project to conform to the
building décor, trade dress, and FF&E required under then-current Brand
Standards for Projects of similar age. Licensee will (or, as applicable, will
request Property Owners’ Associations to) submit its plans for such upgrading
and remodeling to Licensor for its review and approval in accordance with the
Design Review Addendum.

 

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13. PROPRIETARY MARKS AND INTELLECTUAL PROPERTY

13.1 Licensor’s and Licensee’s Representations and Responsibility Regarding the
Licensed Marks.

A. Licensee acknowledges that Licensor has provided Licensee with a list of the
trademark registrations and applications for the Licensed Marks and the
jurisdictions in which the registrations are active or applications for such
Licensed Marks are pending, and Licensor hereby represents that such list is
accurate, true, and correct to the best of Licensor’s actual knowledge as of the
Effective Date hereof.

B. Licensor acknowledges that Licensee has provided Licensor with a list of
(i) all trademarks, service marks, and trade names that Licensee or its
Affiliates are currently using or intend to use in connection with the Licensed
Destination Club Business and Licensed Whole Ownership Residential Business
(whether or not such trademarks, service marks, and trade names have been
registered or registration has been applied for) and which are not included in
the list of Licensed Marks that Licensor has provided to Licensee under
Section 13.1.A. and the registration or application status of each such
trademark, service mark, and trade name on a jurisdiction-by-jurisdiction basis
and (ii) the jurisdictions in which (1) there are Existing Projects or Projects
currently under development; (2) there is a Sales Facility or sales or marketing
office related to the Licensed Business; (3) Licensee or its Affiliates are
marketing or selling Licensed Destination Club Units or Licensed Residential
Units (but in which there are no physical Sales Facilities or sales or marketing
offices); (4) Licensee has a commercially reasonable basis for anticipating
developing New Projects or marketing or selling Licensed Destination Club Units
or Licensed Residential Units during the twelve (12) month period immediately
following the Effective Date; or (5) Licensee operates or controls a website
under a country-code top-level domain used to promote the Licensed Business.
Licensee hereby represents that such lists are accurate, true, and correct as of
the Effective Date.

C. Licensor represents with respect to the Licensed Marks that:

(1) Licensor or its Affiliates own the trademark registrations and applications
for (or have the right to use and sublicense) the Licensed Marks for the
Licensed Services in the jurisdictions all as identified on the list described
in Section 13.1.A.

(2) Licensor has the right to grant the license contemplated hereunder, subject
to the following: (a) neither Licensor nor its Affiliates own trademark
registrations or applications for the Licensed Marks for some or all of the
Licensed Services in every country or jurisdiction of the Territory and some
countries or jurisdictions do not permit registration of service marks or do not
have trademark registration systems (each, an “Unregistered Area”), and
(b) Licensor or its Affiliates own trademark registrations for the Licensed
Marks for the Licensed Services in countries or jurisdictions in the Territory
in which it does not currently render Licensed Services and/or hotel services
under the Licensed Marks, and some of these registrations may be susceptible to
cancellation in whole or in part for nonuse or abandonment now or in the future
(“Vulnerable Registrations”). Licensor will provide Licensee with a list of
jurisdictions that may have Vulnerable Registrations within ninety (90) days
following the end of each calendar year during the Term. This provision does not
require Licensor to obtain opinions or advice from foreign counsel or other
counsel regarding the potential vulnerability of the registrations, but rather
only requires Licensor to identify jurisdictions that may have Vulnerable
Registrations based on the information possessed by Licensor at the time.

 

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(3) To the best of Licensor’s actual knowledge, there are no agreements, claims,
litigation, or proceedings completed, pending or threatened in writing, that
might affect its right to grant the license.

D. Licensor covenants with respect to the Licensed Marks that:

(1) Subject to Section 13.1.D(2), it will take or will cause to be taken all
commercially reasonable steps necessary to preserve and protect the ownership
and validity of the Licensed Marks; provided, however, that Licensor will not be
required to maintain any particular registration or application for the Licensed
Marks that Licensor determines cannot or should not be maintained, and Licensor
will not be required to take action against any third-party trademark, name or
other identifier that Licensor determines cannot or should not be challenged;
and

(2)     (i) If Licensee has a commercially reasonable expectation that it will
render Licensed Services under the Licensed Marks in any particular Unregistered
Area or in a jurisdiction of which Licensor has notified Licensee may have
Vulnerable Registrations under Section 13.1.C(2) (“Subject Jurisdictions”),
Licensee will provide notice to Licensor of the Subject Jurisdiction(s) at least
ninety (90) days prior to rendering any Licensed Services under the Licensed
Marks or entering into any sublicense agreement under Sections 5.1.C., 5.2.D.,
or 5.8.B., in any Subject Jurisdiction. Upon receipt of such notice(s), Licensor
or its Affiliate will file and prosecute new trademark application(s), or
continue to use commercially reasonable efforts to prosecute any then-pending
trademark applications, at Licensor’s expense, subject to any prior or superior
third-party rights in that country or jurisdiction and the laws and regulations
of that country or jurisdiction. Licensor shall have no obligation to file
applications for or otherwise obtain any trademarks that have previously been
registered or applied for by third parties or with respect to which there are
prior users or prior conflicting rights held by third parties. Licensor agrees
to consult with Licensee upon learning of third-party rights that may conflict
with Licensor’s ability to obtain a registration in the Subject Jurisdiction;
provided, however, that such consultation shall not, and is not intended to,
modify the provision above that Licensor has no obligation to file or obtain
such trademarks and that Licensor may make such determination in its sole and
final discretion. Licensee shall have no claim against Licensor or its
Affiliates with respect to, and neither Licensor nor its Affiliates shall be
liable for, any failure by Licensor or its Affiliates to obtain registration of
the Licensed Marks in any Unregistered Area or to obtain any protection of the
Licensed Marks in jurisdictions with Vulnerable Registrations. Licensee shall
have no right to use, sublicense, or otherwise permit or consent to the use of,
any of the Licensed Marks for any purpose in any Unregistered Areas or any
jurisdictions of which Licensor has notified Licensee may have Vulnerable
Registrations until Licensor has notified Licensee in writing that Licensee is
authorized to use the Licensed Marks in such jurisdiction(s).

(ii) Licensor acknowledges that in certain circumstances Licensee or its
Affiliates may need to pursue opportunities in Subject Jurisdictions prior to
the time that Licensee has been notified by Licensor that Licensee or its
Affiliates are authorized to use the Licensed Marks in such Subject
Jurisdictions and, notwithstanding Section 13.1.D.(2)(i), such use will not be
deemed a breach of this Agreement prior to Licensor notifying Licensee that a
Licensed Mark in a Subject Jurisdiction cannot be registered or cannot be used
due to prior or superior third party rights. Until such time that Licensor has
authorized Licensee’s or its Affiliate’s use of the Licensed Marks in the
Subject Jurisdiction, if Licensee or its Affiliate elects to proceed with the
use of the Licensed Marks prior to receiving such notice, (x) such use shall be
at Licensee’s or its Affiliates’ sole risk and Licensee shall indemnify Licensor
as if such use were an unauthorized use pursuant to Section 16.1.A.(i), and
(y) notwithstanding anything in Section 16.1.B. to the contrary, Licensor will
have no obligation to indemnify Licensee or its Affiliates for such use. If
Licensor determines, and notifies Licensee, that a Licensed Mark in a Subject
Jurisdiction cannot be registered or cannot be used due to prior or superior
third party rights, Licensee and

 

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its Affiliates shall cease any use that it commenced with respect to the
applicable Licensed Mark under this Section 13.1.D.(2)(ii) promptly following
receipt of such notice.

E. If, following the Effective Date, Licensor or its Affiliates secure a
trademark registration for the applicable elements of the Licensed Business for
the registered services (that are Licensed Services) under the applicable
Licensed Mark in any portion of the Excluded Area, Licensee will be granted the
right to use the Licensed Marks and the System pursuant to Section 1.A in the
subject portion of the Excluded Area, but only with respect to the specific
Licensed Services covered by the newly secured registration.

13.2 Licensee’s Use of System and Licensor Intellectual Property.

A. With respect to Licensee’s use of the System and Licensor Intellectual
Property under this Agreement:

(1) Licensee will use the System and Licensor Intellectual Property only as and
in the form and manner expressly authorized by Licensor. Unauthorized use of
Licensor Intellectual Property by Licensee will constitute an infringement of
Licensor’s rights as well as a material default of this Agreement;

(2) Licensee will use the Licensed Marks only in substantially the same places,
combination, arrangement, and manner as provided in the Brand Standards or
approved by Licensor. Licensee will use the symbol “®,” “TM,” “SM” or such
symbols or words as Licensor may designate to use with or otherwise protect the
Licensed Marks;

(3)    (i) Licensee will identify itself as a licensee of Licensor and the owner
and/or operator of the Licensed Business and each Project as allowed or required
by Licensor under the Brand Standards.

(ii) Licensor hereby licenses Licensee to use “Marriott” in the name “Marriott
Vacations Worldwide Corporation” as the corporate name for Licensee (“Permitted
Corporate Name”), and where applicable to use “Marriott” as part of the
corporate names of Licensee’s Affiliates existing as of the date of the Spin-Off
Transaction (“Permitted Licensee Affiliate Names”) as set forth in Exhibit J.

(iii) Licensor may terminate such license to use the Permitted Corporate Name
and/or, subject to (iv) below, the Permitted Licensee Affiliate Names
immediately upon notice to Licensee, in which event, Licensee’s and its
Affiliates’ use of such names shall be immediately discontinued and such
corporate names shall be promptly changed to names that do not use the word
“Marriott” or any of Licensor’s or its Affiliates’ other trademarks or trade
names or any similar trademarks or trade names if (i) at any time the aggregate
number of Licensed Destination Club Units is less than one-half (1/2) of the
total number of Destination Club Units owned or operated by Licensee, or
(ii) Licensee acquires, or merges or is combined with, the Destination Club
Business of Hilton Worldwide or its successors-in-interest (excluding Licensor
or its Affiliates) or Starwood Hotels and Resorts or its successors-in-interest
(excluding Licensor or its Affiliates) or any Hilton Brand or Starwood Brand,
and continues to use any Hilton Brand or Starwood Brand on or in connection with
its Destination Club Business, provided that if clause (ii) is implicated,
Licensee shall, in no event, be required to discontinue such use until the fifth
(5th) anniversary of the Effective Date. Additionally, if any Affiliate of
Licensee that is using a Permitted Licensee Affiliate Name affiliates with a
Lodging Competitor Brand, Licensor may terminate the right to use the Permitted
Licensee Affiliate Name as to that Affiliate, in which event, the use of the
Permitted Licensee Affiliate Name of such Affiliate shall be immediately
discontinued and such corporate name shall be promptly changed to a name that
does not use the word “Marriott” or any of Licensor’s or its Affiliates’ other
trademarks or trade names or any similar trademarks or trade names.

 

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(iv) In the event that it is impossible for any Permitted Licensee Affiliate
Name to be changed to a corporate name that does not use of the word “Marriott”
pursuant to (iii) above, the license to use the Permitted Licensee Affiliate
Name will remain in place for so long during the Term as it remains impossible
to change the name; provided, however, the parties will discuss and agree on a
solution whereby there are no further consumer-facing uses of the Permitted
Licensee Affiliate Name, which may include the adoption of a “doing business as”
(DBA) name that does not use the word “Marriott” or any of Licensor’s or its
Affiliates’ other trademarks or trade names or any similar trademarks or trade
names.

(v) Licensee shall not, at any time, include any brand name in its corporate
name (other than the name “Marriott” in the Permitted Corporate Name and
Permitted Licensee Affiliate Names), other than a new brand name developed by
Licensee that does not contain any of the Licensor Intellectual Property or any
similar marks or names, provided, that Licensee and its Affiliates may at any
time use the words “Vacation”, “Vacations”, “Worldwide”, and/or “Corporation” in
an entity name that does not contain any of the Licensor Intellectual Property
or any similar marks or names.

(vi) Licensee acknowledges and agrees that the grant of rights to use the
Permitted Corporate Name and the Permitted Licensee Affiliate Names hereunder
shall not restrict or limit in any way Licensor’s or its Affiliates’ ability to
use the words “Marriott”, “Vacations”, “Vacation”, or “Worldwide” in any form,
manner, or combination or in any context or respect at any time, provided that
Licensor and its Affiliates will not use all three of the words “Marriott”,
“Vacations”, and “Worldwide” together in the name of a single entity for
consumer-facing purposes at any time during the Term that Licensee is permitted
to use the Permitted Corporate Name and Permitted Licensee Affiliate Names
hereunder, but Licensor and its Affiliates may use such words in any other
combination or manner without any restriction whatsoever.

(vii) Licensor acknowledges that as of the Effective Date certain Non-Controlled
Property Owners’ Associations have names that contain the word “Marriott”
(“Existing Association Names”). Except for the Existing Association Names,
Licensee will not permit any other Property Owners’ Associations to use the word
“Marriott” or any other Licensor Intellectual Property or any similar marks or
names in their names. Licensee will use commercially reasonable efforts to cause
each Non-Controlled Property Owners’ Association with an Existing Association
Name to change its name to a name that does not contain the word “Marriott” or
any of Licensor’s or its Affiliates’ other trademarks or trade names or any
similar trademarks or trade names.

(4) Notwithstanding Section 13.2.A.(3) or any “fair use” rights that Licensee or
its Affiliates may have with respect to the Permitted Corporate Name or the
Permitted Licensee Affiliate Names, Licensee and its Affiliates are expressly
prohibited from using, and Licensee hereby agrees not to use and agrees to cause
its Affiliates not to use, the Permitted Corporate Name or the Permitted
Licensee Affiliate Names (or any variation thereof) as part of, or in any way
associated with, the name of any property that is not part of the Licensed
Business without Licensor’s prior written consent in its sole discretion. For
illustrative purposes only, Licensee and its Affiliates would be prohibited from
using the following name: “Napa Valley Destination Club operated by Marriott
Vacations Worldwide Corporation”. However, if a jurisdiction recognizes
nominative fair use rights and a Member makes nominative fair use of a Licensed
Mark in connection with a sale of its interests in a Project in such
jurisdiction, then this section is not intended to limit or modify such fair use
rights. If Licensee or its Affiliates use the Permitted Corporate Name, the
Permitted Licensee Affiliate Names, or any variation thereof in violation of
this Section 13.2.A(4), then, in addition to any damages that Licensor

 

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or its Affiliates may be entitled to hereunder or under Applicable Law, Licensor
will have the right to require Licensee or its Affiliates, as applicable, to pay
Royalties for each property with respect to which Licensee or its Affiliates are
using the Permitted Corporate Name, the Permitted Licensee Affiliate Names, or a
variation thereof, in violation of this Section 13.2.A(4).

(5) Licensee does not have any right to and will not Transfer, sublicense, or
allow any Person to use any of the Licensor Intellectual Property, except as
expressly permitted in this Agreement;

(6) Licensee will not use the Licensor Intellectual Property to incur any
obligation or indebtedness on behalf of Licensor or any of its Affiliates;

(7) Licensee will not apply for trademark or service mark registration of any
Proprietary Mark, any variation thereof, or any mark determined by Licensor to
be similar to, or that includes, any Proprietary Mark in the United States or
any other country or jurisdiction. If Licensee requests that Licensor file an
application for a new trademark that includes any Proprietary Mark which is
related to a new program or initiative under the Licensed Business and Licensor
approves such request (such approval to be granted if the request is
commercially reasonable), Licensor will file such application at Licensor’s
expense. If Licensee wishes to modify an existing Licensed Mark and requests
that Licensor file an application for such modified Licensed Mark, and Licensor
approves such request to modify, Licensor will file such application, but
Licensee must reimburse Licensor for all costs and expenses related to such
application (including without limitation the costs for conducting a trademark
search, filing and prosecuting an application through to registration,
maintenance of any resulting registrations (unless such resulting registration
replaces an existing registration that is not maintained), and any related
appeals, proceedings, disputes, oppositions and litigation).

(8) If Licensee or any of its Affiliates registers or has registered or directly
or indirectly controls any domain name that is determined by Licensor to be
similar to the domain names owned by Licensor or its Affiliates as described in
Section 13.2.B(1) below or that incorporate any of the Proprietary Marks (or any
variation thereof), Licensee or its Affiliates, as applicable, must
unconditionally assign such domain names to Licensor or its Affiliate;

(9) Licensee will obtain Licensor’s approval of, and will comply with Licensor’s
instructions in filing and maintaining, any required business, trade,
fictitious, assumed, or similar name registrations containing the Licensed
Marks. Licensee will also execute any documents and take such other action
deemed necessary by Licensor or its counsel to protect and enforce the
Proprietary Marks or maintain their validity and enforceability; and

(10) If litigation or other demand or action involving the Licensor Intellectual
Property is instituted or threatened against Licensee or any notice of such
infringement is received by Licensee, or if Licensee becomes aware of any
infringement or other violation of the Licensor Intellectual Property by
Licensee or a third party, Licensee will promptly notify Licensor in writing and
will cooperate fully with Licensor and comply with Licensor’s instructions in
connection with Licensor’s defense, prosecution or settlement of such
litigation, notice, infringement or violation. Licensor shall have sole
responsibility for enforcing the Licensor Intellectual Property at its sole
discretion and cost and is entitled to all settlements, damages, costs,
attorneys’ fees or other amounts received from such enforcement efforts. If any
such settlement amount or damage award received by Licensor is solely based on
damage to or impact on the exclusively licensed aspects of the Licensed
Business, then after applying such amount or award toward Licensor’s attorneys’
fees and other costs related to the matter, Licensor will share any remaining
portion of the settlement amount or damage award with Licensee in a equitable
manner as determined by Licensor based on the relative interests of the parties.

 

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B. Licensee agrees that:

(1) Licensor and/or its Affiliates are the owners or licensees of all right,
title, and interest in and to the System (other than Electronic Systems provided
by or licensed by third parties), the goodwill associated with and symbolized by
the Proprietary Marks, and the domain names www.marriottvacationclub.com,
www.marriottvacationsworldwide, www.grandresidenceclub.com, and
www.marriott.com, and other domain names owned by Licensor or its Affiliates;

(2) the Proprietary Marks are valid and serve to identify the System and those
who hold rights to operate under the System;

(3) the Proprietary Marks are subject to replacement, addition, deletion, and
other modification by Licensor (or the Affiliate that owns the Proprietary
Marks) in its discretion. In such event,

(a) Licensor may require Licensee to discontinue or modify Licensee’s use of any
of the Licensed Marks or to use one or more additional or substitute or modified
marks; provided, however, that Licensor shall not amend, modify, delete, or
change the word “Marriott” in any of the Licensed Marks described in clauses
(i) through (iv) of the definition of “Licensed Marks” as used in connection
with the Licensed Business (other than the appearance, including the color,
font, stylization, script, or format of the word “Marriott” used as part of such
Licensed Marks, provided that Licensor will not change the size or location of
the word “Marriott” in relation to the other components of the marks described
in (i) through (iv) of the definition of Licensed Marks) without Licensee’s
prior written consent in its sole discretion. Notwithstanding the foregoing,
Licensee will not be required to discontinue using or change any Licensed Mark
that is used solely in connection with the Licensed Business and is not the same
as or similar to any mark owned by Licensor or its Affiliates for use in
connection with Licensor Lodging Facilities or other businesses and activities
of Licensor and its Affiliates; and

(b) Licensor may require that Licensee bear the costs related to such
replacement, addition, deletion, or other modification in respect of the
Licensed Business; provided, however, that Licensor shall treat Licensee in the
same way that Licensor treats franchisees or licensees of Licensor Lodging
Facilities with respect to such costs, or the economic equivalent thereof.

(4) During the Term and thereafter, Licensee will not directly or indirectly
(i) attack or otherwise challenge the ownership, title or rights of Licensor or
its Affiliates in and to any part of the System; (ii) contest the validity of
any part of the System, or the right of Licensor to grant to Licensee the use of
any part of the System (other than Electronic Systems provided by or licensed by
third parties) in accordance with this Agreement; (iii) take any action or
refrain from taking any action that could impair, jeopardize, violate, or
infringe any part of the System; (iv) claim adversely to Licensor or its
Affiliates any right, title, or interest in and to the System; (v) assert any
interest in all or any part of the System or the Licensor Intellectual Property
by virtue of a constructive trust; (vi) misuse or harm or bring into dispute the
System; or (vii) make any demand, or serve any notice orally or in writing, on a
third party or institute any legal action against a third party, or negotiate,
litigate, compromise or settle any controversy with a third party in relation to
any claim, suit or demand, involving the Licensor Intellectual Property without
first obtaining Licensor’s consent, which consent may be granted or withheld in
Licensor’s discretion;

(5) Licensee has no Ownership Interest in the System or the Licensor
Intellectual Property (including any modifications, derivatives or additions
thereto proposed by or on behalf of Licensee or its Affiliates (for purposes
hereof, collectively, “modifications”)), and Licensee’s

 

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use of the System and the Licensor Intellectual Property in connection with the
operation of the Licensed Business and the Projects will not give Licensee any
Ownership Interest therein. Licensee hereby assigns (and will cause each of its
employees or independent contractors who contributed to such modifications to
assign) to Licensor, in perpetuity throughout the world, all rights, title and
interest (including the entire copyright and all renewals, reversions and
extensions thereof) in and to all modifications to the Licensor Intellectual
Property and other aspects of the System proposed or created by or on behalf of
Licensee or its Affiliates. Licensee waives (and will cause each of its
employees or independent contractors who contributed to such modifications to
waive) all rights of “droit moral” or “moral rights of authors” or any similar
rights that Licensee (or its employees or independent contractors) may now or
hereafter have in such modifications, and Licensee disclaims any interest in
such modifications by virtue of a constructive trust. Licensee agrees to execute
(or cause to be executed) and deliver to Licensor any documents and to do any
acts that may be deemed necessary by Licensor to perfect or protect the title in
the modifications herein conveyed, or intended to be conveyed now or in the
future; and

(6) all goodwill arising from Licensee’s use of the System (other than
Electronic Systems provided by or licensed by third parties) and any other
aspect of the System will inure solely and exclusively to Licensor’s benefit,
and upon expiration or termination of this Agreement, no monetary amount will be
assigned as attributable to any goodwill associated with Licensee’s use of any
aspect of the System.

C. The provisions of this Section 13.2 will survive the expiration or
termination of this Agreement.

13.3 Licensee’s Use of Other Marks.

A. Licensee will not use in any manner any of the System in connection with any
Other Mark(s) (except the Licensee Marks), without Licensor’s prior written
approval in Licensor’s sole discretion.

B. Licensee will not use any name or Other Mark (including the Licensee Marks)
in connection with the Licensed Business or the Projects that may infringe upon,
or tend to be confused with, dilute or otherwise violate a third party’s trade
name, trademark, or other rights in intellectual property.

C. Except as otherwise expressly permitted by Section 9.3 and 9.5, Licensee will
not use or permit the use of any Other Mark (except for the Licensee Marks) in
connection with the Licensed Business or the Projects or in any Marketing
Content, advertising of, for, relating to or involving the Licensed Business or
the Projects or its operation without Licensor’s prior approval, which approval
may be granted or withheld in Licensor’s sole discretion; provided, however,
nothing in this Section 13.3.C is intended to prohibit Licensee or its
Affiliates from utilizing Other Marks in connection with the operation of
country clubs, spas, golf courses, food and beverage outlets, gift and sundry
shops in the ordinary course of business at Projects.

13.4 Licensee Website.

A. Licensee has established and intends to continue the use of an Internet
website to advertise and promote the Licensed Business and the Projects
(“Licensee’s Website”). Except as permitted with respect to Licensee’s Website
as described below, Licensee will not display the Licensed Marks or associate
the System with (through a link or otherwise) any website, electronic Marketing
Content, domain name, address, designation, or listing on the Internet or other
communication system, except in compliance with the Brand Standards. Licensor
will not object to foregoing items that Licensee

 

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has in place as of the Effective Date as not being in compliance with Brand
Standards, other than misuses of the Licensed Marks; provided, however, that,
following the Effective Date, any changes, additions, expansions, or other
modifications of the foregoing and any new uses with respect to the foregoing
must be in accordance with the Brand Standards. Licensor will permit Licensee to
operate and maintain Licensee’s Website, provided that (a) the form, content and
appearance of the Licensed Marks that appear on Licensee’s Website, and any
modifications thereto, comply with the Brand Style and Communications Guide or
are otherwise approved in writing by Licensor (such approval not to be
unreasonably withheld, conditioned or delayed) before being posted on the
Internet; and (b) Licensee’s Website complies with all Data Protection Laws and
the data protection laws of other jurisdictions that apply to Licensee’s
Website.

B. Licensee agrees that Licensor will be the registrant (i.e., registered owner)
of all domain names that contain, reference, or are comprised of any of the
Licensed Marks now and in the future (collectively, “Licensed Domains”), and
that all Licensed Domains will be registered and maintained with Licensor’s
domain name registrar (the “Registrar”), which, as of the Effective Date, is
CSC. Licensor will have a “parent account” at the Registrar, and Licensee will
have a “child account” at the Registrar under Licensor’s parent account for
purposes of registering and managing all Licensed Domains that Licensee is
permitted to use under this Agreement. Licensee will serve as and be identified
as the administrative and technical contacts for the Licensed Domains, and
Licensee will be solely responsible for the use and maintenance of the Licensed
Domains (including without limitation controlling the child account and the user
name and password for that account, paying all registration and renewal fees,
maintaining and updating the servers for the Licensed Domains and any
corresponding websites, and maintaining accurate contact information on the
WHOIS records for the administrative and technical contacts). However, Licensor
has the option, but is not required, to pay registration and renewal fees and
take any actions to prevent the cancellation or expiration of any of the
Licensed Domains. Licensee will not directly or indirectly: (1) delete or cancel
any of the Licensed Domains without prior notice to Licensor and affording
Licensor an opportunity to assume control or management of such Licensed
Domains, (2) transfer control or management of any of the Licensed Domains to a
new registrar, (3) transfer ownership of any of the Licensed Domains to an owner
other than Licensor, (4) except as consented to by Licensor, encumber any of the
Licensed Domains in any way (collectively, the “Changes”), or (5) permit use of
the Licensed Domains, directly or indirectly, in any manner inconsistent with
the terms of this Agreement. Licensee’s child account with the Registrar will
not permit Licensee to make any Changes. Upon expiration or termination of the
Agreement, Licensor will subsume Licensee’s child account into its parent
account and will take over the disposition and management of all Licensed
Domains in that account as Licensor may determine in its sole discretion, and
Licensee will provide any cooperation necessary to carry this out.

13.5 Credit and Debit Cards.

A. Except to the extent used under Section 13.5.B(ii)(a), Licensee and its
Affiliates shall not use any of the Licensor Intellectual Property, including
the Licensed Marks or the Licensed Business Customer Information, to brand,
co-brand, sponsor, market, or promote or otherwise affiliate with a credit,
charge or debit card other than through an arrangement with Licensor in
connection with a Marriott branded, co-branded, sponsored, marketed, or promoted
credit, charge or debit card.’

B. Licensee shall not market or promote the acquisition of a credit, charge or
debit card in connection with the Licensed Business, including using any
customer-facing sales assets or facilities that contain or display any of the
Licensor Intellectual Property (including phone numbers, websites, domain names,
screen names, social networking names, email addresses, and customer
information) or Branded Elements in connection with the marketing or promotion
of the acquisition of a credit, charge or debit card, other than (i) in an
arrangement with Licensor in connection with a Marriott branded, co-branded,
sponsored, marketed or promoted credit, charge or debit card, or (ii) in an

 

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arrangement that complies with Section 13.5.A above, and each of the following,
subject to Section 13.5.C: (a) Licensee and its Affiliates may not market or
promote such card except to existing Members of Licensed Destination Club
Products, (b) Licensee and its Affiliates may not market or promote such card at
Licensed Destination Club Projects or Licensed Residential Projects, (c) such
card may offer benefits to cardholders such as discounts on Licensed Destination
Club Products, or stays, products or services at Licensed Destination Club
Projects, but may not offer points or other benefits that consist of or are
exchangeable into points under a Brand Loyalty Program, or usage rights
for Licensed Destination Club Units that may be used or converted into stays or
other benefits at Licensor Lodging Facilities, and (d) such card may not be
branded or sponsored by any Lodging Competitor Brand.

C. Licensee shall only be obligated to participate in an arrangement with
Licensor in connection with a Marriott branded, co-branded, sponsored, marketed
or promoted credit, charge or debit card provided that Licensor is complying
with its obligations relating to such arrangement in the Services Manual. Unless
Licensee elects to no longer participate in such arrangement, so long as
Licensee is participating in such an arrangement and Licensor is complying with
its obligations relating to such arrangement in the Services Manual, Licensee
shall not have the right to enter into an arrangement described in clause
(ii) of Section 13.5.B.

D. Nothing in this Section 13.5 shall restrict Licensee from entering into
(i) credit, charge or debit card acceptance, merchant, servicing, and similar
arrangements in the ordinary course of business with credit, charge and debit
card companies, or (ii) subject to Sections 9.3 and 9.5, co-marketing,
promotional and similar arrangements with credit, charge and debit card
companies designed to promote the sale and general awareness of Licensed
Destination Club Products and Licensed Residential Units to the card company’s
customer base or (iii) subject to Sections 9.3 and 9.5, arrangements with
credit, charge and debit card companies under which the card company’s customers
can use credit card points for stays and services at Projects. For the avoidance
of doubt, with respect to clauses (ii) and (iii) in the previous sentence,
Licensee is not permitted to use any Licensed Business Customer Information;
provided, that in the case of clause (ii), Licensee may use the list of Members
of Licensed Destination Club Products for the sole purpose of expunging such
Members from the card company’s recipient list for such promotion.

13.6 Use of Licensee Marks.

A. Licensee represents that: (i) Licensee owns the registrations and/or the
applications to register the Licensee Marks; and (ii) to the best of its actual
knowledge: (x) Licensee has the right to consent to Licensor’s use of the
Licensee Marks and (y) there are no claims, litigation or proceedings pending or
threatened by any Person that would materially affect Licensor’s use of the
Licensee Marks as contemplated by the terms of this Agreement. Licensee hereby
consents to Licensor’s and its Affiliate’s use of the Licensee Marks in
connection the Licensed Business and the Projects (including in printed
marketing and promotional materials, and on Licensor’s website) and agrees that
such consent shall remain in full force and effect until thirty (30) days
following the termination of this Agreement for any reason. Licensor consents to
Licensee’s use of the Licensee Marks in connection with the Licensed Marks on
the terms and conditions set forth in this Section 13.6.

B. Licensee will use the Licensee Marks together with the Licensed Marks only as
authorized under this Agreement in connection with the Licensed Business and the
Projects and only in accordance with the Brand Style and Communications Guide or
as otherwise authorized in advance by Licensor in writing. Licensee will
strictly conform all uses of the Licensee Marks together with the Licensed Marks
to the content, layout and graphic design of sample materials in accordance with
the Brand Style and Communications Guide or as otherwise approved in advance by
Licensor, and Licensee

 

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shall restrict such usage to types of activity, medium or signage in accordance
with the Brand Style and Communications Guide or as otherwise specifically
approved in advance by Licensor.

C. Licensee will not file, seek or make any registration containing any of the
Licensee Marks together with any Licensed Marks. If such filing is required by
Applicable Law, such registration shall be subject to the prior written approval
of Licensor and shall be made solely by Licensor. Licensee shall withdraw,
cancel or assign to Licensor, at Licensor’s option, any unauthorized
registration upon the request of Licensor. At Licensee’s request upon the
expiration or termination of this Agreement, Licensor shall withdraw or cancel
any registration containing any Licensee Marks together with Licensed Marks.

D. Upon termination of this Agreement for any reason, Licensee will cease using
the Licensed Marks as specified in Section 19 of this Agreement, including all
use of the Licensed Marks together with the Licensee Marks as authorized
pursuant to this Section 13.6. Upon termination of this Agreement for any
reason, Licensor will cease using the Licensee Marks as specified in Section 19
of this Agreement, including all use of the Licensee Marks together with the
Licensed Marks as authorized pursuant to this Section 13.6.

E. Licensee acknowledges and agrees that (a) it shall not acquire any right,
title or interest in or to the Licensed Marks as a result of the use of the
Licensee Marks together with the Licensed Marks, (b) all goodwill associated
with the Licensed Marks generated by their use together with the Licensee Marks
shall inure solely to Licensor, and (c) it shall not assert that the Licensed
Marks and the Licensee Marks when used together comprise a composite or unitary
mark. Licensor acknowledges and agrees that (a) it shall not acquire any right,
title or interest in or to the Licensee Marks as a result of the use of the
Licensed Marks together with the Licensee Marks, (b) all goodwill associated
with the Licensee Marks generated by their use together with the Licensed Marks
shall inure solely to Licensee, and (c) except as necessary in connection with a
filing by Licensor under Section 13.6.C, it shall not assert that the Licensee
Marks and the Licensed Marks when used together comprise a composite or unitary
mark.

F. Licensee hereby acknowledges and agrees that if at any time the use of the
Licensee Marks in connection with the Licensed Business or any Project is
challenged by a third party, Licensor may require that such use immediately
cease or that the affected Licensee Marks be changed in a manner that resolves
the challenge raised by the third party. Notwithstanding the potential
requirement above by Licensor that Licensee cease using or use a changed
Licensed Mark upon a third-party challenge to the Licensed Mark, if Licensee
believes such challenge is without merit, Licensee may request that Licensor
contest such challenge and Licensor shall determine how to proceed in Licensor’s
discretion. Except as otherwise set forth in this Agreement, Licensee shall have
sole responsibility for enforcing the Licensee Marks in its discretion and cost
and is entitled to all settlements, damages, costs, attorneys’ fees or other
amounts received from such enforcement efforts. In the course of enforcing or
defending the Licensee Marks, Licensee shall not make any statements, take any
positions or actions, or enter into any agreements that may restrict, narrow,
limit or affect Licensor’s rights to the Licensed Marks. To the extent any
Licensee Mark is used in connection with any of the Licensed Marks, enforcement
and defense of the Licensed Marks is governed by Section 13.2.A(10).

13.7 Assignment of Certain Intellectual Property to Licensee.

A. Effective as of the date of the Spin-Off Transaction, Licensor and/or its
Affiliates will assign, or have assigned, to Licensee certain intellectual
property pursuant to an assignment agreement in the form agreed to by the
parties.

 

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B. Upon the Deflagging of all Projects using a particular Licensed Project Name,
Licensor and/or its Affiliates will assign, or have assigned, to Licensee the
Licensed Project Name and the related Licensed Project Domains applicable to
such Project(s), and upon the termination or expiration of this Agreement,
Licensor and/or its Affiliates will assign, or have assigned, to Licensee all of
the then-existing Licensed Project Names and the related Licensed Project
Domains. Such assignments shall be made pursuant to an assignment agreement in
the form agreed to by the parties at the time of such assignment.

C. Upon termination or expiration of this Agreement, Licensor and/or its
Affiliates will assign to Licensee any rights that Licensor or its Affiliates
have in the name “Grand Residences” and related domain names that do not also
contain or reference any Licensed Mark (other than “Grand Residences”) pursuant
to an assignment agreement in the form agreed to by the parties at the time of
such assignment.

14. CONFIDENTIAL INFORMATION; DATA PROTECTION LAWS

14.1 Confidential Information.

A. Licensee will not, during the Term or thereafter, without Licensor’s prior
consent, which consent may be granted or withheld in Licensor’s sole discretion,
copy, duplicate, record, reproduce, in whole or in part, or otherwise transmit
or make available to any “unauthorized” Person any Licensor Confidential
Information or use the Licensor Confidential Information in any manner not
expressly authorized by this Agreement. Licensee may divulge such Licensor
Confidential Information only to such of Licensee’s employees or agents as
require access to it in order to operate the Licensed Business and the Projects
and to comply with Licensee’s obligations under the Transaction Agreements, and
only if such employees or agents are apprised of the confidential nature of such
information before it is divulged to them and they are bound by confidentiality
obligations substantially similar to those listed above. All other Persons,
including, without limitation, any acquirer or potential acquirer of Licensee,
are “unauthorized” for purposes of this Agreement. Licensee agrees that the
Licensor Confidential Information has commercial value and that Licensor and its
Affiliates have taken commercially reasonable measures to maintain its
confidentiality, and, as such, the Licensor Confidential Information is
proprietary and a trade secret of Licensor and its Affiliates. Licensee will be
liable to Licensor for any breaches of the confidentiality obligations in this
Section 14.1.A by its employees and agents. Licensee will maintain the Licensor
Confidential Information in a safe and secure location and will immediately
report to Licensor the theft or loss of all or any part of the Licensor
Confidential Information.

B. Licensor will not, during the Term or thereafter, without Licensee’s prior
consent, which consent may be granted or withheld in Licensee’s sole discretion,
copy, duplicate, record, reproduce, in whole or in part, or otherwise transmit
or make available to any “unauthorized” Person any Licensee Confidential
Information or use the Licensee Confidential Information in any manner not
expressly authorized by this Agreement. Licensor may divulge such Licensee
Confidential Information only to such of Licensor’s employees or agents as
require access to it in order to comply with its obligations with respect to the
operation of the Projects and the Licensed Business and with the Transaction
Agreements, and only if such employees or agents are apprised of the
confidential nature of such information before it is divulged to them and they
are bound by confidentiality obligations substantially similar to those listed
above. All other Persons are “unauthorized” for purposes of this Agreement.
Licensor agrees that the Licensee Confidential Information has commercial value
and that Licensee and its Affiliates have taken commercially reasonable measures
to maintain its confidentiality, and, as such, the Licensee Confidential
Information is proprietary and a trade secret of Licensee and its Affiliates.
Licensor will be liable to Licensee for any breaches of the confidentiality
obligations in this Section 14.1.B by its employees and agents. Licensor will
maintain the Licensee Confidential Information in a safe and secure location and
will immediately report to Licensee the theft or loss of all or any part of the
Licensee Confidential Information.

 

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14.2 Data Protection Laws; Data Security.

A. With respect to the Licensed Business, each party will comply with all
applicable Data Protection Laws and the Brand Standards related thereto and do
and execute, or arrange to be done and executed, each act, document and thing
necessary or desirable to keep the other party and its Affiliates in compliance
with any of the Data Protection Laws. Each party shall reimburse the other party
and its Affiliates for any and all costs incurred in connection with the breach
by such party of such Data Protection Laws or the Brand Standards.

B. Without limiting the foregoing, each party shall implement with respect to
the Licensed Business reasonable, current security measures to prevent
unauthorized access to data relating to the Licensed Business (including the
Licensed Business Customer Information) under such party’s control. Such
measures shall in no event be less stringent than (i) those used by such party
to safeguard the Licensee Confidential Information and the Licensee Intellectual
Property (in the case of Licensee) or the Licensor Confidential Information and
the Licensor Intellectual Property (in the case of Licensor) or (ii) industry
standard security measures used by companies of a similar size. Such measures
shall include, where appropriate, use of updated firewalls, virus screening
software, logon identification and passwords, encryption, intrusion detection
systems, logging of incidents, periodic reporting, and prompt application of
current security patches, virus definitions and other updates.

C. Each party shall secure all Personally Identifiable Information from
unauthorized access, use, disclosure and loss using commercially reasonable
security practices and technologies. If either party becomes aware of a
suspected or actual breach of security involving Personally Identifiable
Information, such party will notify the other party promptly after becoming
aware of such occurrence. For purposes of such notification, Licensee shall
notify Licensor’s Information Protection and Privacy Department at
privacy@marriott.com, and Licensor shall notify Licensee’s Information
Protection and Privacy Department at mvciprivacy@vacationclub.com, in either
case or such other email addresses as a party may notify in writing to the other
party from time to time.

15. ACCOUNTING AND REPORTS

15.1 Books, Records, and Accounts.

Licensee at its expense will maintain and preserve for at least the period of
time required by Applicable Law, complete and accurate books, records, and
accounts in accordance with United States generally accepted accounting
principles, consistently applied, and Applicable Law, for the Licensed Business,
including, without limitation, each sale of an interest in Destination Club
Units and Residential Units and other reasonable information that is necessary
for Licensor to determine whether Licensee is in compliance with this Agreement.
Licensee’s obligation to preserve such books, records and accounts will survive
the expiration or termination of this Agreement.

15.2 Reports.

A. Licensee will, at its expense, submit to Licensor within fifteen (15) days
after the close of each Accounting Period during the Term a statement, in the
form attached hereto as Exhibit D, containing specified sales information for
such Accounting Period with respect to the Licensed Business, including
aggregate initial sales relating to Gross Sales Prices, aggregate re-sales
relating to Gross Sales Prices, aggregate initial sales relating to Gross
Commissions, and aggregate re-sales relating to Gross

 

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Commissions and the Project count (showing the number of open and operating
Projects and the corresponding number of Licensed Destination Club Units and
Licensed Residential Units built and that have a certificate of occupancy) as of
the end of each such Accounting Period.

B. Licensee will, at its expense, submit to Licensor within ninety (90) days
following the end of each calendar year during the Term information regarding
the length of the terms, renewal rights, and expiration dates of Property
Owners’ Association management agreements.

15.3 Licensor Examination and Audit of Licensee’s Records.

A. Licensor and its authorized representatives have the right, at any time (but
not more than once per calendar year, unless an audit reveals an understatement
in such year), upon reasonable notice to Licensee, to: (i) examine all books,
records, and accounts of Licensee for the five (5) years preceding such
examination that relate to support for calculation of the Royalty Fees and other
amounts payable under this Agreement where the calculation of such amount
depends on information provided by Licensee and copy such information that is
reasonably necessary for, and relevant to, such audit; and (ii) have an
independent audit made of any of such books, records, and accounts. Licensee
will provide such other assistance as may be reasonably requested related to the
audit. If an examination or audit reveals that Licensee has made underpayments
to Licensor or any of its Affiliates, Licensee will promptly pay to Licensor or
such Affiliate upon demand the amount underpaid plus interest on the underpaid
amount which will accrue thereon at a rate per annum equal to the Interest Rate
from the date such amount was due until paid. If Licensee in good faith disputes
that there was an underpayment, the parties will review the books and records in
a cooperative manner in an attempt to resolve any discrepancy.

B. If an examination or audit discloses an understatement of payments due to
Licensor of five percent (5%) or more for the period being examined or audited,
or if the examination or audit reveals that the accounting procedures are
insufficient to determine the accuracy of the calculation of any payments due,
Licensee will reimburse Licensor for all reasonable costs and expenses connected
with the examination or audit (including reasonable accounting and lawyers’
fees). If the examination or audit establishes a pattern of underreporting,
Licensor may require that the financial reports due under Section 15.2 be
audited by an internationally recognized independent accounting firm consented
to by Licensor. The foregoing remedies are in addition to any other remedies
that Licensor may have under this Agreement.

C. If an examination or audit reveals that Licensee has made overpayments to
Licensor or any of its Affiliates, Licensor or such Affiliate will promptly pay
to Licensee upon demand the amount overpaid. If Licensor does not pay Licensee
the overpaid amount within thirty (30) days after receiving documentation
evidencing such overpayment reasonably requested by Licensor, Licensor will also
pay interest on the overpaid amount which will accrue thereon at a rate per
annum equal to the Interest Rate from the thirtieth (30th) day following
Licensor’s receipt of such documentation until paid.

D. To the extent Licensee is required to have access to information that is in
the sole possession of Licensor or its Affiliates for purposes of Licensee’s
compliance obligations with respect to the Sarbanes-Oxley Act of 2002 (or any
successor statute) or for purposes of Licensee’s reporting obligations as a
publicly-traded company, Licensor will cooperate in providing access to the
necessary information that is within Licensor’s or its Affiliates’ control and
that Licensor and its Affiliate is permitted to provide under Applicable Law.

 

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16. INDEMNIFICATION; CONTRIBUTION IN LIEU OF INDEMNIFICATION; AND INSURANCE

16.1 Indemnification.

A. Licensee will, and hereby does, indemnify and defend Licensor and its
Affiliates, their officers, directors, agents and employees, and their
respective successors and assigns, from and against all losses, costs,
liabilities, damages, claims, and expenses of every kind and description with
respect to claims brought by third-parties, including allegations of negligence
by Licensor, its Affiliates, and their respective officers, directors,
employees, and agents (subject to Section 16.1.G.), to the fullest extent
permitted by Applicable Law, and including reasonable lawyers’ fees, arising out
of or resulting from acts or omissions by Licensee or its Affiliates or their
respective officers, directors, agents, or employees involving the following:

(i) the use of any Licensor Intellectual Property in violation of this
Agreement;

(ii) any violation of Applicable Law with respect to the Licensed Business;

(iii) a claim that Licensor or its Affiliates are developers, declarants,
sponsors, or brokers of Licensed Destination Club Units or Licensed Residential
Units;

(iv) any design, renovation, upgrading, alteration, remodeling, repair or
construction defect claims (in no event shall this provision impact Licensee’s
rights and interest under any insurance policies as provided under other
Transaction Agreements) or claims related to services provided to Members;

(v) claims related to services provided to Members, any claim by any Member
relating to the interests in Destination Club Units or Residential Units, any
claim by any Member relating to any untrue statement or alleged untrue statement
of a material fact contained in the offering materials, or any omission or
alleged omission to state a material fact required to be stated in such offering
materials or necessary to make the statements made therein not misleading;

(vi) the offer or sale of interests in Licensed Destination Club Units or
Licensed Residential Units, including any disputes or lawsuits arising
therefrom;

(vii) the development, sales, and marketing activities occurring on or after the
date of the Spin-Off Transaction and the operation or servicing of the Projects
or of any other business conducted by Licensee or its Affiliates on, related to,
or in connection with the Projects or the Licensed Business;

(viii) the unauthorized use of the Licensed Marks in connection with the offer
and sale of interests in Licensed Destination Club Units or Licensed Residential
Units (a) in any Unregistered Area and (b) in any jurisdiction where the
Licensed Marks are the subject of Vulnerable Registrations;

(ix) claims made by Members or other customers of the Licensed Business as a
result of the termination (other than wrongful termination by Licensor) or
expiration of this Agreement or any rights granted hereunder in accordance
herewith;

 

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(x) infringement, dilution or other claims by third parties in relation to the
Licensee Intellectual Property or for Licensor’s use of Licensee Intellectual
Property that is licensed, or the use of which is consented to, hereunder by
Licensee in accordance with the terms of this Agreement;

(xi) failure to pay Taxes payable by, levied or assessed against Licensee, its
Affiliates, or any Property Owners’ Association by Tax authority relating to the
Licensed Business, the Projects, this Agreement, any other Transaction
Agreements or in connection with operating the Projects or the Licensed
Business;

(xii) Logoed Merchandise produced by or on behalf of Licensee, and its
Affiliates bearing the Licensed Marks, including without limitation products
claims and claims for infringement, dilution or any other violation of
intellectual property rights or other rights;

(xiii) breach of the obligations with respect to Personally Identifiable
Information or data security under this Agreement and any and all costs and
expenses related to notification of affected individuals and procurement of
credit protection services for such individuals;

(xiv) the infringement of a third party’s intellectual property rights in
connection with the Licensed Business, other than with respect to use by
Licensee and its Affiliates of Licensor Intellectual Property that is licensed
hereunder to Licensee in accordance with the terms of this Agreement;

(xv) any claim arising from the operation, ownership or use of the Licensed
Business, the Projects or of any other business conducted on, related to, or in
connection with the Projects; and

(xvi) failure to operate the Projects in compliance with the terms, conditions,
restrictions, and prohibitions in this Agreement relating the operation of the
Projects as Destination Club Products or as Residential Products.

B. Licensor will, and hereby does, indemnify and defend Licensee and its
Affiliates, their officers, directors, agents and employees, and their
respective successors and assigns, from and against all losses, costs,
liabilities, damages, claims, and expenses of every kind and description with
respect to claims brought by third-parties, including allegations of negligence
by Licensee, its Affiliates, and their respective officers, directors,
employees, and agents (subject to Section 16.1.G.), to the fullest extent
permitted by Applicable Law, and including reasonable lawyers’ fees, arising out
of or resulting from acts or omissions by Licensor or its Affiliates or their
respective officers, directors, agents, or employees involving the following:

(i) infringement claims by third parties for Licensee’s use of Licensor
Intellectual Property that is licensed hereunder to Licensee in accordance with
the terms of this Agreement, but excluding any Licensor Intellectual Property
that is licensed from, or otherwise provided by, a third party (other than an
Affiliate of Licensor), provided that the use of the Licensor Intellectual
Property is in accordance with the terms and conditions of this Agreement;

(ii) if Licensee and its Affiliates are in compliance with the terms,
conditions, restrictions, and prohibitions in this Agreement relating to the
operation of the Projects as Destination Club Projects or as Residential
Projects, claims by owners, developers, operators, lessees, licensees, or
franchisees of Licensor Lodging Facilities that the conduct of the Licensed
Business violates Agreed Territorial Protections;

 

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(iii) any violation of Applicable Law with respect to the Licensed Business;

(iv) to the extent that Licensor or its Affiliates provide services to customers
of the Licensed Business, claims by the customers concerning the services
provided by Licensor or its Affiliates to such customers of the Licensed
Business;

(v) to the extent that Licensor or its Affiliates operate or provide services to
the Projects or operate other businesses at, or in connection with the Projects
or the Licensed Business, claims by customers arising directly out of or based
solely on the operation of Projects or services provided by Licensor or its
Affiliates; and

(vi) breach of the obligations with respect to Personally Identifiable
Information or data security under this Agreement and any and all costs and
expenses related to notification of affected individuals and procurement of
credit protection services for such individuals.

Notwithstanding the foregoing, Licensor shall have no liability for any claims
arising out of or relating to:

(x) Licensee’s or its Affiliates’ unauthorized use of the Licensed Marks: (a) in
any Unregistered Area or the Excluded Area; (b) in any jurisdiction where the
Licensed Marks are the subject of Vulnerable Registrations; or (c) in any
jurisdiction where the Licensed Marks have been previously registered or applied
for by third parties or with respect to which there are prior users or prior
conflicting rights held by third parties;

(y) any uses of the Licensed Marks by Licensee or its Affiliates that are not
covered by the trademark registrations for the Licensed Marks held by Licensor
or its Affiliates; or

(z) Logoed Merchandise bearing the Licensed Marks, including without limitation
products claims and claims for infringement, dilution or any other violation of
intellectual property rights.

C. If either party receives notice of any action, suit, proceeding, claim,
demand, inquiry, or investigation for which it is entitled to an indemnity under
Sections 16.1.A. or B., the party receiving notice shall promptly notify the
other party.

 

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D. Unless the parties otherwise agree, within 30 days after an indemnifying
party receives notice of a third-party claim in accordance with Section 16.1.C,
the indemnifying party will defend the third-party claim (and, unless the
indemnifying party has specified any reservations or exceptions, seek to settle
or compromise), at its expense and with its counsel. The indemnitee may, at its
expense, employ separate counsel and participate in (but not control) the
defense, compromise, or settlement of the third-party claim. However, the
indemnifying party will pay the fees and expenses of the indemnitee’s counsel
(a) for any period during which the indemnifying party has not assumed the
defense of the third-party claim (other than for any period in which the
indemnitee did not notify the indemnitee of the third-party claim as required by
Section 16.1.C.) or (b) if the engagement of counsel is as a result of a
conflict of interest, as the indemnitee reasonably determines in good faith.
Notwithstanding the above, if Licensor determines that the matter at issue may
have a material adverse effect on Licensor, the Licensed Marks, or Licensor’s
Lodging Business, then Licensor, through counsel of its choice, may control the
defense or response to any such action, and such undertaking by Licensor will
not, in any manner or form, diminish Licensor’s obligations to Licensee
hereunder. If the matter at issue principally relates to Licensee’s interest in
the Licensed Business, Licensor shall allow Licensee through counsel of its
choice to control the defense or response to any such action.

E. Under no circumstances will any indemnitee be required or obligated to seek
recovery from third parties or otherwise mitigate its losses in order to
maintain a claim for indemnification under this Agreement, and the failure to
pursue such recovery or mitigate a loss will in no way reduce the amounts
recoverable from the indemnifying party by the indemnitee.

F. The remedies provided in this Section 16.1 are cumulative and do not preclude
assertion by any indemnitee of any other rights or the seeking of any and all
other remedies against any indemnifying party.

G.     (1) Notwithstanding anything to the contrary in Sections 16.1.A or B, if
the third party claim at issue results directly and solely from a breach by the
party seeking indemnification of such party’s obligations under this Agreement,
the Electronic Systems License Agreement, or the Design Review Addendum, then
the party seeking indemnification will not be entitled to indemnification, to
the extent such claim or some or all of claimants’ damages results directly and
solely from such breach. For the avoidance of doubt, (a) a failure by Licensor
to (i) inspect or note in any inspection a deficiency or non-compliance with
Brand Standards by Licensee or its Affiliate or (ii) enforce compliance with any
Brand Standard by Licensee or its Affiliate or (b) any approval by Licensor of
conduct or actions of Licensee or its Affiliate, shall not be deemed a breach
that would limit or otherwise affect Licensee’s obligation to indemnify
Licensor.

(2) Except as may expressly be set forth in this Agreement, none of Licensor or
its Affiliates or Licensee or its Affiliates will in any event have any
liability to the other (including the obligation to indemnify the other party
under this Section 16.1), or to any other Licensor indemnitee or Licensee
indemnitee, as applicable, under this Agreement (a) for claims where either
party or their Affiliates or their respective officers, directors, employees or
agents are found to be solely responsible by a final non-appealable judicial
decision for such damages or losses based upon such person’s or entity’s willful
misconduct or gross negligence or (b) for any indirect, punitive or
consequential damages (other than to the extent the indemnitee is liable for
such damages under a court order issued in connection with a claim).

H. The parties’ obligations under this Section 16.1 will survive the termination
or expiration of this Agreement.

 

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16.2 Insurance Requirements of Licensee.

A. During the Term, Licensee, at its (or the Property Owners’ Associations’)
expense, will procure and maintain (or cause to be procured and maintained) such
insurance as may be required by the terms of any condominium, association, and
trust agreements on each Project or Applicable Law, and no less than the
following:

(1) Property Insurance

(a) Property insurance coverage on each Project as required under the applicable
Project condominium, association, and trust agreements, except to the extent
procured by Licensor under any Licensor Management Agreement. In the event the
applicable Project does not have condominium, association, or trust agreements
or insurance requirements set forth in such agreements, the Project building(s)
and contents shall be insured against loss or damage by fire, lightning, and all
other risks covered by the usual all-risk policy form, all in an amount not less
than the full replacement cost (as such term is customarily used in the
insurance industry) and earthquake, windstorm, flood and terrorism in reasonable
amounts.

(2) Workers’ compensation insurance in statutory amounts on all employees of
each Project and employer’s liability insurance in amounts not less than
$1,000,000 per accident/disease.

(3) Comprehensive or commercial general liability insurance for any losses
arising from each Project or its operation, with a limit of not less than
$1,000,000 per each occurrence for bodily injury and property damage. If the
general liability coverages contain a general aggregate limit, such limit will
be not less than $2,000,000, and it will apply in total to the applicable
Project only. Such insurance will be on an occurrence policy form and will
include premises and operations, independent contractors, blanket contractual,
products and completed operations, acts of terrorism, world wide defense and
indemnity, advertising injury, employees as additional insureds, personal
injury, incidental medical malpractice, severability of interests, innkeeper’s
and safe deposit box liability, and explosion, collapse and underground coverage
during any construction, renovation, upgrading and/or remodeling.

(4) Liquor Liability (applicable when alcoholic beverages are distributed, sold,
served, or furnished at the Project ) for combined single limits of bodily
injury and property damage of not less than $1,000,000 each occurrence or each
“common cause” and an aggregate of $2,000,000.

(5) Business Auto Liability including owned, non-owned and hired vehicles for
combined single limits of bodily injury and property damage of not less than
$1,000,000 each occurrence.

(6) Umbrella or Excess Liability on a following form in amounts not less than
$200,000,000 in excess of the liability insurance required under subsections
A(2) through (5) immediately above.

(7) Fidelity insurance coverage or a fidelity bond in an amount not less than
$1,000,000 per occurrence.

(8) Employment practices liability insurance in an amount not less than
$1,000,000 per occurrence.

 

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(9) Such other insurance as may be customarily carried by other first class
operators on projects similar to the Projects or as required by Licensor on
similar projects.

B. The following general insurance requirements will be satisfied by Licensee:

(1) All insurance under subsection A(3) through (5) of this Section and
subsection A (6) (if such Umbrella or Excess does not follow form with the
additional insured status in underlying policies in subsection A(3) through
(5) of this Section) will by endorsement specifically name as additional
insureds Licensor, any Affiliate of Licensor designated by Licensor, and their
employees. All insurance required hereunder will be specifically endorsed or
provide that the coverages will be primary and that any insurance carried by any
additional insured will be excess and non-contributory, except as provided under
a Licensor Management Agreement for a particular Project.

(2) Any deductibles or self-insured retentions allocated to any individual
Project by Licensee (excluding deductibles for high hazard risks in high hazard
geological zones, such as flood, earthquake, terrorism and windstorm, which will
be as required by the insurance carrier) will not exceed $50,000, or such higher
amount as may be approved in advance in writing by Licensor.

(3) All insurance purchased in compliance herewith will be placed with insurance
companies of recognized responsibility and reasonably acceptable to Licensor
which acceptance shall not be unreasonably withheld and approved to do business
in the state or country where each Project is located.

(4) All insurance required hereunder will provide if commercially available (if
not available, Licensee shall provide such notice) whereby the policies will not
be canceled, non-renewed, or limits reduced without at least thirty (30) days
prior notice to Licensor. Licensee will deliver to Licensor a certificate of
insurance (or certified copy of such insurance policy if requested by Licensor
in the event of a loss) in English evidencing the coverages required herein.
Renewal certificates of insurance (or certified copies of such insurance policy
if requested by Licensor in a particular jurisdiction) will be delivered to
Licensor not less than ten (10) days prior to their respective inception dates.

(5) All insurance required hereunder may be written under policies of blanket
insurance that cover other properties of Licensee and its Affiliates so long as
such blanket insurance fulfills the requirements herein.

(6) Licensee’s obligation to maintain the insurance hereunder will not relieve
Licensee of its indemnification obligations under Section 16.1.

(7) Should Licensee for any reason fail to procure or maintain the insurance
required by this Agreement or as revised in writing by Licensor, Licensor will
have the right and authority (without however any obligation to do so) to
immediately procure such insurance and to charge the cost thereof to Licensee,
which charges, together with a reasonable fee for Licensor’s expenses in so
acting, will be payable by Licensee immediately upon notice.

16.3 Insurance Required During Construction.

Licensee shall maintain insurance pursuant to the requirements in the Design
Review Addendum at Exhibit G.

 

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16.4 Obligation to Maintain Insurance.

Licensee’s obligation to maintain the insurance hereunder will not relieve
Licensee of its obligations under Sections 16.1. As required by Licensor on
similar projects, Licensor reserves the right to review the insurance coverages
and limits from time to time and require increases or amendments to the
insurance outlined in 16.2 and 16.3 based on competitive terms and conditions in
the jurisdiction where the applicable Project is located. Such requirements
shall be mutually agreed by Licensor and Licensee, but in no event shall the
changes be less than those required by Licensor on similar projects. In the
event Licensor or its Affiliates enter into a Licensor Management Agreement with
Licensee, Licensor or its Affiliates agree to maintain the insurance required to
be procured by Licensor or its Affiliates pursuant to the terms and conditions
of such Licensor Management Agreement, but in no event will the coverage, terms
and amounts be less than those terms and conditions set forth in the Licensor
Management Agreement.

16.5 Contribution.

A. If the indemnification provided for under this Agreement is unavailable, or
insufficient to hold harmless an indemnitee in respect of any indemnified
liability, the indemnifying party will contribute to the amount paid or payable
by the indemnitee as a result of such liabilities. The amount contributed by the
indemnifying party will be in such proportion as reflects the relative fault of
the indemnifying party and the indemnitee in connection with the actions or
omissions resulting in the liability and any other relevant equitable
considerations.

B. The parties agree that any method of allocation of contribution under this
Section 16.5 will take into account the equitable considerations referred to in
Section 16.5.A. The amount paid or payable by an indemnitee to which the
indemnifying party will contribute will be deemed to include any legal or other
expenses reasonably incurred by the indemnitee to investigate any claim or
defend any action. No Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act of 1933) will be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.

17. TRANSFERABILITY OF INTERESTS

17.1 Transfers by Licensee.

Except as otherwise expressly provided herein, Licensee may not assign this
Agreement or assign or sublicense any of its rights hereunder, or delegate any
of its duties under this Agreement, or sell, transfer or dispose of all or
substantially all of its assets relating to the Licensed Business, or merge or
consolidate with any other entity in which Licensee is not the surviving entity,
or engage in a transaction or series of related transactions that result in a
Change in Control without Licensor’s prior written consent which it may grant or
withhold in its sole discretion. Any such Transfer will be a material default
under this Agreement, and Licensor shall be entitled to enjoin or obtain a court
order prohibiting such Transfer without posting a bond. Licensee shall not make
any Transfer to a Specially Designated National or Blocked Person; provided,
however, that so long as the Ownership Interests in Licensee are publicly-traded
on a U.S., nationally-recognized securities exchange, the purchase of
publicly-traded Ownership Interests in Licensee by a Specially Designated
National or Blocked Person shall not be deemed to be a violation of this
sentence. If a Specially Designated National or Blocked Person acquires a
Controlling Interest in Licensee, Licensor shall have the right to terminate
this Agreement immediately upon notice to Licensee.

 

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17.2 Transfers by Licensor.

A. Except as otherwise expressly provided herein, Licensor may not assign this
Agreement or assign any of its rights hereunder, or delegate any of its duties
under this Agreement; provided, however, that Licensor may Transfer this
Agreement to any Person without prior notice to, or consent of, Licensee,
provided such Person (a) assumes Licensor’s obligations to Licensee under this
Agreement and (b) (i) is an Affiliate of Licensor that has the legal, financial,
and operational ability to perform the obligations of Licensor under this
Agreement or (ii) acquires all or substantially all of Licensor’s rights in
respect of (a) the System, (b) MHR Hotels, and (c) the Branded Elements. This
Agreement will be binding on and inure to the benefit of Licensor and the
successors and assigns of Licensor. If, in connection with such acquisition of
the rights in respect of the System and the Transfer of this Agreement Licensor
retains ownership or control of any of the underlying assets of the System
necessary to perform Licensor’s obligations under this Agreement, Licensor will
continue to provide to Licensee, or to the Person assuming this Agreement,
access to such underlying assets as is necessary to comply with the terms of
this Agreement. If, in connection with such acquisition of the rights in respect
of the System and the Transfer of this Agreement, the components of the Branded
Elements that are used in MHR Hotels are replaced with different or modified
components by the Person assuming this Agreement, then, as a condition of such
acquisition, such Person will be required to provide Licensee with access to
such different or modified components that are comparable to the corresponding
components of the Branded Elements. Licensor shall not make any Transfer to a
Specially Designated National or Blocked Person; provided, however, that so long
as the Ownership Interests in Licensor are publicly-traded on a U.S.,
nationally-recognized securities exchange, the purchase of publicly-traded
Ownership Interests in Licensor by a Specially Designated National or Blocked
Person shall not be deemed to be a violation of this sentence. If a Specially
Designated National or Blocked Person acquires a Controlling Interest in
Licensor, Licensee shall have the right to terminate this Agreement immediately
upon notice to Licensor.

B. Licensee acknowledges that Licensor and its Affiliates operate as a
multi-national business enterprise. Without limiting Section 17.2.A., Licensor
has the right to Transfer all or part of its rights under this Agreement to any
of Licensor’s Affiliates and, in connection therewith, require Licensee to pay
amounts due under this Agreement to such Affiliates. However, if, as a result of
any such Transfer, Licensee will be liable for greater Tax liability for
payments due hereunder following such Transfer, any resulting increase in Tax
liability shall be borne by Licensor and not by Licensee.

17.3 Proposed Transfers to Lodging Competitors.

Without limiting Section 17.1, no Transfer of any Ownership Interest in
Licensee, any Projects, the Licensed Business or any Transaction Agreement will
be made to a Lodging Competitor that results in a Lodging Competitor obtaining
Control of Licensee, the Projects, or the Licensed Business. Any such Transfer
will be a material default under this Agreement, and Licensor shall be entitled
to enjoin or obtain a court order prohibiting such Transfer without posting a
bond.

17.4 Comfort Letter and Security Interests in This Agreement.

In connection with any financing benefiting the Licensed Business, Licensee may
not assign, mortgage, or grant a security interest in, or pledge as collateral,
this Agreement, except as permitted hereunder. At Licensee’s request, Licensor
hereby agrees to provide to Licensee’s lender a comfort letter that is
substantially similar to the form of comfort letter that has been agreed to by
the parties as of the Effective Date, so long as such lender is not an Affiliate
of Licensee and Licensee is not in breach of any of its obligations under this
Agreement. However, Licensor has no obligation to provide a “comfort letter” in
connection with, or consent to, a transaction that would be prohibited by this
Section

 

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17. If a lender forecloses on, or otherwise exercises its rights against the
assets of the Licensed Business, the revenues of the Licensed Business, or such
Ownership Interests in Licensee, or Licensee violates this Section 17., Licensor
will have the rights under Section 18.1. Licensor has no obligation to license a
lender or any Person acting on behalf of a lender, including a receiver or
servicer of a loan, to use the Licensed Marks or the System, unless that
obligation arises from a valid and binding written agreement between Licensor
and a lender.

18.   BREACH, DEFAULT, AND REMEDIES

18.1 Licensee Project-, Sales Facility-, and Member Service Center-Level
Breaches, Defaults, and Remedies.

A. The Project-, Sales Facility-, and Member Service Center-level breaches
listed in (i) through (viii) below are deemed to be material breaches for which
Licensee may be placed in default with respect to any Project, Sales Facility,
or Member Service Center, as applicable, hereunder if (x) Licensor gives
Licensee notice of the breach that provides the applicable cure period for the
applicable breach (or such greater number of days given by Licensor in its sole
discretion or required by Applicable Law) and (y) Licensee fails to cure the
breach in the time and manner specified in the notice of breach or as
specifically provided in this Section 18.1.A. If Licensee fails to cure the
breach and is placed in default, then Licensor may exercise the applicable
remedy for the specific default as set forth below:

(i) If execution is levied against any Project or Licensee in connection with
such Project in connection with a final, non-appealable judgment for the payment
of an amount in excess of $10,000,000 (as adjusted annually after the Effective
Date by the GDP Deflator), or a suit to foreclose any lien, mortgage, or
security interest (except for foreclosures with respect to consumer financing on
Member interests in Licensed Destination Club Units or Licensed Residential
Units and except for mechanics liens that are placed on such Project in the
ordinary course of business) on such Project or any property necessary for the
operation of such Project in accordance with Brand Standards, is initiated and
not vacated within ninety (90) days, then Licensor may issue of notice of breach
to Licensee with respect to such Project. Licensee shall have thirty (30) days
following notice of breach to post a bond or provide other financial assurances
reasonably acceptable to Licensor that such Project can continue to operate as
part of the Licensed Business in accordance with this Agreement. If Licensee
fails to obtain such bond or provide adequate financial assurances, then
Licensor may issue a notice of default and terminate Licensee’s rights to
operate such Project as part of the Licensed Business immediately upon notice to
Licensee and/or exercise any of the other remedies under Section 18.1.B;

(ii) Except where the failure to meet the applicable thresholds for performance
under the Quality Assurance Audit System at such Project is as a result of
Licensor’s or its Affiliates’ actions or inactions with respect to the provision
of management services or shared services at such Project as contemplated under
Section 11.2.F, if Licensee fails to achieve the thresholds of performance
established by the Quality Assurance Audit System for any Project and such
failure has not been cured within the applicable cure period under the Quality
Assurance Audit System, then Licensor may issue a notice of breach to Licensee
with respect to such Project. Upon such notice of breach, the parties will agree
to a Remediation Arrangement with respect to such failure under the Quality
Assurance Audit System. If Licensee fails to enter into a Remediation
Arrangement within ninety (90) days following the date of the notice of breach
or fails to improve the performance of such Project in accordance with the
Remediation Arrangement, then Licensor may issue a notice of default with
respect to such Project. Licensee shall have thirty (30) days following the
notice of default to enter into an agreement with Licensor in a form reasonably
agreed to by the parties based on Licensor’s then-current MHR Hotel consensual
termination agreement that provides for the orderly removal of such Project from
the System (“System Removal Agreement”) or, if such Project is controlled by a
Non-Controlled Property

 

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Owners’ Association whose management agreement will expire in twenty-four
(24) months or less as of the date of the notice of default, an agreement in a
form reasonably agreed to by the parties that Licensee or its Affiliate, as
applicable, will not renew such Non-Controlled Property Owners’ Association
management agreement (“Non-Renewal Agreement”). If Licensee fails to execute the
System Removal Agreement or Non-Renewal Agreement, as applicable, within such
thirty (30) day period for any reason (including if Licensor and Licensee cannot
agree on the terms of the applicable agreement), then Licensor may terminate
Licensee’s rights to operate such Project as part of the Licensed Business
immediately upon notice to Licensee and/or exercise any of the other remedies
under Section 18.1.B;

(iii) Except where the failure to meet the applicable Minimum Customer
Satisfaction Score under the Customer Satisfaction System at such Project is as
a result of Licensor’s or its Affiliates’ actions or inactions with respect to
the provision of management services or shared services at such Project as
contemplated under Section 11.2.F, if the overall customer satisfaction score
under the Customer Satisfaction System for any Project is less than the Minimum
Customer Satisfaction Score target for the CSS Measurement Period as set forth
in the Customer Satisfaction System and such failure has not been cured within
the applicable cure period under the Customer Satisfaction System, then Licensor
may issue a notice of breach to Licensee with respect to such Project. Upon such
notice of breach, the parties will agree to a Remediation Arrangement with
respect to such failure under the Customer Satisfaction System. If Licensee
fails to enter into a Remediation Arrangement within ninety (90) days following
the date of the notice of breach or fails to meet the cure requirements set
forth in the Remediation Arrangement, then Licensor may issue a notice of
default with respect to such Project. Licensee shall have thirty (30) days
following the notice of default to enter into a System Removal Agreement with
respect to such Project or, if such Project is controlled by a Non-Controlled
Property Owners’ Association whose management agreement will expire in
twenty-four (24) months or less as of the date of the notice of default, a
Non-Renewal Agreement with respect to such Project. If Licensee fails to execute
the System Removal Agreement or Non-Renewal Agreement, as applicable, within
such thirty (30) day period for any reason (including if Licensor and Licensee
cannot agree on the terms of the applicable agreement), then Licensor may
terminate Licensee’s rights to operate such Project as part of the Licensed
Business immediately upon notice to Licensee and/or exercise any of the other
remedies under Section 18.1.B;

(iv)     (a) If any Project that is controlled by a Non-Controlled Property
Owners’ Association fails to develop, operate, maintain, or renovate such
Project in compliance with this Agreement, the System, and the Brand Standards
and Licensee fails to request that such Non-Controlled Property Owners’
Association cure the failure or fails to Deflag such Project in accordance with
Section 8.5, then Licensor may issue a notice of breach to Licensee with respect
to such Project. Licensee shall have thirty (30) days following notice of breach
to comply with such requirements of Section 8.5. If Licensee fails to comply
with such requirements of Section 8.5, then Licensor may issue a notice of
default and terminate Licensee’s rights to operate such Project as part of the
Licensed Business immediately upon notice to Licensee and/or exercise any of the
other remedies under Section 18.1.B;

(b) If Licensee requests that any Non-Controlled Property Owners’ Association
cure any failure to develop, operate, maintain, or renovate any Project in
accordance with the Brand Standards, the System, and the terms of this Agreement
in accordance with Section 8.5; the Non-Controlled Property Owners’ Association
does not cure such failure; and despite Licensee’s commercially reasonable
efforts, Licensee is unable to promptly Deflag such Project in accordance with
Section 8.5, then Licensor and Licensee shall have thirty (30) days following
notice from Licensor to enter into a System Removal Agreement or a Non-Renewal
Agreement, as applicable. If Licensee fails to execute the System Removal
Agreement or Non-Renewal Agreement, as applicable, within such thirty (30) day
period for any reason (including if Licensor and Licensee cannot agree on the
terms of the applicable agreement), then Licensor may issue a notice of default
and terminate Licensee’s rights to operate such Project as part of the Licensed
Business immediately upon notice to Licensee and/or exercise any of the other
remedies under Section 18.1.B;

 

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(v) With respect to any Project that is controlled by Licensee or its Affiliate
or any Controlled Property Owners’ Association, if Licensee, its Affiliate, or
such Controlled Property Owners’ Association fails to develop, operate,
maintain, or renovate such Project in compliance with this Agreement, the
System, and the Brand Standards (whether by failure to provide adequate funds to
comply therewith or otherwise), then Licensor may issue a notice of breach to
Licensee with respect to such Project. Upon such notice of breach, the parties
will agree to a Remediation Arrangement with respect to such failure. If
Licensee fails to enter into a Remediation Arrangement within ninety (90) days
following the date of the notice of breach or fails to cure the breach pursuant
to the Remediation Arrangement, then Licensor may issue a notice of default with
respect to such Project. Licensee shall have thirty (30) days following the
notice of default to enter into a System Removal Agreement. If Licensee fails to
execute the System Removal Agreement within such thirty (30) day period for any
reason (including if Licensor and Licensee cannot agree on the terms of the
System Removal Agreement), then Licensor may terminate Licensee’s rights to
operate such Project as part of the Licensed Business immediately upon notice to
Licensee and/or exercise any of the other remedies under Section 18.1.B;

(vi) If Licensee fails to operate any Sales Facility or Member Service Center in
compliance with this Agreement, the System, or the Brand Standards, then
Licensor may issue a notice of breach with respect to such failure. Upon such
notice of breach, the parties will agree to a Remediation Arrangement with
respect to such failure. If Licensee fails to enter into a Remediation
Arrangement within ninety (90) days following the date of the notice of breach
or fails to cure the breach pursuant to the Remediation Arrangement, Licensor
may issue a notice of default with respect to such Sales Facility or Member
Service Center. Licensee shall have thirty (30) days following notice of default
to enter into an agreement with respect to (i) the change of management
leadership of such Sales Facility (if such default relates to the operational
aspects of such Sales Facility) or Member Service Center in a form agreed to by
the parties, or (ii) the closure of such Sales Facility (if such default relates
to the physical aspects of such Sales Facility) until such default is cured. If
Licensee fails to execute such agreement within such thirty (30) day period for
any reason (including if Licensor and Licensee cannot agree on the terms of such
agreement), then Licensor may require Licensee to close such Sales Facility or
Member Service Center and cease to operate such Sales Facility or Member Service
Center as part of the Licensed Business immediately upon notice to Licensee
and/or exercise any of the other remedies under Section 18.1.B;

(vii) Except as permitted under Sections 8.5 and 9.4, if any Project ceases to
operate as a Project under the Licensed Marks or the System, then Licensor may
issue a notice of breach with respect to such Project. Licensee shall have
thirty (30) days following notice of breach to enter into a System Removal
Agreement with respect to such Project. If Licensee fails to execute the System
Removal Agreement within such thirty (30) day period for any reason (including
if Licensor and Licensee cannot agree on the terms of the System Removal
Agreement), then Licensor may issue a notice of default and terminate Licensee’s
rights to operate such Project as part of the Licensed Business immediately upon
notice to Licensee and/or exercise any of the other remedies under
Section 18.1.B;

(viii)     (a) If a threat or danger to public health or safety occurs at any
Project, that in the determination of Licensor, could be expected to result in
substantial liability or an adverse effect on such Project, the System, the
Proprietary Marks, or the goodwill associated therewith, then Licensee will
notify Licensor of the threat or danger and Licensee will provide Licensor with
a plan to address such threat or danger in a manner reasonably acceptable to
Licensor, which plan may include proposed arrangements to accommodate guests and
Members at alternative lodging facilities and may require the treatment of
Members differently than transient guests. Depending on the severity of such

 

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threat or danger, Licensor may (i) suspend such Project from the Reservation
System, except for booking of Member usage rights, in accordance with
Section 10.2 until the breach is cured; or (ii) remove such Project from the
System pending resolution of the threat or danger. However, if such Project is
removed from the System under (ii) above, Licensee may request that Licensor
reinstate the rights to operate such Project, and Licensor will thereafter
reinstate such rights, if, within six (6) months after removal of such Project
from the System, the threat or danger to public health or safety is eliminated
and Licensor has determined that such reinstatement would not cause substantial
liability or loss of goodwill;

(b) In the event any such threat or danger to public health or safety occurs and
Licensee fails to notify Licensor thereof or provide the plan to address such
threat or danger acceptable to Licensor in accordance with (a) above, then
Licensor may issue a notice of default and terminate Licensee’s rights to
operate such Project as part of the Licensed Business immediately upon notice to
Licensee and/or exercise any of the other remedies under Section 18.1.B;
provided, however, that the reinstatement rights described in (a) above shall
apply upon such termination;

B. Upon any default under Section 18.1.A(i) through (viii) with respect to any
Project, Sales Facility, or Member Service Center, Licensor shall have the right
to pursue any one or more of the following remedies in addition to the remedies
with respect to such Project, Sales Facility, or Member Service Center provided
for in Sections 18.1.A(i) through (viii):

(1) To institute any and all proceedings permitted by Applicable Law or in
equity with respect to such event of default, including, without limitation,
actions for injunctive and/or declaratory relief (including specific
performance) and/or damages. Licensee acknowledges and agrees that, in the event
that Licensor terminates Licensee’s rights to operate such Project, Sales
Facility, or Member Service Center as part of the Licensed Business in
accordance herewith, Licensor will have the right to seek and obtain damages as
to such Project, Sales Facility, or Member Service Center with respect to which
the rights to operate hereunder have been terminated;

(2) To suspend Licensee’s right to use the Reservation System, except for
booking of Member usage rights, in accordance with Section 10.2 at such Project
until the breach is cured;

(3) To suspend Licensee’s right to access to and use of information included in
the Brand Loyalty Programs for sales and marketing efforts with respect such
Project or Sales Facility or utilize any other services to be provided by
Licensor or its Affiliates hereunder with respect to such Project or Sales
Facility until the breach is cured; and

(4) To suspend or limit Licensee’s rights to develop new phases of such Project
as determined by Licensor its sole discretion until the breach is cured.

18.2 Licensee Agreement-Level Defaults.

A. The Agreement-level breaches listed in (i) through (xii) below are deemed to
be material breaches for which Licensee may be placed in default under this
Agreement if (x) Licensor gives Licensee notice of the breach that provides the
applicable cure period for the applicable breach (or such greater number of days
given by Licensor in its sole discretion or required by Applicable Law) and
(y) Licensee fails to cure the breach in the time and manner specified in the
notice of breach or as specifically provided in this Section 18.2.A. If Licensee
fails to cure the breach and is placed in default, then Licensor may exercise
the applicable remedy for the specific default as set forth below:

 

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(i) If Licensee or its Affiliates fail to pay any amounts due under this
Agreement to Licensor or any of its Affiliates when the same becomes due and
payable, then Licensor may issue a notice of breach to Licensee with respect to
such failure. Licensee shall have ten (10) business days following notice of
breach to cure the failure to pay. If Licensee in good faith disputes the amount
due and payable and the parties are unable to resolve the discrepancy, then
Licensee shall pay to Licensor the undisputed amount, if any, and Licensee shall
pay the disputed amount into an escrow account. The disagreement regarding the
disputed amount shall be submitted to an arbitration panel for resolution
pursuant to Section 22.4. Notwithstanding anything to the contrary in
Section 22.4, the non-prevailing party shall pay the prevailing party’s costs of
the arbitration, including attorneys’ fees. If the arbitration panel determines
that any or all of the disputed amount is owed to Licensor or its Affiliates,
then Licensee shall pay such amount and may use the amount in the escrow to pay
such amount. If the arbitration panel determines that none of the disputed
amount is owed to Licensor or its Affiliates, then Licensee shall not be
required to pay the disputed amount and the escrowed funds shall be released to
Licensee. If Licensee fails to cure the payment breach, Licensor may issue a
notice of default to Licensee and exercise any of the remedies under
Section 18.2.B., and if the aggregate amount outstanding that Licensee has
failed to pay at any time is in excess of five million dollars ($5,000,000) (as
adjusted annually after the Effective Date by the GDP Deflator), Licensor may
terminate this Agreement and all rights granted to Licensee hereunder
immediately upon notice to Licensee;

(ii) If Licensee or its Affiliates fail to pay any amount in excess of two
million five hundred thousand dollars ($2,500,000) (as adjusted annually after
the Effective Date by the GDP Deflator) due to Licensor or any of its Affiliates
when the same becomes due and payable, in each case, after having been issued a
notice of breach by Licensor and having failed to cure the failure to pay within
ten (10) business days following such notice, three (3) or more times within any
thirty-six (36) month period, Licensor may issue a notice of default and
terminate this Agreement immediately upon notice to Licensee and/or exercise any
of the other remedies under Section 18.2.B.;

(iii) (a) If Licensee or its Affiliates fails to pay when due a total amount in
excess of five million dollars ($5,000,000) (as adjusted annually after the
Effective Date by the GDP Deflator) under the Separation and Distribution
Agreement, under the Tax Sharing and Indemnity Agreement, under the Employee
Benefits Allocation Agreement, under the Ritz-Carlton License Agreement, or
under all such agreements taken together, then Licensor may issue a notice of
breach to Licensee with respect to such failure. Licensee shall have ten
(10) business days following notice of breach to cure the failure to pay. If
Licensee in good faith disputes the amount due and payable and the parties are
unable to resolve the discrepancy, then Licensee shall pay to Licensor the
undisputed amount, if any, and Licensee shall pay the disputed amount into an
escrow account. The disagreement regarding the disputed amount shall be
submitted to an arbitration panel for resolution pursuant to Section 22.4.
Notwithstanding anything to the contrary in Section 22.4, the non-prevailing
party shall pay the prevailing party’s costs of the arbitration, including
attorneys’ fees. If the arbitration panel determines that any or all of the
disputed amount is owed to Licensor or its Affiliates, then Licensee shall pay
such amount and may use the amount in the escrow to pay such amount. If the
arbitration panel determines that none of the disputed amount is owed to
Licensor or its Affiliates, then Licensee shall not be required to pay the
disputed amount and the escrowed funds shall be released to Licensee. If
Licensee fails to cure the payment breach, then Licensor may issue a notice of
default to Licensee and terminate this Agreement and all rights granted to
Licensee hereunder immediately upon notice to Licensee and/or exercise any of
the other remedies under Section 18.2.B;

(b) If Licensor terminates the Rewards Agreement or the Ritz-Carlton License
Agreement in accordance with the terms thereof based on Licensee’s default
thereunder, Licensor may issue a notice of default to Licensee and terminate
this Agreement and all rights granted to Licensee hereunder immediately upon
notice to Licensee and/or exercise any of the other remedies under
Section 18.2.B;

 

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(iv) If Licensee or any principal, director, officer, shareholder, or agent of
Licensee, contrary to the provisions of this Agreement, discloses, causes, or
fails to exercise commercially reasonable efforts to prevent the disclosure of,
or otherwise uses in an unauthorized manner, any Licensor Confidential
Information in violation of this Agreement, including Sections 9.1, 9.3, 9.4,
13.2, 13.3, or 14.1.A, then:

(a) Licensor may issue a notice of breach to Licensee. In connection with such
breach, Licensor may, depending on various factors, including, the severity of
the breach, whether the breach was intentional or unintentional, and the damages
or potential damages resulting from such breach, exercise any of the remedies
provided for in Section 18.2.B.

(b) If an arbitration panel under Section 22.4 determines that (i) a material
breach has occurred, (ii) (x) Licensee has failed to exercise commercially
reasonable efforts to prevent such breach or (y) such breach was intentional or
resulted from Licensee’s gross negligence, and (iii) such breach has or may
result in the goodwill associated with the Licensed Marks and System being so
materially damaged as a result of the breach that interim injunctive relief is
an inadequate remedy and that termination of the entire relationship
contemplated by this Agreement is the only adequate remedy, then upon the
rendering of arbitration panel’s determination Licensor may issue a notice of
default to Licensee and terminate this Agreement and all rights granted to
Licensee hereunder and/or exercise any of the other remedies under
Section 18.2.B.

(c) If Licensee violates Sections 9.1.D. or 9.3.B(i) with respect to the use of
Licensor Confidential Information, then Licensor may issue a notice of default
to Licensee and exercise any of the remedies under Section 18.2.B.

(v) If at any time twenty-five percent (25%) or more of the Projects are then
failing to achieve the minimum thresholds of performance established by the
Quality Assurance Audit System and such failure has not been cured within the
applicable cure period under the Quality Assurance Audit System for such breach,
then Licensor may issue a notice of breach to Licensee. If such breach has not
been cured within one hundred eighty (180) days following such notice of breach,
then Licensor may issue a notice of default to Licensee and terminate this
Agreement and all rights granted to Licensee hereunder immediately upon notice
to Licensee and/or exercise any of the other remedies under Section 18.2.B;

(vi) If at any time the average overall guest satisfaction score under the
Customer Satisfaction System for all Projects is less than the Minimum Customer
Satisfaction Score target for the CSS Measurement Period as set forth in the
Customer Satisfaction System and such failure has not been cured within the
applicable cure period under the Customer Satisfaction System for such breach,
then Licensor may issue a notice of breach to Licensee. If such breach has not
been cured within one hundred eighty (180) days following such notice of breach,
then Licensor may issue a notice of default to Licensee and terminate this
Agreement and all rights granted to Licensee hereunder immediately upon notice
to Licensee and/or exercise any of the other remedies under Section 18.2.B;

(vii) If at any time the weighted average overall composite customer
satisfaction score for on-Project guest experience, Member service, and sales
and marketing under the Customer Satisfaction System for all Projects is less
than the Minimum Composite Customer Satisfaction Score target for the CSS
Measurement Period as set forth in the Customer Satisfaction System and such
failure has not been cured within the applicable cure period under the Customer
Satisfaction System for

 

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such breach, then Licensor may issue a notice of breach to Licensee. If such
breach has not been cured within one hundred eighty (180) days following such
notice of breach, then Licensor may issue a notice of default to Licensee and
terminate this Agreement and all rights granted to Licensee hereunder
immediately upon notice to Licensee and/or exercise any of the other remedies
under Section 18.2.B;

(viii) If Licensee or its Affiliates fail to comply with the Operational Brand
Standards and such failure has, or is reasonably expected to have, a material
adverse effect on Licensor or its Affiliates, then Licensor may issue a notice
of breach with respect to such failure. Upon such notice of breach, the parties
will agree to a Remediation Arrangement with respect to such failure. If
Licensee fails to enter into a Remediation Arrangement within ninety (90) days
following the date of the notice of breach or fails to cure the breach pursuant
to the Remediation Arrangement, Licensor may issue a notice of default and
terminate this Agreement and all rights granted to Licensee hereunder
immediately upon notice to Licensee and/or exercise any of the other remedies
under Section 18.2.B;

(ix) (a) If Licensee or any of its Affiliates is convicted of a felony or other
similar crime or offense or engages in a pattern or practice of acts or conduct
that, as a result of the adverse publicity that has occurred in connection with
such offense, acts, or conduct, is likely to have or has had a material adverse
effect on the System, the Proprietary Marks, the goodwill associated therewith
or Licensor’s interests therein, then Licensor may issue a notice of breach and
exercise any of the remedies under Section 18.2.B;

(b) If Licensee or any of its Affiliates is convicted of a felony or other
similar crime or offense or engages in a pattern or practice of acts or conduct
that, as a result of the adverse publicity that has occurred in connection with
such offense, acts, or conduct, has or may result in the goodwill associated
with the Proprietary Marks and System being so materially damaged that
termination of the entire relationship contemplated by this Agreement is the
only adequate remedy, then Licensor may issue a notice of breach. Upon such
notice of breach, the parties will agree to a Remediation Arrangement under
which Licensee will undertake to remedy the breach to Licensor’s satisfaction.
If Licensee fails to enter into a Remediation Arrangement within ninety
(90) days following the date of the notice of breach or fails to cure the breach
pursuant to the Remediation Arrangement, Licensor may issue a notice of default
and terminate this Agreement and all rights granted to Licensee hereunder
immediately upon notice to Licensee and/or exercise any of the other remedies
under Section 18.2.B;

(x) If a Transfer by Licensee or its Affiliates occurs in violation of
Section 17, Licensor may issue a notice of breach. If Licensee fails to notify
Licensor within fourteen (14) days following the notice of breach that Licensee
intends to unwind such Transfer or fails to actually unwind such Transfer in a
manner satisfactory to Licensor within ninety (90) days following the notice of
breach, then Licensor may issue a notice of default and terminate this Agreement
and all rights granted to Licensee hereunder immediately upon notice to Licensee
and/or exercise any of the other remedies under Section 18.2.B; provided,
however, that nothing herein shall restrict or limit Licensor’s ability to seek
injunctive relief to stop such Transfer at any time;

(xi) If Licensee dissolves or liquidates except in connection with a Transfer
permitted by Section 17., Licensor may issue a notice of default and terminate
this Agreement and all rights granted to Licensee hereunder immediately upon
notice to Licensee and/or exercise any of the other remedies under
Section 18.2.B; or

(xii) To the extent permitted by Applicable Law, if Licensee becomes insolvent,
generally does not pay its debts as they become due, or files a voluntary
petition (or consents to an involuntary petition or an involuntary petition is
filed and is not dismissed within sixty (60) days)

 

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under any bankruptcy, insolvency, or similar law, and such bankruptcy or
insolvency has a material adverse effect on Licensee’s operation of the Licensed
Business or Licensor or Licensor’s Affiliates, Licensor may issue a notice of
default and terminate this Agreement and all rights granted to Licensee
hereunder immediately upon notice to Licensee and/or exercise any of the other
remedies under Section 18.2.B.

B. Upon any default under Section 18.2.A(i) through (xii), Licensor shall have
the right to pursue any one or more of the following remedies in addition to the
remedies provided for in Sections 18.2.A(i) through (xii):

(1) To institute any and all proceedings permitted by Applicable Law or in
equity with respect to such event of default, including, without limitation,
actions for injunctive and/or declaratory relief (including specific
performance) and/or damages. Licensee acknowledges and agrees that, in the event
that Licensor terminates this Agreement pursuant to a termination right
expressly identified in Section 18.2.A, Licensor will, in addition to the right
to terminate, have the right to seek and obtain damages with respect to the
termination of the Agreement. Licensee agrees that Licensor has devoted
substantial resources to developing and building the Licensed Business
(including the Existing Projects, Licensed Marks, and the System) and that the
Licensed Business, including the significant reputation and goodwill associated
therewith, has been developed by Licensor over a period of years prior to the
Effective Date. Licensee further acknowledges and agrees that, in the event
Licensor terminates this Agreement as a result of a material event of default
hereunder by Licensee, it would be commercially impossible for Licensor to take
measures to recreate the Licensed Business or develop an equivalent business,
and, therefore it would be unreasonable to expect or require Licensor to
mitigate its damages resulting from such default and termination;

(2) To suspend Licensee’s right to use the Reservation System, except for
booking of Member usage rights, in accordance with Section 10.2 of this
Agreement at any or all Projects or the entire Licensed Business until the
breach is cured;

(3) To suspend Licensee’s right to access to and use of information included in
the Brand Loyalty Programs and/or the Licensed Business Customer Information
(except for Customer Information related to the Members) for sales and marketing
efforts with respect any or all Projects or the entire Licensed Business until
the breach is cured;

(4) To suspend or limit Licensee’s rights to develop any New Project as
determined by Licensor its sole discretion until the breach is cured; and

(5) To prohibit any New Project from opening or operating under the Licensed
Marks as part of the Licensed Business until the breach is cured.

18.3 Licensor Defaults.

A. The breaches listed in (i) through (viii) below are deemed to be material
breaches for which Licensor may be placed in default under this Agreement if
(x) Licensee gives Licensor notice of the breach that provides the applicable
cure period for the applicable breach (or such greater number of days given by
Licensee in its sole discretion or required by Applicable Law) and (y) Licensor
fails to cure the breach in the time and manner specified in the notice of
breach or as specifically provided in this Section 18.3.A. If Licensor fails to
cure the breach and is placed in default, then Licensee may exercise the
applicable remedy for the specific default as set forth below:

 

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(i) If Licensor or its Affiliates fail to pay any amounts due under this
Agreement to Licensee or any of its Affiliates when the same becomes due and
payable, then Licensee may issue a notice of breach to Licensor with respect to
such failure. Licensor shall have ten (10) business days following notice of
breach to cure the failure to pay. If Licensor in good faith disputes the amount
due and payable and the parties are unable to resolve the discrepancy, then
Licensor shall pay to Licensee the undisputed amount, if any, and Licensor shall
pay the disputed amount into an escrow account. The disagreement regarding the
disputed amount shall be submitted to an arbitration panel for resolution
pursuant to Section 22.4. Notwithstanding anything to the contrary in
Section 22.4, the non-prevailing party shall pay the prevailing party’s costs of
the arbitration, including attorneys’ fees. If the arbitration panel determines
that any or all of the disputed amount is owed to Licensee or its Affiliates,
then Licensor shall pay such amount and may use the amount in the escrow to pay
such amount. If the arbitration panel determines that none of the disputed
amount is owed to Licensee or its Affiliates, then Licensor shall not be
required to pay the disputed amount and the escrowed funds shall be released to
Licensor. If Licensor fails to cure the payment breach, Licensee may issue a
notice of default to Licensor and exercise any of the remedies under
Section 18.3.B, and if the aggregate amount outstanding that Licensor has failed
to pay at any time is in excess of five million dollars ($5,000,000) (as
adjusted annually after the Effective Date by the GDP Deflator), Licensee may
terminate this Agreement immediately upon notice to Licensor;

(ii) If Licensor or its Affiliates fail to pay any amount in excess of two
million five hundred thousand dollars ($2,500,000) (as adjusted annually after
the Effective Date by the GDP Deflator) due to Licensee or any of its Affiliates
when the same becomes due and payable, in each case, after having been issued a
notice of breach by Licensee and having failed to cure the failure to pay within
ten (10) business days following such notice, three (3) or more times within any
thirty-six (36) month period, Licensee may issue a notice of default and
terminate this Agreement immediately upon notice to Licensor and/or exercise any
of the other remedies under Section 18.3.B.;

(iii) (a) If Licensor or its Affiliates fails to pay when due a total amount in
excess of five million dollars ($5,000,000) (as adjusted annually after the
Effective Date by the GDP Deflator) under the Separation and Distribution
Agreement, under the Tax Sharing and Indemnity Agreement, under the Employee
Benefits Allocation Agreement, under the Ritz-Carlton License Agreement, or
under all such agreements taken together, then Licensee may issue a notice of
breach to Licensor with respect to such failure. Licensor shall have ten
(10) business days following notice of breach to cure the failure to pay. If
Licensor in good faith disputes the amount due and payable and the parties are
unable to resolve the discrepancy, then Licensor shall pay to Licensee the
undisputed amount, if any, and Licensor shall pay the disputed amount into an
escrow account. The disagreement regarding the disputed amount shall be
submitted to an arbitration panel for resolution pursuant to Section 22.4.
Notwithstanding anything to the contrary in Section 22.4, the non-prevailing
party shall pay the prevailing party’s costs of the arbitration, including
attorneys’ fees. If the arbitration panel determines that any or all of the
disputed amount is owed to Licensee or its Affiliates, then Licensor shall pay
such amount and may use the amount in the escrow to pay such amount. If the
arbitration panel determines that none of the disputed amount is owed to
Licensee or its Affiliates, then Licensor shall not be required to pay the
disputed amount and the escrowed funds shall be released to Licensor. If
Licensor fails to cure the payment breach, then Licensee may issue a notice of
default to Licensor and terminate this Agreement immediately upon notice to
Licensor and/or exercise any of the other remedies under Section 18.3.B.;

(b) If Licensee terminates the Rewards Agreement or the Ritz-Carlton License
Agreement in accordance with the terms thereof based on Licensor’s default
thereunder, Licensee may issue a notice of default to Licensor and terminate
this Agreement immediately upon notice to Licensor and/or exercise any of the
other remedies under Section 18.3.B.

 

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(iv) If Licensor or any principal, director, officer, shareholder, or agent of
Licensor, contrary to the provisions of this Agreement, discloses, causes, or
fails to exercise commercially reasonable efforts to prevent the disclosure of,
or otherwise uses in an unauthorized manner, any Licensee Confidential
Information in violation of this Agreement, including Section 14.1.B., then:

(a) Licensee may issue a notice of breach to Licensor. In connection with such
breach, Licensee may, depending on various factors, including, the severity of
the breach, whether the breach was intentional or unintentional, and the damages
or potential damages resulting from such breach, exercise any of the remedies
provided for in Section 18.3.B.

(b) If an arbitration panel under Section 22.4 determines that (i) a material
breach has occurred, (ii) (x) Licensor has failed to exercise commercially
reasonable efforts to prevent such breach or (y) such breach was intentional or
resulted from Licensor’s gross negligence, and (iii) such breach has or may
result in the goodwill associated with the Licensed Business being so materially
damaged as a result of the breach that interim injunctive relief is an
inadequate remedy and that termination of the entire relationship contemplated
by this Agreement is the only adequate remedy, then upon the rendering of
arbitration panel’s determination Licensee may issue a notice of default to
Licensor and terminate this Agreement and/or exercise any of the other remedies
under Section 18.3.B.

(v) If a Transfer by Licensor occurs in violation of Section 17.2, Licensee may
issue a notice of breach. If Licensor fails to notify Licensee within fourteen
(14) days following the notice of breach that Licensor intends to unwind such
Transfer or fails to actually unwind such Transfer in a manner satisfactory to
Licensee within ninety (90) days following the notice of breach, then Licensee
may issue a notice of default and terminate this Agreement immediately upon
notice to Licensor and/or exercise any of the other remedies under
Section 18.3.B; provided, however, that nothing herein shall restrict or limit
Licensee’s ability to seek injunctive relief to stop such Transfer at any time;

(vi) If Licensor dissolves or liquidates, except in connection with a Transfer
permitted by Section 17, Licensee may issue a notice of default and terminate
this Agreement immediately upon notice to Licensor and/or exercise any of the
other remedies under Section 18.3.B;

(vii) To the extent permitted by Applicable Law, if Licensor becomes insolvent,
generally does not pay its debts as they become due, or files a voluntary
petition (or consents to an involuntary petition or an involuntary petition is
filed and is not dismissed within sixty (60) days) under any bankruptcy,
insolvency, or similar law, and such bankruptcy or insolvency has a material
adverse effect on the Licensed Business or Licensee or Licensee’s Affiliates,
Licensee may issue a notice of default and terminate this Agreement immediately
upon notice to Licensor and/or exercise any of the other remedies under
Section 18.3.B; and

(viii) (a) If Licensor or any of its Affiliates is convicted of a felony or
other similar crime or offense and such conviction prevents Licensee from
obtaining or retaining the licenses that it requires to continue operating the
Licensed Business at any individual Project(s), then Licensee may issue a notice
of breach and exercise any of the remedies under Section 18.3.B;

(b) If Licensor or any of its Affiliates is convicted of a felony or other
similar crime or offense and such conviction is the actual and sole cause of
Licensee being prevented from obtaining or retaining the licenses that it
requires to continue operating the Licensed Business at all or substantially all
of the Projects and the Licensed Business is so materially damaged that
termination of the entire relationship contemplated by this Agreement is the
only adequate remedy, then Licensee may issue a notice of breach. Upon such
notice of breach, the parties will agree to a Remediation Arrangement under
which Licensor will undertake to remedy the breach to Licensee’s

 

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satisfaction. If Licensor fails to enter into a Remediation Arrangement within
ninety (90) days following the date of the notice of breach or fails to cure the
breach pursuant to the Remediation Arrangement, Licensee may issue a notice of
default and terminate this Agreement immediately upon notice to Licensor and/or
exercise any of the other remedies under Section 18.3.B.

B. Upon any default under Section 18.3.A(i) through (viii), Licensee shall have
the right to pursue any one or more of the following remedies in addition to the
remedies provided for in Sections 18.3.A(i) through (viii):

(1) To institute any and all proceedings permitted by Applicable Law or in
equity with respect to such event of default, including, without limitation,
actions for injunctive and/or declaratory relief (including specific
performance) and/or damages. Licensor acknowledges and agrees that, in the event
that Licensee terminates this Agreement pursuant to a termination right
expressly identified in Section 18.3.A, Licensee will, in addition to the right
to terminate, have the right to seek and obtain damages with respect to the
termination of the Agreement; or

(2) To suspend provision of the services that Licensee is required to provide to
Licensor under this Agreement until the breach is cured.

18.4 Other Breaches.

If Licensee or Licensor materially fail to fulfill any of the other material
covenants, undertakings, obligations or conditions set forth in this Agreement,
the Ritz-Carlton License Agreement, the Rewards Agreement, the Electronic
Systems License Agreement, or the Design Review Addendum, except for where
specific remedies are identified for breaches and defaults described in
Section 18.1, 18.2 and 18.3, the non-defaulting party shall have the right to
institute any and all proceedings permitted by Applicable Law or in equity with
respect to such failure, including, without limitation, actions for injunctive
and/or declaratory relief (including specific performance) and/or damages;
provided, however, that the non-defaulting party shall not have the right to
terminate this Agreement with respect to such failure unless it is determined by
an arbitration panel under Section 22.4 that (i) the non-defaulting party has
been or will be damaged in an amount in excess of fifty million dollars
($50,000,000) (as adjusted annually after the Effective Date by the GDP
Deflator) or (ii) the goodwill associated with the Licensed Marks and System (if
Licensor is the non-defaulting party) or the Licensed Business (if Licensee is
the non-defaulting party) has been or will be so materially damaged as a result
of the conduct of the defaulting party that interim injunctive relief is an
inadequate remedy and that termination of the entire relationship contemplated
by this Agreement is the only adequate remedy, in which case the non-defaulting
party shall have the right to terminate this Agreement upon the rendering of
arbitration panel’s determination. The parties acknowledge and agree that, in
the event that the non-defaulting party terminates this Agreement pursuant to
this Section 18.4, the non-defaulting party will, in addition to the right to
terminate, have the right to seek and obtain damages with respect to the
termination of the Agreement.

18.5 Extraordinary Events.

A. If either Licensee’s or Licensor’s failure to conform to, keep, perform,
fulfill, or satisfy any representation, warranty, covenant, undertaking,
obligation, standard, test, or condition set forth in this Agreement with
respect to one or more Projects, Sales Facilities, or Member Service Centers,
other than an obligation to make monetary payments or provide monetary funding,
is caused in whole or in material part by one or more Extraordinary Events, such
failure shall not constitute a failure or a default under this Agreement, and
such failure shall be excused with respect to the subject Projects, Sales
Facilities, or Member Service Centers (but only as to the subject Projects,
Sales Facilities, or Member

 

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Service Centers) for as long as the failure is caused in whole or in part by
such Extraordinary Event(s) and so long as cure is diligently pursued.

B. If either Licensee’s or Licensor’s failure to conform to, keep, perform,
fulfill, or satisfy a material obligation set forth in this Agreement that
affects all or substantially all of the services to be provided under this
Agreement or that has a material adverse effect on the Licensed Business as a
whole, other than an obligation to make monetary payments or provide monetary
funding, is caused in whole or in material part by one or more Extraordinary
Events, such failure shall not constitute a failure or a default under this
Agreement, and such failure shall be excused for as long as the failure is
caused in whole or in part by such Extraordinary Event(s) and so long as cure is
diligently pursued.

19. POST-TERMINATION OBLIGATIONS; DE-IDENTIFICATION

19.1 Project De-Identification and Post-Termination Obligations.

A. Upon termination of Licensee’s rights to operate one or more (but not all) of
the Licensed Destination Club Projects under the System, all rights to operate
the subject Licensed Destination Club Project under the System shall terminate,
and the subject Licensed Destination Club Project shall be Deflagged. In
connection with the Deflagging:

(i) the Deflagged Destination Club Project may continue to be included in the
inventory of the Licensed Non-Site Specific Destination Club Program as a usage
option for Members, but must be clearly identified as a non-Marriott product in
all of Licensee’s distribution channels. Licensee will notify all Members upon
the Deflagging pursuant to a form of notice agreed to by the parties that the
Deflagged Destination Club Project in no longer affiliated with the System and
is no longer a Licensed Destination Club Project.

(ii) Members who own interests in the Destination Club Units at the subject
Deflagged Destination Club Project other than through a Non-Site Specific
Destination Club Program, if any, will lose their right to participate in the
Licensed Non-Site Specific Destination Club Program, and will no longer be
permitted to trade usage rights in such interests for points under the Brand
Loyalty Program. Such Members may, however, continue to elect to enroll such
interests in the Licensed Non-Site Specific Destination Club Program in exchange
for usage rights in the Licensed Non-Site Specific Destination Club Program and
trade such usage rights for points under the Brand Loyalty Program.

(iii) Members who own interests in Destination Club Units at the subject
Deflagged Destination Club Project through a Non-Site Specific Destination Club
Program may continue to trade usage rights in such interests for points under
the Brand Loyalty Program.

(iv) Interests in Destination Club Units at the subject Deflagged Destination
Club Project that are not part of a Licensed Non-Site Specific Destination Club
Program shall no longer be sold under, or in association with, the Licensed
Marks or any other aspect of the System, or made part of a Licensed Non-Site
Specific Destination Club Program.

(v) Interests in Destination Club Units in phases of the Deflagged Destination
Club Project that were already part of a Licensed Non-Site Specific Destination
Club Program at the time of the Deflagging may, however, continue to be sold for
use in the Licensed Non-Site Specific Destination Club Program, but interests in
new phases of the Deflagged Destination Club Project shall not be made part of a
Licensed Non-Site Specific Destination Club Program and shall not be sold as
part of a Licensed Non-Site Specific Destination Club Program.

 

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(vi) Inventory for transient rental at the Deflagged Destination Club Project
will no longer be listed on Marriott.com, and stays at the Deflagged Destination
Club Project will not be deemed a “Marriott” stay for purposes of the Brand
Loyalty Program.

B. Upon termination of Licensee’s rights to operate one or more (but not all) of
the Projects under the System and except as otherwise provided in
Section 19.1.A, all rights to operate the subject Project under the System will
immediately terminate, including the rights to use the Electronic Systems, the
Licensed Marks, the Licensor Intellectual Property, and the Branded Elements
with respect to the subject Project, and the parties will comply with their
respective obligations described below:

(1) Licensee will not represent that the subject Project is or was in any way
connected with the System and will fully comply with Section 13.2.A(4), other
than as required Applicable Law.

(2) Licensor will not represent that the subject Project is or was in any way
connected with the System, other than as required by Applicable Law.

(3) Licensee at its expense will promptly remove any items using the Licensor
Intellectual Property from or in connection with the subject Project (except
Licensed Business Customer Information relating to Members of the subject
Project that Licensee is permitted to retain and use under Section 19.2(7)) and
perform such additional actions as set forth in any de-identification list
Licensor provides to Licensee to ensure that the subject Project is not
connected with the System and is not using any Licensor Intellectual Property.
Licensee agrees that Licensor or its designated agent may enter upon the
premises of any subject Project at any time to make such changes at Licensee’s
sole risk and expense and without liability for trespass, if Licensee has not
done so within ten (10) days after termination of Licensee’s rights to operate
the subject Project under the System (provided, however, that such period shall
be extended for a reasonable period with respect to any de-identification
activities that cannot be completed within such period (e.g., removal of
monument signage)).

(4) Each party will promptly pay all amounts owing to the other party and any of
its Affiliates related to the subject Project.

(5) Licensor at its expense will promptly perform such reasonable additional
actions as set forth in any de-identification list Licensee provides to Licensor
to ensure that Licensor is not connected with the subject Project.

C. Upon discontinuation of Licensee’s rights to include a Non-Site Specific
Destination Club Ownership Vehicle as part of a Licensed Non-Site Specific
Destination Club Program pursuant to Section 5.2.F., all rights to operate the
subject Non-Site Specific Destination Club Ownership Vehicle under the System
shall terminate, and the subject Non-Site Specific Destination Club Ownership
Vehicle shall be Deflagged. In connection with the Deflagging:

(i) Interests in the Deflagged Non-Site Specific Destination Club Ownership
Vehicle shall no longer be sold under, or included in or associated with, the
Licensed Marks or any other aspect of the System, or be included in a Licensed
Non-Site Specific Destination Club Program.

(ii) Members who own interests in the subject Deflagged Non-Site Specific
Destination Club Ownership Vehicle will no longer have any right to participate
in the Licensed Non-Site Specific Destination Club Program, and will no longer
be permitted to trade usage rights in such interests for points under the Brand
Loyalty Program.

 

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(iii) Upon the Deflagging, Licensee will notify all Members who own interests in
the subject Deflagged Non-Site Specific Destination Club Ownership Vehicle
pursuant to a form of notice agreed to by the parties that the Deflagged
Non-Site Specific Destination Club Ownership Vehicle in no longer affiliated
with the System and is no longer part of a Licensed Non-Site Specific
Destination Club Program.

(iv) The subject Deflagged Non-Site Specific Destination Club Ownership Vehicle
may continue to hold interests in Licensed Destination Club Units that it holds
at the time of Deflagging, however, Licensee shall not, without Licensor’s prior
consent in Licensor’s sole discretion, add interests in Licensed Destination
Club Units to the subject Deflagged Non-Site Specific Destination Club Ownership
Vehicle subsequent to such Deflagging, unless such interests were committed to
be included in the subject Deflagged Non-Site Specific Destination Club
Ownership Vehicle prior to the time of Deflagging.

(v) Licensee may continue to include interests in the Deflagged Non-Site
Specific Destination Club Ownership Vehicle as an external Exchange Program
usage option for Members of the Licensed Destination Club Business, provided
that such Deflagged Non-Site Specific Destination Club Ownership Vehicle is
clearly identified as a non-Marriott product in all of Licensee’s distribution
channels.

19.2 Agreement De-Identification and Post-Termination Obligations.

Upon expiration or other termination of this Agreement, all rights granted under
this Agreement to Licensee to operate the Projects under the System will
immediately terminate, including the rights under this Agreement to use the
Electronic Systems, the Licensed Marks, the Licensor Intellectual Property, and
the Branded Elements, and the parties will comply with their respective
obligations described below:

(1) Licensee will not represent that the Licensed Destination Club Business, the
Licensed Whole Ownership Residential Business or any of the Projects are in any
way connected with the System or hold itself out as a licensee or former
licensee of Licensor or that it was formerly known by the Permitted Corporate
Name or any other corporate name or trade name containing the Licensed Marks,
other than as required by Applicable Law.

(2) Licensor will not represent that any of the Projects are in any way
connected with the System or hold itself out as a licensor or former licensor of
Licensee, other than as required Applicable Law.

(3) Licensee at its expense will promptly remove any items using the Licensor
Intellectual Property from or in connection with the Projects (except for the
Licensed Business Customer Information relating to Members of the Projects that
Licensee is permitted to retain and use under Section 19.2(7)) and perform such
additional actions as set forth in any de-identification list Licensor provides
to Licensee to ensure that Licensee is not connected with the System and is not
using any Licensor Intellectual Property. Licensee agrees that Licensor or its
designated agent may enter upon the premises of any Project at any time to make
such changes at Licensee’s sole risk and expense and without liability for
trespass, if Licensee has not done so within ten (10) days after expiration or
termination of this Agreement (provided, however, that such period shall be
extended for a reasonable period with respect to any de-identification
activities that cannot be completed within such period (e.g., removal of
monument signage)).

 

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(4) Licensor at its expense will promptly remove any items using the Licensee
Intellectual Property from or in connection with any Licensor Lodging Facilities
or any other businesses of Licensor and its Affiliates (except that Licensee
shall be responsible for removing any Sales Facilities located at Licensor
Lodging Facilities at Licensee’s expense) and perform such additional actions as
set forth in any de-identification list Licensee provides to Licensor to ensure
that Licensor is not connected with the Projects or the Destination Club
Business or Whole Ownership Residential Business of Licensee and its Affiliates
and is not using any Licensee Intellectual Property.

(5) Licensee will immediately turn over to Licensor all copies of any Licensor
Confidential Information, Licensor Intellectual Property, and all other System
materials relating to the operation of the Licensed Business and the Projects
(except for the Licensed Business Customer Information relating to Members of
the Projects that Licensee is permitted to retain and use under
Section 19.2(7)), all of which are acknowledged by Licensee to be Licensor’s
property. Licensee will not retain a copy or record of any of the foregoing,
except for Licensee’s copy of this Agreement, any correspondence between the
parties, and any other documents that Licensee reasonably needs for compliance
with any provisions of Applicable Law. If Licensor expressly permits Licensee to
continue to use any Licensor Intellectual Property after the termination or
expiration date, such use by Licensee will be in accordance with the terms of
this Agreement.

(6) Licensor will immediately turn over to Licensee all copies of any Licensee
Confidential Information, Licensee Intellectual Property, and all other
materials relating to the operation of the Projects, all of which are
acknowledged by Licensor to be Licensee’s property. Licensor will not retain a
copy or record of any of the foregoing, except for Licensor’s copy of this
Agreement, any correspondence between the parties, and any other documents that
Licensor reasonably needs for compliance with any provisions of Applicable Law.
If Licensee expressly permits Licensor to continue to use any Licensee
Intellectual Property after the termination or expiration date, such use by
Licensor will be in accordance with the terms of this Agreement.

(7) Licensee may retain Licensed Business Customer Information only for the
purposes of servicing the Members of the Licensed Destination Club Projects and
the residents of the Licensed Residential Projects in existence at the end of
the Term. Licensee shall have the right to use the name, address, telephone
number, e-mail address, and other contact information with respect to those
Members in the same manner and form as Customer Information of other customers
of the Destination Club Business or the Whole Ownership Residential Business
generally is used. Licensee shall not use that portion of the Licensed Business
Customer Information with respect to those Members that includes or relates to
those Members’ participation in the Brand Loyalty Program in any way, shape, or
form to identify or otherwise to market to those Members Destination Club
Products, Residential Units, or a Lodging Business of Licensee, its Affiliates,
or any other third party. Licensee shall at all times comply with the
confidentiality provisions of this Agreement with respect to such Licensed
Business Customer Information.

(8) Each party will promptly pay all amounts owing to the other party and any of
its Affiliates under this Agreement.

19.3 Survival.

The rights and obligations of the parties under this Section 19 will survive
termination or expiration of this Agreement.

 

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20. COMPLIANCE WITH LAWS; LEGAL ACTIONS

20.1 Compliance with Laws.

A. The parties will comply with all Applicable Laws in connection with the
fulfillment of their respective obligations under this Agreement. Licensee will
forward to Licensor within a reasonable period of time (not to exceed ten
(10) business days) following Licensee’s receipt copies of all inspection
reports, warnings, certificates, and ratings issued by any governmental entity
related to any Project or the Licensed Business that identify a material failure
to meet or maintain governmental standards regarding health or life safety or
any other material violation of Applicable Law that may materially and adversely
affect the operation of any Project or adversely affect the Licensed Business or
Licensee.

B. Each party will, if required by Applicable Law, timely file, register, or
report this Agreement or the payments to be made hereunder, as applicable, to
the appropriate governmental authorities having jurisdiction over any Project,
the Licensed Business or this Agreement, and pay all costs and expenses related
thereto.

20.2 Notice Regarding Legal Actions.

Licensee and Licensor will each notify the other (i) within a reasonable period
of time (not to exceed ten (10) business days) after the applicable party has
actual knowledge of the commencement of any material action, suit, or other
proceeding that involves any Project or the Licensed Business that could have a
material adverse effect on the Project or the Licensed Business or with respect
to which the amount in controversy exceeds five million dollars ($5,000,000) (as
adjusted annually after the Effective Date by the GDP Deflator); or Licensor’s
or Licensee’s relationship with any Project, the Licensed Business or the
System, and (ii) within a reasonable period of time (not to exceed ten
(10) business days) after the issuance of any judgment, order, writ, injunction,
award, or other decree of any court, agency, or other governmental
instrumentality that may materially adversely affect the operation or financial
condition of any Project, Licensor or Licensee. Nothing in this Section 20.2,
however, will abrogate any notice requirement that Licensor or Licensee may have
under any insurance program or contract.

20.3 Block Exemption.

Licensor and Licensee acknowledge and agree that the license is granted on the
assumption that this Agreement complies, and will continue to comply, with the
European Commission’s Block Exemption Regulation for Vertical Agreements (EU
No. 330/2010) (the “Regulation”) and with Article 101 of the Treaty on the
Functioning of the European Union (“Article 101”) and with the official
interpretative guidelines of 2010, and any successor to the Regulation and to
the guidelines. If, at any time, questions arise concerning this Agreement’s
compliance with the Regulation, the parties agree to use their best efforts and
to cooperate with each other to amend this Agreement either to bring it into
conformity with the requirements of the Regulation or to seek an alternative way
to comply with Article 101. If, in Licensor’s sole judgment, this Agreement
cannot be modified to comply with Article 101, including the Regulation, without
undermining material elements of the license relationship, Licensor may, at its
option, without liability for such action or any further obligation to Licensee,
terminate the provisions of this Agreement and the license upon thirty
(30) days’ notice to Licensee as to the portions of the Agreement or Territory
that violate the Regulation. In such event, with respect to any change in the
territorial rights that are materially adverse to Licensee or a material
decrease in revenue of the Licensed Business that are directly attributable to
such termination, the Base Royalty shall be equitably adjusted to take into
account the termination of the provisions of this Agreement and the license as
to the portions of

 

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the Territory that include the European Union. To the extent that the
post-termination obligations described in Section 19 of this Agreement would be
applicable, Licensee and its Affiliates will comply with such obligations.

21. RELATIONSHIP OF PARTIES

21.1 Reasonable Business Judgment.

Unless Licensor has reserved “sole discretion,” Licensor will use its reasonable
business judgment when discharging its obligations or exercising its rights or
discretion under this Agreement. Licensee agrees that Licensor, in the exercise
of its reasonable business judgment, may act with the intention to benefit the
System and Licensor’s business as a whole, and not individual Licensor Lodging
Facilities or other facilities, including the Projects. Licensee will have the
burden of establishing that Licensor failed to exercise reasonable business
judgment, and neither the fact that Licensor benefited economically from an
action nor the existence of other “reasonable” or “commercially reasonable”
alternatives will, by themselves, imply such a failure. To the extent that any
implied covenant, such as the implied covenant of good faith and fair dealing,
or civil law duty of good faith is applied to this Agreement, Licensor and
Licensee intend that Licensor will not have violated such covenant or duty if
Licensor has exercised reasonable business judgment.

21.2 Independent Contractor.

A. This Agreement does not create a fiduciary relationship between Licensor and
Licensee. Licensee and Licensor are independent contractors, and nothing in this
Agreement is intended to constitute either party as an agent, legal
representative, subsidiary, joint venturer, partner, manager, employee, or
servant of the other for any purpose, except that Licensor may act on Licensee’s
behalf as Licensee’s agent for purposes of booking reservations at any Project.

B. Nothing in this Agreement authorizes either party to make any contract,
agreement, warranty, or representation on the other party’s behalf or to incur
any debt or other obligation in the other party’s name.

 

  22. GOVERNING LAW; INJUNCTIVE RELIEF; COSTS OF ENFORCEMENT; ARBITRATION; AND
EXPERT RESOLUTION

22.1 Governing Law; Venue.

A. This Agreement is executed pursuant to, and will be interpreted and construed
under the laws of New York, without regard to the conflict of laws provisions of
such jurisdiction. Nothing in this Section 22.1 is intended to invoke the
application of any franchise, business opportunity, antitrust, “implied
covenant,” unfair competition, fiduciary or any other doctrine of law of the
State of New York or any other state which would not otherwise apply absent this
Section 22.1.

B. Each party hereby expressly and irrevocably submits itself to the
non-exclusive jurisdiction of the courts of New York for the purpose of
resolving any Dispute under Section 22.2. So far as is permitted under the laws
of New York, this consent to personal jurisdiction will be self-operative.

22.2 Injunctive Relief.

A. Licensor will be entitled to injunctive or other equitable relief from a
court of competent jurisdiction, without the necessity of proving the inadequacy
of money damages as a remedy or

 

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irreparable harm, without the necessity of posting a bond, and without waiving
any other rights or remedies at law or in equity, for any actual or threatened
material breach or violation of this Agreement for which such relief is an
available remedy, the Brand Standards (including, but not limited to, threats or
danger to public health or safety) or actual or threatened misuse or
misappropriation of the Licensor Intellectual Property or Licensor Confidential
Information. The rights conferred by this Section 22.2.A expressly include,
without limitation, Licensor’s entitlement to affirmative injunctive,
declaratory, and other equitable or judicial relief (including specific
performance) for Licensee’s failure to operate any portion of the Licensed
Business in accordance with the applicable Brand Standards, including, without
limitation, affirmative relief that any such deficiencies are cured and
thereafter meet the Brand Standards.

B. Licensee will be entitled to injunctive or other equitable relief from a
court of competent jurisdiction, without the necessity of proving the inadequacy
of money damages as a remedy or irreparable harm, without the necessity of
posting a bond, and without waiving any other rights or remedies at law or in
equity, for any actual or threatened material breach or violation of this
Agreement for which such relief is an available remedy or actual or threatened
misuse or misappropriation of the Licensee Intellectual Property or Licensee
Confidential Information.

22.3 Costs of Enforcement.

If for any reason it becomes necessary for either party to initiate any legal or
equitable action to secure or protect its rights under this Agreement, the
prevailing party will be entitled to recover all costs incurred by it in
successfully enforcing such rights, including reasonable lawyers’ fees.

22.4 Arbitration.

A. Except as otherwise specified in this Agreement, any Dispute or any other
matter concerning any aspect of the relationship of the parties will be finally
settled, by arbitration administered by the American Arbitration Association
under its Commercial Arbitration Rules, except as modified herein (the “AAA
Rules”), conducted in Washington, DC.

B. There will be three (3) arbitrators. If there are only two (2) parties to the
arbitration, each of Licensor and Licensee will appoint one (1) arbitrator
within twenty (20) days after receipt by respondent of a copy of the demand for
arbitration. For purposes of this Section 22.4, Licensor and its Affiliates, on
one hand, and Licensee and its Affiliates, on the other hand, will each be
deemed to be one (1) party. The two (2) party-appointed arbitrators will have
twenty (20) days from the appointment of the second (2nd) arbitrator to agree on
a third (3rd) arbitrator who will chair the arbitral tribunal. Any arbitrator
not timely appointed by the parties under this Section 22.4.B. will be appointed
in accordance with AAA Rule R.11, and in any such procedure, each party will be
given a limited number of strikes, excluding strikes for cause.

C. Any Dispute to be settled by arbitration under this Section 22.4 will at the
request of Licensor or Licensee be resolved in a single arbitration before a
single tribunal together with any Dispute arising out of or relating to this
Agreement or any other agreement (including any other Transaction Agreements)
between or among Licensee, Guarantor and their respective Affiliates on the one
hand and Licensor or its Affiliates on the other. If there are multiple
claimants and/or multiple respondents to the effect that there are more than two
(2) parties to the arbitration, all claimants and/or all respondents will
attempt to agree upon their respective appointments. If such multiple parties
fail to nominate an arbitrator within thirty (30) days, the AAA will appoint an
arbitrator on their behalf. In such circumstances, any existing nomination of
the arbitrator chosen by the party or parties on the other side of the proposed
arbitration will be unaffected, and the remaining arbitrators will be appointed
in accordance with AAA Rules R. 12 and R. 13.

 

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D. Any controversy concerning whether a Dispute is an arbitrable Dispute,
whether arbitration has been waived, whether an assignee of this Agreement is
bound to arbitrate, or as to the interpretation or enforceability of this
Section 22.4 will be determined by the arbitrators.

E. The decision of the arbitral tribunal will be final and binding upon the
parties, and such decision will be enforceable through any courts having
jurisdiction. The arbitral tribunal will have no authority to amend or modify
the terms of this Agreement. The arbitral tribunal may award or include in their
award any relief they deem proper in the circumstances, including money damages
(with Interest on unpaid amounts from the date due), specific performance and
legal fees and costs in accordance with this Agreement; however, the arbitral
tribunal may not award special, punitive, consequential or exemplary damages.
The costs and expenses of arbitration will be allocated and paid by the parties
as determined by the arbitral tribunal. The arbitral tribunal will have the
authority to make such orders granting interim or provisional relief during the
pendency of the arbitration as it deems just and equitable. Any such order will
be without prejudice to the final determination of the controversy.

F. The parties will use their reasonable best efforts to encourage the
arbitrators to resolve any arbitration related to any Dispute as promptly as
practicable. Subject to Applicable Law, including disclosure or reporting
requirements, or the parties’ agreement, the parties will maintain the
confidentiality of the arbitration. Unless agreed to by all the parties or
required by Applicable Law, including disclosure or reporting requirements, the
arbitrators and the parties will maintain the confidentiality of all
information, records, reports, or other documents obtained in the course of the
arbitration, and of all awards, orders, or other arbitral decisions rendered by
the arbitrators.

G. Any arbitration proceeding under this Agreement will be conducted on an
individual (not a class-wide) basis and will not be consolidated with any other
arbitration proceedings to which Licensor is a party, except as specified below.
No decision on any matter in any other arbitration proceeding in which Licensor
is a party will prevent any party to the arbitration proceeding from submitting
evidence with respect to the same or a similar matter or prevent the arbitral
tribunal from rendering an independent decision without regard to such decision
in such other arbitration proceeding.

H. Each party may, without waiving any rights it has under this Agreement, seek
from a court having jurisdiction any interim or provisional relief that may be
necessary to protect its rights or property.

I. The provisions of this Section 22.4 will survive the expiration or
termination of this Agreement.

22.5. Expert Resolution.

Where this Agreement calls for a matter to be referred to Expert(s) for
determination, the following provisions shall apply.

A. The use of Expert(s) shall be the exclusive remedy of the parties and neither
party shall attempt to adjudicate any dispute in any other forum. The decision
of Expert(s) shall be final and binding on the parties and shall not be capable
of challenge, whether by arbitration, in court or otherwise. In the event there
is more than one (1) Expert, then the decision of Experts shall be determined by
a majority vote. Recognition and enforcement of any decision or award rendered
by the Expert(s) may be sought in any court of competent jurisdiction.

 

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B. If either party calls for a determination by Expert(s) in accordance with the
terms of this Agreement, the parties shall have ten (10) days from the date of
such request to agree upon and appoint an Expert and, if they fail to agree,
each party shall have an additional ten (10) days to make its respective
selection of an Expert, and within ten (10) days of such respective selections,
the two (2) respective Experts so selected shall select a third (3rd) Expert. If
either party fails to make its respective selection of an Expert within the
specified period, then the other party’s selection shall be the Expert. If the
two (2) respective Experts selected by the parties fail to select a third
(3rd) Expert, then the third Expert shall be appointed by the American
Arbitration Association. Any dispute to be determined by the Expert pursuant to
this Section shall, at the request of either party, be resolved in a single
Expert proceeding before the same Expert(s) together with any dispute to be
determined by an Expert arising out of or relating to this Agreement.

C. Each party shall be entitled to make written submissions to the Expert(s),
and if a party makes any submission, it shall also provide a copy to the other
party(ies) and the other party(ies) shall have the right to comment on such
submission within the time periods established pursuant to Section 22.5.E.
During the period beginning with the appointment of an Expert or the appointment
of three (3) Experts pursuant to Section 22.5.B. and continuing until an Expert
determination is rendered, neither party shall communicate with any of the
Experts regarding the subject matter submitted for determination without
disclosing the content of any such communication to the other party. The parties
shall make available to the Expert(s) such books and records relating to the
issue in dispute and shall render to the Expert(s) any assistance requested of
the parties. The costs of the Expert(s) and the proceedings shall be borne as
directed by the Expert(s) unless otherwise provided for herein.

D. The Expert(s) shall decide the matter referred for determination by applying
the terms, conditions and standards set forth in this Agreement regarding such
matter.

E. The terms of engagement of the Expert(s) shall include an obligation on the
part of the Expert(s) to: (i) notify the parties in writing of the decision
within thirty (30) business days (ninety (90) days for matters referred to
Expert determination under Section 2.5.C) from the date on which the Expert (or
last Expert, if there are three (3)) has been selected (or such other period as
the parties may agree or as set forth herein); and (ii) establish a timetable
for the making of submissions and replies.

22.6 Waiver of Jury Trial and Punitive Damages.

Each party hereby absolutely, irrevocably and unconditionally waives trial by
jury and the right to claim or receive special, consequential, punitive or
exemplary damages arising out of, pertaining to or in any way associated with
the covenants, undertakings, representations or warranties set forth in this
Agreement, the relationships of the parties hereto, this Agreement or any other
Transaction Agreement.

 

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23. NOTICES.

23.1 Notices.

A. Subject to Section 23.1.B, all notices, requests, demands, statements, and
other communications required or permitted to be given under the terms of this
Agreement will be in writing, in the English language, and delivered by hand
against receipt or carried by reputable overnight/international courier service,
to the respective party at the following addresses:

 

To Licensor:   

 

Marriott International, Inc.

and

Marriott Worldwide Corporation

10400 Fernwood Road

Bethesda, Maryland 20817

United States of America

Attn: General Counsel

Telephone: (1) (301) 380-8326

To Licensee:   

 

Marriott Vacations Worldwide Corporation

6649 Westwood Blvd.

Suite 500

Orlando, Florida 32821

United States of America

Attn: President and Chief Executive Officer

Telephone: (1) 407-206-6000

With a copy to:   

 

Marriott Vacations Worldwide Corporation

6649 Westwood Blvd.

Suite 500

Orlando, Florida 32821

United States of America

Attn: General Counsel

Telephone: (1) 407-206-6000

or at such other address as designated by notice from the respective party to
the other party. Any such notice or communication will be deemed to have been
given at the date and time of: (i) receipt or first refusal of delivery if
delivered by hand; or (ii) two days after the posting thereof if sent via
reputable overnight/international courier service.

B. Each party may provide the other party with routine information, invoices,
Brand Standards and other System requirements and programs, such as the Quality
Assurance Program, including any modifications thereto, by regular mail or by
e-mail, facsimile, or by making such information available to the other party on
the Internet, an extranet, or other electronic means.

 

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24. CONSTRUCTION AND SEVERABILITY; APPROVALS, CONSENTS AND WAIVERS; ENTIRE
AGREEMENT

24.1 Construction and Severability.

A. Except as expressly provided to the contrary in this Agreement, each section,
part, term and/or provision of this Agreement, including Section 16.1, will be
considered severable; and if, for any reason any section, part, term, or
provision is determined to be invalid, unenforceable or contrary to, or in
conflict with, any existing or future Applicable Law or by an arbitral tribunal,
a court or agency having valid jurisdiction, such will not impair the operation
of, or have any other effect upon, such other sections, parts, terms, and
provisions of this Agreement as may remain otherwise intelligible, and the
latter will continue to be given full force and effect and bind Licensor and
Licensee. To the extent possible, such invalid or unenforceable sections, parts,
terms, or provisions will be deemed to be replaced with a provision that is
valid and enforceable and most nearly reflects the original intent of the
invalid or unenforceable provision.

B. No right or remedy conferred upon or reserved to Licensor or Licensee by this
Agreement is intended to be, nor will be deemed, exclusive of any other right or
remedy herein or by law or equity provided or permitted, but each will be
cumulative of every other right or remedy.

C. When this Agreement provides that either party may take or refrain from
taking any action or exercise discretion, such as rights of approval or consent,
or to modify any part of the Brand Standards or System, or to make other
determinations or modifications under this Agreement, such party may do so from
time to time.

D. Unless otherwise stated, references to Sections are to Sections of this
Agreement.

E. Unless otherwise stated, references to Exhibits, Attachments or Addenda are
to Exhibits, Attachments and Addenda to this Agreement, and all of such are
incorporated by reference into this Agreement.

F. Words importing the singular include the plural and vice versa as the context
may imply. Words importing a gender include each gender as the context may
imply.

G. Unless otherwise stated, references to days, months, and years are to
calendar days, calendar months, and calendar years, respectively.

H. The words “include,” “included” and “including” will be terms of enlargement
or example (meaning that, for instance, “including” will be read as “including
but not limited to”) and will not imply any restriction or limitation unless the
context clearly requires otherwise.

I. Captions and section headings are used for convenience only. They are not
part of this Agreement and will not be used in construing it.

J. The Recitals are incorporated in and made part of this Agreement.

24.2 Approvals, Consents and Waivers.

Except as otherwise provided in this Agreement, approvals, designations, and
consents required under this Agreement will not be effective unless evidenced by
a writing signed by the duly authorized officer or agent of the party giving
such approval or consent. No waiver, delay, omission, or

 

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forbearance on the part of Licensor or Licensee to exercise any right, option or
power arising from any default or breach by the other party, or to insist upon
strict compliance by the other party with any obligation or condition hereunder,
will affect or impair the rights of Licensor or Licensee, respectively, with
respect to any such default or breach or subsequent default or breach of the
same or of a different kind. Any delay or omission of either party to exercise
any right arising from any such default or breach will not affect or impair such
party’s rights with respect to such default or breach or any future default or
breach. No party will be liable to the other party for providing (or denying)
any waiver, approval, consent, or suggestion to the other party in connection
with this Agreement or by reason of any delay or denial of any request.

24.3 Entire Agreement.

As of the date of this Agreement, this Agreement, including all exhibits,
attachments, and addenda, and the Transaction Agreements contain the entire
agreement between the parties as it relates to the Licensed Business and the
Projects. This is a fully integrated agreement.

24.4 Amendments.

No agreement of any kind relating to the matters covered by this Agreement will
be binding upon either party unless and until the same has been made in a
written, non-electronic instrument that has been duly executed by the
non-electronic signature of all interested parties. This Agreement may only be
amended in a written, non-electronic instrument that has been duly executed by
the non-electronic signature of all interested parties and may not be amended or
modified by conduct manifesting assent, or by electronic signature, and each
party is hereby put on notice that any individual purporting to amend or modify
this Agreement by conduct manifesting assent or by electronic signature is not
authorized to do so.

25. REPRESENTATIONS, WARRANTIES AND COVENANTS

25.1 Existence and Power; Authorization; Contravention.

A. Each party represents, warrants and covenants that: (i) it is a legal entity
duly formed, validly existing, and in good standing under the laws of the
jurisdiction of its formation; (ii) it and its Affiliates have and will continue
to have the ability to perform its obligations under this Agreement; and
(iii) it has and will continue to have all necessary power and authority to
execute and deliver this Agreement.

B. Each party represents, warrants and covenants that the execution and delivery
of this Agreement and the performance by such party of its obligations
hereunder: (i) have been duly authorized by all necessary action; (ii) do not
require the consent, vote, or approval of any third parties (including lenders)
except for such consents as have been properly obtained; and (iii) do not and
will not contravene, violate, result in a breach of, or constitute a default
under (a) its certificate of formation, operating agreement, articles of
incorporation, by-laws, or other governing documents, (b) any Applicable Law; or
(c) any agreement, indenture, contract, commitment, restriction or other
instrument to which it or any of its Affiliates is a party or by which it or any
of its Affiliates is bound.

C. Each party represents and warrants that all information provided in
connection with this Agreement, are true, correct and complete as of the time
made and as of the Effective Date, regardless of whether such representations
and warranties were provided by such party, one of its Affiliates, or by a third
party on behalf of such party, unless such party has notified the other party of
a change in the representations and warranties or the information and such other
party has approved the change.

 

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25.2 Acknowledgements and Representations Regarding Territorial Restrictions in
Existing Contracts.

The parties acknowledge that each party may, as of the Effective Date, be
parties to agreements with third parties that contain territorial restrictions,
including the Permitted Territorial Restrictions, that would be a breach of this
Agreement if either party had agreed to such territorial restrictions without
the consent of the other party during the Term. The parties represent and agree
that those existing territorial restrictions shall, in no event, be deemed a
breach hereof, and that each party will be bound by such territorial
restrictions to the extent that such territorial restrictions are applicable to
them.

26. MISCELLANEOUS

26.1 Translations.

The English language version of all written materials, including this Agreement,
the Brand Standards, the Software, any other documents, forms, agreements,
manuals, and advertising materials provided to either party under this Agreement
will be the version used for determining the intent of the parties. Either party
may translate any such materials into any other language. All translations will
be at the sole cost and expense of the translating party. Ownership of any
translated materials shall vest in the party who owned the materials from which
the translation was made, and all copyrights in any such translated materials
will be assigned by translating party to the owning party or its designated
Affiliate upon the owning party’s request. The translating party will obtain any
necessary agreement with any translator that such translation will be the sole
property of the owning party or its Affiliates.

26.2 Multiple Counterparts.

This Agreement may be executed in a number of identical counterparts, each of
which will be deemed an original for all purposes and all of which will
constitute, collectively, one agreement. Delivery of an executed signature page
to this Agreement by electronic transmission will be effective as delivery of a
manually signed counterpart of this Agreement.

26.3 Failure to Close the Spin-Off Transaction.

Notwithstanding anything to the contrary in this Agreement, if the Spin-Off
Transaction fails to close on or before March 31, 2012, either party may
terminate this Agreement immediately upon notice to the other party and neither
party will have any liability to the other in connection with such termination.

27. LICENSOR MANAGED PROJECTS

27.1 Provisions of this Agreement That Do Not Apply to Licensor Managed
Projects.

The parties acknowledge and agree that, notwithstanding anything to the contrary
in this Agreement, the following provisions do not apply to the Licensor Managed
Projects (but continue to apply to other Projects) and that, to the extent these
matters are covered in the applicable Licensor Management Agreement, the
applicable provisions of such Licensor Management Agreement will govern such
matters:

 

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(i) Section 16.1.A(xvi) regarding Licensee’s indemnification of Licensor for
failure to operate the Projects in compliance with this Agreement; and

(ii) Sections 18.1.A(i), (ii), (iii), (vii), and (viii), regarding Project-level
breaches, defaults, and remedies.

27.2 Provisions of this Agreement That Are Modified With Respect to the Licensor
Managed Projects.

The parties acknowledge and agree that the following provisions are hereby
modified solely for the purposes of their application to the Licensor Managed
Projects (but not with respect to other Projects), and these modified provisions
will control with respect Licensor Managed Projects.

 

  (i) Section 8.4.B shall be modified as follows:

“B. Licensee has provided to Licensor, and Licensor has reviewed and consented
to, the form of Quality Assurance Audit System. Licensee shall administer the
Quality Assurance Audit System, using Licensee’s Quality Assurance System as of
the Effective Date, as it may be subsequently modified in accordance with
Sections 7.2.B, C, D or F. Licensor shall conduct audits of each Project under
the Quality Assurance Audit System no less than annually, unless Licensee
consents to a longer period in writing. Licensee shall pay all costs for such
Quality Assurance Audit System.”

 

  (ii) The first paragraph of Section 18.1.A shall be modified as follows:

“A. The Project-, Sales Facility-, and Member Service Center-level breaches
listed in (i) through (iii) below are deemed to be material breaches for which
Licensee may be placed in default with respect to any Project, Sales Facility,
or Member Service Center, as applicable, hereunder if (x) Licensor gives
Licensee notice of the breach that provides the applicable cure period for the
applicable breach (or such greater number of days given by Licensor in its sole
discretion or required by Applicable Law) and (y) Licensee fails to cure the
breach in the time and manner specified in the notice of breach or as
specifically provided in this Section 18.1.A. If Licensee fails to cure the
breach and is placed in default, then Licensor may exercise the applicable
remedy for the specific default as set forth below:”

 

  (iii) Sections 18.1.A(iv), (v), and (vi) shall be re-lettered as Sections
18.1.A(i), (ii), and (iii).

 

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  (iv) The first paragraph of Section 18.1.B shall be modified as follows:

“B. Upon any default under Section 18.1.A(i) through (iii) with respect to any
Project, Sales Facility, or Member Service Center, Licensor shall have the right
to pursue any one or more of the following remedies in addition to the remedies
with respect to such Project, Sales Facility, or Member Service Center provided
for in Sections 18.1.A(i) through (iii):”

 

  (v) Sections 18.2.A(v) is hereby modified by adding the following at the
beginning of that Section:

“Except where the failure to achieve the minimum thresholds for performance
under the Quality Assurance Audit System at such Projects is as a result of
Licensor’s or its Affiliates’ actions or inactions with respect to the provision
of management services or shared services at such Projects as contemplated under
Section 11.2.F,”

 

  (vi) Sections 18.2.A(vi) is hereby modified by adding the following at the
beginning of that Section:

“Except where the failure to meet the applicable Minimum Customer Satisfaction
Score under the Customer Satisfaction System at such Projects is as a result of
Licensor’s or its Affiliates’ actions or inactions with respect to the provision
of management services or shared services at such Projects as contemplated under
Section 11.2.F,”

 

  (vii) Sections 18.2.A(vii) is hereby modified by adding the following at the
beginning of that Section:

“Except where the failure to achieve the applicable Minimum Composite Customer
Satisfaction Score target for on-Project guest experience, Member service, and
sales and marketing under the Customer Satisfaction System at such Projects is
as a result of Licensor’s or its Affiliates’ actions or inactions with respect
to the provision of management services or shared services at such Projects as
contemplated under Section 11.2.F,”

27.3 Provisions of this Agreement Applicable to Non-Licensor Managed Projects
and Licensor Managed Projects.

A. The provisions of this Agreement except for Sections 27.1 and 27.2, including
all Exhibits hereto, shall apply to the non-Licensor Managed Projects as written
and without reference to Sections 27.1 or 27.2.

 

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B. All provisions of this Agreement not deleted or modified with respect to the
Licensor Managed Projects under Section 27.1 and 27.2 shall apply to the
Licensor Managed Projects as written and without reference to Sections 27.1 or
27.2.

28. GUARANTY.

28.1 Guaranty.

Each Guarantor unconditionally and irrevocably guaranties to Licensor that if
Licensee fails for any reason to perform when due any of its respective
obligations to Licensor under this Agreement, the Electronic Systems License
Agreement, and the Design Review Addendum (the “Obligations”) within the time
specified therein, it will without any demand or notice whatsoever promptly pay
or perform such Obligations (the “Guaranty”). The Guarantors acknowledge that
the Guaranty is a continuing guaranty and may not be revoked and shall not
otherwise terminate unless this (i) Agreement has terminated or expired in
accordance with Sections 4. or 18 and (ii) all amounts owing to Licensor by
Licensee and the Guarantors pursuant to the Obligations have been paid in full.
The liability of each Guarantor hereunder is independent of and not in
consideration of or contingent upon the liability of Licensee or any other
Guarantor and a separate action or actions may be brought and prosecuted against
any Guarantor, whether or not any action is brought or prosecuted against
Licensee or any other Guarantor or whether Licensee or any other Guarantor is
joined in any such action or actions. The Guaranty shall be construed as a
continuing, absolute and unconditional guaranty both of performance and of
payment (and not merely of collection) without regard to: (i) any modification,
amendment or variation in or addition to the terms of any of the Obligations or
any covenants in respect thereof or any security therefor, (ii) any extension of
time for performance or waiver of performance of any covenant of Licensee or any
other Guarantor or any failure or omission to enforce any right with regard to
or any other indulgence with respect to any of the Obligations, (iii) any
exchange, surrender, release of any other guaranty of or security for any of the
Obligations, or (iv) any bankruptcy, insolvency, reorganization, or proceeding
involving or affecting Licensee or any other Guarantor, it being Guarantors’
intent that Guarantors’ obligations hereunder shall be absolute and
unconditional under any and all circumstances.

28.2 Guarantor Waivers.

Each Guarantor hereby expressly waives diligence, presentment, demand, protest,
and all notices whatsoever with regard to any of the Obligations and any
requirement that Licensor exhaust any right, power or remedy or proceed against
Licensee or any other Guarantor of or any security for any of the Obligations.
Each and every default in payment or performance by Licensee of any of the
Obligations shall give rise to a separate cause of action hereunder and separate
suits may be brought hereunder against any Guarantor as each cause of action
arises. Notwithstanding the foregoing, Licensor hereby acknowledges and agrees
that the Guarantors do not waive any defense that an Obligation has already been
paid, already been performed, is not due or yet due, or is subject to offset
under the terms of this Agreement. For the avoidance of doubt, nothing herein
shall obligate any Guarantor to make any payment which is illegal for such
Guarantor to have made under any Applicable Law now or hereafter in effect in
any jurisdiction applicable to such Guarantor.

28.3 Maximum Liability of Guarantors.

It being understood that the intent of Licensor is to obtain a guaranty from
each Guarantor, and the intent of each Guarantor is to incur guaranty
obligations, in an amount no greater than the largest amount that would not
render such obligations subject to avoidance under Section 548 of the Bankruptcy
Code or any applicable state law relating to fraudulent conveyances or
fraudulent transfers, it is hereby agreed that:

 

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(a) if (i) the sum of the obligations of the Guarantors hereunder (the
“Guarantor Obligations”) exceeds (ii) the sum (such sum, the “Total Available
Net Assets”) of the Maximum Available Net Assets of the Guarantors and Licensee,
in the aggregate, then the Guarantor Obligations of each Guarantor shall be
limited to the greater of (x) the Total Available Net Assets and (y) the value
received by such Guarantor in connection with the incurrence of the Guarantor
Obligations to the greatest extent such value can be determined; and

(b) if, but for the operation of this clause (b) and notwithstanding clause
(a) above, the Guarantor Obligations of any Guarantor hereunder otherwise would
be subject to avoidance under Section 548 of the Bankruptcy Code or any
applicable state law relating to fraudulent conveyances or fraudulent transfers,
taking into consideration such Guarantor’s (i) rights of contribution,
reimbursement and indemnity from Licensee and the other Guarantors with respect
to amounts paid by such Guarantor in respect of the Obligations (calculated so
as to reasonably maximize the total amount of obligations able to be incurred
hereunder), and (ii) rights of subrogation to the rights of Licensor, then the
Guarantor Obligations of such Guarantor shall be the largest amount, if any,
that would not leave such Guarantor, after the incurrence of such obligations,
insolvent or with unreasonable small capital within the meaning of Section 548
of the Bankruptcy Code or any applicable state law relating to fraudulent
conveyances or fraudulent transfers, or otherwise make such obligations subject
to such avoidance.

Any Person asserting that the Guarantor Obligations of a Guarantor are subject
to clause (a) or are avoidable as referenced in clause (b) shall have the burden
(including the burden of production and of persuasion) of proving (i) the extent
to which such Guarantor Obligations, by operation of clause (a), are less than
the Obligations owed by Licensee to Licensor or (ii) that, without giving effect
to clause (b), the Guarantor Obligations of such Guarantor hereunder would be
avoidable and the extent to which such Guarantor Obligations, by operation of
clause (b), are less than the Obligations of Licensee, as the case may be.

[SIGNATURE BLOCKS APPEAR ON THE FOLLOWING PAGE]

 

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IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this
Agreement, under seal, as of the Effective Date.

 

LICENSOR: MARRIOTT INTERNATIONAL, INC. By:   /S/ CARL T. BERQUIST Name:   Carl
T. Berquist Title:  

Executive Vice President and

Chief Financial Officer

 

MARRIOTT WORLDWIDE CORPORATION By:   /S/ KEVIN M. KIMBALL Name:  

Kevin M. Kimball

Title:  

Vice President

 

LICENSEE: MARRIOTT VACATIONS WORLDWIDE CORPORATION By:   /S/ STEPHEN P. WEISZ
Name:   Stephen P. Weisz Title:   President and Chief Executive Officer

[ADDITIONAL SIGNATURES BLOCKS APPEAR ON THE FOLLOWING PAGE]

 

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SOLELY FOR THE PURPOSES OF THE GUARANTY IN SECTION 28.: MARRIOTT OWNERSHIP
RESORTS, INC. By:   /S/ STEPHEN P. WEISZ Name:   Stephen P. Weisz Title:  
President

 

MARRIOTT RESORTS HOSPITALITY CORPORATION By:   /S/ STEPHEN P. WEISZ Name:  
Stephen P. Weisz Title:   President

 

MVCI ASIA PACIFIC PTE. LTD. By:   /S/ PASCALE DILLON Name:   Pascale Dillon
Title:   Director

 

MVCO SERIES LLC By:   /S/ STEPHEN P. WEISZ Name:   Stephen P. Weisz Title:  
President

 

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EXHIBIT A

DEFINITIONS

When used in this Agreement the following terms have the meanings indicated:

“AAA Rules” has the meaning set forth in Section 22.4.A.

“Accounting Period” means any four (4) week period having the same beginning and
ending dates as Licensee’s four (4) week accounting periods (except that an
Accounting Period may occasionally contain five (5) weeks when necessary to
conform Licensee’s accounting system to the calendar). Licensee shall have the
right, at its discretion, to modify the definition of Accounting Period to mean
any one of the twelve (12) calendar months in a calendar year or such other
period of time as is consistent with the accounting periods that Licensee may
implement, from time to time with respect to the Licensed Business.

“Affected Services” has the meaning set forth in Section 11.2.C.

“Affiliate” means, for any Person, a Person that is directly (or indirectly
through one or more intermediaries) Controlling, Controlled by, or under common
Control with such Person.

“Agreed Territorial Protections” has the meaning set forth in Section 5.7.A.

“Agreement” means this License Agreement, including any exhibits, attachments,
and addenda.

“Applicable Law” means all laws, regulations, ordinances, rules, orders,
decrees, and requirements of any governmental authority having jurisdiction over
the Licensed Business or over the Projects, the Sales Facilities, Licensee,
Guarantor, Licensor or this Agreement.

“Available Net Assets” shall mean, with respect to any Person, the amount, as of
the respective date of calculation, by which the sum of such Person’s assets
(including subrogation, indemnity, contribution, reimbursement and similar
rights that such Person may have, but excluding any such rights in respect of
the Guarantor Obligations), determined on the basis of a “fair valuation” or
their “fair saleable value” (whichever is the applicable test under Section 548
and other relevant provisions of the Bankruptcy Code and the relevant state
fraudulent conveyance or transfer laws), is greater than the amount that will be
required to pay all of such Person’s debts, in each case matured or unmatured,
contingent or otherwise, as of the date of calculation, but excluding
liabilities arising under the Guaranty set forth in Section 28. of this
Agreement and excluding, to the maximum extent permitted by Applicable Law with
the objective of avoiding rendering such Person insolvent, liabilities
subordinated to the Obligations arising out of loans or advances made to such
Person by any other Person.

“Base Royalty” means fifty million dollars ($50,000,000) per calendar year,
which amount shall be adjusted by fifty percent (50%) of the GDP Deflator every
5 calendar years, compounded annually, starting the fifth (5th) anniversary of
the Effective Date.

“Brand Loyalty Programs” means the programs generally used for MHR Hotels that
are designed to increase brand loyalty (and consequently market share, length of
stay and frequency of usage of such hotels and other branded and affiliated
products), and/or any similar, complementary, or successor program. As of the
Effective Date, such programs include “Marriott Rewards”.

 

Exhibit A - Page 1

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“Brand Standards” means the Design Guide; the Brand Style and Communications
Standards; the Operational Brand Standards; and the Quality Assurance Program
(including the Quality Assurance Audit System and the Customer Satisfaction
System), as of the Effective Date and as thereafter modified, amended or
supplemented in accordance with Section 7.2. The Brand Standards also include
Licensor’s brand standards for the Upscale Brand Segment and Upper-Upscale Brand
Segment of Licensor Lodging Facilities, which include, without limitation,
standards and specifications related to health, fire and life safety, security
and terrorism standards, the bedding package, customer accessible high speed
internet access, Electronic Systems Standards, standards related to transient
rentals, standards related to food and beverage services and outlets, but only
to the extent applicable to the Licensed Business and with appropriate
modifications to reflect appropriate differences between hotel service levels
and service levels applicable to the Licensed Destination Club Business and the
License Whole Ownership Residential Business. The Design Guide; the Brand Style
and Communications Standards; the Operational Brand Standards; and the Quality
Assurance Program will be set forth on Licensee’s intranet site. All other Brand
Standards will be set forth on Licensor’s intranet site. The Brand Standards may
be in paper or in electronic form.

“Brand Style and Communications Standards” means those standards related to use,
style, and presentation of the Licensed Marks and other communications regarding
the Licensed Business as set forth in the Brand Style and Communications
Standards document as it exists on the Effective Date, as they may be modified
pursuant to Section 7.2.

“Branded Elements” means (i) the Brand Loyalty Programs or successor thereto,
(ii) Licensor-owned or -controlled branded elements of the Reservation System,
(iii) Licensor-owned or -controlled branded elements of Licensor’s website,
marriott.com, or any additional pages or sites within marriott.com, (iv) use of
the Brand Loyalty Programs member lists, (v) access to MHR Hotels, JW Marriott
Hotels and Resorts, Renaissance Hotels and Resort, and Courtyard by Marriott
Hotels for marketing of Destination Club Products, and (vi) access to MHR
Hotels, JW Marriott Hotels and Resorts, Renaissance Hotels and Resort, and
Courtyard by Marriott Hotels as an ancillary benefit exchange option for
Destination Club Products. Notwithstanding the foregoing, the platform,
infrastructure, coding, and non-customer facing elements of the Brand Loyalty
Programs, the Reservation System, and the Licensor website(s) shall not be
considered “Branded Elements” for purposes of this Agreement.

“Business Changes” has the meaning set forth in Section 11.2.C.

“Case Goods” means furniture and fixtures used in the Projects and their Public
Facilities, such as chests, armoires, chairs, beds, headboards, desks, tables,
television sets, mirrors, pictures, wall decorations, graphics and all other
unspecified items of the same class.

“Change in Control” shall be deemed to have occurred when (i) any “person” or
“group” (as such terms are used in Sections 13(e) and 14(d) of the Securities
Exchange Act), other than a Significant Shareholder or a “group” of Significant
Shareholders, acquires beneficial ownership (within the meaning of Rule 13d-3
under the Securities Exchange Act) of, or the power to exercise, directly or
indirectly, effective control for any purpose over, shares representing more
than (A) fifteen percent (15%) of the combined voting power of the
then-outstanding securities entitled to vote generally in elections of directors
of Licensee if Licensee is then a publicly traded company or (B) thirty percent
(30%) of the combined voting power of the then-outstanding securities entitled
to vote generally in elections of directors of Licensee if Licensee is not then
a publicly traded; (ii) the stockholders of Licensee approve any plan or
proposal for the liquidation, dissolution or winding up of Licensee; (iii) the
earlier of (A) the date Licensee (x) consolidates with or merges into any other
Person or any other Person merges into Licensee unless the stockholders of
Licensee immediately before such transaction own, directly or indirectly
immediately following such transaction, at least a majority of the combined
voting power of the

 

Exhibit A - Page 2

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outstanding voting securities of the Person resulting from such transaction in
substantially the same proportion as their ownership of the outstanding
securities entitled to vote generally in elections of directors of Licensee
immediately before such transaction, or (y) conveys, transfers or leases all or
a substantial portion of all of Licensee’s assets to any Person (other than a
wholly-owned subsidiary as a result of which Licensee becomes a holding company)
or (B) the date the stockholders of Licensee approve a definitive agreement to
(x) consolidate Licensee with or merge Licensee into any other Person unless the
stockholders of Licensee immediately before such transaction own, directly or
indirectly immediately following such transaction, at least a majority of the
combined voting power of the outstanding voting securities of the Person
resulting from such transaction in substantially the same proportion as their
ownership of the outstanding securities entitled to vote generally in elections
of directors of Licensee immediately before such transaction or (y) convey,
transfer or lease all or a substantial portion of all of Licensee’s assets to
any Person (other than a wholly-owned subsidiary as a result of which Licensee
becomes a holding company); or (iv) Continuing Directors do not at any time
constitute a majority of the Board of Directors of Licensee (or, if applicable,
a successor corporation to Licensee).

“Changes” has the meaning stated in Section 13.4.B.

“Co-Located Hotel” has the meaning set forth in Section 5.4.A.

“Co-Located Licensor Lodging Facility” has the meaning set forth in Section 5.6.

“Continuing Director” means at any date a member of Licensee’s Board of
Directors (i) who was a member of such board on the Effective Date or (ii) who
was nominated or elected by at least a majority of the directors who were
Continuing Directors at the time of such nomination or election or whose
election to Licensee’s Board of Directors was recommended or endorsed by at
least a majority of the directors who were Continuing Directors at the time of
such nomination or election or such lesser number comprising a majority of a
nominating committee if authority for such nominations or elections has been
delegated to a nominating committee whose authority and composition have been
approved by at least a majority of the directors who were Continuing Directors
at the time such committee was formed.

“Competing Entities” has the meaning stated in Section 9.1.F.

“Condominium Hotel” means a hotel in which the guest rooms may be placed in a
rental pool or rental program and some or all of the guest rooms are financed by
virtue of a lease, whole ownership condominium regime, strata title, or any
similar regime. Licensed Residential Projects operating under the “Grand
Residences by Marriott” or “Ritz-Carlton Residences” names shall not be deemed
to be Condominium Hotels for the purposes of this Agreement.

“Control” (and any form thereof, such as “Controlling” or “Controlled”) means,
for any Person, the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of such Person.

“Controlled Property Owners’ Association” means a Property Owners’ Association
that is controlled by Licensee or one of its Affiliates.

“Customer Information” means the names, addresses, phone and fax numbers, email
addresses and other personal information of owners, customers or potential
owners or customers, mailing lists, “lead” lists, contact lists, or similar
lists or databases, and related data.

 

Exhibit A - Page 3

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“Customer Satisfaction System” means the mechanism used by Licensee to
administer and compile customer satisfaction data to measure different aspects
of the customer experience, including product, sales and Member services, as of
the Effective Date as it may be modified pursuant to Section 7.2. As of the
Effective Date, the Customer Satisfaction System consists of the Guest
Satisfaction Survey Program, the Owner Satisfaction Survey Program, and the
Sales and Marketing Satisfaction Program.

“CSS Measurement Period” means the time period set forth in the Customer
Satisfaction System used for measuring customer satisfaction under the Customer
Satisfaction System.

“Data Protection Laws” means data protection and privacy laws and regulations
under Applicable Law.

“Deficiency” has the meaning set forth in Section 8.4.C.

“Deflag” or “Deflagging” means (i) with respect to a Project, when a Project has
been removed from the System and is no longer operating under the Licensed
Marks, (ii) with respect to a Non-Site Specific Destination Club Ownership
Vehicle, when a Non-Site Specific Destination Club Ownership Vehicle has been
removed from the System and is no longer operating as part of a Licensed
Non-Site Specific Destination Club Program or under the Licensed Marks, and
(iii) with respect to a Licensor Lodging Facility, when a Licensor Lodging
Facility has been removed from the applicable system of Licensor Lodging
Facilities and is no longer operating under any of the Proprietary Marks.

“Design Guide” means the guide that comprises the standards necessary for
planning, constructing, renovating, and refurbishing Projects, including site
plans, architectural, mechanical, electrical, civil engineering, landscaping,
and interior design, as set forth in the Design Guide document as it exists on
the Effective Date, as it may be modified pursuant to Section 7.2.

“Design Review Addendum” means the Design Review Addendum attached to this
Agreement as Exhibit G, which is incorporated by reference in this Agreement.

“Destination Club Business” means the business of (i) developing and operating
Destination Club Projects; (ii) developing, selling, marketing, managing,
operating and financing Destination Club Products and Destination Club Units;
(iii) developing, selling, marketing and operating Exchange Programs;
(iv) managing rental programs associated with Destination Club Products;
(v) establishing and operating sales facilities for Destination Club Products;
(vi) managing the Member services related to Destination Club Products; and
(vii) managing or operating the amenities of Destination Club Projects (e.g.,
country clubs, spas, golf courses, food and beverage outlets, gift and sundry
shops, etc.) located at or in the general vicinity of Destination Club Projects,
and businesses that are ancillary to the foregoing activities (e.g. travel
insurance), all of which are associated with Destination Club Products.

“Destination Club Competitor” means any Person or an Affiliate of any Person
that (i) owns or has direct or indirect Ownership Interest in a Destination Club
Competitor Brand or (ii) is a master franchisee, master franchisor or
sub-franchisor for a Destination Club Competitor Brand (for the purposes hereof,
the terms master franchisee, master franchisor, and sub-franchisor each mean a
Person that has been granted the right by a franchisor to offer and sell
subfranchises for such Person’s own account). A Person that has an interest in a
Destination Club Competitor Brand merely as a franchisee or as a mere passive
investor that has no Control or influence over the business decisions of the
Destination Club Competitor Brand, such as limited partners in a partnership or
as a mere non-Controlling stockholder in a corporation, is not a Destination
Club Competitor for purposes of this Agreement.

 

Exhibit A - Page 4

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“Destination Club Competitor Brand” means a branded Destination Club Business
chain with both (i) one thousand (1,000) or more Destination Club Units and
(ii) ten (10) or more Destination Club Projects; provided, however, that
Destination Club Competitor Brand shall not include a branded Destination Club
Business created or developed by Licensee or its Affiliates.

“Destination Club Project” means a project that includes Destination Club Units,
including all land used in connection with the project and (i) the freehold or
long-term leasehold interest to the site of the project; (ii) all improvements,
structures, facilities, entry and exit rights, parking, pools, landscaping, and
other appurtenances (including the project building and all operating systems)
located at the site of the project; and (iii) all furniture, fixtures,
equipment, supplies and inventories installed or located in such improvements at
the site of the project.

“Destination Club Royalty Fees” has the meaning stated in Section 3.1.A.

“Destination Club Products” means timeshare, fractional, interval, vacation
club, destination club, vacation membership, private membership club, private
residence club, points club, and other forms of products, programs and services,
in each case wherein purchasers acquire an ownership interest, use right or
other entitlement to use one or more of certain determinable overnight
accommodations and associated facilities in a system of units and facilities on
a recurring, periodic basis and pay for such ownership interest, use right or
other entitlement in advance (whether payments are made in lump-sum or
periodically over time), and associated Exchange Programs.

“Destination Club Unit” means a physical unit used for overnight accommodation
as part of a Destination Club Product.

“Dispute” means any dispute, controversy, or claim arising out of or relating to
this Agreement, or the making, breach, termination, or invalidity of this
Agreement, or the relationship created thereby.

“Effective Date” has the meaning stated in the preamble to this Agreement.

“Electronic Systems” means all Software, Hardware and all electronic access to
Licensor’s systems and data, licensed or made available to Licensee relating to
the System, including the Reservation System and any other system established
under Section 10.

“Electronic Systems License Agreement” means the electronic systems license
agreement that will be executed by Licensee as a condition to using the
Electronic Systems.

“Electronic Systems Standards” means Licensor’s standards, policies, procedures,
guidelines and practices with respect to (i) systems that interface with
Licensor’s Electronic Systems, (ii) information technology and systems that
store or transmit Licensor Confidential Information, and (iii) data security and
privacy and compliance with Data Protection Laws as applicable to the systems
and information technology referred to in clauses (i) and (ii) in this
definition, in each case as updated from time to time.

“Employee Benefits Allocation Agreement” means the Employee Benefits and Other
Employment Matters Allocation Agreement between Marriott International, Inc. and
Marriott Vacations Worldwide Corporation entered into in connection with the
Spin-Off Transaction.

“Exchange Program” means any method, arrangement, program or procedure for the
voluntary exchange by Members of the right to use and occupy Destination Club
Units for the right to use, occupy or benefit from other accommodations,
facilities, programs or services.

 

Exhibit A - Page 5

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“Excluded Area” means any countries and jurisdictions in which Licensor does not
own a trademark registration for an applicable Licensed Mark, whether due to a
prior third party registration or application or use of a conflicting mark or
for other reasons, and includes any Unregistered Areas.

“Existing Golf Facilities” means the golf courses, facilities and services
managed and operated by Licensee as of the Effective Date as set forth in
Exhibit I.

“Existing Projects” means the Licensed Destination Club Projects and the
Licensed Residential Projects that are existing and in operation or that have
been approved by Licensor as of the Effective Date as set forth in Exhibit B.

“Expert” shall mean an independent, nationally or internationally recognized
consulting firm or individual having a minimum of ten (10) years of
international experience in the timeshare and lodging industry and qualified to
resolve the issue in question, provided that an Expert shall not include any
individual who is, as of the date of appointment or within six (6) months prior
to such date, employed either directly or indirectly as a consultant in
connection with any other matter, by a party (or its Affiliates) seeking to
appoint such person.

“Extension Term” has the meaning set forth in Section 4.2.

“Extraordinary Event” means any of the following events, regardless of where
they occur or their duration: acts of nature (including hurricanes, typhoons,
tornadoes, cyclones, other severe storms, winds, lightning, floods, earthquakes,
volcanic eruptions, fires, explosions, disease, or epidemics); fires and
explosions caused wholly or in part by human agency; acts of war or armed
conflict; riots or other civil commotion; terrorism (including hijacking,
sabotage, chemical or biological events, nuclear events, disease-related events,
bombing, murder, assault and kidnapping), or the threat thereof; strikes or
similar labor disturbances; embargoes or blockades; shortage of critical
materials or supplies; action or inaction of governmental authorities that have
an impact upon the Licensed Business, excluding, however, general economic
and/or market conditions not caused by any of the events described herein.

“Faldo Contract” has the meaning set forth in Section 1.B.

“Faldo Marks” means the names, marks and other intangible property used solely
for the operation of Faldo Golf Facilities pursuant to the Faldo Contract as of
the Effective Date or thereafter, including without limitation the registrations
for marks containing the Faldo name and the Faldo logo to be assigned by
Licensor pursuant to Section 1.B. The Faldo Marks do not include the name or
mark “Marriott” or any other Proprietary Marks.

“Faldo Golf Facilities” means golf facilities that operate under the Faldo Marks
located on sites at or adjacent to Projects.

“Frequent Traveler Program” See definition of Brand Loyalty Program.

“GDP Deflator” means the “Gross Domestic Product Implicit Price Deflator” issued
from time to time by the United States Bureau of Economic Analysis of the
Department of Commerce, or if the aforesaid GDP Deflator is not at such time so
prepared and published, any comparable index selected by Licensor and reasonably
satisfactory to Licensee (a “Substitute Index”) then prepared and published by
an agency of the government of the United States, appropriately adjusted for
changes in the manner in which such index is prepared and/or year upon which
such index is based. Any dispute regarding the selection of the Substitute Index
or the adjustments to be made thereto shall be settled by a panel of three
(3) Experts in accordance with Section 22.5. Except as otherwise expressly
stated herein, whenever a

 

Exhibit A - Page 6

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number or amount is required to be “adjusted by the GDP Deflator,” or similar
terminology, such adjustment shall be equal to the percentage increase or
decrease in the GDP Deflator which is issued for the month in which such
adjustment is to be made (or, if the GDP Deflator for such month is not yet
publicly available, the GDP Deflator for the most recent month for which the GDP
Deflator is publicly available) as compared to the GDP Deflator which was issued
for the month in which the Effective Date occurred.

“Gross Commissions” means the gross commissions paid or to be paid to Licensee
or its Affiliates in connection with the initial sale or re-sale by Licensee or
its Affiliates on behalf of third parties of interests held by such third
parties in Licensed Destination Club Units or in Licensed Residential Units
(without deduction for any costs or Taxes). For the avoidance of doubt, Gross
Commissions exclude maintenance fees, management fees, dues, exchange fees,
enrollment fees, property management fees, or interest or financing charges with
respect to financed purchases.

“Gross Sales Price” means the gross sale price paid or to be paid to Licensee or
its Affiliates for the initial sale or re-sale of interests held by Licensee or
its Affiliates in Licensed Destination Club Units or in Licensed Residential
Units, whether directly or through the issuance of beneficial interests, other
ownership interests, use rights or other entitlements (whether the value of
which is denominated as points, weeks, or any other currency), including
interests in a land trust or similar real estate vehicle (without deduction for
any transaction costs including brokerage commissions and expenses, but less
applicable Taxes paid by Licensee or its Affiliates or gross up for Taxes paid
by purchasers, in each case assessed with respect to such sale or re-sale
transaction (and not on the basis of income)), regardless of whether any part
thereof is financed by Licensee or any third party. For the avoidance of doubt,
the Gross Sales Price excludes maintenance fees, management fees, dues, exchange
fees, enrollment fees, property management fees, or interest or financing
charges with respect to financed purchases. To the extent that interests in
Licensed Destination Club Units are used as consideration, in whole or in part,
for the purchase of interests in other Licensed Destination Club Units, then the
value ascribed to such interests shall be the list price of the acquired
interests, less any applicable discount.

“Guarantor” means individually and collectively the Person(s) who guarantee(s)
the performance of Licensee’s obligations under this Agreement, the Electronic
Systems License Agreement, and the Design Review Addendum under the Guaranty.

“Guarantor Obligations” has the meaning set forth in Section 28.3.

“Guaranty” means the guaranty set forth in Section 28.

“Hardware” means all computer hardware and other equipment (including all future
upgrades, enhancements, additions, substitutions, and other modifications
thereof) required for the operation of and connection to any Electronic System.

“Hilton Brand” means any brand owned or controlled by Hilton Worldwide or its
successors-in-interest (excluding Licensor or its Affiliates) as of the
Effective Date or at any time in the future, regardless of whether such brand is
subsequently acquired by a third party. As of the Effective Date, the Hilton
Brands include Waldorf Astoria Hotels and Resorts, Conrad Hotels and Resorts,
Hilton Hotels and Resorts, Doubletree by Hilton, Embassy Suites, Hampton, Home2,
and Hilton Grand Vacations.

“Illegal Facilities” has the meaning set forth in Section 9.1.G.

“Initial Term” has the meaning set forth in Section 4.1.

 

Exhibit A - Page 7

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“Interest Rate” means the lesser of: (i) LIBOR plus 800 basis points; or
(ii) the maximum rate permitted by applicable usury laws.

“Leisure/Vacation Product” means a product designed and intended primarily for
leisure and vacation travelers and uses, which may include limited meeting space
or multipurpose rooms or facilities designed for internal use by Licensee and
its Affiliates or use by small groups or for Property Owners’ Associations
meetings, as well as certain customary business amenities typically found at
leisure hotels, such as high-speed internet access, business services centers
and fax machines. For the avoidance of doubt, the following intended uses are
consistent with a Leisure/Vacation Product: recreational, social, educational or
other affinity group events, meetings or classes (such as cooking classes and
educational seminars); family reunions; the conducting of business during
leisure and vacation stays; and the fact that some customers may purchase and
use Destination Club Products primarily for business purposes, especially in
urban locations such as Boston or London. A Leisure/Vacation Product does not
include a product designed and intended primarily for business travelers or for
group, meeting, association or convention business.

“LIBOR” means the rate per annum for deposits in U.S. dollars for a one
(1) month period appearing on that page of the Bloomberg’s Report which displays
British Banker’s Association Interest Settlement Rates for deposits in U.S.
dollars (or if such page or service shall cease to be available, such other page
on that service or such other service designated by the British Banker’s
Association for the display of such Association’s Interest Settlement Rates for
Dollar deposits) as of 11:00 a.m. (London, England time) on the first business
day of each month.

“Licensed Business” means, collectively, the Licensed Destination Club Business
and the Licensed Whole Ownership Residential Business operated under the
Licensed Marks and the System pursuant to this Agreement.

“Licensed Business Customer Information” means the names, addresses, phone and
fax numbers, email addresses and other personal information of owners, customers
or potential owners or customers (including all Members and their family
members), mailing lists, “lead” lists, contact lists, or similar lists or
databases, and related data, in each case in whatever form and to the extent
such information (i) was in Licensee’s possession as of the date of the Spin-Off
Transaction, (ii) obtained by Licensee in connection with the Licensed Business
on or after the date of the Spin-Off Transaction (including directly or
indirectly obtained from Licensor or its Affiliates or by or through the Brand
Loyalty Program), or (iii) any Modified Third-Party List.

“Licensed Destination Club Business” means the Destination Club Business
operated under the name “Marriott Vacation Club” and/or “Grand Residences by
Marriott” and the System and using other Licensed Marks, all pursuant to this
Agreement. The Licensed Destination Club Business does not include the business
of managing or franchising hotels, other overnight lodging accommodation
products offered for transient rental, except as specifically provided in
Section 9.2, or any Condominium Hotel. The Licensed Destination Club Business
licensed hereunder also excludes any passenger cruise ship or cruise line
interests, usage rights, products or services; provided, however, that Licensee
shall have the right to include as part of the Licensed Destination Club
Business Destination Club Units on passenger cruise ships approved by Licensor
as to quality, services and brand positioning, using the Licensed Marks
(provided that the number of units on each such passenger cruise ship shall not
exceed 20 units), and Licensee shall have the right to offer usage rights on
third party passenger cruise ships through an Exchange Program associated solely
with Licensed Destination Club Products provided to Members.

 

Exhibit A - Page 8

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“Licensed Destination Club Products” means Destination Club Products existing as
of the Effective Date or to be developed in future, and which are sold,
marketed, developed, and/or operated under the name “Marriott Vacation Club”
and/or “Grand Residences by Marriott” or the System or using other Licensed
Marks, all pursuant to this Agreement. Licensed Destination Club Products shall
exclude hotels and other overnight lodging accommodation products offered for
transient rental, subject to Licensee’s rights set forth in Section 9.2.

“Licensed Non-Site Specific Destination Club Program” means a Non-Site Specific
Destination Club Program operating under the Licensed Marks. As of the Effective
Date, the Licensed Non-Site Specific Destination Club Programs include the
“Marriott Vacation Club Destinations” program and the “Marriott Vacation Club –
Asia Pacific” program.

“Licensed Destination Club Projects” means Destination Club Projects existing as
of the Effective Date or to be developed in future, and which are marketed,
developed, and/or operated under the name “Marriott Vacation Club” and/or “Grand
Residences by Marriott” or the System or using other Licensed Marks, all
pursuant to this Agreement. Licensed Destination Club Projects shall exclude
hotels and other overnight lodging accommodation products offered for transient
rental, subject to Licensee’s rights set forth in Section 9.2. Where the
Licensed Destination Club Project is limited to Licensed Destination Club Units
being offered within a larger, mixed-use facility, and Licensee does not control
the other improvements, structures, facilities, entry and exit rights, parking,
pools, landscaping, and other appurtenances located at such facility, then the
Licensed Destination Club Project shall refer only to such Licensed Destination
Club Units, and the other improvements, structures, facilities, entry and exit
rights, parking, pools, landscaping, and other appurtenances located at such
facility shall be of a quality that is comparable to that required of Licensed
Destination Club Projects generally under this Agreement.

“Licensed Destination Club Units” means Destination Club Units existing as of
the Effective Date or to be developed in future, and which are sold, marketed,
developed, and/or operated under the name “Marriott Vacation Club” and/or “Grand
Residences by Marriott” or the System or using other Licensed Marks, all
pursuant to this Agreement.

“Licensed Domains” has the meaning stated in Section 13.4.B. The Licensed
Domains include the Licensed Project Domains.

“Licensed Marks” means (i) (a) the name and mark “Marriott” solely as used in
the names and marks “Marriott Vacation Club” and “Grand Residences by Marriott”,
in the corporate name “Marriott Vacations Worldwide”, in the Permitted Licensee
Affiliate Names, and in the domain names documented by the parties, and the name
and mark “Marriott’s” solely as used in the name of Projects, but not the name
“Marriott” or “Marriott’s” used by itself or with other words, terms, designs or
other elements, and (b) the Licensed Project Names; (ii) the trademark
“Marriott” in stylized script format solely as used in the names and marks
“Marriott Vacation Club” and “Marriott Vacation Club International” but not to
be used by itself or with other words, terms, designs, or other elements;
(iii) the Sun Logo used in association with Marriott Vacation Club; (iv) the Sun
and Moon Logo used in association with Marriott Vacation Club International;
(v) the name and mark “Marriott” solely as used in the name and mark “Marriott
Golf” pursuant to the terms set forth in Section 1.B., but not the name
“Marriott” used by itself or with other words, terms, designs or other elements;
and (vi) certain specified additional names and marks on an exclusive or
non-exclusive basis that Licensor may specify in writing from time to time. The
Licensed Marks shall not include other hotel brands or marks or other marks
owned by Licensor or its Affiliate. The Licensed Marks do not include the
Licensee Marks.

“Licensed Project Domains” means the domain names that contain, reference, or
are comprised of the Licensed Project Names.

 

Exhibit A - Page 9

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“Licensed Project Names” means the components of the full name and mark for one
or more individual Projects, but excluding the names and marks “Marriott” or
“Marriott’s” in any form. For example, “Cypress Harbour” would constitute the
Licensed Project Name for a Project with respect to which the full name is
“Marriott’s Cypress Harbour”. Notwithstanding the foregoing, the Licensed
Project Names do not include the name and mark “Kauai Lagoons” and the related
design mark, which shall be assigned by Licensor or its Affiliate to Licensee
and be a Licensee Mark.

“Licensed Residential Projects” means Residential Projects existing as of the
Effective Date or to be developed in the future, and which are marketed,
developed, and/or operated under the name “Grand Residences by Marriott” or the
System or using other Licensed Marks, all pursuant to this Agreement. Where the
Licensed Residential Project is limited to Licensed Residential Units being
offered within a larger, mixed-use facility, and Licensee does not control the
other improvements, structures, facilities, entry and exit rights, parking,
pools, landscaping, and other appurtenances located at such facility, then the
Licensed Residential Project shall refer only to such Licensed Residential
Units, and the other improvements, structures, facilities, entry and exit
rights, parking, pools, landscaping, and other appurtenances located at such
facility shall be of a quality that is comparable to that required of Licensed
Residential Projects generally under this Agreement.

“Licensed Residential Units” means Residential Units existing as of the
Effective Date or to be developed in future, and which are sold, marketed,
developed, and/or operated under the name “Grand Residences by Marriott” or the
System or using other Licensed Marks, all pursuant to this Agreement.

“Licensed Services” means timeshare and/or residential services, including
development, marketing, sales, financing and management activities related to
timeshare and residential services.

“Licensed Whole Ownership Residential Business” means the Whole Ownership
Residential Business operated under (i) the name “Grand Residences by Marriott”,
and (ii) the System and other Licensed Marks, all pursuant to this Agreement.

“Licensee” has the meaning stated in the preamble to this Agreement.

“Licensee Confidential Information” means any confidential information,
knowledge, trade secrets, business information, operating procedures and
know-how that are not included in the Brand Standards, which is identified in
writing as confidential and is proprietary to Licensee or its Affiliates.
Licensee Confidential Information does not include any Licensor Confidential
Information, or Licensor Intellectual Property. Additionally, Licensee
Confidential Information shall not include information that Licensor can
demonstrate was, at the time of disclosure by Licensee to Licensor, part of the
public domain or became part of the public domain, by publication or otherwise,
except by breach of the provisions of this Agreement.

“Licensee Intellectual Property” means (i) the Licensee Marks, (ii) the Faldo
Marks, and (iii) all other intangible property used by Licensee in connection
with the Licensed Business, including trade secrets, customer lists, operating
procedures and know-how that are not included in the Brand Standards, copyrights
and copyrightable materials, patents, and online locators (including the
vacationclub.com domain name and other domain names (including domain names
assigned by Licensor or its Affiliates to Licensee), email addresses, metatags,
screen names, and social networking names) that do not comprise or contain any
of the Licensed Marks, provided, the Licensee Intellectual Property does not
include any of the Licensor Intellectual Property.

 

Exhibit A - Page 10

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“Licensee Marks” means all trademarks, service marks, trade names, symbols,
emblems, logos, insignias, slogans and designs and other indicia of origin
(including restaurant names, lounge names, and other outlet names) which are
currently exclusively used to identify or are otherwise used in connection with
the Licensed Business (and not in any of Licensor’s or its Affiliates’ other
businesses) (whether registered or unregistered, and whether used alone or in
connection with any other words, trademarks, service marks, trade names,
symbols, emblems, logos, insignias, indicia of origin, slogans, and designs)
other than the Licensed Marks and other than any marks or names that contain the
word “Marriott” or other Licensor Intellectual Property. The Licensee Marks
include the name and mark “Horizons” and the name and mark “Grand Residences”and
all trademarks and names assigned by Licensor to Licensee under Section 13.7.A.
The Licensee Marks do not include any of the Proprietary Marks.

“Licensee’s Website” has the meaning stated in Section 13.4.

“Licensor” means, collectively, Marriott International, Inc. and Marriott
Worldwide Corporation and their successors and assigns.

“Licensor Confidential Information” means: (i) the Brand Standards, including
the Brand Standards for the design, construction, renovation or operation of the
Projects; (ii) Electronic Systems and accompanying documentation developed for
the System or elements thereof; (iii)Licensed Business Customer Information; or
(iv) any confidential information, knowledge, trade secrets, business
information or know-how identified as confidential obtained from Licensor or its
Affiliates (a) through the use of any part of the System or concerning the
System or the operation of the Licensed Business and the Projects or (b) under
any Transaction Agreements. Licensor Confidential Information does not include
any Licensee Confidential Information or Licensee Intellectual Property.
Additionally, Licensor Confidential Information shall not include information
that Licensee can demonstrate was, at the time of disclosure by Licensor to
Licensee, part of the public domain or became part of the public domain, by
publication or otherwise, except by breach of the provisions of this Agreement.

“Licensor Faldo Services” has the meaning set forth in Section 1.B.

“Licensor Intellectual Property” means (i) the Licensed Marks, and (ii) all
other intangible property licensed to Licensee for use in connection with the
Licensed Business, including trade secrets, Licensed Business Customer
Information, Brand Standards, know-how, copyrights and copyrightable materials,
and online locators that comprise or contain any of the Licensed Marks
(including domain names, email addresses, metatags, screen names and social
networking names), provided, the Licensor Intellectual Property does not include
any of the Licensee Intellectual Property.

“Licensor Lodging Facilities” means all hotels and other lodging facilities,
chains, brands, or hotel systems owned, leased, under development, or operated
or franchised, now or in the future, by Licensor or any of its Affiliates,
including: (i) Marriott Hotels, Resorts and Suites; Marriott Marquis Hotels; JW
Marriott Hotels and Resorts; Marriott Conference Centers; Marriott Executive
Apartments; Courtyard by Marriott Hotels; Fairfield Inn by Marriott Hotels;
Fairfield Inn & Suites by Marriott Hotels; Nickelodeon Resorts by Marriott;
Renaissance Hotels and Resorts; Renaissance ClubSport; Autograph Collection
Hotels; Residence Inn by Marriott Hotels; Bvlgari Hotels and Resorts; Edition
Hotels; Ritz-Carlton Hotels and Resorts; SpringHill Suites by Marriott Hotels;
TownePlace Suites by Marriott Hotels; and AC Hotels by Marriott; (ii) other
lodging products or concepts, including Marriott ExecuStay; JW Marriott
Residences; Marriott Marquis Residences; and (iii) any other lodging product or
concept developed or utilized by Licensor or any of its Affiliates in the
future.

“Licensor Management Agreement” has the meaning set forth in Section 8.3.B.

“Licensor Managed Projects” has the meaning set forth in Section 8.3.B.

 

Exhibit A - Page 11

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“Licensor Usage Fees” means the fees for use of Licensor’s or its Affiliates’
Electronic Systems and other systems, copyrights and other materials, including,
without limitation, the Reservation System Fee and the fees for any other system
established under Section 10.

“Lodging Business” means the business of developing, promoting, constructing,
owning, leasing, acquiring, financing, managing, and/or operating, or
authorizing or otherwise licensing or franchising to other Persons the right to
develop, promote, construct, own, lease, acquire, finance, manage and/or
operate, hotels, resorts, corporate housing, serviced apartments, or other
transient or extended stay lodging facilities, including Condominium Hotels, but
does not include activities included in the term Destination Club Business or
Whole Ownership Residential Business.

“Lodging Competitor” means any Person or an Affiliate of any Person that
(i) owns or has direct or indirect Ownership Interest in a Lodging Competitor
Brand or (ii) is a master franchisee, master franchisor or sub-franchisor for a
Lodging Competitor Brand (for the purposes hereof, the terms master franchisee,
master franchisor, and sub-franchisor each mean a Person that has been granted
the right by a franchisor to offer and sell subfranchises for such Person’s own
account). A Person that has an interest in a Lodging Competitor Brand merely as
a franchisee or as a mere passive investor that has no Control or influence over
the business decisions of the Lodging Competitor Brand, such as limited partners
in a partnership or as a mere non-Controlling stockholder in a corporation, is
not a Lodging Competitor for purposes of this Agreement.

“Lodging Competitor Brand” means (i) a branded full service or luxury hotel
chain with both (x) four thousand (4,000) or more rooms and (y) twenty (20) or
more hotels or (ii) a branded select service or extended stay hotel chain with
both (x) ten thousand (10,000) or more rooms and (y) fifty (50) or more hotels;
provided, however, that Lodging Competitor Brand shall not include a branded
hotel chain created or developed by Licensee or its Affiliates.

“Logoed Merchandise” has the meaning stated in Section 9.1.G.

“Management Company” has the meaning stated in Section 8.3.

“Management Company Acknowledgment” means an acknowledgment signed by the
Management Company, Licensee and Licensor, the current form of which is attached
hereto as Exhibit C.

“Marketing Content” means all advertising, marketing, promotional, sales and
public relations concepts, press releases, materials, copy, concepts, plans,
programs, seminars, brochures, directories, and sales and marketing campaigns or
other information to be released to the public, whether in paper, digital,
electronic or computerized form, or in any form of media now or hereafter
developed.

“Marriott Family Member” means J.W. Marriott, Jr., Richard E. Marriott, any
brother or sister of J.W. Marriott, Sr., any children or grandchildren of any of
the foregoing, any spouses of any of the foregoing, or any trust or other entity
established primarily for the benefit of one or more of the foregoing.

“Maximum Available Net Assets” shall mean, with respect to any Person, the
greatest of the Available Net Assets of such Person calculated as of the
following dates: (A) the Effective Date, and (B) each date on which such Person
expressly reaffirms the Guaranty set forth in Section 28 of this Agreement.

“Member” means (i) an owner of a timeshare, fractional, or interval ownership
interest, use right or other entitlement to use a Destination Club Unit or
(ii) an owner of an interest in a Residential Unit.

 

Exhibit A - Page 12

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“Member Service Center” means a facility at which Licensee provides Members with
off-site services with respect to their use and enjoyment of interests in
Licensed Destination Club Products.

“MHR Hotel” means a full-service hotel operated by Licensor, an Affiliate of
Licensor, or a franchisee or licensee of Licensor or its Affiliates under the
trade name Marriott Hotel, Marriott Resort, Marriott Suites Hotel, or Marriott
Marquis Hotel, and does not include any other Licensor Lodging Facility or other
business operation.

“Minimum Customer Satisfaction Score” means the minimum score that Projects are
required to meet and maintain for customer satisfaction under the Customer
Satisfaction System.

“Modified Third-Party List” has the meaning set forth in Section 9.1.E.

“Negotiation Opportunity Notice” has the meaning stated in Sections 5.4.A. and
5.6.

“New Licensee Programs” has the meaning stated in Section 9.5.B.

“New Project Application” has the meaning stated in Section 5.2.A.

“New Projects” means Licensed Destination Club Projects and Licensed Residential
Projects that are not in existence or operating as of the Effective Date but
that are subsequently developed and operated pursuant to the terms and
conditions of this Agreement.

“Noncompetition Agreement” has the meaning stated in Section 2.1.

“Non-Controlled Property Owners’ Association” means a Property Owners’
Association that is not controlled by Licensee or one of its Affiliates.

“Non-Renewal Agreement” has the meaning stated in Section 18.1.A(ii).

“Non-Site Specific Destination Club Ownership Vehicle” means an ownership
vehicle (such as a trust or property owning company) that (i) holds interests in
Destination Club Units and (ii) is included as part of a Non-Site Specific
Destination Club Program.

“Non-Site Specific Destination Club Program” means a program under which
purchasers acquire an ownership interest, use right or other entitlement to use
a system of Destination Club Projects.

“Obligations” has the meaning set forth in Section 28.1.

“Offering Documents” has the meaning stated in Section 9.1.B.

“Operational Brand Standards” means those standards related to marketing and
sales operations, Member services, and Project operations, as set forth in the
following documents as they exist on the Effective Date, as they may be modified
pursuant to Section 7.2: (i) Owner Services Brand Standards; (ii) Resort
Operations Brand Standards; and (iii) Marketing and Sales Operations Brand
Standards.

“Other Mark(s)” means any trademark, trade name, symbol, slogan, design,
insignia, emblem, device, or service mark that is not a Licensed Mark or a Faldo
Mark.

“Ownership Interest” means all forms of ownership of legal entities or property,
both legal and beneficial, voting and non-voting, including stock interests,
partnership interests, limited liability company interests, joint tenancy
interests, leasehold interests, proprietorship interests, trust beneficiary
interests, proxy interests, power-of-attorney interests, and all options,
warrants, and any other forms of interest evidencing ownership or Control.

 

Exhibit A - Page 13

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“Payment Obligations” has the meaning set forth in Section 3.8.A.

“Permitted Corporate Name” has the meaning set forth in Section 13.2.A(3).

“Permitted Licensee Affiliate Names” means the names of certain of Licensee’s
Affiliates set forth on Exhibit J.

“Permitted Territorial Restrictions” has the meaning set forth in Section 5.7.B.

“Person” means an individual; legal entity such as a partnership, trust,
corporation, limited liability company; a government; an unincorporated
organization; or any other legal entity of any kind.

“Personally Identifiable Information” means any information that can be
associated with or traced to any individual, including an individual’s name,
address, telephone number, e-mail address, credit card information, social
security number, or other similar specific factual information, regardless of
the media on which such information is stored (e.g., on paper or electronically)
and that is generated, collected, stored or obtained as part of this Agreement
or in connection with the Licensed Business, including transactional and other
data pertaining to users.

“Projects” means the Existing Projects and the New Projects.

“Property Owners’ Association” means an association of owners of interests in
Licensed Destination Club Units, in Licensed Residential Units, or in a Licensed
Non-Site Specific Destination Club Program.

“Proprietary Marks” means the Licensed Marks, the Licensor Intellectual
Property, and any other intangible property, trademarks, trade names, trade
dress, words, symbols, logos, slogans, designs, insignia, emblems, devices,
service marks, and indicia of origin (including restaurant names, lounge names,
or other outlet names), or combinations thereof, that are owned or registered by
Licensor or any of its Affiliates, or are used to identify or are otherwise
associated by virtue of usage with the System, all as may be changed, deleted,
added to or otherwise modified by Licensor or its Affiliates. The Proprietary
Marks may be owned currently by Licensor or any of its Affiliates or later
developed or acquired, and may or may not be registered or applied for in any
jurisdiction. The Proprietary Marks do not include any Licensee Marks or
Licensee Intellectual Property.

“Public Facilities” means any meeting rooms, conference rooms, restaurants,
bars, lounges, pools, recreation facilities, lobby areas, and all other similar
public facilities.

“Purchase Contract” has the meaning set forth in Section 3.1.C.(ii).

“Quality Assurance Audit System” means the process utilized by Licensee to
measure the quality and performance of operations at the Projects as it exists
on the Effective Date, as it may be modified pursuant to Section 7.2.

“Quality Assurance Program” means the quality assurance program used by Licensee
to monitor customer satisfaction and the operations, facilities and services at
the Projects as it exists on the Effective Date, as it may be modified pursuant
to Section 7.2. The Quality Assurance Program includes the Customer Satisfaction
System and the Quality Assurance Audit System.

 

Exhibit A - Page 14

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“Registrar” has the meaning stated in Section 13.4.B.

“Remediation Arrangement” means an arrangement agreed to by Licensor and
Licensee under which, as applicable, Licensee agrees to (and completes) the cure
of any material noncompliance with this Agreement or the Brand Standards or
Licensor agrees to (and completes) the cure of any material failure to comply
with Licensor’s material obligations under this Agreement. Such Remediation
Arrangement shall provide (i) reasonable opportunities for the parties to
consult with each other or their respective Affiliates with respect to the
appropriate cure for such noncompliance and (ii) for reasonable time periods for
Licensee or Licensor, as applicable, to diligently pursue and cure such
noncompliance, and the period to cure under the Remediation Arrangement shall
not exceed one (1) year unless otherwise agreed by the parties.

“Reservation System” means any reservation system designated by Licensor for use
by MHR Hotels (including all Software, Hardware and electronic access related
thereto).

“Reservation System Fee” means the fee Licensee must pay to Licensor
representing Licensee’s share of the costs and expenses of the Reservation
System, including development and incremental operating costs, ongoing
maintenance, field support costs, and a reasonable return on capital.

“Residential Project” means a project that includes Residential Units, including
all land used in connection with the project and (i) the freehold or long-term
leasehold interest to the site of the project; (ii) all improvements,
structures, facilities, entry and exit rights, parking, pools, landscaping, and
other appurtenances (including the project building and all operating systems)
located at the site of the project; and (iii) all furniture, fixtures,
equipment, supplies and inventories installed or located in the Public
Facilities of such improvements at the site of the project.

“Residential Royalty Fees” has the meaning stated in Section 3.1.B.

“Residential Units” means whole ownership residential units, including single
family homes, condominium units, or other housing units which are owned on a
whole (not fractional) ownership basis.

“Rewards Agreement” means the Marriott Rewards Affiliation Agreement between
Marriott International, Inc., Marriott Rewards, LLC, Marriott Vacations
Worldwide Corporation, and Marriott Ownership Resorts, Inc. regarding the Brand
Loyalty Program entered into in connection with the Spin-Off Transaction.

“Ritz-Carlton Licensed Business” means the Destination Club Business and Whole
Ownership Residential Business of Licensee that is licensed to use the
“Ritz-Carlton” name and mark pursuant to the Ritz-Carlton License Agreement.

“Ritz-Carlton License Agreement” has the meaning set forth in Recital G.

“Royalty Fees” means, collectively, the Destination Club Royalty Fees and the
Residential Royalty Fees.

“Sales Facilities” means galleries, desks and other physical facilities from
which interests in Destination Club Units and/or Residential Units which are
part of the Licensed Business are offered and sold to the public.

 

Exhibit A - Page 15

--------------------------------------------------------------------------------

“Separation and Distribution Agreement” means the Separation and Distribution
Agreement between Marriott International, Inc. and Marriott Vacations Worldwide
Corporation entered into in connection with the Spin-Off Transaction.

“Separation Plan” has the meaning set forth in Section 9.3.B.

“Service Modifications” has the meaning set forth in Section 11.2.C.

“Services Manual” means the manual under which certain services are provided by
Licensor or its Affiliates to Licensee or its Affiliates in accordance with
Section 11.2.

“Significant Shareholder” means any Person that is:

(i) either a Marriott Family Member or on the date hereof possesses, directly or
indirectly, and such possession has been publicly disclosed, the power to vote
5% or more of the outstanding shares of common stock of the Licensee,

(ii) or hereafter becomes a spouse of or any other relative (by blood, marriage
or adoption) of a Person described in clause (i),

(iii) or becomes a transferee of the interests of any of the foregoing Person or
Persons by descent or by trust or similar arrangement intended as a method of
descent, or

(iv) (x) an employee benefit or stock ownership plan of the Licensee or (y) a
grantor trust established for the funding, directly or indirectly, of the
Licensee’s employee benefit plans and programs.

“Soft Goods” means textile, fabric and vinyl and similar products used in
finishing and decorating the Licensed Destination Club Units and the corridors
and the Public Facilities of the Projects, such as vinyl wall and floor
coverings, drapes, sheers, cornice coverings, carpeting, bedspreads, lamps, lamp
shades, artwork, task chairs, upholstery and all other unspecified items of the
same class.

“Software” means all computer software and accompanying documentation (including
all future enhancements, upgrades, additions, substitutions and other
modifications) provided to Licensee by or through Licensor and/or third parties
designated by Licensor or its Affiliates required for the operation of and
connection to any Electronic System.

“Specially Designated National or Blocked Person” means: (i) a Person designated
by the U.S. Department of Treasury’s Office of Foreign Assets Control as a
“specially designated national or blocked person” or similar status; (ii) a
Person described in Section 1 of U.S. Executive Order 13224, issued on
September 23, 2001; or (iii) a Person otherwise identified by government or
legal authority as a Person with whom Licensor, Licensee or any of their
Affiliates, are prohibited from transacting business. As of the Effective Date,
a list of such designations and the text of the Executive Order are published
under the internet website address www.ustreas.gov/offices/enforcement/ofac.

“Starwood Brand” means any brand owned or controlled by Starwood Hotels and
Resorts or its successors-in-interest (excluding Licensor or its Affiliates) as
of the Effective Date or at any time in the future, regardless of whether such
brand is subsequently acquired by a third party. As of the Effective Date, the
Starwood Brands include Le Meridien, Westin, The Luxury Collection, aLoft, Four
Points, Sheraton, Element by Westin, St. Regis, and W Hotels.

 

Exhibit A - Page 16

--------------------------------------------------------------------------------

“System” means the Brand Standards, the Licensor Intellectual Property and other
distinctive, distinguishing elements or characteristics that Licensor or its
Affiliates have developed, designated or authorized for the operation of the
Licensed Business and the Projects, including: the Reservation System and other
Electronic Systems, the Brand Loyalty Programs, training programs, Licensor
websites, and advertising programs, as such may be modified, amended or
supplemented in accordance with Section 7.2. The System does not include any of
the Licensee Intellectual Property.

“System Removal Agreement” has the meaning stated in Section 18.1.A(ii).

“Tax Sharing and Indemnity Agreement” means the Tax Sharing and Indemnity
Agreement between Marriott International, Inc. and Marriott Vacations Worldwide
Corporation entered into in connection with the Spin-Off Transaction.

“Taxes” means all taxes (including any sales, gross receipts, value-added or
goods and services taxes), levies, charges, impositions, stamp or other duties,
fees, deductions, withholdings or other payments levied or assessed by any
competent governmental authority, including by any federal, national, state,
provincial, local, or other tax authority.

“Term” means the Initial Term and the Extension Terms, if any.

“Territory” means the world.

“Third-Party List” has the meaning stated in Section 9.1.E.

“Total Available Net Assets” has the meaning set forth in Section 28.3.

“Transaction Agreements” has the meaning set forth in the Separation and
Distribution Agreement.

“Transfer” means any sale, conveyance, assignment, exchange, pledge,
encumbrance, lease or other transfer or disposition, directly or indirectly,
voluntarily or involuntarily, absolutely or conditionally, by operation of law
or otherwise.

“Travel Expenses” means all commercially reasonable travel, food and lodging,
living, and other out-of-pocket costs and expenses (including, the cost and
expense of obtaining any required visas, work permits or similar documentation).

“Undeveloped Parcels” has the meaning stated in Section 5.3.A.

“Unregistered Area” has the meaning stated in Section 13.1.C(2).

“Upscale Brand Segment” and “Upper-Upscale Brand Segment” mean the “upscale” and
“upper-upscale” brand segments, respectively, of the hospitality industry as
defined by Smith Travel Research (or its successor). If at any time such
segments are not then defined by Smith Travel Research (or its successor), then
such segments shall be replaced by comparable segments as are then defined by
Smith Travel Research (or its successor). In the event Smith Travel Research (or
its successor) ceases to define comparable segmentation or in the event that
Smith Travel Research (or its successor) ceases to exist, then the parties shall
identify a replacement source and a replacement definition of segments
comparable to “upscale” and “upper-upscale” as previously defined by Smith
Travel Research (or its successor). Any dispute regarding the selection of
replacement definitions or sources shall be settled by Expert resolution in
accordance with Section 22.5.

 

Exhibit A - Page 17

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“Vulnerable Registrations” has the meaning stated in Section 13.1.C(2).

“Whole Ownership Residential Business” means the business of (i) developing and
operating Residential Projects; (ii) developing, selling, marketing, managing,
operating and financing Residential Units;(iii) managing rental programs
associated with Residential Projects; (iv) establishing and operating sales
facilities for Residential Units; (v) managing the owner services related to
Residential Units; and (vi) managing or operating the amenities of Residential
Projects (e.g. country clubs, spas, golf courses, food and beverage outlets,
gift and sundry shops, etc.) located at or in the general vicinity of
Residential Projects and businesses that are ancillary to the foregoing
activities, all associated with Residential Projects.

 

Exhibit A - Page 18

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EXHIBIT B

EXISTING PROJECTS

 

Approved Name of Project

  

Address of Project

   Project Operator    Destination Club
and/or Residential

Grand Residences by Marriott, Bay Point

  

4000 Marriott Drive

Panama City Beach, Florida 32408

   Marriott Resorts Hospitality
Corporation    Residential

Grand Residences by Marriott, Kauai Lagoons

  

3325 Holokawelu Way

Lihue, Hawaii 96766

   Marriott Resorts Hospitality
Corporation    Residential

Grand Residences by Marriott, Lake Tahoe

  

1001 Heavenly Village Way

South Lake Tahoe, California 96150

   Marriott Resorts Hospitality
Corporation    Destination Club

Residential

Grand Residences by Marriott—Mayfair-London

  

47 Park Street, London

England W1K 7EB United Kingdom

   MGRC Management
Limited    Destination Club

Marriott’s Aruba Ocean Club

  

LG Smith Boulevard #99

Palm Beach, Aruba

   Marriott Resorts Hospitality
of Aruba, N.V.    Destination Club

Marriott’s Aruba Surf Club

  

103 L. G. Smith Boulevard

Palm Beach, Aruba

   Costa del Sol Development
Company, N.V.    Destination Club

Marriott’s Barony Beach Club

  

5 Grasslawn Avenue

Hilton Head Island, S. Carolina 29928

   Marriott Resorts Hospitality
Corporation    Destination Club

Marriott’s BeachPlace Towers

  

21 South Fort Lauderdale Beach Blvd

Fort Lauderdale, Florida 33316

   Marriott Resorts Hospitality
Corporation    Destination Club

Marriott’s Canyon Villas

  

5220 E. Marriott Drive

Phoenix, Arizona 85054

   Marriott Resorts Hospitality
Corporation    Destination Club

Marriott’s Club Son Antem

  

CTRA MA 19 Salida 20

Llucmajor, 07620 Spain

   MVCI Management, S.L.    Destination Club

Marriott’s Crystal Shores

  

600 South Collier Boulevard

Marco Island, Florida 34145

   Marriott Resorts Hospitality
Corporation    Destination Club

Marriott’s Custom House

  

3 McKinley Square

Boston, Massachusetts 02109

   Marriott Resorts Hospitality
Corporation    Destination Club

Marriott’s Cypress Harbour

  

11251 Harbour Villa Road

Orlando, Florida 32821

   Marriott Resorts Hospitality
Corporation    Destination Club

Marriott’s Desert Springs Villas I

  

1091 Pinehurst Lane

Palm Desert, California 92260

   Marriott Resorts Hospitality
Corporation    Destination Club

Marriott’s Desert Springs Villas II

  

1091 Pinehurst Lane

Palm Desert, California 92260

   Marriott Resorts Hospitality
Corporation    Destination Club

Marriott’s Fairway Villas

  

500 East Fairway Lane

Galloway, New Jersey 08205

   Marriott Resorts Hospitality
Corporation    Destination Club

Marriott’s Frenchman’s Cove

  

7338 Estate Bakkeroe

St. Thomas 00801 U.S. Virgin Islands

   Marriott Ownership Resorts
(St. Thomas), Inc.    Destination Club

Marriott’s Grand Chateau

  

75 East Harmon Avenue

Las Vegas, Nevada 89109

   Marriott Resorts Hospitality
Corporation    Destination Club

Marriott’s Grande Ocean

  

51 South Forest Beach Drive

Hilton Head, S. Carolina 29928

   Marriott Resorts Hospitality
Corporation    Destination Club

Marriott’s Grande Vista

  

5925 Avenida Vista

Orlando, Florida 32821

   Marriott Resorts Hospitality
Corporation    Destination Club

 

Exhibit B - Page 1

--------------------------------------------------------------------------------

Approved Name of Project

  

Address of Project

   Project Operator    Destination Club
and/or Residential

Marriott’s Harbour Lake

  

7102 Grand Horizons Boulevard

Orlando, Florida 32821

   Marriott Resorts Hospitality
Corporation    Destination Club

Marriott’s Harbour Club

  

144 Light House Road

Hilton Head Island, S. Carolina 29928

   Marriott Resorts Hospitality
Corporation    Destination Club

Marriott’s Harbour Pointe

  

4 Shelter Cove Lane

Hilton Head Island, S. Carolina 29928

   Marriott Resorts Hospitality
Corporation    Destination Club

Marriott’s Heritage Club

  

18 Light House Road

Hilton Head Island, S. Carolina 29928

   Marriott Resorts Hospitality
Corporation    Destination Club

Marriott’s Imperial Palm Villas

  

8404 Vacation Way

Orlando, Florida 32821

   Marriott Resorts Hospitality
Corporation    Destination Club

Marriott’s Kauai Beach Club

  

3610 Rice Street, Kalapaki Beach

Lihue, Kauai, Hawaii 96766

   Marriott Resorts Hospitality
Corporation    Destination Club

Marriott’s Kauai Lagoons

  

3325 Holokawelu Way

Lihue, Hawaii 96766

   Marriott Resorts Hospitality
Corporation    Destination Club

Residential

Marriott’s Ko Olina Beach Club

  

92-1480 Aliinui Drive

Honolulu, Hawaii 96707

   Marriott Resorts Hospitality
Corporation    Destination Club

Marriott’s Lakeshore Reserve

  

11715 Lakeshore Reserve Drive

Orlando Florida 32837

   Marriott Resorts Hospitality
Corporation    Destination Club

Marriott’s Legends Edge at Bay Point

  

4000 Marriott Drive

Panama City Beach, Florida 32408

   Marriott Resorts Hospitality
Corporation    Destination Club

Marriott’s Mai Khao Beach—Phuket

  

234 Mai Khao Talang

Thepsasatri Road

Phuket, 83110 Thailand

   MVCI Asia Pacific PTE.
Limited    Destination Club

Marriott’s Manor Club at Ford’s Colony

  

101 St. Andrews Drive

Williamsburg, Virginia 23188

   Marriott Resorts Hospitality
Corporation    Destination Club

Marriott’s Marbella Beach Resort

  

Crta. de Cadiz, KM 193

Urb. Marbella del Este

Marbella, Malaga 29604 Spain

   MVCI Management S.L.    Destination Club

Marriott’s Maui Ocean Club

  

100 Nohea Kai Drive

Lahaina, Maui, Hawaii 96761

   Marriott Resorts Hospitality
Corporation    Destination Club

Marriott’s Monarch at Sea Pines

  

91 North Sea Pines Drive

Hilton Head Island, S. Carolina 29928

   Marriott Resorts Hospitality
Corporation    Destination Club

Marriott’s MountainSide

  

1305 Lowell Avenue

Park City, Utah 84060

   Marriott Resorts Hospitality
Corporation    Destination Club

Marriott’s Mountain Valley Lodge

  

655 Columbine Drive

Breckenridge, Colorado 80424

   Marriott Resorts Hospitality
Corporation    Destination Club

Marriott’s Newport Coast Villas

  

23000 Newport Coast Drive

Newport Coast, California 92657

   Marriott Resorts Hospitality
Corporation    Destination Club

Marriott’s Oceana Palms

  

3200 North Ocean Drive

Riviera Beach, Florida 33404

   Marriott Resorts Hospitality
Corporation    Destination Club

Marriott’s Ocean Pointe

  

71 Ocean Avenue

Palm Beach Shores, Florida 33404

   Marriott Resorts Hospitality
Corporation    Destination Club

 

Exhibit B - Page 2

--------------------------------------------------------------------------------

Approved Name of Project

  

Address of Project

   Project Operator    Destination Club
and/or Residential  

Marriott’s OceanWatch Villas at Grande Dunes

  

8500 Costa Verde Drive

Myrtle Beach, South Carolina 29572

   Marriott Resorts Hospitality
Corporation      Destination Club   

Marriott’s Phuket Beach Club

  

230 Moo, Maikhao, Talang

Phuket, 83110 Thailand

   - MVCI Management
(Europe), Limited

- Marriott Hotels
(Thailand), Limited

     Destination Club   

Marriott’s Playa Andaluza

  

Ctra. de Cadiz, km 168

Estepona, 29680 Spain

   MVCI Management S.L.      Destination Club   

Marriott’s Royal Palms

  

8805 World Center Drive

Orlando, Florida 32821

   Marriott Resorts Hospitality
Corporation      Destination Club   

Marriott’s Sabal Palms

  

8404 Vacation Way

Orlando, Florida 32821

   Marriott Resorts Hospitality
Corporation      Destination Club   

Marriott’s Shadow Ridge

  

9003 Shadow Ridge Road

Palm Desert, California 92211

   Marriott Resorts Hospitality
Corporation      Destination Club   

Marriott’s St. Kitts Beach Club

  

858 Frigate Bay Road

Frigate Bay, Saint Kitts and Nevis

   MVCI St. Kitts Company
Limited      Destination Club   

Marriott’s StreamSide at Vail, Birch

  

2284 South Frontage Road

Vail, Colorado 81657

   Marriott Resorts Hospitality
Corporation      Destination Club   

Marriott’s StreamSide at Vail, Douglas

  

2284 South Frontage Road

Vail, Colorado 81657

   Marriott Resorts Hospitality
Corporation      Destination Club   

Marriott’s StreamSide at Vail, Evergreen

  

2284 South Frontage Road

Vail, Colorado 81657

   Marriott Resorts Hospitality
Corporation      Destination Club   

Marriott’s Summit Watch

  

780 Main Street

Park City, Utah 84060

   Marriott Resorts Hospitality
Corporation      Destination Club   

Marriott’s Sunset Pointe

  

4 Shelter Cove Lane

Hilton Head Island, S. Carolina 29928

   Marriott Resorts Hospitality
Corporation      Destination Club   

Marriott’s SurfWatch

  

10 Fifth Street

Hilton Head Island, S. Carolina 29928

   Marriott Resorts Hospitality
Corporation      Destination Club   

Marriott’s Timber Lodge

  

4100 Lake Tahoe Boulevard

South Lake Tahoe, California 96150

   Marriott Resorts Hospitality
Corporation      Destination Club   

Marriott Vacation Club at The Empire Place

  

88 Naradhiwas Rajanagarindra Road

Sathorn Yannawa, 10120, Thailand

   MVCI Asia Pacific PTE.
Limited      Destination Club   

Marriott Vacation Club at The Buckingham

  

22652 Rua de Nam Keng

Taipa, Macau SAR

   MVCI Asia Pacific PTE
Limited or Affiliate      Destination Club   

Marriott’s Village d’lle-de-France

   Allee de l’Orme Rond Bailly-Romainvilliers, 77700 France    MVCI Holidays
France,
S.A.S.      Destination Club   

Marriott’s Villas at Doral

  

4101 NW 87th Avenue

Miami, Florida 33178

   Marriott Resorts Hospitality
Corporation      Destination Club   

Marriott’s Waiohai Beach Club

  

2249 Poipu Road

Koloa Kaua’i, Hawaii 96756

   Marriott Resorts Hospitality
Corporation      Destination Club   

Marriott’s Willow Ridge Lodge

  

2921 Green Mountain Drive

Branson, Missouri 65616

   Marriott Resorts Hospitality
Corporation      Destination Club   

 

Exhibit B - Page 3

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EXHIBIT B-1

UNDEVELOPED PARCELS

 

Project / Asset

 

Inv To be Sold

Abaco, Bahamas

 

• Beachfront lots

(10.1 Acres)

• Ironshore lots

(5.6 Acres)

• Golf lots

(26.0 Acres)

• Inland lots

(9.6 Acres)

• Marles facing land

(58.2 Acres)

Cancun - Caribbean Hotel, MX

 

Partially Developed Parcel

 

6 Acres

Canyon Villas, Phoenix, AZ

  Phases 6 & 7

Club Son Antem, Mallorca

  Future Phase Parcels

Crystal Shores, Marco Island, FL

  Phases 2, 3 & 4

Disney Plot 1.03, Paris, France

 

Undeveloped Parcel

 

10 Acres

 

Exhibit B - 1 - Page 1

--------------------------------------------------------------------------------

Project / Asset

  

Inv To be Sold

Fairway Villas, NJ Seaview Parcels(Original MVCI Parcels)

  

Residential

• House Lot (0.69 acres)• Lot used for Golf (0.58 acres)

• New Lots on Ridgewood (5.82 acres)

• New Lot on Seaview (3.44 acres)

• Residential (45.67 acres)

• Comm. Carve-out (5.0 acres)

 

Timeshare

• Building G (1.89 acres)

• Building H (2.12 acres)

• Building I (2.34 acres)

• Open & Ops (7.35 acres)

Fairway Villas, NJ Seaview Parcels(MHS & MI Parcels)

  

• Pines 18-hole golf course, driving range,

golf shed (159.3 acres)

• Single Family Lots (49.0 acres)

• Comm. Parcel (3.4 acres)

• Wetlands (232.1 acres)

Frenchman’s Cove, St. Thomas

   Phases 6, 7 & 8

 

Exhibit B - 1 - Page 2

--------------------------------------------------------------------------------

Project / Asset

  

Inv To be Sold

Grand Bahama, Bahamas

  

• Undeveloped

Timeshare Parcel (20 Acres)

• MVCI Plan = 348 Units

 

• Undeveloped

Hotel Parcel

(10 Acres)

• MVCI Plan = 380 rooms

Grand Chateau, Las Vegas, NV

  

Towers 3 & 4, Phases 3 & 4 - Part of 3+ acre site

not subdivided

Grand Vista Sequel (Grand Pines), FLParcel 11

  

• Undeveloped Parcel (20 Acres)

• MVCI Plan =781 units

Grand Vista, FL Parcel 15

  

Undeveloped Parcel

(3 Acres)

Horizons at Branson, MO

   Phases 12, 13, 14, 15, 16 & 17

 

Exhibit B - 1 - Page 3

--------------------------------------------------------------------------------

Project / Asset

  

Inv To be Sold

Horizons at Orlando (Harbour Lake), Orlando, FL

   Phases 4, 5, 6, 7, 8, 9, 10, 11 & 12

Kauai Lagoons, HI

  

• Inn on the Cliffs

(22 units)

• Townhomes

(5 units)

• Makalii Bldg A

(37 units)

• Makalii Bldg B

(52 units)

• Maikalii Bldg C

(28 units)

• Residential Golf Lots (65 lots)

• MVC T/S

(292 units)

• MVC T/S Sequel

(193 units)

• Affordable Housing (31 units)

• Golf Course, Restaurant & Golf Clubhouse

Ko Olina, HI

   Phases 6 & 7

Lakeshore Reserve (Grand Lakes) Orlando, FL

   Phases 2, 3, 4, 5 & 6

Mirasol

Singer Island, FL

  

Undeveloped Parcel

(2.9 Acres)

Playa Andaluza, Spain

   Future Phase Parcels

 

Exhibit B - 1 - Page 4

--------------------------------------------------------------------------------

Project / Asset

  

Inv To be Sold

Shadow Ridge II, Palm Desert, CA

   Phases 8, 9A, 9B, 10A, 10B, 11. 12, 14, 13A & 13B

St. Thomas Sequel, Cabrita Point, USVI

Residential Lots

  

Lots:

• 28 available

Willow Ridge Sales Center, MO

   Sales Center on 1.4 acre parcel

Willow Ridge Lodge, MO

  

Land Designated for Buildings G, F, H & I (194

units planned)

and Buildings B & C

 

Exhibit B - 1 - Page 5

--------------------------------------------------------------------------------

EXHIBIT B-2

UNDEVELOPED PARCELS SUBJECT TO RIGHT OF FIRST OFFER AND RIGHT OF FIRST REFUSAL

 

Project / Asset

 

Inv To be Sold

Cancun - Caribbean Hotel, MX

 

Partially Developed Parcel

 

6 Acres

Grand Bahama, Bahamas

 

• Undeveloped

Timeshare Parcel (20 Acres)

• MVCI Plan = 348 Units

 

• Undeveloped

Hotel Parcel

(10 Acres)

• MVCI Plan = 380 rooms

 

Exhibit B - 2 - Page 1

--------------------------------------------------------------------------------

Project / Asset

 

Inv To be Sold

Kauai Lagoons, HI

 

• Inn on the Cliffs

(22 units)

• Townhomes

(5 units)

• Makalii Bldg A

(37 units)

• Makalii Bldg B

(52 units)

• Maikalii Bldg C

(28 units)

• Residential Golf Lots (65 lots)

• MVC T/S

(292 units)

• MVC T/S Sequel

(193 units)

• Affordable Housing (31 units)

• Golf Course, Restaurant & Golf Clubhouse

Mirasol

Singer Island, FL

 

Undeveloped Parcel

(2.9 Acres)

 

Exhibit B - 2 - Page 2

--------------------------------------------------------------------------------

EXHIBIT B-3

MEMORANDUM OF RIGHT OF FIRST REFUSAL

Recording Requested by:                        Document Prepared by:          
                  When Recorded, Mail to:                        This space
reserved for Recorder’s use only.

MEMORANDUM OF RIGHT OF FIRST REFUSAL

 

Exhibit B - 3 - Page 1

--------------------------------------------------------------------------------

MEMORANDUM OF RIGHT OF FIRST REFUSAL

This Memorandum of Right of First Refusal (“Memorandum”) is effective as of the
            day of             , 2011 (“Effective Date”) among Marriott
International, Inc., a Delaware corporation (“MII”), and Marriott Worldwide
Corporation, a Maryland corporation (“MWC”) (MII and MWC are referred to
collectively herein as “Licensor”), and             , a             (“Owner”).

RECITALS:

A. Licensor and Owner or its Affiliate have entered into a License, Services,
and Development Agreement dated effective November 19, 2011 (the “License
Agreement”).

B. Owner is the fee owner of the undeveloped parcel of real property described
in Exhibit 1 attached hereto (the “Real Property”).

C. Pursuant to Section 5.3.C of the License Agreement, Owner granted Licensor a
right of first refusal to purchase the Real Property (or a controlling interest
in the owner(s) of such Real Property) on the same terms set forth in a bona
fide third party offer made to Owner, exercisable within thirty (30) days after
notice is given of such offer, in the event of a proposed sale to a Lodging
Competitor (as defined in the License Agreement).

D. Licensor and Owner are executing and delivering this Memorandum in accordance
with Section 5.3.C of the License Agreement for the purpose of submitting it to
be recorded among the Land Records of the counties/cities in which the Real
Property is located.

AGREEMENT:

NOW THEREFORE, for the good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto state as
follows with respect to the License Agreement:

1. Grant of Right of First Refusal. Pursuant to Section 5.3.C. of the License
Agreement, Owner has granted Licensor the right of first refusal (the “Right of
First Refusal”) to purchase the Real Property (or any part thereof), as more
particularly described on Exhibit 1, attached hereto and made a part hereof,
upon the terms and conditions contained in Section 5.3.C. of the License
Agreement in the event of a proposed sale to a Lodging Competitor.

2. Interest in Real Estate and Injunctive Relief. Owner acknowledges that
Licensor’s rights under Section 5.3.C. of the License Agreement are real estate
rights in the Real Property. Owner acknowledges and agrees that damages are not
an adequate remedy in the event that Owner breaches its obligations under
Section 5.3.C. of the License Agreement and that Licensor will be entitled to
injunctive relief to prevent or remedy such breach without the necessity of
proving the inadequacy of money damages as a remedy and without the necessity of
posting a bond.

3. Term. The Right of First Refusal will terminate upon the termination of the
License Agreement. For the avoidance of doubt, however, Licensor’s Right of
First Refusal pursuant to Section 5.3.C. of the License Agreement must be
exercised within thirty (30) days after Licensor receives notice from Owner of a
bona fide third party offer to purchase the Real Property. In the event Licensor
has not submitted notice of its intention to purchase within such thirty
(30) day period, then such right shall be deemed to have expired by its own
terms and no further waiver or acknowledgement of such expiration of Licensor’s
rights shall be necessary or required from Licensor.

 

Exhibit B - 3 - Page 2

--------------------------------------------------------------------------------

4. Subordination. Licensor’s rights in real estate under Section 5.3.C. of the
License will be subordinate to the exercise of the rights of lenders under a
mortgage or security deed secured by the Real Property.

5. Termination. If the License Agreement is terminated and Licensor’s rights
under Sections 5.3.C thereof are no longer in effect or if a Project (as defined
in the License Agreement) or a non-lodging facility is developed by Owner or one
of its affiliates on the Real Property, then, at the request of Owner, Licensor
will deliver upon request an instrument in recordable form to terminate the
recording of interest in the Real Property contemplated hereunder.

6. Addresses. Licensor’s address, as set forth in the License Agreement, is
10400 Fernwood Road, Bethesda, MD 20817, Attn: [            ]. Owner’s address,
as set forth in the License Agreement, is [6649 Westwood Blvd., Suite 500,
Orlando, Florida 32821].

{Signatures appear on following page}

 

Exhibit B - 3 - Page 3

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties hereto have caused this Memorandum to be
executed, under seal, by their duly authorized representatives, as of the date
first above written.

 

    LICENSOR:     ATTEST:     MARRIOTT INTERNATIONAL, INC.,         a Delaware
corporation         By:       (SEAL)  

Assistant Secretary

    Name:           Title:      

ATTEST:

    MARRIOTT WORLDWIDE CORPORATION,         a Maryland corporation         By:  
    (SEAL)  

Assistant Secretary

    Name:           Title:           OWNER:    

ATTEST/WITNESS:

                                             ,        

a                    ]

        By:       (SEAL)  

(Assistant) Secretary/Witness

    Name:           Title:    

 

Exhibit B - 3 - Page 4

--------------------------------------------------------------------------------

STATE OF

CITY/COUNTY OF

I HEREBY CERTIFY that on             , 2011 before me, a Notary Public of the
State and City/County aforesaid, personally appeared             , who
acknowledged himself/herself to be the              of Marriott International,
Inc. (the “MII”), and that he/she, as such officer, being authorized so to do,
executed the foregoing instrument for the purposes therein contained by signing
the name of MII by himself/herself as such officer.

 

 

WITNESS my hand and Notarial Seal.

                  , Notary Public (SEAL)     My Commission Expires:    

STATE OF

CITY/COUNTY OF

I HEREBY CERTIFY that on             , 2011 before me, a Notary Public of the
State and City/County aforesaid, personally appeared             , who
acknowledged himself/herself to be the              of Marriott Worldwide
Corporation, Inc. (“MWC”), and that he/she, as such officer, being authorized so
to do, executed the foregoing instrument for the purposes therein contained by
signing the name of MWC by himself/herself as such officer.

 

WITNESS my hand and Notarial Seal.

                  , Notary Public

(SEAL)

    My Commission Expires:    

 

Exhibit B -3 Page 5

--------------------------------------------------------------------------------

STATE OF

CITY/COUNTY OF

I HEREBY CERTIFY that on             , 2011 before me, a Notary Public of the
State and City/County aforesaid, personally appeared             , who
acknowledged himself/herself to be the             of             (the
“Owner”)], and that he/she, as such officer, being authorized so to do, executed
the foregoing instrument for the purposes therein contained by signing the name
of Owner by himself/herself as such officer.

 

 

WITNESS my hand and Notarial Seal.

                  , Notary Public

(SEAL)

    My Commission Expires:    

 

Exhibit B -3- Page 6

--------------------------------------------------------------------------------

EXHIBIT 1 TO MEMORANDUM OF RIGHT OF FIRST REFUSAL

[Legal Description]

 

Exhibit 1 to Exhibit B-3 -Solo Page

--------------------------------------------------------------------------------

EXHIBIT C

MANAGEMENT COMPANY ACKNOWLEDGMENT

This Management Company Acknowledgment (“Management Company Acknowledgment”) is
executed as of             , 20__, by and among             , a             
(“Management Company”), Marriott Vacations Worldwide Corporation, a Delaware
corporation (“Licensee”), and Marriott International, Inc., a Delaware
corporation and Marriott Worldwide Corporation, a Maryland corporation
(collectively, “Licensor”).

WHEREAS, Management Company has entered into an agreement (“Management
Agreement”) with Licensee, pursuant to which Management Company will operate the
[NAME OF PROJECT] (the “Project”) located at              (“Approved Location”),
in accordance with the terms of that certain License, Services and Development
Agreement dated effective November 19, 2011 for Marriott Projects (as such
agreement may be amended, supplemented, restated or otherwise modified, the
“License Agreement”) between Licensor and Licensee; and

WHEREAS, Licensee has requested that Licensor consent to the operation of the
Project by Management Company in accordance with the License Agreement.

NOW, THEREFORE, in consideration of the mutual undertakings and benefits to be
derived herefrom, the receipt and sufficiency of which are acknowledged by each
of the parties hereto, it is hereby agreed as follows:

1. Licensor’s Consent. Subject to and in accordance with the terms and
conditions of this Management Company Acknowledgment and the License Agreement,
Licensor hereby consents to the operation of the Project by Management Company
and grants to Management Company the right to operate the Project in accordance
with the Brand Standards and to access and use the System, at, and only at, the
Approved Location during the term of the License Agreement on behalf of
Licensee. Licensor’s grant in the immediately preceding sentence will terminate
without notice to Management Company contemporaneously with the occurrence of
any of the following events: (a) any termination of the License Agreement or
Licensee’s rights under the License Agreement with respect to the Project or
(b) the execution of another management company acknowledgment among Licensor,
Licensee and another management company with respect to the Project; provided
that the duties and obligations of Management Company that by their nature or
express language survive such termination, including Sections 3.b. and c. below,
will continue in full force and effect notwithstanding the termination of
Licensor’s grant in the immediately preceding sentence.

2. Management Company Representations and Covenants. Management Company
represents and warrants to Licensor that:

a. Management Company (and any Person this is in Control of Management Company
or that is Controlled by Management Company) (i) is not known in the community
as being of bad moral character; (ii) has not been convicted in any court of a
felony or other offense that could result in imprisonment for one (1) year or
more or a fine or penalty of one million dollars ($1,000,000) (as adjusted
annually after the Effective Date of the License Agreement by the GDP Deflator)
or more; (iii) is not a Specially Designated National or Blocked Person; or
(iv) is not a Lodging Competitor;

b. neither Management Company nor any Affiliate of Management Company is a
Lodging Competitor; and

 

Exhibit C - Page 1

--------------------------------------------------------------------------------

c. the Management Agreement is valid, binding and enforceable and contains no
terms, conditions, or provisions that are, or through any act or omission of
Licensee or Management Company, may be or may cause a breach of or default under
the License Agreement.

3. Management Company and Licensee Acknowledgments. Management Company and
Licensee covenant and agree to the following:

a. Management Company will have the exclusive authority and responsibility for
the day-to-day on-site management of the Project on behalf of and for the
benefit of Licensee with respect to and in accordance with the terms of the
License Agreement. The general manager of the Project will be an employee of
Management Company and devote such time and attention to the management and
operation of the Project as is necessary to fully comply with the terms,
conditions and restrictions set forth in the License Agreement;

b. The Project will be operated in strict compliance with the requirements of
the License Agreement, and Management Company will observe fully and be bound by
all terms, conditions and restrictions regarding the management and operation of
the Project as set forth in the License Agreement, including those related to
Licensor Intellectual Property, as if and as though Management Company had
executed the License Agreement as “Licensee,” provided that Management Company
obtains no rights under the terms of the License Agreement, except as
specifically set forth herein and the rights granted hereunder do not constitute
a license or franchise or sub-license or sub-franchise to Management Company.
Management Company will comply with all Applicable Laws in connection with its
management of the Project and will obtain in a timely manner all permits,
certificates, and licenses necessary for the full and proper operation of the
Project;

c. Licensor may enforce directly against Management Company all terms in the
License Agreement regarding Licensor Intellectual Property and the management
and operation of the Project during and subsequent to Management Company’s
tenure as operator of the Project. Licensor may seek and obtain all available
legal and equitable remedies from Management Company based on Management
Company’s failure to comply with the terms of this Management Company
Acknowledgment, in addition to any remedies Licensor may obtain from Licensee
under the License Agreement;

d. Management Company hereby assigns (and will cause each of its employees or
independent contractors who contributed to such modifications, derivatives or
additions to assign) to Licensor, in perpetuity throughout the world, all
rights, title and interest (including the entire copyright and all renewals,
reversions and extensions thereof) in and to all modifications, derivatives or
additions to the Licensor Intellectual Property and other aspects of the System
proposed by or on behalf of Management Company or its Affiliates. Management
Company waives (and will cause each of its employees or independent contractors
who contributed to such modifications, derivatives or additions to waive) all
rights of “droit moral” or “moral rights of authors” or any similar rights that
Management Company (or its employees or independent contractors) may now or
hereafter have in the modifications, derivatives or additions to the Licensor
Intellectual Property and other aspects of the System proposed by or on behalf
of Management Company or its Affiliates and Management Company disclaims any
interest in such modifications by virtue of a constructive trust. Management
Company agrees to execute (or cause to be executed) and deliver to Licensor any
documents and to do any acts that may reasonably be deemed necessary by Licensor
to perfect or protect the title in the modifications, derivatives and additions
herein conveyed, or intended to be conveyed now or in the future;

 

Exhibit C - Page 2

--------------------------------------------------------------------------------

e. Any default under the terms of the License Agreement caused wholly or
partially by Management Company will constitute a default under the terms of the
Management Agreement, for which Licensee may terminate the Management Agreement;

f. Licensee and Management Company will not modify or amend the Management
Agreement in such a way as to create a conflict or other inconsistency with the
terms of the License Agreement or this Management Company Acknowledgment;

g. Except in extraordinary circumstances, such as theft or fraud on the part of
Management Company or a default by Licensee under the License Agreement caused
by Management Company for which Licensee needs to promptly remove Management
Company from the Project, the Management Agreement will not be terminated or
permitted to expire without at least thirty (30) days’ prior notice to Licensor;

h. Management Company will perform the day-to-day operations of the Project.
Licensor has the right to communicate directly with Management Company, and the
managers at the Project regarding day-to-day operations of the Project, provided
that Licensor shall not direct Management Company to take, or fail to take, any
action that may cause a breach of the Management Agreement or this Management
Acknowledgement. Licensor has the right to rely on instructions of Management
Company and the managers at the Project as to matters relating to the operation
of the Project, and the agreements of such managers are binding on Management
Company; and

4. Existence and Power. Each of Management Company and Licensee represents and
warrants with respect to itself that (i) it is a legal entity duly formed,
validly existing, and in good standing under the laws of the jurisdiction of its
formation, (ii) it has the ability to perform its obligations under this
Management Company Acknowledgment and under the Management Agreement, and
(iii) it has all necessary power and authority to execute and deliver this
Management Company Acknowledgment.

5. Authorization; Contravention.

a. Management Company and Licensee each represents and warrants with respect to
itself that the execution and delivery of this Management Company Acknowledgment
and the performance by Management Company and Licensee of its respective
obligations hereunder and under the Management Agreement: (i) have been duly
authorized by all necessary action; (ii) do not require the consent of any third
parties (including lenders) except for such consents as have been properly
obtained; and (iii) do not and will not contravene, violate, result in a breach
of, or constitute a default under (a) its certificate of formation, operating
agreement, articles of incorporation, by-laws, or other governing documents,
(b) any regulation of any governmental body or any decision, ruling, order, or
award by which each may be bound or affected, or (c) any agreement, indenture or
other instrument to which each is a party; and

b. Management Company represents and warrants to Licensor that: (i) neither
Management Company (including any and all of its directors and officers), nor
any of its Affiliates or the funding sources for any of the foregoing is a
Specially Designated National or Blocked Person (as defined in the License
Agreement); (ii) neither Management Company nor any of its Affiliates is
directly or indirectly owned or controlled by the government of any country that
is subject to an embargo by the United States government; and (iii) neither
Management Company nor any of its Affiliates is acting on behalf of a government
of any country that is subject to such an embargo. Management Company further
represents and warrants that it is in compliance with any applicable anti-money
laundering law and terrorist financing law. Management Company agrees that it
will notify Licensor in writing immediately upon the occurrence of any event
which would render the foregoing representations and warranties of this
Section 5.b. incorrect.

 

Exhibit C - Page 3

--------------------------------------------------------------------------------

6. Controlling Agreement. If there are conflicts between any provision(s) of the
License Agreement and this Management Company Acknowledgment on the one hand and
the Management Agreement on the other hand, the provision(s) of the License
Agreement and this Management Company Acknowledgment will control.

7. No Release. This Management Company Acknowledgment will not release or
discharge Licensee from any liability or obligation under the License Agreement,
and Licensee will remain liable and responsible for the full performance and
observance of all of the provisions, covenants, and conditions set forth in the
License Agreement.

8. Limited Consent. Licensor’s consent to Management Company operating the
Project and Licensor’s grant to Management Company of the right to operate the
Project are personal to Management Company, and this Management Company
Acknowledgment is not assignable by Licensee or Management Company. If there is
a change in control of Management Company or if Management Company becomes, is
acquired by, comes under the control of, or merges with or into a Lodging
Competitor, or if there is a material adverse change to the financial status or
operational capacity of Management Company, Licensee will promptly notify
Licensor of any such change and Management Company will be subject to the
consent process under the License Agreement as a new operator of the Project.

9. Defined Terms. Unless specifically defined herein, all capitalized terms used
in this Management Company Acknowledgment will have the same meanings set forth
in the License Agreement.

10. Governing Law; Venue; Dispute Resolution. The parties agree that this
Management Company                              Acknowledgment shall be subject
to the governing law and, for the purpose of resolving any dispute under
Section 13 of this Management Company Acknowledgment, the venue provisions set
forth in Section 22.1 of the License Agreement.

11. Management Company’s Address. Management Company’s mailing address is
                            . Management Company agrees to provide notice to
both Licensee and Licensor if there is any change in Management Company’s
mailing address.

12. No Third Party Beneficiaries. Nothing in this Management Company
Acknowledgment is intended, or will be deemed, to confer any rights or remedies
under or by reason of this Management Company Acknowledgment upon any Person
other than Licensor, Licensee and their respective Affiliates, successors and
assigns.

13. Injunctive Relief. Licensor will be entitled to injunctive or other
equitable relief from a court of competent jurisdiction, without the necessity
of proving the inadequacy of money damages as a remedy or irreparable harm,
without the necessity of posting a bond, and without waiving any other rights or
remedies at law or in equity, for any actual or threatened material breach or
violation of this Management Company Acknowledgment for which such relief is an
available remedy, the Brand Standards (including, but not limited to, threats or
danger to public health or safety) or actual or threatened misuse or
misappropriation of the Licensor Intellectual Property or the Licensor
Confidential Information. The rights conferred by this Section 13 expressly
include, without limitation, Licensor’s entitlement to affirmative injunctive,
declaratory, and other equitable or judicial relief (including specific
performance) for Management Company’s failure to operate any portion of the
Project in accordance with the applicable Brand Standards, including, without
limitation, affirmative relief that any such deficiencies are cured and
thereafter meet the Brand Standards.

 

Exhibit C - Page 4

--------------------------------------------------------------------------------

14. Arbitration. The parties agree that except as otherwise specified in this
Management Company Acknowledgment, any Dispute or any other matter concerning
any aspect of the relationship of Licensor and Management Company will be
finally settled by arbitration according to the arbitration provisions set forth
in Section 22.4 of the License Agreement.

15. Miscellaneous. The parties hereby incorporate by reference Sections 22.3
(costs of enforcement), 24.1.A (construction and severability), and 26.2
(multiple counterparts) of the License Agreement.

16. WAIVER OF JURY TRIAL AND PUNITIVE AND EXEMPLARY DAMAGES. THE PARTIES AGREE
THAT LICENSEE, MANAGEMENT COMPANY AND LICENSOR EACH HEREBY ABSOLUTELY,
IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY AND THE RIGHT TO CLAIM OR
RECEIVE SPECIAL, CONSEQUENTIAL, PUNITIVE AND EXEMPLARY DAMAGES IN ANY
ARBITRATION, LITIGATION, ACTION, CLAIM, SUIT OR PROCEEDING, AT LAW OR IN EQUITY,
ARISING OUT OF, PERTAINING TO OR IN ANY WAY ASSOCIATED WITH THE COVENANTS,
UNDERTAKINGS, REPRESENTATIONS OR WARRANTIES SET FORTH HEREIN, THE RELATIONSHIPS
OF THE PARTIES HERETO, WHETHER AS “MANAGEMENT COMPANY,” “LICENSEE” OR “LICENSOR”
OR OTHERWISE, THIS AGREEMENT, OR ANY ACTIONS OR OMISSIONS IN CONNECTION WITH ANY
OF THE FOREGOING.

17. Entire Agreement. This Management Company Acknowledgment, together with the
License Agreement and the Management Agreement, including all exhibits,
attachments and addenda, and any execution copies executed simultaneously or in
connection with, this Management Company Acknowledgment and the License
Agreement, contain the entire agreement between the parties as it relates to the
Project and the Approved Location as of the date of this Management Company
Acknowledgment. This is a fully integrated agreement. No agreement of any kind
relating to the matters covered by this Management Company Acknowledgment will
be binding upon any party hereto unless and until the same has been made in a
written, non-electronic instrument that has been duly executed by the
non-electronic signature of the parties. This Management Company Acknowledgment
may not be amended or modified by conduct manifesting assent, or by electronic
signature, and each party is hereby put on notice that any individual purporting
to amend or modify this Management Company Acknowledgment by conduct manifesting
assent or by electronic signature is not authorized to do so.

 

Exhibit C - Page 5

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this
Management Company Acknowledgment, under seal, as of the date first above
written.

 

LICENSOR: MARRIOTT INTERNATIONAL, INC. By:       (SEAL) Name:       Title:      
MARRIOTT WORLDWIDE CORPORATION By:       (SEAL) Name:       Title:      
LICENSEE: MARRIOTT VACATIONS WORLDWIDE CORPORATION By:       (SEAL) Name:      
Title:       MANAGEMENT COMPANY:

[MANAGEMENT COMPANY]

By:       (SEAL) Name:       Title:      

 

Exhibit C - Page 6

--------------------------------------------------------------------------------

EXHIBIT D

FORM OF OPERATING STATEMENT

SEE ATTACHED

 

Exhibit D

--------------------------------------------------------------------------------

Marriott Vacations Worldwide

Royalty fees due to Ml based on period results

For Period X, 20XX from X/XX/20XX to X/X/20XX

 

      Total
Closings      Prespin
Closings      Postspin
Closings      Commission
Earned    Royalty
Rate     Amount Due
to MI      Comments  

NATO

                   

3.1.A.ii.a—Developer Closings in Destination Club

                 2.0 %      —        

3.1.A.ii.b—Reacquired Closings in Destination Club

                 1.0 %      —        

3.1.A.iii.a—M&S Agreements in Destination Club

                 2.0 %      —        

3.1.A.iii.b—Resale Closings in Destination Club

                 1.0 %      —        

3.1.B.ii.a—Developer Closings in Residential Units

                 2.0 %      —        

3.1.B.ii.b—Reacquired Closings in Residential Units

                 1.0 %      —        

3.1.B.iii.a—M&S Agreements in Residential Units

                 2.0 %      —        

3.1.B.iii.b—Resale Closings in Residential Units

                 1.0 %      —           

 

 

    

 

 

    

 

 

         

 

 

    

Total NATO

     —           —           —                —           

 

 

    

 

 

    

 

 

         

 

 

    

Europe

                   

3.1.A.ii.a—Developer Closings in Destination Club

                 2.0 %      —        

3.1.A.ii.b—Reacquired Closings in Destination Club

                 1.0 %      —        

3.1.A.iii.a—M&S Agreements in Destination Club

                 2.0 %      —        

3.1.A.iii.b—Resale Closings in Destination Club

                 1.0 %      —        

3.1.B.ii.a—Developer Closings in Residential Units

                 2.0 %      —        

3.1.B.ii.b—Reacquired Closings in Residential Units

                 1.0 %      —        

3.1.B.iii.a—M&S Agreements in Residential Units

                 2.0 %      —        

3.1.B.iii.b—Resale Closings in Residential Units

                 1.0 %      —           

 

 

    

 

 

    

 

 

         

 

 

    

Total Europe

     —           —           —                —           

 

 

    

 

 

    

 

 

         

 

 

    

Asia

                   

3.1.A.ii.a—Developer Closings in Destination Club

                 2.0 %      —        

3.1.A.ii.b—Reacquired Closings in Destination Club

                 1.0 %      —        

3.1.A.iii.a—M&S Agreements in Destination Club

                 2.0 %      —        

3.1.A.iii.b—Resale Closings in Destination Club

                 1.0 %      —        

3.1.B.ii.a—Developer Closings in Residential Units

                 2.0 %      —        

3.1.B.ii.b—Reacquired Closings in Residential Units

                 1.0 %      —        

3.1.B.iii.a—M&S Agreements in Residential Units

                 2.0 %      —        

3.1.B.iii.b—Resale Closings in Residential Units

                 1.0 %      —           

 

 

    

 

 

    

 

 

         

 

 

    

Total Asia

     —           —           —                —           

 

 

    

 

 

    

 

 

         

 

 

                           

 

 

    

 

 

    

 

 

         

 

 

    

Total MVW

     —           —           —                —           

 

 

    

 

 

    

 

 

         

 

 

    

Adjustment from YTD calculation

                      See comment A                    

 

 

    

Final MVW Amount Due to Ml

                   —                         

 

 

    

A Required true-up of YTD royalty fee due to Ml based on closings that were not
included in previous period report totals.

MVW, to the best of our knowledge, certifies that the data represented in this
document is free of errors and misrepresentations.

 

   VP and Controller, MVW

 

1 of 7

Exhibit D - Page 1

--------------------------------------------------------------------------------

Marriott Vacations Worldwide

Royalty fees due to MI based on period results

YTD For Period X, 20XX from X/X/20XX to X/X/20XX

 

      Total
Closings      Prespin
Closings      Postspin
Closings      Commission
Earned    Royalty
Rate     Amount Due
to MI      Comments  

NATO

                   

3.1.A.ii.a — Developer Closings in Destination Club

                 2.0 %      —        

3.1.A.ii.b — Reacquired Closings in Destination Club

                 1.0 %      —        

3.1.A.iii.a — M&S Agreements in Destination Club

                 2.0 %      —        

3.1.A.iii.b — Resale Closings in Destination Club

                 1.0 %      —        

3.1.B.ii.a — Developer Closings in Residential Units

                 2.0 %      —        

3.1.B.ii.b — Reacquired Closings in Residential Units

                 1.0 %      —        

3.1.B.iii.a — M&S Agreements in Residential Units

                 2.0 %      —        

3.1.B.iii.b — Resale Closings in Residential Units

                 1.0 %      —           

 

 

    

 

 

    

 

 

         

 

 

    

Total NATO

     —           —           —                —           

 

 

    

 

 

    

 

 

         

 

 

    

Europe

                   

3.1.A.ii.a — Developer Closings in Destination Club

                 2.0 %      —        

3.1.A.ii.b — Reacquired Closings in Destination Club

                 1.0 %      —        

3.1.A.iii.a — M&S Agreements in Destination Club

                 2.0 %      —        

3.1.A.iii.b — Resale Closings in Destination Club

                 1.0 %      —        

3.1.B.ii.a — Developer Closings in Residential Units

                 2.0 %      —        

3.1.B.ii.b — Reacquired Closings in Residential Units

                 1.0 %      —        

3.1.B.iii.a — M&S Agreements in Residential Units

                 2.0 %      —        

3.1.B.iii.b — Resale Closings in Residential Units

                 1.0 %      —           

 

 

    

 

 

    

 

 

         

 

 

    

Total Europe

     —           —           —                —           

 

 

    

 

 

    

 

 

         

 

 

    

Asia

                   

3.1.A.ii.a — Developer Closings in Destination Club

                 2.0 %      —        

3.1.A.ii.b — Reacquired Closings in Destination Club

                 1.0 %      —        

3.1.A.iii.a — M&S Agreements in Destination Club

                 2.0 %      —        

3.1.A.iii.b — Resale Closings in Destination Club

                 1.0 %      —        

3.1.B.ii.a — Developer Closings in Residential Units

                 20 %      —        

3.1.B.ii.b — Reacquired Closings in Residential Units

                 1.0 %      —        

3.1.B.iii.a — M&S Agreements in Residential Units

                 2.0 %      —        

3.1.B.iii.b — Resale Closings in Residential Units

                 1.0 %      —           

 

 

    

 

 

    

 

 

         

 

 

    

Total Asia

     —           —           —                —           

 

 

    

 

 

    

 

 

         

 

 

                           

 

 

    

 

 

    

 

 

         

 

 

    

Total MVW

     —           —           —                —           

 

 

    

 

 

    

 

 

         

 

 

    

Adjustment from YTD calculation

                      See comment A                    

 

 

    

Final MVW Amount Due to Ml

                   —                         

 

 

    

A Required true-up of YTD royalty fee due to Ml based on closings that were not
included in previous period report totals.

MVW, to the best of our knowledge, certifies that the data represented in this
document is free of errors and misrepresentations.

 

   VP and Controller, MVW

 

2 of 7

Exhibit D - Page 2

--------------------------------------------------------------------------------

Marriott Vacations Worldwide

Property and Built Unit Counts

For Quarter X, 20XX from X/XX/20XX to X/X/20XX

 

      Beginning of Quarter                Changes                
    End of Quarter      

Property Count

        

North America

        

Asia Pacific

        

Europe

           

 

 

    

 

 

    

 

 

 

Total Property Count

     —           —           —        

 

 

    

 

 

    

 

 

 

Built Units

        

North America

        

Asia Pacific

        

Europe

           

 

 

    

 

 

    

 

 

 

Total Built Units

     —           —           —        

 

 

    

 

 

    

 

 

 

 

3 of 7

Exhibit D - Page 3

--------------------------------------------------------------------------------

Marriott Vacations Worldwide

Royalty fees due to MI based on period results

For Period X, 20XX from X/XX/20XX to X/X/20XX

 

     NATO      Luxury      Europe      Asia Pacific      Total MVW      Comments

Destination Club Closings

                 

3.1.A.ii.a — Developer Closings in Destination Club

                 

NATO Distribution 1

                 

NATO Distribution 2

                 

NATO Distribution 3

                 

NATO Distribution 4

                 

Europe Distribution 1

                 

Europe Distribution 2

                 

Asia Pac Distribution 1

                 

Asia Pac Distribution 2

                 —           

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

3.1.A.ii.a — Developer Closings in Destination Club

     —           —           —           —           —           

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Royalty due at @ 2%

     —           —           —           —           —           

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

3.1.A.II.B — Reacquired Closings in Destination Club

                 

NATO Distribution 1

                 —        

NATO Distribution 2

                 —        

NATO Distribution 3

                 —        

NATO Distribution 4

                 —        

Europe Distribution 1

                 —        

Europe Distribution 2

                 —        

Asia Pac Distribution 1

                 —        

Asia Pac Distribution 2

                 —           

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

3.1.A.ii.B — Reacquired Closings in Destination Club

     —           —           —           —           —           

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Royalty due at @ 1%

     —           —           —           —           —           

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

3.1.A.iii.a — M&S Agreements in Destination Club

                 

NATO Distribution 1

                 —           

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

3.1.A.iii.a — M&S Agreements in Destination Club

     —           —           —           —           —           

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Total MVW commission earned

     —           —           —           —           —           

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Royalty due at 2% of MVW commission earned

     —           —           —           —           —           

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

3.1.A.iii.b — Resale Closings in Destination Club

                 

NATO Distribution 1

                 —        

NATO Distribution 2

                 —        

Europe Distribution 1

                 —        

Asia Pac Distribution 1

                 —           

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

3.1.A.iii.b — Resale Closings in Destination Club

     —           —           —           —           —           

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Total MVW commission earned

     —           —           —           —           —           

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Royalty due at 1% of MVW commission earned

     —           —           —           —           —           

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Total Royalty Due on Destination Club Closings

     —           —           —           —           —           

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Residential Unit Closings

                 

3.1.B.ii.a — Developer Closings in Residential Units

                 

NATO Distribution 1

                 —        

NATO Distribution 2

                 —           

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

3.1.B.ii.a — Developer Closings in Residential Units

     —           —           —           —           —           

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Royalty due at @ 2%

     —           —           —           —           —           

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

3.1.B.II.B — Reacquired Closings in Residential Units

                 

NATO Distribution 1

                 

NATO Distribution 2

                    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

3.1.B.ii.B — Reacquired Closings in Residential Units

     —           —           —           —           —           

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Royalty due at @ 1%

     —           —           —           —           —           

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

3.1.B.iii.a — M&S Agreements in Residential Units

                 

NATO Distribution 1

     —           —              —           —           

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

3.1.B.iii.a — M&S Agreements in Residential Units

     —           —           —           —           —           

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Total MVW commission earned

     —           —           —           —           —           

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Royalty due at 2% of MVW commission earned

     —           —           —           —           —           

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

3.1.B.iii.b — Resale Closings in Residential Units

                 

NATO Distribution 1

                 —           

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

3.1.B.iii.b — Resale Closings in Residential Units

     —           —           —           —           —           

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

4 of 7

Exhibit D - Page 4

--------------------------------------------------------------------------------

Marriott Vacations Worldwide

Royalty fees due to MI based on period results

For Period X, 20XX form X/XX/20XX to X/X/20XX

 

     NATO      Luxury      Europe      Asia Pacific      Total MVW      Comments
 

Total MVW commission earned

     —           —           —           —           —           

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Royalty due art 1% of MVW commission earned

     —           —           —           —           —           

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Total Royalty Due on Residential unit Closings

     —           —           —           —           —           

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Total Royalty Fee to be Paid-PTD

     —           —           —           —           —           

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Add YTD true up if necessary

                    See comment A   

Final Period Royalty Fee to be Paid-PTD

     —           —           —           —           —           

 

 

    

 

 

    

 

 

    

 

 

    

 

 

     A Required Irue-up of YTD royalty fee due to MI based on closings that were
not included in previous period report totals.   

B Breakdown of total period closing to pre- and post-spin totals

        Total MVW Closings               MVW Closings on pre-spin contract sales
                       

 

 

          MVW Closings on post-spin contract sales           
Ties to reference C                  

 

 

          Closings (3.1.A.ii.a)         —        

C Validation of post-spin closing by royalty category

  

 

Closings (3.1.A.ii.b)

  

     —           

 

Closings (3.1.A.iii.a)

  

     —           

 

Closings (3.1.A.iii.b)

  

     —           

 

Closings (3.1.B.ii.a)

  

     —           

 

Closings (3.1.B.ii.b)

  

     —           

 

Closings (3.1.B.iii.a)

  

     —           

 

Closings (3.1.B.iii.b)

  

     —                       

 

 

          Total         —           Ties to reference B                  

 

 

          Check         —                       

 

 

    

MVW, to the best of our knowledge, certifies that the data represented in this
document is free of errors and misrepresentations.

 

   VP and Controller, MVW

 

5 of 7

Exhibit D - Page 5

--------------------------------------------------------------------------------

Marriott Vacations Worldwide

Royalty fees due to MI based on period results

YTD For Period X, 20XX form X/X/20XX

 

VP and Controller, MVW

                                                   NATO      Luxury      Europe
     AsiaPacific      Total MVW      Comments

Destination Club Closings

                 

3.1.A.ii.a — Developer Closings in Destination Club

                 

NATO Distribution 1

                 —        

NATO Distribution 2

                 —        

NATO Distribution 3

                 —        

NATO Distribution 4

                 —        

Europe Distribution 1

                 —        

Europe Distribution 2

                 —        

Asia Pac Distribution 1

                 —        

Asia Pac Distribution 2

                 —              —           —           —           —          
—              

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

3 1.A.ii.a— Developer Closings in Destination Club

                 —              

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Royalty due at @ 2%

                 —              

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

3.1.A.ii.B — Reacquired Closings in Destination Club

                 

NATO Distribution 1

                 —        

NATO Distribution 2

                 —        

NATO Distribution 3

                 —        

NATO Distribution 4

                 —        

Europe Distribution 1

                 —        

Europe Distribution 2

                 —        

Asia Pac Distribution 1

                 —        

Asia Pac Distribution 2

                 —              

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

3.1.A.ii.B — Reacquired Closings In Destination Club

     —           —           —           —           —              

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Royalty due at @ 1%

     —           —           —           —           —              

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

3.1.A.iii.a — M&S Agreements in Destination Club

                 

NATO Distribution 1

                 —              

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

3.1.A.iii.a — M&S Agreements in Destination Club

     —           —           —           —           —              

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Total MVW commission earned

     —           —           —           —           —              

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Royalty due at 2% of MVW commission earned

     —           —           —           —           —              

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

3.1.A.iii.b — Resale Closings in Destination Club

                 

NATO Distribution 1

                 —        

NATO Distribution 2

                 —        

Europe Distribution 1

                 —        

Asia Pac Distribulion 1

                 —              

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

3.1. A.iii.b — Resale Closings in Destination Club

    
—  
  
     —           —           —           —              

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Total MVW commission earned

     —           —           —           —           —              

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Royalty due at 1% of MVW commission earned

     —           —           —           —           —              

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Total Royally Due on Destination Club Closings

     —           —           —           —           —              

 

 

    

 

 

    

 

 

    

 

 

    

 

 

                         

Residential Unit Closings

                 

3.1.B.ii.a — Developer Closings in Residential Units

                 

NATO Distribution 1

                 —        

NATO Distribution 2

        —           —           —          
  —  
     
           

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

3.1.B.ii.a — Developer Closings in Residential Units

     —           —           —           —           —              

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Royalty due at @ 2%

     —           —           —           —           —              

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

3.1.B.ii.B — Reacquired Closings in Residential Units

                 

NATO Distribution 1

                 —        

NATO Distribution 2

                 —              

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

3.1.B.ii.B — Reacquired Closings in Residential Units

     —           —           —           —           —              

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Royalty due at @ 1%

     —           —           —           —           —              

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

3.1.B.iii.a — M&S Agreements in Residential Units

                 

NATO Distribution 1

                 —        

3.1.B.iii.a — M&S Agreements in Residential Units

     —           —           —           —           —              

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Total MVW commission earned

     —           —           —           —           —        

Royalty due at 2% of MVW commission earned

     —           —           —           —           —              

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

3.1.B.iii.b — Resale Closings in Residential Units

                 

NATO Distribution 1

                 —              

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

3.1.B.iii.b — Resale Closings in Residential Units

     —           —           —           —           —              

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

6 of 7

Exhibit D - Page 6

--------------------------------------------------------------------------------

Marriott Vacations Worldwide

Royalty fees due to MI based on period results

YTD Period X, 20XX from X/X/20XX to X/X/20XX

 

     NATO      Luxury      Europe      Asia Pacific      Total MVW      Comments
 

Total MVW commission earned

     —           —           —           —           —           

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Royalty due at 1% of MVW commission earned

     —           —           —           —           —           

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Total Royalty Due on Residential Unit Closings

     —           —           —           —           —           

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Total Royalty Fee to be Paid-YTD

     —           —           —           —           —           

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

True up check:

                 

Total Royality Fee YTD per Period 8 report Current period 9 Royalty Fee

                    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Total

     —           —           —           —           —           

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

YTD true up

     —           —           —           —           —           See comment A
  

A Required true-up of YTD royalty fee due to MI based on closings that were not
included in previous period report totals

  

B Breakdown of total period closing to pre- and post-spin totals

  

     Total MVW Closings               MVW Closings on pre-spin contract sales   
  

 

 

          MVW Closings on post-spin contract sales      

 

 

       Ties to reference C   

C Validation of post-spin closing by royally category

           Closings (3.1.A.ii.a)        —                   
Closings (3.1.A.ii.b)         —                    Closings (3.1.A.iii.a)      
  —                    Closings (3.1.A.iii.b)         —                   
Closings (3.1.B.ii.a)         —                    Closings (3.1.B.ii.b)        
—                    Closings (3.1.B.iii.a)         —                   
Closings (3.1.B.iii.b)         —                       

 

 

                Total         —           Ties to Reference B                  

 

 

                Check         —                       

 

 

    

MVW, to the best of our knowledge, certifies that the data represented in this
document is free of errors and misrepresentations.

 

   VP and Controller, MVW

 

7 of 7

Exhibit D - Page 7

--------------------------------------------------------------------------------

EXHIBIT E

AFFILIATE SUBLICENSE AGREEMENT

THIS AFFILIATE SUBLICENSE AGREEMENT (this “Sublicense Agreement”) is entered
into this             day of              , 2            , (“Effective Date”) by
and between Marriott Vacations Worldwide Corporation, a Delaware corporation
(“MVWC”) and             , a             and an Affiliate of MVWC
(“Sublicensee”).

RECITALS

A. MVWC is the licensee under that certain License, Services And Development
Agreement dated effective November 19, 2011 with Marriott International, Inc., a
Delaware corporation (“MII”) and Marriott Worldwide Corporation, a Maryland
corporation (“MWC”) (MII and MWC are referred to collectively as “Licensor”), a
true and correct copy of which has been provided to Sublicensee (the “Marriott
License”). Each initially capitalized term which is not defined in this
Sublicense Agreement shall have the meaning given to such term in the Marriott
License.

B. Under the Marriott License and subject to the terms and conditions thereof,
including, without limitation, all reservations of rights and limitations on
exclusivity set forth therein, MVWC has been granted a license to use the
Licensed Marks and the System to operate the Licensed Destination Club Business
and the Licensed Whole Ownership Residential Business within the Territory.

[Use the following Recitals C. and D. for New Project development]

C. MVWC is permitted to delegate the authority to develop New Projects to MVWC
Affiliates pursuant to Section 5.2.D. of the Marriott License and in accordance
with the terms and conditions of this Sublicense Agreement.

D. MVWC has delegated to Sublicensee the authority to develop the New Project
described in Exhibit A to this Sublicense Agreement (the “Project”).

[Use the following Recitals C. and D. for Existing/New Project operation]

C. MVWC is permitted to delegate the authority to operate Existing Projects and
New Projects to MVWC Affiliates pursuant to Section 5.1.C. and 5.2.D. of the
Marriott License and in accordance with the terms and conditions of this
Sublicense Agreement.

D. MVWC has delegated to Sublicensee the authority to operate the Project(s)
described in Exhibit A to this Sublicense Agreement (the “Project(s)”).

[Use the following Recitals C. and D. for Sales and Marketing]

C. MVWC is permitted to delegate certain non-management functions involving
regional and/or local sales and marketing of Licensed Destination Club Products
and Residential Units for Licensed Residential Projects to any Affiliate
pursuant to Section 5.8.B. of the Marriott License and, where, in Licensor’s
judgment, it is required to fulfill such functions, to sublicense to such
Affiliate the right to use the Licensed Marks and the System.

D. MVWC has delegated to Sublicensee the sales and marketing functions described
in Exhibit A to this Sublicense Agreement (“Sales and Marketing Services”) and
in connection therewith is willing to sublicense to Sublicensee the right to use
the Licensed Marks and System in accordance with the terms of this Sublicense
Agreement.

 

Exhibit E - Page 1

--------------------------------------------------------------------------------

NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained in this Sublicense Agreement and for other good and valuable
consideration, the receipt and sufficiency of which are acknowledged, Licensee
and Sublicensee agree as follows:

1. RIGHTS GRANTED.

[Use the following paragraph 1 for New Project development]

MVWC hereby grants to Sublicensee a non-exclusive license to use the Licensed
Marks and the System, during the Term (defined below) of this Sublicense
Agreement, for the sole purpose of developing the Project identified on Exhibit
A.

[Use the following paragraph 1 for Existing/New Project operation]

MVWC hereby grants to Sublicensee a non-exclusive license to use the Licensed
Marks and the System, during the Term (defined below) of this Sublicense
Agreement, for the sole purpose of operating the Project(s) identified on
Exhibit A.

[Use the following paragraph 1 for Sales and Marketing]

MVWC hereby grants to Sublicensee a non-exclusive license to use the Licensed
Marks and the System, during the Term (defined below) of this Sublicense
Agreement, for the sole purpose of performing the Sales and Marketing Services
within the territor(y)(ies) identified on Exhibit B.

2. MARRIOTT LICENSE.

This Sublicense Agreement is subject and subordinate to the Marriott License.
Except as may be inconsistent with the terms and provisions hereof, the terms
and provisions of the Marriott License shall be applicable to this Sublicense
Agreement and shall be incorporated into this Sublicense Agreement as if MVWC
was the licensor and Sublicensee was the licensee under the Marriott License
[with respect to the Project(s)] [In Sales and Marketing agreement, substitute
“with respect to the Sales and Marketing Services”]. Sublicensee acknowledges
and agrees that, [with respect to the Project(s)] [In Sales and Marketing
agreement, substitute “with respect to the Sales and Marketing Services”], it is
bound by the same responsibilities, limitations, and duties of the licensee
under the Marriott License and that such responsibilities, limitations, and
duties are hereby incorporated in this Sublicense Agreement.

3. REPRESENTATIONS AND WARRANTIES.

Sublicensee represents and warrants that it satisfies the definition of
“Affiliate” under the Marriott License.

 

Exhibit E - Page 2

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4. TERM AND TERMINATION.

[Use the following paragraph 4.A. for New Project development]

A. The Term of this Sublicense Agreement begins on the Effective Date and
expires on the earlier of (i) the date on which Sublicensee’s authority to
develop the Project expires or terminates, (ii) the date on which the Project is
Deflagged, or (iii) the termination or expiration of the Marriott License.

[Use the following paragraph 4.A. for Existing/New Project operation]

A. The Term of this Sublicense Agreement begins on the Effective Date and
expires on the earlier of (i) the date on which Sublicensee’s authority to
operate the Project, or, if this Sublicense Agreement covers more than one
(1) Project, all of the Projects, expires or terminates, (ii) the date on which
the Project is, or, if this Sublicense Agreement covers more than one
(1) Project, all of the Projects are, Deflagged, or (iii) the termination or
expiration of the Marriott License. If this Sublicense Agreement covers more
than one (1) Project and any (but not all) of those Projects are Deflagged or
Sublicensee’s authority to operate any such Project expires or is terminated,
Exhibit A shall be amended to delete the affected Project(s), and Sublicensee
shall no longer have the right to use the Licensed Marks or System in connection
with the operation of such Project(s).

[Use the following paragraph 4.A. for Sales and Marketing]

A. The Term of this Sublicense Agreement begins on the Effective Date and
expires on the earlier of (i) the date on which Sublicensee’s authority to
perform the Sales and Marketing Services expires or terminates, or (ii) the
termination or expiration of the Marriott License.

B. MVWC shall have the right to terminate this Sublicense Agreement immediately
upon written notice to Sublicensee in the event of Sublicensee’s material breach
of this Sublicense Agreement.

5. RIGHTS AND OBLIGATIONS UPON EXPIRATION OR TERMINATION.

Upon the expiration or termination of this Sublicense Agreement, all rights
herein granted to Sublicensee shall revert to MVWC or Licensor , and Sublicensee
shall immediately cease all use of the Licensed Marks and System.

6. ASSIGNMENT.

A. This Sublicense Agreement is personal to Sublicensee, and Sublicensee may not
Transfer this Sublicense Agreement or any interest herein or any Ownership
Interest in Sublicensee without MVWC’s prior written consent, which MVWC may
grant or withhold in its sole discretion. Any such attempted Transfer shall be
void and shall constitute a material breach of this Sublicense Agreement.

B. MVWC may Transfer this Sublicense Agreement in accordance with the terms of
the Marriott License.

7. MISCELLANEOUS.

A. This Sublicense Agreement, including the Recitals, contains the entire
agreement between the parties concerning the sublicensed rights and may not be
modified without the prior written consent of both parties and, except to the
extent required by Applicable Law, without Licensor’s prior written approval. In
the event of a conflict between this Sublicense Agreement and the Marriott
License, the Marriott License shall control.

 

Exhibit E - Page 3

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B. This Sublicense Agreement does not constitute and shall not be construed as
constituting a partnership, joint venture, agency or employment relationship, or
any relationship other than that of licensor and licensee or sublicensee.

C. The language of this Sublicense Agreement shall in all cases be construed as
a whole, according to its fair meaning and not strictly for or against any of
the parties. Headings of paragraphs herein are for convenience of reference only
and are without substantive significance.

D. Sublicensee acknowledges that the rights and powers retained by Licensor
under the Marriott License are necessary to protect Licensor’s intellectual
property rights, and specifically, to conserve the goodwill and good name of
Licensor’s products and company and the name “Marriott”. Sublicensee therefore
agrees that Sublicensee will not allow the same to become involved in matters
which will, or could, detract from or impugn the public acceptance and
popularity thereof, or impair their legal status.

E. MVWC and Sublicensee agree that to the extent permitted under Applicable Law,
Licensor and its Affiliates are third party beneficiaries of this Sublicense
Agreement, and it is intended by MVWC and Sublicensee that Licensor and its
Affiliates will be entitled to enforce this Sublicense Agreement. MVWC and
Sublicensee further agree that Licensor and its Affiliates are not liable for
and do not assume any duties, obligations or liabilities under this Sublicense
Agreement unless agreed to in writing by Licensor or its Affiliates, as
applicable. Sublicensee acknowledges and agrees that (i) its obligations
hereunder (including payment obligations) [with respect to the Project(s)] [In
Sales and Marketing agreement, substitute “with respect to the Sales and
Marketing Services”] are primary obligations; (ii) that Licensor and its
Affiliates may pursue Sublicensee directly to enforce such obligations, and
(iii) that Licensor and its Affiliates are not required to proceed against MVWC
or any Guarantor (as defined in the Marriott License) before proceeding against
Sublicensee with respect to the enforcement of such obligations.

F. The respective obligations of the parties under this Sublicense Agreement,
which by their nature would continue beyond the termination, cancellation or
expiration of this Sublicense Agreement, including but not limited to the
provisions of Paragraph 4, shall survive termination, cancellation or expiration
of this Sublicense Agreement.

G. Sublicensee agrees that this Sublicense Agreement shall be subject to the
governing law and dispute resolution provisions set forth in the Marriott
License.

{Signatures appear on following page}

 

Exhibit E - Page 4

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

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION By:       Name:       Title:    

 

SUBLICENSEE:   By:           Name:       Title:    

 

Exhibit E - Page 5

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EXHIBIT A

DESCRIPTION OF PROJECT(S)

[In Sales and Marketing agreement, substitute “SALES AND MARKETING SERVICES” for

“DESCRIPTION OF PROJECT(S)”]

 

Exhibit A to Exhibit E - Solo Page

--------------------------------------------------------------------------------

[Use with Sales and Marketing Agreement]

EXHIBIT B

SALES AND MARKETING SERVICES TERRITOR(Y)(IES)

 

Exhibit B to Exhibit E - Solo Page

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EXHIBIT F

PROVISIONS TO BE INCLUDED IN SUBLICENSE AGREEMENT WITH NON-AFFILIATES

FOR SALES, MARKETING AND RELATED SERVICES

1. RIGHTS GRANTED.

Marriott Vacations Worldwide Corporation (“MVWC”) hereby grants to Sublicensee a
non-exclusive license to use the Licensed Mark(s) identified on Exhibit [__]
hereto and relevant aspects of the System, during the Term (defined below) of
this Sublicense Agreement, for the sole purpose of performing the Services.

2. USE AND OWNERSHIP OF LICENSED MARKS; QUALITY CONTROL.

A. All use of the Licensed Marks by Sublicensee under this Sublicense Agreement
shall inure to the benefit of Marriott International, Inc. and Marriott
Worldwide Corporation (collectively, “Licensor”) and its affiliates. Licensor
reserves the right to use and grant to others the right to use all or part of
the Licensed Marks, as may be applicable, in connection with goods and services
offered by Licensor, any of its affiliates or others.

B. Nothing herein shall be construed to grant Sublicensee any right whatsoever
to use (except as provided herein) or license others to use the Licensed Marks
or any names, marks, logos, commercial symbols, or indicia of origin owned by
Licensor or its affiliates.

C. Sublicensee covenants and agrees that in no event will any employees,
contractors, or agents of Sublicensee or others retained by Sublicensee in
connection with its provision of the Services, identify themselves as employees
of, or as representing or speaking or acting for Licensor.

D. Sublicensee recognizes that Licensor and its affiliates are the sole and
exclusive owners of all right, title and interest of every kind and nature,
whether by statute or common law, in law or equity, which attach, inure, subsist
or exist in the Licensed Marks, including specifically the Licensed Marks and
all goodwill associated with the Licensed Marks.

E. Sublicensee agrees that it will not during the term of this Sublicense
Agreement or thereafter (i) contest the ownership rights or any other rights of
Licensor or its affiliates in and to the Licensed Marks, contest the validity of
the Licensed Marks or do anything either by an act of omission or commission
which might impair, jeopardize, violate, infringe or dilute the Licensed Marks;
(ii) claim adversely to Licensor, its affiliates or anyone claiming through
Licensor any right, title, or interest in and to the Licensed Marks; (iii) use
the Licensed Marks other than in the manner provided for in this Sublicense
Agreement; (iv) misuse or harm or bring into dispute the Licensed Marks;
(v) register or apply to register in any country of the world the Licensed Marks
or any other mark which is, in Licensor’s reasonable opinion, the same as or
confusingly similar to the Licensed Marks for the benefit of Sublicensee or any
other person or entity, directly or indirectly; (vi) use any other mark which in
Licensor’s opinion is confusingly similar to the Licensed Marks; or (vii) use
any of the Licensed Marks in its corporate name or trade name or seek to
register any corporate name or trade name containing any of the Licensed Marks.

F. Sublicensee agrees to cooperate fully and in good faith with Licensor and its
affiliates for the purpose of securing and preserving the rights of Licensor and
its affiliates in and to the Licensed Marks by executing all documents and
taking all other acts reasonably necessary to record, register, or otherwise
acknowledge the existence of this sublicense or the rights granted to
Sublicensee hereunder to use the Licensed Marks and by providing such consents,
cooperation, and other assistance as Licensor may reasonably request to perfect,
defend, and protect Licensor’s and its affiliates’ ownership of the Licensed
Marks. [If there is an expense associated with this section, the relevant terms
of the License Agreement between Licensor and MVWC will govern which bears the
expense, as between Licensor and MVWC.]

 

Exhibit F - Page 1

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G. Sublicensee shall promptly notify MVWC of any objection to its use of the
Licensed Marks or any unauthorized use or attempted use, by any other person,
firm or entity, of the Licensed Marks or any variations similar thereto, of
which it is aware. In the event Licensor undertakes the prosecution of any
litigation relating to the Licensed Marks, Sublicensee shall execute any and all
documents and do such acts and things asLicensor may reasonably request in
connection with such defense or prosecution.

H. Any act or omission which purports to create an interest in the Licensed
Marks in favor of Sublicensee, directly or indirectly, shall be considered a
material breach of this Sublicense Agreement and grounds for its immediate
termination, including restitution for any damage incurred. Any application or
registration by or on behalf of Sublicensee or its affiliates made in
contravention of the terms and conditions of this Sublicense Agreement which
would create in Sublicensee or any of its affiliates any right or interest, or
the appearance of any right or interest, with respect to the Licensed Marks,
shall be deemed to at all times to have been made solely and exclusively for the
benefit of Licensor or its affiliates, and Sublicensee and its affiliates
jointly and severally, do unconditionally and irrevocably assign to Licensor any
and all right, title, or interest that it may have or appear to have with
respect to the Licensed Marks.

I. Sublicensee shall at all times conduct its sales and marketing activities in
a high quality, professional and courteous manner so as not to dilute or damage
the image and reputation of high quality service symbolized by the Licensed
Marks. Sublicensee shall immediately cease any marketing or promotional activity
or practice that MVWC or Licensor determines is not in keeping with the
foregoing standards or otherwise not in accordance with the provisions of this
Sublicense Agreement.

3. CONFIDENTIALITY.

During the course of its engagement under this Sublicense Agreement, Sublicensee
may have access to Licensor Confidential Information (as defined in the Marriott
License). Sublicensee will not, during the term hereof or thereafter, without
Licensor’s prior consent, which consent may be granted or withheld in Licensor’s
sole discretion, copy, duplicate, record, reproduce, in whole or in part, or
otherwise transmit or make available to any “unauthorized” person or entity any
Licensor Confidential Information or use the Licensor Confidential Information
in any manner not expressly authorized by this Sublicense Agreement. Sublicensee
may divulge such Licensor Confidential Information only to such of Sublicensee’s
employees or agents as require access to it in order to provide the Services
under this Sublicense Agreement, and only if such employees or agents are
apprised of the confidential nature of such information before it is divulged to
them and they are bound by confidentiality obligations substantially similar to
those listed above. All other persons or entities are “unauthorized” for
purposes of this Sublicense Agreement. Sublicensee agrees that the Licensor
Confidential Information has commercial value and that Licensor and its
affiliates have taken commercially reasonable measures to maintain its
confidentiality, and, as such, the Licensor Confidential Information is
proprietary and a trade secret of Licensor and its affiliates. Licensee will be
liable to Licensor for any breaches of the confidentiality obligations in this
Paragraph 3. by its employees and agents. Licensee will maintain the Licensor
Confidential Information in a safe and secure location and will immediately
report to Licensor and MVWC the theft or loss of all or any part of the Licensor
Confidential Information.

4. INSURANCE AND INDEMNIFICATION.

A. All insurance policies obtained or maintained by Sublicensee will by
endorsement specifically name as additional insureds Licensor, any affiliate of
Licensor designated by Licensor, and their employees.

B. Sublicensee will, and hereby does, indemnify and, at Licensor’s option,
defend Licensor and its affiliates, their officers, directors, agents and
employees, and their respective successors and assigns, from and against any and
all damages, claims, demands, suits, judgments, losses, or expenses (including
attorneys’ fees and litigation costs) of any nature whatsoever (including, but
not limited to, libel, slander, disparagement,

 

Exhibit F - Page 2

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defamation, copyright infringement, trademark infringement, patent infringement,
trade secret infringement, invasion of privacy or publicity rights, piracy
and/or plagiarism arising from or related to any materials prepared by
Sublicensee in connection with the provision of the Services under this
Sublicense Agreement, violation of consumer protection rules, or any offerings
of Sublicensee not consistent with this Sublicense Agreement or applicable law),
arising directly or indirectly from or out of: (i) any act, error or omission of
Sublicensee or its directors, invitees or employees, agents, or contractors;
and/or (ii) any occupational injury or illness sustained by any employees,
agents, or contractors of Sublicensee in furtherance of the Services hereunder;
and/or (iii) any failure of Sublicensee to perform the Services hereunder in
accordance with the highest generally accepted professional standards; and/or
(iv) any breach of Sublicensee’s representations as set forth herein or in any
other agreement related to the provision of the Services; and/or (v) any other
failure of Sublicensee to comply with the obligation on its part to be performed
hereunder or in any other agreement related to the provision of the Services.
The indemnification contained herein shall extend to claims occurring after this
Sublicense Agreement has terminated as well as while this Sublicense Agreement
is in force.

5. TERM AND TERMINATION.

A. The Term of this Sublicense Agreement begins on the Effective Date and
expires on the earlier of (i) the date on which Sublicensee’s authority to
perform the Services expires or terminates or (ii) the termination or expiration
of the Marriott License.

B. MVWC shall have the right to terminate this Sublicense Agreement immediately
upon written notice to Sublicensee in the event of Sublicensee’s material breach
of this Sublicense Agreement.

6. RIGHTS AND OBLIGATIONS UPON EXPIRATION OR TERMINATION.

Upon the expiration or termination of this Sublicense Agreement, all rights
herein granted to Sublicensee shall end, and Sublicensee shall immediately cease
all use of the Licensed Marks and System.

7. ASSIGNMENT.

A. This Sublicense Agreement is personal to Sublicensee, and Sublicensee may not
sell, assign or otherwise transfer this Sublicense Agreement or any interest
herein or any ownership interest in Sublicensee, or delegate any of its
obligations hereunder, without MVWC’s prior written consent, which MVWC may
grant or withhold in its sole discretion. Any such attempted transfer shall be
void and shall constitute a material breach of this Sublicense Agreement.

B. MVWC may sell, assign or otherwise transfer this Sublicense Agreement in
accordance with the terms of the Marriott License.

8. LICENSOR AS THIRD-PARTY BENEFICIARY.

MVWC and Sublicensee agree that to the extent permitted under Applicable Law,
Licensor and its affiliate are third party beneficiaries of this Sublicense
Agreement, and it is intended by MVWC and Sublicensee that Licensor and its
affiliates will be entitled to enforce this Sublicense Agreement. MVWC and
Sublicensee further agree that Licensor and its affiliates are not liable for
and does not assume any duties, obligations or liabilities under this Sublicense
Agreement unless agreed to in writing by Licensor and its affiliates, as
applicable. Sublicensee acknowledges and agrees that (i) its obligations
hereunder (including payment obligations) with respect to the Services are
primary obligations; (ii) that Licensor and its affiliates may pursue
Sublicensee directly to enforce the such obligations, and (iii) that Licensor
and its affiliates are not required to proceed against MVWC or any Guarantor (as
defined in the Marriott License) before proceeding against Sublicensee with
respect to the enforcement of such obligations.

 

Exhibit F - Page 3

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EXHIBIT G

DESIGN REVIEW ADDENDUM

This Design Review Addendum (“Addendum”) is a part of and is incorporated into
that certain License, Services, and Development Agreement dated effective
November 19, 2011 (hereinafter referred to as the “License Agreement”) by and
between Marriott International, Inc. (“MII”), Marriott Worldwide Corporation
(“MWC”) (MII and MWC are referred to collectively herein as “Licensor”), and
Marriott Vacations Worldwide Corporation (“Licensee”).

RECITALS

A. Pursuant to the terms of the License Agreement, Licensee has been granted a
license to operate the Destination Club Business and Whole Ownership Residential
Business by developing, selling, marketing, operating and financing Destination
Club Projects and Residential Projects (each, a “Project”); and

B. Licensee and Licensor intend for each New Project and the refurbishment, or
renovation of Existing Projects, to be designed, constructed, renovated and
refurbished in accordance with the Design Standards and the review process
described in this Addendum; and

C. Licensee desires to engage Licensor to provide certain review services during
the planning, development and operation phases of Projects for the purpose of
assuring compliance with the Design Standards, and Licensor desires to provide
such services to Licensee upon the terms set forth in this Addendum.

NOW, THEREFORE, Licensee and Licensor, in consideration of the foregoing and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, agree as follows:

ARTICLE 1

DEFINITIONS AND GENERAL MATTERS

1.1 Definitions. All capitalized terms not defined in this Addendum shall have
the meanings ascribed to them in the License Agreement, which is incorporated
herein by this reference. In this Addendum, the following terms have the
following meanings:

“Addendum” shall mean this Design Review Addendum, including the exhibits
attached hereto, as it may be amended, restated or supplemented from time to
time.

“Audio/Visual Systems” shall include, but not be limited to, the following
systems: general audio and visual systems, entertainment audio/video systems and
video information systems.

“Decorative Items” shall include, but not be limited to, artifacts, artwork,
carpeting, decorative lighting fixtures, etched glass, furniture, graphics,
interior landscaping, radios, televisions and window treatments.

“Design Standards” shall mean the Marriott Vacation Club Design Standards
(modules) which may be updated and amended on a periodic basis in accordance
with the terms of the License Agreement.

 

Exhibit G - Page 1

--------------------------------------------------------------------------------

“Project Request Date” shall mean the date upon which Licensee provides Licensor
a Project Approval Request for a particular Project.

“Existing Project” shall mean a Project that has received Licensor’s approval
prior to the Project Request Date. A “New Project” will become an “Existing
Project” for purposes of the reviews required by this Addendum upon receipt of
final approval from Licensor for the opening thereof. Existing Projects shall
not include any Project that has ceased to be a Licensed Project.

“Facilities Program” shall have the meaning ascribed to it in Section 2.1.2.

“FF&E” shall mean furniture, fixtures and equipment, including without
limitation: Decorative Items; Audio/Visual Systems; in-unit kitchen appliances,
refrigerators and minibars; cabinetry; computer equipment; Food/Kitchen
Equipment; Laundry Equipment; Housekeeping Equipment; Telecommunications
Systems; and Security Systems.

“Fixed Asset Supplies” shall mean items included within “Operating Equipment”
under the Uniform System of Accounts that may be consumed in the operation of
the Project or are not capitalized including, but not limited to, linen, china,
glassware, tableware, uniforms and similar items used in the operation of the
Project.

“Food/Kitchen Equipment” shall include, but not be limited to, all food
preparation, cooking and holding equipment; exhaust hoods and hood fire
protection systems; general storage layout, refrigerators and freezers
(including coils, condensers and compressors); ice-making, beverage dispensing
and other food and beverage equipment; dishwashing equipment (except any glass
washer included in Housekeeping Equipment); and similar items used in the food
and beverage service operation of the Project.

“Housekeeping Equipment” shall mean equipment items to be used by Project
employees for cleaning the Project on a regular basis.

“Inventories” shall mean “Inventories” as defined in the Uniform System of
Accounts, such as, but not limited to, provisions in storerooms, refrigerators,
pantries and kitchens; beverages in wine cellars and bars; other merchandise
intended for sale; fuel; mechanical supplies; stationery; and other expensed
supplies and similar items.

“Laundry Equipment” shall mean washers, washer/extractors, dryers, chest-type
ironers, steam boiler, thermal fluid heater for ironer, lint control devices,
linen folders, linen carts, dry cleaning equipment (if required), laundry sinks,
air compressors, laundry scales and similar items used in the laundry operation
of the Project.

“Licensee” shall have the meaning ascribed to it in the preamble to this
Addendum or shall mean any successor or permitted assign, as applicable.

“License Agreement” shall have the meaning ascribed to it in the preamble to
this Addendum, as such agreement may be amended, restated or supplemented from
time to time.

“Licensor” shall have the meaning set forth in the preamble to this Addendum or
shall mean any successor or permitted assign, as applicable.

“Model Unit” shall have the meaning ascribed to it in Section 2.4.2.

 

Exhibit G - Page 2

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“Opening Date” shall mean the first (1st) day on which a Project (or phase
thereof) is open for overnight accommodation for owners and guests.

“Plans” shall have the meaning ascribed to it in Section 2.3.1.

“Project” shall have the meaning ascribed to it in the Recitals.

“Project Approval Request” shall have the meaning ascribed to it in Section 1.2.

“Project Related Areas” shall mean all facilities that are part of the Project,
but outside the Project, which: (i) connect to or are directly accessible to the
Project; (ii) provide services to the Project; and/or (iii) would normally be
incorporated as part of a free-standing project.

“Project Systems” shall include, but not be limited to, software, hardware,
cabling and all other items necessary for a computer; Audio/Visual Systems;
management systems; front office, back office and accounting management systems;
sales and reservations systems; timekeeping and payroll systems; point-of-sale
systems, including food, beverage and retail functions; food and beverage
inventory systems; engineering software; and word processing and other personal
computer applications.

“Refurbishment Review Waiver Request” shall mean a request by Licensee for
Licensor to waive the requirements of Article 3 due to the scope of the
refurbishment activities planned for a particular Project. Refurbishment Review
Waiver Requests shall be delivered to Licensor in writing and provide sufficient
detail regarding the activities and Project scope for which Licensee is seeking
a waiver. The intent behind this mechanism is to permit minor renovations and
refurbishments to occur without the cost and time associated with the review
process outlined in Article 3.

“Security Systems” shall mean video surveillance equipment; two-way radio
systems; inspection tour recording systems; security alarm systems; access
control systems (pedestrian and vehicular); and other special security systems
required for the Project.

“Site” shall mean the parcel of land upon which the Project is located.

“Substantial Completion” shall mean: (i) substantial completion of the Project
in conformance, in all material respects, with the Plans, Design Standards and
the requirements of this Addendum (other than minor punchlist items, which will
not individually or in the aggregate impair the use of the Project for its
intended use, or impair the Project owners’ and guests’ experience); (ii) the
provision of all Fixed Asset Supplies and Inventories and installation of the
FF&E and Project Systems as required for the operation of the Project; provided,
however, that if Licensee contracts with Licensor or an affiliate of Licensor to
procure FF&E and/or Fixed Asset Supplies required for the operation of the
Project, and Licensor or such affiliate is in default under the terms of such
procurement contract, such FF&E and/or Fixed Asset Supplies shall not be
required for Substantial Completion of the Project; and (iii) Licensee has
obtained required permits as set forth in Section 2.4.4 necessary for the
opening of the Project.

“Technical Services Fee” shall have the meaning ascribed to it in Article 5.

“Telecommunications Systems” shall mean PBX, phone systems, call accounting and
pocket paging systems, and high-speed Internet access.

“Termination” shall mean the expiration or sooner cessation of this Addendum.

 

Exhibit G - Page 3

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“Variance Notice” shall mean a separate written statement provided by Licensee
to Licensor concurrently with Licensee’s submittals to Licensor pursuant to
Article 2 and Article 3, which statement shall detail all variances from the
Plans or Design Standards contained in the relevant submittal. The Variance
Notice shall also include a description of the rationale for the variance from
the Design Standards.

1.2 Initiating the Review of a Project. To initiate Licensor’s review of work to
be performed in connection with a New Project or Existing Project, Licensee
shall submit to Licensor a memorandum describing the overall scope of the
Project along with a detailed description of the new construction, renovation or
refurbishment work for which Licensee is seeking approval from Licensor (the
“Project Approval Request”). The Project Approval Request should provide
specific contact information for a representative of Licensee through whom
Licensor may coordinate activities pursuant to this Addendum, provide a
narrative of the work contemplated to be performed, a description of the Site,
identify the Project as a New Project or an Existing Project, and include a
preliminary schedule for the work to be performed. Unless an alternative date is
agreed upon by the parties, within fifteen (15) days of receipt of the Project
Approval Request, representatives of Licensee and Licensor shall hold a
“kick-off meeting” to discuss the details surrounding the Project, the scope of
services to be provided by Licensor (e.g., shared services, on site management,
integration with adjoining resort) and other items the parties deem relevant.
Unless an alternative location is mutually agreed upon by the parties, the
kick-off meeting shall be held at the corporate headquarters of Licensor in
Bethesda, Maryland. The date upon which the Project Approval Request is
submitted to Licensor shall be considered the “Project Request Date” for the
subject Project.

1.3 Review of Projects and Scope of Addendum. It is acknowledged that the terms
of this Addendum shall apply to a variety of project types and undertakings,
each one of which will be categorized as a New Project or an Existing Project
for purposes of review for compliance with the Design Standards. The category of
the Project will determine the process for review necessary to obtain the
approval of Licensor. New Projects may include new construction (ground-up), the
addition of a phase at an Existing Resort (which has not been previously
approved by Licensor), or the conversion of a previously existing property to a
Project. New Projects undergo a thorough review in accordance with Article 2 of
this Addendum to assure they comply with the Design Standards. Existing Projects
routinely go through renovations and refurbishment processes which require an
abbreviated review of the undertakings as described in Article 3 of this
Addendum.

1.4 Licensee Representative and Approval of Consultants. As soon as reasonably
possible after the Project Request Date, but in no event later than thirty (30)
days thereafter, Licensee shall provide Licensor with the names and other
information reasonably requested by Licensor related to the Licensee’s
architect, interior designers and other consultants providing services to the
subject Project.

ARTICLE 2

TECHNICAL SERVICES FOR NEW PROJECTS

2.1 New Project Conceptual and Schematic Design Phase

2.1.1 Preliminary Information. Licensor and Licensee shall confirm the then
current version of the Design Standards for use by Licensee’s design team, along
with other information describing the standards that Licensor requires for the
Project and Project Related Areas, as appropriate for the Project. All Plans for
the Project shall incorporate the parameters described in the Design Standards.

 

Exhibit G - Page 4

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2.1.2 Schematic Design Phase. Based upon, and incorporating the information
provided in the materials described in Section 2.1.1 and the kick-off meeting
described in Section 1.2, Licensee shall prepare or cause to be prepared and
submitted to Licensor for approval: (i) a facilities program (“Facilities
Program”) describing the space requirements for all areas of the Project and the
Project Related Areas (e.g., public spaces, kitchen, laundry, back office,
etc.); (ii) a listing of each operating function of the Project and the
as-designed areas, and other documents reasonably necessary to represent the
size, layout and quality of the Project; (iii) a colored vicinity/location map
indicating vehicular traffic directions, ingress and egress points and major
surrounding developments and transportation centers; (iv) a site plan showing
all site elements and proposed landscaping; (v) floor plans, showing all spaces
listed in the Facilities Program; (vi) unit layouts, indicating all bath
fixtures, in-unit kitchen equipment (if applicable), closets, balconies and
other major features; (vii) building elevations and sections, showing exterior
materials, details and colors; (viii) a rendered perspective drawing of the
Project; and (ix) a sample board showing the proposed exterior materials. Such
materials may also include a rendering and preliminary architectural plans of
the Project Related Areas, as reasonably requested by Licensor, and a Variance
Notice, if applicable. Unless an alternative location is mutually agreed upon by
the parties, the presentation of the conceptual and schematic design submittal
shall be made by Licensee’s representatives in Bethesda, Maryland at the
corporate headquarters of Licensor. Licensee will revise and amend the schematic
design submittals as may be necessary to obtain Licensor’s approval.

2.2 New Project Design Development Phase

2.2.1 Design Development Phase. Licensee shall, based upon incorporating the
approvals described in Section 2.1.2, prepare or cause to be prepared in
accordance with the Design Standards a design development submittal which may
include the following: (i) a Project description and as-designed space
utilization program; (ii) development plans and specifications for the Project,
Site and related facilities; (iii) interior designer’s plans, furniture layouts,
reflected ceiling plans, interior elevations, wall sections, materials, lighting
and color schemes; (iv) interior designer’s and mechanical engineer’s
coordinated design of HVAC distribution; (v) interior designer’s and electrical
engineer’s coordination of lighting and emergency lighting and alarm systems;
(vi) a review of lighting layouts for such areas including specific fixture
selection and recommendations on and specifications of dimmer equipment; and
(vii) engineering drawings indicating locations and sizes of necessary
mechanical connections for Food/Kitchen Equipment, Housekeeping Equipment and
Laundry Equipment. All such plans and a Variance Notice, if applicable, shall be
submitted to Licensor for approval.

2.2.2 Interior Design. Prior to submission, or as part of the plans submitted
pursuant to Section 2.2.1, Licensee shall submit to Licensor for review and
approval: (i) interior design plans, including floor plans, reflected ceiling
plans, elevations, sections and renderings that are reasonably necessary to
adequately explain the design intent of the Project’s public spaces (which, upon
approval, shall become part of the Plans); (ii) display boards of fabrics,
carpets, furnishings, finishes, paints, lighting design guidelines (e.g.,
fixtures, chandeliers, sconces, etc.) and other materials for each Project space
designated by Licensor; and (iii) a Variance Notice, if applicable. Upon request
of Licensor and agreement by the parties of the date and location of such
presentation, Licensee shall present these materials to Licensor for approval of
the interior design of the Project, and Licensee shall revise and amend such
presentation materials as required to obtain final approval of the interior
design by Licensor.

2.3 New Project Construction Document Phase

2.3.1 Final Design Phase. Upon Licensor’s approval of the items submitted by
Licensee pursuant to Section 2.2, and based upon the designs therein approved by
Licensor, Licensee shall cause Licensee’s architect to produce final plans,
specifications and complete construction drawings

 

Exhibit G - Page 5

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(including, without limitation, architectural, electrical, plumbing, HVAC,
structural, civil engineering, life safety, and landscape drawings for the
Project and Project Related Areas) (collectively, the “Plans”), which shall be
properly sealed by Licensee’s architect. The Plans shall: (i) incorporate the
Design Standards into the Project and Project Related Areas; and
(ii) incorporate all legal requirements applicable to the design, construction
and operation of the Project and the Project Related Areas.

The Plans and a Variance Notice, if applicable, shall be submitted to Licensor
for approval at least thirty (30) days prior to commencement of construction of
the Project and Project Related Areas., Licensee may submit the Plans at the
time they are 30%, 60% and 90% complete for comment and approval by Licensor.

Following Licensor’s approval of the Plans, no change in such Plans shall be
made that materially affects the design, construction, operation, or aesthetics
of the Project or any of the Project Related Areas (as related to the scope of
Licensor’s approval of such areas), without the prior approval of Licensor.

2.3.2 Systems. In accordance with the approved schedule for the Project,
Licensee shall provide to Licensor: (i) general concepts for food and beverage
facilities, including without limitation point of sale systems; (ii) the
locations of security devices, and their specifications, installation details,
power and space requirements; and (iii) the locations and types of
Telecommunication Systems.

2.3.3 Decorative Items. Upon Licensor’s approval of the interior design
materials submitted pursuant to Section 2.2.2 and incorporating the information
provided to Licensee as set forth above, Licensee shall prepare or cause to be
prepared for Licensor’s approval, documents reasonably describing the Decorative
Items to be installed in the Project, and a Variance Notice, if applicable. Such
information shall include the description, quantity, product specification,
photograph (when appropriate), installed location and other pertinent
information about the Decorative Items.

2.4 New Project Construction Phase

2.4.1 Construction of Project, Observations. Licensee shall construct, furnish
and equip (or cause to be constructed, furnished and equipped) the Project and
the Project Related Areas in accordance with the Design Standards and the Plans
that have been previously approved by Licensor. During the course of
construction, Licensee shall cooperate with Licensor for the purpose of
permitting Licensor to observe from time to time, the construction of the
Project and the Project Related Areas as it proceeds to determine whether
construction is proceeding in accordance with the Design Standards and the
approved Plans. In particular, Licensor may visit the Site at such intervals as
Licensor deems reasonably necessary (which intervals shall include certain
milestone events described on Exhibit A). Licensee shall give Licensor at least
fifteen (15) days’ notice prior to each of the events described in Exhibit A in
order to enable Licensor to schedule its visit(s). However, the parties agree
that despite its right to observe the construction pursuant to this
Section 2.4.1, Licensor shall not be obligated to observe the construction of
the Project or the Project Related Areas unless otherwise specified on Exhibit
A. It is understood and agreed that Licensor is providing no construction
management services, and that construction management shall be the sole
responsibility of Licensee. To the extent that Licensor reasonably determines
and provides notice to Licensee thereof that the Project, or the Project Related
Areas, as constructed, furnished or equipped do not conform to the Design
Standards confirmed in Section 2.1.1, or to the approved Plans, Licensee shall
promptly correct or cause to be corrected such nonconforming work.

 

Exhibit G - Page 6

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2.4.2 Model Units. Prior to construction of the Project, Licensee shall
construct a model unit (“Model Unit”) for review and approval by Licensor, such
review and approval to include: (i) compliance with the Design Standards;
(ii) the level of fit, finish and quality appearing in the units and the general
arrangement of the unit; and (iii) FF&E installed in the Model Unit. Upon
receipt by Licensor of written notice from Licensee of completion of the Model
Unit, Licensor shall have thirty (30) days in which to review and approve the
Model Unit. If Licensor disapproves any portion of any Model Unit, Licensor
shall provide detailed written objections and describe the required changes to
such Model Unit that would be required to satisfy the Design Standards and
obtain the approval of Licensor. Upon receipt by Licensee of written notice from
Licensor that the Model Unit has been approved, Licensee shall construct,
furnish and equip (or cause to be constructed, furnished and equipped) the
Project in accordance with the level of fit, finish and quality appearing in,
the general arrangement of, and the FF&E installed in, the approved Model Unit.

2.4.3 Shop Drawings & Submittal Reviews. Licensee shall submit to Licensor, for
its approval, shop drawings, product data and samples generated by contractors
or vendors (the “Submittals”), in accordance with the list of Submittals
attached as

Exhibit B.

2.4.4 Permits. Licensee shall be responsible for obtaining (or causing to be
obtained) all permits and other approvals required for construction and
operation of the Project, such as the building permit, occupancy permit,
elevator permits, occupational licenses, liquor licenses and others for the
Project and Project Related Areas.

2.4.5 Documents Upon Completion of Construction. Upon completion of construction
of the Project, Licensee shall submit to Licensor: (i) an architect’s
certification that the Plans comply with all applicable legal requirements and
that the Project has been constructed and completed in accordance with the Plans
approved by Licensor; and (ii) a copy of the temporary or, if available,
permanent certificate of occupancy for the Project. A copy of the permanent
certificate of occupancy for the Project should be provided to Licensor by no
later than thirty (30) days after receipt by Licensee.

ARTICLE 3

TECHNICAL SERVICES FOR EXISTING PROJECTS

3.1 Existing Project Refurbishment Conceptual and Schematic Design Phases

3.1.1 Preliminary Information. Licensor and Licensee acknowledge that it will
become necessary to make certain renovations and undertake certain
refurbishments to Existing Projects. Accordingly, Licensor and Licensee shall
confirm the then current version of the Design Standards for use by Licensee’s
design team for the planning and design of such renovation and refurbishment
activities. Unless a Refurbishment Review Waiver has been requested by Licensee,
and approved by Licensor, all Plans for the renovation and refurbishment of an
Existing Project shall incorporate the parameters described in the Design
Standards and be evaluated based on the process described in this Article 3.
Prior to commencing such renovation or refurbishment activities, representatives
of Licensor and Licensee shall meet at the subject Existing Project for an
initial review thereof. Licensor representatives shall cooperate with Licensee
to agree upon conceptual refurbishment and renovation activities that will
comply with the Design Standards.

3.1.2 Schematic Design Phase. Licensee shall, based upon and incorporating the
information provided in accordance with Section 3.1.1, prepare or cause to be
prepared and present to Licensor for approval, a conceptual design submittal
that may include the following: a description of the proposed refurbishment or
renovation plans; rendering and preliminary architectural plans; display boards

 

Exhibit G - Page 7

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of fabrics, carpets, furnishings, finishes, and paints; lighting design
guidelines (e.g., fixtures, chandeliers, sconces, etc.); other materials
proposed to be incorporated into the Project; and a Variance Notice, if
applicable. Unless an alternative location is mutually agreed upon by the
parties, the presentation of the conceptual and schematic design presentation
shall be made by Licensee’s representatives at the corporate headquarters of
Licensor in Bethesda, Maryland.

3.1.3 Decorative Items. Upon Licensor’s approval of the interior design
materials submitted pursuant to Section 3.1.2 and incorporating the information
provided to Licensee as set forth above, Licensee shall prepare or cause to be
prepared for Licensor’s approval documents reasonably describing the Decorative
Items to be installed in the Project and the installation locations or details
therefor, and a Variance Notice, if applicable. Such information may include the
description, quantity, recommended manufacturer and model number, product
specification, photograph (when appropriate), installed location and other
pertinent information about the Decorative Items.

3.2 Existing Project Refurbishment Construction Phase

3.2.1 Renovation and Refurbishment of Existing Project, Observations. Licensee
shall renovate, refurbish, furnish and equip (or cause to be renovated,
refurbished, furnished and equipped) the Project and the Project Related Areas
in accordance with the Design Standards and the Plans that have been previously
approved by Licensor. During the course of such activities, Licensor shall visit
the Project to assure compliance with the Design Standards and prior approvals.
To the extent that Licensor determines that the Project, or the Project Related
Areas, as renovated or refurbished, furnished or equipped do not conform to the
Design Standards in place at the time the Project was reviewed by Licensor,
Licensor shall promptly notify Licensee of such nonconformity in writing and
Licensee shall promptly correct (or cause to be corrected) such nonconforming
work.

3.2.2 Permits. Licensee shall be responsible for obtaining (or causing to be
obtained) all permits and other approvals required for renovation and
refurbishment of the Project, such as the building permit, occupancy permit,
elevator permits, occupational licenses, liquor licenses and others for the
Project and Project Related Areas.

ARTICLE 4

APPROVALS AND VARIANCES

4.1 Requests for Approval

4.4.1 Requests for Approval. Wherever in this Addendum the consent or approval
of Licensor or Licensee is required, such consent or approval unless otherwise
noted shall not be unreasonably withheld, delayed or conditioned, shall be in
writing and shall be executed by a duly authorized officer or agent of the party
granting such consent or approval. If either Licensor or Licensee fails to
respond within fifteen (15) days to a request by the other party for a consent
or approval, the other party shall provide notice to the nonresponsive party of
its failure, and such party shall respond within five (5) days or such consent
or approval shall be deemed to have been given, except (i) as otherwise
expressly provided in this Addendum, or (ii) in the case of consents or
approvals that may be granted or withheld in the sole discretion of a party, in
which case a failure to respond shall be deemed to be a withholding of consent
or approval. Upon obtaining approval from Licensor, Licensee may rely on such
approval for purposes of advancing design, renovation, refurbishment and
construction activities.

 

Exhibit G - Page 8

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In the event Licensor disapproves a request for approval by Licensee, Licensor
shall provide detailed written objections and describe the required changes to
such request that are necessary to obtain the approval of Licensor.

4.4.2 Licensor’s Approval of Variances. Licensee acknowledges that Licensor
will, in its review process, provide comments on the plans and specifications.
Such reviews do not relieve Licensee and its consultants of their responsibility
with regard to determining the completeness of subsequent documents and
compliance with the Design Standards. Licensee acknowledges that an approval by
Licensor at any stage does not constitute an approval of a variation in Plans or
Design Standards unless a Variance Notice covering the deviation has been
properly submitted by Licensee and accepted by Licensor in writing.

4.4.3 Nonconformity. To the extent that Licensor determines that the Project as
constructed, renovated or refurbished, furnished or equipped does not conform to
the Design Standards agreed to by the parties consistent with this Addendum, or
to the approved Plans, Licensor shall provide written notice thereof to Licensee
providing a detailed description of such nonconformity. Upon receipt of such
notice, Licensee shall promptly (i) correct (or cause to be corrected) such
nonconforming work, (ii) commence and diligently pursue a correction to such
nonconforming work, or (iii) provide Licensor with adequate assurances that such
nonconforming work will be promptly remedied within thirty (30) days after
receipt of written notice from Licensor.

ARTICLE 5

TECHNICAL SERVICES FEE

5.1 Technical Services Fee. Licensee shall pay to Licensor a fee for services
rendered pursuant to this Addendum in accordance with the schedule of fees
attached hereto as Exhibit C and incorporated herein by this reference.

ARTICLE 6

OPENING DATE

6.1 Opening Date. The Opening Date shall in no event be earlier than the date on
which all of the following have occurred: (i) all licenses, permits, and other
approvals and instruments necessary for operation of the Project (or phase
thereof) have been obtained, and (ii) on the Opening Date there will be no
ongoing construction on any portion of the Project (or phase thereof) that would
materially adversely limit, restrict, disturb or interfere with the experience
of the Project owners and guests. If, as of the Opening Date, there remain to be
completed minor unfinished punchlist items or installation of incidental FF&E
and Fixed Asset Supplies in the common areas, lobby, administrative offices or
any units to be opened on the Opening Date, none of which preclude Licensee from
operating the Project (or phase thereof) in accordance with the Design
Standards, the Opening Date shall not be delayed for such reasons; however,
Licensee shall be obligated to promptly finish such items pursuant to the
requirements of this Addendum.

ARTICLE 7

INSURANCE

7.1 Insurance Required. At all times during the construction of the Project
(where a certificate of occupancy has not been issued) during such construction
or such later date as indicated below, Licensee shall, at its expense, procure
and maintain (or cause its general contractor to procure and maintain) insurance
protecting Licensee and Licensor against loss or damage arising out of or in
connection with the construction of the Project.

 

Exhibit G - Page 9

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1. Such insurance shall, at minimum include:

(a) Commercial general liability insurance in an amount not less than One
Million Dollars ($1,000,000) per each occurrence with a general aggregate limit
of not less than Two Million Dollars ($2,000,000). Such insurance shall include,
but is not limited to, the following coverages or endorsements:

 

  •  

Independent Contractors Liability

 

  •  

For any time-share Project that is developed or marketed in the United States
including United States Territories and for any Project developed or marketed in
jurisdictions in which there may be liability for construction defects,
Products/Completed Operations Liability (construction defect) to be maintained
for (i) three (3) years after the date of substantial completion of the Project
or issuance of a certificate of occupancy for the Project, whichever is later.
If a jurisdiction requires procurement of completed operations coverage or
equivalent coverage, then such coverage will be procured as required by
applicable law.

 

  •  

For any residential or fractional Project that is developed or marketed in the
United States including United States Territories and for any Project developed
or marketed in jurisdictions in which there may be liability for construction
defects, Products/Completed Operations Liability (construction defect) to be
maintained for (i) ten (10) years after the date of substantial completion of
the Project or issuance of a certificate of occupancy for the Project, whichever
is later, or (ii) such time frame as may be required to cover the statutory time
frame for construction defects in the state or country where the Project is
located. If such coverage is provided by the general contractor, evidence of
insurance shall be provided for the entire statutory time frame.

 

  •  

Explosion, Collapse and Underground Coverage

(b) Business auto liability including owned, non-owned and hired vehicles, with
combined single limits for bodily injury and property damage in an amount not
less than One Million Dollars ($1,000,000) per each occurrence.

(c) Umbrella or excess liability, on a following form, in an amount not less
than:

 

  a. Two Million ($2,000,000) Dollars per occurrence for projects with
construction value equal to or less than $500,000 and the Project is not
occupied

 

  b. Four Million ($4,000,000) Dollars per occurrence for projects with
construction value of $500,001 to $1,000,000 or if under $500,000 and the
Project is occupied

 

  c. Nine Million ($9,000,000) Dollars per occurrence for projects with
construction value of $1,000,001 to $10,000,000;  

 

  d. Fourteen Million ($14,000,000) per occurrence Dollars for projects with
construction value of $10,000,001 to $20,000,000;  

 

Exhibit G - Page 10

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  e. Nineteen Million ($19,000,000) Dollars per occurrence for projects with
construction value of $20,000,001 to $50,000,000;

 

  f. Such greater amount as is reasonably determined by Licensor and Licensee
where the total project construction costs are greater than Fifty Million
Dollars ($50,000,000).

Such coverage shall be in excess of the insurance required under
Section 7.1.A.1(a), Section 7.1.A.1(b), and the employers liability required
under Section 7.1.A.1(f). The general aggregate shall apply in total to this
Project only if coverage is provided by a general contractor and shall be
reinstated annually during construction. Upon the latest to occur of substantial
completion of the Project or the issuance of a certificate of occupancy for the
Project, the coverage shall specifically include the completed operations
liability (construction defects) in the amounts required under this
Section 7.1.1.

(d) Builders risk insuring such risks as commonly covered by an “all risk of
physical loss” form on a replacement cost basis covering equipment to be
installed in, and supplies to be used at, the Project and all Project related
areas, including contractors’ supplies, tools and equipment.

(e) Workers’ compensation insurance covering all of Licensee’s, its general
contractors’, its subcontractors’ and its consultants’ employees, in statutory
amounts and employers’ liability of not less than One Million
Dollars ($1,000,000) for each accident.

7.2 General Provisions.

A. All insurance policies required under Section 7.1.A.1 .(a) and (b) shall
include Licensor and its Affiliates as additional insureds. Licensee shall
deliver to Licensor, upon commencement of construction of a Project,
certificates of insurance, and if so requested copies of the insurance policies
in the event of a claim, with respect to all policies required pursuant to
Section 7.1 and, in the case of insurance policies about to expire, shall
deliver certificates with respect to renewals thereof. If commercially
available, such policies of insurance shall be endorsed to provide that the
insurance shall not be canceled without at least thirty (30) days’ prior written
notice to the certificate holder. For all the above coverages, Licensee shall,
and shall cause the general contractor and all subcontractors to, waive their
respective rights of recovery and its insurers’ rights of subrogation against
Licensor and such coverage shall be primary and non-contributory to any other
coverages Licensor may carry.

B. Licensee’s obligation to maintain the insurance hereunder will not relieve
Licensee of its obligations under any indemnification under this Agreement or
the License Agreement. As required by Licensor on similar projects, Licensor
reserves the right to review the insurance coverages and limits from time to
time and require increases or amendments to the insurance outlined in 7.1 based
on competitive terms and conditions in the jurisdiction of the Project. Such
requirements shall be mutually agreed by Licensor and Licensee, but in no event
shall the changes be less than those required by Licensor on similar projects.

ARTICLE 8

MISCELLANEOUS

8.1 Relationship. In the performance of this Addendum, Licensor shall act solely
as an independent contractor. This Addendum shall in no respect be interpreted,
deemed or construed as making Licensor a partner, joint venturer with, or agent
of, Licensee.

 

Exhibit G - Page 11

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8.2 Third-Party Rights. Nothing herein shall be construed to give any rights or
benefits hereunder to any person or entity, other than Licensee or Licensor, and
the rights of third-party beneficiaries are hereby expressly negated.

8.3 Headings; Section References. The headings of Sections herein are inserted
for convenience only and are in no way intended to describe, interpret, define
or limit the scope or content of this Addendum or any provision hereof. All
references to Articles, Sections, paragraphs, clauses, exhibits, or addenda
shall refer to the corresponding Article, Section, paragraph, clause of or
exhibit or addendum attached to this Addendum unless otherwise specified.

8.4 Waiver. The failure of either party to insist upon a strict performance of
any of the terms or provisions of this Addendum, or to exercise any option,
right or remedy contained in this Addendum, shall not be construed as a waiver
or as a relinquishment for the future of such term, provision, option, right or
remedy, but the same shall continue and remain in full force and effect. No
waiver by either party of any term or provision hereof shall be deemed to have
been made unless expressed in writing and signed by such party.

8.5 Partial Invalidity. If any portion of any term or provision of this
Addendum, or the application thereof to any person or circumstance shall be
invalid or unenforceable, at any time or to any extent, the remainder of this
Addendum, or the application of such term or provision to persons or
circumstances other than those as to which it is held invalid or unenforceable,
shall not be affected thereby, and each term and provision of this Addendum
shall be valid and be enforced to the fullest extent permitted by law.

8.6 Engagement of Third Party Consultants. Licensor may, at its own cost, engage
third party consultants to perform some of its services under this Addendum.

 

Exhibit G - Page 12

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EXHIBIT A

TO

DESIGN REVIEW ADDENDUM

MILESTONE EVENTS

Licensor will visit the Site for the purpose of performing its obligations under
the Addendum at approximately the following times unless otherwise noted:

Commencement of metal stud installation in units.

**Completion of the Model Unit (fully finished and furnished).

**Licensee’s kickoff meeting with the fire and life safety contractor

**After fire life safety equipment has been installed but prior to
drywall/sheetrock.

Commencement of public space finishes.

Commencement of furniture installation.

**Final Acceptance.

In addition to the above-described milestone events, Licensor may visit the Site
to observe the construction of the Project and Project Related Areas at such
intervals as Licensor deems reasonably necessary.

 

** Indicates mandatory visit to the Project by the appropriate Licensor
representative to participate in activities associated with milestone.

 

Exhibit A to Exhibit G - Solo Page

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EXHIBIT B

TO

DESIGN REVIEW ADDENDUM

SUBMITTALS

REQUIRED SUBMITTAL FORM:

* Sample / ** Shop drawing / ***         Manufacturers literature

DIVISION 5

Decorative Metal work (bar rail, wall trim, grills, etc.) **/***

DIVISION 6

Millwork, paneling, trim casework */**

DIVISION 7

Exterior finish materials and colors *

DIVISION 8

Public Space and Guest Unit doors and Hardware ***

Storefront including entrance and revolving doors ***

DIVISION 9

All finish material

(Interior Design installation drawings, specifications and sample/color book) *

DIVISION 10

Building signs **

Interior graphics */**

DIVISION 11

Front desk equipment ***

Kitchen and laundry equipment ***

DIVISION 12

All furniture, fabric and upholstery */**

DIVISION 13 - NA

DIVISION 14

Elevator cab interiors */**

Elevator equipment **/***

 

Exhibit B to Exhibit G - Page 1

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DIVISION 15

Major mechanical equipment & controls including:

Boilers, chillers, cooling tower, air handlers & pumps **/***

Mechanical room layout **

Fire Protection Systems ***/**

- Any exceptions to approved Design Documents

DIVISION 16

Fire Protection Systems **/***

- Any exceptions to approved Design Documents

 

Exhibit B to Exhibit G - Page 2

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EXHIBIT C

TO

DESIGN REVIEW ADDENDUM

TECHNICAL SERVICES FEE

 

Review Categories    Review Fees  

New Projects and Conversions of Existing Projects

   $ 80,000   

Refurbishment/Renovation of Existing Projects

  

Soft Goods Refurbishment Review

   $ 6,000   

Refurbishment/renovation Projects In Excess of Soft Goods Update

   $ 15,000   

The review fees (“Review Fees”) shall be billed by Licensor to Licensee on a
lump sum basis as indicated for each review category identified above. Licensee
shall pay the Review Fees in four (4) quarterly and equal installments. The
first installment shall be payable upon submission of the first documents/plans
for review by Licensor. In the event a Project is terminated before
fully-reviewed by Licensor, the parties shall reasonably pro-rate the Review
Fees based on the actual review work performed by Licensor.

The Review Fees listed above are inclusive of all expenses, included, but not
limited to, travel, telephone, shipping, equipment, supplies, physical reviews
of the Project, document approval, attendance at design progress meetings and
meetings held in conjunction with the milestone events described on Exhibit “A”
to the Addendum, on-site inspections during design & construction, post
construction services and all other meetings required to successfully complete
the review of each Project for compliance with the Design Standards.

Within one hundred twenty (120) days following the second anniversary of the
License Agreement, the parties shall meet to evaluate the Review Fees and again
on each second anniversary thereof. In the event the Review Fees are less, or
greater than, the actual cost incurred by Licensor in the review of Licensee’s
Projects, the Review Fees shall be re-negotiated by the parties to an amount
anticipated to cover the reasonable costs thereof.

 

Exhibit C to Exhibit G - Solo Page

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EXHIBIT H

EXISTING PROJECTS AT WHICH LICENSEE

HAS NOT ENGAGED IN TRANSIENT RENTAL

Existing Projects for which Licensee has not notified Licensor of Licensee’s
intention to engage in transient rentals

 

Project Name

 

Place

None

 

Existing Projects for which Licensee has notified Licensor of Licensee’s
intention to engage in transient rentals

 

Project Name

 

Place

Marriott Vacation Club at Empire Place

  (Bangkok, Thailand)

Marriott Vacation Club at The Buckingham

(opening planned for mid-2012)

  (Macau)

 

Exhibit H - Solo Page

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EXHIBIT I

EXISTING GOLF FACILITIES

 

Facility Name

  

Place

Marriott’s Grande Pines Golf Club

   (Orlando, Florida)

Marriott’s Grande Vista Golf Club

   (Orlando, Florida)

Marriott’s Kauai Lagoons Golf Club

   (Lihue, Hawaii)

Marriott’s Shadow Ridge Golf Club

   (Palm Desert, California)

Marriott’s Son Antem Golf Club

   (Mallorca, Spain)

The Faldo Golf Institute by Marriott

   (Orlando, Florida)

The Faldo Golf Institute by Marriott

   (Palm Desert, California)

 

Exhibit I - Solo Page

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EXHIBIT J

PERMITTED LICENSEE AFFILIATE NAMES

 

Affiliate

  

Jurisdiction of

Organization

United States Affiliates

  

Marriott Kauai Ownership Resorts Inc.

   Delaware

Also does business under the name Marriott Vacation Club International

  

Marriott Overseas Owners Services Corporation

   Delaware

Marriott Ownership Resorts Inc.

   Delaware

Also does business under the names Faldo Golf Institute by Marriott; Grand
Residences by Marriott; Horizons by Marriott Vacation Club; Marriott Vacation
Club International; Marriott Vacation Club International, Corp.; Marriott’s
Mountainside Resort; Marriott’s Summit Watch Resort; and Marriott’s Waiohai
Beach Resort

  

Marriott Ownership Resorts Procurement, LLC

   Delaware

Marriott Resorts Hospitality Corporation

   South Carolina

Also does business under the names Horizons by Marriott Vacation Club; Marriott
Vacation Club International; Marriott’s Grand Chateau; Marriott’s Legends Edge
at Bay Point; Marriott’s Oceana Palms; and Marriott’s Villas at Doral

  

Marriott Resorts Sales Company, Inc.

   Delaware

Also does business under the name Marriott Vacation Club International

  

Marriott Resorts Title Company Inc.

   Florida

Also does business under the name Marriott Resorts Title, Inc.

  

Marriott Resorts, Travel Company Inc.

   Delaware

Also does business under the name Marriott Vacation Club International

  

Marriott Vacation Club Ownership II LLC

   Delaware

Marriott Vacation Club Ownership LLC

   Delaware

Marriott Vacation Properties of Florida Inc.

   Delaware

Marriott Vacations Worldwide Corporation

   Delaware

Marriott’s Desert Springs Development Corporation

   Delaware

Non-United States Affiliates

  

Marriott Ownership Resorts (Bahamas) Limited

   Bahamas

Marriott Resorts Hospitality (Bahamas) Ltd.

   Bahamas

Marriott Vacation Club Timesharing GmbH

   Austria

Marriott Resorts Hospitality of Aruba, N.V.

   Aruba

Marriott Ownership Resorts (St. Thomas), Inc.

   Virgin Islands - US

Marriott Vacation Club International of Aruba N.V.

   Aruba

Marriott Vacation Club International of Japan, Inc.

   Japan

Promociones Marriott S.A. de C.V.

   Mexico

 

Exhibit J - Solo Page

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EXHIBIT K

NEW PROJECT APPLICATION

I. PROJECT DESCRIPTION

Applicant:             Marriott Vacations Worldwide

Date Submitted:                     

 

Project Description:

        

Brand(s):                                                         

 

Project Name (if known):     

Number of Villas/Keys Planned:                      Number of Floors:
                    

 

        Villas         Keys      

Destination Club Unit Mix:

   Studios:               

 

 

    

 

 

        1-Bedroom:               

 

 

    

 

 

        2-Bedroom:               

 

 

    

 

 

        3-Bedroom:               

 

 

    

 

 

        4-Bedroom:               

 

 

    

 

 

        Other:               

 

 

    

 

 

        Lock-out Units               

 

 

    

 

 

             Villas         Keys      

Residential Unit Mix:

   Studios:               

 

 

    

 

 

        1-Bedroom:               

 

 

    

 

 

        2-Bedroom:               

 

 

    

 

 

        3-Bedroom:               

 

 

    

 

 

        4-Bedroom:               

 

 

    

 

 

        Other:               

 

 

    

 

 

        Lock-out Units               

 

 

    

 

 

    

On-Site Facilities

 

Restaurant Facilities /# of Seats:     

Bars or Lounges:     

Retail Shops:     

Recreation/Golf/Spa:     

Marketplace:     

Sales Gallery:     

Pools:     

 

Exhibit K - Page 1

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Play Areas:

    

Other:

    

Is the site co-located with any lodging or other facilities? If so, provide
details.             

 

 

 

 

If co-located with MI lodging, is a shared services and/or integration agreement
contemplated? If so, provide details.             

 

 

Description of Site:

 

Total Square Footage of Site:                                     

  Acreage:                                     

Site is controlled by MVW as follows:

 

( ) Owned by MVW

  ( ) Leased by MVW

( ) Purchase Contract

  ( ) Other:                                              

If the site is currently owned by an entity other than the MVW, please provide
the following information:

 

Fee Owner:

    

Street Address:

    

City, State, Zip Code, Country:

    

Phone Number:

    

Relationship to MVW, if any:

    

OTHER INFORMATION ABOUT THE SITE

 

Are there currently any existing moratoriums?

   ( ) Yes*( ) No

Are there any restrictions on the site that would necessitate special local
variances (e.g., parking, signage, liquor licenses, etc.)?

   ( ) Yes*( ) No

 

 

* Explain the situation(s) and your plans to resolve same (attach supplemental
sheets if necessary):

 

 

 

 

 

 

Please submit with your application:

 

(1) A copy of the deed, lease, purchase contract or other documents showing
MVW’s ownership or control of the site;

(2) A copy of the plat of the site and a site plan;*

(3) Photographs of site and surrounding land uses;

(4) A conceptual floor plan and elevation (may be omitted if prototype [Brand]
or if only variation to prototype is the addition of rooms); and

 

Exhibit K - Page 2

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(5) A map of the location.

 

* See Minimum Submission Requirements at Attachment A

II. PROPOSED DEVELOPMENT/CONVERSION COSTS AND PROJECTIONS

Property will be a:              New Development             
Conversion/Renovation

If a new development, please complete Section II A and C and the remainder of
this application. If a conversion/renovation, please complete Section II B and C
and the remainder of this application.

A. NEW DEVELOPMENT

PROPOSED DEVELOPMENT COSTS:

Land Cost: $                    

Development Cost (Construction/Other): $                    

Total Cost: $                                          Per Villa/Room:
$                                         Per Residence
$                            

Anticipated Construction Start:                     

Estimated Opening Date:                     

SALES PROJECTIONS:

 

Estimated number of Vacation Ownership Interests:                      
Estimated gross contract sales:                     Estimated number of
Residential Units:                       Estimated gross contract
sales:                    

B. CONVERSION/RENOVATION

 

NAME OF PROPERTY AND CURRENT USE:

    

Acquisition Cost: $                    

Conversion Cost: $                    

Total Cost: $                                                 Per Villa/Room:
$                            

Year Built:                     

Anticipated Conversion/Renovation Start:                     

Estimated Conversion/Renovation Date:                     

SALES PROJECTIONS:

 

Estimated number of Vacation Ownership Interests                            

   Estimated gross contract sales:                                     

Estimated number of Residential Units:                                     

   Estimated gross contract sales:                                     

 

Exhibit K - Page 3

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C. PROPOSED TRANSACTION SUMMARY

 

Please describe the proposed transaction terms and associated agreements, as well as 
results of the territorial search.

        

D. RENTAL PROGRAM

 

Please indicate if transient rental is contemplated and describe applicable rental
program arrangements:

                  

III. OWNERSHIP STRUCTURE AND DUE DILIGENCE

Please provide the information requested in this section for the property owner,
if different, from Marriott Vacations Worldwide.

 

Owner Name:

    

 

A/an                                         

   (  ) General Partnership  (  ) Privately Held Corporation

(state)

   (  ) Limited Partnership  (  ) Individual    (  ) Public Corporation   (  )
Joint Venture    (  ) Trust (  ) Estate         (  ) Other    (  ) Syndicated
Limited Partnership    (  ) Limited Liability Company

MVW Interest in Owner:            

 

Contact:

         Principal Correspondent:

Name:

           Name:     

Title:

           Title:     

Street Address:

           Street Address:     

Phone Number:

           Phone Number:     

Fax Number:

           Fax Number:     

E-mail Address:

           E-mail Address:     

Tax ID No.:

             

Authorized Signer for Entity:

 

Name: 

             

Title:

             

 

Exhibit K - Page 4

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Please provide the following for each individual or entity that is related to
the transaction.

 

Full Name

  

Home and Business Street

Addresses, Phone Numbers, &

Email Address

    

Description of Interest

 

Exhibit K - Page 5

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ATTACHMENT A: MINIMUM SUBMISSION REQUIREMENTS

 

1. Facilities program summary describing the space requirements for all areas of
the project and the project related areas (e.g., public spaces, kitchen,
laundry, back office, etc.);

 

2. A listing of each operating function of the project and the “as designed”
areas, and other documents reasonably necessary to represent the size, layout
and quality of the project;

 

3. A colored vicinity/location map indicating vehicular traffic directions,
ingress and egress points and major surrounding developments and transportation
centers;

 

4. A site plan showing all site elements and proposed landscaping;

 

5. Floor plans, showing all spaces listed in the facilities program;

 

6. Unit layouts, in unit kitchen equipment (if applicable), closets, balconies
and other major features;

 

7. Building elevations and sections, showing exterior materials, details and
colors;

 

8. A rendered perspective drawing of the project; and

 

9. A description of the proposed exterior materials.

 

Exhibit K - Page 6

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EXHIBIT L

PURCHASER DISCLOSURE STATEMENT

[Marriott Vacation Club International]1 independently owns and manages the
[Marriott Vacation Club]2 program. The programs and products provided under the
[Marriott Vacation Club] brand are owned, developed, and sold by [Marriott
Vacation Club International], not by Marriott International, Inc. or any of its
affiliates. [Marriott Vacation Club International] is an independent entity and
is not an affiliate of Marriott International, Inc. [Marriott Vacation Club
International] and its affiliates use the Marriott marks under license from
Marriott International, Inc. and its affiliate, and the right to use such marks
shall cease if such license expires or is revoked or terminated. Marriott
International, Inc. and its affiliates make no representations, warranties, or
guaranties, express or implied, with respect to the information contained in any
offering documents or with respect to the [Marriott Vacation Club] program.

 

 

1 

Insert name of appropriate entity to which the disclosure relates.

 

2 

Insert name of appropriate product or program to which the disclosure relates.

 

Exhibit L - Solo Page