Document:

Exhibit 10.6

 

Execution Version

 

EMPLOYEE MATTERS AGREEMENT

 

by and among

 

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.,

 

VISTANA SIGNATURE EXPERIENCES, INC.

 

And

 

INTERVAL LEISURE GROUP, INC.

 

dated as of

 

October 27, 2015

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
ARTICLE I.
    	
 
    
	
DEFINITIONS
    	
 
    
	
 
    	
 
    	
 
    
	
Section 1.01
    	
Definitions
    	
1
    
	
 
    	
 
    	
 
    
	
Section 1.02
    	
Other Terms
    	
5
    
	
 
    	
 
    	
 
    
	
Section 1.03
    	
Interpretation;   Construction
    	
6
    
	
 
    	
 
    	
 
    
	
Section 1.04
    	
Survival
    	
6
    
	
 
    	
 
    	
 
    
	
Section 1.05
    	
Termination
    	
7
    
	
 
    	
 
    	
 
    
	
ARTICLE II.
    	
 
    
	
EMPLOYEE   BENEFITS
    	
 
    
	
 
    	
 
    	
 
    
	
Section 2.01
    	
Employment
    	
7
    
	
 
    	
 
    	
 
    
	
Section 2.02
    	
Retirement Plans
    	
9
    
	
 
    	
 
    	
 
    
	
Section 2.03
    	
Nonqualified Plans
    	
11
    
	
 
    	
 
    	
 
    
	
Section 2.04
    	
Annual Bonus
    	
13
    
	
 
    	
 
    	
 
    
	
Section 2.05
    	
Health and Welfare   Benefits
    	
13
    
	
 
    	
 
    	
 
    
	
Section 2.06
    	
Workers’ Compensation
    	
15
    
	
 
    	
 
    	
 
    
	
Section 2.07
    	
Vacation and Sick Pay   Liabilities
    	
15
    
	
 
    	
 
    	
 
    
	
Section 2.08
    	
Severance
    	
16
    
	
 
    	
 
    	
 
    
	
Section 2.09
    	
Preservation of Right   To Amend or Terminate Plans
    	
16
    
	
 
    	
 
    	
 
    
	
Section 2.10
    	
No Right to Employment
    	
16
    
	
 
    	
 
    	
 
    
	
Section 2.11
    	
Equity Compensation   Awards
    	
16
    
	
 
    	
 
    	
 
    
	
ARTICLE III.
    	
 
    
	
LABOR AND   EMPLOYMENT MATTERS
    	
 
    
	
 
    	
 
    	
 
    
	
Section 3.01
    	
Collective Bargaining   Agreements
    	
18
    
	
 
    	
 
    	
 
    
	
Section 3.02
    	
WARN Obligations
    	
18
    
	
 
    	
 
    	
 
    
	
Section 3.03
    	
Multiemployer Plan
    	
18
    
	
 
    	
 
    	
 
    
	
Section 3.04
    	
Attorney-Client   Privilege
    	
19
    
	
 
    	
 
    	
 
    
	
ARTICLE IV.
    	
 
    
	
REMEDIES
    	
 
    
	
 
    	
 
    	
 
    
	
Section 4.01
    	
Indemnification
    	
20
    
	
 
    	
 
    	
 
    
	
Section 4.02
    	
Enforcement
    	
20
    
	
 
    	
 
    	
 
    
	
ARTICLE V.
    	
 
    
	
MISCELLANEOUS
    	
 
    
	
 
    	
 
    	
 
    
	
Section 5.01
    	
Relationship of Parties
    	
20
    

 

i

 

TABLE OF CONTENTS

(continued)

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
Section 5.02
    	
Assignment
    	
20
    
	
 
    	
 
    	
 
    
	
Section 5.03
    	
Rights of Third Parties
    	
20
    
	
 
    	
 
    	
 
    
	
Section 5.04
    	
Captions
    	
21
    
	
 
    	
 
    	
 
    
	
Section 5.05
    	
Severability of Provisions
    	
21
    
	
 
    	
 
    	
 
    
	
Section 5.06
    	
Notices
    	
21
    
	
 
    	
 
    	
 
    
	
Section 5.07
    	
Further Assurances
    	
23
    
	
 
    	
 
    	
 
    
	
Section 5.08
    	
Amendment; Waiver
    	
23
    
	
 
    	
 
    	
 
    
	
Section 5.09
    	
Governing Law
    	
23
    
	
 
    	
 
    	
 
    
	
Section 5.10
    	
Consent to   Jurisdiction: Waiver of Jury Trial
    	
23
    
	
 
    	
 
    	
 
    
	
Section 5.11
    	
Entire Agreement
    	
24
    
	
 
    	
 
    	
 
    
	
Section 5.12
    	
Counterparts
    	
24
    
	
 
    	
 
    	
 
    
	
Section 5.13
    	
Expenses
    	
24
    

 

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SCHEDULES

 

	
Schedule 2.01(a)
    	
Employees Transferred to Vistana
    	
 
    
	
Schedule 2.01(b)
    	
Employees Transferred to Starwood
    	
 
    
	
Schedule 2.01(d)
    	
Employment Agreements
    	
 
    
	
Schedule 2.01(e)
    	
Severance Guidelines
    	
 
    
	
Schedule 2.11(a)
    	
Starwood Time-Based Awards
    	
 
    
	
Schedule 2.11(b)
    	
Starwood Performance-Based Awards
    	
 
    

 

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EMPLOYEE MATTERS AGREEMENT

 

This EMPLOYEE MATTERS AGREEMENT (this “Agreement”) is made and entered into as of October 27, 2015, by and among STARWOOD HOTELS & RESORTS WORLDWIDE, INC., a Maryland corporation (“Starwood”), VISTANA SIGNATURE EXPERIENCES, INC., a Delaware corporation (“Vistana”) and INTERVAL LEISURE GROUP, INC., a Delaware corporation (“ILG,” and together with Starwood and Vistana, the “Parties”).

 

RECITALS

 

WHEREAS, pursuant to that certain Separation Agreement dated as of October 27, 2015, between Starwood and Vistana (the “Separation Agreement”), Starwood and Vistana have set out the terms on which, and the conditions subject to which, they wish to implement the Internal Reorganization (as defined in the Separation Agreement) and the Distribution (as defined in the Separation Agreement);

 

WHEREAS, pursuant to the Agreement and Plan of Merger, dated as of October 27, 2015, by and among Starwood, Vistana, ILG and Iris Merger Sub, Inc. a Delaware corporation (the “Merger Agreement”), immediately following the Distribution, a Subsidiary of ILG will merge with and into Vistana, and Vistana Common Stock will be converted into ILG Common Stock on the terms and subject to the conditions of the Merger Agreement (the “Merger”); and

 

WHEREAS, in connection with the foregoing, the Parties have agreed to enter into this Agreement to allocate, among Starwood, Vistana and ILG, Assets, Liabilities and responsibilities with respect to certain employee compensation, benefits, labor and certain other employment matters pursuant to the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the mutual covenants contained herein, and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Starwood, ILG, and Vistana agree as follows:

 

ARTICLE I.
 DEFINITIONS

 

Section 1.01                             Definitions.  As used in this Agreement, the following terms shall have the meanings indicated below:

 

Action:  has the meaning specified in the Merger Agreement.

 

Adjustment Ratio:  means a fraction, (x) the numerator of which is the closing sale price of a share of Starwood Common Stock on the New York Stock Exchange immediately preceding the Distribution (as traded on the “regular way” market) as reported by Bloomberg L.P. or any successor thereto, and (y) the denominator of which is the opening sale price of a share of ILG Common Stock on the Nasdaq Stock Market immediately following the Effective Time (as traded on the “regular way” market) as reported by Bloomberg L.P. or any successor thereto.

 

Affiliate:  has the meaning specified in the Separation Agreement.

 

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Assets:  has the meaning specified in the Separation Agreement.

 

Assumed Time-Based Stock Award:  has the meaning specified in Section 2.11(a).

 

Business Day:  has the meaning specified in the Merger Agreement.

 

Business Transfer Date:  has the meaning specified in the Separation Agreement.

 

Business Transfer Time:  has the meaning specified in the Separation Agreement.

 

Closing:  has the meaning specified in the Merger Agreement.

 

Closing Date:  has the meaning specified in the Merger Agreement.

 

Closing Plan Year: means the calendar year in which the Closing Date occurs.

 

COBRA:  has the meaning specified in Section 2.05(d).

 

Code:  means the Internal Revenue Code of 1986, as amended, or any successor federal income tax Law.  Reference to a specific Code provision also includes any temporary or final regulation in force under that provision.

 

Collective Bargaining Agreement:  means any collective bargaining agreement, labor agreement, or other written agreement to which Starwood, ILG, or any of their respective direct or indirect Subsidiaries is a party with any labor union, works council, its predecessors-in-interest, and its constituent local unions.

 

Contract:  has the meaning specified in the Separation Agreement.

 

Converted RSU:  has the meaning specified in Section 2.11(b).

 

Distribution Date:  has the meaning specified in the Separation Agreement.

 

Earned Starwood Performance Shares:  has the meaning specified in Section 2.11(b).

 

Effective Time:  has the meaning specified in the Merger Agreement.

 

Employee:  means with respect to any entity, an individual who is considered, according to the payroll and other records of such entity, to be employed by such entity, whether active or inactive, on disability leave, or on other leave of absence.

 

Employment Agreement:  means any individual employment, offer, retention, consulting, change in control, split dollar life insurance, sale bonus, incentive bonus, severance, restrictive covenant or other employment related or individual compensatory agreement related to the Vistana Business between any current or former employee and Starwood or any of its Affiliates (including Vistana) which is listed on Schedule 2.01(d).

 

Employment Claim:  means any actual or threatened lawsuit, arbitration, ERISA claim, or federal, state, or local judicial or administrative proceeding of whatever kind involving a demand by or on behalf of or relating to an employee, former employee, job applicant, intern or volunteer, independent contractor, leased employee, or anyone

 

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claiming to be an employee or joint employee, or by or relating to a collective bargaining agent of employees, or by or relating to any federal, state, or local government agency alleging liability against an employer or against an employee pension, welfare or other benefit plan, or an administrator, trustee or fiduciary thereof.

 

ERISA:  means the Employee Retirement Income Security Act of 1974, as amended.  Reference to a specified provision of ERISA also includes any temporary or final regulations in force under that provision.

 

Foreign Service DB Plan:  has the meaning specified in Section 2.02(e)(i).

 

Former Vistana Employee:  means former Employees of Starwood or its Affiliates whose last employment with Starwood or its Affiliates before the Closing Date was with a Vistana Entity.

 

FY ILG AIP Award:  has the meaning specified in Section 2.04(a).

 

Governmental Authority:  has the meaning specified in the Merger Agreement.

 

Hotel Trust Fund:  has the meaning specified in Section 3.03(a).

 

ILG:  has the meaning specified in the preamble of this Agreement.

 

ILG AIP:  has the meaning specified in Section 2.04(a).

 

ILG Common Stock:  means the common stock, par value $0.01 per share, of ILG.

 

ILG Equity Award:  means each Assumed Time-Based Stock Award and Converted RSU.

 

ILG FSA: has the meaning specified in Section 2.05(c).

 

ILG Flexible Benefits Plan:  has the meaning specified in Section 2.05(b).

 

ILG HRA:  means the Plan established or designed and maintained by ILG pursuant to Section 2.05(e).

 

ILG Restricted Share Award:  means an award of restricted ILG Common Stock that is subject only to time-based vesting requirements and granted pursuant to an ILG Stock Plan.

 

ILG Retirement Plan:  means the Plan established or designated and maintained by ILG pursuant to Section 2.02(b).

 

ILG RSU Award:  has the meaning specified in the Merger Agreement.

 

ILG Stock Plans:  has the meaning specified in the Merger Agreement.

 

ILG Time-Based Stock Award:  means an ILG RSU Award or ILG Restricted Share Award granted by ILG under an ILG Stock Plan as described in Section 2.11(a).

 

Law:  has the meaning specified in the Merger Agreement.

 

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Liabilities:  has the meaning specified in the Separation Agreement.

 

Merger:  has the meaning specified in the recitals of this Agreement.

 

Merger Agreement:  has the meaning specified in the recitals of this Agreement.

 

Parties:  has the meaning set forth in the preamble of this Agreement.

 

Person:  has the meaning specified in the Merger Agreement.

 

Plan:  means any plan, policy, arrangement, contract or agreement providing compensation or benefits for any group of Employees or individual Employee, or the dependents or beneficiaries of any such Employee(s), whether formal or informal or written or unwritten, and including, without limitation, any means, whether or not legally required, pursuant to which any benefit is provided by an employer to any Employee or the beneficiaries of any such Employee.  The term “Plan” as used in this Agreement does not include any contract, agreement or understanding relating to settlement of actual or potential Employment Claims.  Notwithstanding the foregoing, no Employment Agreement will constitute a Plan for purposes hereof.

 

Plan Payee:  means an individual who is entitled to payment of Plan benefits in his or her capacity as a beneficiary with respect to the benefits of a deceased participant in the Plan or an alternate payee under a qualified domestic relations order within the meaning of Section 414(p)(1)(A) of the Code and Section 206(d)(3)(B)(i) of ERISA with respect to the benefits of a participant in the Plan.

 

Representative:  has the meaning specified in the Merger Agreement.

 

SEC:  has the meaning specified in the Merger Agreement.

 

Separation Agreement:  has the meaning specified in the recitals of this Agreement.

 

Starwood:  has the meaning specified in the preamble of this Agreement.

 

Starwood AIP:  has the meaning specified in Section 2.04(a).

 

Starwood Common Stock:  has the meaning specified in the Merger Agreement.

 

Starwood Deferred Compensation Plan:  means the Amended and Restated Starwood Hotels & Resorts Worldwide, Inc. Deferred Compensation Plan (effective as of January, 1, 2008).

 

Starwood Equity Award:  means each Starwood Time-Based Stock Award and Starwood Performance Share.

 

Starwood Flexible Benefits Plan:  means the Starwood Hotels & Resorts Worldwide, Inc. Flexible Benefits Plan.

 

Starwood FSA:  has the meaning specified in Section 2.05(c).

 

Starwood HRA:  has the meaning specified in Section 2.05(e).

 

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Starwood Performance Share:  means a performance share award granted by Starwood under the Starwood Stock Plan before the Distribution Date.

 

Starwood Plan:  means any of (i) the Starwood Flexible Benefits Plan, the Starwood Retirement Plan, the Starwood Deferred Compensation Plan, and (ii) any other Plan that, as of the close of business on the day before the Closing Date, is sponsored or maintained solely by Starwood.

 

Starwood Retirement Plan:  means the Starwood Hotels & Resorts Worldwide, Inc. Savings and Retirement Plan, as in effect immediately prior to the Closing Date.

 

Starwood Stock Plan:  means the Starwood Hotels & Resorts Worldwide, Inc. 2013 Long-Term Incentive Compensation Plan.

 

Starwood Time-Based Stock Award:  means an award of Starwood restricted stock or, in the case of certain Employees based outside the United States, restricted stock units, granted by Starwood under the Starwood Stock Plan before the Distribution Date.

 

Subsidiary:  has the meaning specified in the Merger Agreement.

 

Transaction:  means those certain transactions contemplated by the Transaction Documents.

 

Transaction Documents:  has the meaning specified in the Merger Agreement.

 

Vistana:  has the meaning specified in the preamble of this Agreement.

 

Vistana Benefit Plans:  has the meaning specified in the Merger Agreement.

 

Vistana Business:  has the meaning specified in the Separation Agreement.

 

Vistana Common Stock:  has the meaning specified in the Separation Agreement.

 

Vistana Deferred Compensation Plan:  has the meaning specified in Section 2.03(b).

 

Vistana Employee(s):  has the meaning specified in Section 2.01(a).

 

Vistana Entities:  has the meaning specified in the Separation Agreement.

 

Vistana Group:  has the meaning specified in the Separation Agreement.

 

WARN:  has the meaning specified in Section 3.02.

 

Withdrawal Liability:  has the meaning specified in Section 3.03(a).

 

Workers’ Compensation Event:  means the event, injury, illness or condition giving rise to a workers’ compensation claim.

 

Section 1.02                             Other Terms.  Any capitalized terms used herein but not defined herein shall have the meaning specified in the Merger Agreement or Separation Agreement, as applicable.

 

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Section 1.03                             Interpretation; Construction.

 

(a)                                 Unless the context of this Agreement otherwise requires:

 

(i)                                     (A) words of any gender include each other gender and neutral form; (B) words using the singular or plural number also include the plural or singular number, respectively; (C) the terms “hereof,” “herein,” “hereby,” “hereto,” “herewith,” “hereunder” and derivative or similar words refer to this entire Agreement; (D) the terms “Article,” “Section,” “Annex,” “Exhibit,” “Schedule,” and “Disclosure Schedule” refer to the specified Article, Section, Annex, Exhibit, Schedule or Disclosure Schedule of this Agreement and references to “paragraphs” or “clauses” shall be to separate paragraphs or clauses of the section or subsection in which the reference occurs; (E) the word “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation,” and (F) the word “or” shall be disjunctive but not exclusive;

 

(ii)                                  references to Contracts (including this Agreement) and other documents or Laws shall be deemed to include references to such Contract or Law as amended, supplemented or modified from time to time in accordance with its terms and the terms hereof, as applicable, and in effect at any given time (and, in the case of any Law, to any successor provisions);

 

(iii)                               references to any federal, state, local, or foreign statute or Law shall include all regulations promulgated thereunder; and

 

(iv)                              references to any Person include references to such Person’s successors and permitted assigns, and in the case of any Governmental Authority, to any Person succeeding to its functions and capacities.

 

(b)                                 The language used in this Agreement shall be deemed to be the language chosen by the Parties to express their mutual intent and no rule of strict construction shall be applied against any party hereto.

 

(c)                                  Whenever this Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified.  If any action is to be taken or given on or by a particular calendar day, and such calendar day is not a Business Day, then such action may be deferred until the next Business Day.

 

(d)                                 The word “to the extent” shall mean the degree to which a subject or other thing extends, and such phrase shall not mean simply “if.”

 

(e)                                  All monetary figures shall be in United States dollars unless otherwise specified.

 

Section 1.04                             Survival.  If the Merger is consummated, the obligations set forth in this Agreement shall remain in full force and effect and shall survive the Closing Date.

 

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Section 1.05                             Termination.  This Agreement shall terminate automatically without any further action of the Parties upon a termination of the Merger Agreement, and no Party will have any further obligations to the other Parties.

 

ARTICLE II.
 EMPLOYEE BENEFITS

 

Section 2.01                             Employment.

 

(a)                                 Transfer of Employees to Vistana.  At or prior to the Business Transfer Time, Starwood shall take all steps necessary and appropriate so that all of the following Employees are transferred to the Vistana Entities:  (i) each Employee (other than any Employees who are on long-term disability leave as of the Business Transfer Time) whose employment duties immediately prior to the Business Transfer Date relate exclusively to the Vistana Business and (ii) each Employee listed on Schedule 2.01(a) attached hereto (clauses (i) and (ii) collectively, the “Vistana Employees,” and each such Employee a “Vistana Employee”).  Between the date hereof and the Business Transfer Date, Starwood and ILG may mutually agree to update, amend or supplement Schedule 2.01(a) attached hereto to correct any inadvertent inclusions and exclusions thereto.  Starwood shall deliver the final Schedule 2.01(a), as amended, updated or supplemented by mutual agreement of the Parties subject to this Section 2.01(a), to ILG immediately prior to the Business Transfer Time.

 

(b)                                 Employees of the Vistana Entities.  Starwood shall not, and shall cause its Affiliates not to, terminate the employment of any Employees of the Vistana Entities other than in the ordinary course of business and shall not transfer the employment of such Employees prior to the Closing Date except as provided below.  Notwithstanding the foregoing, at or prior to the Business Transfer Time, Starwood shall take all steps necessary and appropriate so that the Employees of the Vistana Entities listed on Schedule 2.01(b) shall be transferred to Starwood.  Between the date hereof and the Business Transfer Date, Starwood and ILG may mutually agree to update, amend or supplement Schedule 2.01(b) attached hereto to correct any inadvertent inclusions and exclusions thereto.  Starwood shall deliver the final Schedule 2.01(b), as amended, updated or supplemented by mutual agreement of the Parties subject to this Section 2.01(b), to ILG immediately prior to the Business Transfer Time.

 

(c)                                  Allocation of Responsibilities as Employer.  At the Business Transfer Time, except as otherwise provided under this Agreement or any other agreement relating to the Transaction, the Vistana Group shall retain or assume, as the case may be, responsibility as employer of the Vistana Employees.

 

(d)                                 Employment Agreements.  At or prior to the Business Transfer Time, Starwood shall cause Vistana to assume and be solely and exclusively responsible for all Employment Agreements entered between the Vistana Employees or Former Vistana Employees and Starwood or any of its Affiliates that are listed on Schedule 2.01(d) and all obligations and liabilities with respect thereto, to be effective as of the Business Transfer Date, and on and after the Business Transfer Date Starwood and its

 

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Affiliates (other than Vistana Entities) shall have no obligations or liabilities with respect to such Employment Agreements.  From and after the Closing Date, ILG shall, or shall cause Vistana to, assume and honor all liabilities and obligations to or in respect of the Vistana Employees or Former Vistana Employees (and any dependents or beneficiaries thereof) under all Vistana Benefit Plans and all Employment Agreements, severance, termination, consulting, retirement and other compensation and benefit plans, arrangements and agreements to which any Vistana Entity is a party, as in effect immediately prior to the Closing.  Starwood shall take all steps necessary to terminate the Employment Agreement between Matthew Avril and Starwood Vacation Ownership, Inc., dated April 13, 2015 prior to the Business Transfer Time without any payment by Starwood Vacation Ownership, Inc. or any of the Vistana Entities, and ILG and the Vistana Entitles shall have no liability with respect to such employment agreement or the Consulting Agreement between MAE Business Enterprises, Inc. and Starwood, dated December 15, 2014, as amended.

 

(e)                                  Comparable Benefits.  For the period from the Closing Date through December 31, 2016, ILG shall or shall cause Vistana to provide to each Vistana Employee (i) annual base salary, target bonus opportunities (as a percentage of base salary) and commission opportunities that are no less than the annual base salary, target bonus opportunities and commission opportunities, respectively, provided to such Vistana Employee immediately prior to the Closing Date, (ii) employee benefits that are comparable in the aggregate to such Vistana Employee to those benefits provided to such Vistana Employee immediately prior to the Closing Date but excluding any defined benefit pension benefits, employer or matching contributions under any defined contribution retirement plan, equity compensation arrangement, stock purchase programs, retiree medical or insurance benefits, any benefits under a nonqualified deferred compensation plan or employee discount program, (iii) severance benefit opportunities that are not less favorable to such Vistana Employee than the greater of (A) the severance benefit opportunities available to such Vistana Employee under such Vistana Employee’s offer letter (if listed on Schedule 2.01(d)) or (B) the severance benefit opportunities available to such Vistana Employee under Starwood’s severance benefit guidelines listed on Schedule 2.01(e), in each case immediately prior to the Closing Date, and (iv) an opportunity to participate in the ILG Retirement Plan on substantially the same terms as similarly situated employees of ILG.

 

(f)                                   Service Credit.  From and after the Closing, ILG shall give each Vistana Employee full credit for determining the amount of paid time off, vacation or sick leave, and the level of employer contributions under any defined contribution retirement plan, and for purposes of eligibility to participate and vesting (but not benefit accruals (if applicable)) under any employee benefit plans, arrangements, collective agreements and employment-related entitlements (including under any applicable pension, defined contribution (for example, 401(k)), deferred compensation, savings, medical, dental, life insurance, disability, vacation, long-service leave or other leave entitlements, post-retirement health and life insurance, termination indemnity, severance or separation pay plans) provided, sponsored, maintained or contributed to by ILG or any of its Affiliates (including Vistana and its

 

8

 

Subsidiaries) under which such Vistana Employee is eligible to participate after the Closing for such Vistana Employee’s service with Starwood, Vistana or their Subsidiaries prior to the Effective Time, to the same extent recognized by any of Starwood, Vistana and their Subsidiaries immediately prior to the Effective Time, except to the extent such credit would result in the duplication of benefits for the same period of service.  Notwithstanding the foregoing, to the extent permitted under applicable Law, neither ILG nor Vistana shall be required to provide credit for such service for benefit accrual purposes under any employee benefit plan of ILG that is a defined benefit pension plan.

 

Section 2.02                             Retirement Plans.

 

(a)                                 Starwood Retirement Plan.  Effective on the Closing Date, Vistana Employees shall cease to be eligible to: (A) have elective deferrals contributed on their behalf to the Starwood Retirement Plan with respect to pay paid after the Closing Date, (B) be credited with future employer contributions (for example, matching contributions) in the Starwood Retirement Plan, or (C) make contributions (for example, rollovers or loan repayments) to the Starwood Retirement Plan. Starwood shall contribute to the applicable Vistana Employee or Former Vistana Employee accounts under the Starwood Retirement Plan the employer match true-up pursuant to Section 4.2(b) of such plan with respect to the completed plan year prior to the Closing Plan Year in the ordinary course but no later than the day before the Closing Date.  Such employer match true-up shall be charged to and paid by Vistana pursuant to Starwood’s normal operating rules for the employer match true-up.

 

(b)                                 ILG Retirement Plan.  Prior to the Closing Date, ILG shall take, or cause to be taken, or have taken, all action necessary and appropriate to establish or maintain for the benefit of Vistana Employees (i) a defined contribution plan qualified under Section 401(a) of the Code that includes a cash or deferred arrangement qualified under Section 401(k) of the Code that is a participant-directed individual account plan that complies with Section 404(c) of ERISA, and (ii) a related trust or trusts exempt under Section 501(a) of the Code, each to be effective no later than the Closing Date (such plan and trust(s), the “ILG Retirement Plan”).

 

(c)                                  Spin-Off of the Starwood Retirement Plan and Merger into the ILG Retirement Plan.  Effective on the Closing Date, Starwood shall cause the Starwood Retirement Plan to spin off the portion of the Starwood Retirement Plan attributable to the Vistana Employees and Former Vistana Employees, as well as to any respective Plan Payees, such spinoff to include (but not be limited to) any and all such individual’s accounts, liabilities, related assets, unvested amounts, zero dollar accounts, forfeited accounts, unlocatable participant accounts and outstanding loan balances.  Effective immediately thereafter, ILG or one of its Affiliates shall cause the ILG Retirement Plan to accept the merger of such spun-off portion of the Starwood Retirement Plan.  All assets shall be transferred in cash as soon as administratively practicable thereafter and shall be mapped to appropriate investment options in the ILG Retirement Plan pursuant to Section 404(c)(4) of ERISA or to the appropriate qualified default investment fund under the ILG Retirement Plan pursuant

 

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to Section 404(c)(5) of ERISA.  Such spinoff and merger shall be conducted in accordance with Section 414(l) of the Code, Treasury Regulation Section 1.414(l)-1 and Section 208 of ERISA.  The benefits of the Vistana Employees participating in the Starwood Retirement Plan as of immediately prior to the plan merger described in this Section 2.02(c) shall be preserved in the ILG Retirement Plan effective as of the plan merger described in this Section 2.02(c) to the extent required under the anti-cutback rules of Section 411(d)(6) of the Code.

 

(d)                                 Alternative to Spin-Off and Merger.  Starwood represents that, with respect to the Starwood Retirement Plan (i) the plan is qualified within the meaning of Section 401(a) of the Code, (ii) Starwood has received a favorable determination from the Internal Revenue Service with respect to the qualified status of the plan covering the terms of the plan as currently in effect, (iii) nothing has occurred since the date of such letter that would reasonably be expect to adversely affect the qualified status of the plan, and (iv) the plan has been administered materially in accordance with its terms and all applicable Laws, including ERISA and the Code.  Notwithstanding anything herein to the contrary, if events happen such that the representations made by Starwood set forth in the preceding sentence are not materially true and correct with respect to the Starwood Retirement Plan at any time prior to the Closing Date and have not been fully corrected by the Closing Date, then ILG may elect, in a written notice to Starwood delivered not later than three (3) business days prior to the Closing Date, not to effectuate the transactions described in Section 2.02(c) (which shall be the only consequence of any such breach of Starwood’s representation in this Section 2.02(d)).  In such case, after the Closing Date the Starwood Retirement Plan shall give each Vistana Employee, Former Vistana Employee, and any respective Plan Payee who has a vested account balance under the Starwood Retirement Plan at the Closing Date the opportunity to elect a distribution of the portion of such balance that would be an eligible rollover distribution within the meaning of Section 402(c)(4) of the Code (including any outstanding loan notes that are not in default at the time of the rollover) (“eligible rollover distributions”) in the form of a direct rollover to the ILG Retirement Plan, pursuant to procedures and time frames agreed to by the parties to facilitate this process.  The Starwood Retirement Plan shall arrange for a transfer of these direct eligible rollover distributions to the ILG Retirement Plan in one or more transmissions to occur no later than sixty (60) days following the Closing Date.  ILG shall cause the ILG Retirement Plan and related trust to accept such rollovers (including such outstanding loan notes), except for any for which it has evidence that they are not in fact eligible rollover distributions.  Vistana Employees, Former Vistana Employees, and any respective Plan Payees who do not take advantage of this rollover opportunity retain the right to make direct or indirect rollovers to the ILG Retirement Plan under its usual rules.

 

(e)                                  Foreign Service Defined Benefit Plan.

 

(i)                                     General.  Starwood will, or will cause one of its Affiliates (other than Vistana Entities) to, assume or retain the Starwood Hotels & Resorts

 

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Retirement Plan for Foreign Service Employees (the “Foreign Service DB Plan”), which is a frozen plan.

 

(ii)                                  Foreign Service DB Shortfall.  Notwithstanding Section 2.02(e)(i) above, within seven (7) days following the Closing Date, ILG shall transfer to Starwood $180,000, which Starwood shall immediately contribute to the Foreign Service DB Plan.  ILG and Vistana shall have no liability with respect to the Foreign Services DB Plan, other than as provided in the preceding sentence.

 

(f)                                   Foreign Service Defined Contribution Plan.  Starwood will, or will cause one of its Affiliates (other than Vistana Entities) to, assume or retain the Starwood Hotels & Resorts Defined Contribution Plan for Foreign Service Employees.

 

Section 2.03                             Nonqualified Plans.

 

(a)                                 Starwood Deferred Compensation Plan.  Vistana Employees shall not be permitted to defer compensation to the Starwood Deferred Compensation Plan on or after the Closing Date.

 

(b)                                 Vistana Deferred Compensation Plan.  Effective immediately prior to the Closing Date, Vistana shall take, or cause to be taken, or have taken, all action necessary and appropriate to establish for the benefit of Vistana Employees a nonqualified deferred compensation plan (such plan, the “Vistana Deferred Compensation Plan”).  The Vistana Deferred Compensation Plan shall have terms and features that are substantially similar to the Starwood Deferred Compensation Plan, other than with respect to investment options, such that (for the avoidance of doubt), the Starwood Deferred Compensation Plan shall be substantially replicated by the Vistana Deferred Compensation Plan, except that neither ILG nor Vistana shall be under any obligation to offer any employees the opportunity to make future deferral elections under such Plan, and if it does, neither ILG nor Vistana shall be under any obligation to make deferral elections available under the same terms as applied under the Starwood Deferred Compensation Plan.  However, the Vistana Deferred Compensation Plan shall honor deferral elections made by Vistana Employees in the Starwood Deferred Compensation Plan before the Closing Date.  Vistana shall designate one or more phantom investment options that are commercially reasonable for a nonqualified deferred compensation plan like the Vistana Deferred Compensation Plan, the gains and losses and income and expenses of which shall be used to determine investment return equivalents by which the account of participants in the Vistana Deferred Compensation Plan shall be adjusted.  From and after the Closing Date, Vistana shall be solely and exclusively responsible for all obligations and liabilities with respect to, or in any way related to, the Vistana Deferred Compensation Plan, whether accrued before, on or after the Closing Date.  The Vistana Deferred Compensation Plan is intended to be an unfunded plan maintained primarily for the purpose of providing deferred compensation to a select group of management or highly compensated employees within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA, and Department of Labor Regulation § 2520.104-23.  The Vistana Deferred Compensation Plan shall not be a funded plan,

 

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and neither Vistana nor any of its Affiliates is under any obligation to set aside any funds for the purpose of making payments under the Vistana Deferred Compensation Plan.

 

(c)                                  Transfer of Interests and Elections as of Closing Date.

 

(A)                               Transfer of Interests.  Prior to the Closing Date, Starwood shall cause the Starwood Deferred Compensation Plan to transfer to the Vistana Deferred Compensation Plan, and Vistana or an Affiliate thereof will cause such Vistana Deferred Compensation Plan to accept the transfer of, the interests of participants in the Starwood Deferred Compensation Plan who are Vistana Employees or Former Vistana Employees, as well as any respective Plan Payees.  Starwood will not transfer to Vistana or an Affiliate thereof any assets that are earmarked for the payment of benefits with respect to these transferred interests.

 

(B)                               Transfer of Elections.  Prior to the Closing Date and as permitted by Section 409A of the Code, Vistana will cause the Vistana Deferred Compensation Plan to recognize and maintain existing elections, including deferral, payment form elections, and beneficiary designations with respect to Vistana Employees and Former Vistana Employees, as well as any respective Plan Payees, under the Starwood Deferred Compensation Plan, but Vistana is under no obligation to recognize or maintain the investment elections and options under the Starwood Deferred Compensation Plan. The transfer of elections contemplated in this Section 2.03(c) shall be expressly conditioned on Starwood providing to ILG, no later than thirty (30) days prior to the Closing Date, a data report of all elections (other than investment elections) made by the Vistana Employees or Former Vistana Employees under the Starwood Deferred Compensation Plan, in a format reasonably acceptable to ILG.

 

(d)                                 Transfer of Liabilities.  Within seven (7) days following the Closing Date, Starwood or one of its Affiliates shall transfer to ILG an amount in cash equal to the sum of the value of each of the existing subaccounts under the Starwood Deferred Compensation Plan with respect to each of the participants in the Starwood Deferred Compensation Plan who are Vistana Employees or Former Vistana Employees, as well as any respective plan payees, determined as of the last “Valuation Date” (as defined therein) immediately before the Closing Date, and after crediting such subaccounts with earnings and gains (and debited for expenses and losses) as specified in Section 6 thereof through such Valuation Date.  The recordkeeper for the Starwood Deferred Compensation Plan, which is MullinTBG as of the execution hereof, shall make this determination pursuant to the terms of the Starwood Deferred Compensation Plan and its customary rules for valuing such subaccounts (to the extent such rules do not conflict with the terms of the Starwood Deferred Compensation Plan), subject to the review and approval of ILG which approval shall not be unreasonably withheld.

 

(e)                                  Section 409A.  The Parties will cooperate in good faith so that the transfers contemplated by this Section 2.03 will not result in adverse Tax consequences under Section 409A of the Code.

 

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Section 2.04                             Annual Bonus.

 

(a)                                 ILG will be responsible for establishing, or causing Vistana to establish, effective as of the Closing Date, a bonus program in which Vistana Employees who participated in Starwood’s Annual Incentive Plan or any other bonus or incentive compensation plan or program maintained by Starwood, Vistana or any of their Affiliates (the “Starwood AIP”) immediately prior to the Closing Date will participate effective on the Closing Date (the “ILG AIP”).  The ILG AIP will be structured so that it provides a bonus opportunity for the Closing Plan Year that preserves to the extent practicable the bonus opportunity that each Vistana Employee would have had if he or she would have remained a participant in the Starwood AIP for the entire Closing Plan Year (the “FY ILG AIP Award”).  The FY ILG AIP Award shall consist of (1) a pro-rated award calculated based upon the achievement of the performance objectives applicable to the related Starwood AIP award and the number of days in the Closing Plan Year that occurs prior to the Closing Date and (2) a pro-rated award calculated based upon performance of ILG and the number of days in the Closing Plan Year that occurs following the Closing Date and including the Closing Date.  ILG will pay all FY ILG AIP Awards.  Starwood shall provide ILG with any necessary performance results for the Closing Plan Year and any other information necessary to enable ILG to meet its obligations under this Section 2.04(a).

 

(b)                                 Starwood will retain all obligations related to bonus compensation earned by Vistana Employees under the Starwood AIP with respect to any calendar year ended prior to the Closing Date that is earned but unpaid as of the Effective Time; provided, however, that, if requested by Starwood, ILG or an Affiliate thereof will make all cash payments in respect of any such bonus compensation so long as Starwood transfers to ILG, prior to the date that such payment is to be made to the applicable Vistana Employee, the amounts payable in respect of such cash payments, including all applicable withholding amounts and the employer’s portion of any employment taxes.

 

Section 2.05                             Health and Welfare Benefits.

 

(a)                                 Starwood Flexible Benefits Plan.  Effective as of the Closing Date, Vistana Employees will cease to participate in the Starwood Flexible Benefits Plan.

 

(b)                                 Establishment of ILG Flexible Benefits Plan.  Prior to the Closing Date, ILG shall or shall cause one of its Affiliates to take, or cause to be taken, or have taken, all action necessary and appropriate to establish or designate and administer a group welfare benefits plan for the benefit of all Vistana Employees effective as of the Closing Date (the “ILG Flexible Benefits Plan”) and to provide benefits thereunder for all eligible Vistana Employees who choose to enroll in such Plan.  ILG will cause such ILG Flexible Benefits Plan to cover those Vistana Employees and their dependents who immediately prior to the Closing Date were participating in, or entitled to present or future benefits under, the Starwood Flexible Benefits Plan, and shall recognize the most recent hire date of such Vistana Employee with Starwood or a member of the controlled group of organizations of which 

 

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Starwood is a part (as defined by Section 414 of the Code and regulations issued thereunder) for purposes of determining whether such Vistana Employee has met any otherwise applicable waiting period.  Starwood will be responsible for all liabilities associated with claims incurred prior to the Closing Date by Vistana Employees and Former Vistana Employees and their dependents under the Starwood Flexible Benefits Plan, which are paid on or after the Closing Date, regardless of when such claims are filed and/or paid.

 

(c)                                  Dependent Care Flexible Spending Account.  Notwithstanding anything contained in Section 2.05(b), to the extent Vistana Employees participate in a dependent care spending account under the Starwood Flexible Benefits Plan (the “Starwood FSA”) during the Closing Plan Year, ILG shall establish (or cause its Affiliate, if applicable, to establish) one or more comparable plans (the “ILG FSA”) that will recognize the elections that such Vistana Employees had in effect for purposes of the Closing Plan Year under the Starwood FSA.  The ILG FSA shall (1) assume the assets and obligations of the Starwood FSA with respect to Vistana Employees as of the Closing Date and (2) provide the same level of dependent care spending account benefits as those provided under the Starwood FSA at least through the end of the Closing Plan Year.  After the Closing Date, the ILG FSA will be responsible for reimbursement of all previously unreimbursed reimbursable dependent care claims incurred by Vistana Employees, regardless of when the claims were incurred.

 

(d)                                 Continuation Coverage.  As of the Closing Date, ILG and the ILG Flexible Benefits Plan shall assume or retain and shall be solely responsible for providing and meeting the continuation coverage requirements imposed by Section 4980B of the Code and Sections 601 through 608 of ERISA (“COBRA”) for all Vistana Employees and all Former Vistana Employees, as well as their “qualified beneficiaries” (as defined under COBRA), regardless of whether such liabilities arose before, on or after the Closing Date.

 

(e)                                  Health Reimbursement Account.  Notwithstanding anything contained in Section 2.05(b), ILG shall or shall cause one of its Affiliates to adopt a health reimbursement account (the “ILG HRA”), effective as of the Closing Date.  The ILG HRA shall have similar terms and provide the same level of benefits as Starwood’s health reimbursement account in effect immediately prior to the Closing Date (the “Starwood HRA”).  Effective as of the Closing Date, ILG shall assume the liabilities and obligations with respect to the account balances for all Vistana Employees and Former Vistana Employees under the Starwood HRA and shall pay all benefits with respect thereto to such Vistana Employees and Former Vistana Employees on and after the Closing Date.

 

(f)                                   6055/6056 Reporting.  ILG shall be solely responsible for ensuring that Vistana complies with the reporting obligations under Section 6056 of the Code (Reporting of Offers of Coverage) with respect to Vistana Employees for the Closing Plan Year (including while Vistana was owned by Starwood) and periods after the Closing Date, for which Vistana has a reporting obligation, provided that Starwood shall be responsible for complying with all reporting obligations with respect to the 

 

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year prior to the Closing Plan Year.  In this regard, Vistana shall be responsible for distributing IRS Form 1095-C to applicable individuals and filing IRS Forms 1094-C and 1095-C with the IRS, all according to the applicable rules and regulations governing such forms.  ILG shall also be solely responsible for ensuring that Vistana complies with the reporting obligations under Section 6055 of the Code (Reporting of Enrollment in Minimum Essential Coverage) with respect to all Vistana Employees who are enrolled in a self-insured medical plan under the Starwood Flexible Benefits Plan.  Vistana may meet this obligation either through IRS Forms 1094-C and 1095-C or IRS Forms 1094-B and 1095-B, all in accordance with applicable rules and regulations.  The reporting obligations under Section 6055 of the Code for Vistana Employees who are enrolled in a fully insured medical plan under the Starwood Flexible Benefits Plan shall be met by the applicable insurance carrier or HMO.  Starwood shall work with ILG to provide all necessary, pre-Closing Date information for Vistana to meet its reporting obligation, which information shall be complete, accurate and provided to Vistana no later than thirty (30) days prior to the date that such reporting obligation is due; provided, however, that to the extent reasonably necessary such time frame shall be reduced to fifteen (15) days for any data related to the four (4) month period ending on the date such reporting obligation is due.

 

(g)                                  Credit for Benefits.  ILG shall (1) waive for each Vistana Employee and his or her dependents, any waiting period provision, payment requirement to avoid a waiting period, pre-existing condition limitation, actively-at-work requirement and any other restriction that would prevent immediate or full participation under the welfare plans of ILG or any of its Affiliates applicable to (or was previously satisfied by) such Vistana Employee to the extent such waiting period, pre-existing condition limitation, actively-at-work requirement or other restriction would not have been applicable to such Vistana Employee under the terms of the welfare plans of Vistana and its Affiliates (including Starwood) immediately prior to the Effective Time, and (2) give full credit under the welfare plans of ILG and its Affiliates applicable to each Vistana Employee and his or her dependents for all co-payments and deductibles satisfied prior to the Effective Time in the Closing Plan Year, and for any lifetime maximums, as if there had been a single continuous employer.

 

Section 2.06                             Workers’ Compensation.  Starwood will be solely responsible for all United States (including its territories) workers’ compensation claims for all Employees and former Employees of Starwood or its Affiliates other than the Vistana Employees, regardless of when the Workers’ Compensation Events to which such claims relate occur.  Effective as of the Closing Date, ILG and its Affiliates will be solely responsible for all United States (including its territories) workers’ compensation claims of Vistana Employees with respect to Workers’ Compensation Events, regardless of when such Workers Compensation Events to which such claims relate occur except to the extent claims related to events occurring prior to the Closing Date are covered under an applicable Starwood’s workers’ compensation insurance policy.

 

Section 2.07                             Vacation and Sick Pay Liabilities.  On and after the Closing Date, ILG shall provide the Vistana Employees with the same vested and unvested balances of vacation and sick leave as credited to the Vistana Employees on Starwood’s or its Affiliate’s payroll system 

 

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immediately prior to the Closing Date.  On and after the Closing Date, ILG shall continue to accrue vacation and sick leave in respect of each Vistana Employee according to Starwood’s accrual schedule as in effect immediately prior to the Closing Date.

 

Section 2.08                             Severance.  Effective as of the Effective Time, ILG shall assume all severance obligations under any Starwood Plan with respect to any Former Vistana Employee.

 

Section 2.09                             Preservation of Right To Amend or Terminate Plans.  Except as otherwise expressly provided in this Agreement, the Separation Agreement or the Merger Agreement, no provisions of this Agreement, shall be construed as a limitation on the right of Starwood, Vistana or ILG or any Affiliate thereof to amend any Plan or terminate its participation therein which Starwood, Vistana or ILG or any Affiliate thereof would otherwise have under the terms of such Plan or otherwise, and no provision of this Agreement shall be construed to create a right in any Employee or former Employee, or dependent or beneficiary of such Employee or former Employee, or any Plan Payee under a Plan which such person would not otherwise have under the terms of the Plan itself.

 

Section 2.10                             No Right to Employment.  Notwithstanding anything to the contrary set forth in this Agreement, no provisions of this Agreement shall be deemed to guarantee employment for any period of time for, or preclude the ability of Vistana, ILG or any of its or their Affiliates (as defined in the Merger Agreement) to terminate any employee or individual service provider for any reason.

 

Section 2.11                             Equity Compensation Awards.  Each Starwood Equity Award granted in 2014 or later and held by a Vistana Employee that is outstanding immediately prior to the Effective Time will be converted as described in subsections (a) and (b) below, so that each such Starwood Equity Award will become an ILG Equity Award.  Starwood shall provide all information or documentation reasonably requested by ILG to fulfill such obligation within seven (7) days of receiving such request. From and after the Closing Date, ILG will retain, pay, perform, fulfill and discharge all liabilities arising out of or relating to the ILG Equity Awards.

 

(a)                                 Starwood Time-Based Stock Awards.  Each Starwood Time-Based Stock Award granted in 2014 or later and held by a Vistana Employee and listed on Schedule 2.11(a) will be assumed by ILG and converted, effective as of the Effective Time, into an ILG Time-Based Stock Award of the same type (the “Assumed Time-Based Stock Award”).  Each such Assumed Time-Based Stock Award will be subject to substantially the same terms, vesting conditions and other restrictions, if any, that were applicable to the related Starwood Time-Based Stock Award immediately prior to the Closing Date, except that such terms, conditions and restrictions will be modified to the extent necessary to reflect that the holder of such Assumed Time-Based Stock Award provides services to ILG or its Affiliates (and not Starwood or its Affiliates) and the issuer of the common stock underlying the Assumed Time-Based Stock Award is ILG (and not Starwood).  The number of shares of ILG Common Stock covered by each Assumed Time-Based Stock Award for each Vistana Employee will be equal to the product (rounded up to the nearest whole share) of (1) the number of shares of Starwood Common Stock covered by such Starwood Time-Based Stock Award immediately prior to the Effective Time and (2) the Adjustment

 

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Ratio.  For the avoidance of doubt, the holder of any Starwood Time-Based Stock Award that consists of restricted shares will not be entitled to receive any shares of Vistana Common Stock to which such holder may have been entitled with respect to such restricted shares as a stockholder at the Record Date.  As soon as reasonably practicable following the Effective Time, ILG will issue each Person who holds an Assumed Time-Based Stock Award a document evidencing the foregoing assumption of such Assumed Time-Based Stock Award by ILG.

 

(b)                                 Starwood Performance Shares.  Each Starwood Performance Share award granted in 2014 or later and held by a Vistana Employee and listed on Schedule 2.11(b) will be deemed to have been earned (the “Earned Starwood Performance Shares”) at the greater of (1) the target level of achievement of the applicable management objectives or (2) the actual level of achievement of the applicable management objectives measured as of the Closing Date and reasonably determined by Starwood in accordance with the terms of the Starwood Stock Plan using a methodology consistent with the methodology used in Starwood’s past practice in the ordinary course of business.  For the avoidance of doubt, although the amount of Earned Starwood Performance Shares may be affected as a result of determining the achievement of the applicable management objectives as of the Closing Date rather than as of the end of the original performance period, such Earned Starwood Performance Shares shall not be further reduced or pro-rated based on the Vistana Employee ceasing to be employed by Starwood or its Affiliates as of such date.  The Earned Starwood Performance Shares will be assumed by ILG and converted, effective as of the Effective Time, into a restricted stock units award covering ILG Common Stock (the “Converted RSUs”) and subject to substantially the same terms as the related Starwood Performance Shares, except that (y) such restricted stock units awards will vest in full on the third anniversary of the grant date of the original Starwood Performance Share award (generally subject to continued employment or service with ILG or an Affiliate thereof through such date) and will not be subject to any additional performance objectives and (z) the other terms and conditions will be modified to the extent necessary to reflect that the holder of such Converted RSU provides services to ILG or its Affiliates (and not Starwood or its Affiliates) and the issuer of the common stock underlying the Converted RSU is ILG (and not Starwood).  The number of such Converted RSUs for each such Vistana Employee will be equal to the product (rounded up to the nearest whole share) of (1) the number of Earned Starwood Performance Shares, as determined in accordance with the above, and (2) the Adjustment Ratio.  Any portion of the Starwood Performance Share awards that is not earned as of the Closing Date will be cancelled and forfeited.  As soon as reasonably practicable following the Effective Time, ILG will issue each Person who holds a Converted RSU a document evidencing the foregoing assumption of such Converted RSU by ILG.

 

(c)                                  Miscellaneous.  Starwood and ILG shall take any and all actions reasonably necessary to effectuate the transactions contemplated by this Section 2.11.  Without limiting the generality of the foregoing, as soon as practicable after the Effective Time, to the extent necessary, ILG shall prepare and file with the SEC a 

 

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registration statement registering the number of shares of ILG Common Stock necessary to fulfill ILG’s obligations under this Section 2.11.

 

ARTICLE III.
  LABOR AND EMPLOYMENT MATTERS

 

Notwithstanding any other provision of this Agreement or any other agreement between ILG, Vistana and/or Starwood to the contrary, the Parties understand and agree that:

 

Section 3.01                             Collective Bargaining Agreements.

 

(a)                                 With regard to Employees of Starwood and its Subsidiaries covered by a Collective Bargaining Agreement immediately prior to the Closing Date, the Parties covenant to cooperate with each other to avoid any action which could, on a reasonably foreseeable basis, disrupt or otherwise negatively impact the labor relations of any other Party.

 

(b)                                 Effective as of the Business Transfer Date, Vistana or an Affiliate of Vistana shall retain or assume each Collective Bargaining Agreement covering Vistana Employees, and Starwood shall have no further liability thereunder.  Prior to the Business Transfer Date, Starwood agrees that it will comply and will cause any Affiliate of Starwood to comply, in all material respects, with all of the terms and conditions set forth in each such Collective Bargaining Agreement and with applicable Law covering Starwood and any Starwood Affiliate’s Employees, including but not limited to, the fulfillment of any labor or employment-related notice, information or consultation requirements relating to the matters contemplated hereby.

 

Section 3.02                             WARN Obligations.  Before and after the Closing Date, each party shall comply in all material respects with the Worker Adjustment and Retraining Notification Act and similar state and local laws (“WARN”).  As of the Closing Date, ILG and its Affiliates shall be responsible for all obligations and liabilities under WARN relating to the Vistana Employees arising from mass layoffs or plant closings (each as defined under WARN) occurring on or after the Closing Date, and Starwood shall be responsible for all obligations and liabilities under WARN relating to the Vistana Employees arising from mass layoff or plant closings (each as defined under WARN) occurring prior to the Closing Date and all obligations and liabilities under WARN relating to Former Vistana Employees.

 

Section 3.03                             Multiemployer Plan.

 

(a)                                 In the event the Hotel Union And Hotel Industry Of Hawaii Pension Trust Fund (the “Hotel Trust Fund”) assesses withdrawal liability under Section 4201(a) of ERISA against Starwood, and/or its Affiliates as the result of a complete or partial withdrawal from the Hotel Trust Fund that is caused by actions taken by either Vistana or ILG without the consent of Starwood with respect to Employees at the resort currently known as the Sheraton Kauai Resort (“Withdrawal Liability”) (examples would include, but are not limited to, Withdrawal Liability that is caused by ILG closing the Sheraton Kauai Resort or converting it to timeshares, or 

 

18

 

terminating its management contract with Starwood), ILG shall indemnify Starwood for such Withdrawal Liability as follows:

 

(i)                                     in the event Withdrawal Liability is assessed against Starwood or its Affiliates with respect to a withdrawal event that occurs on or after the Closing Date and prior to the first anniversary of the Closing Date, ILG shall not indemnify Starwood for any portion of such Withdrawal Liability;

 

(ii)                                  in the event Withdrawal Liability is assessed against Starwood or its Affiliates with respect to a withdrawal event that occurs on or after the first anniversary of the Closing Date and prior to the second anniversary of the Closing Date, ILG shall indemnify Starwood for one-third of such Withdrawal Liability;

 

(iii)                               in the event Withdrawal Liability is assessed against Starwood or its Affiliates with respect to a withdrawal event that occurs on or after the second anniversary of the Closing Date and prior to the third anniversary of the Closing Date, ILG shall indemnify Starwood for two-thirds of such Withdrawal Liability; and

 

(iv)                              in the event Withdrawal Liability is assessed against Starwood or its Affiliates on or after the third anniversary of the Closing Date, ILG shall indemnify Starwood for the full amount of such Withdrawal Liability.

 

Starwood shall remain fully responsible, with no right to any indemnification or reimbursement from ILG, for any Withdrawal Liability for which ILG does not expressly agree to indemnify Starwood pursuant to this Section 3.03(a).

 

(b)                                 Notwithstanding anything herein to the contrary, Starwood shall have no right to any indemnification against ILG for any Withdrawal Liability pursuant to Section 3.03(a) above until Starwood or an Affiliate satisfies any of its required ongoing obligations to make contributions under the Hotel Trust Fund that remain unpaid at the time of the withdrawal triggering such indemnification right under Section 3.03(a).

 

(c)                                  In the event that Starwood incurs any Withdrawal Liability for which Starwood is entitled to indemnification from ILG pursuant to this Section 3.03, then with respect to such Withdrawal Liability, ILG shall have the right to direct Starwood to challenge such assessment of Withdrawal Liability to the full extent permitted by applicable Law and the Hotel Trust Fund, including, without limitation, a proceeding under Section 4221 of ERISA provided that ILG pays (or reimburses Starwood for) the costs of such defense in proportion to its obligation to indemnify Starwood for such Withdrawal Liability pursuant to Section 3.03(a).

 

(d)                                 ILG shall not be considered or deemed to be a participating employer in the Hotel Trust Fund and shall have no liability to the Hotel Trust Fund.

 

Section 3.04                             Attorney-Client Privilege.  The provisions herein requiring the Parties to cooperate shall not be deemed to be a waiver of the attorney-client privilege for the Parties nor shall it require the Parties to waive their attorney-client privilege.  In the event of any conflict 

 

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between the applicable terms of the Separation Agreement or the Merger Agreement and the terms of this Agreement with respect to matters relating to attorney-client privilege, the work product doctrine and all other evidentiary privileges and non-disclosure doctrines, the applicable terms of the Merger Agreement or the Separation Agreement, as applicable (including Sections 7.06 and 7.07 of the Merger Agreement and Section 6.8 of the Separation Agreement), shall prevail.

 

ARTICLE IV.
 REMEDIES

 

Section 4.01                             Indemnification.  Any breach of this Agreement by any party hereto or any indemnification obligation under this Agreement shall be subject to the provisions set forth in Article V of the Separation Agreement which shall apply to this Agreement as if incorporated in their entirety herein.

 

Section 4.02                             Enforcement.  The Parties agree that irreparable damage would occur, and that the Parties would not have any adequate remedy at Law, in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached.  It is accordingly agreed that the Parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to specifically enforce the terms and provisions of this Agreement, without proof of actual damages or otherwise, in addition to any other remedy to which any party hereto is entitled at Law or in equity.  Each party hereto agrees to waive any requirement for the securing or posting of any bond in connection with such remedy.  The Parties further agree not to assert that a remedy of specific enforcement is unenforceable, invalid, contrary to Law or inequitable for any reason, nor to assert that a remedy of monetary damages would provide an adequate remedy.  In furtherance of the foregoing, the Parties hereby further acknowledge and agree that prior to the Closing, Starwood and Vistana shall be entitled to specific performance to enforce specifically the terms and provisions of and to prevent or cure breaches of this Agreement by ILG.

 

ARTICLE V.
 MISCELLANEOUS

 

Section 5.01                             Relationship of Parties.  Nothing in this Agreement shall be deemed or construed by the Parties or any third party as creating the relationship of principal and agent, partnership or joint venture between the Parties, it being understood and agreed that no provision contained herein, and no act of the Parties, shall be deemed to create any relationship between the Parties other than the relationship set forth herein.

 

Section 5.02                             Assignment.  No party hereto shall assign this Agreement or any part hereof without the prior written consent of the other Parties.  Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the Parties and their respective permitted successors and assigns.

 

Section 5.03                             Rights of Third Parties.  Nothing expressed or implied in this Agreement is intended or shall be construed to confer upon or give any Person, other than the Parties, any right or remedies under or by reason of this Agreement.

 

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Section 5.04                             Captions.  The captions in this Agreement are inserted for convenience only and shall not be considered a part of or affect the construction or interpretation of any provision of this Agreement.

 

Section 5.05                             Severability of Provisions.  If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement shall remain in full force and effect.  The Parties further agree that if any provision contained herein is, to any extent, held invalid or unenforceable in any respect under the Laws governing this Agreement, they shall take any actions necessary to render the remaining provisions of this Agreement valid and enforceable to the fullest extent permitted by Law and, to the extent necessary, shall amend or otherwise modify this Agreement to replace any provision contained herein that is held invalid or unenforceable with a valid and enforceable provision giving effect to the intent of the Parties.

 

Section 5.06                             Notices.  All notices, consents, approvals and other communications among the Parties shall be in writing and shall be deemed to have been duly given (a) when delivered in person, (b) when after posting in the United States mail having been sent registered or certified mail return receipt requested, postage prepaid, (c) when delivered by FedEx or other nationally recognized overnight delivery service, (d) when delivered by facsimile (solely if receipt is confirmed) or (e) or by email (so long as the sender of such email does not receive an automatic reply from the recipient’s email server indicating that the recipient did not receive such email), addressed as follows:

 

if to Starwood

 

Starwood Hotels & Resorts Worldwide, Inc.

One StarPoint

Stamford, Connecticut 06902

Attention:  Chief Financial Officer

Facsimile:  (203) 351-2519

Email:  thomas.mangas@starwoodhotels.com

with a copy (which shall not constitute notice) to the same address:

 

Attention:                                          Kenneth S. Siegel

Facsimile No.:                   (203) 351-2401

Email:                                                             kenneth.siegel@starwoodhotels.com

 

with a copy (which shall not constitute notice) to:

 

Latham & Watkins LLP

885 Third Avenue

New York, New York 10022

Attention:                                          Jennifer Perkins

Facsimile No.:                   (212) 751-4864

Email:                                                             jennifer.perkins@lw.com

 

with a copy (which shall not constitute notice) to:

 

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Jones Day

North Point

901 Lakeside Avenue

Cleveland, OH 44114-1190

Attention:                                          Stephen Coolbaugh

Facsimile No.:                   (216) 579-0212

Email:                                                             spcoolbaugh@jonesday.com

 

with a copy (which shall not constitute notice) to:

 

Kilpatrick Townsend & Stockton LLP

607 14th Street, NW Suite 900

Washington, DC 20005-2018

Attention:                                          Devon Miller

Facsimile No.:                   (202) 253-1967

Email:                                                             dmiller@kilpatricktownsend.com

 

if to ILG

 

Interval Leisure Group, Inc.

6262 Sunset Drive

Miami, Florida 33143

Attention:  Victoria J. Kincke, General Counsel

Facsimile:  305-667-2072

 

with a copy (which shall not constitute notice) to:

 

Weil, Gotshal & Manges LLP

767 Fifth Avenue

New York, NY 10153

Attention:  Michael E. Lubowitz

Facsimile No.:  (212) 310-8007

Email: michael.lubowitz@weil.com

 

if to Vistana

 

Vistana Signature Experiences, Inc.

9002 San Marco Court

Orlando, Florida 32819

Attention:                                         President and Chief Executive Officer

Facsimile No.: (407) 417-7110

 

with a copy (which shall not constitute notice) to:

 

Weil, Gotshal & Manges LLP

767 Fifth Avenue

 

22

 

New York, NY 10153

Attention:  Michael E. Lubowitz

Facsimile No.:  (212) 310-8007

Email: michael.lubowitz@weil.com

 

or to such other address or addresses as the Parties may from time to time designate in writing.

 

Section 5.07                             Further Assurances.  Each party hereto agrees that it will execute and deliver or cause its respective Affiliates to execute and deliver such further instruments, and take (or cause their respective Affiliates to take) such other action, as may be reasonably necessary to carry out the purposes and intents of this Agreement.

 

Section 5.08                             Amendment; Waiver.  This Agreement may be amended or modified in whole or in part, only by a duly authorized agreement in writing executed by the Parties in the same manner as this Agreement and which makes reference to this Agreement.  Any party hereto may waive any of the terms or conditions of this Agreement in writing executed in the same manner (but not necessarily by the same Persons) as this Agreement.  No waiver by any of the Parties of any of the provisions hereof shall be effective unless explicitly set forth in writing and executed by the party hereto sought to be charged with such waiver.  No waiver by any of the Parties of any default, misrepresentation or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.

 

Section 5.09                             Governing Law.  This Agreement, and all claims or causes of action based upon, arising out of, or related to this Agreement or the transactions contemplated hereby, shall be governed by, and construed in accordance with, the Laws of the State of Delaware, without giving effect to principles or rules of conflict of laws to the extent such principles or rules would require or permit the application of Laws of another jurisdiction.

 

Section 5.10                             Consent to Jurisdiction:  Waiver of Jury Trial.

 

(a)                                 Any Action based upon, arising out of or related to this Agreement or the transactions contemplated hereby shall be brought exclusively in the Court of Chancery of the State of Delaware, or, if it cannot acquire jurisdiction, in any federal court of the United States of America sitting in Delaware, and, in each case, appellate courts therefrom, and each of the Parties irrevocably submits to the exclusive jurisdiction of each such court in any such Action, waives any objection it may now or hereafter have to personal jurisdiction, venue or to convenience of forum, agrees that all claims in respect of the Action shall be heard and determined only in such courts and agrees not to bring any Action arising out of or relating to this Agreement or the transactions contemplated hereby in any other court.  Nothing herein contained shall be deemed to affect the right of any party hereto to serve process in any manner permitted by Law or to commence legal proceedings or otherwise proceed against any other party hereto in any other jurisdiction, in each case, to enforce judgments obtained in any action, suit or proceeding brought pursuant to this Section 5.10(a).

 

23

 

(b)                                 Each party hereto hereby waives, to the fullest extent permitted by applicable Law, any right it may have to a trial by jury in respect of any suit, action or other proceeding arising out of this Agreement or the transactions contemplated hereby.  Each party hereto (i) certifies that no Representative of any other party hereto has represented, expressly or otherwise, that such party would not, in the event of any action, suit or proceeding, seek to enforce the foregoing waiver and (ii) acknowledges that it and the other Parties have been induced to enter into this Agreement, by, among other things, the mutual waiver and certifications in this Section 5.10.

 

Section 5.11                             Entire Agreement.  This Agreement, the Separation Agreement and the Merger Agreement constitute the entire agreement among the Parties relating to the transactions contemplated hereby and supersede any other agreements, whether written or oral, that may have been made or entered into by or among any of the Parties or any of their respective Subsidiaries relating to the transactions contemplated hereby.  No representations, warranties, covenants, understandings, agreements, oral or otherwise, relating to the transactions contemplated by this Agreement exist between the Parties, except as expressly set forth in this Agreement, the Separation Agreement and the Merger Agreement.

 

Section 5.12                             Counterparts.  This Agreement may be executed in two or more counterparts (including by electronic or .pdf transmission), each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.  Delivery of any signature page by facsimile, electronic or .pdf transmission shall be binding to the same extent as an original signature page.

 

Section 5.13                             Expenses.  Each party hereto shall bear its own expenses incurred in connection with this Agreement and the transactions herein contemplated whether or not such transactions shall be consummated, including all fees of its legal counsel, financial advisers and accountants.

 

[Remainder of page intentionally left blank]

 

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

 

	
 
    	
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Thomas B. Mangas
    
	
 
    	
Name:
    	
Thomas B. Mangas
    
	
 
    	
Title:
    	
Executive Vice President, Chief Financial Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
VISTANA SIGNATURE EXPERIENCES, INC.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Sergio D. Rivera
    
	
 
    	
Name:
    	
Sergio D. Rivera
    
	
 
    	
Title:
    	
Chief Executive Officer and President
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
INTERVAL LEISURE GROUP, INC.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Jeanette E. Marbert
    
	
 
    	
Name:
    	
Jeanette E. Marbert
    
	
 
    	
Title:
    	
Executive Vice   President and Chief Operating Officer
    

 

[Signature Page to Employee Matters Agreement]Exhibit 10.1

 

REGISTRATION RIGHTS AGREEMENT

 

This Registration
Rights Agreement (the “Agreement”), dated as of December 3, 2015, is entered into by and among Long Island
Brand Beverages LLC, a New York limited liability company (“Borrower”), Long Island Iced Tea Corp., a
Delaware corporation (“Parent”), and Brentwood LIIT Inc., a Delaware corporation (the “Lender”).

 

RECITALS

 

WHEREAS,
pursuant to the Credit and Security Agreement (the “Credit Agreement”), dated as of November 23, 2015,
by and among the Borrower, the Parent and the Lender, the Borrower is providing Lender with a secured convertible promissory note
(the “Note”) in the original principal amount of up to One Million Dollars ($1,000,000), subject to increase
as provided herein up to a maximum principal amount of Five Million Dollars ($5,000,000), which outstanding principal amount,
all accrued and unpaid interest thereon, and any other sums due and payable thereunder or under the
Credit Agreement, is convertible into shares of common stock, $0.0001 par value per share, of the Parent (the “Common
Stock”), at a price equal to $4.00 per share (the “Conversion Shares”) at any time and
from time to time while the Note is outstanding;

 

WHEREAS, pursuant
to the Credit Agreement, as additional consideration for entering into the Credit Agreement with the Borrower, the Parent is issuing
the Lender a warrant (the “Warrant”) to purchase 1,111,111 shares of Common Stock at an exercise price
of $4.50 per share (the “Warrant Shares”); and

 

WHEREAS, one
of the conditions precedent to the consummation of the transactions contemplated by the Credit Agreement is the execution and delivery
of this Agreement to provide for registration rights to the Lender and its permitted designees for the Conversion Shares into which
the Note is convertible and the Warrant Shares for which the Warrant is exercisable as set forth herein.

 

NOW, THEREFORE,
in consideration of the mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

Section 1. Certain
Definitions. As used in this Agreement, the following terms shall have the following respective meanings:

 

“Affiliate”
means with respect to any Person, any Person that directly or indirectly controls or is controlled by or is under common control
with, such Person.

 

“Agreement”
shall have the meaning ascribed to such term in the Preamble.

 

“Blue
Sky Application” shall have the meaning ascribed to such term in Section 5(a) hereof.

 

    	 	1 	 

     

    

 

“Credit
Agreement” shall have the meaning ascribed to such term in the Recitals. 

 

“Commission”
means the United States Securities and Exchange Commission or any other federal agency at the time administering the Securities
Act and the Exchange Act.

 

“Common Stock”
shall have the meaning ascribed to such term in the Recitals.

 

“Conversion
Shares” shall have the meaning ascribed to such term in the Recitals.

 

“Exchange
Act” means the Securities Exchange Act of 1934, as amended, or any successor federal statute, and the rules and regulations
promulgated thereunder, all as the same shall be in effect from time to time.

 

“Form
S-1 or Form S-3” means Forms S-1 and S-3, as the case may be, each as promulgated under the Securities
Act and as in effect on the date hereof or any successor forms promulgated under the Securities Act or adopted by the Commission.

 

“Lender”
shall have the meaning ascribed to such term in the Preamble. For the purposes of this Agreement, any rights and obligations of
the Lender shall inure to any of the designees or assigns of the Lender.

 

“Losses”
shall have the meaning ascribed to such term in Section 5(a) hereof.

 

“Maximum
Number of Shares” shall have the meaning ascribed to such term in Section 2(c) hereof.

 

“Other
Stockholders” shall have the meaning ascribed to such term in Section 2(b) hereof.

 

“Note”
shall have the meaning ascribed to such term in the Recitals.

 

“Parent”
shall have the meaning ascribed to such term in the Preamble.

 

“Parent
Indemnified Person” shall have the meaning ascribed to such term in Section 5(a) hereof.

 

“Parent Offering”
shall have the meaning ascribed to such term in Section 2(a).

 

“Persons”
means an individual, corporation, limited liability company, partnership, joint venture, trust, or unincorporated organization,
or a government or any agency or political subdivision thereof.

 

“Registration”
shall mean a registration effected by preparing and filing a registration statement or similar document in compliance with the
requirements of the Securities Act, and the applicable rules and regulations promulgated thereunder, and such registration statement
becoming effective.

 

    	 	2 	 

     

    

 

“Registration
Expenses” shall have the meaning ascribed to such term in Section 7(a) hereof.

 

“Registrable
Shares” shall mean (a) the Conversion Shares, (b) the Warrant (including any Warrant Shares), and (c) any other equity
security of the Parent issued or issuable with respect to any such Conversion Shares, the Warrant or Warrant Shares to the Lender
by way of a stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation
or reorganization; provided, however, that, as to any particular Registrable Shares, such securities shall cease to be Registrable
Shares when: (A) a Registration Statement with respect to the sale of such securities shall have become effective under the Securities
Act and such securities shall have been sold or disposed of in accordance with such Registration Statement; (B) such securities
shall have been otherwise transferred, new certificates for such securities not bearing a legend restricting further transfer shall
have been delivered by the Parent and subsequent public distribution of such securities shall permanently not require registration
under the Securities Act; (C) such securities shall have ceased to be outstanding; (D) such securities may be sold without registration
pursuant Rule 144 promulgated under the Securities Act (but with no volume or other restrictions or limitations); or (E) such securities
have been sold to, or through, a broker, dealer or Underwriter in a public distribution or other public securities transaction.

 

“Registration
Statement” shall mean any registration statement that covers the Registrable Shares pursuant to the provisions of
this Agreement, including the prospectus included in such registration statement, amendments (including post-effective amendments)
and supplements to such registration statement, and all exhibits to and all material incorporated by reference in such registration
statement.

 

“Rule
144” means Rule 144 promulgated under the Securities Act or any successor rule.

 

“Rule
145” means Rule 145 promulgated under the Securities Act or any successor rule.

 

“Rule
415” means Rule 415 promulgated by the Securities Act or any similar or successor rule.

 

“Securities
Act” means the Securities Act of 1933, as amended, or any successor federal statute, and the rules and regulations
promulgated thereunder, all as the same shall be in effect from time to time.

 

“Securities
Registration” shall have the meaning ascribed to such term in Section 5(a) hereof.

 

“Seller
Indemnified Person” shall have the meaning ascribed to such term in Section 5(b) hereof.

 

“Selling
Expenses” shall have the meaning ascribed to such term in Section 7(a) hereof.

 

    	 	3 	 

     

    

 

“Stockholder Offering”
shall have the meaning ascribed to such term in Section 2(a).

 

“Underwriter”
shall mean a securities dealer who purchases any Registrable Shares as principal in an Underwritten Offering and not as part of
such dealer’s market-making activities.

 

“Underwritten
Registration” or “Underwritten Offering” shall mean a Registration in which securities
of the Parent are sold to an Underwriter in a firm commitment underwriting for distribution to the public.

 

“Warrant”
shall have the meaning ascribed to such term in the Recitals. 

 

“Warrant
Shares” shall have the meaning ascribed to such term in the Recitals.

 

Section 2.
“Piggy-Back” Registrations.

 

(a)          If,
at any time, and each time, the Parent determines to register under the Securities Act with respect to an offering of its equity
securities, or securities or other obligations exercisable or exchangeable for, or convertible into its equity securities, whether
for its own account (a “Parent Offering”) or for the account of other security holders (a “Stockholder
Offering”), or both (other than a Registration Statement (i) relating either to the sale of securities to employees
of the Parent pursuant to a stock option, stock purchase, equity incentive or similar plan on Form S-8, (ii) a merger acquisition
or other transaction whereby the Parent files a Form S-4 or (iii) for a dividend reinvestment plan), then the Parent will, following
the engagement of counsel to the Parent to prepare the documents to be used in connection with such Registration Statement, as
soon as practicable before the anticipated initial filing date of such Registration Statement, give written notice to all holders
of Registrable Shares of its intention so to do, which notice shall (A) describe the amount and type of securities to be included
in such offering, the intended method(s) of distribution, and the name of the proposed managing Underwriter or Underwriters, if
any, in such offering, and (B) offer to all of the holders of Registrable Shares the opportunity to register the sale of such number
of Registrable Shares as such holders may request in writing within five (5) business days after receipt of such written notice
(such Registration a “Piggyback Registration”). Upon the written request of any such holder to register
any or all of its Registrable Shares, the Parent shall as soon thereafter as practicable, subject to Section 2(c) below, include
the Registrable Shares as to which registration shall have been so requested in the Registration Statement proposed to be filed
or filed by the Parent, all to the extent required to permit the sale or other disposition by the holder of such Registrable Shares
so registered, in accordance with the plan of distribution set forth in such Registration Statement and
shall use its best efforts to cause the managing Underwriter or Underwriters of a proposed Underwritten Offering to permit the
Registrable Shares requested by the Lender pursuant to this Section 2 to be included in a Piggyback Registration on the same terms
and conditions as any similar securities of the Parent included in such Registration and to permit the sale or other disposition
of such Registrable Shares in accordance with the intended method(s) of distribution thereof; provided, that the number
of Registrable Shares to be included in the registration shall be no greater than the amount permitted by United States federal
law, state law or other law or Commission rule or policy. If United States federal law, state law or other law or Commission rule
or policy requires a limitation of the number of Registrable Shares to be registered under this Section 2 pursuant to any particular
Registration Statement, then Registrable Shares shall be excluded in such manner that the securities to be sold shall be allocated
among the selling holders pro rata based on their ownership of Registrable Shares.

 

    	 	4 	 

     

    

 

(b)          If
the Registration of which the Parent gives notice as provided above is for a registered public offering involving an underwriting,
the Parent shall so advise the holders of Registrable Shares as a part of the written notice given referred to in paragraph (a)
above. In such event the right of any holder of Registrable Shares to Registration pursuant to this Section 2 shall be conditioned
upon such holder’s participation in such underwriting to the extent provided herein. All holders of Registrable Shares proposing
to distribute their securities through such underwriting shall (together with the shares of Common Stock to be registered by the
Parent and shares of Common Stock held by Persons who by virtue of agreements with the Parent are entitled to include shares in
such Registration (the “Other Stockholders”)), if so requested by the Underwriter, enter into lockup
agreements no more restrictive than the principals of Parent or other holders whose shares are included in the Registration Statement,
each in customary form, with the Underwriter or Underwriters selected for underwriting by the Parent and enter into other customary
agreements (such as powers of attorney and custody agreements). If any holder of Registrable Shares disapproves of the terms of
any such underwriting, it may elect to withdraw therefrom by written notice to the Parent and the managing Underwriter; provided,
however, that such withdrawal must be made prior to the pricing of such Underwritten Offering. Any Registrable Shares or
other securities excluded or withdrawn from such underwriting shall be withdrawn from such Registration. No person may participate
in any Underwritten Offering for equity securities of the Parent pursuant to a Registration initiated by the Parent hereunder unless
such person (i) agrees to sell such Person’s securities on the basis provided in any underwriting arrangements approved by
the Parent and (ii) completes and executes all customary questionnaires, powers of attorney, indemnities, lock-up agreements, underwriting
agreements and other customary documents as may be reasonably required under the terms of such underwriting arrangements.

 

(c)          Notwithstanding
any other provision of this Section 2, if, in connection with any Underwritten Offering, the Underwriter determines that the number
of Registrable Shares requested to be included in such Underwritten Offering exceeds the maximum dollar amount or maximum number
of shares that can be sold in such offering without adversely affecting the proposed offering price, the timing, the distribution
method, or the probability of success of such offering (such maximum dollar amount or maximum number of shares, as applicable,
the “Maximum Number of Shares”) , then the Parent shall include in such Underwritten Offering:

 

1)              If the
registration is undertaken for the Parent’s account: (A) first, the shares of Common Stock or other securities that the Parent
desires to sell that can be sold without exceeding the Maximum Number of Shares; (B) second, to the extent that the Maximum Number
of Shares has not been reached under the foregoing clause (A), the Registrable Shares as to which registration has been requested
pursuant to this Agreement that can be sold without exceeding the Maximum Number of Shares; and (C) third, to the extent that the
Maximum Number of shares has not been reached under the foregoing clauses (A) and (B), the shares of Common Stock or other securities
for the account of other persons that the Parent is obligated to register pursuant to written contractual piggy-back registration
rights with such persons and that can be sold without exceeding the Maximum Number of Shares;

 

    	 	5 	 

     

    

 

b)              If the
registration is a “demand” registration undertaken at the demand of persons other than the Lender, (A) first, the shares
of Common Stock or other securities for the account of the demanding persons that can be sold without exceeding the Maximum Number
of Shares; (B) second, to the extent that the Maximum Number of Shares has not been reached under the foregoing clause (A), the
shares of Common Stock or other securities that the Parent desires to sell that can be sold without exceeding the Maximum Number
of Shares; (C) third, to the extent that the Maximum Number of Shares has not been reached under the foregoing clauses (A) and
(B), the Registrable Shares, as to which registration has been requested pursuant to the terms hereof that can be sold without
exceeding the Maximum Number of Shares; and (D) fourth, to the extent that the Maximum Number of Shares has not been reached under
the foregoing clauses (A), (B) and (C), the shares of Common Stock or other securities for the account of other persons that the
Parent is obligated to register pursuant to written contractual arrangements with such persons, that can be sold without exceeding
the Maximum Number of Shares.

 

The Parent shall so
advise in writing all holders of securities requesting registration of any limitations on the number of shares to be underwritten
and the number of shares of securities that are entitled to be included in the registration and the Parent shall be obligated to
include in such Registration Statement only such limited portion (which may be none) of the Registrable Shares as the managing
Underwriter determines in good faith. If the Parent excludes any Registrable Shares from Registration, in the manner set forth
in this Section 2(c), then the holders of Registrable Shares shall have the right to require the Parent to register all or part
of such holders’ remaining Registrable Shares by filing with the SEC a Registration Statement within ninety (90) days of
the date the Registration Statement filed in connection with such Underwritten Offering was declared effective by the SEC.

 

(d) The holders whose underlying Registrable
Shares are included or required to be included in such Registration Statement shall be granted the same rights, benefits, liquidated
or other damages and indemnification granted to other holders of securities included in such Registration Statement.

 

(e) If at any time after giving written
notice of its intention to register any Registrable Shares to holders of Registrable Shares and prior to the effective date of
the Registration Statement filed in connection with such registration, the Parent shall determine for any reason not to register
or to delay registration of the other securities for which the Registration Statement is being filed, the Parent shall, give written
notice of such determination to each holder of Registrable Shares that has notified the Parent of participation in the Piggyback
Registration and, thereupon, (i) in the case of such determination not to register, the Parent shall be relieved of its obligation
to register any Registrable Shares in connection with such Registration (but not from its obligation to pay the Registration Expenses
incurred in connection therewith), without prejudice and (ii) in the case of a determination to delay such registration, the Parent
shall be permitted to delay the registration of such Registrable Shares; provided, however, that if such delay shall
extend beyond ninety (90) days from the date the Parent received a notice from such holder to include Registrable Shares in such
Piggyback Registration, then the Parent shall again give holders the opportunity to participate therein and shall follow the notification
procedures set forth in paragraph (a) of this Section 2.

 

    	 	6 	 

     

    

 

Section 3. Expiration
or Waiver of Obligations. The obligations of the Parent to register Registrable Shares pursuant to Section 2 of this Agreement
and to keep any Registration Statement effective shall expire when no Registrable Shares are outstanding or no shares under the
Registration Statement are held by the Lender. The obligations of the Parent under this Agreement may be waived by any holder
of any of the Registrable Shares entitled to registration rights hereunder.

 

Section 4. Effectiveness of Registration
Statements. The Parent will use its commercially reasonable efforts to maintain the effectiveness of any Registration Statement
pursuant to which any of the Registrable Shares are being offered for the period set forth in Section 6(b); provided, however
that such period shall expire as set forth in Section 3.

 

Section 5. Indemnification;
Procedures; Contribution.

 

(a)          In
the event that the Parent registers any of the Registrable Shares under the Securities Act in accordance with this Agreement, the
Parent will, to the extent permitted by law, indemnify and hold harmless each holder of the Registrable Shares and each Underwriter
of the Registrable Shares (including their officers, directors, affiliates and partners) so registered (including any broker or
dealer through whom such shares may be sold) and each Person, if any, who controls such holder or any such Underwriter within the
meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act (each a “Parent Indemnified Person”)
from and against any and all losses, claims, damages, expenses or liabilities, joint or several (collectively, “Losses”),
to which they or any of them become subject under the Securities Act or under any other statute or at common law or otherwise,
and, except as hereinafter provided, will reimburse each such Parent Indemnified Person, if any, for any legal or other expenses
reasonably incurred by them or any of them in connection with investigating or defending any actions whether or not resulting in
any liability, solely insofar as such Losses (or actions in respect thereof) arise out of or are based upon (i) any untrue statement
or alleged untrue statement of any material fact contained in the Registration Statement under which such Registrable Shares were
registered under the Securities Act pursuant to this Agreement, any preliminary prospectus or final prospectus contained therein,
or any free writing prospectus related thereto, or any amendment or supplement thereof, any filing with any state or federal securities
commission or agency or any other prospectus, offering circular or other document incident to such registration (any such application,
document or information herein called a (“Securities Registration”), or based on any omission or alleged
omission in any Securities Registration to state therein a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not misleading, (ii) any blue sky application or other
document executed by the Parent specifically for that purpose or based upon written information furnished by the Parent filed in
any state or other jurisdiction in order to qualify any or all of the Registrable Shares under the securities laws thereof (any
such application, document or information herein called a (“Blue Sky Application”), (iii) any omission
or alleged omission to state in any such Securities Registration or in any Blue Sky Application executed or filed by the Parent,
a material fact required to be stated therein or necessary to make the statements therein not misleading, (iv) any violation by
the Parent or its agents of the Securities Act or any rule or regulation promulgated under the Securities Act applicable to the
Parent or its agents and relating to action or inaction required of the Parent in connection with such Securities Registration,
or (v) any failure to register or qualify the Registrable Shares in any state where the Parent or its agents has affirmatively
undertaken or agreed in writing that the Parent (the undertaking of any Underwriter chosen by the Parent being attributed to the
Parent) will undertake such registration or qualification (provided, that in such instance the Parent shall not be so liable
if it has used its commercially reasonable efforts to so register or qualify the Registrable Shares) and will reimburse each Parent
Indemnified Person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any
such Loss (or actions in respect thereof), promptly after being so incurred; provided, however, that the Parent will
not be liable in any such case (i) through (v) above and will not be required to reimburse any such expenses to a Parent Indemnified
Person if and to the extent that any such Loss arises out of or is based exclusively upon an untrue statement or alleged untrue
statement or omission or alleged omission so made in reliance upon and in conformity with written information furnished by that
Parent Indemnified Person in writing specifically for use in such Securities Registration or Blue Sky Application.

 

    	 	7 	 

     

    

 

(b)          In
the event of a registration of any of the Registrable Shares under the Securities Act in accordance with this Agreement, each holder
of such Registrable Shares thereunder, severally and not jointly, will indemnify and hold harmless the Parent, each Person, if
any, who controls the Parent within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, each officer
of the Parent who signs the Registration Statement, each director of the Parent, each other holder of Registrable Shares, each
Underwriter and any broker or dealer through whom such shares may be sold and each Person who controls such Underwriter or broker
within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (each a “Seller Indemnified
Person”), against all Losses, to which a Seller Indemnified Person may become subject under the Securities Act or
under any other statute or at common law or otherwise, and, except as hereinafter provided, will reimburse each such Seller Indemnified
Person, if any, for any legal or other expenses reasonably incurred by them or any of them in connection with investigating or
defending any actions whether or not resulting in any liability, promptly after being so incurred, solely insofar as such Losses
(or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material
fact contained in any Securities Registration or any Blue Sky Application or omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein not misleading, provided, however,
that such holder will be liable hereunder in any such case if and only to the extent that any such Loss arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged omission made in reliance upon and in conformity with
information pertaining to such holder, as such, furnished in writing to the Parent by such holder specifically for use in such
Securities Registration or any Blue Sky Application; and provided, further, that the liability of each holder hereunder
shall be limited to the proportion of any such Loss which is equal to the proportion that the public offering price of all securities
sold by such holder under such Registration Statement bears to the total public offering price of all securities sold thereunder,
but not in any event to exceed the net proceeds (net of the cost of the Registrable Shares sold and all expenses paid by such holder
and not reimbursed by the Parent and the amount of any damages that such holder has otherwise been required to pay by reason of
such untrue statement or omission) received by such holder from the sale of Registrable Shares covered by such Registration Statement.

 

    	 	8 	 

     

    

 

(c)          Promptly
after receipt by an indemnified party hereunder of notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party hereunder, notify the indemnifying party in writing thereof,
but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to such indemnified
party other than under this Section 5 and shall only relieve it from any liability which it may have to such indemnified party
under this Section 5 if and to the extent the indemnifying party is prejudiced by such omission. In case any such action shall
be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate in and, to the extent it shall wish, to assume and undertake the defense thereof with counsel
reasonably satisfactory to such indemnified party, and, after notice from the indemnifying party to such indemnified party of its
election so to assume and undertake the defense thereof, the indemnifying party shall not be liable to such indemnified party under
this Section 5 for any reasonable legal expenses subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation and of liaison with counsel so selected; provided, however,
that, if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party
shall have reasonably concluded that there may be reasonable defenses available to it which are different from or additional to
those available to the indemnifying party or that the interests of the indemnified party reasonably may be deemed to conflict with
the interests of the indemnifying party, the indemnified party shall have the right to select a separate counsel reasonably satisfactory
to the indemnifying party and to assume such legal defenses and otherwise to participate in the defense of such action, with the
reasonable expenses and fees of such separate counsel and other expenses related to such participation to be reimbursed by the
indemnifying party as incurred. No indemnifying party, in the defense of any such claim or action, shall, except with the consent
of each indemnified party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such
claim or action, and the indemnification agreements contained in Sections 5(a) and 5(b) shall not apply to any settlement entered
into in violation of this sentence. Each indemnified party shall furnish such information regarding itself or the claim in question
as an indemnifying party may reasonably request in writing and as shall be reasonably required in connection with defense of such
claim and litigation resulting therefrom.

 

    	 	9 	 

     

    

 

(d)          If
the indemnification provided for in Section 5(a) or 5(b) from the indemnifying party for any reason is unavailable to (other than
by reason of exceptions provided therein), or is insufficient to hold harmless, an indemnified party hereunder in respect of any
claim for indemnification, then the indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such claim in such proportion as is appropriate to reflect the
relative fault of the indemnifying party, on the one hand, and the indemnified party, on the other hand, in connection with the
actions that resulted in such claim, as well as any other relevant equitable considerations. The relative fault of such indemnifying
party and indemnified party shall be determined by reference to, among other things, whether any action in question, including
any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made
by, or relates to information supplied by, such indemnifying party or indemnified party, and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such action. If, however, the foregoing allocation is not
permitted by applicable law, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party
in such proportion as is appropriate to reflect not only such relative faults but also the relative benefits of the indemnifying
party and the indemnified party as well as any other relevant equitable considerations.

 

The parties hereto
agree that it would not be just and equitable if contribution pursuant to this Section 5(d) were determined by pro rata allocation
or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by a party as a result of any claim referred to in the immediately preceding paragraph
shall be deemed to include, any reasonable legal or other fees, costs or expenses reasonably incurred by such party in connection
with any investigation or proceeding. Notwithstanding anything in this Section 5(d) to the contrary, no indemnifying party (other
than the Parent) shall be required pursuant to this Section 5(d) to contribute any amount in excess of the net proceeds (net of
the cost of the Registrable Shares sold and all expenses paid by such holder and not reimbursed by the Parent and the amount of
any damages that such holder has otherwise been required to pay by reason of such untrue statement or omission) received by such
indemnifying party from the sale of the Registrable Shares pursuant to the Registration Statement giving rise to such claims, less
all amounts previously paid by such indemnifying party with respect to such claims. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation.

 

(e)          Notwithstanding
the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered
into in connection with an underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting
agreement as it relates to the Underwriter shall control.

  

(f)           The
provisions of this Section 5 shall be in addition to any other rights to indemnification or contribution which an indemnified party
may have pursuant to law, equity, contract or otherwise.

 

Section 6. Registration
Procedures.

 

(a)          If
and whenever the Parent is required by the provisions of this Agreement to effect the registration of any Registrable Shares under
the Securities Act, the Parent will, as expeditiously as possible:

 

    	 	10 	 

     

    

 

(i)          Subject
to time periods contained herein, in the case of a Registration Statement under Section 2, prepare and file with the Commission
a Registration Statement on Form S-1 or Form S-3 with respect to such securities including executing an undertaking to file post-effective
amendments and use its commercially reasonable efforts to cause such Registration Statement to become and remain effective for
the period of the distribution contemplated thereby in accordance with the provisions contained herein;

 

(ii)         Prepare
and file with the Commission such amendments and supplements to such Registration Statement and the prospectus used in connection
therewith as may be necessary to keep such Registration Statement effective for the period specified herein and comply with the
provisions of the Securities Act and the Exchange Act with respect to the disposition of all Registrable Shares covered by such
Registration Statement;

 

(iii)        Prior
to filing any Registration Statement described in this Agreement, furnish to each holder of Registrable Shares upon request, within
a reasonable time prior to such filing, copies of the Registration Statement and any amendments or supplements thereto and any
prospectus forming a part thereof, which documents shall be subject to the review of counsel representing each holder, and use
all commercially reasonable efforts to reflect in each such document when so filed with the Commission such comments as counsel
representing each holder shall reasonably propose;

 

(iv)        Furnish
to each seller of Registrable Shares and to each Underwriter, if applicable, such number of copies of the Registration Statement
and each such amendment and supplement thereto (in each case including all exhibits) and the prospectus included therein (including
each preliminary prospectus) as such Persons reasonably may request in order to facilitate the public sale or other disposition
of the Registrable Shares covered by such Registration Statement;

 

(v)         If
the offering is underwritten, enter into and perform its obligations under an underwriting agreement, in usual and customary form,
with the lead or managing Underwriter(s) of such offering.

 

(vi)        Provide
a transfer agent, registrar and a CUSIP number for all Registrable Shares registered pursuant hereto, in each case not later than
the date of the final prospectus for such registration.

 

(vii)       Use
its reasonable commercial efforts to register and qualify the Registrable Shares covered by such Registration Statement under the
securities or “blue sky” laws of such jurisdictions as the sellers of Registrable Shares or, in the case of an underwritten
public offering, the managing Underwriter reasonably shall request; provided, however, that the Parent shall not
for any such purpose be required to qualify generally to transact business as a foreign corporation in any jurisdiction where it
is not so qualified or to consent to general service of process in any such jurisdiction, unless the Parent is already subject
to service in such jurisdiction;

 

(viii)      Use
its reasonable commercial efforts to list the Registrable Shares covered by such Registration Statement with any securities exchange
or quotation system on which the Common Stock is then listed, quoted or traded;

 

    	 	11 	 

     

    

 

(ix)         File
any “free writing prospectus” (as defined in Rule 405 under the Securities Act) that is required to be filed with the
Commission in accordance with the Securities Act;

 

(x)          Notify
each holder of Registrable Shares, promptly after receiving notice thereof, of the time when the Registration Statement becomes
effective or when any amendment or supplement or any prospectus forming a part of the Registration Statement has been filed;

 

(xi)         Comply
with all applicable rules and regulations under the Securities Act and Exchange Act;

 

(xii)        Immediately
notify each holder of Registrable Shares and each Underwriter under such Registration Statement, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, of the happening of any event of which the Parent has knowledge
as a result of which the prospectus contained in such Registration Statement, as then in effect, includes an untrue statement of
a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing, and promptly prepare and furnish to such seller a reasonable number of
copies of a prospectus supplemented or amended so that, as thereafter delivered to the purchasers of such Registrable Shares, such
prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the circumstances then existing;

 

(xiii)       Advise
each holder of Registrable Shares after the Parent shall receive notice or otherwise obtain knowledge of the issuance of any order
by the Commission preventing or suspending the effectiveness of the Registration Statement or any amendment thereto or of the initiation
or threatening of any proceeding for that purpose and promptly use all commercially reasonable efforts to prevent the issuance,
or to obtain its withdrawal at the earliest possible moment, of any stop order with respect to the applicable Registration Statement
or other order suspending the use of any preliminary or final prospectus;

 

(xiv)      If
the offering is underwritten and at the request of any seller of Registrable Shares, furnish on the date that Registrable Shares
are delivered to the Underwriters for sale pursuant to such registration and to the extent reasonably available (A) an opinion
dated such date of counsel representing the Parent, and (B) a letter dated such date from the independent public accountants retained
by the Parent or the holders of Registrable Shares, and each of the opinion and the letter shall be reasonably satisfactory to
the majority-in-interest of the holders participating in the Piggyback Registration and shall be in customary form and covering
substantially the same matters with respect to such Registration Statement and as are customarily covered in opinions of issuer’s
counsel and in accountants’ letters delivered to the Underwriters in an underwritten offerings of securities;

 

    	 	12 	 

     

    

 

(xv)        Upon
reasonable notice and at reasonable times during normal business hours and without undue interference of the Parent’s business
or operations, make available for inspection by each seller of Registrable Shares, any Underwriter participating in any distribution
pursuant to such Registration Statement, and any attorney, accountant or other agent retained by such seller or Underwriter, reasonable
access to all financial and other records, pertinent corporate documents and properties of the Parent, as such parties may reasonably
request, and cause the Parent’s officers, directors and employees to supply all information reasonably requested by any such
seller, Underwriter, attorney, accountant or agent in connection with such Registration Statement; provided that the Parent
need not disclose any such information to any such seller or its representative unless and until such person has entered into a
confidentiality agreement with the Parent;

 

(xvi)      Cooperate
with the selling holders of Registrable Shares and the managing Underwriter, if any, to facilitate the timely preparation and delivery
of certificates representing Registrable Shares to be sold, such certificates to be in such denominations and registered in such
names as such holders or the managing Underwriter may request;

 

(xvii)      Make
generally available to its security holders an earnings statement (in form complying with, and in the manner provided by, the provisions
of Rule 158 under the Securities Act) covering a twelve-month period beginning not later than the first day of the Parent’s
fiscal quarter next following the effective date of a Registration Statement filed hereunder; and

 

(xviii)    Use
its commercially reasonable efforts to make available the executive officers of the Parent to participate with the holders and
any Underwriters in “road shows” or other selling efforts that may be reasonably requested by the holders in connection
with the methods of distributed for the Registrable Shares.

 

(b)          For
purposes of this Agreement, the period of distribution of Registrable Shares in a firm commitment underwritten public offering
shall be deemed to extend until each Underwriter has completed the distribution of all securities purchased by it, and the period
of distribution of Registrable Shares in any other registration shall be deemed to extend until the earlier of the sale of all
Registrable Shares covered thereby or one hundred eighty (180) calendar days after the latter of (i) the date of exercise of the
entire Warrant or (ii) the date of the conversion of the entire Note.

 

(c)          Whenever
under the preceding Sections of this Agreement the holders of Registrable Shares are registering such shares pursuant to any Registration
Statement, each such holder agrees to: (i) timely provide in writing to the Parent, at its request, such information and materials
as the Parent may reasonably request in order to facilitate preparation of the Registration Statement and effect the registration
of such Registrable Shares in compliance with federal and applicable state securities laws, provided, that, at least ten
(10) business days prior to the first anticipated filing date of any Registration Statement or shorter period as may be agreed
by such holder, the Parent notifies such holder of the information the Parent requires from such holder; or (ii) provide the Parent
with appropriate representations with respect to the accuracy of such information provided by such seller pursuant to subsection
(i). The provisions of such information shall be a condition to the Parent’s obligations to register the Registrable Shares.

 

    	 	13 	 

     

    

 

(d)          If
for any reason the Commission does not permit all of the Registrable Shares to be included in a Registration Statement filed pursuant
to this Agreement or if not permitted by law or Commission policy or position as determined by the Parent in its reasonable discretion
or for any other reason any Registrable Shares are not permitted by the Commission to be included in a Registration Statement filed
under this Agreement, the Parent may reduce, on a pro rata basis, the total number of Registrable Shares to be registered on behalf
of the Lender, but must register such Registrable Shares within ninety (90) days as provided in Section 2(c),subject to any other
shares which may be registered under such Registration Statement being reduced only after the reduction of the Registrable Shares.

 

(e)          Notwithstanding
anything to the contrary contained in this Agreement, in the event the Commission determines or the Parent determines in accordance
with Commission policy or practice any Registration Statement filed pursuant to this Agreement (i) constitutes a primary offering
of securities by the Parent or (ii) requires holders of Registrable Shares to be named as an Underwriter and such party does not
consent to being so named as an Underwriter in such Registration Statement, the Parent may reduce the total number of Registrable
Shares of such party to be registered, and the failure to include such Registrable Shares in any Registration Statement shall not
cause the Parent to be in violation of this Agreement or be required to pay any penalty, financial or otherwise.

 

Section 7. Registration
and Selling Expenses.

 

(a)          All
expenses incurred by the Parent in complying with Section 2 hereof, including, without limitation, all registration and filing
fees, printing expenses (if required), fees and disbursements of counsel and independent public accountants for the Parent, fees
and expenses (including reasonable counsel fees) incurred in connection with complying with state securities or “blue sky”
laws, fees of the FINRA, transfer taxes, and fees of transfer agents and registrars, are called “Registration Expenses.”
The Parent will pay all Registration Expenses in connection with the Registration Statement under Section 2. The Parent shall have
no obligation to pay or otherwise bear: (i) the cost and expenses of procuring Underwriters’ insurance in connection with
the sale of Registrable Shares by holders of Registrable Shares, or (ii) any portion of the Underwriters’ or any broker/
dealers’ commissions or discounts attributable to the Registrable Shares being offered and sold by the holders of Registrable
Shares (collectively, the “Selling Expenses”). All Selling Expenses in connection with each Registration
Statement under Section 2 shall be borne by the participating sellers (including the Parent, where applicable) in proportion to
the number of shares registered by each, or by such participating sellers other than the Parent (to the extent the Parent shall
be a seller) as they may agree. Parent shall also pay the reasonable legal fees of one counsel for the holders of Registrable Shares
to review the Registration Statement.

 

Section 8. Conditions
to Registration Obligations. The Parent shall not be obligated to effect the registration of Registrable Shares pursuant
to Section 2 for a holder of Registerable Shares unless such holder consents to the reasonable conditions imposed by the Parent
set forth below:

 

(a)          conditions
requiring such holder to comply with all prospectus delivery requirements of the Securities Act and with all anti-stabilization,
anti-manipulation and similar provisions of Section 10 of the Exchange Act and any rules issued thereunder by the Commission, and
to furnish to the Parent information about sales made in such public offering;

 

    	 	14 	 

     

    

 

(b)          conditions
prohibiting such holder upon receipt of telegraphic or written notice from the Parent (until further notice) from effecting sales
of shares, such notice being given to permit the Parent to correct or update a Registration Statement or prospectus;

 

(c)          conditions
requiring that at the end of the period during which the Parent is obligated to keep the Registration Statement effective under
Section 4, such holder of shares included in the Registration Statement shall discontinue sales of shares pursuant to such Registration
Statement upon receipt of notice form the Parent of its intention to remove from registration the shares covered by such Registration
Statement that remain unsold, and requiring such holders to notify the Parent of the number of shares registered that remain unsold
immediately upon receipt of notice from the Parent;

 

(d)          conditions
requiring such holder of Registrable Shares to enter into an underwriting agreement in form and substance reasonably satisfactory
to the Parent and the holders of Registrable Shares; and

 

(e)          conditions
requiring such holder of Registrable Shares to, if requested by any Underwriter, to enter into a lock-up agreement in form and
substance reasonably satisfactory to the Underwriter in connection with any underwritten offering of securities by the Parent for
the Parent’s own account.

 

Section 9. Transferability
of Registration Rights. For the purposes of this Agreement, the holder of Registrable Shares shall include not only the
Lender but any of Lender’s Affiliates and transferees; provided, however, that each such assignee or transferee
agrees in writing to be bound by all of the provisions of this Agreement.

 

Section 10. Reporting Obligations.
As long as any holder shall own Registrable Shares, the Parent, at all times while it shall be reporting under the Exchange Act,
covenants to file timely (or obtain extensions in respect thereof and file within the applicable grace period) all reports required
to be filed by the Company after the date hereof pursuant to Sections 13(a) or 15(d) of the Exchange Act and to promptly furnish
the holders of Registrable Shares with true and complete copies of all such filings. The Parent further covenants that it shall
take such further action as any holder of Registrable Shares may reasonably request, all to the extent required from time to time
to enable such holders of Registrable Shares to sell shares of the Common Stock held by such holders without registration under
the Securities Act within the limitation of the exemptions provided by Rule 144, including providing any legal opinions. Upon the
request of any holder of Registrable Shares, the Parent shall deliver to such holder a written certification of a duly authorized
officer as to whether it has complied with such requirements.

 

    	 	15 	 

     

    

 

Section 11. Miscellaneous.

 

(a)          The
parties to this Agreement shall be entitled to enforce their rights under this Agreement specifically (without posting a bond or
other security), to recover damages caused by reason of any breach of any provision of this Agreement and to exercise all other
rights existing in their favor. The parties hereto agree and acknowledge that a breach of this Agreement would cause irreparable
harm and money damages would not be an adequate remedy for any such breach and that, in addition to any other rights and remedies
existing hereunder, any party shall be entitled to specific performance and/or other injunctive relief from any court of law or
equity of competent jurisdiction (without posting any bond or other security) in order to enforce or prevent violation of the provisions
of this Agreement.

 

(b)          No failure
or delay on the part of any party to this Agreement in exercising any right, power or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof
or the exercise of any other right, power or remedy hereunder. The remedies herein provided are cumulative and not exclusive of
any remedies provided by law.

 

(c)          Except
as hereinafter provided, amendments or additions to this Agreement may be made, compliance with any covenant or provision set forth
herein may be omitted or waived, and this Agreement may be terminated, if the Parent or Borrower shall obtain consent thereto in
writing from the Lender (unless it does not beneficially own any Registrable Shares) and, if it is not the beneficial owner of
any of the Registrable Shares, the consent of such other beneficial owners as would aggregate at least 51% in interest of the Registrable
Shares. Any waiver or consent may be given subject to satisfaction of conditions stated therein and any waiver or consent shall
be effective only in the specific instance and for the specific purpose for which given.

 

(d)          All
notices or other communications that are required or permitted hereunder shall be in writing and sufficient if delivered personally,
sent by sent by registered or certified mail, return receipt requested, postage prepaid, or sent by a nationally-recognized overnight
courier or by electronic mail, with a copy thereof to be delivered by nationally-recognized overnight courier (as aforesaid) within
24 hours of such electronic mail, or by facsimile, with confirmation as provided above addressed as follows:

 

If to the Parent or Borrower:

 

Long Island Brand Beverages LLC

116 Charlotte Avenue

Hicksville, NY 11801

Attention:

Phone: (855) 542-2832

 

With a copy to (which shall not constitute
notice):

 

Graubard Miller

405 Lexington Avenue

New York, NY 10174

Attention: David Alan
Miller / Jeffrey M. Gallant

Phone: 212-818-8800

Facsimile: 212-818-8881

 

    	 	16 	 

     

    

 

If to the Lender:

 

Brentwood LIIT Inc.

Level 2 Suite 9

20 Augustus Terrace,

Parnell, Auckland

New Zealand

Attention: Kerry Finnigan

 

With a copy to (which
shall not constitute notice):

 

Ellenoff Grossman
& Schole LLP

1345 Avenue of the
Americas

New York, NY 10105

Attention: Douglas
Ellenoff

Phone: 212-370-1300

Facsimile: 212-370-7889

 

or to such other address as the party to
whom notice is to be given may have furnished to the other party in writing in accordance herewith. All such notices or communications
shall be deemed to be received (i) in the case of personal delivery, on the date of such delivery, (ii) in the case of nationally-recognized
overnight courier, on the third business day after the date when sent, in the case of registered or certified mail five (5) days
after the date it is mailed and (iii) in the case of facsimile transmission or electronic mail, upon confirmed receipt.

 

(e)          This
Agreement shall be binding upon and inure to the benefit of the Parent and the Lender and their respective heirs, successors and
assigns, except that the Parent shall not have the right to delegate its obligations hereunder or to assign its rights hereunder
or any interest herein without the prior written consent of the holders of at least a majority in interest of the Registrable Shares,
which shall include the Lender as long as it owns any Registrable Shares. This Agreement is
intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit
of, nor may any provision hereof be enforced by, any other Person.

 

(f)           This
Agreement constitute the entire agreement between the parties and supersedes any prior understandings or agreements concerning
the subject matter hereof.

 

(g)          The
provisions of this Agreement are severable and, in the event that any court of competent jurisdiction shall determine that any
one or more of the provisions or part of a provision contained in this Agreement shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision or
part of a provision of this Agreement; but this Agreement, shall be reformed and construed as if such invalid or illegal or unenforceable
provision, or part of a provision, had never been contained herein, and such provisions or part reformed so that it would be valid,
legal and enforceable to the maximum extent possible.

 

    	 	17 	 

     

    

 

(h)          In
the event that any court of competent jurisdiction shall determine that any provision, or any portion thereof, contained in this
Agreement shall be unenforceable in any respect, then such provision shall be deemed limited to the extent that such court deems
it enforceable, and as so limited shall remain in full force and effect. In the event that such court shall deem any such provision,
or portion thereof, wholly unenforceable, the remaining provisions of this Agreement shall nevertheless remain in full force and
effect.

 

(i)           The
parties hereto acknowledge and agree that (i) each party and its counsel, if so represented, reviewed and negotiated the terms
and provisions of this Agreement and have contributed to its revision and (ii) the rule of construction to the effect that any
ambiguities are resolved against the drafting party shall not be employed in the interpretation of this Agreement.

 

(j)       
   This Agreement shall be construed in accordance with, and governed in all respects by, the laws of the State
of New York. Each of Parent and Borrower agrees that any action or proceeding against it hereunder may be commenced in state or
federal court in any county in the State of New York, and each of Parent and Borrower waives personal service of process and agrees
that a summons and complaint commencing an action or proceeding in any such court shall be properly served and shall confer personal
jurisdiction if served by registered or certified mail in accordance with the notice provisions set forth herein.

 

(k)          EACH
OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ITS RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THE PARTIES HERETO RELATING TO THE SUBJECT MATTER HEREOF. EACH OF THE PARTIES HERETO
ALSO WAIVES ANY BOND OR SURETY OR SECURITY UPON SUCH BOND THAT MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF THE OTHER PARTY. THE
SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE
TO THE SUBJECT MATTER OF THIS AGREEMENT, INCLUDING, BUT NOT LIMITED TO, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND
ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH OF THE PARTIES HERETO ACKNOWLEDGES THAT THIS
WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO THIS AGREEMENT. EACH OF THE PARTIES HERETO HEREBY FURTHER ACKNOWLEDGES AND AGREES
THAT EACH HAS REVIEWED OR HAD THE OPPORTUNITY TO REVIEW THIS WAIVER WITH ITS RESPECTIVE LEGAL COUNSEL, AND THAT IT KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH SUCH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, THIS AGREEMENT
MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

 

(l)           Article, section
and subsection headings in this Agreement are included herein for convenience of reference only and shall not constitute a part
of this Agreement for any other purpose.

 

    	 	18 	 

     

    

 

(m)         This
Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument,
and any of the parties hereto may execute this Agreement by signing any such counterparts.

 

(n)          From
and after the date of this Agreement, upon the request of the Lender or the Parent, the Parent and the Lender, as applicable, shall
execute and deliver such instruments, documents and other writings as may be reasonably necessary or desirable to confirm and carry
out and to effectuate fully the intent and purposes of this Agreement.

 

(o)          This Agreement
shall terminate upon the earlier of (i) the tenth anniversary of the date of this Agreement or (ii) the date as of which (A) all
of the Registrable Shares have been sold pursuant to a Registration Statement (but in no event prior to the applicable period referred
to in Section 4(3) of the Securities Act and Rule 174 thereunder) or (B) the holders of all Registrable Shares are permitted to
sell the Registrable Shares under Rule 144 (or any similar provision) under the Securities Act without limitation on the amount
of securities sold or the manner of sale and such Registrable Shares have been sold. The provisions of Section 5 and Section 10
shall survive any termination of this Agreement.

 

    	 	19 	 

     

    

 

IN WITNESS
WHEREOF, the undersigned have caused this Agreement to be executed as of the date first written above.

 

	 	PARENT:
	 	 
	 	LONG ISLAND ICED TEA CORP.
	 	 	 
	 	By:	/s/ Philip Thomas
	 	 	Name: Philip Thomas
	 	 	Title:   CEO

 

	 	BORROWER:
	 	 
	 	LONG ISLAND BRAND BEVERAGES LLC
	 	 	 
	 	By:	/s/ Philip Thomas
	 	 	Name: Philip Thomas
	 	 	Title:   CEO

 

	 	LENDER:
	 	 
	 	BRENTWOOD LIIT INC.
	 	 	 
	 	By:	/s/ Kerry Finnigan
	 	 	Name: Kerry Finnigan
	 	 	Title:   Director

 

    	 	20

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