Document:

Exhibit 10.4

 

FORM OF TAX MATTERS AGREEMENT

 

by and among

 

Starwood Hotels & Resorts Worldwide, Inc.,

 

Vistana Signature Experiences, Inc.

 

and

 

Interval Leisure Group, Inc.

 

Dated as of [•]

 

1

 

TABLE OF CONTENTS

 

	
ARTICLE I
    
	
 
    
	
DEFINITIONS
    
	
 
    	
 
    	
 
    
	
Section 1.01
    	
General
    	
1
    
	
Section 1.02
    	
Additional Definitions
    	
10
    
	
 
    
	
ARTICLE II
    
	
 
    
	
PREPARATION, FILING AND PAYMENT OF TAXES SHOWN DUE   ON TAX RETURNS
    
	
 
    	
 
    	
 
    
	
Section 2.01
    	
Starwood Consolidated   Returns
    	
10
    
	
Section 2.02
    	
Mixed Business Tax   Returns
    	
11
    
	
Section 2.03
    	
Single Business Returns
    	
11
    
	
Section 2.04
    	
Tax Return Procedures
    	
11
    
	
Section 2.05
    	
Amended Returns
    	
13
    
	
Section 2.06
    	
Straddle Period Tax   Allocation
    	
13
    
	
Section 2.07
    	
Timing of Payments
    	
14
    
	
Section 2.08
    	
Expenses
    	
14
    
	
Section 2.09
    	
Apportionment of   Vistana Taxes
    	
14
    
	
 
    	
 
    	
 
    
	
ARTICLE III
    
	
 
    
	
INDEMNIFICATION
    
	
 
    	
 
    	
 
    
	
Section 3.01
    	
Indemnification by   Starwood
    	
14
    
	
Section 3.02
    	
Indemnification by   Vistana
    	
14
    
	
Section 3.03
    	
Characterization of and   Adjustments to Payments
    	
15
    
	
Section 3.04
    	
Timing of   Indemnification Payments
    	
15
    
	
Section 3.05
    	
Indemnification   Payments under Ancillary Agreements
    	
15
    
	
 
    
	
ARTICLE IV
    
	
 
    
	
REFUNDS, CARRYBACKS, TIMING DIFFERENCE AND TAX ATTRIBUTES
    
	
 
    	
 
    	
 
    
	
Section 4.01
    	
Refunds and Credits
    	
15
    
	
Section 4.02
    	
Carrybacks
    	
17
    
	
Section 4.03
    	
Tax Attributes; E&P
    	
17
    
	
Section 4.04
    	
Treatment of Deductions   Associated with Equity-Related Compensation
    	
18
    
	
Section 4.05
    	
Timing Differences
    	
19
    
	
Section 4.06
    	
Section 336(e) Election
    	
19
    
	
Section 4.07
    	
SVO Conversion
    	
20
    
	
Section 4.08
    	
Tax Benefit   Determinations
    	
20
    
	
Section 4.09
    	
Supporting   Documentation
    	
21
    

 

i

 

	
ARTICLE V
    
	
 
    
	
TAX PROCEEDINGS
    
	
 
    	
 
    	
 
    
	
Section 5.01
    	
Notification of Tax   Proceedings
    	
21
    
	
Section 5.02
    	
Tax Proceeding   Procedures Generally
    	
21
    
	
Section 5.03
    	
Tax Proceedings in   respect of Disqualifying Actions
    	
22
    
	
 
    
	
ARTICLE VI
    
	
 
    
	
TAX-FREE STATUS OF THE DISTRIBUTION
    
	
 
    	
 
    	
 
    
	
Section 6.01
    	
Representations and   Warranties
    	
23
    
	
Section 6.02
    	
Restrictions Relating   to the Distribution
    	
23
    
	
Section 6.03
    	
Procedures Regarding   Opinions and Rulings
    	
25
    
	
 
    	
 
    	
 
    
	
ARTICLE VII
    
	
 
    
	
COOPERATION
    
	
 
    	
 
    	
 
    
	
Section 7.01
    	
General Cooperation
    	
26
    
	
Section 7.02
    	
Retention of Records
    	
27
    
	
 
    
	
ARTICLE VIII
    
	
 
    
	
MISCELLANEOUS
    
	
 
    	
 
    	
 
    
	
Section 8.01
    	
Dispute Resolution
    	
28
    
	
Section 8.02
    	
Interest on Late   Payments
    	
28
    
	
Section 8.03
    	
Survival of Covenants
    	
28
    
	
Section 8.04
    	
Successors
    	
28
    
	
Section 8.05
    	
Severability
    	
28
    
	
Section 8.06
    	
Entire Agreement
    	
29
    
	
Section 8.07
    	
Assignment; No   Third-Party Beneficiaries
    	
29
    
	
Section 8.08
    	
Specific Performance
    	
29
    
	
Section 8.09
    	
Amendment
    	
29
    
	
Section 8.10
    	
Rules of   Construction
    	
29
    
	
Section 8.11
    	
Counterparts
    	
30
    
	
Section 8.12
    	
Coordination with the   Employee Matters Agreements
    	
30
    
	
Section 8.13
    	
Confidentiality
    	
30
    
	
Section 8.14
    	
Expenses
    	
30
    
	
Section 8.15
    	
Governing Law
    	
30
    
	
Section 8.16
    	
Notices
    	
30
    
	
Section 8.17
    	
Coordination with   Ancillary Agreements
    	
31
    
	
Section 8.18
    	
Effective Date
    	
32
    

 

ii

 

FORM OF TAX MATTERS AGREEMENT

 

THIS TAX MATTERS AGREEMENT (this “Agreement”), dated as of [•], is by and among Starwood Hotels & Resorts Worldwide, Inc., a Maryland corporation (“Starwood”), Vistana Signature Experiences, Inc.  (“Vistana”), a Delaware corporation and Interval Leisure Group, Inc. (“Iris”), a Delaware corporation.  Each of Starwood, Vistana and Iris is sometimes referred to herein as a “Party” and, collectively, as the “Parties.”

 

WHEREAS, Starwood is engaged, directly and indirectly, in the Vistana Business;

 

WHEREAS, the Board of Directors of Starwood has determined that it is advisable and in the best interests of Starwood and Starwood’s shareholders to separate the Vistana Business from the other businesses of Starwood and to divest the Vistana Business in the manner contemplated by the Separation Agreement and the Merger Agreement;

 

WHEREAS, Starwood and Vistana have entered into the Separation Agreement pursuant to which (a) (i) Starwood will, and will cause its Subsidiaries to, transfer certain assets, liabilities and subsidiaries of the Vistana Business to Vistana and its Subsidiaries, and (ii) Vistana will, and/or will cause one or more of its Subsidiaries to, transfer certain assets, liabilities, subsidiaries and/or businesses to Starwood and its Subsidiaries, as a result of which Vistana will own, directly and indirectly through its Subsidiaries, the Vistana Business and will not own, directly or indirectly through its Subsidiaries, any of the Starwood Business (collectively, the “Restructuring”), and (b) Starwood will distribute the interests in Vistana to its shareholders (the “Distribution”) as described therein;

 

WHEREAS, the Parties contemplate that, pursuant to the Merger Agreement, immediately after the Distribution and at the Effective Time, Merger Sub shall be merged (the “Merger”) with and into Vistana, with Vistana surviving the Merger as a wholly owned subsidiary of Iris, and the Vistana Common Stock shall be converted into the right to receive shares of common stock of Iris on the terms and subject to the conditions of the Merger Agreement and in accordance with the Delaware General Corporation Law; and

 

WHEREAS, the Parties wish to (a) provide for the payment of Tax liabilities and entitlement to refunds thereof, allocate responsibility for, and cooperation in, the filing of Tax Returns, and provide for certain other matters relating to Taxes and (b) set forth certain covenants and indemnities relating to the preservation of the tax-free status of the Contribution, the Distribution and the Merger.

 

NOW, THEREFORE, in consideration of the foregoing and the representations, warranties, covenants and agreements contained herein, and intending to be legally bound hereby, the Parties agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

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

 

 

“Accounting Firm” has the meaning set forth in Section 8.01.

 

“Adjustment” means an adjustment of any item of income, gain, loss, deduction, credit or any other item affecting Taxes of a taxpayer pursuant to a Final Determination.

 

“Agreement” has the meaning set forth in the preamble to this Agreement.

 

“Ancillary Agreement” has the meaning set forth in the Separation Agreement.

 

“Association” means any association, trust, property owning company or similar entity that is formed (whether incorporated or unincorporated, mandatory or voluntary) for the purpose of protecting the consumer purchasers of vacation ownership interests from the insolvency or bankruptcy of any member of the Vistana Group or for governance purposes relating to a vacation ownership resort, including any entity which the Starwood Group has treated as subject to Section 528 of the Code prior to the Effective Time.

 

“Benefited Party” has the meaning set forth in Section 4.01(b).

 

“Carryback” has the meaning set forth in Section 4.02(b).

 

“Closing Date” has the meaning set forth in the Merger Agreement.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Common Parent” means the “common parent corporation” of an “affiliated group” (in each case, within the meaning of Section 1504 of the Code) filing a U.S. federal consolidated Income Tax Return.

 

“Confidentiality Agreement” has the meaning set forth in the Merger Agreement.

 

“Contribution” means the contribution by Starwood of all of the equity interests in SVO, Starwood Vacation Network, Inc., Starwood Vacation Exchange Company, Westin Vacation Management Corporation, FOH Hospitality, LLC, and Kauai Blue, Inc. to Vistana in exchange for all of Vistana Common Stock and the assumption by Vistana of liabilities related thereto.

 

“Counsel” means Skadden, Arps, Slate, Meagher & Flom LLP.

 

“Disqualifying Action” means a Starwood Disqualifying Action or a Vistana Disqualifying Action.

 

“Distribution” has the meaning set forth in the recitals to this Agreement.

 

“Distribution Date” means the date on which the Distribution is consummated.

 

“Distribution Tax Opinion” means any opinion issued by Counsel and/or other tax advisor to Starwood regarding U.S. federal Income Tax consequences of the Contributions and Distributions.

 

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“Due Date” means (a) with respect to a Tax Return, the date (taking into account all valid extensions) on which such Tax Return is required to be filed under applicable Law and (b) with respect to a payment of Taxes, the date on which such payment is required to be made to avoid the incurrence of interest, penalties and/or additions to Tax.

 

“Effective Time” has the meaning set forth in the Merger Agreement.

 

“Employee Matters Agreement” means the Employee Matters Agreement by and between the Parties dated as of [·].

 

“Extraordinary Transaction” means any action that is not in the Ordinary Course of Business, but shall not include any action described in or contemplated by the Separation Agreement, the Merger Agreement or any Ancillary Agreement or that is undertaken pursuant to the Restructuring or the Distribution.

 

“Fifty-Percent or Greater Interest” has the meaning ascribed to such term for purposes of Sections 355(d) and (e) of the Code.

 

“Final Determination” means the final resolution of liability for any Tax for any taxable period, by or as a result of (a) a final decision, judgment, decree or other order by any court of competent jurisdiction that can no longer be appealed to a court other than the Supreme Court of the United States, (b) a final settlement with the IRS, a closing agreement or accepted offer in compromise under Sections 7121 or 7122 of the Code, or a comparable agreement under the Laws of other jurisdictions, which resolves the entire Tax liability for any taxable period, (c) any allowance of a refund or credit in respect of an overpayment of Tax, but only after the expiration of all periods during which such refund or credit may be recovered by the jurisdiction imposing the Tax, or (d) any other final resolution, including by reason of the expiration of the applicable statute of limitations or the execution of a pre-filing agreement with the IRS or other Taxing Authority.

 

“Group” of which a Person is a member means (i) the Starwood Group if the Person is a member of the Starwood Group, (ii) the Vistana Group if the Person is a member of the Vistana Group, and (iii) the Iris Group if the Person is a member of the Iris Group.

 

“Income Tax Return” means any Tax Return on which Income Taxes are reflected or reported.

 

“Income Taxes”  means any net income, net receipts, net profits, excess net profits or similar Taxes based upon, measured by, or calculated with respect to net income.

 

“Indemnified Party” means the Party which is entitled to seek indemnification from the other Party pursuant to the provisions of Article III.

 

“Indemnifying Party” means the Party from which the other Party is entitled to seek indemnification pursuant to the provisions of Article III.

 

“Information” has the meaning set forth in Section 7.01(a).

 

“Information Request” has the meaning set forth in Section 7.01(a).

 

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“Intended Tax Treatment” means that (a) the Contribution and Distribution, taken together, will constitute a tax-free reorganization pursuant to Sections 355 (including under Section 355(e)), 361 and 368(a)(1)(D) of the Code and the Vistana Common Stock received pursuant to the Distribution will constitute “qualified property” for purposes of Section 355(e) of the Code, (b) the Merger will constitute a tax-free reorganization pursuant to Section 368(a) of the Code, (c) the Starwood Group will recognize any loss realized by Starwood on the Steamboat Sale and, immediately before the Distribution, will take into account any loss so recognized (Section 267(f)(2)(B) and Reg. § 1.267(f)-1(c); Reg. § 1.1502-13(d)(1)(i)), and (d) the SVO Conversion will be treated as a complete liquidation within the meaning of Section 332 of the Code.

 

“Iris” has the meaning set forth in the preamble to this Agreement.

 

“Iris Group” means Iris and each of its Subsidiaries, including, after the Effective Time, the Vistana Group.

 

“IRS” means the U.S. Internal Revenue Service.

 

“IRS Ruling” means the U.S. federal Income Tax ruling issued to Starwood by the IRS in connection with the Restructuring and the Distribution and any amendment or supplement to such ruling.

 

“IRS Ruling Request” means any letter filed by Starwood with the IRS requesting a ruling regarding certain tax consequences of the Restructuring and the Distribution and any amendment or supplement to such ruling request letter.

 

“Law” means any U.S. or non-U.S. federal, national, supranational, state, provincial, local or similar statute, law, ordinance, regulation, rule, code, administrative pronouncement, order, requirement or rule of law (including common law).

 

“Merger” has the meaning set forth in the recitals to this Agreement.

 

“Merger Agreement” has the meaning set forth in the Separation Agreement.

 

“Merger Sub” has the meaning set forth in the Merger Agreement.

 

“Merger Tax Opinion” means any opinion issued by Counsel and/or other tax advisor to Starwood regarding U.S. federal Income Tax consequences of the Merger.

 

“Mixed Business Income Tax Return” means any Mixed Business Tax Return on which Income Taxes are reflected or reported.

 

“Mixed Business Tax Return” means any Tax Return (other than a Starwood Consolidated Return), including any consolidated, combined or unitary Tax Return, that reflects or reports Taxes that relate to at least one asset or activity that is part of the Starwood Business, on the one hand, and at least one asset or activity that is part of the Vistana Business, on the other hand.

 

“Notified Action” has the meaning set forth in Section 6.03(a).

 

4

 

“Opinions” means the Distribution Tax Opinion and the Merger Tax Opinion.

 

“Ordinary Course of Business” means an action taken by a Person only if such action is taken in the ordinary course of the normal operations of such Person.

 

“Party” and “Parties” have the meaning set forth in the preamble to this Agreement.

 

“Past Practice” means past practices, accounting methods, elections and conventions.

 

“Person” has the meaning set forth in the Separation Agreement.

 

“Post-Closing Period” means any taxable period (or portion thereof) beginning after the Distribution Date, including for the avoidance of doubt, the portion of any Straddle Period beginning after the Distribution Date.

 

“Pre-Closing Period” means any taxable period (or portion thereof) ending on or before the Distribution Date, including for the avoidance of doubt, the portion of any Straddle Period ending at the end of the day on the Distribution Date.

 

“Preparing Party” has the meaning set forth in Section 2.04(a)(ii).

 

“Privilege” means any privilege that may be asserted under applicable Law, including any privilege arising under or relating to the attorney-client relationship (including the attorney-client and work product privileges), the accountant-client privilege and any privilege relating to internal evaluation processes.

 

“Proposed Acquisition Transaction” means a transaction or series of transactions (or any agreement, understanding or arrangement, within the meaning of Section 355(e) of the Code and Treasury Regulation Section 1.355-7, or any other regulations promulgated thereunder, to enter into a transaction or series of transactions), whether such transaction is supported by Vistana management or shareholders, is a hostile acquisition, or otherwise, as a result of which one or more Persons would (directly or indirectly) acquire, or have the right to acquire, from Vistana and/or one or more holders of outstanding shares of Vistana capital stock, as the case may be, a number of shares of Vistana capital stock that would, when combined with any other direct or indirect changes in ownership of Vistana capital stock pertinent for purposes of Section 355(e) of the Code (including the Merger), comprise fifty percent (50%) or more of (a) the value of all outstanding shares of stock of Vistana as of the date of such transaction, or in the case of a series of transactions, the date of the last transaction of such series, or (b) the total combined voting power of all outstanding shares of voting stock of Vistana as of the date of such transaction, or in the case of a series of transactions, the date of the last transaction of such series. Notwithstanding the foregoing, a Proposed Acquisition Transaction shall not include (i) the adoption by Vistana or Iris of, or the issuance of stock pursuant to, a shareholder rights plan or (ii) issuances by Vistana that satisfy Safe Harbor VIII (relating to acquisitions in connection with a person’s performance of services) or Safe Harbor IX (relating to acquisitions by a retirement plan of an employer) of Treasury Regulation Section 1.355-7(d).  For purposes of determining whether a transaction constitutes an indirect acquisition, any recapitalization resulting in a shift of voting power or any redemption of shares of stock shall be treated as an indirect acquisition of shares of stock by the non-exchanging shareholders.  This definition and the application thereof is

 

5

 

intended to monitor compliance with Section 355(e) of the Code and shall be interpreted accordingly.  Any clarification of, or change in, the statute or regulations promulgated under Section 355(e) of the Code shall be incorporated in this definition and its interpretation.  For the avoidance of doubt, the Merger shall not constitute a Proposed Acquisition Transaction.

 

“Refund” means any refund (or credit in lieu thereof) of Taxes (including any overpayment of Taxes that can be refunded or, alternatively, applied to other Taxes payable), including any interest paid on or with respect to such refund of Taxes; provided, however, that for purposes of this Agreement, the amount of any Refund required to be paid to another Party shall be reduced by the net amount of any Income Taxes imposed on, related to, or attributable to, the receipt or accrual of such Refund.

 

“Restriction Period” has the meaning set forth in Section 6.02(b).

 

“Restructuring” has the meaning set forth in the recitals to this Agreement.

 

“Restructuring VAT” means any VAT arising pursuant to the Restructuring.

 

“Reviewing Party” has the meaning set forth in Section 2.04(a)(ii).

 

“Separation Agreement” means the Separation Agreement by and between Starwood and Vistana dated as of [·].

 

“Single Business Return” means any Tax Return including any consolidated, combined or unitary Tax Return, that reflects or reports Tax Items relating only to the Starwood Business, on the one hand, or the Vistana Business, on the other (but not both).

 

“Single Business Return Preparing Party” has the meaning set forth in Section 2.04(b).

 

“Single Business Return Reviewing Party” has the meaning set forth in Section 2.04(b).

 

“Single Business Taxes” means any U.S. federal, state or local, or foreign Taxes attributable to any Single Business Return.

 

“Starwood” has the meaning set forth in the preamble to this Agreement.

 

“Starwood Business” means any businesses currently or formerly conducted by any member of the Starwood Group, other than the Vistana Business.

 

“Starwood Consolidated Return” means the U.S. federal Income Tax Return required to be filed by Starwood as the Common Parent.

 

“Starwood Consolidated Taxes” means any U.S. federal Income Taxes attributable to any Starwood Consolidated Return.

 

“Starwood Disqualifying Action” means (a) any action (or the failure to take any action) within its control by Starwood or any Starwood Entity (including entering into any agreement, understanding or arrangement or any negotiations with respect to any transaction or series of

 

6

 

transactions) that, (b) any event (or series of events) involving, directly or indirectly, the capital stock of Starwood, any assets of Starwood or any assets of any Starwood Entity that, or (c) any breach by Starwood or any Starwood Entity of any representation, warranty or covenant made by them in this Agreement, that, in each case, would adversely affect, in whole or in part, the Intended Tax Treatment; provided, however, the term “Starwood Disqualifying Action” shall not include any action expressly required by the Separation Agreement, the Merger Agreement or any Ancillary Agreement.

 

“Starwood Entity” means any Subsidiary of Starwood immediately after the Effective Time.

 

“Starwood Group” means, individually or collectively, as the case may be, Starwood and any Starwood Entity.

 

“Starwood Taxes” means, without duplication, (a) any Starwood Consolidated Taxes, (b) any Taxes imposed on Vistana or any member of the Vistana Group under Treasury Regulations Section 1.1502-6 (or any similar provision of other Law) as a result of Vistana or any such member being or having been included as part of a Starwood Consolidated Return (or similar consolidated or combined Tax Return under any other provision of Law), (c) any Taxes of the Starwood Group and any former Subsidiary of Starwood for any Pre-Closing Period and, with respect to a Straddle Period, the portion of such period ending at the end of the day on the Distribution Date (determined in accordance with Section 2.06), (d) any Taxes attributable to a Starwood Disqualifying Action, (e) any Transaction Taxes, and (f) any Transfer Taxes, in each case other than Vistana Taxes, in each case including any Taxes resulting from an Adjustment.

 

“Straddle Period” means any taxable period that begins on or before and ends after the Distribution Date.

 

“Steamboat Sale” means the sale by Starwood of all of its membership interests in Starwood Steamboat LLC to Points of Colorado, Inc. in exchange for a portion of an intercompany receivable.

 

“Subsidiary” means, with respect to any Person (a) a corporation more than fifty percent (50%) of the voting or capital stock of which is owned, directly or indirectly, by such Person or (b) a partnership, joint venture, association, joint stock company, trust, unincorporated organization or other entity (other than any Association) in which such Person, directly or indirectly, owns more than fifty percent (50%) of the equity economic interests thereof or for which such Person, directly or indirectly, has the power to elect or direct the election of more than fifty percent (50%) of the members of the governing body or which such Person otherwise has control (e.g., as the managing partner or managing member of a partnership or limited liability company, as the case may be).

 

“SVO” means Starwood Vacation Ownership, Inc., or, if the SVO Conversion occurs,  Vistana Vacation Ownership, LLC.

 

“SVO Conversion” means (i) a conversion of SVO from a corporation to a limited liability company under Florida Law treated as a liquidation of SVO under Section 332 of the Code or (ii) other transaction treated as a liquidation of SVO under Section 332 of the Code, if any, as determined by Starwood in its discretion.

 

7

 

“Tax” means (a) all taxes, charges, fees, duties, levies, imposts, or other similar assessments, imposed by any U.S. federal, state or local or foreign governmental authority, including, but not limited to, net income, gross income, gross receipts, excise, real property, personal property, sales, use, service, service use, license, lease, capital stock, transfer, recording, franchise, business organization, occupation, premium, environmental, windfall profits, profits, customs, duties, payroll, wage, withholding, social security, employment, unemployment, insurance, severance, workers compensation, excise, stamp, alternative minimum, estimated, value added, ad valorem, hospitality, accommodations, transient accommodations, unclaimed property, escheat and other taxes, charges, fees, duties, levies, imposts, or other similar assessments, (b) any interest, penalties or additions attributable thereto and (c) all liabilities in respect of any items described in clauses (a) or (b) payable by reason of assumption, transferee or successor liability, operation of Law or Treasury Regulation Section 1.1502-6(a) (or any predecessor or successor thereof or any analogous or similar provision under Law).

 

“Tax Attributes” includes, but is not limited, to net operating losses, capital losses, tax credit carryovers, earnings and profits, foreign tax credit carryovers, overall foreign losses, previously taxed income, tax bases, separate limitation losses and any other losses, deductions, credits or other comparable items that could affect a Tax liability for a past or future taxable period.

 

“Tax Benefit” means any refund, credit, or other reduction in Tax payments otherwise required to be made to a Taxing Authority, including for the avoidance of doubt, any actual Tax savings if, as and when realized arising from a step up in Tax basis or an increase in a Tax Attribute.

 

“Tax Cost” means any increase in Tax payments otherwise required to be made to a Taxing Authority (or any reduction in any refund otherwise receivable from any Taxing Authority).

 

“Tax Group” means the members of a consolidated, combined, unitary or other tax group (determined under applicable U.S., State or foreign Income Tax law) which includes Starwood or Vistana, as the context requires,  but for the avoidance of doubt, (i) Starwood’s Tax Group does not include any members of the Vistana Group and (ii) Vistana’s Tax Group does not include any members of the Starwood Group.

 

“Tax Item” means any item of income, gain, loss, deduction, credit, recapture of credit or any other item which increases or decreases Taxes paid or payable.

 

“Tax Materials” means (a) the IRS Ruling, (b) the Opinions, (c) each submission to the IRS in connection with the IRS Ruling Request, (d) any tax representation letter addressed to Counsel supporting the Opinions, (e) any other materials delivered or deliverable by Starwood, Vistana or Iris, in connection with the rendering by Counsel of the Opinions and the issuance by the IRS of the IRS Ruling and (f) the representation letter from Vistana to the auditors who prepared the Vistana Financial Statements.

 

“Tax Matter” has the meaning set forth in Section 7.01(a).

 

“Tax Proceeding” means any audit, assessment of Taxes, pre-filing agreement, other examination by any Taxing Authority, proceeding, appeal of a proceeding or litigation relating to Taxes, whether administrative or judicial, including proceedings relating to competent authority determinations.

 

8

 

“Tax Return” means any return, report, certificate, form or similar statement or document (including any related or supporting information or schedule attached thereto and any information return, or declaration of estimated Tax) required to be supplied to, or filed with, a Taxing Authority in connection with the payment, determination, assessment or collection of any Tax or the administration of any Laws relating to any Tax and any amended Tax return or claim for refund.

 

“Taxing Authority” means any governmental authority or any subdivision, agency, commission or entity thereof or any quasi-governmental or private body having jurisdiction over the assessment, determination, collection or imposition of any Tax (including the IRS).

 

“Transaction Taxes” means any Taxes imposed on or by reason of the Restructuring (including, for the avoidance of doubt, Taxes payable by reason of the settlement of Intercompany Accounts as contemplated by Section 2.3 of the Separation Agreement) and any Taxes payable by reason of the distribution of cash or any other property from Vistana to Starwood, other than, in each case, any such Taxes caused by a Vistana Disqualifying Action.

 

“Transactions” means the Restructuring, the Distribution and the other transactions contemplated by the Separation Agreement, the Merger Agreement and the Ancillary Agreements.

 

“Transfer Taxes” means all sales, use, transfer, real property transfer, intangible, recordation, registration, documentary, stamp or similar Taxes imposed on the Restructuring or the Distribution.

 

“Treasury Regulations” means the final and temporary (but not proposed) Income Tax regulations promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations).

 

“Universal Explorer Program” means the solicitation program operated by Vistana pursuant to which potential purchasers of VOIs make advance payments of cash in exchange for an opportunity to experience some of the features of VOI ownership at one of Vistana’s resorts without a full purchase of a VOI.

 

“Unqualified Tax Opinion” means a “will” opinion, without substantive qualifications, of a nationally recognized law or accounting firm, which firm is reasonably acceptable to Starwood, to the effect that a transaction will not affect the Intended Tax Treatment.

 

“U.S.” means the United States of America.

 

“VAT” means the value added tax charged under any provision of national legislation, including but not limited to European Union Directive 2006/112/EC and charged under the provisions of any national legislation implementing that directive or European Union Directive 77/388/EEC together with legislation supplemental thereto and any similar tax in any other jurisdiction.

 

“Vistana” has the meaning set forth in the preamble to this Agreement.

 

“Vistana Business” has the meaning set forth in the Separation Agreement.

 

9

 

“Vistana Common Stock” has the meaning set forth in the Separation Agreement.

 

“Vistana Disqualifying Action” means (a) any action (or the failure to take any action) within its control by Vistana or any Vistana Entity (including entering into any agreement, understanding or arrangement or any negotiations with respect to any transaction or series of transactions) that, (b) any event (or series of events) involving, directly or indirectly, the capital stock of Vistana, any assets of Vistana or any assets of any Vistana Entity that, (c) any breach, by Vistana or any Vistana Entity of any warranty or covenant made by them in this Agreement that, or (d) any breach, by Vistana or any Vistana Entity of any representation made by them in this Agreement, with respect to any action (or failure to take any action) of Vistana or any member of the Vistana Group after the Effective Time that, in each case, would adversely affect, in whole or in part, the Intended Tax Treatment; provided, however, the term “Vistana Disqualifying Action” shall not include any action expressly required by the Separation Agreement, the Merger Agreement or any Ancillary Agreement.

 

“Vistana Employee” has the meaning set forth in Section 4.04(b).

 

“Vistana Entity” means any Subsidiary of Vistana immediately after the Effective Time.

 

“Vistana Financial Statements” has the meaning set forth in the Merger Agreement.

 

“Vistana Group” means, individually or collectively, as the case may be, Vistana and any Vistana Entity.

 

“Vistana Taxes” means, without duplication, (a) any Taxes for any Post-Closing Tax Period of (i) Starwood or any Subsidiary or former Subsidiary of Starwood attributable to assets or activities of the Vistana Business, as determined pursuant to Section 2.09 or (ii) Vistana, Iris or any Subsidiary of Vistana or Iris, (b) any Taxes attributable to a Vistana Disqualifying Action and (c) any Taxes attributable to an action taken after the Closing on the Closing Date by Vistana or a Vistana Entity outside the ordinary course of business, in each case including any Taxes resulting from an Adjustment .

 

Section 1.02                             Additional Definitions.  Capitalized terms not defined in this Agreement shall have the meaning ascribed to them in the Merger Agreement.

 

ARTICLE II

 

PREPARATION, FILING AND PAYMENT OF TAXES SHOWN DUE ON TAX RETURNS

 

Section 2.01                             Starwood Consolidated Returns.

 

(a)                       Starwood Consolidated Returns.  Starwood shall prepare and file all Starwood Consolidated Returns for a Pre-Closing Period or a Straddle Period, and shall pay all Taxes shown to be due and payable on such Tax Returns; provided that Vistana shall reimburse Starwood for any such Taxes that are Vistana Taxes.

 

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(b)                       Extraordinary Transactions.  Notwithstanding anything to the contrary in this Agreement, for all Tax purposes, the Parties shall report any Extraordinary Transactions that are caused or permitted by Vistana or any Vistana Entity on the Distribution Date after the Effective Time as occurring on the day after the Distribution Date pursuant to Treasury Regulation Section 1.1502-76(b)(1)(ii)(B) or any similar or analogous provision of state, local or foreign Law.

 

Section 2.02                             Mixed Business Tax Returns.

 

(a)                       Subject to Section 2.02(b), Starwood shall prepare (or cause a Starwood Entity to prepare) and Starwood, a Starwood Entity or Vistana shall file (or cause to be filed) any Mixed Business Tax Returns for a Pre-Closing Period or a Straddle Period and shall pay, or cause such Starwood Entity to pay, all Taxes shown to be due and payable on such Tax Returns; provided that Vistana shall reimburse Starwood for any such Taxes that are Vistana Taxes.

 

(b)                       Vistana shall prepare and file (or cause a Vistana Entity to prepare and file) any Mixed Business Tax Returns for a Pre-Closing Period or a Straddle Period required to be filed by Vistana or a Vistana Entity after the Distribution Date, and Vistana shall pay, or cause such Vistana Entity to pay, all Taxes shown to be due and payable on such Tax Returns; provided that Starwood shall reimburse Vistana for any such Taxes that are Starwood Taxes.

 

Section 2.03                             Single Business Returns.

 

(a)                       Starwood shall prepare and file (or cause a Starwood Entity to prepare and file) any Single Business Returns for a Pre-Closing Period or a Straddle Period required to be filed by Starwood or a Starwood Entity and shall pay, or cause such Starwood Entity to pay, all Taxes shown to be due and payable on such Tax Returns; provided that Vistana shall reimburse Starwood for any such Taxes that are Vistana Taxes.

 

(b)                       Vistana shall prepare and file (or cause a Vistana Entity to prepare and file) any Single Business Returns for a Pre-Closing Period or a Straddle Period required to be filed by Vistana or a Vistana Entity and shall pay, or cause such Vistana Entity to pay, all Taxes shown to be due and payable on such Tax Returns; provided that Starwood shall reimburse Vistana for any such Taxes that are Starwood Taxes.

 

Section 2.04                             Tax Return Procedures.

 

(a)                       Procedures relating to Tax Returns other than Single Business Returns.

 

(i)                         Starwood Consolidated Returns.  With respect to all Starwood Consolidated Returns for the taxable year which includes the Distribution Date, Starwood shall use the closing of the books method under Treasury Regulation Section 1.1502-76.  To the extent that the positions taken on any Starwood Consolidated Tax Return would reasonably be expected to materially adversely affect the Tax position of Vistana or a Vistana Entity for any period after the Distribution Date, Starwood shall prepare the portions of such

 

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Tax Return that relates to the Vistana Business in a manner that is consistent with Past Practice except to the extent that Starwood decides to change the method of reporting with respect to the Universal Explorer Program or unless otherwise required by applicable Law or agreed to in writing by the Parties, and shall provide a draft of such portion of such Tax Return to Vistana for its review and comment at least thirty (30) days prior to the Due Date for such Tax Return, provided, however, that nothing herein shall prevent Starwood from timely filing any such Tax Return.  In the event that Past Practice is not applicable to a particular item or matter, Starwood shall determine the reporting of such item or matter in good faith.  The Parties shall negotiate in good faith to resolve all disputed issues.  Any disputes that the Parties are unable to resolve shall be resolved by the Accounting Firm pursuant to Section 8.01.  In the event that any dispute is not resolved (whether pursuant to good faith negotiations among the Parties or by the Accounting Firm) prior to the Due Date for the filing of any such Tax Return, such Tax Return shall be timely filed by Starwood and Starwood agrees to amend such Tax Return as necessary to reflect the resolution of such dispute in a manner consistent with such resolution.

 

(ii)                      Mixed Business Tax Returns.  To the extent that the positions taken on any Mixed Business Tax Return would reasonably be expected to materially adversely affect the Tax position of the party other than the party that is required to prepare and file any such Tax Return pursuant to Section 2.02 (the “Reviewing Party”) for any period after the Distribution Date, the party required to prepare and file such Tax Return (the “Preparing Party”) shall prepare the portions of such Tax Return that relates to the business of the Reviewing Party (the Vistana Business or the Starwood Business, as the case may be) in a manner that is consistent with Past Practice unless otherwise required by applicable Law or agreed to in writing by the Parties, and shall provide a draft of such portion of such Tax Return to the Reviewing Party for its review and comment at least thirty (30) days prior to the Due Date for such Tax Return, provided, however, that nothing herein shall prevent the Preparing Party from timely filing any such Tax Return.  In the event that Past Practice is not applicable to a particular item or matter, the Preparing Party shall determine the reporting of such item or matter in good faith.  The Parties shall negotiate in good faith to resolve all disputed issues.  Any disputes that the Parties are unable to resolve shall be resolved by the Accounting Firm pursuant to Section 8.01.  In the event that any dispute is not resolved (whether pursuant to good faith negotiations among the Parties or by the Accounting Firm) prior to the Due Date for the filing of any such Tax Return, such Tax Return shall be timely filed by the Preparing Party and the Parties agree to amend such Tax Return as necessary to reflect the resolution of such dispute in a manner consistent with such resolution.

 

(b)                       Procedures relating to Single Business Returns.  The Party that is required to prepare and file any Single Business Return pursuant to Section 2.03 (the “Single Business Return Preparing Party”) which reflects Taxes which are reimbursable by the other Party (the “Single Business Return Reviewing Party”), in whole or in part, shall (x) unless otherwise required by Law or agreed to in writing by the Single Business Return Reviewing

 

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Party, prepare such Tax Return in a manner consistent with Past Practice to the extent such items affect the Taxes for which the Single Business Return Reviewing Party is responsible pursuant to this Agreement, and (y) submit to the Single Business Return Reviewing Party a draft of any such Tax Return (or to the extent practicable the portion of such Tax Return that relates to Taxes for which the Single Business Return Reviewing Party is responsible pursuant to this Agreement) along with a statement setting forth the calculation of the Tax shown due and payable on such Tax Return reimbursable by the Single Business Return Reviewing Party under Section 2.03 at least thirty (30) days prior to the Due Date for such Tax Return provided, however, that nothing herein shall prevent the Single Business Return Preparing Party from timely filing any such Single Business Return. The Parties shall negotiate in good faith to resolve all disputed issues.  Any disputes that the Parties are unable to resolve shall be resolved by the Accounting Firm pursuant to Section 8.01.  In the event that any dispute is not resolved (whether pursuant to good faith negotiations among the Parties or by the Accounting Firm) prior to the Due Date for the filing of any Single Business Return, such Single Business Return shall be timely filed by the Single Business Return Preparing Party and the Parties agree to amend such Single Business Return as necessary to reflect the resolution of such dispute in a manner consistent with such resolution.

 

(c)                        Notwithstanding anything to the contrary in this Article II, (i) the portion of any Tax Return that relates to any Taxes attributable to a Starwood Disqualifying Action shall be prepared by Starwood in the manner determined by Starwood in its sole discretion (or, if such Tax Return is required to be prepared by Vistana, be prepared by Vistana in the manner determined by Starwood in its sole discretion), and (ii) the portion of any Tax Return that relates solely to any Taxes attributable to a Vistana Disqualifying Action shall be prepared by Vistana in the manner determined by Vistana in its sole discretion or, if such Tax Return is required to be prepared by Starwood, be prepared by Starwood in the manner determined by Vistana in its sole discretion, in each case in accordance with applicable Law. For the avoidance of doubt, the foregoing sentence shall apply only to the extent that the Parties shall be aware of the Starwood Disqualifying Action or the Vistana Disqualifying Action at the time such Tax Return is prepared.

 

Section 2.05                             Amended Returns.  Except as provided in Section 2.04 to reflect the resolution of any dispute by the Accounting Firm pursuant to Section 8.01, (a) except with the prior written consent of Starwood, Vistana shall not, and shall not permit any Vistana Entity, to amend any Tax Return of Vistana or any Vistana Entity for any Pre-Closing Period or Straddle Period and (b) except with the prior written consent of Vistana, Starwood shall not, and shall not permit any Starwood Entity, to amend any Tax Return for any Pre-Closing Period or Straddle Period if the result would be to unreasonably increase any liability of Vistana under this Agreement, or to unreasonably increase any liability of Vistana or a Vistana Entity for a Post-Closing Period, in any material way.

 

Section 2.06                             Straddle Period Tax Allocation.  Starwood and Vistana shall take all actions necessary or appropriate to close the taxable year of Vistana and each Vistana Entity for all Tax purposes as of the close of the Distribution Date to the extent permissible or required under applicable Law.  If applicable Law does not require or permit Vistana or a Vistana Entity, as the case may be, to close its taxable year on the Distribution Date, then the allocation of income or deductions required to determine any Taxes or other amounts attributable to the

 

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portion of the Straddle Period ending on, or beginning after, the Distribution Date shall be made by means of a closing of the books and records of Vistana or such Vistana Entity as of the close of the Distribution Date; provided that exemptions, allowances or deductions that are calculated on an annual or periodic basis shall be allocated between such portions in proportion to the number of days in each such portion; provided, further, that real property and other property or similar periodic Taxes shall be apportioned on a per diem basis.

 

Section 2.07                             Timing of Payments.  All Taxes required to be paid or caused to be paid pursuant to this Article II by either Starwood or a Starwood Entity or Vistana or a Vistana Entity, as the case may be, to an applicable Taxing Authority or reimbursed by Starwood or Vistana to the other Party pursuant to this Agreement, shall, in the case of a payment to a Taxing Authority, be paid on or before the Due Date for the payment of such Taxes and, in the case of a reimbursement to the other Party, be paid at least two (2) business days before the Due Date for the payment of such Taxes by the other Party; provided that the Party seeking reimbursement shall furnish such other Party reasonably satisfactory documentation setting forth the basis for, and calculation of, the amount of such reimbursement obligation.

 

Section 2.08                             Expenses.  Except as provided in Section 8.01 in respect of the Accounting Firm, each Party shall bear its own expenses incurred in connection with this Article II.

 

Section 2.09                             Apportionment of Vistana Taxes.  For all purposes of this Agreement, but subject to Section 4.03, Starwood and Iris shall jointly determine in good faith which Tax Items are properly attributable to assets or activities of the Vistana Business (and in the case of a Tax Item that is properly attributable to both the Vistana Business and the Starwood Business, the allocation of such Tax Item between the Vistana Business and the Starwood Business) in a manner consistent with the provisions of this Agreement and any disputes shall be resolved by the Accounting Firm in accordance with Section 8.01.

 

ARTICLE III

 

INDEMNIFICATION

 

Section 3.01                             Indemnification by Starwood.  Subject to Section 3.03, Starwood shall pay, and shall indemnify and hold Vistana harmless from and against, without duplication, (a) all Starwood Taxes, (b) all Taxes incurred by Vistana or any Vistana Entity by reason of the breach by Starwood or any member of the Starwood Group of any of its representations, warranties or covenants hereunder, and (c) any costs and expenses related to the foregoing (including reasonable attorneys’ fees and expenses).

 

Section 3.02                             Indemnification by Vistana.  Subject to Section 3.03, Vistana shall pay, and shall indemnify and hold Starwood harmless from and against, without duplication, (a) all Vistana Taxes, (b) all Taxes incurred by Starwood or any Starwood Entity by reason of the breach by Vistana or any member of the Vistana Group of any of its warranties or covenants hereunder, (c) all Taxes incurred by Starwood or any Starwood Entity by reason of the breach by Vistana or any member of the Vistana Group of any of its representations hereunder with respect to any action (or failure to take any action) of Vistana or any member of the Vistana Group after

 

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the Effective Time, and (d) any costs and expenses related to the foregoing (including reasonable attorneys’ fees and expenses).

 

Section 3.03                             Characterization of and Adjustments to Payments.

 

(a)                       For all Tax purposes, Starwood and Vistana agree to treat any payment required by this Agreement (other than payments with respect to interest accruing after the Distribution Date) as either a contribution by Starwood to Vistana or a distribution by Vistana to Starwood, as the case may be, occurring immediately prior to the Distribution Date.

 

(b)                       Notwithstanding the foregoing, the amount that any Indemnifying Party is or may be required to provide indemnification to or on behalf of any Indemnified Party pursuant to Article III of this Agreement shall be (i) decreased to take into account the actual Tax Benefit to the Indemnified Party (or any of its affiliates) arising from the incurrence or payment of the relevant indemnified item (which Tax Benefit would not have arisen or been allowable but for such indemnified item), and (ii) increased to take into account any actual Tax Cost of the Indemnified Party (or any of its affiliates) arising from the receipt of the relevant indemnity payment (but taking into account any actual offsetting Tax Benefits resulting from the payment of such Tax Cost). The Parties shall use their reasonable best efforts to agree on a one-time estimate of future Tax Costs and Tax Benefits under this paragraph and will make payment accordingly, and any such agreement will be final and conclusive.  To the extent the Parties fail to reach agreement, any disagreement shall be resolved pursuant to Section 8.01 hereof.

 

Section 3.04                             Timing of Indemnification Payments.  Indemnification payments in respect of any liabilities for which an Indemnified Party is entitled to indemnification pursuant to this Article III shall be paid by the Indemnifying Party to the Indemnified Party within ten (10) days after written notification thereof by the Indemnified Party, including reasonably satisfactory documentation setting forth the basis for, and calculation of, the amount of such indemnification payment, or within ten (10) days after resolution pursuant to Section 8.01.

 

Section 3.05                             Indemnification Payments under Ancillary Agreements. To the extent that an indemnification payment is made under any Ancillary Agreement, such indemnification payment shall be decreased to take into account the Tax Benefit actually realized (whether directly or indirectly) by the indemnified party and increased to take into account any Tax Cost actually incurred (whether directly or indirectly) by the indemnified party under principles analogous to the principles described in Section 3.03 hereof.

 

ARTICLE IV

 

REFUNDS, CARRYBACKS, TIMING DIFFERENCE AND TAX ATTRIBUTES

 

Section 4.01                             Refunds and Credits.

 

(a)                       Except as provided in Section 4.02, Starwood shall be entitled to all Refunds of Taxes for which Starwood is responsible pursuant to Article III, and Vistana shall be entitled to all Refunds of Taxes for which Vistana is responsible pursuant to Article III.  For the avoidance of doubt, to the extent that a particular Refund of Taxes may be allocable to a Straddle Period with respect to which the Parties may share responsibility pursuant to Article III, the

 

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portion of such Refund to which each Party will be entitled shall be determined by comparing the amount of payments made by a Party (or any of member of such Party’s Group) to a Taxing Authority or to the other Party (and reduced by the amount of payments received from the other Party) pursuant to Articles II and III hereof with the Tax liability of such Party as determined under Section 2.06, taking into account the facts as utilized for purposes of claiming such Refund.  If a Party (or any member of its Tax Group) receives a Refund to which the other Party is entitled pursuant to this Agreement, such Party shall pay the amount to which such other Party is entitled within ten (10) days after the receipt of the Refund.

 

(b)                       In the event of an Adjustment relating to Taxes for which one Party is responsible pursuant to Article III which would have given rise to a Refund but for an offset against the Taxes for which the other Party (or a member of its Tax Group) is or may be responsible pursuant to Article III (the “Benefited Party”), then the Benefited Party shall pay to the other Party, within ten (10) days of the Final Determination of such Adjustment an amount equal to the amount of such reduction in the Taxes of the Benefited Party (or such Tax Group member) plus interest at the rate set forth in Section 6621(a)(1) on such amount for the period from the filing date of the Tax Return that would have given rise to such Refund to the payment date.

 

(c)                        Notwithstanding Section 4.01(a), to the extent that a Party (or any member of its Tax Group) applies or causes to be applied an overpayment of Taxes as a credit toward or a reduction in Taxes otherwise payable (or a Taxing Authority requires such application in lieu of a Refund) and such overpayment of Taxes, if received as a Refund, would have been payable by such Party to the other Party pursuant to this Section 4.01, such Party shall pay such amount to the other Party no later than the Due Date of the Tax Return for which such overpayment is applied to reduce Taxes otherwise payable.

 

(d)                       If Vistana or any member of its Tax Group receives a Refund attributable to Restructuring VAT, or otherwise utilizes the benefits of a payment of Restructuring VAT (including by way of credit), Vistana shall pay, or cause to be paid, to Starwood, within ten (10) days of the receipt of any such Refund or the filing of the Tax Return utilizing any such benefit the amount of such Restructuring VAT to the extent of such Refund, credit or other benefit.  Vistana agrees to claim, and to cause members of its Tax Group to claim, any refund, offset, credit or other allowance attributable to Restructuring VAT as soon as reasonably possible and to furnish to Starwood at Starwood’s request all information, records and assistance reasonably necessary to verify the amount of any such refund, offset, credit or other allowance.

 

(e)                        To the extent that the amount of any Refund under this Section 4.01 is later reduced by a Taxing Authority or in a Tax Proceeding, such reduction shall be allocated to the Party to which such Refund was allocated pursuant to this Section 4.01 and an appropriate adjusting payment shall be made.

 

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Section 4.02                             Carrybacks.

 

(a)                       The carryback of any loss, credit or other Tax Attribute from any Post-Closing Period shall be in accordance with the provisions of the Code and Treasury Regulations (and any applicable state, local or foreign Laws).

 

(b)                       Except to the extent otherwise consented to by Starwood or prohibited by applicable Law, Vistana (or the appropriate member of its Tax Group) shall elect to relinquish, waive or otherwise forgo the carryback of any loss, credit or other Tax Attribute from any Post-Closing Period to any Pre-Closing Period or Straddle Period with respect to members of the Vistana Group (a “Carryback”).  In the event that Vistana (or the appropriate member of its Tax Group) is prohibited by applicable Law to relinquish, waive or otherwise forgo a Carryback (or Starwood consents to a Carryback), Starwood shall cooperate with Vistana, at Vistana’s expense, in seeking from the appropriate Taxing Authority such Refund as reasonably would result from such Carryback, to the extent that such Refund is directly attributable to such Carryback, and shall pay over to Vistana the amount of such Refund, net of any Taxes imposed on the receipt of such Refund, within ten (10) days after such Refund is received; provided, however, that Vistana shall indemnify and hold the members of Starwood’s Tax Group harmless from and against any and all collateral Tax consequences and reasonable out of pocket expenses resulting from or caused by any such Carryback, including, for the avoidance of doubt, Taxes (including any penalties, interest or other charges imposed by the relevant Taxing Authority) resulting from the Final Determination of an Adjustment that results in the disallowance of or adjustment to the amount of any Carryback under this Section 4.02, and including, without limitation, the loss or postponement of any benefit from the use of Tax Attributes generated by a member of Starwood’s Tax Group if (i) such Tax Attributes expire unutilized, but would have been utilized but for such Carryback, or (ii) the use of such Tax Attributes is postponed to a later taxable period than the taxable period in which such Tax Attributes would have been utilized but for such Carryback and shall pay Starwood such amounts within ten (10) days after written notification thereof by Starwood, including reasonably satisfactory documentation setting forth the basis for, and calculation of, the amount of such Tax consequences and expenses, or within ten (10) days after resolution pursuant to Section 8.01.

 

Section 4.03                             Tax Attributes; E&P.

 

(a)                       Subject to Section 4.03(c), as soon as reasonably practicable after the Effective Time, Starwood shall reasonably determine in good faith the allocation of Tax Attributes arising in a Pre-Closing Period to the Starwood Group and the Vistana Group in accordance with the Code and Treasury Regulations including (i) in the case of Tax Attributes other than earnings and profits, Treasury Regulations Sections 1.1502-9T(c), 1.1502-21, 1.1502-21T, 1.1502-22, 1.1502-79 and, if applicable, 1.1502-79A (and any applicable state, local and foreign Tax Laws), and (ii) in the case of earnings and profits, in accordance with Code Section 312(h) and Treasury Regulations Section 1.312-10(a). Subject to the preceding sentence, Starwood shall be entitled to make any determination as to (A) basis, and (B) valuation, and shall make such determinations reasonably and in good faith and consistent with Past Practice, where applicable.  Starwood shall consult in good faith with Vistana regarding such allocation of Tax Attributes and determinations as to basis and valuation, and shall consider in good faith any reasonable comments received in writing from Vistana regarding such allocation and determinations.  Starwood and Vistana hereby agree to compute all Taxes for Post-Closing

 

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Periods consistently with the determination of the allocation of Tax Attributes pursuant to this Section 4.03(a) unless otherwise required by a Final Determination.

 

(b)                       To the extent that the amount of any Tax Attribute is later reduced or increased by a Taxing Authority or Tax Proceeding, such reduction or increase shall be allocated to the Party to which such Tax Attribute was allocated pursuant to Section 4.03(a).

 

(c)                        Upon the written request of Vistana, Starwood shall provide Vistana, within six (6) months of receipt of such request or as soon as reasonably practicable thereafter, an allocation of earnings and profits (“E&P”) between Starwood and Vistana, and Starwood shall allocate such E&P in accordance with Section 1.312-10(a) of the Treasury Regulations, and such allocation shall control for Tax periods beginning after the Distribution Date; provided however, that (i) Starwood shall provide Vistana a reasonable opportunity to review, and provide written comments to, such allocation of E&P, including an E&P study if an E&P study is conducted, and shall consider in good faith the reasonable comments made by Vistana and (ii) as reasonably requested by Vistana, Starwood shall provide Vistana with copies of any workpapers or other documentation that are used in connection with determining the allocations and/or reductions of E&P, including a final copy of any E&P study conducted and prepared in connection therewith.

 

Section 4.04                             Treatment of Deductions Associated with Equity-Related Compensation.

 

(a)                       Unless otherwise prohibited by applicable Law, from and after the Distribution Date, (i) solely Starwood or any member of the Starwood Group, as the case may be, shall be entitled to claim any Tax deduction associated with (A) the exercise in any taxable period of any Starwood stock options, stock appreciation rights or any other equity award in respect of Starwood stock (“SW Equity Award”) by any Vistana Employee, (B) any cash payment made by Starwood to any Vistana Employee in respect of any SW Equity Award and (C) any other cash payments by Starwood (or for which Starwood or any member of the Starwood Group is economically responsible under the Transaction Documents) to a Vistana Employee, including any annual bonuses payable in 2016, and (ii) solely Iris or any member of the Iris Group, as the case may be, shall be entitled to claim any Tax deduction associated with (A) the exercise in any taxable period of any Iris stock option, stock appreciation rights or other equity award in respect of any Iris stock (“Iris Equity Award”) by any Vistana Employee into which a SW Equity Award is converted pursuant to the Employees Matters Agreement, (B) any cash payment made to any Vistana Employee after the Distribution Date in respect of any Iris Equity Award and (C) any other cash payments to a Vistana Employee for which Iris or any member of the Iris Group is economically responsible under the Transaction Documents.

 

(b)                       “Vistana Employee” means any person employed or formerly employed by any member of the Vistana Group at the time of the exercise, vesting, settlement disqualifying disposition or payment, as appropriate.

 

(c)                        To the extent under applicable law a Party or a member of such Party’s Tax Group is unable to claim any of the Tax deductions in Section 4.04(a) and the other Party or a member of such other Party’s Tax Group obtains a Tax deduction or a Tax Benefit in

 

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respect of a Tax period for which such other Party is responsible for Taxes, then such other Party shall make a cash payment to the first Party in an amount equal to the reduction in Taxes otherwise required to be paid as a result of such Tax deduction or Tax Benefit.

 

Section 4.05                             Timing Differences. If pursuant to a Final Determination an Adjustment (i) increases the amount of liability for any Taxes for which a member of the Starwood Group is responsible hereunder and a Tax Benefit is made allowable to Vistana or a member of its Tax Group for any Tax period after the Effective Time, which Tax Benefit would not have arisen or been allowable but for such Adjustment, and which Tax Benefit reduces Taxes in respect of a Tax period for which Vistana or a member of its Tax Group is liable (and for which no member of the Starwood Group is liable) or (ii) increases the amount of liability for any Taxes for which a member of the Vistana Group is responsible hereunder and a Tax Benefit is made allowable to Starwood or a member of its Tax Group for any Tax period prior to the Effective Time, which Tax Benefit would not have arisen or been allowable but for such Adjustment, and which Tax Benefit reduces Taxes in respect of a Tax period which Starwood or a member of its Tax Group is liable (and for which no member of the Vistana Group is liable), then Vistana or Starwood, as the case may be, shall make a payment to either Starwood or Vistana, as appropriate, within thirty (30) days of the date that such paying Party (or any of its Tax Group members) actually receives such Tax Benefit (determined by comparing its (and its Tax Group members’) Tax liability with and without the Tax consequences of the Adjustment), which payment shall not exceed the increase in the amount of liability for any Taxes resulting from such Adjustment, for which a member of the Starwood Group or Vistana Group, as the case may be, is responsible hereunder.

 

Section 4.06                             Section 336(e) Election.

 

(a)                       Pursuant to Treasury Regulation Sections 1.336-2(h)(1) and 1.336-2(j), Starwood shall make a timely actual or protective election (as shall be appropriate) under Section 336(e) of the Code and the Treasury Regulations issued thereunder for Vistana and any other Vistana Entity for which Starwood determines to make an election with respect to the Distribution (a “Section 336(e) Election”).  It is intended that a Section 336(e) Election will have no effect unless the Distribution is a “qualified stock disposition,” as defined in Treasury Regulation Section 1.336-1(b)(6), if as determined by Starwood in good faith (a) the Distribution is not a transaction described in Treasury Regulation Section 1.336-1(b)(5)(i)(B) or (b) Treasury Regulation Section 1.336-1(b)(5)(ii) applies to the Distribution.  Starwood, Iris,  and Vistana shall cooperate in making the Section 336(e) Election, including filing any statements, amending any Tax Returns or taking such other action reasonably necessary to carry out the Section 336(e) Election.  For the avoidance of doubt, this Agreement is intended to constitute a written, binding agreement to make such Section 336(e) Election within the meaning of Treasury Regulation Section 1.336-2(h)(1)(i).  Starwood shall provide Vistana with a proposed determination of the “Aggregate Deemed Asset Disposition Price” and the “Adjusted Grossed-Up Basis” (each as defined under applicable Treasury Regulations) and the allocation of such Aggregate Deemed Asset Disposition Price and Adjusted Grossed-Up Basis among the disposition date assets of Vistana and its subsidiaries, each in accordance with the applicable provisions of Section 336(e) of the Code and applicable Treasury Regulations (the “Section 336(e) Allocation Statement”).  Within thirty (30) days after Vistana’s receipt of the Section 336(e) Allocation Statement, Vistana may provide comments to Starwood to the Section 336(e) Allocation Statement and

 

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Starwood shall consider such comments in good faith; provided, however, that Starwood may not reject any such Vistana comment if such rejection would materially adversely affect Vistana without Vistana’s consent, which consent may not be unreasonably withheld, delayed or conditioned (taking into account the rights and obligations under this Agreement), provided, however, that if Starwood may not reject any such comment pursuant to this sentence then the Parties shall work together in good faith and any remaining disagreement with respect to such comment shall be resolved pursuant to Section 8.01.  No member of the Iris Group or the Vistana Group shall take any position inconsistent with the Section 336(e) Election including the Section 336(e) Allocation Statement except as may be required by a Final Determination.

 

(b)                       If Starwood files a Tax Return reflecting the position that, or there is a Final Determination that, the Distribution fails to qualify as a Tax-free spin-off under Sections 368(a)(1)(D) and 355 of the Code, including taxation even if only by reason of the application of Section 355(e) of the Code to the Distribution, and Starwood or any member of the Starwood Group is liable for Taxes as a result therefrom, then any Tax Benefit actually realized by Vistana or any member of its Tax Group as a result of the Section 336(e) Election for any Tax period after the Effective Time, whether by virtue of an increase in the Tax basis in such member’s assets or otherwise, shall be paid by Vistana to Starwood within thirty (30) days of the date that Vistana or any member of its Tax Group actually receives such Tax Benefit.

 

Section 4.07                             SVO Conversion.  Starwood may, in its discretion, submit an IRS Ruling Request to the IRS regarding an SVO Conversion.  In such event, Iris shall use commercially reasonable efforts to assist Starwood in obtaining the ruling.  If the SVO Conversion is not effected, whether because such ruling is not obtained or because Starwood in its discretion decides not to convert SVO to a limited liability company and/or effect the SVO Conversion, Iris will pay Starwood an amount equal to eighty-five percent (85%) of any Tax Benefit actually realized (in any period , provided that such Tax Benefit reduces Taxes for which Vistana, and not Starwood, is responsible hereunder) by Vistana or any member of its Tax Group as a result of SVO not being treated as liquidating for U.S. federal Income Tax purposes (including, without limitation, any Tax Benefits relating to losses in respect of a Tax election to treat Westin SVO Los Cabos, S. de R.L. de CV as a partnership for U.S. federal Income Tax purposes and in respect of any transfer of the stock of Caledonia Properties N.V. and Caledonia Development R Management) within thirty (30) days of the date that Vistana or any member of its Tax Group actually receives such Tax Benefit. The amount of such Tax Benefit shall be the amount by which (i) the Vistana Group’s actual Tax liability (treating SVO as a corporation for U.S. federal Income Tax purposes before and immediately after the Distribution Date) is less than (ii) the Tax liability the Vistana Group would have incurred had SVO “liquidated” (within the meaning and as determined for purposes of Section 332 of the Code) prior to the Distribution Date and such “liquidation” of SVO had been respected for U.S. federal Income Tax purposes.

 

Section 4.08                             Tax Benefit Determinations.  Notwithstanding anything herein to the contrary, if and to the extent a Party owns, directly or indirectly, less than 100% of the equity of any entity and as a result of such less-than-100% ownership interest in the entity such entity is not a member of the Party’s Tax Group, then the amount of the Tax Benefit payment under Article IV shall be appropriately adjusted to take into account the percentage ownership (based on value) of any such entity, and shall be determined and due and owing even if such entity is not a member of the Tax Group of a Party.

 

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Section 4.09                             Supporting Documentation.  If a Party seeks any payment from the other Party pursuant to Article IV, the requesting Party shall furnish such other Party reasonably satisfactory documentation setting forth the basis for, and the calculation of, the amount of such payment obligation.   If such other Party disagrees with the determination of the amount of the payment obligation set forth therein, any disputes shall be resolved by the Accounting Firm in accordance with Section 8.01

 

ARTICLE V

 

TAX PROCEEDINGS

 

Section 5.01                             Notification of Tax Proceedings.  Within ten (10) days after an Indemnified Party becomes aware of the commencement of a Tax Proceeding that may give rise to Taxes for which an Indemnifying Party is responsible pursuant to Article III, such Indemnified Party shall notify the Indemnifying Party of such Tax Proceeding, and thereafter shall promptly forward or make available to the Indemnifying Party copies of notices and communications relating to such Tax Proceeding.  The failure of the Indemnified Party to notify the Indemnifying Party of the commencement of any such Tax Proceeding within such ten (10) day period or promptly forward any further notices or communications shall not relieve the Indemnifying Party of any obligation which it may have to the Indemnified Party under this Agreement except to the extent that the Indemnifying Party is materially prejudiced by such failure.

 

Section 5.02                             Tax Proceeding Procedures Generally.

 

(a)                       Tax Proceedings relating to Starwood Consolidated Returns.  Except as provided in Section 5.03, Starwood shall be entitled to contest, compromise, control and settle any adjustment or deficiency proposed, asserted or assessed pursuant to any Tax Proceeding with respect to any Starwood Consolidated Return; provided that to the extent such Tax Proceeding could materially adversely affect the amount of Taxes for which Vistana is responsible pursuant to Article III less the amount payable to Vistana pursuant to Section 4.05, Starwood shall (i) defend such Tax Proceeding diligently and in good faith and (ii) shall keep Vistana informed in a timely manner of all actions proposed to be taken by Starwood with respect to such Tax Proceeding (or to the extent practicable the portion of such Tax Proceeding that relates to Taxes for which Vistana is responsible pursuant to Article III), (C) shall permit Vistana to participate in all proceedings with respect to such tax Proceeding (or to the extent practicable the portion of such Tax Proceeding that relates to Taxes for which Vistana is responsible pursuant to Article III), and (D) shall not settle any such Tax Proceeding without the prior written consent of Vistana, which shall not be unreasonably withheld, conditioned or delayed provided that Starwood may settle any such Tax Proceeding in its sole discretion without the prior written consent of Vistana if Starwood agrees to indemnify Vistana for the incremental Taxes for which Vistana is responsible as a result of the Tax Proceeding.

 

(b)                       Tax Proceedings relating to Mixed Business Returns.  Except as provided in Section 5.03, with respect to any Mixed Business Tax Return, the Preparing Party shall be entitled to contest, compromise, control and settle any adjustment or deficiency proposed, asserted or assessed pursuant to any Tax Proceeding with respect to any Mixed Business Tax Return; provided that to the extent such Tax Proceeding could materially adversely

 

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affect the amount of Taxes for which the Reviewing Party is responsible pursuant to Article III, the Preparing Party shall (A) defend such Tax Proceeding diligently and in good faith, (B) shall keep the Reviewing Party informed in a timely manner of all actions proposed to be taken by the Preparing Party with respect to such Tax Proceeding (or to the extent practicable the portion of such Tax Proceeding that relates to Taxes for which the Reviewing Party is responsible pursuant to Article III), (C) shall permit the Reviewing Party to participate in all proceedings with respect to such Tax Proceeding (or to the extent practicable the portion of such Tax Proceeding that relates to Taxes for which the Reviewing Party is responsible pursuant to Article III), and (D) shall not settle any such Tax Proceeding without the prior written consent of the Reviewing Party, which shall not be unreasonably withheld, conditioned or delayed.

 

(c)                        Tax Proceedings relating to Single Business Returns.  Except as provided in Section 5.03, the Indemnifying Party shall be entitled to contest, compromise, control and settle any adjustment or deficiency proposed, asserted or assessed pursuant to any Tax Proceeding with respect to any Single Business Return for which the Indemnifying Party is responsible pursuant to Article III and any such defense shall be made diligently and in good faith; provided, that the Indemnifying Party shall keep the Indemnified Party informed in a timely manner of all actions proposed to be taken by the Indemnifying Party and shall permit the Indemnified Party to participate in all proceedings with respect to such Tax Proceeding.

 

Section 5.03                             Tax Proceedings in respect of Disqualifying Actions.

 

(a)                       If Vistana has acknowledged in writing its liability for all of the Taxes in the event of an adverse determination with respect to the proposed, asserted, or assessed adjustment or deficiency, Vistana shall be entitled to contest, compromise, control and settle any adjustment or deficiency proposed, asserted or assessed pursuant to any Tax Proceeding relating to any Taxes attributable to a Vistana Disqualifying Action; provided, that Vistana shall keep Starwood informed in a timely manner of all actions proposed to be taken by Vistana and provided further that to the extent such Tax Proceeding could materially adversely affect the amount of Taxes for which Starwood is responsible pursuant to Article III, Vistana shall not settle any such Tax Proceeding without the prior written consent of Starwood, which shall not be unreasonably withheld, conditioned or delayed; provided that Vistana may settle any such Tax Proceeding in its sole discretion without the prior written consent of Starwood if Vistana agrees to indemnify Starwood for the incremental Taxes for which Starwood is responsible arising as a result of the Tax Proceeding.

 

(b)                       Subject to Section 5.03(a), Starwood shall be entitled to contest, compromise, control and settle any adjustment or deficiency proposed, asserted or assessed pursuant to any Tax Proceeding relating to any Taxes attributable to a Disqualifying Action; provided, that Starwood shall keep Vistana informed in a timely manner of all actions proposed to be taken by Starwood and provided further that to the extent such Tax Proceeding could materially adversely affect the amount of Taxes for which Vistana is responsible pursuant to Article III, Starwood shall not settle any such Tax Proceeding without the prior written consent of Vistana, which shall not be unreasonably withheld, conditioned or delayed provided that Starwood may settle any such Tax Proceeding in its sole discretion without the prior written consent of Vistana if Starwood agrees to indemnify Vistana for the incremental Taxes for which Vistana is responsible arising as a result of the Tax Proceeding.

 

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ARTICLE VI

 

TAX-FREE STATUS OF THE DISTRIBUTION

 

Section 6.01                             Representations and Warranties.

 

(a)                       Vistana.  Vistana hereby represents and warrants or covenants and agrees, as appropriate, that the facts presented and the representations made in the Tax Materials, to the extent they both (i) are descriptive of the Vistana Group (including the business purposes for the Distribution described in the Tax Materials to the extent that they relate to the Vistana Group and the plans, proposals, intentions and policies of the Vistana Group after the Effective Time), and (ii) relate to the actions or non-actions of the Vistana Group to be taken (or not taken, as the case may be) after the Effective Time, are, or will be from the time presented or made through and including the Effective Time (and thereafter as relevant) true, correct and complete in all respects.  Iris hereby represents and warrants or covenants and agrees, as appropriate, that the facts presented and the representations made in the Tax Materials, with the consent of Iris, to the extent descriptive of the Iris Group at any time (including the plans, proposals, intentions and policies of the Iris Group at any time) are, or will be from the time presented or made through and including the Effective Time (and thereafter as relevant), true, correct and complete in all respects.

 

(b)                       Starwood.  Starwood hereby represents and warrants or covenants and agrees, as appropriate, that (i) it has, to the extent available, delivered or will deliver complete and accurate copies of the Tax Materials to Vistana and Iris and (ii) the facts presented and the representations made therein, to the extent descriptive of (A) the Starwood Group at any time or (B) the Vistana Group at any time at or prior to the Effective Time (including, in each case, (x) the business purposes for the Distribution described in the Tax Materials to the extent that they relate to the Starwood Group at any time or the Vistana Group at any time at or prior to the Effective Time, and (y) the plans, proposals, intentions and policies of the Starwood Group at any time or the Vistana Group at any time at or prior to the Effective Time), are, or will be from the time presented or made through and including the Effective Time (and thereafter as relevant) true, correct and complete in all respects.

 

(c)                        No Contrary Plan.  Each of Starwood and Vistana represents and warrants that neither it, nor any of its Subsidiaries, has any plan or intent to take any action which is inconsistent with any statements or representations made in the Tax Materials.

 

Section 6.02                             Restrictions Relating to the Distribution.

 

(a)                       General.  Vistana shall not, and shall not permit, any Vistana Entity to take or fail to take, as applicable, any action that constitutes a Vistana Disqualifying Action.

 

(b)                       Restrictions.  Prior to the first day following the second anniversary of the Distribution (the “Restriction Period”), Vistana:

 

(i)                         shall continue and cause to be continued the active conduct of the Vistana Business (as defined in Section 355(b)(2) of the Code), taking into account Section 355(b)(3) of the Code;

 

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(ii)                      shall not dissolve or liquidate itself or any Vistana Entity (including any action that is a liquidation for federal Income Tax purposes);

 

(iii)                   shall not and shall not permit any Vistana Entity to  (1) enter into any Proposed Acquisition Transaction or, to the extent Vistana has the right to prohibit any Proposed Acquisition Transaction, permit any Proposed Acquisition Transaction to occur, (2) redeem or otherwise repurchase (directly or through a Subsidiary) any stock, or rights to acquire stock, other than repurchases satisfying the requirements of Section 4.05(1)(b) of Revenue Procedure 96-30, 1996-1 C.B. 696 (as in effect prior to the release of Revenue Procedure 2003-48, 2003-2 C.B. 86), (3) amend its certificate of incorporation (or other organizational documents), or take any other action, whether through a stockholder vote or otherwise, affecting the relative voting rights of its capital stock (including through the conversion of any capital stock into another class of capital stock), (4) merge or consolidate with any other Person (other than pursuant to the Merger) or (5) take any other action or actions (including any action or transaction that would be reasonably likely to be inconsistent with, or cause to be untrue, any information, statement, representation, undertaking or covenant made in the Tax Materials) which in the aggregate (and taking into account the Merger and any other transactions described in this Section 6.02(b)(iii)) would, when combined with any other direct or indirect changes in ownership of Vistana capital stock pertinent for purposes of Section 355(e) of the Code (including the Merger), have the effect of causing or permitting one or more Persons (whether or not acting in concert) to acquire directly or indirectly stock representing a Fifty-Percent or Greater Interest in Vistana or would reasonably be expected to result in a failure to preserve the Intended Tax Treatment; and

 

(iv)                  shall not, and shall not permit any member of the Vistana Group, to sell, transfer, or otherwise dispose of or agree to, sell, transfer or otherwise dispose (including in any transaction treated for federal Income Tax purposes as a sale, transfer or disposition) of assets (including, any shares of capital stock of a Subsidiary) that, in the aggregate, constitute more than twenty-five percent (25%) of the consolidated gross assets of Vistana or the Vistana Group.  The foregoing sentence shall not apply to (1) sales, transfers, or dispositions of assets in the Ordinary Course of Business, (2) any cash paid to acquire assets from an unrelated Person in an arm’s-length transaction, (3) any assets transferred to a Person that is disregarded as an entity separate from the transferor for federal Income Tax purposes or (4) any mandatory or optional repayment (or pre-payment) of any indebtedness of Vistana or any member of the Vistana Group.  The percentages of gross assets or consolidated gross assets of Vistana or the Vistana Group, as the case may be, sold, transferred, or otherwise disposed of, shall be based on the fair market value of the gross assets of Vistana and the members of the Vistana Group as of the Distribution Date.  For purposes of this Section 6.02(b)(iv), a merger of Vistana or one of its Subsidiaries with and into any Person that is not a wholly owned Subsidiary of Vistana or Iris shall constitute a disposition of all of the assets of Vistana or such Subsidiary.

 

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(c)                        Notwithstanding the restrictions imposed by Section 6.02(b), during the Restriction Period, Vistana may proceed with any of the actions or transactions described therein, if (i) Vistana shall first have requested Starwood to obtain a ruling in accordance with Section 6.03(a) to the effect that such action or transaction will not affect the Intended Tax Treatment and Starwood shall have received such a ruling in form and substance reasonably satisfactory to it, (ii) Vistana shall have provided to Starwood an Unqualified Tax Opinion in form and substance reasonably satisfactory to Starwood, or (iii) Starwood shall have waived in writing the requirement to obtain such ruling or opinion.  For the avoidance of doubt, the presence of a ruling, an Unqualified Tax Opinion or a waiver from Starwood shall not relieve Vistana from indemnification obligations otherwise present under Article III of this Agreement.  In determining whether a ruling or opinion is satisfactory, Starwood may consider, among other factors, the appropriateness of any underlying assumptions, representations or covenants used as a basis for the ruling or opinion and the views on the substantive merits.

 

(d)                       Tax Reporting.  Each of Starwood and Vistana covenants and agrees that it will not take, and will cause its respective Subsidiaries to refrain from taking, any position on any Tax Return that is inconsistent with the Intended Tax Treatment.

 

(e)                        For the avoidance of the doubt, notwithstanding the restrictions set forth in this Section 6.02, (i) Vistana shall be permitted to enter into the Merger and (ii) Vistana may adopt or modify a shareholder rights plan (and issue stock in accordance therewith) that is described in or similar to the shareholder rights plan described in Revenue Ruling 90-11, 1990-1 C.B. 10.

 

Section 6.03                             Procedures Regarding Opinions and Rulings.

 

(a)                       If Vistana notifies Starwood that it desires to take one of the actions described in Section 6.02(b) (a “Notified Action”), Starwood shall cooperate with Vistana and use its reasonable best efforts to seek to obtain a ruling from the IRS or an Unqualified Tax Opinion for the purpose of permitting Vistana to take the Notified Action unless Starwood shall have waived the requirement to obtain such ruling or opinion.  If such a ruling is to be sought, Starwood shall apply for such ruling and Starwood and Vistana shall jointly control the process of obtaining such ruling.  In no event shall Starwood be required to file any ruling request under this Section 6.03(a) unless Vistana represents that (i) it has read such ruling request, (ii) agrees to all representations contained in such ruling request and (iii) all information and representations, if any, relating to any member of the Vistana Group, contained in such ruling request documents are (subject to any qualifications therein) true, correct and complete.  Vistana shall reimburse Starwood for all reasonable costs and expenses incurred by the Starwood Group in obtaining or seeking to obtain a ruling or Unqualified Tax Opinion requested by Vistana within ten (10) days after receiving an invoice from Starwood therefor.

 

(b)                       Starwood shall have the right to obtain a ruling or an Unqualified Tax Opinion at any time in its sole and absolute discretion.  If Starwood determines to obtain such ruling or opinion, Vistana shall (and shall cause each Vistana Entity to) cooperate with Starwood and take any and all actions reasonably requested by Starwood in connection with obtaining such ruling or opinion (including by making any representation or reasonable covenant or providing any materials requested by the IRS or the law firm issuing such opinion); provided,

 

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that Vistana shall not be required to make (or cause a Vistana Entity to make) any representation or covenant that is untrue or inconsistent with historical facts, or as to future matters or events over which it has no control.  In connection with obtaining such ruling, Starwood shall apply for such ruling and shall have sole and exclusive control over the process of obtaining such ruling.  Starwood shall reimburse Vistana for all reasonable costs and expenses incurred by the Vistana Group in cooperating with Starwood’s efforts to obtain a ruling or Unqualified Tax Opinion within ten (10) days after receiving an invoice from Vistana therefor.

 

(c)                        Except as provided in Sections 6.03(a) and (b), following the Effective Time, neither Vistana nor any Vistana Subsidiary shall seek any guidance from, initiate any communication with, the IRS or any other Taxing Authority (whether written, verbal or otherwise) at any time concerning the Contribution, the Distribution or the Restructuring (including the impact of any transaction on the Contribution, the Distribution or the Restructuring) without the prior approval of Starwood (such approval not to be unreasonably withheld, conditioned or delayed).

 

ARTICLE VII

 

COOPERATION

 

Section 7.01                             General Cooperation.

 

(a)                       The Parties shall each cooperate fully (and each shall cause its respective Subsidiaries to cooperate fully) with all reasonable requests in writing (“Information Request”) from another Party hereto, or from an agent, representative or advisor to such Party, in connection with the preparation and filing of Tax Returns, claims for Refunds, Tax Proceedings, and calculations of amounts required to be paid pursuant to this Agreement, in each case, related or attributable to or arising in connection with Taxes of any of the Parties or their respective Subsidiaries covered by this Agreement and the establishment of any reserve required in connection with any financial reporting (a “Tax Matter”). Such cooperation shall include the provision of any information reasonably necessary or helpful in connection with a Tax Matter (“Information”) and shall include, without limitation:

 

(i)                         the provision of any Tax Returns, other than any Starwood Consolidated Return, of the Parties and their respective Subsidiaries, books, records (including information regarding ownership and Tax basis of property), documentation and other information relating to such Tax Returns, including accompanying schedules, related work papers, and documents relating to rulings or other determinations by Taxing Authorities (or, in the case of any Mixed Business Income Tax Return, to the extent practicable, the portion of such Tax Return that relates to Taxes for which Vistana is responsible pursuant to this Agreement);

 

(ii)                      the execution of any document (including any power of attorney) in connection with any Tax Proceedings of any of the Parties or their respective Subsidiaries, or the filing of a Tax Return or a Refund claim of the Parties or any of their respective Subsidiaries;

 

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(iii)                   the use of the Party’s reasonable best efforts to obtain any documentation in connection with a Tax Matter;

 

(iv)                  the use of the Party’s reasonable best efforts to obtain any Tax Returns (including accompanying schedules, related work papers, and documents) (other than any Starwood Consolidated Return), documents, books, records or other information in connection with the filing of any Tax Returns of any of the Parties or their Subsidiaries (or, in the case of any Mixed Business Income Tax Return, to the extent practicable, the portion of such Tax Return, documents, books, records or other information that relates to Taxes for which Vistana is responsible pursuant to this Agreement); and

 

(v)                     Each Party shall make its employees, advisors, and facilities available on a reasonable and mutually convenient basis in connection with the foregoing matters.

 

(b)                       Notwithstanding anything in this Agreement to the contrary, neither Party shall be required to provide the other Party or any of such other Party’s Subsidiaries access to or copies of information, documents or personnel if such action could reasonably be expected to result in the waiver of any Privilege.  In the event that either Party determines that the provision of any information or documents to the other Party or any of such other Party’s Subsidiaries could be commercially detrimental, violate any law or agreement or waive any Privilege, the Parties shall use commercially reasonable efforts to permit compliance with its obligations hereunder in a manner that avoids any such harm or consequence.

 

(c)                        The Parties shall perform all actions required or permitted under this Agreement in good faith.  If one Party requests the cooperation of the other Party pursuant to this Section 7.01 or any other provision of this Agreement, except as otherwise expressly provided in this Agreement, the requesting Party shall reimburse such other Party for all reasonable out-of-pocket costs and expenses incurred by such other Party in complying with the requesting Party’s request.

 

Section 7.02                             Retention of Records.  Starwood and Vistana shall retain or cause to be retained all Tax Returns, schedules and work papers, and all material records or other documents relating thereto in their possession, in each case that relate to a Pre-Closing Period, until the later of the six-year anniversary of the filing of the relevant Tax Return or, upon the written request of the other Party, for a reasonable time thereafter (the “Retention Date”).  Upon the expiration of the Retention Period, the foregoing information may be destroyed or disposed of by the Party retaining such documentation or other information unless the other Party otherwise requests in writing before the expiration of the Retention Period.  In such case, the Party retaining such documentation or other information shall deliver such materials to the other Party or continue to retain such materials, in either case at the expense of such other Party.

 

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ARTICLE VIII

 

MISCELLANEOUS

 

Section 8.01                             Dispute Resolution.  In the event of any dispute between the Parties as to any matter covered by this Agreement, the Parties shall appoint a nationally recognized independent public accounting firm (the “Accounting Firm”) to resolve such dispute.  In this regard, the Accounting Firm shall make determinations with respect to the disputed items based solely on representations made by Starwood and Vistana and their respective representatives, and not by independent review, and shall function only as an expert and not as an arbitrator and shall be required to make a determination in favor of one Party only.  The Parties shall require the Accounting Firm to resolve all disputes no later than thirty (30) days after the submission of such dispute to the Accounting Firm, but in no event later than the Due Date for the payment of Taxes or the filing of the applicable Tax Return, if applicable, and agree that all decisions by the Accounting Firm with respect thereto shall be final and conclusive and binding on the Parties.  The Accounting Firm shall resolve all disputes in a manner consistent with this Agreement and, to the extent not inconsistent with this Agreement, in a manner consistent with the Past Practices of Starwood and its Subsidiaries, except as otherwise required by applicable Law.  The Parties shall require the Accounting Firm to render all determinations in writing and to set forth, in reasonable detail, the basis for such determination.  The fees and expenses of the Accounting Firm shall be borne equally by the Parties.

 

Section 8.02                             Interest on Late Payments.  With respect to any payment between the Parties pursuant to this Agreement not made by the due date set forth in this Agreement for such payment, the outstanding amount will accrue interest at a rate per annum equal to the prime rate published in the Wall Street Journal for the relevant period.

 

Section 8.03                             Survival of Covenants.  Except as otherwise contemplated by this Agreement, all covenants and agreements of the Parties contained in this Agreement shall survive the Effective Time and remain in full force and effect in accordance with their applicable terms.

 

Section 8.04                             Successors.  This Agreement shall be binding on and inure to the benefit of any successor by merger, acquisition of assets, or otherwise, to any of the parties hereto (including without limitation any successor of Starwood or Vistana succeeding to the Tax Attributes of either under Section 381 of the Code), to the same extent as if such successor had been an original party to this Agreement.  As of the Effective Time, this Agreement shall be binding on Iris and Iris shall be subject to the obligations and restrictions imposed on Vistana hereunder, including, without limitation, with respect to the restrictions imposed on Vistana hereunder, including, without limitation, with respect to the indemnification obligations of Vistana under Section 3.02 and the restrictions imposed on Vistana under Section 6.02, and for the avoidance of doubt any references to Vistana capital stock shall mean both Vistana’s capital stock and, as of and after the Effective Time, Iris’s capital stock and any restrictions applicable to Vistana shall apply to Iris mutatis mutandis.

 

Section 8.05                             Severability.  If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced under any Law or as a matter of public policy, all

 

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other conditions and provisions of this Agreement shall remain in full force and effect.  Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties to this Agreement shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in a mutually acceptable manner.

 

Section 8.06                             Entire Agreement.  Except as otherwise expressly provided in this Agreement, this Agreement constitutes the entire agreement of the Parties hereto with respect to the subject matter of this Agreement and supersedes all prior agreements and undertakings, both written and oral, between or on behalf of the Parties hereto with respect to the subject matter of this Agreement.

 

Section 8.07                             Assignment; No Third-Party Beneficiaries.  This Agreement shall not be assigned by any Party without the prior written consent of the other Parties hereto, except that each Party may assign (a) any or all of its rights and obligations under this Agreement to any of its Subsidiaries and (b) any or all of its rights and obligations under this Agreement in connection with a sale or disposition of any of its assets or entities or lines of business; provided, however, that, in each case, no such assignment shall release such Party from any liability or obligation under this Agreement. Except as provided in Article III with respect to indemnified Parties, this Agreement is for the sole benefit of the Parties to this Agreement and their respective Subsidiaries and their permitted successors and assigns and nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

 

Section 8.08                             Specific Performance.  In the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement, the Party who is or is to be thereby aggrieved shall have the right to specific performance and injunctive or other equitable relief of its rights under this Agreement, in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative.  The Parties agree that the remedies at law for any breach or threatened breach, including monetary damages, may be inadequate compensation for any loss and that any defense in any action for specific performance that a remedy at law would be adequate is waived.  Any requirements for the securing or posting of any bond with such remedy are waived by the Parties to this Agreement.

 

Section 8.09                             Amendment.  No provision of this Agreement may be amended or modified except by a written instrument signed by the Parties to this Agreement.  No waiver by any Party of any provision of this Agreement shall be effective unless explicitly set forth in writing and executed by the Party so waiving.  The waiver by any Party of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any other subsequent breach.

 

Section 8.10                             Rules of Construction.  Interpretation of this Agreement shall be governed by the following rules of construction: (a) words in the singular shall be held to include the plural and vice versa and words of one gender shall be held to include the other gender as the context requires; (b) references to the terms Article, Section, paragraph, clause, Exhibit and

 

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Schedule are references to the Articles, Sections, paragraphs, clauses, exhibits and schedules of this Agreement unless otherwise specified; (c) the terms “hereof,” “herein,” “hereby,” “hereto,” and derivative or similar words refer to this entire Agreement, including the Schedules and Exhibits hereto; (d) references to “$” shall mean U.S. dollars; (e) the word “including” and words of similar import when used in this Agreement shall mean “including without limitation,” unless otherwise specified; (f) the word “or” shall not be exclusive; (g) references to “written” or “in writing” include in electronic form; (h) provisions shall apply, when appropriate, to successive events and transactions; (i) the headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement; (j) Starwood and Vistana have each participated in the negotiation and drafting of this Agreement and if an ambiguity or question of interpretation should arise, this Agreement shall be construed as if drafted jointly by the parties hereto and no presumption or burden of proof shall arise favoring or burdening either Party by virtue of the authorship of any of the provisions in this Agreement or any interim drafts of this Agreement; and (k) a reference to any Person includes such Person’s successors and permitted assigns.

 

Section 8.11                             Counterparts.  This Agreement may be executed in one or more counterparts each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.  Delivery of an executed counterpart of a signature page to this Agreement by facsimile or portable document format (PDF) shall be as effective as delivery of a manually executed counterpart of any such Agreement.

 

Section 8.12                             Coordination with the Employee Matters Agreements.  To the extent any covenants or agreements between the Parties with respect to employee withholding Taxes are set forth in the Employee Matters Agreement, such Taxes shall be governed exclusively by the Employee Matters Agreement and not by this Agreement.

 

Section 8.13                             Confidentiality.  The parties hereby agree that the provisions of the Confidentiality Agreement shall apply to all information and material furnished by any party or its representatives hereunder (including any Information and any Tax Returns).

 

Section 8.14                             Expenses.  Except as otherwise provided in this Agreement, whether or not the Distribution or the other transactions contemplated by this Agreement are consummated, all costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the Party incurring such costs or expenses.

 

Section 8.15                             Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware.

 

Section 8.16                             Notices.  Any notice, demand, claim or other communication under this Agreement will be in writing and will be deemed to have been given (a) on delivery if delivered personally; (b) on the date on which delivery thereof is guaranteed by the carrier if delivered by a national courier guaranteeing delivery within a fixed number of days of sending; or (c) on the date of facsimile transmission thereof if delivery is confirmed, but, in each case,

 

30

 

only if addressed to the Parties in the following manner at the following addresses or facsimile numbers (or at the other address or other number as a Party may specify by notice to the others):

 

If to: Starwood, to:

 

Starwood Hotels & Resorts Worldwide, Inc.

15140 N. Scottsdale Road, Suite H-210

Scottsdale, Arizona  85254

 

Attention:  Sr. Vice President of Global Tax

Email:            [·]
 Facsimile:                                         [·]

 

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

 

Skadden, Arps, Slate, Meagher & Flom, LLP

300 South Grand Avenue, Suite 3400

Los Angeles, California  90071

 

Attention:                                         Ken Betts

Email:                                                            kenneth.betts@skadden.com

Facsimile:                                         (213) 621-5300

 

If to: Iris or Vistana, to:

 

Vistana Signature Experiences, Inc.

9002 San Marco Court

Orlando, Florida  32819

 

Attention:                                         Chief Financial Officer

Email:                                                            [·]

Facsimile:                                         [·]

 

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

 

[·]

Attention:                                         [·]

Email:                                                            [·]

Facsimile:                                         [·]

 

Any notice to Starwood will be deemed notice to all members of the Starwood Group, and any notice to Vistana will be deemed notice to all members of the Vistana Group.

 

Section 8.17                             Coordination with Ancillary Agreements.   Except as explicitly set forth in the Separation Agreement or any other Ancillary Agreement, this Agreement shall be the exclusive agreement among the Parties with respect to all Tax matters, including indemnification

 

31

 

in respect of Tax matters.  The Parties agree that this Agreement shall take precedence over any and all agreements among the Parties with respect to Tax matters.

 

Section 8.18                             Effective Date.  This Agreement shall become effective only upon the occurrence of the Distribution.

 

[The remainder of this page is intentionally left blank.]

 

32

 

IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the day and year first above written.

 

	
 
    	
Starwood Hotels &   Resorts Worldwide, Inc.
    
	
 
    	
 
    
	
 
    	
By
    	
 
    
	
 
    	
Name: 
    
	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Vistana Signature   Experiences, Inc.
    
	
 
    	
 
    
	
 
    	
By
    	
 
    
	
 
    	
Name: 
    
	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Interval Leisure   Group, Inc.
    
	
 
    	
 
    
	
 
    	
By
    	
 
    
	
 
    	
Name: 
    
	
 
    	
Title:
    

 

[Signature Page to Tax Matters Agreement]Exhibit 10.5

 

FORM OF TRANSITION SERVICES AGREEMENT

 

dated as of

 

[ · ], 2015

 

by and among

 

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

 

and

 

INTERVAL LEISURE GROUP, INC.

 

 

Table of Contents

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
ARTICLE I   DEFINITIONS
    	
1
    
	
 
    	
 
    	
 
    
	
Section 1.1
    	
Defined Terms
    	
1
    
	
Section 1.2
    	
Cross References
    	
2
    
	
Section 1.3
    	
Interpretation;   Exhibits and Schedules
    	
3
    
	
 
    	
 
    	
 
    
	
ARTICLE II   SERVICES
    	
3
    
	
 
    	
 
    	
 
    
	
Section 2.1
    	
Provision of Services
    	
3
    
	
Section 2.2
    	
Cooperation; Access
    	
5
    
	
Section 2.3
    	
Books and Records
    	
5
    
	
Section 2.4
    	
Service Quality
    	
5
    
	
Section 2.5
    	
Uses of Services
    	
6
    
	
Section 2.6
    	
Location of Services
    	
6
    
	
Section 2.7
    	
No Violation of Laws or   Third Party Contracts
    	
7
    
	
Section 2.8
    	
Provision of Services
    	
7
    
	
Section 2.9
    	
Modification of   Procedures
    	
8
    
	
Section 2.10
    	
No Transfer of Rights
    	
8
    
	
Section 2.11
    	
Security
    	
8
    
	
Section 2.12
    	
Personally Identifiable   Information
    	
9
    
	
 
    	
 
    	
 
    
	
ARTICLE III   FEES AND EXPENSES
    	
9
    
	
 
    	
 
    	
 
    
	
Section 3.1
    	
Service Fees
    	
9
    
	
Section 3.2
    	
Payment
    	
10
    
	
Section 3.3
    	
Taxes
    	
10
    
	
Section 3.4
    	
Regulatory Changes
    	
11
    
	
 
    	
 
    	
 
    
	
ARTICLE IV   TERM OF SERVICES
    	
11
    
	
 
    	
 
    	
 
    
	
Section 4.1
    	
Term and Cancellation   of Services
    	
11
    
	
Section 4.2
    	
Extension of Term of   Services
    	
11
    
	
 
    	
 
    	
 
    
	
ARTICLE V   GOVERNANCE
    	
12
    
	
 
    	
 
    	
 
    
	
Section 5.1
    	
Project Leads;   Functional Leads; Disputes
    	
12
    
	
Section 5.2
    	
Steering Committee
    	
12
    
	
Section 5.3
    	
Meetings
    	
12
    
	
Section 5.4
    	
Audit Rights
    	
13
    
	
 
    	
 
    	
 
    
	
ARTICLE VI   FORCE MAJEURE
    	
13
    
	
 
    	
 
    	
 
    
	
Section 6.1
    	
Force Majeure Event
    	
13
    
	
Section 6.2
    	
Consequences of Force Majeure   Event
    	
14
    

 

i

 

	
 
    	
 
    	
Page
    
	
ARTICLE VII   LIABILITIES
    	
14
    
	
 
    	
 
    	
 
    
	
Section 7.1
    	
Limitations of   Liability
    	
14
    
	
Section 7.2
    	
Indemnity
    	
14
    
	
Section 7.3
    	
Entire Obligation
    	
15
    
	
 
    	
 
    	
 
    
	
ARTICLE VIII   TERMINATION
    	
16
    
	
 
    	
 
    	
 
    
	
Section 8.1
    	
Term of Agreement
    	
16
    
	
Section 8.2
    	
Breach of Agreement
    	
16
    
	
Section 8.3
    	
Effect of Termination
    	
16
    
	
Section 8.4
    	
Survival
    	
16
    
	
 
    	
 
    	
 
    
	
ARTICLE IX   MISCELLANEOUS
    	
17
    
	
 
    	
 
    	
 
    
	
Section 9.1
    	
Notices
    	
17
    
	
Section 9.2
    	
Assignment
    	
18
    
	
Section 9.3
    	
Confidentiality
    	
18
    
	
Section 9.4
    	
Governing Law
    	
19
    
	
Section 9.5
    	
Consent to   Jurisdiction; Waiver of Jury Trial
    	
19
    
	
Section 9.6
    	
Entire Agreement
    	
20
    
	
Section 9.7
    	
Amendments
    	
20
    
	
Section 9.8
    	
Waivers
    	
20
    
	
Section 9.9
    	
No Third Party   Beneficiaries
    	
20
    
	
Section 9.10
    	
Severability
    	
20
    
	
Section 9.11
    	
Counterparts
    	
20
    

 

ii

 

TRANSITION SERVICES AGREEMENT

 

This TRANSITION SERVICES AGREEMENT, dated as of [ · ], 2015 (the “Effective Date”), is entered into by and between Starwood Hotels & Resorts Worldwide, Inc., a Maryland corporation (“Starwood”), on behalf of itself and any of its Affiliates that are Providers hereunder and Interval Leisure Group, Inc., a Delaware corporation (“Buyer”), on behalf of itself and any of its Affiliates that are Recipients hereunder.  Starwood and Buyer are sometimes hereinafter collectively referred to as the “Parties” and individually as a “Party.”

 

WHEREAS, Starwood, Vistana Signature Experiences, Inc. (“Vistana”), Buyer, and Iris Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of Buyer (“Merger Sub”), have entered into that certain Agreement and Plan of Merger, dated as of October 27, 2015 (the “Merger Agreement”), pursuant to which Merger Sub will merge with and into Vistana immediately following the spin-off of Vistana to Starwood’s stockholders; and

 

WHEREAS, the Merger Agreement provides that, in connection with the consummation of the transactions contemplated thereby, the Parties will enter into this Agreement to provide for certain services and other arrangements among Starwood and/or its Affiliates, on the one hand, and Buyer and its Affiliates, on the other hand, all as more fully described herein.

 

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

 

ARTICLE I

 

DEFINITIONS

 

Section 1.1                                    Defined Terms.  For the purposes of this Agreement, (a) unless otherwise defined herein capitalized terms used herein shall have the meanings assigned to them in the Merger Agreement and (b) the following terms shall have the meanings specified below:

 

“Agreement” means this Transition Services Agreement, including the Schedules and Exhibits hereto.

 

“Applicable Law” means all laws, regulations, ordinances, rules, orders, decrees and requirements of any Governmental Authority having jurisdiction over the Services, Recipient, Provider or this Agreement, all as they may be amended from time to time.

 

“Interest Rate” means an annual rate equal to the lesser of (i) the prime rate (as published by the Wall Street Journal or, if no longer published, such other similar source as reasonably selected by Starwood) applicable on the date such payment is due and on each date thereafter that interest is compounded, plus eight (8) percentage points and (ii) the highest rate then permitted by Applicable Law.

 

“Personally Identifiable Information” means any information received by a party in connection with the Services that can be associated with or traced to any individual, including an individual’s name, address, telephone number, e-mail address, credit card information, social security number, or other similar specific factual information, regardless of the media on which

 

 

such information is stored (e.g., on paper or electronically) and includes certain of such information that is generated, collected, stored or obtained as part of this Agreement, including transactional and other data pertaining to users.

 

“Provider” means Starwood or any of its Affiliates, in such Person’s capacity as a Person providing or causing other Persons to provide Services hereunder.

 

“Recipient” means Buyer or any of its Affiliates, in such Person’s capacity as a Person receiving Services from a Provider hereunder.

 

“Reference Period” means the period beginning twelve (12) months prior to the Effective Date, and ending on the Effective Date.

 

“Schedule A” means Schedule A to this Agreement.

 

“Service” or “Services” means, collectively, the Transition Services and the Migration Services.

 

“Third Party Claims” means all claims or threatened claims, civil, criminal, administrative, or investigative action or proceeding, demand, charge, action, cause of action or other proceeding asserted against a party hereto and brought by a third party.

 

“Transition Service” or “Transition Services” means (i) those services, (ii) access to those facilities, networks, equipment and software, and (iii) other assistance, each as listed and described on Schedule A, including any Omitted Services added to Schedule A by amendment pursuant to Section 2.1(b).

 

Section 1.2                                    Cross References.  Each of the following terms is defined in the Section of this Agreement set forth opposite such term:

 

	
Term
    	
 
    	
 
    	
 
    
	
Base Service Fees
    	
 
    	
Section 3.1
    	
 
    
	
Consent
    	
 
    	
Section 2.1(c)
    	
 
    
	
Disclosing Party
    	
 
    	
Section 9.3(a)
    	
 
    
	
Dispute
    	
 
    	
Section 5.1(c)
    	
 
    
	
Effective Date
    	
 
    	
Preamble
    	
 
    
	
Extended Service
    	
 
    	
Section 4.2
    	
 
    
	
Force Majeure Event
    	
 
    	
Section 5.1
    	
 
    
	
Functional Lead
    	
 
    	
Section 5.1(b)
    	
 
    
	
Indemnified Party
    	
 
    	
Section 7.2(a)
    	
 
    
	
Indemnifying Party
    	
 
    	
Section 7.2(a)
    	
 
    
	
Information
    	
 
    	
Section 9.3(a)
    	
 
    
	
Losses
    	
 
    	
Section 7.1
    	
 
    
	
Merger Agreement
    	
 
    	
Recitals
    	
 
    
	
Merger Sub
    	
 
    	
Recitals
    	
 
    
	
Migration Plan
    	
 
    	
Section 2.1(d)
    	
 
    
	
Migration Planning Period
    	
 
    	
Section 2.1(d)
    	
 
    
	
Migration Services
    	
 
    	
Section 2.1(d)
    	
 
    
	
Migration Services Fee
    	
 
    	
Section 3.1(a)
    	
 
    
	
Omitted Services
    	
 
    	
Section 2.1(b)
    	
 
    
	
Omitted Services Fees
    	
 
    	
Section 3.1(e)
    	
 
    

 

2

 

	
Party / Parties
    	
 
    	
Preamble
    	
 
    
	
Receiving Party
    	
 
    	
Section 9.3(a)
    	
 
    
	
Recipient
    	
 
    	
Preamble
    	
 
    
	
Recipient TSA Project Lead
    	
 
    	
Section 5.1(a)
    	
 
    
	
Sales Taxes
    	
 
    	
Section 3.3
    	
 
    
	
Seller
    	
 
    	
Recitals
    	
 
    
	
Service Fees
    	
 
    	
Section 3.1
    	
 
    
	
Service Term
    	
 
    	
Section 4.1
    	
 
    
	
Starwood
    	
 
    	
Preamble
    	
 
    
	
Starwood Auditors
    	
 
    	
Section 5.4(a)
    	
 
    
	
Starwood TSA Project Lead
    	
 
    	
Section 5.1(a)
    	
 
    
	
TSA Project Leads
    	
 
    	
Section 5.1(a)
    	
 
    

 

Section 1.3                                    Interpretation; Exhibits and Schedules.  The table of contents, titles, headings and captions contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.  Unless otherwise indicated to the contrary herein by the context or use thereof: (a) the words “hereof,” “hereby,” “herein,” “hereto,” and “hereunder” and words of similar import shall refer to this Agreement as a whole and not to any particular Section or paragraph of this Agreement; (b) the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation”; (c) masculine gender shall also include the feminine and neutral genders, and vice versa; (d) words importing the singular shall also include the plural, and vice versa; (e) references to an “Article,” “Section,” “Schedule” or “Exhibit” shall be to an Article or Section of, or a Schedule or Exhibit to this Agreement; (f) any agreement, instrument or statute defined or referred to in this Agreement shall mean such agreement, instrument or statute as from time to time amended, supplemented or modified; (g) all Exhibits and Schedules to this Agreement are hereby incorporated in and made a part of this Agreement as if set forth in full herein, and any capitalized terms used in such Exhibits and Schedules and not otherwise defined therein shall have the meaning set forth in this Agreement; (h) “writing,” “written” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form; (i) the sign “$” means the lawful currency of the United States of America; (j) all references to “days” mean calendar days and all references to time mean Eastern Time in the United States of America, in each case unless otherwise indicated; and (k) derivative forms of defined terms will have correlative meanings.  The Parties acknowledge that each Party and its attorney has reviewed and participated in the drafting of this Agreement and that any rule of construction to the effect that any ambiguities are to be resolved against the drafting Party, or any similar rule operating against the drafter of an agreement, shall not be applicable to the construction or interpretation of this Agreement.

 

ARTICLE II

 

SERVICES

 

Section 2.1                                    Provision of Services.

 

(a)                                 Provider shall provide to Recipient the Services in accordance with the terms, fees, limitations and conditions set forth herein and on Schedule A. Starwood hereby represents 

 

3

 

and warrants as of the date hereof that Provider has not changed the level of services provided by Provider in respect of the Vistana Business since October 27, 2015 in a manner that reduced the level or quality of Services provided to Recipient under this Agreement.

 

(b)                                 During the ninety (90) days after the Effective Date, in the event that Buyer identifies in writing to Starwood any services not referenced on Schedule A that were provided by Provider in respect of the Vistana Business during the Reference Period and that are reasonably necessary to operate the Vistana Business in the manner conducted as of the Effective Date (“Omitted Services”), the Parties will promptly negotiate in good faith the terms governing any such Omitted Service with respect to (i) the nature and description of such Omitted Service, which shall be consistent with the descriptions of the Services set forth on Schedule A (to the extent applicable to such Omitted Service), (ii) the duration such Omitted Service will be provided, which shall not be longer than the term of this Agreement and (iii) the fees for such Omitted Service, which shall be set in the same manner as for the other Services.  In the event the Parties agree to such terms, the Parties will enter into an amendment to this Agreement amending Schedule A to reflect such Omitted Service, and such Omitted Service shall be deemed to be part of this Agreement and shall be deemed one of the “Services” hereunder from and after the date of such amendment.  Starwood shall have no obligation to consider any requests for services not listed on Schedule A at any time after ninety (90) days after the Effective Date.

 

(c)                                  Provider and Recipient shall use commercially reasonable efforts to obtain in a cost effective manner any necessary waivers, permits, consents or similar approvals with respect to agreements with third parties in order for Provider to provide the Services directly or indirectly (other than the Omitted Services) (any such waiver, permit, consent or similar approval, a “Consent”).  If after using commercially reasonable efforts, Provider and Recipient are unable to obtain any Consent, the Parties shall work together to agree upon, identify and implement an alternative arrangement in a cost effective manner.  Any license fees, royalties or other fees, costs or expenses to third parties that may be necessary for Provider to obtain Consents in a cost effective manner or for Provider to perform, or for Recipient to receive, the Services will be borne equally by the Recipient and Provider, and any out-of-pocket costs and expenses reasonably incurred by Provider in connection with the implementation of any such alternative arrangements in a cost effective manner shall be borne by Recipient, provided, that Provider and Recipient shall be equally responsible for the amount by which the cost of such alternative arrangement exceeds the amount that Recipient would have paid pursuant to Schedule A, as of the Effective Date, for the applicable Service.  As long as Provider otherwise complies with this Section 2.1(c), failure to obtain any Consent, and any resulting failure to provide Services hereunder, shall not be deemed a breach hereof.

 

(d)                                 Recipient shall be responsible for planning and preparing the transition of the provision of each of the Services to its own internal organization or other third-party service providers, and shall prepare, within thirty (30) days after the Effective Date (“Migration Planning Period”), a plan in order to transition off of each Service by the end of the term for such Service (“Migration Plan”); provided, however, that Recipient will not be deemed to have violated its obligations with respect to preparation of the Migration Plan if Recipient (i) fails to complete the Migration Plan within the Migration Planning Period, (ii) has been working, and thereafter continues to work, in good faith and without undue delay to expeditiously prepare the Migration Plan and (iii) completes the Migration Plan no later than sixty (60) days after the 

 

4

 

Effective Date.  At Recipient’s request, Provider shall reasonably assist, and shall use commercially reasonable efforts to cause any third-party provider of Services to reasonably assist, Recipient in connection with the implementation of Recipient’s transition plan (“Migration Services”), taking into account the need to minimize the cost of such migration and the disruption to the ongoing business activities of the Parties and their Affiliates. For the avoidance of doubt, Migration Services shall not include any services that, in Provider’s commercially reasonable opinion, do not primarily effect the separation of Recipient from the Services.

 

Section 2.2                                    Cooperation; Access.  Subject to the other provisions of this Agreement, Provider and Recipient agree to reasonably cooperate with each other in all matters relating to the provision and receipt of the Services.  Each Provider and Recipient shall, and shall cause any applicable Affiliates to, make available on a timely basis to the other information and materials requested to the extent reasonably necessary for the purposes of providing or receiving the Services.

 

Section 2.3                                    Books and Records.  Provider shall keep books and records relating to the provision of the Services in a manner consistent with how such books and records were kept by Provider with respect to the Vistana Business as of the Effective Date, subject to Provider’s records retention policies (as such policies may be amended or otherwise modified from time to time).  To the extent reasonably necessary for Recipient to conduct the Vistana Business as conducted as of the Effective Date, Provider shall make such books and records in electronic or paper form available to Recipient, at the cost of Recipient (i) upon reasonable written notice (but no more often than once each calendar quarter), during normal business hours, (ii) subject to reasonably imposed security procedures and limitations and (iii) subject to compliance with Section 8.3 (Effect of Termination).

 

Section 2.4                                    Service Quality.

 

(a)                                 Provider will provide, or cause to be provided, the Services in accordance with Provider’s standard policies, procedures and practices in effect with respect to the Vistana Business as of the Effective Date, as the same may be changed from time to time.  In providing the Services, Provider shall at all times exercise the same care and skill it exercises in performing like services for itself and other third parties, including franchisees.  Recipient acknowledges that Provider is not in the business of providing the Services and is providing the Services to Recipient solely for the purpose of facilitating the transactions contemplated by the Merger Agreement.

 

(b)                                 Notwithstanding anything to the contrary herein, Provider shall have the right to shut down temporarily for routine scheduled maintenance purposes (which shall be substantially consistent with Provider’s operations and maintenance policies as of the Effective Date) the operation of the facilities, networks and/or systems providing any Service whenever in its judgment, reasonably exercised, such action is necessary; provided that Provider shall notify Recipient as much in advance as reasonably practicable under the circumstances that such shutdown is planned, and such shutdown shall take place outside normal business hours, or if not so possible, during a period that does not unduly and adversely affect Recipient’s operations to which the provision of such Service relates.  In the event nonscheduled maintenance is reasonably necessary, Provider shall notify Recipient as much in advance as reasonably 

 

5

 

practicable under the circumstances.  Provider shall be relieved of its obligations to provide Services (and Recipient shall be relieved of its obligation to pay for such affected Service(s) to the extent such Services are not performed or have not already been performed by Provider) that require the use of such facilities, networks or systems only for the period of time that such facilities, networks and/or systems are so shut down but shall use commercially reasonable efforts to minimize each period of shutdown for such purpose and to schedule such shutdown so as not to disrupt the conduct of the business of Recipient in the ordinary course.  Provider shall consult with Recipient prior to temporary shutdowns to the extent reasonably practicable or, if not reasonably practicable, immediately thereafter in order to establish alternative sources for such Services.  To the extent commercially reasonable, Provider will afford Recipient the benefit of any arrangements for substitute services that Provider makes on its own behalf.

 

(c)                                  Provider shall maintain during the term of this Agreement its corporate level business continuity/disaster recovery plan (“Recovery Plan”), which plan shall prescribe actions to be taken with respect to continuation and recovery of any of Provider’s computer resources and network processes used to provide the Services.  In the event of a business disaster with respect to Provider that disrupts any “mission critical” computer resources or network processes used to provide the Services, Provider will use commercially reasonable efforts to continue and recover such computer resources and network processes within 24 hours from the occurrence of such business disaster causing a disruption in the Services, except that Provider’s Data Warehouse and StarwoodOne systems may require additional recovery times beyond such 24 hour window but in no event more than a commercially reasonable timeframe following the occurrence of such business disaster.  For purposes hereof, “mission-critical” computer resources or network processes are those which if not operating, would cause the cessation of, or significant adverse impact upon, the Vistana Business.

 

(d)                                 EXCEPT AS EXPRESSLY SET FORTH IN Section 2.4(c), THE SERVICES ARE PROVIDED ON AN “AS IS” BASIS AND PROVIDER MAKES NO REPRESENTATIONS, WARRANTIES OR COVENANTS WITH RESPECT TO THE SERVICES, WHETHER EXPRESS OR IMPLIED, AND ALL IMPLIED WARRANTIES, INCLUDING THOSE RELATING TO MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, CUSTOM OR USAGE IN THE TRADE AND NON-INFRINGEMENT, ARE HEREBY DISCLAIMED.

 

Section 2.5                                    Uses of Services.  Provider shall be required to provide Services only to Recipient in connection with Recipient’s operation of the Vistana Business substantially as conducted as of the Effective Date.  Recipient shall not resell any Services to any Person whatsoever or permit the use of the Services by any Person other than its Affiliates in connection with Recipient’s operation of the Vistana Business.

 

Section 2.6                                    Location of Services.  Provider will not be required to render any Service in a particular location that would necessitate that Provider obtain any permits or regulatory approvals, or qualify to do business, in any location or jurisdiction other than the locations and jurisdictions where Provider does business or conducted business as of the Effective Date.  Provider shall obtain and maintain the permits and regulatory approvals required for providing the Services in good standing during the provision of the Services; provided, however that Recipient shall reimburse Provider for all of Provider’s out of pocket cost of 

 

6

 

maintaining such permits and regulatory approvals to the extent such costs are incurred for the purpose of providing the Services.

 

Section 2.7                                    No Violation of Laws or Third Party Contracts.  Neither Provider nor any third-party service providers shall be required to provide all or any part of any particular Service to the extent that Provider determines in good faith, that providing such Service would require Provider or any third-party service provider to violate any Applicable Laws, or any agreement to which a Provider is a party or would otherwise conflict with the rights of any other party with respect thereto.  In such case, Provider and Recipient shall work together to agree upon, identify and implement an alternative method of delivering such Service in a cost effective manner that does not violate any Applicable Laws or agreement or otherwise conflict with any third party rights.  Any costs and expenses associated with such alternative method shall be borne by Recipient, provided, that Provider and Recipient shall be equally responsible for the amount by which the cost of such alternative arrangement exceeds the amount that Recipient would have paid pursuant to Schedule A, as of the Effective Date, for the applicable Service.  As long as Provider otherwise complies with this Section 2.7, failure to arrange for an alternative method, and any resulting failure to provide Services hereunder, shall not be deemed a breach hereof.

 

Section 2.8                                    Provision of Services; Independent Contractor.

 

(a)                                 Recipient acknowledges and agrees that it has no right to require that Provider perform the Services with specifically identified employees, provided, in all instances, Provider shall use commercially reasonable efforts to provide the Services using either the same employees that performed such duties as of the Effective Date, or employees of similar skill and qualification, to perform the duties assigned to them in connection with such Services.

 

(b)                                 Provider shall act under this Agreement solely as an independent contractor and not as an agent, employee or joint venture counterparty of Recipient.  All employees and representatives providing the Services shall be under the direction, control and supervision of Provider (and not of Recipient), and Provider shall have the sole right to exercise all authority with respect to such employees and representatives (including the right to select, hire, utilize and discharge such employees and representatives) and in no event shall such employees and representatives be deemed to be employees or agents of Recipient.

 

(c)                                  Certain of the Services will require Recipient to make decisions based on recommendations made by Provider or consulting or advisory Services provided by Provider.  Recipient shall be solely responsible for making all such decisions.

 

(d)                                 Notwithstanding anything to the contrary contained herein, Provider shall not be liable under this Agreement for (i) failing to provide or make available a Service as set forth herein if such failure was the result of personnel of Provider performing the Services in accordance with instructions provided by Recipient’s Functional Lead or designee of such Functional Lead (as previously identified by Recipient’s Functional Lead to a Starwood Functional Lead), (ii) the exercise of reasonable discretion and independent judgment in the provision of administrative Services (such as data entry, data management, processing requests and preparing and processing forms) or (iii) any decisions made by Recipient with respect to any consulting or advisory Services.

 

7

 

Section 2.9                                    Modification of Procedures.

 

(a)                                 Provider shall be entitled to make changes from time to time in the manner in which it performs any of the Services; provided that (i) Provider has furnished Recipient notice (the same notice Provider provides its own business) thereof; (ii) Provider changes such practices and procedures for its own business units at the same time; and (iii) Provider gives Recipient a reasonable period of time for Recipient to (A) adapt its operations to accommodate such changes or (B) reject such changes. In the event Recipient fails to accept or reject a proposed change on or before a reasonable date specified in such notice of change, such failure shall be deemed to be an acceptance of such change.  In the event Recipient rejects a proposed change but does not terminate this Agreement, Recipient agrees to pay any reasonable expenses resulting from Provider’s need to maintain different or multiple versions of the same system, procedures, technologies, or services or resulting from requirements of their third party vendors.

 

(b)                                 In the event Recipient makes a change to its technology environment, software or hardware that renders Provider incapable of providing the Services or Recipient incapable of using the Services, Provider’s performance with respect to such affected Service(s) shall be excused, and Recipient shall be relieved of its obligation to pay for such affected Service(s) to the extent such Services are not performed or have not already been performed by Provider, until Recipient has modified its technology to correct the problem.

 

Section 2.10                             No Transfer of Rights.  Recipient acknowledges that it will acquire no right, title or interest (including any license rights or rights of use) in any firmware or software, and the licenses therefor which are held by Provider, by reason of the provision of the Services provided hereunder, except to the extent that any such license rights or rights of use are provided for in a written agreement signed by Provider and Recipient.

 

Section 2.11                             Security.

 

(a)                                  Provider and Recipient shall each maintain reasonable, current security measures (i) to prevent unauthorized access to its systems and (ii) with respect to all data contained in its facilities, networks and systems and used in connection with the Services.  Such measures shall in no event be less stringent than those used to safeguard such party’s own property, or industry standard security measures used by companies of a similar size.  Such measures shall include, where appropriate, use of updated firewalls, virus screening software, logon identification and passwords, encryption, intrusion detection systems, logging of incidents, periodic reporting, and prompt application of current security patches, virus definitions and other updates.  Recipient shall not install any new equipment, software or technology or modify the setup of any existing equipment, software or technology that is, or will be, connected to Provider’s facilities, networks or systems without the prior consent of Provider.

 

(b)                                 Provider may suspend Recipient’s access (if any) to the information technology or communications systems used by Recipient following advance written notice to the extent practicable if, in Provider’s reasonable opinion (i) the integrity, security or performance of its systems, or any data stored on them, is being or is likely to be jeopardized by the activities of Recipient, or (ii) continued access to those information technology or communications systems by Recipient would expose Provider to liability.

 

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(c)                                  Each Party reserves the right to terminate the Agreement, in its sole discretion and without limitation or termination liability, if the Recipient or Provider, as applicable, remains in breach of this Section 2.11 five (5) Business Days after receipt of notice of such breach.  Provider and Recipient acknowledge that the security measures used by the other as of the Effective Date of this Agreement are in compliance with this Section.

 

Section 2.12                             Personally Identifiable Information.  Each party will comply with all applicable privacy and other laws and regulations relating to protection, collection, use, and distribution of Personally Identifiable Information.  In no event may a party sell or transfer Personally Identifiable Information to third parties other than its Affiliates, or otherwise provide third parties other than its Affiliates with access thereto, except (i) as may be allowed pursuant to other written agreements between the Parties, or (ii) in the case of Provider, with any of its third-party service providers assisting Provider with the performance of the Services hereunder.  If there is a suspected or actual breach of security involving Personally Identifiable Information, responsible party will notify the other party’s Privacy counsel within twenty four (24) hours of a management-level associate becoming aware of such occurrence.

 

ARTICLE III

 

FEES AND EXPENSES

 

Section 3.1                                    Service Fees.  In consideration for the provision of the Services, Recipient will pay Provider the fees for each Service specified on Schedule A, which fees are inclusive of an administrative service fee (the “Base Service Fees”); provided that the Base Service Fees for each Service shall be increased by five percent (5%) each year effective as of the anniversary of the Effective Date.  The Base Service Fees, as may be adjusted in accordance with this Article III, together with the Migration Services Fees and any Omitted Services Fees, are referred to herein as the “Service Fees.”

 

(a)                                 The Migration Services, and any assistance in the planning of such Migration Services, shall be provided to Recipient (i) at rates established using the methodology set forth on Schedule [ · ], and (ii) with respect to any Migration Services provided by any third-party service providers, at a cost equal to the actual out of pocket payments made by Provider or its Affiliates to such third-party service provider for performing such Services (the “Migration Services Fees”).

 

(b)                                 Except to the extent otherwise set forth on Schedule A or Schedule [ · ], the Services Fees shall be exclusive of (and Recipient shall pay to Provider) any reasonable, out-of-pocket expenses incurred related to travel (including long-distance and local transportation, accommodation and meal expenses and other incidental expenses) by Provider’s personnel in connection with performing the Services.

 

(c)                                  Notwithstanding anything to the contrary contained herein, any Services to be performed by a third-party service provider shall be provided to Recipient at a cost equal to the actual out of pocket payments made by Provider or its Affiliates to such third-party service provider for performing such Services (it being understood, for the avoidance of doubt, that such third party service provider may include a mark-up in what it charges to Provider and its Affiliates).

 

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(d)                                 Recipient shall be responsible for, and Provider shall not be required to use or advance its own funds for, any payment obligation of Recipient (including employee compensation payments, employee benefit payments and payments to fund checks issued or wire transfer payments made on behalf of Recipient).

 

(e)                                  Unless otherwise agreed by the Parties, the Service Fees for any Omitted Services will be determined by Provider on a pass-through, fully-burdened cost basis, with a fifteen percent (15%) mark-up, including the allocable cost of any Person performing such activities (the “Omitted Services Fees”).

 

(f)                                   Any Extended Service shall be provided to Recipient at the adjusted Base Service Fee set forth on Schedule A for such extension.

 

Section 3.2                                    Payment.  Recipient shall compensate Provider only for Services actually provided pursuant to this Agreement.  Invoices will be rendered each month by Provider to Recipient for the Service Fee for Services delivered during the preceding month and for any other sums due under Sections 2.1, 2.3, 3.3, 2.7, and 5.2 and Article IV.  Each such invoice shall set forth in reasonable detail a description of such Services and the amounts charged therefor.  Recipient shall pay all invoiced amounts, which are not disputed, in immediately available funds within thirty (30) days after the date of the invoice.  If Recipient in good faith disputes an invoice, it must notify Provider in writing of the dispute within thirty (30) days after receipt of the relevant invoice specifying in detail the reason why Recipient disputes the invoice.  Any undisputed amounts not paid within such 30-day period shall be subject to interest from the due date until the date of payment, compounded monthly, at the Interest Rate.  If Recipient disputes an invoiced amount in good faith and such amount is thereafter determined to be due and payable, then the foregoing late charges will apply retroactively to the original due date after which such disputed amounts became delinquent.  Without limiting any of its other rights and remedies hereunder, Provider may suspend performance of any Services in the event that Recipient fails to timely pay any undisputed amounts due under this Agreement within fifteen (15) days after written notice of non-payment from Provider is received following the end of the 30-day period reflected in such notice.  Recipient may not deduct, set-off, counterclaim or otherwise withhold any amount owed to it by Provider (on account of any obligation owed by Provider, whether or not such obligation has been finally adjudicated, settled or otherwise agreed upon in writing) against the fees or other amounts payable or expenses owed by such Recipient to Provider pursuant to this Agreement.

 

Section 3.3                                    Taxes.  Recipient shall pay all applicable federal, state, local or foreign Taxes (including sales, use, value-added, and other similar transaction-based Taxes), duties and tariffs and all other Taxes or charges imposed on the provision of the Services by Provider, except for taxes based on net income of Provider (collectively, “Sales Taxes”).  If any such Sales Taxes are levied on Provider or deducted from amounts otherwise due to Provider hereunder, Recipient shall “gross up” the payments to Provider so that the net amount received by Provider is equal to the amount required to be paid to Provider hereunder.  The amounts set forth for each Service on Schedule A do not include Sales Taxes and will be separately stated on the relevant invoice to Recipient.  Unless otherwise required by Applicable Law, Provider shall be solely responsible for remitting payment of all Sales Taxes to the applicable Governmental Authority.  Notwithstanding the foregoing, in the case of all Sales Taxes, Recipient shall not be obligated to pay such Sales Taxes if and to the extent that Recipient has provided valid 

 

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exemption certificates or other applicable documentation that would eliminate or reduce the obligation to collect and/or pay such Sales Taxes.  Provider shall also be solely responsible for timely withholding and remitting to the applicable Governmental Authority any employment, income or other Taxes required to be withheld in respect of Provider’s employees related to the sale, performance, provision or delivery of Services.

 

Section 3.4                                    Regulatory Changes.  If at any time after the Effective Date, any change in Applicable Law or other material unanticipated change in the operating environment of the Vistana Business materially increases (directly or indirectly) Provider’s cost of providing the Services, Provider shall notify Recipient of such increased cost and the Parties shall promptly negotiate in good faith to adjust the Base Service Fees for each Service to accurately and fairly account for such increased cost to Provider.

 

ARTICLE IV

 

TERM OF SERVICES

 

Section 4.1                                    Term and Cancellation of Services.  Each Service shall be provided during the period commencing on the Effective Date and expiring on the last day such Service, as set forth on Schedule A, is required to be provided (with respect to each Service, the “Service Term”); provided, however, that Recipient may cancel any Service upon not less than one hundred twenty (120) days’ written notice of cancellation to Provider, unless a different period is provided for on Schedule A for such Service; provided that Recipient reimburses Provider for any reasonable, out-of-pocket third party costs incurred to the extent resulting from the cancellation of such Service.  For the avoidance of doubt, once Recipient has cancelled any Service, Recipient shall not be entitled to have such Service resumed pursuant to this Agreement or otherwise.

 

Section 4.2                                    Extension of Term of Services.  Specific Services identified on Schedule A may have their Service Term extended by Recipient for the maximum duration specified on Schedule A (an “Extended Service”).  Recipient shall make requests for Extended Services in writing not less than ninety (90) days prior to the end of the Service Term for such Service.  Notwithstanding the foregoing, if Provider in good faith determines the extension of any Service Term pursuant to this Section 4.2 will burden (financially or otherwise) Provider substantially more than anticipated on the Effective Date, Provider shall notify Recipient at least sixty (60) days prior to the end of the Service Term for that Service that Recipient cannot extend the Service Term for that Service.  No other Services may be extended beyond their Service Term stated on Schedule A.  All Extended Services are subject to (i) obtaining all Consents necessary for Provider to perform or Recipient to receive the Service beyond its original Service Term and (ii) any service limitations set forth in this Agreement.  In no event shall any Services be provided beyond two (2) years after the Effective Date.

 

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ARTICLE V

 

GOVERNANCE

 

Section 5.1                                    Project Leads; Functional Leads; Disputes.

 

(a)                                 Starwood designates [ · ] as its lead administrative contact for purposes of this Agreement (the “Starwood TSA Project Lead”), and Buyer designates [ · ] as its lead administrative contact for purposes of this Agreement (the “Recipient TSA Project Lead” and, together with the Starwood TSA Project Lead, the “TSA Project Leads”).  Either Party may change its TSA Project Lead upon written notice to the other Party.  The TSA Project Leads shall meet regularly or as needed.

 

(b)                                 The initial points of contact for Provider and Recipient with respect to any day-to-day matters about provision of a particular Service, including attempting to resolve any issues that may arise during the performance of such Service, shall be the functional team leaders designated in the “Contact Information” column opposite such Service on Schedule A, who shall have the authority to handle such daily operational matters related to the applicable Service (each such Person, a “Functional Lead”).  Issues that cannot be resolved by the Functional Leads shall be escalated to the TSA Project Leads in accordance with this Section 5.1.

 

(c)                                  Prior to initiating any legal action in accordance with Section 9.4, any dispute, controversy or claim arising out of, relating to or in connection with the Services or this Agreement (a “Dispute”) that cannot be resolved by the applicable Functional Leads after a reasonable period of time (taking into consideration the nature of the Dispute) shall be submitted first to the TSA Project Leads, and the TSA Project Leads shall seek to resolve such Dispute through informal good faith negotiation.  In the event that any Dispute is not resolved by the TSA Project Leads within ten (10) Business Days after the claiming Party verbally notifies the other Party of the Dispute (during which time the TSA Project Leads shall meet in person or by telephone as often as reasonably necessary to attempt to resolve the Dispute), the TSA Project Leads shall escalate the Dispute to senior executive officers of each Party for resolution.  In the event the senior executives fail to resolve the Dispute within an additional twenty (20) Business Days, then either Party may bring an action in accordance with Section 9.4 and Section 9.5 below to resolve the Dispute.

 

Section 5.2                                    Steering Committee.  A steering committee (the “Steering Committee”) comprised of the TSA Project Leads, a finance executive from each Party (the “Finance Officers”) and corporate counsel from each Party (the “Legal Officers”) will have overall responsibility for oversight, administration and issue resolution relating to the performance and migration of Services under this Agreement.  The Starwood Finance Officer will be responsible for gathering data required to calculate variable transition service costs, generating monthly invoices, monitoring receipt of payments, and monitoring stranded costs.  Both Finance Officers will liaise with the TSA Project Leads and Functional Leads and the Legal Officers to suggest modifications to services or their costs (as necessary).  The Legal Officers will adjust the schedule of Services to reflect changes in scope (as necessary) and oversee any litigation matters for their respective Parties not resolved through the dispute resolution process of this Agreement.

 

Section 5.3                                    Meetings.  The key governance personnel will meet in person or by video or teleconference in accordance with the meeting cadence set forth on Exhibit 5.3.

 

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Section 5.4                                    Audit Rights.

 

(a)                                 Compliance Audits by Provider.  Upon notice from Provider, Recipient shall provide Provider, its auditors (including internal audit staff and external auditors), inspectors, regulators and other reasonably designated representatives as Provider may from time to time designate in writing (collectively, the “Starwood Auditors”) with access to, at reasonable times, any Recipient facility or part of a facility at which Recipient is using the Services, Recipient personnel, and data and records relating to the Services for purposes of verifying compliance with this Agreement.  Provider audits may include security reviews (including Recipient’s completion of security related questionnaires) of the Services and Recipient’s systems, including reasonable use of automated scanning tools such as network scanners, port scanners, and web inspection tools.  Recipient will provide any assistance that Starwood Auditors may reasonably require with respect to such audits.  Upon notice from Recipient, Provider shall provide Recipient and its auditors with access to, at reasonable times, books and records relating to the Services or this Agreement in order for Recipient to comply with Applicable Laws.

 

(b)                                 Audits by Buyer.  Buyer shall have the right, upon at least thirty (30) days’ written notice to Provider, and in a manner to avoid unreasonable interruption to Provider’s business, to perform audit procedures over Provider’s internal controls and procedures for the Services provided by Provider under this Agreement; provided that, such audit right shall exist solely to the extent required by Buyer’s external auditors to ensure Buyer’s compliance with the Sarbanes-Oxley Act of 2002, to determine if Buyer’s financial statements conform to Generally Accepted Accounting Principles (GAAP), to verify third-party expenses or to the extent required by any Governmental Authority.  Provider shall provide Buyer and Buyer’s auditors with appropriate space, furnishings, and telephone, facsimile and photocopy equipment as Buyer or Buyer’s auditors may reasonably require to perform such audit procedures.  Provider shall consider in good faith, but shall not be obligated to make, changes to its controls and procedures to address any findings of such audits.  Buyer shall pay or reimburse all of Provider’s incremental costs arising from all such audit-related activities, provision of space, furnishings and equipment, and analysis and implementation, if any, of any potential changes in Provider’s controls or procedures described in this Section 5.4(b).

 

(c)                                  Audit Reports.  Buyer shall be entitled to request, upon reasonable notice to Provider, and Provider shall provide a copy of its most recent SSAE 16 audit report, if any, performed by Provider, or Provider’s auditors, at the same cost as Starwood or its Affiliates charge its hotel franchisees.

 

ARTICLE VI

 

FORCE MAJEURE

 

Section 6.1                                    Force Majeure Event.  Provider shall not be liable for any interruption, delay or failure to perform any obligation under this Agreement when such interruption, delay or failure results from causes beyond its reasonable control (or beyond the reasonable control of any Person acting on its behalf), including any strikes, lockouts, acts of any Governmental Authority, riot, insurrection or other hostilities, acts of the public enemy or terrorism, embargo, fuel or energy shortage, fire, flood, earthquake, tsunami, or acts of God (any such event, a “Force Majeure Event”).  In the event of a Force Majeure Event, Provider’s affected obligations hereunder shall be postponed for such time as its performance is suspended or delayed on account thereof.  For the duration of such suspension or delay, no fees or expenses 

 

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shall be incurred by Recipient for Services that are suspended or delayed, and Recipient shall have the right, but not the obligation, to obtain replacement services for the duration of the Force Majeure Event from a third-party service provider at Recipient’s expense.

 

Section 6.2                                    Consequences of Force Majeure Event.  Provider shall notify Recipient as soon as reasonably practicable upon learning of the occurrence of a Force Majeure Event.  If the Force Majeure Event causes a material failure or delay in the provision of Services by Provider hereunder, (a) Provider shall use commercially reasonable efforts, which efforts shall include carrying out the actions set forth in the Recovery Plan, if such actions are applicable to such Force Majeure event, to remove such Force Majeure Event as soon as and to the extent reasonably and practicably possible, (b) Provider will treat Recipient substantially the same as any other internal or external service recipient (including franchisees) in connection with the restoration of the affected Services, if any, and (c) at the option of Recipient, the term and all additional payments owed in respect of any affected Service shall be tolled to the extent such Services are not provided or have not already been provided by Provider, until such Service is resumed in accordance with the standards set forth in Section 2.4(a).  Upon the cessation of the Force Majeure Event, Provider shall use commercially reasonable efforts to resume its performance of any affected Service in accordance with the standards set forth in Section 2.4(a) with the least possible delay.  If any Service is interrupted or suspended for more than ten (10) consecutive days, Recipient may terminate the affected Service (including any obligation to pay for such Service), in whole or in part, upon written notice to Provider.

 

ARTICLE VII

 

LIABILITIES

 

Section 7.1                                    Limitations of Liability.  With regard to any and all damages, fines, penalties, deficiencies, losses, liabilities (including settlements and judgments) and expenses (including interest, court costs, reasonable fees and expenses of attorneys, accountants and other experts and professionals or other reasonable fees and expenses of litigation or other proceedings or of any claim, default or assessment) (collectively, “Losses”) arising out of a breach of Provider’s obligations in connection with the provision of Services under this Agreement, other than Losses arising as a result of the fraud, willful misconduct or gross negligence of Provider or covered under a Provider indemnity under Section 7.2, Provider’s sole liability for such Losses shall be to use reasonable commercial efforts to re-perform, or cause its contractors to re-perform, such Services.  Recipient shall promptly advise Provider of any such breach of which it becomes aware.

 

Section 7.2                                    Indemnity.

 

(a)                                 Recipient agrees to indemnify, defend and hold harmless each Provider and its respective officers, directors, employees, agents, successors, and assigns, from any Losses resulting from Third Party Claims arising hereunder from (i) Recipient’s breach of its obligations with respect to Provider’s Information under this Agreement, (ii) Recipient’s violation of Applicable Laws, (iii) Recipient’s failure to comply with any applicable Payment Card Industry Data Security Standard and any other credit card company specific security requirements (collectively, “Credit Card Company Regulations”) (iv) the infringement by Recipient of a third 

 

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party’s intellectual property rights, or (v) Recipient’s fraud, willful misconduct or gross negligence.

 

(b)                                 Provider agrees to indemnify, defend and hold harmless Recipient and its respective officers, directors, employees, agents, successors, and assigns, from any Losses resulting from Third Party Claims arising hereunder from (i) Provider’s breach of its obligations with respect to Recipient’s Information under this Agreement, (ii) Provider’s violation of Applicable Laws, (iii) Provider’s failure to comply with any applicable Credit Card Company Regulations, (iv) the infringement by Provider of a third party’s intellectual property rights, or (v) Provider’s fraud, willful misconduct or gross negligence.

 

(c)                                  EXCEPT FOR ITS OBLIGATION TO COMPLY WITH SECTION 7.2(A) OR SECTION 7.2(B) ABOVE, AS APPLICABLE, EACH OF PROVIDER AND RECIPIENT SHALL NOT BE LIABLE FOR ANY LOSSES IN CONNECTION WITH THIS AGREEMENT.  TO THE MAXIMUM EXTENT PERMISSIBLE UNDER APPLICABLE LAW, IN NO EVENT SHALL A PARTY OR ITS AFFILIATES OR AGENTS BE LIABLE TO ANY INDEMNIFIED PERSON FOR LOSS OF PROFITS, LOSS OF BUSINESS, OR LOSS OF DATA, OR FOR ANY PUNITIVE, SPECIAL, CONSEQUENTIAL, EXEMPLARY, INCIDENTAL OR OTHER INDIRECT DAMAGES, IN CONNECTION WITH THIS AGREEMENT UNLESS SUCH DAMAGES ARE AWARDED AND REQUIRED TO BE PAID BY AN INDEMNIFIED PERSON TO A THIRD PARTY PURSUANT TO AN ORDER OF A GOVERNMENTAL AUTHORITY.

 

(d)                                 The party required to indemnify pursuant to this Article (the “Indemnitor”), upon demand by a party (“Indemnitee”), at Indemnitor’s sole cost and expense, shall resist or defend such claim (in the Indemnitee’s name, if necessary), using such attorneys as the Indemnitee shall approve, which approval shall not be unreasonably withheld. If, in the Indemnitee’s reasonable opinion, there exists a conflict of interest which would make it inadvisable to be represented by counsel for the Indemnitor, the Indemnitor and the Indemnitee shall jointly select acceptable attorneys, and the Indemnitor shall pay the reasonable fees and disbursements of such attorneys.

 

(e)                                  No right of indemnification shall exist under this Agreement with respect to matters for which indemnification may reasonably be claimed under the Merger Agreement, it being the intent of the Parties that claims that are addressed under the Merger Agreement shall be governed solely by the Merger Agreement.  No right of indemnification shall exist under the Merger Agreement for claims arising out of the performance of this Agreement, it being the intent of the Parties that such claims shall be solely governed by the provisions of this Agreement.  Notwithstanding the foregoing, no claim for indemnification made under this Agreement shall be denied solely based on the preceding two sentences if such claim was initially brought under the Merger Agreement and denied because the subject matter of such claim was reasonably believed to be covered under the indemnification provisions of this Agreement, and except for the preceding sentence, none of the indemnifications provided in this Agreement shall in any way be deemed to limit, or otherwise impair a Party’s right to indemnification under any provision of the Merger Agreement.

 

Section 7.3                                    Entire Obligation. The foregoing provisions of this Article VII set forth the full extent of the parties’ liability (monetary or otherwise) under this Agreement for any and all Losses.

 

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ARTICLE VIII

 

TERMINATION

 

Section 8.1                                    Term of Agreement.  The term of this Agreement shall commence on the Effective Date and end on the earlier to occur of (a) the date on which the provision of all Services has expired or been canceled or terminated pursuant to Section 6.2, Section 8.2 or Article IV and (b) the date on which this Agreement is terminated pursuant to Section 8.2.

 

Section 8.2                                    Breach of Agreement.  If Provider or Recipient causes or suffers to exist any material breach of any of its obligations under this Agreement, and such party does not cure such breach within (i) ten (10) Business Days with respect to Recipient’s obligations under Article III or (ii) thirty (30) days with respect to all other obligations of Provider or Recipient under this Agreement, after receiving written notice thereof from the non-breaching party, the Party not in breach (or whose Affiliate is not in breach) may terminate this Agreement, in whole or in part, immediately by providing written notice of termination.  In addition, either Party may terminate this Agreement, effective immediately upon written notice, if the other Party commences a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar Applicable Law now or hereafter in effect or seeks the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, or consents to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or makes a general assignment for the benefit of creditors or takes any corporate action to authorize any of the foregoing.

 

Section 8.3                                    Effect of Termination.  In the event of a termination or expiration of this Agreement, Provider shall be entitled to all outstanding amounts due from Recipient for the provision of Services rendered prior to the date of termination or expiration.  Upon termination, cancellation or expiration of any Service in accordance with this Agreement, Provider will have no further obligation to provide such terminated, cancelled or expired Service.  In the event of a termination or expiration of this Agreement, (a) Provider will promptly return to Recipient copies of any of Recipient’s Information that are in Provider’s possession or control, and (b) Recipient will promptly return to Provider copies of any of Provider’s Information that are in Recipient’s possession or control; provided that neither Provider nor Recipient shall be required to erase or extinguish any Information which is contained in any computer or server system or archived computer system backup of such party, including in emails, so long as such Information is kept confidential in accordance with Section 9.3.

 

Section 8.4                                    Survival.  Notwithstanding anything herein to the contrary, Articles VI and VIII and Section 2.4(c), Section 3.2, Section 3.3, Section 8.3 and this Section 8.4 shall survive any termination or expiration of this Agreement.

 

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ARTICLE IX

 

MISCELLANEOUS(1)

 

Section 9.1                                    Notices. Except as otherwise provided herein, all notices, requests, claims, demands, waivers and other communications hereunder shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopier, facsimile or email transmission (in the case of telecopier, facsimile or email transmission, with copies by overnight courier service or registered mail) to the respective Parties as follows (or, in each case, as otherwise notified by any of the Parties) and shall be effective and deemed to have been given (i) immediately when sent by telecopier, facsimile or email between 9:00 A.M. and 6:00 P.M. (New York City time) on any Business Day (and when sent outside of such hours, at 9:00 A.M. (New York City time) on the next Business Day) and (ii) when received if delivered by hand or overnight courier service or certified or registered mail on any Business Day:

 

(a)                                 If to Provider, to:

 

Starwood Hotels & Resorts Worldwide, Inc.

One Star Point

Stamford, CT 06902

Attn.: [·]
 Facsimile: [·]
 Email:  [·]

 

with a copy (which shall not constitute notice or service of process) to:

 

Starwood Hotels & Resorts Worldwide, Inc.
 Attn.:  General Counsel
 Facsimile: 203-351-2401
 Email:  Kenneth.siegel@starwoodhotels.com

 

(b)                                 if to Recipient, to:

 

Interval Leisure Group, Inc.
 6262 Sunset Drive
 Miami, Florida 33143
 Attn.: Victoria J. Kincke, General Counsel
 Facsimile: 305-667-2072
 Email: Victoria.Kincke@iilg.com

 

with a copy (which shall not constitute notice or service of process) to:

 

[ · ]
 Attn.: [·]

(1)  To be conformed to License Agreement once finalized.

 

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Facsimile: [·]
 Email:  [·]

 

Notices sent by multiple means, each of which is in compliance with the provisions of this Agreement will be deemed to have been received at the earliest time provided for by this Agreement.

 

Section 9.2                                    Assignment.  Neither this Agreement nor any of the rights or obligations hereunder shall be assigned by any Party or its Affiliates without the prior written consent of Recipient; provided, however, that, without the consent of Recipient, Provider may delegate the performance of all or any part of its obligations under this Agreement, including the obligation to provide any Service or any portion thereof, to (a) any Affiliate of Provider or (b) one or more third parties; provided that no such delegation by Provider to any such Affiliate or third party shall in any way affect the Recipient’s rights under this Agreement or relieve Provider of any of its obligations under this Agreement.  Any purported assignment in violation of this Section 9.2 shall be null and void.

 

Section 9.3                                    Confidentiality.

 

(a)                                 In the course of the provision or receipt of Services, each Provider or Recipient may need to disclose or make accessible to the other (for purposes of this Section 9.3(a), the entity disclosing or making accessible such information shall hereinafter be referred to as the “Disclosing Party”, and the entity receiving such information shall hereinafter be referred to as the “Receiving Party”) certain information that is either non-public, confidential or proprietary in nature (collectively, the “Information”); provided that for the purposes of this Agreement, Information shall not include information that (i) becomes generally available to the public without any action by, or involvement of, the Receiving Party or its Affiliates or contractors and through no violation of this Agreement, (ii) is obtained by the Receiving Party without restrictions on use or disclosure from a third party who, to the Receiving Party’s knowledge, breached no obligation of confidentiality in disclosing the information, or (iii) is independently developed by the Receiving Party without reference or access to any Information of the Disclosing Party.

 

(b)                                 The Receiving Party shall hold in confidence and not disclose to any third party any Information of the Disclosing Party received by it in connection with this Agreement, and it shall use all Information of the Disclosing Party received by it in connection with this Agreement solely as necessary for the provision or receipt of the Services (and for no other purpose whatsoever) and it shall take the same care with the Disclosing Party’s Information as it does with its own, but in no event less than a reasonable degree of care; provided that Provider may disclose the Information to those of its Affiliates or to third parties that provide Services or to any directors, members, officers, employees, agents and advisors (including, without limitation, attorneys, accountants, consultants and service providers) of any such Person, but only to the extent necessary for such Affiliates, third parties, directors, members, officers, employees, agents and advisors to carry out the Services, and provided they are bound by confidentiality obligations at least as stringent as those set forth herein.  Each Provider and Recipient shall keep the terms of this Agreement confidential and shall not disclose the terms of this Agreement without the other Party’s prior written consent, except as may be necessary to comply with Applicable Law 

 

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(including the rules of any stock exchange) or any financial reporting obligations or except as otherwise permitted under this Agreement.

 

(c)                                  If the Receiving Party is requested to disclose any of the Disclosing Party’s Information pursuant to any judicial or governmental order, or to a regulatory authority or under other operation of Applicable Law, it will not be in breach of this Section 9.3 to make such disclosure; provided that the Receiving Party (i) promptly notifies the Disclosing Party in writing prior to making any such disclosure so that the Disclosing Party may seek a protective order or other appropriate remedy or, in its sole discretion, waive compliance with this Section 9.3, and (ii) if the Disclosing Party is not successful in precluding the requesting legal body from requiring the disclosure of its Information, limits disclosures to the portion of Information specifically required to be disclosed and exercises reasonable efforts to obtain reliable assurances that the Information will be accorded confidential treatment.

 

Section 9.4                                    Governing Law.  This Agreement and all claims arising out of or relating to this Agreement and the transactions contemplated hereby shall be governed by the Applicable Laws of the State of New York.

 

Section 9.5                                    Consent to Jurisdiction; Waiver of Jury Trial.

 

(a)                                 Each of the Parties irrevocably submits to the exclusive jurisdiction of (i) state courts of the State of New York located in New York County and (ii) the United States District Court for the Southern District of the State of New York for the purposes of any suit, Action or other proceeding arising out of or relating to this Agreement or any transaction contemplated hereby (and agrees not to commence any Action, suit or proceeding relating hereto except in such courts).  Each of the Parties further agrees that service of any process, summons, notice or document hand delivered or sent by U.S. registered mail to such Party’s respective address set forth in Section 9.1 shall be effective service of process for any Action, suit or proceeding in New York with respect to any matters to which it has submitted to jurisdiction as set forth in the immediately preceding sentence.  Each of the Parties irrevocably and unconditionally waives any objection to the laying of venue of any Action, suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby in (i) state courts of the State of New York located in New York County or (ii) the United States District Court for the Southern District of the State of New York, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such Action, suit or proceeding brought in any such court has been brought in an inconvenient forum.  Notwithstanding the foregoing, each Party agrees that a final judgment in any Action or proceeding so brought shall be conclusive and may be enforced by suit on the judgment in any jurisdiction or in any other manner provided in law or in equity.

 

(b)                                 EACH OF THE PARTIES IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR THE ACTIONS OF THE PARTIES IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF.

 

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Section 9.6                                    Entire Agreement.  This Agreement, together with the Merger Agreement, constitutes the entire agreement among the Parties with respect to the subject matter hereof and supersedes any prior understandings, negotiations, agreements, or representations among the Parties of any nature, whether written or oral, to the extent they relate in any way to the subject matter hereof.

 

Section 9.7                                    Amendments.  This Agreement may not be amended except by a written instrument executed by the Parties.

 

Section 9.8                                    Waivers.  Any agreement on the part of any Party to any waiver shall be valid only if set forth in an instrument in writing signed by or on behalf of such Party.  No failure or delay on the part of any Party hereto in the exercise of any right hereunder shall impair such right or be construed as a waiver of, or acquiescence in, any breach of any representation, warranty, covenant or agreement herein, nor shall any single or partial exercise of any such right preclude other or further exercise thereof or of any other right.

 

Section 9.9                                    No Third Party Beneficiaries.  No provision of this Agreement is intended to confer any rights, benefits, remedies hereunder upon any Person other than the Parties, their Affiliates and their respective successors and permitted assigns.

 

Section 9.10                             Severability.  If any provision of this Agreement or the application of any such provision to any Person or circumstance shall be declared by any court of competent jurisdiction to be invalid, illegal, void or unenforceable in any respect, all other provisions of this Agreement, or the application of such provision to Persons or circumstances other than those as to which it has been held invalid, illegal, void or unenforceable, shall nevertheless remain in full force and effect and shall in no way be affected, impaired or invalidated thereby.  Upon such determination that any provision, or the application of any such provision, is invalid, illegal, void or unenforceable, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible to the fullest extent permitted by Applicable Law in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the greatest extent possible.

 

Section 9.11                             Counterparts.  This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, and all of which together shall be deemed to be one and the same instrument.  Signed counterparts of this Agreement may be delivered by facsimile and by scanned .pdf image.

 

[Signature pages follow.]

 

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IN WITNESS WHEREOF, each Party has caused this Agreement to be duly executed by its authorized officer as of the date first above written.

 

 

	
 
    	
STARWOOD HOTELS & RESORTS   WORLDWIDE, INC.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

[Signature Page to Transition Services Agreement]

 

 

	
 
    	
INTERVAL LEISURE GROUP, INC.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

[Signature Page to Transition Services Agreement]

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