UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
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☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2020
or
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☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from_________ to ________
Commission file number 001-37794
Hilton Grand Vacations Inc.
(Exact Name of Registrant as Specified in Its Charter)
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Delaware |
81-2545345 |
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(State or Other Jurisdiction of |
(I.R.S. Employer |
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Incorporation or Organization) |
Identification No.) |
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6355 MetroWest Boulevard, Suite 180, |
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Orlando, Florida |
32835 |
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(Address of Principal Executive Offices) |
(Zip Code) |
Registrant’s Telephone Number, Including Area Code (407) 613-3100
(Former Name, Former Address, and Former Fiscal Year, if Changed Since Last Report)
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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Common Stock, $0.01 par value per share |
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HGV |
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New York Stock Exchange |
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirement for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large Accelerated Filer |
☒ |
Accelerated Filer |
☐ |
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Non-Accelerated Filer |
☐ |
Smaller Reporting Company |
☐ |
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Emerging Growth Company |
☐ |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No
The number of shares outstanding of the registrant’s common stock, par value $0.01 per share, as of April 24, 2020 was 84,987,241.
HILTON GRAND VACATIONS INC.
FORM 10-Q TABLE OF CONTENTS
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Item 1. |
2 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
30 |
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Item 3. |
45 |
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Item 4. |
46 |
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Item 1. |
47 |
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Item 1A. |
47 |
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Item 2. |
50 |
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Item 3. |
50 |
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Item 4. |
50 |
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Item 5. |
50 |
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Item 6. |
51 |
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52 |
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1
PART I FINANCIAL INFORMATION
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Item 1. |
Financial Statements |
HILTON GRAND VACATIONS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, except share data)
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March 31, |
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December 31, |
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2020 |
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2019 |
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(unaudited) |
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ASSETS |
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Cash and cash equivalents |
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$ |
669 |
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$ |
67 |
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Restricted cash |
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90 |
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85 |
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Accounts receivable, net of allowance for credit losses of $17 and $21 |
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158 |
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174 |
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Timeshare financing receivables, net |
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1,122 |
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1,156 |
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Inventory |
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885 |
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558 |
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Property and equipment, net |
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473 |
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778 |
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Operating lease right-of-use assets, net |
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62 |
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60 |
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Investments in unconsolidated affiliates |
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47 |
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44 |
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Intangible assets, net |
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78 |
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77 |
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Other assets |
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120 |
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80 |
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TOTAL ASSETS (variable interest entities - $694 and $748) |
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$ |
3,704 |
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$ |
3,079 |
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LIABILITIES AND EQUITY |
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Liabilities: |
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Accounts payable, accrued expenses and other |
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$ |
268 |
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$ |
298 |
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Advanced deposits |
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117 |
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115 |
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Debt, net |
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1,266 |
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828 |
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Non-recourse debt, net |
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885 |
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747 |
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Operating lease liabilities |
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77 |
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76 |
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Deferred revenues |
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277 |
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186 |
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Deferred income tax liabilities |
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251 |
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259 |
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Total liabilities (variable interest entities - $694 and $750) |
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3,141 |
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2,509 |
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Commitments and contingencies - see Note 19 |
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Equity: |
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Preferred stock, $0.01 par value; 300,000,000 authorized shares, none issued or outstanding as of March 31, 2020 and December 31, 2019 |
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— |
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— |
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Common stock, $0.01 par value; 3,000,000,000 authorized shares, 84,987,241 shares issued and outstanding as of March 31, 2020 and 85,535,501 shares issued and outstanding as of December 31, 2019 |
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1 |
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1 |
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Additional paid-in capital |
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172 |
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179 |
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Accumulated retained earnings |
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390 |
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390 |
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Total equity |
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563 |
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570 |
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TOTAL LIABILITIES AND EQUITY |
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$ |
3,704 |
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$ |
3,079 |
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See notes to unaudited condensed consolidated financial statements.
2
HILTON GRAND VACATIONS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in millions, except per share amounts)
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Three Months Ended March 31, |
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2020 |
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2019 |
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Revenues |
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Sales of VOIs, net |
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$ |
56 |
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$ |
125 |
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Sales, marketing, brand and other fees |
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106 |
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141 |
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Financing |
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44 |
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41 |
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Resort and club management |
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44 |
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42 |
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Rental and ancillary services |
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52 |
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59 |
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Cost reimbursements |
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49 |
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42 |
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Total revenues |
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351 |
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450 |
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Expenses |
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Cost of VOI sales |
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14 |
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36 |
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Sales and marketing |
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157 |
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170 |
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Financing |
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13 |
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13 |
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Resort and club management |
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12 |
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11 |
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Rental and ancillary services |
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37 |
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35 |
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General and administrative |
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21 |
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27 |
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Depreciation and amortization |
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12 |
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8 |
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License fee expense |
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22 |
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23 |
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Cost reimbursements |
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49 |
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42 |
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Total operating expenses |
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337 |
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365 |
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Interest expense |
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(10 |
) |
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(10 |
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Equity in earnings from unconsolidated affiliates |
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3 |
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1 |
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Other gain (loss), net |
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2 |
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(1 |
) |
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Income before income taxes |
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9 |
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75 |
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Income tax expense |
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(1 |
) |
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(20 |
) |
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Net income |
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$ |
8 |
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$ |
55 |
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Earnings per share: |
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Basic |
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$ |
0.09 |
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$ |
0.59 |
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Diluted |
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$ |
0.09 |
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$ |
0.58 |
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See notes to unaudited condensed consolidated financial statements.
3
HILTON GRAND VACATIONS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in millions)
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Three Months Ended March 31, |
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2020 |
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2019 |
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Operating Activities |
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Net income |
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$ |
8 |
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$ |
55 |
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation and amortization |
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12 |
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8 |
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Amortization of deferred financing costs, contract costs, and other |
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4 |
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4 |
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Provision for financing receivables losses |
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37 |
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14 |
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Other (gain) loss, net |
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(2 |
) |
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1 |
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Share-based compensation |
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(2 |
) |
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5 |
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Deferred income tax (benefit) expense |
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(8 |
) |
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5 |
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Equity in earnings from unconsolidated affiliates |
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(3 |
) |
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(1 |
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Net changes in assets and liabilities: |
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Accounts receivable, net |
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16 |
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7 |
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Timeshare financing receivables, net |
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(3 |
) |
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(5 |
) |
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Inventory |
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(10 |
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(3 |
) |
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Purchases and development of real estate for future conversion to inventory |
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(5 |
) |
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(63 |
) |
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Other assets |
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(42 |
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(33 |
) |
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Accounts payable, accrued expenses and other |
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(42 |
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(27 |
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Advanced deposits |
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2 |
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5 |
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Deferred revenues |
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91 |
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41 |
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Other |
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— |
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1 |
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Net cash provided by operating activities |
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53 |
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14 |
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Investing Activities |
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Capital expenditures for property and equipment |
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(3 |
) |
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(6 |
) |
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Software capitalization costs |
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(5 |
) |
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(4 |
) |
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Net cash used in investing activities |
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(8 |
) |
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(10 |
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Financing Activities |
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Issuance of debt |
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495 |
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195 |
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Issuance of non-recourse debt |
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195 |
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— |
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Repayment of debt |
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(57 |
) |
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(23 |
) |
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Repayment of non-recourse debt |
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(58 |
) |
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(40 |
) |
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Repurchase and retirement of common stock |
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(10 |
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(92 |
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Payment of withholding taxes on vesting of restricted stock units |
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(2 |
) |
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(2 |
) |
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Other financing activity |
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(1 |
) |
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— |
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Net cash provided by financing activities |
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562 |
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38 |
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Net increase in cash, cash equivalents and restricted cash |
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|
607 |
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42 |
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Cash, cash equivalents and restricted cash, beginning of period |
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152 |
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180 |
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Cash, cash equivalents and restricted cash, end of period |
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$ |
759 |
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$ |
222 |
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Supplemental disclosure of non-cash operating activities: |
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Non-cash transfers from Inventory to Property and Equipment(1) |
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$ |
301 |
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$ |
— |
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Supplemental disclosure of non-cash financing activities: |
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Issuance of other debt |
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$ |
— |
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$ |
23 |
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(1) |
See Note 8: Property and Equipment for more information. |
See notes to unaudited condensed consolidated financial statements.
4
HILTON GRAND VACATIONS INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)
(in millions)
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Additional |
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Accumulated |
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Common Stock |
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Paid-in |
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Retained |
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Total |
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Shares |
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Amount |
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Capital |
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Earnings |
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Equity |
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Balance as of December 31, 2019 |
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|
85 |
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$ |
1 |
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$ |
179 |
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$ |
390 |
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$ |
570 |
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Net income |
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|
— |
|
|
|
— |
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— |
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8 |
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|
8 |
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Activity related to share-based compensation |
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— |
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— |
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(5 |
) |
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— |
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(5 |
) |
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Repurchase and retirement of common stock |
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(1 |
) |
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— |
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(2 |
) |
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(8 |
) |
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(10 |
) |
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Balance as of March 31, 2020 |
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|
84 |
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|
1 |
|
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$ |
172 |
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$ |
390 |
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$ |
563 |
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Additional |
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Accumulated |
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Common Stock |
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Paid-in |
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Retained |
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Total |
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Shares |
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Amount |
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Capital |
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Earnings |
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Equity |
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|||||
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Balance as of December 31, 2018 |
|
|
94 |
|
|
$ |
1 |
|
|
$ |
174 |
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|
$ |
441 |
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|
$ |
616 |
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Net income |
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|
— |
|
|
|
— |
|
|
|
— |
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|
|
55 |
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|
55 |
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Activity related to share-based compensation |
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|
— |
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— |
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1 |
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— |
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|
1 |
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Repurchase and retirement of common stock |
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(3 |
) |
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— |
|
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(5 |
) |
|
|
(92 |
) |
|
|
(97 |
) |
|
Balance as of March 31, 2019 |
|
|
91 |
|
|
|
1 |
|
|
$ |
170 |
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|
$ |
404 |
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|
$ |
575 |
|
See notes to unaudited condensed consolidated financial statements.
5
HILTON GRAND VACATIONS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1: Organization
Our Business
Hilton Grand Vacations Inc. (“Hilton Grand Vacations,” “we,” “us,” “our,” “HGV” or the “Company”) is a global timeshare company engaged in developing, marketing, selling and managing timeshare resorts primarily under the Hilton Grand Vacations brand. Our operations primarily consist of: selling vacation ownership intervals (“VOIs”) for us and third parties; financing and servicing loans provided to consumers for their timeshare purchases; operating resorts; and managing our points-based Hilton Grand Vacations Club exchange program (collectively the “Club”). As of March 31, 2020, we had 59 properties, comprised of 9,551 units, located in the United States (“U.S.”), Japan, the United Kingdom, Italy and Barbados.
Note 2: Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation
The unaudited condensed consolidated financial statements presented herein include 100 percent of our assets, liabilities, revenues, expenses and cash flows as well as all entities in which we have a controlling financial interest. In our opinion, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, including normal recurring items, considered necessary for a fair presentation of the interim periods. All material intercompany transactions and balances have been eliminated in consolidation.
The unaudited condensed consolidated financial statements reflect our financial position, results of operations and cash flows as prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”). Certain information and footnote disclosures normally included in financial statements presented in accordance with U.S. GAAP have been omitted in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). Although we believe the disclosures made are adequate to prevent information presented from being misleading, these financial statements should be read in conjunction with the consolidated financial statements and notes thereto as of and for the year ended December 31, 2019, included in our Annual Report on Form 10-K filed with the SEC on March 2, 2020.
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported and, accordingly, ultimate results could differ from those estimates. Interim results are not necessarily indicative of full year performance.
Summary of Significant Accounting Policies
Accounts Receivable and Allowance for Credit Losses
Accounts receivable primarily consists of trade receivables and is reported at the customers’ outstanding balances, less any allowance for credit losses. The expected credit losses are measured using an expected-loss model that reflects the risk of loss and considers the losses expected over the outstanding period of the receivable.
Cloud Computing Arrangements
We capitalize certain costs associated with cloud computing arrangements (“CCAs”). These costs are included in Other assets in our condensed consolidated balance sheets and are expensed in the same line as the hosting arrangement in our condensed consolidated statements of operations using the straight-line method over the assets’ estimated useful lives, which is generally three to five years. We review the CCAs for impairment when circumstances indicate that their carrying amounts may not be recoverable. If the carrying value of an asset group is not recoverable, we recognize an impairment loss for the excess of carrying value over the fair value in our condensed consolidated statements of operations.
Derivative Instruments
We use derivative instruments as part of our overall strategy to manage our exposure to market risks primarily associated with fluctuations in interest rates and do not use derivatives for trading or speculative purposes. We record the derivative instrument at fair value either as an asset or liability. We assess the effectiveness of our hedging instruments quarterly and record changes in fair value in accumulated other comprehensive income (“AOCI”) for the effective portion of the hedge and record the ineffectiveness of a hedge immediately in earnings in our condensed consolidated statements of operations. We release the derivative’s gain or loss from AOCI to match the timing of the underlying hedged items’ effect on earnings.
6
Recently Issued Accounting Pronouncements
Adopted Accounting Standards
On January 1, 2020, we adopted Accounting Standards Update (ASU) No. 2016-13, (“ASU 2016-13”), Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASC 326”), using the modified retrospective approach. The new standard requires that expected credit losses relating to financial assets measured on an amortized cost basis are measured using an expected-loss model, replacing the current incurred-loss model, and recorded through an allowance for credit losses. The adoption of ASU 2016-13 did not have a material impact on our condensed consolidated financial statements and related disclosures and no cumulative adjustment was recorded primarily as our timeshare financing receivables are recorded net of an allowance that is calculated in accordance with ASC 606, Revenue from Contracts with Customers.
On January 1, 2020, we adopted ASU 2018-15 (“ASU 2018-15”), Customer’s Accounting Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract, which requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in Accounting Standards Codification 350-40 to determine which implementation costs to defer and recognize as an asset. ASU 2018-15 generally aligns the guidance on recognizing implementation costs incurred in a cloud computing arrangement that is a service contract with that for implementation costs incurred to develop or obtain internal-use software, including hosting arrangements that include an internal-use software license. This ASU has been adopted using the retrospective approach. Accordingly, previously reported financial information has been restated to reflect the application of the new standard to the comparative periods presented. The adoption of ASU 2018-15 did not have a material impact on our condensed consolidated financial statements.
Accounting Standards Not Yet Adopted
In December 2019, the FASB issued ASU 2019-12 (“ASU 2019-12”), Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. ASU 2019-12 is intended to simplify various aspects related to accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and which also clarifies and amends existing guidance to improve consistent application. The provisions of this ASU are effective for reporting periods after December 15, 2020. We are currently evaluating the effect that this ASU will have on our condensed consolidated financial statements.
In March 2020, the FASB issued ASU 2020-04 (“ASU 2020-04”), Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04 provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of the London Interbank Offered Rate (“LIBOR”) or by another reference rate expected to be discontinued. The amendments are effective for all entities as of March 12, 2020 through December 31, 2022. We are currently evaluating the effect that this ASU will have on our condensed consolidated financial statements.
7
Note 3: Revenue from Contracts with Customers
Disaggregation of Revenue
The following tables show our disaggregated revenues by segment from contracts with customers. We operate our business in the following two segments: (i) Real estate sales and financing and (ii) Resort operations and club management. Please refer to Note 18: Business Segments below for more details related to our segments.
|
|
|
Three Months Ended March 31, |
|
|||||
|
($ in millions) |
|
2020 |
|
|
2019 |
|
||
|
Real Estate and Financing Segment |
|
|
|
|
|
|
|
|
|
Sales of VOIs, net |
|
$ |
56 |
|
|
$ |
125 |
|
|
Sales, marketing, brand and other fees |
|
|
106 |
|
|
|
141 |
|
|
Interest income |
|
|
38 |
|
|
|
36 |
|
|
Other financing revenue |
|
|
6 |
|
|
|
5 |
|
|
Real estate and financing segment revenues |
|
$ |
206 |
|
|
$ |
307 |
|
|
|
|
Three Months Ended March 31, |
|
|||||
|
($ in millions) |
|
2020 |
|
|
2019 |
|
||
|
Resort Operations and Club Management Segment |
|
|
|
|
|
|
|
|
|
Club management |
|
$ |
25 |
|
|
$ |
26 |
|
|
Resort management |
|
|
19 |
|
|
|
16 |
|
|
Rental |
|
|
47 |
|
|
|
52 |
|
|
Ancillary services |
|
|
5 |
|
|
|
7 |
|
|
Resort operations and club management segment revenues |
|
$ |
96 |
|
|
$ |
101 |
|
Contract Balances
The following table provides information on our accounts receivable and contract assets from contracts with customers which are included in Accounts receivable, net on our condensed consolidated balance sheets:
|
|
|
March 31, |
|
|
December 31, |
|
||
|
($ in millions) |
|
2020 |
|
|
2019 |
|
||
|
Receivables |
|
$ |
115 |
|
|
$ |
129 |
|
|
Contract assets |
|
|
1 |
|
|
|
— |
|
The following table presents the composition of our contract liabilities.
|
|
|
March 31, |
|
|
December 31, |
|
||
|
($ in millions) |
|
2020 |
|
|
2019 |
|
||
|
Contract liabilities: |
|
|
|
|
|
|
|
|
|
Advanced deposits |
|
$ |
117 |
|
|
$ |
115 |
|
|
Deferred Sales of VOIs of projects under construction |
|
|
131 |
|
|
|
84 |
|
|
Club activation fees, annual dues and other |
|
|
130 |
|
|
|
86 |
|
|
Club Bonus Point incentive liability(1) |
|
|
61 |
|
|
|
59 |
|
|
(1) |
Amounts related to the Club Bonus Point incentive liability are included in Accounts payable, accrued expenses and other on our condensed consolidated balance sheets. This liability is comprised of unrecognized revenue for incentives from VOI sales and sales and marketing expenses in conjunction with our fee-for-service arrangements. |
8
Revenue earned for the three months ended March 31, 2020 that was included in the contract liabilities balance at December 31, 2019 was approximately $36 million.
Our accounts receivables that relate to our contracts with customers includes amounts associated with our contractual right to consideration for completed performance obligations related primarily to our fee-for-service arrangements and homeowners’ associations (“HOA”) management agreements and are settled when the related cash is received. Accounts receivable are recorded when the right to consideration becomes unconditional and is only contingent on the passage of time. Refer to Note 6: Timeshare Financing Receivables for information on balances and changes in balances during the period related to our timeshare financing receivables.
Contract assets relate to incentive fees that can be earned for meeting certain target on sales of VOIs at properties under our fee-for-service arrangements; however, our right to consideration is conditional upon completing the requirements of the annual incentive fee period.
Contract liabilities include payments received or due in advance of satisfying our performance obligations. Such contract liabilities include advance deposits received on prepaid vacation packages for future stays at our resorts, deferred revenues related to sales of VOIs of projects under construction, club activation fees and annual dues and the liability for Club Bonus Points awarded to our customers for purchase of VOIs at our properties or properties under our fee-for-service arrangements that may be redeemed in the future.
Transaction Price Allocated to Remaining Performance Obligations
Transaction price allocated to remaining performance obligations represents contract revenue that has not yet been recognized. Our contracts with remaining performance obligations primarily include (i) sales of VOIs under construction, (ii) Club activation fees paid at closing of a VOI purchase, (iii) customers’ advanced deposits on prepaid vacation packages and (iv) Club Bonus Points that may be redeemed in the future. The following table represents the deferred revenue, cost of VOI sales and direct selling costs from sales of VOIs related to projects under construction as of March 31, 2020:
|
|
|
March 31, |
|
|
December 31, |
|
||
|
($ in millions) |
|
2020 |
|
|
2019 |
|
||
|
Sales of VOIs, net |
|
$ |
131 |
|
|
$ |
84 |
|
|
Cost of VOI sales(1) |
|
|
40 |
|
|
|
27 |
|
|
Sales and marketing expense |
|
|
19 |
|
|
|
12 |
|
|
(1) |
Includes anticipated Cost of VOI sales related to inventory associated with Sales of VOIs under construction that will be acquired under a just-in-time arrangement once construction is complete. |
We expect to recognize the revenue, costs of VOI sales and direct selling costs upon completion of the projects in 2021.
The following table includes the remaining transaction price related to Advanced deposits, Club activation fees and Club Bonus Points as of March 31, 2020:
|
($ in millions) |
|
Remaining Transaction Price |
|
|
Recognition Period |
|
Recognition Method |
|
|
Advanced deposits |
|
$ |
117 |
|
|
18 months |
|
Upon customer stays |
|
Club activation fees |
|
|
71 |
|
|
7 years |
|
Straight-line basis over average inventory holding period |
|
Club Bonus Points |
|
|
61 |
|
|
24 months |
|
Upon redemption |
9
Note 4: Restricted Cash
Restricted cash was as follows:
|
|
|
March 31, |
|
|
December 31, |
|
||
|
($ in millions) |
|
2020 |
|
|
2019 |
|
||
|
Escrow deposits on VOI sales |
|
$ |
59 |
|
|
$ |
59 |
|
|
Reserves related to non-recourse debt |
|
|
31 |
|
|
|
26 |
|
|
|
|
$ |
90 |
|
|
$ |
85 |
|
Note 5: Accounts Receivable
The following table represents our accounts receivable, net of allowance for credit losses. Following the adoption of ASC 326 on January 1, 2020, accounts receivable within the scope of ASC 326 are measured at amortized cost.
|
($ in millions) |
March 31, 2020 |
|
|
|
Fee-for-service commissions(1) |
$ |
63 |
|
|
Real estate and financing |
15 |
|
|
|
Resort and club operations |
28 |
|
|
|
Tax receivables |
41 |
|
|
|
Other receivables(2) |
11 |
|
|
|
Total |
$ |
158 |
|
|
(1) |
Net of allowance. |
|
(2) |
Primarily includes individually insignificant accounts receivable recognized in the ordinary course of business, the allowances for which are individually insignificant. |
Our accounts receivable are all due within one year of origination. We use delinquency status and economic factors as credit quality indicators to monitor our receivables within the scope of ASC 326 and use these as a basis for how we develop our expected loss estimates.
We sell VOIs on behalf of third-party developers using the Hilton Grand Vacations brand in exchange for sales, marketing and brand fees. We use historical losses and economic factors as a basis to develop our allowance for credit losses. Under these fee-for-service arrangements, we earn commission fees based on a percentage of total interval sales. Additionally, the terms include provisions requiring the reduction of fees earned for defaults and cancellations.
The changes in our allowance for fee-for-service commissions were as follows:
|
($ in millions) |
March 31, 2020 |
|
|
|
Balance as of December 31, 2019 |
$ |
19 |
|
|
Current period provision for expected credit losses |
4 |
|
|
|
Write-offs charged against the allowance |
|
(8 |
) |
|
Balance at March 31, 2020 |
$ |
15 |
|
10
Note 6: Timeshare Financing Receivables
Timeshare financing receivables were as follows:
|
|
|
March 31, 2020 |
|
|||||||||
|
($ in millions) |
|
Securitized and Pledged |
|
|
Unsecuritized(1) |
|
|
Total |
|
|||
|
Timeshare financing receivables |
|
$ |
703 |
|
|
$ |
631 |
|
|
$ |
1,334 |
|
|
Less: allowance for financing receivables losses |
|
|
(48 |
) |
|
|
(164 |
) |
|
|
(212 |
) |
|
|
|
$ |
655 |
|
|
$ |
467 |
|
|
$ |
1,122 |
|
|
|
|
December 31, 2019 |
|
|||||||||
|
($ in millions) |
|
Securitized and Pledged |
|
|
Unsecuritized(1) |
|
|
Total |
|
|||
|
Timeshare financing receivables |
|
$ |
758 |
|
|
$ |
582 |
|
|
$ |
1,340 |
|
|
Less: allowance for financing receivables losses |
|
|
(54 |
) |
|
|
(130 |
) |
|
|
(184 |
) |
|
|
|
$ |
704 |
|
|
$ |
452 |
|
|
$ |
1,156 |
|
|
(1) |
Includes amounts used as collateral to secure a non-recourse revolving timeshare receivable credit facility ("Timeshare Facility") as well as amounts held as future collateral for securitization activities. |
As of March 31, 2020, the carrying value of our timeshare financing receivables securing the outstanding debt balance of our Timeshare Facility was $191 million. As of December 31, 2019, we had no timeshare receivables pledged to the Timeshare Facility. We record an estimate of variable consideration for estimated defaults as a reduction of revenue from VOI sales at the time revenue is recognized on a VOI sale. We record the difference between the timeshare financing receivable and the variable consideration included in the transaction price for the sale of the related VOI as an allowance for financing receivables and record the receivable net of the allowance. During the three months ended March 31, 2020, we recorded an adjustment to our estimate of variable consideration of $37 million, which includes a $23 million revenue reduction related to changes in estimates primarily driven by economic factors surrounding the COVID-19 pandemic.
Our timeshare financing receivables as of March 31, 2020 mature as follows:
|
($ in millions) |
Securitized and Pledged |
|
|
Unsecuritized |
|
|
Total |
|
|||
|
Year |
|
|
|
|
|
|
|
|
|
|
|
|
2020 (remaining) |
$ |
69 |
|
|
$ |
43 |
|
|
$ |
112 |
|
|
2021 |
|
92 |
|
|
|
50 |
|
|
|
142 |
|
|
2022 |
|
93 |
|
|
|
54 |
|
|
|
147 |
|
|
2023 |
|
93 |
|
|
|
59 |
|
|
|
152 |
|
|
2024 |
|
92 |
|
|
|
63 |
|
|
|
155 |
|
|
Thereafter |
|
264 |
|
|
|
362 |
|
|
|
626 |
|
|
|
|
703 |
|
|
|
631 |
|
|
|
1,334 |
|
|
Less: allowance for financing receivables losses |
|
(48 |
) |
|
|
(164 |
) |
|
|
(212 |
) |
|
|
$ |
655 |
|
|
$ |
467 |
|
|
$ |
1,122 |
|
11
We evaluate this portfolio collectively for purposes of estimating variable consideration, since we hold a large group of homogeneous timeshare financing receivables which are individually immaterial. We monitor the credit quality of our receivables on an ongoing basis. There are no significant concentrations of credit risk with any individual counterparty or groups of counterparties. We use a technique referred to as static pool analysis as the basis for estimating expected defaults and determining our allowance for financing receivables losses on our timeshare financing receivables. For static pool analysis, we use certain key dimensions to stratify our portfolio, including FICO scores, equity percentage at the time of sale and certain other factors. The adequacy of the related allowance is determined by management through analysis of several factors, such as current economic conditions and industry trends, as well as the specific risk characteristics of the portfolio including assumed default rates, aging and historical write-offs of these receivables. The allowance is maintained at a level deemed adequate by management based on a periodic analysis of the mortgage portfolio.
We recognize interest income on our timeshare financing receivables as earned. As of March 31,2020, and December 31, 2019 we had $9 million of interest receivable outstanding included in our condensed consolidated balance sheets. The interest rate charged on the notes correlates to the risk profile of the customer at the time of purchase and the percentage of the purchase that is financed, among other factors. As of March 31, 2020, our timeshare financing receivables had interest rates ranging from 3.90 percent to 20.50 percent, a weighted-average interest rate of 12.52 percent, a weighted-average remaining term of 7.9 years and maturities through 2035.
Our gross timeshare financing receivables balances by FICO score were as follows:
|
|
|
March 31, |
|
|
December 31, |
|
||
|
($ in millions) |
|
2020 |
|
|
2019 |
|
||
|
FICO score |
|
|
|
|
|
|
|
|
|
700+ |
|
$ |
812 |
|
|
$ |
818 |
|
|
600-699 |
|
|
291 |
|
|
|
292 |
|
|
<600 |
|
|
39 |
|
|
|
39 |
|
|
No score(1) |
|
|
192 |
|
|
|
191 |
|
|
|
|
$ |
1,334 |
|
|
$ |
1,340 |
|
|
(1) |
Timeshare financing receivables without a FICO score are primarily related to foreign borrowers. |
The following table details the origination year of our gross timeshare financing receivables by FICO score as of March 31, 2020:
|
($ in millions) |
|
2020 |
|
|
2019 |
|
|
2018 |
|
|
2017 |
|
|
2016 |
|
|
Prior |
|
|
Total |
|
|||||||
|
FICO score |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
700+ |
|
$ |
78 |
|
|
$ |
266 |
|
|
$ |
178 |
|
|
$ |
115 |
|
|
$ |
75 |
|
|
$ |
100 |
|
|
$ |
812 |
|
|
600-699 |
|
|
22 |
|
|
|
92 |
|
|
|
64 |
|
|
|
41 |
|
|
|
27 |
|
|
|
45 |
|
|
|
291 |
|
|
<600 |
|
|
3 |
|
|
|
12 |
|
|
|
8 |
|
|
|
5 |
|
|
|
4 |
|
|
|
7 |
|
|
|
39 |
|
|
No score(1) |
|
|
19 |
|
|
|
62 |
|
|
|
39 |
|
|
|
21 |
|
|
|
15 |
|
|
|
36 |
|
|
|
192 |
|
|
|
|
$ |
122 |
|
|
$ |
432 |
|
|
$ |
289 |
|
|
$ |
182 |
|
|
$ |
121 |
|
|
$ |
188 |
|
|
$ |
1,334 |
|
(1)Timeshare financing receivables without a FICO score are primarily related to foreign borrowers.
12
We apply payments we receive for timeshare financing receivables, including those in non-accrual status, to amounts due in the following order: servicing fees; interest; principal; and late charges. Once a receivable is 91 days past due, we cease accruing interest and reverse the accrued interest recognized up to that point. We resume interest accrual for receivables for which we had previously ceased accruing interest once the receivable is less than 91 days past due. We fully reserve for a timeshare financing receivable in the month following the date that the receivable is 121 days past due and, subsequently, we write off the uncollectible balance against the reserve once the foreclosure process is complete and we receive the deed for the foreclosed unit.
As of March 31, 2020 and December 31, 2019, we had ceased accruing interest on timeshare financing receivables with an aggregate principal balance of $84 million and $74 million, respectively. The following tables detail an aged analysis of our gross timeshare receivables balance:
|
|
|
March 31, 2020 |
|
|||||||||
|
($ in millions) |
|
Securitized and Pledged |
|
|
Unsecuritized |
|
|
Total |
|
|||
|
Current |
|
$ |
683 |
|
|
$ |
540 |
|
|
$ |
1,223 |
|
|
31 - 90 days past due |
|
|
13 |
|
|
|
14 |
|
|
|
27 |
|
|
91 - 120 days past due |
|
|
4 |
|
|
|
4 |
|
|
|
8 |
|
|
121 days and greater past due |
|
|
3 |
|
|
|
73 |
|
|
|
76 |
|
|
|
|
$ |
703 |
|
|
$ |
631 |
|
|
$ |
1,334 |
|
|
|
|
December 31, 2019 |
|
|||||||||
|
($ in millions) |
|
Securitized and Pledged |
|
|
Unsecuritized |
|
|
Total |
|
|||
|
Current |
|
$ |
743 |
|
|
$ |
502 |
|
|
$ |
1,245 |
|
|
31 - 90 days past due |
|
|
9 |
|
|
|
12 |
|
|
|
21 |
|
|
91 - 120 days past due |
|
|
3 |
|
|
|
4 |
|
|
|
7 |
|
|
121 days and greater past due |
|
|
3 |
|
|
|
64 |
|
|
|
67 |
|
|
|
|
$ |
758 |
|
|
$ |
582 |
|
|
$ |
1,340 |
|
The changes in our allowance for financing receivables losses were as follows:
|
|
|
March 31, 2020 |
|
|||||||||
|
($ in millions) |
|
Securitized and Pledged |
|
|
Unsecuritized |
|
|
Total |
|
|||
|
Balance as of December 31, 2019 |
|
$ |
54 |
|
|
$ |
130 |
|
|
$ |
184 |
|
|
Write-offs |
|
|
— |
|
|
|
(9 |
) |
|
|
(9 |
) |
|
Provision for financing receivables losses(1) |
|
|
(6 |
) |
|
|
43 |
|
|
|
37 |
|
|
Balance as of March 31, 2020 |
|
$ |
48 |
|
|
$ |
164 |
|
|
$ |
212 |
|
|
|
|
March 31, 2019 |
|
|||||||||
|
($ in millions) |
|
Securitized and Pledged |
|
|
Unsecuritized |
|
|
Total |
|
|||
|
Balance as of December 31, 2018 |
|
$ |
43 |
|
|
$ |
129 |
|
|
$ |
172 |
|
|
Write-offs |
|
|
— |
|
|
|
(17 |
) |
|
|
(17 |
) |
|
Provision for financing receivables losses(1) |
|
|
(4 |
) |
|
|
18 |
|
|
|
14 |
|
|
Balance as of March 31, 2019 |
|
$ |
39 |
|
|
$ |
130 |
|
|
$ |
169 |
|
|
|
(1) |
Includes incremental provision for financing receivables losses, net of activity related to the repurchase of defaulted and upgraded securitized timeshare financing receivables. |
13
Note 7: Inventory
Inventory was as follows:
|
|
|
March 31, |
|
|
December 31, |
|
||
|
($ in millions) |
|
2020 |
|
|
2019 |
|
||
|
Completed unsold VOIs |
|
$ |
241 |
|
|
$ |
241 |
|
|
Construction in process |
|
|
386 |
|
|
|
59 |
|
|
Land, infrastructure and other |
|
|
258 |
|
|
|
258 |
|
|
|
|
$ |
885 |
|
|
$ |
558 |
|
During the three months ended March 31, 2020, we recorded non-cash operating activity transfers from Property and equipment to Inventory. See Note 8: Property and Equipment.
Shown below are (i) costs of sales true-ups relating to VOI products and the related impacts to the carrying value of inventory and (ii) expenses incurred, recorded in Cost of VOI sales, related to granting credit to customers for their existing ownership when upgrading into fee-for service projects.
|
|
|
Three Months Ended March 31, |
|
|||||
|
($ in millions) |
|
2020 |
|
|
2019 |
|
||
|
Cost of sales true-up(1) |
|
$ |
4 |
|
|
$ |
4 |
|
|
Cost of VOI sales related to fee-for-service upgrades |
|
|
5 |
|
|
|
9 |
|
|
(1) |
Costs of sales true ups reduced costs of VOI sales and increased inventory in all periods presented. |
Note 8: Property and Equipment
Property and equipment was as follows:
|
|
|
March 31, |
|
|
December 31, |
|
||
|
($ in millions) |
|
2020 |
|
|
2019 |
|
||
|
Land |
|
$ |
104 |
|
|
$ |
154 |
|
|
Building and leasehold improvements |
|
|
245 |
|
|
|
286 |
|
|
Furniture and equipment |
|
|
66 |
|
|
|
65 |
|
|
Construction in progress |
|
|
172 |
|
|
|
383 |
|
|
|
|
|
587 |
|
|
|
888 |
|
|
Accumulated depreciation |
|
|
(114 |
) |
|
|
(110 |
) |
|
|
|
$ |
473 |
|
|
$ |
778 |
|
During the three months ended March 31, 2020, we recorded non-cash operating activity transfers of $301 million related to the registrations for timeshare units under construction from Property and equipment to Inventory. Non-cash transfers are reflected in our unaudited condensed consolidated statements of cash flows.
Note 9: Consolidated Variable Interest Entities
As of March 31, 2020 and December 31, 2019, we consolidated 4 variable interest entities (“VIEs”) that issued non-recourse debt backed by pledged assets consisting primarily of a pool of timeshare financing receivables which is without recourse to us. We are the primary beneficiaries of these VIEs as we have the power to direct the activities that most significantly affect their economic performance. We are also the servicer of these timeshare financing receivables and we are required to replace or repurchase timeshare financing receivables that are in default at their outstanding principal amounts. Additionally, we have the obligation to absorb their losses and the right to receive benefits that could be significant to them. Only the assets of our VIEs are available to settle the obligations of the respective entities.
14
Our condensed consolidated balance sheets included the assets and liabilities of these entities, which primarily consisted of the following:
|
|
|
March 31, |
|
|
December 31, |
|
||
|
($ in millions) |
|
2020 |
|
|
2019 |
|
||
|
Restricted cash |
|
$ |
26 |
|
|
$ |
26 |
|
|
Timeshare financing receivables, net |
|
|
655 |
|
|
|
704 |
|
|
Non-recourse debt(1) |
|
|
690 |
|
|
|
747 |
|
|
(1) |
Net of deferred financing costs. |
During the three months ended March 31, 2020 and 2019, we did not provide any financial or other support to any VIEs that we were not previously contractually required to provide, nor do we intend to provide such support in the future.
Note 10: Investments in Unconsolidated Affiliates
As of March 31, 2020, we have 25 percent and 50 percent ownership interests in BRE Ace LLC and 1776 Holding LLC, respectively, that are deemed as VIEs. We do not consolidate BRE Ace LLC and 1776 Holding LLC because we are not the primary beneficiary. Our investment interests in and equity earned from both VIEs are included in the consolidated balance sheets as Investments in unconsolidated affiliates and in the consolidated statements of operations as Equity in earnings from unconsolidated affiliates, respectively.
We held investments in our two unconsolidated affiliates with aggregated debt balances of $477 million and $479 million as of March 31, 2020 and December 31, 2019, respectively. The debt is secured by their assets and is without recourse to us. Our maximum exposure to loss as a result of our investment interests in the two unconsolidated affiliates is primarily limited to (i) the carrying amount of the investments which totals $47 million and $44 million as of March 31, 2020 and December 31, 2019, respectively and (ii) receivables for commission and other fees earned under fee-for-service arrangements. See Note 17: Related Party Transactions for additional information.
Note 11: Debt & Non-recourse Debt
Debt
The following table details our outstanding debt balance and its associated interest rates:
|
|
|
March 31, |
|
|
December 31, |
|
||
|
($ in millions) |
|
2020 |
|
|
2019 |
|
||
|
Debt(1) |
|
|
|
|
|
|
|
|
|
Senior secured credit facilities: |
|
|
|
|
|
|
|
|
|
Term loan with a rate of 2.709%, due 2023 |
|
$ |
185 |
|
|
$ |
187 |
|
|
Revolver with a weighted average rate of 2.597%, due 2023 |
|
|
760 |
|
|
|
320 |
|
|
Senior notes with a rate of 6.125%, due 2024 |
|
|
300 |
|
|
|
300 |
|
|
Other debt |
|
|
27 |
|
|
|
27 |
|
|
|
|
|
1,272 |
|
|
|
834 |
|
|
Less: unamortized deferred financing costs and discount(2)(3) |
|
|
(6 |
) |
|
|
(6 |
) |
|
|
|
$ |
1,266 |
|
|
$ |
828 |
|
|
(1) |
As of the three months ended March 31, 2020 and year ended December 31, 2019, weighted-average interest rates were 3.537 percent and 4.571 percent, respectively. |
|
(2) |
Amount includes deferred financing costs related to our term loan and senior notes of $1 million and $5 million, respectively, as of March 31, 2020 and December 31, 2019. |
|
(3) |
Amount does not include deferred financing costs of $5 million as of March 31, 2020 and December 31, 2019, relating to our revolving facility included in Other Assets in our condensed consolidated balance sheets. |
15
During the three months ended March 31, 2020, we borrowed $495 million and repaid $57 million (including recurring payments) under the senior secured credit facilities with an interest rate based on one month LIBOR plus 1.75 percent.
During the first quarter of 2020, we entered into a pay-fixed/receive-variable interest rate swap agreement on our senior secured credit facility with a notional amount of $62 million. The one-month LIBOR was effectively modified to a fixed rate of 0.62% through November 2023. For the three months ended March 31, 2020, we recorded less than $1 million in accumulated other comprehensive income related to the hedge.
As of March 31, 2020 and December 31, 2019, we had $1 million of outstanding letters of credit under the revolving credit facility. We were in compliance with all applicable financial covenants as of March 31, 2020.
Non-recourse Debt
The following table details our outstanding non-recourse debt balance and its associated interest rates:
|
|
|
March 31, |
|
|
December 31, |
|
||
|
($ in millions) |
|
2020 |
|
|
2019 |
|
||
|
Non-recourse debt(1) |
|
|
|
|
|
|
|
|
|
Timeshare Facility with an average rate of 1.861%, due 2022 |
|
$ |
195 |
|
|
$ |
— |
|
|
Securitized Debt with an average rate of 1.810%, due 2026 |
|
|
40 |
|
|
|
46 |
|
|
Securitized Debt with an average rate of 2.711%, due 2028 |
|
|
136 |
|
|
|
149 |
|
|
Securitized Debt with an average rate of 3.602%, due 2032 |
|
|
250 |
|
|
|
275 |
|
|
Securitized Debt with an average rate of 2.431%, due 2033 |
|
|
271 |
|
|
|
285 |
|
|
|
|
|
892 |
|
|
|
755 |
|
|
Less: unamortized deferred financing costs(2) |
|
|
(7 |
) |
|
|
(8 |
) |
|
|
|
$ |
885 |
|
|
$ |
747 |
|
|
(1) |
As of three months ended March 31, 2020 and year ended December 31, 2019, weighted-average interest rates were 2.650 percent and 2.876 percent, respectively. |
|
(2) |
Amount relates to securitized debt only and does not include deferred financing costs of $2 million as of March 31, 2020 and $3 million as of December 31, 2019 relating to our Timeshare Facility which are included in Other Assets in our condensed consolidated balance sheets. |
The Timeshare Facility is a non-recourse obligation with a borrowing capacity of $450 million and is payable solely from the pool of timeshare financing receivables pledged as collateral and related assets. In January 2020, we amended the Timeshare Facility, temporarily changing certain covenant requirements. All other terms and borrowing capacity remained the same in both amendments.
We are required to deposit payments received from customers on the timeshare financing receivables securing the Timeshare Facility and Securitized Debt into depository accounts maintained by third parties. On a monthly basis, the depository accounts are utilized to make required principal, interest and other payments due under the respective loan agreements. The balances in the depository accounts were $31 million and $26 million as of March 31, 2020 and December 31, 2019, respectively, and were included in Restricted cash in our condensed consolidated balance sheets.
16
Debt Maturities
The contractual maturities of our debt and non-recourse debt as of March 31, 2020 were as follows:
|
($ in millions) |
|
Debt |
|
|
Non-recourse Debt |
|
|
Total |
|
|||
|
Year |
|
|
|
|
|
|
|
|
|
|
|
|
|
2020 (remaining) |
|
$ |
9 |
|
|
$ |
174 |
|
|
$ |
183 |
|
|
2021 |
|
|
11 |
|
|
|
161 |
|
|
|
172 |
|
|
2022 |
|
|
11 |
|
|
|
307 |
|
|
|
318 |
|
|
2023 |
|
|
918 |
|
|
|
112 |
|
|
|
1,030 |
|
|
2024 |
|
|
300 |
|
|
|
43 |
|
|
|
343 |
|
|
Thereafter |
|
|
23 |
|
|
|
95 |
|
|
|
118 |
|
|
|
|
$ |
1,272 |
|
|
$ |
892 |
|
|
$ |
2,164 |
|
Note 12: Fair Value Measurements
The carrying amounts and estimated fair values of our financial assets and liabilities were as follows:
|
|
|
March 31, 2020 |
|
|||||||||
|
|
|
|
|
|
|
Hierarchy Level |
|
|||||
|
($ in millions) |
|
Carrying Amount |
|
|
Level 1 |
|
|
Level 3 |
|
|||
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Timeshare financing receivables, net(1) |
|
$ |
1,122 |
|
|
$ |
— |
|
|
$ |
1,377 |
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt, net(2) |
|
|
1,266 |
|
|
|
270 |
|
|
|
962 |
|
|
Non-recourse debt, net(2) |
|
|
885 |
|
|
|
— |
|
|
|
845 |
|
|
(1) |
Carrying amount net of allowance for financing receivables losses. |
|
(2) |
Carrying amount net of unamortized deferred financing costs and discount. |
|
|
|
December 31, 2019 |
|
|||||||||
|
|
|
|
|
|
|
Hierarchy Level |
|
|||||
|
($ in millions) |
|
Carrying Amount |
|
|
Level 1 |
|
|
Level 3 |
|
|||
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Timeshare financing receivables, net(1) |
|
$ |
1,156 |
|
|
$ |
— |
|
|
$ |
1,446 |
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt, net(2) |
|
|
828 |
|
|
|
326 |
|
|
|
544 |
|
|
Non-recourse debt, net(2) |
|
|
747 |
|
|
|
— |
|
|
|
749 |
|
|
(1) |
Carrying amount net of allowance for financing receivables losses. |
|
(2) |
Carrying amount net of unamortized deferred financing costs and discount. |
Our estimates of the fair values were determined using available market information and appropriate valuation methods. Considerable judgment is necessary to interpret market data and develop the estimated fair values. The table above excludes cash and cash equivalents, restricted cash, accounts receivable, accounts payable, advance deposits and accrued liabilities, all of which had fair values approximating their carrying amounts due to the short maturities and liquidity of these instruments.
The estimated fair values of our timeshare financing receivables were determined using a discounted cash flow model. Our model incorporates default rates, coupon rates, credit quality and borrowing terms respective to the portfolio based on current market assumptions for similar types of arrangements.
The estimated fair values of our Level 1 debt was based on prices in active debt markets. The estimated fair value of our Level 3 debt and non-recourse debt were as follows:
|
|
• |
Debt - based on indicative quotes obtained for similar issuances and projected future cash flows discounted at risk-adjusted rates. |
|
|
• |
Non-recourse debt - based on projected future cash flows discounted at risk-adjusted rates. |
17
We do not have any assets or liabilities measured at fair value on a recurring or non-recurring basis as of March 31, 2020.
Note 13: Leases
We lease sales centers, office space and equipment under operating leases. Our leases expire at various dates from 2020 through 2030, with varying renewal and termination options. Our lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.
We recognize rent expense on leases with both contingent and non-contingent lease payment terms. Rent associated with non-contingent lease payments are recognized on a straight-line basis over the lease term. Rent expense for all operating leases for the three months ended March 31, 2020 and 2019 was $2 million and $6 million, respectively. This amount includes immaterial short-term leases and variable lease costs.
Supplemental cash flow information related to operating leases was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|||||
|
($ in millions) |
|
2020 |
|
|
2019 |
|
||
|
Cash paid for amounts included in the measurement of lease liabilities: |
|
|
|
|
|
|
|
|
|
Operating cash flows from operating leases |
|
$ |
5 |
|
|
$ |
5 |
|
|
Right-of-use assets obtained in exchange for new lease liabilities: |
|
|
|
|
|
|
|
|
|
Operating Leases |
|
|
5 |
|
|
|
1 |
|
Supplemental balance sheet information related to operating leases was as follows:
|
|
|
March 31, |
|
|
December 31, |
|
||
|
|
|
2020 |
|
|
2019 |
|
||
|
Weighted-average remaining lease term of operating leases (in years) |
|
5.9 |
|
|
6.1 |
|
||
|
Weighted-average discount rate of operating leases |
|
|
5.24 |
% |
|
|
5.34 |
% |
Future minimum lease payments under noncancelable operating leases, due in each of the next five years and thereafter as of March 31, 2020, are as follows:
|
($ in millions) |
|
Operating Leases |
|
|
|
Year |
|
|
|
|
|
2020 (remaining) |
|
$ |
14 |
|
|
2021 |
|
|
18 |
|
|
2022 |
|
|
13 |
|
|
2023 |
|
|
12 |
|
|
2024 |
|
|
11 |
|
|
Thereafter |
|
|
22 |
|
|
Total future minimum lease payments |
|
$ |
90 |
|
|
Less: imputed interest |
|
|
(13 |
) |
|
Present value of lease liabilities |
|
$ |
77 |
|
Note 14: Income Taxes
At the end of each quarter, we estimate the effective tax rate expected to be applied for the full year. The effective tax rate is determined by the level and composition of pre-tax ordinary income or loss, which is subject to federal, foreign and state and local income taxes. The effective tax rate for the three months ended March 31, 2020 and 2019 was approximately 11 percent and 27 percent, respectively. The decrease in the effective tax rate is primarily due to the tax benefit on our worldwide estimated ordinary loss being reduced by the incremental tax expense from the estimated ordinary income in our foreign jurisdictions, and the impact of estimated permanent differences between financial reporting and taxable income.
We have considered the income tax accounting and disclosure implications of the relief provided by the Coronavirus Aid, Relief, and Economic Security (CARES) Act enacted on March 27, 2020. The effect of tax law changes is required to
18
be recognized either in the interim period in which the legislation is enacted or reflected in the computation of the annual effective tax rate, depending on the nature of the change. As of March 31, 2020, we evaluated the income tax provisions of the CARES Act and have determined there to be no effect on either the March 31, 2020 tax rate or the computation of the estimated effective tax rate for the year. We will continue to evaluate the income tax provisions of the CARES Act and monitor the developments in the jurisdictions where we have significant operations for tax law changes that could have income tax accounting and disclosure implications.
Note 15: Share-Based Compensation
Stock Plan
We issue service-based restricted stock units (“Service RSUs”), service and performance-based restricted stock units (“Performance RSUs”) and nonqualified stock options (“Options”) to certain employees and directors. For the three months ended March, 31, 2020, we recognized a credit to share-based compensation expense of $2 million due to the reversal of $8 million of expense recognized in prior years related to our Performance RSUs which are not expected to achieve certain performance targets. See Performance Shares below for additional information. For the three months ended March 31, 2019, we recognized share-based compensation expense of $5 million. As of March 31, 2020, unrecognized compensation costs for unvested awards were approximately $32 million, which is expected to be recognized over a weighted average period of 1.9 years. As of March 31, 2020, there were 5,192,801 shares of common stock available for future issuance under this plan.
Service RSUs
During the three months ended March 31, 2020, we issued 609,311 Service RSUs with a grant date fair value of $25.80, which generally vest in equal annual installments over three years from the date of grant.
Options
During the three months ended March 31, 2020, we issued 566,401 Options with an exercise price of $25.80, which vest over three years from the date of the grant.
The weighted-average grant date fair value of these options was $9.14, which was determined using the Black-Scholes-Merton option-pricing model with the following assumptions:
|
Expected volatility |
|
|
35.4 |
% |
|
Dividend yield |
|
|
— |
% |
|
Risk-free rate |
|
|
1.0 |
% |
|
Expected term (in years) |
|
|
6.0 |
|
As of March 31, 2020, we had 1,122,415 Options outstanding that were exercisable.
Performance Shares
During the three months ended March 31, 2020, we issued 172,620 Performance RSUs with a grant date fair value of $25.80. The Performance RSUs are settled at the end of a three-year performance period, with 70 percent of the Performance RSUs subject to achievement based on the Company’s adjusted earnings before interest expense, taxes and depreciation and amortization further adjusted for net deferral and recognition of revenues and related direct expenses related to sales of VOIs of projects under construction. The remaining 30 percent of the Performance RSUs are subject to the achievement of certain contract sales targets. As of March 31, 2020, we determined that the performance conditions for the 2018, 2019, and 2020 Performance RSU awards are improbable of achievement due to the significantly negative impact of the COVID-19 pandemic on the global economy, demand for travel and leisure, and our business, including the temporary closures of substantially all of our properties and suspension of substantially all of our sales and other operations, as described in Note 21: COVID-19 and Subsequent Events. As a result, we reversed $8 million of previously recognized share-based compensation expense related to our 2018 and 2019 Performance RSUs and ceased accruing expense related to Performance RSUs granted in 2018, 2019, and 2020, during the three months ended March 31, 2020.
19
Employee Stock Purchase Plan
In March 2017, the Board of Directors adopted the Hilton Grand Vacations Inc. Employee Stock Purchase Plan (the “ESPP”), which became effective during 2017. In connection with the Plan, we issued 2.5 million shares of common stock which may be purchased under the ESPP. The ESPP allows eligible employees to purchase shares of our common stock at a price per share not less than 95% of the fair market value per share of common stock on the purchase date, up to a maximum threshold established by the plan administrator for the offering period. During the three months ended March 31, 2020 and 2019, we recognized less than $1 million of compensation expense related to this plan.
20
Note 16: Earnings Per Share
The following table presents the calculation of our basic and diluted earnings per share (“EPS”). The weighted- average shares outstanding used to compute basic EPS and diluted EPS for the three months ended March 31, 2020 was 85,519,151 and 86,044,525, respectively, and for the three months ended March 31, 2019 was 94,092,147 and 94,597,630, respectively.
|
(1) |
Net income for the three months ended March 31, 2020 and 2019 was $7,826,746 and $55,067,801, respectively. |
The dilutive effect of outstanding share-based compensation awards is reflected in diluted earnings per common share by application of the treasury stock method using average market prices during the period.
For the three months ended March 31, 2020 and 2019, we excluded 1,754,656 and 948,248 share-based compensation awards, respectively, because their effect would have been anti-dilutive under the treasury stock method.
Note 17: Related Party Transactions
BRE Ace LLC and 1776 Holding, LLC
We hold a 25 percent ownership interest in BRE Ace LLC, a VIE, which owns a timeshare resort property and related operations, commonly known as “Elara, by Hilton Grand Vacations.”
We hold a 50 percent ownership interest in 1776 Holding, LLC, a VIE, which will construct a timeshare resort property, known as “Liberty Place Charleston, by Hilton Club.”
We record Equity in earnings (losses) from our unconsolidated affiliates in our condensed consolidated statements of operations. See Note 10: Investments in Unconsolidated Affiliates for additional information. Additionally, we earn commissions and other fees related to fee-for-service agreements with the investees to sell VOIs at Elara, by Hilton Grand Vacations and Liberty Place Charleston, by Hilton Club. These amounts are summarized in the following table and are included in our condensed consolidated statements of operations as of the date they became related parties.
|
|
|
Three Months Ended March 31, |
|
|||||
|
($ in millions) |
|
2020 |
|
|
2019 |
|
||
|
Equity in earnings from unconsolidated affiliates |
|
$ |
3 |
|
|
$ |
1 |
|
|
Commissions and other fees |
|
|
23 |
|
|
|
36 |
|
We also have $23 million and $25 million of outstanding receivables related to the fee-for-service agreements as of March 31, 2020 and December 31, 2019, respectively.
21
Note 18: Business Segments
We operate our business through the following two segments:
|
|
• |
Real estate sales and financing – We market and sell VOIs that we own. We also source VOIs through fee-for-service agreements with third-party developers. Related to the sales of the VOIs that we own, we provide consumer financing, which includes interest income generated from the origination of consumer receivables to customers to finance their purchase of VOIs and revenue from servicing the timeshare financing receivables. We also generate fee revenue from servicing the timeshare financing receivables provided by third-party developers to purchasers of their VOIs. |
|
|
• |
Resort operations and club management – We manage the Club, earn activation fees, annual dues and transaction fees from member exchanges for other vacation products. We earn fees for managing the timeshare properties. We generate rental revenue from unit rentals of unsold inventory and inventory made available due to ownership exchanges under our Club program. We also earn revenue from food and beverage, retail and spa outlets at our timeshare properties. |
The performance of our operating segments is evaluated primarily based on adjusted earnings before interest expense (excluding non-recourse debt), taxes, depreciation and amortization (“EBITDA”). We define Adjusted EBITDA as EBITDA which has been further adjusted to exclude certain items, including, but not limited to, gains, losses and expenses in connection with: (i) asset dispositions; (ii) foreign currency transactions; (iii) debt restructurings/retirements; (iv) non-cash impairment losses; (v) reorganization costs, including severance and relocation costs; (vi) share-based and other compensation expenses; (vii) costs related to the spin-off; and (viii) other items.
We do not include equity in earnings (losses) from unconsolidated affiliates in our measures of segment operating performance.
The following table present revenues for our reportable segments reconciled to consolidated amounts:
|
|
|
Three Months Ended March 31, |
|
|||||
|
($ in millions) |
|
2020 |
|
|
2019 |
|
||
|
Revenues: |
|
|
|
|
|
|
|
|
|
Real estate sales and financing |
|
$ |
206 |
|
|
$ |
307 |
|
|
Resort operations and club management(1)(2) |
|
|
104 |
|
|
|
110 |
|
|
Total segment revenues |
|
|
310 |
|
|
|
417 |
|
|
Cost reimbursements |
|
|
49 |
|
|
|
42 |
|
|
Intersegment eliminations(1)(2) |
|
|
(8 |
) |
|
|
(9 |
) |
|
Total revenues |
|
$ |
351 |
|
|
$ |
450 |
|
|
(1) |
Includes charges to the real estate sales and financing segment from the resort operations and club management segment for fulfillment of discounted marketing package stays at resorts. These charges totaled $8 million and $9 million for the three months ended March 31, 2020 and 2019, respectively. |
|
(2) |
Includes charges to the real estate sales and financing segment from the resort operations and club management segment for the rental of model units to show prospective buyers. These charges totaled less than $1 million for the three months ended March 31, 2020 and 2019. |
22
The following table presents Segment Adjusted EBITDA for our reportable segments reconciled to net income:
|
|
|
Three Months Ended March 31, |
|
|||||
|
($ in millions) |
|
2020 |
|
|
2019 |
|
||
|
Adjusted EBITDA: |
|
|
|
|
|
|
|
|
|
Real estate sales and financing(1) |
|
$ |
15 |
|
|
$ |
80 |
|
|
Resort operations and club management(1) |
|
|
55 |
|
|
|
65 |
|
|
Segment Adjusted EBITDA |
|
|
70 |
|
|
|
145 |
|
|
General and administrative |
|
|
(21 |
) |
|
|
(27 |
) |
|
Depreciation and amortization |
|
|
(12 |
) |
|
|
(8 |
) |
|
License fee expense |
|
|
(22 |
) |
|
|
(23 |
) |
|
Other gain (loss), net |
|
|
2 |
|
|
|
(1 |
) |
|
Interest expense |
|
|
(10 |
) |
|
|
(10 |
) |
|
Income tax expense |
|
|
(1 |
) |
|
|
(20 |
) |
|
Equity in earnings from unconsolidated affiliates |
|
|
3 |
|
|
|
1 |
|
|
Other adjustment items(2) |
|
|
(1 |
) |
|
|
(2 |
) |
|
Net income |
|
$ |
8 |
|
|
$ |
55 |
|
|
(1) |
Includes intersegment transactions. Refer to our table presenting revenues by reportable segment above for additional discussion. |
|
(2) |
For the three months ended March 31, 2020 and 2019, this amount includes costs associated with restructuring, one-time charges and other non-cash items. |
Note 19: Commitments and Contingencies
We have entered into certain arrangements with developers whereby we have committed to purchase vacation ownership units or other real estate at a future date to be marketed and sold under our Hilton Grand Vacations brand. As of March 31, 2020, we were committed to purchase approximately $473 million of inventory and land over a period of 11 years and $26 million of other commitments under the normal course of business. Additionally, we have committed to develop additional vacation ownership units at an existing resort in Japan. The actual amount and timing of the acquisitions is subject to change pursuant to the terms of the respective arrangements, which could also allow for cancellation in certain circumstances. During the three months ended March 31, 2020, we did not make any purchases under our commitments. During the three months ended March 31, 2019, we purchased $9 million as required under our commitments. As of March 31, 2020, our remaining obligation pursuant to these arrangements were expected to be incurred as follows:
|
($ in millions) |
|
2020 (remaining) |
|
|
2021 |
|
|
2022 |
|
|
2023 |
|
|
2024 |
|
|
Thereafter |
|
|
Total |
|
|||||||
|
Inventory purchase obligations |
|
$ |
26 |
|
|
$ |
225 |
|
|
$ |
110 |
|
|
$ |
58 |
|
|
$ |
40 |
|
|
$ |
14 |
|
|
$ |
473 |
|
|
Other commitments(1) |
|
|
14 |
|
|
|
11 |
|
|
|
1 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
26 |
|
|
Total |
|
$ |
40 |
|
|
$ |
236 |
|
|
$ |
111 |
|
|
$ |
58 |
|
|
$ |
40 |
|
|
$ |
14 |
|
|
$ |
499 |
|
|
(1) |
Primarily relates to commitments related to information technology and brand licensing under the normal course of business. |
We are involved in litigation arising from the normal course of business, some of which includes claims for substantial sums. Management has evaluated these legal matters and we believe that possible losses derived from an unfavorable outcome that is reasonably possible or remote is not reasonably estimable. While the actual results of claims and litigation cannot be predicted with certainty, we expect that the resolution of all pending or threatened claims and litigation as of March 31, 2020, will not materially affect our unaudited condensed consolidated financial statements.
23
Note 20: Condensed Consolidating Guarantor Financial Information
The following schedules present the unaudited condensed consolidating financial information as of March 31, 2020 and December 31, 2019 and for the three months ended March 31, 2020 and 2019 for the Parent, Subsidiary Issuers, Guarantors and Non-Guarantors.
|
|
|
March 31, 2020 |
|
|||||||||||||||||||||
|
($ in millions) |
|
Parent |
|
|
Issuers |
|
|
Guarantors |
|
|
Non- Guarantors |
|
|
Eliminations |
|
|
Total |
|
||||||
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
4 |
|
|
$ |
— |
|
|
$ |
617 |
|
|
$ |
48 |
|
|
$ |
— |
|
|
$ |
669 |
|
|
Restricted cash |
|
|
— |
|
|
|
— |
|
|
|
59 |
|
|
|
31 |
|
|
|
— |
|
|
|
90 |
|
|
Accounts receivable, net |
|
|
— |
|
|
|
— |
|
|
|
168 |
|
|
|
34 |
|
|
|
(44 |
) |
|
|
158 |
|
|
Timeshare financing receivables, net |
|
|
— |
|
|
|
— |
|
|
|
276 |
|
|
|
846 |
|
|
|
— |
|
|
|
1,122 |
|
|
Inventory |
|
|
— |
|
|
|
— |
|
|
|
803 |
|
|
|
82 |
|
|
|
— |
|
|
|
885 |
|
|
Property and equipment, net |
|
|
— |
|
|
|
— |
|
|
|
462 |
|
|
|
11 |
|
|
|
— |
|
|
|
473 |
|
|
Operating lease right-of-use assets, net |
|
|
— |
|
|
|
— |
|
|
|
60 |
|
|
|
2 |
|
|
|
— |
|
|
|
62 |
|
|
Investments in unconsolidated affiliates |
|
|
— |
|
|
|
— |
|
|
|
47 |
|
|
|
— |
|
|
|
— |
|
|
|
47 |
|
|
Intangible assets, net |
|
|
— |
|
|
|
— |
|
|
|
78 |
|
|
|
— |
|
|
|
— |
|
|
|
78 |
|
|
Other assets |
|
|
— |
|
|
|
5 |
|
|
|
103 |
|
|
|
12 |
|
|
|
— |
|
|
|
120 |
|
|
Investments in subsidiaries |
|
|
559 |
|
|
|
1,793 |
|
|
|
146 |
|
|
|
— |
|
|
|
(2,498 |
) |
|
|
— |
|
|
TOTAL ASSETS |
|
$ |
563 |
|
|
$ |
1,798 |
|
|
$ |
2,819 |
|
|
$ |
1,066 |
|
|
$ |
(2,542 |
) |
|
$ |
3,704 |
|
|
LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable, accrued expenses and other |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
278 |
|
|
$ |
34 |
|
|
$ |
(44 |
) |
|
$ |
268 |
|
|
Advanced deposits |
|
|
— |
|
|
|
— |
|
|
|
117 |
|
|
|
— |
|
|
|
— |
|
|
|
117 |
|
|
Debt, net |
|
|
— |
|
|
|
1,239 |
|
|
|
27 |
|
|
|
— |
|
|
|
— |
|
|
|
1,266 |
|
|
Non-recourse debt, net |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
885 |
|
|
|
— |
|
|
|
885 |
|
|
Operating lease liabilities |
|
|
— |
|
|
|
— |
|
|
|
76 |
|
|
|
1 |
|
|
|
— |
|
|
|
77 |
|
|
Deferred revenues |
|
|
— |
|
|
|
— |
|
|
|
277 |
|
|
|
— |
|
|
|
— |
|
|
|
277 |
|
|
Deferred income tax liabilities |
|
|
— |
|
|
|
— |
|
|
|
251 |
|
|
|
— |
|
|
|
— |
|
|
|
251 |
|
|
Total equity |
|
|
563 |
|
|
|
559 |
|
|
|
1,793 |
|
|
|
146 |
|
|
|
(2,498 |
) |
|
|
563 |
|
|
TOTAL LIABILITIES AND EQUITY |
|
$ |
563 |
|
|
$ |
1,798 |
|
|
$ |
2,819 |
|
|
$ |
1,066 |
|
|
$ |
(2,542 |
) |
|
$ |
3,704 |
|
24
|
|
|
December 31, 2019 |
|
|||||||||||||||||||||
|
($ in millions) |
|
Parent |
|
|
Issuers |
|
|
Guarantors |
|
|
Non- Guarantors |
|
|
Eliminations |
|
|
Total |
|
||||||
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
2 |
|
|
$ |
— |
|
|
$ |
33 |
|
|
$ |
32 |
|
|
$ |
— |
|
|
$ |
67 |
|
|
Restricted cash |
|
|
— |
|
|
|
— |
|
|
|
59 |
|
|
|
26 |
|
|
|
— |
|
|
|
85 |
|
|
Accounts receivable, net |
|
|
— |
|
|
|
— |
|
|
|
192 |
|
|
|
52 |
|
|
|
(70 |
) |
|
|
174 |
|
|
Timeshare financing receivables, net |
|
|
— |
|
|
|
— |
|
|
|
449 |
|
|
|
707 |
|
|
|
— |
|
|
|
1,156 |
|
|
Inventory |
|
|
— |
|
|
|
— |
|
|
|
524 |
|
|
|
34 |
|
|
|
— |
|
|
|
558 |
|
|
Property and equipment, net |
|
|
— |
|
|
|
— |
|
|
|
718 |
|
|
|
60 |
|
|
|
— |
|
|
|
778 |
|
|
Operating lease right-of-use assets, net |
|
|
— |
|
|
|
— |
|
|
|
58 |
|
|
|
2 |
|
|
|
— |
|
|
|
60 |
|
|
Investments in unconsolidated affiliate |
|
|
— |
|
|
|
— |
|
|
|
44 |
|
|
|
— |
|
|
|
— |
|
|
|
44 |
|
|
Intangible assets, net |
|
|
— |
|
|
|
— |
|
|
|
77 |
|
|
|
— |
|
|
|
— |
|
|
|
77 |
|
|
Other assets |
|
|
— |
|
|
|
5 |
|
|
|
64 |
|
|
|
11 |
|
|
|
— |
|
|
|
80 |
|
|
Investments in subsidiaries |
|
|
568 |
|
|
|
1,364 |
|
|
|
136 |
|
|
|
— |
|
|
|
(2,068 |
) |
|
|
— |
|
|
TOTAL ASSETS |
|
$ |
570 |
|
|
$ |
1,369 |
|
|
$ |
2,354 |
|
|
$ |
924 |
|
|
$ |
(2,138 |
) |
|
$ |
3,079 |
|
|
LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable, accrued expenses and other |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
329 |
|
|
$ |
39 |
|
|
$ |
(70 |
) |
|
$ |
298 |
|
|
Advanced deposits |
|
|
— |
|
|
|
— |
|
|
|
115 |
|
|
|
— |
|
|
|
— |
|
|
|
115 |
|
|
Debt, net |
|
|
— |
|
|
|
801 |
|
|
|
27 |
|
|
|
— |
|
|
|
— |
|
|
|
828 |
|
|
Non-recourse debt, net |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
747 |
|
|
|
— |
|
|
|
747 |
|
|
Operating lease liabilities |
|
|
— |
|
|
|
— |
|
|
|
74 |
|
|
|
2 |
|
|
|
— |
|
|
|
76 |
|
|
Deferred revenues |
|
|
— |
|
|
|
— |
|
|
|
186 |
|
|
|
— |
|
|
|
— |
|
|
|
186 |
|
|
Deferred income tax liabilities |
|
|
— |
|
|
|
— |
|
|
|
259 |
|
|
|
— |
|
|
|
— |
|
|
|
259 |
|
|
Total equity |
|
|
570 |
|
|
|
568 |
|
|
|
1,364 |
|
|
|
136 |
|
|
|
(2,068 |
) |
|
|
570 |
|
|
TOTAL LIABILITIES AND EQUITY |
|
$ |
570 |
|
|
$ |
1,369 |
|
|
$ |
2,354 |
|
|
$ |
924 |
|
|
$ |
(2,138 |
) |
|
$ |
3,079 |
|
25
|
|
|
For the Three Months Ended March 31, 2020 |
|
|||||||||||||||||||||
|
($ in millions) |
|
Parent |
|
|
Issuers |
|
|
Guarantors |
|
|
Non- Guarantors |
|
|
Eliminations |
|
|
Total |
|
||||||
|
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales of VOIs, net |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
32 |
|
|
$ |
24 |
|
|
$ |
— |
|
|
$ |
56 |
|
|
Sales, marketing, brand and other fees |
|
|
— |
|
|
|
— |
|
|
|
120 |
|
|
|
3 |
|
|
|
(17 |
) |
|
|
106 |
|
|
Financing |
|
|
— |
|
|
|
— |
|
|
|
20 |
|
|
|
26 |
|
|
|
(2 |
) |
|
|
44 |
|
|
Resort and club management |
|
|
— |
|
|
|
— |
|
|
|
44 |
|
|
|
— |
|
|
|
— |
|
|
|
44 |
|
|
Rental and ancillary services |
|
|
— |
|
|
|
— |
|
|
|
51 |
|
|
|
1 |
|
|
|
— |
|
|
|
52 |
|
|
Cost reimbursements |
|
|
— |
|
|
|
— |
|
|
|
48 |
|
|
|
1 |
|
|
|
— |
|
|
|
49 |
|
|
Total revenues |
|
|
— |
|
|
|
— |
|
|
|
315 |
|
|
|
55 |
|
|
|
(19 |
) |
|
|
351 |
|
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of VOI sales |
|
|
— |
|
|
|
— |
|
|
|
9 |
|
|
|
5 |
|
|
|
— |
|
|
|
14 |
|
|
Sales and marketing |
|
|
— |
|
|
|
— |
|
|
|
157 |
|
|
|
17 |
|
|
|
(17 |
) |
|
|
157 |
|
|
Financing |
|
|
— |
|
|
|
— |
|
|
|
5 |
|
|
|
10 |
|
|
|
(2 |
) |
|
|
13 |
|
|
Resort and club management |
|
|
— |
|
|
|
— |
|
|
|
12 |
|
|
|
— |
|
|
|
— |
|
|
|
12 |
|
|
Rental and ancillary services |
|
|
— |
|
|
|
— |
|
|
|
35 |
|
|
|
2 |
|
|
|
— |
|
|
|
37 |
|
|
General and administrative |
|
|
— |
|
|
|
— |
|
|
|
21 |
|
|
|
— |
|
|
|
— |
|
|
|
21 |
|
|
Depreciation and amortization |
|
|
— |
|
|
|
— |
|
|
|
12 |
|
|
|
— |
|
|
|
— |
|
|
|
12 |
|
|
License fee expense |
|
|
— |
|
|
|
— |
|
|
|
22 |
|
|
|
— |
|
|
|
— |
|
|
|
22 |
|
|
Cost reimbursements |
|
|
— |
|
|
|
— |
|
|
|
48 |
|
|
|
1 |
|
|
|
— |
|
|
|
49 |
|
|
Total operating expenses |
|
|
— |
|
|
|
— |
|
|
|
321 |
|
|
|
35 |
|
|
|
(19 |
) |
|
|
337 |
|
|
Interest expense |
|
|
— |
|
|
|
(10 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(10 |
) |
|
Dividends from subsidiary |
|
|
12 |
|
|
|
12 |
|
|
|
— |
|
|
|
— |
|
|
|
(24 |
) |
|
|
— |
|
|
Equity in earnings from unconsolidated affiliates |
|
|
— |
|
|
|
— |
|
|
|
3 |
|
|
|
— |
|
|
|
— |
|
|
|
3 |
|
|
Other gain, net |
|
|
— |
|
|
|
— |
|
|
|
2 |
|
|
|
— |
|
|
|
— |
|
|
|
2 |
|
|
Income before income taxes |
|
|
12 |
|
|
|
2 |
|
|
|
(1 |
) |
|
|
20 |
|
|
|
(24 |
) |
|
|
9 |
|
|
Income tax expense |
|
|
— |
|
|
|
— |
|
|
|
(1 |
) |
|
|
— |
|
|
|
— |
|
|
|
(1 |
) |
|
Income before equity in earnings from subsidiaries |
|
|
12 |
|
|
|
2 |
|
|
|
(2 |
) |
|
|
20 |
|
|
|
(24 |
) |
|
|
8 |
|
|
Equity in earnings from subsidiaries |
|
|
(4 |
) |
|
|
18 |
|
|
|
20 |
|
|
|
— |
|
|
|
(34 |
) |
|
|
— |
|
|
Net income |
|
$ |
8 |
|
|
$ |
20 |
|
|
$ |
18 |
|
|
$ |
20 |
|
|
$ |
(58 |
) |
|
$ |
8 |
|
26
|
|
|
For the Three Months Ended March 31, 2019 |
|
|||||||||||||||||||||
|
($ in millions) |
|
Parent |
|
|
Issuers |
|
|
Guarantors |
|
|
Non- Guarantors |
|
|
Eliminations |
|
|
Total |
|
||||||
|
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales of VOIs, net |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
107 |
|
|
$ |
18 |
|
|
$ |
— |
|
|
$ |
125 |
|
|
Sales, marketing, brand and other fees |
|
|
— |
|
|
|
— |
|
|
|
151 |
|
|
|
1 |
|
|
|
(11 |
) |
|
|
141 |
|
|
Financing |
|
|
— |
|
|
|
— |
|
|
|
18 |
|
|
|
25 |
|
|
|
(2 |
) |
|
|
41 |
|
|
Resort and club management |
|
|
— |
|
|
|
— |
|
|
|
42 |
|
|
|
— |
|
|
|
— |
|
|
|
42 |
|
|
Rental and ancillary services |
|
|
— |
|
|
|
— |
|
|
|
58 |
|
|
|
1 |
|
|
|
— |
|
|
|
59 |
|
|
Cost reimbursements |
|
|
— |
|
|
|
— |
|
|
|
41 |
|
|
|
1 |
|
|
|
— |
|
|
|
42 |
|
|
Total revenues |
|
|
— |
|
|
|
— |
|
|
|
417 |
|
|
|
46 |
|
|
|
(13 |
) |
|
|
450 |
|
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of VOI sales |
|
|
— |
|
|
|
— |
|
|
|
33 |
|
|
|
3 |
|
|
|
— |
|
|
|
36 |
|
|
Sales and marketing |
|
|
— |
|
|
|
— |
|
|
|
170 |
|
|
|
11 |
|
|
|
(11 |
) |
|
|
170 |
|
|
Financing |
|
|
— |
|
|
|
— |
|
|
|
4 |
|
|
|
11 |
|
|
|
(2 |
) |
|
|
13 |
|
|
Resort and club management |
|
|
— |
|
|
|
— |
|
|
|
11 |
|
|
|
— |
|
|
|
— |
|
|
|
11 |
|
|
Rental and ancillary services |
|
|
— |
|
|
|
— |
|
|
|
34 |
|
|
|
1 |
|
|
|
— |
|
|
|
35 |
|
|
General and administrative |
|
|
— |
|
|
|
— |
|
|
|
27 |
|
|
|
— |
|
|
|
— |
|
|
|
27 |
|
|
Depreciation and amortization |
|
|
— |
|
|
|
— |
|
|
|
8 |
|
|
|
— |
|
|
|
— |
|
|
|
8 |
|
|
License fee expense |
|
|
— |
|
|
|
— |
|
|
|
22 |
|
|
|
1 |
|
|
|
— |
|
|
|
23 |
|
|
Cost reimbursements |
|
|
— |
|
|
|
— |
|
|
|
41 |
|
|
|
1 |
|
|
|
— |
|
|
|
42 |
|
|
Total operating expenses |
|
|
— |
|
|
|
— |
|
|
|
350 |
|
|
|
28 |
|
|
|
(13 |
) |
|
|
365 |
|
|
Interest expense |
|
|
— |
|
|
|
(10 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(10 |
) |
|
Dividends from subsidiary |
|
|
125 |
|
|
|
125 |
|
|
|
— |
|
|
|
— |
|
|
|
(250 |
) |
|
|
— |
|
|
Equity in earnings from unconsolidated affiliates |
|
|
— |
|
|
|
— |
|
|
|
1 |
|
|
|
— |
|
|
|
— |
|
|
|
1 |
|
|
Other loss, net |
|
|
— |
|
|
|
— |
|
|
|
(1 |
) |
|
|
— |
|
|
|
— |
|
|
|
(1 |
) |
|
Income (loss) before income taxes |
|
|
125 |
|
|
|
115 |
|
|
|
67 |
|
|
|
18 |
|
|
|
(250 |
) |
|
|
75 |
|
|
Income tax expense |
|
|
— |
|
|
|
— |
|
|
|
(20 |
) |
|
|
— |
|
|
|
— |
|
|
|
(20 |
) |
|
Income (loss) before equity in earnings (loss) from subsidiaries |
|
|
125 |
|
|
|
115 |
|
|
|
47 |
|
|
|
18 |
|
|
|
(250 |
) |
|
|
55 |
|
|
Equity in (loss) earnings from subsidiaries |
|
|
(70 |
) |
|
|
65 |
|
|
|
18 |
|
|
|
— |
|
|
|
(13 |
) |
|
|
— |
|
|
Net income |
|
$ |
55 |
|
|
$ |
180 |
|
|
$ |
65 |
|
|
$ |
18 |
|
|
$ |
(263 |
) |
|
$ |
55 |
|
27
|
|
|
For the Three Months Ended March 31, 2020 |
|
|||||||||||||||||||||
|
($ in millions) |
|
Parent |
|
|
Issuers |
|
|
Guarantors |
|
|
Non- Guarantors |
|
|
Eliminations |
|
|
Total |
|
||||||
|
Operating Activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities |
|
$ |
8 |
|
|
$ |
20 |
|
|
$ |
186 |
|
|
$ |
(104 |
) |
|
$ |
(57 |
) |
|
$ |
53 |
|
|
Investing Activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures for property and equipment |
|
|
— |
|
|
|
— |
|
|
|
(1 |
) |
|
|
(2 |
) |
|
|
— |
|
|
|
(3 |
) |
|
Software capitalization costs |
|
|
— |
|
|
|
— |
|
|
|
(5 |
) |
|
|
— |
|
|
|
— |
|
|
|
(5 |
) |
|
Investments in unconsolidated affiliates |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Dividends from subsidiary |
|
|
12 |
|
|
|
12 |
|
|
|
— |
|
|
|
— |
|
|
|
(24 |
) |
|
|
— |
|
|
Net cash provided by (used in) investing activities |
|
|
12 |
|
|
|
12 |
|
|
|
(6 |
) |
|
|
(2 |
) |
|
|
(24 |
) |
|
|
(8 |
) |
|
Financing Activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of debt |
|
|
— |
|
|
|
495 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
495 |
|
|
Issuance of non-recourse debt |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
195 |
|
|
|
— |
|
|
|
195 |
|
|
Repayment of debt |
|
|
— |
|
|
|
(57 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(57 |
) |
|
Repayment of non-recourse debt |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(58 |
) |
|
|
— |
|
|
|
(58 |
) |
|
Repurchase and retirement of common stock |
|
|
(10 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(10 |
) |
|
Payment of withholding taxes on vesting of restricted stock units |
|
|
(2 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2 |
) |
|
Other financing activity |
|
|
— |
|
|
|
— |
|
|
|
(1 |
) |
|
|
— |
|
|
|
— |
|
|
|
(1 |
) |
|
Intercompany transfers |
|
|
(6 |
) |
|
|
(470 |
) |
|
|
405 |
|
|
|
(10 |
) |
|
|
81 |
|
|
|
— |
|
|
Net cash (used in) provided by financing activities |
|
|
(18 |
) |
|
|
(32 |
) |
|
|
404 |
|
|
|
127 |
|
|
|
81 |
|
|
|
562 |
|
|
Net increase in cash, cash equivalents and restricted cash |
|
|
2 |
|
|
|
— |
|
|
|
584 |
|
|
|
21 |
|
|
|
— |
|
|
|
607 |
|
|
Cash, cash equivalents and restricted cash, beginning of period |
|
|
2 |
|
|
|
— |
|
|
|
92 |
|
|
|
58 |
|
|
|
— |
|
|
|
152 |
|
|
Cash, cash equivalents and restricted cash, end of period |
|
$ |
4 |
|
|
$ |
— |
|
|
$ |
676 |
|
|
$ |
79 |
|
|
$ |
— |
|
|
$ |
759 |
|
28
|
|
|
For the Three Months Ended March 31, 2019 |
|
|||||||||||||||||||||
|
($ in millions) |
|
Parent |
|
|
Issuers |
|
|
Guarantors |
|
|
Non- Guarantors |
|
|
Eliminations |
|
|
Total |
|
||||||
|
Operating Activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities |
|
$ |
— |
|
|
$ |
140 |
|
|
$ |
(2 |
) |
|
$ |
66 |
|
|
$ |
(190 |
) |
|
$ |
14 |
|
|
Investing Activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures for property and equipment |
|
|
— |
|
|
|
— |
|
|
|
(5 |
) |
|
|
(1 |
) |
|
|
— |
|
|
|
(6 |
) |
|
Software capitalization costs |
|
|
— |
|
|
|
— |
|
|
|
(4 |
) |
|
|
— |
|
|
|
— |
|
|
|
(4 |
) |
|
Dividends from subsidiary |
|
|
100 |
|
|
|
100 |
|
|
|
— |
|
|
|
— |
|
|
|
(200 |
) |
|
|
— |
|
|
Net cash used in investing activities |
|
|
100 |
|
|
|
100 |
|
|
|
(9 |
) |
|
|
(1 |
) |
|
|
(200 |
) |
|
|
(10 |
) |
|
Financing Activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of debt |
|
|
— |
|
|
|
195 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
195 |
|
|
Repayment of debt |
|
|
— |
|
|
|
(23 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(23 |
) |
|
Repayment of non-recourse debt |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(40 |
) |
|
|
— |
|
|
|
(40 |
) |
|
Repurchase and retirement of common stock |
|
|
— |
|
|
|
(92 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(92 |
) |
|
Payment of withholding taxes on vesting of restricted stock units |
|
|
— |
|
|
|
(2 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2 |
) |
|
Intercompany transfers |
|
|
(91 |
) |
|
|
(318 |
) |
|
|
37 |
|
|
|
(18 |
) |
|
|
390 |
|
|
|
— |
|
|
Net cash (used in) provided by financing activities |
|
|
(91 |
) |
|
|
(240 |
) |
|
|
37 |
|
|
|
(58 |
) |
|
|
390 |
|
|
|
38 |
|
|
Net increase in cash, cash equivalents and restricted cash |
|
|
9 |
|
|
|
— |
|
|
|
26 |
|
|
|
7 |
|
|
|
— |
|
|
|
42 |
|
|
Cash, cash equivalents and restricted cash, beginning of period |
|
|
4 |
|
|
|
— |
|
|
|
134 |
|
|
|
42 |
|
|
|
— |
|
|
|
180 |
|
|
Cash, cash equivalents and restricted cash, end of period |
|
$ |
13 |
|
|
$ |
— |
|
|
$ |
160 |
|
|
$ |
49 |
|
|
$ |
— |
|
|
$ |
222 |
|
Note 21: COVID-19 and Subsequent Events
The novel coronavirus (“COVID-19”) pandemic has significantly impacted the hospitality industry due to travel restrictions and stay-at-home directives that have resulted in cancellations and significantly reduced travel around the world. As a result of the reduction in travel, we have closed substantially all of our resorts and sales centers for an indeterminate duration. In response to the impact of COVID-19, we have taken actions to ensure the continuity of our business and operations, including furloughing approximately 67 percent of our employees, implementing salary reductions for the remaining active employees, eliminating all discretionary spending, and reducing our planned investment in new inventory by approximately $200 million.
In addition, we drew down on the availability under our credit facility as a precautionary measure to ensure liquidity for a sustained period. As we are not able to estimate the dates that the suspensions of resort and sales operations will be lifted, we may need to take additional actions to ensure the continuity of our business. Any sustained material adverse impact on our revenues, net income and other operating results due to COVID-19 could cause our financial covenants under our debt obligations to be adversely affected. If we are unable to comply with or obtain potential modifications to such covenants prior to any breaches, we may trigger events of defaults under these arrangements. We are currently in negotiations with our lenders to amend such covenants as needed and believe we will be able to reach an agreement in advance of any such default.
|
|
• |
On April 16, we announced that we had adopted a shareholder rights plan. |
|
|
• |
On April 22, we entered into Amendment No. 14 to our Timeshare Facility, which amended certain key definitions related to delinquency level calculations of underlying timeshare loans that are used as collateral for borrowings under our Timeshare Facility. Additionally, it provides us with the added flexibility to manage any potential increase in the rate of delinquency that may result from the impact of the COVID-19 pandemic. All other terms and borrowing capacity remained unchanged. |
|
|
• |
In April 2020, we furloughed approximately 6,100 out of our 9,100 employees. |
29
|
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and with our Annual Report on Form 10-K for the year ended December 31, 2019.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q (this “Report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements convey management’s expectations as to our future, and are based on management’s beliefs, expectations, assumptions and such plans, estimates, projections and other information available to management at the time we make such statements. Forward-looking statements include all statements that are not historical facts and may be identified by terminology such as the words “outlook,” “believe,” “expect,” “potential,” “goal,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “approximately,” “projects,” predicts,” “intends,” “plans,” “estimates,” “anticipates” “future,” “guidance,” “target,” or the negative version of these words or other comparable words. The forward-looking statements contained in this Report include statements related to our revenues, earnings, taxes, cash flow and related financial and operating measures, and expectations with respect to future operating, financial and business performance, and other anticipated future events and expectations that are not historical facts.
We caution you that our forward-looking statements involve known and unknown risks, uncertainties and other factors, including those that are beyond our control, that may cause our actual results, performance or achievements to be materially different from the future results, business performance or achievements expressed in or implied by such statements. The forward-looking statements in this Report are not guarantees of our future performance, and you should not place undue reliance on such statements. Factors that could cause our actual results to differ materially from those contemplated by our forward-looking statements include: the material impact of the COVID-19 pandemic on our business, operating results, and financial condition, including, without limitation, our ability to meet certain sales and performance levels, particularly as they relate to our fee-for-service and third party partners, the effectiveness of actions taken by us to manage the impact of the pandemic, and the duration of closure of substantially all of our properties and operations, and uncertainties of when our properties will re-open or the period of time required for ramp-up of operations upon re-opening; the extent and duration of the impact of the COVID-19 pandemic on global economic conditions; the extent and duration of government and other restrictions on travel and commercial activity in response to the COVID-19 pandemic; our ability to meet our liquidity needs and ability to remain compliant with our debt covenants; risks associated with the inherent business, financial and operating risks of the timeshare industry, including limited underwriting standards due to the real-time nature of industry sales practices, and the intense competition associated with the industry; our ability successfully market and sell VOIs; our development and other activities to source inventory for VOI sales; significant increases in defaults on our vacation ownership mortgage receivables; the ability of managed homeowner associations to collect sufficient maintenance fees; general volatility in the economy and/or the financial and credit markets; adverse economic or market conditions and trends in the tourism and hospitality industry, which may impact the purchasing and vacationing decisions of consumers; our actions or the occurrence of other events that could cause a breach under or termination of our license agreement with Hilton that could affect or terminate our access to the Hilton brands and programs, or actions of Hilton that affect the reputation of the licensed marks or Hilton’s programs; economic and operational uncertainties related to our expanding global operations, including our ability to manage the outcome and timing of such operations and compliance with anti-corruption, data privacy and other applicable laws and regulations affecting our international operations; the effects of foreign currency exchange; changes in tax rates and exposure to additional tax liabilities; the impact of future changes in legislation, regulations or accounting pronouncements; our acquisitions, joint ventures, and strategic alliances that that may not result in expected benefits, including the termination of material fee-for-service agreements; our dependence on third-party development activities to secure just-in-time inventory; our use of social media platforms; cyber-attacks, security vulnerabilities, and information technology system failures resulting in disclosure of personal data, company data loss, system outages or disruptions of our online services, which could lead to reduced revenue, increased costs, liability claims, harm to user engagement, and harm to our reputation or competitive position; the impact of claims against us that may result in adverse outcomes, including regulatory proceedings or litigation; our credit facilities, indenture and other debt agreements and instruments, including variable interest rates, operating and financial restrictions, our ability to make scheduled payments, and our ability to refinance our debt on acceptable terms; the continued service and availability of key executives and employees, including our ability to meet human capital needs given our recent furloughs as our business and operations normalize after the COVID-19 pandemic eases and the succession planning of our key executives; and catastrophic events or geo-political conditions including war, terrorist activity, political strife, pandemic outbreak (including COVID-19), or natural disasters that may disrupt our operations in key vacation destinations. Any one or more of the foregoing factors could adversely impact our operations, revenue, operating margins, financial condition and/or credit rating.
30
For additional information regarding factors that could cause our actual results to differ materially from those expressed or implied in the forward-looking statements in this Report, please see the risk factors discussed in “Part I—Item 1A. Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, as supplemented and updated by the risk factors discussed in “Part II-Item 1A. Risk Factors” of this Report, as well as those described from time to time other periodic reports that we file with the SEC. There may be other risks and uncertainties that we are unable to predict at this time or that we currently do not expect to have a material adverse effect on our business. Except for our ongoing obligations to disclose material information under the federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments, changes in management’s expectations, or otherwise.
Terms Used in this Quarterly Report on Form 10-Q
Except where the context requires otherwise, references in this Quarterly Report on Form 10-Q to “Hilton Grand Vacations,” “HGV,” “the Company,” “we,” “us” and “our” refer to Hilton Grand Vacations Inc., together with its consolidated subsidiaries. Except where the context requires otherwise, references to our “properties” or “resorts” and “units” refer to the timeshare properties that we manage or own. Of these resorts and units, a portion is directly owned by us or or joint ventures in which we have an interest and the remaining resorts and units are owned by our third-party owners.
“Developed” refers to VOI inventory that is sourced from projects developed by HGV.
“Fee for service” refers to VOI inventory that we sell and manage on behalf of third-party developers.
“Just-in-time” refers to VOI inventory that is primarily sourced in transactions that are designed to closely correlate the timing of the acquisition by us with our sale of that inventory to purchasers.
“VOI” refers to vacation ownership intervals.
Non-GAAP Financial Measures
This Quarterly Report on Form 10-Q includes discussion of terms that are not recognized terms under U.S. Generally Accepted Accounting Principles (“U.S. GAAP”), and financial measures that are not calculated in accordance with U.S. GAAP, including earnings before interest expense (excluding interest expense relating to our non-recourse debt), taxes and depreciation and amortization (“EBITDA”), Adjusted EBITDA, free cash flow and adjusted free cash flow.
Operational Metrics
This Quarterly Report on Form 10-Q includes discussion of key business operational metrics including contract sales, sales revenue, real estate margin, tour flow, volume per guest and transient rate.
See “Key Business and Financial Metrics and Terms Used by Management” and “-Results of Operations” for a discussion of the meanings of these terms, the Company’s reasons for providing non-GAAP financial measures, and reconciliations of non-GAAP financial measures to measures calculated in accordance with U.S. GAAP.
Overview
Our Business
We are a timeshare company that markets and sells VOIs, manages resorts in top leisure and urban destinations, and operates a points-based vacation club. As of March 31, 2020, we have 59 properties, representing 9,551 units, that are primarily located in vacation destinations such as Orlando, Las Vegas, Hawaiian Islands, New York City, Washington D.C., and South Carolina and feature spacious, condominium-style accommodations with superior amenities and quality service. As of March 31, 2020, we have approximately 328,000 Hilton Grand Vacations Club and Hilton Club (collectively the “Club”) members. Club members have the flexibility to exchange their VOIs for stays at any Hilton Grand Vacations resort or any property in the Hilton system of 18 industry-leading brands across approximately 6,000 properties, as well as numerous experiential vacation options, such as cruises and guided tours. Our business has been adversely impacted by the COVID-19 pandemic and its effects on the global economy, including the various government orders and mandates for closures of non-essential businesses. Please see “COVID-19 and Subsequent Events” and other discussions throughout this Report for additional information regarding such impacts.
31
We operate our business across two segments: (1) real estate sales and financing; and (2) resort operations and club management.
Real Estate Sales and Financing
Our primary product is the marketing and selling of fee-simple VOIs deeded in perpetuity and right to use real estate interests, developed either by us or by third parties. This ownership interest is an interest in real estate generally equivalent to one week on an annual basis, at the timeshare resort where the VOI was purchased. Traditionally, timeshare operators have funded 100 percent of the investment necessary to acquire land and construct timeshare properties. In 2010, we began sourcing VOIs through fee-for-service and just-in-time agreements with third-party developers and have focused our inventory strategy on developing an optimal inventory mix focused on developed properties as well as fee-for-service and just-in-time agreements. The fee-for-service agreements enable us to generate fees from the sales and marketing of the VOIs and Club memberships and from the management of the timeshare properties without requiring us to fund acquisition and construction costs. The just-in-time agreements enable us to source VOI inventory in a manner that allows us to correlate the timing of acquisition of the inventory with the sale to purchasers. Sales of owned, including just-in-time inventory, generally result in greater Adjusted EBITDA contributions, while fee-for-service sales require less initial investment and allow us to accelerate our sales growth. Both sales of owned inventory and fee-for-service sales generate long-term, predictable fee streams, by adding to the Club membership base and properties under management, that generate strong returns on invested capital.
For the three months ended March 31, 2020, sales from fee-for-service, just-in-time and developed inventory sources were 53 percent, 25 percent and 22 percent, respectively, of contract sales. See “Key Business and Financial Metrics and Terms Used by Management——Real Estate Sales Metrics” for additional discussion of contract sales. Based on our trailing twelve months sales pace, we have access to approximately seven years of future inventory, with capital efficient arrangements representing approximately 52 percent of that supply. We believe that the visibility into our long-term supply allows us to efficiently manage inventory to meet predicted sales, reduce capital investments, minimize our exposure to the cyclicality of the real estate market and mitigate the risks of entering into new markets.
We sell our vacation ownership products under the Hilton Grand Vacations brand primarily through our distribution network of both in-market and off-site sales centers. Our products are currently marketed for sale throughout the United States and the Asia-Pacific region. We operate sales distribution centers in major markets and popular leisure destinations with year-round demand and a history of being a friendly environment for vacation ownership. We have sales distribution centers in Las Vegas, Orlando, Oahu, Japan, New York, Myrtle Beach, Waikoloa, Washington D.C., Hilton Head, Park City, Chicago, Korea and Carlsbad. Our marketing and sales activities are based on targeted direct marketing and a highly personalized sales approach. We use targeted direct marketing to reach potential members who are identified as having the financial ability to pay for our products and have an affinity with Hilton and are frequent leisure travelers. Tour flow quality impacts key metrics such as close rate and VPG, defined in “Key Business and Financial Metrics and Terms Used by Management——Real Estate Sales Metrics.” Additionally, the quality of tour flow impacts sales revenue and the collectability of our timeshare financing receivables. For the three months ended March 31, 2020, 55 percent of our contract sales were to our existing owners.
We provide financing for members purchasing our developed and acquired inventory and generate interest income. Our timeshare financing receivables are collateralized by the underlying VOIs and are generally structured as 10-year, fully-amortizing loans that bear a fixed interest rate typically ranging from 9 percent to 18 percent per annum. Financing propensity was 63 percent and 65 percent for the three months ended March 31, 2020 and 2019, respectively. We calculate financing propensity as contract sales volume of financed contracts originated in the period divided by contract sales volume of all contracts originated in the period.
The interest rate on our loans is determined by, among other factors, the amount of the down payment, the borrower’s credit profile and the loan term. The weighted-average FICO score for new loans to U.S. and Canadian borrowers at the time of origination were as follows:
|
|
|
Three Months Ended March 31, |
|
|||||
|
|
|
2020 |
|
|
2019 |
|
||
|
Weighted-average FICO score |
|
|
736 |
|
|
|
738 |
|
Prepayment is permitted without penalty. When a member defaults, we ultimately return their VOI to inventory for resale and that member no longer participates in our Club.
32
Some of our timeshare financing receivables have been pledged as collateral in our securitization transactions, which have in the past and may in the future provide funding for our business activities. In these securitization transactions, special purpose entities are established to issue various classes of debt securities which are generally collateralized by a single pool of assets, consisting of timeshare financing receivables that we service and related cash deposits. For additional information see Note 6: Timeshare Financing Receivables in our unaudited condensed consolidated financial statements.
In addition, we earn fees from servicing the loans provided by third-party developers of our fee-for-service projects to purchasers of their VOIs and from our securitized timeshare financing receivables.
Resort Operations and Club Management
We enter into management agreements with the HOAs of the VOI owners for timeshare resorts developed by us or a third party. Each of the HOAs is governed by a board of directors comprised of owner and developer representatives that are charged with ensuring the resorts are well-maintained and financially stable. Our management services include day-to-day operations of the resorts, maintenance of the resorts, preparation of reports, budgets and projections and employee training and oversight. Our HOA management agreements provide for a cost-plus management fee, which means we generally earn a fee equal to 10 percent to 15 percent of the costs to operate the applicable resort. The fees we earn are highly predictable due to the relatively fixed nature of resort operating expenses and our management fees are unaffected by changes in rental rate or occupancy. We are reimbursed for the costs incurred to perform our services, principally related to personnel providing on-site services. The initial term of our management agreements typically ranges from three to five years and the agreements are subject to periodic renewal for one to three-year periods. Many of these agreements renew automatically unless either party provides advance notice of termination before the expiration of the term.
We also manage and operate the points-based Hilton Grand Vacations Club and Hilton Club exchange programs, which provide exclusive exchange, leisure travel and reservation services to our Club members. When owners purchase a VOI, they are generally enrolled in the Club and given an annual allotment of points that allow the member to exchange their annual usage rights in the VOI that they own for a number of vacation and travel options. In addition to an annual membership fee, Club members pay incremental fees depending on exchanges they choose within the Club system.
We rent unsold VOI inventory, third-party inventory and inventory made available due to ownership exchanges through our club programs. We earn a fee from rentals of third-party inventory. Additionally, we provide ancillary offerings including food and beverage, retail and spa offerings at these timeshare properties.
Key Business and Financial Metrics and Terms Used by Management
Real Estate Sales Operating Metrics
We measure our performance using the following key operating metrics:
|
|
• |
Contract sales represents the total amount of VOI products (fee-for-service and developed) under purchase agreements signed during the period where we have received a down payment of at least 10 percent of the contract price. Contract sales differ from revenues from the Sales of VOIs, net that we report in our condensed consolidated statements of operations due to the requirements for revenue recognition, as well as adjustments for incentives and other administrative fee revenues. We consider contract sales to be an important operating measure because it reflects the pace of sales in our business and is used to manage the performance of the sales organization. While we do not record the purchase price of sales of VOI products developed by fee-for-service partners as revenue in our condensed consolidated financial statements, rather recording the commission earned as revenue in accordance with U.S. GAAP, we believe contract sales to be an important operational metric, reflective of the overall volume and pace of sales in our business and believe it provides meaningful comparability of our results to the results of our competitors which may source their VOI products differently. |
We believe that the presentation of contract sales on a combined basis (fee-for-service and developed) is most appropriate for the purpose of the operating metric, additional information regarding the split of contract sales, is included in “—Real Estate” below. See Note 2: Basis of Presentation and Summary of Significant Accounting Policies in our audited consolidated financial statements included in Item 8 in our Annual Report on form 10-K for the year ended December 31, 2019, for additional information on Sales of VOI, net.
|
|
• |
Sales revenue represents Sales of VOIs, net, commissions and brand fees earned from the sale of fee-for-service intervals. |
33
|
|
• |
Real estate margin represents sales revenue less the cost of VOI sales, sales and marketing costs, net of marketing revenue. Real estate margin percentage is calculated by dividing real estate margin by sales revenue. We consider this to be an important operating measure because it measures the efficiency of our sales and marketing spending and management of inventory costs. |
|
|
• |
Tour flow represents the number of sales presentations given at our sales centers during the period. |
|
|
• |
Volume per guest (“VPG”) represents the sales attributable to tours at our sales locations and is calculated by dividing Contract sales, excluding telesales, by tour flow. We consider VPG to be an important operating measure because it measures the effectiveness of our sales process, combining the average transaction price with the closing rate. |
Resort and Club Management and Rental Metrics
|
|
• |
Transient rate represents the total rental room revenue for transient guests divided by total number of transient room nights sold in a given period and excludes room rentals associated with marketing programs, owner usage and the redemption of Club Bonus Points. |
For further information see Item 8. Financial Statements and Supplementary Data - Note 2: Basis of Presentation and Summary of Significant Accounting Policies in our Annual Report on Form 10-K for the year ended December 31, 2019.
EBITDA and Adjusted EBITDA
EBITDA, presented herein, is a financial measure that is not recognized under U.S. GAAP that reflects net income (loss), before interest expense (excluding non-recourse debt), a provision for income taxes and depreciation and amortization.
Adjusted EBITDA, presented herein, is calculated as EBITDA, as previously defined, further adjusted to exclude certain items, including, but not limited to, gains, losses and expenses in connection with: (i) asset dispositions; (ii) foreign currency transactions; (iii) debt restructurings/retirements; (iv) non-cash impairment losses; (v) reorganization costs, including severance and relocation costs; (vi) share-based and certain other compensation expenses; (vii) costs related to the spin-off; and (viii) other items.
EBITDA and Adjusted EBITDA are not recognized terms under U.S. GAAP and should not be considered as alternatives to net income (loss) or other measures of financial performance or liquidity derived in accordance with U.S. GAAP. In addition, our definitions of EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures of other companies.
We believe that EBITDA and Adjusted EBITDA provide useful information to investors about us and our financial condition and results of operations for the following reasons: (i) EBITDA and Adjusted EBITDA are among the measures used by our management team to evaluate our operating performance and make day-to-day operating decisions; and (ii) EBITDA and Adjusted EBITDA are frequently used by securities analysts, investors and other interested parties as a common performance measure to compare results or estimate valuations across companies in our industry.
EBITDA and Adjusted EBITDA have limitations as analytical tools and should not be considered either in isolation or as a substitute for net income (loss), cash flow or other methods of analyzing our results as reported under U.S. GAAP. Some of these limitations are:
|
|
• |
EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs; |
|
|
• |
EBITDA and Adjusted EBITDA do not reflect our interest expense (excluding interest expense on non-recourse debt), or the cash requirements necessary to service interest or principal payments on our indebtedness; |
|
|
• |
EBITDA and Adjusted EBITDA do not reflect our tax expense or the cash requirements to pay our taxes; |
|
|
• |
EBITDA and Adjusted EBITDA do not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments; |
|
|
• |
EBITDA and Adjusted EBITDA do not reflect the effect on earnings or changes resulting from matters that we consider not to be indicative of our future operations; |
34
|
|
• |
EBITDA and Adjusted EBITDA do not reflect any cash requirements for future replacements of assets that are being depreciated and amortized; and |
|
|
• |
EBITDA and Adjusted EBITDA may be calculated differently from other companies in our industry limiting their usefulness as comparative measures. |
Because of these limitations, EBITDA and Adjusted EBITDA should not be considered as discretionary cash available to us to reinvest in the growth of our business or as measures of cash that will be available to us to meet our obligations.
Recent Events Related to the COVID-19 Pandemic and Other Matters
In March 2020, a National Public Health Emergency was declared in response to the coronavirus, known as COVID-19. As a result, many local, county and state government officials have issued, and continue to issue, various mandates and orders to close non-essential businesses, impose travel restrictions, and require “stay-at-home” and/or self-quarantine in certain cases, all in an effort to protect the health and safety of individuals and aimed at slowing and ultimately stopping the spread and transmission of the virus.
Accordingly, as of March 31, 2020 we had temporarily closed substantially all of our properties and suspended our U.S sales operations and closed such sales offices. In addition, we have stopped accepting reservations at our U.S., Europe, and Barbados resorts. We also furloughed more than 6,100 of our approximately 9,100 employees and implemented hiring freezes. We currently anticipate that these temporary closures. modified operating plans, non-acceptance of reservations, and related actions will be in place through the end of April 2020, after which we will re-evaluate our decision on a case-by-case basis after taking into account various government orders and mandates at such time, as well as the safety of our owners, guests and employees. Our sales operations in Japan and South Korea remain open on a limited basis.
In April 2020, in response to the impact of the COVID-19 pandemic, we filed a Current Report on Form 8-K disclosing that our executive officers and the Board of Directors had agreed to temporarily reduce officers’ base salaries and forgo non-employee directors’ annual cash retainers. In addition, we disclosed that we had drawn down the substantial remainder of our available borrowings under our credit facility through net borrowings of an additional $445 million. After taking into account the other borrowings and repayments over the course of March 2020, the total amount outstanding under our credit facility immediately thereafter was $761 million at an average interest rate of 2.60%.
Outlook
The COVID-19 pandemic has created an unprecedented and challenging time. Our current focus is on taking critical actions that are aimed at positioning the Company in sound position from an operational, liquidity, credit access, and compliance perspective for a strong recovery when the impact of COVID-19 subsides. As discussed above, we have taken several steps to enhance our liquidity, preserve cash, reduce our expenditures and provide financial flexibility, and our management is continuing to assess the evolving situation and will take additional actions as appropriate. We will continue to monitor the COVID-19 pandemic and its related impact, including the various government mandates and orders that have caused us to close substantially all of our properties, and any new recommended or required business practice, and start to re-open our properties and normalize our operations. In the meantime, we will continue to work on key initiatives, such as our digital strategy and other sales strategy that may not be impacted by the various closures, so that we are as well positioned as possible once the impact of COVID-19 has eased.
Any sustained material adverse impact on our revenues, net income and other operating results due to COVID-19 could cause our financial covenants under our debt obligations to be adversely affected. If we are unable to comply with or obtain potential modifications to such covenants prior to any breaches, we may trigger events of defaults under these arrangements. We are currently in negotiations with our lenders to amend such covenants as needed and believe we will be able to reach an agreement in advance of any such default.
35
Results of Operations
Three Months Ended March 31, 2020 Compared with the Three Months Ended March 31, 2019
Segment Results
We evaluate our business segment operating performance using segment Adjusted EBITDA, as described in Note 18: Business Segments in our unaudited condensed consolidated financial statements. We do not include equity in earnings (losses) from unconsolidated affiliates in our measures of segment operating performance. For a discussion of our definition of EBITDA and Adjusted EBITDA, how management uses them to manage our business and material limitations on their usefulness, refer to “—Key Business and Financial Metrics and Terms Used by Management—EBITDA and Adjusted EBITDA.” The following tables set forth revenues and Adjusted EBITDA by segment:
|
|
|
Three Months Ended March 31, |
|
|
Variance |
|
||||||||||
|
($ in millions) |
|
2020 |
|
|
2019 |
|
|
$ |
|
|
% |
|
||||
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate sales and financing |
|
$ |
206 |
|
|
$ |
307 |
|
|
$ |
(101 |
) |
|
|
(32.9 |
)% |
|
Resort operations and club management |
|
|
104 |
|
|
|
110 |
|
|
|
(6 |
) |
|
|
(5.5 |
) |
|
Segment revenues |
|
|
310 |
|
|
|
417 |
|
|
|
(107 |
) |
|
|
(25.7 |
) |
|
Cost reimbursements |
|
|
49 |
|
|
|
42 |
|
|
|
7 |
|
|
|
16.7 |
|
|
Intersegment eliminations(1) |
|
|
(8 |
) |
|
|
(9 |
) |
|
|
1 |
|
|
|
(11.1 |
) |
|
Total revenues |
|
$ |
351 |
|
|
$ |
450 |
|
|
$ |
(99 |
) |
|
|
(22.0 |
) |
|
(1) |
Refer to Note 18: Business Segments in our unaudited condensed consolidated financial statements for details on the intersegment eliminations. |
The following table reconciles net income, our most comparable U.S. GAAP financial measure, to EBITDA and Adjusted EBITDA:
|
|
|
Three Months Ended March 31, |
|
|
Variance |
|
||||||||||
|
($ in millions) |
|
2020 |
|
|
2019 |
|
|
$ |
|
|
% |
|
||||
|
Net Income |
|
$ |
8 |
|
|
$ |
55 |
|
|
$ |
(47 |
) |
|
|
(85.5 |
)% |
|
Interest expense |
|
|
10 |
|
|
|
10 |
|
|
|
— |
|
|
|
— |
|
|
Income tax expense |
|
|
1 |
|
|
|
20 |
|
|
|
(19 |
) |
|
|
(95.0 |
) |
|
Depreciation and amortization |
|
|
12 |
|
|
|
8 |
|
|
|
4 |
|
|
|
50.0 |
|
|
Interest expense, depreciation and amortization included in equity in earnings from unconsolidated affiliates |
|
|
1 |
|
|
|
1 |
|
|
|
— |
|
|
|
— |
|
|
EBITDA |
|
|
32 |
|
|
|
94 |
|
|
|
(62 |
) |
|
|
(66.0 |
) |
|
Other (gain) loss, net |
|
|
(2 |
) |
|
|
1 |
|
|
|
(3 |
) |
|
NM(1) |
|
|
|
Share-based compensation expense(2) |
|
|
(2 |
) |
|
|
5 |
|
|
|
(7 |
) |
|
NM(1) |
|
|
|
Other adjustment items(3) |
|
|
5 |
|
|
|
2 |
|
|
|
3 |
|
|
NM(1) |
|
|
|
Adjusted EBITDA |
|
$ |
33 |
|
|
$ |
102 |
|
|
$ |
(69 |
) |
|
|
(67.6 |
) |
|
(1) |
Fluctuation in terms of percentage change is not meaningful. |
|
(2) |
As of March 31, 2020, we determined that the performance conditions for our 2018, 2019, and 2020 Performance RSUs are improbable of achievement therefore we reversed $8 million of share-based compensation expense recognized in prior years and ceased accruing expense related to all Performance RSUs granted during the three months ended March 31, 2020. |
|
(3) |
For the three months ended March 31, 2020 and 2019, this amount includes costs associated with restructuring, one-time charges and other non-cash items. |
36
The following table reconciles our segment Adjusted EBITDA to Adjusted EBITDA:
|
|
|
Three Months Ended March 31, |
|
|
Variance |
|
||||||||||
|
($ in millions) |
|
2020 |
|
|
2019 |
|
|
$ |
|
|
% |
|
||||
|
Adjusted EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate sales and financing(1) |
|
$ |
15 |
|
|
$ |
80 |
|
|
$ |
(65 |
) |
|
|
(81.3 |
)% |
|
Resort operations and club management(1) |
|
|
55 |
|
|
|
65 |
|
|
|
(10 |
) |
|
|
(15.4 |
) |
|
Segment Adjusted EBITDA |
|
|
70 |
|
|
|
145 |
|
|
|
(75 |
) |
|
|
(51.7 |
) |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA from unconsolidated affiliates |
|
|
4 |
|
|
|
2 |
|
|
|
2 |
|
|
|
100.0 |
|
|
License fee expense |
|
|
(22 |
) |
|
|
(23 |
) |
|
|
1 |
|
|
|
(4.3 |
) |
|
General and administrative(2) |
|
|
(19 |
) |
|
|
(22 |
) |
|
|
3 |
|
|
|
(13.6 |
) |
|
Adjusted EBITDA |
|
$ |
33 |
|
|
$ |
102 |
|
|
$ |
(69 |
) |
|
|
(67.6 |
) |
|
(1) |
Includes intersegment transactions, share-based compensation, depreciation and other adjustments attributable to the segments. |
|
(2) |
Excludes segment related share-based compensation, depreciation and other adjustment items. |
Real Estate Sales and Financing
In accordance with Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers” (“ASC 606”), revenue and the related costs to fulfill and acquire the contract (“direct costs”) from sales of VOIs under construction are deferred until the point in time when construction activities are deemed to be completed. The Real estate sales and financing segment is impacted by construction related deferral and recognition activity. In periods where Sales of VOIs and related direct costs of projects under construction are deferred, margin percentages will generally contract as the indirect marketing and selling costs associated with these sales are recognized as incurred in the current period. In periods where previously deferred Sales of VOIs and related direct costs are recognized upon construction completion, margin percentages will generally expand as the indirect marketing and selling costs associated with these sales were recognized in prior periods.
The following table represents deferrals and recognitions of Sales of VOI revenue and direct costs for properties under construction for the three months ended March 31, 2020. There were no construction deferrals or recognitions for the three months ended March 31, 2019.
|
|
|
Three Months Ended March 31, |
|
|
|
($ in millions) |
|
2020 |
|
|
|
Sales of VOIs (deferrals) |
|
$ |
(47 |
) |
|
Sales of VOIs recognitions |
|
|
— |
|
|
Net Sales of VOIs (deferrals) recognitions |
|
|
(47 |
) |
|
Cost of VOI sales (deferrals)(1) |
|
|
(13 |
) |
|
Cost of VOI sales recognitions |
|
|
— |
|
|
Net Cost of VOI sales (deferrals) recognitions(1) |
|
|
(13 |
) |
|
Sales and marketing expense (deferrals) |
|
|
(7 |
) |
|
Sales and marketing expense recognitions |
|
|
— |
|
|
Net Sales and marketing expense (deferrals) recognitions |
|
|
(7 |
) |
|
Net construction (deferrals) recognitions |
|
$ |
(27 |
) |
|
(1) |
Includes anticipated Costs of VOI sales of VOIs under construction that will be acquired under a just-in-time arrangement once construction is complete for the three months ended March 31, 2020. |
Real estate sales and financing segment revenues decreased by $101 million for the three months ended March 31, 2020, compared to the same period in 2019, primarily due to a $99 million decrease in sales revenue, a $5 million decrease in marketing revenue and a $3 million increase in financing revenue.
37
Real estate sales and financing segment Adjusted EBITDA decreased by $65 million for the three months ended March 31, 2020, compared to the same period in 2019, primarily due to the decreases in segment revenues associated with segment performance discussed herein partially offset by decreases in related expenses. In addition, real estate sales and financing segment Adjusted EBITDA was impacted by $11 million one-time payroll related expenses incurred primarily related to payments made to employees’ as a result of operational closures caused by the COVID-19 pandemic.
Refer to “—Real Estate” and “—Financing” for further discussion on the revenues and expenses of the real estate sales and financing segment.
Resort Operations and Club Management
Resort operations and club management segment revenues decreased $6 million for the three months ended March 31, 2020, compared to the same period in 2019, primarily due to a decrease in rental and ancillary services revenue, partially offset by an increase in resort and club management revenue. Resort operations and club management segment Adjusted EBITDA decreased $10 million for the three months ended March 31, 2020, compared to the same period in 2019, primarily due to the decreases in segment margin associated with segment performance discussed herein.
Refer to “— Resort and Club Management” and “—Rental and Ancillary Services” for further discussion on the revenues and expenses of the resort operations and club management segment.
Real Estate Sales and Financing Segment
Real Estate
|
|
|
Three Months Ended March 31, |
|
|
Variance |
|
||||||||||
|
($ in millions, except Tour flow and VPG) |
|
2020 |
|
|
2019 |
|
|
$ |
|
|
% |
|
||||
|
Sales of VOIs, net |
|
$ |
56 |
|
|
$ |
125 |
|
|
$ |
(69 |
) |
|
|
(55.2 |
)% |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fee-for-service sales(2) |
|
|
130 |
|
|
|
190 |
|
|
|
(60 |
) |
|
|
(31.6 |
) |
|
Provision for financing receivables losses |
|
|
37 |
|
|
|
14 |
|
|
|
23 |
|
|
NM(1) |
|
|
|
Reportability and other: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net deferral (recognition) of sales of VOIs under construction(3) |
|
|
47 |
|
|
|
— |
|
|
|
47 |
|
|
NM(1) |
|
|
|
Fee-for-service sale upgrades, net |
|
|
(8 |
) |
|
|
(14 |
) |
|
|
6 |
|
|
|
(42.9 |
) |
|
Other(4) |
|
|
(18 |
) |
|
|
7 |
|
|
|
(25 |
) |
|
NM(1) |
|
|
|
Contract sales |
|
$ |
244 |
|
|
$ |
322 |
|
|
$ |
(78 |
) |
|
|
(24.2 |
) |
|
Tour flow |
|
|
66,965 |
|
|
|
82,644 |
|
|
|
(15,679 |
) |
|
|
(19.0 |
) |
|
VPG |
|
$ |
3,506 |
|
|
$ |
3,677 |
|
|
$ |
(171 |
) |
|
|
(4.7 |
) |
|
(1) |
Fluctuation in terms of percentage change is not meaningful. |
|
(2) |
Represents contract sales from fee-for-service properties on which we earn commissions and brand fees. |
|
(3) |
Represents the net impact of deferred revenues related to the Sales of VOIs under construction that are recognized when construction is complete. |
|
(4) |
Includes adjustments for revenue recognition, including amounts in rescission and sales incentives. |
38
Contract sales decreased $78 million for the three months ended March 31, 2020, compared to the same period in 2019, primarily due to a decrease in VPG from both a 29-basis point decline in close rate and a 5 percent average transaction price reduction coupled with a decrease in tour flow primarily related to the temporary closure of substantially all of our properties and suspension of sales and related operations due to the COVID-19 pandemic.
|
|
|
Three Months Ended March 31, |
|
|
Variance |
|
||||||||||
|
($ in millions) |
|
2020 |
|
|
2019 |
|
|
$ |
|
|
% |
|
||||
|
Sales, marketing, brand and other fees |
|
$ |
106 |
|
|
$ |
141 |
|
|
$ |
(35 |
) |
|
|
(24.8 |
)% |
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketing revenue and other fees |
|
|
25 |
|
|
|
30 |
|
|
|
(5 |
) |
|
|
(16.7 |
) |
|
Commissions and brand fees |
|
|
81 |
|
|
|
111 |
|
|
|
(30 |
) |
|
|
(27.0 |
) |
|
Sales of VOIs, net |
|
|
56 |
|
|
|
125 |
|
|
|
(69 |
) |
|
|
(55.2 |
) |
|
Sales revenue |
|
|
137 |
|
|
|
236 |
|
|
|
(99 |
) |
|
|
(41.9 |
) |
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of VOI sales |
|
|
14 |
|
|
|
36 |
|
|
|
(22 |
) |
|
|
(61.1 |
) |
|
Sales and marketing expense, net(1) |
|
|
125 |
|
|
|
131 |
|
|
|
(6 |
) |
|
|
(4.6 |
) |
|
Real estate margin |
|
$ |
(2 |
) |
|
$ |
69 |
|
|
$ |
(71 |
) |
|
NM(1) |
|
|
|
Real estate margin percentage |
|
|
(1.5 |
)% |
|
|
29.2 |
% |
|
|
|
|
|
|
|
|
|
(1) |
Includes revenue recognized through our marketing programs for existing owners and prospective first-time buyers and revenue associated with sales incentives, title service and document compliance. |
Sales revenue decreased for the three months ended March 31, 2020, compared to the same period in 2019, primarily due to (i) decreases in sales as a result of the temporary closure of substantially all of our properties and suspension of our sales and related operations as a result of the COVID-19 pandemic, (ii) $47 million of deferrals of VOI sales of projects under construction during the three months ended March 31, 2020, compared to the same period in 2019 where there were no projects under construction, (iii) a $23 million incremental increase to the provision for financing receivables related to our estimate of the impacts to our portfolio as a result of the COVID-19 pandemic and (iv) a $30 million decrease in commission and brand fees as a result of the COVID-19 pandemic and due to a shift in inventory mix, partially offset by a $5 million decrease in marketing revenue and other fees mainly associated with reduced vacation package sales and lower redemptions of marketing packages as a result of the COVID-19 pandemic.
Financing
|
|
|
Three Months Ended March 31, |
|
|
Variance |
|
||||||||||
|
($ in millions) |
|
2020 |
|
|
2019 |
|
|
$ |
|
|
% |
|
||||
|
Interest income |
|
$ |
38 |
|
|
$ |
36 |
|
|
$ |
2 |
|
|
|
5.6 |
% |
|
Other financing revenue |
|
|
6 |
|
|
|
5 |
|
|
|
1 |
|
|
|
20.0 |
|
|
Financing revenue |
|
|
44 |
|
|
|
41 |
|
|
|
3 |
|
|
|
7.3 |
|
|
Consumer financing interest expense |
|
|
7 |
|
|
|
7 |
|
|
|
— |
|
|
|
— |
|
|
Other financing expense |
|
|
6 |
|
|
|
6 |
|
|
|
— |
|
|
|
— |
|
|
Financing expense |
|
|
13 |
|
|
|
13 |
|
|
|
— |
|
|
|
— |
|
|
Financing margin |
|
$ |
31 |
|
|
$ |
28 |
|
|
$ |
3 |
|
|
|
10.7 |
|
|
Financing margin percentage |
|
|
70.5 |
% |
|
|
68.3 |
% |
|
|
|
|
|
|
|
|
Financing revenue increased by $3 million for the three months ended March 31, 2020, compared to the same period in 2019, due to higher interest income resulting from an increase in the weighted average interest rate we receive on our timeshare financing receivables balance and an increase in other financing revenue related to higher loan servicing fees. Financing margin and finance margin percentage increased for the three months ended March 31, 2020, compared to the same period in 2019, due to the increase in interest income and other financing revenue.
39
Resort Operations and Club Management Segment
Resort and Club Management
|
|
|
Three Months Ended March 31, |
|
|
Variance |
|
||||||||||
|
($ in millions) |
|
2020 |
|
|
2019 |
|
|
$ |
|
|
% |
|
||||
|
Club management revenue |
|
$ |
25 |
|
|
$ |
26 |
|
|
$ |
(1 |
) |
|
|
(3.8 |
)% |
|
Resort management revenue |
|
|
19 |
|
|
|
16 |
|
|
|
3 |
|
|
|
18.8 |
|
|
Resort and club management revenues |
|
|
44 |
|
|
|
42 |
|
|
|
2 |
|
|
|
4.8 |
|
|
Club management expense |
|
|
7 |
|
|
|
7 |
|
|
|
— |
|
|
|
— |
|
|
Resort management expense |
|
|
5 |
|
|
|
4 |
|
|
|
1 |
|
|
|
25.0 |
|
|
Resort and club management expenses |
|
|
12 |
|
|
|
11 |
|
|
|
1 |
|
|
|
9.1 |
|
|
Resort and club management margin |
|
$ |
32 |
|
|
$ |
31 |
|
|
$ |
1 |
|
|
|
3.2 |
|
|
Resort and club management margin percentage |
|
|
72.7 |
% |
|
|
73.8 |
% |
|
|
|
|
|
|
|
|
Resort and club management revenues increased by $2 million for the three months ended March 31, 2020, compared to the same period in 2019, primarily due to a $3 million in increase in resort management revenue driven by (i) an increase of approximately 17,000 Club members and higher rates pertaining to annual dues and (ii) higher resort management revenue and other fees from the launch of new properties subsequent to the first quarter of 2019, partially offset by a $1 million decrease in club management revenue primarily related to the refunding of club transaction fees to accommodate our guests impacted by the COVID-19 pandemic. Resort and club management margin percentage decreased for the three months ended March 31, 2020, compared to the same period in 2019, primarily due to an increase in segment expenses relating to the launch of new properties subsequent to the first quarter of 2019.
Rental and Ancillary Services
|
|
|
Three Months Ended March 31, |
|
|
Variance |
|
||||||||||
|
($ in millions) |
|
2020 |
|
|
2019 |
|
|
$ |
|
|
% |
|
||||
|
Rental revenues |
|
$ |
47 |
|
|
$ |
52 |
|
|
$ |
(5 |
) |
|
|
(9.6 |
)% |
|
Ancillary services revenues |
|
|
5 |
|
|
|
7 |
|
|
|
(2 |
) |
|
|
(28.6 |
) |
|
Rental and ancillary services revenues |
|
|
52 |
|
|
|
59 |
|
|
|
(7 |
) |
|
|
(11.9 |
) |
|
Rental expenses |
|
|
32 |
|
|
|
29 |
|
|
|
3 |
|
|
|
10.3 |
|
|
Ancillary services expense |
|
|
5 |
|
|
|
6 |
|
|
|
(1 |
) |
|
|
(16.7 |
) |
|
Rental and ancillary services expenses |
|
|
37 |
|
|
|
35 |
|
|
|
2 |
|
|
|
5.7 |
|
|
Rental and ancillary services margin |
|
$ |
15 |
|
|
$ |
24 |
|
|
$ |
(9 |
) |
|
|
(37.5 |
) |
|
Rental and ancillary services margin percentage |
|
|
28.8 |
% |
|
|
40.7 |
% |
|
|
|
|
|
|
|
|
Rental and ancillary services revenues decreased by $7 million for the three months ended March 31, 2020, compared to the same period in 2019, primarily due to the temporary closure of substantially all of our properties and suspension of substantially all of our resort operations as a result of the COVID-19 pandemic. Rental and ancillary services expenses increased $2 million for the three months ended March 31, 2020, compared to the same period in 2019, primarily due to the launch of new properties subsequent to the first quarter of 2019, partially offset by a decrease in transient expenses driven by lower transient arrivals from the temporary suspension of operations due to the COVID-19 pandemic. Rental and ancillary services margin and margin percentage decreased for the three months ended March 31, 2020, compared to the same period in 2019 primarily due to the decreases in revenue and increases in expenses discussed above.
Other Operating Expenses
|
|
|
Three Months Ended March 31, |
|
|
Variance |
|
||||||||||
|
($ in millions) |
|
2020 |
|
|
2019 |
|
|
$ |
|
|
% |
|
||||
|
General and administrative |
|
$ |
21 |
|
|
$ |
27 |
|
|
$ |
(6 |
) |
|
|
(22.2 |
)% |
|
Depreciation and amortization |
|
|
12 |
|
|
|
8 |
|
|
|
4 |
|
|
|
50.0 |
|
|
License fee expense |
|
|
22 |
|
|
|
23 |
|
|
|
(1 |
) |
|
|
(4.3 |
) |
40
The change in other operating expenses for the three months ended March 31, 2020, compared to the same period in 2019, is primarily due to (i) the reversal of previously recognized expense related to our 2018 and 2019 Performance RSUs which are not expected to achieve certain performance targets and (ii) higher depreciation and amortization expense as a result of additional software placed into service related to systems enhancements and leasehold improvements at newly renovated sales centers subsequent to the first quarter of 2019.
Non-Operating Expenses
|
|
|
Three Months Ended March 31, |
|
|
Variance |
|
||||||||||
|
($ in millions) |
|
2020 |
|
|
2019 |
|
|
$ |
|
|
% |
|
||||
|
Interest expense |
|
$ |
10 |
|
|
$ |
10 |
|
|
$ |
— |
|
|
|
— |
|
|
Equity in earnings from unconsolidated affiliates |
|
|
(3 |
) |
|
|
(1 |
) |
|
|
(2 |
) |
|
NM(1) |
|
|
|
Other (gain) loss, net |
|
|
(2 |
) |
|
|
1 |
|
|
|
(3 |
) |
|
NM(1) |
|
|
|
Income tax expense |
|
|
1 |
|
|
|
20 |
|
|
|
(19 |
) |
|
|
(95.0 |
) |
|
(1) |
Fluctuation in terms of percentage change is not meaningful |
The change in non-operating expenses for the three months ended March 31, 2020, compared to the same periods in 2019, is primarily due to an increase in equity in earnings from unconsolidated affiliates and a decrease in income tax expense due to a decrease in income before income taxes combined with a decrease in the effective tax rate. See Note 14: Income Taxes for additional information.
Liquidity and Capital Resources
Overview
Our cash management objectives are to maintain the availability of liquidity, minimize operational costs, make debt payments and fund future acquisitions and development projects. Our known short-term liquidity requirements primarily consist of funds necessary to pay for operating expenses and other expenditures, including payroll and related benefits, legal costs, operating costs associated with the operation of our resorts and sales centers, interest and scheduled principal payments on our outstanding indebtedness, inventory-related purchase commitments, and capital expenditures for renovations and maintenance at our offices and sales centers. Our long-term liquidity requirements primarily consist of funds necessary to pay for scheduled debt maturities, inventory-related purchase commitments and costs associated with potential acquisitions and development projects.
We finance our short- and long-term liquidity needs primarily through cash and cash equivalents, cash generated from our operations, draws on our senior secured credit facility and our non-recourse revolving timeshare credit facility (“Timeshare Facility”), and through periodic securitizations of our timeshare financing receivables.
|
|
• |
As of March 31, 2020, we had total cash and cash equivalents of $759 million, including $90 million of restricted cash. The restricted cash balance relates to escrowed cash from sales of our VOIs and reserves related to our non-recourse debt. |
|
|
• |
During the first quarter of 2020, we substantially drew down the remaining borrowing capacity under the revolver facility as a precautionary measure to ensure liquidity for a sustained period as a result of the COVID-19 pandemic. We do not have a plan for the use of the proceeds other than for general corporate and working capital purposes in the ordinary course of business. As of March 31, 2020, we have $39 million remaining borrowing capacity under the revolver facility (“Revolver”) which includes $29 million of undrawn borrowing capacity available for letters of credit and $10 million available under short-term borrowings. See Note 11: Debt and Non-Recourse Debt for additional information. |
|
|
• |
During the first quarter of 2020, we drew down $195 million on our Timeshare Facility and have $255 million remaining borrowing capacity under our Timeshare Facility. See Note 11: Debt and Non-Recourse Debt for additional information. |
To optimize our liquidity and access to capital in light of the significant adverse impact of the COVID-19 pandemic, particularly as substantially all of our properties have temporarily closed and substantially all of our sales, operations and other activities have been suspended, we have undertaken efforts to increase our capital and decrease our expenses. These include the furlough of approximately 67 percent of our employees, temporary salary reductions for the remaining employees’, eliminating discretionary spending, and reducing our planned investment in new inventory by approximately $200 million.
41
We believe that these actions, together with drawing on available borrowings under our Revolver and preserving our capacity under our Timeshare Facility as described above, will provide adequate capital to meet our short- and long-term liquidity requirements for operating expenses and other expenditures, including payroll and related benefits, legal costs, and to finance our long-term growth plan and capital expenditures for the foreseeable future. As we are not able to estimate the date that the suspensions of resort and sales operations will be lifted, we may need to take additional actions to ensure the continuity of our business. Any sustained material adverse impact on our revenues, net income and other operating results due to COVID-19 could cause our financial covenants under our debt obligations to be adversely affected. If we are unable to comply with or obtain potential modifications to such covenants prior to any breaches, we may trigger events of defaults under these arrangements. We are currently in negotiations with our lenders to amend such covenants as needed and believe we will be able to reach an agreement in advance of any such default.
Sources and Uses of Our Cash
The following table summarizes our net cash flows and key metrics related to our liquidity:
|
|
|
Three Months Ended March 31, |
|
|
Variance |
|
||||||
|
($ in millions) |
|
2020 |
|
|
2019 |
|
|
$ |
|
|||
|
Net cash provided by (used in): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating activities |
|
$ |
53 |
|
|
$ |
14 |
|
|
$ |
39 |
|
|
Investing activities |
|
|
(8 |
) |
|
|
(10 |
) |
|
|
2 |
|
|
Financing activities |
|
|
562 |
|
|
|
38 |
|
|
|
524 |
|
Operating Activities
Cash flow provided by operating activities is primarily generated from (1) sales and financing of VOIs and (2) net cash generated from managing our resorts, Club operations and providing related ancillary services. Cash flows used in operating activities primarily include spending for the purchase and development of real estate for future conversion to inventory and funding our working capital needs. Our cash flows from operations generally vary due to the following factors related to the sale of our VOIs; the degree to which our owners finance their purchase and our owners’ repayment of timeshare financing receivables; the timing of management and sales and marketing services provided; and cash outlays for VOI inventory acquisition and development. Additionally, cash flow from operations will also vary depending upon our sales mix of VOIs; over time, we generally receive more cash from the sale of an owned VOI as compared to that from a fee-for-service sale.
The change in net cash flows provided by operating activities for the three months ended March 31, 2020, compared to the same period in 2019 was primarily due to a reduction in the purchase and development of real estate for future conversion to inventory, partially offset by decreased sources of cash from working capital.
The following table exhibits our VOI inventory spending:
|
|
|
Three Months Ended March 31, |
|
|||||
|
($ in millions) |
|
2020 |
|
|
2019 |
|
||
|
VOI spending - owned properties |
|
$ |
17 |
|
|
$ |
26 |
|
|
VOI spending - fee-for-service upgrades(1) |
|
|
8 |
|
|
|
14 |
|
|
Purchases and development of real estate for future conversion to inventory |
|
|
5 |
|
|
|
60 |
|
|
Total VOI inventory spending |
|
$ |
30 |
|
|
$ |
100 |
|
|
(1) |
Includes expense related to granting credit to customers for their existing ownership when upgrading into fee-for-service projects from developed projects of $5 million and $9 million recorded in Costs of VOI sales for the three months ended March 31, 2020 and 2019, respectively. |
42
Investing Activities
The following table summarizes our net cash used in investing activities:
|
|
|
Three Months Ended March 31, |
|
|
Variance |
|
||||||
|
($ in millions) |
|
2020 |
|
|
2019 |
|
|
$ |
|
|||
|
Capital expenditures for property and equipment |
|
$ |
(3 |
) |
|
$ |
(6 |
) |
|
$ |
3 |
|
|
Software capitalization costs |
|
|
(5 |
) |
|
|
(4 |
) |
|
|
(1 |
) |
|
Net cash used in investing activities |
|
$ |
(8 |
) |
|
$ |
(10 |
) |
|
$ |
2 |
|
The change in net cash used in investing activities for the three months ended March 31, 2020, compared to the same period in 2019, was primarily due to a reduction of property and equipment spending.
Our capital expenditures include spending related to technology, buildings and leasehold improvements used to support sales and marketing locations, resort operations and corporate activities. We believe the renovations of our existing assets are necessary to stay competitive in the markets in which we operate.
Financing Activities
The following table summarizes our net cash provided by financing activities:
|
|
|
Three Months Ended March 31, |
|
|
Variance |
|
||||||
|
($ in millions) |
|
2020 |
|
|
2019 |
|
|
$ |
|
|||
|
Issuance of debt |
|
$ |
495 |
|
|
$ |
195 |
|
|
$ |
300 |
|
|
Issuance of non-recourse debt |
|
|
195 |
|
|
|
— |
|
|
|
195 |
|
|
Repayment of debt |
|
|
(57 |
) |
|
|
(23 |
) |
|
|
(34 |
) |
|
Repayment of non-recourse debt |
|
|
(58 |
) |
|
|
(40 |
) |
|
|
(18 |
) |
|
Repurchase and retirement of common stock |
|
|
(10 |
) |
|
|
(92 |
) |
|
|
82 |
|
|
Payment of withholding taxes on vesting of restricted stock units |
|
|
(2 |
) |
|
|
(2 |
) |
|
|
— |
|
|
Other financing activity |
|
|
(1 |
) |
|
|
— |
|
|
|
(1 |
) |
|
Net cash provided by financing activities |
|
$ |
562 |
|
|
$ |
38 |
|
|
$ |
524 |
|
The change in net cash flows provided by financing activities for the three months ended March 31, 2020, compared to the same period in 2019, was primarily due to (i) higher issuances of debt and non-recourse debt relating to our Revolver and Timeshare Facility and (ii) a reduction in share repurchases of common stock, partially offset by higher repayments of debt and non-recourse debt. See Note 11: Debt & Non-recourse Debt in our condensed consolidated financial statements for further discussion.
Contractual Obligations
The following table summarizes our significant contractual obligations as of March 31, 2020:
|
|
|
Payments Due by Period |
|
|||||||||||||||||
|
($ in millions) |
|
Total |
|
|
Less Than 1 Year |
|
|
1-3 Years |
|
|
3-5 Years |
|
|
More Than 5 Years |
|
|||||
|
Debt |
|
$ |
1,272 |
|
|
$ |
12 |
|
|
$ |
22 |
|
|
$ |
1,215 |
|
|
$ |
23 |
|
|
Non-recourse debt |
|
|
892 |
|
|
|
221 |
|
|
|
444 |
|
|
|
141 |
|
|
|
86 |
|
|
Interest on debt(1) |
|
|
258 |
|
|
|
67 |
|
|
|
115 |
|
|
|
61 |
|
|
|
15 |
|
|
Operating leases |
|
|
90 |
|
|
|
19 |
|
|
|
29 |
|
|
|
23 |
|
|
|
19 |
|
|
Inventory purchase commitments |
|
|
473 |
|
|
|
101 |
|
|
|
260 |
|
|
|
98 |
|
|
|
14 |
|
|
Other commitments(2) |
|
|
26 |
|
|
|
18 |
|
|
|
8 |
|
|
|
— |
|
|
|
— |
|
|
Total contractual obligations |
|
$ |
3,011 |
|
|
$ |
438 |
|
|
$ |
878 |
|
|
$ |
1,538 |
|
|
$ |
157 |
|
|
(1) |
Includes interest on our debt and non-recourse debt. For our variable-rate debt, we have assumed a constant 30-day LIBOR rate of 0.99 percent as of March 31, 2020. |
|
(2) |
Primarily relates commitments related to information technology and brand licensing under the normal course of business. |
43
We have made commitments with developers to purchase vacation ownership units at a future date to be marketed and sold under our Hilton Grand Vacations brand. As of March 31, 2020, our inventory-related purchase commitment totaled $473 million over 11 years of which we expect to purchase $26 million for the remaining of 2020.
We utilize surety bonds related to the sales of VOIs in order to meet regulatory requirements of certain states. The availability, terms and conditions and pricing of such bonding capacity are dependent on, among other things, continued financial strength and stability of the insurance company affiliates providing the bonding capacity, general availability of such capacity and our corporate credit rating. We have commitments from surety providers in the amount of $569 million as of March 31, 2020 which primarily consist of escrow and construction related bonds.
Off-Balance Sheet Arrangements
Our off-balance sheet arrangements as of March 31, 2020 consisted of $473 million of certain commitments with developers whereby we have committed to purchase vacation ownership units at a future date to be marketed and sold under our Hilton Grand Vacations brand and $26 million of other commitments under the normal course of business. The ultimate amount and timing of the acquisitions is subject to change pursuant to the terms of the respective arrangements, which could also allow for cancellation in certain circumstances. See Note 19: Commitments and Contingencies in our unaudited condensed consolidated financial statements for a discussion of our off-balance sheet arrangements.
COVID-19 and Subsequent Events
The novel coronavirus (“COVID-19”) pandemic has significantly impacted the hospitality industry due to travel restrictions and stay-at-home directives that have resulted in cancellations and significantly reduced travel around the world. As a result of the reduction in travel, we have closed substantially all of our resorts and sales centers for an indeterminate duration. In response to the impact of COVID-19, we have taken actions to ensure the continuity of our business and operations, including furloughing approximately 67 percent of our employees, implementing salary reductions for the remaining active employees, eliminating all discretionary spending, and reducing our planned investment in new inventory by approximately $200 million.
In addition, we drew down on the availability under our credit facility as a precautionary measure to ensure liquidity for a sustained period. As we are not able to estimate the date that the suspensions of resort and sales operations will be lifted, we may need to take additional actions to ensure the continuity of our business. Any sustained material adverse impact on our revenues, net income and other operating results due to COVID-19 could cause our financial covenants under our debt obligations to be adversely affected. If we are unable to comply with or obtain potential modifications to such covenants prior to any breaches, we may trigger events of defaults under these arrangements. We are currently in negotiations with our lenders to amend such covenants as needed and believe we will be able to reach an agreement in advance of any such default.
|
|
• |
On April 16, we announced that we had adopted a shareholder rights plan. |
|
|
• |
On April 22, we entered into Amendment No. 14 to our Timeshare Facility, which amended certain key definitions related to delinquency level calculations of underlying timeshare loans that are used as collateral for borrowings under our Timeshare Facility. Additionally, it provides us with the added flexibility to manage any potential increase in the rate of delinquency that may result from the impact of the COVID-19 pandemic. All other terms and borrowing capacity remained unchanged. |
|
|
• |
In April 2020, we furloughed approximately 6,100 out of our 9,100 employees. |
Critical Accounting Policies and Estimates
The preparation of our unaudited condensed consolidated financial statements in accordance with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts and related disclosures. We have discussed those policies and estimates that we believe are critical and require the use of complex judgment in their application in our Annual Report on Form 10-K for the year ended December 31, 2019.
44
|
ITEM 3. |
Quantitative and Qualitative Disclosures about Market Risk |
We are exposed to market risk from changes in interest rates and currency exchange rates. We manage our exposure to these risks by monitoring available financing alternatives and through pricing policies that may take into account currency exchange rates. During the course of March 2020, we drew down the substantial remainder of our credit facility through net borrowings of an additional $445 million that was available under our revolver facility, for a total amount of $761 million outstanding at an average interest rate of 2.60%, after taking into account repayments. Our exposure to market risk has not materially changed from what we previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2019.
Interest Rate Risk
We are exposed to interest rate risk on our variable-rate debt, comprised of the term loans, Revolver and our Timeshare Facility, of which the Timeshare Facility is without recourse to us. The interest rates are based on one-month LIBOR and we are most vulnerable to changes in this rate.
We intend to securitize timeshare financing receivables in the asset-backed financing market periodically. We expect to secure fixed-rate funding to match our fixed-rate timeshare financing receivables. However, if we have variable-rate debt in the future, we will monitor the interest rate risk and evaluate opportunities to mitigate such risk through the use of derivative instruments.
To the extent we continue to have variable-rate borrowings and continue to utilize variable-rate indebtedness in the future, any increase in interest rates beyond amounts covered under any corresponding derivative financial instruments, particularly if sustained, could have an adverse effect on our net income, cash flows and financial position. While we have entered into certain hedging transactions to address such potential risk, such transactions and any future hedging transactions we may enter into may not adequately mitigate the adverse effects of interest rate increases or that counterparties in those transactions will honor their obligations.
The following table sets forth the contractual maturities, weighted-average interest rates and the total fair values as of March 31, 2020, for our financial instruments that are materially affected by interest rate risk:
|
|
|
|
|
|
|
Maturities by Period |
|
|||||||||||||||||||||||||||||
|
($ in millions) |
|
Weighted Average Interest Rate(1) |
|
|
2020 |
|
|
2021 |
|
|
2022 |
|
|
2023 |
|
|
2024 |
|
|
There- after |
|
|
Total(2) |
|
|
Fair Value |
|
|||||||||
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed-rate securitized timeshare financing receivables |
|
|
12.148 |
% |
|
$ |
69 |
|
|
$ |
92 |
|
|
$ |
93 |
|
|
$ |
93 |
|
|
$ |
92 |
|
|
$ |
264 |
|
|
$ |
703 |
|
|
$ |
729 |
|
|
Fixed-rate unsecuritized timeshare financing receivables |
|
|
12.945 |
% |
|
|
43 |
|
|
|
50 |
|
|
|
54 |
|
|
|
59 |
|
|
|
63 |
|
|
|
362 |
|
|
|
631 |
|
|
|
648 |
|
|
Liabilities:(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed-rate debt |
|
|
3.930 |
% |
|
|
176 |
|
|
|
162 |
|
|
|
113 |
|
|
|
112 |
|
|
|
343 |
|
|
|
118 |
|
|
|
1,024 |
|
|
|
954 |
|
|
Variable-rate debt(4) |
|
|
2.489 |
% |
|
|
7 |
|
|
|
10 |
|
|
|
205 |
|
|
|
918 |
|
|
|
— |
|
|
|
— |
|
|
|
1,140 |
|
|
|
1,123 |
|
|
(1) |
Weighted-average interest rate as of March 31, 2020. |
|
(2) |
Amount excludes unamortized deferred financing costs. |
|
(3) |
Includes debt and non-recourse debt. |
|
(4) |
Variable-rate debt includes principal outstanding debt of $945 million and non-recourse debt of $195 million as of March 31, 2020. See Note 11: Debt & Non-recourse Debt in our unaudited condensed consolidated financial statements for additional information. |
Foreign Currency Exchange Rate Risk
Though the majority of our operations are conducted in United States dollar (“U.S. dollar”), we are exposed to earnings and cash flow volatility associated with changes in foreign currency exchange rates. Our principal exposure results from our timeshare financing receivables denominated in Japanese yen, the value of which could change materially in reference to our reporting currency, the U.S. dollar. A 10 percent increase in the foreign exchange rate of Japanese yen to U.S. dollar would change our gross timeshare financing receivables by less than $1 million. A 10 percent change in the foreign exchange rate of Mexican Peso to U.S. dollar would change our gross VAT receivable by less than $1 million.
45
|
ITEM 4. |
Controls and Procedures |
Disclosure Controls and Procedures
Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act) or our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act) will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of the controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error and mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of effectiveness of controls and procedures to future periods are subject to the risk that the controls and procedures may become inadequate because of changes in conditions, or that the degree of compliance with the controls and procedures may have deteriorated.
In accordance with Rule 13a-15(b) of the Exchange Act, as of the end of the period covered by this quarterly report, an evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures, as of the end of the period covered by this quarterly report, were effective to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. We will continue to assess the adequacy of our disclosure controls and procedures and make any appropriate changes given the various government mandates and orders of business closures and the resulting remote working conditions as a result of the COVID-19 pandemic.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the three months ended March 31, 2020, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. We will continue to assess the effectiveness of our internal controls over financial reporting consistent with past practice, particularly in light of the various government mandates and orders of business closures and the resulting remote working conditions as a result of the COVID-19 pandemic.
46
PART II OTHER INFORMATION
|
Item 1. |
Legal Proceedings |
We are involved in litigation arising from the normal course of business, some of which includes claims for substantial sums. Management has evaluated these legal matters and we believe an unfavorable outcome is either reasonably possible or remote and/or for which are not reasonably estimable. While the ultimate results of claims and litigation cannot be predicted with certainty, we expect that the ultimate resolution of all pending or threatened claims and litigation as of March 31, 2020 will not have a material effect on our unaudited condensed consolidated financial statements.
|
Item 1A. |
Risk Factors |
The following represents material changes and updates to the risk factors previously disclosed in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2019. The risk factor below and the risk factors included in our Annual Report on Form 10-K may be important to understanding statements in this Form 10-Q and should be read in conjunction with the unaudited condensed consolidated financial statements and related notes in Part I, Item 1, “Financial Statements” and Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Form 10-Q.
The following risks and those risks described in our Annual Report on Form 10-K for the year ended December 31, 2019 contain forward-looking statements, and they may not be the only risks facing the Company. The business, financial condition and operating results of the Company can be affected by the risk factors described in such reports and by other factors currently unknown, that management presently believes not to be material, that management has made certain forward looking, projections, estimates or assumptions, or that may rapidly evolve, develop or change, including those that are caused, directly or indirectly, by the COVID-19 pandemic. Any one or more of such factors could, directly or indirectly, cause the Company’s actual financial condition and operating results to vary materially from past, or from anticipated future, financial condition and operating results. Any of these factors, in whole or in part, could materially and adversely affect the Company’s business, financial condition, operating results and the trading price of our common stock. Because of these factors affecting the Company’s financial condition and operating results, past financial performance should not be considered to be a reliable indicator of future performance, and investors should not use historical trends to anticipate results or trends in future periods.
The COVID-19 pandemic has impacted, and will likely continue to have a material adverse impact on, our business, financial condition and results of operations for the foreseeable future, and may also impact our ability to meet certain financial covenants under our debt agreements in the future.
The COVID-19 pandemic has led governments and other authorities around the world to impose measures intended to control its spread, including restrictions on freedom of movement and business operations, such as travel bans, border closings, business closures, quarantines and shelter-in-place orders. As a result, the pandemic has significantly disrupted domestic and international travel, and has adversely impacted commercial activity across the travel, lodging and hospitality industries, including the timeshare industry. The COVID-19 pandemic has had, and is expected to or may continue to have, significant adverse impacts on global economic and market, financial, healthcare, societal, and government regulatory conditions.
The effects of the COVID-19 pandemic on the travel and hospitality industries are unprecedented with demand reaching historic lows. As of March 31, 2020, we had temporarily closed operations at substantially all of our resorts and closed substantially all of our sales centers. We cannot predict when the effects of the pandemic will subside, and thus we cannot predict when we will be able to reopen our properties and if or when our business will return to normalized levels. There also can be no guarantee that when the restrictions implemented to mitigate the health impact of the pandemic are lifted, the demand for VOIs and consumer confidence in travel generally, will recover as quickly as other industries. The economic downturn resulting from the measures taken to mitigate the health impact of the pandemic may deter consumers from spending on travel and leisurely activities, which would adversely impact our business. The impact of the pandemic on our operations has had and will continue to have a significantly adverse impact on our revenues, results of operations and liquidity.
47
Although we have taken certain actions to ensure the continuity of our business and operations, including implementing salary reductions, employee furloughs of over 6,100 of our approximately 9,100 employees, and hiring freezes, we may need to take additional actions to ensure the continuity of our business. We drew down on the availability under our credit facility as a precautionary measure to ensure liquidity for a sustained period but we cannot guarantee we will have sufficient liquidity to continue to fund our business depending on the extent and duration of the pandemic and resulting economic downturn. The increase in our level of debt may adversely affect our financial and operating activities or ability to incur additional debt.
In addition, any sustained materially adverse impact on our revenues, net income and other operating results due to the impact of the COVID-19 pandemic could cause us to breach our operating and financial covenants under our debt obligations, including our credit facility. If we are unable to comply with such covenants, or obtain modifications or waivers to such covenants prior to any such breaches under our credit facility, warehouse facility, term loans or indenture governing our public notes, as applicable, we may trigger events of defaults under such documents and the lenders may have the right to terminate their commitments thereunder and declare the outstanding loans thereunder to be immediately due and payable.
We rely on various commercial agreements and arrangements, including our arrangements with joint venture partners, key developers, and fee-for-service partners, that are critical to our business and operations. Some of those agreements, such as our fee-for-service arrangements, require us to achieve certain sales and related performance levels before we earn our fees and the failure to achieve those targets will not only result in us not earning our fees but may give rise to the other parties’ ability to terminate such arrangements. While we believe we can rely on certain force majeure related exceptions to such termination rights, there can be no assurance that such parties will agree with our view. In addition, these events may result in renegotiating the agreements and there can be no assurance that we will be able to agree to new or revised terms that are favorable to us. Finally, parties to other commercial agreements may themselves assert or attempt to terminate various agreements and arrangements with us on the basis of force majeure provisions that may be contained in such agreements. Any termination of significant commercial agreements may adversely harm our operations.
In addition to the foregoing, the COVID-19 pandemic and the resulting adverse and unpredictable economic conditions are likely to implicate or exacerbate the risk factors that we identified in our Annual Report on Form 10-K for the year ended December 31, 2019, which in turn could significantly increase the adverse effects on our business, financial condition, liquidity and results of operations. Such risks include, but are not limited to, the following:
|
|
• |
adverse changes in the supply and demand for our products and services, including, without limitation, those resulting from the various government mandates and orders that have resulted in the closure of most of our properties; |
|
|
• |
contraction in the global economy and recession; |
|
|
• |
changes in global and U.S. economic conditions, including low consumer confidence, high unemployment levels and depressed real estate prices, and global or domestic recessions; |
|
|
• |
sustained steep decline in tourism and travel by consumers, including due to changing perception and behavior of consumers affecting travel, lodging and vacationing; |
|
|
• |
delays in or cancellations of planned or future development or refurbishment projects, including due to steps we have taken and announced in an effort to proactively preserve our liquidity; |
|
|
• |
increased delinquency and default rates on our financing or loan receivables, including defaults on payments by borrowers due to loss of jobs, unemployment, or other financial difficulties; |
|
|
• |
our ability to securitize the receivables that we originate in connection with VOI sales; |
|
|
• |
the financial condition of third-party developers with whom we do business; |
|
|
• |
adverse impact on our human capital and its adequacy to operate our business and respond to continuously evolving regulatory, economic, health, business and related challenges, including successor planning for our executive team in the event any of them may be affected by COVID-19; |
|
|
• |
negative impact on the fair value of our assets, recognition of impairment losses of our assets, or reserves (including increases in estimated amount) against our financing receivables that; |
|
|
• |
increased exposure to variable rate indebtedness as interest rates fluctuate due to our increase borrowing and uncertain global economic and financial climate; |
48
|
|
• |
general compliance with the agreements relating to our outstanding indebtedness in addition to the financial and operating covenants discussed above; |
|
|
• |
inability to repay our debt as they mature or are due as a result of decreases in our operating cash flows; |
|
|
• |
inability to obtain the requisite licenses, permits, or other approvals that are critical in connection with our business, including due to COVID-19 related closures of, or delays of approvals by, regulatory agencies; |
|
|
• |
changes in governmental regulations resulting from COVID-19 that may impose significant restrictions, rules, regulations, and additional resources on our business and operations; |
|
|
• |
the availability and cost of capital necessary for us, and third-party developers with whom we do business, to fund investments, capital expenditures and service debt obligations; |
|
|
• |
the economic environment for and trends in the tourism and hospitality industry, which may impact the vacationing and purchasing decisions of consumers; |
|
|
• |
cyber security exposure and IT infrastructure, particularly with the rapid surge in remote working conditions due to above-described closures of properties and offices; |
|
|
• |
increases in compensation and general & administrative expenses (including, without limitation, severance and termination costs) due to significant furloughs, layoffs, or other changes to our workforce to date and in the future; |
|
|
• |
uncertainties related to our ability to re-hire or replace furloughed or terminated employees as we normalize our business and operations in the future; |
|
|
• |
the financial and general business condition of the travel industry; |
|
|
• |
war, political conditions or civil unrest, violence or terrorist activities or threats and additional, heightened travel security measures; |
|
|
• |
potential increases in litigation and adverse claims against us due to various actions that we have taken and may take in the future in response to the effects of COVID-19 with respect to various aspects of our operations (including, without limitation, labor and employment, commercial arrangements and agreements, and remediation efforts implemented at our properties in response to any COVID-19 related incidents); and |
|
|
• |
lasting negative public perception of travel, lodging, leisure, socialization, and other travel-related activities due to COVID-19 and other contagious diseases, such as Ebola, avian flu, severe acute respiratory syndrome (SARS), H1N1 (swine flu), and the Zika virus, and their impact on the way we conduct our business, operate our properties, and our employees work. |
The COVID-19 pandemic has also resulted in severe disruption and volatility in the financial markets. Depending on the extent and duration of the COVID-19 pandemic, the price of our common stock on the NYSE may continue to experience declines and volatility which may negatively impact our ability to raise capital through the equity markets if necessary to increase our liquidity and will adversely impact your investments in our common stock.
49
|
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
|
|
(a) |
None. |
|
|
(b) |
Not Applicable. |
|
|
(c) |
Issuer Repurchases. On March 13, 2020, the Company announced that our Board of Directors approved a share repurchase program authorizing the Company to repurchase up to an aggregate of $200 million of its outstanding shares of common stock. The following table presents details regarding our repurchase of securities during the quarter ended March 31,2020. Due to the then-still developing significant adverse impact on the global economy, capital markets, travel industry, and various government mandates regarding closures of businesses, all due to the COVID-19 pandemic and various uncertainties related to it, the Company previously announced on March 31, 2020 that it had suspended the repurchase program. |
|
|
|
Total Number of Shares Purchased |
|
|
Average Price Paid Per Share |
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |
|
|
Appropriate Dollar Value of Shares that May Yet Be Purchased Under Plan |
|
||||
|
January 1 - January 31, 2020 |
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
— |
|
|
February 1 - February 28, 2020 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
March 1 - March 31, 2020 |
|
|
814,128 |
|
|
|
11.92 |
|
|
|
814,128 |
|
|
|
190,314,211 |
|
|
Total |
|
|
814,128 |
|
|
$ |
11.92 |
|
|
|
814,128 |
|
|
$ |
190,314,211 |
|
|
Item 3. |
Defaults Upon Senior Securities |
None.
|
Item 4. |
Mine Safety Disclosures |
Not applicable.
|
Item 5. |
Other Information |
None.
50
|
Item 6. |
Exhibits |
|
* |
Filed herewith. |
|
+ |
Compensatory arrangement. |
51
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on this 30th day of April 2020.
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|
HILTON GRAND VACATIONS INC. |
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|
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|
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By: |
/s/ Mark D. Wang |
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|
Name: |
Mark D. Wang |
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|
Title: |
President and Chief Executive Officer |
|
|
|
|
|
|
By: |
/s/ Daniel J. Mathewes |
|
|
Name: |
Daniel J. Mathewes |
|
|
Title: |
Executive Vice President and Chief Financial Officer |
52
Execution Version
Exhibit 10.1
AMENDMENT NO. 13 TO
RECEIVABLES LOAN AGREEMENT
This AMENDMENT NO. 13 TO RECEIVABLES LOAN AGREEMENT (this “Amendment”), effective as of January 17, 2020 (the “Effective Date”), is executed by and among HILTON GRAND VACATIONS TRUST I LLC, a Delaware limited liability company (together with its successors and assigns, the “Borrower”), HILTON RESORTS CORPORATION, a Delaware corporation (the “Seller”), the financial institutions signatory hereto as Managing Agents, the financial institutions signatory hereto as Conduit Lenders, the financial institutions signatory hereto as Committed Lenders, BANK OF AMERICA, N.A., as Administrative Agent (the “Administrative Agent”), and WELLS FARGO BANK, NATIONAL ASSOCIATION, as Securities Intermediary and Paying Agent. Capitalized terms used, but not otherwise defined herein, shall have the meanings ascribed thereto in the “Receivables Loan Agreement” (defined below).
WITNESSETH:
WHEREAS, the Borrower, the Managing Agents party thereto, the Administrative Agent, Wells Fargo Bank, National Association, as Securities Intermediary and Paying Agent, the Conduit Lenders party thereto, and the Committed Lenders party thereto are parties to that certain Receivables Loan Agreement dated as of May 9, 2013 (as amended, restated, supplemented or otherwise modified from time to time, the “Receivables Loan Agreement”);
WHEREAS, as provided herein, the parties hereto have agreed to amend certain provisions of the Receivables Loan Agreement as further described below;
NOW, THEREFORE, in consideration of the premises and the mutual agreements hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
SECTION 1. Amendment to the Receivables Loan Agreement. Effective as of the Effective Date, and subject to the satisfaction of the conditions precedent set forth in Section 2 hereof, the Receivables Loan Agreement is hereby amended as follows:
1.1Section 7.01(s) is hereby amended and restated in its entirety as follows:
“(s)for any Distribution Date:
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|
(i) |
occurring in August 2019 or prior thereto, the Average Delinquency Ratio exceeds 3.50%; or |
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(ii) |
occurring in January 2020, the Average Delinquency Ratio exceeds 4.75%; or |
|
|
(iii) |
occurring in February 2020, the Average Delinquency Ratio exceeds 4.00%; or |
DB1/ 110926649.2
|
|
(v) |
the Securitized Portfolio Three Month Rolling Average Delinquency Percentage exceeds 3.50%; or |
|
|
(vi) |
the Average Default Ratio or the Securitized Portfolio Three Month Rolling Average Default Percentage exceeds 1.0%; or |
|
|
(vii) |
occurring in September 2019, October 2019, November 2019, December 2019, January 2020 and February 2020, the Default Ratio exceeds 0.00%; or” |
SECTION 2. Conditions Precedent. This Amendment shall become effective on the Effective Date upon the satisfaction of the Administrative Agent having received counterparts of this Amendment executed by each of the parties hereto.
SECTION 3. Representations, Warranties and Confirmations. The Borrower hereby represents and warrants that:
3.1It has the power and is duly authorized, including by all limited liability company action on its part, to execute and deliver this Amendment.
3.2This Amendment has been duly and validly executed and delivered by it.
3.3This Amendment and the Receivables Loan Agreement as amended hereby, constitute legal, valid and binding obligations of the Borrower and are enforceable against the Borrower in accordance with their terms.
3.4Immediately prior, and after giving all effect, to this Amendment, the covenants, representations and warranties of the Borrower set forth in the Receivables Loan Agreement are true and correct in all material respects as of the date hereof (except to the extent such representations or warranties relate solely to an earlier date and then as of such date).
3.5Immediately prior, and after giving all effect, to this Amendment, no event, condition or circumstance has occurred and is continuing which constitutes a Servicer Termination Event, Unmatured Servicer Termination Event, Default or Event of Default.
SECTION 4. Delivery of Executed Amendment. The Borrower covenants and agrees that it will deliver an executed copy of this Amendment to the Servicer, the Paying Agent, the Backup Servicer and the Custodian promptly following the effectiveness hereof.
SECTION 5. Entire Agreement. The parties hereto hereby agree that this Amendment constitutes the entire agreement concerning the subject matter hereof and supersedes any and all written and/or oral prior agreements, negotiations, correspondence, understandings and communications.
2
DB1/ 110926649.2
SECTION 6. Effectiveness of Amendment. Except as expressly amended by the terms of this Amendment, all terms and conditions of the Receivables Loan Agreement and the other Facility Documents, as applicable, shall remain in full force and effect and are hereby ratified and confirmed. This Amendment shall not operate as a consent, waiver, amendment or other modification of any other term or condition set forth in the Receivables Loan Agreement and the other Facility Documents or any right, power or remedy of the Administrative Agent or any Managing Agent or Lender under the Receivables Loan Agreement and the other Facility Documents, except as expressly modified hereby. Upon the effectiveness of this Amendment, each reference in the Receivables Loan Agreement to “this Agreement” or “this Receivables Loan Agreement” or words of like import shall mean and be references to the Receivables Loan Agreement as amended hereby, and each reference in any other Facility Document to the Receivables Loan Agreement or to any terms defined in the Receivables Loan Agreement which are modified hereby shall mean and be references to the Receivables Loan Agreement or to such terms as modified hereby.
SECTION 7. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 8. Binding Effect. This Amendment shall be binding upon and shall be enforceable by parties hereto and their respective successors and permitted assigns.
SECTION 9. Headings. The Section headings herein are for convenience only and will not affect the construction hereof.
SECTION 10. Novation. This Amendment does not constitute a novation or termination of the Receivables Loan Agreement or any Facility Document and all obligations thereunder are in all respects continuing with only the terms thereof being modified as provided herein.
SECTION 11. Counterparts. This Amendment may be executed in any number of counterparts, each of which so executed will be deemed to be an original, but all such counterparts will together constitute but one and the same instrument. Delivery of an executed counterpart of a signature page to this Amendment by facsimile or by electronic mail in a “.pdf” file shall be effective as delivery of a manually executed counterpart of this Amendment.
SECTION 12. Fees, Costs and Expenses. The Borrower agrees to pay on demand all reasonable fees and out-of-pocket expenses of Morgan, Lewis & Bockius LLP, counsel for the Administrative Agent, incurred in connection with the preparation, execution and delivery of this Amendment and the other instruments and documents to be delivered in connection herewith.
[Signature Pages Follow]
3
DB1/ 110926649.2
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their respective authorized officers as of the date first above written.
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HILTON GRAND VACATIONS TRUST I LLC, |
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as Borrower |
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By: |
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/s/ Charles Corbin |
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Name: |
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Charles Corbin |
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Title: |
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Executive Vice President, Chief Legal Officer, Chief |
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Development Officer and Secretary |
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HILTON RESORTS CORPORATION, |
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as Seller |
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By: |
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/s/ Dan Mathewes |
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Name: |
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Dan Mathewes |
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Title: |
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Executive Vice President and Chief Financial Officer |
[Signature Page to Amendment No. 13 to Receivables Loan Agreement]
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BANK OF AMERICA, N.A. |
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as Administrative Agent |
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By: |
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/s/ Carl W. Anderson |
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Name: |
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Carl W. Anderson |
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Title: |
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Managing Director |
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BANK OF AMERICA, N.A. |
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as a Committed Lender and a Managing Agent |
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By: |
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/s/ Carl W. Anderson |
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Name: |
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Carl W. Anderson |
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Title: |
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Managing Director |
[Signature Page to Amendment No. 13 to Receivables Loan Agreement]
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DEUTSCHE BANK AG, NEW YORK BRANCH |
||
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as a Committed Lender and a Managing Agent |
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By: |
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/s/ Robert Sannicandro |
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Name: |
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Robert Sannicandro |
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Title: |
|
Managing Director |
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|
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By: |
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/s/ Kai Ang |
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Name: |
|
Kai Ang |
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Title: |
|
Director |
[Signature Page to Amendment No. 13 to Receivables Loan Agreement]
[Signature Page to Amendment No. 13 to Receivables Loan Agreement]
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WELLS FARGO BANK, NATIONAL ASSOCIATION, |
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as a Committed Lender and a Managing Agent |
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By: |
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/s/ Leigh Poltrack |
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Name: |
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Leigh Poltrack |
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Title: |
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Vice President |
[Signature Page to Amendment No. 13 to Receivables Loan Agreement]
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TRUIST BANK, successor by merger to SunTrust Bank, |
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as a Committed Lender and a Managing Agent |
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By: |
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/s/ Emily Shields |
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Name: |
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Emily Shields |
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Title: |
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First Vice President |
[Signature Page to Amendment No. 13 to Receivables Loan Agreement]
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Acknowledged and agreed: |
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GRAND VACATIONS SERVICES LLC, |
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as Servicer |
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||
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By: |
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/s/ Mark Laurent |
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Name: |
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Mark Laurent |
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Title: |
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Vice President |
[Signature Page to Amendment No. 13 to Receivables Loan Agreement]
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WELLS FARGO BANK, NATIONAL ASSOCIATION |
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as Paying Agent and Securities Intermediary |
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By: |
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/s/ Jennifer C. Westberg |
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Name: |
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Jennifer C. Westberg |
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Title: |
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Vice President |
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Acknowledged and Agreed: |
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WELLS FARGO BANK, NATIONAL ASSOCIATION |
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as Backup Servicer and Custodian |
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By: |
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/s/ Jennifer C. Westberg |
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Name: |
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Jennifer C. Westberg |
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Title: |
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Vice President |
[Signature Page to Amendment No. 13 to Receivables Loan Agreement]
Exhibit 10.2
2018 PSU
yaahuSECOND AMENDED AND RESTATED
PERFORMANCE- AND SERVICE-BASED
RESTRICTED STOCK UNIT AGREEMENT
HILTON GRAND VACATIONS INC.
2017 OMNIBUS INCENTIVE PLAN
AWARD NOTICE
The Participant has been granted Performance- and Service-Based Restricted Stock Units (or “RSUs”) with the terms set forth in this Award Notice and subject to the terms and conditions of the Plan and the Amended and Restated Performance- and Service-Based Restricted Stock Unit Agreement, including its appendices, to which this Award Notice is attached. Capitalized terms used and not defined in this Award Notice shall have the meanings set forth in the Second Amended and Restated Performance- and Service-Based Restricted Stock Unit Agreement and the Plan.
1.General.
Participant:
Date of Grant:
Performance Period: January 1, 2018 to December 31, 2020
Target Number of Restricted Stock Units Granted: RSUs
2.Performance Conditions.
Performance Conditions (the “Performance Conditions”). The extent to which the Performance Conditions are satisfied and the number of RSUs which become vested, if any, shall be calculated with respect to each Performance Component identified below. All determinations made with respect to Adjusted EBITDA and Contract Sales shall be made by the Committee in its sole discretion and the applicable Performance Conditions shall not be achieved and the RSUs shall not vest unless and to the extent that the Committee certifies that such Performance Conditions have been met.
|
|
• |
Adjusted EBITDA. The total number of RSUs which become vested based on the achievement of Adjusted EBITDA performance levels shall be equal to (x) the target number of RSUs multiplied by (y) a relative weighting component equal to seventy percent (70%), multiplied by (z) the Achievement Percentage determined based upon the applicable Adjusted EBITDA Position for the Performance Period as follows, and rounded down to the nearest whole Share: |
|
Level of Achievement |
|
Adjusted EBITDA Position |
|
Percentage of
|
|
Below Threshold |
|
Less than$[●]M |
|
0% |
|
Threshold |
|
$[●]M |
|
50% |
|
Target |
|
$[●]M |
|
100% |
|
Maximum |
|
$[●]M |
|
200% |
1
2018 PSU
|
Level of Achievement |
|
Adjusted EBITDA Position |
|
Percentage of
|
|
Below Threshold |
|
Less than$[●]M |
|
0% |
|
Threshold |
|
$[●]M |
|
50% |
|
Target |
|
$[●]M |
|
100% |
|
Maximum |
|
$[●]M |
|
200% |
|
|
• |
Continued Employment or Service. In addition to the attainment of the Performance Conditions, the Participant must be an employee of or in service to the Company or the Company Group from the Date of Grant until the last day of the Performance Period, except to the extent otherwise provided in the Plan or the Agreement. |
|
|
• |
Committee Discretion to Adjust Performance Goals and/or Calculations. In the event of an acquisition or disposition of any business, line of business or assets by the Company (and in the case of an acquisition, only such acquisition transaction in which the Company is the acquiror and/or the surviving entity, and does not otherwise constitute a Change in Control), the Committee shall in good faith and in such manner as it may deem equitable adjust the performance goals and/or the calculation of Adjusted EBITDA and Contract Sales to reflect the projected effect of such transaction(s) or event(s). |
3.Definitions.
For purposes of this Award Notice:
(a)“Achievement Percentage” means the “Percentage of Award Earned” specified with respect to the below threshold, threshold, target, and/or maximum levels for each Performance Component, as applicable, or a percentage determined using linear interpolation if actual performance falls between threshold and target, or between target and maximum levels (and rounded to the nearest whole percentage point and, if equally between two percentage points, rounded up). In the event that actual performance does not meet the threshold level for any Performance Component, the “Achievement Percentage” with respect to such Performance Component shall be zero.
(b)“Adjusted EBITDA” means the Company’s earnings before interest expense, taxes and depreciation and amortization, (i) adjusted to exclude gains, losses and expenses in connection with (A) asset dispositions, (B) foreign currency transactions, (C) debt restructurings/retirements, (D) non-cash impairment losses, (E) reorganization costs, including severance and relocation costs, (F) share-based and certain other compensation expenses, (G) costs related to the spin-off, and (H) other items, and (ii) further adjusted for net construction related recognition and deferral activity.
(c)“Contract Sales” means the total dollar amount of vacation ownership interest products under purchase agreements signed during the period where the Company has received a down payment of at least ten percent (10%) of the contract price, net of upgrades, before first-day incentives.
(d)“Performance Components” means the performance criteria applicable to an Award, as set forth on the Award Notice.
2
2018 PSU
SECOND AMENDED AND RESTATED
PERFORMANCE- AND SERVICE-BASED
RESTRICTED STOCK UNIT AGREEMENT
HILTON GRAND VACATIONS INC.
2017 OMNIBUS INCENTIVE PLAN
This Second Amended and Restated Performance- and Service-Based Restricted Stock Unit Agreement (the “Second Amended and Restated Agreement”), entered into the [ ] day of [ ], 2020 and effective as of the Date of Grant (as defined below), is between Hilton Grand Vacations Inc., a Delaware corporation (the “Company”), and the Participant (as defined below).
WHEREAS, the Company has adopted the Hilton Grand Vacations Inc. 2017 Omnibus Incentive Plan (as it may be amended, the “Plan”) to provide a means through which the Company and the other members of the Company Group may attract and retain key personnel and to provide a means whereby officers, employees, consultants and advisors of the Company and the other members of the Company Group can acquire and maintain an equity interest in the Company or receive an incentive award;
WHEREAS, the Participant is an employee or consultant of the Company or another member of the Company Group, and pursuant to the Plan, the Committee has granted performance- and service-based RSUs to the Participant pursuant to the Performance- and Service-Based Restricted Stock Unit Agreement entered into between the Company and the Participant on (the “Original Agreement”);
WHEREAS, on August 7, 2018, the Participant and the Company entered into an amended and restated Original Agreement (the “Amended and Restated Agreement”) pursuant to which the parties agreed to certain modifications to the vesting terms of the RSUs subject to the Original Agreement in the event of a termination of the Participant’s employment with or service to the Company due to Retirement, or in the event of a Change in Control and the RSUs are not assumed, substituted or continued following the Change in Control;
WHEREAS, on March 5, 2019, the Participant and the Company entered into an amendment to the Amended and Restated Agreement to further amend the definition of “Adjusted EBITDA” (the “Amendment”); and
WHEREAS, none of the RSUs subject to the Original Agreement or the Amended and Restated Agreement, as amended by the Amendment, are vested as of the date of this Second Amended and Restated Agreement, and the Company and the Participant have agreed to certain additional modifications and to enter into this Second Amended and Restated Agreement that reflects the cumulative amendments made to the Original Agreement to date (including such additional modifications), with all other terms of the Amended and Restated Agreement, as amended by the Amendment, remaining the same.
NOW, THEREFORE, the parties hereto agree as follows:
1.Definitions. Capitalized terms not otherwise defined herein shall have the same meanings as in the Plan. In addition to other terms defined herein or in the Award Notice, the following terms shall have the following meanings for purposes of this Agreement:
(a)“Agreement” shall mean this Second Amended and Restated Performance- and Service-Based Restricted Stock Unit Agreement including (unless the context otherwise requires) the Award Notice, Appendix A, and the appendices for non-U.S. Participants attached hereto as Appendix B and Appendix C.
3
2018 PSU
(b)“Award Notice” shall mean the notice to the Participant.
(c)“Date of Grant” shall mean the “Date of Grant” listed in the Award Notice.
(d)“Participant” shall mean the “Participant” listed in the Award Notice.
(e)“Performance Conditions” shall mean the performance conditions set forth in the Award Notice.
(f)“Performance Period” shall mean the performance period set forth in the Award Notice.
(g)“Restrictive Covenant Violation” shall mean the Participant’s breach of the Restrictive Covenants listed on Appendix A or any covenant regarding confidentiality, competitive activity, solicitation of the Company’s vendors, suppliers, customers, or employees, or any similar provision applicable to or agreed to by the Participant.
(h)“Retirement” shall mean the Participant’s termination of employment with the Company Group, other than (i) for Cause or while grounds for Cause exist, (ii) due to the Participant’s death or (iii) due to or during the Participant’s Disability, in each case, following the date on which both (X) the Participant attained the age of 55 years old and (Y) the number of completed years of the Participant’s employment with any member(s) of the Company Group (including any predecessor of a member thereof, including, for the avoidance of doubt, employment by Hilton Worldwide and its affiliates prior to January 3, 2017) is at least ten (10).
(i)“RSUs” shall mean that total number of performance- and service-based restricted stock units listed in the Award Notice as “Target Number of Restricted Stock Units Granted” (or such greater or lesser number of RSUs as may be vested and earned herein, as determined in the Committee’s discretion), as such number of performance- and service-based restricted stock units may be adjusted in accordance with Section 10 below.
(j)“Shares” shall mean a number of shares of the Company’s Common Stock equal to the number of RSUs (or such greater or lesser number of shares as may be vested and earned herein, as determined in the Committee’s discretion).
Grant of Units. On _____________, the Company granted the RSUs to the Participant, each of which represents the right to receive one Share upon vesting of such RSUs, subject to and in accordance with the terms, conditions and restrictions set forth in the Plan, the Award Notice, and this Agreement.
RSU Account. The Company shall cause an account (the “Unit Account”) to be established and maintained on the books of the Company to record the number of RSUs credited to the Participant under the terms of this Agreement. The Participant’s interest in the Unit Account shall be that of a general, unsecured creditor of the Company.
4.Vesting; Settlement; Tax Withholding.
(a)As promptly as practicable (and, in no event more than 70 days) following the last day of the Performance Period, the Committee shall determine if and the extent to which the Performance Conditions have been satisfied (the date of such determination, the “Determination Date”), and any RSUs with respect to which the Performance Conditions have been satisfied shall become vested effective as of the last day of the Performance Period, subject to Section 5(d); provided that, unless otherwise provided in Section 5, the Participant also meets the continued employment or service condition set forth in the Award
4
2018 PSU
Notice. Any RSU which does not become vested effective as of the last day of the Performance Period shall be cancelled and forfeited to the Company without consideration or any further action by the Participant or the Company. In the event of an equity restructuring, the Committee shall adjust any Performance Condition to the extent it is affected by such restructuring in order to preserve (without enlarging) the likelihood that such Performance Condition shall be satisfied. The manner of such adjustment shall be determined by the Committee in its sole discretion. For this purpose, “equity restructuring” shall mean an “equity restructuring” as defined in Financial Accounting Standards Board Accounting Standards Codification 718-10 (formerly Statement of Financial Accounting Standards 123R).
(b)The Company shall deliver to the Participant one share of Common Stock for each vested RSU (as adjusted under the Plan), pursuant to Section 4(c) below, and each such vested RSU shall be cancelled upon delivery.
(c)Shares, free and clear of all restrictions, shall be issued to the Participant (or his or her beneficiary) only in the event, and to the extent, that the RSUs have vested and been earned as provided in the Award Notice and in the Agreement. Upon vesting of the RSUs, Shares shall be issued to the Participant (or his or her beneficiary) within 70 days following the applicable vesting date set forth in Section 4(a) herein. Notwithstanding the foregoing, the following provisions shall apply: (i) any Shares earned and vested due to termination of employment or service as provided in Section 5(b) or Section 5(e) shall be paid within 70 days following the Participant’s Termination Date; (ii) any Shares earned and vested following Retirement as provided in Section 5(c) shall be paid within 70 days following the applicable vesting date set forth in Section 4(a) and Section 5(c) herein; and (iii) any Shares earned and vested as a result of a Change in Control as provided in Section 5(h) shall be paid within 70 days following the date of the Change in Control. If the 70-day period described herein begins in one calendar year and ends in another, the Participant (or his or her beneficiary) shall not have the right to designate the calendar year of the payment (except as otherwise provided below with respect to a delay in payments if the Participant is a “specified employee”). Further, if calculation of the amount of the payment is not administratively practicable due to events beyond the control of the Participant (or his or her beneficiary), the payment will be treated as made within the applicable 70-day time period specified herein if the payment is made during the first taxable year of the Participant in which the calculation of the amount of the payment is administratively practicable or otherwise in accordance with Code Section 409A. Notwithstanding the foregoing, if the Participant is or may be a “specified employee” (as defined under Code Section 409A), and the distribution is considered deferred compensation under Code Section 409A, then such distribution if made due to separation from service shall be subject to delay as provided in Section 14(u) of the Plan (or any successor provision thereto).
(d)The Participant shall be required to pay to the Company or, if different, the Service Recipient, an amount in cash (by check or wire transfer) equal to the aggregate amount of any income, employment and/or other applicable taxes (the “Withholding Taxes”) that are statutorily required to be withheld in respect of the RSUs. Alternatively, the Company may elect, in its sole discretion, to satisfy this requirement by withholding such amount from any cash compensation or other cash amounts owing to the Participant. Without limiting the foregoing, the Committee may (but is not obligated to), in its sole discretion, permit or require the Participant to satisfy, all or any portion of the minimum Withholding Taxes that are statutorily required to be withheld with respect to the RSUs by (i) the delivery of shares of Common Stock (which are not subject to any pledge or other security interest) that have been both held by the Participant and vested for any period of time as established from time to time by the Committee in order to avoid adverse accounting treatment under GAAP having an aggregate Fair Market Value equal to such minimum statutorily required Withholding Taxes (or portion thereof); or (ii) having the Company withhold from the Shares otherwise issuable or deliverable to, or that would otherwise be retained by, the Participant upon the vesting of the RSUs, a number of Shares with an aggregate Fair Market Value equal to an amount not in excess of such minimum statutorily required Withholding Taxes (or portion thereof).
5
2018 PSU
Notwithstanding the foregoing, the Committee, subject to its having considered the applicable accounting impact of any such determination, has full discretion to allow the Participant to satisfy, in whole or in part, any additional Withholding Taxes payable by him or her with respect to the RSUs by electing to have the Company withhold from the Shares issuable to the Participant upon the vesting of the RSUs, a number of Shares having an aggregate Fair Market Value that is greater than the applicable minimum required statutory Withholding Taxes (but such withholding may in no event be in excess of the maximum statutory withholding amount(s) in the Participant’s relevant tax jurisdiction). Further, for non-U.S. Participants, the Company may withhold from the Shares issuable to such non-U.S. Participant upon the vesting of the RSUs, a number of Shares having an aggregate Fair Market Value up to the maximum statutory withholding amount(s) in the non-U.S. Participant’s relevant tax jurisdiction.
(e)The Company shall pay any costs incurred in connection with issuing the Shares. Upon the issuance of the Shares (to the extent earned) to the Participant, the Participant’s Unit Account shall be eliminated. Notwithstanding anything in this Agreement to the contrary, the Company shall have no obligation to issue or transfer the Shares as contemplated by this Agreement unless and until such issuance or transfer shall comply with all relevant provisions of law and the requirements of any stock exchange on which the Company’s shares are listed for trading.
5.Termination of Employment or Service.
(a)Subject to the provisions of this Section 5, if the Participant’s employment with or service to the Company Group terminates for any reason, the unvested RSUs shall terminate as of the effective date of termination (the “Termination Date”), and all of the Participant’s rights hereunder with respect to such unvested RSUs shall cease as of the Termination Date (unless otherwise provided for by the Committee in accordance with the Plan).
(b)If the Participant’s employment or service is terminated by the Service Recipient during the Performance Period due to or during the Participant’s Disability or due to the Participant’s death, a pro-rated number of the target number of RSUs granted hereunder shall become vested and nonforfeitable (irrespective of performance) based on the number of days in the Performance Period prior to the Termination Date relative to the number of the days in the full Performance Period. Any RSUs that vest as provided herein shall be settled in accordance with Section 4.
(c)In the event the Participant’s employment with or service to the Company Group is terminated as a result of the Participant’s Retirement, the RSUs granted hereunder shall remain outstanding and eligible to vest, notwithstanding such termination of employment or service, based on (and to the extent) the Committee’s determination that the Performance Conditions have been satisfied on the Determination Date, in accordance with the schedule set forth in the Award Notice, so long as no Restrictive Covenant Violation occurs (as determined by the Committee, or its designee, in its sole discretion) prior to the Determination Date. Any RSUs that vest as provided herein shall be settled in accordance with Section 4. As a pre-condition to the Participant’s right to continued vesting following Retirement, the Committee, or its designee, may require the Participant to certify in writing prior to the applicable vesting date that no Restrictive Covenant Violation has occurred. Notwithstanding the foregoing, if the Date of Grant of the RSUs is not at least six months prior to the date of the Participant’s Retirement, any unvested RSUs shall terminate as of the Termination Date.
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2018 PSU
(d)If the Participant’s employment with or service to the Company Group terminates for any reason after the last day of the Performance Period and before the Determination Date (other than a termination by the Company for Cause, or by the Participant while grounds for Cause exist or without Good Reason), and no Restrictive Covenant Violation occurs before the Determination Date, then all RSUs shall remain outstanding and eligible to vest based on (and to the extent) the Committee’s determination that the Performance Conditions have been satisfied on the Determination Date.
(e)Notwithstanding anything herein to the contrary, the RSUs granted hereunder shall become immediately fully vested as of the Termination Date and settled in accordance with Section 4 if the Participant’s employment with or service to the Company Group shall be terminated by the Company other than for Cause, or by the Participant for Good Reason, in either case if such termination of the Participant’s employment occurs within 12 months following a Change in Control (for the avoidance of doubt, a Change in Control alone shall not, also, result in any vesting hereunder), with the actual number of RSUs determined based on (i) actual performance through the Termination Date, as determined by the Committee, or (ii) if the Committee determines that measurement of actual performance cannot be reasonably assessed, the assumed achievement of target performance as determined by the Committee.
(f)For purposes of this Section 5, “Good Reason” means the occurrence of any of the following, without the Participant’s written consent:
(i)a material diminution in the Participant’s base salary;
(ii) a material diminution in the Participant’s authority, duties, responsibilities or position; or
(iii)a permanent reassignment by the Company or the Service Recipient of the Participant’s primary office to a location that is more than 100 miles from the Participant’s assigned primary office;
provided, however, that a termination by the Participant for any of the reasons listed in (i) through (iii) above shall not constitute a termination for Good Reason unless the Participant shall first have delivered to the Company written notice setting forth with specificity the occurrence deemed to give rise to a right to terminate for Good Reason (which notice must be given no later than 60 days after the initial occurrence of such event), and the Company fails to cure such event within 30 days after receipt of this written notice. The Participant’s employment must be terminated for Good Reason within 120 days after the occurrence of an event of Good Reason.
(g)The Participant’s rights with respect to the RSUs shall not be affected by any change in the nature of the Participant’s employment or service so long as the Participant continues to be an employee or consultant, respectively, of the Company Group. Whether (and the circumstances under which) employment or service has terminated and the determination of the Termination Date for the purposes of this Agreement shall be determined by the Committee (or, with respect to any Participant who is not a director or “officer” as defined under Rule 16a-1(f) of the Exchange Act, such action may also be taken by its designee, in each case whose good faith determination shall be final, binding and conclusive; provided, that such designee may not make any such determination with respect to the designee’s own employment for purposes of the RSUs).
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2018 PSU
(h)Without limiting the effect of Section 5(e) herein, and subject to Section 12 of the Plan, in the event of a Change in Control during the Participant’s employment with or service to the Company Group or while any RSUs remain outstanding and eligible to vest, and prior to the completion of the Performance Period, the successor or surviving company in the Change in Control may assume or substitute for the RSUs (or in which the Company is the ultimate parent corporation and continues the RSUs), with the actual number of RSUs determined based on (i) actual performance through the date of such Change in Control, as determined by the Committee, or (ii) if the Committee determines that measurement of actual performance cannot be reasonably assessed, the assumed achievement of target performance as determined by the Committee, and such assumed or substituted RSUs shall remain outstanding and eligible to vest based on continued service through the last day of the Performance Period, except to the extent otherwise provided in the Plan or the Agreement. Notwithstanding the foregoing, in the event the successor or surviving company in the Change in Control does not assume or substitute for the RSUs (or in which the Company is the ultimate parent corporation and does not continue the RSUs) on substantially similar terms or with substantially equivalent economic benefits (as determined by the Committee) as RSUs outstanding under the Plan immediately prior to the Change in Control, then the target number of RSUs granted hereunder shall become immediately fully vested as of the date of such Change in Control and settled in accordance with Section 4.
Dividend Equivalents. A Participant holding unvested RSUs shall be entitled to be credited with dividend equivalent payments (upon the payment by the Company of dividends on Shares), which shall accrue in cash without interest (unless otherwise elected by the Committee) and shall be delivered in cash (unless the Committee in its sole discretion, elects to settle such amount in shares of Common Stock, other securities, other Awards or other property having a Fair Market Value as of the settlement date equal to the amount of such dividends). Accrued dividend equivalents shall not be paid unless and until the underlying RSUs (or portion thereof) have vested. Any such dividend equivalents in respect of unvested RSUs shall be paid within fifteen (15) days after the RSUs are vested and become payable or distributable unless the Committee determines otherwise.
Restrictions on Transfer. The Participant may not assign, alienate, pledge, attach, sell or otherwise transfer or encumber the RSUs or the Participant’s right under the RSUs to receive Shares (unless such transfer is specifically required pursuant to a domestic relations order or by applicable law), other than by will or by the laws of descent and distribution, and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against any member of the Company Group; provided that the designation of a beneficiary shall not constitute an assignment, alienation, pledge, attachment, sale, transfer or encumbrance.
No Right to Continued Employment or Service. Neither the Plan, the Agreement nor any action taken thereunder or hereunder shall be construed as giving the Participant any right to be retained in the employ or service of the Service Recipient or any other member of the Company Group. The Service Recipient or any other member of the Company Group may at any time dismiss the Participant from employment or discontinue any consulting relationship, free from any liability or claim under the Plan or this Agreement, unless otherwise expressly provided in the Plan or this Agreement.
No Rights as a Stockholder. Except as otherwise provided in the Plan or this Agreement, the Participant shall not be entitled to the privileges of ownership in respect of the Shares until the Shares have been issued or delivered to the Participant.
Adjustments Upon Change in Capitalization. The terms of this Agreement, including the RSUs, the Participant’s Unit Account, any dividend equivalent payments accrued pursuant to Section 6 and/or the Shares, shall be subject to adjustment in accordance with Section 12 of the Plan. This paragraph shall also apply with respect to any extraordinary dividend or other extraordinary distribution in respect of the Company’s Common Stock (whether in the form of cash or other property) to the extent provided in the Plan.
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2018 PSU
Award Subject to Plan. By entering into this Agreement, the Participant agrees and acknowledges that the Participant has received and read a copy of the Plan. The RSUs granted hereunder are subject to the Plan. The terms and provisions of the Plan, as it may be amended from time to time, are hereby incorporated herein by reference. Unless the Committee determines otherwise, in the event of a conflict between any term or provision contained herein and a term or provision of the Plan, the applicable terms and provisions of the Plan shall govern and prevail.
Severability. If any provision of the Plan or this Agreement is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction or as to the Participant or the RSUs, or would disqualify the Plan or the RSUs under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to the applicable laws, or if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Agreement, such provision shall be construed or deemed stricken as to such jurisdiction, the Participant or the RSUs and the remainder of the Plan and this Agreement shall remain in full force and effect.
Governing Law; Waiver of Jury Trial; Venue. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware applicable to contracts made and performed wholly within the State of Delaware, without giving effect to the conflict of laws provisions thereof. The Participant hereby irrevocably waives all right to a trial by jury in any suit, action or other proceeding instituted by or against such Participant in respect of the Participant’s rights or obligations hereunder. Any suit, action or proceeding with respect to this Agreement (or any provision incorporated by reference), or any judgment entered by any court in respect of any thereof, shall be brought in any court of competent jurisdiction in the State of Florida, and each of the Participant, the Company, and any transferees who hold RSUs pursuant to a valid assignment, hereby submit to the exclusive jurisdiction of such courts for the purpose of any such suit, action, proceeding, or judgment. Each of the Participant, the Company, and any transferees who hold RSUs pursuant to a valid assignment hereby irrevocably waive (a) any objections which he or she may now or hereafter have to the laying of the venue of any suit, action, or proceeding arising out of or relating to this Agreement brought in any court of competent jurisdiction in the State of Florida and (b) any claim that any such suit, action, or proceeding brought in any such court has been brought in any inconvenient forum.
Language. If the Participant has received a copy of this Agreement (or the Plan or any other document related hereto or thereto) translated into a language other than English, such translated copy is qualified in its entirety by reference to the English version thereof, and in the event of any conflict the English version shall govern. The Participant acknowledges that the Participant is sufficiently proficient in English to understand the terms and conditions of the Plan and this Agreement.
Successors in Interest. Any successor to the Company shall have the benefits of the Company under, and be entitled to enforce, this Agreement. Likewise, the Participant’s legal representative shall have the benefits of the Participant under, and be entitled to enforce, this Agreement. All obligations imposed upon the Participant and all rights granted to the Company under this Agreement shall be final, binding and conclusive upon the Participant’s heirs, executors, administrators and successors.
16.Data Privacy Consent.
The Participant hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of the Participant’s personal data as described in this Agreement and any other RSU grant materials by and among, as applicable, the Service Recipient, the Company and other members of the Company Group for the purpose of implementing, administering and managing the Plan.
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2018 PSU
Participant understands that the Company and the Service Recipient may hold certain personal information about the Participant, including, but not limited to, the Participant’s name, home address, email address and telephone number, date of birth, passport, social insurance number or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company, details of all stock options, restricted stock units or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in the Participant’s favor (“Data”), for the purpose of implementing, administering and managing the Plan.
The Participant understands that Data will be transferred to any third parties as may be selected by the Company (presently or in the future), which assist the Company with the implementation, administration and management of the Plan. The Participant understands that the recipients of the Data may be located in the United States or elsewhere, and that the recipients’ country (e.g., the United States) may have different data privacy laws and protections than the Participant’s country. The Participant understands that if the Participant resides outside the United States the Participant may request a list with the names and addresses of any potential recipients of the Data by contacting the Participant’s local human resources representative. The Participant authorizes the Company and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purpose of implementing, administering and managing the Plan. The Participant understands that Data will be held only as long as is necessary to implement, administer and manage the Plan. The Participant understands that if the Participant resides outside the United States, the Participant may, at any time, view Data, request information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing the Participant’s local human resources representative. Further, the Participant understands that the Participant is providing the consents herein on a purely voluntary basis. If the Participant does not consent, or if the Participant later seeks to revoke the Participant’s consent, the Participant’s employment status or service with the Service Recipient will not be affected; the only consequence of refusing or withdrawing the Participant’s consent is that the Company may not be able to grant options or other equity awards to the Participant or administer or maintain such awards. Therefore, the Participant understands that refusing or withdrawing the Participant’s consent may affect the Participant’s ability to participate in the Plan. For more information on the consequences of the Participant’s refusal to consent or withdrawal of consent, the Participant understands that the Participant may contact the Participant’s local human resources representative.
Restrictive Covenants. The Participant acknowledges and recognizes the highly competitive nature of the businesses of the Company and its Affiliates, that the Participant shall be allowed access to confidential and proprietary information (including but not limited to trade secrets) about those businesses, as well as access to the prospective and actual customers, suppliers, investors, clients and partners involved in those businesses, and the goodwill associated with the Company and its Affiliates. Participant accordingly agrees to the provisions of Appendix A to this Agreement (the “Restrictive Covenants”). For the avoidance of doubt, the Restrictive Covenants contained in this Agreement are in addition to, and not in lieu of, any other restrictive covenants or similar covenants or agreements between the Participant and the Company or any of its Affiliates.
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2018 PSU
18.Repayment of Proceeds; Clawback Policy; Compliance with Ownership and Other Policies and Agreements.
(a)If a Restrictive Covenant Violation occurs or the Company discovers after a termination of employment or service that grounds existed for Cause at the time thereof, then the Participant shall be required, unless the Committee determines otherwise, in addition to any other remedy available (on a non-exclusive basis), to pay to the Company, within ten (10) business days of the Company’s request to the Participant therefor, an amount equal the aggregate after-tax proceeds (taking into account all amounts of tax that would be recoverable upon a claim of loss for payment of such proceeds in the year of repayment) the Participant received upon the sale or other disposition of, or distributions in respect of, the RSUs and any Shares or cash issued in respect thereof. Any reference in this Agreement to grounds existing for a termination of employment or service with Cause shall be determined without regard to any notice period, cure period or other procedural delay or event required prior to finding of or termination with Cause.
(b)The RSUs shall be subject to reduction, cancellation, forfeiture or recoupment to the extent necessary to comply with (i) any clawback, forfeiture or other similar policy adopted by the Board or the Committee and as in effect from time to time and (ii) applicable law. Further, to the extent that the Participant receives any amount in excess of the amount that the Participant should otherwise have received under the terms of this Agreement for any reason (including, without limitation, by reason of a financial restatement, mistake in calculations or other administrative error), the Participant shall be required to repay any such excess amount to the Company.
(c)Without limiting the terms of the Plan, and as a condition to receiving the RSUs or any benefit hereunder, the Participant agrees that he or she shall abide by all provisions of any equity retention policy, stock ownership guidelines and/or other policies adopted by the Company or an Affiliate, each as in effect from time to time and to the extent applicable to the Participant.
Limitation on Rights; No Right to Future Grants; Extraordinary Item of Compensation. By accepting this Agreement and the grant of the RSUs contemplated hereunder, the Participant expressly acknowledges that (a) the Plan is discretionary in nature and may be suspended or terminated by the Company at any time; (b) the grant of RSUs is a one-time benefit that does not create any contractual or other right to receive future grants of RSUs or other Awards under the Plan, or benefits in lieu of RSUs; (c) all determinations with respect to future grants of RSUs, if any, including the grant date, the number of Shares granted and the applicable vesting terms, shall be at the sole discretion of the Committee and/or the Company; (d) the Participant’s participation in the Plan is voluntary; (e) the value of the RSUs is an extraordinary item of compensation that is outside the scope of the Participant’s employment or consulting contract, if any, and nothing can or must automatically be inferred from such employment or consulting contract or its consequences; (f) grants of RSUs are not part of normal or expected compensation for any purpose and are not to be used for calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments, the Participant waives any claim on such basis, and for the avoidance of doubt, the RSUs shall not constitute an “acquired right” under the applicable law of any jurisdiction; and (g) the future value of the underlying Shares is unknown and cannot be predicted with certainty. In addition, the Participant hereby waives any claim to continued vesting of the RSUs or to damages or severance entitlement related to non-continuation of the RSUs beyond the period provided under the Plan or this Agreement, except to the extent of any provision to the contrary in any written employment contract or other agreement between the Service Recipient and/or any member of the Company Group and the Participant, whether any such agreement is executed before, on or after the Date of Grant.
Amendment of Agreement. The Committee may, to the extent consistent with the terms of the Plan and this Agreement, waive any conditions or rights under, amend any terms of, or alter, suspend, discontinue, cancel or terminate, any RSUs granted hereunder or this Agreement, prospectively or retroactively (including after the Participant’s Termination); provided, that, other than as provided in the Plan, any such waiver, amendment, alteration, suspension, discontinuance, cancellation or termination that would materially and adversely affect the rights of any Participant with respect to the RSUs granted hereunder shall not to that extent be effective without the consent of the Participant; provided, further, that in no event shall any such amendment alter the Minimum Vesting Condition.
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2018 PSU
Award Administrator. The Company may from time to time designate a third party (an “Award Administrator”) to assist the Company in the implementation, administration and management of the Plan and any RSUs granted thereunder, including, but not limited to, by sending award notices on behalf of the Company to Participants, and by facilitating through electronic means acceptance of agreements by Participants.
22.Section 409A of the Code.
(a)Notwithstanding any provision of the Plan or this Agreement to the contrary, it is intended that the provisions of this Agreement comply with, or be exempt from, Section 409A of the Code, and all provisions of this Agreement shall be construed and interpreted in a manner consistent with the requirements for avoiding taxes or penalties under Section 409A of the Code. The Participant is solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on or in respect of the Participant in connection with this Agreement (including any taxes and penalties under Section 409A of the Code), and neither the Service Recipient nor any other member of the Company Group shall have any obligation to indemnify or otherwise hold the Participant (or any beneficiary) harmless from any or all such taxes or penalties. If the RSUs are considered “deferred compensation” subject to Section 409A of the Code, references in this Agreement to “termination of employment” (and substantially similar phrases) shall mean “separation from service” within the meaning of Section 409A of the Code. For purposes of Section 409A of the Code, each of the payments that may be made in respect of the RSUs shall be deemed as separate payments.
(b)Notwithstanding anything in the Plan or this Agreement to the contrary, if a Participant is a “specified employee” within the meaning of Section 409A of the Code, no payments in respect of any RSU that is “deferred compensation” subject to Section 409A of the Code and which would otherwise be payable upon the Participant’s “separation from service” (as defined in Section 409A of the Code) shall be made to such Participant prior to the date that is six (6) months after the date of the Participant’s “separation from service” or, if earlier, the date of the Participant’s death. Following any applicable six (6) month delay, all such delayed payments shall be paid in a single lump sum on the earliest date permitted under Section 409A of the Code that is also a business day.
(c)Unless otherwise provided by the Committee in this Agreement or otherwise, in the event that the timing of payments in respect of the RSUs (that would otherwise be considered “deferred compensation” subject to Section 409A of the Code) would be accelerated upon the occurrence of (i) a Change in Control, no such acceleration shall be permitted (to the extent required under Section 409A) unless the event giving rise to the Change in Control satisfies the definition of a change in the ownership or effective control of a corporation, or a change in the ownership of a substantial portion of the assets of a corporation pursuant to Section 409A of the Code or (ii) a Disability, no such acceleration shall be permitted unless the Disability also satisfies the definition of “Disability” pursuant to Section 409A of the Code if and to the extent required under Section 409A of the Code.
Restriction on Restricted Stock Unit Award and Shares. The obligation of the Company to settle the RSUs in Shares or other consideration shall be subject to all applicable laws, rules and regulations, and to such approvals by governmental agencies as may be required. Notwithstanding any terms or conditions of this Agreement to the contrary, the Company shall be under no obligation to offer to sell, and shall be prohibited from offering to sell or selling, any Shares underlying the RSUs unless such shares have been properly registered for sale pursuant to the Securities Act with the Securities and Exchange Commission or unless the Company has received an opinion of counsel (if the Company has requested such an opinion), satisfactory to the Company, that such shares may be offered or sold without such registration pursuant to an available exemption therefrom and the terms and conditions of such exemption have been fully complied with. The Company shall be under no obligation to register for sale under the Securities Act any of the
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2018 PSU
Shares. The Committee shall have the authority to provide that all Shares shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan, this Agreement, the Federal securities laws or the rules, regulations and other requirements of the Securities and Exchange Commission, any securities exchange or inter-dealer quotation system on which the securities of the Company are listed or quoted and any other applicable Federal, state, local or non-U.S. laws, rules, regulations and other requirements, and, without limiting the generality of the Plan, the Committee may cause a legend or legends to be put on certificates representing the Shares. Notwithstanding any provision in the Plan to the contrary, the Committee reserves the right to add any additional terms or provisions to the Performance- and Service-Based Restricted Stock Unit Agreement that the Committee, in its sole discretion, deems necessary or advisable in order that this Agreement complies with the legal requirements of any governmental entity to whose jurisdiction this Agreement is subject. The Committee may cancel the RSUs or any portion thereof if it determines, in its sole discretion, that legal or contractual restrictions and/or blockage and/or other market considerations would make the Company’s acquisition of shares of Common Stock from the public markets, the Company’s issuance of the Shares to the Participant, the Participant’s acquisition of the Shares from the Company and/or the Participant’s sale of Common Stock to the public markets, illegal, impracticable or inadvisable. If the Committee determines to cancel all or any portion of the RSUs in accordance with the foregoing, the Company shall, subject to any limitations or reductions as may be necessary to comply with Section 409A of the Code, provide the Participant with a cash payment or equity subject to deferred vesting and delivery consistent with the vesting restrictions applicable to the RSUs.
Book Entry Delivery of Shares. Whenever reference in this Agreement is made to the issuance or delivery of certificates representing one or more Shares, the Company may elect to issue or deliver such Shares in book entry form in lieu of certificates.
Electronic Delivery and Acceptance. The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.
Acceptance and Agreement by the Participant. By accepting the RSUs (including through electronic means), the Participant agrees to be bound by the terms, conditions and restrictions set forth in the Plan, this Agreement and the Company’s policies, as in effect from time to time, relating to the Plan.
No Advice Regarding Grant. The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Participant’s participation in the Plan, or the Participant’s acquisition or sale of the underlying Shares. The Participant is hereby advised to consult with his or her own personal tax, legal and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan.
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2018 PSU
Appendices For Non-U.S. Participants. Notwithstanding any provisions in this Agreement, Participants residing and/or working outside the United States shall be subject to the Terms and Conditions for Non-U.S. Participants attached hereto as Appendix B and to any Country-Specific Terms and Conditions for the Participant’s country attached hereto as Appendix C. If the Participant relocates from the United States to another country, the Terms and Conditions for Non-U.S. Participants and the applicable Country-Specific Terms and Conditions shall apply to the Participant, to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. Moreover, if the Participant relocates between any of the countries included in the Country-Specific Terms and Conditions, the special terms and conditions for such country shall apply to the Participant, to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. The Terms and Conditions for Non-U.S. Participants and the Country-Specific Terms and Conditions constitute part of this Agreement.
Imposition of Other Requirements. The Company reserves the right to impose other requirements on the Participant’s participation in the Plan, on the RSUs and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require the Participant to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.
Right of Offset. Subject to any considerations under Section 409A of the Code, the Company shall have the right to offset against its obligation to deliver Shares under this Agreement any outstanding amounts (including, without limitation, travel and entertainment or advance account balances, loans, repayment obligations under any Awards or amounts repayable to the Company pursuant to tax equalization, housing, automobile or other employee programs) that the Participant then owes to any member of the Company Group and any amounts the Committee otherwise deems appropriate pursuant to any tax equalization policy or agreement. Notwithstanding the foregoing, if the RSUs are “deferred compensation” subject to Section 409A of the Code, the Committee shall have no right to offset against its obligation to deliver Shares under this Agreement if such offset could subject the Participant to the additional tax imposed under Section 409A of the Code in respect of the RSUs.
Waiver. The Participant acknowledges that a waiver by the Company of breach of any provision of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by the Participant or any other participant in the Plan.
Rules of Construction. Headings are given to the section of this Agreement solely as a convenience to facilitate reference. The reference to any statute, regulation or other provision of law shall (unless the Administrator determines otherwise) be construed to refer to any amendment to or successor of such provision of law.
Counterparts. This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one in the same agreement.
[Signatures follow]
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2018 PSU
IN WITNESS WHEREOF, the parties have caused this Agreement to be effective as of the Date of Grant.
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HILTON GRAND VACATIONS INC. |
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[NAME] |
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[TITLE] |
Acknowledged and Agreed:
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Participant Signature
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2018 PSU
Restrictive Covenants
1.Non-Competition; Non-Solicitation.
(a)Participant acknowledges and recognizes the highly competitive nature of the businesses of the Company and its Affiliates and accordingly agrees as follows:
(i)During Participant’s employment with or service to the Company or its Affiliates (the “Employment Term”) and for a period that ends on the later of (A) one year following the date Participant ceases to be employed by or in service to the Company or any of its Affiliates or (B) the last date any portion of the Award granted under this Agreement is eligible to vest if Participant ceases to be employed by the Company or any of its Affiliates as a result of the Participant’s Retirement (the “Restricted Period”), Participant shall not, whether on Participant’s own behalf or on behalf of or in conjunction with any person, firm, partnership, joint venture, association, corporation or other business organization, entity or enterprise whatsoever (“Person”), directly or indirectly solicit or assist in soliciting in competition with the Restricted Group in the Business, the business of any then current or prospective client or customer with whom Participant (or his direct reports) had personal contact or dealings on behalf of the Company or any of its Affiliates during the one-year period preceding Participant’s termination of employment or service.
(ii)During the Restricted Period, Participant shall not directly or indirectly:
(A)engage in the Business providing services in the nature of the services Participant provided to the Company at any time in the one year prior to the termination of Participant’s employment or service, for a Competitor;
(B)enter the employ of, or render any services to, a Competitor, except where such employment or services do not relate in any manner to the Business;
(C)acquire a financial interest in, or otherwise become actively involved with, a Competitor, directly or indirectly, as an individual, partner, shareholder, officer, director, principal, agent, trustee or consultant; or
(D)intentionally and adversely interfere with, or attempt to adversely interfere with, business relationships between the members of the Restricted Group and any of their clients, customers, suppliers, partners, members or investors.
(iii)Notwithstanding anything to the contrary in this Appendix A, Participant may, directly or indirectly own, solely as an investment, securities of any Person engaged in a Business (including, without limitation, a Competitor) which are publicly traded on a national or regional stock exchange or on the over-the-counter market if Participant (A) is not a controlling person of, or a member of a group which controls, such person and (B) does not, directly or indirectly, own 2% or more of any class of securities of such Person.
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2018 PSU
(iv)During the Restricted Period, Participant shall not, whether on Participant’s own behalf or on behalf of or in conjunction with any Person, directly or indirectly:
(A)solicit or encourage any executive-level employee of the Restricted Group, with whom Participant has had material business contact during the Employment Term or, if no longer an employee or consultant, in the one year prior to the termination of Participant’s employment with or service to any member of the Company Group, to leave the employment of the Restricted Group to become affiliated in any respect with a Competitor or otherwise be engaged in the Business; or
(B)hire any such executive-level employee to become affiliated in any respect with a Competitor or otherwise be engaged in the Business and with whom Participant had material business contact in the one year prior to the termination of Participant’s employment with or service to the Company, who (x) was employed by the Restricted Group as of the date of Participant’s termination of employment with or service to the Company or any of its Affiliates or (y) left the employment of the Restricted Group within one year after the termination of Participant’s employment with or service to the Company or any of its Affiliates.
(v)For purposes of this Agreement:
(A)“Restricted Group” shall mean the Company Group and, to the extent engaged in the Business, its Affiliates, provided, however, that for the purposes of this definition, an “Affiliate” shall not include any portfolio company of The Blackstone Group L.P. or its Affiliates (other than the Company Group).
(B)“Business” shall mean the business of owning, financing, developing, redeveloping, managing, marketing, operating, licensing, leasing or franchising vacation, timeshare or lodging properties, and natural ancillary business products and services related to such business, including, without limitation, membership services, exchange programs, rental programs, and provision of amenities.
(C)“Competitor” shall mean any person engaged in the Business, including but not limited to any vacation, timeshare or lodging companies that are comparable in size to the Company, including, without limitation, Marriott Vacations Worldwide, Wyndham Vacation Ownership, Interval Leisure Group, Disney Vacation Club, Hyatt Vacation Ownership, Holiday Inn Club Vacations, Bluegreen Vacations, Diamond Resorts International and Westgate Resorts.
(b)It is expressly understood and agreed that although Participant and the Company consider the restrictions contained in this Section 1 to be reasonable, if a judicial determination is made by a court of competent jurisdiction that the time or territory or any other restriction contained in this Appendix A is an unenforceable restriction against Participant, the provisions of this Appendix A shall not be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such maximum extent as such court may judicially determine or indicate to be enforceable. Alternatively, if any court of competent jurisdiction finds that any restriction contained in this Appendix A is unenforceable, and such restriction cannot be amended so as to make it enforceable, such finding shall not affect the enforceability of any of the other restrictions contained herein. Notwithstanding the foregoing, if Participant’s principal place of employment or service on the date hereof is located in Virginia, then this Section 1(b) of this Appendix A shall not apply following Participant’s termination of employment or service to the extent any such provision is prohibited by applicable Virginia law.
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2018 PSU
(c)The period of time during which the provisions of this Section 1 shall be in effect shall be extended by the length of time during which Participant is in breach of the terms hereof as determined by any court of competent jurisdiction on the Company’s application for injunctive relief.
(d)Notwithstanding the foregoing, if Participant’s principal place of employment or service on the date hereof is located in California or any other jurisdiction where any provision of this Section 1 is prohibited by applicable law, then the provisions of this Section 1 shall not apply following Participant’s termination of employment or service to the extent any such provision is prohibited by applicable law.
2.Confidentiality; Non-Disparagement; Intellectual Property; Protected Rights.
(a)Confidentiality.
(i)Participant shall not at any time (whether during or after Participant’s employment with or service to the Company) (x) retain or use for the benefit, purposes or account of Participant or any other Person; or (y) disclose, divulge, reveal, communicate, share, transfer or provide access to any Person outside the Company or any of its Affiliates (other than its professional advisers who are bound by confidentiality obligations or otherwise in performance of Participant’s duties under Participant’s employment or service and pursuant to customary industry practice), any non-public, proprietary or confidential information (including, without limitation, trade secrets, know-how, research and development, software, databases, inventions, processes, formulae, technology, designs and other intellectual property, information concerning finances, investments, profits, pricing, costs, products, services, vendors, customers, clients, partners, investors, personnel, compensation, recruiting, training, advertising, sales, marketing, promotions, government and regulatory activities and approvals) concerning the past, current or future business, activities and operations of the Company, its Subsidiaries or Affiliates and/or any third party that has disclosed or provided any of same to the Company on a confidential basis (“Confidential Information”) without the prior written authorization of the Board.
(ii)“Confidential Information” shall not include any information that is (a) generally known to the industry or the public other than as a result of Participant’s breach of this covenant; (b) made legitimately available to Participant by a third party without breach of any confidentiality obligation of which Participant has knowledge; or (c) required by law to be disclosed; provided that, unless otherwise provided under applicable law, with respect to subsection (c), Participant shall give prompt written notice to the Company of such requirement, disclose no more information than is so required, and reasonably cooperate with any attempts by the Company to obtain a protective order or similar treatment.
(iii)Except as required by law, Participant shall not disclose to anyone, other than Participant’s family (it being understood that, in this Agreement, the term “family” refers to Participant’s spouse, minor children, parents and spouse’s parents) and advisors, the existence or contents of this Agreement; provided that Participant may disclose to any prospective future employer the provisions of this Appendix A. This Section 2(a)(iii) shall terminate if the Company publicly discloses a copy of this Agreement (or, if the Company publicly discloses summaries or excerpts of this Agreement, to the extent so disclosed).
(iv)Upon termination of Participant’s employment with or service to the Company or any of its Affiliates for any reason, Participant shall (x) cease and not thereafter commence use of any Confidential Information or intellectual property (including without limitation, any patent, invention, copyright, trade secret, trademark, trade name, logo, domain name or other source indicator) owned or used by the Company, its Subsidiaries or Affiliates; and (y) immediately destroy, delete, or return to the Company, at the Company’s option, all originals and copies in any form or medium (including memoranda, books, papers, plans, computer files, letters and other data) in Participant’s possession or control (including any of the foregoing stored or located in Participant’s office, home, laptop or other computer, whether or not Company property) that contain Confidential Information, except that Participant may retain only those portions of any personal notes, notebooks and diaries that do not contain any Confidential Information.
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2018 PSU
(v)Participant acknowledges and agrees that the Company and its Affiliates will prosecute any non-confidential disclosure or misappropriation of the Company’s and/or its Affiliates’ trade secrets to the full extent allowed by federal, state and common law. Participant further acknowledges and agrees that Participant has received and understands the following notice concerning immunity from liability for confidential disclosure of a trade secret to the government or in a court filing: Pursuant to the Defend Trade Secrets Act, 18 U.S.C. § 1833, an individual shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is made (A) in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney, and solely for the purpose of reporting or investigating a suspected violation of law, or (B) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.
(b)Non-Disparagement. During Participant’s Employment Term and at all times thereafter (including following the termination of Participant’s Employment Term for any reason), Participant shall not to intentionally make any statement that criticizes, ridicules, disparages or is otherwise derogatory of the Company, any of its Affiliates, or any of their respective officers, directors, stockholders, employees or other service providers, or any product or service offered by the Company or any of its Affiliates; provided, however, that nothing contained in this Section 2(b) shall preclude Participant from providing truthful testimony in any legal proceeding, or making any truthful statement (i) to any governmental agency; (ii) as required or permitted by applicable law or regulation; (iii) as required by court order or other legal process; or (iv) after the Restricted Period, for any legitimate business reason.
(c)Intellectual Property.
(i)If Participant has created, invented, designed, developed, contributed to or improved any works of authorship, inventions, intellectual property, materials, documents or other work product (including without limitation, research, reports, software, databases, systems, applications, presentations, textual works, content, or audiovisual materials) (“Works”), either alone or with third parties, prior to Participant’s employment or engagement by the Company or any of its Affiliates, that are relevant to or implicated by such employment (“Prior Works”), Participant hereby grants the Company a perpetual, non-exclusive, royalty-free, worldwide, assignable, sublicensable license under all rights and intellectual property rights (including rights under patent, industrial property, copyright, trademark, trade secret, unfair competition and related laws) therein for all purposes in connection with the Company’s current and future business.
(ii)If Participant creates, invents, designs, develops, contributes to or improves any Works, either alone or with third parties, at any time during Participant’s employment by or service to the Company and within the scope of such employment or service and with the use of any Company resources (“Company Works”), Participant shall promptly and fully disclose same to the Company and hereby irrevocably assigns, transfers and conveys, to the maximum extent permitted by applicable law, all rights and intellectual property rights therein (including rights under patent, industrial property, copyright, trademark, trade secret, unfair competition and related laws) to the Company to the extent ownership of any such rights does not vest originally in the Company.
(iii)Participant shall take all reasonably requested actions and execute all reasonably requested documents (including any licenses or assignments required by a government contract) at the Company’s expense (but without further remuneration) to assist the Company in validating, maintaining, protecting, enforcing, perfecting, recording, patenting or registering any of the Company’s rights in the Prior Works and Company Works. If the Company is unable for any other reason, after reasonable attempt, to secure Participant’s signature on any document for this purpose, then Participant hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as Participant’s agent and attorney in fact, to act for and in Participant’s behalf and stead to execute any documents and to do all other lawfully permitted acts required in connection with the foregoing.
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2018 PSU
(iv)Participant shall not improperly use for the benefit of, bring to any premises of, divulge, disclose, communicate, reveal, transfer or provide access to, or share with the Company any confidential, proprietary or non-public information or intellectual property relating to a former employer or other third party without the prior written permission of such third party. Participant shall comply with all relevant policies and guidelines of the Company that are from time to time previously disclosed to Participant, including regarding the protection of Confidential Information and intellectual property and potential conflicts of interest. Participant acknowledges that the Company may amend any such policies and guidelines from time to time, and that Participant remains at all times bound by their most current version from time to time previously disclosed to Participant.
(d)Protected Rights. Notwithstanding any other provision of this Agreement, (i) nothing in this Agreement or any other agreement prohibits the Participant from reporting possible violations of law or regulation to any governmental agency or entity, including, but not limited to, the Department of Justice, the Securities and Exchange Commission, the Congress and any agency Inspector General (the “Government Agencies”), or communicating with Government Agencies or otherwise participating in any investigation or proceeding that may be conducted by Government Agencies, including providing documents or other information, (ii) the Participant does not need the prior authorization of the Company to take any action described in (i), and the Participant is not required to notify the Company that he or she has taken any action described in (i); and (iii) this Agreement does not limit the Participant’s right to receive an award for providing information relating to a possible securities law violation to the Securities and Exchange Commission. Further, notwithstanding the foregoing, the Participant will not be held criminally or civilly liable under any federal, state or local trade secret law for the disclosure of a trade secret that (i) is made (A) in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney, and (B) solely for the purpose of reporting or investigating a suspected violation of law; or (ii) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. Additionally, an individual suing an employer for retaliation based on the reporting of a suspected violation of law may disclose a trade secret to his or her attorney and use the trade secret information in the court proceeding, so long as any document containing the trade secret is filed under seal and the individual does not disclose the trade secret except pursuant to court order.
The provisions of Section 2 hereof shall survive the termination of Participant’s employment or service for any reason (except as otherwise set forth in Section 2(a)(iii) hereof).
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2018 PSU
HILTON GRAND VACATIONS INC.
2017 OMNIBUS INCENTIVE PLAN
PERFORMANCE- AND SERVICE-BASED
RESTRICTED STOCK UNIT AGREEMENT
TERMS AND CONDITIONS FOR NON-U.S. PARTICIPANTS
Capitalized terms used but not otherwise defined herein shall have the meaning given to such terms in the Plan and the Performance- and Service-Based Restricted Stock Unit Agreement.
Responsibility for Taxes
. This provision supplements Section 4(d) of the Performance- and Service-Based Restricted Stock Unit Agreement:
(a)The Participant acknowledges that, regardless of any action taken by the Company or, if different, the Service Recipient, the ultimate liability for all income tax, excise tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax-related items related to the Participant’s participation in the Plan and legally applicable to the Participant (“Tax-Related Items”) is and remains the Participant’s responsibility and may exceed the amount actually withheld by the Company or the Service Recipient. The Participant further acknowledges that the Company and/or the Service Recipient (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the RSUs, including, but not limited to, the grant, vesting or settlement of the RSUs, the subsequent sale of Shares acquired pursuant to such settlement and the receipt of any dividends and/or any dividend equivalents; and (2) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the RSUs to reduce or eliminate the Participant’s liability for Tax-Related Items or achieve any particular tax result. Further, if the Participant is subject to Tax-Related Items in more than one jurisdiction, the Participant acknowledges that the Company and/or the Service Recipient (or former service recipient, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.
(b)If the obligation for Tax-Related Items is satisfied by withholding in Shares, for tax purposes, the Participant is deemed to have been issued the full number of Shares subject to the vested RSUs, notwithstanding that a number of the Shares are held back solely for the purpose of satisfying the Withholding Taxes.
(c)Finally, the Participant agrees to pay to the Company or the Service Recipient, any amount of the Withholding Taxes that cannot be satisfied by the means previously described. The Company may refuse to issue or deliver the Shares or the proceeds of the sale of Shares, if the Participant fails to comply with the Participant’s obligations in connection with the Withholding Taxes.
(d)Notwithstanding anything to the contrary in the Plan or in Section 4(d) of the Performance- and Service-Based Restricted Stock Unit Agreement, if the Company is required by applicable law to use a particular definition of fair market value for purposes of calculating the taxable income for the Participant, the Company shall have the discretion to calculate the Shares to be withheld to cover any Withholding Taxes by using either the price used to calculate the taxable income under applicable law or by using the closing price per Share on the New York Stock Exchange (or other principal exchange on which the Shares then trade) on the trading day immediately prior to the date of delivery of the Shares.
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2018 PSU
Nature of Grant. This provision supplements Section 19 of the Performance- and Service-Based Restricted Stock Unit Agreement:
In accepting the grant of the RSUs, the Participant acknowledges, understands and agrees that:
(a)the RSU grant and the Participant’s participation in the Plan shall not create a right to employment or be interpreted as forming an employment or services contract with the Company or any member of the Company Group;
(b)the RSUs and the Shares subject to the RSUs, and the income from and value of same, are not intended to replace any pension rights or compensation;
(c)unless otherwise agreed with the Company, the RSUs and the Shares subject to the RSUs, and the income from and value of same, are not granted as consideration for, or in connection with, the service the Participant may provide as a director of any member of the Company Group;
(d)for purposes of the RSUs, the Termination Date shall be the date the Participant is no longer actively providing services to the Company or any member of the Company Group (regardless of the reason for such termination and whether or not later to be found invalid or in breach of employment laws in the jurisdiction where the Participant is employed or the terms of the Participant’s employment agreement, if any), and unless otherwise expressly provided in this Agreement or determined by the Company, the Participant’s right to vest in the RSUs under the Plan, if any, shall terminate as of such date and shall not be extended by any notice period (e.g., the Participant’s period of service would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment laws in the jurisdiction where the Participant is employed or the terms of the Participant’s employment agreement, if any); the Committee shall have the exclusive discretion to determine when the Participant is no longer actively providing services for purposes of the RSUs grant (including whether the Participant may still be considered to be providing services while on a leave of absence);
(e)unless otherwise provided in the Plan or by the Company in its discretion, the RSUs and the benefits evidenced by this Agreement do not create any entitlement to have the RSUs or any such benefits transferred to, or assumed by, another company nor be exchanged, cashed out or substituted for, in connection with any corporate transaction affecting the Company’s Common Stock; and
(f)neither the Company nor any member of the Company Group shall be liable for any foreign exchange rate fluctuation between the Participant’s local currency and the United States Dollar that may affect the value of the RSUs or of any amounts due to the Participant pursuant to the settlement of the RSUs or the subsequent sale of any Shares acquired upon settlement.
Insider Trading Restrictions/Market Abuse Laws. The Participant acknowledges that the Participant may be subject to insider trading restrictions and/or market abuse laws in applicable jurisdictions, which may affect his or her ability to, directly or indirectly, acquire, sell, or attempt to sell Shares or rights to Shares (e.g., RSUs) under the Plan during such times as the Participant is considered to have “inside information” regarding the Company (as defined by the laws in the applicable jurisdictions or Participant’s country). Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Company insider trading policy. The Participant is responsible for ensuring compliance with any applicable restrictions and is advised to consult his or her personal legal advisor on this matter.
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2018 PSU
Foreign Asset/Account Reporting; Exchange Controls. The Participant’s country may have certain foreign asset and/or account reporting requirements and/or exchange controls that may affect the Participant’s ability to acquire or hold Shares under the Plan or cash received from participating in the Plan (including from any dividends received or sale proceeds arising from the sale of Shares) in a brokerage or bank account outside the Participant’s country. The Participant may be required to report such accounts, assets or transactions to the tax or other authorities in his or her country. The Participant also may be required to repatriate sale proceeds or other cash received as a result of the Participant’s participation in the Plan to his or her country through a designated bank or broker and/or within a certain time after receipt. The Participant acknowledges that it is his or her responsibility to be compliant with such regulations, and the Participant is advised to consult his or her personal legal advisor for any details.
Termination of Employment. This provision supplements Section 5(c) of the Performance- and Service-Based Restricted Stock Unit Agreement:
Notwithstanding anything in this Section 5(c), if the Company receives a legal opinion that there has been a legal judgment and/or legal development in the Participant’s jurisdiction that likely would result in the favorable treatment that applies to the RSUs when the Participant terminates employment as a result of the Participant’s Retirement being deemed unlawful and/or discriminatory, the provisions of this Section 5(c) regarding the treatment of the RSUs when the Participant terminates employment as a result of the Participant’s Retirement shall not be applicable to the Participant and the remaining provisions of this Section 5 shall govern.
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2018 PSU
HILTON GRAND VACATIONS INC.
2017 OMNIBUS INCENTIVE PLAN
PERFORMANCE- AND SERVICE-BASED
RESTRICTED STOCK UNIT AGREEMENT
COUNTRY-SPECIFIC TERMS AND CONDITIONS
Capitalized terms used but not otherwise defined herein shall have the meaning given to such terms in the Plan, the Performance- and Service-Based Restricted Stock Unit Agreement and the Terms and Conditions for Non-U.S. Participants.
Terms and Conditions
This Appendix C includes additional terms and conditions that govern the RSUs if the Participant resides and/or works in one of the countries listed below. If the Participant is a citizen or resident of a country (or is considered as such for local law purposes) other than the one in which the Participant is currently residing and/or working or if the Participant moves to another country after receiving the grant of the RSUs, the Company shall, in its discretion, determine the extent to which the terms and conditions herein shall be applicable to the Participant.
Notifications
This Appendix C also includes information regarding exchange controls and certain other issues of which the Participant should be aware with respect to the Participant’s participation in the Plan. The information is based on the securities, exchange control and other laws in effect in the respective countries as of January 2017. Such laws are often complex and change frequently. As a result, the Company strongly recommends that the Participant not rely on the information in this Appendix C as the only source of information relating to the consequences of the Participant’s participation in the Plan because the information may be out of date at the time that the RSUs vest or the Participant sells Shares acquired under the Plan.
In addition, the information contained herein is general in nature and may not apply to the Participant’s particular situation and the Company is not in a position to assure the Participant of a particular result. Accordingly, the Participant is advised to seek appropriate professional advice as to how the relevant laws in the Participant’s country may apply to the Participant’s situation.
If the Participant is a citizen or resident of a country other than the one in which the Participant is currently residing and/or working (or if the Participant is considered as such for local law purposes) or if the Participant moves to another country after receiving the grant of the RSUs, the information contained herein may not be applicable to the Participant in the same manner.
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2018 PSU
Notifications
Foreign Asset/Account Reporting Information. If the Participant holds assets (including cash and Shares acquired under the Plan, and possibly RSUs) outside of Japan with a value exceeding ¥50,000,000 (as of December 31 each year), the Participant is required to comply with annual tax reporting obligations with respect to such assets. The Participant is responsible for complying with this reporting obligation, if applicable, and should consult with Participant’s personal tax advisor to ensure that the Participant is properly complying with applicable reporting requirements.
UNITED KINGDOM
Terms and Conditions
Responsibility for Taxes. This provision supplements Section 1 of the Terms and Conditions for Non-U.S. Participants:
Without limitation to Section 1 of the Terms and Conditions for Non-U.S. Participants, the Participant hereby covenants to pay all Tax-Related Items, as and when requested by the Company, the Service Recipient or by Her Majesty’s Revenue and Customs (“HMRC”) (or any other tax authority or other relevant authority). The Participant also agrees to indemnify and keep indemnified the Company and the Service Recipient against any Tax-Related Items that they are required to pay or withhold on the Participant’s behalf, have paid or will pay to HMRC (or any other tax authority or other relevant authority).
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Exhibit 10.3
2018 PSU - WANG
SECOND AMENDED AND RESTATED
PERFORMANCE- AND SERVICE-BASED
RESTRICTED STOCK UNIT AGREEMENT
HILTON GRAND VACATIONS INC.
2017 OMNIBUS INCENTIVE PLAN
AWARD NOTICE
The Participant has been granted Performance- and Service-Based Restricted Stock Units (or “RSUs”) with the terms set forth in this Award Notice and subject to the terms and conditions of the Plan and the Second Amended and Restated Performance- and Service-Based Restricted Stock Unit Agreement, including its appendices, to which this Award Notice is attached. Capitalized terms used and not defined in this Award Notice shall have the meanings set forth in the Second Amended and Restated Performance- and Service-Based Restricted Stock Unit Agreement and the Plan.
1.General.
Date of Grant:
Performance Period: January1, 2018 to December 31, 2020
Target Number of Restricted Stock Units Granted: RSUs
2.Performance Conditions.
Performance Conditions (the “Performance Conditions”): The extent to which the Performance Conditions are satisfied and the number of RSUs which become vested, if any, shall be calculated with respect to each Performance Component identified below. All determinations made with respect to Adjusted EBITDA and Contract Sales shall be made by the Committee in its sole discretion and the applicable Performance Conditions shall not be achieved and the RSUs shall not vest unless and to the extent that the Committee certifies that such Performance Conditions have been met.
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Adjusted EBITDA. The total number of RSUs which become vested based on the achievement of Adjusted EBITDA performance levels shall be equal to (x) the target number of RSUs multiplied by (y) a relative weighting component equal to seventy percent (70%), multiplied by (z) the Achievement Percentage determined based upon the applicable Adjusted EBITDA Position for the Performance Period as follows, and rounded down to the nearest whole Share: |
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2018 PSU - WANG
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Continued Employment or Service. In addition to the attainment of the Performance Conditions, the Participant must be an employee of or in service to the Company or the Company Group from the Date of Grant until the last day of the Performance Period, except to the extent otherwise provided in the Plan or the Agreement. |
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Committee Discretion to Adjust Performance Goals and/or Calculations. In the event of an acquisition or disposition of any business, line of business or assets by the Company (and in the case of an acquisition, only such acquisition transaction in which the Company is the acquiror and/or the surviving entity, and does not otherwise constitute a Change in Control), the Committee shall in good faith and in such manner as it may deem equitable adjust the performance goals and/or the calculation of Adjusted EBITDA and Contract Sales to reflect the projected effect of such transaction(s) or event(s). |
3.Definitions.
For purposes of this Award Notice:
(a)“Achievement Percentage” means the “Percentage of Award Earned” specified with respect to the below threshold, threshold, target, and/or maximum levels for each Performance Component, as applicable, or a percentage determined using linear interpolation if actual performance falls between threshold and target, or between target and maximum levels (and rounded to the nearest whole percentage point and, if equally between two percentage points, rounded up). In the event that actual performance does not meet the threshold level for any Performance Component, the “Achievement Percentage” with respect to such Performance Component shall be zero.
(b)“Adjusted EBITDA” means the Company’s earnings before interest expense, taxes and depreciation and amortization, (i) adjusted to exclude gains, losses and expenses in connection with (A) asset dispositions, (B) foreign currency transactions, (C) debt restructurings/retirements, (D) non-cash impairment losses, (E) reorganization costs, including severance and relocation costs, (F) share-based and certain other compensation expenses, (G) costs related to the spin-off and (H) other items, and (ii) further adjusted for net construction related recognition and deferral activity.
(c)“Contract Sales” means the total dollar amount of vacation ownership interest products under purchase agreements signed during the period where the Company has received a down payment of at least ten percent (10%) of the contract price, net of upgrades, before first-day incentives.
(d)“Performance Components” means the performance criteria applicable to an Award, as set forth on the Award Notice.
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2018 PSU - WANG
SECOND AMENDED AND RESTATED
PERFORMANCE- AND SERVICE-BASED
RESTRICTED STOCK UNIT AGREEMENT
HILTON GRAND VACATIONS INC.
2017 OMNIBUS INCENTIVE PLAN
This Second Amended and Restated Performance- and Service-Based Restricted Stock Unit Agreement (the “Second Amended and Restated Agreement”), entered into the [ ] day of [ ], 2020 and effective as of the Date of Grant (as defined below), is between Hilton Grand Vacations Inc., a Delaware corporation (the “Company”), and the Participant (as defined below).
WHEREAS, the Company has adopted the Hilton Grand Vacations Inc. 2017 Omnibus Incentive Plan (as it may be amended, the “Plan”) to provide a means through which the Company and the other members of the Company Group may attract and retain key personnel and to provide a means whereby officers, employees, consultants and advisors of the Company and the other members of the Company Group can acquire and maintain an equity interest in the Company or receive an incentive award;
WHEREAS, the Participant is an employee or consultant of the Company or another member of the Company Group, and pursuant to the Plan, the Committee has granted performance- and service-based RSUs to the Participant pursuant to the Performance- and Service-Based Restricted Stock Unit Agreement entered into between the Company and the Participant on (the “Original Agreement”);
WHEREAS, on August 7, 2018, the Participant and the Company entered into an amended and restated agreement to reflect the terms and conditions related to stock awards set forth in the Participant’s Severance Agreement effective as of April 17, 2017 (the “Amended and Restated Agreement”);
WHEREAS, on March 5, 2019, the Participant and the Company entered into an amendment to the Amended and Restated Agreement to amend the definition of “Adjusted EBITDA” (the “Amendment”); and
WHEREAS, none of the RSUs subject to the Original Agreement or the Amended and Restated Agreement, as amended by the Amendment, are vested as of the date of this Second Amended and Restated Agreement, and the Company and the Participant have agreed to certain additional modifications and to enter into this Second Amended and Restated Agreement that reflects the cumulative amendments made to the Original Agreement to date (including such additional modifications), with all other terms of the Amended and Restated Agreement, as amended by the Amendment, remaining the same.
NOW, THEREFORE, the parties hereto agree as follows:
1.Definitions. Capitalized terms not otherwise defined herein shall have the same meanings as in the Plan. In addition to other terms defined herein or in the Award Notice, the following terms shall have the following meanings for purposes of this Agreement:
(a)“Agreement” shall mean this Second Amended and Restated Performance- and Service-Based Restricted Stock Unit Agreement including (unless the context otherwise requires) the Award Notice, Appendix A, and the appendices for non-U.S. Participants attached hereto as Appendix B and Appendix C.
(b)“Award Notice” shall mean the notice to the Participant.
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2018 PSU - WANG
(c)“Date of Grant” shall mean the “Date of Grant” listed in the Award Notice.
(d)“Participant” shall mean the “Participant” listed in the Award Notice.
(e)“Performance Conditions” shall mean the performance conditions set forth in the Award Notice.
(f)“Performance Period” shall mean the performance period set forth in the Award Notice.
(g)“Restrictive Covenant Violation” shall mean the Participant’s breach of the Restrictive Covenants listed on Appendix A or any covenant regarding confidentiality, competitive activity, solicitation of the Company’s vendors, suppliers, customers, or employees, or any similar provision applicable to or agreed to by the Participant.
(h)“Retirement” shall mean the Participant’s termination of employment with the Company Group, other than (i) for Cause or while grounds for Cause exist, (ii) due to the Participant’s death or (iii) due to or during the Participant’s Disability, in each case, following the date on which both (x) the Participant attained the age of 55 years old and (y) the number of completed years of the Participant’s employment with any member(s) of the Company Group (including any predecessor of a member thereof, including, for the avoidance of doubt, employment by Hilton Worldwide and its affiliates prior to January 3, 2017) is at least ten (10).
(i)“RSUs” shall mean that total number of performance- and service-based restricted stock units listed in the Award Notice as “Target Number of Restricted Stock Units Granted” (or such greater or lesser number of RSUs as may be vested and earned herein, as determined in the Committee’s discretion), as such number of performance- and service-based restricted stock units may be adjusted in accordance with Section 10 below.
(j)“Shares” shall mean a number of shares of the Company’s Common Stock equal to the number of RSUs (or such greater or lesser number of shares as may be vested and earned herein, as determined in the Committee’s discretion).
2.Grant of Units. On, the Company granted the RSUs to the Participant, each of which represents the right to receive one Share upon vesting of such RSUs, subject to and in accordance with the terms, conditions and restrictions set forth in the Plan, the Award Notice, and this Agreement.
3.RSU Account. The Company shall cause an account (the “Unit Account”) to be established and maintained on the books of the Company to record the number of RSUs credited to the Participant under the terms of this Agreement. The Participant’s interest in the Unit Account shall be that of a general, unsecured creditor of the Company.
4.Vesting; Settlement; Tax Withholding.
(a)As promptly as practicable (and, in no event more than 70 days) following the last day of the Performance Period, the Committee shall determine if and the extent to which the Performance Conditions have been satisfied (the date of such determination, the “Determination Date”), and any RSUs with respect to which the Performance Conditions have been satisfied shall become vested effective as of the last day of the Performance Period, subject to Section 5(d) ; provided that, unless otherwise provided in Section 5, the Participant also meets the continued employment or service condition set forth in the Award Notice. Any RSU which does not become vested effective as of the last day of the Performance Period shall be cancelled and forfeited to the Company without consideration or any further action by the
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Participant or the Company. In the event of an equity restructuring, the Committee shall adjust any Performance Condition to the extent it is affected by such restructuring in order to preserve (without enlarging) the likelihood that such Performance Condition shall be satisfied. The manner of such adjustment shall be determined by the Committee in its sole discretion. For this purpose, “equity restructuring” shall mean an “equity restructuring” as defined in Financial Accounting Standards Board Accounting Standards Codification 718-10 (formerly Statement of Financial Accounting Standards 123R).
(b)The Company shall deliver to the Participant one share of Common Stock for each vested RSU (as adjusted under the Plan), pursuant to Section 4(c) below, and each such vested RSU shall be cancelled upon delivery.
(c)Shares, free and clear of all restrictions, shall be issued to the Participant (or his or her beneficiary) only in the event, and to the extent, that the RSUs have vested and been earned as provided in the Award Notice and in the Agreement. Upon vesting of the RSUs, Shares shall be issued to the Participant (or his or her beneficiary) within 70 days following the applicable vesting date set forth in Section 4(a) herein. Notwithstanding the foregoing, the following provisions shall apply: (i) any Shares earned and vested due to termination of employment or service as provided in Section 5(b) or Section 5(e) shall be paid within 70 days following the Participant’s Termination Date; (ii) any Shares earned and vested following Retirement as provided in Section 5(c) shall be paid within 70 days following the applicable vesting date set forth in Section 4(a) and Section 5(c) herein; (iii) any Shares earned and vested as a result of a Change in Control as provided in Section 5(h) shall be paid within 70 days following the date of the Change in Control; and (iv) any Shares earned and vested due to a Qualifying Termination as provided in Section 5(i) shall be paid within 70 days following the Participant’s Termination Date. If the70-dayperiod described herein begins in one calendar year and ends in another, the Participant (or his or her beneficiary) shall not have the right to designate the calendar year of the payment (except as otherwise provided below with respect to a delay in payments if the Participant is a “specified employee”). Further, if calculation of the amount of the payment is not administratively practicable due to events beyond the control of the Participant (or his or her beneficiary), the payment will be treated as made within the applicable70-daytime period specified herein if the payment is made during the first taxable year of the Participant in which the calculation of the amount of the payment is administratively practicable or otherwise in accordance with Code Section 409A. Notwithstanding the foregoing, if the Participant is or may be a “specified employee” (as defined under Code Section 409A), and the distribution is considered deferred compensation under Code Section 409A, then such distribution if made due to separation from service shall be subject to delay as provided in Section 14(u) of the Plan (or any successor provision thereto).
(d)The Participant shall be required to pay to the Company or, if different, the Service Recipient, an amount in cash (by check or wire transfer) equal to the aggregate amount of any income, employment and/or other applicable taxes (the “Withholding Taxes”) that are statutorily required to be withheld in respect of the RSUs. Alternatively, the Company may elect, in its sole discretion, to satisfy this requirement by withholding such amount from any cash compensation or other cash amounts owing to the Participant. Without limiting the foregoing, the Committee may (but is not obligated to), in its sole discretion, permit or require the Participant to satisfy, all or any portion of the minimum Withholding Taxes that are statutorily required to be withheld with respect to the RSUs by (i) the delivery of shares of Common Stock (which are not subject to any pledge or other security interest) that have been both held by the Participant and vested for any period of time as established from time to time by the Committee in order to avoid adverse accounting treatment under GAAP having an aggregate Fair Market Value equal to such minimum statutorily required Withholding Taxes (or portion thereof); or (ii) having the Company withhold from the Shares otherwise issuable or deliverable to, or that would otherwise be retained by, the Participant upon the vesting of the RSUs, a number of Shares with an aggregate Fair Market Value equal
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to an amount not in excess of such minimum statutorily required Withholding Taxes (or portion thereof). Notwithstanding the foregoing, the Committee, subject to its having considered the applicable accounting impact of any such determination, has full discretion to allow the Participant to satisfy, in whole or in part, any additional Withholding Taxes payable by him or her with respect to the RSUs by electing to have the Company withhold from the Shares issuable to the Participant upon the vesting of the RSUs, a number of Shares having an aggregate Fair Market Value that is greater than the applicable minimum required statutory Withholding Taxes (but such withholding may in no event be in excess of the maximum statutory withholding amount(s) in the Participant’s relevant tax jurisdiction). Further, for non-U.S. Participants, the Company may withhold from the Shares issuable to such non-U.S. Participant upon the vesting of the RSUs, a number of Shares having an aggregate Fair Market Value up to the maximum statutory withholding amount(s) in the non-U.S. Participant’s relevant tax jurisdiction.
(e)The Company shall pay any costs incurred in connection with issuing the Shares. Upon the issuance of the Shares (to the extent earned) to the Participant, the Participant’s Unit Account shall be eliminated. Notwithstanding anything in this Agreement to the contrary, the Company shall have no obligation to issue or transfer the Shares as contemplated by this Agreement unless and until such issuance or transfer shall comply with all relevant provisions of law and the requirements of any stock exchange on which the Company’s shares are listed for trading.
5.Termination of Employment or Service.
(a)Subject to the provisions of this Section 5, if the Participant’s employment with or service to the Company Group terminates for any reason, the unvested RSUs shall terminate as of the effective date of termination (the “Termination Date”), and all of the Participant’s rights hereunder with respect to such unvested RSUs shall cease as of the Termination Date (unless otherwise provided for by the Committee in accordance with the Plan).
(b)If the Participant’s employment or service is terminated by the Service Recipient during the Performance Period due to or during the Participant’s Disability or due to the Participant’s death, a pro-rated number of the target number of RSUs granted hereunder shall become vested and nonforfeitable (irrespective of performance) based on the number of days in the Performance Period prior to the Termination Date relative to the number of the days in the full Performance Period. Any RSUs that vest as provided herein shall be settled in accordance with Section 4.
(c)In the event the Participant’s employment with or service to the Company Group is terminated as a result of the Participant’s Retirement, the RSUs granted hereunder shall remain outstanding and eligible to vest, notwithstanding such termination of employment or service, based on (and to the extent) the Committee’s determination that the Performance Conditions have been satisfied on the Determination Date, in accordance with the schedule set forth in the Award Notice, so long as no Restrictive Covenant Violation occurs (as determined by the Committee, or its designee, in its sole discretion) prior to the Determination Date. Any RSUs that vest as provided herein shall be settled in accordance with Section 4. As a pre-condition to the Participant’s right to continued vesting following Retirement, the Committee, or its designee, may require the Participant to certify in writing prior to the applicable vesting date that no Restrictive Covenant Violation has occurred. Notwithstanding the foregoing, if the Date of Grant of the RSUs is not at least six months prior to the date of the Participant’s Retirement, any unvested RSUs shall terminate as of the Termination Date.
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(d)If the Participant’s employment with or service to the Company Group terminates for any reason after the last day of the Performance Period and before the Determination Date (other than a termination by the Company for Cause, or by the Participant while grounds for Cause exist or without Good Reason), and no Restrictive Covenant Violation occurs before the Determination Date, then all RSUs shall remain outstanding and eligible to vest based on (and to the extent) the Committee’s determination that the Performance Conditions have been satisfied on the Determination Date.
(e)Notwithstanding anything herein to the contrary, the RSUs granted hereunder shall become immediately fully vested as of the Termination Date and settled in accordance with Section 4 if the Participant’s employment with or service to the Company Group shall be terminated by the Company other than for Cause, or by the Participant for Good Reason, in either case if such termination of the Participant’s employment occurs within 12 months following a Change in Control (for the avoidance of doubt, a Change in Control alone shall not, also, result in any vesting hereunder), with the actual number of RSUs determined based on (i) actual performance through the Termination Date, as determined by the Committee, or (ii) if the Committee determines that measurement of actual performance cannot be reasonably assessed, the assumed achievement of target performance as determined by the Committee.
(f)For purposes of this Section 5, “Good Reason” means the occurrence of any of the following, without the Participant’s written consent:
(i)a material diminution in the Participant’s base salary;
(ii)a material diminution in the Participant’s authority, duties, responsibilities or position; or
(iii)a permanent reassignment by the Company or the Service Recipient of the Participant’s primary office to a location that is more than 100 miles from the Participant’s assigned primary office;
provided, however, that a termination by the Participant for any of the reasons listed in (i) through (iii) above shall not constitute a termination for Good Reason unless the Participant shall first have delivered to the Company written notice setting forth with specificity the occurrence deemed to give rise to a right to terminate for Good Reason (which notice must be given no later than 60 days after the initial occurrence of such event), and the Company fails to cure such event within 30 days after receipt of this written notice. The Participant’s employment must be terminated for Good Reason within 120 days after the occurrence of an event of Good Reason.
(g)The Participant’s rights with respect to the RSUs shall not be affected by any change in the nature of the Participant’s employment or service so long as the Participant continues to be an employee or consultant, respectively, of the Company Group. Whether (and the circumstances under which) employment or service has terminated and the determination of the Termination Date for the purposes of this Agreement shall be determined by the Committee (or, with respect to any Participant who is not a director or “officer” as defined under Rule16a-1(f) of the Exchange Act, such action may also be taken by its designee, in each case whose good faith determination shall be final, binding and conclusive; provided, that such designee may not make any such determination with respect to the designee’s own employment for purposes of the RSUs).
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(h)Without limiting the effect of Section 5(e) herein, and subject to Section 12 of the Plan, in the event of a Change in Control during the Participant’s employment with or service to the Company Group or while any RSUs remain outstanding and eligible to vest, and prior to the completion of the Performance Period, the successor or surviving company in the Change in Control may assume or substitute for the RSUs (or in which the Company is the ultimate parent corporation and continues the RSUs), with the actual number of RSUs determined based on (i) actual performance through the date of such Change in Control, as determined by the Committee, or (ii) if the Committee determines that measurement of actual performance cannot be reasonably assessed, the assumed achievement of target performance as determined by the Committee, and such assumed or substituted RSUs shall remain outstanding and eligible to vest based on continued service through the last day of the Performance Period, except to the extent otherwise provided in the Plan or the Agreement. Notwithstanding the foregoing, in the event the successor or surviving company in the Change in Control does not assume or substitute for the RSUs (or in which the Company is the ultimate parent corporation and does not continue the RSUs) on substantially similar terms or with substantially equivalent economic benefits (as determined by the Committee) as RSUs outstanding under the Plan immediately prior to the Change in Control, then the target number of RSUs granted hereunder shall become immediately fully vested as of the date of such Change in Control and settled in accordance with Section 4.
(i)Notwithstanding anything to the contrary contained herein, in the event of a Qualifying Termination (as defined in the Severance Agreement) and a Change in Control has not occurred, a pro-rated number of the target number of RSUs granted hereunder shall become vested and nonforfeitable (irrespective of performance) as of the Termination Date based on the number of days in the Performance Period prior to the Termination Date (inclusive), plus an additional 730 days (not to exceed 1,095 days), relative to the number 1,095. Any RSUs that vest as provided herein shall be settled in accordance with Section 4.
6.Dividend Equivalents. A Participant holding unvested RSUs shall be entitled to be credited with dividend equivalent payments (upon the payment by the Company of dividends on Shares), which shall accrue in cash without interest (unless otherwise elected by the Committee) and shall be delivered in cash (unless the Committee in its sole discretion, elects to settle such amount in shares of Common Stock, other securities, other Awards or other property having a Fair Market Value as of the settlement date equal to the amount of such dividends). Accrued dividend equivalents shall not be paid unless and until the underlying RSUs (or portion thereof) have vested. Any such dividend equivalents in respect of unvested RSUs shall be paid within fifteen (15) days after the RSUs are vested and become payable or distributable unless the Committee determines otherwise.
7.Restrictions on Transfer. The Participant may not assign, alienate, pledge, attach, sell or otherwise transfer or encumber the RSUs or the Participant’s right under the RSUs to receive Shares (unless such transfer is specifically required pursuant to a domestic relations order or by applicable law), other than by will or by the laws of descent and distribution, and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against any member of the Company Group; provided that the designation of a beneficiary shall not constitute an assignment, alienation, pledge, attachment, sale, transfer or encumbrance.
8.No Right to Continued Employment or Service. Neither the Plan, the Agreement nor any action taken thereunder or hereunder shall be construed as giving the Participant any right to be retained in the employ or service of the Service Recipient or any other member of the Company Group. The Service Recipient or any other member of the Company Group may at any time dismiss the Participant from employment or discontinue any consulting relationship, free from any liability or claim under the Plan or this Agreement, unless otherwise expressly provided in the Plan or this Agreement.
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9.No Rights as a Stockholder. Except as otherwise provided in the Plan or this Agreement, the Participant shall not be entitled to the privileges of ownership in respect of the Shares until the Shares have been issued or delivered to the Participant.
10.Adjustments Upon Change in Capitalization. The terms of this Agreement, including the RSUs, the Participant’s Unit Account, any dividend equivalent payments accrued pursuant to Section 6 and/or the Shares, shall be subject to adjustment in accordance with Section 12 of the Plan. This paragraph shall also apply with respect to any extraordinary dividend or other extraordinary distribution in respect of the Company’s Common Stock (whether in the form of cash or other property) to the extent provided in the Plan.
11.Award Subject to Plan. By entering into this Agreement, the Participant agrees and acknowledges that the Participant has received and read a copy of the Plan. The RSUs granted hereunder are subject to the Plan. The terms and provisions of the Plan, as it may be amended from time to time, are hereby incorporated herein by reference. Unless the Committee determines otherwise, in the event of a conflict between any term or provision contained herein and a term or provision of the Plan, the applicable terms and provisions of the Plan shall govern and prevail.
12.Severability. If any provision of the Plan or this Agreement is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction or as to the Participant or the RSUs, or would disqualify the Plan or the RSUs under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to the applicable laws, or if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Agreement, such provision shall be construed or deemed stricken as to such jurisdiction, the Participant or the RSUs and the remainder of the Plan and this Agreement shall remain in full force and effect.
13.Governing Law; Waiver of Jury Trial; Venue. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware applicable to contracts made and performed wholly within the State of Delaware, without giving effect to the conflict of laws provisions thereof. The Participant hereby irrevocably waives all right to a trial by jury in any suit, action or other proceeding instituted by or against such Participant in respect of the Participant’s rights or obligations hereunder. Any suit, action or proceeding with respect to this Agreement (or any provision incorporated by reference), or any judgment entered by any court in respect of any thereof, shall be brought in any court of competent jurisdiction in the State of Florida, and each of the Participant, the Company, and any transferees who hold RSUs pursuant to a valid assignment, hereby submit to the exclusive jurisdiction of such courts for the purpose of any such suit, action, proceeding, or judgment. Each of the Participant, the Company, and any transferees who hold RSUs pursuant to a valid assignment hereby irrevocably waive (A) any objections which he or she may now or hereafter have to the laying of the venue of any suit, action, or proceeding arising out of or relating to this Agreement brought in any court of competent jurisdiction in the State of Florida and (B) any claim that any such suit, action, or proceeding brought in any such court has been brought in any inconvenient forum.
14.Language. If the Participant has received a copy of this Agreement (or the Plan or any other document related hereto or thereto) translated into a language other than English, such translated copy is qualified in its entirety by reference to the English version thereof, and in the event of any conflict the English version shall govern. The Participant acknowledges that the Participant is sufficiently proficient in English to understand the terms and conditions of the Plan and this Agreement.
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15.Successors in Interest. Any successor to the Company shall have the benefits of the Company under, and be entitled to enforce, this Agreement. Likewise, the Participant’s legal representative shall have the benefits of the Participant under, and be entitled to enforce, this Agreement. All obligations imposed upon the Participant and all rights granted to the Company under this Agreement shall be final, binding and conclusive upon the Participant’s heirs, executors, administrators and successors.
16.Data Privacy Consent.
The Participant hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of the Participant’s personal data as described in this Agreement and any other RSU grant materials by and among, as applicable, the Service Recipient, the Company and other members of the Company Group for the purpose of implementing, administering and managing the Plan.
Participant understands that the Company and the Service Recipient may hold certain personal information about the Participant, including, but not limited to, the Participant’s name, home address, email address and telephone number, date of birth, passport, social insurance number or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company, details of all stock options, restricted stock units or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in the Participant’s favor (“Data”), for the purpose of implementing, administering and managing the Plan.
The Participant understands that Data will be transferred to any third parties as may be selected by the Company (presently or in the future), which assist the Company with the implementation, administration and management of the Plan. The Participant understands that the recipients of the Data may be located in the United States or elsewhere, and that the recipients’ country (e.g., the United States) may have different data privacy laws and protections than the Participant’s country. The Participant understands that if the Participant resides outside the United States the Participant may request a list with the names and addresses of any potential recipients of the Data by contacting the Participant’s local human resources representative. The Participant authorizes the Company and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purpose of implementing, administering and managing the Plan. The Participant understands that Data will be held only as long as is necessary to implement, administer and manage the Plan. The Participant understands that if the Participant resides outside the United States, the Participant may, at any time, view Data, request information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing the Participant’s local human resources representative. Further, the Participant understands that the Participant is providing the consents herein on a purely voluntary basis. If the Participant does not consent, or if the Participant later seeks to revoke the Participant’s consent, the Participant’s employment status or service with the Service Recipient will not be affected; the only consequence of refusing or withdrawing the Participant’s consent is that the Company may not be able to grant options or other equity awards to the Participant or administer or maintain such awards. Therefore, the Participant understands that refusing or withdrawing the Participant’s consent may affect the Participant’s ability to participate in the Plan. For more information on the consequences of the Participant’s refusal to consent or withdrawal of consent, the Participant understands that the Participant may contact the Participant’s local human resources representative.
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17.Restrictive Covenants. The Participant acknowledges and recognizes the highly competitive nature of the businesses of the Company and its Affiliates, that the Participant shall be allowed access to confidential and proprietary information (including but not limited to trade secrets) about those businesses, as well as access to the prospective and actual customers, suppliers, investors, clients and partners involved in those businesses, and the goodwill associated with the Company and its Affiliates. Participant accordingly agrees to the provisions of Appendix A to this Agreement (the “Restrictive Covenants”). For the avoidance of doubt, the Restrictive Covenants contained in this Agreement are in addition to, and not in lieu of, any other restrictive covenants or similar covenants or agreements between the Participant and the Company or any of its Affiliates.
18.Repayment of Proceeds; Clawback Policy; Compliance with Ownership and Other Policies and Agreements.
(a)If a Restrictive Covenant Violation occurs or the Company discovers after a termination of employment or service that grounds existed for Cause at the time thereof, then the Participant shall be required, unless the Committee determines otherwise, in addition to any other remedy available (on a non-exclusive basis), to pay to the Company, within ten (10) business days of the Company’s request to the Participant therefor, an amount equal the aggregate after-tax proceeds (taking into account all amounts of tax that would be recoverable upon a claim of loss for payment of such proceeds in the year of repayment) the Participant received upon the sale or other disposition of, or distributions in respect of, the RSUs and any Shares or cash issued in respect thereof. Any reference in this Agreement to grounds existing for a termination of employment or service with Cause shall be determined without regard to any notice period, cure period or other procedural delay or event required prior to finding of or termination with Cause.
(b)The RSUs shall be subject to reduction, cancellation, forfeiture or recoupment to the extent necessary to comply with (i) any clawback, forfeiture or other similar policy adopted by the Board or the Committee and as in effect from time to time and (ii) applicable law. Further, to the extent that the Participant receives any amount in excess of the amount that the Participant should otherwise have received under the terms of this Agreement for any reason (including, without limitation, by reason of a financial restatement, mistake in calculations or other administrative error), the Participant shall be required to repay any such excess amount to the Company.
(c)Without limiting the terms of the Plan, and as a condition to receiving the RSUs or any benefit hereunder, the Participant agrees that he or she shall abide by all provisions of any equity retention policy, stock ownership guidelines and/or other policies adopted by the Company or an Affiliate, each as in effect from time to time and to the extent applicable to the Participant.
19.Limitation on Rights; No Right to Future Grants; Extraordinary Item of Compensation. By accepting this Agreement and the grant of the RSUs contemplated hereunder, the Participant expressly acknowledges that (A) the Plan is discretionary in nature and may be suspended or terminated by the Company at any time; (B) the grant of RSUs is a one-time benefit that does not create any contractual or other right to receive future grants of RSUs or other Awards under the Plan, or benefits in lieu of RSUs; (C) all determinations with respect to future grants of RSUs, if any, including the grant date, the number of Shares granted and the applicable vesting terms, shall be at the sole discretion of the Committee and/or the Company; (D) the Participant’s participation in the Plan is voluntary; (E) the value of the RSUs is an extraordinary item of compensation that is outside the scope of the Participant’s employment or consulting contract, if any, and nothing can or must automatically be inferred from such employment or consulting contract or its consequences; (F) grants of RSUs are not part of normal or expected compensation for any purpose and are not to be used for calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or
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similar payments, the Participant waives any claim on such basis, and for the avoidance of doubt, the RSUs shall not constitute an “acquired right” under the applicable law of any jurisdiction; and (G) the future value of the underlying Shares is unknown and cannot be predicted with certainty. In addition, the Participant hereby waives any claim to continued vesting of the RSUs or to damages or severance entitlement related to non-continuation of the RSUs beyond the period provided under the Plan or this Agreement, except to the extent of any provision to the contrary in any written employment contract or other agreement between the Service Recipient and/or any member of the Company Group and the Participant, whether any such agreement is executed before, on or after the Date of Grant.
20.Amendment of Agreement. The Committee may, to the extent consistent with the terms of the Plan and this Agreement, waive any conditions or rights under, amend any terms of, or alter, suspend, discontinue, cancel or terminate, any RSUs granted hereunder or this Agreement, prospectively or retroactively (including after the Participant’s Termination); provided, that, other than as provided in the Plan, any such waiver, amendment, alteration, suspension, discontinuance, cancellation or termination that would materially and adversely affect the rights of any Participant with respect to the RSUs granted hereunder shall not to that extent be effective without the consent of the Participant; provided, further, that in no event shall any such amendment alter the Minimum Vesting Condition.
21.Award Administrator. The Company may from time to time designate a third party (an “Award Administrator”) to assist the Company in the implementation, administration and management of the Plan and any RSUs granted thereunder, including, but not limited to, by sending award notices on behalf of the Company to Participants, and by facilitating through electronic means acceptance of agreements by Participants.
22.Section 409A of the Code.
(a)Notwithstanding any provision of the Plan or this Agreement to the contrary, it is intended that the provisions of this Agreement comply with, or be exempt from, Section 409A of the Code, and all provisions of this Agreement shall be construed and interpreted in a manner consistent with the requirements for avoiding taxes or penalties under Section 409A of the Code. The Participant is solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on or in respect of the Participant in connection with this Agreement (including any taxes and penalties under Section 409A of the Code), and neither the Service Recipient nor any other member of the Company Group shall have any obligation to indemnify or otherwise hold the Participant (or any beneficiary) harmless from any or all such taxes or penalties. If the RSUs are considered “deferred compensation” subject to Section 409A of the Code, references in this Agreement to “termination of employment” (and substantially similar phrases) shall mean “separation from service” within the meaning of Section 409A of the Code. For purposes of Section 409A of the Code, each of the payments that may be made in respect of the RSUs shall be deemed as separate payments.
(b)Notwithstanding anything in the Plan or this Agreement to the contrary, if a Participant is a “specified employee” within the meaning of Section 409A of the Code, no payments in respect of any RSU that is “deferred compensation” subject to Section 409A of the Code and which would otherwise be payable upon the Participant’s “separation from service” (as defined in Section 409A of the Code) shall be made to such Participant prior to the date that is six (6) months after the date of the Participant’s “separation from service” or, if earlier, the date of the Participant’s death. Following any applicable six (6) month delay, all such delayed payments shall be paid in a single lump sum on the earliest date permitted under Section 409A of the Code that is also a business day.
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(c)Unless otherwise provided by the Committee in this Agreement or otherwise, in the event that the timing of payments in respect of the RSUs (that would otherwise be considered “deferred compensation” subject to Section 409A of the Code) would be accelerated upon the occurrence of (i) a Change in Control, no such acceleration shall be permitted (to the extent required under Section 409A) unless the event giving rise to the Change in Control satisfies the definition of a change in the ownership or effective control of a corporation, or a change in the ownership of a substantial portion of the assets of a corporation pursuant to Section 409A of the Code or (ii) a Disability, no such acceleration shall be permitted unless the Disability also satisfies the definition of “Disability” pursuant to Section 409A of the Code if and to the extent required under Section 409A of the Code.
23.Restriction on Restricted Stock Unit Award and Shares. The obligation of the Company to settle the RSUs in Shares or other consideration shall be subject to all applicable laws, rules and regulations, and to such approvals by governmental agencies as may be required. Notwithstanding any terms or conditions of this Agreement to the contrary, the Company shall be under no obligation to offer to sell, and shall be prohibited from offering to sell or selling, any Shares underlying the RSUs unless such shares have been properly registered for sale pursuant to the Securities Act with the Securities and Exchange Commission or unless the Company has received an opinion of counsel (if the Company has requested such an opinion), satisfactory to the Company, that such shares may be offered or sold without such registration pursuant to an available exemption therefrom and the terms and conditions of such exemption have been fully complied with. The Company shall be under no obligation to register for sale under the Securities Act any of the Shares. The Committee shall have the authority to provide that all Shares shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan, this Agreement, the Federal securities laws or the rules, regulations and other requirements of the Securities and Exchange Commission, any securities exchange or inter-dealer quotation system on which the securities of the Company are listed or quoted and any other applicable Federal, state, local or non-U.S. laws, rules, regulations and other requirements, and, without limiting the generality of the Plan, the Committee may cause a legend or legends to be put on certificates representing the Shares. Notwithstanding any provision in the Plan to the contrary, the Committee reserves the right to add any additional terms or provisions to the Performance- and Service-Based Restricted Stock Unit Agreement that the Committee, in its sole discretion, deems necessary or advisable in order that this Agreement complies with the legal requirements of any governmental entity to whose jurisdiction this Agreement is subject. The Committee may cancel the RSUs or any portion thereof if it determines, in its sole discretion, that legal or contractual restrictions and/or blockage and/or other market considerations would make the Company’s acquisition of shares of Common Stock from the public markets, the Company’s issuance of the Shares to the Participant, the Participant’s acquisition of the Shares from the Company and/or the Participant’s sale of Common Stock to the public markets, illegal, impracticable or inadvisable. If the Committee determines to cancel all or any portion of the RSUs in accordance with the foregoing, the Company shall, subject to any limitations or reductions as may be necessary to comply with Section 409A of the Code, provide the Participant with a cash payment or equity subject to deferred vesting and delivery consistent with the vesting restrictions applicable to the RSUs.
24.Book Entry Delivery of Shares. Whenever reference in this Agreement is made to the issuance or delivery of certificates representing one or more Shares, the Company may elect to issue or deliver such Shares in book entry form in lieu of certificates.
25.Electronic Delivery and Acceptance. The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through a non-line or electronic system established and maintained by the Company or a third party designated by the Company.
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26.Acceptance and Agreement by the Participant. By accepting the RSUs (including through electronic means), the Participant agrees to be bound by the terms, conditions and restrictions set forth in the Plan, this Agreement and the Company’s policies, as in effect from time to time, relating to the Plan.
27.No Advice Regarding Grant. The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Participant’s participation in the Plan, or the Participant’s acquisition or sale of the underlying Shares. The Participant is hereby advised to consult with his or her own personal tax, legal and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan.
28.Appendices For non-U.S. Participants. Notwithstanding any provisions in this Agreement, Participants residing and/or working outside the United States shall be subject to the Terms and Conditions for non-U.S. Participants attached hereto as Appendix B and to any Country-Specific Terms and Conditions for the Participant’s country attached hereto as Appendix C. If the Participant relocates from the United States to another country, the Terms and Conditions for non-U.S. Participants and the applicable Country-Specific Terms and Conditions shall apply to the Participant, to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. Moreover, if the Participant relocates between any of the countries included in the Country-Specific Terms and Conditions, the special terms and conditions for such country shall apply to the Participant, to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. The Terms and Conditions for non-U.S. Participants and the Country-Specific Terms and Conditions constitute part of this Agreement.
29.Imposition of Other Requirements. The Company reserves the right to impose other requirements on the Participant’s participation in the Plan, on the RSUs and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require the Participant to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.
30.Right of Offset. Subject to any considerations under Section 409A of the Code, the Company shall have the right to offset against its obligation to deliver Shares under this Agreement any outstanding amounts (including, without limitation, travel and entertainment or advance account balances, loans, repayment obligations under any Awards or amounts repayable to the Company pursuant to tax equalization, housing, automobile or other employee programs) that the Participant then owes to any member of the Company Group and any amounts the Committee otherwise deems appropriate pursuant to any tax equalization policy or agreement. Notwithstanding the foregoing, if the RSUs are “deferred compensation” subject to Section 409A of the Code, the Committee shall have no right to offset against its obligation to deliver Shares under this Agreement if such offset could subject the Participant to the additional tax imposed under Section 409A of the Code in respect of the RSUs.
31.Waiver. The Participant acknowledges that a waiver by the Company of breach of any provision of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by the Participant or any other participant in the Plan.
32.Rules of Construction. Headings are given to the sections of this Agreement solely as a convenience to facilitate reference. The reference to any statute, regulation or other provision of law shall (unless the Administrator determines otherwise) be construed to refer to any amendment to or successor of such provision of law.
33.Counterparts. This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one in the same agreement.
[Signatures follow]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be effective as of the Date of Grant.
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[NAME] |
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Acknowledged and Agreed: |
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Participant Signature |
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APPENDIX A
Restrictive Covenants
1.Non-Competition; Non-Solicitation.
(a)Participant acknowledges and recognizes the highly competitive nature of the businesses of the Company and its Affiliates and accordingly agrees as follows:
(i)During Participant’s employment with or service to the Company or its Affiliates (the “Employment Term”) and for a period that ends on the later of (A) one year following the date Participant ceases to be employed by or in service to the Company or any of its Affiliates or (B) the last date any portion of the Award granted under this Agreement is eligible to vest if Participant ceases to be employed by the Company or any of its Affiliates as a result of the Participant’s Retirement (the “Restricted Period”), Participant shall not, whether on Participant’s own behalf or on behalf of or in conjunction with any person, firm, partnership, joint venture, association, corporation or other business organization, entity or enterprise whatsoever (“Person”), directly or indirectly solicit or assist in soliciting in competition with the Restricted Group in the Business, the business of any then current or prospective client or customer with whom Participant (or his direct reports) had personal contact or dealings on behalf of the Company or any of its Affiliates during the one-year period preceding Participant’s termination of employment or service.
(ii)During the Restricted Period, Participant shall not directly or indirectly:
(A)engage in the Business providing services in the nature of the services Participant provided to the Company at any time in the one year prior to the termination of Participant’s employment or service, for a Competitor;
(B)enter the employ of, or render any services to, a Competitor, except where such employment or services do not relate in any manner to the Business;
(C)acquire a financial interest in, or otherwise become actively involved with, a Competitor, directly or indirectly, as an individual, partner, shareholder, officer, director, principal, agent, trustee or consultant; or
(D)intentionally and adversely interfere with, or attempt to adversely interfere with, business relationships between the members of the Restricted Group and any of their clients, customers, suppliers, partners, members or investors.
(iii)Notwithstanding anything to the contrary in this Appendix A, Participant may, directly or indirectly own, solely as an investment, securities of any Person engaged in a Business (including, without limitation, a Competitor) which are publicly traded on a national or regional stock exchange or on the over-the-counter market if Participant (A) is not a controlling person of, or a member of a group which controls, such person and (B) does not, directly or indirectly, own 2% or more of any class of securities of such Person.
(iv)During the Restricted Period, Participant shall not, whether on Participant’s own behalf or on behalf of or in conjunction with any Person, directly or indirectly:
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(A)solicit or encourage any executive-level employee of the Restricted Group, with whom Participant has had material business contact during the Employment Term or, if no longer an employee or consultant, in the one year prior to the termination of Participant’s employment with or service to any member of the Company Group, to leave the employment of the Restricted Group to become affiliated in any respect with a Competitor or otherwise be engaged in the Business; or
(B)hire any such executive-level employee to become affiliated in any respect with a Competitor or otherwise be engaged in the Business and with whom Participant had material business contact in the one year prior to the termination of Participant’s employment with or service to the Company, who (x) was employed by the Restricted Group as of the date of Participant’s termination of employment with or service to the Company or any of its Affiliates or (y) left the employment of the Restricted Group within one year after the termination of Participant’s employment with or service to the Company or any of its Affiliates.
(v)For purposes of this Agreement:
(A)“Restricted Group” shall mean the Company Group and, to the extent engaged in the Business, its Affiliates, provided, however, that for the purposes of this definition, an “Affiliate” shall not include any portfolio company of The Blackstone Group L.P. or its Affiliates (other than the Company Group).
(B)“Business” shall mean the business of owning, financing, developing, redeveloping, managing, marketing, operating, licensing, leasing or franchising vacation, timeshare or lodging properties, and natural ancillary business products and services related to such business, including, without limitation, membership services, exchange programs, rental programs, and provision of amenities.
(C)“Competitor” shall mean any person engaged in the Business, including but not limited to any vacation, timeshare or lodging companies that are comparable in size to the Company, including, without limitation, Marriott Vacations Worldwide, Wyndham Vacation Ownership, Interval Leisure Group, Disney Vacation Club, Hyatt Vacation Ownership, Holiday Inn Club Vacations, Bluegreen Vacations, Diamond Resorts International and Westgate Resorts.
(b)It is expressly understood and agreed that although Participant and the Company consider the restrictions contained in this Section 1 to be reasonable, if a judicial determination is made by a court of competent jurisdiction that the time or territory or any other restriction contained in this Appendix A is an unenforceable restriction against Participant, the provisions of this Appendix A shall not be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such maximum extent as such court may judicially determine or indicate to be enforceable. Alternatively, if any court of competent jurisdiction finds that any restriction contained in this Appendix A is unenforceable, and such restriction cannot be amended so as to make it enforceable, such finding shall not affect the enforceability of any of the other restrictions contained herein. Notwithstanding the foregoing, if Participant’s principal place of employment or service on the date hereof is located in Virginia, then this Section 1(b) of this Appendix A shall not apply following Participant’s termination of employment or service to the extent any such provision is prohibited by applicable Virginia law.
(c)The period of time during which the provisions of this Section 1 shall be in effect shall be extended by the length of time during which Participant is in breach of the terms hereof as determined by any court of competent jurisdiction on the Company’s application for injunctive relief.
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(d)Notwithstanding the foregoing, if Participant’s principal place of employment or service on the date hereof is located in California or any other jurisdiction where any provision of this Section 1 is prohibited by applicable law, then the provisions of this Section 1 shall not apply following Participant’s termination of employment or service to the extent any such provision is prohibited by applicable law.
2.Confidentiality; Non-Disparagement; Intellectual Property; Protected Rights.
(a)Confidentiality.
(i)Participant shall not at any time (whether during or after Participant’s employment with or service to the Company) (x) retain or use for the benefit, purposes or account of Participant or any other Person; or (y) disclose, divulge, reveal, communicate, share, transfer or provide access to any Person outside the Company or any of its Affiliates (other than its professional advisers who are bound by confidentiality obligations or otherwise in performance of Participant’s duties under Participant’s employment or service and pursuant to customary industry practice), public proprietary or confidential information (including, without limitation, trade secrets know-how 7research and development, software, databases, inventions, processes, formulae, technology, designs and other intellectual property, information concerning finances, investments, profits, pricing, costs, products, services, vendors, customers, clients, partners, investors, personnel, compensation, recruiting, training, advertising, sales, marketing, promotions, government and regulatory activities and approvals) concerning the past, current or future business, activities and operations of the Company, its Subsidiaries or Affiliates and/or any third party that has disclosed or provided any of same to the Company on a confidential basis (“Confidential Information”) without the prior written authorization of the Board.
(ii)“Confidential Information” shall not include any information that is (A) generally known to the industry or the public other than as a result of Participant’s breach of this covenant; (B) made legitimately available to Participant by a third party without breach of any confidentiality obligation of which Participant has knowledge; or (C) required by law to be disclosed provided that, unless otherwise provided under applicable law, with respect to subsection (C), Participant shall give prompt written notice to the Company of such requirement, disclose no more information than is so required, and reasonably cooperate with any attempts by the Company to obtain a protective order or similar treatment.
(iii)Except as required by law, Participant shall not disclose to anyone, other than Participant’s family (it being understood that, in this Agreement, the term “family” refers to Participant’s spouse, minor children, parents and spouse’s parents) and advisors, the existence or contents of this Agreement provided; that Participant may disclose to any prospective future employer the provisions of this Appendix A. This Section 2(A)(iii) shall terminate if the Company publicly discloses a copy of this Agreement (or, if the Company publicly discloses summaries or excerpts of this Agreement, to the extent so disclosed).
(iv)Upon termination of Participant’s employment with or service to the Company or any of its Affiliates for any reason, Participant shall (x) cease and not thereafter commence use of any Confidential Information or intellectual property (including without limitation, any patent, invention, copyright, trade secret, trademark, trade name, logo, domain name or other source indicator) owned or used by the Company, its Subsidiaries or Affiliates; and (y) immediately destroy, delete, or return to the Company, at the Company’s option, all originals and copies in any form or medium (including memoranda, books, papers, plans, computer files, letters and other data) in Participant’s possession or control (including any of the foregoing stored or located in Participant’s office, home, laptop or other computer, whether or not Company property) that contain Confidential Information, except that Participant may retain only those portions of any personal notes, notebooks and diaries that do not contain any Confidential Information.
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(v)Participant acknowledges and agrees that the Company and its Affiliates will prosecute any non-confidential disclosure or misappropriation of the Company’s and/or its Affiliates’ trade secrets to the full extent allowed by federal, state and common law. Participant further acknowledges and agrees that Participant has received and understands the following notice concerning immunity from liability for confidential disclosure of a trade secret to the government or in a court filing: Pursuant to the Defend Trade Secrets Act, 18 U.S.C. § 1833, an individual shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is made (A) in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney, and solely for the purpose of reporting or investigating a suspected violation of law, or (B) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.
(b)Non-Disparagement. During Participant’s Employment Term and at all times thereafter (including following the termination of Participant’s Employment Term for any reason), Participant shall not to intentionally make any statement that criticizes, ridicules, disparages or is otherwise derogatory of the Company, any of its Affiliates, or any of their respective officers, directors, stockholders, employees or other service providers, or any product or service offered by the Company or any of its Affiliates; provided, however, that nothing contained in this Section 2(b) shall preclude Participant from providing truthful testimony in any legal proceeding, or making any truthful statement (i) to any governmental agency; (ii) as required or permitted by applicable law or regulation; (iii) as required by court order or other legal process; or (iv) after the Restricted Period, for any legitimate business reason.
(c)Intellectual Property.
(i)If Participant has created, invented, designed, developed, contributed to or improved any works of authorship, inventions, intellectual property, materials, documents or other work product (including without limitation, research, reports, software, databases, systems, applications, presentations, textual works, content, or audiovisual materials) (“Works”), either alone or with third parties, prior to Participant’s employment or engagement by the Company or any of its Affiliates, that are relevant to or implicated by such employment (“Prior Works”), Participant hereby grants the Company a perpetual non-exclusive royalty-free, worldwide, assignable, sublicensable license under all rights and intellectual property rights (including rights under patent, industrial property, copyright, trademark, trade secret, unfair competition and related laws) therein for all purposes in connection with the Company’s current and future business.
(ii)If Participant creates, invents, designs, develops, contributes to or improves any Works, either alone or with third parties, at any time during Participant’s employment by or service to the Company and within the scope of such employment or service and with the use of any Company resources (“Company Works”), Participant shall promptly and fully disclose same to the Company and hereby irrevocably assigns, transfers and conveys, to the maximum extent permitted by applicable law, all rights and intellectual property rights therein (including rights under patent, industrial property, copyright, trademark, trade secret, unfair competition and related laws) to the Company to the extent ownership of any such rights does not vest originally in the Company.
(iii)Participant shall take all reasonably requested actions and execute all reasonably requested documents (including any licenses or assignments required by a government contract) at the Company’s expense (but without further remuneration) to assist the Company in validating, maintaining, protecting, enforcing, perfecting, recording, patenting or registering any of the Company’s rights in the Prior Works and Company Works. If the Company is unable for any other reason, after reasonable attempt, to secure Participant’s signature on any document for this purpose, then Participant hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as Participant’s agent and attorney in fact, to act for and in Participant’s behalf and stead to execute any documents and to do all other lawfully permitted acts required in connection with the foregoing.
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(iv)Participant shall not improperly use for the benefit of, bring to any premises of, divulge, disclose, communicate, reveal, transfer or provide access to, or share with the Company any confidential, proprietary or non-public information or intellectual property relating to a former employer or other third party without the prior written permission of such third party. Participant shall comply with all relevant policies and guidelines of the Company that are from time to time previously disclosed to Participant, including regarding the protection of Confidential Information and intellectual property and potential conflicts of interest. Participant acknowledges that the Company may amend any such policies and guidelines from time to time, and that Participant remains at all times bound by their most current version from time to time previously disclosed to Participant.
(d)Protected Rights. Notwithstanding any other provision of this Agreement, (i) nothing in this Agreement or any other agreement prohibits the Participant from reporting possible violations of law or regulation to any governmental agency or entity, including, but not limited to, the Department of Justice, the Securities and Exchange Commission, the Congress and any agency Inspector General (the “Government Agencies”), or communicating with Government Agencies or otherwise participating in any investigation or proceeding that may be conducted by Government Agencies, including providing documents or other information, (ii) the Participant does not need the prior authorization of the Company to take any action described in (i) , and the Participant is not required to notify the Company that he or she has taken any action described in (i) ; and (iii) this Agreement does not limit the Participant’s right to receive an award for providing information relating to a possible securities law violation to the Securities and Exchange Commission. Further, notwithstanding the foregoing, the Participant will not be held criminally or civilly liable under any federal, state or local trade secret law for the disclosure of a trade secret that (i) is made (A) in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney, and (B) solely for the purpose of reporting or investigating a suspected violation of law; or (ii) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. Additionally, an individual suing an employer for retaliation based on the reporting of a suspected violation of law may disclose a trade secret to his or her attorney and use the trade secret information in the court proceeding, so long as any document containing the trade secret is filed under seal and the individual does not disclose the trade secret except pursuant to court order.
The provisions of Section 2 hereof shall survive the termination of Participant’s employment or service for any reason (except as otherwise set forth in Section 2(A)(iii) hereof).
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HILTON GRAND VACATIONS INC.
2017 OMNIBUS INCENTIVE PLAN
PERFORMANCE- AND SERVICE-BASED
RESTRICTED STOCK UNIT AGREEMENT
TERMS AND CONDITIONS FOR NON-U.S. PARTICIPANTS
Capitalized terms used but not otherwise defined herein shall have the meaning given to such terms in the Plan and the Performance- and Service-Based Restricted Stock Unit Agreement.
1.Responsibility for Taxes. This provision supplements Section 4(d) of the Performance- and Service-Based Restricted Stock Unit Agreement:
(a)The Participant acknowledges that, regardless of any action taken by the Company or, if different, the Service Recipient, the ultimate liability for all income tax, excise tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax-related items related to the Participant’s participation in the Plan and legally applicable to the Participant (“Tax-Related items”) is and remains the Participant’s responsibility and may exceed the amount actually withheld by the Company or the Service Recipient. The Participant further acknowledges that the Company and/or the Service Recipient (1) make no representations or undertakings regarding the treatment of any tax-`s in connection with any aspect of the RSUs, including, but not limited to, the grant, vesting or settlement of the RSUs, the subsequent sale of Shares acquired pursuant to such settlement and the receipt of any dividends and/or any dividend equivalents; and (2) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the RSUs to reduce or eliminate the Participant’s liability for tax-Related items or achieve any particular tax result. Further, if the Participant is subject to tax-Related items in more than one jurisdiction, the Participant acknowledges that the Company and/or the Service Recipient (or former service recipient, as applicable) may be required to withhold or account for tax-Related items in more than one jurisdiction.
(b)If the obligation for tax-Related items is satisfied by withholding in Shares, for tax purposes, the Participant is deemed to have been issued the full number of Shares subject to the vested RSUs, notwithstanding that a number of the Shares are held back solely for the purpose of satisfying the Withholding Taxes.
(c)Finally, the Participant agrees to pay to the Company or the Service Recipient, any amount of the Withholding Taxes that cannot be satisfied by the means previously described. The Company may refuse to issue or deliver the Shares or the proceeds of the sale of Shares, if the Participant fails to comply with the Participant’s obligations in connection with the Withholding Taxes.
(d) Notwithstanding anything to the contrary in the Plan or in Section 4(d) of the Performance- and Service-Based Restricted Stock Unit Agreement, if the Company is required by applicable law to use a particular definition of fair market value for purposes of calculating the taxable income for the Participant, the Company shall have the discretion to calculate the Shares to be withheld to cover any Withholding Taxes by using either the price used to calculate the taxable income under applicable law or by using the closing price per Share on the New York Stock Exchange (or other principal exchange on which the Shares then trade) on the trading day immediately prior to the date of delivery of the Shares.
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2.Nature of Grant. This provision supplements Section 19 of the Performance- and Service-Based Restricted Stock Unit Agreement:
In accepting the grant of the RSUs, the Participant acknowledges, understands and agrees that:
(a)the RSU grant and the Participant’s participation in the Plan shall not create a right to employment or be interpreted as forming an employment or services contract with the Company or any member of the Company Group;
(b)the RSUs and the Shares subject to the RSUs, and the income from and value of same, are not intended to replace any pension rights or compensation;
(c)unless otherwise agreed with the Company, the RSUs and the Shares subject to the RSUs, and the income from and value of same, are not granted as consideration for, or in connection with, the service the Participant may provide as a director of any member of the Company Group;
(d)for purposes of the RSUs, the Termination Date shall be the date the Participant is no longer actively providing services to the Company or any member of the Company Group (regardless of the reason for such termination and whether or not later to be found invalid or in breach of employment laws in the jurisdiction where the Participant is employed or the terms of the Participant’s employment agreement, if any), and unless otherwise expressly provided in this Agreement or determined by the Company, the Participant’s right to vest in the RSUs under the Plan, if any, shall terminate as of such date and shall not be extended by any notice period (e.g., the Participant’s period of service would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment laws in the jurisdiction where the Participant is employed or the terms of the Participant’s employment agreement, if any); the Committee shall have the exclusive discretion to determine when the Participant is no longer actively providing services for purposes of the RSUs grant (including whether the Participant may still be considered to be providing services while on a leave of absence);
(e)unless otherwise provided in the Plan or by the Company in its discretion, the RSUs and the benefits evidenced by this Agreement do not create any entitlement to have the RSUs or any such benefits transferred to, or assumed by, another company nor be exchanged, cashed out or substituted for, in connection with any corporate transaction affecting the Company’s Common Stock; and
(f)neither the Company nor any member of the Company Group shall be liable for any foreign exchange rate fluctuation between the Participant’s local currency and the United States Dollar that may affect the value of the RSUs or of any amounts due to the Participant pursuant to the settlement of the RSUs or the subsequent sale of any Shares acquired upon settlement.
3.Insider Trading Restrictions/Market Abuse Laws. The Participant acknowledges that the Participant may be subject to insider trading restrictions and/or market abuse laws in applicable jurisdictions, which may affect his or her ability to, directly or indirectly, acquire, sell, or attempt to sell Shares or rights to Shares (e.g., RSUs) under the Plan during such times as the Participant is considered to have “inside information” regarding the Company (as defined by the laws in the applicable jurisdictions or Participant’s country). Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Company insider trading policy. The Participant is responsible for ensuring compliance with any applicable restrictions and is advised to consult his or her personal legal advisor on this matter.
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4.Foreign Asset/Account Reporting; Exchange Controls. The Participant’s country may have certain foreign asset and/or account reporting requirements and/or exchange controls that may affect the Participant’s ability to acquire or hold Shares under the Plan or cash received from participating in the Plan (including from any dividends received or sale proceeds arising from the sale of Shares) in a brokerage or bank account outside the Participant’s country. The Participant may be required to report such accounts, assets or transactions to the tax or other authorities in his or her country. The Participant also may be required to repatriate sale proceeds or other cash received as a result of the Participant’s participation in the Plan to his or her country through a designated bank or broker and/or within a certain time after receipt. The Participant acknowledges that it is his or her responsibility to be compliant with such regulations, and the Participant is advised to consult his or her personal legal advisor for any details.
5.Termination of Employment. This provision supplements Section 5(c) of the Performance- and Service-Based Restricted Stock Unit Agreement:
Notwithstanding anything in this Section 5(c), if the Company receives a legal opinion that there has been a legal judgment and/or legal development in the Participant’s jurisdiction that likely would result in the favorable treatment that applies to the RSUs when the Participant terminates employment as a result of the Participant’s Retirement being deemed unlawful and/or discriminatory, the provisions of this Section 5(c) regarding the treatment of the RSUs when the Participant terminates employment as a result of the Participant’s Retirement shall not be applicable to the Participant and the remaining provisions of this Section 5 shall govern.
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HILTON GRAND VACATIONS INC.
2017 OMNIBUS INCENTIVE PLAN\
PERFORMANCE- AND SERVICE-BASED
RESTRICTED STOCK UNIT AGREEMENT
COUNTRY-SPECIFIC TERMS AND CONDITIONS
Capitalized terms used but not otherwise defined herein shall have the meaning given to such terms in the Plan, the Performance- and Service-Based Restricted Stock Unit Agreement and the Terms and Conditions for non-U.S. Participants.
Terms and Conditions
This Appendix C includes additional terms and conditions that govern the RSUs if the Participant resides and/or works in one of the countries listed below. If the Participant is a citizen or resident of a country (or is considered as such for local law purposes) other than the one in which the Participant is currently residing and/or working or if the Participant moves to another country after receiving the grant of the RSUs, the Company shall, in its discretion, determine the extent to which the terms and conditions herein shall be applicable to the Participant.
Notifications
This Appendix C also includes information regarding exchange controls and certain other issues of which the Participant should be aware with respect to the Participant’s participation in the Plan. The information is based on the securities, exchange control and other laws in effect in the respective countries as of January 2017. Such laws are often complex and change frequently. As a result, the Company strongly recommends that the Participant not rely on the information in this Appendix C as the only source of information relating to the consequences of the Participant’s participation in the Plan because the information may be out of date at the time that the RSUs vest or the Participant sells Shares acquired under the Plan.
In addition, the information contained herein is general in nature and may not apply to the Participant’s particular situation and the Company is not in a position to assure the Participant of a particular result. Accordingly, the Participant is advised to seek appropriate professional advice as to how the relevant laws in the Participant’s country may apply to the Participant’s situation.
If the Participant is a citizen or resident of a country other than the one in which the Participant is currently residing and/or working (or if the Participant is considered as such for local law purposes) or if the Participant moves to another country after receiving the grant of the RSUs, the information contained herein may not be applicable to the Participant in the same manner.
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2018 PSU - WANG
Notifications
Foreign Asset/Account Reporting Information. If the Participant holds assets (including cash and Shares acquired under the Plan, and possibly RSUs) outside of Japan with a value exceeding ¥50,000,000 (as of December31 each year), the Participant is required to comply with annual tax reporting obligations with respect to such assets. The Participant is responsible for complying with this reporting obligation, if applicable, and should consult with Participant’s personal tax advisor to ensure that the Participant is properly complying with applicable reporting requirements.
UNITED KINGDOM
Terms and Conditions
Responsibility for Taxes. This provision supplements Section 1 of the Terms and Conditions for non-U.S. Participants:
Without limitation to Section 1 of the Terms and Conditions for non-U.S. Participants, the Participant hereby covenants to pay all Tax-Related items, as and when requested by the Company, the Service Recipient or by Her Majesty’s Revenue and Customs (“HMRC”) (or any other tax authority or other relevant authority). The Participant also agrees to indemnify and keep indemnified the Company and the Service Recipient against any tax-Related items that they are required to pay or withhold on the Participant’s behalf, have paid or will pay to HMRC (or any other tax authority or other relevant authority).
25
Exhibit 10.4
2019 PSU
SECOND AMENDED AND RESTATED
PERFORMANCE- AND SERVICE-BASED
RESTRICTED STOCK UNIT AGREEMENT
HILTON GRAND VACATIONS INC.
2017 OMNIBUS INCENTIVE PLAN
AWARD NOTICE
The Participant has been granted Performance- and Service-Based Restricted Stock Units (or “RSUs”) with the terms set forth in this Award Notice and subject to the terms and conditions of the Plan and the Amended and Restated Performance- and Service-Based Restricted Stock Unit Agreement, including its appendices, to which this Award Notice is attached. Capitalized terms used and not defined in this Award Notice shall have the meanings set forth in the Second Amended and Restated Performance- and Service-Based Restricted Stock Unit Agreement and the Plan.
1.General.
Participant:
Date of Grant:
Performance Period: January 1, 2019 to December 31, 2021
Target Number of Restricted Stock Units Granted: RSUs
2.Performance Conditions.
Performance Conditions (the “Performance Conditions”). The extent to which the Performance Conditions are satisfied and the number of RSUs which become vested, if any, shall be calculated with respect to each Performance Component identified below. All determinations made with respect to Adjusted EBITDA and Contract Sales shall be made by the Committee in its sole discretion and the applicable Performance Conditions shall not be achieved and the RSUs shall not vest unless and to the extent that the Committee certifies that such Performance Conditions have been met.
|
|
• |
Adjusted EBITDA. The total number of RSUs which become vested based on the achievement of Adjusted EBITDA performance levels shall be equal to (x) the target number of RSUs multiplied by (y) a relative weighting component equal to seventy percent (70%), multiplied by (z) the Achievement Percentage determined based upon the applicable Adjusted EBITDA Position for the Performance Period as follows, and rounded down to the nearest whole Share: |
|
Level of Achievement |
|
Adjusted EBITDA Position |
|
Percentage of
|
|
Below Threshold |
|
Less than$[●]M |
|
0% |
|
Threshold |
|
$[●]M |
|
50% |
|
Target |
|
$[●]M |
|
100% |
|
Maximum |
|
$[●]M |
|
200% |
1
2019 PSU
|
Level of Achievement |
|
Adjusted EBITDA Position |
|
Percentage of
|
|
Below Threshold |
|
Less than$[●]M |
|
0% |
|
Threshold |
|
$[●]M |
|
50% |
|
Target |
|
$[●]M |
|
100% |
|
Maximum |
|
$[●]M |
|
200% |
|
|
• |
Continued Employment or Service. In addition to the attainment of the Performance Conditions, the Participant must be an employee of or in service to the Company or the Company Group from the Date of Grant until the last day of the Performance Period, except to the extent otherwise provided in the Plan or the Agreement. |
|
|
• |
Committee Discretion to Adjust Performance Goals and/or Calculations. In the event of an acquisition or disposition of any business, line of business or assets by the Company (and in the case of an acquisition, only such acquisition transaction in which the Company is the acquiror and/or the surviving entity, and does not otherwise constitute a Change in Control), the Committee shall in good faith and in such manner as it may deem equitable adjust the performance goals and/or the calculation of Adjusted EBITDA and Contract Sales to reflect the projected effect of such transaction(s) or event(s). |
3.Definitions.
For purposes of this Award Notice:
(a)“Achievement Percentage” means the “Percentage of Award Earned” specified with respect to the below threshold, threshold, target, and/or maximum levels for each Performance Component, as applicable, or a percentage determined using linear interpolation if actual performance falls between threshold and target, or between target and maximum levels (and rounded to the nearest whole percentage point and, if equally between two percentage points, rounded up). In the event that actual performance does not meet the threshold level for any Performance Component, the “Achievement Percentage” with respect to such Performance Component shall be zero.
(b)“Adjusted EBITDA” means the Company’s earnings before interest expense, taxes and depreciation and amortization, (i) adjusted to exclude gains, losses and expenses in connection with (A) asset dispositions, (B) foreign currency transactions, (C) debt restructurings/retirements, (D) non-cash impairment losses, (E) reorganization costs, including severance and relocation costs, (F) share-based and certain other compensation expenses, (G) costs related to the spin-off, and (H) other items, and (ii) further adjusted for net construction related recognition and deferral activity.
(c)“Contract Sales” means the total dollar amount of vacation ownership interest products under purchase agreements signed during the period where the Company has received a down payment of at least ten percent (10%) of the contract price, net of upgrades, before first-day incentives.
(d)“Performance Components” means the performance criteria applicable to an Award, as set forth on the Award Notice.
2
2019 PSU
SECOND AMENDED AND RESTATED
PERFORMANCE- AND SERVICE-BASED
RESTRICTED STOCK UNIT AGREEMENT
HILTON GRAND VACATIONS INC.
2017 OMNIBUS INCENTIVE PLAN
This Second Amended and Restated Performance- and Service-Based Restricted Stock Unit Agreement (the “Second Amended and Restated Agreement”), entered into the [ ] day of [ ], 2020 and effective as of the Date of Grant (as defined below), is between Hilton Grand Vacations Inc., a Delaware corporation (the “Company”), and the Participant (as defined below).
WHEREAS, the Company has adopted the Hilton Grand Vacations Inc. 2017 Omnibus Incentive Plan (as it may be amended, the “Plan”) to provide a means through which the Company and the other members of the Company Group may attract and retain key personnel and to provide a means whereby officers, employees, consultants and advisors of the Company and the other members of the Company Group can acquire and maintain an equity interest in the Company or receive an incentive award;
WHEREAS, the Participant is an employee or consultant of the Company or another member of the Company Group, and pursuant to the Plan, the Committee has granted performance- and service-based RSUs to the Participant pursuant to the Performance- and Service-Based Restricted Stock Unit Agreement entered into between the Company and the Participant on March 5, 2019 (the “Original Agreement”); and
WHEREAS, none of the RSUs subject to the Amended and Restated Agreement, are vested as of the date of this Second Amended and Restated Agreement, and the Company and the Participant have agreed to certain additional modifications and to enter into this Second Amended and Restated Agreement that reflects the cumulative amendments made to the Amended and Restated Agreement to date (including such additional modifications), with all other terms of the Amended and Restated Agreement remaining the same.
NOW, THEREFORE, the parties hereto agree as follows:
1.Definitions. Capitalized terms not otherwise defined herein shall have the same meanings as in the Plan. In addition to other terms defined herein or in the Award Notice, the following terms shall have the following meanings for purposes of this Agreement:
(a)“Agreement” shall mean this Second Amended and Restated Performance- and Service-Based Restricted Stock Unit Agreement including (unless the context otherwise requires) the Award Notice, Appendix A, and the appendices for non-U.S. Participants attached hereto as Appendix B and Appendix C.
(b)“Award Notice” shall mean the notice to the Participant.
(c)“Date of Grant” shall mean the “Date of Grant” listed in the Award Notice.
(d)“Participant” shall mean the “Participant” listed in the Award Notice.
(e)“Performance Conditions” shall mean the performance conditions set forth in the Award Notice.
(f)“Performance Period” shall mean the performance period set forth in the Award Notice.
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2019 PSU
(g)“Restrictive Covenant Violation” shall mean the Participant’s breach of the Restrictive Covenants listed on Appendix A or any covenant regarding confidentiality, competitive activity, solicitation of the Company’s vendors, suppliers, customers, or employees, or any similar provision applicable to or agreed to by the Participant.
(h)“Retirement” shall mean the Participant’s termination of employment with the Company Group, other than (i) for Cause or while grounds for Cause exist, (ii) due to the Participant’s death or (iii) due to or during the Participant’s Disability, in each case, following the date on which both (X) the Participant attained the age of 55 years old and (Y) the number of completed years of the Participant’s employment with any member(s) of the Company Group (including any predecessor of a member thereof, including, for the avoidance of doubt, employment by Hilton Worldwide and its affiliates prior to January 3, 2017) is at least ten (10).
(i)“RSUs” shall mean that total number of performance- and service-based restricted stock units listed in the Award Notice as “Target Number of Restricted Stock Units Granted” (or such greater or lesser number of RSUs as may be vested and earned herein, as determined in the Committee’s discretion), as such number of performance- and service-based restricted stock units may be adjusted in accordance with Section 10 below.
(j)“Shares” shall mean a number of shares of the Company’s Common Stock equal to the number of RSUs (or such greater or lesser number of shares as may be vested and earned herein, as determined in the Committee’s discretion).
2.Grant of Units. On _____________, the Company granted the RSUs to the Participant, each of which represents the right to receive one Share upon vesting of such RSUs, subject to and in accordance with the terms, conditions and restrictions set forth in the Plan, the Award Notice, and this Agreement.
3.RSU Account. The Company shall cause an account (the “Unit Account”) to be established and maintained on the books of the Company to record the number of RSUs credited to the Participant under the terms of this Agreement. The Participant’s interest in the Unit Account shall be that of a general, unsecured creditor of the Company.
4.Vesting; Settlement; Tax Withholding.
(a)As promptly as practicable (and, in no event more than 70 days) following the last day of the Performance Period, the Committee shall determine if and the extent to which the Performance Conditions have been satisfied (the date of such determination, the “Determination Date”), and any RSUs with respect to which the Performance Conditions have been satisfied shall become vested effective as of the last day of the Performance Period, subject to Section 5(d); provided that, unless otherwise provided in Section 5, the Participant also meets the continued employment or service condition set forth in the Award Notice. Any RSU which does not become vested effective as of the last day of the Performance Period shall be cancelled and forfeited to the Company without consideration or any further action by the Participant or the Company. In the event of an equity restructuring, the Committee shall adjust any Performance Condition to the extent it is affected by such restructuring in order to preserve (without enlarging) the likelihood that such Performance Condition shall be satisfied. The manner of such adjustment shall be determined by the Committee in its sole discretion. For this purpose, “equity restructuring” shall mean an “equity restructuring” as defined in Financial Accounting Standards Board Accounting Standards Codification 718-10 (formerly Statement of Financial Accounting Standards 123R).
(b)The Company shall deliver to the Participant one share of Common Stock for each vested RSU (as adjusted under the Plan), pursuant to Section 4(c) below, and each such vested RSU shall be cancelled upon delivery.
4
2019 PSU
(c)Shares, free and clear of all restrictions, shall be issued to the Participant (or his or her beneficiary) only in the event, and to the extent, that the RSUs have vested and been earned as provided in the Award Notice and in the Agreement. Upon vesting of the RSUs, Shares shall be issued to the Participant (or his or her beneficiary) within 70 days following the applicable vesting date set forth in Section 4(a) herein. Notwithstanding the foregoing, the following provisions shall apply: (i) any Shares earned and vested due to termination of employment or service as provided in Section 5(b) or Section 5(e) shall be paid within 70 days following the Participant’s Termination Date; (ii) any Shares earned and vested following Retirement as provided in Section 5(c) shall be paid within 70 days following the applicable vesting date set forth in Section 4(a) and Section 5(c) herein; and (iii) any Shares earned and vested as a result of a Change in Control as provided in Section 5(h) shall be paid within 70 days following the date of the Change in Control. If the 70-day period described herein begins in one calendar year and ends in another, the Participant (or his or her beneficiary) shall not have the right to designate the calendar year of the payment (except as otherwise provided below with respect to a delay in payments if the Participant is a “specified employee”). Further, if calculation of the amount of the payment is not administratively practicable due to events beyond the control of the Participant (or his or her beneficiary), the payment will be treated as made within the applicable 70-day time period specified herein if the payment is made during the first taxable year of the Participant in which the calculation of the amount of the payment is administratively practicable or otherwise in accordance with Code Section 409A. Notwithstanding the foregoing, if the Participant is or may be a “specified employee” (as defined under Code Section 409A), and the distribution is considered deferred compensation under Code Section 409A, then such distribution if made due to separation from service shall be subject to delay as provided in Section 14(u) of the Plan (or any successor provision thereto).
(d)The Participant shall be required to pay to the Company or, if different, the Service Recipient, an amount in cash (by check or wire transfer) equal to the aggregate amount of any income, employment and/or other applicable taxes (the “Withholding Taxes”) that are statutorily required to be withheld in respect of the RSUs. Alternatively, the Company may elect, in its sole discretion, to satisfy this requirement by withholding such amount from any cash compensation or other cash amounts owing to the Participant. Without limiting the foregoing, the Committee may (but is not obligated to), in its sole discretion, permit or require the Participant to satisfy, all or any portion of the minimum Withholding Taxes that are statutorily required to be withheld with respect to the RSUs by (i) the delivery of shares of Common Stock (which are not subject to any pledge or other security interest) that have been both held by the Participant and vested for any period of time as established from time to time by the Committee in order to avoid adverse accounting treatment under GAAP having an aggregate Fair Market Value equal to such minimum statutorily required Withholding Taxes (or portion thereof); or (ii) having the Company withhold from the Shares otherwise issuable or deliverable to, or that would otherwise be retained by, the Participant upon the vesting of the RSUs, a number of Shares with an aggregate Fair Market Value equal to an amount not in excess of such minimum statutorily required Withholding Taxes (or portion thereof). Notwithstanding the foregoing, the Committee, subject to its having considered the applicable accounting impact of any such determination, has full discretion to allow the Participant to satisfy, in whole or in part, any additional Withholding Taxes payable by him or her with respect to the RSUs by electing to have the Company withhold from the Shares issuable to the Participant upon the vesting of the RSUs, a number of Shares having an aggregate Fair Market Value that is greater than the applicable minimum required statutory Withholding Taxes (but such withholding may in no event be in excess of the maximum statutory withholding amount(s) in the Participant’s relevant tax jurisdiction). Further, for non-U.S. Participants, the Company may withhold from the Shares issuable to such non-U.S. Participant upon the vesting of the RSUs, a number of Shares having an aggregate Fair Market Value up to the maximum statutory withholding amount(s) in the non-U.S. Participant’s relevant tax jurisdiction.
5
2019 PSU
(e)The Company shall pay any costs incurred in connection with issuing the Shares. Upon the issuance of the Shares (to the extent earned) to the Participant, the Participant’s Unit Account shall be eliminated. Notwithstanding anything in this Agreement to the contrary, the Company shall have no obligation to issue or transfer the Shares as contemplated by this Agreement unless and until such issuance or transfer shall comply with all relevant provisions of law and the requirements of any stock exchange on which the Company’s shares are listed for trading.
5.Termination of Employment or Service.
(a)Subject to the provisions of this Section 5, if the Participant’s employment with or service to the Company Group terminates for any reason, the unvested RSUs shall terminate as of the effective date of termination (the “Termination Date”), and all of the Participant’s rights hereunder with respect to such unvested RSUs shall cease as of the Termination Date (unless otherwise provided for by the Committee in accordance with the Plan).
(b)If the Participant’s employment or service is terminated by the Service Recipient during the Performance Period due to or during the Participant’s Disability or due to the Participant’s death, a pro-rated number of the target number of RSUs granted hereunder shall become vested and nonforfeitable (irrespective of performance) based on the number of days in the Performance Period prior to the Termination Date relative to the number of the days in the full Performance Period. Any RSUs that vest as provided herein shall be settled in accordance with Section 4.
(c)In the event the Participant’s employment with or service to the Company Group is terminated as a result of the Participant’s Retirement, the RSUs granted hereunder shall remain outstanding and eligible to vest, notwithstanding such termination of employment or service, based on (and to the extent) the Committee’s determination that the Performance Conditions have been satisfied on the Determination Date, in accordance with the schedule set forth in the Award Notice, so long as no Restrictive Covenant Violation occurs (as determined by the Committee, or its designee, in its sole discretion) prior to the Determination Date. Any RSUs that vest as provided herein shall be settled in accordance with Section 4. As a pre-condition to the Participant’s right to continued vesting following Retirement, the Committee, or its designee, may require the Participant to certify in writing prior to the applicable vesting date that no Restrictive Covenant Violation has occurred. Notwithstanding the foregoing, if the Date of Grant of the RSUs is not at least six months prior to the date of the Participant’s Retirement, any unvested RSUs shall terminate as of the Termination Date.
(d)If the Participant’s employment with or service to the Company Group terminates for any reason after the last day of the Performance Period and before the Determination Date (other than a termination by the Company for Cause, or by the Participant while grounds for Cause exist or without Good Reason), and no Restrictive Covenant Violation occurs before the Determination Date, then all RSUs shall remain outstanding and eligible to vest based on (and to the extent) the Committee’s determination that the Performance Conditions have been satisfied on the Determination Date.
(e)Notwithstanding anything herein to the contrary, the RSUs granted hereunder shall become immediately fully vested as of the Termination Date and settled in accordance with Section 4 if the Participant’s employment with or service to the Company Group shall be terminated by the Company other than for Cause, or by the Participant for Good Reason, in either case if such termination of the Participant’s employment occurs within 12 months following a Change in Control (for the avoidance of doubt, a Change in Control alone shall not, also, result in any vesting hereunder), with the actual number of RSUs determined based on (i) actual performance through the Termination Date, as determined by the Committee, or (ii) if the Committee determines that measurement of actual performance cannot be reasonably assessed, the assumed achievement of target performance as determined by the Committee.
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2019 PSU
(f)For purposes of this Section 5, “Good Reason” means the occurrence of any of the following, without the Participant’s written consent:
(i)a material diminution in the Participant’s base salary;
(ii) a material diminution in the Participant’s authority, duties, responsibilities or position; or
(iii)a permanent reassignment by the Company or the Service Recipient of the Participant’s primary office to a location that is more than 100 miles from the Participant’s assigned primary office;
provided, however, that a termination by the Participant for any of the reasons listed in (i) through (iii) above shall not constitute a termination for Good Reason unless the Participant shall first have delivered to the Company written notice setting forth with specificity the occurrence deemed to give rise to a right to terminate for Good Reason (which notice must be given no later than 60 days after the initial occurrence of such event), and the Company fails to cure such event within 30 days after receipt of this written notice. The Participant’s employment must be terminated for Good Reason within 120 days after the occurrence of an event of Good Reason.
(g)The Participant’s rights with respect to the RSUs shall not be affected by any change in the nature of the Participant’s employment or service so long as the Participant continues to be an employee or consultant, respectively, of the Company Group. Whether (and the circumstances under which) employment or service has terminated and the determination of the Termination Date for the purposes of this Agreement shall be determined by the Committee (or, with respect to any Participant who is not a director or “officer” as defined under Rule 16a-1(f) of the Exchange Act, such action may also be taken by its designee, in each case whose good faith determination shall be final, binding and conclusive; provided, that such designee may not make any such determination with respect to the designee’s own employment for purposes of the RSUs).
(h)Without limiting the effect of Section 5(e) herein, and subject to Section 12 of the Plan, in the event of a Change in Control during the Participant’s employment with or service to the Company Group or while any RSUs remain outstanding and eligible to vest, and prior to the completion of the Performance Period, the successor or surviving company in the Change in Control may assume or substitute for the RSUs (or in which the Company is the ultimate parent corporation and continues the RSUs), with the actual number of RSUs determined based on (i) actual performance through the date of such Change in Control, as determined by the Committee, or (ii) if the Committee determines that measurement of actual performance cannot be reasonably assessed, the assumed achievement of target performance as determined by the Committee, and such assumed or substituted RSUs shall remain outstanding and eligible to vest based on continued service through the last day of the Performance Period, except to the extent otherwise provided in the Plan or the Agreement. Notwithstanding the foregoing, in the event the successor or surviving company in the Change in Control does not assume or substitute for the RSUs (or in which the Company is the ultimate parent corporation and does not continue the RSUs) on substantially similar terms or with substantially equivalent economic benefits (as determined by the Committee) as RSUs outstanding under the Plan immediately prior to the Change in Control, then the target number of RSUs granted hereunder shall become immediately fully vested as of the date of such Change in Control and settled in accordance with Section 4.
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2019 PSU
6.Dividend Equivalents. A Participant holding unvested RSUs shall be entitled to be credited with dividend equivalent payments (upon the payment by the Company of dividends on Shares), which shall accrue in cash without interest (unless otherwise elected by the Committee) and shall be delivered in cash (unless the Committee in its sole discretion, elects to settle such amount in shares of Common Stock, other securities, other Awards or other property having a Fair Market Value as of the settlement date equal to the amount of such dividends). Accrued dividend equivalents shall not be paid unless and until the underlying RSUs (or portion thereof) have vested. Any such dividend equivalents in respect of unvested RSUs shall be paid within fifteen (15) days after the RSUs are vested and become payable or distributable unless the Committee determines otherwise.
7.Restrictions on Transfer. The Participant may not assign, alienate, pledge, attach, sell or otherwise transfer or encumber the RSUs or the Participant’s right under the RSUs to receive Shares (unless such transfer is specifically required pursuant to a domestic relations order or by applicable law), other than by will or by the laws of descent and distribution, and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against any member of the Company Group; provided that the designation of a beneficiary shall not constitute an assignment, alienation, pledge, attachment, sale, transfer or encumbrance.
8.No Right to Continued Employment or Service. Neither the Plan, the Agreement nor any action taken thereunder or hereunder shall be construed as giving the Participant any right to be retained in the employ or service of the Service Recipient or any other member of the Company Group. The Service Recipient or any other member of the Company Group may at any time dismiss the Participant from employment or discontinue any consulting relationship, free from any liability or claim under the Plan or this Agreement, unless otherwise expressly provided in the Plan or this Agreement.
9.No Rights as a Stockholder. Except as otherwise provided in the Plan or this Agreement, the Participant shall not be entitled to the privileges of ownership in respect of the Shares until the Shares have been issued or delivered to the Participant.
10.Adjustments Upon Change in Capitalization. The terms of this Agreement, including the RSUs, the Participant’s Unit Account, any dividend equivalent payments accrued pursuant to Section 6 and/or the Shares, shall be subject to adjustment in accordance with Section 12 of the Plan. This paragraph shall also apply with respect to any extraordinary dividend or other extraordinary distribution in respect of the Company’s Common Stock (whether in the form of cash or other property) to the extent provided in the Plan.
11.Award Subject to Plan. By entering into this Agreement, the Participant agrees and acknowledges that the Participant has received and read a copy of the Plan. The RSUs granted hereunder are subject to the Plan. The terms and provisions of the Plan, as it may be amended from time to time, are hereby incorporated herein by reference. Unless the Committee determines otherwise, in the event of a conflict between any term or provision contained herein and a term or provision of the Plan, the applicable terms and provisions of the Plan shall govern and prevail.
12.Severability. If any provision of the Plan or this Agreement is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction or as to the Participant or the RSUs, or would disqualify the Plan or the RSUs under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to the applicable laws, or if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Agreement, such provision shall be construed or deemed stricken as to such jurisdiction, the Participant or the RSUs and the remainder of the Plan and this Agreement shall remain in full force and effect.
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2019 PSU
13.Governing Law; Waiver of Jury Trial; Venue. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware applicable to contracts made and performed wholly within the State of Delaware, without giving effect to the conflict of laws provisions thereof. The Participant hereby irrevocably waives all right to a trial by jury in any suit, action or other proceeding instituted by or against such Participant in respect of the Participant’s rights or obligations hereunder. Any suit, action or proceeding with respect to this Agreement (or any provision incorporated by reference), or any judgment entered by any court in respect of any thereof, shall be brought in any court of competent jurisdiction in the State of Florida, and each of the Participant, the Company, and any transferees who hold RSUs pursuant to a valid assignment, hereby submit to the exclusive jurisdiction of such courts for the purpose of any such suit, action, proceeding, or judgment. Each of the Participant, the Company, and any transferees who hold RSUs pursuant to a valid assignment hereby irrevocably waive (a) any objections which he or she may now or hereafter have to the laying of the venue of any suit, action, or proceeding arising out of or relating to this Agreement brought in any court of competent jurisdiction in the State of Florida and (b) any claim that any such suit, action, or proceeding brought in any such court has been brought in any inconvenient forum.
14.Language. If the Participant has received a copy of this Agreement (or the Plan or any other document related hereto or thereto) translated into a language other than English, such translated copy is qualified in its entirety by reference to the English version thereof, and in the event of any conflict the English version shall govern. The Participant acknowledges that the Participant is sufficiently proficient in English to understand the terms and conditions of the Plan and this Agreement.
15.Successors in Interest. Any successor to the Company shall have the benefits of the Company under, and be entitled to enforce, this Agreement. Likewise, the Participant’s legal representative shall have the benefits of the Participant under, and be entitled to enforce, this Agreement. All obligations imposed upon the Participant and all rights granted to the Company under this Agreement shall be final, binding and conclusive upon the Participant’s heirs, executors, administrators and successors.
16.Data Privacy Consent.
The Participant hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of the Participant’s personal data as described in this Agreement and any other RSU grant materials by and among, as applicable, the Service Recipient, the Company and other members of the Company Group for the purpose of implementing, administering and managing the Plan.
Participant understands that the Company and the Service Recipient may hold certain personal information about the Participant, including, but not limited to, the Participant’s name, home address, email address and telephone number, date of birth, passport, social insurance number or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company, details of all stock options, restricted stock units or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in the Participant’s favor (“Data”), for the purpose of implementing, administering and managing the Plan.
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2019 PSU
The Participant understands that Data will be transferred to any third parties as may be selected by the Company (presently or in the future), which assist the Company with the implementation, administration and management of the Plan. The Participant understands that the recipients of the Data may be located in the United States or elsewhere, and that the recipients’ country (e.g., the United States) may have different data privacy laws and protections than the Participant’s country. The Participant understands that if the Participant resides outside the United States the Participant may request a list with the names and addresses of any potential recipients of the Data by contacting the Participant’s local human resources representative. The Participant authorizes the Company and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purpose of implementing, administering and managing the Plan. The Participant understands that Data will be held only as long as is necessary to implement, administer and manage the Plan. The Participant understands that if the Participant resides outside the United States, the Participant may, at any time, view Data, request information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing the Participant’s local human resources representative. Further, the Participant understands that the Participant is providing the consents herein on a purely voluntary basis. If the Participant does not consent, or if the Participant later seeks to revoke the Participant’s consent, the Participant’s employment status or service with the Service Recipient will not be affected; the only consequence of refusing or withdrawing the Participant’s consent is that the Company may not be able to grant options or other equity awards to the Participant or administer or maintain such awards. Therefore, the Participant understands that refusing or withdrawing the Participant’s consent may affect the Participant’s ability to participate in the Plan. For more information on the consequences of the Participant’s refusal to consent or withdrawal of consent, the Participant understands that the Participant may contact the Participant’s local human resources representative.
17.Restrictive Covenants. The Participant acknowledges and recognizes the highly competitive nature of the businesses of the Company and its Affiliates, that the Participant shall be allowed access to confidential and proprietary information (including but not limited to trade secrets) about those businesses, as well as access to the prospective and actual customers, suppliers, investors, clients and partners involved in those businesses, and the goodwill associated with the Company and its Affiliates. Participant accordingly agrees to the provisions of Appendix A to this Agreement (the “Restrictive Covenants”). For the avoidance of doubt, the Restrictive Covenants contained in this Agreement are in addition to, and not in lieu of, any other restrictive covenants or similar covenants or agreements between the Participant and the Company or any of its Affiliates.
18.Repayment of Proceeds; Clawback Policy; Compliance with Ownership and Other Policies and Agreements.
(a)If a Restrictive Covenant Violation occurs or the Company discovers after a termination of employment or service that grounds existed for Cause at the time thereof, then the Participant shall be required, unless the Committee determines otherwise, in addition to any other remedy available (on a non-exclusive basis), to pay to the Company, within ten (10) business days of the Company’s request to the Participant therefor, an amount equal the aggregate after-tax proceeds (taking into account all amounts of tax that would be recoverable upon a claim of loss for payment of such proceeds in the year of repayment) the Participant received upon the sale or other disposition of, or distributions in respect of, the RSUs and any Shares or cash issued in respect thereof. Any reference in this Agreement to grounds existing for a termination of employment or service with Cause shall be determined without regard to any notice period, cure period or other procedural delay or event required prior to finding of or termination with Cause.
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2019 PSU
(b)The RSUs shall be subject to reduction, cancellation, forfeiture or recoupment to the extent necessary to comply with (i) any clawback, forfeiture or other similar policy adopted by the Board or the Committee and as in effect from time to time and (ii) applicable law. Further, to the extent that the Participant receives any amount in excess of the amount that the Participant should otherwise have received under the terms of this Agreement for any reason (including, without limitation, by reason of a financial restatement, mistake in calculations or other administrative error), the Participant shall be required to repay any such excess amount to the Company.
(c)Without limiting the terms of the Plan, and as a condition to receiving the RSUs or any benefit hereunder, the Participant agrees that he or she shall abide by all provisions of any equity retention policy, stock ownership guidelines and/or other policies adopted by the Company or an Affiliate, each as in effect from time to time and to the extent applicable to the Participant.
19.Limitation on Rights; No Right to Future Grants; Extraordinary Item of Compensation. By accepting this Agreement and the grant of the RSUs contemplated hereunder, the Participant expressly acknowledges that (a) the Plan is discretionary in nature and may be suspended or terminated by the Company at any time; (b) the grant of RSUs is a one-time benefit that does not create any contractual or other right to receive future grants of RSUs or other Awards under the Plan, or benefits in lieu of RSUs; (c) all determinations with respect to future grants of RSUs, if any, including the grant date, the number of Shares granted and the applicable vesting terms, shall be at the sole discretion of the Committee and/or the Company; (d) the Participant’s participation in the Plan is voluntary; (e) the value of the RSUs is an extraordinary item of compensation that is outside the scope of the Participant’s employment or consulting contract, if any, and nothing can or must automatically be inferred from such employment or consulting contract or its consequences; (f) grants of RSUs are not part of normal or expected compensation for any purpose and are not to be used for calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments, the Participant waives any claim on such basis, and for the avoidance of doubt, the RSUs shall not constitute an “acquired right” under the applicable law of any jurisdiction; and (g) the future value of the underlying Shares is unknown and cannot be predicted with certainty. In addition, the Participant hereby waives any claim to continued vesting of the RSUs or to damages or severance entitlement related to non-continuation of the RSUs beyond the period provided under the Plan or this Agreement, except to the extent of any provision to the contrary in any written employment contract or other agreement between the Service Recipient and/or any member of the Company Group and the Participant, whether any such agreement is executed before, on or after the Date of Grant.
20.Amendment of Agreement. The Committee may, to the extent consistent with the terms of the Plan and this Agreement, waive any conditions or rights under, amend any terms of, or alter, suspend, discontinue, cancel or terminate, any RSUs granted hereunder or this Agreement, prospectively or retroactively (including after the Participant’s Termination); provided, that, other than as provided in the Plan, any such waiver, amendment, alteration, suspension, discontinuance, cancellation or termination that would materially and adversely affect the rights of any Participant with respect to the RSUs granted hereunder shall not to that extent be effective without the consent of the Participant; provided, further, that in no event shall any such amendment alter the Minimum Vesting Condition.
21.Award Administrator. The Company may from time to time designate a third party (an “Award Administrator”) to assist the Company in the implementation, administration and management of the Plan and any RSUs granted thereunder, including, but not limited to, by sending award notices on behalf of the Company to Participants, and by facilitating through electronic means acceptance of agreements by Participants.
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2019 PSU
(a)Notwithstanding any provision of the Plan or this Agreement to the contrary, it is intended that the provisions of this Agreement comply with, or be exempt from, Section 409A of the Code, and all provisions of this Agreement shall be construed and interpreted in a manner consistent with the requirements for avoiding taxes or penalties under Section 409A of the Code. The Participant is solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on or in respect of the Participant in connection with this Agreement (including any taxes and penalties under Section 409A of the Code), and neither the Service Recipient nor any other member of the Company Group shall have any obligation to indemnify or otherwise hold the Participant (or any beneficiary) harmless from any or all such taxes or penalties. If the RSUs are considered “deferred compensation” subject to Section 409A of the Code, references in this Agreement to “termination of employment” (and substantially similar phrases) shall mean “separation from service” within the meaning of Section 409A of the Code. For purposes of Section 409A of the Code, each of the payments that may be made in respect of the RSUs shall be deemed as separate payments.
(b)Notwithstanding anything in the Plan or this Agreement to the contrary, if a Participant is a “specified employee” within the meaning of Section 409A of the Code, no payments in respect of any RSU that is “deferred compensation” subject to Section 409A of the Code and which would otherwise be payable upon the Participant’s “separation from service” (as defined in Section 409A of the Code) shall be made to such Participant prior to the date that is six (6) months after the date of the Participant’s “separation from service” or, if earlier, the date of the Participant’s death. Following any applicable six (6) month delay, all such delayed payments shall be paid in a single lump sum on the earliest date permitted under Section 409A of the Code that is also a business day.
(c)Unless otherwise provided by the Committee in this Agreement or otherwise, in the event that the timing of payments in respect of the RSUs (that would otherwise be considered “deferred compensation” subject to Section 409A of the Code) would be accelerated upon the occurrence of (i) a Change in Control, no such acceleration shall be permitted (to the extent required under Section 409A) unless the event giving rise to the Change in Control satisfies the definition of a change in the ownership or effective control of a corporation, or a change in the ownership of a substantial portion of the assets of a corporation pursuant to Section 409A of the Code or (ii) a Disability, no such acceleration shall be permitted unless the Disability also satisfies the definition of “Disability” pursuant to Section 409A of the Code if and to the extent required under Section 409A of the Code.
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2019 PSU
23.Restriction on Restricted Stock Unit Award and Shares. The obligation of the Company to settle the RSUs in Shares or other consideration shall be subject to all applicable laws, rules and regulations, and to such approvals by governmental agencies as may be required. Notwithstanding any terms or conditions of this Agreement to the contrary, the Company shall be under no obligation to offer to sell, and shall be prohibited from offering to sell or selling, any Shares underlying the RSUs unless such shares have been properly registered for sale pursuant to the Securities Act with the Securities and Exchange Commission or unless the Company has received an opinion of counsel (if the Company has requested such an opinion), satisfactory to the Company, that such shares may be offered or sold without such registration pursuant to an available exemption therefrom and the terms and conditions of such exemption have been fully complied with. The Company shall be under no obligation to register for sale under the Securities Act any of the Shares. The Committee shall have the authority to provide that all Shares shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan, this Agreement, the Federal securities laws or the rules, regulations and other requirements of the Securities and Exchange Commission, any securities exchange or inter-dealer quotation system on which the securities of the Company are listed or quoted and any other applicable Federal, state, local or non-U.S. laws, rules, regulations and other requirements, and, without limiting the generality of the Plan, the Committee may cause a legend or legends to be put on certificates representing the Shares. Notwithstanding any provision in the Plan to the contrary, the Committee reserves the right to add any additional terms or provisions to the Performance- and Service-Based Restricted Stock Unit Agreement that the Committee, in its sole discretion, deems necessary or advisable in order that this Agreement complies with the legal requirements of any governmental entity to whose jurisdiction this Agreement is subject. The Committee may cancel the RSUs or any portion thereof if it determines, in its sole discretion, that legal or contractual restrictions and/or blockage and/or other market considerations would make the Company’s acquisition of shares of Common Stock from the public markets, the Company’s issuance of the Shares to the Participant, the Participant’s acquisition of the Shares from the Company and/or the Participant’s sale of Common Stock to the public markets, illegal, impracticable or inadvisable. If the Committee determines to cancel all or any portion of the RSUs in accordance with the foregoing, the Company shall, subject to any limitations or reductions as may be necessary to comply with Section 409A of the Code, provide the Participant with a cash payment or equity subject to deferred vesting and delivery consistent with the vesting restrictions applicable to the RSUs.
24.Book Entry Delivery of Shares. Whenever reference in this Agreement is made to the issuance or delivery of certificates representing one or more Shares, the Company may elect to issue or deliver such Shares in book entry form in lieu of certificates.
25.Electronic Delivery and Acceptance. The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.
26.Acceptance and Agreement by the Participant. By accepting the RSUs (including through electronic means), the Participant agrees to be bound by the terms, conditions and restrictions set forth in the Plan, this Agreement and the Company’s policies, as in effect from time to time, relating to the Plan.
27.No Advice Regarding Grant. The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Participant’s participation in the Plan, or the Participant’s acquisition or sale of the underlying Shares. The Participant is hereby advised to consult with his or her own personal tax, legal and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan.
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2019 PSU
28.Appendices For Non-U.S. Participants. Notwithstanding any provisions in this Agreement, Participants residing and/or working outside the United States shall be subject to the Terms and Conditions for Non-U.S. Participants attached hereto as Appendix B and to any Country-Specific Terms and Conditions for the Participant’s country attached hereto as Appendix C. If the Participant relocates from the United States to another country, the Terms and Conditions for Non-U.S. Participants and the applicable Country-Specific Terms and Conditions shall apply to the Participant, to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. Moreover, if the Participant relocates between any of the countries included in the Country-Specific Terms and Conditions, the special terms and conditions for such country shall apply to the Participant, to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. The Terms and Conditions for Non-U.S. Participants and the Country-Specific Terms and Conditions constitute part of this Agreement.
29.Imposition of Other Requirements. The Company reserves the right to impose other requirements on the Participant’s participation in the Plan, on the RSUs and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require the Participant to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.
30.Right of Offset. Subject to any considerations under Section 409A of the Code, the Company shall have the right to offset against its obligation to deliver Shares under this Agreement any outstanding amounts (including, without limitation, travel and entertainment or advance account balances, loans, repayment obligations under any Awards or amounts repayable to the Company pursuant to tax equalization, housing, automobile or other employee programs) that the Participant then owes to any member of the Company Group and any amounts the Committee otherwise deems appropriate pursuant to any tax equalization policy or agreement. Notwithstanding the foregoing, if the RSUs are “deferred compensation” subject to Section 409A of the Code, the Committee shall have no right to offset against its obligation to deliver Shares under this Agreement if such offset could subject the Participant to the additional tax imposed under Section 409A of the Code in respect of the RSUs.
31.Waiver. The Participant acknowledges that a waiver by the Company of breach of any provision of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by the Participant or any other participant in the Plan.
32.Rules of Construction. Headings are given to the section of this Agreement solely as a convenience to facilitate reference. The reference to any statute, regulation or other provision of law shall (unless the Administrator determines otherwise) be construed to refer to any amendment to or successor of such provision of law.
33.Counterparts. This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one in the same agreement.
[Signatures follow]
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2019 PSU
IN WITNESS WHEREOF, the parties have caused this Agreement to be effective as of the Date of Grant.
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HILTON GRAND VACATIONS INC. |
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By: |
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[NAME] |
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[TITLE] |
Acknowledged and Agreed:
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Participant Signature
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2019 PSU
Restrictive Covenants
1.Non-Competition; Non-Solicitation.
(a)Participant acknowledges and recognizes the highly competitive nature of the businesses of the Company and its Affiliates and accordingly agrees as follows:
(i)During Participant’s employment with or service to the Company or its Affiliates (the “Employment Term”) and for a period that ends on the later of (A) one year following the date Participant ceases to be employed by or in service to the Company or any of its Affiliates or (B) the last date any portion of the Award granted under this Agreement is eligible to vest if Participant ceases to be employed by the Company or any of its Affiliates as a result of the Participant’s Retirement (the “Restricted Period”), Participant shall not, whether on Participant’s own behalf or on behalf of or in conjunction with any person, firm, partnership, joint venture, association, corporation or other business organization, entity or enterprise whatsoever (“Person”), directly or indirectly solicit or assist in soliciting in competition with the Restricted Group in the Business, the business of any then current or prospective client or customer with whom Participant (or his direct reports) had personal contact or dealings on behalf of the Company or any of its Affiliates during the one-year period preceding Participant’s termination of employment or service.
(ii)During the Restricted Period, Participant shall not directly or indirectly:
(A)engage in the Business providing services in the nature of the services Participant provided to the Company at any time in the one year prior to the termination of Participant’s employment or service, for a Competitor;
(B)enter the employ of, or render any services to, a Competitor, except where such employment or services do not relate in any manner to the Business;
(C)acquire a financial interest in, or otherwise become actively involved with, a Competitor, directly or indirectly, as an individual, partner, shareholder, officer, director, principal, agent, trustee or consultant; or
(D)intentionally and adversely interfere with, or attempt to adversely interfere with, business relationships between the members of the Restricted Group and any of their clients, customers, suppliers, partners, members or investors.
(iii)Notwithstanding anything to the contrary in this Appendix A, Participant may, directly or indirectly own, solely as an investment, securities of any Person engaged in a Business (including, without limitation, a Competitor) which are publicly traded on a national or regional stock exchange or on the over-the-counter market if Participant (A) is not a controlling person of, or a member of a group which controls, such person and (B) does not, directly or indirectly, own 2% or more of any class of securities of such Person.
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2019 PSU
(iv)During the Restricted Period, Participant shall not, whether on Participant’s own behalf or on behalf of or in conjunction with any Person, directly or indirectly:
(A)solicit or encourage any executive-level employee of the Restricted Group, with whom Participant has had material business contact during the Employment Term or, if no longer an employee or consultant, in the one year prior to the termination of Participant’s employment with or service to any member of the Company Group, to leave the employment of the Restricted Group to become affiliated in any respect with a Competitor or otherwise be engaged in the Business; or
(B)hire any such executive-level employee to become affiliated in any respect with a Competitor or otherwise be engaged in the Business and with whom Participant had material business contact in the one year prior to the termination of Participant’s employment with or service to the Company, who (x) was employed by the Restricted Group as of the date of Participant’s termination of employment with or service to the Company or any of its Affiliates or (y) left the employment of the Restricted Group within one year after the termination of Participant’s employment with or service to the Company or any of its Affiliates.
(v)For purposes of this Agreement:
(A)“Restricted Group” shall mean the Company Group and, to the extent engaged in the Business, its Affiliates, provided, however, that for the purposes of this definition, an “Affiliate” shall not include any portfolio company of The Blackstone Group L.P. or its Affiliates (other than the Company Group).
(B)“Business” shall mean the business of owning, financing, developing, redeveloping, managing, marketing, operating, licensing, leasing or franchising vacation, timeshare or lodging properties, and natural ancillary business products and services related to such business, including, without limitation, membership services, exchange programs, rental programs, and provision of amenities.
(C)“Competitor” shall mean any person engaged in the Business, including but not limited to any vacation, timeshare or lodging companies that are comparable in size to the Company, including, without limitation, Marriott Vacations Worldwide, Wyndham Vacation Ownership, Interval Leisure Group, Disney Vacation Club, Hyatt Vacation Ownership, Holiday Inn Club Vacations, Bluegreen Vacations, Diamond Resorts International and Westgate Resorts.
(b)It is expressly understood and agreed that although Participant and the Company consider the restrictions contained in this Section 1 to be reasonable, if a judicial determination is made by a court of competent jurisdiction that the time or territory or any other restriction contained in this Appendix A is an unenforceable restriction against Participant, the provisions of this Appendix A shall not be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such maximum extent as such court may judicially determine or indicate to be enforceable. Alternatively, if any court of competent jurisdiction finds that any restriction contained in this Appendix A is unenforceable, and such restriction cannot be amended so as to make it enforceable, such finding shall not affect the enforceability of any of the other restrictions contained herein. Notwithstanding the foregoing, if Participant’s principal place of employment or service on the date hereof is located in Virginia, then this Section 1(b) of this Appendix A shall not apply following Participant’s termination of employment or service to the extent any such provision is prohibited by applicable Virginia law.
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2019 PSU
(c)The period of time during which the provisions of this Section 1 shall be in effect shall be extended by the length of time during which Participant is in breach of the terms hereof as determined by any court of competent jurisdiction on the Company’s application for injunctive relief.
(d)Notwithstanding the foregoing, if Participant’s principal place of employment or service on the date hereof is located in California or any other jurisdiction where any provision of this Section 1 is prohibited by applicable law, then the provisions of this Section 1 shall not apply following Participant’s termination of employment or service to the extent any such provision is prohibited by applicable law.
2.Confidentiality; Non-Disparagement; Intellectual Property; Protected Rights.
(a)Confidentiality.
(i)Participant shall not at any time (whether during or after Participant’s employment with or service to the Company) (x) retain or use for the benefit, purposes or account of Participant or any other Person; or (y) disclose, divulge, reveal, communicate, share, transfer or provide access to any Person outside the Company or any of its Affiliates (other than its professional advisers who are bound by confidentiality obligations or otherwise in performance of Participant’s duties under Participant’s employment or service and pursuant to customary industry practice), any non-public, proprietary or confidential information (including, without limitation, trade secrets, know-how, research and development, software, databases, inventions, processes, formulae, technology, designs and other intellectual property, information concerning finances, investments, profits, pricing, costs, products, services, vendors, customers, clients, partners, investors, personnel, compensation, recruiting, training, advertising, sales, marketing, promotions, government and regulatory activities and approvals) concerning the past, current or future business, activities and operations of the Company, its Subsidiaries or Affiliates and/or any third party that has disclosed or provided any of same to the Company on a confidential basis (“Confidential Information”) without the prior written authorization of the Board.
(ii)“Confidential Information” shall not include any information that is (a) generally known to the industry or the public other than as a result of Participant’s breach of this covenant; (b) made legitimately available to Participant by a third party without breach of any confidentiality obligation of which Participant has knowledge; or (c) required by law to be disclosed; provided that, unless otherwise provided under applicable law, with respect to subsection (c), Participant shall give prompt written notice to the Company of such requirement, disclose no more information than is so required, and reasonably cooperate with any attempts by the Company to obtain a protective order or similar treatment.
(iii)Except as required by law, Participant shall not disclose to anyone, other than Participant’s family (it being understood that, in this Agreement, the term “family” refers to Participant’s spouse, minor children, parents and spouse’s parents) and advisors, the existence or contents of this Agreement; provided that Participant may disclose to any prospective future employer the provisions of this Appendix A. This Section 2(a)(iii) shall terminate if the Company publicly discloses a copy of this Agreement (or, if the Company publicly discloses summaries or excerpts of this Agreement, to the extent so disclosed).
(iv)Upon termination of Participant’s employment with or service to the Company or any of its Affiliates for any reason, Participant shall (x) cease and not thereafter commence use of any Confidential Information or intellectual property (including without limitation, any patent, invention, copyright, trade secret, trademark, trade name, logo, domain name or other source indicator) owned or used by the Company, its Subsidiaries or Affiliates; and (y) immediately destroy, delete, or return to the Company, at the Company’s option, all originals and copies in any form or medium (including memoranda, books, papers, plans, computer files, letters and other data) in Participant’s possession or control (including any of the foregoing stored or located in Participant’s office, home, laptop or other computer, whether or not Company property) that contain Confidential Information, except that Participant may retain only those portions of any personal notes, notebooks and diaries that do not contain any Confidential Information.
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2019 PSU
(v)Participant acknowledges and agrees that the Company and its Affiliates will prosecute any non-confidential disclosure or misappropriation of the Company’s and/or its Affiliates’ trade secrets to the full extent allowed by federal, state and common law. Participant further acknowledges and agrees that Participant has received and understands the following notice concerning immunity from liability for confidential disclosure of a trade secret to the government or in a court filing: Pursuant to the Defend Trade Secrets Act, 18 U.S.C. § 1833, an individual shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is made (A) in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney, and solely for the purpose of reporting or investigating a suspected violation of law, or (B) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.
(b)Non-Disparagement. During Participant’s Employment Term and at all times thereafter (including following the termination of Participant’s Employment Term for any reason), Participant shall not to intentionally make any statement that criticizes, ridicules, disparages or is otherwise derogatory of the Company, any of its Affiliates, or any of their respective officers, directors, stockholders, employees or other service providers, or any product or service offered by the Company or any of its Affiliates; provided, however, that nothing contained in this Section 2(b) shall preclude Participant from providing truthful testimony in any legal proceeding, or making any truthful statement (i) to any governmental agency; (ii) as required or permitted by applicable law or regulation; (iii) as required by court order or other legal process; or (iv) after the Restricted Period, for any legitimate business reason.
(c)Intellectual Property.
(i)If Participant has created, invented, designed, developed, contributed to or improved any works of authorship, inventions, intellectual property, materials, documents or other work product (including without limitation, research, reports, software, databases, systems, applications, presentations, textual works, content, or audiovisual materials) (“Works”), either alone or with third parties, prior to Participant’s employment or engagement by the Company or any of its Affiliates, that are relevant to or implicated by such employment (“Prior Works”), Participant hereby grants the Company a perpetual, non-exclusive, royalty-free, worldwide, assignable, sublicensable license under all rights and intellectual property rights (including rights under patent, industrial property, copyright, trademark, trade secret, unfair competition and related laws) therein for all purposes in connection with the Company’s current and future business.
(ii)If Participant creates, invents, designs, develops, contributes to or improves any Works, either alone or with third parties, at any time during Participant’s employment by or service to the Company and within the scope of such employment or service and with the use of any Company resources (“Company Works”), Participant shall promptly and fully disclose same to the Company and hereby irrevocably assigns, transfers and conveys, to the maximum extent permitted by applicable law, all rights and intellectual property rights therein (including rights under patent, industrial property, copyright, trademark, trade secret, unfair competition and related laws) to the Company to the extent ownership of any such rights does not vest originally in the Company.
(iii)Participant shall take all reasonably requested actions and execute all reasonably requested documents (including any licenses or assignments required by a government contract) at the Company’s expense (but without further remuneration) to assist the Company in validating, maintaining, protecting, enforcing, perfecting, recording, patenting or registering any of the Company’s rights in the Prior Works and Company Works. If the Company is unable for any other reason, after reasonable attempt, to secure Participant’s signature on any document for this purpose, then Participant hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as Participant’s agent and attorney in fact, to act for and in Participant’s behalf and stead to execute any documents and to do all other lawfully permitted acts required in connection with the foregoing.
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2019 PSU
(iv)Participant shall not improperly use for the benefit of, bring to any premises of, divulge, disclose, communicate, reveal, transfer or provide access to, or share with the Company any confidential, proprietary or non-public information or intellectual property relating to a former employer or other third party without the prior written permission of such third party. Participant shall comply with all relevant policies and guidelines of the Company that are from time to time previously disclosed to Participant, including regarding the protection of Confidential Information and intellectual property and potential conflicts of interest. Participant acknowledges that the Company may amend any such policies and guidelines from time to time, and that Participant remains at all times bound by their most current version from time to time previously disclosed to Participant.
(d)Protected Rights. Notwithstanding any other provision of this Agreement, (i) nothing in this Agreement or any other agreement prohibits the Participant from reporting possible violations of law or regulation to any governmental agency or entity, including, but not limited to, the Department of Justice, the Securities and Exchange Commission, the Congress and any agency Inspector General (the “Government Agencies”), or communicating with Government Agencies or otherwise participating in any investigation or proceeding that may be conducted by Government Agencies, including providing documents or other information, (ii) the Participant does not need the prior authorization of the Company to take any action described in (i), and the Participant is not required to notify the Company that he or she has taken any action described in (i); and (iii) this Agreement does not limit the Participant’s right to receive an award for providing information relating to a possible securities law violation to the Securities and Exchange Commission. Further, notwithstanding the foregoing, the Participant will not be held criminally or civilly liable under any federal, state or local trade secret law for the disclosure of a trade secret that (i) is made (A) in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney, and (B) solely for the purpose of reporting or investigating a suspected violation of law; or (ii) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. Additionally, an individual suing an employer for retaliation based on the reporting of a suspected violation of law may disclose a trade secret to his or her attorney and use the trade secret information in the court proceeding, so long as any document containing the trade secret is filed under seal and the individual does not disclose the trade secret except pursuant to court order.
The provisions of Section 2 hereof shall survive the termination of Participant’s employment or service for any reason (except as otherwise set forth in Section 2(a)(iii) hereof).
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2019 PSU
HILTON GRAND VACATIONS INC.
2017 OMNIBUS INCENTIVE PLAN
PERFORMANCE- AND SERVICE-BASED
RESTRICTED STOCK UNIT AGREEMENT
TERMS AND CONDITIONS FOR NON-U.S. PARTICIPANTS
Capitalized terms used but not otherwise defined herein shall have the meaning given to such terms in the Plan and the Performance- and Service-Based Restricted Stock Unit Agreement.
1.Responsibility for Taxes. This provision supplements Section 4(d) of the Performance- and Service-Based Restricted Stock Unit Agreement:
(a)The Participant acknowledges that, regardless of any action taken by the Company or, if different, the Service Recipient, the ultimate liability for all income tax, excise tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax-related items related to the Participant’s participation in the Plan and legally applicable to the Participant (“Tax-Related Items”) is and remains the Participant’s responsibility and may exceed the amount actually withheld by the Company or the Service Recipient. The Participant further acknowledges that the Company and/or the Service Recipient (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the RSUs, including, but not limited to, the grant, vesting or settlement of the RSUs, the subsequent sale of Shares acquired pursuant to such settlement and the receipt of any dividends and/or any dividend equivalents; and (2) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the RSUs to reduce or eliminate the Participant’s liability for Tax-Related Items or achieve any particular tax result. Further, if the Participant is subject to Tax-Related Items in more than one jurisdiction, the Participant acknowledges that the Company and/or the Service Recipient (or former service recipient, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.
(b)If the obligation for Tax-Related Items is satisfied by withholding in Shares, for tax purposes, the Participant is deemed to have been issued the full number of Shares subject to the vested RSUs, notwithstanding that a number of the Shares are held back solely for the purpose of satisfying the Withholding Taxes.
(c)Finally, the Participant agrees to pay to the Company or the Service Recipient, any amount of the Withholding Taxes that cannot be satisfied by the means previously described. The Company may refuse to issue or deliver the Shares or the proceeds of the sale of Shares, if the Participant fails to comply with the Participant’s obligations in connection with the Withholding Taxes.
(d)Notwithstanding anything to the contrary in the Plan or in Section 4(d) of the Performance- and Service-Based Restricted Stock Unit Agreement, if the Company is required by applicable law to use a particular definition of fair market value for purposes of calculating the taxable income for the Participant, the Company shall have the discretion to calculate the Shares to be withheld to cover any Withholding Taxes by using either the price used to calculate the taxable income under applicable law or by using the closing price per Share on the New York Stock Exchange (or other principal exchange on which the Shares then trade) on the trading day immediately prior to the date of delivery of the Shares.
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2019 PSU
2.Nature of Grant. This provision supplements Section 19 of the Performance- and Service-Based Restricted Stock Unit Agreement:
In accepting the grant of the RSUs, the Participant acknowledges, understands and agrees that:
(a)the RSU grant and the Participant’s participation in the Plan shall not create a right to employment or be interpreted as forming an employment or services contract with the Company or any member of the Company Group;
(b)the RSUs and the Shares subject to the RSUs, and the income from and value of same, are not intended to replace any pension rights or compensation;
(c)unless otherwise agreed with the Company, the RSUs and the Shares subject to the RSUs, and the income from and value of same, are not granted as consideration for, or in connection with, the service the Participant may provide as a director of any member of the Company Group;
(d)for purposes of the RSUs, the Termination Date shall be the date the Participant is no longer actively providing services to the Company or any member of the Company Group (regardless of the reason for such termination and whether or not later to be found invalid or in breach of employment laws in the jurisdiction where the Participant is employed or the terms of the Participant’s employment agreement, if any), and unless otherwise expressly provided in this Agreement or determined by the Company, the Participant’s right to vest in the RSUs under the Plan, if any, shall terminate as of such date and shall not be extended by any notice period (e.g., the Participant’s period of service would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment laws in the jurisdiction where the Participant is employed or the terms of the Participant’s employment agreement, if any); the Committee shall have the exclusive discretion to determine when the Participant is no longer actively providing services for purposes of the RSUs grant (including whether the Participant may still be considered to be providing services while on a leave of absence);
(e)unless otherwise provided in the Plan or by the Company in its discretion, the RSUs and the benefits evidenced by this Agreement do not create any entitlement to have the RSUs or any such benefits transferred to, or assumed by, another company nor be exchanged, cashed out or substituted for, in connection with any corporate transaction affecting the Company’s Common Stock; and
(f)neither the Company nor any member of the Company Group shall be liable for any foreign exchange rate fluctuation between the Participant’s local currency and the United States Dollar that may affect the value of the RSUs or of any amounts due to the Participant pursuant to the settlement of the RSUs or the subsequent sale of any Shares acquired upon settlement.
3.Insider Trading Restrictions/Market Abuse Laws. The Participant acknowledges that the Participant may be subject to insider trading restrictions and/or market abuse laws in applicable jurisdictions, which may affect his or her ability to, directly or indirectly, acquire, sell, or attempt to sell Shares or rights to Shares (e.g., RSUs) under the Plan during such times as the Participant is considered to have “inside information” regarding the Company (as defined by the laws in the applicable jurisdictions or Participant’s country). Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Company insider trading policy. The Participant is responsible for ensuring compliance with any applicable restrictions and is advised to consult his or her personal legal advisor on this matter.
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2019 PSU
4.Foreign Asset/Account Reporting; Exchange Controls. The Participant’s country may have certain foreign asset and/or account reporting requirements and/or exchange controls that may affect the Participant’s ability to acquire or hold Shares under the Plan or cash received from participating in the Plan (including from any dividends received or sale proceeds arising from the sale of Shares) in a brokerage or bank account outside the Participant’s country. The Participant may be required to report such accounts, assets or transactions to the tax or other authorities in his or her country. The Participant also may be required to repatriate sale proceeds or other cash received as a result of the Participant’s participation in the Plan to his or her country through a designated bank or broker and/or within a certain time after receipt. The Participant acknowledges that it is his or her responsibility to be compliant with such regulations, and the Participant is advised to consult his or her personal legal advisor for any details.
5.Termination of Employment. This provision supplements Section 5(c) of the Performance- and Service-Based Restricted Stock Unit Agreement:
Notwithstanding anything in this Section 5(c), if the Company receives a legal opinion that there has been a legal judgment and/or legal development in the Participant’s jurisdiction that likely would result in the favorable treatment that applies to the RSUs when the Participant terminates employment as a result of the Participant’s Retirement being deemed unlawful and/or discriminatory, the provisions of this Section 5(c) regarding the treatment of the RSUs when the Participant terminates employment as a result of the Participant’s Retirement shall not be applicable to the Participant and the remaining provisions of this Section 5 shall govern.
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2019 PSU
HILTON GRAND VACATIONS INC.
2017 OMNIBUS INCENTIVE PLAN
PERFORMANCE- AND SERVICE-BASED
RESTRICTED STOCK UNIT AGREEMENT
COUNTRY-SPECIFIC TERMS AND CONDITIONS
Capitalized terms used but not otherwise defined herein shall have the meaning given to such terms in the Plan, the Performance- and Service-Based Restricted Stock Unit Agreement and the Terms and Conditions for Non-U.S. Participants.
Terms and Conditions
This Appendix C includes additional terms and conditions that govern the RSUs if the Participant resides and/or works in one of the countries listed below. If the Participant is a citizen or resident of a country (or is considered as such for local law purposes) other than the one in which the Participant is currently residing and/or working or if the Participant moves to another country after receiving the grant of the RSUs, the Company shall, in its discretion, determine the extent to which the terms and conditions herein shall be applicable to the Participant.
Notifications
This Appendix C also includes information regarding exchange controls and certain other issues of which the Participant should be aware with respect to the Participant’s participation in the Plan. The information is based on the securities, exchange control and other laws in effect in the respective countries as of January 2017. Such laws are often complex and change frequently. As a result, the Company strongly recommends that the Participant not rely on the information in this Appendix C as the only source of information relating to the consequences of the Participant’s participation in the Plan because the information may be out of date at the time that the RSUs vest or the Participant sells Shares acquired under the Plan.
In addition, the information contained herein is general in nature and may not apply to the Participant’s particular situation and the Company is not in a position to assure the Participant of a particular result. Accordingly, the Participant is advised to seek appropriate professional advice as to how the relevant laws in the Participant’s country may apply to the Participant’s situation.
If the Participant is a citizen or resident of a country other than the one in which the Participant is currently residing and/or working (or if the Participant is considered as such for local law purposes) or if the Participant moves to another country after receiving the grant of the RSUs, the information contained herein may not be applicable to the Participant in the same manner.
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2019 PSU
Notifications
Foreign Asset/Account Reporting Information. If the Participant holds assets (including cash and Shares acquired under the Plan, and possibly RSUs) outside of Japan with a value exceeding ¥50,000,000 (as of December 31 each year), the Participant is required to comply with annual tax reporting obligations with respect to such assets. The Participant is responsible for complying with this reporting obligation, if applicable, and should consult with Participant’s personal tax advisor to ensure that the Participant is properly complying with applicable reporting requirements.
UNITED KINGDOM
Terms and Conditions
Responsibility for Taxes. This provision supplements Section 1 of the Terms and Conditions for Non-U.S. Participants:
Without limitation to Section 1 of the Terms and Conditions for Non-U.S. Participants, the Participant hereby covenants to pay all Tax-Related Items, as and when requested by the Company, the Service Recipient or by Her Majesty’s Revenue and Customs (“HMRC”) (or any other tax authority or other relevant authority). The Participant also agrees to indemnify and keep indemnified the Company and the Service Recipient against any Tax-Related Items that they are required to pay or withhold on the Participant’s behalf, have paid or will pay to HMRC (or any other tax authority or other relevant authority).
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Exhibit 10.5
2019 PSU - WANG
SECOND AMENDED AND RESTATED
PERFORMANCE- AND SERVICE-BASED
RESTRICTED STOCK UNIT AGREEMENT
HILTON GRAND VACATIONS INC.
2017 OMNIBUS INCENTIVE PLAN
AWARD NOTICE
The Participant has been granted Performance- and Service-Based Restricted Stock Units (or “RSUs”) with the terms set forth in this Award Notice and subject to the terms and conditions of the Plan and the Second Amended and Restated Performance- and Service-Based Restricted Stock Unit Agreement, including its appendices, to which this Award Notice is attached. Capitalized terms used and not defined in this Award Notice shall have the meanings set forth in the Second Amended and Restated Performance- and Service-Based Restricted Stock Unit Agreement and the Plan.
1.General.
Participant: Mark D. Wang
Date of Grant:
Performance Period: January 1, 2019 to December 31, 2021
Target Number of Restricted Stock Units Granted: RSUs
2.Performance Conditions.
Performance Conditions (the “Performance Conditions”): The extent to which the Performance Conditions are satisfied and the number of RSUs which become vested, if any, shall be calculated with respect to each Performance Component identified below. All determinations made with respect to Adjusted EBITDA and Contract Sales shall be made by the Committee in its sole discretion and the applicable Performance Conditions shall not be achieved and the RSUs shall not vest unless and to the extent that the Committee certifies that such Performance Conditions have been met.
|
|
• |
Adjusted EBITDA. The total number of RSUs which become vested based on the achievement of Adjusted EBITDA performance levels shall be equal to (x) the target number of RSUs multiplied by (y) a relative weighting component equal to seventy percent (70%), multiplied by (z) the Achievement Percentage determined based upon the applicable Adjusted EBITDA Position for the Performance Period as follows, and rounded down to the nearest whole Share: |
|
Level of Achievement |
|
Adjusted EBITDA Position |
Percentage of
|
|
|
Below Threshold |
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Less than$[●]M |
|
0% |
|
Threshold |
|
$[●]M |
|
50% |
|
Target |
|
$[●]M |
|
100% |
|
Maximum |
|
$[●]M |
|
200% |
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2019 PSU - WANG
|
|
• |
Continued Employment or Service. In addition to the attainment of the Performance Conditions, the Participant must be an employee of or in service to the Company or the Company Group from the Date of Grant until the last day of the Performance Period, except to the extent otherwise provided in the Plan or the Agreement. |
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|
• |
Committee Discretion to Adjust Performance Goals and/or Calculations. In the event of an acquisition or disposition of any business, line of business or assets by the Company (and in the case of an acquisition, only such acquisition transaction in which the Company is the acquiror and/or the surviving entity, and does not otherwise constitute a Change in Control), the Committee shall in good faith and in such manner as it may deem equitable adjust the performance goals and/or the calculation of Adjusted EBITDA and Contract Sales to reflect the projected effect of such transaction(s) or event(s). |
3.Definitions.
For purposes of this Award Notice:
(a)“Achievement Percentage” means the “Percentage of Award Earned” specified with respect to the below threshold, threshold, target, and/or maximum levels for each Performance Component, as applicable, or a percentage determined using linear interpolation if actual performance falls between threshold and target, or between target and maximum levels (and rounded to the nearest whole percentage point and, if equally between two percentage points, rounded up). In the event that actual performance does not meet the threshold level for any Performance Component, the “Achievement Percentage” with respect to such Performance Component shall be zero.
(b)“Adjusted EBITDA” means the Company’s earnings before interest expense, taxes and depreciation and amortization, (i) adjusted to exclude gains, losses and expenses in connection with (A) asset dispositions, (B) foreign currency transactions, (C) debt restructurings/retirements, (D) non-cash impairment losses, (E) reorganization costs, including severance and relocation costs, (F) share-based and certain other compensation expenses, (G) costs related to the spin-off, and (H) other items, and (ii) further adjusted for net construction related recognition and deferral activity.
(c) “Contract Sales” means the total dollar amount of vacation ownership interest products under purchase agreements signed during the period where the Company has received a down payment of at least ten percent (10%) of the contract price, net of upgrades, before first-day incentives.
(d)“Performance Components” means the performance criteria applicable to an Award, as set forth on the Award Notice.
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2019 PSU - WANG
SECOND AMENDED AND RESTATED
PERFORMANCE- AND SERVICE-BASED
RESTRICTED STOCK UNIT AGREEMENT
HILTON GRAND VACATIONS INC.
2017 OMNIBUS INCENTIVE PLAN
This Second Amended and Restated Performance- and Service-Based Restricted Stock Unit Agreement (the “Second Amended and Restated Agreement”), entered into the [ ] day of [ ], 2020 and effective as of the Date of Grant (as defined below), is between Hilton Grand Vacations Inc., a Delaware corporation (the “Company”), and the Participant (as defined below).
WHEREAS, the Company has adopted the Hilton Grand Vacations Inc. 2017 Omnibus Incentive Plan (as it may be amended, the “Plan”) to provide a means through which the Company and the other members of the Company Group may attract and retain key personnel and to provide a means whereby officers, employees, consultants and advisors of the Company and the other members of the Company Group can acquire and maintain an equity interest in the Company or receive an incentive award;
WHEREAS, the Participant is an employee or consultant of the Company or another member of the Company Group, and pursuant to the Plan, the Committee has granted performance- and service-based RSUs to the Participant pursuant to the Performance- and Service-Based Restricted Stock Unit Agreement entered into between the Company and the Participant on March 5, 2019 (the “Amended and Restated Agreement”); and
WHEREAS, none of the RSUs subject to the Amended and Restated Agreement, are vested as of the date of this Second Amended and Restated Agreement, and the Company and the Participant have agreed to certain additional modifications and to enter into this Second Amended and Restated Agreement that reflects the cumulative amendments made to the Amended and Restated Agreement to date (including such additional modifications), with all other terms of the Amended and Restated Agreement remaining the same.
NOW, THEREFORE, the parties hereto agree as follows:
Definitions
. Capitalized terms not otherwise defined herein shall have the same meanings as in the Plan. In addition to other terms defined herein or in the Award Notice, the following terms shall have the following meanings for purposes of this Agreement:
(a)“Agreement” shall mean this Second Amended and Restated Performance- and Service-Based Restricted Stock Unit Agreement including (unless the context otherwise requires) the Award Notice, Appendix A, and the appendices for non-U.S. Participants attached hereto as Appendix B and Appendix C.
(b)“Award Notice” shall mean the notice to the Participant.
(c)“Date of Grant” shall mean the “Date of Grant” listed in the Award Notice.
(d)“Participant” shall mean the “Participant” listed in the Award Notice.
(e)“Performance Conditions” shall mean the performance conditions set forth in the Award Notice.
(f)“Performance Period” shall mean the performance period set forth in the Award Notice.
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2019 PSU - WANG
(g)“Restrictive Covenant Violation” shall mean the Participant’s breach of the Restrictive Covenants listed on Appendix A or any covenant regarding confidentiality, competitive activity, solicitation of the Company’s vendors, suppliers, customers, or employees, or any similar provision applicable to or agreed to by the Participant.
(h)“Retirement” shall mean the Participant’s termination of employment with the Company Group, other than (i) for Cause or while grounds for Cause exist, (ii) due to the Participant’s death or (iii) due to or during the Participant’s Disability, in each case, following the date on which both (x) the Participant attained the age of 55 years old and (y) the number of completed years of the Participant’s employment with any member(s) of the Company Group (including any predecessor of a member thereof, including, for the avoidance of doubt, employment by Hilton Worldwide and its affiliates prior to January3, 2017) is at least ten (10).
(i)“RSUs” shall mean that total number of performance- and service-based restricted stock units listed in the Award Notice as “Target Number of Restricted Stock Units Granted” (or such greater or lesser number of RSUs as may be vested and earned herein, as determined in the Committee’s discretion), as such number of performance- and service-based restricted stock units may be adjusted in accordance with Section 10 below.
(j)“Shares” shall mean a number of shares of the Company’s Common Stock equal to the number of RSUs (or such greater or lesser number of shares as may be vested and earned herein, as determined in the Committee’s discretion).
2.Grant of Units. On, the Company granted the RSUs to the Participant, each of which represents the right to receive one Share upon vesting of such RSUs, subject to and in accordance with the terms, conditions and restrictions set forth in the Plan, the Award Notice, and this Agreement.
3.RSU Account. The Company shall cause an account (the “Unit Account”) to be established and maintained on the books of the Company to record the number of RSUs credited to the Participant under the terms of this Agreement. The Participant’s interest in the Unit Account shall be that of a general, unsecured creditor of the Company.
4.Vesting; Settlement; Tax Withholding.
(a)As promptly as practicable (and, in no event more than 70 days) following the last day of the Performance Period, the Committee shall determine if and the extent to which the Performance Conditions have been satisfied (the date of such determination, the “Determination Date”), and any RSUs with respect to which the Performance Conditions have been satisfied shall become vested effective as of the last day of the Performance Period, subject to Section 5(d) ; provided that, unless otherwise provided in Section 5, the Participant also meets the continued employment or service condition set forth in the Award Notice. Any RSU which does not become vested effective as of the last day of the Performance Period shall be cancelled and forfeited to the Company without consideration or any further action by the Participant or the Company. In the event of an equity restructuring, the Committee shall adjust any Performance Condition to the extent it is affected by such restructuring in order to preserve (without enlarging) the likelihood that such Performance Condition shall be satisfied. The manner of such adjustment shall be determined by the Committee in its sole discretion. For this purpose, “equity restructuring” shall mean an “equity restructuring” as defined in Financial Accounting Standards Board Accounting Standards Codification 718-10 (formerly Statement of Financial Accounting Standards 123R).
(b)The Company shall deliver to the Participant one share of Common Stock for each vested RSU (as adjusted under the Plan), pursuant to Section 4(c) below, and each such vested RSU shall be cancelled upon delivery.
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2019 PSU - WANG
(c)Shares, free and clear of all restrictions, shall be issued to the Participant (or his or her beneficiary) only in the event, and to the extent, that the RSUs have vested and been earned as provided in the Award Notice and in the Agreement. Upon vesting of the RSUs, Shares shall be issued to the Participant (or his or her beneficiary) within 70 days following the applicable vesting date set forth in Section 4(a) herein. Notwithstanding the foregoing, the following provisions shall apply: (i) any Shares earned and vested due to termination of employment or service as provided in Section 5(b) or Section 5(e) shall be paid within 70 days following the Participant’s Termination Date; (ii) any Shares earned and vested following Retirement as provided in Section 5(c) shall be paid within 70 days following the applicable vesting date set forth in Section 4(a) and Section 5(c) herein; (iii) any Shares earned and vested as a result of a Change in Control as provided in Section 5(h) shall be paid within 70 days following the date of the Change in Control; and (iv) any Shares earned and vested due to a Qualifying Termination as provided in Section 5(i) shall be paid within 70 days following the Participant’s Termination Date. If the 70-day period described herein begins in one calendar year and ends in another, the Participant (or his or her beneficiary) shall not have the right to designate the calendar year of the payment (except as otherwise provided below with respect to a delay in payments if the Participant is a “specified employee”). Further, if calculation of the amount of the payment is not administratively practicable due to events beyond the control of the Participant (or his or her beneficiary), the payment will be treated as made within the applicable 70-day time period specified herein if the payment is made during the first taxable year of the Participant in which the calculation of the amount of the payment is administratively practicable or otherwise in accordance with Code Section 409A. Notwithstanding the foregoing, if the Participant is or may be a “specified employee” (as defined under Code Section 409A), and the distribution is considered deferred compensation under Code Section 409A, then such distribution if made due to separation from service shall be subject to delay as provided in Section 14(u) of the Plan (or any successor provision thereto).
(d)The Participant shall be required to pay to the Company or, if different, the Service Recipient, an amount in cash (by check or wire transfer) equal to the aggregate amount of any income, employment and/or other applicable taxes (the “Withholding Taxes”) that are statutorily required to be withheld in respect of the RSUs. Alternatively, the Company may elect, in its sole discretion, to satisfy this requirement by withholding such amount from any cash compensation or other cash amounts owing to the Participant. Without limiting the foregoing, the Committee may (but is not obligated to), in its sole discretion, permit or require the Participant to satisfy, all or any portion of the minimum Withholding Taxes that are statutorily required to be withheld with respect to the RSUs by (i) the delivery of shares of Common Stock (which are not subject to any pledge or other security interest) that have been both held by the Participant and vested for any period of time as established from time to time by the Committee in order to avoid adverse accounting treatment under GAAP having an aggregate Fair Market Value equal to such minimum statutorily required Withholding Taxes (or portion thereof); or (ii) having the Company withhold from the Shares otherwise issuable or deliverable to, or that would otherwise be retained by, the Participant upon the vesting of the RSUs, a number of Shares with an aggregate Fair Market Value equal to an amount not in excess of such minimum statutorily required Withholding Taxes (or portion thereof). Notwithstanding the foregoing, the Committee, subject to its having considered the applicable accounting impact of any such determination, has full discretion to allow the Participant to satisfy, in whole or in part, any additional Withholding Taxes payable by him or her with respect to the RSUs by electing to have the Company withhold from the Shares issuable to the Participant upon the vesting of the RSUs, a number of Shares having an aggregate Fair Market Value that is greater than the applicable minimum required statutory Withholding Taxes (but such withholding may in no event be in excess of the maximum statutory withholding amount(s) in the Participant’s relevant tax jurisdiction). Further, for non-U.S. Participants, the Company may withhold from the Shares issuable to such non-U.S. Participant upon the vesting of the RSUs, a number of Shares having an aggregate Fair Market Value up to the maximum statutory withholding amount(s) in the non-U.S. Participant’s relevant tax jurisdiction.
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2019 PSU - WANG
(e)The Company shall pay any costs incurred in connection with issuing the Shares. Upon the issuance of the Shares (to the extent earned) to the Participant, the Participant’s Unit Account shall be eliminated. Notwithstanding anything in this Agreement to the contrary, the Company shall have no obligation to issue or transfer the Shares as contemplated by this Agreement unless and until such issuance or transfer shall comply with all relevant provisions of law and the requirements of any stock exchange on which the Company’s shares are listed for trading.
5.Termination of Employment or Service.
(a)Subject to the provisions of this Section 5, if the Participant’s employment with or service to the Company Group terminates for any reason, the unvested RSUs shall terminate as of the effective date of termination (the “Termination Date”), and all of the Participant’s rights hereunder with respect to such unvested RSUs shall cease as of the Termination Date (unless otherwise provided for by the Committee in accordance with the Plan).
(b)If the Participant’s employment or service is terminated by the Service Recipient during the Performance Period due to or during the Participant’s Disability or due to the Participant’s death, a pro-rated number of the target number of RSUs granted hereunder shall become vested and nonforfeitable (irrespective of performance) based on the number of days in the Performance Period prior to the Termination Date relative to the number of the days in the full Performance Period. Any RSUs that vest as provided herein shall be settled in accordance with Section 4.
(c)In the event the Participant’s employment with or service to the Company Group is terminated as a result of the Participant’s Retirement, the RSUs granted hereunder shall remain outstanding and eligible to vest, notwithstanding such termination of employment or service, based on (and to the extent) the Committee’s determination that the Performance Conditions have been satisfied on the Determination Date, in accordance with the schedule set forth in the Award Notice, so long as no Restrictive Covenant Violation occurs (as determined by the Committee, or its designee, in its sole discretion) prior to the Determination Date. Any RSUs that vest as provided herein shall be settled in accordance with Section 4. As a pre-condition to the Participant’s right to continued vesting following Retirement, the Committee, or its designee, may require the Participant to certify in writing prior to the applicable vesting date that no Restrictive Covenant Violation has occurred. Notwithstanding the foregoing, if the Date of Grant of the RSUs is not at least six months prior to the date of the Participant’s Retirement, any unvested RSUs shall terminate as of the Termination Date.
(d)If the Participant’s employment with or service to the Company Group terminates for any reason after the last day of the Performance Period and before the Determination Date (other than a termination by the Company for Cause, or by the Participant while grounds for Cause exist or without Good Reason), and no Restrictive Covenant Violation occurs before the Determination Date, then all RSUs shall remain outstanding and eligible to vest based on (and to the extent) the Committee’s determination that the Performance Conditions have been satisfied on the Determination Date.
(e)Notwithstanding anything herein to the contrary, the RSUs granted hereunder shall become immediately fully vested as of the Termination Date and settled in accordance with Section 4 if the Participant’s employment with or service to the Company Group shall be terminated by the Company other than for Cause, or by the Participant for Good Reason, in either case if such termination of the Participant’s employment occurs within 12 months following a Change in Control (for the avoidance of doubt, a Change in Control alone shall not, also, result in any vesting hereunder), with the actual number of RSUs determined based on (i) actual performance through the Termination Date, as determined by the Committee, or (ii) if the Committee determines that measurement of actual performance cannot be reasonably assessed, the assumed achievement of target performance as determined by the Committee.
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2019 PSU - WANG
(f)For purposes of this Section 5, “Good Reason” means the occurrence of any of the following, without the Participant’s written consent:
(i)a material diminution in the Participant’s base salary;
(ii)a material diminution in the Participant’s authority, duties, responsibilities or position; or
(iii)a permanent reassignment by the Company or the Service Recipient of the Participant’s primary office to a location that is more than 100 miles from the Participant’s assigned primary office;
provided, however, that a termination by the Participant for any of the reasons listed in (i) through (iii) above shall not constitute a termination for Good Reason unless the Participant shall first have delivered to the Company written notice setting forth with specificity the occurrence deemed to give rise to a right to terminate for Good Reason (which notice must be given no later than 60 days after the initial occurrence of such event), and the Company fails to cure such event within 30 days after receipt of this written notice. The Participant’s employment must be terminated for Good Reason within 120 days after the occurrence of an event of Good Reason.
(g)The Participant’s rights with respect to the RSUs shall not be affected by any change in the nature of the Participant’s employment or service so long as the Participant continues to be an employee or consultant, respectively, of the Company Group. Whether (and the circumstances under which) employment or service has terminated and the determination of the Termination Date for the purposes of this Agreement shall be determined by the Committee (or, with respect to any Participant who is not a director or “officer” as defined under Rule16a-1(F) of the Exchange Act, such action may also be taken by its designee, in each case whose good faith determination shall be final, binding and conclusive; provided, that such designee may not make any such determination with respect to the designee’s own employment for purposes of the RSUs).
(h)Without limiting the effect of Section 5(e) herein, and subject to Section 12 of the Plan, in the event of a Change in Control during the Participant’s employment with or service to the Company Group or while any RSUs remain outstanding and eligible to vest, and prior to the completion of the Performance Period, the successor or surviving company in the Change in Control may assume or substitute for the RSUs (or in which the Company is the ultimate parent corporation and continues the RSUs), with the actual number of RSUs determined based on (i) actual performance through the date of such Change in Control, as determined by the Committee, or (ii) if the Committee determines that measurement of actual performance cannot be reasonably assessed, the assumed achievement of target performance as determined by the Committee, and such assumed or substituted RSUs shall remain outstanding and eligible to vest based on continued service through the last day of the Performance Period, except to the extent otherwise provided in the Plan or the Agreement. Notwithstanding the foregoing, in the event the successor or surviving company in the Change in Control does not assume or substitute for the RSUs (or in which the Company is the ultimate parent corporation and does not continue the RSUs) on substantially similar terms or with substantially equivalent economic benefits (as determined by the Committee) as RSUs outstanding under the Plan immediately prior to the Change in Control, then the target number of RSUs granted hereunder shall become immediately fully vested as of the date of such Change in Control and settled in accordance with Section 4.
(i)Notwithstanding anything to the contrary contained herein, in the event of a Qualifying Termination (as defined in the Severance Agreement) and a Change in Control has not occurred, a pro-rated number of the target number of RSUs granted hereunder shall become vested and nonforfeitable (irrespective of performance) as of the Termination Date based on the number of days in the Performance Period prior to the Termination Date (inclusive), plus an additional 730 days (not to exceed 1,095 days), relative to the number 1,095. Any RSUs that vest as provided herein shall be settled in accordance with Section 4.
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6.Dividend Equivalents. A Participant holding unvested RSUs shall be entitled to be credited with dividend equivalent payments (upon the payment by the Company of dividends on Shares), which shall accrue in cash without interest (unless otherwise elected by the Committee) and shall be delivered in cash (unless the Committee in its sole discretion, elects to settle such amount in shares of Common Stock, other securities, other Awards or other property having a Fair Market Value as of the settlement date equal to the amount of such dividends). Accrued dividend equivalents shall not be paid unless and until the underlying RSUs (or portion thereof) have vested. Any such dividend equivalents in respect of unvested RSUs shall be paid within fifteen (15) days after the RSUs are vested and become payable or distributable unless the Committee determines otherwise.
7.Restrictions on Transfer. The Participant may not assign, alienate, pledge, attach, sell or otherwise transfer or encumber the RSUs or the Participant’s right under the RSUs to receive Shares (unless such transfer is specifically required pursuant to a domestic relations order or by applicable law), other than by will or by the laws of descent and distribution, and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against any member of the Company Group; provided that the designation of a beneficiary shall not constitute an assignment, alienation, pledge, attachment, sale, transfer or encumbrance.
8.No Right to Continued Employment or Service. Neither the Plan, the Agreement nor any action taken thereunder or hereunder shall be construed as giving the Participant any right to be retained in the employ or service of the Service Recipient or any other member of the Company Group. The Service Recipient or any other member of the Company Group may at any time dismiss the Participant from employment or discontinue any consulting relationship, free from any liability or claim under the Plan or this Agreement, unless otherwise expressly provided in the Plan or this Agreement.
9.No Rights as a Stockholder. Except as otherwise provided in the Plan or this Agreement, the Participant shall not be entitled to the privileges of ownership in respect of the Shares until the Shares have been issued or delivered to the Participant.
Adjustments Upon Change in Capitalization
The terms of this Agreement, including the RSUs, the Participant’s Unit Account, any dividend equivalent payments accrued pursuant to Section 6 and/or the Shares, shall be subject to adjustment in accordance with Section 12 of the Plan. This paragraph shall also apply with respect to any extraordinary dividend or other extraordinary distribution in respect of the Company’s Common Stock (whether in the form of cash or other property) to the extent provided in the Plan.
11.Award Subject to Plan. By entering into this Agreement, the Participant agrees and acknowledges that the Participant has received and read a copy of the Plan. The RSUs granted hereunder are subject to the Plan. The terms and provisions of the Plan, as it may be amended from time to time, are hereby incorporated herein by reference. Unless the Committee determines otherwise, in the event of a conflict between any term or provision contained herein and a term or provision of the Plan, the applicable terms and provisions of the Plan shall govern and prevail.
12.Severability. If any provision of the Plan or this Agreement is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction or as to the Participant or the RSUs, or would disqualify the Plan or the RSUs under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to the applicable laws, or if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Agreement, such provision shall be construed or deemed stricken as to such jurisdiction, the Participant or the RSUs and the remainder of the Plan and this Agreement shall remain in full force and effect.
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13.Governing Law; Waiver of Jury Trial; Venue. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware applicable to contracts made and performed wholly within the State of Delaware, without giving effect to the conflict of laws provisions thereof. The Participant hereby irrevocably waives all right to a trial by jury in any suit, action or other proceeding instituted by or against such Participant in respect of the Participant’s rights or obligations hereunder. Any suit, action or proceeding with respect to this Agreement (or any provision incorporated by reference), or any judgment entered by any court in respect of any thereof, shall be brought in any court of competent jurisdiction in the State of Florida, and each of the Participant, the Company, and any transferees who hold RSUs pursuant to a valid assignment, hereby submit to the exclusive jurisdiction of such courts for the purpose of any such suit, action, proceeding, or judgment. Each of the Participant, the Company, and any transferees who hold RSUs pursuant to a valid assignment hereby irrevocably waive (A) any objections which he or she may now or hereafter have to the laying of the venue of any suit, action, or proceeding arising out of or relating to this Agreement brought in any court of competent jurisdiction in the State of Florida and (B) any claim that any such suit, action, or proceeding brought in any such court has been brought in any inconvenient forum.
14.Language. If the Participant has received a copy of this Agreement (or the Plan or any other document related hereto or thereto) translated into a language other than English, such translated copy is qualified in its entirety by reference to the English version thereof, and in the event of any conflict the English version shall govern. The Participant acknowledges that the Participant is sufficiently proficient in English to understand the terms and conditions of the Plan and this Agreement.
15.Successors in Interest. Any successor to the Company shall have the benefits of the Company under, and be entitled to enforce, this Agreement. Likewise, the Participant’s legal representative shall have the benefits of the Participant under, and be entitled to enforce, this Agreement. All obligations imposed upon the Participant and all rights granted to the Company under this Agreement shall be final, binding and conclusive upon the Participant’s heirs, executors, administrators and successors.
16.Data Privacy Consent.
The Participant hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of the Participant’s personal data as described in this Agreement and any other RSU grant materials by and among, as applicable, the Service Recipient, the Company and other members of the Company Group for the purpose of implementing, administering and managing the Plan.
Participant understands that the Company and the Service Recipient may hold certain personal information about the Participant, including, but not limited to, the Participant’s name, home address, email address and telephone number, date of birth, passport, social insurance number or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company, details of all stock options, restricted stock units or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in the Participant’s favor (“Data”), for the purpose of implementing, administering and managing the Plan.
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The Participant understands that Data will be transferred to any third parties as may be selected by the Company (presently or in the future), which assist the Company with the implementation, administration and management of the Plan. The Participant understands that the recipients of the Data may be located in the United States or elsewhere, and that the recipients’ country (e.g., the United States) may have different data privacy laws and protections than the Participant’s country. The Participant understands that if the Participant resides outside the United States the Participant may request a list with the names and addresses of any potential recipients of the Data by contacting the Participant’s local human resources representative. The Participant authorizes the Company and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purpose of implementing, administering and managing the Plan. The Participant understands that Data will be held only as long as is necessary to implement, administer and manage the Plan. The Participant understands that if the Participant resides outside the United States, the Participant may, at any time, view Data, request information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing the Participant’s local human resources representative. Further, the Participant understands that the Participant is providing the consents herein on a purely voluntary basis. If the Participant does not consent, or if the Participant later seeks to revoke the Participant’s consent, the Participant’s employment status or service with the Service Recipient will not be affected; the only consequence of refusing or withdrawing the Participant’s consent is that the Company may not be able to grant options or other equity awards to the Participant or administer or maintain such awards. Therefore, the Participant understands that refusing or withdrawing the Participant’s consent may affect the Participant’s ability to participate in the Plan. For more information on the consequences of the Participant’s refusal to consent or withdrawal of consent, the Participant understands that the Participant may contact the Participant’s local human resources representative.
17.Restrictive Covenants. The Participant acknowledges and recognizes the highly competitive nature of the businesses of the Company and its Affiliates, that the Participant shall be allowed access to confidential and proprietary information (including but not limited to trade secrets) about those businesses, as well as access to the prospective and actual customers, suppliers, investors, clients and partners involved in those businesses, and the goodwill associated with the Company and its Affiliates. Participant accordingly agrees to the provisions of Appendix A to this Agreement (the “Restrictive Covenants”). For the avoidance of doubt, the Restrictive Covenants contained in this Agreement are in addition to, and not in lieu of, any other restrictive covenants or similar covenants or agreements between the Participant and the Company or any of its Affiliates.
18.Repayment of Proceeds; Clawback Policy; Compliance with Ownership and Other Policies and Agreements.
(a)If a Restrictive Covenant Violation occurs or the Company discovers after a termination of employment or service that grounds existed for Cause at the time thereof, then the Participant shall be required, unless the Committee determines otherwise, in addition to any other remedy available (on a non-exclusive basis), to pay to the Company, within ten (10) business days of the Company’s request to the Participant therefor, an amount equal the aggregate after-tax proceeds (taking into account all amounts of tax that would be recoverable upon a claim of loss for payment of such proceeds in the year of repayment) the Participant received upon the sale or other disposition of, or distributions in respect of, the RSUs and any Shares or cash issued in respect thereof. Any reference in this Agreement to grounds existing for a termination of employment or service with Cause shall be determined without regard to any notice period, cure period or other procedural delay or event required prior to finding of or termination with Cause.
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(b)The RSUs shall be subject to reduction, cancellation, forfeiture or recoupment to the extent necessary to comply with (i) any clawback, forfeiture or other similar policy adopted by the Board or the Committee and as in effect from time to time and (ii) applicable law. Further, to the extent that the Participant receives any amount in excess of the amount that the Participant should otherwise have received under the terms of this Agreement for any reason (including, without limitation, by reason of a financial restatement, mistake in calculations or other administrative error), the Participant shall be required to repay any such excess amount to the Company.
(c)Without limiting the terms of the Plan, and as a condition to receiving the RSUs or any benefit hereunder, the Participant agrees that he or she shall abide by all provisions of any equity retention policy, stock ownership guidelines and/or other policies adopted by the Company or an Affiliate, each as in effect from time to time and to the extent applicable to the Participant.
19.Limitation on Rights; No Right to Future Grants; Extraordinary Item of Compensation. By accepting this Agreement and the grant of the RSUs contemplated hereunder, the Participant expressly acknowledges that (A) the Plan is discretionary in nature and may be suspended or terminated by the Company at any time; (B) the grant of RSUs is a one-time benefit that does not create any contractual or other right to receive future grants of RSUs or other Awards under the Plan, or benefits in lieu of RSUs; (C) all determinations with respect to future grants of RSUs, if any, including the grant date, the number of Shares granted and the applicable vesting terms, shall be at the sole discretion of the Committee and/or the Company; (D) the Participant’s participation in the Plan is voluntary; (E) the value of the RSUs is an extraordinary item of compensation that is outside the scope of the Participant’s employment or consulting contract, if any, and nothing can or must automatically be inferred from such employment or consulting contract or its consequences; (F) grants of RSUs are not part of normal or expected compensation for any purpose and are not to be used for calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments, the Participant waives any claim on such basis, and for the avoidance of doubt, the RSUs shall not constitute an “acquired right” under the applicable law of any jurisdiction; and (G) the future value of the underlying Shares is unknown and cannot be predicted with certainty. In addition, the Participant hereby waives any claim to continued vesting of the RSUs or to damages or severance entitlement related to non-continuation of the RSUs beyond the period provided under the Plan or this Agreement, except to the extent of any provision to the contrary in any written employment contract or other agreement between the Service Recipient and/or any member of the Company Group and the Participant, whether any such agreement is executed before, on or after the Date of Grant.
20.Amendment of Agreement. The Committee may, to the extent consistent with the terms of the Plan and this Agreement, waive any conditions or rights under, amend any terms of, or alter, suspend, discontinue, cancel or terminate, any RSUs granted hereunder or this Agreement, prospectively or retroactively (including after the Participant’s Termination); provided, that, other than as provided in the Plan, any such waiver, amendment, alteration, suspension, discontinuance, cancellation or termination that would materially and adversely affect the rights of any Participant with respect to the RSUs granted hereunder shall not to that extent be effective without the consent of the Participant; provided, further, that in no event shall any such amendment alter the Minimum Vesting Condition.
21.Award Administrator. The Company may from time to time designate a third party (an “Award Administrator”) to assist the Company in the implementation, administration and management of the Plan and any RSUs granted thereunder, including, but not limited to, by sending award notices on behalf of the Company to Participants, and by facilitating through electronic means acceptance of agreements by Participants.
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(a)Notwithstanding any provision of the Plan or this Agreement to the contrary, it is intended that the provisions of this Agreement comply with, or be exempt from, Section 409A of the Code, and all provisions of this Agreement shall be construed and interpreted in a manner consistent with the requirements for avoiding taxes or penalties under Section 409A of the Code. The Participant is solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on or in respect of the Participant in connection with this Agreement (including any taxes and penalties under Section 409A of the Code), and neither the Service Recipient nor any other member of the Company Group shall have any obligation to indemnify or otherwise hold the Participant (or any beneficiary) harmless from any or all such taxes or penalties. If the RSUs are considered “deferred compensation” subject to Section 409A of the Code, references in this Agreement to “termination of employment” (and substantially similar phrases) shall mean “separation from service” within the meaning of Section 409A of the Code. For purposes of Section 409A of the Code, each of the payments that may be made in respect of the RSUs shall be deemed as separate payments.
(b)Notwithstanding anything in the Plan or this Agreement to the contrary, if a Participant is a “specified employee” within the meaning of Section 409A of the Code, no payments in respect of any RSU that is “deferred compensation” subject to Section 409A of the Code and which would otherwise be payable upon the Participant’s “separation from service” (as defined in Section 409A of the Code) shall be made to such Participant prior to the date that is six (6) months after the date of the Participant’s “separation from service” or, if earlier, the date of the Participant’s death. Following any applicable six (6) month delay, all such delayed payments shall be paid in a single lump sum on the earliest date permitted under Section 409A of the Code that is also a business day.
(c)Unless otherwise provided by the Committee in this Agreement or otherwise, in the event that the timing of payments in respect of the RSUs (that would otherwise be considered “deferred compensation” subject to Section 409A of the Code) would be accelerated upon the occurrence of (i) a Change in Control, no such acceleration shall be permitted (to the extent required under Section 409A) unless the event giving rise to the Change in Control satisfies the definition of a change in the ownership or effective control of a corporation, or a change in the ownership of a substantial portion of the assets of a corporation pursuant to Section 409A of the Code or (ii) a Disability, no such acceleration shall be permitted unless the Disability also satisfies the definition of “Disability” pursuant to Section 409A of the Code if and to the extent required under Section 409A of the Code.
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23.Restriction on Restricted Stock Unit Award and Shares. The obligation of the Company to settle the RSUs in Shares or other consideration shall be subject to all applicable laws, rules and regulations, and to such approvals by governmental agencies as may be required. Notwithstanding any terms or conditions of this Agreement to the contrary, the Company shall be under no obligation to offer to sell, and shall be prohibited from offering to sell or selling, any Shares underlying the RSUs unless such shares have been properly registered for sale pursuant to the Securities Act with the Securities and Exchange Commission or unless the Company has received an opinion of counsel (if the Company has requested such an opinion), satisfactory to the Company, that such shares may be offered or sold without such registration pursuant to an available exemption therefrom and the terms and conditions of such exemption have been fully complied with. The Company shall be under no obligation to register for sale under the Securities Act any of the Shares. The Committee shall have the authority to provide that all Shares shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan, this Agreement, the Federal securities laws or the rules, regulations and other requirements of the Securities and Exchange Commission, any securities exchange or inter-dealer quotation system on which the securities of the Company are listed or quoted and any other applicable Federal, state, local or non-U.S. laws, rules, regulations and other requirements, and, without limiting the generality of the Plan, the Committee may cause a legend or legends to be put on certificates representing the Shares. Notwithstanding any provision in the Plan to the contrary, the Committee reserves the right to add any additional terms or provisions to the Performance- and Service-Based Restricted Stock Unit Agreement that the Committee, in its sole discretion, deems necessary or advisable in order that this Agreement complies with the legal requirements of any governmental entity to whose jurisdiction this Agreement is subject. The Committee may cancel the RSUs or any portion thereof if it determines, in its sole discretion, that legal or contractual restrictions and/or blockage and/or other market considerations would make the Company’s acquisition of shares of Common Stock from the public markets, the Company’s issuance of the Shares to the Participant, the Participant’s acquisition of the Shares from the Company and/or the Participant’s sale of Common Stock to the public markets, illegal, impracticable or inadvisable. If the Committee determines to cancel all or any portion of the RSUs in accordance with the foregoing, the Company shall, subject to any limitations or reductions as may be necessary to comply with Section 409A of the Code, provide the Participant with a cash payment or equity subject to deferred vesting and delivery consistent with the vesting restrictions applicable to the RSUs.
24.Book Entry Delivery of Shares. Whenever reference in this Agreement is made to the issuance or delivery of certificates representing one or more Shares, the Company may elect to issue or deliver such Shares in book entry form in lieu of certificates.
25.Electronic Delivery and Acceptance. The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through a non-line or electronic system established and maintained by the Company or a third party designated by the Company.
26.Acceptance and Agreement by the Participant. By accepting the RSUs (including through electronic means), the Participant agrees to be bound by the terms, conditions and restrictions set forth in the Plan, this Agreement and the Company’s policies, as in effect from time to time, relating to the Plan.
27.No Advice Regarding Grant. The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Participant’s participation in the Plan, or the Participant’s acquisition or sale of the underlying Shares. The Participant is hereby advised to consult with his or her own personal tax, legal and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan.
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28.Appendices For Non-U.S. Participants. Notwithstanding any provisions in this Agreement, Participants residing and/or working outside the United States shall be subject to the Terms and Conditions for Non-U.S. Participants attached hereto as Appendix B and to any Country-Specific Terms and Conditions for the Participant’s country attached hereto as Appendix C. If the Participant relocates from the United States to another country, the Terms and Conditions for Non-U.S. Participants and the applicable Country-Specific Terms and Conditions shall apply to the Participant, to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. Moreover, if the Participant relocates between any of the countries included in the Country-Specific Terms and Conditions, the special terms and conditions for such country shall apply to the Participant, to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. The Terms and Conditions for Non-U.S. Participants and the Country-Specific Terms and Conditions constitute part of this Agreement.
29.Imposition of Other Requirements. The Company reserves the right to impose other requirements on the Participant’s participation in the Plan, on the RSUs and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require the Participant to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.
30.Right of Offset. Subject to any considerations under Section 409A of the Code, the Company shall have the right to offset against its obligation to deliver Shares under this Agreement any outstanding amounts (including, without limitation, travel and entertainment or advance account balances, loans, repayment obligations under any Awards or amounts repayable to the Company pursuant to tax equalization, housing, automobile or other employee programs) that the Participant then owes to any member of the Company Group and any amounts the Committee otherwise deems appropriate pursuant to any tax equalization policy or agreement. Notwithstanding the foregoing, if the RSUs are “deferred compensation” subject to Section 409A of the Code, the Committee shall have no right to offset against its obligation to deliver Shares under this Agreement if such offset could subject the Participant to the additional tax imposed under Section 409A of the Code in respect of the RSUs.
31.Waiver. The Participant acknowledges that a waiver by the Company of breach of any provision of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by the Participant or any other participant in the Plan.
32.Rules of Construction. Headings are given to the Section of this Agreement solely as a convenience to facilitate reference. The reference to any statute, regulation or other provision of law shall (unless the Administrator determines otherwise) be construed to refer to any amendment to or successor of such provision of law.
33.Counterparts. This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one in the same agreement.
[[Signatures follow]]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be effective as of the Date of Grant.
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HILTON GRAND VACATIONS INC. |
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By: |
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[NAME] |
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[TITLE] |
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Acknowledged and Agreed: |
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Participant Signature |
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APPENDIX A
Restrictive Covenants
1.Non-Competition; Non-Solicitation.
(a)Participant acknowledges and recognizes the highly competitive nature of the businesses of the Company and its Affiliates and accordingly agrees as follows:
(i)During Participant’s employment with or service to the Company or its Affiliates (the “Employment Term”) and for a period that ends on the later of (A) one year following the date Participant ceases to be employed by or in service to the Company or any of its Affiliates or (B) the last date any portion of the Award granted under this Agreement is eligible to vest if Participant ceases to be employed by the Company or any of its Affiliates as a result of the Participant’s Retirement (the “Restricted Period”), Participant shall not, whether on Participant’s own behalf or on behalf of or in conjunction with any person, firm, partnership, joint venture, association, corporation or other business organization, entity or enterprise whatsoever (“Person”), directly or indirectly solicit or assist in soliciting in competition with the Restricted Group in the Business, the business of any then current or prospective client or customer with whom Participant (or his direct reports) had personal contact or dealings on behalf of the Company or any of its Affiliates during the one-year period preceding Participant’s termination of employment or service.
(ii)During the Restricted Period, Participant shall not directly or indirectly:
(A)engage in the Business providing services in the nature of the services Participant provided to the Company at any time in the one year prior to the termination of Participant’s employment or service, for a Competitor;
(B)enter the employ of, or render any services to, a Competitor, except where such employment or services do not relate in any manner to the Business;
(C)acquire a financial interest in, or otherwise become actively involved with, a Competitor, directly or indirectly, as an individual, partner, shareholder, officer, director, principal, agent, trustee or consultant; or
(D)intentionally and adversely interfere with, or attempt to adversely interfere with, business relationships between the members of the Restricted Group and any of their clients, customers, suppliers, partners, members or investors.
(iii)Notwithstanding anything to the contrary in this Appendix A, Participant may, directly or indirectly own, solely as an investment, securities of any Person engaged in a Business (including, without limitation, a Competitor) which are publicly traded on a national or regional stock exchange or on the over-the-counter market if Participant (A) is not a controlling person of, or a member of a group which controls, such person and (B) does not, directly or indirectly, own 2% or more of any class of securities of such Person.
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(iv)During the Restricted Period, Participant shall not, whether on Participant’s own behalf or on behalf of or in conjunction with any Person, directly or indirectly:
(A)solicit or encourage any executive-level employee of the Restricted Group, with whom Participant has had material business contact during the Employment Term or, if no longer an employee or consultant, in the one year prior to the termination of Participant’s employment with or service to any member of the Company Group, to leave the employment of the Restricted Group to become affiliated in any respect with a Competitor or otherwise be engaged in the Business; or
(B)hire any such executive-level employee to become affiliated in any respect with a Competitor or otherwise be engaged in the Business and with whom Participant had material business contact in the one year prior to the termination of Participant’s employment with or service to the Company, who (x) was employed by the Restricted Group as of the date of Participant’s termination of employment with or service to the Company or any of its Affiliates or (y) left the employment of the Restricted Group within one year after the termination of Participant’s employment with or service to the Company or any of its Affiliates.
(v)For purposes of this Agreement:
(A)“Restricted Group” shall mean the Company Group and, to the extent engaged in the Business, its Affiliates, provided, however, that for the purposes of this definition, an “Affiliate” shall not include any portfolio company of The Blackstone Group L.P. or its Affiliates (other than the Company Group).
(B)“Business” shall mean the business of owning, financing, developing, redeveloping, managing, marketing, operating, licensing, leasing or franchising vacation, timeshare or lodging properties, and natural ancillary business products and services related to such business, including, without limitation, membership services, exchange programs, rental programs, and provision of amenities.
(C)“Competitor” shall mean any person engaged in the Business, including but not limited to any vacation, timeshare or lodging companies that are comparable in size to the Company, including, without limitation, Marriott Vacations Worldwide, Wyndham Vacation Ownership, Interval Leisure Group, Disney Vacation Club, Hyatt Vacation Ownership, Holiday Inn Club Vacations, Bluegreen Vacations, Diamond Resorts International and Westgate Resorts.
(b)It is expressly understood and agreed that although Participant and the Company consider the restrictions contained in this Section 1 to be reasonable, if a judicial determination is made by a court of competent jurisdiction that the time or territory or any other restriction contained in this Appendix A is an unenforceable restriction against Participant, the provisions of this Appendix A shall not be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such maximum extent as such court may judicially determine or indicate to be enforceable. Alternatively, if any court of competent jurisdiction finds that any restriction contained in this Appendix A is unenforceable, and such restriction cannot be amended so as to make it enforceable, such finding shall not affect the enforceability of any of the other restrictions contained herein. Notwithstanding the foregoing, if Participant’s principal place of employment or service on the date hereof is located in Virginia, then this Section 1(b) of this Appendix A shall not apply following Participant’s termination of employment or service to the extent any such provision is prohibited by applicable Virginia law.
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(c)The period of time during which the provisions of this Section 1 shall be in effect shall be extended by the length of time during which Participant is in breach of the terms hereof as determined by any court of competent jurisdiction on the Company’s application for injunctive relief.
(d)Notwithstanding the foregoing, if Participant’s principal place of employment or service on the date hereof is located in California or any other jurisdiction where any provision of this Section 1 is prohibited by applicable law, then the provisions of this Section 1 shall not apply following Participant’s termination of employment or service to the extent any such provision is prohibited by applicable law.
2.Confidentiality; Non-Disparagement; Intellectual Property; Protected Rights.
(a)Confidentiality.
(i)Participant shall not at any time (whether during or after Participant’s employment with or service to the Company) (x) retain or use for the benefit, purposes or account of Participant or any other Person; or (y) disclose, divulge, reveal, communicate, share, transfer or provide access to any Person outside the Company or any of its Affiliates (other than its professional advisers who are bound by confidentiality obligations or otherwise in performance of Participant’s duties under Participant’s employment or service and pursuant to customary industry practice), any non-public proprietary or confidential information (including, without limitation, trade secrets ,know-how ,research and development, software, databases, inventions, processes, formulae, technology, designs and other intellectual property, information concerning finances, investments, profits, pricing, costs, products, services, vendors, customers, clients, partners, investors, personnel, compensation, recruiting, training, advertising, sales, marketing, promotions, government and regulatory activities and approvals) concerning the past, current or future business, activities and operations of the Company, its Subsidiaries or Affiliates and/or any third party that has disclosed or provided any of same to the Company on a confidential basis (“Confidential Information”) without the prior written authorization of the Board.
(ii)“Confidential Information” shall not include any information that is (A) generally known to the industry or the public other than as a result of Participant’s breach of this covenant; (B) made legitimately available to Participant by a third party without breach of any confidentiality obligation of which Participant has knowledge; or (C) required by law to be disclosed; provided that, unless otherwise provided under applicable law, with respect to subsection (c) , Participant shall give prompt written notice to the Company of such requirement, disclose no more information than is so required, and reasonably cooperate with any attempts by the Company to obtain a protective order or similar treatment.
(iii)Except as required by law, Participant shall not disclose to anyone, other than Participant’s family (it being understood that, in this Agreement, the term “family” refers to Participant’s spouse, minor children, parents and spouse’s parents) and advisors, the existence or contents of this Agreement provided that Participant may disclose to any prospective future employer the provisions of this Appendix A. This Section 2(a)(iii) shall terminate if the Company publicly discloses a copy of this Agreement (or, if the Company publicly discloses summaries or excerpts of this Agreement, to the extent so disclosed).
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2019 PSU - WANG
(iv)Upon termination of Participant’s employment with or service to the Company or any of its Affiliates for any reason, Participant shall (x) cease and not thereafter commence use of any Confidential Information or intellectual property (including without limitation, any patent, invention, copyright, trade secret, trademark, trade name, logo, domain name or other source indicator) owned or used by the Company, its Subsidiaries or Affiliates; and (y) immediately destroy, delete, or return to the Company, at the Company’s option, all originals and copies in any form or medium (including memoranda, books, papers, plans, computer files, letters and other data) in Participant’s possession or control (including any of the foregoing stored or located in Participant’s office, home, laptop or other computer, whether or not Company property) that contain Confidential Information, except that Participant may retain only those portions of any personal notes, notebooks and diaries that do not contain any Confidential Information.
(v)Participant acknowledges and agrees that the Company and its Affiliates will prosecute any non-confidential disclosure or misappropriation of the Company’s and/or its Affiliates’ trade secrets to the full extent allowed by federal, state and common law. Participant further acknowledges and agrees that Participant has received and understands the following notice concerning immunity from liability for confidential disclosure of a trade secret to the government or in a court filing: Pursuant to the Defend Trade Secrets Act, 18 U.S.C. § 1833, an individual shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is made (A) in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney, and solely for the purpose of reporting or investigating a suspected violation of law, or (B) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.
(b)Non-Disparagement. During Participant’s Employment Term and at all times thereafter (including following the termination of Participant’s Employment Term for any reason), Participant shall not to intentionally make any statement that criticizes, ridicules, disparages or is otherwise derogatory of the Company, any of its Affiliates, or any of their respective officers, directors, stockholders, employees or other service providers, or any product or service offered by the Company or any of its Affiliates; provided, however, that nothing contained in this Section 2(b) shall preclude Participant from providing truthful testimony in any legal proceeding, or making any truthful statement (i) to any governmental agency; (ii) as required or permitted by applicable law or regulation; (iii) as required by court order or other legal process; or (iv) after the Restricted Period, for any legitimate business reason.
(c)Intellectual Property.
(i)If Participant has created, invented, designed, developed, contributed to or improved any works of authorship, inventions, intellectual property, materials, documents or other work product (including without limitation, research, reports, software, databases, systems, applications, presentations, textual works, content, or audiovisual materials) (“Works”), either alone or with third parties, prior to Participant’s employment or engagement by the Company or any of its Affiliates, that are relevant to or implicated by such employment (“Prior Works”), Participant hereby grants the Company a perpetual ,non-exclusive ,royalty-free, worldwide, assignable, sublicensable license under all rights and intellectual property rights (including rights under patent, industrial property, copyright, trademark, trade secret, unfair competition and related laws) therein for all purposes in connection with the Company’s current and future business.
(ii)If Participant creates, invents, designs, develops, contributes to or improves any Works, either alone or with third parties, at any time during Participant’s employment by or service to the Company and within the scope of such employment or service and with the use of any Company resources (“Company Works”), Participant shall promptly and fully disclose same to the Company and hereby irrevocably assigns, transfers and conveys, to the maximum extent permitted by applicable law, all rights and intellectual property rights therein (including rights under patent, industrial property, copyright, trademark, trade secret, unfair competition and related laws) to the Company to the extent ownership of any such rights does not vest originally in the Company.
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2019 PSU - WANG
(iii)Participant shall take all reasonably requested actions and execute all reasonably requested documents (including any licenses or assignments required by a government contract) at the Company’s expense (but without further remuneration) to assist the Company in validating, maintaining, protecting, enforcing, perfecting, recording, patenting or registering any of the Company’s rights in the Prior Works and Company Works. If the Company is unable for any other reason, after reasonable attempt, to secure Participant’s signature on any document for this purpose, then Participant hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as Participant’s agent and attorney in fact, to act for and in Participant’s behalf and stead to execute any documents and to do all other lawfully permitted acts required in connection with the foregoing.
(iv)Participant shall not improperly use for the benefit of, bring to any premises of, divulge, disclose, communicate, reveal, transfer or provide access to, or share with the Company any confidential, proprietary or non-public information or intellectual property relating to a former employer or other third party without the prior written permission of such third party. Participant shall comply with all relevant policies and guidelines of the Company that are from time to time previously disclosed to Participant, including regarding the protection of Confidential Information and intellectual property and potential conflicts of interest. Participant acknowledges that the Company may amend any such policies and guidelines from time to time, and that Participant remains at all times bound by their most current version from time to time previously disclosed to Participant.
(d)Protected Rights. Notwithstanding any other provision of this Agreement, (i) nothing in this Agreement or any other agreement prohibits the Participant from reporting possible violations of law or regulation to any governmental agency or entity, including, but not limited to, the Department of Justice, the Securities and Exchange Commission, the Congress and any agency Inspector General (the “Government Agencies”), or communicating with Government Agencies or otherwise participating in any investigation or proceeding that may be conducted by Government Agencies, including providing documents or other information, (ii) the Participant does not need the prior authorization of the Company to take any action described in (i), and the Participant is not required to notify the Company that he or she has taken any action described in (i); and (iii) this Agreement does not limit the Participant’s right to receive an award for providing information relating to a possible securities law violation to the Securities and Exchange Commission. Further, notwithstanding the foregoing, the Participant will not be held criminally or civilly liable under any federal, state or local trade secret law for the disclosure of a trade secret that (i) is made (A) in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney, and (B) solely for the purpose of reporting or investigating a suspected violation of law; or (ii) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. Additionally, an individual suing an employer for retaliation based on the reporting of a suspected violation of law may disclose a trade secret to his or her attorney and use the trade secret information in the court proceeding, so long as any document containing the trade secret is filed under seal and the individual does not disclose the trade secret except pursuant to court order.
The provisions of Section 2 hereof shall survive the termination of Participant’s employment or service for any reason (except as otherwise set forth in Section 2(A)(iii) hereof).
20
2019 PSU - WANG
HILTON GRAND VACATIONS INC.
2017 OMNIBUS INCENTIVE PLAN
PERFORMANCE- AND SERVICE-BASED
RESTRICTED STOCK UNIT AGREEMENT
TERMS AND CONDITIONS FORNON-U.S.PARTICIPANTS
Capitalized terms used but not otherwise defined herein shall have the meaning given to such terms in the Plan and the Performance- and Service-Based Restricted Stock Unit Agreement.
1.Responsibility for Taxes. This provision supplements Section 4(d) of the Performance- and Service-Based Restricted Stock Unit Agreement:
(a)The Participant acknowledges that, regardless of any action taken by the Company or, if different, the Service Recipient, the ultimate liability for all income tax, excise tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax-related items related to the Participant’s participation in the Plan and legally applicable to the Participant (“Tax-Related Items”) is and remains the Participant’s responsibility and may exceed the amount actually withheld by the Company or the Service Recipient. The Participant further acknowledges that the Company and/or the Service Recipient (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the RSUs, including, but not limited to, the grant, vesting or settlement of the RSUs, the subsequent sale of Shares acquired pursuant to such settlement and the receipt of any dividends and/or any dividend equivalents; and (2) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the RSUs to reduce or eliminate the Participant’s liability for Tax-Related Items or achieve any particular tax result. Further, if the Participant is subject to Tax-Related Items in more than one jurisdiction, the Participant acknowledges that the Company and/or the Service Recipient (or former service recipient, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.
(b)If the obligation for Tax-Related Items is satisfied by withholding in Shares, for tax purposes, the Participant is deemed to have been issued the full number of Shares subject to the vested RSUs, notwithstanding that a number of the Shares are held back solely for the purpose of satisfying the Withholding Taxes.
(c)Finally, the Participant agrees to pay to the Company or the Service Recipient, any amount of the Withholding Taxes that cannot be satisfied by the means previously described. The Company may refuse to issue or deliver the Shares or the proceeds of the sale of Shares, if the Participant fails to comply with the Participant’s obligations in connection with the Withholding Taxes.
(d) Notwithstanding anything to the contrary in the Plan or in Section 4(d) of the Performance- and Service-Based Restricted Stock Unit Agreement, if the Company is required by applicable law to use a particular definition of fair market value for purposes of calculating the taxable income for the Participant, the Company shall have the discretion to calculate the Shares to be withheld to cover any Withholding Taxes by using either the price used to calculate the taxable income under applicable law or by using the closing price per Share on the New York Stock Exchange (or other principal exchange on which the Shares then trade) on the trading day immediately prior to the date of delivery of the Shares.
21
2019 PSU - WANG
2.Nature of Grant. This provision supplements Section 19 of the Performance- and Service-Based Restricted Stock Unit Agreement:
In accepting the grant of the RSUs, the Participant acknowledges, understands and agrees that:
(a)the RSU grant and the Participant’s participation in the Plan shall not create a right to employment or be interpreted as forming an employment or services contract with the Company or any member of the Company Group;
(b)the RSUs and the Shares subject to the RSUs, and the income from and value of same, are not intended to replace any pension rights or compensation;
(c)unless otherwise agreed with the Company, the RSUs and the Shares subject to the RSUs, and the income from and value of same, are not granted as consideration for, or in connection with, the service the Participant may provide as a director of any member of the Company Group;
(d)for purposes of the RSUs, the Termination Date shall be the date the Participant is no longer actively providing services to the Company or any member of the Company Group (regardless of the reason for such termination and whether or not later to be found invalid or in breach of employment laws in the jurisdiction where the Participant is employed or the terms of the Participant’s employment agreement, if any), and unless otherwise expressly provided in this Agreement or determined by the Company, the Participant’s right to vest in the RSUs under the Plan, if any, shall terminate as of such date and shall not be extended by any notice period (e.g., the Participant’s period of service would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment laws in the jurisdiction where the Participant is employed or the terms of the Participant’s employment agreement, if any); the Committee shall have the exclusive discretion to determine when the Participant is no longer actively providing services for purposes of the RSUs grant (including whether the Participant may still be considered to be providing services while on a leave of absence);
(e)unless otherwise provided in the Plan or by the Company in its discretion, the RSUs and the benefits evidenced by this Agreement do not create any entitlement to have the RSUs or any such benefits transferred to, or assumed by, another company nor be exchanged, cashed out or substituted for, in connection with any corporate transaction affecting the Company’s Common Stock; and
(f)neither the Company nor any member of the Company Group shall be liable for any foreign exchange rate fluctuation between the Participant’s local currency and the United States Dollar that may affect the value of the RSUs or of any amounts due to the Participant pursuant to the settlement of the RSUs or the subsequent sale of any Shares acquired upon settlement.
3.Insider Trading Restrictions/Market Abuse Laws. The Participant acknowledges that the Participant may be subject to insider trading restrictions and/or market abuse laws in applicable jurisdictions, which may affect his or her ability to, directly or indirectly, acquire, sell, or attempt to sell Shares or rights to Shares (e.g., RSUs) under the Plan during such times as the Participant is considered to have “inside information” regarding the Company (as defined by the laws in the applicable jurisdictions or Participant’s country). Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Company insider trading policy. The Participant is responsible for ensuring compliance with any applicable restrictions and is advised to consult his or her personal legal advisor on this matter.
22
2019 PSU - WANG
4.Foreign Asset/Account Reporting; Exchange Controls. The Participant’s country may have certain foreign asset and/or account reporting requirements and/or exchange controls that may affect the Participant’s ability to acquire or hold Shares under the Plan or cash received from participating in the Plan (including from any dividends received or sale proceeds arising from the sale of Shares) in a brokerage or bank account outside the Participant’s country. The Participant may be required to report such accounts, assets or transactions to the tax or other authorities in his or her country. The Participant also may be required to repatriate sale proceeds or other cash received as a result of the Participant’s participation in the Plan to his or her country through a designated bank or broker and/or within a certain time after receipt. The Participant acknowledges that it is his or her responsibility to be compliant with such regulations, and the Participant is advised to consult his or her personal legal advisor for any details.
5.Termination of Employment. This provision supplements Section 5(c) of the Performance- and Service-Based Restricted Stock Unit Agreement:
Notwithstanding anything in this Section 5(c), if the Company receives a legal opinion that there has been a legal judgment and/or legal development in the Participant’s jurisdiction that likely would result in the favorable treatment that applies to the RSUs when the Participant terminates employment as a result of the Participant’s Retirement being deemed unlawful and/or discriminatory, the provisions of this Section 5(c) regarding the treatment of the RSUs when the Participant terminates employment as a result of the Participant’s Retirement shall not be applicable to the Participant and the remaining provisions of this Section 5 shall govern.
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2019 PSU - WANG
HILTON GRAND VACATIONS INC.
2017 OMNIBUS INCENTIVE PLAN
PERFORMANCE- AND SERVICE-BASED
RESTRICTED STOCK UNIT AGREEMENT
COUNTRY-SPECIFIC TERMS AND CONDITIONS
Capitalized terms used but not otherwise defined herein shall have the meaning given to such terms in the Plan, the Performance- and Service-Based Restricted Stock Unit Agreement and the Terms and Conditions for Non-U.S. Participants.
Terms and Conditions
This Appendix C includes additional terms and conditions that govern the RSUs if the Participant resides and/or works in one of the countries listed below. If the Participant is a citizen or resident of a country (or is considered as such for local law purposes) other than the one in which the Participant is currently residing and/or working or if the Participant moves to another country after receiving the grant of the RSUs, the Company shall, in its discretion, determine the extent to which the terms and conditions herein shall be applicable to the Participant.
Notifications
This Appendix C also includes information regarding exchange controls and certain other issues of which the Participant should be aware with respect to the Participant’s participation in the Plan. The information is based on the securities, exchange control and other laws in effect in the respective countries as of January 2017. Such laws are often complex and change frequently. As a result, the Company strongly recommends that the Participant not rely on the information in this Appendix C as the only source of information relating to the consequences of the Participant’s participation in the Plan because the information may be out of date at the time that the RSUs vest or the Participant sells Shares acquired under the Plan.
In addition, the information contained herein is general in nature and may not apply to the Participant’s particular situation and the Company is not in a position to assure the Participant of a particular result. Accordingly, the Participant is advised to seek appropriate professional advice as to how the relevant laws in the Participant’s country may apply to the Participant’s situation.
If the Participant is a citizen or resident of a country other than the one in which the Participant is currently residing and/or working (or if the Participant is considered as such for local law purposes) or if the Participant moves to another country after receiving the grant of the RSUs, the information contained herein may not be applicable to the Participant in the same manner.
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2019 PSU - WANG
Notifications
Foreign Asset/Account Reporting Information. If the Participant holds assets (including cash and Shares acquired under the Plan, and possibly RSUs) outside of Japan with a value exceeding ¥50,000,000 (as of December 31 each year), the Participant is required to comply with annual tax reporting obligations with respect to such assets. The Participant is responsible for complying with this reporting obligation, if applicable, and should consult with Participant’s personal tax advisor to ensure that the Participant is properly complying with applicable reporting requirements.
UNITED KINGDOM
Terms and Conditions
Responsibility for Taxes. This provision supplements Section 1 of the Terms and Conditions for Non-U.S. Participants:
Without limitation to Section 1 of the Terms and Conditions for Non-U.S. Participants, the Participant hereby covenants to pay all Tax Related Items, as and when requested by the Company, the Service Recipient or by Her Majesty’s Revenue and Customs (“HMRC”) (or any other tax authority or other relevant authority). The Participant also agrees to indemnify and keep indemnified the Company and the Service Recipient against any Tax-Related Items that they are required to pay or withhold on the Participant’s behalf, have paid or will pay to HMRC (or any other tax authority or other relevant authority).
25
Exhibit 10.6
2020 PSU
SECOND AMENDED AND RESTATED
PERFORMANCE- AND SERVICE-BASED
RESTRICTED STOCK UNIT AGREEMENT
HILTON GRAND VACATIONS INC.
2017 OMNIBUS INCENTIVE PLAN
AWARD NOTICE
The Participant has been granted Performance- and Service-Based Restricted Stock Units (or “RSUs”) with the terms set forth in this Award Notice and subject to the terms and conditions of the Plan and the Amended and Restated Performance- and Service-Based Restricted Stock Unit Agreement, including its appendices, to which this Award Notice is attached. Capitalized terms used and not defined in this Award Notice shall have the meanings set forth in the Second Amended and Restated Performance- and Service-Based Restricted Stock Unit Agreement and the Plan.
1.General.
Participant:
Date of Grant:
Performance Period:
Target Number of Restricted Stock Units Granted: RSUs
2.Performance Conditions.
Performance Conditions (the “Performance Conditions”). The extent to which the Performance Conditions are satisfied and the number of RSUs which become vested, if any, shall be calculated with respect to each Performance Component identified below. All determinations made with respect to Adjusted EBITDA and Contract Sales shall be made by the Committee in its sole discretion and the applicable Performance Conditions shall not be achieved and the RSUs shall not vest unless and to the extent that the Committee certifies that such Performance Conditions have been met.
|
|
• |
Adjusted EBITDA. The total number of RSUs which become vested based on the achievement of Adjusted EBITDA performance levels shall be equal to (x) the target number of RSUs multiplied by (y) a relative weighting component equal to seventy percent (70%), multiplied by (z) the Achievement Percentage determined based upon the applicable Adjusted EBITDA Position for the Performance Period as follows, and rounded down to the nearest whole Share: |
|
Level of Achievement |
|
Adjusted EBITDA Position |
|
Percentage of
|
|
Below Threshold |
|
Less than$[●]M |
|
0% |
|
Threshold |
|
$[●]M |
|
50% |
|
Target |
|
$[●]M |
|
100% |
|
Maximum |
|
$[●]M |
|
200% |
1
2020 PSU
|
Level of Achievement |
|
Adjusted EBITDA Position |
|
Percentage of
|
|
Below Threshold |
|
Less than$[●]M |
|
0% |
|
Threshold |
|
$[●]M |
|
50% |
|
Target |
|
$[●]M |
|
100% |
|
Maximum |
|
$[●]M |
|
200% |
|
|
• |
Continued Employment or Service. In addition to the attainment of the Performance Conditions, the Participant must be an employee of or in service to the Company or the Company Group from the Date of Grant until the last day of the Performance Period, except to the extent otherwise provided in the Plan or the Agreement. |
|
|
• |
Committee Discretion to Adjust Performance Goals and/or Calculations. In the event of an acquisition or disposition of any business, line of business or assets by the Company (and in the case of an acquisition, only such acquisition transaction in which the Company is the acquiror and/or the surviving entity, and does not otherwise constitute a Change in Control), the Committee shall in good faith and in such manner as it may deem equitable adjust the performance goals and/or the calculation of Adjusted EBITDA and Contract Sales to reflect the projected effect of such transaction(s) or event(s). |
3.Definitions.
For purposes of this Award Notice:
(a)“Achievement Percentage” means the “Percentage of Award Earned” specified with respect to the below threshold, threshold, target, and/or maximum levels for each Performance Component, as applicable, or a percentage determined using linear interpolation if actual performance falls between threshold and target, or between target and maximum levels (and rounded to the nearest whole percentage point and, if equally between two percentage points, rounded up). In the event that actual performance does not meet the threshold level for any Performance Component, the “Achievement Percentage” with respect to such Performance Component shall be zero.
(b)“Adjusted EBITDA” means the Company’s earnings before interest expense, taxes and depreciation and amortization, (i) adjusted to exclude gains, losses and expenses in connection with (A) asset dispositions, (B) foreign currency transactions, (C) debt restructurings/retirements, (D) non-cash impairment losses, (E) reorganization costs, including severance and relocation costs, (F) share-based and certain other compensation expenses, (G) costs related to the spin-off, and (H) other items, and (ii) further adjusted for net construction related recognition and deferral activity.
(c)“Contract Sales” means the total dollar amount of vacation ownership interest products under purchase agreements signed during the period where the Company has received a down payment of at least ten percent (10%) of the contract price, net of upgrades, before first-day incentives.
(d)“Performance Components” means the performance criteria applicable to an Award, as set forth on the Award Notice.
2
2020 PSU
SECOND AMENDED AND RESTATED
PERFORMANCE- AND SERVICE-BASED
RESTRICTED STOCK UNIT AGREEMENT
HILTON GRAND VACATIONS INC.
2017 OMNIBUS INCENTIVE PLAN
This Second Amended and Restated Performance- and Service-Based Restricted Stock Unit Agreement (the “Second Amended and Restated Agreement”), entered into the [ ] day of [ ], 2020 and effective as of the Date of Grant (as defined below), is between Hilton Grand Vacations Inc., a Delaware corporation (the “Company”), and the Participant (as defined below).
WHEREAS, the Company has adopted the Hilton Grand Vacations Inc. 2017 Omnibus Incentive Plan (as it may be amended, the “Plan”) to provide a means through which the Company and the other members of the Company Group may attract and retain key personnel and to provide a means whereby officers, employees, consultants and advisors of the Company and the other members of the Company Group can acquire and maintain an equity interest in the Company or receive an incentive award;
WHEREAS, the Participant is an employee or consultant of the Company or another member of the Company Group; and
WHEREAS, the Committee has determined to grant performance- and service-based RSUs to the Participant as provided for herein, and the Company and the Participant hereby wish to memorialize the terms and conditions applicable to the performance- and service-based RSUs.
NOW, THEREFORE, the parties hereto agree as follows:
1.Definitions. Capitalized terms not otherwise defined herein shall have the same meanings as in the Plan. In addition to other terms defined herein or in the Award Notice, the following terms shall have the following meanings for purposes of this Agreement:
(a)“Agreement” shall mean this Second Amended and Restated Performance- and Service-Based Restricted Stock Unit Agreement including (unless the context otherwise requires) the Award Notice, Appendix A, and the appendices for non-U.S. Participants attached hereto as Appendix B and Appendix C.
(b)“Award Notice” shall mean the notice to the Participant.
(c)“Date of Grant” shall mean the “Date of Grant” listed in the Award Notice.
(d)“Participant” shall mean the “Participant” listed in the Award Notice.
(e)“Performance Conditions” shall mean the performance conditions set forth in the Award Notice.
(f)“Performance Period” shall mean the performance period set forth in the Award Notice.
(g)“Restrictive Covenant Violation” shall mean the Participant’s breach of the Restrictive Covenants listed on Appendix A or any covenant regarding confidentiality, competitive activity, solicitation of the Company’s vendors, suppliers, customers, or employees, or any similar provision applicable to or agreed to by the Participant.
3
2020 PSU
(h)“Retirement” shall mean the Participant’s termination of employment with the Company Group, other than (i) for Cause or while grounds for Cause exist, (ii) due to the Participant’s death or (iii) due to or during the Participant’s Disability, in each case, following the date on which both (X) the Participant attained the age of 55 years old and (Y) the number of completed years of the Participant’s employment with any member(s) of the Company Group (including any predecessor of a member thereof, including, for the avoidance of doubt, employment by Hilton Worldwide and its affiliates prior to January 3, 2017) is at least ten (10).
(i)“RSUs” shall mean that total number of performance- and service-based restricted stock units listed in the Award Notice as “Target Number of Restricted Stock Units Granted” (or such greater or lesser number of RSUs as may be vested and earned herein, as determined in the Committee’s discretion), as such number of performance- and service-based restricted stock units may be adjusted in accordance with Section 10 below.
(j)“Shares” shall mean a number of shares of the Company’s Common Stock equal to the number of RSUs (or such greater or lesser number of shares as may be vested and earned herein, as determined in the Committee’s discretion).
2.Grant of Units. On _____________, the Company granted the RSUs to the Participant, each of which represents the right to receive one Share upon vesting of such RSUs, subject to and in accordance with the terms, conditions and restrictions set forth in the Plan, the Award Notice, and this Agreement.
3.RSU Account. The Company shall cause an account (the “Unit Account”) to be established and maintained on the books of the Company to record the number of RSUs credited to the Participant under the terms of this Agreement. The Participant’s interest in the Unit Account shall be that of a general, unsecured creditor of the Company.
4.Vesting; Settlement; Tax Withholding.
(a)As promptly as practicable (and, in no event more than 70 days) following the last day of the Performance Period, the Committee shall determine if and the extent to which the Performance Conditions have been satisfied (the date of such determination, the “Determination Date”), and any RSUs with respect to which the Performance Conditions have been satisfied shall become vested effective as of the last day of the Performance Period, subject to Section 5(d); provided that, unless otherwise provided in Section 5, the Participant also meets the continued employment or service condition set forth in the Award Notice. Any RSU which does not become vested effective as of the last day of the Performance Period shall be cancelled and forfeited to the Company without consideration or any further action by the Participant or the Company. In the event of an equity restructuring, the Committee shall adjust any Performance Condition to the extent it is affected by such restructuring in order to preserve (without enlarging) the likelihood that such Performance Condition shall be satisfied. The manner of such adjustment shall be determined by the Committee in its sole discretion. For this purpose, “equity restructuring” shall mean an “equity restructuring” as defined in Financial Accounting Standards Board Accounting Standards Codification 718-10 (formerly Statement of Financial Accounting Standards 123R).
(b)The Company shall deliver to the Participant one share of Common Stock for each vested RSU (as adjusted under the Plan), pursuant to Section 4(c) below, and each such vested RSU shall be cancelled upon delivery.
4
2020 PSU
(c)Shares, free and clear of all restrictions, shall be issued to the Participant (or his or her beneficiary) only in the event, and to the extent, that the RSUs have vested and been earned as provided in the Award Notice and in the Agreement. Upon vesting of the RSUs, Shares shall be issued to the Participant (or his or her beneficiary) within 70 days following the applicable vesting date set forth in Section 4(a) herein. Notwithstanding the foregoing, the following provisions shall apply: (i) any Shares earned and vested due to termination of employment or service as provided in Section 5(b) or Section 5(e) shall be paid within 70 days following the Participant’s Termination Date; (ii) any Shares earned and vested following Retirement as provided in Section 5(c) shall be paid within 70 days following the applicable vesting date set forth in Section 4(a) and Section 5(c) herein; and (iii) any Shares earned and vested as a result of a Change in Control as provided in Section 5(h) shall be paid within 70 days following the date of the Change in Control. If the 70-day period described herein begins in one calendar year and ends in another, the Participant (or his or her beneficiary) shall not have the right to designate the calendar year of the payment (except as otherwise provided below with respect to a delay in payments if the Participant is a “specified employee”). Further, if calculation of the amount of the payment is not administratively practicable due to events beyond the control of the Participant (or his or her beneficiary), the payment will be treated as made within the applicable 70-day time period specified herein if the payment is made during the first taxable year of the Participant in which the calculation of the amount of the payment is administratively practicable or otherwise in accordance with Code Section 409A. Notwithstanding the foregoing, if the Participant is or may be a “specified employee” (as defined under Code Section 409A), and the distribution is considered deferred compensation under Code Section 409A, then such distribution if made due to separation from service shall be subject to delay as provided in Section 14(u) of the Plan (or any successor provision thereto).
(d)The Participant shall be required to pay to the Company or, if different, the Service Recipient, an amount in cash (by check or wire transfer) equal to the aggregate amount of any income, employment and/or other applicable taxes (the “Withholding Taxes”) that are statutorily required to be withheld in respect of the RSUs. Alternatively, the Company may elect, in its sole discretion, to satisfy this requirement by withholding such amount from any cash compensation or other cash amounts owing to the Participant. Without limiting the foregoing, the Committee may (but is not obligated to), in its sole discretion, permit or require the Participant to satisfy, all or any portion of the minimum Withholding Taxes that are statutorily required to be withheld with respect to the RSUs by (i) the delivery of shares of Common Stock (which are not subject to any pledge or other security interest) that have been both held by the Participant and vested for any period of time as established from time to time by the Committee in order to avoid adverse accounting treatment under GAAP having an aggregate Fair Market Value equal to such minimum statutorily required Withholding Taxes (or portion thereof); or (ii) having the Company withhold from the Shares otherwise issuable or deliverable to, or that would otherwise be retained by, the Participant upon the vesting of the RSUs, a number of Shares with an aggregate Fair Market Value equal to an amount not in excess of such minimum statutorily required Withholding Taxes (or portion thereof). Notwithstanding the foregoing, the Committee, subject to its having considered the applicable accounting impact of any such determination, has full discretion to allow the Participant to satisfy, in whole or in part, any additional Withholding Taxes payable by him or her with respect to the RSUs by electing to have the Company withhold from the Shares issuable to the Participant upon the vesting of the RSUs, a number of Shares having an aggregate Fair Market Value that is greater than the applicable minimum required statutory Withholding Taxes (but such withholding may in no event be in excess of the maximum statutory withholding amount(s) in the Participant’s relevant tax jurisdiction). Further, for non-U.S. Participants, the Company may withhold from the Shares issuable to such non-U.S. Participant upon the vesting of the RSUs, a number of Shares having an aggregate Fair Market Value up to the maximum statutory withholding amount(s) in the non-U.S. Participant’s relevant tax jurisdiction.
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2020 PSU
(e)The Company shall pay any costs incurred in connection with issuing the Shares. Upon the issuance of the Shares (to the extent earned) to the Participant, the Participant’s Unit Account shall be eliminated. Notwithstanding anything in this Agreement to the contrary, the Company shall have no obligation to issue or transfer the Shares as contemplated by this Agreement unless and until such issuance or transfer shall comply with all relevant provisions of law and the requirements of any stock exchange on which the Company’s shares are listed for trading.
5.Termination of Employment or Service.
(a)Subject to the provisions of this Section 5, if the Participant’s employment with or service to the Company Group terminates for any reason, the unvested RSUs shall terminate as of the effective date of termination (the “Termination Date”), and all of the Participant’s rights hereunder with respect to such unvested RSUs shall cease as of the Termination Date (unless otherwise provided for by the Committee in accordance with the Plan).
(b)If the Participant’s employment or service is terminated by the Service Recipient during the Performance Period due to or during the Participant’s Disability or due to the Participant’s death, a pro-rated number of the target number of RSUs granted hereunder shall become vested and nonforfeitable (irrespective of performance) based on the number of days in the Performance Period prior to the Termination Date relative to the number of the days in the full Performance Period. Any RSUs that vest as provided herein shall be settled in accordance with Section 4.
(c)In the event the Participant’s employment with or service to the Company Group is terminated as a result of the Participant’s Retirement, the RSUs granted hereunder shall remain outstanding and eligible to vest, notwithstanding such termination of employment or service, based on (and to the extent) the Committee’s determination that the Performance Conditions have been satisfied on the Determination Date, in accordance with the schedule set forth in the Award Notice, so long as no Restrictive Covenant Violation occurs (as determined by the Committee, or its designee, in its sole discretion) prior to the Determination Date. Any RSUs that vest as provided herein shall be settled in accordance with Section 4. As a pre-condition to the Participant’s right to continued vesting following Retirement, the Committee, or its designee, may require the Participant to certify in writing prior to the applicable vesting date that no Restrictive Covenant Violation has occurred. Notwithstanding the foregoing, if the Date of Grant of the RSUs is not at least six months prior to the date of the Participant’s Retirement, any unvested RSUs shall terminate as of the Termination Date.
(d)If the Participant’s employment with or service to the Company Group terminates for any reason after the last day of the Performance Period and before the Determination Date (other than a termination by the Company for Cause, or by the Participant while grounds for Cause exist or without Good Reason), and no Restrictive Covenant Violation occurs before the Determination Date, then all RSUs shall remain outstanding and eligible to vest based on (and to the extent) the Committee’s determination that the Performance Conditions have been satisfied on the Determination Date.
(e)Notwithstanding anything herein to the contrary, the RSUs granted hereunder shall become immediately fully vested as of the Termination Date and settled in accordance with Section 4 if the Participant’s employment with or service to the Company Group shall be terminated by the Company other than for Cause, or by the Participant for Good Reason, in either case if such termination of the Participant’s employment occurs within 12 months following a Change in Control (for the avoidance of doubt, a Change in Control alone shall not, also, result in any vesting hereunder), with the actual number of RSUs determined based on (i) actual performance through the Termination Date, as determined by the Committee, or (ii) if the Committee determines that measurement of actual performance cannot be reasonably assessed, the assumed achievement of target performance as determined by the Committee.
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2020 PSU
(f)For purposes of this Section 5, “Good Reason” means the occurrence of any of the following, without the Participant’s written consent:
(i)a material diminution in the Participant’s base salary;
(ii) a material diminution in the Participant’s authority, duties, responsibilities or position; or
(iii)a permanent reassignment by the Company or the Service Recipient of the Participant’s primary office to a location that is more than 100 miles from the Participant’s assigned primary office;
provided, however, that a termination by the Participant for any of the reasons listed in (i) through (iii) above shall not constitute a termination for Good Reason unless the Participant shall first have delivered to the Company written notice setting forth with specificity the occurrence deemed to give rise to a right to terminate for Good Reason (which notice must be given no later than 60 days after the initial occurrence of such event), and the Company fails to cure such event within 30 days after receipt of this written notice. The Participant’s employment must be terminated for Good Reason within 120 days after the occurrence of an event of Good Reason.
(g)The Participant’s rights with respect to the RSUs shall not be affected by any change in the nature of the Participant’s employment or service so long as the Participant continues to be an employee or consultant, respectively, of the Company Group. Whether (and the circumstances under which) employment or service has terminated and the determination of the Termination Date for the purposes of this Agreement shall be determined by the Committee (or, with respect to any Participant who is not a director or “officer” as defined under Rule 16a-1(f) of the Exchange Act, such action may also be taken by its designee, in each case whose good faith determination shall be final, binding and conclusive; provided, that such designee may not make any such determination with respect to the designee’s own employment for purposes of the RSUs).
(h)Without limiting the effect of Section 5(e) herein, and subject to Section 12 of the Plan, in the event of a Change in Control during the Participant’s employment with or service to the Company Group or while any RSUs remain outstanding and eligible to vest, and prior to the completion of the Performance Period, the successor or surviving company in the Change in Control may assume or substitute for the RSUs (or in which the Company is the ultimate parent corporation and continues the RSUs), with the actual number of RSUs determined based on (i) actual performance through the date of such Change in Control, as determined by the Committee, or (ii) if the Committee determines that measurement of actual performance cannot be reasonably assessed, the assumed achievement of target performance as determined by the Committee, and such assumed or substituted RSUs shall remain outstanding and eligible to vest based on continued service through the last day of the Performance Period, except to the extent otherwise provided in the Plan or the Agreement. Notwithstanding the foregoing, in the event the successor or surviving company in the Change in Control does not assume or substitute for the RSUs (or in which the Company is the ultimate parent corporation and does not continue the RSUs) on substantially similar terms or with substantially equivalent economic benefits (as determined by the Committee) as RSUs outstanding under the Plan immediately prior to the Change in Control, then the target number of RSUs granted hereunder shall become immediately fully vested as of the date of such Change in Control and settled in accordance with Section 4.
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2020 PSU
6.Dividend Equivalents. A Participant holding unvested RSUs shall be entitled to be credited with dividend equivalent payments (upon the payment by the Company of dividends on Shares), which shall accrue in cash without interest (unless otherwise elected by the Committee) and shall be delivered in cash (unless the Committee in its sole discretion, elects to settle such amount in shares of Common Stock, other securities, other Awards or other property having a Fair Market Value as of the settlement date equal to the amount of such dividends). Accrued dividend equivalents shall not be paid unless and until the underlying RSUs (or portion thereof) have vested. Any such dividend equivalents in respect of unvested RSUs shall be paid within fifteen (15) days after the RSUs are vested and become payable or distributable unless the Committee determines otherwise.
7.Restrictions on Transfer. The Participant may not assign, alienate, pledge, attach, sell or otherwise transfer or encumber the RSUs or the Participant’s right under the RSUs to receive Shares (unless such transfer is specifically required pursuant to a domestic relations order or by applicable law), other than by will or by the laws of descent and distribution, and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against any member of the Company Group; provided that the designation of a beneficiary shall not constitute an assignment, alienation, pledge, attachment, sale, transfer or encumbrance.
8.No Right to Continued Employment or Service. Neither the Plan, the Agreement nor any action taken thereunder or hereunder shall be construed as giving the Participant any right to be retained in the employ or service of the Service Recipient or any other member of the Company Group. The Service Recipient or any other member of the Company Group may at any time dismiss the Participant from employment or discontinue any consulting relationship, free from any liability or claim under the Plan or this Agreement, unless otherwise expressly provided in the Plan or this Agreement.
9.No Rights as a Stockholder. Except as otherwise provided in the Plan or this Agreement, the Participant shall not be entitled to the privileges of ownership in respect of the Shares until the Shares have been issued or delivered to the Participant.
10.Adjustments Upon Change in Capitalization. The terms of this Agreement, including the RSUs, the Participant’s Unit Account, any dividend equivalent payments accrued pursuant to Section 6 and/or the Shares, shall be subject to adjustment in accordance with Section 12 of the Plan. This paragraph shall also apply with respect to any extraordinary dividend or other extraordinary distribution in respect of the Company’s Common Stock (whether in the form of cash or other property) to the extent provided in the Plan.
11.Award Subject to Plan. By entering into this Agreement, the Participant agrees and acknowledges that the Participant has received and read a copy of the Plan. The RSUs granted hereunder are subject to the Plan. The terms and provisions of the Plan, as it may be amended from time to time, are hereby incorporated herein by reference. Unless the Committee determines otherwise, in the event of a conflict between any term or provision contained herein and a term or provision of the Plan, the applicable terms and provisions of the Plan shall govern and prevail.
12.Severability. If any provision of the Plan or this Agreement is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction or as to the Participant or the RSUs, or would disqualify the Plan or the RSUs under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to the applicable laws, or if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Agreement, such provision shall be construed or deemed stricken as to such jurisdiction, the Participant or the RSUs and the remainder of the Plan and this Agreement shall remain in full force and effect.
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2020 PSU
13.Governing Law; Waiver of Jury Trial; Venue. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware applicable to contracts made and performed wholly within the State of Delaware, without giving effect to the conflict of laws provisions thereof. The Participant hereby irrevocably waives all right to a trial by jury in any suit, action or other proceeding instituted by or against such Participant in respect of the Participant’s rights or obligations hereunder. Any suit, action or proceeding with respect to this Agreement (or any provision incorporated by reference), or any judgment entered by any court in respect of any thereof, shall be brought in any court of competent jurisdiction in the State of Florida, and each of the Participant, the Company, and any transferees who hold RSUs pursuant to a valid assignment, hereby submit to the exclusive jurisdiction of such courts for the purpose of any such suit, action, proceeding, or judgment. Each of the Participant, the Company, and any transferees who hold RSUs pursuant to a valid assignment hereby irrevocably waive (a) any objections which he or she may now or hereafter have to the laying of the venue of any suit, action, or proceeding arising out of or relating to this Agreement brought in any court of competent jurisdiction in the State of Florida and (b) any claim that any such suit, action, or proceeding brought in any such court has been brought in any inconvenient forum.
14.Language. If the Participant has received a copy of this Agreement (or the Plan or any other document related hereto or thereto) translated into a language other than English, such translated copy is qualified in its entirety by reference to the English version thereof, and in the event of any conflict the English version shall govern. The Participant acknowledges that the Participant is sufficiently proficient in English to understand the terms and conditions of the Plan and this Agreement.
Successors in Interest. Any successor to the Company shall have the benefits of the Company under, and be entitled to enforce, this Agreement. Likewise, the Participant’s legal representative shall have the benefits of the Participant under, and be entitled to enforce, this Agreement. All obligations imposed upon the Participant and all rights granted to the Company under this Agreement shall be final, binding and conclusive upon the Participant’s heirs, executors, administrators and successors.
16.Data Privacy Consent.
The Participant hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of the Participant’s personal data as described in this Agreement and any other RSU grant materials by and among, as applicable, the Service Recipient, the Company and other members of the Company Group for the purpose of implementing, administering and managing the Plan.
Participant understands that the Company and the Service Recipient may hold certain personal information about the Participant, including, but not limited to, the Participant’s name, home address, email address and telephone number, date of birth, passport, social insurance number or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company, details of all stock options, restricted stock units or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in the Participant’s favor (“Data”), for the purpose of implementing, administering and managing the Plan.
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2020 PSU
The Participant understands that Data will be transferred to any third parties as may be selected by the Company (presently or in the future), which assist the Company with the implementation, administration and management of the Plan. The Participant understands that the recipients of the Data may be located in the United States or elsewhere, and that the recipients’ country (e.g., the United States) may have different data privacy laws and protections than the Participant’s country. The Participant understands that if the Participant resides outside the United States the Participant may request a list with the names and addresses of any potential recipients of the Data by contacting the Participant’s local human resources representative. The Participant authorizes the Company and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purpose of implementing, administering and managing the Plan. The Participant understands that Data will be held only as long as is necessary to implement, administer and manage the Plan. The Participant understands that if the Participant resides outside the United States, the Participant may, at any time, view Data, request information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing the Participant’s local human resources representative. Further, the Participant understands that the Participant is providing the consents herein on a purely voluntary basis. If the Participant does not consent, or if the Participant later seeks to revoke the Participant’s consent, the Participant’s employment status or service with the Service Recipient will not be affected; the only consequence of refusing or withdrawing the Participant’s consent is that the Company may not be able to grant options or other equity awards to the Participant or administer or maintain such awards. Therefore, the Participant understands that refusing or withdrawing the Participant’s consent may affect the Participant’s ability to participate in the Plan. For more information on the consequences of the Participant’s refusal to consent or withdrawal of consent, the Participant understands that the Participant may contact the Participant’s local human resources representative.
Restrictive Covenants. The Participant acknowledges and recognizes the highly competitive nature of the businesses of the Company and its Affiliates, that the Participant shall be allowed access to confidential and proprietary information (including but not limited to trade secrets) about those businesses, as well as access to the prospective and actual customers, suppliers, investors, clients and partners involved in those businesses, and the goodwill associated with the Company and its Affiliates. Participant accordingly agrees to the provisions of Appendix A to this Agreement (the “Restrictive Covenants”). For the avoidance of doubt, the Restrictive Covenants contained in this Agreement are in addition to, and not in lieu of, any other restrictive covenants or similar covenants or agreements between the Participant and the Company or any of its Affiliates.
18.Repayment of Proceeds; Clawback Policy; Compliance with Ownership and Other Policies and Agreements.
(a)If a Restrictive Covenant Violation occurs or the Company discovers after a termination of employment or service that grounds existed for Cause at the time thereof, then the Participant shall be required, unless the Committee determines otherwise, in addition to any other remedy available (on a non-exclusive basis), to pay to the Company, within ten (10) business days of the Company’s request to the Participant therefor, an amount equal the aggregate after-tax proceeds (taking into account all amounts of tax that would be recoverable upon a claim of loss for payment of such proceeds in the year of repayment) the Participant received upon the sale or other disposition of, or distributions in respect of, the RSUs and any Shares or cash issued in respect thereof. Any reference in this Agreement to grounds existing for a termination of employment or service with Cause shall be determined without regard to any notice period, cure period or other procedural delay or event required prior to finding of or termination with Cause.
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2020 PSU
(b)The RSUs shall be subject to reduction, cancellation, forfeiture or recoupment to the extent necessary to comply with (i) any clawback, forfeiture or other similar policy adopted by the Board or the Committee and as in effect from time to time and (ii) applicable law. Further, to the extent that the Participant receives any amount in excess of the amount that the Participant should otherwise have received under the terms of this Agreement for any reason (including, without limitation, by reason of a financial restatement, mistake in calculations or other administrative error), the Participant shall be required to repay any such excess amount to the Company.
(c)Without limiting the terms of the Plan, and as a condition to receiving the RSUs or any benefit hereunder, the Participant agrees that he or she shall abide by all provisions of any equity retention policy, stock ownership guidelines and/or other policies adopted by the Company or an Affiliate, each as in effect from time to time and to the extent applicable to the Participant.
Limitation on Rights; No Right to Future Grants; Extraordinary Item of Compensation. By accepting this Agreement and the grant of the RSUs contemplated hereunder, the Participant expressly acknowledges that (a) the Plan is discretionary in nature and may be suspended or terminated by the Company at any time; (b) the grant of RSUs is a one-time benefit that does not create any contractual or other right to receive future grants of RSUs or other Awards under the Plan, or benefits in lieu of RSUs; (c) all determinations with respect to future grants of RSUs, if any, including the grant date, the number of Shares granted and the applicable vesting terms, shall be at the sole discretion of the Committee and/or the Company; (d) the Participant’s participation in the Plan is voluntary; (e) the value of the RSUs is an extraordinary item of compensation that is outside the scope of the Participant’s employment or consulting contract, if any, and nothing can or must automatically be inferred from such employment or consulting contract or its consequences; (f) grants of RSUs are not part of normal or expected compensation for any purpose and are not to be used for calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments, the Participant waives any claim on such basis, and for the avoidance of doubt, the RSUs shall not constitute an “acquired right” under the applicable law of any jurisdiction; and (g) the future value of the underlying Shares is unknown and cannot be predicted with certainty. In addition, the Participant hereby waives any claim to continued vesting of the RSUs or to damages or severance entitlement related to non-continuation of the RSUs beyond the period provided under the Plan or this Agreement, except to the extent of any provision to the contrary in any written employment contract or other agreement between the Service Recipient and/or any member of the Company Group and the Participant, whether any such agreement is executed before, on or after the Date of Grant.
Amendment of Agreement. The Committee may, to the extent consistent with the terms of the Plan and this Agreement, waive any conditions or rights under, amend any terms of, or alter, suspend, discontinue, cancel or terminate, any RSUs granted hereunder or this Agreement, prospectively or retroactively (including after the Participant’s Termination); provided, that, other than as provided in the Plan, any such waiver, amendment, alteration, suspension, discontinuance, cancellation or termination that would materially and adversely affect the rights of any Participant with respect to the RSUs granted hereunder shall not to that extent be effective without the consent of the Participant; provided, further, that in no event shall any such amendment alter the Minimum Vesting Condition.
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2020 PSU
Award Administrator. The Company may from time to time designate a third party (an “Award Administrator”) to assist the Company in the implementation, administration and management of the Plan and any RSUs granted thereunder, including, but not limited to, by sending award notices on behalf of the Company to Participants, and by facilitating through electronic means acceptance of agreements by Participants.
22.Section 409A of the Code.
(a)Notwithstanding any provision of the Plan or this Agreement to the contrary, it is intended that the provisions of this Agreement comply with, or be exempt from, Section 409A of the Code, and all provisions of this Agreement shall be construed and interpreted in a manner consistent with the requirements for avoiding taxes or penalties under Section 409A of the Code. The Participant is solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on or in respect of the Participant in connection with this Agreement (including any taxes and penalties under Section 409A of the Code), and neither the Service Recipient nor any other member of the Company Group shall have any obligation to indemnify or otherwise hold the Participant (or any beneficiary) harmless from any or all such taxes or penalties. If the RSUs are considered “deferred compensation” subject to Section 409A of the Code, references in this Agreement to “termination of employment” (and substantially similar phrases) shall mean “separation from service” within the meaning of Section 409A of the Code. For purposes of Section 409A of the Code, each of the payments that may be made in respect of the RSUs shall be deemed as separate payments.
(b)Notwithstanding anything in the Plan or this Agreement to the contrary, if a Participant is a “specified employee” within the meaning of Section 409A of the Code, no payments in respect of any RSU that is “deferred compensation” subject to Section 409A of the Code and which would otherwise be payable upon the Participant’s “separation from service” (as defined in Section 409A of the Code) shall be made to such Participant prior to the date that is six (6) months after the date of the Participant’s “separation from service” or, if earlier, the date of the Participant’s death. Following any applicable six (6) month delay, all such delayed payments shall be paid in a single lump sum on the earliest date permitted under Section 409A of the Code that is also a business day.
(c)Unless otherwise provided by the Committee in this Agreement or otherwise, in the event that the timing of payments in respect of the RSUs (that would otherwise be considered “deferred compensation” subject to Section 409A of the Code) would be accelerated upon the occurrence of (i) a Change in Control, no such acceleration shall be permitted (to the extent required under Section 409A) unless the event giving rise to the Change in Control satisfies the definition of a change in the ownership or effective control of a corporation, or a change in the ownership of a substantial portion of the assets of a corporation pursuant to Section 409A of the Code or (ii) a Disability, no such acceleration shall be permitted unless the Disability also satisfies the definition of “Disability” pursuant to Section 409A of the Code if and to the extent required under Section 409A of the Code.
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2020 PSU
Restriction on Restricted Stock Unit Award and Shares. The obligation of the Company to settle the RSUs in Shares or other consideration shall be subject to all applicable laws, rules and regulations, and to such approvals by governmental agencies as may be required. Notwithstanding any terms or conditions of this Agreement to the contrary, the Company shall be under no obligation to offer to sell, and shall be prohibited from offering to sell or selling, any Shares underlying the RSUs unless such shares have been properly registered for sale pursuant to the Securities Act with the Securities and Exchange Commission or unless the Company has received an opinion of counsel (if the Company has requested such an opinion), satisfactory to the Company, that such shares may be offered or sold without such registration pursuant to an available exemption therefrom and the terms and conditions of such exemption have been fully complied with. The Company shall be under no obligation to register for sale under the Securities Act any of the Shares. The Committee shall have the authority to provide that all Shares shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan, this Agreement, the Federal securities laws or the rules, regulations and other requirements of the Securities and Exchange Commission, any securities exchange or inter-dealer quotation system on which the securities of the Company are listed or quoted and any other applicable Federal, state, local or non-U.S. laws, rules, regulations and other requirements, and, without limiting the generality of the Plan, the Committee may cause a legend or legends to be put on certificates representing the Shares. Notwithstanding any provision in the Plan to the contrary, the Committee reserves the right to add any additional terms or provisions to the Performance- and Service-Based Restricted Stock Unit Agreement that the Committee, in its sole discretion, deems necessary or advisable in order that this Agreement complies with the legal requirements of any governmental entity to whose jurisdiction this Agreement is subject. The Committee may cancel the RSUs or any portion thereof if it determines, in its sole discretion, that legal or contractual restrictions and/or blockage and/or other market considerations would make the Company’s acquisition of shares of Common Stock from the public markets, the Company’s issuance of the Shares to the Participant, the Participant’s acquisition of the Shares from the Company and/or the Participant’s sale of Common Stock to the public markets, illegal, impracticable or inadvisable. If the Committee determines to cancel all or any portion of the RSUs in accordance with the foregoing, the Company shall, subject to any limitations or reductions as may be necessary to comply with Section 409A of the Code, provide the Participant with a cash payment or equity subject to deferred vesting and delivery consistent with the vesting restrictions applicable to the RSUs.
Book Entry Delivery of Shares. Whenever reference in this Agreement is made to the issuance or delivery of certificates representing one or more Shares, the Company may elect to issue or deliver such Shares in book entry form in lieu of certificates.
Electronic Delivery and Acceptance. The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.
Acceptance and Agreement by the Participant. By accepting the RSUs (including through electronic means), the Participant agrees to be bound by the terms, conditions and restrictions set forth in the Plan, this Agreement and the Company’s policies, as in effect from time to time, relating to the Plan.
No Advice Regarding Grant. The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Participant’s participation in the Plan, or the Participant’s acquisition or sale of the underlying Shares. The Participant is hereby advised to consult with his or her own personal tax, legal and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan.
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2020 PSU
Appendices For Non-U.S. Participants. Notwithstanding any provisions in this Agreement, Participants residing and/or working outside the United States shall be subject to the Terms and Conditions for Non-U.S. Participants attached hereto as Appendix B and to any Country-Specific Terms and Conditions for the Participant’s country attached hereto as Appendix C. If the Participant relocates from the United States to another country, the Terms and Conditions for Non-U.S. Participants and the applicable Country-Specific Terms and Conditions shall apply to the Participant, to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. Moreover, if the Participant relocates between any of the countries included in the Country-Specific Terms and Conditions, the special terms and conditions for such country shall apply to the Participant, to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. The Terms and Conditions for Non-U.S. Participants and the Country-Specific Terms and Conditions constitute part of this Agreement.
Imposition of Other Requirements. The Company reserves the right to impose other requirements on the Participant’s participation in the Plan, on the RSUs and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require the Participant to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.
Right of Offset. Subject to any considerations under Section 409A of the Code, the Company shall have the right to offset against its obligation to deliver Shares under this Agreement any outstanding amounts (including, without limitation, travel and entertainment or advance account balances, loans, repayment obligations under any Awards or amounts repayable to the Company pursuant to tax equalization, housing, automobile or other employee programs) that the Participant then owes to any member of the Company Group and any amounts the Committee otherwise deems appropriate pursuant to any tax equalization policy or agreement. Notwithstanding the foregoing, if the RSUs are “deferred compensation” subject to Section 409A of the Code, the Committee shall have no right to offset against its obligation to deliver Shares under this Agreement if such offset could subject the Participant to the additional tax imposed under Section 409A of the Code in respect of the RSUs.
Waiver. The Participant acknowledges that a waiver by the Company of breach of any provision of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by the Participant or any other participant in the Plan.
Rules of Construction. Headings are given to the section of this Agreement solely as a convenience to facilitate reference. The reference to any statute, regulation or other provision of law shall (unless the Administrator determines otherwise) be construed to refer to any amendment to or successor of such provision of law.
Counterparts. This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one in the same agreement.
[Signatures follow]
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2020 PSU
IN WITNESS WHEREOF, the parties have caused this Agreement to be effective as of the Date of Grant.
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Participant Signature |
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2020 PSU
Restrictive Covenants
1.Non-Competition; Non-Solicitation.
(a)Participant acknowledges and recognizes the highly competitive nature of the businesses of the Company and its Affiliates and accordingly agrees as follows:
(i)During Participant’s employment with or service to the Company or its Affiliates (the “Employment Term”) and for a period that ends on the later of (A) one year following the date Participant ceases to be employed by or in service to the Company or any of its Affiliates or (B) the last date any portion of the Award granted under this Agreement is eligible to vest if Participant ceases to be employed by the Company or any of its Affiliates as a result of the Participant’s Retirement (the “Restricted Period”), Participant shall not, whether on Participant’s own behalf or on behalf of or in conjunction with any person, firm, partnership, joint venture, association, corporation or other business organization, entity or enterprise whatsoever (“Person”), directly or indirectly solicit or assist in soliciting in competition with the Restricted Group in the Business, the business of any then current or prospective client or customer with whom Participant (or his direct reports) had personal contact or dealings on behalf of the Company or any of its Affiliates during the one-year period preceding Participant’s termination of employment or service.
(ii)During the Restricted Period, Participant shall not directly or indirectly:
(A)engage in the Business providing services in the nature of the services Participant provided to the Company at any time in the one year prior to the termination of Participant’s employment or service, for a Competitor;
(B)enter the employ of, or render any services to, a Competitor, except where such employment or services do not relate in any manner to the Business;
(C)acquire a financial interest in, or otherwise become actively involved with, a Competitor, directly or indirectly, as an individual, partner, shareholder, officer, director, principal, agent, trustee or consultant; or
(D)intentionally and adversely interfere with, or attempt to adversely interfere with, business relationships between the members of the Restricted Group and any of their clients, customers, suppliers, partners, members or investors.
(iii)Notwithstanding anything to the contrary in this Appendix A, Participant may, directly or indirectly own, solely as an investment, securities of any Person engaged in a Business (including, without limitation, a Competitor) which are publicly traded on a national or regional stock exchange or on the over-the-counter market if Participant (A) is not a controlling person of, or a member of a group which controls, such person and (B) does not, directly or indirectly, own 2% or more of any class of securities of such Person.
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2020 PSU
(iv)During the Restricted Period, Participant shall not, whether on Participant’s own behalf or on behalf of or in conjunction with any Person, directly or indirectly:
(A)solicit or encourage any executive-level employee of the Restricted Group, with whom Participant has had material business contact during the Employment Term or, if no longer an employee or consultant, in the one year prior to the termination of Participant’s employment with or service to any member of the Company Group, to leave the employment of the Restricted Group to become affiliated in any respect with a Competitor or otherwise be engaged in the Business; or
(B)hire any such executive-level employee to become affiliated in any respect with a Competitor or otherwise be engaged in the Business and with whom Participant had material business contact in the one year prior to the termination of Participant’s employment with or service to the Company, who (x) was employed by the Restricted Group as of the date of Participant’s termination of employment with or service to the Company or any of its Affiliates or (y) left the employment of the Restricted Group within one year after the termination of Participant’s employment with or service to the Company or any of its Affiliates.
(v)For purposes of this Agreement:
(A)“Restricted Group” shall mean the Company Group and, to the extent engaged in the Business, its Affiliates, provided, however, that for the purposes of this definition, an “Affiliate” shall not include any portfolio company of The Blackstone Group L.P. or its Affiliates (other than the Company Group).
(B)“Business” shall mean the business of owning, financing, developing, redeveloping, managing, marketing, operating, licensing, leasing or franchising vacation, timeshare or lodging properties, and natural ancillary business products and services related to such business, including, without limitation, membership services, exchange programs, rental programs, and provision of amenities.
(C)“Competitor” shall mean any person engaged in the Business, including but not limited to any vacation, timeshare or lodging companies that are comparable in size to the Company, including, without limitation, Marriott Vacations Worldwide, Wyndham Vacation Ownership, Interval Leisure Group, Disney Vacation Club, Hyatt Vacation Ownership, Holiday Inn Club Vacations, Bluegreen Vacations, Diamond Resorts International and Westgate Resorts.
(b)It is expressly understood and agreed that although Participant and the Company consider the restrictions contained in this Section 1 to be reasonable, if a judicial determination is made by a court of competent jurisdiction that the time or territory or any other restriction contained in this Appendix A is an unenforceable restriction against Participant, the provisions of this Appendix A shall not be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such maximum extent as such court may judicially determine or indicate to be enforceable. Alternatively, if any court of competent jurisdiction finds that any restriction contained in this Appendix A is unenforceable, and such restriction cannot be amended so as to make it enforceable, such finding shall not affect the enforceability of any of the other restrictions contained herein. Notwithstanding the foregoing, if Participant’s principal place of employment or service on the date hereof is located in Virginia, then this Section 1(b) of this Appendix A shall not apply following Participant’s termination of employment or service to the extent any such provision is prohibited by applicable Virginia law.
(c)The period of time during which the provisions of this Section 1 shall be in effect shall be extended by the length of time during which Participant is in breach of the terms hereof as determined by any court of competent jurisdiction on the Company’s application for injunctive relief.
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2020 PSU
(d)Notwithstanding the foregoing, if Participant’s principal place of employment or service on the date hereof is located in California or any other jurisdiction where any provision of this Section 1 is prohibited by applicable law, then the provisions of this Section 1 shall not apply following Participant’s termination of employment or service to the extent any such provision is prohibited by applicable law.
2.Confidentiality; Non-Disparagement; Intellectual Property; Protected Rights.
(a)Confidentiality.
(i)Participant shall not at any time (whether during or after Participant’s employment with or service to the Company) (x) retain or use for the benefit, purposes or account of Participant or any other Person; or (y) disclose, divulge, reveal, communicate, share, transfer or provide access to any Person outside the Company or any of its Affiliates (other than its professional advisers who are bound by confidentiality obligations or otherwise in performance of Participant’s duties under Participant’s employment or service and pursuant to customary industry practice), any non-public, proprietary or confidential information (including, without limitation, trade secrets, know-how, research and development, software, databases, inventions, processes, formulae, technology, designs and other intellectual property, information concerning finances, investments, profits, pricing, costs, products, services, vendors, customers, clients, partners, investors, personnel, compensation, recruiting, training, advertising, sales, marketing, promotions, government and regulatory activities and approvals) concerning the past, current or future business, activities and operations of the Company, its Subsidiaries or Affiliates and/or any third party that has disclosed or provided any of same to the Company on a confidential basis (“Confidential Information”) without the prior written authorization of the Board.
(ii)“Confidential Information” shall not include any information that is (a) generally known to the industry or the public other than as a result of Participant’s breach of this covenant; (b) made legitimately available to Participant by a third party without breach of any confidentiality obligation of which Participant has knowledge; or (c) required by law to be disclosed; provided that, unless otherwise provided under applicable law, with respect to subsection (c), Participant shall give prompt written notice to the Company of such requirement, disclose no more information than is so required, and reasonably cooperate with any attempts by the Company to obtain a protective order or similar treatment.
(iii)Except as required by law, Participant shall not disclose to anyone, other than Participant’s family (it being understood that, in this Agreement, the term “family” refers to Participant’s spouse, minor children, parents and spouse’s parents) and advisors, the existence or contents of this Agreement; provided that Participant may disclose to any prospective future employer the provisions of this Appendix A. This Section 2(a)(iii) shall terminate if the Company publicly discloses a copy of this Agreement (or, if the Company publicly discloses summaries or excerpts of this Agreement, to the extent so disclosed).
(iv)Upon termination of Participant’s employment with or service to the Company or any of its Affiliates for any reason, Participant shall (x) cease and not thereafter commence use of any Confidential Information or intellectual property (including without limitation, any patent, invention, copyright, trade secret, trademark, trade name, logo, domain name or other source indicator) owned or used by the Company, its Subsidiaries or Affiliates; and (y) immediately destroy, delete, or return to the Company, at the Company’s option, all originals and copies in any form or medium (including memoranda, books, papers, plans, computer files, letters and other data) in Participant’s possession or control (including any of the foregoing stored or located in Participant’s office, home, laptop or other computer, whether or not Company property) that contain Confidential Information, except that Participant may retain only those portions of any personal notes, notebooks and diaries that do not contain any Confidential Information.
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2020 PSU
(v)Participant acknowledges and agrees that the Company and its Affiliates will prosecute any non-confidential disclosure or misappropriation of the Company’s and/or its Affiliates’ trade secrets to the full extent allowed by federal, state and common law. Participant further acknowledges and agrees that Participant has received and understands the following notice concerning immunity from liability for confidential disclosure of a trade secret to the government or in a court filing: Pursuant to the Defend Trade Secrets Act, 18 U.S.C. § 1833, an individual shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is made (A) in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney, and solely for the purpose of reporting or investigating a suspected violation of law, or (B) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.
(b)Non-Disparagement. During Participant’s Employment Term and at all times thereafter (including following the termination of Participant’s Employment Term for any reason), Participant shall not to intentionally make any statement that criticizes, ridicules, disparages or is otherwise derogatory of the Company, any of its Affiliates, or any of their respective officers, directors, stockholders, employees or other service providers, or any product or service offered by the Company or any of its Affiliates; provided, however, that nothing contained in this Section 2(b) shall preclude Participant from providing truthful testimony in any legal proceeding, or making any truthful statement (i) to any governmental agency; (ii) as required or permitted by applicable law or regulation; (iii) as required by court order or other legal process; or (iv) after the Restricted Period, for any legitimate business reason.
(c)Intellectual Property.
(i)If Participant has created, invented, designed, developed, contributed to or improved any works of authorship, inventions, intellectual property, materials, documents or other work product (including without limitation, research, reports, software, databases, systems, applications, presentations, textual works, content, or audiovisual materials) (“Works”), either alone or with third parties, prior to Participant’s employment or engagement by the Company or any of its Affiliates, that are relevant to or implicated by such employment (“Prior Works”), Participant hereby grants the Company a perpetual, non-exclusive, royalty-free, worldwide, assignable, sublicensable license under all rights and intellectual property rights (including rights under patent, industrial property, copyright, trademark, trade secret, unfair competition and related laws) therein for all purposes in connection with the Company’s current and future business.
(ii)If Participant creates, invents, designs, develops, contributes to or improves any Works, either alone or with third parties, at any time during Participant’s employment by or service to the Company and within the scope of such employment or service and with the use of any Company resources (“Company Works”), Participant shall promptly and fully disclose same to the Company and hereby irrevocably assigns, transfers and conveys, to the maximum extent permitted by applicable law, all rights and intellectual property rights therein (including rights under patent, industrial property, copyright, trademark, trade secret, unfair competition and related laws) to the Company to the extent ownership of any such rights does not vest originally in the Company.
(iii)Participant shall take all reasonably requested actions and execute all reasonably requested documents (including any licenses or assignments required by a government contract) at the Company’s expense (but without further remuneration) to assist the Company in validating, maintaining, protecting, enforcing, perfecting, recording, patenting or registering any of the Company’s rights in the Prior Works and Company Works. If the Company is unable for any other reason, after reasonable attempt, to secure Participant’s signature on any document for this purpose, then Participant hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as Participant’s agent and attorney in fact, to act for and in Participant’s behalf and stead to execute any documents and to do all other lawfully permitted acts required in connection with the foregoing.
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2020 PSU
(iv)Participant shall not improperly use for the benefit of, bring to any premises of, divulge, disclose, communicate, reveal, transfer or provide access to, or share with the Company any confidential, proprietary or non-public information or intellectual property relating to a former employer or other third party without the prior written permission of such third party. Participant shall comply with all relevant policies and guidelines of the Company that are from time to time previously disclosed to Participant, including regarding the protection of Confidential Information and intellectual property and potential conflicts of interest. Participant acknowledges that the Company may amend any such policies and guidelines from time to time, and that Participant remains at all times bound by their most current version from time to time previously disclosed to Participant.
(d)Protected Rights. Notwithstanding any other provision of this Agreement, (i) nothing in this Agreement or any other agreement prohibits the Participant from reporting possible violations of law or regulation to any governmental agency or entity, including, but not limited to, the Department of Justice, the Securities and Exchange Commission, the Congress and any agency Inspector General (the “Government Agencies”), or communicating with Government Agencies or otherwise participating in any investigation or proceeding that may be conducted by Government Agencies, including providing documents or other information, (ii) the Participant does not need the prior authorization of the Company to take any action described in (i), and the Participant is not required to notify the Company that he or she has taken any action described in (i); and (iii) this Agreement does not limit the Participant’s right to receive an award for providing information relating to a possible securities law violation to the Securities and Exchange Commission. Further, notwithstanding the foregoing, the Participant will not be held criminally or civilly liable under any federal, state or local trade secret law for the disclosure of a trade secret that (i) is made (A) in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney, and (B) solely for the purpose of reporting or investigating a suspected violation of law; or (ii) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. Additionally, an individual suing an employer for retaliation based on the reporting of a suspected violation of law may disclose a trade secret to his or her attorney and use the trade secret information in the court proceeding, so long as any document containing the trade secret is filed under seal and the individual does not disclose the trade secret except pursuant to court order.
The provisions of Section 2 hereof shall survive the termination of Participant’s employment or service for any reason (except as otherwise set forth in Section 2(a)(iii) hereof).
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2020 PSU
HILTON GRAND VACATIONS INC.
2017 OMNIBUS INCENTIVE PLAN
PERFORMANCE- AND SERVICE-BASED
RESTRICTED STOCK UNIT AGREEMENT
TERMS AND CONDITIONS FOR NON-U.S. PARTICIPANTS
Capitalized terms used but not otherwise defined herein shall have the meaning given to such terms in the Plan and the Performance- and Service-Based Restricted Stock Unit Agreement.
Responsibility for Taxes. This provision supplements Section 4(d) of the Performance- and Service-Based Restricted Stock Unit Agreement:
(a)The Participant acknowledges that, regardless of any action taken by the Company or, if different, the Service Recipient, the ultimate liability for all income tax, excise tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax-related items related to the Participant’s participation in the Plan and legally applicable to the Participant (“Tax-Related Items”) is and remains the Participant’s responsibility and may exceed the amount actually withheld by the Company or the Service Recipient. The Participant further acknowledges that the Company and/or the Service Recipient (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the RSUs, including, but not limited to, the grant, vesting or settlement of the RSUs, the subsequent sale of Shares acquired pursuant to such settlement and the receipt of any dividends and/or any dividend equivalents; and (2) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the RSUs to reduce or eliminate the Participant’s liability for Tax-Related Items or achieve any particular tax result. Further, if the Participant is subject to Tax-Related Items in more than one jurisdiction, the Participant acknowledges that the Company and/or the Service Recipient (or former service recipient, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.
(b)If the obligation for Tax-Related Items is satisfied by withholding in Shares, for tax purposes, the Participant is deemed to have been issued the full number of Shares subject to the vested RSUs, notwithstanding that a number of the Shares are held back solely for the purpose of satisfying the Withholding Taxes.
(c)Finally, the Participant agrees to pay to the Company or the Service Recipient, any amount of the Withholding Taxes that cannot be satisfied by the means previously described. The Company may refuse to issue or deliver the Shares or the proceeds of the sale of Shares, if the Participant fails to comply with the Participant’s obligations in connection with the Withholding Taxes.
(d)Notwithstanding anything to the contrary in the Plan or in Section 4(d) of the Performance- and Service-Based Restricted Stock Unit Agreement, if the Company is required by applicable law to use a particular definition of fair market value for purposes of calculating the taxable income for the Participant, the Company shall have the discretion to calculate the Shares to be withheld to cover any Withholding Taxes by using either the price used to calculate the taxable income under applicable law or by using the closing price per Share on the New York Stock Exchange (or other principal exchange on which the Shares then trade) on the trading day immediately prior to the date of delivery of the Shares.
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2020 PSU
Nature of Grant. This provision supplements Section 19 of the Performance- and Service-Based Restricted Stock Unit Agreement:
In accepting the grant of the RSUs, the Participant acknowledges, understands and agrees that:
(a)the RSU grant and the Participant’s participation in the Plan shall not create a right to employment or be interpreted as forming an employment or services contract with the Company or any member of the Company Group;
(b)the RSUs and the Shares subject to the RSUs, and the income from and value of same, are not intended to replace any pension rights or compensation;
(c)unless otherwise agreed with the Company, the RSUs and the Shares subject to the RSUs, and the income from and value of same, are not granted as consideration for, or in connection with, the service the Participant may provide as a director of any member of the Company Group;
(d)for purposes of the RSUs, the Termination Date shall be the date the Participant is no longer actively providing services to the Company or any member of the Company Group (regardless of the reason for such termination and whether or not later to be found invalid or in breach of employment laws in the jurisdiction where the Participant is employed or the terms of the Participant’s employment agreement, if any), and unless otherwise expressly provided in this Agreement or determined by the Company, the Participant’s right to vest in the RSUs under the Plan, if any, shall terminate as of such date and shall not be extended by any notice period (e.g., the Participant’s period of service would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment laws in the jurisdiction where the Participant is employed or the terms of the Participant’s employment agreement, if any); the Committee shall have the exclusive discretion to determine when the Participant is no longer actively providing services for purposes of the RSUs grant (including whether the Participant may still be considered to be providing services while on a leave of absence);
(e)unless otherwise provided in the Plan or by the Company in its discretion, the RSUs and the benefits evidenced by this Agreement do not create any entitlement to have the RSUs or any such benefits transferred to, or assumed by, another company nor be exchanged, cashed out or substituted for, in connection with any corporate transaction affecting the Company’s Common Stock; and
(f)neither the Company nor any member of the Company Group shall be liable for any foreign exchange rate fluctuation between the Participant’s local currency and the United States Dollar that may affect the value of the RSUs or of any amounts due to the Participant pursuant to the settlement of the RSUs or the subsequent sale of any Shares acquired upon settlement.
Insider Trading Restrictions/Market Abuse Laws. The Participant acknowledges that the Participant may be subject to insider trading restrictions and/or market abuse laws in applicable jurisdictions, which may affect his or her ability to, directly or indirectly, acquire, sell, or attempt to sell Shares or rights to Shares (e.g., RSUs) under the Plan during such times as the Participant is considered to have “inside information” regarding the Company (as defined by the laws in the applicable jurisdictions or Participant’s country). Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Company insider trading policy. The Participant is responsible for ensuring compliance with any applicable restrictions and is advised to consult his or her personal legal advisor on this matter.
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2020 PSU
Foreign Asset/Account Reporting; Exchange Controls. The Participant’s country may have certain foreign asset and/or account reporting requirements and/or exchange controls that may affect the Participant’s ability to acquire or hold Shares under the Plan or cash received from participating in the Plan (including from any dividends received or sale proceeds arising from the sale of Shares) in a brokerage or bank account outside the Participant’s country. The Participant may be required to report such accounts, assets or transactions to the tax or other authorities in his or her country. The Participant also may be required to repatriate sale proceeds or other cash received as a result of the Participant’s participation in the Plan to his or her country through a designated bank or broker and/or within a certain time after receipt. The Participant acknowledges that it is his or her responsibility to be compliant with such regulations, and the Participant is advised to consult his or her personal legal advisor for any details.
Termination of Employment. This provision supplements Section 5(c) of the Performance- and Service-Based Restricted Stock Unit Agreement:
Notwithstanding anything in this Section 5(c), if the Company receives a legal opinion that there has been a legal judgment and/or legal development in the Participant’s jurisdiction that likely would result in the favorable treatment that applies to the RSUs when the Participant terminates employment as a result of the Participant’s Retirement being deemed unlawful and/or discriminatory, the provisions of this Section 5(c) regarding the treatment of the RSUs when the Participant terminates employment as a result of the Participant’s Retirement shall not be applicable to the Participant and the remaining provisions of this Section 5 shall govern.
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2020 PSU
HILTON GRAND VACATIONS INC.
2017 OMNIBUS INCENTIVE PLAN
PERFORMANCE- AND SERVICE-BASED
RESTRICTED STOCK UNIT AGREEMENT
COUNTRY-SPECIFIC TERMS AND CONDITIONS
Capitalized terms used but not otherwise defined herein shall have the meaning given to such terms in the Plan, the Performance- and Service-Based Restricted Stock Unit Agreement and the Terms and Conditions for Non-U.S. Participants.
Terms and Conditions
This Appendix C includes additional terms and conditions that govern the RSUs if the Participant resides and/or works in one of the countries listed below. If the Participant is a citizen or resident of a country (or is considered as such for local law purposes) other than the one in which the Participant is currently residing and/or working or if the Participant moves to another country after receiving the grant of the RSUs, the Company shall, in its discretion, determine the extent to which the terms and conditions herein shall be applicable to the Participant.
Notifications
This Appendix C also includes information regarding exchange controls and certain other issues of which the Participant should be aware with respect to the Participant’s participation in the Plan. The information is based on the securities, exchange control and other laws in effect in the respective countries as of January 2017. Such laws are often complex and change frequently. As a result, the Company strongly recommends that the Participant not rely on the information in this Appendix C as the only source of information relating to the consequences of the Participant’s participation in the Plan because the information may be out of date at the time that the RSUs vest or the Participant sells Shares acquired under the Plan.
In addition, the information contained herein is general in nature and may not apply to the Participant’s particular situation and the Company is not in a position to assure the Participant of a particular result. Accordingly, the Participant is advised to seek appropriate professional advice as to how the relevant laws in the Participant’s country may apply to the Participant’s situation.
If the Participant is a citizen or resident of a country other than the one in which the Participant is currently residing and/or working (or if the Participant is considered as such for local law purposes) or if the Participant moves to another country after receiving the grant of the RSUs, the information contained herein may not be applicable to the Participant in the same manner.
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2020 PSU
Notifications
Foreign Asset/Account Reporting Information. If the Participant holds assets (including cash and Shares acquired under the Plan, and possibly RSUs) outside of Japan with a value exceeding ¥50,000,000 (as of December 31 each year), the Participant is required to comply with annual tax reporting obligations with respect to such assets. The Participant is responsible for complying with this reporting obligation, if applicable, and should consult with Participant’s personal tax advisor to ensure that the Participant is properly complying with applicable reporting requirements.
UNITED KINGDOM
Terms and Conditions
Responsibility for Taxes. This provision supplements Section 1 of the Terms and Conditions for Non-U.S. Participants:
Without limitation to Section 1 of the Terms and Conditions for Non-U.S. Participants, the Participant hereby covenants to pay all Tax-Related Items, as and when requested by the Company, the Service Recipient or by Her Majesty’s Revenue and Customs (“HMRC”) (or any other tax authority or other relevant authority). The Participant also agrees to indemnify and keep indemnified the Company and the Service Recipient against any Tax-Related Items that they are required to pay or withhold on the Participant’s behalf, have paid or will pay to HMRC (or any other tax authority or other relevant authority).
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Exhibit 10.7
SECOND AMENDED AND RESTATED
PERFORMANCE- AND SERVICE-BASED
RESTRICTED STOCK UNIT AGREEMENT
HILTON GRAND VACATIONS INC.
2017 OMNIBUS INCENTIVE PLAN
AWARD NOTICE
The Participant has been granted Performance- and Service-Based Restricted Stock Units (or “RSUs”) with the terms set forth in this Award Notice and subject to the terms and conditions of the Plan and the Second Amended and Restated Performance- and Service-Based Restricted Stock Unit Agreement, including its appendices, to which this Award Notice is attached. Capitalized terms used and not defined in this Award Notice shall have the meanings set forth in the Second Amended and Restated Performance- and Service-Based Restricted Stock Unit Agreement and the Plan.
1.General.
Participant: Mark D. Wang
Date of Grant:
Performance Period:
Target Number of Restricted Stock Units Granted: RSUs
2.Performance Conditions.
Performance Conditions (the “Performance Conditions”): The extent to which the Performance Conditions are satisfied and the number of RSUs which become vested, if any, shall be calculated with respect to each Performance Component identified below. All determinations made with respect to Adjusted EBITDA and Contract Sales shall be made by the Committee in its sole discretion and the applicable Performance Conditions shall not be achieved and the RSUs shall not vest unless and to the extent that the Committee certifies that such Performance Conditions have been met.
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Adjusted EBITDA. The total number of RSUs which become vested based on the achievement of Adjusted EBITDA performance levels shall be equal to (x) the target number of RSUs multiplied by (y) a relative weighting component equal to seventy percent (70%), multiplied by (z) the Achievement Percentage determined based upon the applicable Adjusted EBITDA Position for the Performance Period as follows, and rounded down to the nearest whole Share: |
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2020 PSU – WANG
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Contract Sales. The total number of RSUs which become vested based on the achievement of Contract Sales performance levels shall be equal to (x) the target number of RSUs specified above with respect to Contract Sales multiplied by (y) a relative weighting component equal to thirty percent (30%), multiplied by (z) the Achievement Percentage determined based upon the applicable Contract Sales Position for the Performance Period as follows, and rounded down to the nearest whole Share: |
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Continued Employment or Service. In addition to the attainment of the Performance Conditions, the Participant must be an employee of or in service to the Company or the Company Group from the Date of Grant until the last day of the Performance Period, except to the extent otherwise provided in the Plan or the Agreement. |
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Committee Discretion to Adjust Performance Goals and/or Calculations. In the event of an acquisition or disposition of any business, line of business or assets by the Company (and in the case of an acquisition, only such acquisition transaction in which the Company is the acquiror and/or the surviving entity, and does not otherwise constitute a Change in Control), the Committee shall in good faith and in such manner as it may deem equitable adjust the performance goals and/or the calculation of Adjusted EBITDA and Contract Sales to reflect the projected effect of such transaction(s) or event(s). |
3.Definitions.
For purposes of this Award Notice:
(a)“Achievement Percentage” means the “Percentage of Award Earned” specified with respect to the below threshold, threshold, target, and/or maximum levels for each Performance Component, as applicable, or a percentage determined using linear interpolation if actual performance falls between threshold and target, or between target and maximum levels (and rounded to the nearest whole percentage point and, if equally between two percentage points, rounded up). In the event that actual performance does not meet the threshold level for any Performance Component, the “Achievement Percentage” with respect to such Performance Component shall be zero.
(b)“Adjusted EBITDA” means the Company’s earnings before interest expense, taxes and depreciation and amortization, (i) adjusted to exclude gains, losses and expenses in connection with (A) asset dispositions, (B) foreign currency transactions, (C) debt restructurings/retirements,(D) non-cash impairment losses, (E) reorganization costs, including severance and relocation costs, (F) share-based and certain other compensation expenses, (G) costs related to the spin-off, and (H) other items, and (ii) further adjusted for net construction related recognition and deferral activity.
(c)“Contract Sales” means the total dollar amount of vacation ownership interest products under purchase agreements signed during the period where the Company has received a down payment of at least ten percent (10%) of the contract price, net of upgrades, before first-day incentives.
(d)“Performance Components” means the performance criteria applicable to an Award, as set forth on the Award Notice.
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SECOND AMENDED AND RESTATED
PERFORMANCE- AND SERVICE-BASED
RESTRICTED STOCK UNIT AGREEMENT
HILTON GRAND VACATIONS INC.
2017 OMNIBUS INCENTIVE PLAN
This Second Amended and Restated Performance- and Service-Based Restricted Stock Unit Agreement (the “Second Amended and Restated Agreement”), entered into the [ ] day of [ ], 2020 and effective as of the Date of Grant (as defined below), is between Hilton Grand Vacations Inc., a Delaware corporation (the “Company”), and the Participant (as defined below).
WHEREAS, the Company has adopted the Hilton Grand Vacations Inc. 2017 Omnibus Incentive Plan (as it may be amended, the “Plan”) to provide a means through which the Company and the other members of the Company Group may attract and retain key personnel and to provide a means whereby officers, employees, consultants and advisors of the Company and the other members of the Company Group can acquire and maintain an equity interest in the Company or receive an incentive award;
WHEREAS, the Participant is an employee or consultant of the Company or another member of the Company Group; and
WHEREAS, the Committee has determined to grant performance- and service-based RSUs to the Participant as provided for herein, and the Company and the Participant hereby wish to memorialize the terms and conditions applicable to the performance- and service-based RSUs.
NOW, THEREFORE, the parties hereto agree as follows:
1.Definitions. Capitalized terms not otherwise defined herein shall have the same meanings as in the Plan. In addition to other terms defined herein or in the Award Notice, the following terms shall have the following meanings for purposes of this Agreement:
(a)“Agreement” shall mean this Second Amended and Restated Performance- and Service-Based Restricted Stock Unit Agreement including (unless the context otherwise requires) the Award Notice, Appendix A, and the appendices for non-U.S. Participants attached hereto as Appendix B and Appendix C.
(b)“Award Notice” shall mean the notice to the Participant.
(c)“Date of Grant” shall mean the “Date of Grant” listed in the Award Notice.
(d)“Participant” shall mean the “Participant” listed in the Award Notice.
(e)“Performance Conditions” shall mean the performance conditions set forth in the Award Notice.
(f)“Performance Period” shall mean the performance period set forth in the Award Notice.
(g)“Restrictive Covenant Violation” shall mean the Participant’s breach of the Restrictive Covenants listed on Appendix A or any covenant regarding confidentiality, competitive activity, solicitation of the Company’s vendors, suppliers, customers, or employees, or any similar provision applicable to or agreed to by the Participant.
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(h)“Retirement” shall mean the Participant’s termination of employment with the Company Group, other than (i) for Cause or while grounds for Cause exist, (ii) due to the Participant’s death or (iii) due to or during the Participant’s Disability, in each case, following the date on which both (X) the Participant attained the age of 55 years old and (Y) the number of completed years of the Participant’s employment with any member(s) of the Company Group (including any predecessor of a member thereof, including, for the avoidance of doubt, employment by Hilton Worldwide and its affiliates prior to January3, 2017) is at least ten (10).
(i)“RSUs” shall mean that total number of performance- and service-based restricted stock units listed in the Award Notice as “Target Number of Restricted Stock Units Granted” (or such greater or lesser number of RSUs as may be vested and earned herein, as determined in the Committee’s discretion), as such number of performance- and service-based restricted stock units may be adjusted in accordance with Section 10 below.
(j)“Shares” shall mean a number of shares of the Company’s Common Stock equal to the number of RSUs (or such greater or lesser number of shares as may be vested and earned herein, as determined in the Committee’s discretion).
2.Grant of Units. On _______________, the Company granted the RSUs to the Participant, each of which represents the right to receive one Share upon vesting of such RSUs, subject to and in accordance with the terms, conditions and restrictions set forth in the Plan, the Award Notice, and this Agreement.
3.RSU Account. The Company shall cause an account (the “Unit Account”) to be established and maintained on the books of the Company to record the number of RSUs credited to the Participant under the terms of this Agreement. The Participant’s interest in the Unit Account shall be that of a general, unsecured creditor of the Company.
4.Vesting; Settlement; Tax Withholding.
(a)As promptly as practicable (and, in no event more than 70 days) following the last day of the Performance Period, the Committee shall determine if and the extent to which the Performance Conditions have been satisfied (the date of such determination, the “Determination Date”), and any RSUs with respect to which the Performance Conditions have been satisfied shall become vested effective as of the last day of the Performance Period, subject to Section 5(d); provided that, unless otherwise provided in Section 5, the Participant also meets the continued employment or service condition set forth in the Award Notice. Any RSU which does not become vested effective as of the last day of the Performance Period shall be cancelled and forfeited to the Company without consideration or any further action by the Participant or the Company. In the event of an equity restructuring, the Committee shall adjust any Performance Condition to the extent it is affected by such restructuring in order to preserve (without enlarging) the likelihood that such Performance Condition shall be satisfied. The manner of such adjustment shall be determined by the Committee in its sole discretion. For this purpose, “equity restructuring” shall mean an “equity restructuring” as defined in Financial Accounting Standards Board Accounting Standards Codification 718-10 (formerly Statement of Financial Accounting Standards 123R).
(b)The Company shall deliver to the Participant one share of Common Stock for each vested RSU (as adjusted under the Plan), pursuant to Section 4(c) below, and each such vested RSU shall be cancelled upon delivery.
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(c)Shares, free and clear of all restrictions, shall be issued to the Participant (or his or her beneficiary) only in the event, and to the extent, that the RSUs have vested and been earned as provided in the Award Notice and in the Agreement. Upon vesting of the RSUs, Shares shall be issued to the Participant (or his or her beneficiary) within 70 days following the applicable vesting date set forth in Section 4(a) herein. Notwithstanding the foregoing, the following provisions shall apply: (i) any Shares earned and vested due to termination of employment or service as provided in Section 5(b) or Section 5(e) shall be paid within 70 days following the Participant’s Termination Date; (ii) any Shares earned and vested following Retirement as provided in Section 5(c) shall be paid within 70 days following the applicable vesting date set forth in Section 4(a) and Section 5(c) herein; (iii) any Shares earned and vested as a result of a Change in Control as provided in Section 5(h) shall be paid within 70 days following the date of the Change in Control; and (iv) any Shares earned and vested due to a Qualifying Termination as provided in Section 5(i) shall be paid within 70 days following the Participant’s Termination Date. If the 70-day period described herein begins in one calendar year and ends in another, the Participant (or his or her beneficiary) shall not have the right to designate the calendar year of the payment (except as otherwise provided below with respect to a delay in payments if the Participant is a “specified employee”). Further, if calculation of the amount of the payment is not administratively practicable due to events beyond the control of the Participant (or his or her beneficiary), the payment will be treated as made within the applicable 70-day time period specified herein if the payment is made during the first taxable year of the Participant in which the calculation of the amount of the payment is administratively practicable or otherwise in accordance with Code Section 409A. Notwithstanding the foregoing, if the Participant is or may be a “specified employee” (as defined under Code Section 409A), and the distribution is considered deferred compensation under Code Section 409A, then such distribution if made due to separation from service shall be subject to delay as provided in Section 14(u) of the Plan (or any successor provision thereto).
(d)The Participant shall be required to pay to the Company or, if different, the Service Recipient, an amount in cash (by check or wire transfer) equal to the aggregate amount of any income, employment and/or other applicable taxes (the “Withholding Taxes”) that are statutorily required to be withheld in respect of the RSUs. Alternatively, the Company may elect, in its sole discretion, to satisfy this requirement by withholding such amount from any cash compensation or other cash amounts owing to the Participant. Without limiting the foregoing, the Committee may (but is not obligated to), in its sole discretion, permit or require the Participant to satisfy, all or any portion of the minimum Withholding Taxes that are statutorily required to be withheld with respect to the RSUs by (i) the delivery of shares of Common Stock (which are not subject to any pledge or other security interest) that have been both held by the Participant and vested for any period of time as established from time to time by the Committee in order to avoid adverse accounting treatment under GAAP having an aggregate Fair Market Value equal to such minimum statutorily required Withholding Taxes (or portion thereof); or (ii) having the Company withhold from the Shares otherwise issuable or deliverable to, or that would otherwise be retained by, the Participant upon the vesting of the RSUs, a number of Shares with an aggregate Fair Market Value equal to an amount not in excess of such minimum statutorily required Withholding Taxes (or portion thereof). Notwithstanding the foregoing, the Committee, subject to its having considered the applicable accounting impact of any such determination, has full discretion to allow the Participant to satisfy, in whole or in part, any additional Withholding Taxes payable by him or her with respect to the RSUs by electing to have the Company withhold from the Shares issuable to the Participant upon the vesting of the RSUs, a number of Shares having an aggregate Fair Market Value that is greater than the applicable minimum required statutory Withholding Taxes (but such withholding may in no event be in excess of the maximum statutory withholding amount(s) in the Participant’s relevant tax jurisdiction). Further, for non-U.S. Participants, the Company may withhold from the Shares issuable to such non-U.S. Participant upon the vesting of the RSUs, a number of Shares having an aggregate Fair Market Value up to the maximum statutory withholding amount(s) in the non-U.S. Participant’s relevant tax jurisdiction.
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(e)The Company shall pay any costs incurred in connection with issuing the Shares. Upon the issuance of the Shares (to the extent earned) to the Participant, the Participant’s Unit Account shall be eliminated. Notwithstanding anything in this Agreement to the contrary, the Company shall have no obligation to issue or transfer the Shares as contemplated by this Agreement unless and until such issuance or transfer shall comply with all relevant provisions of law and the requirements of any stock exchange on which the Company’s shares are listed for trading.
5.Termination of Employment or Service.
(a)Subject to the provisions of this Section 5, if the Participant’s employment with or service to the Company Group terminates for any reason, the unvested RSUs shall terminate as of the effective date of termination (the “Termination Date”), and all of the Participant’s rights hereunder with respect to such unvested RSUs shall cease as of the Termination Date (unless otherwise provided for by the Committee in accordance with the Plan).
(b)If the Participant’s employment or service is terminated by the Service Recipient during the Performance Period due to or during the Participant’s Disability or due to the Participant’s death, a pro-rated number of the target number of RSUs granted hereunder shall become vested and nonforfeitable (irrespective of performance) based on the number of days in the Performance Period prior to the Termination Date relative to the number of the days in the full Performance Period. Any RSUs that vest as provided herein shall be settled in accordance with Section 4.
(c)In the event the Participant’s employment with or service to the Company Group is terminated as a result of the Participant’s Retirement, the RSUs granted hereunder shall remain outstanding and eligible to vest, notwithstanding such termination of employment or service, based on (and to the extent) the Committee’s determination that the Performance Conditions have been satisfied on the Determination Date, in accordance with the schedule set forth in the Award Notice, so long as no Restrictive Covenant Violation occurs (as determined by the Committee, or its designee, in its sole discretion) prior to the Determination Date. Any RSUs that vest as provided herein shall be settled in accordance with Section 4. As a pre-condition to the Participant’s right to continued vesting following Retirement, the Committee, or its designee, may require the Participant to certify in writing prior to the applicable vesting date that no Restrictive Covenant Violation has occurred. Notwithstanding the foregoing, if the Date of Grant of the RSUs is not at least six months prior to the date of the Participant’s Retirement, any unvested RSUs shall terminate as of the Termination Date.
(d)If the Participant’s employment with or service to the Company Group terminates for any reason after the last day of the Performance Period and before the Determination Date (other than a termination by the Company for Cause, or by the Participant while grounds for Cause exist or without Good Reason), and no Restrictive Covenant Violation occurs before the Determination Date, then all RSUs shall remain outstanding and eligible to vest based on (and to the extent) the Committee’s determination that the Performance Conditions have been satisfied on the Determination Date.
(e)Notwithstanding anything herein to the contrary, the RSUs granted hereunder shall become immediately fully vested as of the Termination Date and settled in accordance with Section 4 if the Participant’s employment with or service to the Company Group shall be terminated by the Company other than for Cause, or by the Participant for Good Reason, in either case if such termination of the Participant’s employment occurs within 12 months following a Change in Control (for the avoidance of doubt, a Change in Control alone shall not, also, result in any vesting hereunder), with the actual number of RSUs determined based on (i)actual performance through the Termination Date, as determined by the Committee, or (ii)if the Committee determines that measurement of actual performance cannot be reasonably assessed, the assumed achievement of target performance as determined by the Committee.
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(f)For purposes of this Section 5, “Good Reason” means the occurrence of any of the following, without the Participant’s written consent:
(i)a material diminution in the Participant’s base salary;
(ii)a material diminution in the Participant’s authority, duties, responsibilities or position; or
(iii)a permanent reassignment by the Company or the Service Recipient of the Participant’s primary office to a location that is more than 100 miles from the Participant’s assigned primary office;
provided, however, that a termination by the Participant for any of the reasons listed in (i)through (iii) above shall not constitute a termination for Good Reason unless the Participant shall first have delivered to the Company written notice setting forth with specificity the occurrence deemed to give rise to a right to terminate for Good Reason (which notice must be given no later than 60 days after the initial occurrence of such event), and the Company fails to cure such event within 30 days after receipt of this written notice. The Participant’s employment must be terminated for Good Reason within 120 days after the occurrence of an event of Good Reason.
(g)The Participant’s rights with respect to the RSUs shall not be affected by any change in the nature of the Participant’s employment or service so long as the Participant continues to be an employee or consultant, respectively, of the Company Group. Whether (and the circumstances under which) employment or service has terminated and the determination of the Termination Date for the purposes of this Agreement shall be determined by the Committee (or, with respect to any Participant who is not a director or “officer” as defined under Rule16a-1(f) of the Exchange Act, such action may also be taken by its designee, in each case whose good faith determination shall be final, binding and conclusive; provided, that such designee may not make any such determination with respect to the designee’s own employment for purposes of the RSUs).
(h)Without limiting the effect of Section 5(e) herein, and subject to Section 12 of the Plan, in the event of a Change in Control during the Participant’s employment with or service to the Company Group or while any RSUs remain outstanding and eligible to vest, and prior to the completion of the Performance Period, the successor or surviving company in the Change in Control may assume or substitute for the RSUs (or in which the Company is the ultimate parent corporation and continues the RSUs), with the actual number of RSUs determined based on (i) actual performance through the date of such Change in Control, as determined by the Committee, or (ii) if the Committee determines that measurement of actual performance cannot be reasonably assessed, the assumed achievement of target performance as determined by the Committee, and such assumed or substituted RSUs shall remain outstanding and eligible to vest based on continued service through the last day of the Performance Period, except to the extent otherwise provided in the Plan or the Agreement. Notwithstanding the foregoing, in the event the successor or surviving company in the Change in Control does not assume or substitute for the RSUs (or in which the Company is the ultimate parent corporation and does not continue the RSUs) on substantially similar terms or with substantially equivalent economic benefits (as determined by the Committee) as RSUs outstanding under the Plan immediately prior to the Change in Control, then the target number of RSUs granted hereunder shall become immediately fully vested as of the date of such Change in Control and settled in accordance with Section 4.
(i)Notwithstanding anything to the contrary contained herein, in the event of a Qualifying Termination (as defined in the Severance Agreement) and a Change in Control has not occurred, a pro-rated number of the target number of RSUs granted hereunder shall become vested and nonforfeitable (irrespective of performance) as of the Termination Date based on the number of days in the Performance Period prior to the Termination Date (inclusive), plus an additional 730 days (not to exceed 1,095 days), relative to the number 1,095. Any RSUs that vest as provided herein shall be settled in accordance with Section 4.
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6.Dividend Equivalents. A Participant holding unvested RSUs shall be entitled to be credited with dividend equivalent payments (upon the payment by the Company of dividends on Shares), which shall accrue in cash without interest (unless otherwise elected by the Committee) and shall be delivered in cash (unless the Committee in its sole discretion, elects to settle such amount in shares of Common Stock, other securities, other Awards or other property having a Fair Market Value as of the settlement date equal to the amount of such dividends). Accrued dividend equivalents shall not be paid unless and until the underlying RSUs (or portion thereof) have vested. Any such dividend equivalents in respect of unvested RSUs shall be paid within fifteen (15) days after the RSUs are vested and become payable or distributable unless the Committee determines otherwise.
7.Restrictions on Transfer. The Participant may not assign, alienate, pledge, attach, sell or otherwise transfer or encumber the RSUs or the Participant’s right under the RSUs to receive Shares (unless such transfer is specifically required pursuant to a domestic relations order or by applicable law), other than by will or by the laws of descent and distribution, and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against any member of the Company Group; provided that the designation of a beneficiary shall not constitute an assignment, alienation, pledge, attachment, sale, transfer or encumbrance.
8.No Right to Continued Employment or Service. Neither the Plan, the Agreement nor any action taken thereunder or hereunder shall be construed as giving the Participant any right to be retained in the employ or service of the Service Recipient or any other member of the Company Group. The Service Recipient or any other member of the Company Group may at any time dismiss the Participant from employment or discontinue any consulting relationship, free from any liability or claim under the Plan or this Agreement, unless otherwise expressly provided in the Plan or this Agreement.
9.No Rights as a Stockholder. Except as otherwise provided in the Plan or this Agreement, the Participant shall not be entitled to the privileges of ownership in respect of the Shares until the Shares have been issued or delivered to the Participant.
10.Adjustments Upon Change in Capitalization. The terms of this Agreement, including the RSUs, the Participant’s Unit Account, any dividend equivalent payments accrued pursuant to Section 6 and/or the Shares, shall be subject to adjustment in accordance with Section 12 of the Plan. This paragraph shall also apply with respect to any extraordinary dividend or other extraordinary distribution in respect of the Company’s Common Stock (whether in the form of cash or other property) to the extent provided in the Plan.
11.Award Subject to Plan. By entering into this Agreement, the Participant agrees and acknowledges that the Participant has received and read a copy of the Plan. The RSUs granted hereunder are subject to the Plan. The terms and provisions of the Plan, as it may be amended from time to time, are hereby incorporated herein by reference. Unless the Committee determines otherwise, in the event of a conflict between any term or provision contained herein and a term or provision of the Plan, the applicable terms and provisions of the Plan shall govern and prevail.
12.Severability. If any provision of the Plan or this Agreement is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction or as to the Participant or the RSUs, or would disqualify the Plan or the RSUs under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to the applicable laws, or if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Agreement, such provision shall be construed or deemed stricken as to such jurisdiction, the Participant or the RSUs and the remainder of the Plan and this Agreement shall remain in full force and effect.
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13.Governing Law; Waiver of Jury Trial; Venue. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware applicable to contracts made and performed wholly within the State of Delaware, without giving effect to the conflict of laws provisions thereof. The Participant hereby irrevocably waives all right to a trial by jury in any suit, action or other proceeding instituted by or against such Participant in respect of the Participant’s rights or obligations hereunder. Any suit, action or proceeding with respect to this Agreement (or any provision incorporated by reference), or any judgment entered by any court in respect of any thereof, shall be brought in any court of competent jurisdiction in the State of Florida, and each of the Participant, the Company, and any transferees who hold RSUs pursuant to a valid assignment, hereby submit to the exclusive jurisdiction of such courts for the purpose of any such suit, action, proceeding, or judgment. Each of the Participant, the Company, and any transferees who hold RSUs pursuant to a valid assignment hereby irrevocably waive (a) any objections which he or she may now or hereafter have to the laying of the venue of any suit, action, or proceeding arising out of or relating to this Agreement brought in any court of competent jurisdiction in the State of Florida and (b) any claim that any such suit, action, or proceeding brought in any such court has been brought in any inconvenient forum.
14.Language. If the Participant has received a copy of this Agreement (or the Plan or any other document related hereto or thereto) translated into a language other than English, such translated copy is qualified in its entirety by reference to the English version thereof, and in the event of any conflict the English version shall govern. The Participant acknowledges that the Participant is sufficiently proficient in English to understand the terms and conditions of the Plan and this Agreement.
15.Successors in Interest. Any successor to the Company shall have the benefits of the Company under, and be entitled to enforce, this Agreement. Likewise, the Participant’s legal representative shall have the benefits of the Participant under, and be entitled to enforce, this Agreement. All obligations imposed upon the Participant and all rights granted to the Company under this Agreement shall be final, binding and conclusive upon the Participant’s heirs, executors, administrators and successors.
16.Data Privacy Consent.
The Participant hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of the Participant’s personal data as described in this Agreement and any other RSU grant materials by and among, as applicable, the Service Recipient, the Company and other members of the Company Group for the purpose of implementing, administering and managing the Plan.
Participant understands that the Company and the Service Recipient may hold certain personal information about the Participant, including, but not limited to, the Participant’s name, home address, email address and telephone number, date of birth, passport, social insurance number or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company, details of all stock options, restricted stock units or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in the Participant’s favor (“Data”), for the purpose of implementing, administering and managing the Plan.
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The Participant understands that Data will be transferred to any third parties as may be selected by the Company (presently or in the future), which assist the Company with the implementation, administration and management of the Plan. The Participant understands that the recipients of the Data may be located in the United States or elsewhere, and that the recipients’ country (e.g., the United States) may have different data privacy laws and protections than the Participant’s country. The Participant understands that if the Participant resides outside the United States the Participant may request a list with the names and addresses of any potential recipients of the Data by contacting the Participant’s local human resources representative. The Participant authorizes the Company and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purpose of implementing, administering and managing the Plan. The Participant understands that Data will be held only as long as is necessary to implement, administer and manage the Plan. The Participant understands that if the Participant resides outside the United States, the Participant may, at any time, view Data, request information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing the Participant’s local human resources representative. Further, the Participant understands that the Participant is providing the consents herein on a purely voluntary basis. If the Participant does not consent, or if the Participant later seeks to revoke the Participant’s consent, the Participant’s employment status or service with the Service Recipient will not be affected; the only consequence of refusing or withdrawing the Participant’s consent is that the Company may not be able to grant options or other equity awards to the Participant or administer or maintain such awards. Therefore, the Participant understands that refusing or withdrawing the Participant’s consent may affect the Participant’s ability to participate in the Plan. For more information on the consequences of the Participant’s refusal to consent or withdrawal of consent, the Participant understands that the Participant may contact the Participant’s local human resources representative.
17.Restrictive Covenants. The Participant acknowledges and recognizes the highly competitive nature of the businesses of the Company and its Affiliates, that the Participant shall be allowed access to confidential and proprietary information (including but not limited to trade secrets) about those businesses, as well as access to the prospective and actual customers, suppliers, investors, clients and partners involved in those businesses, and the goodwill associated with the Company and its Affiliates. Participant accordingly agrees to the provisions of Appendix A to this Agreement (the “Restrictive Covenants”). For the avoidance of doubt, the Restrictive Covenants contained in this Agreement are in addition to, and not in lieu of, any other restrictive covenants or similar covenants or agreements between the Participant and the Company or any of its Affiliates.
18.Repayment of Proceeds; Clawback Policy; Compliance with Ownership and Other Policies and Agreements.
(a)If a Restrictive Covenant Violation occurs or the Company discovers after a termination of employment or service that grounds existed for Cause at the time thereof, then the Participant shall be required, unless the Committee determines otherwise, in addition to any other remedy available (on anon-exclusive basis), to pay to the Company, within ten (10) business days of the Company’s request to the Participant therefor, an amount equal the aggregate after-tax proceeds (taking into account all amounts of tax that would be recoverable upon a claim of loss for payment of such proceeds in the year of repayment) the Participant received upon the sale or other disposition of, or distributions in respect of, the RSUs and any Shares or cash issued in respect thereof. Any reference in this Agreement to grounds existing for a termination of employment or service with Cause shall be determined without regard to any notice period, cure period or other procedural delay or event required prior to finding of or termination with Cause.
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(b)The RSUs shall be subject to reduction, cancellation, forfeiture or recoupment to the extent necessary to comply with (i) any clawback, forfeiture or other similar policy adopted by the Board or the Committee and as in effect from time to time and (ii) applicable law. Further, to the extent that the Participant receives any amount in excess of the amount that the Participant should otherwise have received under the terms of this Agreement for any reason (including, without limitation, by reason of a financial restatement, mistake in calculations or other administrative error), the Participant shall be required to repay any such excess amount to the Company.
(c)Without limiting the terms of the Plan, and as a condition to receiving the RSUs or any benefit hereunder, the Participant agrees that he or she shall abide by all provisions of any equity retention policy, stock ownership guidelines and/or other policies adopted by the Company or an Affiliate, each as in effect from time to time and to the extent applicable to the Participant.
19.Limitation on Rights; No Right to Future Grants; Extraordinary Item of Compensation. By accepting this Agreement and the grant of the RSUs contemplated hereunder, the Participant expressly acknowledges that (A) the Plan is discretionary in nature and may be suspended or terminated by the Company at any time; (B) the grant of RSUs is a one-time benefit that does not create any contractual or other right to receive future grants of RSUs or other Awards under the Plan, or benefits in lieu of RSUs; (C) all determinations with respect to future grants of RSUs, if any, including the grant date, the number of Shares granted and the applicable vesting terms, shall be at the sole discretion of the Committee and/or the Company; (D) the Participant’s participation in the Plan is voluntary; (E) the value of the RSUs is an extraordinary item of compensation that is outside the scope of the Participant’s employment or consulting contract, if any, and nothing can or must automatically be inferred from such employment or consulting contract or its consequences; (F) grants of RSUs are not part of normal or expected compensation for any purpose and are not to be used for calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments, the Participant waives any claim on such basis, and for the avoidance of doubt, the RSUs shall not constitute an “acquired right” under the applicable law of any jurisdiction; and (G) the future value of the underlying Shares is unknown and cannot be predicted with certainty. In addition, the Participant hereby waives any claim to continued vesting of the RSUs or to damages or severance entitlement related to non-continuation of the RSUs beyond the period provided under the Plan or this Agreement, except to the extent of any provision to the contrary in any written employment contract or other agreement between the Service Recipient and/or any member of the Company Group and the Participant, whether any such agreement is executed before, on or after the Date of Grant.
20.Amendment of Agreement. The Committee may, to the extent consistent with the terms of the Plan and this Agreement, waive any conditions or rights under, amend any terms of, or alter, suspend, discontinue, cancel or terminate, any RSUs granted hereunder or this Agreement, prospectively or retroactively (including after the Participant’s Termination); provided, that, other than as provided in the Plan, any such waiver, amendment, alteration, suspension, discontinuance, cancellation or termination that would materially and adversely affect the rights of any Participant with respect to the RSUs granted hereunder shall not to that extent be effective without the consent of the Participant; provided, further, that in no event shall any such amendment alter the Minimum Vesting Condition.
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21.Award Administrator. The Company may from time to time designate a third party (an “Award Administrator”) to assist the Company in the implementation, administration and management of the Plan and any RSUs granted thereunder, including, but not limited to, by sending award notices on behalf of the Company to Participants, and by facilitating through electronic means acceptance of agreements by Participants.
22.Section 409A of the Code.
(a)Notwithstanding any provision of the Plan or this Agreement to the contrary, it is intended that the provisions of this Agreement comply with, or be exempt from, Section 409A of the Code, and all provisions of this Agreement shall be construed and interpreted in a manner consistent with the requirements for avoiding taxes or penalties under Section 409A of the Code. The Participant is solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on or in respect of the Participant in connection with this Agreement (including any taxes and penalties under Section 409A of the Code), and neither the Service Recipient nor any other member of the Company Group shall have any obligation to indemnify or otherwise hold the Participant (or any beneficiary) harmless from any or all such taxes or penalties. If the RSUs are considered “deferred compensation” subject to Section 409A of the Code, references in this Agreement to “termination of employment” (and substantially similar phrases) shall mean “separation from service” within the meaning of Section 409A of the Code. For purposes of Section 409A of the Code, each of the payments that may be made in respect of the RSUs shall be deemed as separate payments.
(b)Notwithstanding anything in the Plan or this Agreement to the contrary, if a Participant is a “specified employee” within the meaning of Section 409A of the Code, no payments in respect of any RSU that is “deferred compensation” subject to Section 409A of the Code and which would otherwise be payable upon the Participant’s “separation from service” (as defined in Section 409A of the Code) shall be made to such Participant prior to the date that is six (6) months after the date of the Participant’s “separation from service” or, if earlier, the date of the Participant’s death. Following any applicable six (6) month delay, all such delayed payments shall be paid in a single lump sum on the earliest date permitted under Section 409A of the Code that is also a business day.
(c)Unless otherwise provided by the Committee in this Agreement or otherwise, in the event that the timing of payments in respect of the RSUs (that would otherwise be considered “deferred compensation” subject to Section 409A of the Code) would be accelerated upon the occurrence of (i) a Change in Control, no such acceleration shall be permitted (to the extent required under Section 409A) unless the event giving rise to the Change in Control satisfies the definition of a change in the ownership or effective control of a corporation, or a change in the ownership of a substantial portion of the assets of a corporation pursuant to Section 409A of the Code or (ii) a Disability, no such acceleration shall be permitted unless the Disability also satisfies the definition of “Disability” pursuant to Section 409A of the Code if and to the extent required under Section 409A of the Code.
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23.Restriction on Restricted Stock Unit Award and Shares. The obligation of the Company to settle the RSUs in Shares or other consideration shall be subject to all applicable laws, rules and regulations, and to such approvals by governmental agencies as may be required. Notwithstanding any terms or conditions of this Agreement to the contrary, the Company shall be under no obligation to offer to sell, and shall be prohibited from offering to sell or selling, any Shares underlying the RSUs unless such shares have been properly registered for sale pursuant to the Securities Act with the Securities and Exchange Commission or unless the Company has received an opinion of counsel (if the Company has requested such an opinion), satisfactory to the Company, that such shares may be offered or sold without such registration pursuant to an available exemption therefrom and the terms and conditions of such exemption have been fully complied with. The Company shall be under no obligation to register for sale under the Securities Act any of the Shares. The Committee shall have the authority to provide that all Shares shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan, this Agreement, the Federal securities laws or the rules, regulations and other requirements of the Securities and Exchange Commission, any securities exchange or inter-dealer quotation system on which the securities of the Company are listed or quoted and any other applicable Federal, state, local or non-U.S. laws, rules, regulations and other requirements, and, without limiting the generality of the Plan, the Committee may cause a legend or legends to be put on certificates representing the Shares. Notwithstanding any provision in the Plan to the contrary, the Committee reserves the right to add any additional terms or provisions to the Performance- and Service-Based Restricted Stock Unit Agreement that the Committee, in its sole discretion, deems necessary or advisable in order that this Agreement complies with the legal requirements of any governmental entity to whose jurisdiction this Agreement is subject. The Committee may cancel the RSUs or any portion thereof if it determines, in its sole discretion, that legal or contractual restrictions and/or blockage and/or other market considerations would make the Company’s acquisition of shares of Common Stock from the public markets, the Company’s issuance of the Shares to the Participant, the Participant’s acquisition of the Shares from the Company and/or the Participant’s sale of Common Stock to the public markets, illegal, impracticable or inadvisable. If the Committee determines to cancel all or any portion of the RSUs in accordance with the foregoing, the Company shall, subject to any limitations or reductions as may be necessary to comply with Section 409A of the Code, provide the Participant with a cash payment or equity subject to deferred vesting and delivery consistent with the vesting restrictions applicable to the RSUs.
24.Book Entry Delivery of Shares. Whenever reference in this Agreement is made to the issuance or delivery of certificates representing one or more Shares, the Company may elect to issue or deliver such Shares in book entry form in lieu of certificates.
25.Electronic Delivery and Acceptance. The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through a non-line or electronic system established and maintained by the Company or a third party designated by the Company.
26.Acceptance and Agreement by the Participant. By accepting the RSUs (including through electronic means), the Participant agrees to be bound by the terms, conditions and restrictions set forth in the Plan, this Agreement and the Company’s policies, as in effect from time to time, relating to the Plan.
27.No Advice Regarding Grant. The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Participant’s participation in the Plan, or the Participant’s acquisition or sale of the underlying Shares. The Participant is hereby advised to consult with his or her own personal tax, legal and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan.
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28.Appendices For Non-U.S. Participants. Notwithstanding any provisions in this Agreement, Participants residing and/or working outside the United States shall be subject to the Terms and Conditions for Non-U.S. Participants attached hereto as Appendix B and to any Country-Specific Terms and Conditions for the Participant’s country attached hereto as Appendix C. If the Participant relocates from the United States to another country, the Terms and Conditions for Non-U.S. Participants and the applicable Country-Specific Terms and Conditions shall apply to the Participant, to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. Moreover, if the Participant relocates between any of the countries included in the Country-Specific Terms and Conditions, the special terms and conditions for such country shall apply to the Participant, to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. The Terms and Conditions for Non-U.S. Participants and the Country-Specific Terms and Conditions constitute part of this Agreement.
29.Imposition of Other Requirements. The Company reserves the right to impose other requirements on the Participant’s participation in the Plan, on the RSUs and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require the Participant to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.
30.Right of Offset. Subject to any considerations under Section 409A of the Code, the Company shall have the right to offset against its obligation to deliver Shares under this Agreement any outstanding amounts (including, without limitation, travel and entertainment or advance account balances, loans, repayment obligations under any Awards or amounts repayable to the Company pursuant to tax equalization, housing, automobile or other employee programs) that the Participant then owes to any member of the Company Group and any amounts the Committee otherwise deems appropriate pursuant to any tax equalization policy or agreement. Notwithstanding the foregoing, if the RSUs are “deferred compensation” subject to Section 409A of the Code, the Committee shall have no right to offset against its obligation to deliver Shares under this Agreement if such offset could subject the Participant to the additional tax imposed under Section 409A of the Code in respect of the RSUs.
31.Waiver. The Participant acknowledges that a waiver by the Company of breach of any provision of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by the Participant or any other participant in the Plan.
32.Rules of Construction. Headings are given to the sections of this Agreement solely as a convenience to facilitate reference. The reference to any statute, regulation or other provision of law shall (unless the Administrator determines otherwise) be construed to refer to any amendment to or successor of such provision of law.
33.Counterparts. This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one in the same agreement.
[Signatures follow]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be effective as of the Date of Grant.
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HILTON GRAND VACATIONS INC. |
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By: |
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[NAME] |
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[TITLE] |
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Acknowledged and Agreed: |
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Participant Signature |
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APPENDIX A
Restrictive Covenants
1.Non-Competition; Non-Solicitation.
(a)Participant acknowledges and recognizes the highly competitive nature of the businesses of the Company and its Affiliates and accordingly agrees as follows:
(i)During Participant’s employment with or service to the Company or its Affiliates (the “Employment Term”) and for a period that ends on the later of (A) one year following the date Participant ceases to be employed by or in service to the Company or any of its Affiliates or (B) the last date any portion of the Award granted under this Agreement is eligible to vest if Participant ceases to be employed by the Company or any of its Affiliates as a result of the Participant’s Retirement (the “Restricted Period”), Participant shall not, whether on Participant’s own behalf or on behalf of or in conjunction with any person, firm, partnership, joint venture, association, corporation or other business organization, entity or enterprise whatsoever (“Person”), directly or indirectly solicit or assist in soliciting in competition with the Restricted Group in the Business, the business of any then current or prospective client or customer with whom Participant (or his direct reports) had personal contact or dealings on behalf of the Company or any of its Affiliates during the one-year period preceding Participant’s termination of employment or service.
(ii)During the Restricted Period, Participant shall not directly or indirectly:
(A)engage in the Business providing services in the nature of the services Participant provided to the Company at any time in the one year prior to the termination of Participant’s employment or service, for a Competitor;
(B)enter the employ of, or render any services to, a Competitor, except where such employment or services do not relate in any manner to the Business;
(C)acquire a financial interest in, or otherwise become actively involved with, a Competitor, directly or indirectly, as an individual, partner, shareholder, officer, director, principal, agent, trustee or consultant; or
(D)intentionally and adversely interfere with, or attempt to adversely interfere with, business relationships between the members of the Restricted Group and any of their clients, customers, suppliers, partners, members or investors.
(iii)Notwithstanding anything to the contrary in this Appendix A, Participant may, directly or indirectly own, solely as an investment, securities of any Person engaged in a Business (including, without limitation, a Competitor) which are publicly traded on a national or regional stock exchange or on the over-the-counter market if Participant (A) is not a controlling person of, or a member of a group which controls, such person and (B) does not, directly or indirectly, own 2% or more of any class of securities of such Person.
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(iv)During the Restricted Period, Participant shall not, whether on Participant’s own behalf or on behalf of or in conjunction with any Person, directly or indirectly:
(A)solicit or encourage any executive-level employee of the Restricted Group, with whom Participant has had material business contact during the Employment Term or, if no longer an employee or consultant, in the one year prior to the termination of Participant’s employment with or service to any member of the Company Group, to leave the employment of the Restricted Group to become affiliated in any respect with a Competitor or otherwise be engaged in the Business; or
(B)hire any such executive-level employee to become affiliated in any respect with a Competitor or otherwise be engaged in the Business and with whom Participant had material business contact in the one year prior to the termination of Participant’s employment with or service to the Company, who (x) was employed by the Restricted Group as of the date of Participant’s termination of employment with or service to the Company or any of its Affiliates or (y)left the employment of the Restricted Group within one year after the termination of Participant’s employment with or service to the Company or any of its Affiliates.
(v)For purposes of this Agreement:
(A)“Restricted Group” shall mean the Company Group and, to the extent engaged in the Business, its Affiliates, provided, however, that for the purposes of this definition, an “Affiliate” shall not include any portfolio company of The Blackstone Group L.P. or its Affiliates (other than the Company Group).
(B)“Business” shall mean the business of owning, financing, developing, redeveloping, managing, marketing, operating, licensing, leasing or franchising vacation, timeshare or lodging properties, and natural ancillary business products and services related to such business, including, without limitation, membership services, exchange programs, rental programs, and provision of amenities.
(C)“Competitor” shall mean any person engaged in the Business, including but not limited to any vacation, timeshare or lodging companies that are comparable in size to the Company, including, without limitation, Marriott Vacations Worldwide, Wyndham Vacation Ownership, Interval Leisure Group, Disney Vacation Club, Hyatt Vacation Ownership, Holiday Inn Club Vacations, Bluegreen Vacations, Diamond Resorts International and Westgate Resorts.
(b)It is expressly understood and agreed that although Participant and the Company consider the restrictions contained in this Section 1 to be reasonable, if a judicial determination is made by a court of competent jurisdiction that the time or territory or any other restriction contained in this Appendix A is an unenforceable restriction against Participant, the provisions of this Appendix A shall not be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such maximum extent as such court may judicially determine or indicate to be enforceable. Alternatively, if any court of competent jurisdiction finds that any restriction contained in this Appendix A is unenforceable, and such restriction cannot be amended so as to make it enforceable, such finding shall not affect the enforceability of any of the other restrictions contained herein. Notwithstanding the foregoing, if Participant’s principal place of employment or service on the date hereof is located in Virginia, then this Section 1(b) of this Appendix A shall not apply following Participant’s termination of employment or service to the extent any such provision is prohibited by applicable Virginia law.
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(c)The period of time during which the provisions of this Section 1 shall be in effect shall be extended by the length of time during which Participant is in breach of the terms hereof as determined by any court of competent jurisdiction on the Company’s application for injunctive relief.
(d)Notwithstanding the foregoing, if Participant’s principal place of employment or service on the date hereof is located in California or any other jurisdiction where any provision of this Section 1 is prohibited by applicable law, then the provisions of this Section 1 shall not apply following Participant’s termination of employment or service to the extent any such provision is prohibited by applicable law.
2.Confidentiality; Non-Disparagement; Intellectual Property; Protected Rights.
(a)Confidentiality.
(i)Participant shall not at any time (whether during or after Participant’s employment with or service to the Company) (x) retain or use for the benefit, purposes or account of Participant or any other Person; or (y) disclose, divulge, reveal, communicate, share, transfer or provide access to any Person outside the Company or any of its Affiliates (other than its professional advisers who are bound by confidentiality obligations or otherwise in performance of Participant’s duties under Participant’s employment or service and pursuant to customary industry practice), any non-public proprietary or confidential information (including, without limitation, trade secrets know-how research and development, software, databases, inventions, processes, formulae, technology, designs and other intellectual property, information concerning finances, investments, profits, pricing, costs, products, services, vendors, customers, clients, partners, investors, personnel, compensation, recruiting, training, advertising, sales, marketing, promotions, government and regulatory activities and approvals) concerning the past, current or future business, activities and operations of the Company, its Subsidiaries or Affiliates and/or any third party that has disclosed or provided any of same to the Company on a confidential basis (“Confidential Information”) without the prior written authorization of the Board.
(ii)“Confidential Information” shall not include any information that is (a) generally known to the industry or the public other than as a result of Participant’s breach of this covenant; (b )made legitimately available to Participant by a third party without breach of any confidentiality obligation of which Participant has knowledge; or (c) required by law to be disclosed provided that, unless otherwise provided under applicable law, with respect to subsection (c), Participant shall give prompt written notice to the Company of such requirement, disclose no more information than is so required, and reasonably cooperate with any attempts by the Company to obtain a protective order or similar treatment.
(iii)Except as required by law, Participant shall not disclose to anyone, other than Participant’s family (it being understood that, in this Agreement, the term “family” refers to Participant’s spouse, minor children, parents and spouse’s parents) and advisors, the existence or contents of this Agreement provided that Participant may disclose to any prospective future employer the provisions of this Appendix A. This Section 2(a)(iii) shall terminate if the Company publicly discloses a copy of this Agreement (or, if the Company publicly discloses summaries or excerpts of this Agreement, to the extent so disclosed).
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(iv)Upon termination of Participant’s employment with or service to the Company or any of its Affiliates for any reason, Participant shall (x) cease and not thereafter commence use of any Confidential Information or intellectual property (including without limitation, any patent, invention, copyright, trade secret, trademark, trade name, logo, domain name or other source indicator) owned or used by the Company, its Subsidiaries or Affiliates; and (y) immediately destroy, delete, or return to the Company, at the Company’s option, all originals and copies in any form or medium (including memoranda, books, papers, plans, computer files, letters and other data) in Participant’s possession or control (including any of the foregoing stored or located in Participant’s office, home, laptop or other computer, whether or not Company property) that contain Confidential Information, except that Participant may retain only those portions of any personal notes, notebooks and diaries that do not contain any Confidential Information.
(v)Participant acknowledges and agrees that the Company and its Affiliates will prosecute any non-confidential disclosure or misappropriation of the Company’s and/or its Affiliates’ trade secrets to the full extent allowed by federal, state and common law. Participant further acknowledges and agrees that Participant has received and understands the following notice concerning immunity from liability for confidential disclosure of a trade secret to the government or in a court filing: Pursuant to the Defend Trade Secrets Act, 18 U.S.C. § 1833, an individual shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is made (A)in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney, and solely for the purpose of reporting or investigating a suspected violation of law, or (B) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.
(b)Non-Disparagement. During Participant’s Employment Term and at all times thereafter (including following the termination of Participant’s Employment Term for any reason), Participant shall not to intentionally make any statement that criticizes, ridicules, disparages or is otherwise derogatory of the Company, any of its Affiliates, or any of their respective officers, directors, stockholders, employees or other service providers, or any product or service offered by the Company or any of its Affiliates; provided, however, that nothing contained in this Section 2(b) shall preclude Participant from providing truthful testimony in any legal proceeding, or making any truthful statement (i) to any governmental agency; (ii) as required or permitted by applicable law or regulation; (iii) as required by court order or other legal process; or (iv) after the Restricted Period, for any legitimate business reason.
(c)Intellectual Property.
(i)If Participant has created, invented, designed, developed, contributed to or improved any works of authorship, inventions, intellectual property, materials, documents or other work product (including without limitation, research, reports, software, databases, systems, applications, presentations, textual works, content, or audiovisual materials) (“Works”), either alone or with third parties, prior to Participant’s employment or engagement by the Company or any of its Affiliates, that are relevant to or implicated by such employment (“Prior Works”), Participant hereby grants the Company a perpetual, non-exclusive royalty-free, worldwide, assignable, sublicensable license under all rights and intellectual property rights (including rights under patent, industrial property, copyright, trademark, trade secret, unfair competition and related laws) therein for all purposes in connection with the Company’s current and future business.
(ii)If Participant creates, invents, designs, develops, contributes to or improves any Works, either alone or with third parties, at any time during Participant’s employment by or service to the Company and within the scope of such employment or service and with the use of any Company resources (“Company Works”), Participant shall promptly and fully disclose same to the Company and hereby irrevocably assigns, transfers and conveys, to the maximum extent permitted by applicable law, all rights and intellectual property rights therein (including rights under patent, industrial property, copyright, trademark, trade secret, unfair competition and related laws) to the Company to the extent ownership of any such rights does not vest originally in the Company.
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(iii)Participant shall take all reasonably requested actions and execute all reasonably requested documents (including any licenses or assignments required by a government contract) at the Company’s expense (but without further remuneration) to assist the Company in validating, maintaining, protecting, enforcing, perfecting, recording, patenting or registering any of the Company’s rights in the Prior Works and Company Works. If the Company is unable for any other reason, after reasonable attempt, to secure Participant’s signature on any document for this purpose, then Participant hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as Participant’s agent and attorney in fact, to act for and in Participant’s behalf and stead to execute any documents and to do all other lawfully permitted acts required in connection with the foregoing.
(iv)Participant shall not improperly use for the benefit of, bring to any premises of, divulge, disclose, communicate, reveal, transfer or provide access to, or share with the Company any confidential, proprietary or non-public information or intellectual property relating to a former employer or other third party without the prior written permission of such third party. Participant shall comply with all relevant policies and guidelines of the Company that are from time to time previously disclosed to Participant, including regarding the protection of Confidential Information and intellectual property and potential conflicts of interest. Participant acknowledges that the Company may amend any such policies and guidelines from time to time, and that Participant remains at all times bound by their most current version from time to time previously disclosed to Participant.
(d)Protected Rights. Notwithstanding any other provision of this Agreement, (i) nothing in this Agreement or any other agreement prohibits the Participant from reporting possible violations of law or regulation to any governmental agency or entity, including, but not limited to, the Department of Justice, the Securities and Exchange Commission, the Congress and any agency Inspector General (the “Government Agencies”), or communicating with Government Agencies or otherwise participating in any investigation or proceeding that may be conducted by Government Agencies, including providing documents or other information, (ii) the Participant does not need the prior authorization of the Company to take any action described in (i), and the Participant is not required to notify the Company that he or she has taken any action described in (i); and (iii )this Agreement does not limit the Participant’s right to receive an award for providing information relating to a possible securities law violation to the Securities and Exchange Commission. Further, notwithstanding the foregoing, the Participant will not be held criminally or civilly liable under any federal, state or local trade secret law for the disclosure of a trade secret that (i) is made (A) in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney, and (B) solely for the purpose of reporting or investigating a suspected violation of law; or (ii) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. Additionally, an individual suing an employer for retaliation based on the reporting of a suspected violation of law may disclose a trade secret to his or her attorney and use the trade secret information in the court proceeding, so long as any document containing the trade secret is filed under seal and the individual does not disclose the trade secret except pursuant to court order.
The provisions of Section 2 hereof shall survive the termination of Participant’s employment or service for any reason (except as otherwise set forth in Section 2(a)(iii) hereof).
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HILTON GRAND VACATIONS INC.
2017 OMNIBUS INCENTIVE PLAN
PERFORMANCE- AND SERVICE-BASED
RESTRICTED STOCK UNIT AGREEMENT
TERMS AND CONDITIONS FORNON-U.S. PARTICIPANTS
Capitalized terms used but not otherwise defined herein shall have the meaning given to such terms in the Plan and the Performance- and Service-Based Restricted Stock Unit Agreement.
1.Responsibility for Taxes. This provision supplements Section 4(d) of the Performance- and Service-Based Restricted Stock Unit Agreement:
(a)The Participant acknowledges that, regardless of any action taken by the Company or, if different, the Service Recipient, the ultimate liability for all income tax, excise tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax-related items related to the Participant’s participation in the Plan and legally applicable to the Participant (“Tax-Related Items”) is and remains the Participant’s responsibility and may exceed the amount actually withheld by the Company or the Service Recipient. The Participant further acknowledges that the Company and/or the Service Recipient (1)make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the RSUs, including, but not limited to, the grant, vesting or settlement of the RSUs, the subsequent sale of Shares acquired pursuant to such settlement and the receipt of any dividends and/or any dividend equivalents; and (2) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the RSUs to reduce or eliminate the Participant’s liability for Tax-Related Items or achieve any particular tax result. Further, if the Participant is subject to Tax-Related Items in more than one jurisdiction, the Participant acknowledges that the Company and/or the Service Recipient (or former service recipient, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.
(b)If the obligation for Tax-Related Items is satisfied by withholding in Shares, for tax purposes, the Participant is deemed to have been issued the full number of Shares subject to the vested RSUs, notwithstanding that a number of the Shares are held back solely for the purpose of satisfying the Withholding Taxes.
(c)Finally, the Participant agrees to pay to the Company or the Service Recipient, any amount of the Withholding Taxes that cannot be satisfied by the means previously described. The Company may refuse to issue or deliver the Shares or the proceeds of the sale of Shares, if the Participant fails to comply with the Participant’s obligations in connection with the Withholding Taxes.
(d) Notwithstanding anything to the contrary in the Plan or in Section 4(d) of the Performance- and Service-Based Restricted Stock Unit Agreement, if the Company is required by applicable law to use a particular definition of fair market value for purposes of calculating the taxable income for the Participant, the Company shall have the discretion to calculate the Shares to be withheld to cover any Withholding Taxes by using either the price used to calculate the taxable income under applicable law or by using the closing price per Share on the New York Stock Exchange (or other principal exchange on which the Shares then trade) on the trading day immediately prior to the date of delivery of the Shares.
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2.Nature of Grant. This provision supplements Section 19 of the Performance- and Service-Based Restricted Stock Unit Agreement:
In accepting the grant of the RSUs, the Participant acknowledges, understands and agrees that:
(a)the RSU grant and the Participant’s participation in the Plan shall not create a right to employment or be interpreted as forming an employment or services contract with the Company or any member of the Company Group;
(b)the RSUs and the Shares subject to the RSUs, and the income from and value of same, are not intended to replace any pension rights or compensation;
(c)unless otherwise agreed with the Company, the RSUs and the Shares subject to the RSUs, and the income from and value of same, are not granted as consideration for, or in connection with, the service the Participant may provide as a director of any member of the Company Group;
(d)for purposes of the RSUs, the Termination Date shall be the date the Participant is no longer actively providing services to the Company or any member of the Company Group (regardless of the reason for such termination and whether or not later to be found invalid or in breach of employment laws in the jurisdiction where the Participant is employed or the terms of the Participant’s employment agreement, if any), and unless otherwise expressly provided in this Agreement or determined by the Company, the Participant’s right to vest in the RSUs under the Plan, if any, shall terminate as of such date and shall not be extended by any notice period (e.g., the Participant’s period of service would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment laws in the jurisdiction where the Participant is employed or the terms of the Participant’s employment agreement, if any); the Committee shall have the exclusive discretion to determine when the Participant is no longer actively providing services for purposes of the RSUs grant (including whether the Participant may still be considered to be providing services while on a leave of absence);
(e)unless otherwise provided in the Plan or by the Company in its discretion, the RSUs and the benefits evidenced by this Agreement do not create any entitlement to have the RSUs or any such benefits transferred to, or assumed by, another company nor be exchanged, cashed out or substituted for, in connection with any corporate transaction affecting the Company’s Common Stock; and
(f)neither the Company nor any member of the Company Group shall be liable for any foreign exchange rate fluctuation between the Participant’s local currency and the United States Dollar that may affect the value of the RSUs or of any amounts due to the Participant pursuant to the settlement of the RSUs or the subsequent sale of any Shares acquired upon settlement.
3.Insider Trading Restrictions/Market Abuse Laws. The Participant acknowledges that the Participant may be subject to insider trading restrictions and/or market abuse laws in applicable jurisdictions, which may affect his or her ability to, directly or indirectly, acquire, sell, or attempt to sell Shares or rights to Shares (e.g., RSUs) under the Plan during such times as the Participant is considered to have “inside information” regarding the Company (as defined by the laws in the applicable jurisdictions or Participant’s country). Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Company insider trading policy. The Participant is responsible for ensuring compliance with any applicable restrictions and is advised to consult his or her personal legal advisor on this matter.
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4.Foreign Asset/Account Reporting; Exchange Controls. The Participant’s country may have certain foreign asset and/or account reporting requirements and/or exchange controls that may affect the Participant’s ability to acquire or hold Shares under the Plan or cash received from participating in the Plan (including from any dividends received or sale proceeds arising from the sale of Shares) in a brokerage or bank account outside the Participant’s country. The Participant may be required to report such accounts, assets or transactions to the tax or other authorities in his or her country. The Participant also may be required to repatriate sale proceeds or other cash received as a result of the Participant’s participation in the Plan to his or her country through a designated bank or broker and/or within a certain time after receipt. The Participant acknowledges that it is his or her responsibility to be compliant with such regulations, and the Participant is advised to consult his or her personal legal advisor for any details.
5.Termination of Employment. This provision supplements Section 5(c) of the Performance- and Service-Based Restricted Stock Unit Agreement:
Notwithstanding anything in this Section 5(c), if the Company receives a legal opinion that there has been a legal judgment and/or legal development in the Participant’s jurisdiction that likely would result in the favorable treatment that applies to the RSUs when the Participant terminates employment as a result of the Participant’s Retirement being deemed unlawful and/or discriminatory, the provisions of this Section 5(c) regarding the treatment of the RSUs when the Participant terminates employment as a result of the Participant’s Retirement shall not be applicable to the Participant and the remaining provisions of this Section 5 shall govern.
23
2020 PSU – WANG
HILTON GRAND VACATIONS INC.
2017 OMNIBUS INCENTIVE PLAN
PERFORMANCE- AND SERVICE-BASED
RESTRICTED STOCK UNIT AGREEMENT
COUNTRY-SPECIFIC TERMS AND CONDITIONS
Capitalized terms used but not otherwise defined herein shall have the meaning given to such terms in the Plan, the Performance- and Service-Based Restricted Stock Unit Agreement and the Terms and Conditions for Non-U.S. Participants.
Terms and Conditions
This Appendix C includes additional terms and conditions that govern the RSUs if the Participant resides and/or works in one of the countries listed below. If the Participant is a citizen or resident of a country (or is considered as such for local law purposes) other than the one in which the Participant is currently residing and/or working or if the Participant moves to another country after receiving the grant of the RSUs, the Company shall, in its discretion, determine the extent to which the terms and conditions herein shall be applicable to the Participant.
Notifications
This Appendix C also includes information regarding exchange controls and certain other issues of which the Participant should be aware with respect to the Participant’s participation in the Plan. The information is based on the securities, exchange control and other laws in effect in the respective countries as of January 2017. Such laws are often complex and change frequently. As a result, the Company strongly recommends that the Participant not rely on the information in this Appendix C as the only source of information relating to the consequences of the Participant’s participation in the Plan because the information may be out of date at the time that the RSUs vest or the Participant sells Shares acquired under the Plan.
In addition, the information contained herein is general in nature and may not apply to the Participant’s particular situation and the Company is not in a position to assure the Participant of a particular result. Accordingly, the Participant is advised to seek appropriate professional advice as to how the relevant laws in the Participant’s country may apply to the Participant’s situation.
If the Participant is a citizen or resident of a country other than the one in which the Participant is currently residing and/or working (or if the Participant is considered as such for local law purposes) or if the Participant moves to another country after receiving the grant of the RSUs, the information contained herein may not be applicable to the Participant in the same manner.
24
2020 PSU – WANG
Notifications
Foreign Asset/Account Reporting Information. If the Participant holds assets (including cash and Shares acquired under the Plan, and possibly RSUs) outside of Japan with a value exceeding ¥50,000,000 (as of December 31 each year), the Participant is required to comply with annual tax reporting obligations with respect to such assets. The Participant is responsible for complying with this reporting obligation, if applicable, and should consult with Participant’s personal tax advisor to ensure that the Participant is properly complying with applicable reporting requirements.
UNITED KINGDOM
Terms and Conditions
Responsibility for Taxes. This provision supplements Section 1 of the Terms and Conditions for Non-U.S. Participants:
Without limitation to Section 1 of the Terms and Conditions for Non-U.S. Participants, the Participant hereby covenants to pay all Tax-Related Items, as and when requested by the Company, the Service Recipient or by Her Majesty’s Revenue and Customs (“HMRC”) (or any other tax authority or other relevant authority). The Participant also agrees to indemnify and keep indemnified the Company and the Service Recipient against any Tax-Related Items that they are required to pay or withhold on the Participant’s behalf, have paid or will pay to HMRC (or any other tax authority or other relevant authority).
25
Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, Mark D. Wang, certify that:
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1. |
I have reviewed this Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 of Hilton Grand Vacations Inc.; |
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2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
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3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
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4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
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a. |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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b. |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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c. |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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d. |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
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5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
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a. |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
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b. |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
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By: |
/s/ Mark D. Wang |
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Mark D. Wang |
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President and Chief Executive Officer (Principal Executive Officer) |
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April 30, 2020 |
Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, Daniel J. Mathewes, certify that:
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1. |
I have reviewed this Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 of Hilton Grand Vacations Inc.; |
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2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
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3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
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4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
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a. |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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b. |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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c. |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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d. |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
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5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
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a. |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
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b. |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
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By: |
/s/ Daniel J. Mathewes |
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Daniel J. Mathewes |
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Executive Vice President and Chief Financial Officer |
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(principal financial officer) |
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April 30, 2020 |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY
ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Hilton Grand Vacations Inc. (the “Company”) for the quarter ended March 31, 2020 filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Mark D. Wang, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
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1. |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
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2. |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
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/s/ Mark D. Wang |
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Mark D. Wang |
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President and Chief Executive Officer (Principal Executive Officer) |
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April 30, 2020 |
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A signed original of this certification required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY
ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Hilton Grand Vacations Inc. (the “Company”) for the quarterly period ended March 31, 2020, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Daniel J. Mathewes, Executive Vice President and Chief Financial Officer of the Company, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, certify that:
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1. |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
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2. |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
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By: |
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/s/ Daniel J. Mathewes |
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Daniel J. Mathewes |
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Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
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April 30, 2020 |
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A signed original of this certification required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.