Exhibit 10.3

 

 

 

TAX DISAFFILIATION AGREEMENT

BETWEEN

THE MADISON SQUARE GARDEN COMPANY

(TO BE RENAMED MADISON SQUARE GARDEN SPORTS CORP.)

AND

MSG ENTERTAINMENT SPINCO, INC.

(TO BE RENAMED MADISON SQUARE GARDEN ENTERTAINMENT CORP.)

dated as of March 31, 2020

 

 

 

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TABLE OF CONTENTS

 

SECTION 1.

 

Definition of Terms

     2  

SECTION 2.

 

Allocation of Taxes and Tax-Related Losses

     10    

2.1

 

Allocation of Taxes

     10    

2.2

 

Special Allocation of Certain Taxes

     11    

2.3

 

Tax Payments

     12  

SECTION 3.

 

Preparation and Filing of Tax Returns

     12    

3.1

 

Combined Returns

     12    

3.2

 

Separate Returns

     12    

3.3

 

Agent

     12    

3.4

 

Provision of Information

     13    

3.5

 

Special Rules Relating to the Preparation of Tax Returns

     13    

3.6

 

Refunds, Credits, Offsets, Tax Benefits

     13    

3.7

 

Carrybacks

     14    

3.8

 

Amended Returns

     14    

3.9

 

Compensatory Equity Interests

     15  

SECTION 4.

 

Tax Payments

     15    

4.1

 

Payment of Taxes to Tax Authority

     15    

4.2

 

Indemnification Payments

     15    

4.3

 

Interest on Late Payments

     15    

4.4

 

Tax Consequences of Payments

     16    

4.5

 

Adjustments to Payments

     16    

4.6

 

Section 336(e) Election

     16    

4.7

 

Certain Final Determinations

     17  

SECTION 5.

 

Cooperation and Tax Contests

     17    

5.1

 

Cooperation

     17    

5.2

 

Notices of Tax Contests

     17    

5.3

 

Control of Tax Contests

     18    

5.4

 

Cooperation Regarding Tax Contests

     18  

SECTION 6.

 

Tax Records

     18    

6.1

 

Retention of Tax Records

     18    

6.2

 

Access to Tax Records

     19    

6.3

 

Confidentiality

     19  

 

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SECTION 7.

 

Representations and Covenants

     19    

7.1

 

Covenants of MSG and Spinco

     19    

7.2

 

Covenants of Spinco

     20    

7.3

 

Covenants of MSG

     20    

7.4

 

Exceptions

     21    

7.5

 

Injunctive Relief

     22    

7.6

 

Further Assurances

     22  

SECTION 8.

 

General Provisions

     22    

8.1

 

Construction

     22    

8.2

 

Ancillary Agreements

     22    

8.3

 

Counterparts

     22    

8.4

 

Notices

     22    

8.5

 

Amendments

     23    

8.6

 

Assignment

     23    

8.7

 

Successors and Assigns

     23    

8.8

 

Change in Law

     23    

8.9

 

Authorization, Etc.

     23    

8.10

 

Termination

     24    

8.11

 

Subsidiaries

     24    

8.12

 

Third-Party Beneficiaries

     24    

8.13

 

Double Recovery

     24    

8.14

 

Titles and Headings

     24    

8.15

 

Governing Law

     24    

8.16

 

Waiver of Jury Trial

     24    

8.17

 

Severability

     24    

8.18

 

No Strict Construction; Interpretation

     24  

SCHEDULE A

    

 

 

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TAX DISAFFILIATION AGREEMENT

THIS TAX DISAFFILIATION AGREEMENT (the “Agreement”) is dated as of March 31,
2020, by and between The Madison Square Garden Company (to be renamed Madison
Square Garden Sports Corp. at the Effective Time (as defined below)), a Delaware
corporation (“MSG”), and MSG Entertainment Spinco, Inc. (to be renamed Madison
Square Garden Entertainment Corp. at the Effective Time), a Delaware corporation
and a direct wholly-owned subsidiary of MSG (“Spinco” and, together with MSG,
the “Parties”, and each, a “Party”). Unless otherwise indicated, all “Section”
references in this Agreement are to sections of the Agreement.

RECITALS

WHEREAS, the Board of Directors of MSG determined that, based on the Corporate
Business Purposes (as defined below), it is in the best interests of MSG and its
stockholders to separate the businesses of Spinco, all as more fully described
in Spinco’s registration statement on Form 10, from MSG’s other businesses on
the terms and conditions set forth in the Distribution Agreement between MSG and
Spinco dated on or about the date hereof (the “Distribution Agreement”);

WHEREAS, pursuant to the Contribution Agreement (as defined below), (a) MSG
Sports & Entertainment, LLC (to be renamed MSG Entertainment Group, LLC), a
Delaware limited liability company and a direct wholly-owned subsidiary of MSG
(“MSG Entertainment”), intends to complete the Sports Assignments (as defined
below), and (b) MSG intends to complete the Entertainment Assignments (as
defined below);

WHEREAS, the Board of Directors of MSG has authorized the distribution to the
holders of the issued and outstanding shares of Class A Common Stock, par value
$0.01 per share, and Class B Common Stock, par value $0.01 per share, of MSG
(collectively, the “MSG Shares”) as of the record date for the distribution of
all the issued and outstanding shares of Class A Common Stock, par value $0.01
per share, and Class B Common Stock, par value $0.01 per share, of Spinco (each,
a “Spinco Share” and collectively, the “Spinco Shares”), respectively, on the
basis of one Spinco Share for every one MSG Share (the “Distribution”);

WHEREAS, MSG and Spinco intend the Recapitalization (as defined below) to
qualify as a tax-free transaction under section 368(a)(1)(E) of the Internal
Revenue Code of 1986, as amended (as defined below);

WHEREAS, MSG and Spinco intend the Contribution (as defined below) and
Distribution to qualify for the Tax-Free Status (as defined below);

WHEREAS, the Boards of Directors of MSG and Spinco have each determined that the
Distribution and the other transactions contemplated by the Distribution
Agreement, and the Ancillary Agreements (as defined below) are in furtherance of
and consistent with the Corporate Business Purposes and, as such, are in the
best interests of their respective companies and stockholders or sole
stockholder, as applicable, and have approved the Distribution Agreement, and
each of the Ancillary Agreements;

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WHEREAS, the Parties set forth in the Distribution Agreement the principal
arrangements between them regarding the separation of the Spinco Group (as
defined below) from the MSG Group (as defined below); and

WHEREAS, the Parties desire to provide for and agree upon the allocation between
the Parties of liabilities for Taxes (as defined below) arising prior to, as a
result of, and subsequent to the Distribution, and to provide for and agree upon
other matters relating to Taxes;

NOW, THEREFORE, in consideration of the mutual covenants contained in this
Agreement, the Parties hereby agree as follows:

SECTION 1. Definition of Terms. For purposes of this Agreement (including the
recitals hereof), the following terms have the following meanings:

“Affiliate” has the meaning set forth in the Distribution Agreement. For the
avoidance of doubt, the term “Affiliate” as it applies to Spinco shall include
the Spinco Company Entities.

“Agreed Treatment” means the treatment of (i) the Sports Assignments as a
transaction that is disregarded for U.S. federal income Tax purposes, (ii) the
Recapitalization as a tax-free transaction to which section 368(a)(1)(E) of the
Code applies, and (iii) the Contribution and the Distribution in accordance with
the Tax-Free Status.

“Agreement” has the meaning set forth in the preamble hereof.

“Ancillary Agreements” means the agreements encompassed by such term in the
Distribution Agreement.

“Business Day” has the meaning set forth in the Distribution Agreement.

“Code” has the meaning set forth in the recitals hereof.

“Combined Return” means a consolidated, combined or unitary Tax Return that
includes, by election or otherwise, one or more members of the MSG Group and one
or more members of the Spinco Group.

“Companies” means MSG and Spinco.

“Company” means MSG or Spinco, as the context requires.

“Compensatory Equity Interests” means options, stock appreciation rights,
restricted stock, restricted stock units or other rights with respect to MSG
Common Shares or Spinco Shares that are granted by MSG, Spinco or any of their
respective Subsidiaries in connection with employee or director compensation or
other employee benefits.

“Compensatory Equity Net Share Settlements” means “net share settlement”
transactions with respect to Compensatory Equity Interests between either Party
(or any of their respective Subsidiaries) on the one hand and the employee (or
director, as the case may be) of such Party or the other Party (or any of their
respective Subsidiaries) on the other hand, in each case pursuant to the terms
of the relevant agreement with respect to such Compensatory Equity Interests.

 

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“Contribution Agreement” means the Contribution Agreement between MSG, Spinco
and MSG Entertainment dated on or about the date hereof.

“Contribution” means the Entertainment Assignments.

“Controlling Party” means, with respect to a Tax Contest, the Person that has
responsibility, control and discretion in handling, defending, settling or
contesting such Tax Contest.

“Corporate Business Purposes” means the Corporate Business Purposes as set forth
in the Tax Opinion Representations (including any appendices thereto) and the
“Reasons for the Distribution” in Spinco’s registration statement on Form 10, as
amended.

“Deconsolidation Taxes” means any Taxes imposed on any member of the MSG Group
or the Spinco Group as a result of or in connection with the Sports Assignments,
the Contribution and the Distribution (or any portion thereof), but excluding
any Transfer Taxes and Distribution Taxes.

“Disclosing Party” has the meaning set forth in Section 6.3.

“Distribution” has the meaning set forth in the recitals hereof.

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

“Distribution Date” has the meaning set forth in the Distribution Agreement.

“Distribution Taxes” means any Taxes arising from a Final Determination that the
Contribution and the Distribution failed to be tax-free to MSG in accordance
with the requirements of section 355 or section 368(a)(1)(D) of the Code
(including any Taxes resulting from the application of section 355(d) or (e) to
the Distribution), or that any stock of Spinco failed to qualify as “qualified
property” within the meaning of section 355(c)(2) or 361(c)(2) of the Code
(including as a result of the application of section 355(d) or 355(e) of the
Code to the Distribution) or where applicable, failed to be stock permitted to
be received without recognition of gain or loss under section 361(a) of the
Code, and shall include any Taxes resulting from an election under section
336(e) of the Code in the circumstances set forth in Section 4.6 hereof.

“Due Date” has the meaning set forth in Section 4.3.

“Entertainment Assignments” has the meaning set forth in the Contribution
Agreement.

“Effective Time” means 11:59 p.m., New York City time, on the Distribution Date.

 

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“Employee Matters Agreement” means the Employee Matters Agreement by and between
MSG and Spinco entered into on or about the date hereof.

“Escheat Liability” means any unclaimed property or escheat liability, including
any interest, penalty, administrative charge, or addition thereto and further
including all costs of responding to or defending against an audit, examination,
or controversy with respect to such liability, imposed by or on behalf of a
governmental entity with respect to any property or obligation (including,
without limitation, uncashed checks to vendors, customers, or employees and
non-refunded overpayments).

“Excess Taxes” means the excess of (x) the Taxes for which MSG Group is liable
if an election is made pursuant to section 336(e) of the Code under Section 4.6
of this Agreement, over (y) the Taxes for which MSG Group is liable if such an
election is not made, in each case taking into account the allocation of Taxes
that is otherwise applicable in this Agreement but without regard to Section 4.6
hereof.

“Expert Law Firm” means a law firm nationally recognized for its expertise in
the matter for which its opinion is sought.

“Fifty-Percent Equity Interest” means, in respect of any corporation (within the
meaning of the Code), stock or other equity interests of such corporation
possessing (i) at least fifty percent (50%) of the total combined voting power
of all classes of stock or equity interests entitled to vote, or (ii) at least
fifty percent (50%) of the total value of shares of all classes of stock or of
the total value of all equity interests.

“Filer” means the Company that is responsible for filing the applicable Tax
Return pursuant to Sections 3.1 or 3.2.

“Final Determination” means a determination within the meaning of section 1313
of the Code or any similar provision of state or local Tax Law.

“Group” means the MSG Group or the Spinco Group, as the context requires.

“Income Tax” or “Income Taxes” means any Tax that is imposed on or measured by
or referred to as income, gross income, gross receipts, profits, capital stock,
franchise or other similar Tax.

“Indemnified Party” has the meaning set forth in Section 4.5.

“Indemnifying Party” has the meaning set forth in Section 4.5.

“Interest Rate” means (x) the “Applicable Rate” as set forth in the Distribution
Agreement, or (y) if higher and if with respect to a payment to indemnify for a
Tax to which the “large corporate underpayment” provision within the meaning of
section 6621(c) of the Code applies, such interest rate that would be applicable
at such time to such “large corporate underpayment.”

“IRS” means the Internal Revenue Service.

 

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“MSG” has the meaning set forth in the preamble hereof.

“MSG Business” has the meaning ascribed to the term “MSG Business” in the Tax
Opinion Representations that constitutes an active trade or business (within the
meaning of section 355(b) of the Code) of the separate affiliated group (as
defined in section 355(b)(3)(B) of the Code) of MSG.

“MSG Group” has the meaning ascribed to the term “MSG Group” in the Distribution
Agreement.

“MSG Indemnified Party” includes each member of the MSG Group, each of their
representatives and Affiliates, each of their respective directors, officers,
managers and employees, and each of their heirs, executors, trustees,
administrators, successors and assigns.

“MSG Restricted Action” means any action by MSG or any of its Subsidiaries
inconsistent with the covenants set forth in Section 7.4(a); and, for the
avoidance of doubt, an action shall be and remain a MSG Restricted Action even
if MSG or any of its Subsidiaries is permitted to take such an action pursuant
to Section 7.5(b).

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

“MSG Tainting Act” means any breach of a representation or covenant made by MSG
in Section 7.1 of this Agreement or the taking of a MSG Restricted Action, if as
a result of such breach or taking of a MSG Restricted Action a Final
Determination is made that the Contribution and the Distribution failed to be
tax-free by reason of (i) failing to qualify as a transaction described in
section 355 and section 368(a)(1)(D) of the Code, or (ii) any stock of Spinco
failing to qualify as “qualified property” within the meaning of
section 355(c)(2) or 361(c)(2) of the Code (including as a result of the
application of section 355(d) or 355(e) of the Code to the Distribution) or
where applicable, failing to be stock permitted to be received without
recognition of gain or loss under section 361(a) of the Code.

“Non-Controlling Party” has the meaning set forth in Section 5.3(a).

“Non-Filer” means any Company that is not responsible for filing the applicable
Tax Return pursuant to Sections 3.1 or 3.2.

“Non-Income Tax” or “Non-Income Taxes” means any Tax that is not an Income Tax.

“Other Party” has the meaning set forth in Section 4.6(b).

“Party” has the meaning set forth in the preamble hereof.

“Parties” has the meaning set forth in the preamble hereof.

“Payment Date” means (x) with respect to any U.S. federal income tax return, the
date on which any required installment of estimated taxes determined under
section 6655 of the Code is due, the date on which (determined without regard to
extensions) filing the return determined under section 6072 of the Code is
required, and the date the return is filed, and (y) with respect to any other
Tax Return, the corresponding dates determined under the applicable Tax Law.

 

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“Periodic Taxes” means Taxes imposed on a periodic basis that are not based upon
or related to income or receipts. Periodic Taxes include property Taxes and
similar Taxes.

“Permitted Acquisition” means any acquisition (as a result of the Distribution)
of Spinco Shares solely by reason of holding MSG Shares, but does not include
such an acquisition if such MSG Shares, before such acquisition, were themselves
acquired in a manner to which the flush language of section 355(e)(3)(A) of the
Code applies (thus causing, for the avoidance of doubt, section 355(e)(3)(A)(i),
(ii), (iii) or (iv) of the Code not to apply).

“Person” means any individual, corporation, company, limited liability company,
partnership, trust, incorporated or unincorporated association, joint venture or
other entity of any kind.

“Post-Distribution Period” means any Tax Year or other taxable period beginning
after the Distribution Date and, in the case of any Straddle Period, that part
of the Tax Year or other taxable period that begins at the beginning of the day
after the Distribution Date.

“Pre-Distribution Period” means any Tax Year or other taxable period that ends
on or before the Distribution Date and, in the case of any Straddle Period, that
part of the Tax Year or other taxable period through the end of the day on the
Distribution Date.

“Preparer” means the Company that is responsible for the preparation and filing
of the applicable Tax Return pursuant to Sections 3.1 or 3.2.

“Recapitalization” means the issuance of all Spinco Shares to MSG in exchange
for all of the Spinco Pre-Recapitalization Shares held by MSG.

“Receiving Party” has the meaning set forth in Section 6.3.

“Responsible Party” has the meaning set forth in Section 4.6(b).

“Restriction Period” means the period beginning on the Distribution Date and
ending twenty-four (24) months after the Distribution Date.

“Satisfactory Guidance” means either a ruling from the IRS or an Unqualified
Opinion, in either case reasonably satisfactory to MSG or Spinco (as the context
dictates) in both form and substance.

“Separate Return” means (a) in the case of any Tax Return required under
relevant Tax Law to be filed by any member of the MSG Group (including any
consolidated, combined or unitary Tax Return), any such Tax Return that does not
include any member of the Spinco Group, and (b) in the case of any Tax Return
required under relevant Tax Law to be filed by any member of the Spinco Group
(including any consolidated, combined or unitary Tax Return), any such Tax
Return that does not include any member of the MSG Group.

 

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“Spinco” has the meaning set forth in the preamble hereof.

“Spinco Business” has the meaning ascribed to the term “Spinco Business” in the
Tax Opinion Representations that constitutes an active trade or business (within
the meaning of section 355(b) of the Code) of the separate affiliated group (as
defined in section 355(b)(3)(B) of the Code) of Spinco.

“Spinco Share” or “Spinco Shares” has the meaning set forth in the recitals to
this Agreement.

“Spinco Company Entities” means, collectively, the entities listed on Schedule A
of the Distribution Agreement.

“Spinco Group” has the meaning ascribed to the term “Spinco Group” in the
Distribution Agreement.

“Spinco Indemnified Party” includes each member of the Spinco Group, each of
their representatives and Affiliates, each of their respective directors,
officers, managers and employees, and each of their heirs, executors, trustees,
administrators, successors and assigns.

“Spinco Pre-Recapitalization Shares” means the single class of issued and
outstanding common stock, par value $0.01 per share, of Spinco.

“Spinco Restricted Action” means any action by Spinco or any of its Subsidiaries
inconsistent with the covenants set forth in Section 7.3; and, for the avoidance
of doubt, an action shall be and remain a Spinco Restricted Action even if
Spinco or any of its Subsidiaries is permitted to take such an action pursuant
to Section 7.5(a).

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

“Spinco Tainting Act” means any breach of a representation or covenant made by
Spinco in Section 7.1 of this Agreement or the taking of a Spinco Restricted
Action, if as a result of such breach or taking of a Spinco Restricted Action a
Final Determination is made that the Contribution and the Distribution failed to
be tax-free by reason of (i) failing to qualify as a transaction described in
section 355 and section 368(a)(1)(D) of the Code, or (ii) any stock of Spinco
failing to qualify as “qualified property” within the meaning of section
355(c)(2) or 361(c)(2) of the Code (including as a result of the application of
section 355(d) or 355(e) of the Code to the Distribution) or where applicable,
failing to be stock permitted to be received without recognition of gain or loss
under section 361(a) of the Code.

“Sports Assignments” has the meaning set forth in the Contribution Agreement.

“Straddle Period” means any taxable period beginning on or prior to, and ending
after, the Distribution Date.

 

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“Subsidiary” when used with respect to any Person, means (i)(A) a corporation a
majority in voting power of whose share capital or capital stock with voting
power, under ordinary circumstances, to elect directors is at the time, directly
or indirectly, owned by such Person, by one or more Subsidiaries of such Person,
or by such Person and one or more Subsidiaries of such Person, whether or not
such power is subject to a voting agreement or similar encumbrance, (B) a
partnership or limited liability company in which such Person or a Subsidiary of
such Person is, at the date of determination, (1) in the case of a partnership,
a general partner of such partnership with the power affirmatively to direct the
policies and management of such partnership or (2) in the case of a limited
liability company, the managing member or, in the absence of a managing member,
a member with the power affirmatively to direct the policies and management of
such limited liability company, or (C) any other Person (other than a
corporation) in which such Person, one or more Subsidiaries of such Person or
such Person and one or more Subsidiaries of such Person, directly or indirectly,
at the date of determination thereof, has or have (1) the power to elect or
direct the election of a majority of the members of the governing body of such
Person, whether or not such power is subject to a voting agreement or similar
encumbrance, or (2) in the absence of such a governing body, at least a majority
ownership interest or (ii) any other Person of which an aggregate of 50% or more
of the equity interests are, at the time, directly or indirectly, owned by such
Person and/or one or more Subsidiaries of such Person. For the avoidance of
doubt, the term “Subsidiary” as it applies to Spinco shall include the Spinco
Company Entities.

“Tax” or “Taxes” means any income, gross income, gross receipts, profits,
capital stock, franchise, withholding, payroll, social security, workers’
compensation, employment, unemployment, disability, property, ad valorem, stamp,
excise, severance, occupation, service, sales, use, license, lease, transfer,
import, export, value added, alternative minimum, estimated or other similar tax
(including any fee, assessment, or other charge in the nature of or in lieu of
any tax) imposed by any Tax Authority, any Escheat Liability, abandoned, or
unclaimed property law, and any interest, penalties, additions to tax, or
additional amounts in respect of the foregoing, together with any reasonable
expenses, including attorneys’ fees, incurred in defending against any such tax.

“Tax Adjustment” has the meaning set forth in Section 4.7.

“Tax Authority” means, with respect to any Tax, the governmental entity or
political subdivision, agency, commission or authority thereof that imposes such
Tax, and the agency, commission or authority (if any) charged with the
assessment, determination or collection of such Tax for such entity or
subdivision.

“Tax Benefit” means a reduction in the Tax liability of a taxpayer (or of the
Group of which it is a member) for any taxable period. Except as otherwise
provided in this Agreement, a Tax Benefit shall be deemed to have been realized
or received from a Tax Item in a taxable period only if and to the extent that
the Tax liability of the taxpayer (or of the Group of which it is a member) for
such period, after taking into account the effect of the Tax Item on the Tax
liability of such taxpayer in the current period and all prior periods, is less
than it would have been if such Tax liability were determined without regard to
such Tax Item.

“Tax Contest” means an audit, review, examination, or any other administrative
or judicial proceeding with the purpose, potential or effect of redetermining
Taxes of any member of either Group (including any administrative or judicial
review of any claim for refund).

 

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“Tax Counsel” means the advisors listed in Schedule A.

“Tax-Free Status” means the qualification of the Contribution and the
Distribution (a) as a transaction described in section 355 and section
368(a)(1)(D) of the Code, (b) as a transaction in which the stock of Spinco
distributed by MSG is “qualified property” for purposes of sections 355(c)(2),
355(d), 355(e) and 361(c) of the Code, and (c) a transaction in which
shareholders of MSG will not recognize income, gain or loss upon the
Distribution under section 355(a) of the Code (except with respect to cash
received in lieu of fractional shares).

“Tax Item” means, with respect to any Tax, any item of income, gain, loss,
deduction, credit, adjustment in basis, or other attribute that may have the
effect of increasing or decreasing any Tax.

“Tax Law” means the law of any governmental entity or political subdivision
thereof, and any controlling judicial or administrative interpretations of such
law, relating to any Tax.

“Tax Opinion” means the opinion (or opinions) to be delivered by Tax Counsel to
MSG in connection with the Distribution to the effect that (i) MSG will not
recognize gain or loss upon the Distribution under section 355(c) or section
361(c) of the Code, and (ii) shareholders of MSG will not recognize gain or loss
upon the Distribution under section 355(a) of the Code, and no amount will be
included in such shareholders’ income, except in respect of cash received in
lieu of fractional Spinco Shares.

“Tax Opinion Representations” means the written and signed representations
delivered to Tax Counsel in connection with the Tax Opinion.

“Tax Records” means Tax Returns, Tax Return work papers, documentation relating
to any Tax Contests, and any other books of account or records required to be
maintained under applicable Tax Laws (including but not limited to section 6001
of the Code) or under any record retention agreement with any Tax Authority.

“Tax Return” means any report of Taxes due, any claims for refund of Taxes paid,
any information return with respect to Taxes, or any other similar report,
statement, declaration, or document filed or required to be filed (by paper,
electronically or otherwise) under any applicable Tax Law, including any
attachments, exhibits, or other materials submitted with any of the foregoing,
and including any amendments or supplements to any of the foregoing.

“Tax Year” means, with respect to any Tax, the year, or shorter period, if
applicable, for which the Tax is reported as provided under applicable Tax Law.

“Transactions” means the transactions contemplated by the Contribution Agreement
and the Distribution Agreement and includes, for the avoidance of doubt, (i) the
Sports Assignments, (ii) the Contribution, (iii) the Recapitalization, and
(iv) the Distribution.

“Transfer Taxes” means all U.S. federal, state, local or foreign sales, use,
privilege, transfer, documentary, gains, stamp, duties, recording, and similar
Taxes and fees (including any penalties, interest or additions thereto) imposed
upon any Party hereto or any of its Affiliates in connection with the
Distribution.

 

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“Transition Services Agreement” means the transition services agreement between
MSG and Spinco dated on or about the date hereof.

“Treasury Regulations” means the regulations promulgated from time to time under
the Code as in effect for the relevant Tax Year.

“Unqualified Opinion” means an unqualified “will” opinion of an Expert Law Firm
that permits reliance by MSG or Spinco (as the context dictates). For the
avoidance of doubt, an Unqualified Opinion must be based on factual
representations and assumptions that are reasonably satisfactory to MSG or
Spinco (as the context dictates).

“Arena License Agreements” means (i) the Arena License Agreement between MSG
Arena, LLC and New York Knicks, LLC dated on or about the date hereof, and
(ii) the Arena License Agreement between MSG Arena, LLC and New York Rangers,
LLC dated on or about the date hereof.

SECTION 2. Allocation of Taxes and Tax-Related Losses.

2.1 Allocation of Taxes. Except as provided in Section 2.2, Taxes shall be
allocated as follows:

(a) MSG shall be liable for and shall be allocated (i) any Taxes attributable to
members of the MSG Group for all periods, and (ii) any Income Taxes attributable
to members of the Spinco Group for any Pre-Distribution Period.

(b) Spinco shall be liable for and shall be allocated (i) any Taxes attributable
to members of the Spinco Group for any Post-Distribution Period, and (ii) any
Non-Income Taxes attributable to members of the Spinco-Group for any
Pre-Distribution Period.

(c) In applying the provisions of Sections 2.1(a) and 2.1(b) (but subject to the
provisions of Section 2.2):

(i) Any Taxes, other than Periodic Taxes, in respect of a Straddle Period shall
be allocated between the Pre-Distribution Period and the Post-Distribution
Period on a “closing of the books” basis by assuming that the books of the
members of the MSG Group and the members of the Spinco Group were closed on the
Distribution Date. For purposes of the foregoing, depreciation and amortization
deductions with respect to property placed in service after the Distribution
Date shall be allocated to the Post-Distribution Period, and all other
depreciation and amortization deductions shall be allocated on a per diem basis.

(ii) Any Periodic Taxes in respect of a Straddle Period shall be allocated to
the Pre-Distribution Period in an amount equal to such Periodic Taxes for the
entire Straddle Period multiplied by a fraction the numerator of which is the
number of calendar days in the period ending on the Distribution Date and the
denominator of which is the number of calendar days in the entire period. The
portion of any Periodic Taxes in respect of a Straddle Period not allocated to
the Pre-Distribution Period shall be allocated to the Post-Distribution Period.
For the avoidance of doubt, if a Party has prepaid Periodic Taxes that are
allocated to the other Party under any provisions of this Agreement, the second
Party shall reimburse the first Party to the extent so allocated.

 

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(iii) Taxes attributable to any transaction or action taken by or with respect
to any member of the Spinco Group before the Effective Time on the Distribution
Date shall be allocated to the Pre-Distribution Period, and Taxes attributable
to any transaction or action taken by or with respect to any member of the
Spinco Group after the Effective Time on the Distribution Date shall be
allocated to the Post-Distribution Period.

(iv) In determining the allocation of any Escheat Liability, the liability shall
be allocated to the Party whose Group members actually hold (or are required to
hold) the property subject to the Escheat Liability at the time a payment or
remittance in respect of such liability is required to be made to the applicable
governmental entity.

2.2 Special Allocation of Certain Taxes. Notwithstanding any other provision of
this Agreement:

(a) Any and all Deconsolidation Taxes shall be borne by MSG.

(b) Spinco shall indemnify and hold harmless each MSG Indemnified Party from and
against any liability of MSG for Distribution Taxes to the extent such
Distribution Taxes are attributable to a Spinco Tainting Act, provided, however,
that Spinco shall have no obligation to indemnify any MSG Indemnified Party
hereunder if there has occurred, prior to such Spinco Tainting Act, a MSG
Tainting Act and such Distribution Taxes are attributable to such MSG Tainting
Act. It is understood and agreed that, in determining the amounts payable under
this Section 2.2(b), there shall be included all costs, expenses and damages
associated with shareholders litigation or controversies and any amount paid by
MSG in respect of the liability of its shareholders, whether paid to its
shareholders or to any Tax Authority, in connection with liability that may
arise to shareholders as a result of receiving or accruing an amount payable
under this Section 2.2(b), and all reasonable costs and expenses associated with
such payments.

(c) MSG shall indemnify and hold harmless each Spinco Indemnified Party from and
against any liability of Spinco for Distribution Taxes to the extent that Spinco
is not liable for such Taxes pursuant to Section 2.2(b).

(d) In the case of any conflict between this Agreement and any of the Arena
License Agreements in relation to any Tax matters addressed by such Arena
License Agreement, the applicable Arena License Agreement shall prevail unless
such Arena License Agreement explicitly states that this Agreement shall
control.

(e) The Companies shall cooperate with each other and use their commercially
reasonable efforts to reduce and/or eliminate any Transfer Taxes. If any
Transfer Tax remains payable after application of the first sentence of this
Section 2.2(d) and notwithstanding any other provision in this Section 2, all
Transfer Taxes shall be allocated to MSG.

 

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2.3 Tax Payments. Each Company shall be liable for and shall pay the Taxes
allocated to it by this Section 2 either to the applicable Tax Authority or to
the other Company in accordance with Section 4 and the other applicable
provisions of this Agreement.

SECTION 3. Preparation and Filing of Tax Returns.

3.1 Combined Returns.

(a) MSG shall be responsible for preparing and filing (or causing to be prepared
or filed) all Combined Returns for any Tax Year. For any such return, Spinco
shall furnish any relevant information, including pro forma returns,
disclosures, apportionment data and supporting schedules, relating to any member
of the Spinco Group necessary for completing any such return in a format
suitable for inclusion in such return, provided that Spinco shall have the right
to review and approve items on such returns if and to the extent such items
directly relate to Taxes for which Spinco would be liable under Section 2, such
approval not to be unreasonably delayed, conditioned or withheld by Spinco.

(b) For the period in which the Transition Services Agreement is in effect,
Spinco shall assist in the preparation of any Tax Returns which may be requested
by MSG in accordance with the terms of the Transition Services Agreement (even
if, for the avoidance of doubt, the responsibility for preparation such Tax
Return may be allocated to MSG under other provisions of this Agreement).
Nothing in this Section 3.1(b) shall be construed to affect MSG’s right or
responsibility to file the Tax Returns whose filing is allocated to MSG under
other provisions of this Agreement.

3.2 Separate Returns.

(a) Tax Returns to be Prepared by MSG. MSG shall be responsible for preparing
and filing (or causing to be prepared and filed) all Separate Returns which
relate to one or more members of the MSG Group and for which Spinco is not
responsible under Section 3.2(b).

(b) Tax Returns to be Prepared by Spinco. Spinco shall be responsible for
preparing and filing (or causing to be prepared and filed) all Separate Returns
which relate to one or more members of the Spinco Group for any Tax Year,
provided, however, that in the case of such returns in respect of any
Pre-Distribution Period or Straddle Period, MSG shall have the right to review
and approve such returns, such approval not to be unreasonably delayed,
conditioned or withheld by MSG.

3.3 Agent. Subject to the other applicable provisions of this Agreement
(including, without limitation, Section 5), MSG and Spinco (and their respective
Affiliates) shall designate the other Party as its agent and attorney-in-fact to
take such action (including execution of documents) as such other Party may deem
reasonably appropriate in matters relating to the preparation or filing of any
Tax Return described in Sections 3.1 and 3.2.

 

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3.4 Provision of Information.

(a) MSG shall provide to Spinco, and Spinco shall provide to MSG, any
information about members of the MSG Group or the Spinco Group, respectively,
that the Preparer reasonably requires to determine the amount of Taxes due on
any Payment Date with respect to a Tax Return for which the Preparer is
responsible pursuant to Section 3.1 or 3.2 and to properly and timely file all
such Tax Returns.

(b) If a member of the Spinco Group supplies information to a member of the MSG
Group, or a member of the MSG Group supplies information to a member of the
Spinco Group, and an officer of the requesting member intends to sign a
statement or other document under penalties of perjury in reliance upon the
accuracy of such information, then a duly authorized officer of the member
supplying such information shall certify, to the best of such officer’s
knowledge, the accuracy of the information so supplied.

3.5 Special Rules Relating to the Preparation of Tax Returns.

(a) In General. All Tax Returns that include any members of the MSG Group or
Spinco Group, or any of their respective Affiliates, shall be prepared in a
manner that is consistent with the Tax Opinion (including, for the avoidance
doubt, the Tax Opinion Representations). Except as otherwise set forth in this
Agreement, all Tax Returns for which MSG has the right to prepare, review,
approve or file under Sections 3.1 and 3.2 shall be prepared (x) in accordance
with elections, Tax accounting methods and other practices used with respect to
such Tax Returns filed prior to the Distribution Date (unless such past
practices are not permissible under applicable law), or (y) to the extent any
items are not covered by past practices (or in the event such past practices are
not permissible under applicable Tax Law), in any reasonable manner, in
accordance with the preparation, review, approval and filing responsibilities of
Sections 3.1 and 3.2; provided, however, that in each case of (x) and (y) to the
extent that a change in such elections, methods or practices could not
reasonably be expected to result in any adverse impact on MSG and would not be
inconsistent with applicable law, such Tax Returns shall be prepared in
accordance with reasonable practices selected by Spinco.

(b) Election to File Consolidated, Combined or Unitary Tax Returns. Subject to
Spinco’s reasonable approval, MSG shall elect to file any Tax Return on a
consolidated, combined or unitary basis, if such Tax Return would include at
least one member of each Group and the filing of such Tax Return is elective
under the relevant Tax Law.

3.6 Refunds, Credits, Offsets, Tax Benefits

(a) Any refunds, credits, or offsets with respect to Taxes allocated to MSG
pursuant to this Agreement shall be for the account of MSG. Any refunds, credits
or offsets with respect to Taxes allocated to Spinco pursuant to this Agreement
shall be for the account of Spinco.

(b) MSG shall forward to Spinco, or reimburse Spinco for, any such refunds,
credits or offsets, plus any interest received thereon, net of any Taxes
incurred with respect to the receipt or accrual thereof and any expenses
incurred in connection therewith, that are for the account of Spinco within
fifteen (15) Business Days from receipt thereof by MSG or any of its Affiliates.
Spinco shall forward to MSG, or reimburse MSG for, any refunds, credits or
offsets,

 

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plus any interest received thereon, net of any Taxes incurred with respect to
the receipt or accrual thereof and any expenses incurred in connection
therewith, that are for the account of MSG within fifteen (15) Business Days
from receipt thereof by Spinco or any of its Affiliates. Any refunds, credits or
offsets, plus any interest received thereon, or reimbursements not forwarded or
made within the fifteen (15) Business Day period specified above shall bear
interest from the date received by the refunding or reimbursing party (or its
Affiliates) through and including the date of payment at the Interest Rate
(treating the date received as the Due Date for purposes of determining such
interest). If, subsequent to a Tax Authority’s allowance of a refund, credit or
offset, such Tax Authority reduces or eliminates such allowance, any refund,
credit or offset, plus any interest received thereon, forwarded or reimbursed
under this Section 3.6 shall be returned to the party who had forwarded or
reimbursed such refund, credit or offset and interest upon the request of such
forwarding party in an amount equal to the applicable reduction, including any
interest received thereon.

(c) For the avoidance of doubt, no Party shall be required to reimburse the
other Party under this Section 3.6 for the use of a refund, credit or offset or
other Tax Benefit, calculated by reference to the Tax allocated to the other
Party, including but not limited to a “dividends received deduction” set forth
under section 243 of the Code and an unincorporated business tax credit as
currently provided by Section 11-604 of the New York City Administrative Code or
any successor thereto, if such deduction, credit or offset is not available to
reduce the Tax liability of such other Party for any Tax Year.

3.7 Carrybacks. To the extent permitted under applicable Tax Laws, the Spinco
Group shall make the appropriate elections in respect of any Tax Returns to
waive any option to carry back any net operating loss, any credits or any
similar item from a Post-Distribution Period to any Pre-Distribution Period or
to any Straddle Period. Any refund of or credit for Taxes resulting from any
such carryback by a member of the Spinco Group that cannot be waived shall be
payable to Spinco net of any Taxes incurred with respect to the receipt or
accrual thereof and any expenses incurred in connection therewith.

3.8 Amended Returns. Any amended Tax Return or claim for Tax refund, credit or
offset with respect to any member of the MSG Group or Spinco Group may be made
only by the Company (or its Affiliates) responsible for filing the original Tax
Return with respect to such member pursuant to Sections 3.1 or 3.2 (and, for the
avoidance of doubt, subject to the same preparation, review, approval and filing
rights set forth in Sections 3.1 or 3.2, to the extent applicable). Such Company
(or its Affiliates) shall not, without the prior written consent of the other
Company (which consent shall not be unreasonably withheld or delayed), file, or
cause to be filed, any such amended Tax Return or claim for Tax refund, credit
or offset to the extent that such filing, if accepted, is likely to increase the
Taxes allocated to, or the Tax indemnity obligations under this Agreement of,
such other Company for any Tax Year (or portion thereof); provided, however,
that such consent need not be obtained if the Company filing the amended Tax
Return by written notice to the other Company agrees to indemnify the other
Company for the incremental Taxes allocated to, or the incremental Tax indemnity
obligation resulting under this Agreement to, such other Company as a result of
the filing of such amended Tax Return.

 

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3.9 Compensatory Equity Interests. Matters relating to Taxes and/or Tax Items
with respect to Compensatory Equity Interests shall be governed by the Employee
Matters Agreement.

SECTION 4. Tax Payments.

4.1 Payment of Taxes to Tax Authority. MSG shall be responsible for remitting to
the proper Tax Authority the Tax shown on any Tax Return for which it is
responsible for filing pursuant to Section 3.1 or Section 3.2, and Spinco shall
be responsible for remitting to the proper Tax Authority the Tax shown on any
Tax Return for which it is responsible for filing pursuant to Section 3.2.

4.2 Indemnification Payments.

(a) Tax Payments Made by the MSG Group. If any member of the MSG Group is
required to make a payment to a Tax Authority for Taxes allocated to Spinco
under this Agreement, Spinco will pay the amount of Taxes allocated to it to MSG
not later than the later of (i) five (5) Business Days after receiving
notification requesting such amount, and (ii) five (5) Business Days prior to
the date such payment is required to be made to such Tax Authority.
Notwithstanding the preceding sentence, if any member of the MSG Group has made
a prepayment of Periodic Taxes that are allocated to Spinco under this
Agreement, Spinco will pay the amount of such Taxes allocated to it to MSG not
later than thirty (30) Business Days after the Distribution Date.

(b) Tax Payments Made by the Spinco Group. If any member of the Spinco Group is
required to make a payment to a Tax Authority for Taxes allocated to MSG under
this Agreement, MSG will pay the amount of Taxes allocated to it to Spinco not
later than the later of (i) five (5) Business Days after receiving notification
requesting such amount, and (ii) five (5) Business Days prior to the date such
payment is required to be made to such Tax Authority. Notwithstanding the
preceding sentence, if any member of the Spinco Group has made a prepayment of
Periodic Taxes that are allocated to MSG under this Agreement, MSG will pay the
amount of such Taxes allocated to it to Spinco not later than thirty
(30) Business Days after the Distribution Date.

4.3 Interest on Late Payments. Payments pursuant to this Agreement that are not
made by the date prescribed in this Agreement or, if no such date is prescribed,
not later than five (5) Business Days after demand for payment is made (the “Due
Date”) shall bear interest for the period from and including the date
immediately following the Due Date through and including the date of payment at
the Interest Rate. Such interest will be payable at the same time as the payment
to which it relates. Interest will be calculated on the basis of a year of
365 days and the actual number of days for which due. Any payments of interest
made under this Section 4.3 shall be treated as taxable or deductible, as the
case may be, to the Party entitled under this Agreement to retain such payment
or required under this Agreement to make such payment, in either case except as
otherwise required by applicable law.

 

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4.4 Tax Consequences of Payments. For all Tax purposes and to the extent
permitted by applicable Tax Law, the parties hereto shall treat any payment
(except as provided in Section 4.3) made pursuant to this Agreement as a capital
contribution or a distribution, as the case may be, immediately prior to the
Distribution or as payments of an assumed or retained liability.

4.5 Adjustments to Payments. The amount of any payment made pursuant to this
Agreement shall be adjusted as follows:

(a) If the receipt or accrual of any indemnity amounts for which any Party
hereto (the “Indemnifying Party”) is required to pay another Party (the
“Indemnified Party”) under this Agreement causes, directly or indirectly, an
increase in the taxable income of the Indemnified Party under one or more
applicable Tax Laws, such payment shall be increased so that, after the payment
of any Taxes with respect to the payment, the Indemnified Party shall have
realized the same net amount it would have realized had the payment not resulted
in taxable income. For the avoidance of doubt, any liability for Taxes due to an
increase in taxable income described in the immediately preceding sentence shall
be governed by this Section 4.5(a) and not by Section 2.2.

(b) To the extent that Taxes for which the Indemnifying Party is required to pay
to the Indemnified Party pursuant to this Agreement gives rise to a deduction,
credit or other Tax Benefit (including as a result of any election set forth in
Section 4.6) to the Indemnified Party or any of its Affiliates, the amount of
any payment made to the Indemnified Party by the Indemnifying Party shall be
decreased by taking into account any resulting reduction in Taxes actually
realized by the Indemnified Party or any of its Affiliates resulting from such
Tax Benefit (including as a result of any election set forth in Section 4.6). If
such a reduction in Taxes of the Indemnified Party occurs following the payment
made to the Indemnified Party with respect to the relevant indemnified Taxes,
the Indemnified Party shall promptly repay the Indemnifying Party the amount of
such reduction when actually realized. If the Tax Benefit arising from the
foregoing reduction of Taxes described in this Section 4.5(b) is subsequently
decreased or eliminated, then the Indemnifying Party shall promptly pay the
Indemnified Party the amount of the decrease in such Tax Benefit. This
Section 4.5(b) shall not apply to the extent that Section 3.6(d) would also
apply to cause recovery of the same amounts to the Indemnifying Party.

4.6 Section 336(e) Election.

(a) Upon request by MSG, Spinco shall join with MSG in making a protective
election under section 336(e) of the Code (and any similar election under state
or local law) with respect to the Distribution in accordance with Treasury
Regulations section 1.336-2(h) and (j) (and any applicable provisions under
state and local law), provided that Spinco shall indemnify MSG for any cost to
the MSG Group of making such an election (but it being understood that any such
cost arising from Taxes shall be limited to Excess Taxes). MSG and Spinco shall
cooperate in the timely completion and/or filings of such elections and any
related filings or procedures (including filing or amending any Tax Returns to
implement an election that becomes effective). This Section 4.6 is intended to
constitute a binding, written agreement to make an election under section 336(e)
of the Code with respect to the Distribution.

 

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(b) If Taxes are allocated to a Party (the “Responsible Party”) as a result of
any election set forth in Section 4.6, then to the extent that such Taxes give
rise to a Tax Benefit, other than a refund, credit or offset as described in
Section 3.6(b), to the other Party (the “Other Party”) or any of its Affiliates,
and such Tax Benefit results in an actual reduction in Taxes (determined on a
with and without basis) of the Other Party or any of its Affiliates in any Tax
Year, the Other Party shall pay to the Responsible Party in the relevant Tax
Year an amount equal to such reduction in Taxes (determined on a with and
without basis); provided, however, that this provision shall not apply to the
extent that the actual reduction in Taxes for the relevant Tax Year and any
unpaid reduction in Taxes for all prior Tax Years is less than $50,000.

4.7 Certain Final Determinations. If an adjustment (a “Tax Adjustment”) pursuant
to a Final Determination in a Tax Contest initiated by a Tax Authority results
in a Tax greater than the Tax shown on the relevant Tax Return for any
Pre-Distribution Period, the Indemnified Party shall pay to the Indemnifying
Party an amount equal to any Tax Benefit as and when actually realized by such
Indemnified Party as a result of such Tax Adjustment. The Parties agree that if
an Indemnified Party is required to make a payment to an Indemnifying Party
pursuant to this Section 4.7, the Parties shall negotiate in good faith to set
off the amount of such payment against any indemnity payments owed by the
Indemnifying Party to the Indemnified Party, taking into account time value and
similar concepts as appropriate.

SECTION 5. Cooperation and Tax Contests.

5.1 Cooperation. In addition to the obligations enumerated in Sections 3.4 and
5.4, MSG and Spinco will cooperate (and cause their respective Subsidiaries and
Affiliates to cooperate) with each other and with each other’s agents, including
accounting firms and legal counsel, in connection with Tax matters, including
provision of relevant documents and information in their possession and making
available to each other, as reasonably requested and available, personnel
(including officers, directors, employees and agents of the Parties or their
respective Subsidiaries or Affiliates) responsible for preparing, maintaining,
and interpreting information and documents relevant to Taxes, and personnel
reasonably required as witnesses or for purposes of providing information or
documents in connection with any administrative or judicial proceedings relating
to Taxes.

5.2 Notices of Tax Contests. Each Company shall provide prompt notice to the
other Company of any pending or threatened Tax audit, assessment or proceeding
or other Tax Contest of which it becomes aware relating to (i) Taxes for which
it is or may be indemnified by such other Company hereunder or (ii) Tax Items
that may affect the amount or treatment of Tax Items of such other Company. Such
notice shall contain factual information (to the extent known) describing any
asserted Tax liability in reasonable detail and shall be accompanied by copies
of any notice and other documents received from any Tax Authority in respect of
any such matters; provided, however, that failure to give such notification
shall not affect the indemnification provided hereunder except, and only to the
extent that, the indemnifying Company shall have been actually prejudiced as a
result of such failure. Thereafter, the indemnified Company shall deliver to the
indemnifying Company such additional information with respect to such Tax
Contest in its possession that the indemnifying Company may reasonably request.

 

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5.3 Control of Tax Contests.

(a) Controlling Party. Subject to the limitations set forth in Section 5.3(b),
each Filer (or the appropriate member of its Group) shall, at its own cost and
expense, be the Controlling Party with respect to any Tax Contest involving a
Tax reported (or that, it is asserted, should have been reported) on a Tax
Return for which such Company is responsible for filing (or causing to be filed)
pursuant to Section 3 of this Agreement (it being understood, for the avoidance
of doubt but subject to the other provisions of this Section 5.3(a), that MSG
shall be the Controlling Party with respect to any Tax Contest involving
Distribution Taxes), in which case any Non-Filer that could have liability under
this Agreement for a Tax to which such Tax Contest relates shall be treated as
the “Non-Controlling Party.” Notwithstanding the immediately preceding sentence,
if a Non-Filer (x) acknowledges to the Filer in writing its full liability under
this Agreement to indemnify for any Tax, and (y) provides to the Filer evidence
(that is satisfactory to the Filer as determined in the Filer’s reasonable
discretion) of the Non-Filer’s financial readiness and capacity to make such
indemnity payment, then thereafter with respect to the Tax Contest relating
solely to such Tax the Non-Filer shall be the Controlling Party (subject to
Section 5.3(b)) and the Filer shall be treated as the Non-Controlling Party.

(b) Non-Controlling Party Participation Rights. With respect to a Tax Contest of
any Tax Return that could result in a Tax liability that is allocated under this
Agreement, (i) the Non-Controlling Party shall, at its own cost and expense, be
entitled to participate in such Tax Contest and to provide comments and
suggestions to the Controlling Party, such comments and suggestions not to be
unreasonably rejected, (ii) the Controlling Party shall keep the Non-Controlling
Party updated and informed, and shall consult with the Non-Controlling Party,
(iii) the Controlling Party shall act in good faith with a view to the merits in
connection with the Tax Contest, and (iv) the Controlling Party shall not settle
or compromise such Tax Contest without the prior written consent of the
Non-Controlling Party (which consent shall not be unreasonably withheld).

5.4 Cooperation Regarding Tax Contests. The Parties shall provide each other
with all information relating to a Tax Contest which is needed by the other
Party or Parties to handle, participate in, defend, settle or contest the Tax
Contest. At the request of any party, the other Parties shall take any action
(e.g., executing a power of attorney) that is reasonably necessary in order for
the requesting Party to exercise its rights under this Agreement in respect of a
Tax Contest. Spinco shall assist MSG, and MSG shall assist Spinco, in taking any
remedial actions that are necessary or desirable to minimize the effects of any
adjustment made by a Tax Authority. The Indemnifying Party or Parties shall
reimburse the Indemnified Party or Parties for any reasonable out-of-pocket
costs and expenses incurred in complying with this Section 5.4.

SECTION 6. Tax Records.

6.1 Retention of Tax Records. Each of MSG and Spinco shall preserve, and shall
cause their respective Subsidiaries to preserve, all Tax Records that are in
their possession, and that could affect the liability of any member of the other
Group for Taxes, for as long as the contents thereof may become material in the
administration of any matter under applicable Tax Law, but in any event until
the later of (x) the expiration of any applicable statute of limitations, as
extended, and (y) seven years after the Distribution Date.

 

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6.2 Access to Tax Records. Spinco shall make available, and cause its
Subsidiaries to make available, to members of the MSG Group for inspection and
copying the portion of any Tax Record in their possession that relates to a
Pre-Distribution Period or Post-Distribution Period and which is reasonably
necessary for the preparation, review, approval or filing of a Tax Return by a
member of the MSG Group or any of their Affiliates or with respect to any Tax
Contest with respect to such return. MSG shall make available, and cause its
Subsidiaries to make available, to members of the Spinco Group for inspection
and copying the portion of any Tax Record in their possession that relates to a
Pre-Distribution Period and which is reasonably necessary for the preparation,
review, approval or filing of a Tax Return by a member of the Spinco Group or
any of their Affiliates or with respect to any Tax Contest with respect to such
return.

6.3 Confidentiality. Each party hereby agrees that it will hold, and shall use
its reasonable best efforts to cause its officers, directors, employees,
accountants, counsel, consultants, advisors and agents to hold, in confidence
all records and information prepared and shared by and among the Parties in
carrying out the intent of this Agreement, except as may otherwise be necessary
in connection with the filing of Tax Returns or any administrative or judicial
proceedings relating to Taxes or unless disclosure is compelled by a
governmental authority. Information and documents of one Party (the “Disclosing
Party”) shall not be deemed to be confidential for purposes of this Section 6.3
to the extent that such information or document (i) is previously known to or in
the possession of the other Party or Parties (the “Receiving Party”) and is not
otherwise subject to a requirement to be kept confidential, (ii) becomes
publicly available by means other than unauthorized disclosure under this
Agreement by the Receiving Party or (iii) is received from a third party
without, to the knowledge of the Receiving Party after reasonable diligence, a
duty of confidentiality owed to the Disclosing Party.

SECTION 7. Representations and Covenants.

7.1 Covenants of MSG and Spinco.

(a) MSG hereby covenants that, to the fullest extent permissible under U.S.
federal income and state Tax Laws, it will, and will cause the members of the
MSG Group to, treat the applicable Transactions in accordance with the Agreed
Treatment. Spinco hereby covenants that, to the fullest extent permissible under
U.S. federal income and state Tax Laws, it will, and will cause each Subsidiary
of Spinco to, treat the applicable Transactions in accordance with the Agreed
Treatment.

(b) MSG further covenants that, as of and following the date hereof, MSG shall
not and shall cause the members of the MSG Group not to take any action that (or
fail to take any action the omission of which) would be inconsistent with the
applicable Transactions qualifying for the Agreed Treatment or that would
preclude the applicable Transactions from qualifying for the Agreed Treatment.

(c) Spinco further covenants that, as of and following the date hereof, Spinco
shall not and shall cause its Subsidiaries not to take any action that (or fail
to take any action the omission of which) would be inconsistent with the
applicable Transactions qualifying for the Agreed Treatment or that would
preclude the applicable Transactions from qualifying for the Agreed Treatment.

 

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7.2 Covenants of Spinco.

(a) Without limiting the generality of the provisions of Section 7.1, Spinco, on
behalf of itself and its Subsidiaries, agrees and covenants that Spinco and each
of its Subsidiaries will not, directly or indirectly, during the Restriction
Period, (i) take any action that would result in Spinco’s ceasing to be engaged
in the active conduct of the Spinco Business with the result that Spinco is not
engaged in the active conduct of a trade or business within the meaning of
section 355(b)(2) of the Code, (ii) redeem or otherwise repurchase (directly or
through an Affiliate of Spinco) any of Spinco’s outstanding stock, other than
through stock purchases meeting the requirements of section 4.05(1)(b) of
Revenue Procedure 96-30, 1996-1 C.B. 696 (but it being understood, for the
avoidance of doubt, that no agreement or covenant under this Section 7.3(a)(ii)
is being entered with respect to Compensatory Equity Net Share Settlements),
(iii) amend the certificate of incorporation (or other organizational documents)
of Spinco that would affect the relative voting rights of separate classes of
Spinco’s stock or would convert one class of Spinco’s stock into another class
of its stock, (iv) liquidate (within the meaning of section 331 of the Code and
the Treasury Regulations promulgated thereunder) or partially liquidate Spinco,
(v) merge Spinco with any other corporation (other than in a transaction that
does not affect the relative shareholding of Spinco shareholders), sell or
otherwise dispose of (other than in the ordinary course of business) the assets
of Spinco and its Subsidiaries, or take any other action or actions if such
merger, sale, other disposition or other action or actions in the aggregate
would have the effect that one or more Persons acquire (or have the right to
acquire), directly or indirectly, as part of a plan or series of related
transactions, assets representing one-half or more of the asset value of the
Spinco Group, or (vi) take any other action or actions that in the aggregate
would have the effect that one or more Persons acquire (or have the right to
acquire), directly or indirectly, as part of a plan or series of related
transactions, stock of Spinco representing a Fifty-Percent Equity Interest in
Spinco (as determined for purposes of section 355(e) of the Code), other than a
Permitted Acquisition.

7.3 Covenants of MSG.

(a) Without limiting the generality of the provisions of Section 7.1, MSG, on
behalf of itself and each member of the MSG Group, agrees and covenants that MSG
and each member of the MSG Group will not, directly or indirectly, during the
Restriction Period, (i) take any action that would result in MSG’s ceasing to be
engaged in the active conduct of the MSG Business with the result that MSG is
not engaged in the active conduct of a trade or business within the meaning of
section 355(b)(2) of the Code, (ii) redeem or otherwise repurchase (directly or
through an Affiliate of MSG) any of MSG’s outstanding stock, other than through
stock purchases meeting the requirements of section 4.05(1)(b) of Revenue
Procedure 96-30, 1996-1 C.B. 696 (but it being understood, for the avoidance of
doubt, that no agreement or covenant under this Section 7.4(a)(ii) is being
entered with respect to Compensatory Equity Net Share Settlements), (iii) amend
the certificate of incorporation (or other organizational documents) of MSG that
would affect the relative voting rights of separate classes of MSG’s stock or
would convert one class of MSG’s stock into another class of its stock,
(iv) liquidate (within the meaning of section 331 of the Code and the Treasury
Regulations promulgated

 

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thereunder) or partially liquidate MSG, (v) merge MSG with any other corporation
(other than in a transaction that does not affect the relative shareholding of
MSG shareholders), sell or otherwise dispose of (other than in the ordinary
course of business) the assets of MSG and its Subsidiaries, or take any other
action or actions if such merger, sale, other disposition or other action or
actions in the aggregate would have the effect that one or more Persons acquire
(or have the right to acquire), directly or indirectly, as part of a plan or
series of related transactions, assets representing one-half or more of the
asset value of the MSG Group, or (vi) take any other action or actions that in
the aggregate would have the effect that one or more Persons acquire (or have
the right to acquire), directly or indirectly, as part of a plan or series of
related transactions, stock of MSG representing a Fifty-Percent Equity Interest
in MSG (as determined for purposes of section 355(e) of the Code).

(b) Nothing in this Section 7 shall be construed to give Spinco or any
Affiliates of Spinco any right to remedies other than indemnification for any
increase in the actual Tax liability (and/or decrease in Tax Benefit) of Spinco
or any Affiliate of Spinco that results from MSG Group’s failure to comply with
the covenants and representations in this Section 7.

7.4 Exceptions.

(a) Exceptions with Respect to Spinco.

(i) Notwithstanding Section 7.3 above, Spinco or any of its Subsidiaries may
take a Spinco Restricted Action if MSG consents in writing to such Spinco
Restricted Action, or if Spinco provides MSG with Satisfactory Guidance
concluding that such Spinco Restricted Action will not alter the Tax-Free Status
of the Distribution in respect of MSG and MSG’s shareholders.

(ii) Spinco and each of its Subsidiaries agree that MSG and each MSG Affiliate
are to have no liability for any Tax resulting from any Spinco Restricted
Actions permitted pursuant to this Section 7.5(a) and, subject to Section 2.2,
agree to indemnify and hold harmless each MSG Indemnified Party against any such
Tax. Spinco shall bear all costs incurred by it, and all reasonable costs
incurred by MSG, in connection with requesting and/or obtaining any Satisfactory
Guidance.

(b) Exceptions with Respect to MSG.

(i) Notwithstanding Section 7.4(a) above, MSG or any of its Subsidiaries may
take a MSG Restricted Action if Spinco consents in writing to such MSG
Restricted Action, or if MSG provides Spinco with Satisfactory Guidance
concluding that such MSG Restricted Action will not alter the Tax-Free Status of
the Distribution in respect of Spinco and Spinco’s shareholders.

(ii) MSG and each of its Subsidiaries agree that Spinco and each Spinco
Affiliate are to have no liability for any Tax resulting from any MSG Restricted
Actions permitted pursuant to this Section 7.5(b) and, subject to Section 2.2,
agree to indemnify and hold harmless each Spinco Indemnified Party against any
such Tax. MSG shall bear all costs incurred by it, and all reasonable costs
incurred by Spinco, in connection with requesting and/or obtaining any
Satisfactory Guidance.

 

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7.5 Injunctive Relief. For the avoidance of doubt, MSG shall have the right to
seek injunctive relief to prevent Spinco or any of its Subsidiaries from taking
any action that is not consistent with the covenants of the Spinco or any of its
Subsidiaries under Section 7.1 or 7.3.

7.6 Further Assurances. For the avoidance of doubt, (i) neither MSG nor a member
of the MSG Group shall take any action on the Distribution Date that would
result in an increase of the actual Tax liability (and/or decrease of any Tax
Benefit) of Spinco or any of its Subsidiaries, other than in the ordinary course
of business, except for actions undertaken in connection with the Distribution,
which actions are described in the Tax Opinion or the Tax Opinion
Representations, and (ii) neither Spinco nor any of its Subsidiaries shall take
any action on the Distribution Date that would result in an increase of the
actual Tax liability (and/or decrease of any Tax Benefit) of MSG or a member of
the MSG Group, other than in the ordinary course of business, except for actions
undertaken in connection with the Distribution, which actions are described in
the Tax Opinion or the Tax Opinion Representations.

SECTION 8. General Provisions.

8.1 Construction. This Agreement shall constitute the entire agreement (except
insofar and to the extent that it specifically and expressly references the
Distribution Agreement and any other Ancillary Agreement) between the Parties
with respect to the subject matter hereof and shall supersede all previous
negotiations, commitments and writings with respect to such subject matter.

8.2 Ancillary Agreements. This Agreement is not intended to address, and should
not be interpreted to address, the matters specifically and expressly covered by
the Distribution Agreement or any other Ancillary Agreement.

8.3 Counterparts. This Agreement may be executed in one or more counterparts,
all of which shall be considered one and the same agreement, and shall become
effective when one or more such counterparts have been signed by each of the
Parties and delivered to the other Party.

8.4 Notices. All notices and other communications hereunder shall be in writing,
shall reference this Agreement and shall be hand delivered or mailed by
registered or certified mail (return receipt requested) to the Parties at the
following addresses (or at such other addresses for a Party as shall be
specified by like notice) and will be deemed given on the date on which such
notice is received:

To MSG:

The Madison Square Garden Company (or, after the applicable name change, Madison
Square Garden Sports Corp.)

11 Penn Plaza

New York, New York 10001

Attention: General Counsel

 

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with copy to:

MSG Entertainment Spinco, Inc. (or, after the applicable name change, Madison
Square Garden Entertainment Corp.)

Two Penn Plaza

New York, New York 10121

Attention: General Counsel

To Spinco:

MSG Entertainment Spinco, Inc. (or, after the applicable name change, Madison
Square Garden Entertainment Corp.)

Two Penn Plaza

New York, New York 10121

Attention: General Counsel

8.5 Amendments. This Agreement may not be modified or amended except by an
agreement in writing signed by each of the Parties.

8.6 Assignment. This Agreement shall not be assignable, in whole or in part,
directly or indirectly, by any Party without the prior written consent of the
other Party, and any attempt to assign any rights or obligations arising under
this Agreement without such consent shall be void; provided that, subject to
compliance with Section 7, if applicable, either Party may assign this Agreement
to a purchaser of all or substantially all of the properties and assets of such
Party so long as such purchaser expressly assumes, in a written instrument in
form reasonably satisfactory to the non-assigning Party, the due and punctual
performance or observance of every agreement and covenant of this Agreement on
the part of the assigning Party to be performed or observed.

8.7 Successors and Assigns. The provisions to this Agreement shall be binding
upon, inure to the benefit of and be enforceable by the Parties and their
respective successors and permitted assigns.

8.8 Change in Law. Any reference to a provision of the Code or any other Tax Law
shall include a reference to any applicable successor provision or law.

8.9 Authorization, Etc. Each of the Parties hereto hereby represents and
warrants that it has the power and authority to execute, deliver and perform
this Agreement, that this Agreement has been duly authorized by all necessary
corporate action on the part of such Party, that this Agreement constitutes a
legal, valid and binding obligation of such Party and that the execution,
delivery and performance of this Agreement by such Party does not contravene or
conflict with any provision of law or the Party’s charter or bylaws or any
agreement, instrument or order binding such Party.

 

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8.10 Termination. This Agreement may be terminated at any time prior to the
Distribution by and in the sole discretion of MSG without the approval of Spinco
or the stockholders of MSG. In the event of such termination, no Party shall
have any liability of any kind to any other Party or any other Person. After the
Distribution, this Agreement may not be terminated except by an agreement in
writing signed by the Parties.

8.11 Subsidiaries. Each of the Parties shall cause to be performed, and hereby
guarantees the performance of, all actions, agreements and obligations set forth
herein to be performed by any entity that is contemplated to be a Subsidiary of
such Party after the Distribution Date.

8.12 Third-Party Beneficiaries. Except with respect to MSG Indemnified Parties
and Spinco Indemnified Parties, and in each case, only where and as indicated
herein, this Agreement is solely for the benefit of the Parties and their
respective Subsidiaries and Affiliates and should not be deemed to confer upon
any other Person any remedy, claim, liability, reimbursement, cause of action or
other right in excess of those existing without reference to this Agreement.
Notwithstanding anything in this Agreement to the contrary, this Agreement is
not intended to confer upon any Spinco Indemnified Parties any rights or
remedies against Spinco hereunder, and this Agreement is not intended to confer
upon any MSG Indemnified Parties any rights or remedies against MSG hereunder.

8.13 Double Recovery. Nothing in this Agreement is intended to confer to or
impose upon any Party a duplicative right, entitlement, obligation or recovery
with respect to any matter arising out of the same facts and circumstances.

8.14 Titles and Headings. Titles and headings to Sections herein are inserted
for convenience of reference only and are not intended to be a part of or to
affect the meaning or interpretation of this Agreement.

8.15 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed in the State of New York.

8.16 Waiver of Jury Trial. The Parties hereby irrevocably waive any and all
right to trial by jury in any legal proceeding arising out of or related to this
Agreement or the transactions contemplated hereby.

8.17 Severability. In the event any one or more of the provisions contained in
this Agreement should be held invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
herein and therein shall not in any way be affected or impaired thereby. The
Parties shall endeavor in good faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions, the economic effect
of which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.

8.18 No Strict Construction; Interpretation.

(a) Each of MSG and Spinco acknowledges that this Agreement has been prepared
jointly by the Parties hereto and shall not be strictly construed against any
Party hereto.

 

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(b) The table of contents and headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words “include”, “includes” or
“including” are used in this Agreement, they shall be deemed to be followed by
the words “without limitation”. The words “hereof”, “herein” and “hereunder” and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement. All
terms defined in this Agreement shall have the defined meanings when used in any
certificate or other document made or delivered pursuant hereto unless otherwise
defined therein. The definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such term. Any agreement,
instrument or statute defined or referred to herein or in any agreement or
instrument that is referred to herein means such agreement, instrument or
statute as from time to time amended, modified or supplemented, including (in
the case of agreements or instruments) by waiver or consent and (in the case of
statutes) by succession of comparable successor statutes and references to all
attachments thereto and instruments incorporated therein. References to a Person
are also to its permitted successors and assigns.

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by the
respective officers as of the date set forth above.

 

THE MADISON SQUARE GARDEN COMPANY

(To be renamed Madison Square Garden Sports Corp.)

By:  

/s/ Andrew Lustgarten

  Name:   Andrew Lustgarten   Title:   President

MSG ENTERTAINMENT SPINCO, INC.

(To be renamed Madison Square Garden Entertainment Corp.)

By:  

/s/ James L. Dolan

  Name:   James L. Dolan   Title:   Executive Chairman and Chief Executive
Officer

[Signature Page to Tax Disaffiliation Agreement]

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SCHEDULE A

Tax Counsel to The Madison Square Garden Company

Sullivan & Cromwell LLP

KPMG LLP