Exhibit 10.1

TAX MATTERS AGREEMENT

DATED AS OF JANUARY 14, 2014

BY AND AMONG

ONEOK, INC.

AND

ONE GAS, INC.

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TABLE OF CONTENTS

 

         Page  

Section 1. Definition of Terms

     1   

Section 2. Preparation and Filing of Tax Returns

     9   

Section 2.01

  Parent’s Responsibility      9   

Section 2.02

  Spinco’s Responsibility      9   

Section 2.03

  Tax Reporting Practices      9   

Section 2.04

  Consolidated or Combined Tax Returns      9   

Section 2.05

  Right to Review Tax Returns      10   

Section 2.06

  Spinco Carrybacks and Claims for Refund      10   

Section 2.07

  Apportionment of Tax Attributes      10   

Section 3. Allocation of Tax Liabilities

     11   

Section 3.01

  General Rule      11   

Section 3.02

  Allocation of Taxes      11   

Section 3.03

  Determination of Taxes Attributable to the LDC Business      11   

Section 3.04

  Spinco Liability      13   

Section 3.05

  Parent Liability      13   

Section 4. Tax Payments

     13   

Section 4.01

  Payment of Taxes With Respect to Certain Joint Returns      13   

Section 4.02

  Payment of Separate Party Taxes      15   

Section 4.03

  Indemnification Payments      15   

Section 5. Tax Refunds and Tax Benefits

     15   

Section 5.01

  Tax Refunds      15   

Section 5.02

  Tax Benefits      15   

Section 6. Tax-Free Status

     16   

Section 6.01

  Restrictions on Spinco      16   

Section 6.02

  Restrictions on Parent      18   

Section 6.03

  Procedures Regarding Opinions and Rulings      18   

Section 6.04

  Liability for Tax-Related Losses      19   

Section 7. Assistance and Cooperation

     20   

Section 7.01

  Assistance and Cooperation      20   

Section 7.02

  Tax Return Information      21   

Section 7.03

  Reliance by Parent      21   

Section 7.04

  Reliance by Spinco      22   

 

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Section 8. Tax Records

     22   

Section 8.01

  Tax Records      22   

Section 8.02

  Access to Tax Records      22   

Section 8.03

  Preservation of Privilege      23   

Section 9. Tax Contests

     23   

Section 9.01

  Notice      23   

Section 9.02

  Control of Tax Contests      23   

Section 10. Effective Date

     24   

Section 11. Survival of Obligations

     24   

Section 12. Treatment of Payments

     25   

Section 13. Disagreements

     25   

Section 13.01

  Discussion      25   

Section 13.02

  Injunctive Relief      25   

Section 14. Late Payments

     26   

Section 15. Expenses

     26   

Section 16. General Provisions

     26   

Section 16.01

  Notices      26   

Section 16.02

  Waivers and Consents      26   

Section 16.03

  Severability      26   

Section 16.04

  Authorization      27   

Section 16.05

  Further Action      27   

Section 16.06

  Complete Agreement; Construction      27   

Section 16.07

  Title and Headings      27   

Section 16.08

  No Double Recovery      27   

Section 16.09

  Counterparts; Electronic Delivery      27   

Section 16.10

  Governing Law      28   

Section 16.11

  Consent to Jurisdiction      28   

Section 16.12

  Specific Performance      28   

Section 16.13

  Waiver of Jury Trial      28   

Section 16.14

  Amendments      28   

Section 16.15

  Certain Termination and Amendment Rights      29   

Section 16.16

  Payment Terms      29   

Section 16.17

  No Circumvention      29   

 

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Section 16.18

  Subsidiaries      29   

Section 16.19

  Assignment      29   

Section 16.20

  Successors and Assigns      30   

Section 16.21

  Third Party Beneficiaries      30   

Section 16.22

  Interpretation      30   

 

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TAX MATTERS AGREEMENT

This Tax Matters Agreement (this “Agreement”) is entered into as of January 14,
2014 between ONEOK, Inc., an Oklahoma corporation (“Parent”), and ONE Gas, Inc.,
an Oklahoma corporation (“Spinco” and, together with Parent, the “Parties”).
Capitalized terms used in this Agreement and not otherwise defined herein shall
have the meanings ascribed to such terms in the Separation and Distribution
Agreement, dated as of January 14, 2014, between Parent and Spinco (the
“Separation Agreement”).

RECITALS

WHEREAS, the board of directors of Parent has determined that it would be
appropriate, desirable and in the best interests of Parent and its stockholders
to separate completely the LDC Business from Parent;

WHEREAS, the board of directors of Parent has determined that it is in the best
interests of Parent and its stockholders to create a new publicly traded company
that shall operate the LDC Business;

WHEREAS, Spinco is a newly-formed, direct Subsidiary of Parent incorporated for
these purposes that has not engaged in activities except in preparation for its
corporate reorganization (including activities with respect to the Spinco
Financing Arrangements) and the distribution of its stock;

WHEREAS, as of the date hereof, Parent is the common parent of an affiliated
group of corporations, within the meaning of Section 1504(a) of the Code, that
has elected to file consolidated Federal Income Tax Returns, and Spinco is a
member of that group;

WHEREAS, the Parties currently intend to effect the Separation and the
Distribution;

WHEREAS, the Parties currently intend that the Separation and the Distribution
will have Tax-Free Status; and

WHEREAS, the Parties desire to set forth their rights and obligations with
respect to Taxes due for periods before and after the Distribution Date and to
address certain other Tax matters.

NOW, THEREFORE, in consideration of the foregoing and the mutual agreements,
provisions and 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:

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

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“Active Trade or Business” means, with respect to Spinco, the active conduct (as
defined in Section 355(b)(2) of the Code and the Treasury Regulations
thereunder) of the LDC Business as conducted immediately prior to the
Distribution.

“Adjustment Request” means any formal or informal claim or request filed with
any Tax Authority, or with any administrative agency or court, for the
adjustment, refund, or credit of Taxes, including (i) any amended Tax Return
claiming adjustment to the Taxes as reported on the Tax Return or, if
applicable, as previously adjusted, (ii) any claim for equitable recoupment or
other offset, and (iii) any claim for refund or credit of Taxes previously paid.

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

“Ancillary Agreement” has the meaning set forth in the Separation Agreement,
except that it shall not include this Agreement.

“Blended Income Tax Rate” has the meaning set forth in Section 3.03(a)(viii) of
this Agreement.

“Board Certificate” has the meaning set forth in Section 6.01(d) of this
Agreement.

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

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

“Controlling Party” has the meaning set forth in Section 9.02(c) of this
Agreement.

“Dispute” has the meaning set forth in Section 13.01 of this Agreement.

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

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

“Effective Date” has the meaning set forth in Section 10 of this Agreement.

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

“Employee Matters Agreement” means the Employee Matters Agreement, dated as of
January 14, 2014, by and among Parent and Spinco.

“Employment Tax” means any Tax the liability or responsibility for which is
allocated pursuant to the Employee Matters Agreement.

“Employment Tax Item” means an item of income gain, loss, deduction, or credit
that is allocated between the Parent Group, on the one hand, and the Spinco
Group, on the other hand, pursuant to the Employee Matters Agreement.

“Federal Income Tax” means any Tax imposed by Subtitle A of the Code and any
interest, penalties, additions to tax, or additional amounts in respect of the
foregoing.

 

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

“Final Determination” means the final resolution of liability for any Tax, which
resolution may be for a specific issue or adjustment or for a taxable period,
(i) by IRS Form 870 or 870-AD (or any successor forms thereto), on the date of
acceptance by or on behalf of the taxpayer, or by a comparable form under the
laws of a state or local taxing jurisdiction, except that a Form 870 or 870-AD
or comparable form shall not constitute a Final Determination to the extent that
it reserves (whether by its terms or by operation of law) the right of the
taxpayer to file a claim for refund or the right of the Tax Authority to assert
a further deficiency in respect of such issue or adjustment or for such taxable
period (as the case may be); (ii) by a decision, judgment, decree, or other
order by a court of competent jurisdiction, which has become final and
unappealable; (iii) by a closing agreement or accepted offer in compromise under
Sections 7121 or 7122 of the Code, or a comparable agreement under other
applicable Tax Law; (iv) by any allowance of a refund or credit in respect of an
overpayment of a Tax, but only after the expiration of all periods during which
such refund may be recovered (including by way of offset) by the jurisdiction
imposing such Tax; or (v) by any other final disposition, including by reason of
the expiration of the applicable statute of limitations or by mutual agreement
of the Parties.

“Governmental Approval” has the meaning set forth in the Separation Agreement.

“Governmental Entity” has the meaning set forth in the Separation Agreement.

“Group” means the Parent Group or the Spinco Group, or both, as the case may be.

“IRS” means the United States Internal Revenue Service.

“Joint Return” means any Tax Return that actually includes, by election or
otherwise, one or more members of the Parent Group, on the one hand, and one or
more members of the Spinco Group or results from operations arising from the LDC
Business or LDC Assets, on the other hand.

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

“LDC Assets” has the meaning set forth in the Separation Agreement.

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

“LDC Business Accounting Books” means the accounting records maintained by
Parent for the LDC Business and the LDC Assets.

“Non-Controlling Party” has the meaning set forth in Section 9.02(c) of this
Agreement.

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

“Parent Affiliated Group” means the affiliated group (as that term is defined in
Section 1504 of the Code and the regulations thereunder) of which Parent is the
common parent.

 

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“Parent Federal Consolidated Income Tax Return” means any United States Federal
Income Tax Return for the Parent Affiliated Group.

“Parent Group” means Parent and its Affiliates, excluding any entity that is a
member of the Spinco Group, as determined immediately after the Distribution.

“Parent Indemnitees” shall have the meaning set forth in the Separation
Agreement.

“Parent Separate Return” means any Tax Return of or including any member of the
Parent Group (including any consolidated, combined or unitary Return) that does
not include any member of the Spinco Group or any results from operations
arising from the LDC Business or LDC Assets.

“Parent State Consolidated Income Tax Return” means any state consolidated,
combined or unitary Tax Return for the Parent Affiliated Group (or any analogous
group under applicable State Income Tax Law).

“Past Practices” has the meaning set forth in Section 2.03(b) of this Agreement.

“Payment Date” means (i) with respect to any Parent Federal Consolidated Income
Tax Return, (A) the due date for any required installment of estimated taxes
determined under Section 6655 of the Code, (B) the due date (determined without
regard to extensions) for filing the Return determined under Section 6072 of the
Code, or (C) the date the Return is filed, as the case may be, and (ii) with
respect to any other Tax Return, the corresponding dates determined under the
applicable Tax Law.

“Payor” has the meaning set forth in Section 4.03(a) of this Agreement.

“Person” means an individual, a partnership, a corporation, a limited liability
company, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization or a Governmental Entity or any department, agency
or political subdivision thereof, without regard to whether any entity is
treated as disregarded for U.S. federal income tax purposes.

“Post-Distribution Period” means any Tax Period beginning after the Distribution
Date and, in the case of any Straddle Period, the portion of such Tax Period
beginning on the day after the Distribution Date.

“Pre-Distribution Period” means any Tax Period ending on or before the
Distribution Date and, in the case of any Straddle Period, the portion of such
Tax Period ending on the Distribution Date.

“Preliminary Tax Advisor” has the meaning set forth in Section 13.01 of this
Agreement.

“Prime Rate” has the meaning set forth in the Separation Agreement.

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

 

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“Pro Forma Spinco Group Consolidated Return” means a schedule prepared in
accordance with the principles of Section 3.03, in a format reasonably
determined by Parent, relating to the LDC Business and the LDC Assets,
containing information that is reasonably necessary to determine the Parties'
rights and obligations under Section 3, Section 4 or Section 5 of this
Agreement.

“Proposed Acquisition Transaction” means a transaction or series of transactions
(or any agreement, understanding or arrangement, within the meaning of
Section 355(e) of the Code and Treasury Regulation Section 1.355-7, or any other
regulations promulgated thereunder, to enter into a transaction or series of
transactions), whether such transaction is supported by Spinco management or
shareholders, is a hostile acquisition, or otherwise, as a result of which
Spinco would merge or consolidate with any other Person or as a result of which
any Person or any group of Persons would (directly or indirectly) acquire, or
have the right to acquire, from Spinco and/or one or more holders of outstanding
shares of Spinco Capital Stock, a number of shares of Spinco Capital Stock that
would, when combined with any other changes in ownership of Spinco Capital Stock
pertinent for purposes of Section 355(e) of the Code, comprise 40% or more of
(i) the value of all outstanding shares of Spinco Capital Stock as of the date
of such transaction, or in the case of a series of transactions, the date of the
last transaction of such series, or (ii) the total combined voting power of all
outstanding shares of voting Spinco Capital Stock as of the date of such
transaction, or in the case of a series of transactions, the date of the last
transaction of such series. Notwithstanding the foregoing, a Proposed
Acquisition Transaction shall not include (i) the adoption by Spinco of a
shareholder rights plan or (ii) issuances by Spinco that satisfy Safe Harbor
VIII (relating to acquisitions in connection with a Person's performance of
services) or Safe Harbor IX (relating to acquisitions by a retirement plan of an
employer) of Treasury Regulation Section 1.355-7(d). For purposes of determining
whether a transaction constitutes an indirect acquisition, any recapitalization
resulting in a shift of voting power or any redemption of shares of stock shall
be treated as an indirect acquisition of shares of stock by the non-exchanging
shareholders. This definition and the application thereof is intended to monitor
compliance with Section 355(e) of the Code and shall be interpreted accordingly.
Any clarification of, or change in, the statute or regulations promulgated under
Section 355(e) of the Code shall be incorporated in this definition and its
interpretation.

“Representation Letters” means the statements of facts and representations,
officer’s certificates, representation letters and any other materials
(including, without limitation, a Ruling Request and any related supplemental
submissions to the IRS or other Tax Authority) delivered or deliverable by
Parent, its Affiliates or representatives thereof in connection with the
rendering by Tax Advisors, and/or the issuance by the IRS or other Tax
Authority, of the Tax Opinions/Rulings.

“Required Party” has the meaning set forth in Section 4.03(a) of this Agreement.

“Responsible Party” means, with respect to any Tax Return, the Party having
responsibility for preparing and filing such Tax Return under this Agreement.

 

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“Retention Date” has the meaning set forth in Section 8.01 of this Agreement.

“Ruling” means a private letter ruling issued by the IRS to Parent in connection
with the Separation and the Distribution.

“Ruling Request” means any letter filed by Parent with the IRS or other Tax
Authority requesting a ruling regarding certain tax consequences of the
Separation and/or the Distribution (including all attachments, exhibits, and
other materials submitted with such ruling request letter) and any amendment or
supplement to such ruling request letter.

“Section 6.01(d) Acquisition Transaction” means any transaction or series of
transactions that is not a Proposed Acquisition Transaction but would be a
Proposed Acquisition Transaction if the percentage reflected in the definition
of Proposed Acquisition Transaction were 25% instead of 40%.

“Separate Return” means a Parent Separate Return or a Spinco Separate Return, as
the case may be.

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

“Separation Tax” means all (A) Taxes arising as a result of the Separation
and/or the Distribution from (i) excess loss accounts taken into account under
Section 1502 of the Code, (ii) Section 357(c) of the Code or
(iii) Section 361(b) of the Code, in each case, including analogous provisions
of other applicable Tax Law and (B) stamp, sales, use, gross receipts,
value-added, real estate transfer or other transfer Taxes arising as a result of
the Separation and/or the Distribution. Notwithstanding the foregoing,
Separation Taxes shall not include any Tax-Related Losses.

“Spinco Capital Stock” means all classes or series of capital stock of Spinco,
including (i) the Spinco Common Stock, (ii) all options, warrants and other
rights to acquire such capital stock and (iii) all instruments properly treated
as stock in Spinco for U.S. federal income tax purposes.

“Spinco Carryback” means any net operating loss, net capital loss, excess tax
credit, or other similar Tax Item of any member of the Spinco Group which may or
must be carried from one Tax Period to another prior Tax Period under the Code
or other applicable Tax Law.

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

“Spinco Financing Arrangements” has the meaning set forth in the Separation
Agreement.

“Spinco Group” means (i) Spinco and its Affiliates, as determined immediately
after the Distribution or (ii) any entity which (A) was an Affiliate of Parent
or an Affiliate of a member of the Spinco Group prior to the Distribution,
(B) conducted solely the LDC Business, and (C) is no longer an Affiliate of
Parent immediately prior to the Distribution.

“Spinco Indemnitees” shall have the meaning set forth in the Separation
Agreement.

 

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“Spinco Separate Return” means any Tax Return of or including any member of the
Spinco Group (including any consolidated, combined or unitary Return) that does
not include any member of the Parent Group.

“State Income Taxes” means any Tax imposed by any state of the United States or
by any political subdivision of any such state which is imposed on or measured
by net income, including state or local franchise or similar Taxes measured by
net income, as well as any state or local franchise, capital or similar Taxes
imposed in lieu of a tax imposed on or measured by net income, and any interest,
penalties, additions to tax, or additional amounts in respect of the foregoing.

“Straddle Period” means any Tax Period beginning before the Distribution Date
and ending after the Distribution Date.

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

“Tax” or “Taxes” means any income, gross income, gross receipts, profits,
capital stock, franchise, withholding, payroll, social security, workers
compensation, unemployment, disability, property, ad valorem, value added,
stamp, excise, severance, occupation, service, sales, use, license, lease,
transfer, import, export, alternative minimum, estimated or other tax (including
any fee, assessment, or other charge in the nature of or in lieu of any tax)
imposed by any Governmental Entity or political subdivision thereof, and any
interest, penalty, additions to tax, or additional amounts in respect of the
foregoing.

“Tax Advisor” means a tax counsel or accountant of recognized national standing.

“Tax Attribute” means a net operating loss, net capital loss, unused investment
credit, excess charitable contribution, general business credit, research and
development credit or any other Tax Item that could reduce a Tax or create a Tax
Benefit.

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

“Tax Benefit” means any refund, credit, or other reduction in otherwise required
liability for Taxes.

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

“Tax-Free Status” means the qualification of the Separation and the
Distribution, taken together, (i) as a reorganization described in Sections
355(a) and 368(a)(1)(D) of the Code or in any similar provisions of other
applicable Tax Laws, (ii) as a transaction in which the stock distributed
thereby is “qualified property” for purposes of Sections 355(d), 355(e) and
361(c) of the Code or in any similar provisions of other applicable Tax Laws,
and (iii) as a transaction in which Parent, Spinco and the shareholders of
Parent recognize no income or gain for U.S. federal income tax purposes pursuant
to Sections 355, 361 and 1032 of the Code, or in any similar

 

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provisions of other applicable Tax Laws, other than, in the case of Parent and
Spinco, intercompany items or excess loss accounts taken into account pursuant
to the Treasury Regulations promulgated pursuant to Section 1502 of the Code or
in any similar provisions of other applicable Tax Laws.

“Tax Item” means, with respect to any Tax, any item of income, gain, loss,
deduction, or credit.

“Tax Law” means the law of any Governmental Entity or political subdivision
thereof relating to any Tax.

“Tax Opinions/Rulings” means the opinions of Tax Advisors and/or the rulings by
the IRS or other Tax Authorities received by Parent in connection with the
Separation and/or the Distribution.

“Tax Period” means, with respect to any Tax, the period for which the Tax is
reported as provided under the Code or other applicable Tax Law.

“Tax Records” means any (i) Tax Returns, (ii) Tax Return workpapers,
(iii) documentation relating to any Tax Contests, and (iv) any other books of
account or records (whether or not in written, electronic or other tangible or
intangible forms and whether or not stored on electronic or any other medium)
required to be maintained under the Code or other applicable Tax Laws or under
any record retention agreement relating to any Tax Authority, in each case filed
with respect to or otherwise relating to Taxes.

“Tax-Related Losses” means (i) all Taxes (including interest and penalties
thereon) imposed pursuant to any settlement, Final Determination, judgment or
otherwise; (ii) all accounting, legal and other professional fees, and court
costs incurred in connection with such Taxes, as well as any other out-of-pocket
costs incurred in connection with such Taxes; and (iii) all costs, expenses and
damages associated with stockholder litigation or controversies and any amount
paid by Parent (or any Parent Affiliate) or Spinco (or any Spinco Affiliate) in
respect of the liability of shareholders, whether paid to shareholders or to the
IRS or any other Tax Authority, in each case, resulting from the failure of the
Separation and the Distribution to have Tax-Free Status.

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

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

“Unqualified Tax Opinion” means an unqualified “will” opinion of a Tax Advisor,
which Tax Advisor is acceptable to Parent, on which Parent may rely to the
effect that a transaction will not affect the Tax-Free Status of the Separation
and the Distribution. Any such opinion must assume that the Separation and the
Distribution would have qualified for Tax-Free Status if the transaction in
question did not occur.

 

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Section 2. Preparation and Filing of Tax Returns.

Section 2.01 Parent’s Responsibility. Parent has the exclusive obligation and
right to prepare and file, or to cause to be prepared and filed:

 

  (a) All Joint Returns; and

 

  (b) Parent Separate Returns.

Section 2.02 Spinco’s Responsibility. Spinco shall prepare and file, or shall
cause to be prepared and filed, all Tax Returns required to be filed by or with
respect to members of the Spinco Group other than those Tax Returns which Parent
is required to prepare and file under Section 2.01. For the avoidance of doubt,
the Tax Returns required to be prepared and filed by Spinco under this
Section 2.02 shall include any Spinco Separate Returns.

Section 2.03 Tax Reporting Practices.

(a) Parent General Rule. Except as provided in Section 2.03(c), Parent shall
prepare any Tax Return which it has the obligation and right to prepare and
file, or cause to be prepared and filed, under Section 2.01, in the manner
determined in its sole and absolute discretion.

(b) Spinco General Rule. Except as provided in Section 2.03(c), with respect to
any Tax Return that Spinco has the obligation and right to prepare and file, or
cause to be prepared and filed, under Section 2.02 for any Pre-Distribution
Period or Straddle Period, such Tax Return shall be prepared in accordance with
past practices, accounting methods, elections or conventions (“Past Practices”)
used with respect to the Tax Returns in question (unless there is no reasonable
basis for the use of such Past Practices), and to the extent any items are not
covered by Past Practices (or in the event that there is no reasonable basis for
the use of such Past Practices), in accordance with reasonable Tax accounting
practices selected by Spinco after consultation with Parent.

(c) Reporting of the Separation and the Distribution. The Tax treatment of the
Separation and the Distribution reported on any Tax Return shall be consistent
with the treatment thereof in the Ruling Request and the Tax Opinions/Rulings,
taking into account the jurisdiction in which such Tax Returns are filed. Such
treatment reported on any Tax Return for which Spinco is the Responsible Party
shall be consistent with that on any Tax Return filed or to be filed by Parent
or any member of the Parent Group or caused or to be caused to be filed by
Parent or any member of the Parent Group.

Section 2.04 Consolidated or Combined Tax Returns. Spinco will elect and join,
and will cause its respective Affiliates to elect and join, in filing any Joint
Returns that Parent determines are required to be filed or that Parent chooses
to file pursuant to Section 2.01(a).

 

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Section 2.05 Right to Review Tax Returns.

(a) General. The Responsible Party with respect to any Tax Return shall make the
portion of such Tax Return and related workpapers which are relevant to the
determination of the other Party's rights or obligations under this Agreement
available for review by the other Party, if requested, to the extent (i) such
Tax Return relates to Taxes for which the requesting Party would reasonably be
expected to be liable, (ii) the requesting Party would reasonably be expected to
be liable, in whole or in part, for any additional Taxes owing as a result of
adjustments to the amount of such Taxes reported on such Tax Return, (iii) such
Tax Return relates to Taxes for which the requesting Party would reasonably be
expected to have a claim for Tax Benefits under this Agreement, or (iv) the
requesting Party reasonably determines that it must inspect such Tax Return to
confirm compliance with the terms of this Agreement. The Responsible Party shall
(i) use its reasonable best efforts to make such portion of such Tax Return
available for review as required under this paragraph sufficiently in advance of
the due date for filing of such Tax Return to provide the requesting Party with
a meaningful opportunity to analyze and comment on such Tax Return and (ii) use
reasonable efforts to have such Tax Return modified before filing, taking into
account the comments of the Person responsible for payment of the Taxes (if any)
reported on such Tax Return and whether the amount of Tax liability allocable to
the requesting Party with respect to such Tax Return is material. The Parties
shall attempt in good faith to resolve any issues arising out of the review of
such Tax Return.

Section 2.06 Spinco Carrybacks and Claims for Refund. Spinco hereby agrees that,
unless Parent in its sole and absolute discretion consents in writing, (i) no
Adjustment Request with respect to any Joint Return shall be filed, and (ii) any
available elections to waive the right to claim in any Pre-Distribution Period
with respect to any Joint Return any Spinco Carryback arising in a
Post-Distribution Period shall be made, and no affirmative election shall be
made to claim any such Spinco Carryback.

Section 2.07 Apportionment of Tax Attributes. Parent shall in good faith advise
Spinco of the amount, if any, of any Tax Attributes, which Parent determines, in
its sole and absolute discretion, shall be allocated or apportioned to the
Spinco Group under applicable Law, provided that this Section 2.07 shall not be
construed as obligating Parent to undertake any such determination. Spinco and
all members of the Spinco Group shall prepare all Tax Returns in accordance with
such determination. Spinco agrees that it shall not dispute Parent's allocation
or apportionment of Tax Attributes. Spinco may request that Parent undertake a
determination of the portion, if any, of any particular Tax Attribute to be
allocated or apportioned to the Spinco Group under applicable Law; to the extent
that Parent determines, in its sole and absolute discretion, not to undertake
such determination, or does not otherwise advise Spinco of its intention to
undertake such determination within 20 Business Days of the receipt of such
request, Spinco shall be permitted to undertake such determination at its own
cost and expense and shall notify Parent of its determination, which
determination shall not be binding upon Parent. Parent shall provide reasonably
timely updates of the allocation of Tax Attributes as it finalizes its Tax
Returns and as adjustments, if any, are subsequently made to such Tax Returns.

 

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Section 3. Allocation of Tax Liabilities.

Section 3.01 General Rule.

(a) Parent Liability. Parent shall be liable for, and shall indemnify and hold
harmless the Spinco Group from and against any liability for, Taxes which are
allocated to Parent under this Section 3.

(b) Spinco Liability. Spinco shall be liable for, and shall indemnify and hold
harmless the Parent Group from and against any liability for, Taxes which are
allocated to Spinco under this Section 3.

Section 3.02 Allocation of Taxes. Except as provided in Sections 3.04 and 3.05,
Taxes shall be allocated as follows:

(a) Allocation of Taxes Relating to Joint Returns.

(i) Allocation to Spinco. Spinco shall be responsible for any and all Taxes due
with respect to or required to be reported on any Joint Return (including any
increase in such Taxes as a result of a Final Determination) which Taxes are
attributable to the LDC Business, as determined pursuant to Section 3.03.

(ii) Allocation to Parent. Parent shall be responsible for any and all Taxes due
with respect to or required to be reported on any Joint Return (including any
increase in such Taxes as a result of a Final Determination), other than those
Taxes described in Section 3.02(a)(i).

(b) Allocation of Taxes Relating to Separate Returns.

(i) Allocation to Spinco. Spinco shall be responsible for any and all Taxes due
with respect to or required to be reported on any Spinco Separate Return
(including any increase in such Taxes as a result of a Final Determination) for
all Tax Periods.

(ii) Allocation to Parent. Parent shall be responsible for any and all Taxes due
with respect to or required to be reported on any Parent Separate Return
(including any increase in such Taxes as a result of a Final Determination) for
all Tax Periods.

Section 3.03 Determination of Taxes Attributable to the LDC Business.

(a) United States Federal Income Tax. For purposes of Section 3.02(a), the
amount of Federal Income Taxes and State Income Taxes attributable to the LDC
Business for each Pre-Distribution Period shall be as determined by Parent on a
Pro Forma Spinco Group Consolidated Return prepared:

(i) in a manner consistent with the past practices and general accounting
policies of Parent for purposes of preparing its financial statements
(including, without limitation, those filed as part of Securities and Exchange
Commission Form 10-K or Federal Energy Regulatory Commission Form 2);

 

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(ii) allocating interest expense between the Parent Group, on the one hand, and
the Spinco Group, on the other hand, based on the intercompany accounts
established between Parent and the LDC Business;

(iii) allocating other shared expenses between the Parent Group, on the one
hand, and the Spinco Group, on the other hand, in accordance with the
“Distrigas” method;

(iv) including the results from operations arising from the LDC Business and the
LDC Assets during such period without regard to whether such operations and
assets were operated and owned by a member of the Parent Group or the Spinco
Group;

(v) assuming that the members of the Spinco Group were not included in the
Parent Affiliated Group (or any analogous group under applicable State Income
Tax Law);

(vi) including only Tax Items attributable to the LDC Business and LDC Assets or
the members of the Spinco Group that were actually included in the relevant
Parent Federal Consolidated Income Tax Return and/or any relevant Parent State
Consolidated Income Tax Return;

(vii) except as provided in Section 3.03(a)(ix) hereof, using all elections,
accounting methods and conventions used on the Parent Federal Consolidated
Income Tax Return and/or any relevant Parent State Consolidated Income Tax
Return, in each case for the relevant Tax Period;

(viii) applying a blended Tax rate for Federal Income Taxes and State Income
Taxes for the relevant Tax Period, calculated in a manner consistent with the
past practices and general accounting policies of Parent for purposes of
preparing its financial statements, as reasonably determined by Parent (the
“Blended Income Tax Rate”); and

(ix) assuming that the Spinco Group elects not to carry forward or carry back
any net operating losses.

(b) Allocation of Employment Taxes and Employment Tax Items. Notwithstanding
anything to the contrary, this Agreement shall not apply with respect to
Employment Taxes, which shall be allocated as provided in the Employee Matters
Agreement. For purposes of preparing any Pro Forma Spinco Group Consolidated
Return, Employment Tax Items shall be allocated to the Parent Group, on the one
hand, and the Spinco Group, on the other hand, in accordance with the Employee
Matters Agreement.

(c) Other Taxes. The amount of Taxes, other than Federal Income Taxes and State
Income Taxes, attributable to the LDC Business shall be determined by Parent in
a manner consistent with the principles set forth in Section 3.03(a).

 

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Section 3.04 Spinco Liability. Spinco shall, and shall cause the other members
of the Spinco Group to, indemnify, defend and hold harmless the Parent
Indemnitees from and against any liability for:

(a) any Tax resulting from a breach by Spinco of any covenant in this Agreement,
the Separation Agreement or any Ancillary Agreement; and

(b) any Tax-Related Losses for which Spinco is responsible pursuant to
Section 6.04 of this Agreement.

Section 3.05 Parent Liability. Parent shall, and shall cause the other members
of the Parent Group to, indemnify, defend and hold harmless the Spinco
Indemnitees from and against any liability for:

(a) any Separation Tax;

(b) any Tax resulting from a breach by Parent of any covenant in this Agreement,
the Separation Agreement or any Ancillary Agreement; and

(c) any Tax-Related Losses for which Parent is responsible pursuant to
Section 6.04 of this Agreement.

Section 4. Tax Payments.

Section 4.01 Payment of Taxes With Respect to Certain Joint Returns. In the case
of any Joint Return:

(a) Computation and Payment of Tax Due. At least three Business Days prior to
any Payment Date for any such Tax Return, Parent shall compute the amount of Tax
required to be paid to the applicable Tax Authority with respect to such Tax
Return on such Payment Date. Parent shall pay such amount to such Tax Authority
on or before such Payment Date.

(b) Payments for Prior Tax Periods. The Parties acknowledge and agree that
Spinco, as of the date hereof, has either (A) been deemed to pay Parent the
amount listed as a “current tax liability” on the LDC Business Accounting Books
with respect to Taxes allocable to the Spinco Group, to the extent such amount
is treated as a liability on such LDC Business Accounting Books, or (B) been
deemed to have received from Parent the amount listed as a “current tax
liability” on the LDC Business Accounting Books with respect to net losses
allocable to the Spinco Group, to the extent such amount is treated as a
receivable on such LDC Business Accounting Books, in each case, with respect to
both the Pre-Distribution Period ending on December 31, 2013 and the
Pre-Distribution Period ending on the Distribution Date (each a “Relevant
Period”). For purposes of separately determining the amounts deemed paid by
Spinco to Parent or Parent to Spinco, as applicable, with respect to each
Relevant Period, the Parties shall refer to the schedules and workpapers
supporting the LDC Business Accounting Books, as determined by Parent. Each such
intercompany account on the LDC Business Accounting Books shall be treated as
settled as of the Effective Time. Each Party acknowledges and agrees that such
intercompany accounts do not represent indebtedness for U.S. federal income tax
purposes. Each Party further acknowledges and agrees that it will take no
position inconsistent with the foregoing Tax treatment on any Tax Return, in an
audit or otherwise.

 

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(c) Computation and Payment of Liability With Respect To Tax Due. Within 90
Business Days following the earlier of the due date (including extensions) for
filing the last Joint Return for each Relevant Period (excluding any Joint
Return with respect to payment of estimated Taxes) or the date on which such
last Joint Return for each Relevant Period is filed:

(i) Spinco shall pay to Parent an amount equal to (A) the excess, if any, of
(i) the amount of Taxes allocable to the Spinco Group, in the aggregate, with
respect to all such Joint Returns for the Relevant Period under the provisions
of Section 3 as finally determined over (ii) the amount of Taxes Spinco was
deemed to have paid to Parent for the Relevant Period pursuant to
Section 4.01(b) with respect to all such Joint Returns for the Relevant Period,
and (B) the excess, if any, of (i) the amount Spinco was deemed to have received
from Parent attributable to net losses for the Relevant Period pursuant to
Section 4.01(b) with respect to all such Joint Returns for the Relevant Period
over (ii) the payment attributable to net losses allocable to the Spinco Group,
in the aggregate, with respect to all such Joint Returns for the Relevant Period
under the provisions of Section 5.02 as finally determined.

(ii) Parent shall pay to Spinco an amount equal to (A) the excess, if any, of
(i) the amount of Taxes Spinco was deemed to have paid to Parent for the
Relevant Period pursuant to Section 4.01(b) with respect to all such Joint
Returns for the Relevant Period, over (ii) the amount of Taxes allocable to the
Spinco Group, in the aggregate, with respect to all such Joint Returns under the
provisions of Section 3 as finally determined and (B) the excess, if any, of
(i) the payment attributable to net losses allocable to the Spinco Group, in the
aggregate, with respect to all such Joint Returns for the Relevant Period under
the provisions of Section 5.02 as finally determined over (ii) the amount Spinco
was deemed to have received from Parent attributable to net losses for the
relevant Period pursuant to Section 4.01(b) with respect to all such Joint
Returns for the Relevant Period.

Any payments required under this Section 4.01(c) shall include interest computed
at the Prime Rate plus 2% per annum on the amount of the payment based on the
number of days from the earlier of (i) the due date of the last Joint Return for
each Relevant Period (including extensions) and (ii) the date on which such last
Joint Return is filed, to the date of payment.

(d) Adjustments Resulting in Underpayments. In the case of any adjustment
pursuant to a Final Determination with respect to any such Joint Return, Parent
shall pay to the applicable Tax Authority when due any additional Tax due with
respect to such Joint Return required to be paid as a result of such adjustment
pursuant to a Final Determination. Parent shall compute the amount attributable
to the Spinco Group in accordance with Section 3 (with respect to an increase in
Taxes allocable to the Spinco Group) and Section 5.02 (with respect to a
decrease in net losses of the Spinco Group), and Spinco shall pay such amount to
Parent within

 

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20 Business Days from the later of (i) the date the additional Tax was paid by
Parent or (ii) the date of receipt of a written notice and demand from Parent
for payment of the amount due, accompanied by evidence of payment and a
statement detailing the Taxes paid and describing in reasonable detail the
particulars relating thereto. Any payments required under this Section 4.01(d)
shall include interest computed at the Prime Rate plus 2% per annum based on the
number of days from the date the additional Tax was paid by Parent to the date
of the payment under this Section 4.01(d).

Section 4.02 Payment of Separate Party Taxes. Each Party shall pay, or shall
cause to be paid, to the applicable Tax Authority when due all Taxes owed by
such Party or a member of such Party's Group with respect to a Separate Return.

Section 4.03 Indemnification Payments.

(a) If any Party (the “Payor”) is required under applicable Tax Law to pay to a
Tax Authority a Tax that another Party (the “Required Party”) is liable for
under this Agreement, the Required Party shall reimburse the Payor within 20
Business Days of delivery by the Payor to the Required Party of an invoice for
the amount due, accompanied by evidence of payment and a statement detailing the
Taxes paid and describing in reasonable detail the particulars relating thereto.
The reimbursement shall include interest on the Tax payment computed at the
Prime Rate plus 2% per annum based on the number of days from the date of the
payment to the Tax Authority to the date of reimbursement under this Section
4.03.

(b) All indemnification payments under this Agreement shall be made by Parent
directly to Spinco and by Spinco directly to Parent; provided, however, that if
the Parties mutually agree with respect to any such indemnification payment, any
member of the Parent Group, on the one hand, may make such indemnification
payment to any member of the Spinco Group, on the other hand, and vice versa.
All indemnification payments shall be treated in the manner described in
Section 12.

Section 5. Tax Refunds and Tax Benefits.

Section 5.01 Tax Refunds. Parent shall be entitled to any refund (and any
interest thereon received from the applicable Tax Authority) of Taxes for which
Parent is liable hereunder; Spinco shall be entitled to any refund (and any
interest thereon received from the applicable Tax Authority) of Taxes for which
Spinco is liable hereunder, in each case, as determined by Parent in accordance
with Section 3; and a Party receiving a refund to which another Party is
entitled hereunder shall pay over such refund to such other Party within 20
Business Days after such refund is received (together with interest computed at
the Prime Rate plus 2% per annum based on the number of days from the date the
refund was received to the date the refund was paid over).

Section 5.02 Tax Benefits. Without duplication of any amounts paid or payable by
Parent to Spinco pursuant to Section 4.01 and Section 5.01, (i) if the Pro Forma
Spinco Group Consolidated Return prepared pursuant to Section 3 with respect to
a Relevant Period shows a net loss, or (ii) if a Final Determination results in
the creation of or an increase in a net loss shown on any Pro Forma Spinco Group
Consolidated Return prepared pursuant to Section 3 with

 

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respect to any Pre-Distribution Period, then, in each case, Parent shall pay to
Spinco an amount equal to the product of (x) any such losses or increase in
losses (such losses to be taken into account only to the extent that no member
of the Spinco Group is allocated such net losses or any related Tax Attributes
that could be utilized in a Post-Distribution Period) and (y) the Blended Income
Tax Rate in effect for such Tax Period. In the case of clause (ii) of this
Section 5.02, any amounts shall be paid within 20 Business Days of such Final
Determination (together with interest computed at the Prime Rate plus 2% per
annum based on the number of days from the date of the Final Determination to
the date such amount was paid over).

Section 6. Tax-Free Status.

Section 6.01 Restrictions on Spinco.

(a) Spinco agrees that it will not take or fail to take, or permit any Spinco
Affiliate, as the case may be, to take or fail to take, any action where such
action or failure to act would be inconsistent with or cause to be untrue any
statement, information, covenant or representation in any Representation Letters
or Tax Opinions/Rulings. Spinco agrees that it will not take or fail to take, or
permit any Spinco Affiliate, as the case may be, to take or fail to take, any
action which adversely affects or could reasonably be expected to adversely
affect the Tax-Free Status of the Separation and the Distribution.

(b) Spinco agrees that, from the date hereof until the first Business Day after
the two-year anniversary of the Distribution Date, it will (i) maintain its
status as a company engaged in the Active Trade or Business for purposes of
Section 355(b)(2) of the Code, (ii) not engage in any transaction that would
result in it ceasing to be a company engaged in the Active Trade or Business for
purposes of Section 355(b)(2) of the Code, (iii) cause each Spinco Affiliate
whose Active Trade or Business is relied upon in the Tax Opinions/Rulings for
purposes of qualifying a transaction as tax-free pursuant to Section 355 of the
Code or other Tax Law, if any, to maintain its status as a company engaged in
such Active Trade or Business for purposes of Section 355(b)(2) of the Code and
any such other applicable Tax Law, (iv) not engage in any transaction or permit
a Spinco Affiliate to engage in any transaction that would result in a Spinco
Affiliate described in clause (iii) hereof, if any, ceasing to be a company
engaged in the relevant Active Trade or Business for purposes of
Section 355(b)(2) or such other applicable Tax Law, taking into account
Section 355(b)(3) of the Code for purposes of clauses (i) through (iv) hereof,
and (v) not dispose of or permit a Spinco Affiliate to dispose of, directly or
indirectly, any interest in a Spinco Affiliate described in clause (iii) hereof,
if any, or permit any such Spinco Affiliate, if any, to make or revoke any
election under Treasury Regulation Section 301.7701-3.

(c) Spinco agrees that, from the date hereof until the first Business Day after
the two-year anniversary of the Distribution Date, it will not and will not
permit any Spinco Affiliate described in clause (iii) of Section 6.01(b), if
any, to (i) enter into any Proposed Acquisition Transaction or, to the extent
Spinco has the right to prohibit any Proposed Acquisition Transaction, permit
any Proposed Acquisition Transaction to occur (whether by (a) redeeming rights
under a shareholder rights plan, (b) finding a tender offer to be a “permitted
offer” under any such plan or otherwise causing any such plan to be inapplicable
or neutralized with respect to any Proposed Acquisition Transaction,
(c) approving any Proposed Acquisition Transaction, whether for purposes of any
corporate statute similar to Section 203 of the

 

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Delaware General Corporation Law, any “fair price” or other provision of
Spinco's charter or bylaws, or (d) amending its certificate of incorporation to
declassify its board of directors or approving any such amendment, or
otherwise), (ii) merge or consolidate with any other Person or liquidate or
partially liquidate, (iii) in a single transaction or series of transactions
sell or transfer (other than sales or transfers of inventory in the ordinary
course of business) all or substantially all of the LDC Assets or sell or
transfer 25% or more of the gross assets of any Active Trade or Business or 25%
or more of the consolidated gross assets of Spinco and its Affiliates (such
percentages to be measured based on fair market value as of the Distribution
Date), (iv) redeem or otherwise repurchase (directly or through a Spinco
Affiliate) any Spinco Capital Stock, except to the extent such repurchases
satisfy Section 4.05(1)(b) of Revenue Procedure 96-30 (as in effect prior to the
amendment of such Revenue Procedure by Revenue Procedure 2003-48), (v) amend its
certificate of incorporation (or other organizational documents), or take any
other action, whether through a stockholder vote or otherwise, affecting the
voting rights of Spinco Capital Stock (including, without limitation, through
the conversion of one class of Spinco Capital Stock into another class of Spinco
Capital Stock), or (vi) take any other action or actions (including any action
or transaction that would be reasonably likely to be inconsistent with any
representation made in the Representation Letters or the Tax Opinions/Rulings)
which in the aggregate (and taking into account any other transactions described
in this subparagraph (c)) would be reasonably likely to have the effect of
causing or permitting one or more Persons (whether or not acting in concert) to
acquire directly or indirectly Spinco Capital Stock representing a Fifty-Percent
or Greater Interest in Spinco or otherwise jeopardize the Tax-Free Status of the
Separation and the Distribution, unless prior to taking any such action set
forth in the foregoing clauses (i) through (vi), (A) Spinco shall have requested
that Parent obtain a Ruling in accordance with Section 6.03(b) and (d) of this
Agreement to the effect that such transaction will not affect the Tax-Free
Status of the Separation and the Distribution, and Parent shall have received
such a Ruling in form and substance satisfactory to Parent in its sole and
absolute discretion, or (B) Spinco shall provide Parent with an Unqualified Tax
Opinion in form and substance satisfactory to Parent in its sole and absolute
discretion (and in determining whether an opinion is satisfactory, Parent may
consider, among other factors, the appropriateness of any underlying assumptions
and management's representations if used as a basis for the opinion and Parent
may determine that no opinion would be acceptable to Parent) or (C) Parent shall
have waived the requirement to obtain such Ruling or Unqualified Tax Opinion.

(d) Certain Issuances of Spinco Capital Stock. If Spinco proposes to enter into
any Section 6.01(d) Acquisition Transaction or, to the extent Spinco has the
right to prohibit any Section 6.01(d) Acquisition Transaction, proposes to
permit any Section 6.01(d) Acquisition Transaction to occur, in each case,
during the period from the date hereof until the first Business Day after the
two-year anniversary of the final Distribution Date, Spinco shall provide
Parent, no later than ten Business Days following the signing of any written
agreement with respect to the Section 6.01(d) Acquisition Transaction, with a
written description of such transaction (including the type and amount of Spinco
Capital Stock to be issued in such transaction) and a certificate of the board
of directors of Spinco to the effect that the Section 6.01(d) Acquisition
Transaction is not a Proposed Acquisition Transaction or any other transaction
to which the requirements of Section 6.01(c) apply (a “Board Certificate”).

 

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(e) Spinco Internal Restructuring. Spinco shall provide written notice to Parent
describing any internal restructuring (including by making or revoking any
election under Treasury Regulation Section 301.7701-3) involving a member of the
Spinco Group or any of the LDC Assets apart from sales in the ordinary course of
business proposed to be taken during or with respect to any Post-Distribution
Period ending on or prior to the two-year anniversary of the Distribution Date,
and shall consult with Parent regarding any such proposed actions reasonably in
advance of taking any such proposed actions and shall consider in good faith any
comments from Parent relating thereto.

Section 6.02 Restrictions on Parent. Parent agrees that it will not take or fail
to take, or permit any Parent Affiliate, as the case may be, to take or fail to
take, any action (i) where such action or failure to act would be inconsistent
with or cause to be untrue any statement, information, covenant or
representation in any Representation Letters or Tax Opinions/Rulings, or
(ii) which adversely affects or could reasonably be expected to adversely affect
the Tax-Free Status of the Separation and the Distribution; provided, however,
that this Section 6.02 shall not be construed as obligating Parent to consummate
the Distribution, nor shall it be construed as preventing Parent from
terminating the Separation Agreement pursuant to Section 11.11 thereof or from
terminating this Agreement pursuant to Section 16.15 hereof.

Section 6.03 Procedures Regarding Opinions and Rulings

(a) If Spinco notifies Parent that it desires to take one of the actions
described in clauses (i) through (vi) of Section 6.01(c) (a “Notified Action”),
Parent and Spinco shall, subject to Section 6.03(b), reasonably cooperate to
attempt to obtain the Ruling or Unqualified Tax Opinion referred to in
Section 6.01(c), unless Parent shall have waived the requirement to obtain such
Ruling or Unqualified Tax Opinion.

(b) Rulings or Unqualified Tax Opinions at Spinco's Request. Parent agrees that
at the reasonable request of Spinco pursuant to Section 6.01(c), Parent shall
cooperate with Spinco and use its reasonable best efforts to seek to obtain, as
expeditiously as possible, a Ruling from the IRS or an Unqualified Tax Opinion
for the purpose of permitting Spinco to take the Notified Action; provided that,
notwithstanding anything to the contrary herein, Parent shall not be required to
seek a Ruling from the IRS if it reasonably determines that it is unlikely to
obtain such a Ruling or that seeking such a Ruling could result in adverse Tax
consequences to Parent. Further, in no event shall Parent be required to file
any Ruling Request under this Section 6.03(b) unless Spinco represents that
(A) it has read the Ruling Request, and (B) all information and representations,
if any, relating to any member of the Spinco Group contained in the Ruling
Request documents are (subject to any qualifications therein) true, correct and
complete. Spinco shall reimburse Parent for all reasonable costs and expenses,
including expenses relating to the utilization of Parent personnel, incurred by
the Parent Group in obtaining a Ruling or Unqualified Tax Opinion requested by
Spinco within ten Business Days after receiving an invoice from Parent therefor.

(c) Rulings or Unqualified Tax Opinions at Parent’s Request. Parent shall have
the right to obtain a Ruling or an Unqualified Tax Opinion at any time in its
sole and absolute discretion. If Parent determines to obtain a Ruling or an
Unqualified Tax Opinion, Spinco shall (and shall cause each Affiliate of Spinco
to) cooperate with Parent and take any and all actions reasonably requested by
Parent in connection with obtaining the Ruling or Unqualified Tax Opinion
(including, without limitation, by making any representation or

 

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covenant or providing any materials or information requested by the IRS or Tax
Advisor; provided that Spinco shall not be required to make (or cause any
Affiliate of Spinco to make) any representation or covenant that is inconsistent
with historical facts or as to future matters or events over which it has no
control). Parent shall reimburse Spinco for all reasonable costs and expenses,
including expenses relating to the utilization of Spinco personnel, incurred by
the Spinco Group in connection with such cooperation within ten Business Days
after receiving an invoice from Spinco therefor.

(d) Spinco hereby agrees that Parent shall have sole and exclusive control over
the process of obtaining any Ruling, and that only Parent shall apply for a
Ruling. In connection with obtaining a Ruling pursuant to Section 6.03(b),
(A) Parent shall keep Spinco informed in a timely manner of all material actions
taken or proposed to be taken by Parent in connection therewith; (B) Parent
shall (1) reasonably in advance of the submission of any Ruling Request
documents provide Spinco with a draft copy thereof, (2) reasonably consider
Spinco’s comments on such draft copy, and (3) provide Spinco with a final copy;
and (C) Parent shall provide Spinco with notice reasonably in advance of, and
Spinco shall have the right to attend, any formally scheduled meetings with the
IRS (subject to the approval of the IRS) that relate to such Ruling. Neither
Spinco nor any Spinco Affiliate directly or indirectly controlled by Spinco
shall seek any guidance from the IRS or any other Tax Authority (whether
written, verbal or otherwise) at any time concerning the Separation or the
Distribution (including the impact of any transaction on the Separation or the
Distribution).

Section 6.04 Liability for Tax-Related Losses.

(a) Notwithstanding anything in this Agreement or the Separation Agreement to
the contrary (and in each case regardless of whether a Ruling, Unqualified Tax
Opinion or waiver described in clause (A), (B) or (C) of Section 6.01(c) may
have been provided), Spinco shall be responsible for, and shall indemnify and
hold harmless the Parent Indemnitees from and against, one hundred percent
(100%) of any Tax-Related Losses that are attributable to or result from any one
or more of the following: (A) the acquisition (other than pursuant to the
Separation or the Distribution) of all or a portion of Spinco’s Capital Stock
and/or its or its subsidiaries’ assets by any means whatsoever by any Person,
(B) any negotiations, understandings, agreements or arrangements by Spinco with
respect to transactions or events (including, without limitation, stock
issuances, pursuant to the exercise of stock options or otherwise, option
grants, capital contributions or acquisitions, or a series of such transactions
or events) that cause the Distribution to be treated as part of a plan pursuant
to which one or more Persons acquire directly or indirectly Spinco Capital Stock
representing a Fifty-Percent or Greater Interest therein, (C) any action or
failure to act by Spinco after the Distribution (including, without limitation,
any amendment to Spinco’s certificate of incorporation (or other organizational
documents), whether through a stockholder vote or otherwise, affecting the
voting rights of Spinco Capital Stock (including, without limitation, through
the conversion of one class of Spinco Capital Stock into another class of Spinco
Capital Stock), (D) any act or failure to act by Spinco or any Spinco Affiliate
described in Section 6.01 (regardless of whether such act or failure to act may
be covered by a Ruling, Unqualified Tax Opinion or waiver described in clause
(A), (B) or (C) of Section 6.01(c), a Board Certificate described in
Section 6.01(d), or a consultation described in Section 6.01(e)) or (E) any
breach by Spinco of its agreement and representation set forth in
Section 6.01(a) – 6.01(e).

 

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(b) Notwithstanding anything in this Agreement or the Separation Agreement to
the contrary, Parent shall be responsible for, and shall indemnify and hold
harmless the Spinco Indemnitees from and against, one hundred percent (100%) of
any Tax-Related Losses that are attributable to, or result from any one or more
of the following: (A) the acquisition (other than pursuant to the Separation or
the Distribution) of all or a portion of Parent's stock and/or its assets by any
means whatsoever by any Person, (B) any negotiations, agreements or arrangements
by Parent with respect to transactions or events (including, without limitation,
stock issuances, pursuant to the exercise of stock options or otherwise, option
grants, capital contributions or acquisitions, or a series of such transactions
or events) that cause the Distribution to be treated as part of a plan pursuant
to which one or more Persons acquire directly or indirectly stock of Parent
representing a Fifty-Percent or Greater Interest therein, (C) any act or failure
to act by Parent or a member of the Parent Group described in Section 6.02 or
any breach by Parent of its agreement and representation set forth in Section
6.02.

(c) For purposes of calculating the amount and timing of any Tax-Related Loss
for which Spinco is responsible under this Section 6.04, Tax-Related Losses
shall be calculated by assuming that Parent, the Parent Affiliated Group and
each member of the Parent Group (I) pay Tax at the highest marginal corporate
Tax rates in effect in each relevant taxable year and (II) have no Tax
Attributes in any relevant taxable year.

(d) Spinco shall pay Parent the amount of any Tax-Related Losses for which
Spinco is responsible under this Section 6.04: (A) in the case of Tax-Related
Losses described in clause (i) of the definition of Tax-Related Losses no later
than two Business Days prior to the date Parent pays such Tax-Related Losses,
and (B) in the case of Tax-Related Losses described in clause (ii) or (iii) of
the definition of Tax-Related Losses, no later than two Business Days after the
date Parent pays such Tax-Related Losses. Parent shall pay Spinco the amount of
any Tax-Related Losses for which Parent is responsible under this Section 6.04:
(A) in the case of Tax-Related Losses described in clause (i) of the definition
of Tax-Related Losses no later than two Business Days prior to the date Spinco
pays such Tax-Related Losses, and (B) in the case of Tax-Related Losses
described in clause (ii) or (iii) of the definition of Tax-Related Losses, no
later than two Business Days after the date Spinco pays such Tax-Related Losses.

Section 7. Assistance and Cooperation.

Section 7.01 Assistance and Cooperation.

(a) The Parties shall cooperate (and cause their respective Affiliates to
cooperate) with each other and with each other’s agents, including accounting
firms and legal counsel, in connection with Tax matters relating to the Parties
and their Affiliates including (i) preparation and filing of Tax Returns,
(ii) determining the liability for and amount of any Taxes due (including
estimated Taxes) or the right to and amount of any refund of Taxes,
(iii) examinations of Tax Returns, and (iv) any administrative or judicial
proceeding in respect of Taxes assessed or proposed to be assessed. Such
cooperation shall include making all information and documents in their
possession relating to the other Party and its Affiliates available to such
other Party as provided in Section 8. Each of the Parties shall also make
available to the other, as reasonably requested and available, personnel
(including officers, directors, employees and agents of the Parties or their
respective Affiliates) responsible for

 

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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. Spinco shall cooperate with Parent and
take any and all actions reasonably requested by Parent in connection with
obtaining the Tax Opinions/Rulings (including, without limitation, by making any
new representation or covenant, confirming any previously made representation or
covenant or providing any materials or information requested by any Tax Advisor
or Tax Authority; provided that Spinco shall not be required to make or confirm
any representation or covenant that is inconsistent with historical facts or as
to future matters or events over which it has no control).

(b) Any information or documents provided under this Section 7 or Section 8
shall be kept confidential by the Party receiving the information or documents,
except as may otherwise be necessary in connection with the filing of Tax
Returns or in connection with any administrative or judicial proceedings
relating to Taxes. Notwithstanding any other provision of this Agreement or any
other agreement, (i) neither Parent nor any Parent Affiliate shall be required
to provide Spinco or any Spinco Affiliate or any other Person access to or
copies of any information, documents or procedures (including the proceedings of
any Tax Contest) other than information, documents or procedures that relate to
Spinco, the business or assets of Spinco or any Spinco Affiliate and (ii) in no
event shall Parent or any Parent Affiliate be required to provide Spinco, any
Spinco Affiliate or any other Person access to or copies of any information or
documents if such action could reasonably be expected to result in the waiver of
any Privilege. In addition, in the event that Parent determines that the
provision of any information or documents to Spinco or any Spinco Affiliate
could be commercially detrimental, violate any law or agreement or waive any
Privilege, the Parties shall use reasonable best efforts to permit compliance
with its obligations under this Section 7 in a manner that avoids any such harm
or consequence.

Section 7.02 Tax Return Information. Spinco and Parent acknowledge that time is
of the essence in relation to any request for information, assistance or
cooperation made by Parent or Spinco pursuant to Section 7.01 or this
Section 7.02. Spinco and Parent acknowledge that failure to conform to the
reasonable deadlines set by Parent or Spinco could cause irreparable harm. Each
Party shall provide to the other Party information and documents relating to its
Group required by the other Party to prepare Tax Returns, including, but not
limited to, any Pro Forma Spinco Group Consolidated Return prepared by Parent
for purposes of preparing Joint Returns. Any information or documents the
Responsible Party requires to prepare such Tax Returns shall be provided in such
form as the Responsible Party reasonably requests and at or prior to the time
reasonably specified by the Responsible Party so as to enable the Responsible
Party to file such Tax Returns on a timely basis.

Section 7.03 Reliance by Parent. If any member of the Spinco Group supplies
information to a member of the Parent Group in connection with a Tax liability
and an officer of a member of the Parent Group signs a statement or other
document under penalties of perjury in reliance upon the accuracy of such
information, then upon the written request of such member of the Parent Group
identifying the information being so relied upon, the chief financial officer of
Spinco (or any officer of Spinco as designated by the chief financial officer of
Spinco) shall certify in writing that to his or her knowledge (based upon
consultation with appropriate employees) the information so supplied is accurate
and complete.

 

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Section 7.04 Reliance by Spinco. If any member of the Parent Group supplies
information to a member of the Spinco Group in connection with a Tax liability
and an officer of a member of the Spinco Group signs a statement or other
document under penalties of perjury in reliance upon the accuracy of such
information, then upon the written request of such member of the Spinco Group
identifying the information being so relied upon, the chief financial officer of
Parent (or any officer of Parent as designated by the chief financial officer of
Parent) shall certify in writing that to his or her knowledge (based upon
consultation with appropriate employees) the information so supplied is accurate
and complete.

Section 8. Tax Records.

Section 8.01 Tax Records. Each Party shall preserve and keep, and shall cause
their respective Affiliates to preserve and keep, all Tax Records that are in
their possession, and that could affect the liability of any member of the other
Group for Taxes, for so long as the contents thereof may become material in the
administration of any matter under the Code or other applicable Tax Law, but, in
any event, until the later of (i) the expiration of any applicable statutes of
limitations, or (ii) seven years after the Distribution Date (such later date,
the “Retention Date”). After the Retention Date, each Party may, and may allow
its respective Affiliates to, dispose of such Tax Records upon 60 Business Days'
prior written notice to the other Party. If, prior to the Retention Date, (a) a
Party reasonably determines that any Tax Records which it, or any of its
Affiliates, would otherwise be required to preserve and keep under this
Section 8.01 are no longer material in the administration of any matter under
the Code or other applicable Tax Law and the other Party agrees, then such first
Party, or the applicable Affiliate, may dispose of such Tax Records upon 60
Business Days' prior notice to the other Party. Any notice of an intent to
dispose given pursuant to this Section 8.01 shall include a list of the Tax
Records to be disposed of describing in reasonable detail each file, book, or
other record accumulation being disposed. The notified Party shall have the
opportunity, at its cost and expense, to copy or remove, within such 60 Business
Day period, all or any part of such Tax Records. If, at any time prior to the
Retention Date, Spinco determines to decommission or otherwise discontinue any
computer program or information technology system used to access or store any
Tax Records, then Spinco may decommission or discontinue such program or system
upon 90 days’ prior notice to Parent and Parent shall have the opportunity, at
its cost and expense, to copy, within such 90-day period, all or any part of the
underlying data relating to the Tax Records accessed by or stored on such
program or system.

Section 8.02 Access to Tax Records. The Parties and their respective Affiliates
shall make available to each other for inspection and copying during normal
business hours upon reasonable notice all Tax Records (and, for the avoidance of
doubt, any pertinent underlying data accessed or stored on any computer program
or information technology system) in their possession and shall permit the other
Party and its Affiliates, authorized agents and representatives and any
representative of a Tax Authority or other Tax auditor direct access, at the
cost and expense of such other Party, during normal business hours upon
reasonable notice to any computer program or information technology system used
to access or store any Tax Records, in each case to the extent reasonably
required by the other Party in connection with the preparation of Tax Returns or
financial accounting statements, audits, litigation, or the resolution of items
under this Agreement.

 

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Section 8.03 Preservation of Privilege. No member of the Spinco Group shall
provide access to, copies of, or otherwise disclose to any Person any
documentation relating to Taxes existing prior to the Distribution Date to which
Privilege may reasonably be asserted without the prior written consent of
Parent, such consent not to be unreasonably withheld.

Section 9. Tax Contests.

Section 9.01 Notice. Each of the Parties shall provide prompt notice to the
other Party of any written communication from a Tax Authority regarding any
pending Tax Contest of which it becomes aware related to Taxes for Tax Periods
for which it may be indemnified by the other Party hereunder or for which it may
be required to indemnify the other Party hereunder. Such notice shall attach
copies of the pertinent portion of any written communication from a Tax
Authority and 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. If an indemnified Party has knowledge of an asserted Tax
liability with respect to a matter for which it is to be indemnified hereunder
and such Party fails to give the indemnifying Party prompt notice of such
asserted Tax liability and the indemnifying Party is entitled under this
Agreement to contest the asserted Tax liability, then (i) if the indemnifying
Party is precluded from contesting the asserted Tax liability in any forum as a
result of the failure to give prompt notice, the indemnifying Party shall have
no obligation to indemnify the indemnified Party for any Taxes arising out of
such asserted Tax liability, and (ii) if the indemnifying Party is not precluded
from contesting the asserted Tax liability in any forum, but such failure to
give prompt notice results in a material monetary detriment to the indemnifying
Party, then any amount which the indemnifying Party is otherwise required to pay
the indemnified Party pursuant to this Agreement shall be reduced by the amount
of such detriment.

Section 9.02 Control of Tax Contests.

(a) Separate Returns. In the case of any Tax Contest with respect to any
Separate Return, the Party having liability for the Tax pursuant to Section 3
hereof shall have exclusive control over the Tax Contest, including exclusive
authority with respect to any settlement of such Tax liability, subject to
Sections 9.02(c) and (d) below.

(b) Joint Returns. In the case of any Tax Contest with respect to any Joint
Return, Parent shall have exclusive control over the Tax Contest, including
exclusive authority with respect to any settlement of such Tax liability,
subject to Sections 9.02(c) and (d) below.

(c) Settlement Rights. The Controlling Party shall have the sole right to
contest, litigate, compromise and settle any Tax Contest without obtaining the
prior consent of the Non-Controlling Party. Unless waived by the Parties in
writing, in connection with any potential adjustment in a Tax Contest as a
result of which adjustment the Non-Controlling Party may reasonably be expected
to become liable to make any indemnification payment to the Controlling Party
under this Agreement: (i) the Controlling Party shall keep the Non-Controlling

 

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Party informed in a timely manner of all actions taken or proposed to be taken
by the Controlling Party with respect to such potential adjustment in such Tax
Contest; (ii) the Controlling Party shall timely provide the Non-Controlling
Party copies of any written materials relating to such potential adjustment in
such Tax Contest received from any Tax Authority; (iii) the Controlling Party
shall timely provide the Non-Controlling Party with copies of any correspondence
or filings submitted to any Tax Authority or judicial authority in connection
with such potential adjustment in such Tax Contest; (iv) the Controlling Party
shall consult with the Non-Controlling Party and offer the Non-Controlling Party
a reasonable opportunity to comment before submitting any written materials
prepared or furnished in connection with such potential adjustment in such Tax
Contest; and (v) the Controlling Party shall defend such Tax Contest diligently
and in good faith. The failure of the Controlling Party to take any action
specified in the preceding sentence with respect to the Non-Controlling Party
shall not relieve the Non-Controlling Party of any liability and/or obligation
which it may have to the Controlling Party under this Agreement except to the
extent that the Non-Controlling Party was actually harmed by such failure, and
in no event shall such failure relieve the Non-Controlling Party from any other
liability or obligation which it may have to the Controlling Party. In the case
of any Tax Contest described in Section 9.02(a) or (b), “Controlling Party”
means the Party entitled to control the Tax Contest under such Section and
“Non-Controlling Party” means the other Party.

(d) Tax Contest Participation. Unless waived by the Parties in writing, the
Controlling Party shall provide the Non-Controlling Party with written notice
reasonably in advance of, and the Non-Controlling Party shall have the right to
attend, any formally scheduled meetings with Tax Authorities or hearings or
proceedings before any judicial authorities in connection with any potential
adjustment in a Tax Contest pursuant to which the Non-Controlling Party may
reasonably be expected to become liable to make any indemnification payment to
the Controlling Party under this Agreement. The failure of the Controlling Party
to provide any notice specified in this Section 9.02(d) to the Non-Controlling
Party shall not relieve the Non-Controlling Party of any liability and/or
obligation which it may have to the Controlling Party under this Agreement
except to the extent that the Non-Controlling Party was actually harmed by such
failure, and in no event shall such failure relieve the Non-Controlling Party
from any other liability or obligation which it may have to the Controlling
Party.

(e) Power of Attorney. Each member of the Spinco Group shall execute and deliver
to Parent (or such member of the Parent Group as Parent shall designate) any
power of attorney or other similar document reasonably requested by Parent (or
such designee) in connection with any Tax Contest (as to which Parent is the
Controlling Party) described in this Section 9. Each member of the Parent Group
shall execute and deliver to Spinco (or such member of the Spinco Group as
Spinco shall designate) any power of attorney or other similar document
requested by Spinco (or such designee) in connection with any Tax Contest (as to
which Spinco is the Controlling Party) described in this Section 9.

Section 10. Effective Date. This Agreement shall be effective as of the date
hereof (the “Effective Date”).

Section 11. Survival of Obligations. The representations, warranties, covenants
and agreements set forth in this Agreement shall be unconditional and absolute
and shall remain in effect without limitation as to time.

 

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Section 12. Treatment of Payments. In the absence of any change in Tax treatment
under the Code or except as otherwise required by other applicable Tax Law, any
Tax indemnity payments made by a Party under this Agreement shall be reported
for Tax purposes by the Payor and the recipient as distributions or capital
contributions, as appropriate, occurring immediately before the Distribution
(but only to the extent the payment does not relate to a Tax allocated to the
payor in accordance with Section 1552 of the Code or the regulations thereunder
or Treasury Regulation Section 1.1502-33(d) (or under corresponding principles
of other applicable Tax Laws)) or as payments of an assumed or retained
liability. Any Tax indemnity payment made by a Party under this Agreement shall
be increased as necessary so that after making all payments in respect of Taxes
imposed on or attributable to such indemnity payment, the recipient Party
receives an amount equal to the sum it would have received had no such Taxes
been imposed; provided that a payment of interest shall be treated as reasonably
determined by Parent.

Section 13. Disagreements.

Section 13.01 Discussion. The Parties will use commercially reasonable efforts,
and they will cause their respective Group members to use commercially
reasonable efforts, to resolve in an amicable manner all disagreements and
misunderstandings connected with their respective rights and obligations under
this Agreement, including any amendments hereto. In furtherance thereof, in the
event of any dispute or disagreement (a “Dispute”) between any member of the
Parent Group and any member of the Spinco Group as to the interpretation of any
provision of this Agreement or the performance of obligations hereunder, the Tax
departments of the Parties shall negotiate in good faith to resolve the Dispute.
If such good faith negotiations do not resolve the Dispute, then the matter,
upon written request of either Party, will be referred to the Persons at each
Party holding the title of General Counsel (or such other chief legal officer at
such Party) for resolution. If such Dispute is not resolved within ninety
(90) Business Days following the date on which the General Counsel (or such
other chief legal officer at such Party) receives notification, the Parties to
such Dispute shall each separately retain an independent, nationally recognized
law or accounting firm (each, a “Preliminary Tax Advisor” and, together, the
“Preliminary Tax Advisors”), which Preliminary Tax Advisors shall jointly select
a Tax Advisor on behalf of the Parties to the Dispute to act as an arbitrator in
order to resolve the Dispute. The Tax Advisor may, in its discretion, obtain the
services of any third-party appraiser, accounting firm or consultant that the
Tax Advisor deems necessary to assist it in resolving such disagreement. The Tax
Advisor shall furnish written notice to the Parties of its resolution of any
such Dispute as soon as practical, but in any event no later than 60 Business
Days after its acceptance of the matter for resolution. Any such resolution by
the Tax Advisor will be conclusive and binding on the Parties. Following receipt
of the Tax Advisor's written notice to the Parties of its resolution of the
Dispute, the Parties shall each take or cause to be taken any action necessary
to implement such resolution of the Tax Advisor. All fees and expenses of the
Preliminary Tax Advisor shall be borne by the Party that engaged such advisor
and all of the fees and expenses of the Tax Advisor shall be shared equally by
each of the Parties to the Dispute.

Section 13.02 Injunctive Relief. Nothing in this Section 13 will prevent either
Party from seeking injunctive relief if any delay resulting from the efforts to
resolve the Dispute through the process set forth above could result in serious
and irreparable injury to either Party. Notwithstanding anything to the contrary
in this Agreement, Parent and Spinco are the only members of their respective
Groups entitled to commence a dispute resolution procedure under this Agreement,
and each of Parent and Spinco will cause its respective Group members not to
commence any dispute resolution procedure other than through such Party as
provided in this Section 13.

 

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Section 14. Late Payments. Any amount owed by one Party to another Party under
this Agreement which is not paid when due shall bear interest at the Prime Rate
plus 2% per annum from the due date of the payment to the date paid.

Section 15. Expenses. Except as otherwise provided in this Agreement, each Party
and its Affiliates shall bear their own expenses incurred in connection with
preparation of Tax Returns, Tax Contests, and other matters related to Taxes
under the provisions of this Agreement.

Section 16. General Provisions.

Section 16.01 Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be given or
made (and shall be deemed to have been duly given or made upon receipt unless
the day of receipt is not a Business Day, in which case it shall be deemed to
have been given on the next Business Day) by delivery in person, by overnight
courier service, by facsimile with receipt confirmed (followed by delivery of an
original via overnight courier service) or by registered or certified mail
(postage prepaid, return receipt requested) to the respective Party at the
following addresses (or at such other address for a Party as shall be specified
in a notice given in accordance with this Section 16.01):

To Parent:

ONEOK, Inc.

100 West Fifth Street

Tulsa, OK 74103

Attn: General Counsel

Facsimile: (918) 588 - 7890

To Spinco:

ONE Gas, Inc.

15 E. 5th Street

Tulsa, OK 74103

Attn: General Counsel

Facsimile: (918) 947-7010

Section 16.02 Waivers and Consents. The failure of any Party to require strict
performance by the other Party of any provision in this Agreement will not waive
or diminish that Party's right to demand strict performance thereafter of that
or any other provision hereof. Any consent required or permitted to be given by
any Party to the other Party under this Agreement shall be in writing and signed
by the Party giving such consent.

Section 16.03 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 shall not in any way be affected or impaired
thereby, and 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.

 

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Section 16.04 Authorization. Each of the Parties 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 each 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 of its charter or bylaws or any material
agreement, instrument or order binding on such Party.

Section 16.05 Further Action. Each Party shall execute and deliver all
documents, provide all information, and take or refrain from taking action as
may be necessary or appropriate to achieve the purposes of this Agreement,
including the execution and delivery to the other Party and its Affiliates and
representatives of such powers of attorney or other authorizing documentation as
is reasonably necessary or appropriate in connection with Tax Contests (or
portions thereof) under the control of such other Party in accordance with
Section 9 hereof.

Section 16.06 Complete Agreement; Construction. This Agreement shall constitute
the entire agreement between the Parties with respect to the subject matter
hereof and shall supersede all previous negotiations, commitments, courses of
dealing and writings with respect to such subject matter. All such other
agreements shall be of no further effect between the Parties, and any rights or
obligations existing thereunder shall be fully and finally settled, calculated
as of the date hereof. In the event and to the extent that there shall be a
conflict between the provisions of this Agreement and the Separation Agreement
or any of the Ancillary Agreements, with respect to the subject matter hereof,
the provisions of this Agreement shall control.

Section 16.07 Title and Headings. Titles and headings to Sections are inserted
for the convenience of reference only and are not intended to be a part of or to
affect the meaning or interpretation of this Agreement.

Section 16.08 No Double Recovery. No provision of this Agreement shall be
construed to provide an indemnity or other recovery for any costs, damages, or
other amounts for which the damaged Party has been fully compensated under any
other provision of this Agreement or under any other agreement or Action at law
or equity. Unless expressly required in this Agreement, a Party shall not be
required to exhaust all remedies available under other agreements or at law or
equity before recovering under the remedies provided in this Agreement.

Section 16.09 Counterparts; Electronic Delivery. This Agreement may be executed
in two or more counterparts, each of which shall be deemed an original, but all
of which taken together shall be considered one and the same agreement, and,
except as otherwise expressly provided in Section 10, shall become effective
when one or more such counterparts have been signed by each Party and delivered
to each Party. Execution and delivery of this Agreement or any other documents
pursuant to this Agreement by facsimile or other electronic means shall be
deemed to be, and shall have the same legal effect as, execution by an original
signature and delivery in person.

 

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Section 16.10 Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws, and not the Laws governing conflicts of
Laws, of the State of Oklahoma.

Section 16.11 Consent to Jurisdiction. Subject to the provisions of Section 13
herein, each of the Parties irrevocably submits to the exclusive jurisdiction of
(a) the District Court of the State of Oklahoma for Tulsa County, and (b) the
United States District Court for the Northern District of Oklahoma, Tulsa
Division (the “Oklahoma Courts”), for the purposes of any suit or Action or
other proceeding or for provisional relief to prevent irreparable harm, and to
the non-exclusive jurisdiction of the Oklahoma Courts for the enforcement of any
award issued thereunder. Each of the Parties further agrees that service of any
process, summons, notice or document by United States registered mail or
receipted courier service to such Party's respective address set forth in
Section 16.01 shall be effective service of process for any Action, suit or
proceeding in the Oklahoma Courts with respect to any matters to which it has
submitted to jurisdiction in this Section 16.11. Each of the Parties irrevocably
and unconditionally waives any objection to the laying of venue of any Action,
suit or proceeding arising out of this Agreement or the transactions
contemplated hereby in the Oklahoma Courts, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such Action, suit or proceeding brought in any such court has been brought
in an inconvenient forum.

Section 16.12 Specific Performance. The Parties agree that irreparable damage
would occur in the event that the provisions of this Agreement were not
performed in accordance with their specific terms. Accordingly, it is hereby
agreed that the Parties shall be entitled to (i) an injunction or injunctions to
enforce specifically the terms and provisions hereof in any Action in accordance
with Section 13.02 of this Agreement, (ii) provisional or temporary injunctive
relief in accordance therewith in any Oklahoma Court, and (iii) enforcement of
any such award of an arbitral tribunal or an Oklahoma Court in any court of the
United States, or any other any court or tribunal sitting in any state of the
United States or in any foreign country that has jurisdiction, this being in
addition to any other remedy or relief to which they may be entitled.

Section 16.13 Waiver of Jury Trial. Subject to Sections 13, 16.11 and 16.12
herein, each of the Parties hereby waives to the fullest extent permitted by
applicable Law any right it may have to a trial by jury with respect to any
court proceeding contemplated by Section 16.11 of this Agreement. Each of the
Parties hereby (a) certifies that no representative, agent or attorney of the
other Party has represented, expressly or otherwise, that such other Party would
not, in the event of litigation, seek to enforce the foregoing waiver and
(b) acknowledges that it has been induced to enter into this Agreement and the
transactions contemplated by this Agreement, as applicable, by, among other
things, the mutual waivers and certifications in this Section 16.13.

Section 16.14 Amendments. Subject to the terms of Section 16.15, this Agreement
may not be modified or amended except by an agreement in writing signed by each
Party.

 

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Section 16.15 Certain Termination and Amendment Rights. This Agreement may be
terminated and the Distribution may be amended, modified or abandoned at any
time prior to the Distribution Date by and in the sole discretion of Parent
without the approval of Spinco or the stockholders of Parent. 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 Date, this Agreement may not
be terminated except by an agreement in writing signed by Parent and Spinco.

Section 16.16 Payment Terms.

(a) Except as expressly provided in this Agreement, any amount to be paid or
reimbursed by any Party (and/or a member of such Party's Group), on the one
hand, to the other Party (and/or a member of such Party's Group), on the other
hand, under this Agreement shall be paid or reimbursed hereunder within 30 days
after presentation of an invoice or a written demand therefore and setting
forth, or accompanied by, reasonable documentation or other reasonable
explanation supporting such amount.

(b) Except as expressly provided to the contrary in this Agreement, any amount
not paid when due pursuant to this Agreement shall bear interest at a rate per
annum equal to the then effective Prime Rate plus 2% (or the maximum legal rate,
whichever is lower), calculated for the actual number of days elapsed, accrued
from the date on which such payment was due up to the date of the actual receipt
of payment.

Section 16.17 No Circumvention. The Parties agree not to directly or indirectly
take any actions, act in concert with any Person who takes an action, or cause
or allow any member of such Party's Group to take any actions (including the
failure to take a reasonable action) such that the resulting effect is to
materially undermine the effectiveness of any provisions of this Agreement.

Section 16.18 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 Subsidiary of such Party or by any
entity that becomes a Subsidiary of such Party on and after the Effective Time.
The Parties acknowledge that certain actions, agreements and obligations that
certain of their Affiliates and Subsidiaries may be required to perform in
connection with the performance of the Parties' obligations under this Agreement
may require Governmental Approval by Governmental Entities under applicable Law,
and therefore agree that performance of such actions, agreements and obligations
is subject to the receipt of all such necessary Governmental Approvals, which
approvals each Party shall, and shall cause the members of its respective Group
to, use its commercially reasonable efforts to obtain.

Section 16.19 Assignment. This Agreement shall not be assignable, in whole or in
part, directly or indirectly, by either 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 null and void; provided that
a Party may assign this Agreement in connection with a merger transaction in
which such Party is not the surviving entity or the sale by such Party of all or
substantially all of its assets; provided that the surviving entity of such
merger or the transferee of such assets shall agree in writing, reasonably
satisfactory to the other Party, to be bound by the terms of this Agreement as
if named as a “Party” hereto. In addition, in the event

 

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that any third Person or “group” (as such term is used in Section 13(d) and
14(d) of the Exchange Act) acquires, including by way of merger, consolidation
or other business combination, fifty percent or more of the consolidated assets
or voting equity of either Parent or Spinco, such Party, as applicable, shall
take all necessary action so that such third Person or group shall become a
guarantor of the obligations of Parent or Spinco, as applicable, under this
Agreement.

Section 16.20 Successors and Assigns. Subject to Section 16.19, the provisions
of this Agreement and the obligations and rights hereunder shall be binding
upon, inure to the benefit of and be enforceable by (and against) the Parties
and their respective successors and permitted transferees and assigns
(including, but not limited to, any successor of Parent or Spinco succeeding to
the Tax Attributes of either under Section 381 of the Code).

Section 16.21 Third Party Beneficiaries. Except as otherwise provided herein,
this Agreement is solely for the benefit of the Parties and should not be deemed
to confer upon third parties any remedy, claim, liability, reimbursement, cause
of action or other right in excess of those existing without reference to this
Agreement.

Section 16.22 Interpretation. The Parties have participated jointly in the
negotiation and drafting of this Agreement. This Agreement shall be construed
without regard to any presumption or rule requiring construction or
interpretation against the Party drafting or causing any instrument to be
drafted.

 

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

 

ONEOK, INC. By  

/s/ John W. Gibson

Name:   John W. Gibson Title:   Chairman and Chief Executive Officer ONE GAS,
INC. By  

/s/ John W. Gibson

Name:   John W. Gibson Title:   Chairman of the Board

 

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