Document:

Exhibit 10.1

 

TRANSITION SERVICES AGREEMENT

 

BY AND BETWEEN

 

GANNETT CO., INC.

 

AND

 

GANNETT SPINCO, INC.

 

DATED AS OF [·], 2015

 

 

TABLE OF CONTENTS

 

	
 
    	
Page
    
	
 
    	
 
    
	
ARTICLE I DEFINITIONS
    	
1
    
	
 
    	
 
    
	
 
    	
Section 1.01.
    	
Definitions
    	
1
    
	
 
    	
 
    	
 
    
	
ARTICLE II SERVICES
    	
5
    
	
 
    	
 
    	
 
    
	
 
    	
Section 2.01.
    	
Services
    	
5
    
	
 
    	
Section 2.02.
    	
Performance of Services
    	
6
    
	
 
    	
Section 2.03.
    	
Charges for Services
    	
8
    
	
 
    	
Section 2.04.
    	
Reimbursement for Out-of-Pocket Costs and Expenses
    	
8
    
	
 
    	
Section 2.05.
    	
Changes in the Performance of Services
    	
9
    
	
 
    	
Section 2.06.
    	
Transitional Nature of Services
    	
9
    
	
 
    	
Section 2.07.
    	
Subcontracting
    	
9
    
	
 
    	
Section 2.08.
    	
Certain SpinCo IP/IT
    	
9
    
	
 
    
	
ARTICLE III OTHER   ARRANGEMENTS  
    	
10
    
	
 
    
	
 
    	
Section 3.01.
    	
Access
    	
10
    
	
 
    
	
ARTICLE IV BILLING; TAXES  
    	
11
    
	
 
    
	
 
    	
Section 4.01.
    	
Procedure
    	
11
    
	
 
    	
Section 4.02.
    	
Late Payments
    	
11
    
	
 
    	
Section 4.03.
    	
Taxes
    	
11
    
	
 
    	
Section 4.04.
    	
No Set-Off
    	
11
    
	
 
    	
Section 4.05.
    	
Audit Rights
    	
11
    
	
 
    	
 
    
	
ARTICLE V TERM AND   TERMINATION
    	
 
    	
12
    
	
 
    	
 
    
	
 
    	
Section 5.01.
    	
Term
    	
12
    
	
 
    	
Section 5.02.
    	
Early Termination
    	
12
    
	
 
    	
Section 5.03.
    	
Interdependencies
    	
13
    
	
 
    	
Section 5.04.
    	
Effect of Termination
    	
13
    
	
 
    	
Section 5.05.
    	
Information Transmission
    	
13
    
	
 
    
	
ARTICLE VI CONFIDENTIALITY;   PROTECTIVE ARRANGEMENTS  
    	
13
    
	
 
    
	
 
    	
Section 6.01.
    	
Parent and SpinCo Obligations
    	
13
    
	
 
    	
Section 6.02.
    	
No Release; Return or Destruction
    	
14
    
	
 
    	
Section 6.03.
    	
Privacy and Data Protection Laws
    	
14
    
	
 
    	
Section 6.04.
    	
Protective Arrangements
    	
14
    
					

 

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ARTICLE VII LIMITED   LIABILITY AND INDEMNIFICATION  
    	
15
    
	
 
    
	
 
    	
Section 7.01.
    	
Limitations on Liability
    	
15
    
	
 
    	
Section 7.02.
    	
Obligation to Re-Perform; Liabilities
    	
16
    
	
 
    	
Section 7.03.
    	
Third-Party Claims
    	
16
    
	
 
    	
Section 7.04.
    	
Provider Indemnity
    	
16
    
	
 
    	
Section 7.05.
    	
Indemnification Procedures
    	
17
    
	
 
    
	
ARTICLE VIII TRANSITION   COMMITTEE  
    	
17
    
	
 
    
	
 
    	
Section 8.01.
    	
Establishment
    	
17
    
	
 
    
	
ARTICLE IX MISCELLANEOUS  
    	
17
    
	
 
    
	
 
    	
Section 9.01.
    	
Mutual Cooperation
    	
17
    
	
 
    	
Section 9.02.
    	
Further Assurances
    	
17
    
	
 
    	
Section 9.03.
    	
Audit Assistance
    	
17
    
	
 
    	
Section 9.04.
    	
Title to Intellectual Property
    	
17
    
	
 
    	
Section 9.05.
    	
Independent Contractors
    	
18
    
	
 
    	
Section 9.06.
    	
Counterparts; Entire Agreement; Corporate Power
    	
18
    
	
 
    	
Section 9.07.
    	
Governing Law
    	
19
    
	
 
    	
Section 9.08.
    	
Assignability
    	
19
    
	
 
    	
Section 9.09.
    	
Third-Party Beneficiaries
    	
19
    
	
 
    	
Section 9.10.
    	
Notices
    	
19
    
	
 
    	
Section 9.11.
    	
Severability
    	
20
    
	
 
    	
Section 9.12.
    	
Force Majeure
    	
20
    
	
 
    	
Section 9.13.
    	
Headings
    	
21
    
	
 
    	
Section 9.14.
    	
Survival of Covenants
    	
21
    
	
 
    	
Section 9.15.
    	
Waivers of Default
    	
21
    
	
 
    	
Section 9.16.
    	
Dispute Resolution
    	
21
    
	
 
    	
Section 9.17.
    	
Specific Performance
    	
21
    
	
 
    	
Section 9.18.
    	
Amendments
    	
22
    
	
 
    	
Section 9.19.
    	
Precedence of Schedules
    	
22
    
	
 
    	
Section 9.20.
    	
Interpretation
    	
22
    
	
 
    	
Section 9.21.
    	
Mutual Drafting
    	
23
    

 

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TRANSITION SERVICES AGREEMENT

 

This TRANSITION SERVICES AGREEMENT, dated as of [·], 2015 (this “Agreement”), is by and between Gannett Co., Inc., a Delaware corporation (“Parent”), and Gannett SpinCo Inc., a Delaware corporation (“SpinCo”).

 

R E C I T A L S:

 

WHEREAS, the board of directors of Parent (the “Parent Board”) has determined that it is in the best interests of Parent and its shareholders to create a new publicly traded company that shall operate the SpinCo Business;

 

WHEREAS, in furtherance of the foregoing, the Parent Board has determined that it is appropriate and desirable to separate the SpinCo Business from the Parent Business (the “Separation”) and, following the Separation, make a distribution, on a pro rata basis, to holders of Parent Shares on the Record Date of 98.5% of the outstanding SpinCo Shares owned by Parent (the “Distribution”);

 

WHEREAS, in order to effectuate the Separation and the Distribution, Parent and SpinCo have entered into a Separation and Distribution Agreement, dated as of [·], 2015 (the “Separation and Distribution Agreement”); and

 

WHEREAS, in order to facilitate and provide for an orderly transition in connection with the Separation and the Distribution, the Parties desire to enter into this Agreement to set forth the terms and conditions pursuant to which each of the Parties shall provide Services to the other Party for a transitional period.

 

NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:

 

ARTICLE I
 DEFINITIONS

 

Section 1.01.                          Definitions.  For purposes of this Agreement, the following terms shall have the following meanings:

 

“Action” shall mean any demand, action, claim, dispute, suit, countersuit, arbitration, inquiry, subpoena, proceeding or investigation of any nature (whether criminal, civil, legislative, administrative, regulatory, prosecutorial or otherwise) by or before any federal, state, local, foreign or international Governmental Authority or any arbitration or mediation tribunal.

 

“Additional Services” shall have the meaning set forth in Section 2.01(b).

 

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

 

 

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

 

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

 

“Charge” and “Charges” have the meaning set forth in Section 2.03.

 

“Confidential Information” means all Information that is either confidential or proprietary.

 

“Dispute” has the meaning set forth in Section 9.16(a).

 

“Distribution” has the meaning set forth in the Recitals.

 

“Distribution Date” shall mean the date of the consummation of the Distribution, which shall be determined by the Parent Board in its sole and absolute discretion.

 

“Effective Time” shall mean 12:01 a.m., New York City time, on the Distribution Date.

 

“Force Majeure” shall mean, with respect to a Party, an event beyond the reasonable control of such Party (or any Person acting on its behalf), which event (a) does not arise or result from the fault or negligence of such Party (or any Person acting on its behalf) and (b) by its nature would not reasonably have been foreseen by such Party (or such Person), or, if it would reasonably have been foreseen, was unavoidable, and includes acts of God, acts of civil or military authority, embargoes, epidemics, war, riots, insurrections, fires, explosions, earthquakes, floods, unusually severe weather conditions, labor problems or unavailability of parts, or, in the case of computer systems, any significant and prolonged failure in electrical or air conditioning equipment.  Notwithstanding the foregoing, the receipt by a Party of an unsolicited takeover offer or other acquisition proposal, even if unforeseen or unavoidable, and such Party’s response thereto, shall not be deemed an event of Force Majeure.

 

“Governmental Authority” shall mean any nation or government, any state, municipality or other political subdivision thereof, and any entity, body, agency, commission, department, board, bureau, court, tribunal or other instrumentality, whether federal, state, local, domestic, foreign or multinational, exercising executive, legislative, judicial, regulatory, administrative or other similar functions of, or pertaining to, government and any executive official thereof.

 

“Information” shall mean information, whether or not patentable or copyrightable, in written, oral, electronic or other tangible or intangible forms, stored in any medium, including studies, reports, records, books, contracts, instruments, surveys, discoveries, ideas, concepts, know-how, techniques, designs, specifications, drawings, blueprints, diagrams, models, prototypes, samples, flow charts, data, computer data, disks, diskettes, tapes, computer programs or other software, marketing plans, customer names, communications by or to attorneys (including attorney-client privileged communications), memos and other materials prepared by attorneys or under their direction (including attorney work product), and other technical, financial, employee or business information or data.

 

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“Interest Payment” has the meaning set forth in Section 4.02.

 

“Law” shall mean any national, supranational, federal, state, provincial, local or similar law (including common law), statute, code, order, ordinance, rule, regulation, treaty (including any income tax treaty), license, permit, authorization, approval, consent, decree, injunction, binding judicial or administrative interpretation or other requirement, in each case, enacted, promulgated, issued or entered by a Governmental Authority.

 

“Level of Service” has the meaning set forth in Section 2.02(c).

 

“Liabilities” shall mean all debts, guarantees, assurances, commitments, liabilities, responsibilities, Losses, remediation, deficiencies, damages, fines, penalties, settlements, sanctions, costs, expenses, interest and obligations of any nature or kind, whether accrued or fixed, absolute or contingent, matured or unmatured, accrued or not accrued, asserted or unasserted, liquidated or unliquidated, foreseen or unforeseen, known or unknown, reserved or unreserved, or determined or determinable, including those arising under any Law, claim (including any Third-Party Claim), demand, Action, or order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority or arbitration tribunal, and those arising under any contract, agreement, obligation, indenture, instrument, lease, promise, arrangement, release, warranty, commitment or undertaking, or any fines, damages or equitable relief that is imposed, in each case, including all costs and expenses relating thereto.

 

“Losses” shall mean actual losses (including any diminution in value), costs, damages, penalties and expenses (including legal and accounting fees and expenses and costs of investigation and litigation), whether or not involving a Third-Party Claim.

 

“Minimum Service Period” means the period commencing on the Distribution Date and ending ninety (90) days after the Distribution Date, unless otherwise specified with respect to a particular service on the Schedules hereto.

 

“Parent” has the meaning set forth in the Preamble.

 

“Parent Board” has the meaning set forth in the Recitals.

 

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

 

“Parent Shares” shall mean the shares of common stock, par value $1.00 per share, of Parent.

 

“Parties” means the parties to this Agreement.

 

“Person” shall mean an individual, a general or limited partnership, a corporation, a trust, a joint venture, an unincorporated organization, a limited liability entity, any other entity and any Governmental Authority.

 

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“Provider” means, with respect to any Service, the Party providing such Service hereunder.

 

“Provider Indemnitees” has the meaning set forth in Section 7.03.

 

“Recipient” means, with respect to any Service, the Party receiving such Service hereunder.

 

“Recipient Indemnitees” has the meaning set forth in Section 7.04.

 

“Record Date” shall mean the close of business on the date to be determined by the Parent Board as the record date for determining holders of Parent Shares entitled to receive SpinCo Shares pursuant to the Distribution.

 

“Representatives” shall mean, with respect to any Person, any of such Person’s directors, officers, employees, agents, consultants, advisors, accountants, attorneys or other representatives.

 

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

 

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

 

“Service Baseline Period” has the meaning set forth in Section 2.02(c).

 

“Service Period” means, with respect to any Service, the period commencing on the Distribution Date and ending on the earlier of (a) the date that a Party terminates the provision of such Service pursuant to Section 5.02, (b) the date that is the two year anniversary of the Distribution Date and (c) the date specified for termination of such Service in the Schedules hereto.

 

“Services” has the meaning set forth in Section 2.01(a).

 

“Significant Service Shortfall” has the meaning set forth in Section 2.02(d).

 

“SpinCo” has the meaning set forth in the Preamble.

 

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

 

“SpinCo Shares” shall mean the shares of common stock, par value $0.01 per share, of SpinCo.

 

“Subsidiary” shall mean, with respect to any Person, any corporation, limited liability company, joint venture or partnership of which such Person (a) beneficially owns, either directly or indirectly, fifty percent (50%) or more of (i) the total combined voting power of all classes of voting securities, (ii) the total combined equity interests or (iii) the capital or profit interests, in the case of a partnership, or (b) otherwise has the power to vote, either directly or

 

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indirectly, sufficient securities to elect a majority of the board of directors or similar governing body.

 

“Tax” means any and all forms of taxation, whenever created or imposed by a Taxing Authority, and, without limiting the generality of the foregoing, shall include net income, alternative or add-on minimum, estimated, gross income, sales, use, ad valorem, gross receipts, value added, franchise, profits, license, transfer, recording, withholding, payroll, employment, excise, severance, stamp, occupation, premium, property, windfall profit, custom duty or other tax, governmental fee or other like assessment or charge of any kind whatsoever, together with any related interest, penalties or other additions to tax, or additional amounts imposed by any such Taxing Authority.

 

“Tax Matters Agreement” shall mean the Tax Matters Agreement to be entered into by and between Parent and SpinCo or their respective Subsidiaries in connection with the Separation, the Distribution or the other transactions contemplated by the Separation and Distribution Agreement.

 

“Taxing Authority” means a national, foreign, municipal, state, federal or other governmental authority responsible for the administration of any Tax.

 

“Termination Charges” shall mean, with respect to the termination of any Service pursuant to Section 5.02(a)(i), any and all costs, fees and expenses (other than any severance or retention costs, unless otherwise specified with respect to a particular Service on the Schedules hereto or in the other Ancillary Agreements) payable by the Provider of such Service to a Third Party directly as a result of the early termination of such Service; provided, however, that the Provider shall use commercially reasonable efforts to minimize any costs, fees or expenses payable to any Third Party in connection with such early termination of such Service and credit any such reductions against the Termination Charges payable by the Recipient.

 

“Third Party” shall mean any Person other than the Parties or any of their Affiliates.

 

“Third-Party Claim” shall mean any Action commenced by any Third Party against any Party or any of its Affiliates.

 

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

 

ARTICLE II
 SERVICES

 

Section 2.01.                          Services.

 

(a)                                 Commencing as of the Effective Time, the Provider agrees to provide, or to cause one or more of its Subsidiaries to provide, to the Recipient, or any Subsidiary of the Recipient, the applicable services (the “Services”) set forth on the Schedules hereto.

 

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(b)                                 After the date of this Agreement, if SpinCo or Parent (i) identifies a service that (x) the Parent provided to SpinCo prior to the Distribution Date that SpinCo reasonably needs in order for the SpinCo Business to continue to operate in substantially the same manner in which the SpinCo Business operated prior to the Distribution Date, and such service was not included on the Schedules hereto (other than because the Parties agreed such service shall not be provided), or (y) SpinCo provided to Parent prior to the Distribution Date that Parent reasonably needs in order for the Parent Business to continue to operate in substantially the same manner in which the Parent Business operated prior to the Distribution Date, and such service was not included on the Schedules hereto (other than because the Parties agreed such service shall not be provided), and (ii) provides written notice to the other Party within ninety (90) days after the Distribution Date requesting such additional services, then such other Party shall use its commercially reasonable efforts to provide such requested additional services (such requested additional services, the “Additional Services”); provided, however, that no Party shall be obligated to provide any Additional Service if it does not, in its reasonable judgment, have adequate resources to provide such Additional Service or if the provision of such Additional Service would significantly disrupt the operation of its or its Subsidiaries’ businesses; and provided, further, that the Provider shall not be required to provide any Additional Services if the Parties are unable to reach agreement on the terms thereof (including with respect to Service Charges therefor). In connection with any request for Additional Services in accordance with this Section 2.01(b), the Parties shall in good faith negotiate the terms of a supplement to the applicable Schedule, which terms shall be consistent with the terms of, and the pricing methodology used for, similar Services provided under this Agreement.  Upon the mutual written agreement of the Parties, the supplement to the applicable Schedule shall describe in reasonable detail the nature, scope, service period(s), termination provisions and other terms applicable to such Additional Services in a manner similar to that in which the Services are described in the existing Schedules.  Each supplement to the applicable Schedule, as agreed to in writing by the Parties, shall be deemed part of this Agreement as of the date of such agreement and the Additional Services set forth therein shall be deemed “Services” provided under this Agreement, in each case subject to the terms and conditions of this Agreement.

 

Section 2.02.                          Performance of Services.

 

(a)                                 Subject to Section 2.06, the Provider shall perform, or shall cause one or more of its Subsidiaries to perform, all Services to be provided by the Provider in a manner that is based on its past practice and that is substantially similar in all material respects to the analogous services provided by or on behalf of Parent or any of its Subsidiaries to Parent or its applicable functional group or Subsidiary prior to the Effective Time, and, in any event, in a manner that conforms in all material respects with the terms of the Schedules hereto.

 

(b)                                 Nothing in this Agreement shall require the Provider to perform or cause to be performed any Service to the extent that the manner of such performance would constitute a violation of any applicable Law or any existing contract or agreement with a Third Party.  If the Provider is or becomes aware of any potential violation on the part of the Provider, the Provider shall promptly advise the Recipient of such potential violation, and the Provider and the Recipient will mutually seek an alternative that addresses such potential violation.  The Parties agree to cooperate in good faith and use commercially reasonable efforts to obtain any necessary Third Party consents required under any existing contract or agreement with a Third Party to

 

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allow the Provider to perform, or cause to be performed, all Services to be provided by the Provider hereunder in accordance with the standards set forth in this Section 2.02.  Unless otherwise agreed in writing by the Parties, all reasonable out-of-pocket costs and expenses (if any) incurred by any Party or any of its Subsidiaries in connection with obtaining any such Third Party consent that is required to allow the Provider to perform or cause to be performed such Services shall be divided proportionately between the Provider and the Recipient in accordance with such Parties’ respective utilization of such Services at such time.  If, with respect to a Service, the Parties, despite the use of such commercially reasonable efforts, are unable to obtain a required Third Party consent, or the performance of such Service by the Provider would constitute a violation of any applicable Law, the Provider shall have no obligation whatsoever to perform or cause to be performed such Service.

 

(c)                                  Unless otherwise provided with respect to a specific Service on the Schedules hereto, the Provider shall not be obligated to perform or to cause to be performed any Service in a manner that is materially more burdensome (with respect to service quality or quantity) than analogous services provided to Parent or its applicable functional group or Subsidiary (collectively referred to as the “Level of Service”) during the one year period ending on the last day of Parent’s last fiscal quarter completed on or prior to the date of the Distribution (the “Service Baseline Period”).  If the Recipient requests that the Provider perform or cause to be performed any Service that exceeds the Level of Service during the Service Baseline Period, then the Parties shall cooperate and act in good faith to determine whether the Provider will be required to provide such requested higher Level of Service.  If the Parties determine that the Provider shall provide the requested higher Level of Service, then such higher Level of Service shall be documented in a written agreement signed by the Parties.  Each amended section of the Schedules hereto, as agreed to in writing by the Parties, shall be deemed part of this Agreement as of the date of such written agreement and the Level of Service increases set forth in such written agreement shall be deemed a part of the “Services” provided under this Agreement, in each case subject to the terms and conditions of this Agreement.

 

(d)                                 Subject to Sections 2.02(b) and 9.12, if a Recipient provides a Provider with written notice of the occurrence of any Significant Service Shortfall (as defined below), such Provider shall promptly, for no additional charge, use reasonable best efforts to rectify or cause to be rectified such Significant Service Shortfall. In addition to any other rights the Recipient may have pursuant to this Agreement, if the Provider fails to rectify or cause to be rectified such Significant Service Shortfall within five (5) business days from the date of such notice, such Recipient may obtain replacement services from a Third Party or perform such services for itself and such Provider shall reimburse the Recipient for the reasonable cost of any such replacement services, less the amount such Recipient would have paid pursuant to this Agreement for such Services. A “Significant Service Shortfall” shall be deemed to have occurred if, subject to the Recipient’s compliance in all material respects with Section 3.01  and the Recipient providing its approval as specified in the proviso in Section 2.04, the quality or performance of the Services provided by a Provider hereunder falls (i) below an express service level identified with respect to a specific Service in the Schedules hereto, or (ii) materially below the standards required by Section 2.02(a), as applicable.

 

(e)                                  (i) Neither the Provider nor any of its Subsidiaries shall be required to perform or to cause to be performed any of the Services for the benefit of any Third Party or any

 

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other Person other than the Recipient and its Subsidiaries, and (ii) EXCEPT AS EXPRESSLY PROVIDED IN THIS SECTION 2.02 OR SECTION 7.04, EACH PARTY ACKNOWLEDGES AND AGREES THAT ALL SERVICES ARE PROVIDED ON AN “AS-IS” BASIS, THAT THE RECIPIENT ASSUMES ALL RISK AND LIABILITY ARISING FROM OR RELATING TO ITS USE OF AND RELIANCE UPON THE SERVICES, AND THAT THE PROVIDER MAKES NO OTHER REPRESENTATIONS OR GRANTS ANY WARRANTIES, EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, BY STATUTE OR OTHERWISE, WITH RESPECT TO THE SERVICES.  EACH PARTY SPECIFICALLY DISCLAIMS ANY OTHER WARRANTIES, WHETHER WRITTEN OR ORAL, OR EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF QUALITY, MERCHANTABILITY, OR FITNESS FOR A PARTICULAR USE OR PURPOSE OR THE NON-INFRINGEMENT OF ANY INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES.

 

(f)                                   Each Party shall be responsible for its own compliance with any and all Laws applicable to its performance under this Agreement.  No Party shall knowingly take any action in violation of any such applicable Law that results in Liability being imposed on the other Party.

 

Section 2.03.                          Charges for Services.  Unless otherwise provided with respect to a specific Service on the Schedules hereto, the Recipient shall pay the Provider of the Services a fee (either one-time or recurring) for such Services (or category of Services, as applicable) (each fee constituting a “Charge” and, collectively, “Charges”), which Charges shall be set forth on the applicable Schedules hereto, or if not so set forth, then, unless otherwise provided with respect to a specific Services on the Schedule hereto, based upon the cost of providing such Services and shall be agreed to by the Parties from time to time.  During the term of this Agreement, the amount of a Charge for any Service may be modified to the extent of (a) any adjustments mutually agreed to by the Parties, (b) any adjustments due to a change in Level of Service requested by the Recipient and agreed upon by the Provider, and (c) any adjustment in the rates or charges imposed by any Third Party provider that is providing Services (proportional to the respective use of such Services by each Party), provided that the Provider will notify the Recipient in writing of any such change in rates at least thirty (30) days prior to the effective date of such rate change.  Together with any invoice for Charges, the Provider shall provide the Recipient with reasonable documentation, including any additional documentation reasonably requested by the Recipient to the extent that such documentation is in the Provider’s or its Subsidiaries’ possession or control, to support the calculation of such Charges.

 

Section 2.04.                          Reimbursement for Out-of-Pocket Costs and Expenses.  The Recipient shall reimburse the Provider for reasonable out-of-pocket costs and expenses incurred by the Provider or any of its Subsidiaries in connection with providing the Services (including reasonable travel-related expenses) to the extent that such costs and expenses are not reflected in the Charges for such Services; provided, however, that any such cost or expense in excess of five thousand dollars ($5,000.00) that is not consistent with historical practice between the Parties for any individual Service (including business travel and related expenses) shall require advance written approval of the Recipient.  Any authorized travel-related expenses incurred in performing the Services shall be incurred and charged to the Recipient in accordance with the Provider’s then-applicable business travel policies.

 

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Section 2.05.                          Changes in the Performance of Services.  Subject to the performance standards for Services set forth in Sections 2.02(a), 2.02(b) and 2.02(c), the Provider may make changes from time to time in the manner of performing the Services if the Provider is making similar changes in performing analogous services for itself and if the Provider furnishes to the Recipient reasonable prior written notice (in content and timing) of such changes.  If such change shall materially adversely affect the timeliness or quality of, or the Charges for, the applicable Service, the Recipient shall be permitted to terminate this Agreement pursuant to Section 5.02(a)(i) without being required to pay any Termination Charges pursuant to Section 5.04 or comply with clauses (x), (y) and (z) of Section 5.02(a)(i).

 

Section 2.06.                          Transitional Nature of Services.  The Parties acknowledge the transitional nature of the Services and agree to cooperate in good faith and to use commercially reasonable efforts to avoid a disruption in the transition of the Services from the Provider to the Recipient (or its designee).  Unless otherwise agreed with respect to a specific Service, each Party agrees to use its commercially reasonable efforts to reduce or eliminate its and its Affiliates’ dependency on each Service to the extent and as soon as is reasonably practicable.

 

Section 2.07.                          Subcontracting.  A Provider may hire or engage one or more Third Parties to perform any or all of its obligations under this Agreement; provided, however, that (a) such Provider shall use the same degree of care (but at least reasonable care) in selecting each of such Third Party as it would if such Third Party was being retained to provide similar services to the Provider and (b) such Provider shall in all cases remain responsible (as primary obligor) for all of its obligations under this Agreement with respect to the scope of the Services, the performance standard for Services set forth in Sections 2.02(a), 2.02(b) and 2.02(c) and the content of the Services provided to the Recipient.  Such Provider shall be liable for any breach of its obligations under this Agreement by any Third Party service provider engaged by such Provider.  Subject to the confidentiality provisions set forth in Article VI, each Party shall, and shall cause their respective Affiliates to, provide, upon ten (10) business days’ prior written notice from the other Party, any Information within such Party’s or its Affiliates’ control that the requesting Party reasonably requests in connection with any Services being provided to such requesting Party by a Third Party, including any applicable invoices, agreements documenting the arrangements between such Third Party and the Provider and other supporting documentation; provided, further, however, that each Party shall make no more than one such request per Third Party during any calendar quarter.

 

Section 2.08.                          Certain SpinCo IP/IT.  If requested by Parent in writing, SpinCo hereby agrees that, at least 30 days prior to the completion or termination of the Services provided by SpinCo set forth on Schedule 2.08, SpinCo shall in good faith negotiate (if Parent so desires), during such 30 day period, to enter into a separate agreement either to extend such Services or to license the applicable SpinCo IP/IT to Parent, in each case on commercially reasonable terms mutually acceptable to the Parties at such time.

 

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ARTICLE III
 OTHER ARRANGEMENTS

 

Section 3.01.                          Access.

 

(a)                                 SpinCo shall, and shall cause its Subsidiaries to, allow Parent and its Subsidiaries and their respective Representatives reasonable access to the facilities of SpinCo and its Subsidiaries that is necessary for Parent and its Subsidiaries to fulfill their obligations under this Agreement.  In addition to the foregoing right of access, SpinCo shall, and shall cause its Subsidiaries to, afford Parent, its Subsidiaries and their respective Representatives, upon reasonable advance written notice, reasonable access during normal business hours to the facilities, Information, systems, infrastructure and personnel of SpinCo and its Subsidiaries as reasonably necessary for Parent to verify the adequacy of internal controls over information technology, reporting of financial data and related processes employed in connection with the Services being provided by SpinCo or its Subsidiaries, including in connection with verifying compliance with Section 404 of the Sarbanes-Oxley Act of 2002; provided that (i) such access shall not unreasonably interfere with any of the business or operations of SpinCo or any of its Subsidiaries and (ii) in the event that SpinCo determines that providing such access could violate any applicable Law or agreement or waive any attorney-client privilege, then the Parties shall use commercially reasonable efforts to permit such access in a manner that avoids any such consequence.  Parent agrees that all of its and its Subsidiaries’ employees shall, and that it shall use commercially reasonable efforts to cause its Representatives’ employees to, when on the property of SpinCo or its Subsidiaries, or when given access to any facilities, Information, systems, infrastructure or personnel of SpinCo or its Subsidiaries, conform to the policies and procedures of SpinCo and its Subsidiaries, as applicable, concerning health, safety, conduct and security which are made known or provided to Parent from time to time.

 

(b)                                 Parent shall, and shall cause its Subsidiaries to, allow SpinCo and its Subsidiaries and their respective Representatives reasonable access to the facilities of Parent and its Subsidiaries that is necessary for SpinCo and its Subsidiaries to fulfill their obligations under this Agreement.  In addition to the foregoing right of access, Parent shall, and shall cause its Subsidiaries to, afford SpinCo, its Subsidiaries and their respective Representatives, upon reasonable advance written notice, reasonable access during normal business hours to the facilities, Information, systems, infrastructure and personnel of Parent and its Subsidiaries as reasonably necessary for SpinCo to verify the adequacy of internal controls over information technology, reporting of financial data and related processes employed in connection with the Services being provided by Parent or its Subsidiaries, including in connection with verifying compliance with Section 404 of the Sarbanes-Oxley Act of 2002; provided that (i) such access shall not unreasonably interfere with any of the business or operations of Parent or any of its Subsidiaries and (ii) in the event that Parent determines that providing such access could violate any applicable Law or agreement or waive any attorney-client privilege, then the Parties shall use commercially reasonable efforts to permit such access in a manner that avoids any such consequence.  SpinCo agrees that all of its and its Subsidiaries’ employees shall, and that it shall use commercially reasonable efforts to cause its Representatives’ employees to, when on the property of Parent or its Subsidiaries, or when given access to any facilities, Information, systems, infrastructure or personnel of Parent or its Subsidiaries, conform to the policies and

 

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procedures of Parent and its Subsidiaries, as applicable, concerning health, safety, conduct and security which are made known or provided to SpinCo from time to time.

 

ARTICLE IV
 BILLING; TAXES

 

Section 4.01.                          Procedure.  Charges for the Services shall be charged to and payable by the Recipient.  Amounts payable pursuant to this Agreement shall be paid by wire transfer (or such other method of payment as may be agreed between the Parties from time to time) to the Provider (as directed by the Provider), on a monthly basis in the case of recurring fees, which amounts shall be due within forty-five (45) days of the Recipient’s receipt of each such invoice, including reasonable documentation pursuant to Section 2.03.  All amounts due and payable hereunder shall be invoiced and paid in U.S. dollars.  In the event of any billing dispute, the Recipient shall promptly pay any undisputed amount.

 

Section 4.02.                          Late Payments.  Charges not paid when due (including any undisputed amounts) pursuant to this Agreement (and any amounts billed or otherwise invoiced or demanded and properly payable that are not paid within forty-five (45) days of the receipt of such bill, invoice or other demand) shall accrue interest at a rate per annum equal to the Prime Rate plus two percent (2%) or the maximum rate under applicable Law, whichever is lower (the “Interest Payment”).

 

Section 4.03.                          Taxes.  Without limiting any provisions of this Agreement, the Recipient shall bear any and all Taxes and other similar charges (and any related interest and penalties) imposed on, or payable with respect to, any fees or charges, including any Charges, payable by it pursuant to this Agreement, including all sales, use, value-added, and similar Taxes, but excluding any Taxes on the Provider’s income.  Notwithstanding anything to the contrary in the previous sentence or elsewhere in this Agreement, the Recipient shall be entitled to withhold from any payments to the Provider any such Taxes that the Recipient is required by applicable Law to withhold and shall pay such Taxes to the applicable Taxing Authority.

 

Section 4.04.                          No Set-Off.  Except as mutually agreed to in writing by Parent and SpinCo, no Party or any of its Affiliates shall have any right of set-off or other similar rights with respect to (a) any amounts received pursuant to this Agreement or (b) any other amounts claimed to be owed to the other Party or any of its Subsidiaries arising out of this Agreement.

 

Section 4.05.                          Audit Rights.  Subject to the confidentiality provisions of this Agreement, each Party shall, and shall cause their respective Affiliates to, provide, upon ten (10) days’ prior written notice from the other Party, any information within such Party’s or its Affiliates’ possession that the requesting Party reasonably requests in connection with any Services being provided to such requesting Party by the other Party or a Third Party service provider, including any applicable invoices or other supporting documentation, or in the case of a Third Party service provider, agreements documenting the arrangements between such Third Party service provider and the Provider; provided, however, that each Party shall make no more than one such request during any calendar month.

 

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ARTICLE V
 TERM AND TERMINATION

 

Section 5.01.                          Term.  This Agreement shall commence at the Effective Time and shall terminate upon the earlier to occur of (a) the last date on which either Party is obligated to provide any Service to the other Party in accordance with the terms of this Agreement; (b) the mutual written agreement of the Parties to terminate this Agreement in its entirety; and (c) the date that is the two year anniversary of the Distribution Date.  Unless otherwise terminated pursuant to Section 5.02, this Agreement shall terminate with respect to each Service as of the close of business on the last day of the Service Period for such Service.

 

Section 5.02.                          Early Termination.

 

(a)                                 Without prejudice to the Recipient’s rights with respect to Force Majeure, the Recipient may from time to time terminate this Agreement with respect to the entirety or portion of any Service (for the avoidance of doubt, the Recipient may terminate any Service (or portion thereof) set forth on any part of the Schedules hereto without terminating all or any other Services set forth on the same Schedule as such terminated Service (or portion thereof)):

 

(i)                                     For any reason or no reason, upon the giving of at least forty-five (45) days’ prior written notice (or such other number of days specified in the Schedules hereto) to the Provider of such Service; provided, however, that any such termination (x) may not be effective prior to the end of the Minimum Service Period, (y) may only be effective as of the last day of a month and (z) shall be subject to the obligation to pay any applicable Termination Charges pursuant to Section 5.04; or

 

(ii)                                  if the Provider of such Service has failed to perform any of its material obligations under this Agreement with respect to such Service, and such failure shall continue to be uncured by the Provider for a period of at least thirty (30) days after receipt by the Provider of written notice of such failure from the Recipient;  provided, however, that the Recipient shall not be entitled to terminate this Agreement with respect to the applicable Service if, as of the end of such period, there remains a good-faith Dispute between the Parties (undertaken in accordance with the terms of Section 9.16) as to whether the Provider has cured the applicable breach.

 

(b)                                 The Provider may terminate this Agreement with respect to the entirety or portion of any Service at any time upon prior written notice to the Recipient if the Recipient has failed to perform any of its material obligations under this Agreement with respect to such Service, including making payment of Charges for such Service when due, and such failure shall continue to be uncured by the Recipient for a period of at least thirty (30) days after receipt by the Recipient of a written notice of such failure from the Provider; provided, however, that the Provider shall not be entitled to terminate this Agreement with respect to the applicable Service if, as of the end of such period, there remains a good-faith Dispute between the Parties (undertaken in accordance with the terms of Section 9.16) as to whether the Recipient has cured the applicable breach.  The Schedules hereto shall be updated to reflect any terminated Service.

 

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Section 5.03.                          Interdependencies.  The Parties acknowledge and agree that (a) there may be interdependencies among the Services being provided under this Agreement; (b) upon the request of either Party, the Parties shall cooperate and act in good faith to determine whether (i) any such interdependencies exist with respect to the particular Service that a Party is seeking to terminate pursuant to Section 5.02 and (ii) in the case of such termination, the Provider’s ability to provide a particular Service in accordance with this Agreement would be materially and adversely affected by such termination of another Service; and (c) in the event that the Parties have determined that such interdependencies exist and such termination would materially and adversely affect the Provider’s ability to provide a particular Service in accordance with this Agreement, the Parties shall (i) negotiate in good faith to amend the Schedules hereto with respect to such impacted Service prior to such termination, which amendment shall be consistent with the terms of comparable Services, and (ii) if after such negotiation, the Parties are unable to agree on such amendment, the Provider’s obligation to provide such Service shall terminate automatically with such termination.

 

Section 5.04.                          Effect of Termination.  Upon the termination of any Service pursuant to this Agreement, the Provider of the terminated Service shall have no further obligation to provide the terminated Service, and the Recipient of such Service shall have no obligation to pay any future Charges relating to such Service; provided, however, that the Recipient shall remain obligated to the Provider for (a) the Charges owed and payable in respect of Services provided prior to the effective date of termination for such Service, and (b) any applicable Termination Charges (which, in the case of clause (b), shall not be payable in the event that the Recipient terminates any Service pursuant to Section 5.02(a)(ii)).  In connection with the termination of any Service, the provisions of this Agreement not relating solely to such terminated Service shall survive any such termination, and in connection with a termination of this Agreement, Article I, this Article V, Article VII and Article IX, all confidentiality obligations under this Agreement and Liability for all due and unpaid Charges, and Termination Charges shall continue to survive indefinitely.

 

Section 5.05.                          Information Transmission.  The Provider, on behalf of itself and its respective Subsidiaries, shall use commercially reasonable efforts to provide or make available, or cause to be provided or made available, to the Recipient, in accordance with Section 6.1 of the Separation and Distribution Agreement, any Information received or computed by the Provider for the benefit of the Recipient concerning the relevant Service during the Service Period; provided, however, that, except as otherwise agreed to in writing by the Parties (a) the Provider shall not have any obligation to provide, or cause to be provided, Information in any non-standard format, (b) the Provider and its Subsidiaries shall be reimbursed for their reasonable costs in accordance with Section 6.3 of the Separation and Distribution Agreement for creating, gathering, copying, transporting and otherwise providing such Information, and (c) the Provider shall use commercially reasonable efforts to maintain any such Information in accordance with Section 6.4 of the Separation and Distribution Agreement.

 

ARTICLE VI
 CONFIDENTIALITY; PROTECTIVE ARRANGEMENTS

 

Section 6.01.                          Parent and SpinCo Obligations.  Subject to Section 6.04, until the three (3)-year anniversary of the date of the termination of this Agreement in its entirety, each of

 

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Parent and SpinCo, on behalf of itself and each of its Subsidiaries, agrees to hold, and to cause its respective Representatives to hold, in strict confidence, with at least the same degree of care that applies to Parent’s Confidential Information pursuant to policies in effect as of the Effective Time, all Confidential Information concerning the other Party or its Subsidiaries or their respective businesses that is either in its possession (including Confidential Information in its possession prior to the date hereof) or furnished by such other Party or such other Party’s Subsidiaries or their respective Representatives at any time pursuant to this Agreement, and shall not use any such Confidential Information other than for such purposes as may be expressly permitted hereunder, except, in each case, to the extent that such Confidential Information (a) is or becomes generally available to the public, other than as a result of a disclosure by such Party or any of its Subsidiaries or any of their respective Representatives in violation of this Agreement; (b) is lawfully acquired from other sources by such Party or any of its Subsidiaries, which sources are not themselves bound by a confidentiality obligation or other contractual, legal or fiduciary obligation of confidentiality with respect to such Confidential Information; or (c) is independently developed or generated without reference to or use of the Confidential Information of the other Party or any of its Subsidiaries.  If any Confidential Information of a Party or any of its Subsidiaries is disclosed to the other Party or any of its Subsidiaries in connection with providing the Services, then such disclosed Confidential Information shall be used only as required to perform such Services.

 

Section 6.02.                          No Release; Return or Destruction.  Each Party agrees (a) not to release or disclose, or permit to be released or disclosed, any Confidential Information of the other Party addressed in Section 6.01 to any other Person, except its Representatives who need to know such Confidential Information in their capacities as such (whom shall be advised of their obligations hereunder with respect to such Confidential Information) and except in compliance with Section 6.04, and (b) to use commercially reasonable efforts to maintain such Confidential Information in accordance with Section 6.4 of the Separation and Distribution Agreement.  Without limiting the foregoing, when any such Confidential Information is no longer needed for the purposes contemplated by the Separation and Distribution Agreement, this Agreement or any other Ancillary Agreements, each Party will promptly after request of the other Party either return to the other Party all such Confidential Information in a tangible form (including all copies thereof and all notes, extracts or summaries based thereon) or notify the other Party in writing that it has destroyed such information (and such copies thereof and such notes, extracts or summaries based thereon); provided, that the Parties may retain electronic back-up versions of such Confidential Information maintained on routine computer system backup tapes, disks or other backup storage devices.

 

Section 6.03.                          Privacy and Data Protection Laws.  Each Party shall comply with all applicable state, federal and foreign privacy and data protection Laws that are or that may in the future be applicable to the provision of the Services under this Agreement.

 

Section 6.04.                          Protective Arrangements.  In the event that a Party or any of its Subsidiaries either determines on the advice of its counsel that it is required to disclose any information pursuant to applicable Law or receives any request or demand under lawful process or from any Governmental Authority to disclose or provide information of the other Party (or any of its Subsidiaries) that is subject to the confidentiality provisions hereof, such Party shall notify the other Party (to the extent legally permitted) as promptly as practicable under the

 

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circumstances prior to disclosing or providing such information and shall cooperate, at the expense of the other Party, in seeking any appropriate protective order requested by the other Party.  In the event that such other Party fails to receive such appropriate protective order in a timely manner and the Party receiving the request or demand reasonably determines that its failure to disclose or provide such information shall actually prejudice the Party receiving the request or demand, then the Party that received such request or demand may thereafter disclose or provide information to the extent required by such Law (as so advised by its counsel) or by lawful process or such Governmental Authority, and the disclosing Party shall promptly provide the other Party with a copy of the information so disclosed, in the same form and format so disclosed, together with a list of all Persons to whom such information was disclosed, in each case to the extent legally permitted.

 

ARTICLE VII
 LIMITED LIABILITY AND INDEMNIFICATION

 

Section 7.01.                          Limitations on Liability.

 

(a)                                 SUBJECT TO SECTION 7.02, THE LIABILITIES OF THE PROVIDER AND ITS SUBSIDIARIES AND THEIR RESPECTIVE REPRESENTATIVES, COLLECTIVELY, UNDER THIS AGREEMENT FOR ANY ACT OR FAILURE TO ACT IN CONNECTION HEREWITH (INCLUDING THE PERFORMANCE OR BREACH OF THIS AGREEMENT), OR FROM THE SALE, DELIVERY, PROVISION OR USE OF ANY SERVICES PROVIDED UNDER OR CONTEMPLATED BY THIS AGREEMENT, WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE AND STRICT LIABILITY) OR OTHERWISE, SHALL NOT EXCEED $7,500,000.  SUBJECT TO SECTION 7.02 AND EXCEPT FOR THE FAILURE OF THE RECIPIENT TO PAY FOR SERVICES, THE LIABILITIES OF THE RECIPIENT AND ITS SUBSIDIARIES AND THEIR RESPECTIVE REPRESENTATIVES, COLLECTIVELY, UNDER THIS AGREEMENT FOR ANY ACT OR FAILURE TO ACT IN CONNECTION HEREWITH (INCLUDING THE PERFORMANCE OR BREACH OF THIS AGREEMENT), OR FROM THE RECEIPT OF ANY SERVICES PROVIDED UNDER OR CONTEMPLATED BY THIS AGREEMENT, WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE AND STRICT LIABILITY) OR OTHERWISE, SHALL NOT EXCEED $7,500,000.

 

(b)                                 IN NO EVENT SHALL EITHER PARTY, ITS SUBSIDIARIES OR THEIR RESPECTIVE REPRESENTATIVES BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, PUNITIVE, EXEMPLARY, REMOTE, SPECULATIVE OR SIMILAR DAMAGES IN EXCESS OF COMPENSATORY DAMAGES OF THE OTHER PARTY IN CONNECTION WITH THE PERFORMANCE OF THIS AGREEMENT (OTHER THAN ANY SUCH LIABILITY WITH RESPECT TO A THIRD-PARTY CLAIM), AND EACH PARTY HEREBY WAIVES ON BEHALF OF ITSELF, ITS SUBSIDIARIES AND ITS REPRESENTATIVES ANY CLAIM FOR SUCH DAMAGES, WHETHER ARISING IN CONTRACT, TORT OR OTHERWISE.

 

(c)                                  The limitations in Section 7.01(a) and Section 7.01(b) shall not apply in respect of any Liability arising out of or in connection with (i) either Party’s Liability for breaches of confidentiality under Article VI, (ii) either Party’s obligations under Section 7.03 or

 

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7.04 or (iii) the gross negligence, willful misconduct or fraud of or by the Party to be charged. The limitations in Section 7.01(b) shall not apply in respect of any Liability arising out of or in connection with the negligent provision of technical Services by the Provider which results in the inability of the Recipient to display advertisements, whether through digital media or otherwise.

 

Section 7.02.                          Obligation to Re-Perform; Liabilities.  In the event of any breach of this Agreement by the Provider with respect to the provision of any Services (with respect to which the Provider can reasonably be expected to re-perform in a commercially reasonable manner), the Provider shall (a) promptly correct in all material respects such error, defect or breach or re-perform in all material respects such Services at the request of the Recipient and at the sole cost and expense of the Provider and (b) subject to the limitations set forth in Section 7.01, reimburse the Recipient and its Subsidiaries and Representatives for Liabilities attributable to such breach by the Provider.  The remedy set forth in this Section 7.02 shall be the sole and exclusive remedy of the Recipient for any such breach of this Agreement; provided, however, that the foregoing shall not prohibit the Recipient from exercising its right to terminate this Agreement in accordance with the provisions of Section 5.02(a)(ii) or, if applicable, seeking replacement services and reimbursement in accordance with the provisions of Section 2.02(d) or specific performance in accordance with Section 9.17.  Any request for re-performance in accordance with this Section 7.02 by the Recipient must be in writing and specify in reasonable detail the particular error, defect or breach, and such request must be made no more than one month from the later of (x) the date on which such breach occurred and (y) the date on which such breach was reasonably discovered by the Recipient.

 

Section 7.03.                          Third-Party Claims.  In addition to (but not in duplication of) its other indemnification obligations (if any) under the Separation and Distribution Agreement, this Agreement or any other Ancillary Agreement, the Recipient shall indemnify, defend and hold harmless the Provider, its Subsidiaries and each of their respective Representatives, and each of the successors and assigns of any of the foregoing (collectively, the “Provider Indemnitees”), from and against any and all claims of Third Parties relating to, arising out of or resulting from the Recipient’s use or receipt of the Services provided by the Provider hereunder, other than (a) Third Party Claims arising out of the gross negligence, willful misconduct or fraud of any Provider Indemnitee and (b) as set forth in Section 2.02(b).

 

Section 7.04.                          Provider Indemnity.  In addition to (but not in duplication of) its other indemnification obligations (if any) under the Separation and Distribution Agreement, this Agreement or any other Ancillary Agreement, the Provider shall indemnify, defend and hold harmless the Recipient, its Subsidiaries and each of their respective Representatives, and each of the successors and assigns of any of the foregoing (collectively, the “Recipient Indemnitees”), from and against any and all Liabilities relating to, arising out of or resulting from the sale, delivery or provision of any Services provided by such Provider hereunder, but only to the extent that such Liability relates to, arises out of or results from (a) the Provider’s gross negligence, willful misconduct or fraud or (b) the Provider’s negligent provision of technical Services which results in the inability of the Recipient to display advertisements, whether through digital media or otherwise.

 

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Section 7.05.                          Indemnification Procedures.  The procedures for indemnification set forth in Sections 4.5, 4.6 and 4.7 of the Separation and Distribution Agreement shall govern claims for indemnification under this Agreement.

 

ARTICLE VIII
 TRANSITION COMMITTEE

 

Section 8.01.                          Establishment.  Pursuant to the Separation and Distribution Agreement, a Transition Committee is to be established by Parent and SpinCo to, among other things, monitor and manage matters arising out of or resulting from this Agreement.  Without limiting the generality of the foregoing, each Party shall cause each member of the Transition Committee who is an employee, agent or other Representative of such Party to work in good faith to resolve any Dispute arising out of or relating in any way to this Agreement.

 

ARTICLE IX
 MISCELLANEOUS

 

Section 9.01.                          Mutual Cooperation.  Each Party shall, and shall cause its Subsidiaries to, cooperate with the other Party and its Subsidiaries in connection with the performance of the Services hereunder; provided, however, that such cooperation shall not unreasonably disrupt the normal operations of such Party or its Subsidiaries; and, provided, further, that this Section 9.01 shall not require such Party to incur any out-of-pocket costs or expenses unless and except as expressly provided in this Agreement or otherwise agreed to in writing by the Parties.

 

Section 9.02.                          Further Assurances.  Subject to the terms of this Agreement, each Party shall take, or cause to be taken, any and all reasonable actions, including the execution, acknowledgment, filing and delivery of any and all documents and instruments that any other Party may reasonably request in order to effect the intent and purpose of this Agreement and the transactions contemplated hereby.

 

Section 9.03.                          Audit Assistance.  Each of the Parties and their respective Subsidiaries are or may be subject to regulation and audit by a Governmental Authority (including a Taxing Authority), standards organizations, customers or other parties to contracts with such Parties or their respective Subsidiaries under applicable Law, standards or contract provisions.  If a Governmental Authority, standards organization, customer or other party to a contract with a Party or its Subsidiary exercises its right to examine or audit such Party’s or its Subsidiary’s books, records, documents or accounting practices and procedures pursuant to such applicable Law, standards or contract provisions, and such examination or audit relates to the Services, then the other Party shall provide, at the sole cost and expense of the requesting Party, all assistance reasonably requested by the Party that is subject to the examination or audit in responding to such examination or audits or requests for Information, to the extent that such assistance or Information is within the reasonable control of the cooperating Party and is related to the Services.

 

Section 9.04.                          Title to Intellectual Property.  Except as expressly provided for under the terms of this Agreement or the Separation and Distribution Agreement, the Recipient acknowledges that it shall acquire no right, title or interest (including any license rights or rights

 

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of use) in any intellectual property which is owned or licensed by the Provider, by reason of the provision of the Services hereunder.  The Recipient shall not remove or alter any copyright, trademark, confidentiality or other proprietary notices that appear on any intellectual property owned or licensed by the Provider, and the Recipient shall reproduce any such notices on any and all copies thereof.  The Recipient shall not attempt to decompile, translate, reverse engineer or make excessive copies of any intellectual property owned or licensed by the Provider, and the Recipient shall promptly notify the Provider of any such attempt, regardless of whether by the Recipient or any Third Party, of which the Recipient becomes aware.

 

Section 9.05.                          Independent Contractors.  The Parties each acknowledge and agree that they are separate entities, each of which has entered into this Agreement for independent business reasons.  The relationships of the Parties hereunder are those of independent contractors and nothing contained herein shall be deemed to create a joint venture, partnership or any other relationship between the Parties.  Employees performing Services hereunder do so on behalf of, under the direction of, and as employees of, the Provider, and the Recipient shall have no right, power or authority to direct such employees, unless otherwise specified with respect to a particular Service on the Schedules hereto.

 

Section 9.06.                          Counterparts; Entire Agreement; Corporate Power.

 

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

 

(b)                                 This Agreement, the Separation and Distribution Agreement and the Ancillary Agreements and the Exhibits, Schedules and appendices hereto and thereto contain the entire agreement between the Parties with respect to the subject matter hereof, supersede all previous agreements, negotiations, discussions, writings, understandings, commitments and conversations with respect to such subject matter, and there are no agreements or understandings between the Parties other than those set forth or referred to herein or therein.

 

(c)                                  Parent represents on behalf of itself and, to the extent applicable, each of its Subsidiaries, and SpinCo represents on behalf of itself and, to the extent applicable, each of its Subsidiaries, as follows:

 

(i)                                     each such Person has the requisite corporate or other power and authority and has taken all corporate or other action necessary in order to execute, deliver and perform this Agreement and to consummate the transactions contemplated hereby; and

 

(ii)                                  this Agreement has been duly executed and delivered by it and constitutes a valid and binding agreement of it and is enforceable in accordance with the terms hereof.

 

(d)                                 Each Party acknowledges and agrees that delivery of an executed counterpart of a signature page to this Agreement (whether executed by manual, stamp or 

 

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mechanical signature) by facsimile or by email in portable document format (PDF) shall be effective as delivery of such executed counterpart of this Agreement.  Each Party expressly adopts and confirms each such facsimile, stamp or mechanical signature (regardless of whether delivered in person, by mail, by courier, by facsimile or by email in portable document format (PDF)) made in its respective name as if it were a manual signature delivered in person, agrees that it will not assert that any such signature or delivery is not adequate to bind such Party to the same extent as if it were signed manually and delivered in person and agrees that, at the reasonable request of the other Party at any time, it will as promptly as reasonably practicable cause this Agreement to be manually executed (any such execution to be as of the date of the initial date thereof) and delivered in person, by mail or by courier.

 

Section 9.07.                          Governing Law.  This Agreement (and any claims or disputes arising out of or related hereto or to the transactions contemplated hereby or to the inducement of any Party to enter herein, whether for breach of contract, tortious conduct or otherwise and whether predicated on common law, statute or otherwise) shall be governed by and construed and interpreted in accordance with the Laws of the State of Delaware, irrespective of the choice of Laws principles of the State of Delaware, including all matters of validity, construction, effect, enforceability, performance and remedies.

 

Section 9.08.                          Assignability.  This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns; provided, however, that neither Party may assign its rights or delegate its obligations under this Agreement without the express prior written consent of the other Party (such consent not to be unreasonably withheld in connection with the divestiture of any Subsidiary or business of such Party that is a Recipient).  Notwithstanding the foregoing, no such consent shall be required for the assignment of a Party’s rights and obligations under the Separation and Distribution Agreement, this Agreement and the other Ancillary Agreements in whole (i.e., the assignment of a Party’s rights and obligations under the Separation and Distribution Agreement, this Agreement and all the other Ancillary Agreements all at the same time) in connection with a merger, consolidation or other business combination of a Party with or into any other Person or a sale of all or substantially all of the assets of a Party to another Person, in each case so long as the resulting, surviving or acquiring Person assumes all the obligations of the relevant Party by operation of Law or pursuant to an agreement in form and substance reasonably satisfactory to the other Party.

 

Section 9.09.                          Third-Party Beneficiaries.  Except as provided in Article VII with respect to the Provider Indemnitees and the Recipient Indemnitees in their respective capacities as such, (a) the provisions of this Agreement are solely for the benefit of the Parties and are not intended to confer upon any other Person except the Parties any rights or remedies hereunder; and (b) there are no other third-party beneficiaries of this Agreement and this Agreement shall not provide any other Third Party with any remedy, claim, Liability, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement.

 

Section 9.10.                          Notices.  All notices, requests, claims, demands or 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) by delivery in person, by overnight courier service, 

 

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to the respective Parties 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 9.10):

 

If to Parent, to:

 

TEGNA Inc.
 7950 Jones Branch Drive
 McLean, Virginia 22107
 Attention:  General Counsel

 

If to SpinCo, to:

 

Gannett Co, Inc.
 7950 Jones Branch Drive
 McLean, Virginia 22107
 Attention:  General Counsel

 

Any Party may, by notice to the other Party, change the address to which such notices are to be given.

 

Section 9.11.                          Severability.  If any provision of this Agreement or the application thereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof, or the application of such provision to Persons or circumstances or in jurisdictions other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby.  Upon such determination, the Parties shall negotiate in good faith in an effort to agree upon such a suitable and equitable provision to effect the original intent of the Parties.

 

Section 9.12.                          Force Majeure.  No Party shall be deemed in default of this Agreement for any delay or failure to fulfill any obligation hereunder so long as and to the extent to which any delay or failure in the fulfillment of such obligations is prevented, frustrated, hindered or delayed as a consequence of circumstances of Force Majeure.  Without limiting the termination rights contained in this Agreement, in the event of any such excused delay, the time for performance shall be extended for a period equal to the time lost by reason of the delay.  A Party claiming the benefit of this provision shall, as soon as reasonably practicable after the occurrence of any such Force Majeure, (a) provide written notice to the other Party of the nature and extent of such Force Majeure; and (b) use commercially reasonable efforts to remove any such causes and resume performance under this Agreement as soon as reasonably practicable (and in no event later than the date that the affected Party resumes providing analogous services to, or otherwise resumes analogous performance under any other agreement for, itself, its Affiliates or any Third Party) unless this Agreement has previously been terminated under Article V or this Section 9.12.  The Recipient shall be (i) relieved of the obligation to pay Charges for the affected Service(s) throughout the duration of such Force Majeure and (ii) entitled to permanently terminate such Service(s) if the delay or failure in providing such Services because of a Force Majeure shall continue to exist for more than thirty (30) consecutive days (it being understood 

 

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that the Recipient shall not be required to provide any advance notice of such termination to the Provider).

 

Section 9.13.                          Headings.  The Article, Section and Paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

 

Section 9.14.                          Survival of Covenants.  Except as expressly set forth in this Agreement, the covenants, representations and warranties and other agreements contained in this Agreement, and Liability for the breach of any obligations contained herein, shall survive the Effective Time and shall remain in full force and effect thereafter.

 

Section 9.15.                          Waivers of Default.  Waiver by any Party of any default by the other Party of any provision of this Agreement shall not be deemed a waiver by the waiving Party of any subsequent or other default, nor shall it prejudice the rights of the waiving Party.  No failure or delay by any Party in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof, nor shall a single or partial exercise thereof prejudice any other or further exercise thereof or the exercise of any other right, power or privilege.

 

Section 9.16.                          Dispute Resolution.

 

(a)                                 In the event of any controversy, dispute or claim (a “Dispute”) (i) arising out of or relating to any Party’s rights or obligations under this Agreement (whether arising in contract, tort or otherwise), calculation or allocation of the costs of any Service or otherwise arising out of or relating in any way to this Agreement (including the interpretation or validity of this Agreement) and (ii) that is not resolved by the Transition Committee after a reasonable period of time, such Dispute shall be resolved in accordance with the dispute resolution process referred to in Article VII of the Separation and Distribution Agreement.

 

(b)                                 In any Dispute regarding the amount of a Charge or a Termination Charge, if such Dispute is finally resolved by the Transition Committee or pursuant to the dispute resolution process set forth or referred to in Section 9.16(a) and it is determined that the Charge or the Termination Charge, as applicable, that the Provider has invoiced the Recipient, and that the Recipient has paid to the Provider, is greater or less than the amount that the Charge or the Termination Charge, as applicable, should have been, then (i) if it is determined that the Recipient has overpaid the Charge or the Termination Charge, as applicable, the Provider shall within ten (10) calendar days after such determination reimburse the Recipient an amount of cash equal to such overpayment, plus the Interest Payment, accruing from the date of payment by the Recipient to the time of reimbursement by the Provider; and (ii) if it is determined that the Recipient has underpaid the Charge or the Termination Charge, as applicable, the Recipient shall within ten (10) calendar days after such determination reimburse the Provider an amount of cash equal to such underpayment, plus the Interest Payment, accruing from the date such payment originally should have been made by the Recipient to the time of payment by the Recipient.

 

Section 9.17.                          Specific Performance.  Subject to Section 9.16, in the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement, the Party or Parties who are, or are to be, thereby aggrieved shall have the right to 

 

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specific performance and injunctive or other equitable relief (on an interim or permanent basis) in respect of its rights or their rights under this Agreement, in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative.  The Parties agree that the remedies at law for any breach or threatened breach are inadequate compensation for any loss and that any defense in any Action for specific performance that a remedy at law would be adequate is waived.  Any requirements for the securing or posting of any bond with such remedy are hereby waived by each of the Parties.  Unless otherwise agreed in writing, the Parties shall continue to provide Services and honor all other commitments under this Agreement during the course of dispute resolution pursuant to the provisions of Section 9.16 and this Section 9.17 with respect to all matters not subject to such Dispute; provided, however, that this obligation shall only exist during the term of this Agreement.

 

Section 9.18.                          Amendments.  No provisions of this Agreement or any Ancillary Agreement shall be deemed waived, amended, supplemented or modified by a Party, unless such waiver, amendment, supplement or modification is in writing and signed by the authorized representative of the Party against whom it is sought to enforce such waiver, amendment, supplement or modification.

 

Section 9.19.                          Precedence of Schedules.  Each Schedule attached to or referenced in this Agreement is hereby incorporated into and shall form a part of this Agreement; provided, however, that the terms contained in such Schedule shall only apply with respect to the Services provided under that Schedule.  In the event of a conflict between the terms contained in an individual Schedule and the terms in the body of this Agreement, the terms in the Schedule shall take precedence with respect to the Services under such Schedule only.  No terms contained in individual Schedules shall otherwise modify the terms of this Agreement.

 

Section 9.20.                          Interpretation.  In this Agreement, (a) words in the singular shall be deemed to include the plural and vice versa and words of one gender shall be deemed to include the other genders as the context requires; (b) the terms “hereof,” “herein,” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole (including all of the Schedules, Annexes and Exhibits hereto) and not to any particular provision of this Agreement; (c) Article, Section, Exhibit, Annex and Schedule references are to the Articles, Sections, Exhibits, Annexes and Schedules to this Agreement unless otherwise specified; (d) unless otherwise stated, all references to any agreement shall be deemed to include the exhibits, schedules and annexes to such agreement; (e) the word “including” and words of similar import when used in this Agreement shall mean “including, without limitation,” unless otherwise specified; (f) the word “or” shall not be exclusive; (g) unless otherwise specified in a particular case, the word “days” refers to calendar days; (h) references to “business day” shall mean any day other than a Saturday, a Sunday or a day on which banking institutions are generally authorized or required by law to close in McLean, Virginia; (i) references herein to this Agreement or any other agreement contemplated herein shall be deemed to refer to this Agreement or such other agreement as of the date on which it is executed and as it may be amended, modified or supplemented thereafter, unless otherwise specified; and (j) unless expressly stated to the contrary in this Agreement, all references to “the date hereof,” “the date of this Agreement,” “hereby” and “hereupon” and words of similar import shall all be references to [·], 2015.

 

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Section 9.21.                          Mutual Drafting(a).  This Agreement shall be deemed to be the joint work product of the Parties and any rule of construction that a document shall be interpreted or construed against a drafter of such document shall not be applicable to this Agreement.

 

[Remainder of page intentionally left blank]

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their duly authorized representatives as of the date first written above.

 

 

	
 
    	
GANNETT   CO., INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
GANNETT SPINCO, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

[Signature Page to Transition Services Agreement]Exhibit 10.2

 

TAX MATTERS AGREEMENT

 

This Tax Matters Agreement (the “Agreement”), dated as of [·], is by and among Gannett Co., Inc., a Delaware corporation (“Parent”), and Gannett SpinCo, Inc., a Delaware corporation (“SpinCo”), and all of its direct and indirect Subsidiaries (SpinCo and its present and future Subsidiaries shall be collectively referred to herein as the “SpinCo Entities”).

 

WHEREAS, one or more of the SpinCo Entities is a member of the affiliated group of corporations of which Parent is the common parent corporation and which files a consolidated federal income tax return and combined and consolidated state tax returns;

 

WHEREAS, following the Distribution Date (as such term is defined in the Separation and Distribution Agreement between Parent and SpinCo, dated as of [·] (the “Separation Agreement”)), such SpinCo Entities will no longer be included in the affiliated group of corporations (within the meaning of Section 1504 of the Code) of which Parent is the common parent; and

 

WHEREAS, Parent and the SpinCo Entities desire to set forth their agreement regarding the allocation of taxes, the filing of tax returns, the administration of tax contests and other related tax matters.

 

NOW, THEREFORE, in consideration of the mutual obligations and undertakings contained herein, the parties agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and the plural forms of the terms defined) and capitalized terms used by not defined herein shall have the meaning ascribed to them in the Separation Agreement:

 

“Active Trade or Business” means the active conduct (as defined in Section 355(b)(2) of the Code and the regulations thereunder) by SpinCo and its “separate affiliated group” (as defined in Section 355(b)(3)(B) of the Code) of the SpinCo Business as conducted immediately prior to the Distribution.

 

“Affiliate” means, with respect to any specified person, a person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, the specified person.

 

“Board Certificate” has the meaning set forth in Section 8.02(d) of this Agreement.

 

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

 

 

“Consolidated Group” means the affiliated group of corporations (within the meaning of Section 1504 of the Code) of which Parent is the common parent for any Pre-Closing Tax Period (and any successor group).

 

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

 

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

 

“Distribution Date” means the date of the Distribution.

 

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

 

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

 

“Filing Date” has the meaning set forth in Section 8.05(d) of this Agreement

 

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

 

“Foreign Taxes” means any Taxes imposed by any foreign country or any possession of the United States, or by any political subdivision of any foreign country or United States possession that are imposed on, allocated or attributable to or incurred or payable by the SpinCo Business or the SpinCo Entities and any interest, penalties, additions to tax, or additional amounts in respect of the foregoing.

 

“Member” has the meaning ascribed to such term in Treasury Regulation Section l.1502-1(b).

 

“Notified Action” has the meaning set forth in Section 8.03(a) of this Agreement.

 

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

 

“Parent Entity” means Parent and its Affiliates, as determined immediately after the Separation.

 

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“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-Closing Tax Period” means any taxable period beginning after the Distribution Date and, with respect to a taxable period that begins on or before such date and ends thereafter, the portion of such taxable period beginning after the Distribution Date.

 

“Pre-Closing Tax Period” means any taxable period ending on or before the Distribution Date and, with respect to a taxable period that begins on or before such date and ends thereafter, the portion of such taxable period ending on the Distribution Date.

 

“Pre-Closing Taxes” means any Taxes that are imposed, allocated or attributable to or incurred or payable by any SpinCo Entity for any Pre-Closing Tax Period, provided that in the case of Sales and Use Taxes, Pre-Closing Taxes shall not include any Sales and Use Taxes reported on a Tax Return required to be filed after the Distribution Date.  For purposes of calculating “Pre-Closing Taxes”, any liability for Taxes attributable to a Tax period that begins before and ends after the Closing Date shall be apportioned between the portion of such period ending on such date and the portion of such period beginning after such date (a) in the case of any Property Taxes, by apportioning such Taxes on a per diem basis, (b) in the case of Sales and Use Taxes, to the portion of the period during which the Tax Return on which such Taxes are reflected is required to be filed, and (c) in the case of all other Taxes, on the basis of a closing of the books, provided, that exemptions, allowances or deductions that are calculated on an annual basis shall be apportioned on a per diem basis.

 

“Prime Rate” means the rate that Bloomberg displays as “Prime Rate by Country United States” at www.bloomberg.com/markets/rates-bonds/key-rates/ or on a Bloomberg terminal at PRIMBB Index.

 

“Property Taxes” means mean any real, personal, and intangible ad valorem property Taxes that are imposed on, allocated or attributable to or incurred or payable by the SpinCo Business or the SpinCo Entities, together with any interest, additions or penalties with respect thereto and any interest in respect of such additions or penalties.

 

“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 related 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 (A) the value of all outstanding shares of stock of SpinCo as of the date of such transaction, or in the case of a series of transactions, the date of the last transaction of such series, or (B) the total combined voting power of all outstanding shares of voting stock of SpinCo as of the date of such

 

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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 (A) the adoption by SpinCo of a Shareholder Rights Plan or (B) 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.

 

“Protective Section 336(e) Election” has the meaning set forth in Section 8.06.

 

“Representation Letters” means the representation letters and any other materials delivered or deliverable by Parent and others in connection with the rendering by Tax Advisor of the Tax Opinion.

 

“Reverse Timing Difference” means an adjustment to a Tax Return that results in (a) an increase in income, gain or recapture, or a decrease in deduction, loss or credit, of any member of the SpinCo Group for a Post-Closing Tax Period and (b) an increase in deduction, loss or credit, or a decrease in income, gain or recapture, of any Parent Entity for any Pre-Closing Tax Period.

 

“Sales and Use Taxes” mean any sales, use, value added or similar Taxes and fees that are imposed on, allocated or attributable to or incurred or payable by the SpinCo Business or the SpinCo Entities, together with any interest, additions or penalties with respect thereto and any interest in respect of such additions or penalties.

 

“Section 8.02(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) in the case of any Tax Return of any Parent Entity (including any consolidated, combined or unitary return), any such Tax Return that does not include any SpinCo Entity and (b) in the case of any Tax Return of any SpinCo Entity (including any consolidated, combined or unitary return), any such Tax Return that does not include any Parent Entity.

 

“SpinCo Separate Return Taxes” means any Taxes required to be reflected on a SpinCo Separate Return, including (i) any Foreign Taxes and (ii) any South Carolina or Virginia State Income Taxes reflected on a post-apportionment nexus combined Tax Return.

 

“SpinCo Business” means the business and assets contributed to, or owned by, SpinCo pursuant to the Separation Agreement.

 

“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

 

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stock and (iii) all instruments properly treated as stock in SpinCo for U.S. federal income tax purposes.

 

“SpinCo Federal Consolidated Income Tax Return” means any United States federal income Tax Return for the affiliated group of corporations (within the meaning of Section 1504 of the Code) of which SpinCo is the common parent (and any successor group).

 

“SpinCo Group” means SpinCo and its Affiliates, excluding any entity that is a Parent Entity.

 

“SpinCo Separate Return” means any Separate Return of SpinCo or any member of the SpinCo Group.

 

“Shareholder Rights Plan” means any plan or arrangement of the sort commonly referred to as a “rights plan” or “stockholder rights plan” or “shareholder rights plan” or “poison pill” that is designed to increase the cost to a potential acquirer of exceeding the applicable ownership thresholds through the issuance of new rights, common stock or preferred shares (or any other security or device that may be issued to stockholders of SpinCo other than ratably to all stockholders of SpinCo) that carry severe redemption provisions, favorable purchase provisions or otherwise, and any related rights agreement that effectuates the Shareholder Rights Plan.

 

“State Affiliated Companies” means all entities that Parent determines are included in a State Combined or Consolidated Return or that any jurisdiction determines under applicable law are included in a State Combined or Consolidated Return.

 

“State Combined or Consolidated Return” means a single state or local Tax Return filed for (i) one or more of Parent and its Subsidiaries (other than any SpinCo Entity) and (ii) one or more SpinCo Entities.

 

“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 and local franchise or similar Taxes measured by net income, and any interest, penalties, additions to tax, or additional amounts in respect of the foregoing.

 

“State Group” means any group of corporations filing a State Combined or Consolidated Return.

 

“Subsidiary” means a corporation, limited liability company, partnership or other entity, whether or not such entity is treated as such for tax purposes.

 

“Tax” or “Taxes” means any and all forms of taxation, whenever created or imposed by a Taxing Authority, and, without limiting the generality of the foregoing, shall include net income, alternative or add-on minimum, estimated, gross income, sales, use, ad valorem, gross receipts, value added, franchise, profits, license, escheat, transfer, recording, withholding, payroll, employment, excise, severance, stamp, occupation, premium, property, windfall profit, custom duty or other tax, governmental fee or other like assessment or charge of any kind whatsoever, together with any related interest, penalties or other additions to tax, or additional amounts imposed by any such Taxing Authority.

 

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

 

“Tax Attribute” means a net operating loss, net capital loss, unused investment credit, unused foreign tax credit, excess charitable contribution, general business credit or any other Tax item that could reduce a Tax.

 

“Taxing Authority” means a national, foreign, municipal, state, federal or other governmental authority responsible for the administration of any Tax.

 

“Tax Benefit Item” means any net operating loss, unused foreign Tax credit, unused charitable deduction, unused capital loss, or similar unused Tax benefit item arising with respect to the SpinCo Entities in a given taxable period, computed as though the SpinCo Entities had independently filed a federal, state or local Tax Return for such taxable period including all of the SpinCo Entities.

 

“Tax Controversy” means any pending or threatened audit, dispute, suit, action, proposed assessment or other proceeding relating to Taxes.

 

“Tax-Free Status” means the qualification of the Contribution and Distribution, taken together, (a) as a reorganization described in Sections 355(a) and 368(a)(1)(D) of the Code, (b) 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 and (c) 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, 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.

 

“Tax Opinion” means the opinion of Tax Advisor deliverable to Parent in connection with the Contribution and the Distribution.

 

“Tax-Related Losses” means (i) all federal, state and local Taxes (including interest and penalties thereon and without giving effect to any Tax Benefit Items of Parent or its Affiliates) 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; 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 Taxing Authority, in each case, resulting from the failure of the Contribution and the Distribution to qualify for the Tax-Free Status.

 

“Tax Return” means any return, filing, questionnaire or other document, including requests for extensions of time, filings made with estimated Tax payments, claims for refund and amended returns, that may be filed for any taxable period with any Taxing Authority in connection with any Tax (whether or not a payment is required to be made with respect to such filing) or any information reporting requirement.

 

“Timing Difference” means an adjustment to a Tax Return that results in (a) an increase in income, gain or recapture, or a decrease in deduction, loss or credit, of any Parent Entity for any

 

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Pre-Closing Tax Period and (b) an increase in deduction, loss or credit, or a decrease in income, gain or recapture, of any member of the SpinCo Group for a Post-Closing Tax Period.

 

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

 

ARTICLE II

 

PREPARATION AND FILING OF TAX RETURNS

 

Section 2.01.                          Parent Consolidated Group Tax Returns.

 

(a)                                 Parent shall timely prepare and file (or cause to be timely prepared and filed) all federal income Tax Returns for the Consolidated Group. The SpinCo Entities shall timely provide to Parent all financial data and any other information and documentation reasonably requested by Parent in connection with the filing of any such federal income Tax Returns.

 

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

 

Section 2.02.                          State Combined or Consolidated Returns.

 

(a)                                 Parent or one or more of its Subsidiaries shall prepare all State Combined or Consolidated Returns.  To the extent permitted by law, Parent (or one of its Subsidiaries) shall timely file each such State Combined or Consolidated Return.  If Parent (or one of its Subsidiaries) is not permitted to file any such State Combined or Consolidated Return, a SpinCo Entity shall file such State Combined or Consolidated Return.  The SpinCo Entities shall timely provide to Parent all financial data and any other information and documentation reasonably requested by Parent in connection with the preparation of any such State Combined or Consolidated Return.

 

(b)                                 To the extent reasonably requested by the SpinCo Entities and if the SpinCo Entities are responsible for any portion of the Taxes reported thereon, Parent shall (i) consult with the SpinCo Entities regarding the preparation of a State Combined or Consolidated Return and (ii) deliver any such State Combined or Consolidated Return to the SpinCo Entities for review and comment no later than five days prior to the date on which such State Combined or Consolidated Return is due.  Parent shall consider in good faith any changes to such State Combined or Consolidated Tax Return reasonably requested by the SpinCo Entities, to the extent that such changes relate to items for which the SpinCo Entities have responsibility hereunder.

 

Section 2.03.                          Other Tax Returns of the SpinCo Entities.

 

(a)                                 Except as provided in Section 2.03(b), the SpinCo Entities shall timely prepare and file, or cause to be timely prepared and filed, all Tax Returns required to be filed by or

 

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with respect to the SpinCo Entities other than those described in sections 2.01 and 2.02 herein. The Tax Returns required to be prepared and filed by SpinCo under this Section 2.03(a) shall include (a) any SpinCo Federal Consolidated Income Tax Return for periods ending after the Distribution Date and (b) SpinCo Separate Returns required to be filed for Tax periods ending after the Distribution Date.

 

(b)                                 To the extent any Tax Return described in Section 2.03(a) involves Pre-Closing Taxes (including any SpinCo Separate Return for periods ending on or prior to the Distribution Date), SpinCo shall (i) consult with Parent regarding the preparation of such Tax Return, (ii) deliver such Tax Return to Parent for review and comment no later than five days prior to the date on which such Tax Return is due and (iii) not file such return without Parent’s prior written consent.  A SpinCo Entity shall timely file such Tax Return and shall timely pay (or cause to be timely paid) any Tax that is due in connection with any such Tax Return.  Within 10 days of filing any such Tax Return, Parent shall pay SpinCo the amount of Pre-Closing Taxes shown on such Tax Return for which Parent is responsible pursuant to Article VI.

 

Section 2.04.                          Notwithstanding anything herein to the contrary, SpinCo shall not on any Tax Return (i) claim any Tax deduction or Tax Benefit Item that has been or will be claimed by Parent on any Parent Tax Return, (ii) take any position in respect of a prior transaction that is inconsistent with the position taken by Parent on any Tax Return prepared by Parent in which any SpinCo Entity is included or (iii) take any position in respect of the transactions contemplated by the Separation Agreement inconsistent with the Tax-Free Status or the position taken by Parent on any Tax Return.

 

ARTICLE III

 

ALLOCATION AND PAYMENT OF CONSOLIDATED FEDERAL TAXES

 

Section 3.01.                          Payment of Consolidated Federal Income Tax.  Parent shall be responsible for all payments of federal income Tax due with respect to the Consolidated Group.

 

Section 3.02.                          Carrybacks.  In the event any federal Tax Benefit Item of the SpinCo Entities for any taxable period after they cease being Members of the Consolidated Group is eligible to be carried back to a taxable period while the SpinCo Entities were Members of the Consolidated Group, the SpinCo Entities shall, where possible, elect to carry such amounts forward to subsequent taxable periods.  If the SpinCo Entities are required by law to carry back any such federal Tax Benefit Item, the SpinCo Entities shall be entitled to a payment at the time and to the extent that such Tax Benefit Item reduces the federal income Tax liability of the Consolidated Group.  For purposes of computing the amount of the payment described in this section 3.02, one or more federal Tax Benefit Items shall be considered to have reduced the Consolidated Group’s federal income Tax liability in a given taxable period by an amount equal to the difference, if any, between (i) the amount of the Consolidated Group’s federal income Tax liability for the taxable period computed without regard to such federal Tax Benefit Item or Items and (ii) the amount of the Consolidated Group’s federal income Tax liability for the taxable period computed with regard to such federal Tax Benefit Item or Items.  For the avoidance of doubt, if the SpinCo Entities are required to carry back a federal Tax Benefit Item, such federal Tax Benefit Item shall reduce the Consolidated Group’s federal income Tax liability only after all federal Tax Benefit Items of Parent have been applied to reduce the Consolidated Group’s federal income Tax liability in such taxable period.  Appropriate reconciliation payments shall be made in the event that it is subsequently determined that a Tax Benefit Item did not reduce the Consolidated Group’s federal income Tax liabilities, including by reason of any such Tax Benefit Item being subsequently disallowed in whole or in part or by reason of other Tax benefits becoming available.

 

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ARTICLE IV

 

ALLOCATION AND PAYMENT OF

 

COMBINED/CONSOLIDATED STATE AND LOCAL TAXES

 

Section 4.01.                          Allocation of Combined/Consolidated State and Local Tax.  Except as provided in Section 4.01(a) below, Parent shall be responsible for any and all State Income Taxes due with respect to or required to be reported on any State Combined or Consolidated Return.

 

(a)                                 With respect to any State Combined or Consolidated Return relating to any Post-Closing Tax Period, SpinCo shall be liable to Parent for any State Income Taxes attributable to such Post-Closing Tax Period.

 

(b)                                 If, with respect to any State Combined or Consolidated Return relating to any Post-Closing Tax Period, a Tax Attribute of any of the SpinCo Entities arising in such Post-Closing Tax Period actually reduces the combined Tax liability on the State Combined or Consolidated Return below the amount that would have been payable by Parent if the SpinCo Entities had not been included in such Tax return (the “Parent Reduction”), then Parent shall be liable to SpinCo in an amount equal to the Parent Reduction.

 

(c)                                  With respect to any State Combined or Consolidated Return that is not an income Tax Return, the applicable state or local Tax liability shall be allocated among the SpinCo Entities and all the other State Affiliated Companies pro rata based on the Tax that would have been paid by the SpinCo Entities as one group, on the one hand, and all other State Affiliated Companies as a separate group, on the other hand.

 

Section 4.02.                          Payment.

 

(a)                                 The computation of the state or local Tax allocations, as well as any required payment to and from Parent, shall be made within 10 days after Parent or any of its Affiliates (other than the SpinCo Entities), makes a payment to, or receives a payment credit or offset from, any Taxing Authority pursuant to this Article IV.  All decisions relating to the allocation and payment of Taxes under this Article IV shall be made at the reasonable discretion of Parent.

 

(b)                                 The same method used for the calculation of estimated Tax for any State Combined or Consolidated Return shall be used to determine the amount of estimated Tax allocated to the SpinCo Entities.  With regard to any estimated Tax that is calculated based upon income of a prior taxable period, the payments under this Agreement shall also be calculated based upon such income and appropriate adjustments made when the final Tax Return is filed with respect to such estimated Tax.  For estimated Tax calculated in any other manner, the payments under this Agreement shall be determined based upon the principles of section 4.01.

 

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ARTICLE V

 

ALLOCATION AND PAYMENT OF OTHER TAXES

 

Section 5.01                             Other Taxes.  Except as set forth in Sections 5.02 and 5.03, all Taxes of (or with respect to) a SpinCo Entity or the SpinCo Business shall be paid by the SpinCo Entities, other than (i) Taxes of the Consolidated Group, (ii) Taxes reportable on a Tax Return described in Section 2.02(a) (other than such Taxes for which the SpinCo Entities are responsible pursuant to Article IV), and (iii) any Pre-Closing Taxes.

 

Section 5.02                             Non-Income Taxes.  Notwithstanding any other provision of this Agreement, SpinCo shall be responsible for and pay all (i) Property Taxes and (ii) any Sales and Use Taxes reflected on a Tax Return required to be filed after the Distribution Date, in each case other than such Taxes that are Pre-Closing Taxes.

 

Section 5.03                             Escheat Taxes.

 

(a)                                 Parent shall be responsible for (and shall indemnify the SpinCo Entities from and against) any escheat or unclaimed property Taxes with respect to Tax Returns filed or required to be filed prior to the Distribution Date.

 

(b)                                 Any refund of any escheat or unclaimed property Taxes attributable to any Pre-Closing Tax Period (including, for the avoidance of doubt, capital recovery items originating in any Pre-Closing Tax Period) shall be for the benefit of Parent and any such refund received by any member of the SpinCo Group shall be paid over to Parent within 10 days of receipt by the SpinCo Group member.

 

ARTICLE VI

 

TAX DEFICIENCIES AND REFUNDS; INDEMNIFICATION

 

Section 6.01.                          Pre-Closing Taxes.  Except as set forth in Section 5.03, Parent shall be responsible for (and shall indemnify the SpinCo Entities from and against) all Pre-Closing Taxes, including any Pre-Closing Taxes resulting from any audit, amendment, other change or adjustment, Taxes of the Consolidated Group, and Taxes reportable on a Tax Return described in Section 2.02(a) (to the extent allocated to Parent under Article IV).  Any refund of Pre-Closing Taxes and such other Taxes for which Parent is responsible (whether by payment, credit, offset against other Taxes due or otherwise) shall be for the benefit of (and paid to) Parent.

 

Section 6.02.                          Timing Differences.

 

(a)                                 If any audit, amendment, other change or adjustment to any Tax Return, pursuant to a Final Determination, results in a Timing Difference, then for each Post-Closing Tax Period in which a member of the SpinCo Group actually realizes a Tax benefit by reason of such Timing Difference, SpinCo shall pay to Parent an amount equal to such Tax benefit within 10 days of such benefit being realized.

 

(b)                                 If any audit, amendment, other change or adjustment to any Tax Return, pursuant to a Final Determination, results in a Reverse Timing Difference, then for each Pre-

 

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Closing Tax Period in which any Parent Entity actually realizes a Tax benefit by reason of such Reverse Timing Difference, Parent shall pay to SpinCo an amount equal to such Tax benefit within 10 days of such benefit being realized.

 

Section 6.03.                          Indemnification.

 

(a)                                 SpinCo Liability.  SpinCo shall be liable for, and shall indemnify and hold harmless Parent and any Parent Entities from and against any liability for, (i) Taxes which are allocated to SpinCo under Articles IV and V, (ii) Taxes resulting from a breach by SpinCo of any covenant in this Agreement, (iii) any Tax-Related Losses for which SpinCo is responsible pursuant to Section 8.05 of this Agreement, and (iv) any stamp, sales and use, gross receipts, value-added or other transfer Taxes imposed on any SpinCo Entity (if such entity is primarily liable for such Tax) on the transfers occurring pursuant to the transactions contemplated by the Separation Agreement.

 

(b)                                 Parent Liability.  Parent shall be liable for, and shall indemnify and hold harmless SpinCo and the SpinCo Entities from and against any liability for, (i) Taxes which are allocated to Parent under Articles III, IV and VI, (ii) Taxes resulting from a breach by Parent of any covenant in this Agreement, (iii) any Tax-Related Losses for which Parent is responsible pursuant to Section 8.05 of this Agreement, and (iv) any stamp, sales and use, gross receipts, value-added or other transfer Taxes imposed on any Parent Entity (if such entity is primarily liable for such Tax) on the transfers occurring pursuant to the transactions contemplated by the Separation Agreement.

 

Section 6.04.                          Characterization of and Adjustments to Payments.

 

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

 

(b)                                 Any indemnity payment under this Agreement shall be increased to take into account any inclusion in income of the indemnified party arising from the receipt of such indemnity payment and shall be decreased to take into account any reduction in income of the indemnified party arising from such indemnified liability. For purposes hereof, any inclusion or reduction shall be determined (i) using the highest marginal rates in effect at the time of the determination and (ii) assuming that the indemnified party will be liable for Taxes at such rate and has no Tax Attributes at the time of the determination.

 

ARTICLE VII

 

COOPERATION AND TAX CONTROVERSY

 

Section 7.01.                          Cooperation.

 

(a)                                 Parent and the SpinCo Entities shall cooperate fully at such time and to the extent reasonably requested by the other party in connection with the preparation and filing of any Tax Return or the conduct of any Tax Controversy concerning any issues or any other matter contemplated hereunder.  Such cooperation shall include, without limitation, (i) the retention and

 

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provision on demand of books, records, documentation or other information relating to any Tax Return until the later of (x) the expiration of the applicable federal or state statute of limitation (giving effect to any extension, waiver, or mitigation thereof) and (y) in the event any claim has been made under this Agreement for which such information is relevant, until a Final Determination with respect to such claim; (ii) the filing or execution of any document that may be necessary or reasonably helpful in connection with the filing of any Tax Return, or claim for a refund of Taxes previously paid, by either party, or in connection with any Tax Controversy addressed in the preceding sentence (including a requisite power of attorney); and (iii) the use of the parties’ reasonable best efforts to obtain any documentation from a governmental authority or a third party that may be necessary or helpful in connection with the foregoing.  Each party shall make its employees and facilities reasonably available on a mutually convenient basis to facilitate such cooperation.

 

(b)                                 Parent and the SpinCo Entities shall use reasonable efforts to keep each other informed as to the status of Tax Controversies involving any issue which could give rise to any liability of the other party under this Agreement.  Parent and the SpinCo Entities shall each promptly notify the other of any inquiries by any Taxing Authority or any other administrative, judicial or other governmental authority that relate to any Tax that may be imposed on the other or any Affiliate of the other that might give rise to any liability under this Agreement.  Parent shall have sole control of any Tax Controversy relating to the Consolidated Group or to any Pre-Closing Taxes.  Parent shall have sole control of any Tax Controversy relating to any State Combined and Consolidated Return, provided, that in the case of any such Tax Controversy that may affect Taxes for which the SpinCo Entities have responsibility hereunder, the SpinCo Entities may participate in such Tax Controversies at their own expense.  If the potential liability of the SpinCo Entities under this Agreement relating to any Tax Controversy exceeds $5,000,000, Parent shall not settle or concede such Tax Controversy without the prior written consent of the SpinCo Entities, not to be unreasonably withheld, conditioned or delayed.

 

Section 7.02.                          Contest Provisions.  Subject to the cooperation provisions in section 7.01, Parent shall have the right to resolve any difference or disagreement on any matter that arises out of the application and interpretation of this Agreement; provided, however, that Parent shall (i) in good faith cooperate and consult with the SpinCo Entities in an effort to resolve any differences with respect to Parent’s position with regard to such matter, (ii) in good faith consider the SpinCo Entities’ position on such matter and (iii) advise the SpinCo Entities of the reason for rejecting any such recommendation for alternative positions.

 

ARTICLE VIII

 

TAX-FREE STATUS

 

Section 8.01.                          Tax Opinions and Representation Letters.

 

(a)                                 Each of SpinCo and Parent hereby represents and agrees that (A) it has read and reviewed the Representation Letters prior to the Distribution Date and (B) subject to any qualifications therein, all information contained in such Representation Letters that concerns or relates to such company or any of its Subsidiaries are true, correct and complete.

 

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Section 8.02.                          Restrictions on SpinCo.

 

(a)                                 SpinCo agrees that it will not take or fail to take, or permit any SpinCo Entity 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 material, information, covenant or representation in any Representation Letters or Tax Opinion.  SpinCo agrees that it will not take or fail to take, or permit any SpinCo Entity to take or fail to take, any action which prevents or could reasonably be expected to prevent (A) the Tax-Free Status, or (B) any transaction contemplated by the Separation Agreement which is intended by the parties to be tax-free from so qualifying, including, in the case of SpinCo, issuing any SpinCo Capital Stock that would prevent the Distribution from qualifying as a tax-free distribution within the meaning of Section 355 of the Code.

 

(b)                                 SpinCo agrees that, from the date hereof until the first 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 and (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, in each case, taking into account Section 355(b)(3) of the Code.

 

(c)                                  SpinCo agrees that, from the date hereof until the first day after the two-year anniversary of the Distribution Date, it will not (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, (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) 30% or more of the gross assets of the Active Trade or Business or 30% 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 an SpinCo Affiliate) any SpinCo stock, or rights to acquire 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 Opinion) which in the aggregate (and taking into account any other transactions described in this subparagraph (d)) 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 stock representing a Fifty-Percent or Greater Interest in SpinCo or otherwise jeopardize the Tax-Free Status, unless prior to taking any such action set forth in the foregoing clauses (i) through (vi), (A) SpinCo shall provide Parent with an Unqualified Tax Opinion in form and substance satisfactory to Parent in its sole and absolute discretion, which discretion shall be exercised in good faith solely to preserve the Tax-Free Status (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) (B) SpinCo shall have requested Parent to obtain a supplemental ruling in accordance with Section 8.03 of this Agreement to the effect that such action  will not affect the Tax-Free Status and Parent shall have received such a supplemental ruling in form and substance reasonably satisfactory to it or (C) Parent shall have waived the requirement to obtain such Unqualified Tax Opinion or supplemental ruling.

 

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(d)                                 Certain Issuances of SpinCo Capital Stock. If SpinCo proposes to enter into any Section 8.02(d) Acquisition Transaction or, to the extent SpinCo has the right to prohibit any Section 8.02(d) Acquisition Transaction, proposes to permit any Section 8.02(d) Acquisition Transaction to occur, in each case, during the period from the date hereof until the first day after the two-year anniversary of the Distribution Date, SpinCo shall provide Parent, no later than ten days following the signing of any written agreement with respect to the Section 8.02(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 8.02(d) Acquisition Transaction is not a Proposed Acquisition Transaction or any other transaction to which the requirements of Section 8.02(c) apply (a “Board Certificate”).

 

(e)                                  Distributions by Foreign SpinCo Subsidiaries. Until December 28, 2015, SpinCo shall neither cause nor permit any foreign Subsidiary of SpinCo to enter into any transaction or take any action that would be considered under the Code to constitute the declaration or payment of a dividend (including pursuant to Section 304 of the Code) without obtaining the prior written consent of Parent (such prior written consent not to be unreasonably withheld).

 

Section 8.03.                          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 8.02(c) (a “Notified Action”), Parent and SpinCo shall reasonably cooperate to attempt to obtain the Unqualified Tax Opinion or supplemental ruling from the IRS referred to in Section 8.02(c), unless Parent shall have waived the requirement to obtain such Unqualified Tax Opinion or supplemental ruling.  If such a ruling is to be sought, Parent shall apply for such ruling and Parent and SpinCo shall jointly control the process of obtaining such ruling.  In no event shall Parent be required to file any ruling request under this Section 8.03(a) unless SpinCo represents that (i) it has read such ruling request, and (ii) all information and representations, if any, relating to any member of the SpinCo Group, contained in such ruling request documents are (subject to any qualifications therein) true, correct and complete.  Parent and SpinCo shall each bear its own costs and expenses in obtaining a supplemental ruling requested by SpinCo.

 

(b)                                 Unqualified Tax Opinion at SpinCo’s Request. Parent agrees that at the reasonable request of SpinCo, Parent shall cooperate with SpinCo’s efforts to obtain, as expeditiously as possible, an Unqualified Tax Opinion for the purpose of permitting SpinCo to take the Notified Action. Parent and SpinCo shall each bear its own costs and expenses in obtaining an Unqualified Tax Opinion requested by SpinCo.

 

(c)                                  Unqualified Tax Opinion at Parent’s Request. Parent shall have the right to obtain a supplemental ruling or an Unqualified Tax Opinion at any time in its sole and absolute discretion. If Parent determines to obtain a supplemental 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 supplemental ruling or Unqualified Tax Opinion (including, without limitation, by making any representation or covenant or providing any materials or information requested by Tax Advisor or the IRS). Parent and SpinCo shall each bear its own costs and expenses in obtaining an Unqualified Tax Opinion or supplemental ruling requested by Parent.

 

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(d)                                 Except as provided in Sections 8.03(a) and (b) neither SpinCo nor any SpinCo Affiliate shall seek any guidance from the IRS or any other Taxing Authority (whether written, verbal or otherwise) at any time concerning the Distribution (including the impact of any transaction on the Distribution).

 

Section 8.04.                          [RESERVED]

 

Section 8.05.                          Liability for Tax-Related Losses.

 

(a)                                 Notwithstanding anything in this Agreement or the Separation Agreement to the contrary, subject to Section 8.05(c), SpinCo shall be responsible for, and shall indemnify and hold harmless Parent and its Affiliates and each of their respective officers, directors and employees 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 Contribution or the Distribution) of all or a portion of SpinCo’s 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 stock of SpinCo 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 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 8.02 (regardless whether such act or failure to act is covered by a supplemental ruling, Unqualified Tax Opinion or waiver described in clause (A), (B) or (C) of Section 8.02(c), a Board Certificate described in Section 8.02(d) or a consent described in Section 8.02(e) ) or (E) any breach by SpinCo of its agreement and representation set forth in Section 8.01(a).

 

(b)                                 Notwithstanding anything in this Agreement or the Separation Agreement to the contrary, subject to Section 8.05(c), Parent shall be responsible for, and shall indemnify and hold harmless SpinCo and its Affiliates and each of their respective officers, directors and employees 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 Contribution 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, or (C) any breach by Parent of its agreement and representation set forth in Section 8.01(a).

 

(c)                                  To the extent that any Tax-Related Loss is subject to indemnity under both Sections 8.05(a) and (b), responsibility for such Tax-Related Loss shall be shared by Parent and SpinCo according to relative fault.

 

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(d)                                 SpinCo shall pay Parent the amount of any Tax-Related Losses for which SpinCo is responsible under this Section 8.05: (A) in the case of Tax-Related Losses described in clause (i) of the definition of Tax-Related Losses no later than five days prior to the date Parent files, or causes to be filed, the applicable Tax Return for the year of the Contribution or Distribution, as applicable (the “Filing Date”) (provided that if such Tax-Related Losses arise pursuant to a Final Determination described in clause (i), (ii) or (iii) of the definition of “Final Determination”, then SpinCo shall pay Parent no later than five days after the date of such Final Determination with interest calculated at a rate per annum equal to the Prime Rate plus two percent, from the date that is five days prior to the Filing Date through the date of such Final Determination) 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 five days after the date Parent pays such Tax-Related Losses. Parent shall pay SpinCo the amount of any Tax-Related Losses (described in clause (ii) or (iii) of the definition of Tax-Related Loss) for which Parent is responsible under this Section 8.05 no later than five days after the date SpinCo pays such Tax-Related Losses.

 

Section 8.06.                          336(e) Election.  The Parties agree that (i) Parent and SpinCo shall enter into a written, binding agreement and (ii) Parent shall timely make a protective election under Section 336(e) of the Code (and any similar provision of any U.S. state or local jurisdiction) and Treasury Regulation Section 1.336-2(j) (a “Protective Section 336(e) Election”) with respect to the Distribution, in each case, in accordance with Treasury Regulation Section 1.336-2(h).  Parent shall timely file such forms as may be contemplated by applicable Tax law or administrative practice to effect such Protective Section 336(e) Election.  To the extent, pursuant to a Final Determination, the Distribution constitutes a “qualified stock disposition,” as defined in Treasury Regulation Section 1.336-1(b)(6), the Parties shall not and shall not permit any of their respective Subsidiaries to, take any position for Tax purposes inconsistent with the relevant Protective Section 336(e) Election, except as may be required pursuant to a Final Determination.  For the avoidance of doubt, in the event that (x) Section 336(e) applies to the Distribution and (y) neither Section 355(c) nor Section 361(c) applies to the Internal Distribution, Parent shall be permitted to make an election under Treasury Regulation Section 1.1502-13(f)(5)(ii) in accordance with Treasury Regulation Section 1.1502-13(f)(5)(ii)(E) and specifying Treasury Regulation Section 1.1502-13(f)(5)(ii)(C) as the basis for relief.

 

Section 8.07.                          Tax Reporting.  Each of Parent and SpinCo covenants and agrees that it will not take, and will cause its respective Affiliates to refrain from taking, any position on any Tax Return that is inconsistent with the Tax-Free Status.

 

ARTICLE IX

 

MISCELLANEOUS

 

Section 9.01.                          Effective Date.  This Agreement applies to all matters related to any Tax Returns filed, Taxes paid, adjustments made in respect of any Tax, and any other matters involving Taxes on or after the Distribution Date between or among (i) Parent or any of its Subsidiaries (other than the SpinCo Entities) and (ii) the SpinCo Entities.  Notwithstanding any other provisions of this Agreement, the representations and covenants of Section 8.01 shall be effective as of the date of this Agreement.

 

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Section 9.02.  Counterparts; Entire Agreement; Corporate Power.

 

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

 

(b)                                 This Agreement, the Separation and Distribution Agreement and the Ancillary Agreements and the Exhibits, Schedules and appendices hereto and thereto contain the entire agreement between the Parties with respect to the subject matter hereof, supersede all previous agreements, negotiations, discussions, writings, understandings, commitments and conversations with respect to such subject matter, and there are no agreements or understandings between the Parties other than those set forth or referred to herein or therein.

 

(c)                                  Parent represents on behalf of itself and, to the extent applicable, each of its Subsidiaries, and SpinCo represents on behalf of itself and, to the extent applicable, each of its Subsidiaries, as follows:

 

(i)                                     each such Person has the requisite corporate or other power and authority and has taken all corporate or other action necessary in order to execute, deliver and perform this Agreement and to consummate the transactions contemplated hereby; and

 

(ii)                                  this Agreement has been duly executed and delivered by it and constitutes a valid and binding agreement of it and is enforceable in accordance with the terms hereof.

 

Each Party acknowledges and agrees that delivery of an executed counterpart of a signature page to this Agreement (whether executed by manual, stamp or mechanical signature) by facsimile or by email in portable document format (PDF) shall be effective as delivery of such executed counterpart of this Agreement.  Each Party expressly adopts and confirms each such facsimile, stamp or mechanical signature (regardless of whether delivered in person, by mail, by courier, by facsimile or by email in portable document format (PDF)) made in its respective name as if it were a manual signature delivered in person, agrees that it will not assert that any such signature or delivery is not adequate to bind such Party to the same extent as if it were signed manually and delivered in person and agrees that, at the reasonable request of the other Party at any time, it will as promptly as reasonably practicable cause this Agreement to be manually executed (any such execution to be as of the date of the initial date thereof) and delivered in person, by mail or by courier.

 

Section 9.03.                          Notices.  All notices, requests, claims, demands or 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) by delivery in person, by overnight courier service, to the respective Parties 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 9.03):

 

If to Parent, to:

 

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TEGNA Inc.
 7950 Jones Branch Drive
 McLean, Virginia 22107
 Attention:  General Counsel

 

If to SpinCo, to:

 

Gannett Co, Inc.
 7950 Jones Branch Drive
 McLean, Virginia 22107
 Attention:  General Counsel

 

                                                Any Party may, by notice to the other Party, change the address to which such notices are to be given.

 

Section 9.04.                          Governing Law.  This Agreement (and any claims or disputes arising out of or related hereto or to the transactions contemplated hereby or to the inducement of any Party to enter herein, whether for breach of contract, tortious conduct or otherwise and whether predicated on common law, statute or otherwise) shall be governed by and construed and interpreted in accordance with the Laws of the State of Delaware, irrespective of the choice of Laws principles of the State of Delaware, including all matters of validity, construction, effect, enforceability, performance and remedies.

 

Section 9.05.                          Assignability.  This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns; provided, however, that neither Party may assign its rights or delegate its obligations under this Agreement without the express prior written consent of the other Party hereto.  Notwithstanding the foregoing, no such consent shall be required for the assignment of a party’s rights and obligations under this Agreement, the Separation Agreement and all other Ancillary Agreements (except as may be otherwise provided in any such Ancillary Agreement) in whole (i.e., the assignment of a party’s rights and obligations under this Agreement and all Ancillary Agreements all at the same time) in connection with a change of control of a Party so long as the resulting, surviving or transferee Person assumes all the obligations of the relevant party thereto by operation of Law or pursuant to an agreement in form and substance reasonably satisfactory to the other Party.  Nothing herein is intended to, or shall be construed to, prohibit either Party or any member of its Group from being party to or undertaking a change of control.

 

Section 9.06.                          Dispute Resolution.  The dispute resolution procedures set forth in Article VII of the Separation Agreement shall apply to any dispute, controversy or claim arising out of or relating to this Agreement.

 

Section 9.07.                          Intended Third Party Beneficiaries.  This Agreement is solely for the benefit of the parties to this Agreement and should not be deemed to confer upon third parties any remedy, claim, liability, reimbursement, claim of action or other right in excess of those existing without this Agreement.

 

Section 9.08.                          Severability.  If any provision of this Agreement or the application thereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid,

 

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void or unenforceable, the remaining provisions hereof or thereof, or the application of such provision to Persons or circumstances or in jurisdictions other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby.  Upon such determination, the Parties shall negotiate in good faith in an effort to agree upon such a suitable and equitable provision to effect the original intent of the Parties.

 

Section 9.09.                          Expenses.  Unless otherwise expressly provided in this Agreement, each party shall bear any and all expenses that arise from its respective obligations under this Agreement.  In the event either party to this Agreement brings an action or proceeding for the breach or enforcement of this Agreement, the prevailing party in such action or proceeding, whether or not such action or proceeding proceeds to final judgment, shall be entitled to recover as an element of its costs, and not as damages, such reasonable attorneys’ fees as may be awarded in the action or proceeding in addition to whatever other relief to which the prevailing party may be entitled.

 

Section 9.10.                          Headings.  The Article, Section and Paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

 

Section 9.11.                          Survival of Covenants.  Except as expressly set forth in this Agreement, the covenants, representations and warranties and other agreements contained in this Agreement, and Liability for the breach of any obligations contained herein, shall survive the Effective Time and shall remain in full force and effect thereafter.

 

Section 9.12.                          Waivers of Default.  Waiver by any Party of any default by the other Party of any provision of this Agreement shall not be deemed a waiver by the waiving Party of any subsequent or other default, nor shall it prejudice the rights of the waiving Party.  No failure or delay by any Party in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof, nor shall a single or partial exercise thereof prejudice any other or further exercise thereof or the exercise of any other right, power or privilege.

 

Section 9.13.                          Amendments.  No provisions of this Agreement shall be deemed waived, amended, supplemented or modified by a Party, unless such waiver, amendment, supplement or modification is in writing and signed by the authorized representative of the Party against whom it is sought to enforce such waiver, amendment, supplement or modification.

 

Section 9.14.                          Mutual Drafting.  This Agreement shall be deemed to be the joint work product of the Parties and any rule of construction that a document shall be interpreted or construed against a drafter of such document shall not be applicable to this Agreement.

 

[Remainder of page intentionally left blank; signature page to follow]

 

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

 

 

	
GANNETT CO., INC.
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
Name:
    	
 
    
	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
GANNETT SPINCO, INC.
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
Name:
    	
 
    
	
Title:

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