Document:

Exhibit 10.2

 

EXECUTION VERSION

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

THIS EXECUTIVE EMPLOYMENT AGREEMENT (the “Agreement”) is entered into effective as of June 3, 2015 (the “Effective Date”), by and between Michael J. DeMarco, an individual residing at 100 Monroe Avenue, Spring Lake, New Jersey (the “Executive”), and Mack-Cali Realty Corporation, a Maryland corporation, with offices at 343 Thornall Street, Edison, NJ 08837-2206 (the “Company”).

 

RECITALS

 

WHEREAS, the Company desires to employ Executive as its President and Chief Operating Officer (“COO”) and Executive desires to be employed by the Company as its President and COO, pursuant to the terms and provisions set forth herein.

 

NOW THEREFORE, in consideration of the premises and the mutual covenants and agreements set forth herein, the parties hereby agree as follows:

 

1.                                      Employment.

 

The Company hereby agrees to employ Executive, and Executive hereby agrees to accept such employment, upon the terms and conditions set forth in this Agreement.  The employment of Executive shall commence on the Effective Date.

 

2.                                      Employment Period.

 

(a)                                 Subject to Sections 3(b) and 5 hereof, the Company agrees to employ the Executive, and the Executive agrees to be employed by the Company, in each case pursuant to this Agreement, for a period commencing on the Effective Date and ending December 31, 2018 (the “Term”).

 

(b)                                 Notwithstanding anything contained herein to the contrary: (i) Executive’s employment with the Company may be terminated by the Company or Executive during the Term, subject to the terms and conditions of this Agreement; and (ii) nothing in this Agreement shall mandate or prohibit a continuation of Executive’s employment following the expiration of the Term upon such terms and conditions as the Board of Directors of the Company (the “Board”) and Executive may mutually agree. The Executive’s period of employment pursuant to this Agreement shall hereinafter be referred to as the “Employment Period”).

 

3.                                      Duties and Responsibilities.

 

(a)                                 During the Employment Period, Executive shall be employed and serve as the President and COO of the Company reporting directly to the Board.  In his position, Executive shall perform such duties, functions and responsibilities during the Employment Period, commensurate with the Executive’s position, as reasonably and lawfully directed by the Board.

 

(b)                                 Executive shall devote substantially all of his business time, attention and efforts to the performance of his duties under this Agreement, render such services to the best of his ability, and use his reasonable best efforts to promote the interests of the Company.  Without limiting the foregoing, Executive shall not engage in any other business, occupation or related activity during 

 

 

the Employment Period that (a) conflicts with the interests of the Company or its subsidiaries, (b) interferes with the proper and efficient performance of his duties for the Company, or (c) interferes with the exercise of his judgment in the Company’s best interests.  Notwithstanding the foregoing or any other provision of this Agreement, it shall not be a breach or violation of this Agreement for Executive to (i) with the advance approval of the Board or the Governance Committee of the Board (not to be unreasonably withheld), serve on corporate, civic or charitable boards or committees, (ii) deliver lectures, fulfill speaking engagements or teach at educational institutions, or (iii) manage personal investments, so long as such activities do not significantly interfere with or significantly detract from the performance of Executive’s responsibilities to the Company in accordance with this Agreement.

 

4.                                      Compensation and Benefits.

 

(a)                                 Base Salary.  During the Employment Period, the Company shall pay Executive an annual base salary in the amount of $700,000 (the “Annual Base Salary”), payable in installments consistent with the Company’s normal payroll schedule, subject to applicable withholding and other taxes.  Executive’s Annual Base Salary shall be reviewed, at least annually, for merit increases and may, by action and in the discretion of the Board or its executive compensation and option committee (the “Compensation Committee”), be increased at any time or from time to time, but may not be decreased from the then current Annual Base Salary without Executive’s prior written consent.

 

(b)                                 Incentive Compensation/Bonuses.  In addition, for each calendar year during the Employment Period, Executive shall be entitled to receive annual cash incentive compensation (an “Annual Bonus”) as follows:

 

·                                          Bonus Opportunity: Executive shall be entitled to receive an Annual Bonus equal to fifty percent (50%) of his then current Annual Base Salary if threshold performance is attained, an Annual Bonus equal to one hundred percent (100%) of his then current Annual Base Salary (the “Target Bonus”) if target performance is attained, and an Annual Bonus equal to two hundred percent (200%) of his then current Annual Base Salary if performance exceeds the maximum performance level.  For performance between threshold and maximum levels, the Annual Bonus will be determined on the basis of linear interpolation. The performance criteria for each fiscal year shall, after consultation with Executive, be determined in good faith by the Board or the Compensation Committee within the first three (3) months of each calendar year that begins during the Employment Period. For 2015, the amount of the Annual Bonus will be based on the Compensation Committee’s assessment in its sole discretion of Executive’s development of an effective strategy for the Company, and any such bonus will be pro-rated for the time worked during 2015.  In respect of the Annual Bonus for 2018, provided that Executive is employed by the Company until the expiration of the Term and that Executive’s employment was not terminated for Cause by the Company following the Term, any qualitative performance evaluation will be performed by December 16, 2018, and the achievement of quantitative performance metrics shall be determined based on actual 2018 performance and determined on or before March 31, 2019, whether or not Executive is employed during 2019.

 

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·                                          Payment of Annual Bonuses to Executive, if any, shall be made in the same manner and at the same time that other senior-level executives receive their annual bonus awards, but in any event on or before the end of the calendar year following the end of the applicable performance year.

 

·                  Annual Long-Term Incentive (“LTI”) Awards:  On or as soon as practicable after the Effective Date, but in no event earlier than the date that is two (2) days following the press release announcing the hiring of Executive, the Company shall grant to Executive the following long term incentive awards (the “2015 Grants”), which awards shall be granted pursuant to the Mack-Cali Realty Corporation 2013 Incentive Stock Plan (the “Plan”), and shall be subject to all terms and conditions set forth herein or in the award agreements attached hereto as Exhibits A (the “RSU Agreement”), B (the “PSU Agreement”), C (the “Time-Vesting Option Agreement”) and D (the “Price-Vesting Option Agreement”):

 

·                  Restricted Stock Units (“RSUs”).  The Company shall grant to Executive that number of restricted stock units (the “RSUs”) equal to $325,000 divided by the closing stock price of the Company’s common stock on the New York Stock Exchange (the “NYSE”) on the date that is two trading days following the date of the press release announcing the hiring of Executive, which shall vest in three (3) approximately equal annual installments on each anniversary of the date of grant, subject to such other terms and conditions set forth herein and in the RSU Agreement.

 

Dividend equivalents shall accrue on RSUs, and will be deemed reinvested in additional RSUs (at the then fair market value of the Company’s common stock), which will only be paid when the underlying RSUs are paid

 

·                  Performance Share Units (“PSUs”).  The Company shall grant to Executive that number of target performance stock units (the “PSUs”) equal to $975,000 divided by the closing stock price of the Company’s common stock on the NYSE on the date that is two days following the date of the press release announcing the hiring of Executive.  Such PSUs shall vest based on total shareholder return (“TSR”) versus the equity office REITs in the NAREIT (or comparable replacing) index over a three-year performance period commencing on the date of grant, based on the following payout schedule and shall be subject to such other terms and conditions set forth herein and in the PSU Agreement:

 

	
Performance
   Level
    	
 
    	
CLI 3-Year TSR Percentile
   Rank
    	
 
    	
Payout
    (% of target PSUs)
    	
 
    
	
< Threshold
    	
 
    	
< 40th percentile
    	
 
    	
0
    	
%
    
	
Threshold
    	
 
    	
40th percentile
    	
 
    	
50
    	
%
    
	
Target
    	
 
    	
60th percentile
    	
 
    	
100
    	
%
    
	
Maximum
    	
 
    	
>=80th percentile
    	
 
    	
150
    	
%
    

 

Payout for performance between threshold and maximum will be linearly interpolated

 

The payout of the foregoing grant will be limited to 100% of target if the Company’s absolute TSR is negative.

 

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Dividend equivalents shall accrue on PSUs, and will be deemed reinvested in additional PSUs (at the then fair market value of the Company’s common stock), which will only be paid when, and to the extent, the underlying PSUs are paid.

 

·                  Stock Options. On the date that is two (2) days following the date of the press release announcing the hiring of Executive, the Company shall grant to Executive options having a ten-year term to purchase up to 400,000 shares of the common stock of the Company at an exercise price equal to the closing stock price on the NYSE on the date of grant, as follows:

 

·                  Time-Vesting Options: The Company shall grant to Executive options to purchase all or any portion of 200,000 shares of the common stock of the Company, which shall vest in three (3) equal annual installments on each anniversary of the date of grant, subject to such other terms and conditions set forth herein and in the Time-Vesting Option Agreement.

 

·                  Price-Vesting Options:  The Company shall grant to Executive options to purchase all or any portion of 200,000 shares of the common stock of the Company, which shall vest upon the satisfaction of the Share Price Vesting Condition, subject to such other terms and conditions set forth herein and in the Price-Vesting Option Agreement.  The “Share Price Vesting Condition” means the closing share price of the shares of common stock of the Company being equal to or greater than $25 for at least thirty (30) consecutive trading days either (i) during the Employment Period, or (ii) in the event that the Employment Period has lasted for the entire Term, on or before June 30, 2019 (except if the Executive’s employment is terminated by the Company for Cause following the expiration of the Term).

 

·                  Additional LTI Awards.  For calendar year 2016, as soon as practicable within the first quarter of 2016, the Company shall grant to Executive additional equity awards with an aggregate target grant value of $1.3 million, with seventy-five percent (75%) in the form of PSUs (on substantially the same terms as the 2015 PSUs described above, with the number of target PSUs determined by dividing $975,000 by the closing stock price of the Company’s common stock on the NYSE on the date of grant), and twenty-five percent (25%) in the form of RSUs (on substantially the same terms as the 2015 RSUs described above, with the number of RSUs determined by dividing $325,000 by the closing stock price of the Company’s common stock on the NYSE on the date of grant).  In addition, during the Employment Period, Executive shall be eligible to be granted additional LTI Awards as may be determined by the Board or the Compensation Committee in its sole discretion.

 

(c)                                  Taxes and Withholding.  Anything in this Agreement to the contrary notwithstanding, all payments required to be made by the Company hereunder to Executive or his estate or beneficiaries shall be subject to the withholding of such amounts relating to taxes as the Company may reasonably determine it should withhold pursuant to any applicable law or

 

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regulation.  In lieu of withholding such amounts, in whole or in part, the Company may, in its sole discretion, accept other provisions for payment of taxes and withholding as required by law, provided it is satisfied that all requirements of law affecting its responsibilities to withhold have been satisfied.

 

(d)                                 Additional Benefits.  In addition to the compensation specified above and other benefits provided pursuant to this Section 4, Executive shall be entitled to the following benefits:

 

(i)                                     participation in the Mack-Cali Realty Corporation 401(k) Savings and Retirement Plan (subject to statutory rules and maximum contributions and non-discrimination requirements applicable to 401(k) plans) and eligibility to participate in such other benefit plans and programs, including but not limited to restricted stock, phantom stock and/or unit awards, and any other incentive compensation plans or programs (whether or not employee benefit plans or programs), as maintained by the Company from time to time and made generally available to executives of the Company with such participation to be consistent with reasonable Company guidelines and each pursuant to the terms and conditions of such benefit plan as they may exist from time to time;

 

(ii)                                  participation in any health insurance, disability insurance, paid vacation, group life insurance or other welfare benefit program made generally available to executives of the Company, subject to the general eligibility and participation provisions set forth in such plans;

 

(iii)                               participation in all deferred compensation, retirement or other benefit plans or perquisities as may be provided to any other executive of the Company on terms and conditions at least as favorable to the Executive as the terms and conditions applicable to any other executive of the Company;

 

(iv)                              upon the submission of proper substantiation by Executive, and subject to such rules and guidelines as the Company may from time to time adopt with respect to the reimbursement of expenses of executive personnel, reimbursement for all reasonable expenses actually paid or incurred by Executive during the Employment Period in the course of and pursuant to the business of the Company; and

 

(v)                                 The Company shall reimburse Executive for reasonable and documented legal fees incurred by the Executive in connection with the negotiation and review of this Agreement and related documentation.

 

5.                                      Termination of Employment; Severance Agreement.

 

(a)                                 Termination. The Employment Period, and Executive’s employment with the Company, shall terminate upon the earliest to occur of (i) Executive’s death, (ii) a termination by the Company by reason of Executive’s Disability, (iii) a termination by the Company with or without Cause, or (iv) a termination by Executive with or without Good Reason.  Upon any termination of Executive’s employment for any reason, except as may otherwise be requested by the Company in writing and agreed upon in writing by Executive, Executive shall resign from any and all directorships, committee memberships or any other positions Executive holds with the Company or any of its subsidiaries.  For the avoidance of doubt, the expiration of the Term in

 

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accordance with Section 2(a) shall not be considered a termination of Executive’s employment by the Company with or without Cause or the resignation of Executive for Good Reason or otherwise, and Executive’s employment shall not be considered to have been constructively terminated for any reason unless he resigns for Good Reason in accordance with this Agreement.

 

(b)                                 Notice of Termination.  Any termination of Executive’s employment by the Company or any such termination by Executive (other than on account of death) shall be communicated by written Notice of Termination to the other party hereto.  For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated.  In the event of the termination of Executive’s employment on account of death, written Notice of Termination shall be deemed to have been provided on the date of death.

 

(c)                                  Definitions.  The following definitions shall apply for all purposes under this Agreement:

 

(i)                                     “Cause” shall mean the commission by Executive of any of the following acts or omissions:

 

(1)                                 willful and continued failure to use best efforts to substantially perform his duties to the Company (other than any such failure resulting from Executive’s incapacity due to physical or mental illness) for a period of thirty (30) days after written demand for substantial performance is delivered by the Company specifically identifying the manner in which the Company believes Executive has not substantially performed his duties;

 

(2)                                 material and continued failure to comply with Executive’s obligations under any written policy of the Company applicable to senior executives as approved by the Board from time to time for a period of thirty (30) days after written demand for substantial compliance is delivered by the Company specifically identifying the manner in which the Company believes Executive has not substantially complied;

 

(3)                                 any act of fraud, embezzlement, misappropriation, or misuse for personal benefit of the assets or property of the Company; or

 

(4)                                 A conviction of or plea of “guilty” or “no contest” to a felony under the laws of the United States or any state thereof;

 

For purposes of this Section 5(c)(i), no act, or failure to act, on Executive’s part shall be considered “willful” unless done, or omitted to be done, by him not in good faith and without reasonable belief that his action or omission was in furtherance of, or not opposed to, the interests of the Company. Any determination of Cause by the Company will be made by the Board at a duly held meeting of the Board (held after reasonable notice to Executive and reasonable opportunity for him, together with his counsel, to be heard before the Board at the meeting) and pursuant to resolutions duly adopted by the affirmative vote of the majority of the Board present and voting at such meeting finding that in the good faith opinion of the Board after reasonable investigation that

 

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Executive has engaged in acts or omissions constituting Cause, provided that no such determination may be made, until Executive has been given written notice detailing the specific Cause event and, where applicable, the lapsing of any cure period.

 

(d)                                 “Change in Control” shall mean that any of the following events has occurred:

 

(i)                                     any “person” or “group” of persons, as such terms are used in Sections 13 and 14 of the Exchange Act, other than the Company, any of its Subsidiaries, or any employee benefit plan sponsored by the Company or any of its Subsidiaries, becomes the “beneficial owner” (as such term is defined in Rule 13d-3 under the Exchange Act) of 30% or more of the shares of common stock of the Company (the “Shares”) issued and outstanding immediately prior to such acquisition;

 

(ii)                                  any Shares are purchased pursuant to a tender or exchange offer, other than an offer by the Company, that results in any “person” or “group” of persons, as such terms are used in Sections 13 and 14 of the Exchange Act becoming the “beneficial owner” (as such term is defined in Rule 13d-3 under the Exchange Act) of 30% or more of the Shares issued and outstanding immediately prior to such tender or exchange offer; or

 

(iii)                               the dissolution or liquidation of the Company or the consummation of any merger or consolidation of the Company or any sale or other disposition of all or substantially all of its assets, if the shareholders of the Company immediately prior to such transaction own, immediately after consummation of such transaction, equity securities (other than options and other rights to acquire equity securities) possessing less than 30% of the voting power of the surviving or acquiring Company.

 

(e)                                  “Change in Control Period” shall mean the period commencing on the earlier of (i) the date that a Change in Control occurs or (ii) the date that the Company enters into a definitive agreement with respect to a transaction, the consummation of which would constitute a Change in Control (provided it is actually consummated), and in either case ending on the second anniversary of the Change in Control.

 

(f)                                   “Code” shall mean the Internal Revenue Code of 1986, as amended.

 

(g)                                  “Disability” shall mean the inability of Executive, as a result of any medically determinable physical or mental disease, injury, or congenital condition, to substantially perform his principal duties to the Company, with or without reasonable accommodation, for a continuous period of one hundred and eighty (180) days, or periods aggregating two hundred and seventy (270) days in any twelve (12) month period.

 

(h)                                 “Good Reason” shall mean, without the express written consent of Executive, the occurrence of any of the following circumstances during either the Employment Period or a Change in Control Period:

 

(i)                                     the material diminishment of Executive’s authority, duties or responsibilities (as shall be established by the Board as soon as practicable following the date hereof), it being understood that during a Change in Control Period, Good Reason shall be deemed

 

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to have occurred if Executive is not the chief operating officer of the ultimate parent following the Change in Control;

 

(ii)                                  a material reduction in Executive’s Annual Base Salary, it being understood that any reduction below the Base Salary as in effect as of the Effective Date of this Agreement shall constitute Good Reason;

 

(iii)                               a material change in the geographic location at which the Executive must perform the services under this Agreement; or

 

(iv)                              the failure of the Company to obtain agreement from any successor to assume and agree to perform this Agreement.

 

Notwithstanding the foregoing, Executive shall not be considered to have resigned for Good Reason unless, Executive gives the Company written notice of resignation, specifying in reasonable detail the circumstance constituting Good Reason, not more than thirty (30) days after the occurrence of such circumstance, and the Company fails to cure such circumstance within thirty (30) days after receipt of such notice; provided, that if the Company does cure such circumstance within such period Executive may withdraw his notice of resignation without prejudice within ten (10) days after the end of the cure period.

 

(i)                                     “Termination Date” shall mean the date on which Executive’s employment is terminated for any reason.

 

6.                                      Severance Benefits Resulting from Death or Disability.

 

Upon a termination of Executive’s employment by reason of death or Disability whether before or after the expiration of the Term, Executive (or the representative of his estate) shall be entitled to receive the following payments and benefits, subject to compliance in the case of Disability with the release requirement of Section 9 and except as otherwise provided in Sections 13(h) and 15(f):

 

(a)                                 The following “Accrued Obligations”, payable as and when those amounts would have been payable had the Employment Period not ended:

 

(i)                                     all accrued but unpaid Base Salary through the Termination Date;

 

(ii)                                  any unpaid or unreimbursed expenses incurred in accordance with Company policy to the extent incurred during the Employment Period;

 

(iii)                               any accrued but unpaid benefits provided under the Company’s employee benefit plans (not including any severance, separation pay, or supplemental unemployment benefit plan), subject to and in accordance with the terms of those plans;

 

(iv)                              any earned but unpaid Annual Bonus in respect to any completed fiscal year that has ended on or prior to the Termination Date; and

 

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(v)                                 rights to indemnification by virtue of Executive’s position as an officer or director of the Company or its subsidiaries and the benefits under any directors’ and officers’ liability insurance policy maintained by the Company, in accordance with its terms thereof.

 

(b)                                 An amount equal to Executive’s Target Bonus for the year in which the Termination Date occurs, multiplied by a fraction, the numerator of which is the number of days in such year through and including the Termination Date and the denominator of which is the total number of days in such year, payable in a single lump sum as soon as practicable after Termination Date.

 

(c)                                  All then outstanding LTI Awards (and all other then outstanding options, restricted stock units, performance stock units or other equity-based compensation) shall immediately vest in full as of the Termination Date, provided that (i) performance-based LTI Awards shall vest based on performance as of the Termination Date, and (ii) Price-Vesting Options shall be subject to vesting in accordance with Section 4(b) or be forfeited if they do not vest as provided in Section 4(b). All then vested options and those that become vested pursuant to Section 4(b) shall remain outstanding until the end of the term of the applicable option.

 

7.                                      Severance Benefits upon Termination Without Cause, or Resignation for Good Reason during the Term or a Change of Control Period.

 

In the event that either during the Term or thereafter during a Change in Control Period (i) the Company terminates Executive’s employment for any reason other than Cause or Disability, or (ii) Executive resigns for Good Reason, Executive shall be entitled to receive the following payments and benefits, subject to compliance with the release requirement of Section 9 and except as otherwise provided in Sections 13(h) and 15(f):

 

(a)                                 All payments and benefits described in Section 6; provided, however, that with respect to the vesting of outstanding LTI Awards as provided in Section 6(c), if there shall be a termination of Executive’s employment by the Company without Cause or resignation by Executive for Good Reason, which occurs during the Term but not during a Change in Control Period, then the LTI Awards which are subject to time-vesting (other than the 2015 Grants which shall fully vest as provided in Section 6(c)) shall vest on a pro rata basis based on the number of days of Executive’s employment during the applicable annual vesting period through the Termination Date.

 

(b)                                 a lump sum cash payment in an amount equal to one and one-half (1.5) times the sum of (i) Executive’s Annual Base Salary immediately prior to the Termination Date, and (ii) Executive’s Target Bonus for the year during which the Termination Date occurs, payable as soon as practicable after the Termination Date.

 

(c)                                  If Executive elects, on behalf of himself or his eligible dependents, to continue medical coverage under any medical plan of the Company pursuant to the provisions of Section 4980B of the Code or any other applicable law (“COBRA”), and such election is available to him pursuant to then governing law, and complies with all requirements for such coverage, an amount, payable not later than the last day of each month that such coverage is in effect, up to a maximum of eighteen (18) months, (or such shorter duration as governing law may then allow) equal to the excess, if any, of the premium paid by Executive for such coverage pursuant to COBRA over the

 

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premium that would be paid by an active employee for comparable coverage (the “Medical Continuation”). If Executive’s continuation coverage is terminated for any reason other than dictate of governing law prior to the end of such eighteen month period, the Company’s obligations under this Section 7(c) shall terminate, regardless of whether the termination of Executive’s coverage constitutes a second qualifying event as defined by COBRA with respect to any other dependent.

 

8.                                      Compensation or Severance Benefits upon Termination of Employment by the Company for Cause, Termination by the Company Without Cause following the Term, or Resignation by Executive following the Term.

 

(a)                                 Termination by the Company for Cause.  In the event the Company terminates Executive’s employment for Cause (whether during the Term or thereafter), or Executive resigns without Good Reason prior to the expiration of the Term, Executive shall only be entitled to receive the Accrued Obligations, payable as and when those amounts would have been payable had the Employment Period not ended.

 

(b)                                 Termination by the Company without Cause or Resignation by Executive with Good Reason following the Term.  In the event that following the expiration of the Term on its own accord (assuming Executive’s employment has not been terminated prior to such date), the Company terminates Executive’s employment for any reason other than as set forth in Sections 6, 7 or 8(a), or Executive resigns with Good Reason, Executive shall be entitled to receive, subject to compliance with the release requirement of Section 9 and except as otherwise provided in Sections 13(h) and 15(f): (i) the Accrued Obligations, and (ii) all unvested LTI Awards granted in respect of calendar years 2015, 2016, 2017 and 2018 shall immediately vest in full as of the Termination Date, provided that (A) performance-based LTI Awards shall vest based on performance as of the Termination Date, and (B) Price-Vesting Options shall be subject to vesting in accordance with Section 4(b) or be forfeited if they do not vest as provided in Section 4(b).  All then vested options and those that become vested pursuant to Section 4(b) shall remain outstanding until the end of the term of the applicable option. For the avoidance of doubt, expiration of the Term on its own accord shall not be deemed a termination by Company.

 

(c)                                  Resignation by Executive without Good Reason following the Term.  In the event that following the expiration of the Term on its own accord (assuming Executive’s employment has not been terminated prior to such date), Executive resigns without Good Reason, Executive shall be entitled to receive, subject to compliance with the release requirement of Section 9 and except as otherwise provided in Sections 13(h) and 15(f): (i) the Accrued Obligations, and (ii) all unvested LTI Awards granted in respect of calendar years 2015, 2016 and 2017 shall immediately vest in full as of the Termination Date (but not unvested LTI Awards granted in respect of calendar year 2018 or later which shall be forfeited), provided that (A) performance-based LTI Awards shall vest based on performance as of the Termination Date, and (B) Price-Vesting Options shall be subject to vesting in accordance with Section 4(b) or be forfeited if they do not vest as provided in Section 4(b).  All then vested options and those that become vested pursuant to Section 4(b) shall remain outstanding until the end of the term of the applicable option.  For the avoidance of doubt, expiration of Term on its own accord shall not be deemed a resignation by Executive.

 

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9.                                      Release.

 

Notwithstanding anything to the contrary above, all benefits and payments that may become payable pursuant to Section 6 (other than the Accrued Obligations) are conditioned on Executive, or the representative of his estate, executing a release of claims and covenant not to sue, in form attached hereto as Exhibit E (the “Release”), and the period provided in such Release having expired without Executive exercising his right to revoke, not later than sixty (60) days after the Termination Date (subject to Section 15(f)(iv)), and if Executive fails to execute such Release, revokes the Release, or the revocation period has not yet expired by the end of such sixty (60) day period, Executive shall have no right to any such payment or benefit.

 

10.                               Effect on Employee Benefit Plans and Programs; Adjustment of Payments and Benefits.

 

(a)                                 Effect on Employee Benefit Programs.  The termination of Executive’s employment hereunder, whether by the Company or Executive, shall have no effect on the rights and obligations of the parties hereto under the Company’s (i) welfare benefit plans including, without limitation, Medical Continuation as provided for herein and, health coverage thereafter but only to the extent required by law, and on the same basis applicable to other employees and (ii) 401(k) Plan but only to the extent required by law and pursuant to the terms of the 401(k) Plan.

 

(b)                                 Adjustment of Payments and Benefits.

 

(i)                                     Notwithstanding any provision of this Agreement to the contrary, if any payment or benefit to be paid or provided hereunder, when combined with any other amount payable to Executive, would be an “Excess Parachute Payment,” within the meaning of Section 280G of the Code, or any successor provision thereto, but for the application of this sentence, then the payments  and benefits to be paid or provided hereunder shall be reduced to the minimum extent necessary so that no portion of any such payment or benefit, as so reduced, constitutes an Excess Parachute Payment; provided, however, that the foregoing reduction shall be made only if and to the extent that such reduction would result in an increase in the aggregate payments and benefits to be provided, determined on an after-tax basis (taking into account the excise tax imposed pursuant to Section 4999 of the Code, or any successor provision thereto, any tax imposed by any comparable provision of state law, and any applicable federal, state and local income taxes). In the event that any payment or benefit intended to be provided hereunder is required to be reduced pursuant to this Section the reduction shall occur in the following order:: (A) by first reducing or eliminating the portion of the payments which are not payable in cash and are not attributable to equity awards (other than that portion of the payments subject to clause (D) hereof), (B) then by reducing or eliminating cash payments (other than that portion of the payments subject to clause (D) hereof), (C) then by reducing or eliminating the portion of the payments which are not payable in cash and are attributable to equity awards (other than that portion of the Payments subject to clause (D) hereof) and (D) then by reducing or eliminating the portion of the Payments (whether payable in cash or not payable in cash) to which Treasury Regulation § 1.280G-1 Q/A 24(c) (or successor thereto) applies, in each case in reverse order beginning with payments or benefits which are to be paid the farthest in time.

 

(c)                                  The determination of whether the any payment or benefit shall be reduced as provided in Section 10(b)(i) hereof and the amount of such reduction shall be made at the Company’s expense by an accounting firm selected by the Company from among the four (4)

 

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largest accounting firms in the United States (the “Accounting Firm”).  The Accounting Firm shall provide its determination (the “Determination”), together with supporting calculations and documentation, to the Company and Executive within forty five (45) days after Executive’s final day of employment, which Determination, absent manifest error, shall be binding, final and conclusive upon the Company and Executive. If the Accounting Firm determines that the payments and benefits to be provided to Executive will not result in any Excess Parachute Payments, it shall furnish Executive with an opinion to that effect.  If the Accounting Firm determines that the payments and benefits to be provided to Executive will result in Excess Parachute Payments, it shall furnish the Executive with an opinion that no Excess Parachute Payments will be made after the reductions contemplated by Section 10(b)(i) hereof.

 

11.                               Confidential Information.

 

(a)                                 Executive understands and acknowledges that during his employment with the Company, he will be exposed to Confidential Information (as defined below), all of which is proprietary and which will rightfully belong to the Company.  Executive shall hold in a fiduciary capacity for the benefit of the Company such Confidential Information obtained by Executive during his employment with the Company and shall not, directly or indirectly, at any time, either during or after his employment with the Company terminates, without the Company’s prior written consent, use any of such Confidential Information or disclose any of such Confidential information to any individual or entity other than the Company or its employees, attorneys, accountants, financial advisors, consultants, or investment bankers except as required in the performance of his duties for the Company or as otherwise required by law, court order or an order of any governmental authority.  Executive such take all reasonable steps to safeguard such Confidential Information and to protect such Confidential Information against disclosure, misuse, loss or theft.

 

(b)                                 The term “Confidential Information” shall mean any information not generally known in the relevant trade or industry or otherwise not generally available to the public, which was obtained from the Company or its predecessors or which was learned, discovered, developed, conceived, originated or prepared during or as a result of the performance of any services by Executive on behalf of the Company or its predecessors.  For purposes of this Section 11, the Company shall be deemed to include any entity which is controlled, directly or indirectly, by the Company and any entity of which a majority of the economic interest is owned, directly or indirectly, by the Company.

 

12.                               Return of Documents.

 

Except for such items which are of a personal nature to Executive (e.g., daily business planner), all writings, records, and other documents and things containing any Confidential Information shall be the exclusive property of the Company, shall not be copied, summarized, extracted from, or removed from the premises of the Company, except in pursuit of the business of the Company, and shall be delivered to the Company, without retaining any copies, upon the termination of Executive’s employment or at any time as requested by the Company.

 

13.                               Noncompete; Non-Solicitation; Non-Disparagement.

 

Executive agrees that:

 

12

 

(a)                                 During the Employment Period, and for a one (1) year period thereafter in the event Executive’s employment is terminated under circumstances in which he is entitled to  receive and is receiving the benefits provided in Sections 6, 7, 8(b) or 8(c) hereof, Executive shall not, directly or indirectly, within the continental United States, engage in, or own, invest in, manage or control any venture or enterprise primarily engaged in any office-service, flex, or office property development or acquisition activities that are competitive with the activities of the Company. Nothing herein shall prohibit Executive from being a passive owner of not more than five percent (5%) of the outstanding stock of any class of securities of a Company or other entity engaged in such business which is publicly traded, so long as he has no active participation in the business of such Company or other entity.

 

(b)                                 If, at the time of enforcement of this Section 13, a court shall hold that the duration, scope, area or other restrictions stated herein are unreasonable, the parties agree that reasonable maximum duration, scope, area or other restrictions may be substituted by such court for the stated duration, scope, area or other restrictions and upon substitution by such court, this Agreement shall be automatically modified without further action by the parties hereto.

 

(c)                                  For purposes of this Section 13, the Company shall be deemed to include any entity which is controlled, directly or indirectly, by the Company and any entity of which a majority of the economic interest is owned, directly or indirectly, by the Company.

 

(d)                                 Nonsolicitation.  Executive agrees that during the Employment Period, and for a one (1) year period thereafter, regardless of the reason for termination (the “Restricted Period”), Executive will not, without written consent of the Company, directly or indirectly, including causing, encouraging, directing or soliciting any other person to, contact, approach or solicit (other than, so long as Executive continues to be employed by the Company and makes such contact, approach or solicitation made on behalf of the Company) for the purpose of offering employment to or hiring (whether as an employee, consultant, agent, independent contractor or otherwise) or actually hire any person who is or has been employed or retained in the operation of the Company’s business during the period commencing three (3) months prior to the date of such hiring or offering of employment, or induce, interfere with or solicit, or attempt to induce, interfere with or solicit, any person that is a current or former customer, supplier or other business relation of the Company to terminate its relationship or otherwise cease doing business in whole or in part or reduce the amount of business with the Company.

 

(e)                                  Nondisparagement.  Executive agrees not to disparage the Company or its past and present investors, officers, directors or employees, and the Company agrees not to disparage Executive.

 

(f)                                   Acknowledgements.  Executive acknowledges and agrees that (i) Executive’s obligation to comply with the restrictions in this Section 13 shall be independent of any obligation owed to Executive by the Company (whether under this Agreement or otherwise), and specifically shall not be dependent upon whether Executive is entitled to any form of severance pay or benefits pursuant to this Agreement or otherwise; (ii) no claim against the Company by Executive (whether under this Agreement or otherwise) shall constitute a defense to the enforcement by the Company or its affiliates of the restrictions in this Section 13, (iii) the time limitations and the geographic scope on the restrictions in this Section 13 are reasonable, (iv) the restrictions imposed under this

 

13

 

Section 13 are reasonably necessary for the protection of the Company and its goodwill, Confidential Information, and other legitimate business interests and do not impose a greater restraint than necessary to provide such protection, (v) that through this Agreement, Executive shall receive adequate consideration for any loss of opportunity associated with the restrictions of this Section 13, and (vi) that the provisions of this Section 13 and its subparts provide a reasonable way of protecting Company’s business value.

 

(g)                                  Extension of Time.  In the event that Executive breaches any covenant, obligation or duty in this Section 13, any such duty, obligation, or covenants to which the parties agreed by this Section 13 shall automatically toll from the date of the first breach, and all subsequent breaches, until the resolution of the breach through private settlement, judicial or other action, including all appeals. The duration and length of Executive’s duties and obligations as agreed by this Section 13 shall continue upon the effective date of any such settlement, or judicial or other resolution.

 

(h)                                 Legal and Equitable Remedies.  Upon any material breach by Executive of any of the provisions of Sections 11, 12 or 13, Executive shall immediately, permanently and irrevocably forfeit without payment of consideration of any kind any and all rights to any of the benefits and payments otherwise payable to Executive pursuant to this Agreement (other than the Accrued Obligations). In addition, in view of the nature of the rights in goodwill, employee relations, trade secrets, and business reputation and prospects of the Company to be protected under Sections 11, 12 and 13, Executive understands and agrees that the Company could not be reasonably or adequately compensated in damages in an action at law for Executive’s breach of Executive’s obligations (whether individually or together) under Sections 11, 12 or 13.  Accordingly, Executive specifically agrees that the Company shall be entitled to temporary and permanent injunctive relief, specific performance, and other equitable relief to enforce the provisions of Sections 11, 12 and 13, and that such relief may be granted without the necessity of proving actual damages, and without bond.  EXECUTIVE ACKNOWLEDGES AND AGREES THAT THE PROVISIONS IN SECTIONS 11, 12 AND 13 ARE ESSENTIAL AND MATERIAL TO THIS AGREEMENT, AND THAT UPON BREACH OF SECTIONS 11, 12 OR 13 BY EXECUTIVE, COMPANY IS ENTITLED TO WITHHOLD PROVIDING PAYMENTS OR CONSIDERATION, TO EQUITABLE RELIEF TO PREVENT CONTINUED BREACH, TO RECOVER DAMAGES AND TO SEEK ANY OTHER REMEDIES AVAILABLE TO COMPANY. This provision with respect to injunctive relief shall not, however, diminish the right of the Company to claim and recover damages or other remedies in addition to equitable relief.

 

14.                               Successors.

 

(a)                                 Company’s Successors.  This Agreement may not be assigned by the Company except to a successor (whether by purchase, merger, consolidation or otherwise) to all or substantially all of the Company’s business and/or assets, and the Company shall require any such successor to assume expressly and agree to perform this Agreement, in the same manner and to the same extent as the Company would be required to perform it in the absence of a succession. As used in this Agreement, “Company” shall mean the Company as defined herein and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, contract or otherwise.

 

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(b)                                 Executive’s Successors.  This Agreement and all rights of Executive hereunder shall inure to the benefit of, and be enforceable by, Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributes, devisees and legatees.

 

15.                               Miscellaneous Provisions.

 

(a)                                 Notice.  Notices and all other communications contemplated by this Agreement shall be in writing and shall be deemed to have been duly given when personally delivered, on the first business day after being sent by reputable overnight courier, or on the third business day after being mailed by U.S. registered or certified mail, return receipt requested and postage prepaid, and addressed to Executive at the address shown on the Company’s personnel records, or to the Company at the address set forth below, or such other address as a party shall give notice of by notice given in the same manner:

 

	
Mack-Cali   Realty Corporation
    
	
343   Thornall Street
    
	
Edison,   NJ 08837-2206
    
	
Attn:   Chief Legal Officer
    

 

(b)                                 Entire Agreement. This Agreement contains all the legally binding understandings and agreements between Executive and the Company pertaining to the subject matter of this Agreement and supersedes all such agreements, whether oral or in writing, previously entered into between the parties, including, without limitation, any offer letter from the Company to Executive.

 

(c)                                  Severability. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect.

 

(d)                                 Interpretation. When a reference is made in this Agreement to sections, subsections or clauses, such references shall be to a section, subsection or clause of this Agreement, unless otherwise indicated. The words “herein” and “hereof’ mean, except where a specific section, subsection or clause reference is expressly indicated, the entire Agreement rather than any specific section, subsection or clause. The words “include”, “includes” and “including” when used in this Agreement shall be deemed to in each case to be followed by the words “without limitation”. The headings of the sections or subsections of this Agreement are inserted for convenience only and shall not be deemed to constitute a part hereof and shall not affect the construction or interpretation of this Agreement.

 

(e)                                  Counterparts.  This Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement.

 

(f)                                   Section 409A of the Code.  To the extent applicable, it is intended that payments and benefits provided hereunder be exempt from or comply with Section 409A of the Code and the guidance promulgated thereunder (collectively, “Section 409A”). This Agreement shall be administered in a manner consistent with this intent and if Executive or the Company believes, at

 

15

 

any time, that any of such payment or benefit is not exempt or does not so comply, Executive or the Company shall promptly advise the other party and will negotiate reasonably and in good faith to amend the terms of such arrangement such that it is exempt or complies (with the most limited possible economic effect on Executive and on the Company) or to minimize any additional tax, interest and/or penalties that may apply under Section 409A if exemption or compliance is not practicable. In furtherance of the foregoing, the following provisions shall apply notwithstanding anything to the contrary in this Agreement:

 

(i)                                     To the extent applicable, each and every payment to be made pursuant to this Agreement shall be treated as a separate payment and not as one of a series of payments treated as a single payment for purposes of Treasury Regulation §1.409A-2(b)(2)(iii).

 

(ii)                                  If Executive becomes entitled to receive any payment that constitutes deferred compensation subject to Section 409A upon a termination of employment, and such termination of employment does not constitute a “separation from service” as defined in Section 409A, payment of such amount shall be deferred, without interest, and paid on the earlier of the date Executive incurs a separation from service, as so defined (subject to subsection (f)(iii)) below, or the date of Executive’s death.

 

(iii)                               If Executive is a “specified employee”, as defined in Section 409A on the date he incurs a separation from service, any amount that becomes payable by reason of such separation from service that constitutes deferred compensation subject to Section 409A, including any amount deferred pursuant to subsection (f)(ii) above, shall be deferred, without interest, and paid on the earlier of the first business day of the seventh month following the month that includes Executive’s separation from service, or the date of Executive’s death.

 

(iv)                              If the sixty (60) day period described in Section 9 ends in the calendar year following the year that includes the Termination Date, no amount that is subject to Section 409A, the payment of which is dependent upon the execution of the Release, shall be paid until the first business day of the calendar year following the year that includes the Termination Date, regardless of when the Release is signed.

 

(v)                                 Any reimbursement of any expense payable to Executive that constitutes taxable income shall be paid not later than the last day of the year following the year in which the expense is incurred, and all reimbursements and in-kind benefits shall be paid in accordance with Treasury Regulation §1.409A-3(i)(1)(iv).

 

(vi)                              The Company shall not be obligated to guarantee any particular tax result for Executive with respect to any payment or benefit provided to Executive hereunder, and Executive shall be responsible for any taxes, additional taxes or penalties imposed on Executive in connection with any such payment or benefit with respect to Section 409A or any other obligation to pay taxes.

 

(g)                                  Indemnification.  In the event Executive is made party or threatened to be made a party to any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”), by reason of Executive’s employment with or serving as an officer or director of the Company, whether or not the basis of such Proceeding is alleged action in an official capacity,

 

16

 

the Company shall indemnify, hold harmless and defend Executive to the fullest extent authorized by Maryland law, as the same exists and may hereafter be amended, against any and all claims, demands, suits, judgments, assessments and settlements including all expenses incurred or suffered by Executive in connection therewith (including, without limitation, all reasonable legal fees incurred using counsel reasonably acceptable to Executive) and such indemnification shall continue as to Executive even after Executive is no longer employed by the Company and shall inure to the benefit of his heirs, executors, and administrators.  Expenses incurred by Executive in connection with any Proceeding shall be paid by the Company in advance upon request of Executive that the Company pay such expenses; but, only in the event that Executive shall have delivered in writing to the Company an undertaking in form and substance reasonably acceptable to the Company to reimburse the Company for expenses with respect to which Executive is not entitled to indemnification.  The provisions of this Section shall remain in effect after this Agreement is terminated irrespective of the reasons for termination.  The indemnification provisions of this Section shall not supersede or reduce any indemnification provided to Executive under any separate agreement, or the by-laws of the Company since it is intended that this Agreement shall expand and extend Executive’s rights to receive indemnity.

 

(h)                                 Legal Fees.  If any contest or dispute shall arise between the Company and Executive regarding or as a result of any provision of this Agreement, the Company shall reimburse Executive for all legal fees and expenses reasonably incurred by Executive in connection with such contest or dispute, but only if Executive is successful in respect of substantially all of Executive’s claims pursued or defended in connection with such contest or dispute.  Such reimbursement shall be made as soon as practicable following the resolution of such contest or dispute (whether or not appealed).

 

(i)                                     Timing of and No Duplication of Payments.

 

All payments payable to Executive pursuant to this Agreement shall be paid as soon as practicable after such amounts have become fully vested and determinable.  In addition, Executive shall not be entitled to receive duplicate payments under any of the provisions of this Agreement.

 

(j)                                    Modification or Waiver.

 

No amendment, modification, waiver, termination or cancellation of this Agreement shall be binding or effective for any purpose unless it is made in a writing signed by the party against whom enforcement of such amendment, modification, waiver, termination or cancellation is sought.  No course of dealing between or among the parties to this Agreement shall be deemed to affect or to modify, amend or discharge any provision or term of this Agreement.  No delay on the part of the Company or Executive in the exercise of any of their respective rights or remedies shall operate as a waiver thereof, and no single or partial exercise by the Company or Executive of any such right or remedy shall preclude other or further exercise thereof.  A waiver of right or remedy on any one occasion shall not be construed as a bar to or waiver of any such right or remedy on any other occasion.

 

The respective rights and obligations of the parties hereunder shall survive Executive’s termination of employment and termination of this Agreement to the extent necessary for the intended preservation of such rights and obligations.

 

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(k)                                 Governing Law.

 

This Agreement will be governed by and construed in accordance with the laws of the State of New Jersey, without regard to principles of conflicts of laws thereunder.

 

(l)                                     Survival of Agreements.

 

The provisions of Sections 5, 6, 7, 8, 9, 10, 11, 12, and 13 each shall survive the Term and termination of this Agreement.

 

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

 

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Company:  
    
	
 
    	
 
    
	
 
    	
MACK-CALI   REALTY CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:   
    	
/s/   William Mack
    
	
 
    	
Name:   
    	
William   Mack 
    
	
 
    	
Title:   
    	
Chairman
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Executive:  
    
	
 
    	
 
    
	
 
    	
MICHAEL   J. DEMARCO
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/   Michael J. DeMarco
    
				

 

19

 

EXHIBIT A

 

MACK-CALI REALTY CORPORATION

RESTRICTED UNIT AWARD AGREEMENT

MICHAEL J. DEMARCO

 

 

AGREEMENT EVIDENCING THE GRANT

OF A RESTRICTED UNIT AWARD PURSUANT

TO THE 2013 INCENTIVE STOCK PLAN

OF MACK-CALI REALTY CORPORATION

 

 

This Restricted Stock Unit Award Agreement (this “Agreement”) between Mack-Cali Realty Corporation (the “Company”) and Michael J. DeMarco (the “Recipient”) is delivered under the Mack-Cali Realty Corporation 2013 Incentive Stock Plan (the “Plan”), and shall be effective as of the Grant Date.  The Company and Recipient mutually agree as follows:

 

1.                                      Defined Terms.  Capitalized terms used in this Agreement, and not otherwise defined in this Agreement, shall have the meaning assigned to them in the Plan.  For purposes of this Agreement, a “Restricted Stock Unit” or “RSU” means a unit of measurement equal to one outstanding Share.

 

2.                                      Grant of Restricted Stock Units.  The Recipient is hereby granted Restricted Stock Units under the Plan equal to $325,000, divided by the Fair Market Value of the Shares on the Grant Date.  The number of Restricted Stock Units shall be denominated in whole and partial RSUs, calculated to the nearest 100th of a RSU.  The Restricted Stock Units shall not vest in the Recipient and shall remain subject to forfeiture unless the Restricted Stock Units vest pursuant to Section 4 of this Agreement prior to the date the Recipient’s employment with the Company terminates, except that the RSUs shall not be forfeited and shall vest as specifically provided in that certain Executive Employment Agreement, dated June 3, 2015, by and between the Company and the Recipient (the “Employment Agreement”).

 

3.                                      Grant Date.  The date of the grant of the Restricted Stock Units shall be                                         . [Date shall be two days following the date of the press release announcing the hiring of Recipient.]

 

4.                                      Vesting.  Restricted Stock Units granted under this Agreement shall vest at a rate of 33 1/3 % on each first, second and third anniversaries of the Grant Date, provided the Recipient remains employed or continues to provide services to the Company continuously through such applicable anniversary date, except as set forth under Sections 6, 7, or 8 of the Employment Agreement.  To the extent the Recipient, does not vest in a portion of the RSUs awarded under this Agreement or earlier upon termination of employment as provided in the Employment Agreement, all unvested RSUs under this Agreement shall be cancelled upon the Recipient’s

 

1

 

termination of employment and the Recipient shall no longer have any rights thereto.  No amounts shall be payable with respect to any such cancelled unvested RSUs.

 

5.                                      Dividend Equivalents.  If the Company pays a cash dividend on Shares for which the Record Date occurs after the Grant Date, the Recipient shall receive additional RSUs equal to the amount of the ordinary cash dividend paid by the Company on a single Share multiplied by the number of RSUs awarded under this Agreement that are unpaid as of such Record Date, and divided by the Fair Market Value of the Shares on the Record Date.  The number of additional RSUs attributable to dividend equivalents shall be denominated in whole and partial RSUs, calculated to the nearest 100th of a RSU. With respect to each Record Date in a calendar year, the additional RSUs shall be allocated to the Recipient as soon as administratively practical following the Record Date.  Record Date shall mean the date on which shareholders of record are determined for purposes of paying the cash dividend on Shares. The Recipient shall be vested in these additional RSUs attributable to dividend equivalents when, and to the extent, the underlying RSUs are vested.

 

6.                                      RSU Settlement.  The Recipient shall be entitled to settlement of the vested portion of the RSUs (as determined in accordance with Sections 4 and 5 hereof) as of the earliest to occur of: (i) the date on which the RSU vests under Section 4, or (ii) the date on which the Recipient terminates employment with the Company to the extent the RSUs vest upon such termination of employment pursuant to Sections 6, 7 or 8 of the Employment Agreement.

 

7.                                      Timing of Payment for RSUs.  Payment shall be made to the Recipient on the date the Recipient becomes entitled to settlement of RSUs pursuant to Section 6 hereof.

 

8.                                      Form of Payment for RSUs.  The Recipient shall receive those number of whole Shares equal to the number of vested RSUs (and cash in lieu of any fractional shares) for which the Recipient is entitled to settlement of RSUs pursuant to Section 6 hereof.

 

9.                                      Withholding and Taxes.  No later than the date as of which an amount first becomes includible in the gross income of the Recipient for income tax purposes or subject to the Federal Insurance Contributions Act withholding with respect to the Award, the Recipient will pay to the Company any minimum United States federal, state or local or foreign taxes of any kind required by law to be withheld with respect to such amount (the “Minimum Withholding Amount”).  Payment of the Minimum Withholding Amount shall be made by the Recipient either (x) in cash, or (y) by transferring to the Company (or having the Company withhold from the Shares to be delivered hereunder) such number of Shares with a tax value equal to the Minimum Withholding Amount.  The obligations of the Company under this Agreement will be conditional on such payment or arrangements, and the Company and its affiliates shall, to the extent permitted by law, have the right to deduct any such taxes from any payment otherwise due to the Recipient.

 

10.                               Termination of Unvested Stock Units.  Except as specifically provided in the Employment Agreement, upon the Recipient’s termination of employment with the Company, all unvested RSUs under this Agreement (after taking into account the RSUs that become vested pursuant to the Employment Agreement upon such termination) shall be cancelled and the Recipient shall no longer have any rights thereto. No amounts shall be payable with respect to any such cancelled unvested RSUs.

 

2

 

11.                               Adjustment Provisions.  In the event of (i) changes in the Shares by reason of stock dividends, spin-offs, split-ups or combination of shares, reclassifications, recapitalizations, mergers, consolidation, reorganizations or liquidations or (ii) any spin-off, extraordinary dividend or distribution of assets, appropriate adjustments shall be made by the Committee in (a) the number and class of shares thereafter subject to RSUs to prevent dilution or enlargement of the Recipient’s rights hereunder.  Whether any adjustment or modification is required, and the amount thereof, shall be determined by the Committee, which determination shall be final and binding on all interested parties.

 

12.                               Restrictions on Transfer.  None of the Restricted Stock Units granted hereunder shall be sold, assigned, transferred, pledged, hypothecated, given away or in any other manner disposed of or encumbered, whether voluntarily or by operation of law.

 

13.                               409A.   It is intended that payments and benefits provided to the Recipient under this Agreement either (a) are exempt from the requirements of § 409A of Code and regulations promulgated thereunder pursuant to an exception or otherwise or (b) comply with the requirements of Code § 409A (including current and future guidance issued by the Department of Treasury or the Internal Revenue Service).  To the extent that any provision in this Agreement is ambiguous as to its compliance with Code § 409A, the provision shall be interpreted so that no payments made or benefits provided pursuant to the Agreement shall be subject to any adverse tax consequences.  To the extent that any provision of the Agreement fails to satisfy those requirements, the provision shall be applied in operation in a manner that, in the good-faith opinion of the Company, brings the provision into compliance with the requirements of Code § 409A, or any exception thereto, while preserving as closely as possible the original intent of the Agreement provision. The parties shall amend the Agreement as necessary to avoid or comply with the requirements of Code § 409A or any exception thereto. In no event may Recipient, directly or indirectly, designate the calendar year of a payment or the receipt of a benefit.  In no event shall the Company be liable for any additional tax, interest or penalty that may be imposed on Recipient by Code § 409A or damages to Recipient for failing to comply with Code § 409A.

 

14.                               Miscellaneous.

 

(a)                                 Amendments.  This Agreement may be amended or modified only with the consent of the Company upon the recommendation or determination of the Board or the Committee; provided that any such amendment or modification adversely affecting the rights of the Recipient hereunder must be consented to by the Recipient to be effective,

 

(b)                                 Incorporation of Plan.  The provisions of the Plan are hereby incorporated by reference as if set forth herein.  If and to the extent that any provision contained in this Agreement is inconsistent with the Plan, this Agreement shall govern.

 

(c)                                  Entire Agreement.  This Agreement, the Plan and the Employment Agreement together constitute the entire agreement and supersede all prior understandings and agreements, written or oral, of the parties to the Agreement with respect to the Award.

 

3

 

(d)                                 Receipt of Plan. By entering into this Agreement, Recipient acknowledges (i) that he has received and read a copy of the Plan and (ii) that this Agreement is subject to and shall be construed in accordance with the terms and conditions of the Plan, as now or hereinafter in effect.  By entering into this Agreement, Recipient further acknowledges that all grants under the Plan are determined by the Committee in its sole discretion and that nothing contained in the Plan or in any grant under the Plan shall confer a right or entitlement to receive any further grants in the future.

 

(e)                                  Severability.  In the event that one or more of the provisions of this Agreement may be invalidated for any reason by a court, any provision so invalidated will be deemed to be separable from the other provisions hereof, and the remaining provisions hereof will continue to be valid and fully enforceable.

 

(f)                                   No Obligation to Continue Position as an Officer or to Employ.  Neither the Company nor any affiliate is obligated by or as a result of this Agreement to continue to have the Recipient as an executive officer or to employ the Recipient and this Agreement shall not interfere in any way with the right of the Company or any affiliate to terminate the Recipient’s employment as an executive officer or employee at any time.

 

In Witness Whereof, the parties hereto have executed this Agreement, effective as of the Grant Date.

 

	
 
    	
MACK-CALI   REALTY CORPORATION  
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
RECIPIENT
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    

 

4

 

EXHIBIT B

 

MACK-CALI REALTY CORPORATION

TSR-BASED PERFORMANCE SHARE UNIT AWARD AGREEMENT

MICHAEL J. DEMARCO

 

 

AGREEMENT EVIDENCING THE GRANT

OF A TSR-BASED PERFORMANCE SHARE UNIT AWARD PURSUANT

TO THE 2013 INCENTIVE STOCK PLAN

OF MACK-CALI REALTY CORPORATION

 

 

This TSR-Based Performance Share Unit Award Agreement (this “Agreement”) between Mack-Cali Realty Corporation (the “Company”) and Michael J. DeMarco (the “Recipient”) is delivered under the Mack-Cali Realty Corporation 2013 Incentive Stock Plan, as may be amended from time to time (the “Plan”), and shall be effective as of the Grant Date (as defined in Section 3 below).  The Company and Recipient mutually agree as follows:

 

1.                                      Defined Terms.  Capitalized terms used in this Agreement, and not otherwise defined in this Agreement, shall have the meaning assigned to them in the Plan.  In addition, as used herein:

 

“Company TSR” means, for any Performance Period, the Company’s TSR for such Performance Period.

 

“Performance Share Unit” or “PSU” means a unit of measurement equal to one outstanding Share.

 

“Total Stockholder Return” or “TSR” means, for any Performance Period, the appreciation in the stock price of a company’s common equity (assuming the reinvestment of all dividends in additional shares of common stock at the Fair Market Value of the such common equity on the date of payment of the dividend)  measured from the Trading Day coincident with or immediately following the Grant Date through the last Trading Day of such Performance Period, divided by the stock price of a company’s common equity on the Trading Day coincident with or immediately following the Grant Date.  The Fair Market Value of the Shares on the Grant Date shall be used in determining the Company’s TSR.

 

“Trading Day” means any date on which the Shares are traded on the New York Stock Exchange; provided that “Trading Day” shall not include any day on which the Shares are scheduled to trade on the New York Stock Exchange for less than 4.5 hours or any day that the Shares are suspended from trading during the final hour of trading on the New York Stock Exchange.

 

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“TSR Percentile Rank” means the Company TSR for the Performance Period relative to the TSRs of the Equity Office REITs in the FTSE NAREIT Equity Office Index (or comparable index that replaces the FTSE NAREIT Equity Office Index) for the same Performance Period expressed as a percentile calculated by dividing the number of such Equity Office REITs with a TSR less than the Company TSR by the sum of the total number of such Equity Office REITs (including the Company).

 

2.                                      Grant of Performance Share Units.  The Recipient is hereby granted Performance Share Units under the Plan equal to $975,000, divided by the Fair Market Value of the Shares on the Grant Date.  The number of Performance Share Units shall be denominated in whole and partial PSUs, calculated to the nearest 100th of a PSU.  The Performance Share Units shall not vest in the Recipient and shall remain subject to forfeiture unless and until the Performance Share Units vest pursuant to Section 5 of this Agreement prior to the date the Recipient’s employment with the Company terminates, except that the PSUs shall not be forfeited and shall vest as specifically provided in that certain Executive Employment Agreement, dated June 3, 2015, by and between the Company and the Recipient (the “Employment Agreement”).

 

3.                                      Grant Date.  The date of grant of the Performance Share Units shall be                                         . [Date shall be two days following the date of the press release announcing the hiring of Recipient.]

 

4.                                      Performance Period.  The Performance Period shall begin on the Grant Date and shall end on 3rd annual anniversary of the Grant Date.

 

5.                                      Vesting.  Performance Share Units shall vest and be earned and payable to the Recipient based on the Company’s TSR Percentile Rank for the Performance Period, in accordance with the following performance levels:

 

	
Company TSR

Performance

Level
    	
 
    	
Company TSR Percentile

Rank for the Performance
   Period
    	
 
    	
PSUs
    Vesting
   Percentage
    	
 
    
	
< Threshold
    	
 
    	
< 40th percentile
    	
 
    	
0
    	
%
    
	
Threshold
    	
 
    	
40th percentile
    	
 
    	
50
    	
%
    
	
Target
    	
 
    	
60th percentile
    	
 
    	
100
    	
%
    
	
Maximum
    	
 
    	
>=80th percentile
    	
 
    	
150
    	
%
    

 

The Award payout will be limited to 100% of PSUs granted under this Agreement if the Company TSR is negative for the Performance Period.  The PSUs Vesting Percentage for attainment of a Performance Level between the Threshold Performance Level and the Maximum Performance Level will be linearly interpolated.  To the extent the Recipient does not vest in a portion of the PSUs awarded under this Agreement at the end of the Performance Period or earlier upon termination of employment as provided in the Employment Agreement, all unvested PSUs under this Agreement shall be cancelled at the end of the Performance Period and the Recipient shall no longer have any rights thereto. No amounts shall be payable with respect to any such cancelled unvested PSUs.

 

2

 

6.                                      Dividend Equivalents.  If the Company pays a cash dividend on Shares for which the Record Date occurs after the Grant Date, the Recipient shall receive additional PSUs equal to the amount of the ordinary cash dividend paid by the Company on a single Share multiplied by the number of PSUs awarded under this Agreement that are unvested and unpaid as of such Record Date, and divided by the Fair Market Value of the Shares on the Record Date.  The number of additional PSUs attributable to dividend equivalents shall be denominated in whole and partial PSUs, calculated to the nearest 100th of a PSU. With respect to each Record Date in a calendar year, the additional PSUs shall be allocated to the Recipient as soon as administratively practical following the Record Date.  Record Date shall mean the date on which shareholders of record are determined for purposes of paying the cash dividend on Shares. The Recipient shall be vested in these additional PSUs attributable to dividend equivalents when, and to the extent, the underlying PSUs are vested.

 

7.                                      PSU Settlement.  The Recipient shall be entitled to settlement of the vested portion of the PSUs (as determined in accordance with Sections 5 and 6 hereof) as of the earliest to occur of: (i) the date on which the PSU vests under Section 5, or (ii) the date on which the Recipient terminates employment with the Company to the extent the PSUs vest upon such termination of employment pursuant to Sections 6, 7 or 8 of the Employment Agreement (the “Payment Date”).

 

8.                                      Timing of Payment for PSUs.  Payment shall be made to the Recipient on the date the Recipient becomes entitled to settlement of PSUs pursuant to Section 7 hereof or as soon as administratively practicable but no later than the 15th day of the third month after the Payment Date.

 

9.                                      Form of Payment for PSUs.  The Recipient shall receive those number of whole Shares equal to the number of vested PSUs (and cash in lieu of any fractional shares) for which the Recipient is entitled to settlement of PSUs pursuant to Section 7 hereof.

 

10.                               Withholding and Taxes.  No later than the date as of which an amount first becomes includible in the gross income of the Recipient for income tax purposes or subject to the Federal Insurance Contributions Act withholding with respect to the PSUs, the Recipient will pay to the Company any minimum United States federal, state or local or foreign taxes of any kind required by law to be withheld with respect to such amount (the “Minimum Withholding Amount”).  Payment of the Minimum Withholding Amount shall be made by the Recipient either (i) in cash, or (ii) by transferring to the Company (or having the Company withhold from the Shares to be delivered hereunder) such number of Shares with a tax value equal to the Minimum Withholding Amount.  The obligations of the Company under this Agreement will be conditional on such payment or arrangements, and the Company and its affiliates shall, to the extent permitted by law, have the right to deduct any such taxes from any payment otherwise due to the Recipient.

 

11.                               Termination of Unvested Stock Units.  Except as specifically provided in the Employment Agreement, upon the Recipient’s termination of employment with the Company, all unvested PSUs under this Agreement shall be cancelled and the Recipient shall no longer have any rights thereto. No amounts shall be payable with respect to any such cancelled unvested PSUs.

 

12.                               Adjustment Provisions.  In the event of (i) changes in the Shares by reason of stock dividends, spin-offs, split-ups or combination of shares, reclassifications, recapitalizations, mergers, consolidation, reorganizations or liquidations or (ii) any spin-off, extraordinary dividend or distribution of assets,  appropriate adjustments shall be made by the Committee in (a) the

 

3

 

number and class of shares thereafter subject to PSUs and (b) the TSR determination, in each case, to prevent dilution or enlargement of the Recipient’s rights hereunder.  Whether any adjustment or modification is required, and the amount thereof, shall be determined by the Committee, which determination shall be final and binding on all interested parties.

 

13.                               Restrictions on Transfer.  None of the Performance Share Units granted hereunder shall be sold, assigned, transferred, pledged, hypothecated, given away or in any other manner disposed of or encumbered, whether voluntarily or by operation of law.

 

14.                               409A. It is intended that payments and benefits provided to the Recipient under this Agreement either (a) are exempt from the requirements of § 409A of the Code and regulations promulgated thereunder pursuant to an exception or otherwise or (b) comply with the requirements of Code § 409A (including current and future guidance issued by the Department of Treasury or the Internal Revenue Service).  To the extent that any provision in this Agreement is ambiguous as to its compliance with Code § 409A, the provision shall be interpreted so that no payments made or benefits provided pursuant to the Agreement shall be subject to any adverse tax consequences.  To the extent that any provision of the Agreement fails to satisfy those requirements, the provision shall be applied in operation in a manner that, in the good-faith opinion of the Company, brings the provision into compliance with the requirements of Code § 409A, or any exception thereto, while preserving as closely as possible the original intent of the Agreement provision. The parties shall amend the Agreement as necessary to avoid or comply with the requirements of Code § 409A or any exception thereto. In no event may Recipient, directly or indirectly, designate the calendar year of a payment or the receipt of a benefit.  In no event shall the Company be liable for any additional tax, interest or penalty that may be imposed on Recipient by Code § 409A or damages to Recipient for failing to comply with Code § 409A.

 

15.                               Miscellaneous.

 

(a)                                 Amendments.  This Agreement may be amended or modified only with the consent of the Company upon the recommendation or determination of the Board or the Committee; provided that any such amendment or modification adversely affecting the rights of the Recipient hereunder must be consented to by the Recipient to be effective,

 

(b)                                 Incorporation of Plan.  The provisions of the Plan are hereby incorporated by reference as if set forth herein.  If and to the extent that any provision contained in this Agreement is inconsistent with the Plan, this Agreement shall govern.

 

(c)                                  Entire Agreement.  This Agreement, the Plan and the Employment Agreement together constitute the entire agreement and supersede all prior understandings and agreements, written or oral, of the parties to the Agreement with respect to the Award.

 

(d)                                 Receipt of Plan.  By entering into this Agreement, Recipient acknowledges (i) that he has received and read a copy of the Plan and (ii) that this Agreement is subject to and shall be construed in accordance with the terms and conditions of the Plan, as now or hereinafter in effect.  By entering into this Agreement, Recipient further acknowledges that all grants under the Plan are determined by the Committee in its sole discretion and that nothing contained in the

 

4

 

Plan or in any grant under the Plan shall confer a right or entitlement to receive any further grants in the future.

 

(e)                                  Severability.  In the event that one or more of the provisions of this Agreement may be invalidated for any reason by a court, any provision so invalidated will be deemed to be separable from the other provisions hereof, and the remaining provisions hereof will continue to be valid and fully enforceable.

 

(f)                                   No Obligation to Continue Position as an Officer or to Employ.  Neither the Company nor any affiliate is obligated by or as a result of this Agreement to continue to have the Recipient as an executive officer or to employ the Recipient and this Agreement shall not interfere in any way with the right of the Company or any affiliate to terminate the Recipient’s employment as an executive officer or employee at any time.

 

In Witness Whereof, the parties hereto have executed this Agreement, effective as of the Grant Date.

 

	
 
    	
MACK-CALI   REALTY CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:   
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
RECIPIENT
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    

 

5

 

EXHIBIT C

 

MACK-CALI REALTY CORPORATION

STOCK OPTION AGREEMENT

MICHAEL J. DEMARCO

 

 

AGREEMENT EVIDENCING THE GRANT

OF A TIME VESTING STOCK OPTION AWARD PURSUANT

TO THE 2013 INCENTIVE STOCK PLAN

OF MACK-CALI REALTY CORPORATION

 

 

This Stock Option Agreement (this “Agreement”) between Mack-Cali Realty Corporation (the “Company”) and Michael J. DeMarco (the “Optionee”) is delivered under the Mack-Cali Realty Corporation 2013 Incentive Stock Plan (the “Plan”), and shall be effective as of                                [Date shall be two days following the date of the press release announcing the hiring of Recipient.] (the “Grant Date”).

 

WITNESSETH:

 

1.                                      Grant of this Option:  Pursuant to the provisions of the Plan, the Company hereby grants to the Optionee, subject to the terms and conditions of the Plan and subject further to the terms and conditions herein set forth, an option (the “Option”) to purchase from the Company all or any part of an aggregate of 200,000 Shares  (the “Option Shares”), at a purchase price of $          per share, subject to adjustment as provided herein and in the Plan, such Option to be exercised as hereinafter provided.

 

2.                                      Terms and Conditions:  It is understood and agreed that this Option evidenced hereby is an incentive stock option to the extent all or any portion of this Option qualifies as an “incentive stock option” under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”) and to the extent that all or any portion of this Option does not so qualify, a non-qualified stock option subject to the following terms and conditions:

 

(a)                                 Expiration Date: This Option shall expire on the tenth (10th) anniversary of the Grant Date, unless earlier terminated as provided in Section 2(d).

 

(b)                                 Vesting of Option:  Subject to earlier termination of this Option as provided herein and that certain Executive Employment Agreement, dated June 3, 2015, by and between the Company and the Optionee (the “Employment Agreement”) regarding the exercisability of this Option, this Option shall vest and may be exercised by Optionee after each vesting date in accordance with the following:

 

1

 

	
Vesting Date
    	
 
    	
Number of Shares
    
	
 
    	
 
    	
 
    
	
First   anniversary of Grant Date
    	
 
    	
1/3   of shares
    
	
Second   anniversary of Grant Date
    	
 
    	
1/3   of shares
    
	
Third   anniversary of Grant Date
    	
 
    	
1/3   of shares
    

 

To the extent that any vested portion of this Option is not exercised in any given year, the vested portion of this Option subject to exercise in that year may be exercised in subsequent years until this Option expires or otherwise terminates pursuant to the terms and conditions contained herein, the Plan or the Employment Agreement.

 

Any exercise shall be accompanied by a written notice to the Company specifying the number of Option Shares as to which this Option is being exercised.  Vesting of this Option granted hereunder is conditioned upon Optionee being employed by the Company on each of the Vesting Dates listed above (except as may be set forth in the Employment Agreement).

 

(c)                                  Payment of Purchase Price Upon Exercise: At the time of any exercise, the purchase price of the Option Shares as to which this Option is being exercised shall be paid by Optionee to the Company (i) in cash, (ii) at the option of the Optionee, in Shares (including Option Shares), valued at the mean of the high and low sale prices of such stock on the New York Stock Exchange on the day of exercise, or (iii) a combination thereof.

 

(d)                                 Termination of Employment: Except as specifically set forth in Sections 6, 7 and 8 of the Employment Agreement, in the event Optionee shall cease to be employed by the Company or a subsidiary of the Company (other than by reason of the Optionee’s death or Disability, as defined in the Employment Agreement), any portion of this Option granted hereunder that is not vested and exercisable as of the date of the Optionee’s termination of employment shall automatically expire and be forfeited as of such date and the Optionee’s ability to exercise the vested portion of the Option granted hereunder shall terminate on the earlier to occur of (i) the expiration of three (3) months from the date of termination of employment or (ii) the Expiration Date.

 

(e)                                  Non-transferability: This Option shall not be transferable and may not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed by Optionee other than by will or by the laws of descent and distribution (in which case, such transferee shall succeed to the rights and obligations of Optionee hereunder).  During the lifetime of Optionee, this Option shall be exercisable only by Optionee.  If Optionee or anyone claiming under or through Optionee attempts to violate this Section, such attempted violation shall be null and void and without effect and the Company’s obligations hereunder shall terminate.

 

(f)                                   Death; Disability:  Pursuant to Section 6 of the Employment Agreement, if Optionee dies while in the employ of the Company or any subsidiary of the Company, or Optionee’s employment is terminated by the Company or any subsidiary on account of

 

2

 

Disability, then any unvested portion of this Option shall become immediately fully vested as of the date of death or termination for Disability, and the entire unexercised portion shall be exercisable by the Optionee or his beneficiary, estate or personal representative until the Expiration Date, and otherwise in accordance with this Agreement.

 

(g)                                  No Rights as Stockholder: Optionee shall have no rights as a stockholder with respect to any Shares subject to this Option prior to the date of issuance to Optionee of a certificate or certificates for such shares (or evidence of book entry shares).

 

(h)                                 No Rights to Continued Employment: This Option shall not confer upon Optionee any right to continue in the employ of the Company or any subsidiary of the Company, or limit in any respect the right of the Company, the Board or any subsidiary to terminate such employment or service of Optionee at any time.

 

(i)                                     Compliance With Laws and Regulations: This Option and the obligation of the Company to sell and deliver shares hereunder, shall be subject to all applicable federal and state laws, rules and regulations and to such approvals by any governmental or regulatory agency as may be required.  The Company shall not be required to issue or deliver any certificates for Shares prior to (i) the listing of such shares on any stock exchange on which the Shares may then be listed and (ii) the completion of any registration or qualification of such shares under and federal or state law, or any rule or regulation of any government body which the Board or the Committee shall, in its sole discretion, determine to be necessary or advisable.  Moreover, this option may not be exercised if its exercise, or the receipt of Shares pursuant thereto, would be contrary to applicable law.

 

Optionee hereby acknowledges that the Shares which Optionee may acquire by exercising this Option shall be acquired for investment without a view to distribution, within the meaning of the Securities Act of 1933, as amended, (the “Securities Act”), and shall not be sold, transferred, assigned, pledged or hypothecated in the absence of an effective registration statement for the Shares under the Securities Act and applicable state securities laws or an applicable exemption from the registration requirements of the Act and any applicable state securities laws.  Optionee also agrees that the Shares which Optionee may acquire by exercising this Option shall not be sold or otherwise disposed of in any manner which would constitute a violation of any applicable securities laws, whether federal or state.

 

3.                                      Withholding and Taxes:  In connection with the exercise of the Option, the Optionee will pay to the Company any minimum United States federal, state or local or foreign taxes of any kind required by law to be withheld with respect to such amount (the “Minimum Withholding Amount”).  Payment of the Minimum Withholding Amount shall be made by the Optionee either (x) in cash, or (y) by transferring to the Company such number of Shares (including by withholding Option Shares) with a tax value equal to the Minimum Withholding Amount.  The obligations of the Company under this Agreement will be conditional on such payment or arrangements, and the Company and its affiliates shall, to the extent permitted by law, have the right to deduct any such taxes from any payment otherwise due to the Optionee.

 

3

 

4.                                      Adjustment Provisions:  In the event of (i) changes in the Shares by reason of stock dividends, spin-offs, split-ups or combination of shares, reclassifications, recapitalizations, mergers, consolidation, reorganizations or liquidations or (ii) any spin-off, extraordinary dividend or distribution of assets,  appropriate adjustments shall be made by the Committee in (a) the number and class of shares thereafter subject to this Option and (b) the purchase price as set forth above, in each case to prevent dilution or enlargement of the Optionee’s rights hereunder.  Whether any adjustment or modification is required, and the amount thereof, shall be determined by the Committee, which determination shall be final and binding on all interested parties.

 

5.                                      Corporate Action by the Company:  Existence of this Option shall not impair the right of the Company or its shareholders to make adjustments, recapitalizations, reorganizations or other changes in its capital structure or business, to consummate any merger or consolidation of the Company, to issue bonds, debentures, preferred or prior preference stocks ahead of or affecting the Shares or the rights thereof, to dissolve or liquidate the Company, to sell or transfer all or any part of its assets or business, or to do or take any other corporate act or proceeding it or they might have done or taken if this Option was not in existence.

 

6.                                      Interpretation:  As a condition of granting of this option, Optionee, and each person who succeeds to Optionee’s rights hereunder, agrees that any dispute or disagreement which shall arise out of or by reason of this Option shall be determined by the Committee in its sole discretion and such determination shall be final and binding on all interested parties.  If no Committee is acting, its functions shall be performed by the Board, and each reference herein to the Committee shall, in that event, be deemed to refer to the Board.  By accepting this grant or other benefit under the Plan, Optionee and each person claiming under or through Optionee shall be conclusively deemed to have indicated acceptance and ratification of, and consent to, any action taken under the Plan by the Company, the Board or the Committee or its delegates.

 

7.                                      Optionee Bound by Plan:  Enclosed is a copy of the Plan which is incorporated herein by reference and made a part hereof.  The Plan shall govern in all aspects of this Agreement except as otherwise specifically stated herein.  Optionee hereby acknowledges receipt of a copy of the Plan and agrees to be bound by all the terms and provisions thereof.  Unless otherwise defined, capitalized terms used in this Agreement without definition shall have the respective meanings given to them in the Plan.  The Plan should be carefully examined before any decision is made to exercise this Option.

 

8.                                      Notices:  Any notice hereunder to the Company shall be addressed to it at its office, 343 Thornall Street, Edison, NJ 08837-2206; Attention:  General Counsel, and any notice hereunder to Optionee shall be addressed to Optionee at the residence address of Optionee as noted in the Company’s files, subject to the right of either party to designate at any time hereafter in writing some other address.

 

9.                                      Binding Effect:  This Agreement shall be binding upon and inure to the benefit of any successors to the Company and all persons lawfully claiming under the Optionee.

 

4

 

10.                               Governing Law: This Agreement and the rights and obligations of the parties hereto shall be governed by the laws of the State of Maryland.

 

OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THIS OPTION IS EARNED ONLY BY CONTINUED EMPLOYMENT AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS AGREEMENT, NOR IN THE COMPANY’S PLAN WHICH IS INCORPORATED HEREIN BY REFERENCE, SHALL CONFER UPON OPTIONEE ANY RIGHT WITH RESPECT TO CONTINUATION OF EMPLOYMENT WITH THE COMPANY, NOR SHALL IT INTERFERE IN ANY WAY WITH HIS OR HER RIGHT OR THE COMPANY’S RIGHT TO TERMINATE HIS OR HER EMPLOYMENT AT ANY TIME, WITH OR WITHOUT CAUSE.

 

5

 

IN WITNESS WHEREOF, Mack-Cali Realty Corporation has caused this Agreement to be executed by its duly authorized officers, and Optionee has executed this Agreement, both as of the date and year first above written.

 

	
ATTEST:
    	
 
    	
 
    	
MACK-CALI   REALTY CORPORATION
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Name:
    	
 
    	
Name:
    	
 
    
	
Title:
    	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Optionee:
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Michael   J. DeMarco
    

 

6

 

Optionee acknowledges receipt of a copy of the Plan and represents that he or she is familiar with the terms and provisions thereof, and hereby accepts this Option subject to all of the terms and provisions thereof except as otherwise specifically stated in this Agreement.  Optionee has reviewed the Plan and this Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Agreement and fully understands all provisions of this Agreement.  Optionee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee or the Board upon any questions arising under the Plan.

 

	
 
    	
Optionee:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Michael   J. DeMarco
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Date
    

 

7

 

EXHIBIT D

 

MACK-CALI REALTY CORPORATION

STOCK OPTION AGREEMENT

MICHAEL J. DEMARCO

 

 

AGREEMENT EVIDENCING THE GRANT

OF A PRICE VESTING STOCK OPTION AWARD PURSUANT

TO THE 2013 INCENTIVE STOCK PLAN

OF MACK-CALI REALTY CORPORATION

 

 

This Stock Option Agreement (this “Agreement”) between Mack-Cali Realty Corporation (the “Company”) and Michael J. DeMarco (the “Optionee”) is delivered under the Mack-Cali Realty Corporation 2013 Incentive Stock Plan (the “Plan”), and shall be effective as of                                [Date shall be two days following the date of the press release announcing the hiring of Recipient] (the “Grant Date”).

 

WITNESSETH:

 

1.                                      Grant of this Option:  Pursuant to the provisions of the Plan, the Company hereby grants to the Optionee, subject to the terms and conditions of the Plan and subject further to the terms and conditions herein set forth, an option (the “Option”) to purchase from the Company all or any part of an aggregate of 200,000 Shares  (the “Option Shares”), at a purchase price of $          per share, subject to adjustment as provided herein and in the Plan, such Option to be exercised as hereinafter provided.

 

2.                                      Terms and Conditions:  It is understood and agreed that this Option evidenced hereby is an incentive stock option to the extent all or any portion of this Option qualifies as an “incentive stock option” under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”) and to the extent that all or any portion of this Option does not so qualify, a non-qualified stock option subject to the following terms and conditions:

 

(a)                                 Expiration Date: This Option shall expire on the tenth (10th) anniversary of the Grant Date, unless earlier terminated as provided in Section 2(d).

 

(b)                                 Vesting of Option:  Subject to earlier termination of this Option as provided herein and that certain Executive Employment Agreement, dated June 3, 2015, by and between the Company and the Optionee (the “Employment Agreement”) regarding the exercisability of this Option, this Option shall vest in full and may be exercised by Optionee upon the satisfaction of the Share Price Vesting Condition. For purposes of this Agreement, the “Share Price Vesting Condition” means the closing share price of the a Share being equal to or

 

1

 

greater than $25 for at least thirty (30) consecutive trading days either (i) during the Employment Period (as defined in the Employment Agreement), or (2) in the event that the Employment Period has lasted for the entire Term (as defined in the Employment Agreement), on or before June 30, 2019 (except if the Optionee’s employment is terminated by the Company for Cause (as defined in the Employment Agreement) following the expiration of the Term).

 

Any exercise shall be accompanied by a written notice to the Company specifying the number of Option Shares as to which this Option is being exercised.

 

(c)                                  Payment of Purchase Price Upon Exercise: At the time of any exercise, the purchase price of the Option Shares as to which this Option is being exercised shall be paid by Optionee to the Company (i) in cash, (ii) at the option of the Optionee, in Shares (including Option Shares), valued at the mean of the high and low sale prices of such stock on the New York Stock Exchange on the day of exercise, or (iii) a combination thereof.

 

(d)                                 Termination of Employment: Except as specifically set forth in Sections 6, 7 and 8 of the Employment Agreement: (i) in the event Optionee’s employment with the Company or any of its subsidiaries terminates for Cause prior to the Share Price Vesting Condition being satisfied, then the Option shall automatically expire and be forfeited as of the date of such termination of employment and (ii) in the event Optionee’s employment with the Company or any of its subsidiaries terminates for any reason other than for Cause after December 31, 2018 but prior to the Share Price Vesting Condition being satisfied, then the Option shall continue to be eligible to satisfy the Share Vesting Condition until June 30, 2019 and, if not, then the Option shall automatically expire and be forfeited as of June 30, 2019.

 

(e)                                  Non-transferability: This Option shall not be transferable and may not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed by Optionee other than by will or by the laws of descent and distribution (in which case, such transferee shall succeed to the rights and obligations of Optionee hereunder).  During the lifetime of Optionee, this Option shall be exercisable only by Optionee.  If Optionee or anyone claiming under or through Optionee attempts to violate this Section, such attempted violation shall be null and void and without effect and the Company’s obligations hereunder shall terminate.

 

(f)                                   No Rights as Stockholder: Optionee shall have no rights as a stockholder with respect to any Shares subject to this Option prior to the date of issuance to Optionee of a certificate or certificates for such shares (or evidence of book entry shares).

 

(g)                                  No Rights to Continued Employment: This Option shall not confer upon Optionee any right to continue in the employ of the Company or any subsidiary of the Company, or limit in any respect the right of the Company, the Board or any subsidiary to terminate such employment or service of Optionee at any time.

 

(h)                                 Compliance With Laws and Regulations: This Option and the obligation of the Company to sell and deliver shares hereunder, shall be subject to all applicable federal and state

 

2

 

laws, rules and regulations and to such approvals by any governmental or regulatory agency as may be required.  The Company shall not be required to issue or deliver any certificates for Shares prior to (i) the listing of such shares on any stock exchange on which the Shares may then be listed and (ii) the completion of any registration or qualification of such shares under and federal or state law, or any rule or regulation of any government body which the Board or the Committee shall, in its sole discretion, determine to be necessary or advisable.  Moreover, this option may not be exercised if its exercise, or the receipt of Shares pursuant thereto, would be contrary to applicable law.

 

Optionee hereby acknowledges that the Shares which Optionee may acquire by exercising this Option shall be acquired for investment without a view to distribution, within the meaning of the Securities Act of 1933, as amended, (the “Securities Act”), and shall not be sold, transferred, assigned, pledged or hypothecated in the absence of an effective registration statement for the Shares under the Securities Act and applicable state securities laws or an applicable exemption from the registration requirements of the Act and any applicable state securities laws.  Optionee also agrees that the Shares which Optionee may acquire by exercising this Option shall not be sold or otherwise disposed of in any manner which would constitute a violation of any applicable securities laws, whether federal or state.

 

3.                                      Withholding and Taxes:  In connection with the exercise of the Option, the Optionee will pay to the Company any minimum United States federal, state or local or foreign taxes of any kind required by law to be withheld with respect to such amount (the “Minimum Withholding Amount”).  Payment of the Minimum Withholding Amount shall be made by the Optionee either (x) in cash, or (y) by transferring to the Company such number of Shares (including by withholding Option Shares) with a tax value equal to the Minimum Withholding Amount.  The obligations of the Company under this Agreement will be conditional on such payment or arrangements, and the Company and its affiliates shall, to the extent permitted by law, have the right to deduct any such taxes from any payment otherwise due to the Optionee.

 

4.                                      Adjustment Provisions:  In the event of (i) changes in the Shares by reason of stock dividends, split-ups or combination of shares, reclassifications, recapitalizations, mergers, consolidation, reorganizations or liquidations or (ii)any spin-off, extraordinary dividend or distribution of assets,  appropriate adjustments shall be made by the Committee in (a) the number and class of shares thereafter subject to this Option and (b) the purchase price as set forth above, in each case to prevent dilution or enlargement of the Optionee’s rights hereunder. Whether any adjustment or modification is required, and the amount thereof, shall be determined by the Committee, which determination shall be final and binding on all interested parties.

 

5.                                      Corporate Action by the Company:  Existence of this Option shall not impair the right of the Company or its shareholders to make adjustments, recapitalizations, reorganizations or other changes in its capital structure or business, to consummate any merger or consolidation of the Company, to issue bonds, debentures, preferred or prior preference stocks ahead of or affecting the Shares or the rights thereof, to dissolve or liquidate the Company, to sell or transfer all or any part of its assets or business, or to do or take any other corporate act or proceeding it or they might have done or taken if this Option was not in existence.

 

3

 

6.                                      Interpretation:  As a condition of granting of this option, Optionee, and each person who succeeds to Optionee’s rights hereunder, agrees that any dispute or disagreement which shall arise out of or by reason of this Option shall be determined by the Committee in its sole discretion and such determination shall be final and binding on all interested parties.  If no Committee is acting, its functions shall be performed by the Board, and each reference herein to the Committee shall, in that event, be deemed to refer to the Board.  By accepting this grant or other benefit under the Plan, Optionee and each person claiming under or through Optionee shall be conclusively deemed to have indicated acceptance and ratification of, and consent to, any action taken under the Plan by the Company, the Board or the Committee or its delegates.

 

7.                                      Optionee Bound by Plan:  Enclosed is a copy of the Plan which is incorporated herein by reference and made a part hereof.  The Plan shall govern in all aspects of this Agreement except as otherwise specifically stated herein or in the Employment Agreement.  Optionee hereby acknowledges receipt of a copy of the Plan and agrees to be bound by all the terms and provisions thereof.  Unless otherwise defined, capitalized terms used in this Agreement without definition shall have the respective meanings given to them in the Plan.  The Plan should be carefully examined before any decision is made to exercise this Option.

 

8.                                      Notices:  Any notice hereunder to the Company shall be addressed to it at its office, 343 Thornall Street, Edison, NJ 08837-2206; Attention:  General Counsel, and any notice hereunder to Optionee shall be addressed to Optionee at the residence address of Optionee as noted in the Company’s files, subject to the right of either party to designate at any time hereafter in writing some other address.

 

9.                                      Binding Effect:  This Agreement shall be binding upon and inure to the benefit of any successors to the Company and all persons lawfully claiming under the Optionee.

 

10.                               Governing Law: This Agreement and the rights and obligations of the parties hereto shall be governed by the laws of the State of Maryland.

 

OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THIS OPTION IS EARNED ONLY BY CONTINUED EMPLOYMENT AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS AGREEMENT, NOR IN THE COMPANY’S PLAN WHICH IS INCORPORATED HEREIN BY REFERENCE, SHALL CONFER UPON OPTIONEE ANY RIGHT WITH RESPECT TO CONTINUATION OF EMPLOYMENT WITH THE COMPANY, NOR SHALL IT INTERFERE IN ANY WAY WITH HIS OR HER RIGHT OR THE COMPANY’S RIGHT TO TERMINATE HIS OR HER EMPLOYMENT AT ANY TIME, WITH OR WITHOUT CAUSE.

 

4

 

IN WITNESS WHEREOF, Mack-Cali Realty Corporation has caused this Agreement to be executed by its duly authorized officers, and Optionee has executed this Agreement, both as of the date and year first above written.

 

	
ATTEST:
    	
 
    	
 
    	
MACK-CALI   REALTY CORPORATION
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Name:
    	
 
    	
Name:
    	
 
    
	
Title:
    	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Optionee:
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Michael   J. DeMarco
    

 

5

 

Optionee acknowledges receipt of a copy of the Plan and represents that he or she is familiar with the terms and provisions thereof, and hereby accepts this Option subject to all of the terms and provisions thereof except as otherwise specifically stated in this Agreement.  Optionee has reviewed the Plan and this Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Agreement and fully understands all provisions of this Agreement.  Optionee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee or the Board upon any questions arising under the Plan.

 

	
 
    	
Optionee:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Michael   J. DeMarco
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Date
    

 

6

 

EXHIBIT E

 

RELEASE

 

Reference is made to that certain Employment Agreement dated as of June 3, 2015 (“Agreement”), by and between Michael J. DeMarco (“Executive”) and Mack-Cali Realty Corporation (the “Company”). Capitalized terms used in this Release and not defined herein shall have the meaning assigned to them in the Agreement.

 

In further consideration of the covenants undertaken pursuant to the Agreement, including, without limitation, the payments and benefits described in Sections 6, 7 and 8 thereof, Executive hereby waives, releases and forever discharges the Company and any of its predecessors, parents, subsidiaries, affiliates, and related companies, and all of his, its and/or their respective past and present parents, subsidiaries and affiliates, and all of their past and present employees, directors, officers, members, attorneys, representatives, insurers, agents, shareholders, successors, and assigns (individually and collectively “Company Releasees”), from and with respect to any and all legally waivable claims, grievances, injuries, controversies, agreements, covenants, promises, debts, accounts, actions, causes of action, suits, arbitrations, sums of money, attorneys’ fees, costs, damages, or any right to any monetary recovery or any other personal relief, whether  known or unknown, in law or in equity, by contract, tort or pursuant to federal, state or local statute, regulation, ordinance or common law, which Executive now has, ever had, or may  hereafter have, based upon or arising from any fact or set of facts, whether known or unknown to Executive, from the beginning of time until the Termination Date.  Without limiting the generality of the foregoing, this waiver, release, and discharge includes any claim or right asserted or which could have been asserted by Executive against the Company and/ or based upon or arising under any federal, state or local tort, fair employment practices, equal opportunity, or wage and hour laws, including, but not limited to, the common law of the State of New York and the State of New Jersey, Title VII of the Civil Rights Act of 1964, the New York State Human Rights Law, the New York City Human Rights Law, the Americans with Disabilities Act, the Age Discrimination in Employment Act, 42 U.S.C. Section 1981, the Equal Pay Act, the Fair Labor Standards Act, the New York Labor Law, the New Jersey Law Against Discrimination, the New Jersey Wage and Hour Law, the New Jersey Family Leave Act, the New Jersey Conscientious Employee Protection Act and the Employee Retirement Income Security Act, including all amendments thereto.

 

Notwithstanding the generality of the foregoing, nothing herein constitutes a release or waiver by Executive of: (i) any claim or right that may first arise after the Termination Date; (ii) any right to payments or benefits pursuant to the Agreement, including any such payments or benefits  that will be due to Executive upon the due execution and delivery, and no revocation, of this Release in accordance with Section 9 of the Agreement; (iii) any claim or right Executive may have pursuant to any indemnification agreements, or to indemnification, advancement, defense or reimbursement pursuant to any applicable D&O policies or any similar insurance policies, the Company’s amended and restated by-laws, as amended, or under applicable law or (iv) any claim Executive may have as a stockholder of the Company.

 

 

 

Executive acknowledges that he has a right by written notice to the Company in accordance with the notice provisions set forth in Section 15(a) of the Agreement to revoke this Release within seven (7) days after delivery thereof, which revocation shall result in the consequences set forth in the Agreement, including, without limitation, Section 9 thereof.

 

	
Dated:
    	
 
    	
 
    	
Michael   J. DeMarco: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
    
					

 

i

 

	
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
    

 

ii

 

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”);

 

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; and

 

WHEREAS, the Parties acknowledge that this Agreement, the Separation and Distribution Agreement, and the Ancillary Agreements represent the integrated agreement of Parent and SpinCo relating to the Separation and Distribution, are being entered together, and would not have been entered independently.

 

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.

 

2

 

“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.

 

3

 

“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

 

4

 

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.

 

5

 

(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

 

6

 

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

 

7

 

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.  This Agreement, the Separation and Distribution Agreement, and the Ancillary Agreements govern the arrangements in connection with the Separation and Distribution and would not have been entered independently.

 

(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]

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