Document:

Exhibit 10.1

 

 

TRANSITION SERVICES AGREEMENT

 

by and between

 

Wyndham Destinations, Inc.

 

and

 

Wyndham Worldwide Corporation

 

 

Dated as of
 [·], 2018

 

 

 

 

Table of Contents

 

	
ARTICLE 1 DEFINITIONS AND INTERPRETATION
    	
1
    
	
 
    	
 
    	
 
    
	
Section 1.01
    	
Certain Definitions
    	
1
    
	
Section 1.02
    	
References;   Interpretation
    	
3
    
	
 
    	
 
    	
 
    
	
ARTICLE 2 SERVICES
    	
4
    
	
 
    	
 
    	
 
    
	
Section 2.01
    	
Provision of Services
    	
4
    
	
Section 2.02
    	
Additional Services
    	
4
    
	
Section 2.03
    	
Standard of Performance
    	
5
    
	
Section 2.04
    	
Subcontracting
    	
5
    
	
Section 2.05
    	
Cooperation
    	
5
    
	
Section 2.06
    	
Third Party Consents
    	
6
    
	
Section 2.07
    	
Certain Limits on   Services
    	
7
    
	
Section 2.08
    	
Transitional Nature of   Services; Changes
    	
7
    
	
Section 2.09
    	
Limited Remedy
    	
7
    
	
 
    	
 
    	
 
    
	
ARTICLE 3 PAYMENT; BILLING
    	
8
    
	
 
    	
 
    	
 
    
	
Section 3.01
    	
Charges for the   Services
    	
8
    
	
Section 3.02
    	
Invoices
    	
8
    
	
Section 3.03
    	
Payments
    	
8
    
	
Section 3.04
    	
Late Payments; Invoice   Disputes
    	
8
    
	
Section 3.05
    	
Taxes
    	
9
    
	
Section 3.06
    	
Indirect Tax   Registration
    	
9
    
	
 
    	
 
    	
 
    
	
ARTICLE 4 BOOKS AND RECORDS
    	
9
    
	
 
    	
 
    	
 
    
	
Section 4.01
    	
Maintenance of Books   and Records; Inspection Rights
    	
9
    
	
 
    	
 
    	
 
    
	
ARTICLE 5 CONFIDENTIALITY
    	
9
    
	
 
    	
 
    	
 
    
	
Section 5.01
    	
Confidentiality   Obligations
    	
9
    
	
Section 5.02
    	
Permitted Disclosures
    	
10
    
	
Section 5.03
    	
Return of Confidential Information
    	
10
    
	
 
    	
 
    	
 
    
	
ARTICLE 6 INTELLECTUAL PROPERTY; DATA;   PERSONAL INFORMATION
    	
11
    
	
 
    	
 
    	
 
    
	
Section 6.01
    	
Intellectual Property
    	
11
    
	
Section 6.02
    	
Ownership of Data
    	
11
    
	
Section 6.03
    	
Sharing
    	
11
    
	
 
    	
 
    	
 
    
	
ARTICLE 7 TERM AND TERMINATION
    	
12
    
	
 
    	
 
    	
 
    
	
Section 7.01
    	
Initial Term
    	
12
    
	
Section 7.02
    	
Service Period   Extensions
    	
13
    
	
Section 7.03
    	
Early Termination
    	
13
    
	
Section 7.04
    	
Data Transmission
    	
13
    
	
Section 7.05
    	
Effect of Termination
    	
14
    

 

i

 

	
ARTICLE 8 DISCLAIMER AND LIMITATION OF   LIABILITY
    	
15
    
	
 
    	
 
    	
 
    
	
Section 8.01
    	
Disclaimer of   Warranties
    	
15
    
	
Section 8.02
    	
Disclaimer of   Consequential Damages
    	
15
    
	
Section 8.03
    	
Liability Cap
    	
15
    
	
 
    	
 
    	
 
    
	
ARTICLE 9 MISCELLANEOUS
    	
15
    
	
 
    	
 
    	
 
    
	
Section 9.01
    	
Force Majeure
    	
15
    
	
Section 9.02
    	
Complete Agreement;   Construction
    	
16
    
	
Section 9.03
    	
Relationship of the   Parties
    	
16
    
	
Section 9.04
    	
No Third Party   Beneficiaries
    	
16
    
	
Section 9.05
    	
Notices
    	
16
    
	
Section 9.06
    	
Waivers
    	
17
    
	
Section 9.07
    	
Amendments
    	
17
    
	
Section 9.08
    	
Assignment
    	
17
    
	
Section 9.09
    	
Counterparts
    	
17
    
	
Section 9.10
    	
Severability
    	
17
    
	
Section 9.11
    	
GOVERNING LAW
    	
18
    
	
Section 9.12
    	
Waiver of Jury Trial
    	
18
    
	
Section 9.13
    	
Dispute Resolution
    	
18
    

 

Service Schedules

 

[·]

 

ii

 

TRANSITION SERVICES AGREEMENT

 

THIS TRANSITION SERVICES AGREEMENT (this “Agreement”) effective as of [·], 2018 (the “Effective Date”), is hereby made by and between Wyndham Hotels & Resorts, Inc., a Delaware corporation (“SpinCo”), and Wyndham Destinations, Inc., a Delaware corporation (“RemainCo”).  Each of SpinCo and RemainCo is sometimes referred to herein as a “Party” and collectively, as the “Parties”.

 

W  I  T  N  E  S  S  E  T  H:

 

WHEREAS, SpinCo and RemainCo have entered into a Separation and Distribution Agreement, dated as of [·], 2018 (the “SDA”), pursuant to which, among other things, (i) RemainCo and SpinCo will enter into a series of transactions whereby (A) RemainCo and/or one or more members of the RemainCo Group will, collectively, own all of the RemainCo Assets  and Assume (or retain) all of the RemainCo Liabilities, and (B) SpinCo and/or one or more members of the SpinCo Group will, collectively, own all of the SpinCo Assets and Assume (or retain) all of the SpinCo Liabilities and (ii) for RemainCo to distribute to the holders of RemainCo Common Stock on a pro rata basis (without consideration being paid by such stockholders) all of the outstanding shares of SpinCo Common Stock; and

 

WHEREAS, this Agreement is the “Transition Services Agreement” referred to in the SDA, and the Parties have agreed to enter into this Agreement at the Closing pursuant to the SDA.

 

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

 

ARTICLE 1

 

DEFINITIONS AND INTERPRETATION

 

Section 1.01                             Certain Definitions.  As used in this Agreement, the following terms shall have the following meanings (and all other capitalized terms used but not defined herein shall have the meanings given to such terms in the SDA):

 

“Additional Services” shall have the meaning set forth in Section 2.02.

 

“Affiliate” shall mean, when used with respect to a specified Person, a Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with such specified Person.  For the purposes of this definition, “control”, when used with respect to any specified Person shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or other interests, by Contract or otherwise.  It is expressly agreed that no Party shall be deemed to be an Affiliate of the other Party by reason of having one or more directors in common or having the same Chairman of the board of directors.

 

“Agreement” shall have the meaning set forth in the preamble.

 

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“Charges” shall have the meaning set forth in Section 3.01.

 

“Confidential Information” shall mean all non-public, confidential or proprietary Information received, or otherwise obtained, by Receiving Party from Disclosing Party, on or after the Effective Date, in connection with this Agreement, of or concerning (a) the Disclosing Party or its past, current or future activities, businesses, finances, Assets, Liabilities or operations or (b) any third party who has provided Information to the Disclosing Party in confidence, except, in each case, for any Information that is (i) in the public domain or available to the public through no fault of the Receiving Party, (ii) lawfully acquired after the Effective Date by the Receiving Party from other sources not known to be subject to confidentiality obligations with respect to such Information or (iii) independently developed by the Receiving Party after the Effective Date without use of or reference to any Confidential Information.

 

“Data” shall have the meaning set forth in the Data Sharing Addendum.

 

“Data Processor” shall have the meaning set forth in the Data Sharing Addendum.

 

“Disclosing Party” shall mean a Party or any of its Affiliates or any Person acting on any of their behalves that discloses Confidential Information to a Receiving Party under this Agreement.

 

“Dispute” shall have the meaning set forth in Section 9.14 (a).

 

“Dispute Notice” shall have the meaning set forth in Section 9.14 (a).

 

“Effective Date” shall have the meaning set forth in the preamble.

 

“Force Majeure” shall have the meaning set forth in Section 9.01.

 

“Indirect Taxes” shall have the meaning set forth in the Tax Matters Agreement.

 

“Information” shall mean information and data, whether or not patentable or copyrightable, in written, oral, electronic, computerized or digital, or other tangible or intangible forms, stored in any medium, including studies, reports, records, ledgers, books, contracts, instruments, surveys, discoveries, ideas, concepts, know-how, techniques, designs, specifications, drawings, blueprints, diagrams, artwork, models, prototypes, samples, policies, procedures and manuals, flow charts, product literature, files, data, computer data, disks, diskettes, tapes, computer programs or other software, marketing plans, customer names, correspondence, communications (including attorney-client privileged communications), memos and other materials of any nature, including operational, technical or legal, and other technical, financial, employee or business information or data, including earnings reports and forecasts, macro-economic reports and forecasts, all cost information, sales and pricing data, business plans, market evaluations, surveys, credit-related information and customer information.

 

“Party” or “Parties” shall have the meaning set forth in the preamble.

 

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“Receiving Party” shall mean a Party or any of its Affiliates or any Person acting on any of their behalves that receives Confidential Information from a Disclosing Party under this Agreement.

 

“Related Parties” shall mean, with respect to a Party, its officers, directors, employees and any of its Affiliates or Subsidiaries, and their officers, directors or employees, shareholders, agents and other representatives, or any of the successors or assigns of any of the foregoing Persons.

 

“RemainCo” shall have the meaning set forth in the preamble.

 

“Representative” shall have the meaning set forth in Section 2.05(a).

 

“Review Meetings” shall have the meaning set forth in Section 2.05(a).

 

“SDA” shall have the meaning set forth in the recitals.

 

“Service Period” shall mean, with respect to any Service, the period commencing on the Effective Date and ending on the earlier of (i) the date Service Provider or Service Recipient terminates the provision of such Service in accordance with the terms of this Agreement, and (ii) the termination date specified with respect to such Service on the Service Schedule applicable to such Service (or, if no termination date is specified in the applicable Service Schedule, twelve (12) months from the Effective Date), taking into consideration any extensions thereto made in accordance with the terms of this Agreement.

 

“Service Provider” shall mean the Party providing a Service hereunder.

 

“Service Recipient” shall mean the Party receiving a Service hereunder.

 

“Service Schedule” shall have the meaning set forth in Section 2.01.

 

“Service Taxes” shall have the meaning set forth in Section 3.05.

 

“Services” shall have the meaning set forth in Section 2.01.

 

“SpinCo” shall have the meaning set forth in the preamble.

 

“Subcontractor” shall have the meaning set forth in Section 2.04.

 

“Tax” or “Taxes” shall have the meaning set forth in the Tax Matters Agreement.

 

“Term” shall have the meaning set forth in Section 7.01.

 

“Third Party” shall mean a Person that is neither a Party nor an Affiliate of a Party.

 

Section 1.02                             References; Interpretation.  References in this Agreement to any gender include references to all genders, and references to the singular include references to the plural and vice versa. Unless the context otherwise requires, the words “include”, “includes” and

 

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“including” when used in this Agreement shall be deemed to be followed by the phrase “without limitation”. Unless the context otherwise requires, references in this Agreement to Articles, Sections, Annexes, Exhibits and Schedules shall be deemed references to Articles and Sections of, and Annexes, Exhibits and Schedules to, this Agreement. Unless the context otherwise requires, the words “hereof”, “hereby” and “herein” and words of similar meaning when used in this Agreement refer to this Agreement in its entirety and not to any particular Article, Section or provision of this Agreement.

 

ARTICLE 2

 

SERVICES

 

Section 2.01                             Provision of Services.  Service Provider shall provide to Service Recipient (or, as applicable, its Affiliates), the applicable services (each, a “Service” and collectively, the “Services”) set out on schedules attached hereto (as may be amended, supplemented or modified from time to time by mutual agreement of the Parties or in accordance with Section 2.02, each, a “Service Schedule” and collectively, the “Service Schedules”), in each case for the duration of the applicable Service Period.  Subject to Section 2.02, Service Provider shall not have any obligation hereunder to provide any services not set forth on a Service Schedule.   The Services shall in not in any event include any services identified as “Excluded Services” on the Service Schedules.  For clarity, each Party may perform its obligations, and exercise its rights, under this Agreement through any of its Affiliates.

 

Section 2.02                             Additional Services.

 

(a)                                 From time to time during the Term, Service Recipient may request that Service Provider provide additional services (which may include Excluded Services) not included in the Services (such services, “Additional Services”).  In the event that Service Recipient requests that Service Provider provide any Additional Services that (i) are directly dependent upon or inextricably intertwined with the Services and (ii) were inadvertently and unintentionally omitted from the Services, the Parties shall negotiate in good faith to determine the terms and conditions for the provision of such Additional Services; provided, however, that Service Provider shall not be obligated to provide Additional Services if, notwithstanding such good faith negotiation, the Parties are unable to reach agreement on the terms and conditions with respect to the provision of such Additional Services.  For clarity, Service Provider shall not have any obligation to consider in good faith any request from Service Recipient for Additional Services unless such Services meet the criteria in (i) and (ii) above.

 

(b)                                 In the event the Parties agree that Service Provider will provide any Additional Service, such Additional Service shall automatically constitute a “Service” hereunder, and the Parties shall execute an amendment to the relevant Service Schedule that shall set forth, among other things, (i) the termination date for such Additional Service, (ii) a description of such Additional Service in reasonable detail, (iii) the fees and costs to Service Recipient for such Additional Service, and (iv) any additional terms and conditions specific to such Additional Service.  For clarity, Service Provider’s obligations with respect to providing any Additional Services shall become effective only upon an amendment to the applicable Service Schedule being duly executed and delivered by Service Provider and Service Recipient.

 

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Section 2.03                             Standard of Performance.

 

(a)                                 Service Provider shall perform the Services (i) in a manner, and at a level of service (including with respect to care, frequency and functionality), that is substantially similar to the manner in which, and at the level of service with which such Services were provided during the twelve (12) month period immediately prior to the Effective Date, subject to any different or additional service levels for a Service specifically set forth on the applicable Service Schedule and (ii) in compliance with applicable Law.

 

(b)                                 Service Recipient hereby acknowledges that Service Provider (i) may be providing similar services and/or services that involve the same resources as those used to provide the Services hereunder to its internal organizations and businesses and to other Affiliates and to customers and other Third Parties, and that the provision of, and allocation of resources to, any such similar services shall in no event be deemed to be a breach of Service Provider’s obligations hereunder, so long as Service Provider continues to provide the Services in accordance with the terms of this Agreement, and (ii) is not in the business of providing the Services (or any services similar to the Services) and is providing the Services to Service Recipient solely for the purpose of facilitating the transactions contemplated by the SDA.

 

Section 2.04                             Subcontracting.  Service Recipient acknowledges and agrees that Service Provider may hire or engage one or more of its Affiliates or unaffiliated Third Parties (each such Third Party, a “Subcontractor”) to provide any Service (including any part of any Service) under this Agreement; provided, that no such arrangement shall relieve Service Provider of its obligations to provide the Services hereunder.  Notwithstanding the foregoing, Service Provider shall not be liable for the acts or omissions of its Subcontractors (including any Third Party licensors, outsourcers or other vendors) in providing the Services on behalf of Service Provider, except to the extent such liability results from the willful misconduct or gross negligence of Service Provider; provided, however, that Service Provider shall take commercially reasonable efforts, and cooperate with Service Recipient (and, as applicable, its Affiliates), to pass through the benefit of any indemnities, representations or warranties under Service Provider’s agreements with such Subcontractors, to the extent permitted under the applicable agreement.  Upon Service Recipient’s request, Service Provider shall, at its option, either (i) enforce its rights under such agreement(s), or (ii) grant to Service Recipient rights of subrogation, to the extent permitted under the applicable agreement(s), so that Service Recipient may directly enforce the applicable agreement(s) against the applicable Subcontractor.  Notwithstanding the foregoing, Service Provider shall not be responsible for any failure by any Subcontractor to provide any remedies to which either Party is entitled from the applicable Subcontractors.  Service Recipient shall be responsible for all costs and expenses incurred in connection with seeking or enforcing any rights or remedies with respect to any Subcontractors hereunder (including, for clarity, any costs and expenses incurred by Service Provider in connection therewith).

 

Section 2.05                             Cooperation.

 

(a)                                 Each Party shall designate in writing to the other Party one (1) representative to act as a contact person with respect to all issues relating to the provision of the Services pursuant to this Agreement (each, a “Representative”).  The Representatives shall hold

 

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review meetings by telephone or in person, as mutually agreed upon, to discuss issues relating to the provision of the Services under this Agreement (“Review Meetings”).  In the Review Meetings, the Representatives shall be responsible for discussing, and seeking to address and resolve, any problems identified relating to the provision (or lack thereof) of Services.  If the Representatives are unable to resolve any such problems, the dispute resolution procedure set forth in Section 9.13 shall apply.

 

(b)                                 Service Recipient shall, during the applicable Service Period, timely provide to Service Provider all information, materials and other items, and otherwise cooperate, as reasonably requested by Service Provider in connection with the performance of the Services.  In the event that Service Recipient fails to timely provide any such information, materials or other items, or otherwise cooperate with Service Provider in connection with the provision of the Services, Service Provider shall be relieved of its obligation to provide any impacted Service hereunder, if and to the extent the provision of such Service is dependent or otherwise reliant on such information, materials or other items or such cooperation, but only for so long as the failure to provide such information, materials and other items continues.  For clarity, Service Provider shall not be deemed to be in default under, or otherwise in breach of any provision of, this Agreement for any failure or delay in fulfilling or performing any of its obligations under this Agreement if such failure or delay results from Service Recipient’s failure to provide such information, materials or other items to, or otherwise cooperate with, Service Provider in connection with the provision of the Services hereunder.  Each Party shall bear its own costs and expenses incurred in connection with complying with its obligations to provide information, materials and other items, and otherwise cooperate, as provided in this Section 2.05(b).

 

Section 2.06                             Third Party Consents.

 

(a)                                 The Parties shall reasonably cooperate and use commercially reasonable efforts to obtain all third-party consents, licenses and other agreements, if any, necessary for the provision of the Services.

 

(b)                                 In the event that any consent, license or other agreement necessary for the provision of the Services cannot be obtained despite the Parties’ commercially reasonable efforts, or is revoked after the Effective Date, (i) Service Provider shall (A) promptly notify Service Recipient, describing the nature of the potential exposure and any proposed modification in the Services, (B) cooperate and assist Service Recipient (or, as applicable, its Affiliates) in obtaining a reasonable alternative means by which Service Recipient (or such Affiliate) may obtain the affected Services and (C) continue to provide the Services, to the extent reasonably practicable under the circumstances, and (ii) the Parties shall use commercially reasonable efforts to reduce the amount and/or effect of disruption caused by any such failure to obtain such consent, license or other agreement.  All costs and expenses incurred in connection with obtaining any consent or obtaining any alternative arrangement shall be split evenly between the Parties.

 

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Section 2.07                             Certain Limits on Services.

 

(a)                                 Nothing in this Agreement shall require Service Provider to perform any Service in a manner that would constitute a violation of (i) applicable Law or (ii) the rights of any Person.

 

(b)                                 In the event that (i) there is nonperformance of any Service as a result of a Force Majeure or (ii) the provision of a Service would violate (A) applicable Law or (B) the rights of any Person, the Parties hereby acknowledge and agree that Service Provider may suspend performance of the Service(s) so affected during such period (but, without limiting the foregoing, only if and to the extent such Service(s) so affected cannot reasonably be performed by Service Provider in another commercially reasonable manner) and agree to work together in good faith to arrange for a reasonable alternative means by which Service Recipient (or, as applicable, its Affiliates) may obtain the Services so affected.  Service Provider shall use commercially reasonable efforts during any such period to mitigate its costs with respect to any such affected Service.  All costs and expenses incurred in connection with obtaining any alternative arrangement shall be split evenly between the Parties.

 

Section 2.08                             Transitional Nature of Services; Changes.  Notwithstanding anything to the contrary in this Agreement, but without limiting Section 2.03, the Parties hereby acknowledge (i) the transitional nature of the Services and that the intent of the Parties is that Service Recipient shall seek to obtain each of the Services internally or from Third Parties as soon as reasonably practical, and (ii) that Service Provider may make changes from time to time in the manner of performing the Services if (A) Service Provider is making similar changes in performing similar services for itself or its Affiliates, and (B) Service Provider furnishes to Service Recipient substantially the same notice (in content and timing) as Service Provider furnishes to its Affiliates with respect to such changes.

 

Section 2.09                             Limited Remedy.  Unless otherwise provided on a Service Schedule, in the event Service Provider materially fails to perform any Service in accordance with the terms of this Agreement, then at Service Recipient’s request, Service Provider shall use commercially reasonable efforts to re-perform such Service (“Reperformance”) as soon as reasonably practicable, at no cost to Service Recipient.  To the maximum extent permitted by applicable Law, this Section 2.09 sets forth Service Recipient’s sole and exclusive remedy, and Service Provider’s sole and exclusive liability and obligation, with respect to the performance (or nonperformance) of the Services hereunder, except (i) to the extent any such failure to perform results from the gross negligence or willful misconduct of Service Provider or any Related Parties (in which case, for clarity, any such liability shall be subject to the liability cap set forth in Section 8.03) and (ii) for such specific performance or other equitable remedy that may be awarded by a court of competent jurisdiction.  The Parties hereby expressly acknowledge and agree that, in the event any Reperformance pursuant to this Section 2.09 is not promptly performed in accordance herewith, then in addition to, and without limiting, any other remedy available to a Service Recipient under this Agreement, Service Recipient shall be entitled to specific performance and immediate injunctive relief, without being required to (x) prove the inadequacy of money damages as a remedy or (y) post a bond.

 

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ARTICLE 3

 

PAYMENT; BILLING

 

Section 3.01                             Charges for the Services.  With respect to each Service, Service Recipient shall pay to Service Provider (i) the fees set out on the applicable Service Schedule (each, a “Service Fee”) and (ii) all costs and expenses paid or payable to Third Parties in connection with the Services, which shall be passed-through to Service Recipient consistent with past practice or as otherwise set forth on the Service Schedules (“Third-Party Costs”, and together with the Service Fees, the “Charges”).

 

Section 3.02                             Invoices.  Charges for the Services and all other amounts payable hereunder shall be invoiced by Service Provider to Service Recipient on a monthly basis and shall be payable to Service Provider by Service Recipient.  Each invoice shall set forth reasonable details for any amounts payable under this Agreement, and Service Provider agrees to provide to Service Recipient a copy of any supporting documentation reasonably requested by Service Recipient with respect to any such invoice.  The amounts set forth in such invoices with respect to Taxes shall be separately stated on the relevant invoice to Service Recipient.

 

Section 3.03                             Payments. Service Recipient shall pay to Service Provider all undisputed amounts documented in each invoice in U.S. Dollars within forty five (45) days of receipt of an invoice from Service Provider, to the bank account set out in the applicable invoice, or such other method agreed upon by the Parties.  All payments shall be made in full without any withholding, deduction or setoff except as may be required by applicable Law.  If Service Recipient is required to deduct or withhold any amount under applicable Law, it shall be obliged to pay to Service Provider such sum as will, after such deduction or withholding has been made, leave Service Provider with the same amount as it would have been entitled to receive in the absence of any such requirement to make a deduction or withholding. The Parties will use reasonable efforts to provide each other with any and all documentation required by any Taxing authority to reduce or eliminate any Taxes or withholding.

 

Section 3.04                             Late Payments; Invoice Disputes.

 

(a)                                 If Service Recipient fails to pay any undisputed amount due to Service Provider hereunder by the due date for payment, Service Recipient shall pay interest on any outstanding amounts at the rate equal to the then applicable Prime Rate plus four percent (4%) (or the maximum rate under applicable Law, whichever is lower), from the due date for such payment until such payment is made in full.

 

(b)                                 Service Recipient may withhold payments for amounts disputed in good faith pending resolution of such disputes in accordance with Section 9.13 of this Agreement; provided that if Service Recipient disputes any amount of an invoice, Service Recipient shall notify Service Provider in writing promptly following Service Recipient’s receipt of such invoice and shall describe in reasonable detail the reason for disputing such amount.  Upon resolution of such dispute, to the extent Service Recipient owes Service Provider some or all of the amount withheld, such amount shall bear interest in accordance with this Section 3.04 and Service

 

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Recipient shall promptly pay such applicable amount, together with the interest accrued, to Service Provider.

 

Section 3.05                             Taxes.  Service Recipient shall pay all sales, service, valued added, use, excise, occupation, and other similar taxes and duties (in each case, together with all interest, penalties, fines and additions thereto) that are assessed against either Party on the provision of Services (either as a whole or against any particular Service) received by Service Recipient from Service Provider pursuant to the terms of this Agreement (including with respect to amounts paid by Service Provider to Third Parties) (collectively, “Service Taxes”); provided that the Parties shall use commercially reasonable efforts to minimize any such Service Taxes.  If required under applicable Law (or, in the case of Service Taxes relating to amounts paid by Service Provider to Third Parties), Service Provider shall invoice Service Recipient for the full amount of all Service Taxes, and Service Recipient shall pay, in addition to the other amounts required to be paid pursuant to the terms of this Agreement, such Service Taxes to Service Provider

 

Section 3.06                             Indirect Tax Registration.  Service Provider and Service Recipient will, at the Effective Date, be registered for all Indirect Taxes to the extent required by applicable Law.

 

ARTICLE 4

 

BOOKS AND RECORDS

 

Section 4.01                             Maintenance of Books and Records; Inspection Rights.  For so long as Service Provider is providing any Services under this Agreement, and for three (3) years thereafter (or such longer period as may be required under applicable Law or by either Party’s document retention policies of which such Party is aware), Service Provider shall keep and maintain books, records, data, reports and all other information related to the provision of the Services, including all information related to the payment obligations hereunder, including any costs and expenses incurred in the provision of the Services, and which books, records, data, reports and other information shall be sufficient to enable Service Recipient to verify and substantiate Service Provider’s invoicing of Charges therefor.  Service Provider shall make such books, records, data, reports and other information reasonably available to any officer of, or other authorized Person designated by, Service Recipient for inspection and audit at the principal office of Service Provider, at reasonable times and on reasonable advance written request therefor, subject to the confidentiality provisions set forth herein.

 

ARTICLE 5

 

CONFIDENTIALITY

 

Section 5.01                             Confidentiality Obligations.  Notwithstanding any termination of this Agreement, for a period of three (3) years from the Effective Date, Receiving Party shall hold, and shall cause its Related Parties to hold, in strict confidence, and not to disclose or release or use, without the prior written consent of Disclosing Party, any and all Confidential Information concerning Disclosing Party.  Receiving Party may only use Confidential Information of

 

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Disclosing Party in connection with the Services hereunder, or to otherwise exercise its rights and fulfill its obligations hereunder.  Receiving Party agrees that it shall not disclose Confidential Information to any Third Party without the prior written consent of Disclosing Party, except as set forth in Section 5.02 and/or as otherwise expressly permitted under this Agreement.

 

Section 5.02                             Permitted Disclosures.

 

(a)                                 Receiving Party may disclose Confidential Information of Disclosing Party (i) between and among its Affiliates in connection with the Services hereunder and to otherwise exercise its rights and fulfill its obligations hereunder and (ii) to Receiving Party’s auditors, attorneys, financial advisors, bankers and other appropriate consultants and advisors, to the extent (A) such disclosure is related to the Services; (B) such Person’s duties justify the need to know such Confidential Information and (C) such Person is under obligations of confidentiality and non-use at least as restrictive as those set forth in this Agreement.

 

(b)                                 Receiving Party may disclose Confidential Information (i) if Receiving Party is required or compelled to disclose any such Confidential Information by judicial or administrative process or by other requirements of applicable Law or stock exchange rule or (ii) as required in connection with any legal or other proceeding by Receiving Party against Disclosing Party (or vice versa).  Notwithstanding the foregoing, in the event that any demand or request for disclosure of Confidential Information is made pursuant to clause (i) or (ii) above, Receiving Party shall promptly notify Disclosing Party of the existence of such request or demand and shall provide Disclosing Party a reasonable opportunity to seek an appropriate protective order or other remedy, which Receiving Party will cooperate in obtaining.  In the event that such appropriate protective order or other remedy is not obtained, Receiving Party shall furnish only that portion of the Confidential Information that is legally required to be disclosed and shall take commercially reasonable steps to ensure that confidential treatment is accorded such information.

 

Section 5.03                             Return of Confidential Information.  Upon the expiration or other termination of this Agreement, or at any other time upon the written request of Disclosing Party, Receiving Party shall promptly return to Disclosing Party or, at Disclosing Party’s request, destroy all Confidential Information of Disclosing Party in Receiving Party’s possession or control, together with all copies, summaries and analyses thereof, regardless of the format in which such Confidential Information exists or is stored.  In the case of destruction, upon Disclosing Party’s request, Receiving Party shall promptly send a written certification that destruction has been accomplished to Disclosing Party.  Notwithstanding the foregoing, however, Receiving Party is entitled to retain one copy of such Confidential Information for the sole purpose of complying with its obligations under applicable Law or this Agreement.  With regard to Confidential Information stored electronically on backup tapes, servers or other electronic media, except to the extent required by applicable Law, the Parties agree to use commercially reasonable efforts to destroy such Confidential Information without undue expense or business interruption; provided however that Confidential Information so stored is subject to the obligations of confidentiality and non-use contained in this Agreement for as long as it is stored.

 

10

 

ARTICLE 6

 

INTELLECTUAL PROPERTY; DATA; PERSONAL INFORMATION

 

Section 6.01                             Intellectual Property.

 

(a)                                 IP Ownership.  Except as expressly provided in this Agreement, the SDA or another Ancillary Agreement, no rights or obligations (including any license) in respect of a Party’s Intellectual Property rights are granted, or are implied to be granted, to the other Party.

 

(b)                                 Limited Licenses.

 

(i)                                     Service Recipient hereby grants, on behalf of itself and its Affiliates, to Service Provider (and, as applicable, any Person working on its behalf) a limited, non-exclusive, royalty-free right and license (with the right to grant sublicenses as provided herein) to use any Intellectual Property rights or Data owned or controlled by Service Recipient (the “Service Recipient Intellectual Property”), solely to the extent necessary for the provision of the Services hereunder (the “Service Provider License”).  Service Provider hereby acknowledges and agrees that all right, title and interest in and to the Service Recipient Intellectual Property are, as between the Parties, owned solely and exclusively by Service Recipient, and that Service Provider shall not have any right, title or interest therein or thereto, whether by implication, estoppel or otherwise.

 

(ii)                                  Service Provider hereby grants, on behalf of itself and its Affiliates, to Service Recipient (and, as applicable, its Affiliates) a limited, non-exclusive, royalty-free right and license (with the right to grant sublicenses as provided herein) to use any Intellectual Property rights or Data owned or controlled by Service Provider (the “Service Provider Intellectual Property”), solely to the extent necessary for Service Recipient to receive the Services hereunder (the “Service Recipient License”).  Service Recipient hereby acknowledges and agrees that all right, title and interest in and to the Service Provider Intellectual Property are, as between the Parties, owned solely and exclusively by Service Provider, and that Service Recipient shall not have any right, title or interest therein or thereto, whether by implication, estoppel or otherwise.

 

(iii)                               The Service Provider License and the Service Recipient License (and any sublicenses granted thereunder) shall automatically terminate with respect to each Service upon the earlier of (i) the expiration of the applicable Service Period and (ii) the termination of such Service in accordance with the terms of this Agreement.

 

Section 6.02                             Ownership of Data.  Except as expressly provided in this Agreement, the SDA, or another Ancillary Agreement, no rights or obligations in respect of Service Recipient’s (or any of its Affiliates’) Data are granted, or are implied to be granted, to Service Provider (or any Person working on its behalf).

 

Section 6.03                             Sharing of Personal Information.  With respect to the exchange of information or data, the Parties shall comply with the Data Sharing Addendum attached hereto as Exhibit A (“Data Sharing Addendum”), the terms of which are hereby incorporated into this Agreement.  The Parties shall further comply with the Business Associate Agreements attached

 

11

 

hereto as Exhibit B (each a “Business Associate Agreement”) the terms of which are hereby incorporated into this Agreement, with respect to the exchange of Protected Health Information (as defined in the Business Associate Agreements).  For the purposes of this Section 6.03, capitalized terms used but not defined herein shall have the meanings given to such terms in the Data Sharing Addendum. For the purposes of the Data Sharing Addendum, the Parties acknowledge and agree that the details of the Processing of Personal Information pursuant to the performance of this Agreement (as required by Article 28(3) GDPR) shall be as follows:

 

(a)                                 The subject matter of the Processing of Personal Information is set out in this Agreement and on each respective Service Schedule under which Personal Information is Processed.  Subject to Section 4.11 and Section 4.12 of the Data Sharing Addendum, Data Recipient will Process Personal Information for the duration of the period set forth in accordance with RemainCo’s records management policy in effect as of the Effective Date, unless otherwise set forth in the applicable Service Schedule or otherwise agreed between the Parties in writing to comply with applicable Law.

 

(b)                                 Data Recipient will Process Personal Information as necessary to perform its obligations under the applicable Service Schedule and this Agreement.

 

(c)                                  The Personal Information to be Processed by the Data Recipient in performing its obligations under this Agreement may include, but is not limited to, the categories of Personal Information (if any) set forth in the applicable Service Schedule (the “Data Processing Categories”).

 

(d)                                 The Personal Information to be Processed by the Data Recipient in relation to this Agreement may include, but is not limited to, Personal Information relating to the categories (if any) of Data Subjects set forth in the applicable Service Schedule (the “Data Subject Categories”).

 

ARTICLE 7

 

TERM AND TERMINATION

 

Section 7.01                             Initial Term.  The term of this Agreement (the “Term”) shall commence on the Effective Date and, unless otherwise terminated pursuant to Section 2.08 or Section 7.03, shall terminate with respect to (i) each Service, upon the expiration or earlier termination of the Service Period for such Service (which shall include, for clarity, any extension to such Service Period made in accordance with the terms of this Agreement) and (ii) this Agreement, upon the expiration or earlier termination of the Service Periods for all Services.  Notwithstanding anything to the contrary in this Agreement or any Service Schedule, this Agreement, including all of the Services provided hereunder, shall terminate no later than twenty-four (24) months after the Effective Date, plus the total period of any extensions made by Service Provider pursuant to the first sentence of Section 7.02.

 

12

 

Section 7.02                             Service Period Extensions.  Unless otherwise provided on the applicable Service Schedule, Service Recipient may, at its option, extend the Service Period for any Service (i) for up to an additional two (2) months, on the same terms and conditions (including with respect to fees) as such Service was provided during the initial term for such Service, and (ii) thereafter, for up to an additional three (3) months, on the same terms and conditions as previously provided, except the Service Fees for such Service provided during such extension period shall be increased by twenty percent (20%).  Thereafter, any extension to the Service Period for any Service shall be at Service Provider’s sole discretion.  All fees payable pursuant to this Section 7.02 shall be paid in accordance with the procedures set forth in Article 3.

 

Section 7.03                             Early Termination.

 

(a)                                 Termination for Cause.

 

(i)                                     If a Party materially breaches this Agreement and fails to remedy such breach within sixty (60) days after receipt of written notice of such breach from the other Party, such other Party may terminate this Agreement, solely with respect to the Service or Services impacted by such breach, upon written notice to the other Party.

 

(ii)                                  Either Party may terminate this Agreement upon written notice to the other Party if the other Party makes a general assignment for the benefit of creditors or becomes insolvent, a receiver is appointed on behalf of the other Party, or a court approves reorganization or arrangement proceedings for the other Party.

 

(b)                                 Termination for Convenience.  Unless otherwise provided on a Service Schedule, any Service or group of Services may be terminated by Service Recipient for convenience, upon forty-five (45) days’ prior written notice to Service Provider, subject to Section 7.05(b); provided, however, that if the termination of any Service or group of Services results in any layoffs that could, alone or combined with any other layoffs, trigger advance notice requirements under the Worker Adjustment Retraining and Notification Act or any similar foreign, state or local Law, then the Service Recipient shall provide Service Provider with advance notice of no less than the days required to be provided to employees under applicable Law plus five (5) Business Days.

 

Section 7.04                             Data Transmission.  On or prior to the last day of each applicable Service Period, Service Provider shall cooperate, and shall cause its Affiliates and any other Person working on its behalf, to cooperate, to support the transfer to Service Recipient (or its designee) of any data owned by Service Recipient or any of its Affiliates that was generated in connection with the performance of the applicable Services.  If requested by Service Recipient, Service Provider shall promptly deliver, and shall cause its Affiliates and any Person working on its behalf to promptly deliver to Service Recipient (or its designee), within such time periods as the Parties may reasonably agree, copies of records, data, files and other information received or computed for the benefit of Service Recipient or any of its Affiliates during the Term, in electronic and/or hard copy form; provided, however, that (i) Service Provider and its Affiliates shall not have any obligation to provide any data in any format other than the format in which such data was originally generated, and (ii) Service Provider shall be reimbursed for its

 

13

 

reasonable out-of-pocket costs incurred in connection with providing such records, data, files and other information.

 

Section 7.05                             Effect of Termination.

 

(a)                                 General.  Expiration or other termination of this Agreement shall not:  (i) relieve the Parties of any liability or obligation which accrued hereunder prior to the effective date of such termination; (ii) preclude either Party from pursuing any rights and remedies it may have hereunder or at law or in equity with respect to any breach of this Agreement prior to the effective date of such termination; or (iii) prejudice either Party’s right to obtain performance of any obligation that accrued hereunder prior to the effective date of such termination or that, by the terms of this Agreement, survives such termination.

 

(b)                                 Reimbursement of Stranded Costs.  In the event that Service Recipient requests the termination of any Service (or group of Services) in accordance with Section 7.03(b), Service Provider shall provide Service Recipient with a reasonable estimate of all costs and expenses Service Provider expects to incur in connection with such termination, including Service Recipient’s share of applicable severance costs in accordance with Section 7.05(c), and all costs and expenses related to transitioning such Service (or group of Services) to Service Recipient, as well as reasonable unamortized hardware, software or other costs and charges that were allocated to and related to the provision of such Service (or group of Services), but excluding any allocation of corporate overhead costs (such costs, collectively, the “Termination Costs”).  Upon receipt of Service Provider’s estimate of Termination Costs, Service Recipient shall have the option to (i) terminate such Service (or group of Services), (ii) revoke its request to terminate such Service (or group of Services) or (iii) dispute Service Provider’s estimate of Termination Costs (in which case such dispute will be resolved in accordance with Section 9.13).  If Service Recipient elects to terminate such Service (or group of Services), Service Recipient shall, upon receipt of an invoice consistent with Article 3, reimburse Service Provider for all Termination Costs in accordance with Article 3.  Service Provider shall take commercially reasonable efforts to mitigate the Termination Costs associated with any such termination.

 

(c)                                  Employee Severance Costs.  Unless otherwise set forth on the applicable Service Schedule, upon termination of employment of any employee providing Services (as listed on the Service Schedules), where such termination is primarily and demonstrably due to termination or reduction of the Services such employee was supporting in accordance with Section 7.03(b), Service Recipient shall reimburse Service Provider for a portion of the severance costs and any other resulting Liabilities in proportion to such employee’s time allocable to the benefit received by Service Recipient.

 

(d)                                 Survival.  Notwithstanding anything to the contrary in this Agreement, Sections 6.01(a), 6.02, 6.03 and 7.05, and Articles 4, 5, 8 and 9, and any other provisions of this Agreement that by their nature are necessary to survive the expiration or termination of this Agreement, shall survive the termination or expiration of this Agreement.

 

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ARTICLE 8

DISCLAIMER AND LIMITATION OF LIABILITY

 

Section 8.01                             Disclaimer of Warranties.  EXCEPT AS EXPRESSLY SET FORTH HEREIN, EACH PARTY MAKES NO, AND HEREBY EXPRESSLY DISCLAIMS ANY AND ALL, REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, WITH RESPECT TO THE SERVICES TO BE PROVIDED OR RECEIVED BY IT OR OTHERWISE WITH RESPECT TO THIS AGREEMENT.

 

Section 8.02                             Disclaimer of Consequential Damages.  UNDER NO CIRCUMSTANCES WHATSOEVER SHALL EITHER PARTY (OR ANY OF ITS RELATED PARTIES) BE LIABLE TO THE OTHER PARTY (OR ANY OF ITS RELATED PARTIES) IN CONTRACT, TORT, NEGLIGENCE, BREACH OF STATUTORY DUTY OR OTHERWISE FOR ANY INDIRECT, CONSEQUENTIAL, SPECIAL, INCIDENTAL OR PUNITIVE DAMAGES OR ANY LOST PROFITS, LOSS OF USE, DAMAGE TO GOODWILL OR LOSS OF BUSINESS IN CONNECTION WITH THIS AGREEMENT, EVEN IF IT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, AND EACH PARTY HEREBY WAIVES, ON BEHALF OF ITSELF AND ITS RELATED PARTIES, ANY AND ALL CLAIMS FOR SUCH DAMAGES, INCLUDING ANY CLAIM FOR LOST PROFITS, LOSS OF USE, DAMAGE TO GOODWILL OR LOSS OF BUSINESS WHETHER ARISING IN CONTRACT, TORT OR OTHERWISE.

 

Section 8.03                             Liability Cap.  Notwithstanding anything contained herein or in the SDA, to the maximum extent permitted by applicable Law, the maximum aggregate liability of each Party (including its Related Parties) arising out of or in connection with this Agreement shall not exceed the greater of (i) the aggregate amount paid or payable by Service Recipient to Service Provider for all Services contained within the same Service Schedule as the Service giving rise to such liability, as of the date of the events or circumstances giving rise to such liability, and (ii) one hundred thousand U.S. dollars (U.S. $100,000).

 

ARTICLE 9

 

MISCELLANEOUS

 

Section 9.01                             Force Majeure.  Neither Party shall be held liable or responsible to the other Party, nor be deemed to be in default under, or otherwise in breach of any provision of, this Agreement for failure or delay in fulfilling or performing any obligation of this Agreement (other than a payment failure) when such failure or delay is due to an event of Force Majeure.  For purposes of this Agreement, “Force Majeure” is defined as causes beyond the control of the applicable Party which could not, with the exercise of due diligence, have been avoided, including acts of God, civil disorders or commotions, acts of aggression, fires, accidents, explosions, floods, drought, war, sabotage, embargo, earthquakes, storms, utility failures, material shortages, national labor disturbances, riots, delays or errors by shipping companies, changes in applicable Law, national health emergencies, destruction, damage or appropriations of property, government requirements, acts of civil or military authorities or terrorism or the threat of any of the foregoing.  In such event, the Party so affected shall not be excused from

 

15

 

such performance, but shall merely suspend such performance during the continuation of such event of Force Majeure.  The Party prevented from performing its obligations or duties because of the event of Force Majeure shall, after becoming aware of such event of Force Majeure, promptly notify the other Party hereto of the occurrence and particulars of such event and of the period for which such event is expected to continue, and shall provide the other Party, from time to time, with its best estimate of the duration of such event of Force Majeure and with notice of the termination thereof.  The affected Party shall use its commercially reasonable efforts to avoid or remove such causes of nonperformance and to ameliorate the effects of such nonperformance as promptly as practicable thereafter and upon termination of all applicable events of Force Majeure, the performance of any suspended obligation or duty shall promptly recommence.  When an event of Force Majeure arises, the Parties shall discuss what, if any, modification of the terms of this Agreement may be required in order to arrive at an equitable solution.  No Party shall be liable to the other Party for any direct, indirect, consequential, incidental, special, punitive, exemplary or other damages arising out of or relating to the suspension or termination of any of its obligations or duties under this Agreement by reason of the occurrence of an event of Force Majeure.

 

Section 9.02                             Complete Agreement; Construction.  This Agreement shall constitute the entire agreement between the Parties with respect to the subject matter hereof and shall supersede all previous negotiations, commitments and writings with respect to such subject matter.  In the event of any inconsistency between this Agreement and any Service Schedule hereto, the Service Schedule shall prevail.  In the event and to the extent that there shall be any inconsistency between the provisions of this Agreement and the provisions of the SDA with respect to the provision of the Services, this Agreement shall control.

 

Section 9.03                             Relationship of the Parties.  Each Party hereby acknowledges that the Parties 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 in this Agreement is intended or shall be deemed to constitute a partnership, agency, employer-employee or joint venture relationship between the Parties.  The Parties’ obligations and rights in connection with the subject matter hereof are solely as specifically set forth in this Agreement (including in any Service Schedule hereto), and each Party acknowledges and agrees that it owes no fiduciary or other duties or obligations to the other by virtue of any relationship created by this Agreement.

 

Section 9.04                             No Third Party Beneficiaries.  This Agreement is for the sole benefit of the Parties hereto (and, where applicable, its Affiliates) and their permitted assigns and nothing herein expressed or implied shall give or be construed to give to any Person, other than the Parties hereto and such assigns, any legal or equitable rights hereunder.

 

Section 9.05                             Notices.  All notices, requests, claims, demands and other communications under this Agreement shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by overnight courier service, by facsimile with receipt confirmed (followed by delivery of an original via overnight courier service) or by registered or certified mail (postage prepaid, return receipt requested) to the respective 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 9.05):

 

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To RemainCo:

 

Wyndham Destinations, Inc.
 6277 Sea Harbor Drive

Orlando, FL 32821

Attn: Office of the General Counsel

Facsimile: [·]

 

To SpinCo:

 

Wyndham Hotels & Resorts, Inc.
 22 Sylvan Way

Parsippany, NJ 07054

Attn: Office of the General Counsel

Facsimile: [·]

 

Section 9.06                             Waivers. The failure of any Party to require strict performance by the other Party of any provision in this Agreement will not waive or diminish that Party’s right to demand strict performance thereafter of that or any other provision hereof.

 

Section 9.07                             Amendments. This Agreement may not be modified or amended except by an agreement in writing signed by the Parties.

 

Section 9.08                             Assignment.  Except as otherwise provided in this Agreement, this Agreement shall not be assignable, in whole or in part, directly or indirectly, by either Party without the prior written consent of the other Party, and any attempt to assign any rights or obligations arising under this Agreement without such consent shall be void; provided, that a Party may assign this Agreement in connection with a merger transaction in which such Party is not the surviving entity or the sale by such Party of all or substantially all of its Assets; provided, that the surviving entity of such merger or the transferee of such Assets shall agree in writing, reasonably satisfactory to the other Party, to be bound by the terms of this Agreement as if named as a “Party” hereto.  No assignment shall relieve either Party of the performance of any accrued obligation that such Party may then have under this Agreement.

 

Section 9.09                             Counterparts.  This Agreement may be executed in more than one counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more such counterparts have been signed by each Party and delivered to the other Party.

 

Section 9.10                             Severability.  In the event any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby.  The Parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions, the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

 

17

 

Section 9.11                             GOVERNING LAW.  THIS AGREEMENT (INCLUDING THE ARBITRATION PROCEDURE REFERENCED IN SECTION 9.13) SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF NEW YORK, INCLUDING ITS STATUTE OF LIMITATIONS, WITHOUT GIVING EFFECT TO ANY CONFLICTS OF LAW PRINCIPLES OR OTHER RULES THAT WOULD RESULT IN THE APPLICATION OF THE LAWS OF A DIFFERENT JURISDICTION.

 

Section 9.12                             Waiver of Jury Trial. EACH OF THE PARTIES HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH OF THE PARTIES HEREBY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.12.

 

Section 9.13                             Dispute Resolution.

 

(a)                                 In the event of any dispute, controversy or claim arising out of or in connection with this Agreement (including its formation, interpretation, breach or termination, and whether contractual or non-contractual in nature) (a “Dispute”), either Party may serve written notice of the Dispute on the other Party (a “Dispute Notice”).  The general counsels of the Parties and/or an executive officer designated by each Party shall negotiate for a reasonable period of time following receipt of a Dispute Notice to seek to amicably resolve such Dispute; provided, that such period shall not, unless otherwise agreed by the Parties in writing, exceed forty-five (45) days from the time of receipt by a Party of a Dispute Notice.  The receipt of a Dispute Notice associated with a specified Dispute pursuant to this Section 9.13(a) shall toll the running of any applicable statute of limitations associated with the Dispute, until the Parties have jointly determined in writing that they are unable to resolve the Dispute, or the dispute is resolved, in accordance with this Section 9.13.

 

(b)                                 In the event that the Parties are unable to resolve a Dispute within forty-five (45) days following receipt of a Dispute Notice, a Party may request that such Dispute be finally settled under the then-existing Commercial Rules of the American Arbitration Association (the “Rules”), except as modified herein.  The seat of the arbitration shall be New York, New York.  Within twenty (20) days of requesting that such Dispute be submitted to arbitration, each Party shall designate one (1) arbitrator, and the two (2) arbitrators so appointed shall jointly designate the third arbitrator.  The proceedings shall be conducted in the English language.  All matters relating to the arbitration or the award, and any negotiations, conferences and discussions pursuant to this Section 9.13 shall be treated as Confidential Information and shall be subject Article 5 of this Agreement.  Judgment upon any award rendered may be entered

 

18

 

in any court having jurisdiction over the relevant Party or its assets.  The costs associated with arbitration shall be borne by the losing Party.

 

(c)                                  Neither Section 9.13 (a) nor Section 9.13(b) shall prohibit a Party from seeking injunctive relief from any court of competent jurisdiction in the event of a breach or prospective breach of this Agreement or the Confidentiality Agreement by the other Party where such relief is available under applicable Law.  The Parties acknowledge and agree that, in the event either Party seeks injunctive relief in the event of a breach or prospective breach of this Agreement, the prevailing Party shall be entitled to reimbursement from the non-prevailing party for commercially reasonable attorneys’ fees and costs incurred in connection with seeking such relief.

 

[signature page follows]

 

19

 

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

 

	
 
    	
WYNDHAM   HOTELS & RESORTS, INC.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
WYNDHAM   DESTINATIONS, INC.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Title:Exhibit 10.2

 

TAX MATTERS AGREEMENT

 

by and among

 

Wyndham Destinations, Inc., and

 

Wyndham Hotels & Resorts, Inc.

 

Dated as of [·], 2018

 

 

TABLE OF CONTENTS

	
 
    	
 
    	
 
    
	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
 
    	
ARTICLE I
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
DEFINITIONS AND   INTERPRETATION
    	
 
    
	
 
    	
 
    	
 
    
	
Section 1.1
    	
Definitions
    	
6
    
	
Section 1.2
    	
References;   Interpretation
    	
13
    
	
Section 1.3
    	
Effective Time
    	
14
    
	
 
    	
 
    	
 
    
	
 
    	
ARTICLE II
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
PREPARATION AND   FILING OF TAX RETURNS
    	
 
    
	
 
    	
 
    	
 
    
	
Section 2.1
    	
Responsibility for   Preparation and Filing of Tax Returns
    	
14
    
	
Section 2.2
    	
Tax Return Review   Rights
    	
15
    
	
Section 2.3
    	
Time of Filing Tax   Returns
    	
15
    
	
Section 2.4
    	
Costs and Expenses
    	
15
    
	
Section 2.5
    	
Methods of Accounting
    	
16
    
	
 
    	
 
    	
 
    
	
 
    	
ARTICLE III
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
RESPONSIBILITY   FOR PAYMENT OF TAXES
    	
 
    
	
 
    	
 
    	
 
    
	
Section 3.1
    	
Responsibility for   Payment of Taxes
    	
16
    
	
Section 3.2
    	
Timing of Payments of   Taxes
    	
16
    
	
Section 3.3
    	
Notice
    	
16
    
	
Section 3.4
    	
Audits
    	
16
    
	
Section 3.5
    	
Third Party Indemnity   Payments
    	
18
    
	
 
    	
 
    	
 
    
	
 
    	
ARTICLE IV
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
REFUNDS, CARRYBACKS   AND AMENDED TAX RETURNS
    	
 
    
	
 
    	
 
    	
 
    
	
Section 4.1
    	
Refunds
    	
18
    
	
Section 4.2
    	
Carrybacks
    	
18
    
	
Section 4.3
    	
Amended Tax Returns
    	
18
    
	
 
    	
 
    	
 
    
	
 
    	
ARTICLE V
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
DISTRIBUTION   TAXES
    	
 
    
	
 
    	
 
    	
 
    
	
Section 5.1
    	
Liability for   Distribution Taxes
    	
19
    
	
Section 5.2
    	
Definition of Fault for   Distribution Purposes
    	
19
    
	
Section 5.3
    	
Limits on Proposed   Acquisition Transactions and Other Transactions During Restricted Period
    	
20
    
	
Section 5.4
    	
IRS Ruling, Tax   Representation Letters, and Tax Opinions; Consistency
    	
21
    
	
Section 5.5
    	
Timing of Payment of   Taxes
    	
21
    
	
Section 5.6
    	
Protective   Section 336(e) Elections
    	
21
    

 

 

	
 
    	
ARTICLE VI
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
GROUP TAXES
    	
 
    
	
 
    	
 
    	
 
    
	
Section 6.1
    	
Group Tax Arrangements
    	
21
    
	
Section 6.2
    	
Indirect Tax Groups
    	
22
    
	
Section 6.3
    	
Group Payment   Arrangements
    	
23
    
	
Section 6.4
    	
Non-U.S. Transfer   Pricing
    	
23
    
	
Section 6.5
    	
Coordination
    	
24
    
	
 
    	
 
    	
 
    
	
 
    	
ARTICLE VII
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
INDEMNIFICATION
    	
 
    
	
 
    	
 
    	
 
    
	
Section 7.1
    	
Indemnification   Obligations of RemainCo
    	
24
    
	
Section 7.2
    	
Indemnification   Obligations of SpinCo
    	
24
    
	
 
    	
 
    	
 
    
	
 
    	
ARTICLE VIII
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
PAYMENTS
    	
 
    
	
 
    	
 
    	
 
    
	
Section 8.1
    	
Payments
    	
24
    
	
Section 8.2
    	
Treatment of Payments   made Pursuant to Tax Matters Agreement
    	
25
    
	
Section 8.3
    	
Treatment of Payments   made Pursuant to Separation and Distribution Agreement
    	
25
    
	
Section 8.4
    	
Tax Treatment of   Assumed Liabilities
    	
25
    
	
Section 8.5
    	
Payments Net of Tax   Benefit Actually Realized and Tax Cost
    	
26
    
	
 
    	
 
    	
 
    
	
 
    	
ARTICLE IX
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
COOPERATION AND   EXCHANGE OF INFORMATION
    	
 
    
	
 
    	
 
    	
 
    
	
Section 9.1
    	
Cooperation and   Exchange of Information
    	
26
    
	
Section 9.2
    	
Retention of Records
    	
26
    
	
Section 9.3
    	
Tax Opinions
    	
26
    
	
Section 9.4
    	
Data Sharing Addendum
    	
26
    
	
Section 9.5
    	
Global Preparation   Standard
    	
26
    
	
 
    	
 
    	
 
    
	
 
    	
ARTICLE X
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
ALLOCATION OF   TAX ATTRIBUTES AND OTHER TAX MATTERS
    	
 
    
	
 
    	
 
    	
 
    
	
Section 10.1
    	
Allocation of Tax   Attributes
    	
27
    
	
Section 10.2
    	
Allocation of Tax Items
    	
27
    
	
Section 10.3
    	
Allocation of WEX   Receivable
    	
27
    
	
Section 10.4
    	
Non-U.S. Tax   Attributes.
    	
28
    
	
 
    	
 
    	
 
    
	
 
    	
ARTICLE XI
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
DISPUTE   RESOLUTION
    	
 
    
	
 
    	
 
    	
 
    
	
Section 11.1
    	
Negotiation
    	
28
    
	
Section 11.2
    	
Confidentiality
    	
28
    

 

 

	
Section 11.3
    	
Continuity of Performance
    	
28
    
	
 
    	
 
    	
 
    
	
 
    	
ARTICLE XII
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
MISCELLANEOUS
    	
 
    
	
 
    	
 
    	
 
    
	
Section 12.1
    	
Counterparts
    	
29
    
	
Section 12.2
    	
Survival
    	
29
    
	
Section 12.3
    	
Notices
    	
29
    
	
Section 12.4
    	
Waivers
    	
29
    
	
Section 12.5
    	
Assignment
    	
29
    
	
Section 12.6
    	
Successors and Assigns
    	
30
    
	
Section 12.7
    	
Termination and   Amendment
    	
30
    
	
Section 12.8
    	
No Circumvention
    	
30
    
	
Section 12.9
    	
Subsidiaries
    	
30
    
	
Section 12.10
    	
Third Party   Beneficiaries
    	
30
    
	
Section 12.11
    	
Title and Headings
    	
30
    
	
Section 12.12
    	
Schedules
    	
30
    
	
Section 12.13
    	
Specific Performance
    	
30
    
	
Section 12.14
    	
Governing Law
    	
30
    
	
Section 12.15
    	
Consent to Jurisdiction
    	
31
    
	
Section 12.16
    	
Waiver of Jury Trial
    	
31
    
	
Section 12.17
    	
Force Majeure
    	
31
    
	
Section 12.18
    	
Interpretation
    	
31
    
	
Section 12.19
    	
Changes in Law
    	
31
    
	
Section 12.20
    	
Severability
    	
32
    
	
Section 12.21
    	
Tax Sharing Agreements
    	
32
    
	
Section 12.22
    	
Exclusivity
    	
32
    
	
Section 12.23
    	
No Duplication; No   Double Recovery
    	
32
    

 

 

TAX MATTERS AGREEMENT

 

THIS TAX MATTERS AGREEMENT (this “Agreement”) is made and entered into as of [·], 2018, by and between Wyndham Destinations, Inc. (f/k/a Wyndham Worldwide Corporation), a Delaware corporation (“RemainCo”) and Wyndham Hotels & Resorts, Inc., a Delaware corporation (“SpinCo”). Each of RemainCo and SpinCo is sometimes referred to herein as a “Party” and, collectively, as the “Parties”.

 

W I T N E S S E T H:

 

WHEREAS, RemainCo, acting through its direct and indirect Subsidiaries, currently conducts a number of businesses, including (i) the RemainCo Business (as defined herein) and (ii) the SpinCo Business (as defined herein);

 

WHEREAS, the Board of Directors of RemainCo (the “Board”) has determined that it is appropriate, desirable and in the best interests of RemainCo and its stockholders to separate RemainCo into two separate, publicly traded companies, one for each of (i) the RemainCo Business, which shall be owned and conducted, directly or indirectly, by RemainCo and (ii) the SpinCo Business, which shall be owned and conducted, directly or indirectly, by SpinCo;

 

WHEREAS, in order to effect such separation, the Board has determined that it is appropriate, desirable and in the best interests of RemainCo and its stockholders (i) to enter into a series of transactions whereby (A) RemainCo and/or one or more members of the RemainCo Group (as defined herein) will, collectively, own all of the RemainCo Assets (as defined herein) and assume (or retain) all of the RemainCo Liabilities (as defined herein) and (B) SpinCo and/or one or more members of the SpinCo Group (as defined herein) will, collectively, own all of the SpinCo Assets (as defined herein) and assume (or retain) all of the SpinCo Liabilities (as defined herein) and (ii) for RemainCo to distribute to the holders of its common stock, par value $0.01 per share (“RemainCo Common Stock”), on a pro rata basis (without consideration being paid by such stockholders) all of the outstanding shares of common stock, par value $0.01 per share, of SpinCo (the “SpinCo Common Stock”), pursuant to the terms and conditions set forth in that certain Separation and Distribution Agreement, dated of even date herewith, by and between SpinCo and RemainCo (the “Separation and Distribution Agreement”) (clause (ii), the “External Distribution”);

 

WHEREAS, it is the intention of the Parties that (i) each of the internal reorganization steps, including the Internal Distribution, set forth on Exhibit A qualifies for nonrecognition of gain or loss under the Internal Revenue Code of 1986, as amended (the “Code”) to the extent described therein (the “Reorganization Intended Tax Treatment”), (ii) the contributions by RemainCo of Assets to, and the assumption of Liabilities by, SpinCo (each such contribution, an “Internal Contribution” and together, the “Internal Contributions”) together with the distribution by RemainCo of all of the SpinCo Common Stock in the External Distribution, qualify as a reorganization and tax-free distribution within the meaning of Sections 368(a)(1)(D) and 355 of the Code (the “Distribution Intended Tax Treatment”), (iii) the receipt by RemainCo of the Cash Amounts (as defined herein) from SpinCo, together with the uses of RemainCo of such Cash Amounts qualifies under Section 361(b) of the Code such that no gain is recognized upon receipt of the Cash Amounts by RemainCo in connection with any Internal Contribution (the “Cash Amount Intended Tax Treatment”, and together with the Reorganization Intended Tax Treatment and the Distribution Intended Tax Treatment), the “Intended Tax Treatment”); and

 

WHEREAS, in connection with the transactions contemplated by the Separation and Distribution Agreement, the Parties desire to set forth their agreement on the rights and obligations with respect to handling and allocating Taxes and related matters.

 

5

 

NOW, THEREFORE, in consideration of the foregoing and the terms, conditions, covenants and provisions of this Agreement, each of the Parties mutually covenant and agree as follows:

 

ARTICLE I

 

DEFINITIONS AND INTERPRETATION

 

Section 1.1                                    Definitions. As used in this Agreement, the following terms shall have the following meanings:

 

(1)                                 “Active Business” means (i) with respect to the External Distribution, each of the RemainCo Business and the SpinCo Business, in each case taken as a whole and (ii) with respect to the Internal Distribution, each of the Asian hotel business conducted by Wyndham Hotel Asia Pacific Co. Limited and its Subsidiaries and the Asia-Pacific timeshare business conducted by Wyndham Vacation Resorts Asia Pacific Pty. Ltd. and its Subsidiaries.

 

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

 

(3)                                 “Affiliated Group” means any affiliated group as defined in Section 1504 of the Code (or any analogous combined, consolidated or unitary group defined under state, local or non-U.S. Income Tax Law).

 

(4)                                 “Agreement” has the meaning set forth in the preamble hereto.

 

(5)                                 “Agreement Dispute” has the meaning set forth in Section 11.1.

 

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

 

(7)                                 “Applicable RemainCo Portion” has the meaning set forth in the Separation and Distribution Agreement.

 

(8)                                 “Applicable SpinCo Portion” has the meaning set forth in the Separation and Distribution Agreement.

 

(9)                                 “Assets” has the meaning set forth in the Separation and Distribution Agreement.

 

(10)                          “Audit” means any audit, assessment of Taxes, other examination by or on behalf of any Taxing Authority (including notices), proceeding, or appeal of such a proceeding relating to Taxes, whether administrative or judicial, including proceedings relating to competent authority determinations initiated by a Party or any of its Subsidiaries.

 

(11)                          “Audit Management Party” means the Party responsible for administering and controlling an Audit pursuant to Section 3.4(a)(i) or Section 3.4(a)(ii).

 

(12)                          “Audit Representative” means the chief tax officer of each Party (or such other officer of a Party that may be designated by that Party’s Chief Financial Officer from time to time).

 

(13)                          “Big Four Accounting Firm” means each of Deloitte & Touche LLP, Ernst & Young LLP, KPMG LLP, and PricewaterhouseCoopers LLP.

 

(14)                          “Board” has the meaning set forth in the recitals hereto.

 

6

 

(15)                          “Business Day” means any day other than a Saturday, Sunday or a day on which banks are required to be closed in New York, New York.

 

(16)                          “Cash Amount Intended Tax Treatment” has the meaning set forth in the recitals hereto.

 

(17)                          “Cash Amounts” means the cash received by RemainCo from SpinCo before the External Distribution in connection with the Plan of Reorganization.

 

(18)                          “Code” has the meaning set forth in the recitals hereto.

 

(19)                          “Deloitte” means Deloitte Tax LLP.

 

(20)                          “Distribution” means, individually or collectively, as applicable, the Internal Distribution and the External Distribution.

 

(21)                          “Distribution Date” means the date of the External Distribution as effectuated pursuant to the Separation and Distribution Agreement.

 

(22)                          “Distribution Intended Tax Treatment” has the meaning set forth in the recitals hereto.

 

(23)                          “Distribution Taxes” mean, without duplication, (i) any and all U.S. federal, state and local Income Taxes required to be paid by or imposed on a Party or any of its Affiliates resulting from, or directly arising in connection with, the failure of any of the steps set forth on Exhibit A, any Internal Contribution, the Distribution, or any receipt of Cash Amounts to qualify for the Intended Tax Treatment  (or the failure to qualify under or the application of corresponding provisions of the Laws of any U.S. state or local jurisdiction), and (ii) any other Tax required to be paid by or imposed on a Party or any of its Affiliates, imposed directly in connection with transactions contemplated by the Plan of Reorganization or the Implementing Agreements, in each case undertaken before or at the same time as any of the Distributions.

 

(24)                          “Due Date” means the date (taking into account all valid extensions) upon which a Tax Return is required to be filed with or Taxes are required to be paid to a Taxing Authority, whichever is applicable.

 

(25)                          “Effective Time” has the meaning set forth in the Separation and Distribution Agreement.

 

(26)                          “External Distribution” has the meaning set forth in the recitals hereto.

 

(27)                          “Fault for Distribution Purposes” has the meaning set forth in Section 5.2.

 

(28)                          “Final Determination” means the final resolution of liability for any Tax for any taxable period, by or as a result of:

 

(a)                                 a final decision, judgment, decree or other order by any court of competent jurisdiction that can no longer be appealed to a court other than the Supreme Court of the United States;

 

(b)                                 a final settlement with the IRS, a closing agreement or accepted offer in compromise under Sections 7121 or 7122 of the Code, or a comparable agreement under the Laws of other jurisdictions, which resolves the liability for the Taxes addressed in such agreement for any taxable period;

 

7

 

(c)                                  any allowance of a refund or credit in respect of an overpayment of Tax, but only after the expiration of all periods during which such refund or credit may be recovered by the jurisdiction imposing the Tax; or

 

(d)                                 any other final disposition, including by reason of the expiration of the applicable statute of limitations.

 

(29)                          “Global Preparation Standard” has the meaning set forth in Section 9.5.

 

(30)                          “GPA” has the meaning set forth in Section 6.3(a).

 

(31)                          “GPA Payment” has the meaning set forth in Section 6.3(a).

 

(32)                          “Group” means the RemainCo Group or the SpinCo Group.

 

(33)                          “Group Tax Arrangement” means any arrangements or procedures, where the Tax affairs of any company can be voluntarily managed (wholly or partly) on a group basis or income, profits or gains can be reallocated or readjusted between group companies or group payment arrangements (other than any arrangement or procedure for any U.S. federal, state or local purposes).

 

(34)                          “Implementing Agreement” means any agreement the primary purpose of which is to implement one or more steps described in the Plan of Reorganization.

 

(35)                          “Income Tax Returns” mean all Tax Returns that relate to Income Taxes.

 

(36)                          “Income Taxes” mean:

 

(a)                                 all Taxes based upon, measured by, or calculated with respect to (i) net income or profits (including, but not limited to, any corporate income, corporation, capital gains, minimum tax or any Tax on items of tax preference, but not including sales, use, real, or personal property, gross or net receipts, Indirect Tax, excise, leasing, transfer or similar Taxes), or (ii) multiple bases (including, but not limited to, corporate franchise, doing business and occupation Taxes) if one or more bases upon which such Tax is determined is described in clause (a)(i) above; and

 

(b)                                 all U.S., state, local or non-U.S. franchise or branch Taxes.

 

(37)                          “Indemnified Party” means the Party which is or may be entitled pursuant to this Agreement to receive any payments (including reimbursement for Taxes and costs and expenses) from another Party or Parties to this Agreement.

 

(38)                          “Indemnifying Party” means the Party which is or may be required pursuant to this Agreement to make indemnification or other payments (including reimbursement for Taxes and costs and expenses) to another Party to this Agreement.

 

(39)                          “Indirect Tax” means all value added, turnover, sales, use or similar Taxes.

 

(40)                          “Intended Tax Treatment” has the meaning set forth in the recitals hereto.

 

(41)                          “Internal Contribution” has the meaning set forth in the recitals hereto.

 

8

 

(42)                          “Internal Distribution” means the distribution of stock of WHG Caribbean Holdings, Inc. by Wyndham Hotel Group International, Inc. in redemption of a portion of its stock, which is intended to qualify as a reorganization and tax-free distribution within the meaning of Sections 368(a)(1)(D) and 355 of the Code.

 

(43)                          “IRS” means the United States Internal Revenue Service or any successor thereto, including, but not limited to its agents, representatives, and attorneys.

 

(44)                          “IRS Ruling” means that certain IRS private letter ruling, dated February 21, 2018, delivered to RemainCo and addressing, among other things, certain issues relevant to the tax-free treatment of the transactions described in the Separation and Distribution Agreement, together with the requests submitted to the IRS for such private letter ruling and any supplemental materials submitted to the IRS relating thereto.

 

(45)                          “Kirkland” means Kirkland & Ellis LLP.

 

(46)                          “Law” means any U.S. or non-U.S. federal, national, supranational, state, provincial, local or similar statute, law, ordinance, regulation, rule, code, administrative pronouncement, order, requirement or rule of law (including common law), or any Income Tax treaty.

 

(47)                          “LIBOR” has the meaning set forth in the Separation and Distribution Agreement.

 

(48)                          “Losses” has the meaning assigned to the term “Indemnifiable Losses” in the Separation and Distribution Agreement.

 

(49)                          “Negotiation Period” has the meaning set forth in Section 11.1.

 

(50)                          “Non-Managing Party” has the meaning set forth in Section 3.4(b).

 

(51)                          “Non-U.S. Income Tax Returns” means any Pre-Distribution Tax Return, Straddle Income Tax Return, SpinCo Separate Tax Return or RemainCo Separate Return to be filed or submitted to any Non-U.S. Taxing Authority.

 

(52)                          “Non-U.S. Tax Attribute” means any Tax Attribute for non-U.S Income Tax purposes.

 

(53)                          “Non-U.S. Taxing Authority” means any Taxing Authority which is not a U.S. Taxing Authority.

 

(54)                          “Party” has the meaning set forth in the preamble hereto.

 

(55)                          “Person” means any natural person, firm, individual, corporation, business trust, joint venture, association, company, limited liability company, partnership, or other organization or entity, whether incorporated or unincorporated, or any governmental entity.

 

(56)                          “Plan of Reorganization” means the Separation and Distribution Agreement (together with any Plan of Reorganization Documents and any Exhibit thereto), which together constitute a “plan of reorganization” within the meaning of Treasury Regulations Section 1.368-2(g), as described in Section 4.6(a) of the Separation and Distribution Agreement.

 

(57)                          “Plan of Reorganization Document” has the meaning set forth in the Separation and Distribution Agreement.

 

9

 

(58)                          “Post-Distribution Income Tax Returns” mean, collectively, all Income Tax Returns required to be filed by a Party or its Affiliates for a Post-Distribution Tax Period.

 

(59)                          “Post-Distribution Ruling” has the meaning set forth in Section 5.3.

 

(60)                          “Post-Distribution Tax Period” means a Tax period beginning after the Distribution Date.

 

(61)                          “Pre-Distribution Tax Returns” mean, collectively, all Income Tax Returns required to be filed by a Party or its Affiliates (including any Affiliated Group of which any such Party is a member) for a Pre-Distribution Tax Period.

 

(62)                          “Pre-Distribution Tax Period” means a Tax period beginning and ending on or before the Distribution Date.

 

(63)                          “Preparing Party” means the Party responsible for preparing a Tax Return under this Agreement.

 

(64)                          “Proposed Acquisition Transaction” means a transaction or series of transactions (i) as a result of which any of the Parties would merge or consolidate with any other Person, or (ii) as a result of which any Person or any group of Persons would (directly or indirectly) acquire, or have the right to acquire (through an option or otherwise), from any of the Parties or any of their Affiliates and/or one or more holders of their stock, respectively, any amount of stock of any of the Parties that would, when combined with any other changes in ownership of the stock of such Party, result in a shift of more than thirty-five percent (35%) of (a) the value of all outstanding shares of stock of such Party as of the Distribution Date, or (b) the total combined voting power of all outstanding shares of voting stock of such Party as of the Distribution Date. Notwithstanding the foregoing, a Proposed Acquisition Transaction shall not include (i) the adoption by a Party of, or the issuance of stock pursuant to, a stockholder rights plan or (ii) transactions that satisfy Safe Harbor VIII (relating to acquisitions in connection with a person’s performance of services) or Safe Harbor IX (relating to acquisitions by a retirement plan of an employer) of Treasury Regulations Section 1.355-7(d). For purposes of determining whether and to what extent a transaction constitutes an indirect acquisition for purposes of the first sentence of this definition, any recapitalization or other action resulting in a shift of voting power or any redemption or repurchase of shares of stock shall be treated as an indirect acquisition of shares of stock by the benefitted or non-exchanging stockholders. Notwithstanding the previous sentence, the effect of any such recapitalization, other action, or redemption or repurchase (directly or indirectly) of shares shall take into account any applicable IRS private letter ruling received by one or more of the Parties with respect thereto. This definition and the application thereof is intended to monitor compliance with Section 355(e) of the Code and the Treasury Regulations promulgated thereunder and shall be interpreted accordingly by the Parties in good faith.

 

(65)                          “Qualified Tax Advisor” means any Big Four Accounting Firm or any law firm of nationally recognized standing.

 

(66)                          “RemainCo” has the meaning set forth in the preamble hereto.

 

(67)                          “RemainCo Assets” has the meaning set forth in the Separation and Distribution Agreement.

 

(68)                          “RemainCo Business” has the meaning set forth in the Separation and Distribution Agreement.

 

10

 

(69)                          “RemainCo Combined Income Tax Return” means any U.S. federal, state, local or foreign consolidated, combined, unitary or similar Income Tax Return that actually includes, by election or otherwise, one or more members of the RemainCo Group together with one or more members of the SpinCo Group (but excluding, for the avoidance of doubt, any GPA).

 

(70)                          “RemainCo Common Stock” has the meaning set forth in the recitals hereto.

 

(71)                          “RemainCo Group” has the meaning set forth in the Separation and Distribution Agreement.

 

(72)                          “RemainCo Liabilities” has the meaning set forth in the Separation and Distribution Agreement.

 

(73)                          “RemainCo Pre-Distribution Non-U.S. Tax Attribute” means any Tax Attribute for non-U.S Income Tax purposes which arises or becomes available to a member of the SpinCo Group as a result of or in connection with any income, profits or gains earned, received or accrued (or deemed to be earned, received or accrued for any Tax purpose) before the External Distribution or any event, act, transaction or omission before the External Distribution.

 

(74)                          “RemainCo Separate Tax Returns” means any Tax Return required under applicable Law to be filed by any member of the RemainCo Group, and that does not include any member of the SpinCo Group or a Shared Entity, for a Pre-Distribution Tax Period or a Straddle Period.

 

(75)                          “RemainCo Straddle Income Tax Returns” means any Income Tax Return required under applicable Law to be filed by or including any member of the RemainCo Group for a Straddle Period.

 

(76)                          “Requesting Party” shall have the meaning set forth in Section 5.3.

 

(77)                          “Restricted Period” means the period beginning at the Effective Time and ending on the two-year anniversary of the day after the Distribution Date.

 

(78)                          “Separation and Distribution Agreement” means the Separation and Distribution Agreement by and among RemainCo and SpinCo dated as of [•].

 

(79)                          “Shared Entity” means the entities listed on Exhibit B, each of which (i) either (x) conducts both a RemainCo and SpinCo Business or (y) provides services to both RemainCo entities and SpinCo entities and (ii) is included on a U.S. federal, state, local or foreign consolidated, combined, unitary or similar Income Tax Return of a RemainCo Entity or a SpinCo entity, in each case with respect to a Pre-Distribution Tax Period.

 

(80)                          “Sharing Percentage” means, with respect to SpinCo, the Applicable SpinCo Portion, and with respect to RemainCo, the Applicable RemainCo Portion.

 

(81)                          “SpinCo” has the meaning set forth in the preamble hereto.

 

(82)                          “SpinCo Assets” has the meaning set forth in the Separation and Distribution Agreement.

 

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

 

11

 

(84)                          “SpinCo Common Stock” has the meaning set forth in the recitals hereto.

 

(85)                          “SpinCo Distribution” has the meaning set forth in the recitals hereto.

 

(86)                          “SpinCo Group” has the meaning set forth in the Separation and Distribution Agreement.

 

(87)                          “SpinCo Liabilities” has the meaning set forth in the Separation and Distribution Agreement.

 

(88)                          “SpinCo Pre-Distribution Non-U.S. Tax Attribute” means any Non-U.S. Tax Attribute which arises or becomes available to a member of the SpinCo Group as a result of or in connection with any income, profits or gains earned, received or accrued (or deemed to be earned, received or accrued for any Tax purpose) before the External Distribution or any event, act, transaction or omission before the External Distribution.

 

(89)                          “SpinCo Prepared Joint Tax Return” means, with respect to any Tax Return prepared pursuant to Section 2.1(a) and without duplication, (i) any Pre-Distribution Tax Return or RemainCo Straddle Income Tax Return that includes a member of the SpinCo Group and the RemainCo Group, (ii) any Tax Return of a Shared Entity, and (iii) any RemainCo Separate Tax Return required to be prepared by SpinCo pursuant to Section 2.1(a)(i)(D).

 

(90)                          “SpinCo Separate Tax Returns” means any Tax Return required under applicable Law to be filed by any member of the SpinCo Group, and that does not include any member of the RemainCo Group or a Shared Entity, for a Pre-Distribution Tax Period or a Straddle Period.

 

(91)                          “Straddle Period” means a Tax period beginning on or before the Distribution Date and ending after the Distribution Date.

 

(92)                          “Subsidiary” has the meaning set forth in the Separation and Distribution Agreement.

 

(93)                          “Tax” or “Taxes” means (i) all taxes, charges, fees, imposts, levies or other assessments, including all net income, gross receipts, capital, sales, use, gains, ad valorem, value added, transfer, franchise, profits, inventory, capital stock, license, withholding, payroll, employment, social security, unemployment, excise, severance, stamp, occupation, property and estimated taxes, custom duties, fees, assessments and charges of any kind whatsoever, and (ii) liability for the payment of any amount of the type described in clause (i) above arising as a result of being (or having been) a member of any group or being (or having been) included or required to be included in any Tax Return related thereto. Whenever the term “Tax” or “Taxes” is used it shall include penalties, fines, additions to tax and interest thereon.

 

(94)                          “Tax Attributes” mean for U.S. federal, state, local, and non-U.S. Income Tax purposes, earnings and profits, tax basis, net operating and capital loss carryovers or carrybacks, alternative minimum Tax credit carryovers or carrybacks, general business credit carryovers or carrybacks, income tax credits or credits against Income Tax, disqualified interest and excess limitation carryovers or carrybacks, overall foreign losses, research and experimentation credit base periods credits, reliefs, losses, allowances, and all other items that are determined or computed on an affiliated group basis (as defined in Section 1504(a) of the Code determined without regard to the exclusion contained in Section 1504(b)(3) of the Code), or similar Tax items determined under applicable Tax law.

 

(95)                          “Tax Benefit Actually Realized” means with respect to a Party and its Subsidiaries a reduction in the amount of Taxes that are required to be paid or an increase in refund due, whether resulting from a deduction, from reduced gain or increased loss from disposition of an asset, or otherwise,

 

12

 

such reduction or increase in refund due determined on an “actually realized” basis. For purposes of this definition, a Party or its Subsidiaries will be deemed to have “actually realized” such reduction or increase in refund due at the time the amount of Taxes such Party or any of its Subsidiaries is required to pay is reduced or the amount of any refund due is increased. The amount of any Tax Benefit Actually Realized shall be computed on a “with and without” basis.

 

(96)                          “Tax Opinions” mean certain Tax opinions and supporting memoranda rendered by Kirkland or Deloitte to RemainCo or any of its Affiliates in connection with the Plan of Reorganization.

 

(97)                          “Tax Package” means Tax data and information relating to the operations of RemainCo and/or its Subsidiaries, or the RemainCo Business that is reasonably necessary to prepare and file any Pre-Distribution Income Tax Return or Straddle Period Tax Return, as applicable, including any additional information specifically requested by SpinCo in writing.

 

(98)                          “Tax Representation Letter” means any letter containing certain representations and covenants issued by RemainCo or any of its Affiliates to Kirkland or Deloitte in connection with the Tax Opinions.

 

(99)                          “Tax Returns” mean any return, report, certificate, form or similar statement or document (including any related or supporting information or schedule attached thereto and any information return, amended tax return, claim for refund, or declaration of estimated Tax) supplied or required to be supplied to, or filed with, a Taxing Authority in connection with the determination, assessment or collection of any Tax or the administration of any Laws, regulations, or administrative requirements relating to any Taxes.

 

(100)                   “Tax Sharing Agreement” has the meaning set forth in Section 3.5.

 

(101)                   “Taxing Authority” means any governmental authority or any subdivision, agency, commission, or authority thereof or any quasi-governmental or private body having jurisdiction over the assessment, determination, collection, or imposition of any Tax (including the IRS).

 

(102)                   “Treasury Regulations” mean the income tax and administrative regulations promulgated from time to time under the Code, as in effect for the relevant tax period.

 

(103)                   “U.S.” means the United States of America.

 

(104)                   “U.S. Preparation Standard” has the meaning set forth in Section 2.1(a).

 

(105)                   “U.S. Taxing Authority” means any U.S. federal, state or local Taxing Authority.

 

(106)                   “Unqualified Tax Opinion” means an unqualified “will” opinion of a Qualified Tax Advisor, in form and substance reasonably acceptable to each of applicable Parties and upon which each of the applicable Parties may rely to confirm that a transaction (or transactions) will not affect the Intended Tax Treatment.

 

(107)                   “WEX Tax Receivable Agreement” means that certain Tax Receivable Agreement, dated February 22, 2005, by and among Cendant Corporation, a Delaware corporation, Cendant Mobility Services Corporation, a Delaware corporation, and Wright Express Corporation, a Delaware corporation.

 

Section 1.2                                    References; Interpretation. Terms not otherwise defined herein shall have the meaning ascribed to them in the Separation and Distribution Agreement. References in this Agreement to any gender include references to all genders, and references to the singular include references to the plural

 

13

 

and vice versa. Unless the context otherwise requires, the words “include”, “includes”, and “including” when used in this Agreement shall be deemed to be followed by the phrase “without limitation”. Unless the context otherwise requires, references in this Agreement to Articles, Sections and Schedules shall be deemed references to Articles and Sections of, and Schedules to, this Agreement. Unless the context otherwise requires, the words “hereof”, “hereby”, and “herein” and words of similar meaning when used in this Agreement refer to this Agreement in its entirety and not to any particular Article, Section or provision of this Agreement. Unless the context otherwise requires, the word “stock” or “shares” refers to any equity interests of the applicable entity for U.S. federal income tax purposes and any references to a Person include a reference to any successor to such Person.

 

Section 1.3                                    Effective Time. Notwithstanding that certain interrelated and intermediate internal transactions must be given effect prior to the Distributions, the agreements contained herein, including, but not limited to, the manner in which Taxes are shared amongst the Parties, shall be effective no earlier than and only upon the Effective Time.

 

ARTICLE II

 

PREPARATION AND FILING OF TAX RETURNS

 

Section 2.1                                    Responsibility for Preparation and Filing of Tax Returns.

 

(a)                                 General. To the extent not previously filed, and subject to the rights and obligations of the Parties set forth herein:

 

(i)                                     SpinCo shall prepare or cause to be prepared, without duplication, (A) except as provided in clause (ii), all Pre-Distribution Tax Returns, (B) except as provided in clause (ii), all RemainCo Straddle Income Tax Returns, (C) all Tax Returns with respect to the Shared Entities for Pre-Distribution Tax Periods and Straddle Periods, (D) all RemainCo Separate Tax Returns [for Income Taxes] for a Pre-Distribution Period or Straddle Period that are required to be filed with any U.S. state or U.S. locality (including, in each case, any political subdivision thereof), and (E) all SpinCo Separate Returns required to be filed after the Distribution Date; and

 

(ii)                                  RemainCo shall prepare or cause to be prepared, without duplication, (A) all RemainCo Separate Tax Returns other than RemainCo Separate Tax Returns described in clause (i)(D), and (B) all RemainCo Separate Tax Returns required to be filed after the Distribution Date.

 

RemainCo shall file or cause to be filed all such Tax Returns with the applicable Taxing Authority to the extent a member of the RemainCo Group is responsible under applicable Law for filing such Tax Returns, and SpinCo shall cooperate (or cause its Subsidiaries to cooperate) in the filing of such Tax Returns to the extent a member of the SpinCo Group is responsible for filing such Tax Returns under applicable Law. SpinCo shall file or cause to be filed all SpinCo Separate Tax Returns with the applicable Taxing Authority. All such Tax Returns to be submitted to any U.S. Taxing Authority shall be prepared in a manner consistent with (A) the Intended Tax Treatment, the IRS Ruling, the Tax Representation Letters, the Tax Opinions, and otherwise in a manner consistent with this Agreement and (B) the Global Preparation Standard (clauses (A) and (B), the “U.S. Preparation Standard”), and all such Tax Returns to be submitted to any non-U.S. Taxing Authority shall be prepared in a manner consistent with the Global Preparation Standard.

 

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(b)                                 Tax Package. To the extent not previously provided, RemainCo shall (at its own cost and expense), to the extent that a Pre-Distribution Income Tax Return or Straddle Period Tax Return includes items of any RemainCo Entity, prepare and provide or cause to be prepared and provided to SpinCo a Tax Package relating to such Tax Return. Such Tax Package shall be provided in a timely manner but in any event, within sixty (60) days of being requested by SpinCo in writing. In the event RemainCo does not fulfill its obligations pursuant to this Section 2.1(b), SpinCo shall be entitled, at the sole cost and expense of RemainCo and its Affiliates, to prepare or cause to be prepared the information required to be included in the Tax Package for purposes of preparing any such Tax Returns, and RemainCo shall cooperate with SpinCo in providing all relevant information in accordance with Section 8.1. 

 

Section 2.2                                    Tax Return Review Rights.

 

(a)                                 SpinCo shall deliver to or cause to be delivered to RemainCo a draft of any SpinCo Prepared Joint Tax Return no later than thirty (30) days (or, in the case of any such Tax Return for state or local Taxes, fifteen (15) days) prior to the Due Date thereof. RemainCo and any Subsidiary of RemainCo shall have (to the extent permitted by applicable Law) access to any and all data and information reasonably necessary for its review of all such Tax Returns as reasonably requested by RemainCo. Subject to the preceding sentence, no later than ten (10) days (or, in the case of any such Tax Return for state or local Taxes, five (5) days) after receipt of such Tax Returns, RemainCo shall have a right to object to such SpinCo Prepared Joint Tax Return (or items with respect thereto) by written notice to SpinCo; such written notice shall contain such disputed item (or items) and the basis for its objection. 

 

(b)                                 If RemainCo does not object by proper written notice in accordance with Section 2.2(a), above, within the time period described, such Tax Return shall be deemed to have been accepted and agreed upon, and to be final and conclusive, for purposes of this Section 2.2(b). If RemainCo does object by proper written notice in accordance with Section 2.2(a), above, within such applicable time period, SpinCo shall reflect or cause to be reflected RemainCo’s reasonable comments on such Tax Return; provided, however, that SpinCo shall not be required to reflect or cause to be reflected comments to the extent such comments are inconsistent with the U.S. Preparation Standard or the Global Preparation Standard (as appropriate), or if SpinCo determines in good faith such comments do not reflect a position “more likely than not” to be sustained. The Parties shall act in good faith to resolve any such dispute as promptly as practicable. If the Parties have not reached a final resolution with respect to all disputed items for which proper written notice in accordance with Section 2.2(a), above, was given within ten (10) days (or, in the case of any such Tax Return for state or local Taxes, five (5) days) prior to the Due Date for such Tax Return, then any disputed issues shall be submitted to a Big Four Accounting Firm (excluding any firm involved in preparing such Tax Return) mutually agreed by the Parties for a final binding resolution. If the Big Four Accounting Firm has not reached a decision by the Due Date, such Tax Return shall be filed as prepared by SpinCo (with any agreed changes), and the Parties shall cooperate to file and cause any Subsidiary to file an amended Tax Return (with each Party paying costs and expenses associated therewith in accordance with its Sharing Percentages) if the Big Four Accounting Firm resolves the dispute in RemainCo’s favor.

 

Section 2.3                                    Time of Filing Tax Returns. Each Tax Return shall be filed on or prior to the Due Date for such Tax Return by the Party responsible for filing such Tax Return hereunder. 

 

Section 2.4                                    Costs and Expenses. The party responsible for preparing any Tax Return or Tax Package under Section 2.1, 2.2, or 2.3 shall be responsible for the costs and expenses associated with preparing such Tax Return or Tax Package, except as otherwise specified in this Article II; provided that RemainCo shall be responsible for the reasonable costs and expenses associated with preparing any RemainCo Separate Tax Return that is prepared by SpinCo pursuant to Section 2.1(a). 

 

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Section 2.5                                    Methods of Accounting.  Notwithstanding anything herein to the contrary, SpinCo shall not make or cause to be made a change in method of accounting for U.S. federal, state, local or non-U.S. tax purposes with respect to a Pre-Distribution Tax Period or a Straddle Period without the prior written consent of RemainCo (not to be unreasonably withheld, conditioned or delayed) other than with respect to Taxes reflected (or to be reflected) exclusively on a SpinCo Separate Tax Return.

 

ARTICLE III

 

RESPONSIBILITY FOR PAYMENT OF TAXES

 

Section 3.1                                    Responsibility for Payment of Taxes. Except as otherwise provided in this Agreement, without duplication, (a) RemainCo shall have responsibility for (i) all Taxes with respect to any RemainCo Separate Tax Return, (ii) Distribution Taxes that are the responsibility of RemainCo pursuant to Article V and (iii) the Applicable RemainCo Portion of all the Taxes of any member of the RemainCo Group or the SpinCo Group (or any Affiliated Group of which any of them was a member) for any Pre-Distribution Tax Period or the portion of any Straddle Period ending as of the end of the Pre-Distribution Tax Period other than (x) Taxes with respect to any SpinCo Separate Tax Return and (y) Distribution Taxes that are the responsibility of SpinCo pursuant to Article V; and (b) SpinCo shall have responsibility for (i) all Taxes with respect to any SpinCo Separate Tax Return, (ii) Distribution Taxes that are the responsibility of SpinCo pursuant to Article V and (iii) the Applicable SpinCo Portion of all the Taxes of any member of the RemainCo Group or the SpinCo Group (or any Affiliated Group of which any of them was a member) for any Pre-Distribution Tax Period or the portion of any Straddle Period ending as of the end of the Pre-Distribution Tax Period other than (x) Taxes with respect to any RemainCo Separate Tax Return and (y) Distribution Taxes that are the responsibility of RemainCo pursuant to Article V. If any Party responsible for the payment of Taxes under this Article III is not the person responsible for the payment of such Taxes under applicable Law (other than an Affiliate of such Party), such Party shall pay to the other Party (either directly to the other Party if the other Party is responsible for the payment of such Taxes or on behalf of the Affiliate of the other Party if such Affiliate is responsible for the payment of such Taxes) under applicable Law the Taxes for which it is responsible, as described in this Section 3.1, and the Party responsible for paying such Tax shall timely pay (or cause to be paid) over amounts received to the appropriate Taxing Authority.

 

Section 3.2                                    Timing of Payments of Taxes. All Taxes required to be paid or caused to be paid by a Party to a Taxing Authority pursuant to this Article III shall be paid or caused to be paid by such Party on or prior to the Due Date of such Taxes. All amounts required to be paid by one Party to another Party pursuant to this Article III shall be paid or caused to be paid by such first Party to such other Party in accordance with Article VIII; provided, that the amounts required to be paid by SpinCo to RemainCo pursuant to Section 3.1(b)(ii) shall be paid or caused to be paid by SpinCo to RemainCo no later than five (5) Business Days prior to the Due Date of the applicable Taxes.

 

Section 3.3                                    Notice. Within twenty (20) Business Days after a Party or any of its Affiliates receives a written notice from a Taxing Authority of the existence of an Audit that may require indemnification pursuant to this Agreement, that Party shall notify the other Parties of such receipt and send such notice to the other Parties pursuant to Section 12.3. The failure of one Party to notify the other Parties of an Audit shall not relieve such other Party of any liability and/or obligation that it may have under this Agreement, except to the extent that the Indemnifying Party’s rights under this Agreement are materially prejudiced by such failure.

 

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Section 3.4                                    Audits.

 

(a)                                 Determination of Administering Party.

 

(i)                                     Subject to Sections 3.4(b) and 3.4(c), SpinCo and its Subsidiaries shall administer and control all Audits (or portions thereof) of Pre-Distribution Tax Returns and Straddle Period Tax Returns, other than RemainCo Separate Tax Returns. For the avoidance of doubt, SpinCo shall control any Audit (or portion thereof) of a RemainCo Combined Income Tax Return. With respect to Straddle Period Tax Returns, SpinCo may elect, in its sole discretion, within ten (10) days of written notice of a proposed Audit to make RemainCo the Audit Management Party with respect to such Audit.

 

(ii)                                  Audits (or portions thereof) of SpinCo Separate Tax Returns, RemainCo Separate Tax Returns and Post-Distribution Income Tax Returns shall be administered and controlled by the Party and its Subsidiaries that would be primarily liable under applicable Law to pay to the applicable Taxing Authority the Taxes resulting from such Audits. Audits (or portions thereof) of Tax Returns with respect to any Post-Distribution Tax Period shall not be subject to Sections 3.4(b) and 3.4(c).

 

(b)                                 Administration and Control; Cooperation. The Audit Management Party must obtain the prior consent of the non-controlling Party (the “Non-Managing Party”) prior to contesting, litigating, compromising or settling any Audit related to an adjustment which the Non-Managing Party may reasonably be expected to become liable to make any indemnification payment under this Agreement (or any payment under Article VIII) (such consent not to be unreasonably withheld, conditioned or delayed). Unless waived by the Parties in writing, in connection with any potential adjustment in an Audit as a result of which adjustment the Non-Managing Party may reasonably be expected to become liable to make any indemnification payment under this Agreement (or any payment under Section 8.5) to the Audit Management Party under this Agreement: (i) the Audit Management Party shall keep the Non-Audit Management Party informed in a timely manner of all actions taken or proposed to be taken by the Audit Management Party with respect to such potential adjustment in such Audit; (ii) the Audit Management Party shall provide in a timely manner the Non-Managing Party copies of any written materials relating to such potential adjustment in such Audit received from any Taxing Authority; (iii) the Audit Management Party shall timely provide the Non-Managing Party with copies of any correspondence or filings submitted to any Taxing Authority or judicial authority in connection with such potential adjustment in such Audit; (iv) the Audit Management Party shall consult with the Non-Managing Party (including, without limitation, regarding the use of outside advisors to assist with the Audit) and offer the Non-Managing Party a reasonable opportunity to comment before submitting any written materials prepared or furnished in connection with such potential adjustment in such Audit; and (v) the Audit Management Party shall defend such Audit diligently and in good faith. Unless waived by the Parties in writing, the Audit Management Party shall provide the Non-Managing Party with written notice reasonably in advance of, and the Non-Managing Party shall have the right to attend, any formally scheduled meetings with Taxing Authorities or hearings or proceedings before any judicial authorities in connection with any such potential adjustment. The costs and expenses of all Audits shall be borne by (i) RemainCo in accordance with the Applicable RemainCo Portion and (ii) SpinCo in accordance with the Applicable SpinCo Portion.

 

(c)                                  Power of Attorney/Officer Signature. Each Party hereby appoints (and shall cause its Subsidiaries to appoint) the Audit Management Party (and its designated representatives) as its agent and attorney-in-fact to take the actions the Audit Management Party deems necessary or appropriate to implement the responsibilities of the Audit Management Party under this Agreement. Each Party also shall (or shall cause its Subsidiaries to) execute and deliver to the Audit Management Party a power of attorney, and such other documents as are reasonably requested in writing from time to time by the Audit Management Party (or its designee).

 

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Section 3.5                                    Third Party Indemnity Payments. Any benefit or liability resulting from any Tax sharing, contractual indemnity agreements or similar agreements, written or unwritten, as between any of the Parties or their respective Subsidiaries, on the one hand, and any other third party, on the other hand (other than the Separation and Distribution Agreement, this Agreement or any other Ancillary Agreement) (“Tax Sharing Agreements”), shall remain the benefit or liability of such Party or its respective Subsidiary; provided, however, that the Party or Parties, as applicable, responsible under this Agreement for any Taxes shall be responsible for any related liability in respect of such Taxes under any Tax Sharing Agreement, and be entitled to any related benefit in respect of such Taxes under any Tax Sharing Agreement. No Party shall be entitled to indemnification under this Agreement in respect of Taxes to the extent such Party or one of its Subsidiaries is indemnified under any Tax Sharing Agreement, and the Parties shall (and shall cause their Subsidiaries to) use commercially reasonable efforts to pursue any indemnification rights under any Tax Sharing Agreement if such indemnification would reduce the other Party’s responsibility for such Taxes under this Agreement. All amounts required to be paid by one Party to another Party pursuant to this Section 3.5 shall be paid or caused to be paid by such first Party to such other Party in accordance with Article VIII.

 

ARTICLE IV

 

REFUNDS, CARRYBACKS AND AMENDED TAX RETURNS

 

Section 4.1                                    Refunds; Payments.

 

(a)                                 Refunds. If any Party or its Affiliates receive any refunds in any Post-Distribution Tax Period (including a credit, relief or offset of Taxes actually utilized to decrease by use of the amount of such refund a Tax liability of a Party (as determined on a “with and without” basis)) that relate to Taxes of any member of the RemainCo Group or the SpinCo Group (or any Affiliated Group of which any of them was a member) for any Pre-Distribution Tax Period or the portion of any Straddle Period ending at the end of the Pre-Distribution Period, such refund and any Taxes and reasonable documented out of pocket expenses incurred in connection therewith shall be allocated in the same manner as the underlying Tax is allocated pursuant to Section 3.1.

 

(b)                                 Payments. Any refund or portion thereof to which a Party is entitled pursuant to this Section 4.1 that is received or deemed to have been received as described herein by another Party, shall be paid by such other Party to such first Party in immediately available funds in accordance with Article VIII.

 

Section 4.2                                    Carrybacks. SpinCo agrees and will cause its Subsidiaries not to carry back any Tax Attribute for any taxable period ending after the Distribution Date to a RemainCo Combined Income Tax Return or any Pre-Distribution Income Tax Return, including by making any election permitted by Law regarding the carryback of losses or credits that would eliminate the carryback of losses or credits for any taxable period ending after the Distribution Date to a RemainCo Combined Income Tax Return or any Pre-Distribution Income Tax Return, except as is required by applicable Law; provided that where such Tax Attribute is so required to be carried back, RemainCo shall reimburse SpinCo for any Tax Benefit Actually Realized with respect to such Tax Attribute, net of any Taxes and reasonable documented out of pocket expenses incurred in connection with such carryback or the receipt of any Tax Benefit Actually Realized with respect thereto.

 

Section 4.3                                    Amended Tax Returns.

 

(a)                                 Notwithstanding Sections 2.1 and 2.2, a Party or its Subsidiary that is entitled to file an amended Tax Return for a Pre-Distribution Tax Period or a Straddle Period for members of its Group

 

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shall be permitted to prepare and file an amended Tax Return at its own cost and expense; provided, however, that (i) such amended Tax Return shall be prepared in a manner: (x) consistent with the past practice of the Parties and their Affiliates unless otherwise modified by a Final Determination or required by applicable Law; (y) consistent with the U.S. Preparation Standard or the Global Preparation Standard (as applicable); and (ii) if such amended Tax Return could result in one or more other Parties (or their Subsidiaries) becoming responsible for a payment of Taxes (including pursuant to this Agreement), such amended Tax Return shall be permitted only if the prior written consent of such other Parties is obtained. The consent of such other Parties may be withheld in their sole discretion but shall be deemed to be obtained in the event that a Party or its Subsidiary is required to file an amended Tax Return as a result of an Audit adjustment that arose in accordance with Article IX.

 

(b)                                 A Party or its Subsidiary that is entitled to file an amended Tax Return for a Post-Distribution Tax Period shall be permitted to do so without the consent of any Party.

 

(c)                                  A Party that is permitted (or whose Subsidiary is permitted) to file an amended Tax Return shall not be relieved of any liability for payments pursuant to this Agreement notwithstanding that another Party consented thereto.

 

ARTICLE V

 

DISTRIBUTION TAXES

 

Section 5.1                                    Liability for Distribution Taxes. In the event that Distribution Taxes become due and payable to a Taxing Authority pursuant to a Final Determination, then, notwithstanding anything to the contrary in this Agreement:

 

(a)                                 No Fault. If such Distribution Taxes are not attributable to the Fault for Distribution Purposes of any Party or any of its Affiliates, the responsibility for such Distribution Taxes shall be shared by the Parties in accordance with the Parties’ sharing of Shared Contingent Liabilities pursuant to Section 6.1(b) of the Separation and Distribution Agreement (and not as might otherwise be determined pursuant to Article III, Article VI or Article VIII).

 

(b)                                 Fault. If such Distribution Taxes are attributable to the Fault for Distribution Purposes of one or more Parties or any of their Affiliates, the responsibility for such Distribution Taxes shall reside with the Party or Parties at Fault for Distribution Purposes. If more than one Party is at Fault for Distribution Purposes, the responsibility for the Distribution Taxes shall be allocated equally between the Parties at Fault for Distribution Purposes. Notwithstanding anything to the contrary in this Agreement, such Distribution Taxes shall not be subject to Article III.

 

Section 5.2                                    Definition of Fault for Distribution Purposes. For purposes of this Agreement, Distribution Taxes shall be deemed to result from the fault (“Fault for Distribution Purposes”) of a Party if such Distribution Taxes are attributable to, or result from:

 

(a)                                 any act, or failure or omission to act, by such Party or any of such Party’s Affiliates following the Distribution that results in one or more Parties (or any of their Affiliates) being responsible for such Distribution Taxes pursuant to a Final Determination, regardless of whether such act or failure to act (i) is covered by a Post-Distribution Ruling, Unqualified Tax Opinion, or waiver in accordance with Section 5.3, or (ii) occurs during or after the Restricted Period, or

 

(b)                                 the direct or indirect acquisition of all or a portion of the stock of such Party (or any transaction or series of related transactions that is deemed to be such an acquisition for purposes of

 

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Section 355(e) of the Code and the Treasury Regulations promulgated thereunder) by any means whatsoever by any person including pursuant to an issuance or repurchase of stock by such Party or any of its Affiliates.

 

Section 5.3                                    Limits on Proposed Acquisition Transactions and Other Transactions During Restricted Period. During the Restricted Period, neither SpinCo nor RemainCo shall (or allow any of its Subsidiaries to take any such action with respect to SpinCo or RemainCo):

 

(a)                                 allow any Proposed Acquisition Transaction to occur;

 

(b)                                 merge or consolidate with any other Person or dissolve, liquidate or partially liquidate (other than a wholly owned Subsidiary of a Party merging or consolidating with such Party or another wholly owned Subsidiary of such Party);

 

(c)                                  approve or allow the discontinuance, cessation, or sale or other transfer (to an Affiliate or otherwise) of any Active Business by a Party, as applicable, for purposes of Section 355 of the Code;

 

(d)                                 sell or otherwise dispose of more than thirty-five percent (35%) of its consolidated gross or net assets or allow the sale or other disposition (to an Affiliate or otherwise) of more than thirty-five percent (35%) of the consolidated gross or net assets of SpinCo (as applicable) (in each case, excluding sales in the ordinary course of business, sales the net cash proceeds (taking into account any Taxes payable) of which are reinvested in other assets (including pursuant to an exchange under Section 1031 of the Code) and sales the net cash proceeds (taking into account any Taxes payable) of which are used to repay indebtedness, and measured based on fair market values as of the date of the applicable Distribution or other transaction);

 

(e)                                  amend its certificate of incorporation (or other organizational documents) or take any other action or approve or allow the taking of any action, whether through a stockholder vote or otherwise, in each case that affects the economic or voting rights of the stock of such Party;

 

(f)                                   purchase, directly or through any Affiliate, any of its outstanding stock after the Distributions, other than through stock purchases meeting the requirements of Section 4.05(1)(b) of Revenue Procedure 96-30 (as in effect prior to the amendment of such Revenue Procedure by Revenue Procedure 2003-48);

 

(g)                                  take any action or fail to take any action, or permit any of its Affiliates to take any action or fail to take any action, that is inconsistent with the representations and covenants made in the IRS Ruling or in the Tax Representation Letters, or that is inconsistent with any rulings or opinions in the IRS Ruling or any Tax Opinion; nor

 

(h)                                 enter into an arrangement or agreement to do any of the foregoing.

 

provided, however, that a Party (the “Requesting Party”) shall be permitted to take such action or one or more actions set forth in the foregoing clauses (a) through (h) if such action is described in the Plan of Reorganization or if, prior to taking any such actions: (1) such Requesting Party or RemainCo shall have received a favorable private letter ruling from the IRS, or a ruling from another Taxing Authority (a “Post-Distribution Ruling”), in form and substance reasonably satisfactory to the other Party and upon which RemainCo and SpinCo are entitled to rely that confirms that such action or actions will not result in Distribution Taxes, taking into account such actions and any other relevant transactions in the aggregate; (2) such Requesting Party shall have received an Unqualified Tax Opinion that confirms that such action or actions will not result in Distribution Taxes, taking into account such actions and any other

 

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relevant transactions in the aggregate; or (3) such Requesting Party shall have received a written statement from the other Party that provides that such other Party waives the requirement to obtain a Post-Distribution Ruling or Unqualified Tax Opinion described in this paragraph. The Requesting Party shall bear all costs and expenses of securing any such Post-Distribution Ruling or Unqualified Tax Opinion.

 

Section 5.4                                    IRS Ruling, Tax Representation Letters, and Tax Opinions; Consistency. Each Party represents that the information and representations furnished with respect to such Party or its Subsidiaries in or in connection with the IRS Ruling, the Tax Representation Letters, and the Tax Opinions are accurate and complete as of the Effective Time. Each Party covenants that if, after the Effective Time, it or any of its Affiliates obtains information indicating, or otherwise becomes aware, that any such information or representations is or may be inaccurate or incomplete, to promptly inform the other Party.

 

Section 5.5                                    Timing of Payment of Taxes. All Distribution Taxes required to be paid or caused to be paid by a Party to a Taxing Authority under applicable Law shall be paid or caused to be paid by such Party on or prior to the date on which such Distribution Taxes are due. All amounts required to be paid by one Party to another Party (including obligations arising under Article VII) pursuant to this Article V shall be paid or caused to be paid by such first Party to such other Party in accordance with Article VIII.

 

Section 5.6                                    Protective Section 336(e) Elections.

 

(a)                                 RemainCo and SpinCo shall make a protective election with respect to SpinCo under Section 336(e) of the Code (and any similar election under state or local law) with respect to the External Distribution in accordance with Treasury Regulations Section 1.336-2(h) and (j) (and any applicable provisions under state and local law) and shall cooperate in the timely completion and/or filings of such elections and any related filings or procedures (including filing or amending any Tax Returns to implement an election that becomes effective). This Section 5.6(a) is intended to constitute a binding, written agreement to make an election under Section 336(e) of the Code with respect to the External Distribution.

 

(b)                                 Notwithstanding anything to the contrary herein, in the event that the election contemplated in Section 5.6(a) is made and becomes effective, then the Parties shall share in the Tax Benefit Actually Realized as a result of such election in accordance with the Parties’ relative responsibility for such Taxes under this Article V, and payments shall be made between the Parties, if necessary.

 

(c)                                  RemainCo and SpinCo shall cooperate in order to determine whether to make a protective election under Section 336(e) of the Code (any any similar election under state or local law) with respect to any SpinCo Subsidiary or with respect to the Internal Distribution in accordance with Treasury Regulations Section 1.336-2(h) and (j) (and any applicable provisions under state and local law).

 

ARTICLE VI

 

GROUP TAXES

 

Section 6.1                                    Group Tax Arrangements. Other than with respect to VAT, RemainCo and SpinCo agree (and agree to cause their Subsidiaries) to cooperate in order to take the relevant steps for all members of the RemainCo Group and the SpinCo Group to cease to be treated as members of any Group Tax Arrangement or GPA which includes members of both the RemainCo Group and the SpinCo Group with effect from the Distribution Date.

 

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Section 6.2                                    Indirect Tax Groups.

 

(a)                                 SpinCo Indirect Tax Group. If a member of the RemainCo Group is part of an Indirect Tax group with any member of the SpinCo Group and for which a member of the SpinCo Group is the responsible member for the payment of Indirect Tax immediately before the Distribution Date (“SpinCo’s Indirect Tax Group”), then following receipt of a calculation reflecting the same, RemainCo shall pay and cause any member of the RemainCo Group to pay such proportion of any Indirect Tax for which the responsible member of SpinCo’s Indirect Tax Group is accountable and that is properly attributable to supplies, acquisitions and importations (“Supplies”) made before the Distribution Date by a member of the RemainCo Group (less any amount of Indirect Tax that is attributable to Supplies made before the Distribution Date by the relevant member of the RemainCo Group and properly deductible or creditable against Indirect Tax on Supplies (“RemainCo Input Tax”)) and RemainCo shall provide and cause any member of the RemainCo Group to provide any information reasonably required by SpinCo’s Indirect Tax Group in order for SpinCo’s Indirect Tax Group to prepare, file and submit any Tax Return relating to any Indirect Tax.

 

(b)                                 RemainCo Indirect Tax Group. If a member of the SpinCo Group is part of an Indirect Tax group with any member of the RemainCo Group and for which a member of the RemainCo Group is the responsible member for the payment of Indirect Tax immediately before the Distribution Date (“RemainCo’s Indirect Tax Group”), then SpinCo shall pay and cause any member of the SpinCo Group to pay such proportion of any Indirect Tax for which the responsible member of RemainCo’s Indirect Tax Group is accountable and that is properly attributable to Supplies made before the Distribution Date by a member of the RemainCo Group (less any amount of Indirect Tax that is attributable to Supplies made before the Distribution Date by the relevant member of the SpinCo Group and properly deductible or creditable against Indirect Tax on Supplies (“SpinCo Input Tax”)) and SpinCo shall provide and cause any member of the SpinCo Group to provide any information reasonably required by RemainCo’s Indirect Tax Group in order for RemainCo’s Indirect Tax Group to prepare, file and submit any Tax Return relating to any Indirect Tax.

 

(c)                                  Payment of Indirect Tax. Any payment required pursuant to Sections 6.2(a) and 6.2(b) shall be paid on the day five (5) Business Days after demand is made for it or if later, five (5) Business Days before the Due Date of the applicable Indirect Tax.

 

(d)                                 Payment with Respect to Tax Credits. SpinCo shall pay or cause to be paid to RemainCo an amount equivalent to such proportion of any repayment of Indirect Tax received by SpinCo’s Indirect Tax Group or of any credit obtained by reference to an excess of RemainCo Input Tax over Indirect Tax that must be accounted for to the relevant Taxing Authority that is attributable to Supplies made or deemed to be made by a member of RemainCo Group while a member of SpinCo’s Indirect Tax Group within five (5) Business Days of receipt by, or offset against a liability of, the responsible member. RemainCo shall pay or cause to be paid to SpinCo an amount equivalent to such proportion of any repayment of Indirect Tax received by RemainCo’s Indirect Tax Group or of any credit obtained by reference to an excess of SpinCo Input Tax over Indirect Tax that must be accounted for to the relevant Taxing Authority that is attributable to Supplies made or deemed to be made by a member of SpinCo Group while a member of RemainCo’s Indirect Tax Group within five (5) Business Days of receipt by, or offset against a liability of, the responsible member.

 

(e)                                  Notice. Each Party will give or will cause that a Subsidiary of the relevant Party to give, on or before the Distribution Date, notice to the relevant Taxing Authority (copying the notice to the other Party) that members of the SpinCo Group will cease to be under their control of RemainCo and with effect from the External Distribution and will use their best efforts to cause that the date on which

 

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members of the RemainCo Group ceases to be members of SpinCo’s Indirect Tax Group and members of SpinCo cease to be members of RemainCo’s Indirect Tax Group on the Distribution Date.

 

Section 6.3                                    Group Payment Arrangements.

 

(a)                                 To the extent not provided for pursuant to Articles II or III, each Party shall pay and shall cause that their Subsidiaries pay to the other Party an amount (“GPA Payment”) equal to any payment of Tax (other than any Tax payable to any U.S. Taxing Authority) (either directly to the other Party if the other Party is responsible for the payment of such Taxes or on behalf of the Subsidiary of the other Party if such Subsidiary is responsible for the payment of such Taxes) that has been discharged by the Subsidiary of such Party in accordance with any arrangement under which one company discharges the liability to Tax of any other company (“GPA”) and such Party shall pay or cause to be paid any amount received pursuant to this Section 6.3 to the relevant Taxing Authority prior to the Due Date of the applicable Taxes.  No payment shall be required to the extent the Party or its Subsidiaries have satisfied their obligations under the GPA or payment in respect of the liability under the GPA has already been paid by the Party or its Subsidiaries pursuant to another provision of this Agreement or any other agreement or arrangement.

 

(b)                                 Payment to the Seller under Section 6.3(a) shall be on whichever is the later of: (a) five (5) Business Days after written demand is made for it and (b) the Due Date for Taxes to be paid under the GPA.

 

Section 6.4                                    Non-U.S. Transfer Pricing.

 

(a)                                 To the extent that any transfer pricing or thin capitalization legislation in another jurisdiction outside the United States applies or may apply in relation to transactions between any of the members of the RemainCo Group, on the one hand, and any member of the SpinCo Group, on the other hand (a “TP Transaction”) for a Pre-Distribution Tax Period or any Straddle Period, RemainCo and SpinCo agree (the extent permitted by law) to and cause their Subsidiaries to (i) apply the Global Preparation Standard to any TP Transaction and (ii) use reasonable endeavors to minimize any Taxes that become payable by the Group as a whole in respect of any TP Transaction.

 

(b)                                 If a Non-U.S. Taxing Authority challenges, adjusts or rejects the position taken in any Tax Return in respect of any TP Transaction, and such challenge, adjustment or rejection gives rise to an additional Tax liability for a member of one Party’s Group (other than a Tax liability expected as a result of the Global Preparation Standard) (“TP Tax Liability”), then to the extent that (i) a member of the other Party’s Group is unable to obtain and utilize or the Parties agree (acting reasonably) that a member of the other Party’s Group is unlikely to obtain and utilize a deduction, relief, corresponding benefit or other Tax Attribute as a result of or in connection with the TP Tax Liability (“TP Tax Attribute”) to reduce an actual Tax liability of such Party’s Group, the Parties agree to bear the cost of such TP Tax Liability in accordance with their respective Sharing Percentages or (ii) a member of the other Party’s Group is able to obtain and utilize a TP Tax Attribute to reduce an actual Tax liability, the Parties agree to share the amount of actual Tax saved or reduced as a result of the obtaining and utilization of such TP Tax Attribute in accordance with their respective Sharing Percentages (“TP Tax Attribute Sharing”) and bear the cost of such TP Tax Liability in their respective Sharing Percentages.

 

(c)                                  If the Parties have borne the cost of any TP Tax Liability in accordance with Section 6.4(b)(i) and a member of a Party’s Group subsequently obtains and utilizes a TP Tax Attribute to reduce an actual Tax liability, then such Party will pay the other Party an amount equal to such other Party’s Sharing Percentage of the amount of actual Tax saved or reduced as a result of the obtaining and

 

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utilization of such TP Tax Attribute within ten (10) days of the filing of the Tax Return evidencing such utilization.

 

(d)                                 If the Parties have shared in any TP Tax Attribute Sharing and borne the cost of any TP Tax Liability in accordance with Section 6.4(b)(ii) and a member of a Party’s Group subsequently obtains and utilizes an additional TP Tax Attribute (which was not already taken into account in Section 6.4(b)(ii)) to reduce an actual Tax liability, then such Party will pay the other Party an amount equal to such other Party’s Sharing Percentage of the amount  of actual Tax saved or reduced as a result of the obtaining and utilization of such TP Tax Attribute.

 

(e)                                  The Parties agree to and agree to cause their Subsidiaries to use reasonable efforts in order to obtain and utilize any TP Tax Attribute.

 

Section 6.5                                    Coordination. Notwithstanding anything to the contrary in this Agreement, to the extent of any inconsistency between this Article VI and any other provision in this Agreement, this Article VI shall control.

 

ARTICLE VII

 

INDEMNIFICATION

 

Section 7.1                                    Indemnification Obligations of RemainCo. RemainCo shall indemnify SpinCo and its Affiliates and hold the indemnified party harmless from and against (without duplication):

 

(a)                                 all Taxes and other amounts for which the RemainCo Group is responsible under this Agreement and any related Losses, including, for the avoidance of doubt, any Taxes actually paid by SpinCo as the result of a RemainCo Fault for Distribution Purposes; and

 

(b)                                 all Taxes and Losses attributable to a breach of any representation, covenant, or obligation of RemainCo under this Agreement.

 

Section 7.2                                    Indemnification Obligations of SpinCo. SpinCo shall indemnify RemainCo and its Affiliates and hold them harmless from and against (without duplication):

 

(a)                                 all Taxes and other amounts for which the SpinCo Group is responsible under this Agreement and any related Losses, including, for the avoidance of doubt, any Taxes actually paid by RemainCo as the result of a SpinCo Fault for Distribution Purposes; and

 

(b)                                 all Taxes and Losses attributable to a breach of any representation, covenant or obligation of SpinCo under this Agreement.

 

ARTICLE VIII

 

PAYMENTS

 

Section 8.1                                    Payments.

 

(a)                                 General. In the event that an Indemnifying Party is required to make a payment to an Indemnified Party pursuant to this Agreement, such payment shall be made to the Indemnified Party within the time prescribed for payment in this Agreement, or if no period is prescribed, within ten (10) days after delivery of written notice of payment owing together with a computation of the amounts due. If

 

24

 

the Indemnifying Party fails to make a payment to the Indemnified Party within the time period set forth in this Section 8.1 or as otherwise provided in this Agreement, such Indemnifying Party shall pay to the Indemnified Party interest that accrues (at a rate equal to the Prime Rate (as defined in the Separation and Distribution Agreement)) on the amount of such payment from the time that such payment was due to the Indemnified Party until the date that payment is actually made to the Indemnified Party; provided, however, that this provision for interest shall not be construed to give the Indemnifying Party the right to defer payment beyond the due date hereunder.

 

(b)                                 Right of Setoff. It is expressly understood that an Indemnifying Party is hereby authorized to set off and apply any and all amounts required to be paid to an Indemnified Party pursuant to this Section 8.1 against any and all of the obligations of the Indemnified Party to the Indemnifying Party arising under Section 8.1 of this Agreement that are then either due and payable or past due, irrespective of whether such Indemnifying Party has made any demand for payment with respect to such obligations.

 

Section 8.2                                    Treatment of Payments made Pursuant to Tax Matters Agreement. Unless otherwise required by a Final Determination or this Agreement or otherwise agreed to among the Parties, for U.S. federal Tax purposes, any payment (other than payments of interest pursuant to Section 8.1(a)) made pursuant to this Agreement by:

 

(a)                                 SpinCo to RemainCo shall be treated for all U.S. federal, state or local Tax purposes as a distribution by SpinCo to RemainCo occurring immediately before the External Distribution;

 

(b)                                 RemainCo to SpinCo shall be treated for all U.S. federal, state or local Tax purposes as a tax-free contribution by RemainCo to SpinCo occurring immediately before the External Distribution;

 

(c)                                  in each case, none of the Parties shall take any position inconsistent with such treatment. In the event that a U.S. Taxing Authority asserts that a Party’s treatment of a payment pursuant to this Agreement should be other than as required pursuant to this Agreement (ignoring any potential inconsistent or adverse Final Determination), such Party shall use its commercially reasonable efforts to contest such challenge.

 

Section 8.3                                    Treatment of Payments made Pursuant to Separation and Distribution Agreement. Unless otherwise required by a Final Determination or this Agreement or otherwise agreed to among the Parties, for U.S. federal Tax purposes any payment made pursuant to the Separation and Distribution Agreement shall be treated for all Tax purposes in accordance with the principles set forth in Section 8.2 of this Agreement.

 

Section 8.4                                    Tax Treatment of Assumed Liabilities. Notwithstanding Section 8.2 or anything herein to the contrary, in accordance with Revenue Ruling 95-74, 1995-2 C.B. 36, payments made by SpinCo to RemainCo pursuant to this Agreement in respect of state, local and/or non-U.S. Taxes that, but for such assumption by SpinCo of a liability would have been deductible by RemainCo under Sections 162 or 164 of the Code (and applicable provisions of state, local and non-U.S. Law) or capitalized by RemainCo under Section 263 of the Code (and applicable provisions of state, local and non-U.S. Law) or otherwise, as the case may be, pursuant to applicable principles of Tax Law if such amounts had been actually paid by RemainCo shall be treated for all Tax purposes as payments actually made by SpinCo to unrelated third parties that are deductible to SpinCo under Sections 162(a) or 164 of the Code (and applicable provisions of state, local and non-U.S. Law) or capitalized under Section 263 of the Code (and applicable provisions of state, local and non-U.S. Law) or otherwise, as the case may be. None of the Parties shall take any position inconsistent with such treatment, except to the extent that SpinCo is required to treat such payment differently as a result of a Final Determination. In the event a Taxing

 

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Authority asserts that a SpinCo’s treatment of such a payment should be other than as required by this Section 8.4, SpinCo shall use its reasonable best efforts to contest such challenge.

 

Section 8.5                                    Payments Net of Tax Benefit Actually Realized and Tax Cost. Subject to Section 5.6(b), all amounts required to be paid by one Party to another pursuant to this Agreement or the Separation and Distribution Agreement shall be reduced by the Tax Benefit Actually Realized by the Indemnified Party or its Affiliates in the taxable year the payment is made or any prior taxable year as a result of the claim giving rise to the payment. If the receipt or accrual of any such payment (other than payments of interest pursuant to Section 12.12 of the Separation and Distribution Agreement or Section 8.1(a)) results in taxable income to the Indemnified Party or its Affiliates, such payment shall be increased so that, after the payment of any Taxes with respect to the payment, the Indemnified Party or its Affiliates shall have realized the same net amount it would have realized had the payment not resulted in taxable income.

 

ARTICLE IX

 

COOPERATION AND EXCHANGE OF INFORMATION

 

Section 9.1                                    Cooperation and Exchange of Information. The Parties shall each cooperate fully (and each shall cause its respective Subsidiaries to cooperate fully) and in a timely manner (considering the other Party’s normal internal processing or reporting requirements) with all reasonable requests in writing from another Party hereto, or from an agent, representative, or advisor to such Party, in connection with the preparation and filing of Tax Returns, claims for refund, Audits, determinations of Tax Attributes and the calculation of Taxes or other amounts required to be paid hereunder, and any applicable financial reporting requirements of a Party or its Affiliates, in each case, related or attributable to or arising in connection with Taxes or Tax Attributes of any of the Parties or their respective Subsidiaries covered by this Agreement.

 

Section 9.2                                    Retention of Records. Subject to Section 9.1, if either of the Parties or their respective Subsidiaries intends to dispose of any documentation relating to the Taxes of a Party or its respective Subsidiaries for which another Party to this Agreement may be responsible pursuant to the terms of this Agreement (including, without limitation, Tax Returns, books, records, documentation, and other information, accompanying schedules, related work papers, and documents relating to rulings or other determinations by Taxing Authorities), such Party shall or shall cause written notice to the other Party describing the documentation to be destroyed or disposed of sixty (60) Business Days prior to taking such action. The other Party may arrange to take delivery of the documentation described in the notice at its expense during the succeeding sixty (60) Business Day period.

 

Section 9.3                                    Tax Opinions. The Parties shall reasonably cooperate (and cause the members of the relevant Group to reasonably cooperate) in obtaining any Unqualified Tax Opinion (including making reasonable representations required in connection with any such opinion), including by maintaining and making available to each other all records necessary in connection with such opinions and making employees available on a mutually convenient basis to provide additional information or explanation of any material provided hereunder.

 

Section 9.4                                    Data Sharing Addendum.  With respect to the exchange of information or data, the Parties shall comply with the Data Sharing Addendum attached hereto as Exhibit C (“Data Sharing Addendum”), the terms of which are hereby incorporated into this Agreement.

 

Section 9.5                                    Global Preparation Standard. Notwithstanding any other provision in this Agreement, the Parties agree to use commercially reasonable efforts (including the making or submission

 

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of any filing, election, claim or notice to any Taxing Authority) to minimize the aggregate Tax payable in respect of the SpinCo Business and the RemainCo Business with respect to Pre-Distribution Tax Periods and Straddle Periods, and shall cause all Tax Returns to be prepared in accordance with applicable Law (the “Global Preparation Standard”); provided, that the Parties agree that the Global Preparation Standard does not require the other Party to take any action with respect to any SpinCo Separate Tax Return or RemainCo Separate Tax Return if it would impose any material unreimbursed cost, expense or Tax on such Party.

 

ARTICLE X

 

ALLOCATION OF TAX ATTRIBUTES AND OTHER TAX MATTERS

 

Section 10.1                             Allocation of Tax Attributes. SpinCo shall in good faith advise RemainCo in writing of the portion, if any, of any Tax Attributes, earnings and profits, or other consolidated, combined or unitary attribute that SpinCo determines shall be allocated or apportioned to each Group under applicable Law; provided, however, that such determination shall be made in a manner that is: (a) reasonably consistent with the past practices of the Parties and their respective Subsidiaries; (b) in accordance with the rules prescribed by applicable Law, including the Code and the Treasury Regulations; (c) in respect of U.S. federal, state or local Tax Attributes, consistent with the IRS Ruling the Tax Representation Letters, the Tax Opinions, and the terms of this Agreement, and (d) in respect of  Tax Attributes not described in clause (c), consistent with the Global Preparation Standard and the terms of this Agreement. SpinCo agrees to provide RemainCo with all information reasonably supporting the Tax Attribute and other determinations made by SpinCo pursuant to this Section 10.1.

 

Section 10.2                             Allocation of Tax Items. All determinations for purposes of this Agreement regarding the allocation of Income Tax items (other than Tax items arising on the Distribution Date but after the applicable Distribution that are outside the ordinary course of business) between the portion of a Straddle Period that ends on the Distribution Date and the portion that begins the day after the Distribution Date shall be made based on a closing of the books method under the principles of Treasury Regulation 1.1502-76 (and any similar rule under U.S. state, non-U.S. or local Law) as determined by SpinCo on any RemainCo Combined Income Tax Return, unless in each case the Parties agree otherwise in writing; provided, however, any Taxes in respect of actions taken outside the ordinary course of business on the date of the Distribution but after such Distribution shall be deemed to arise the day after such Distribution. Any such allocation of Tax items shall initially be made by SpinCo. To the extent that RemainCo disagrees with such determination, the dispute shall be resolved by a Big Four Accounting Firm mutually agreed upon by the Parties for a final binding resolution. Except for the transactions contemplated in the Plan of Reorganization or any Implementing Agreement, neither RemainCo nor SpinCo shall (and neither shall permit any member of the RemainCo Group or the SpinCo Group, as applicable, to) take any action outside the ordinary course of business on the date of the Distribution but after such Distribution.

 

Section 10.3                             Allocation of WEX Receivable.

 

(a)                                 Sharing. RemainCo and SpinCo, respectively, shall be entitled to the Applicable RemainCo Portion and the Applicable SpinCo Portion of all proceeds from the WEX Tax Receivable Agreement.

 

(b)                                 Payments. RemainCo shall timely pay or cause to be timely paid to SpinCo all amounts to which SpinCo is entitled pursuant to Section 10.3(a) within twenty (20) Business Days of the receipt by RemainCo of any amounts pursuant to the WEX Tax Receivable Agreement.

 

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(c)                                  Notice. Within ten (10) Business Days of the receipt by RemainCo of any amounts pursuant to the WEX Tax Receivable Agreement, RemainCo shall notify SpinCo of such receipt and send such notice to SpinCo via overnight mail.

 

Section 10.4                             Non-U.S. Tax Attributes.

 

(a)                                 Subject to Section 6.4, SpinCo shall and each member of the SpinCo Group shall be entitled to use any SpinCo Pre-Distribution Non-U.S. Tax Attribute to reduce any non-U.S. Tax liability of the SpinCo Group for any Pre-Distribution Tax Period and any Straddle Period.  RemainCo shall and each member of the RemainCo Group shall be entitled to use any RemainCo Pre-Distribution Non-U.S. Tax Attribute to reduce any liability non-U.S. Tax liability.

 

(b)                                 To the extent that after the application of Section 10.4(a), there remains any available RemainCo Pre-Distribution Non-U.S. Tax Attribute and/or SpinCo Pre-Distribution Non-U.S. Tax Attribute (other than a TP Tax Attribute) (“Available Pre-Distribution Non-U.S. Tax Attributes”), then the Parties agree to and agree to cause their respective Subsidiaries to use reasonable efforts to surrender, transfer or allocate any Available Pre-Distribution Non-U.S. Tax Attributes to the other Party (and the other Party’s Subsidiaries) in order to minimize the non-U.S. Tax liability of the other Party (and of the other Party’s Subsidiaries) for any Pre-Distribution Tax Period and any Straddle Period.  No Party shall be required to make any payment for any such surrender, transfer or allocation.

 

(c)                                  For the avoidance of doubt, no Party shall and no Party’s Subsidiary shall be required to surrender, transfer or allocate any Non-U.S. Tax Attribute which is neither a SpinCo Pre-Distribution Non-U.S. Tax Attribute nor a RemainCo Pre-Distribution Non-U.S. Tax Attribute.

 

ARTICLE XI

 

DISPUTE RESOLUTION

 

Section 11.1                             Negotiation.

 

(a)                                 In the event of a dispute arising out of or in connection with this Agreement (including its interpretation, performance or validity) (collectively, “Agreement Disputes”), the senior tax officers of the Parties (or such other individuals designated thereby) shall negotiate for a maximum of twenty-one (21) days (or a mutually-agreed extension) (such period of days, the “Negotiation Period”) from the time of receipt by a Party of written notice of such Agreement Dispute. The Parties shall not assert the defenses of statute of limitations and laches for any delays arising due to the procedures in Section 11.1.

 

(b)                                 If the Parties are unable to reach Agreement with respect to any Agreement Dispute during the Negotiation Period, (i) any such dispute that does not arise from or relate to Distribution Taxes shall be governed by Section 9.2 of the Separation and Distribution Agreement and (ii) any such dispute that arises from or relates to Distribution Taxes shall be governed by Section 12.15 below.

 

Section 11.2                             Confidentiality. All information and communications between the Parties relating to an Agreement Dispute and/or under the procedures in Sections 11.1 shall be considered “Confidential Information” for which the provisions of Section 8.7 of the Separation and Distribution Agreement shall apply herein, mutatis mutandis.

 

Section 11.3                             Continuity of Performance. Unless otherwise agreed in writing, the Parties shall continue to perform under this Agreement during the course of dispute resolution under this Article X with respect to all matters not subject thereto.

 

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ARTICLE XII

 

MISCELLANEOUS

 

Section 12.1                             Counterparts. This Agreement may be executed in more than one counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more such counterparts have been signed by each Party and delivered to the other Party.

 

Section 12.2                             Survival. Except as otherwise contemplated by this Agreement or the Separation and Distribution Agreement, all covenants and agreements of the Parties contained in this Agreement shall survive the Effective Time and remain in full force and effect in accordance with their applicable terms; provided, however, that all indemnification for Taxes shall survive until ninety (90) days following the expiration of the applicable statute of limitations (taking into account all extensions thereof), if any, of the Tax that gave rise to the indemnification; provided, further, that, in the event that notice for indemnification has been given within the applicable survival period, such indemnification shall survive until such time as such claim is finally resolved.

 

Section 12.3                             Notices. All notices, requests, claims, demands, and other communications under this Agreement shall be in English, 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, by facsimile with receipt confirmed (followed by delivery of an original via overnight courier service), or by registered or certified mail (postage prepaid, return receipt requested) to the respective 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 12.3):

 

To RemainCo:

 

Wyndham Destinations, Inc.

6277 Sea Harbor Drive

Orlando, FL 32821

Attn: Office of the General Counsel
 Facsimile: [·]

 

To SpinCo:

 

Wyndham Hotels & Resorts, Inc.

22 Sylvan Way

Parsippany, NJ 07054

Attn: Office of the General Counsel
 Facsimile: [·]

 

Section 12.4                             Waivers. The failure of any Party to require strict performance by the other Party of any provision in this Agreement will not waive or diminish that Party’s right to demand strict performance thereafter of that or any other provision hereof.

 

Section 12.5                             Assignment. This Agreement shall not be assignable, in whole or in part, directly or indirectly, by any Party without the prior written consent of the other Party, and any attempt to assign any rights or obligations arising under this Agreement without such consent shall be void; provided, that a Party may assign this Agreement in connection with a merger transaction in which such Party is not the surviving entity or the sale by such Party of all or substantially all of its assets; provided, that the surviving entity of such merger or the transferee of such assets shall agree in writing, reasonably

 

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satisfactory to the other Parties, to be bound by the terms of this Agreement as if named as a “Party” hereto.

 

Section 12.6                             Successors and Assigns. The provisions of this Agreement and the obligations and rights hereunder shall be binding upon, inure to the benefit of and be enforceable by (and against) the Parties and their respective successors and permitted transferees and assigns.

 

Section 12.7                             Termination and Amendment. This Agreement (including any indemnification obligations hereunder) may be terminated, modified or amended at any time prior to the Effective Time by and in the sole discretion of RemainCo without the approval of SpinCo or the stockholders of RemainCo. In the event of such termination, no Party shall have any liability of any kind to any other Party or any other Person. After the Effective Time, this Agreement may not be terminated except by an agreement in writing signed by each of the Parties.

 

Section 12.8                             No Circumvention. The Parties agree not to directly or indirectly take any actions, act in concert with any Person who takes an action, or cause or allow any member of any such Party’s Group to take any actions (including the failure to take a reasonable action) such that the resulting effect is to materially undermine the effectiveness of any of the provisions of this Agreement, the Separation and Distribution Agreement or any other Ancillary Agreement (including adversely affecting the rights or ability of any Party to successfully pursue indemnification, contribution or payment under this Agreement, the Separation and Distribution Agreement or any other Ancillary Agreement).

 

Section 12.9                             Subsidiaries. Each of the Parties shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth herein to be performed by any Subsidiary of such Party or by any entity that becomes a Subsidiary of such Party on and after the Effective Time.

 

Section 12.10                      Third Party Beneficiaries. This Agreement is solely for the benefit of the Parties and should not be deemed to confer upon third parties any remedy, claim, liability, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement.

 

Section 12.11                      Title and Headings. Titles and headings to sections herein are inserted for the convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement.

 

Section 12.12                      Schedules. The Schedules shall be construed with and as an integral part of this Agreement to the same extent as if the same had been set forth verbatim herein.

 

Section 12.13                      Specific Performance. The Parties agree that irreparable damage would occur in the event that the provisions of this Agreement were not performed in accordance with their specific terms. Accordingly, it is hereby agreed that the Parties shall be entitled to an injunction or injunctions or other equitable relief to enforce specifically the terms and provisions hereof in any court of the United States or any state having jurisdiction, this being in addition to any other remedy to which they are entitled 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, including monetary damages, 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 waived by each of the Parties.

 

Section 12.14                      Governing Law. This Agreement shall be interpreted and construed in accordance with the Laws of the State of Delaware. Any and all claims, controversies, and causes of

 

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action arising out of or relating to this Agreement, whether sounding in contract, tort, statute or otherwise, shall be governed by the Laws of the State of Delaware, including its statutes of limitations, without giving effect to any conflict-of-laws or other rule that would result in the application of the Laws of a different jurisdiction.

 

Section 12.15                      Consent to Jurisdiction. Each of the Parties irrevocably submits to the exclusive jurisdiction of (a) the Court of Chancery of the State of Delaware, or (b) if such court does not have subject matter jurisdiction, any other state or federal court located within the County of New Castle in the State of Delaware (the “Delaware Courts”), to resolve any dispute that arises from or relates to Distribution Taxes that is not resolved pursuant to Section 11.1 or to prevent irreparable harm.  Any judgment of the Delaware Courts may be enforced by any court of competent jurisdiction. Each of the Parties further agree that service of any process, summons, notice or document by U.S. registered mail to such Party’s respective address set forth above shall be effective service of process for any action, suit or proceeding in the Delaware Courts, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum. Nothing in this Section 12.15 shall limit or restrict the Parties from agreeing to arbitrate any dispute that arises from or relates to Distribution Taxes pursuant to Section 9.2 of the Separation and Distribution Agreement.

 

Section 12.16                      Waiver of Jury Trial. EACH OF THE PARTIES HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH OF THE PARTIES HEREBY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 11.16.

 

Section 12.17                      Force Majeure. No Party (or any Person acting on its behalf) shall have any liability or responsibility for failure to fulfill any obligation (other than a payment obligation) under this Agreement, so long as and to the extent to which the fulfillment of such obligation is prevented, frustrated, hindered, or delayed as a consequence of circumstances of Force Majeure (as defined in the Separation and Distribution Agreement). A Party claiming the benefit of this provision shall, as soon as reasonably practicable after the occurrence of any such event: (a) notify the other applicable Parties of the nature and extent of any such Force Majeure condition and (b) use due diligence to remove any such causes and resume performance under this Agreement as soon as feasible.

 

Section 12.18                      Interpretation. The Parties have participated jointly in the negotiation and drafting of this Agreement. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting or causing any instrument to be drafted.

 

Section 12.19                      Changes in Law.

 

(a)                                 Any reference to a provision of the Code, Treasury Regulations, or a Law of another jurisdiction shall include a reference to any applicable successor provision or Law.

 

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(b)                                 If, due to any change in applicable Law or regulations or their interpretation by any court of Law or other governing body having jurisdiction subsequent to the date hereof, performance of any provision of this Agreement or any transaction contemplated hereby shall become impracticable or impossible, the Parties hereto shall use their commercially reasonable best efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such provision.

 

Section 12.20                      Severability. In the event any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby. The Parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions, the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

 

Section 12.21                      Tax Sharing Agreements. All Tax sharing, indemnification and similar agreements, written or unwritten, as between any member of the SpinCo Group, on the one hand, and any member of the RemainCo Group, on the other hand (other than the Separation and Distribution Agreement, this Agreement, or any other Ancillary Agreement), shall be or shall have been terminated as of the Effective Time and, after the Effective Time, none of such Parties (or their respective Subsidiaries) to any such Tax sharing, indemnification or similar agreement shall have any further rights or obligations under any such agreement.

 

Section 12.22                      Exclusivity. Except as specifically set forth herein or in the Separation and Distribution Agreement or any other Ancillary Agreement, all matters related to Taxes or Tax Returns of the Parties and their respective Subsidiaries shall be governed exclusively by this Agreement. In the event of a conflict between this Agreement, the Separation and Distribution Agreement or any Ancillary Agreement (other than this Agreement) with respect to such matters, this Agreement shall govern and control.

 

Section 12.23                      No Duplication; No Double Recovery. Nothing in this Agreement is intended to confer to or impose upon any Party a duplicative right, entitlement, obligation or recovery with respect to any matter arising out of the same facts and circumstances.

 

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

 

	
 
    	
WYNDHAM   DESTINATIONS, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
WYNDHAM   HOTELS & RESORTS, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:
    

 

 

Exhibit A

 

 

Exhibit B

 

·                  Wyndham Worldwide Corporation

 

·                  Wyndham Operations Inc.

 

·                  Wyndham Sourcing Solutions Inc.

 

·                  Wyndham Resorts Asia Pacific Pty Ltd.

 

 

Exhibit C

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