UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): September 30, 2016

 

 

LSC COMMUNICATIONS, INC.

(Exact Name of Registrant as Specified in Its Charter)

 

 

Delaware

(State or Other Jurisdiction

of Incorporation)

 

001-37729   36-4829580

(Commission

File Number)

 

(IRS Employer

Identification No.)

35 West Wacker Drive,  
Chicago, Illinois   60601
(Address of Principal Executive Offices)   (Zip Code)

(312) 326-8000

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


Item 1.01. Entry into a Material Definitive Agreement.

LSC Communications, Inc. Credit Agreement

On September 30, 2016 (the “Financing Closing Date”), LSC Communications, Inc. (“the Company” or “LSC”) entered into a Credit Agreement (the “Credit Agreement”) by and among LSC, the lenders party thereto from time to time and Bank of America, N.A., as administrative agent and as collateral agent (in such capacities, the “Administrative Agent” or the “Collateral Agent”, as applicable). The Credit Agreement provides for (i) a new senior secured term loan B facility in an aggregate principal amount of $375.0 million (the “Term Loan Facility”) and (ii) a new first lien senior secured revolving credit facility in an aggregate principal amount of $400.0 million (the “Revolving Credit Facility,” and, together with the Term Loan Facility, the “Credit Facilities”). The Term Loan Facility will mature seven years from the Financing Closing Date, and the Revolving Credit Facility will mature five years from the Financing Closing Date.

Incremental Facilities

Subject to customary conditions and restrictions, the Company may add one or more incremental term loan facilities under the Term Loan Credit Facility and/or increase commitments under the Revolving Credit Facility (collectively, the “Incremental Facilities”) in an aggregate principal amount not to exceed the greater of (x) $50.0 million and (y) any other amount so long as the consolidated secured leverage ratio, calculated on a pro forma basis, is equal to or less than 2.00 to 1.00.

Use of Proceeds

The Company intends to use certain of the proceeds from the Credit Facilities to fund a distribution to RR Donnelley in connection with the spin off, as described below under the caption “Agreements with RR Donnelley and Donnelley Financial Solutions, Inc.”, and will use the remainder of the proceeds (i) to pay fees and expenses related to the spin off from RR Donnelley, borrowings under the Credit Facilities and any related transactions and (ii) for general corporate purposes, including the financing of permitted investments.

Interest Rates

The interest rate per annum applicable to the term loans under the Credit Facilities is equal to, at the Company’s option, either a base rate plus a margin of 5.00% or LIBOR plus a margin of 6.00%. The interest rate per annum applicable to revolving loans under the Revolving Credit Facility is equal to a base rate plus a margin ranging from 1.75% to 2.25%, or LIBOR plus a margin ranging from 2.75% to 3.25%, in either case based upon the consolidated leverage ratio of the Company and its restricted subsidiaries. The LIBOR rate with respect to the Term Loan Facility is subject to a “floor” of 1%. In addition, the Company will pay a facility fee on the average daily amount of the total revolving commitments regardless of usage, ranging from 0.375% to 0.50%, based upon the consolidated leverage ratio of the Company and its restricted subsidiaries.

Amortization

The Term Loan Facility will amortize in quarterly installments of $12.5 million for first eight quarters, and $10.625 million for subsequent quarters. The Term Loan Facility is subject to standard mandatory prepayment provisions including (i) 100% of the net cash proceeds in excess of $10.0 million from any asset disposition or casualty event by or with respect to the Company or any of its restricted subsidiaries (the “Guarantors”), (ii) 100% of the net cash proceeds from the issuance or incurrence after the Financing Closing Date of additional debt of the Company or any Guarantor, and (iii) 50% of annual excess cash flow of the Company and its restricted subsidiaries, subject to customary exceptions and limitations.

Guarantees and Security

The Credit Facilities will be fully and unconditionally guaranteed, jointly and severally on a senior secured basis by certain direct and indirect material subsidiaries of the Company (the “Guarantors”). The Credit Facilities are not guaranteed by LSC’s foreign subsidiaries or unrestricted subsidiaries.


The Credit Facilities are secured by: (a) a perfected first priority pledge of the equity interests of each wholly-owned restricted subsidiary directly held by the Company or any Guarantor, subject to certain restrictions, and (b) perfected first priority security interests in, and mortgages on, substantially all owned real property and all other tangible and intangible personal property of the Company and each Guarantor, subject to certain restrictions, in each case subject to certain exceptions and permitted liens (the “Collateral”).

On the Financing Closing Date, LSC, the Guarantors and the Collateral Agent entered into a security agreement (the “Security Agreement”), which created and established the terms of the security interests that secure the Credit Facilities. On the Financing Closing Date, LSC, the Guarantors, the Collateral Agent and the collateral agent under the Notes (as defined below) entered into an intercreditor agreement (the “Intercreditor Agreement”), that governs all arrangements in respect of the priority of the security interests in the Collateral among the parties to the Credit Agreement and the Indenture (as defined below).

Ranking

The Credit Facilities and the related guarantees constitute senior secured obligations of the Company and the Guarantors, respectively, secured by the Collateral, and rank equally in right of payment with all of the Company and the Guarantors’ existing and future senior debt that is not subordinated and rank senior in right of payment to all of the Company and the Guarantors’ future senior subordinated and subordinated debt. The proceeds of any collection or other realization of Collateral received in connection with the exercise of remedies and any distribution in respect of Collateral in any bankruptcy proceeding will be applied first to repay amounts due under the Revolving Credit Facility, before the lenders under the Term Loan Facility or the holders of the Notes (as defined below) receive such proceeds.

Covenants

The Credit Facilities contain certain covenants applicable to the Company and its restricted subsidiaries, including financial maintenance covenants and limitations on: (1) liens; (2) indebtedness; (3) fundamental changes; (4) disposition of property; (5) restricted payments; (6) transactions with affiliates; (7) changes in fiscal periods; (8) sales and leasebacks; (9) subsidiary distributions, (10) investments, (11) restrictive agreements, (12) amendments of certain documents, and (13) line of business. Each of these covenants is subject to important exceptions and qualifications.

Events of Default

The Credit Facilities also contain certain customary events of default, including, but not limited to: (i) failure to pay principal, interest or other amounts after a grade period; (ii) any representation or warranty proving to have been incorrect in any material respect when made; (iii) failure to perform or observe covenants or other terms of the Credit Agreement subject to certain grace periods; (iv) a cross-default and cross-acceleration with certain other material debt; (v) bankruptcy or other insolvency events of the Company or its material restricted subsidiaries; (vi) certain defaults under ERISA; and (vii) invalidity or impairment of security documents.

The foregoing summary of the Credit Agreement is qualified in its entirety by reference to actual Credit Agreement, attached hereto as Exhibit 10.1 and incorporated herein by reference.

$450.0 million aggregate principal amount of 8.750% Senior Secured Notes due 2023

On the Financing Closing Date, the Company completed an offering of $450.0 million aggregate principal amount of its 8.750% senior secured notes due 2023 (the “Notes”). Net proceeds from the offering of the Notes (the “Notes Offering”) were distributed to RR Donnelley, in the form of a dividend. The Company did not retain any proceeds from the Notes Offering.

The Notes were issued pursuant to an indenture, dated as of September 30, 2016 (the “Indenture”), among the Company, certain wholly-owned domestic subsidiaries of the Company (the “Guarantors”), and Wells Fargo Bank, National Association, as trustee (in such capacity, the “Trustee”) and collateral agent (in such capacity, the “Collateral Agent”).


The Notes were sold in a private transaction exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), to qualified institutional buyers in accordance with Rule 144A under the Securities Act and to non-U.S. persons outside of the United States pursuant to Regulation S under the Securities Act. Accordingly, the Notes and the related guarantees will not be registered under the Securities Act and the Notes and the related guarantees may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act.

The Notes bear interest at a rate of 8.750% and mature on October 15, 2023. Interest is payable on the Notes on April 15 and October 15 of each year, commencing on April 15, 2017.

Guarantees and Security

The Notes are fully and unconditionally guaranteed, on a senior secured basis, jointly and severally, by the Guarantors, which are comprised of each of the Company’s existing and future direct and indirect wholly-owned U.S. subsidiaries that guarantee the Company’s obligations under its Senior Secured Credit Facilities. The Notes are not guaranteed by the Company’s foreign subsidiaries or unrestricted subsidiaries.

The Notes, and the related guarantees, together with borrowings under the Senior Secured Credit Facilities, are secured on a first-priority lien basis by the Collateral, subject to certain exceptions and permitted liens.

On the Financing Closing Date, the Company, the Guarantors and the Collateral Agent entered into a security agreement (the “Notes Security Agreement”), which created and established the terms of the security interests that secure the Notes and the guarantees. On the Financing Closing Date, the Company, the Guarantors, the Collateral Agent and the collateral agent under the Senior Secured Credit Facilities entered into an intercreditor agreement (the “Intercreditor Agreement”), that governs all arrangements in respect of the priority of the security interests in the Collateral among the parties to the Indenture and the parties to the Senior Secured Credit Facilities.

Under the terms of the Notes Security Agreement and the Intercreditor Agreement, the proceeds of any collection, sale, disposition or other realization of collateral received in connection with the exercise of remedies and any distributions in respect of the collateral in a bankruptcy, insolvency, reorganization or similar proceedings will be applied to repay the Company’s First-Out Debt (as defined under the Indenture), including amounts due under the Company’s Revolving Credit Facility, before the holders of the Notes receive such proceeds.

Ranking

The Notes and the related guarantees constitute senior secured obligations of the Company and the Guarantors, respectively, secured by the Collateral, and rank equally in right of payment with all of the Company and the Guarantors’ existing and future senior debt that is not subordinated and rank senior in right of payment to all of the Company and the Guarantors’ future senior subordinated and subordinated debt; provided that the proceeds of any collection or other realization of Collateral received in connection with the exercise of remedies and any distribution in respect of Collateral in any bankruptcy proceeding will be applied first to repay amounts due under the Company’s First-Out Debt, before the holders of the Notes receive such proceeds. The Notes and the related guarantees are effectively subordinated to all of the Company and the Guarantors’ existing and future debt secured by assets other than the Collateral securing the Notes to the extent of the value of the assets securing such debt and effectively senior to any of the Company or the Guarantors’ future senior unsecured or junior lien obligations to the extent of the value of the Collateral securing the Notes. The Notes and the related guarantees are structurally subordinated to all existing and future liabilities of the Company’s subsidiaries that do not guarantee the notes.

Covenants

The Indenture governing the Notes contains certain covenants applicable to the Company and its restricted subsidiaries, including limitations on: (1) liens; (2) indebtedness; (3) mergers, consolidations and acquisitions; (4) sales, transfers and other dispositions of assets; (5) loans and other investments; (6) dividends and other distributions, stock repurchases and redemptions and other restricted payments; (7) restrictions affecting subsidiaries; (8) transactions with


affiliates; and (9) designations of unrestricted subsidiaries. Each of these covenants is subject to important exceptions and qualifications. In addition, many of the restrictive covenants will not apply to the Company and its restricted subsidiaries during any period when the Notes are rated investment grade by both Standard & Poor’s Ratings Services and Moody’s Investors Service, Inc., or, in certain circumstances, another rating agency selected by the Company, provided at such time no default under the Indenture has occurred and is continuing.

Events of Default

The Indenture provides for customary events of default (subject in certain cases to customary grace and cure periods), which include, among others, nonpayment, breach of covenants in the Indenture, defaults in payment of certain other indebtedness and certain events of bankruptcy or insolvency. Generally, if an event of default occurs, the Trustee or the holders of at least 25% in aggregate principal amount of the outstanding Notes may declare the principal of and unpaid interest on all of the Notes to be due and payable immediately.

Redemption

At any time prior to October 15, 2019, the Company may redeem the Notes in whole or in part at a redemption price equal to 100% of the principal amount of the Notes plus the “applicable premium” set forth in the Indenture. At any time on or after October 15, 2019, the Company may redeem the Notes in whole or in part at a redemption price equal to 106.563% of the principal amount thereof (plus accrued and unpaid interest, if any, to the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date)), declining annually to 100% of the principal amount thereof (plus accrued and unpaid interest, if any, to the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date)) beginning on October 15, 2022.

In addition, at any time before October 15, 2019, the Company may, at its option, redeem up to 40% of the aggregate principal amount of the Notes at a redemption price of 108.750% of the principal amount of the notes, plus accrued and unpaid interest, if any, to the date of redemption, with the proceeds from certain equity issuances; provided, however, that (1) at least 50% of the aggregate principal amount of Notes issued on the issue date of the Offering (excluding Notes held by the Company and its subsidiaries) remains outstanding immediately after the occurrence of such redemption and (2) the redemption occurs within 120 days of the consummation of any such equity issuances. If the Company experience specific kinds of changes of control, the Company may be required to offer to repurchase all of the Notes at 101% of their principal amount, plus accrued and unpaid interest, if any, to the repurchase date.

The foregoing summary of the Indenture is qualified in its entirety by reference to the actual Indenture, attached hereto as Exhibit 4.2 and incorporated by reference herein.

Agreements with RR Donnelley and Donnelley Financial Solutions, Inc.

On October 1, 2016, effective at 12:01 a.m. ET, RR Donnelley distributed 80.75 percent of the outstanding common stock of the Company and 80.75 percent of the outstanding common stock of Donnelley Financial Solutions, Inc. (“Donnelley Financial”) to RR Donnelley stockholders (the “Distributions”). The Distributions are part of a series of transactions, following which the Company and Donnelley Financial became public companies and RR Donnelley retained a 19.25 percent continuing stock ownership interest in each of LSC and Donnelley Financial (the “Separation”). For purposes of governing the ongoing relationships between the Company, RR Donnelley and Donnelley Financial and to provide for an orderly transition, the Company, RR Donnelley and Donnelley Financial entered into the agreements described below prior to the Distributions.

The Separation and Distribution Agreement, dated as of September 14, 2016, by and among the Company, RR Donnelley and Donnelley Financial, attached hereto as Exhibit 2.1, effected the distribution of the Company’s common stock and the distribution of Donnelley Financial’s common stock to RR Donnelley’s common stockholders. This agreement also governs the Company’s relationships with RR Donnelley and Donnelley Financial with respect to pre-Separation matters and provides for the allocation of employee benefit, litigation and other liabilities and obligations attributable to periods prior to the Separation. The Separation and Distribution Agreement also includes an agreement that the Company, RR Donnelley


and Donnelley Financial will provide each other with appropriate indemnities with respect to liabilities arising out of the businesses being distributed and retained by RR Donnelley in the Separation. The Separation and Distribution Agreement also addresses employee compensation and benefits matters.

The Transition Services Agreement, dated as of September 14, 2016, between the Company and RR Donnelley, attached hereto as Exhibit 2.2, and the Transition Services Agreement, dated as of September 14, 2016, between the Company and Donnelley Financial, attached hereto as Exhibit 2.3, under which, in exchange for the fees specified in such agreements, RR Donnelley and Donnelley Financial agree to provide certain services to the Company and the Company agrees to provide certain services to RR Donnelley and Donnelley Financial, respectively, for up to 24 months following the Separation. These services include, but are not limited to, tax, information technology, treasury, internal audit, human resources, accounting, purchasing, communications, security and compensation and benefits.

The Tax Disaffiliation Agreement, dated as of September 14, 2016, between the Company and RR Donnelley, attached hereto as Exhibit 2.4, allocates responsibility for taxes between the Company and RR Donnelley and includes indemnification rights with respect to tax matters and restrictions to preserve the tax-free status of the Separation.

The Patent Assignment and License Agreement, dated as of September 27, 2016, between LSC Communications US, LLC (“LSC US LLC”) and RR Donnelley, attached hereto as Exhibit 2.5, provides for the ownership, licensing and other arrangements regarding the patents that the Company and RR Donnelley use in conducting their respective businesses.

The Trademark Assignment and License Agreement, dated as of September 27, 2016, between LSC US LLC and RR Donnelley, attached hereto as Exhibit 2.6, provides for the ownership, licensing and other arrangements regarding the trademarks that the Company and RR Donnelley use in conducting their respective businesses.

The Data Assignment and License Agreement, dated as of September 27, 2016, between LSC US LLC and RR Donnelley, attached hereto as Exhibit 2.7, provides for the ownership, licensing and other arrangements regarding the data that the Company and RR Donnelley use in conducting their respective businesses.

The Software, Copyright and Trade Secret Assignment and License Agreement, dated as of September 27, 2016, between LSC US LLC and RR Donnelley, attached hereto as Exhibit 2.8, provides for the ownership, licensing and other arrangements regarding certain copyrights, trade secrets and software that the Company and RR Donnelley use in conducting their respective businesses.

The Stockholder and Registration Rights Agreement, dated as of September 14, 2016, between the Company and RR Donnelley, attached hereto as Exhibit 4.1, relates to the 19.25 percent continuing stock ownership interest in the Company retained by RR Donnelley.

The Company has also entered into commercial and other arrangements and agreements with RR Donnelley and Donnelley Financial. These include, among other things, arrangements for the provision of services, including logistics and premedia services, and access to technology.

For a further description of the above agreements refer to the Information Statement filed as Exhibit 99.1 to Amendment No. 8 of the Company’s registration statement on Form 10 filed with the Securities and Exchange Commission (“SEC”) on September 20, 2016 (the “Form 10”) and such information is incorporated into this Item 1.01 by reference.

 

Item 2.01. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

On September 30, 2016, the Company entered into the Credit Agreement and issued the Notes. Information with respect to the Credit Agreement and the Notes is set forth under Item 1.01 under the captions “LSC Communications, Inc. Credit Agreement” and “$450.0 million aggregate principal amount of 8.750% Senior Secured Notes due 2023” and is incorporated by reference into this Item 2.03.


Item 3.02. Unregistered Sales of Equity Securities.

On September 30, 2016 and simultaneously with the effectiveness of the amended and restated certificate of incorporation of the Company (the “Amended and Restated Certificate of Incorporation”) that increased the number of authorized shares of common stock from 100 to 65,000,000, the Company effected a recapitalization of the 100 shares of common stock issued and outstanding, which recapitalized converted such 100 shares into 32,430,139 shares of common stock, par value $0.01. No additional consideration was delivered.

 

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Changes in Directors

On September 30, 2016, effective as of 11:59 p.m. Eastern Time, the following directors of the Company tendered their resignations as directors of the Company: Suzanne S. Bettman and Daniel N. Leib.

Effective on October 1, 2016, the Board of Directors of the Company (the “Board”) increased the number of directors from four to nine and the following individuals were appointed to the Board in such class of directors as specified, to fill the vacancies created by the foregoing resignations and increase in number of directors (or in the case of Mssrs. Quinlan and Palmer, solely to assign them to such director class) and to serve in such capacity until such time as specified for each class in the Amended and Restated Certificate of Incorporation, and/or until such time as their successors are duly elected and qualify:

 

Thomas J. Quinlan III    Class I        
Judith H. Hamilton    Class III
M. Shan Atkins    Class I
Margaret A. Breya    Class I
Francis J. Jules    Class III
Thomas F. O’Toole    Class II
Richard K. Palmer    Class III
Douglas W. Stotlar    Class II
Shivan S. Subramaniam    Class II

Information concerning these individuals, including biographical and compensation information, is included in the Form 10 and such information is incorporated into this Item 5.02 by reference.

On October 1, 2016, Mr. Quinlan was appointed as the Chairperson of the Board and Ms. Hamilton was appointed as Lead Director. The Board determined that each non-employee director is independent under the rules of both the New York Stock Exchange (“NYSE”) and the SEC.

Ms. Breya, Mr. Stotlar, Mr. Palmer and Mr. Subramaniam were appointed to serve as members of the Audit Committee of the Board. Mr. Palmer was appointed as the Chairperson of the Audit Committee. The Board has determined that (i) each member of the Audit Committee is financially literate as required by the NYSE and is independent within the meaning of the rules of both the NYSE and the SEC; (ii) each of Mr. Stotlar, Mr. Palmer and Mr. Subramaniam has the requisite attributes of an “audit committee financial expert” as defined by the regulations promulgated by the SEC and that such attributes were acquired through relevant education and/or experience; (iii) that each of Mr. Palmer and Mr. Subramaniam has “accounting or related financial management expertise” as required by the rules of the NYSE and is able to read and understand fundamental financial statements, including balance sheets, income statements and cash flow statements; and (iv) each member of the Audit Committee has not participated in the preparation of the financial statements of the Company or any subsidiaries at any time during the previous three years.

Ms. Atkins, Ms. Breya, Ms. Hamilton, Mr. O’Toole and Mr. Subramaniam were appointed to serve as members of the Corporate Responsibility and Governance Committee of the Board. Ms. Hamilton was appointed as the Chairperson of the Corporate Responsibility and Governance Committee. The Board has determined that each member of the Corporate Responsibility and Governance Committee is “independent” for purposes of serving on the Corporate Responsibility and Governance Committee within the meaning of the NYSE listing rules.


Ms. Atkins, Mr. Jules, Mr. O’Toole and Mr. Stotlar were appointed to serve as members of the Human Resources Committee of the Board. Mr. Jules was appointed as the Chairperson of the Human Resources Committee. The Board has determined that each member of the Human Resources Committee is “independent” for purposes of serving on the Human Resources Committee within meaning of the NYSE listing rules.

Changes in Executive Officers

On October 1, 2016, the following individuals were designated to serve as executive officers of the Company:

 

Thomas J. Quinlan III            Chairman and Chief Executive Officer
Suzanne S. Bettman    Chief Administrative Officer and General Counsel
Andrew B. Coxhead    Chief Financial Officer
Kent A. Hansen    Controller and Chief Accounting Officer
Richard T. Lane    Chief Strategy and Supply Chain Officer

Effective October 1, 2016, Ms. Bettman no longer serves as President and Mr. Coxhead no longer serves as Secretary and Treasurer. Further information concerning these individuals, including biographical and certain compensation information, is included in the Form 10 and such information is incorporated into this Item 5.02 by reference.

On September 30, 2016, the Board adopted the 2016 LSC Communications, Inc. Performance Incentive Plan, LSC Communications, Inc. Non-Employee Director Compensation Plan and LSC Communications Nonqualified Deferred Compensation Plan, all in the form attached to and as described in the Form 10. The 2016 LSC Communications, Inc. Performance Incentive Plan, LSC Communications, Inc. Non-Employee Director Compensation Plan and LSC Communications Nonqualified Deferred Compensation Plan are attached hereto, as applicable, as Exhibit 10.2, Exhibit 10.3 and Exhibit 10.4, respectively, and are incorporated into this Item 1.01 by reference.

Effective October 1, 2016, the Company entered into the Assignment of Employment Agreement and Acceptance of Assignment between the Company, RR Donnelley and Thomas J. Quinlan III, Assignment of Employment Agreement and Acceptance of Assignment between the Company, RR Donnelley and Andrew B. Coxhead, Assignment of Employment Agreement and Acceptance of Assignment between the Company, RR Donnelley and Suzanne S. Bettman, all in the form attached to and as described in the Form 10. Effective October 1, 2016, the Company also entered into the Assignment of Employment Agreement and Acceptance of Assignment between the Company, RR Donnelley and Richard T. Lane. The above assignments and acceptances are attached hereto, as applicable, as Exhibit 10.5, Exhibit 10.6, Exhibit 10.7 and Exhibit 10.8, respectively, and are incorporated into this Item 5.02 by reference.

 

Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

On September 30, 2016, the Company filed with the Secretary of State of the State of Delaware the Amended and Restated Certificate of Incorporation to amend and restate its certificate of incorporation, effective as of 5:00 p.m. Eastern Time on September 30, 2016, as described in the Form 10. Also on September 30, 2016, the Company amended and restated its by-laws (the “Amended and Restated By-Laws”), effective as of 5:00 p.m. Eastern Time on September 30, 2016, as described in the Form 10.

The above descriptions are qualified in their entirety by reference to the Amended and Restated Certificate of Incorporation and the Amended and Restated By-Laws, which are attached as Exhibit 3.1 and Exhibit 3.2, respectively, to this Current Report on Form 8-K and incorporated into this Item 5.03 by reference.

 

Item 7.01. Regulation FD Disclosure.

On October 3, 2016, the Company announced the completion of the Separation. The Company’s press release is furnished as Exhibit 99.1 to this Current Report.


Information under this Item 7.01, including information set forth in Exhibit 99.1, is deemed to be furnished and not filed.

 

Item 8.01. Other Events.

On September 29, 2016, in connection with the separation of the Company from RR Donnelley, the Company’s outside tax counsel delivered a tax opinion to RR Donnelley in the form previously attached to the Form 10. A copy of such opinion is filed as Exhibit 8.1 hereto and incorporated into this Item 8.01 by reference.

On October 1, 2016, the Board announced that the 2017 Annual Meeting of the Company’s stockholders will be held on May 18, 2017. Additional information regarding the time, location and record dates will be announced by the Company in 2017.

 

Item 9.01. Financial Statements and Exhibits .

(d) Exhibits

 

Exhibit No.

  

Description of Exhibit

  2.1    Separation and Distribution Agreement, dated as of September 14, 2016, by and among R. R. Donnelley & Sons Company, LSC Communications, Inc. and Donnelley Financial Solutions, Inc.
  2.2    Transition Services Agreement, dated as of September 14, 2016, between LSC Communications, Inc. and R. R. Donnelley & Sons Company
  2.3    Transition Services Agreement, dated as of September 14, 2016, between LSC Communications, Inc. and Donnelley Financial Solutions, Inc.
  2.4    Tax Disaffiliation Agreement, dated as of September 14, 2016, between LSC Communications, Inc. and R. R. Donnelley & Sons Company
  2.5    Patent Assignment and License Agreement, dated as of September 27, 2016, between LSC Communications US, LLC and R. R. Donnelley & Sons Company
  2.6    Trademark Assignment and License Agreement, dated as of September 27, 2016, between LSC Communications US, LLC and R. R. Donnelley & Sons Company
  2.7    Data Assignment and License Agreement, dated as of September 27, 2016, between LSC Communications US, LLC and R. R. Donnelley & Sons Company
  2.8    Software, Copyright and Trade Secret Assignment and License Agreement, dated as of September 27, 2016, between LSC Communications US, LLC and R. R. Donnelley & Sons Company
  3.1    Amended and Restated Certificate of Incorporation of LSC Communications, Inc.
  3.2    Amended and Restated By-laws of LSC Communications, Inc.
  4.1    Stockholder and Registration Rights Agreement, dated as of September 14, 2016, between LSC Communications, Inc. and R. R. Donnelley & Sons Company
  4.2    Indenture, dated as of September 30, 2016, among LSC Communications, Inc., the subsidiary guarantors party thereto and Wells Fargo Bank, National Association, as Trustee and as Collateral Agent
  8.1    Tax Opinion of Sullivan & Cromwell LLP, dated as of September 29, 2016
10.1    Amended And Restated Credit Agreement, dated as of September 30, 2016, among R.R. Donnelley & Sons Company, the guarantors party thereto, Bank Of America, N.A., as Administrative Agent, Swing Line Lender and an L/C Issuer, Citigroup Global Markets Inc. and JPMorgan Chase Bank, N.A., as Co-Syndication Agents
10.2    2016 LSC Communications, Inc. Performance Incentive Plan
10.3    LSC Communications, Inc. Non-Employee Director Compensation Plan


10.4    LSC Communications, Inc. Nonqualified Deferred Compensation Plan, dated as of September 22, 2016
10.5    Assignment of Employment Agreement and Acceptance of Assignment, dated as of September 29, 2016, between LSC Communications, Inc., R. R. Donnelley & Sons Company and Thomas J. Quinlan III
10.6    Assignment of Employment Agreement and Acceptance of Assignment, dated as of September 29, 2016, between LSC Communications, Inc., R. R. Donnelley & Sons Company and Andrew B. Coxhead
10.7    Assignment of Employment Agreement and Acceptance of Assignment, dated as of September 29, 2016, between LSC Communications, Inc., R. R. Donnelley & Sons Company and Suzanne S. Bettman
10.8    Assignment of Employment Agreement and Acceptance of Assignment, dated as of September 30, 2016, between LSC Communications, Inc., R. R. Donnelley & Sons Company and Richard T. Lane
99.1    Press Release, dated as of October 3, 2016, of LSC Communications, Inc.


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

   LSC Communications, Inc.

 

Date: October 3, 2016    By:   

/s/ Suzanne S. Bettman

   Name:    Suzanne S. Bettman
   Title:    Secretary; Chief Compliance Officer; General Counsel

Exhibit 2.1

SEPARATION AND DISTRIBUTION AGREEMENT

by and among

R. R. DONNELLEY & SONS COMPANY,

LSC COMMUNICATIONS, INC.

and

DONNELLEY FINANCIAL SOLUTIONS, INC.

Dated as of September 14, 2016


TABLE OF CONTENTS

 

         Page  
ARTICLE I   
DEFINITIONS AND INTERPRETATION   

Section 1.1

 

General

     2   

Section 1.2

 

References; Interpretation

     38   

Section 1.3

 

Effective Time; Suspension

     38   
ARTICLE II   
THE SEPARATION   

Section 2.1

 

General

     38   

Section 2.2

 

Transfer of Assets

     39   

Section 2.3

 

Assumption and Satisfaction of Liabilities

     40   

Section 2.4

 

Intercompany Accounts

     40   

Section 2.5

 

Limitation of Liability

     41   

Section 2.6

 

Transfers Not Effected on or Prior to the Effective Time; Transfers Deemed Effective as of the Effective Time

     42   

Section 2.7

 

Misdirected Customer Payments and Deductions

     44   

Section 2.8

 

Conveyancing and Assumption Instruments

     45   

Section 2.9

 

Novation of Liabilities

     45   

Section 2.10

 

Guarantees

     46   

Section 2.11

 

Bank Accounts

     47   

Section 2.12

 

DISCLAIMER OF REPRESENTATIONS AND WARRANTIES

     48   
ARTICLE III   
CERTAIN ACTIONS AT OR PRIOR TO THE DISTRIBUTIONS   

Section 3.1

 

Certificate of Incorporation; By-laws

     49   

Section 3.2

 

Directors

     49   

Section 3.3

 

Resignations

     50   

Section 3.4

 

Cash Adjustment

     50   

Section 3.5

 

Ancillary Agreements

     52   

Section 3.6

 

Commercial Arrangements

     52   
ARTICLE IV   
THE DISTRIBUTIONS   

Section 4.1

 

Stock Dividends by RRD

     52   

Section 4.2

 

Fractional Shares

     53   

Section 4.3

 

Actions in Connection with the Distribution

     53   

 

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Section 4.4

 

Sole Discretion of RRD

     54   

Section 4.5

 

Conditions to LSC Distribution

     55   

Section 4.6

 

Conditions to Donnelley Financial Distribution

     56   
ARTICLE V   
CERTAIN COVENANTS   

Section 5.1

 

No Solicit; No Hire

     57   

Section 5.2

 

Corporate Names

     58   

Section 5.3

 

Financial Statements and Accounting

     58   

Section 5.4

 

Cooperation

     60   

Section 5.5

 

Further Assurances

     60   
ARTICLE VI   
EMPLOYEE MATTERS   

Section 6.1

 

Stock Options

     61   

Section 6.2

 

Restricted Stock Units, Performance Share Units and Director Stock Units

     62   

Section 6.3

 

Cash Long Term Incentive Awards and Retention Awards

     66   

Section 6.4

 

Employee Stock Purchase Plan

     66   

Section 6.5

 

Nonqualified Deferred Compensation Plans and Supplemental Executive Retirement Plans

     66   

Section 6.6

 

Defined Benefit Plans

     69   

Section 6.7

 

Defined Contribution Retirement Plans

     74   

Section 6.8

 

Retiree Medical Benefits

     77   

Section 6.9

 

Health, Welfare, Voluntary and Other Compensation or Benefit Plans

     77   

Section 6.10

 

Cooperation and Administrative Provisions

     83   

Section 6.11

 

Approval of Plans; Terms of Participation by Employees in Plans

     86   

Section 6.12

 

Taxes and Withholding

     87   

Section 6.13

 

International Regulatory Compliance

     89   
ARTICLE VII   
RRD CONTINGENT ASSETS AND ASSUMED RRD CONTINGENT LIABILITIES   

Section 7.1

 

RRD Contingent Assets and Assumed RRD Contingent Liabilities

     89   

Section 7.2

 

Management of RRD Contingent Assets and Assumed RRD Contingent Liabilities

     91   

Section 7.3

 

Access to Information; Certain Services; Expenses

     92   

Section 7.4

 

Notice Relating to RRD Contingent Assets and Assumed RRD Contingent Liabilities; Disputes

     93   

Section 7.5

 

Cooperation with Governmental Entity

     93   

Section 7.6

 

Default

     94   

 

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ARTICLE VIII   
INDEMNIFICATION   

Section 8.1

 

Release of Pre-Distribution Claims

     94   

Section 8.2

 

Indemnification by RRD

     96   

Section 8.3

 

Indemnification by LSC

     96   

Section 8.4

 

Indemnification by Donnelley Financial

     97   

Section 8.5

 

Procedures for Indemnification

     97   

Section 8.6

 

Cooperation in Defense and Settlement

     99   

Section 8.7

 

Indemnification Payments

     100   

Section 8.8

 

Contribution

     100   

Section 8.9

 

Indemnification Obligations Net of Insurance Proceeds and Other Amounts

     101   

Section 8.10

 

Additional Matters; Survival of Indemnities

     101   
ARTICLE IX   
CONFIDENTIALITY; ACCESS TO INFORMATION   

Section 9.1

 

Provision of Corporate Records

     102   

Section 9.2

 

Access to Information

     103   

Section 9.3

 

Witness Services

     103   

Section 9.4

 

Reimbursement; Other Matters

     103   

Section 9.5

 

Confidentiality

     104   

Section 9.6

 

Privileged Matters

     105   

Section 9.7

 

Ownership of Information

     108   

Section 9.8

 

Record Retention

     108   

Section 9.9

 

Liability for Information Provided

     109   

Section 9.10

 

Other Agreements

     109   
ARTICLE X   
DISPUTE RESOLUTION   

Section 10.1

 

Negotiation

     109   

Section 10.2

 

Mediation

     109   

Section 10.3

 

Arbitration

     109   

Section 10.4

 

Arbitration Period

     110   

Section 10.5

 

Treatment of Negotiations, Mediation and Arbitration

     110   

Section 10.6

 

Continuity of Service and Performance

     111   

Section 10.7

 

Consolidation

     111   

 

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ARTICLE XI   
INSURANCE   

Section 11.1

 

Policies and Rights Included Within Assets

     111   

Section 11.2

 

Claims Made Tail Policies

     112   

Section 11.3

 

Occurrence Based Policies

     115   

Section 11.4

 

Administration; Other Matters

     115   

Section 11.5

 

Cooperation

     117   

Section 11.6

 

Certain Matters Relating to RRD’s Organizational Documents

     117   
ARTICLE XII   
MISCELLANEOUS   

Section 12.1

 

Complete Agreement; Construction

     117   

Section 12.2

 

Ancillary Agreements

     118   

Section 12.3

 

Counterparts

     118   

Section 12.4

 

Survival of Agreements

     118   

Section 12.5

 

Expenses

     118   

Section 12.6

 

Notices

     119   

Section 12.7

 

Waivers and Consents

     119   

Section 12.8

 

Amendments

     119   

Section 12.9

 

Assignment

     120   

Section 12.10

 

Successors and Assigns

     120   

Section 12.11

 

Certain Termination and Amendment Rights

     120   

Section 12.12

 

Payment Terms

     120   

Section 12.13

 

No Circumvention

     121   

Section 12.14

 

Subsidiaries

     121   

Section 12.15

 

Third Party Beneficiaries

     121   

Section 12.16

 

Titles and Headings

     121   

Section 12.17

 

Exhibits and Schedules

     121   

Section 12.18

 

Governing Law

     121   

Section 12.19

 

Consent to Jurisdiction

     121   

Section 12.20

 

Specific Performance

     122   

Section 12.21

 

WAIVER OF JURY TRIAL

     122   

Section 12.22

 

Severability

     122   

Section 12.23

 

Force Majeure

     122   

Section 12.24

 

Interpretation

     122   

Section 12.25

 

No Duplication; No Double Recovery

     122   

 

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List of Schedules

Schedule 1.1(18)

Schedule 1.1(28)

Schedule 1.1(45)(ii)

Schedule 1.1(51)(iv)

Schedule 1.1(63)

Schedule 1.1(67)(vi)

Schedule 1.1(74)

Schedule 1.1(79)

Schedule 1.1(93)(a)

Schedule 1.1(93)(b)

Schedule 1.1(94)(a)

Schedule 1.1(94)(b)

Schedule 1.1(95)(a)

Schedule 1.1(95)(b)

Schedule 1.1(124)(ii)

Schedule 1.1(130)(iv)

Schedule 1.1(142)

Schedule 1.1(146)(vi)

Schedule 1.1(154)

Schedule 1.1(159)

Schedule 1.1(201)

Schedule 1.1(204)

Schedule 1.1(209)

Schedule 1.1(212)

Schedule 1.1(222)(ii)

Schedule 1.1(228)(iii)

Schedule 1.1(238)(a)

Schedule 2.1

Schedule 2.7(a)

Schedule 2.7(b)

Schedule 2.7(c)

Schedule 2.10

Schedule 2.11(a)(i)

Schedule 2.11(a)(ii)

Schedule 2.11(a)(iii)

Schedule 5.1(a)

Schedule 5.1(b)

Schedule 6.2(b)(ii)

Schedule 6.5(a)

Schedule 6.5(a)(i)(1)

Schedule 6.5(a)(i)(2)

Schedule 6.5(b)

Schedule 6.5(b)(i)(1)

Schedule 6.5(b)(i)(2)

Schedule 6.5(c)

 

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Schedule 6.6(a)(ii)(C)

Schedule 6.6(a)(iii)

Schedule 6.6(b)(ii)(C)

Schedule 6.6(b)(iii)

Schedule 6.7

Schedule 6.7(a)(iii)

Schedule 6.7(b)(iii)

Schedule 6.9(b)

Schedule 6.9(d)(ii)

Schedule 6.9(h)(ii)

Schedule 9.8

Schedule 11.3(a)(i)

Schedule 11.3(a)(ii)

Schedule 11.3(a)(iii)

 

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SEPARATION AND DISTRIBUTION AGREEMENT

This SEPARATION AND DISTRIBUTION AGREEMENT (this “ Agreement ”), dated as of September 14, 2016, is entered into by and among R. R. Donnelley & Sons Company, a Delaware corporation (“ RRD ”), LSC Communications, Inc., a Delaware corporation (“ LSC ”), and Donnelley Financial Solutions, Inc., a Delaware corporation (“ Donnelley Financial ”). Each of RRD, LSC and Donnelley Financial is referred to herein as a “ Party ” and collectively, as the “ Parties ”.

W I T N E S S E T H:

WHEREAS, RRD, acting through its direct and indirect Subsidiaries, currently conducts a number of businesses, including (i) the LSC Business (publishing and retail-centric print services and office products businesses), (ii) the Donnelley Financial Business (financial communications and data services businesses), and (iii) the RRD Retained Business (customized multichannel communications management businesses);

WHEREAS, the Board of Directors of RRD (the “ RRD Board ”) has determined that it is appropriate, desirable and in the best interests of RRD and its stockholders to separate RRD into three independent, publicly traded companies: (i) LSC, (ii) Donnelley Financial and (iii) RRD;

WHEREAS, in order to effect such separation, the RRD Board has determined that it is appropriate, desirable and in the best interests of RRD and its stockholders (i) to enter into a series of transactions whereby (A) RRD and/or one or more members of the RRD Group will own all of the RRD Retained Assets and assume (or retain) all of the RRD Retained Liabilities, (B) LSC and/or one or more members of the LSC Group will own all of the LSC Assets and assume (or retain) all of the LSC Liabilities and (C) Donnelley Financial and/or one or more members of the Donnelley Financial Group will own all of the Donnelley Financial Assets and assume (or retain) all of the Donnelley Financial Liabilities (such transactions set forth in this clause (i), as they may be amended or modified from time to time, collectively, the “ Plan of Reorganization ”), and (ii) after the transactions referred to in (i), for RRD to distribute to the holders of RRD Common Stock on a pro rata basis (in each case without consideration being paid by such stockholders) (A) one share of LSC common stock, par value $0.01 per share (“ LSC Common Stock ”), for every eight shares of RRD’s common stock held on the Record Date, which constitutes 80.75% of the outstanding LSC Common Stock, and (B) one share of Donnelley Financial common stock, par value $0.01 per share (“ Donnelley Financial Common Stock ”), for every eight shares of RRD’s common stock held on the Record Date, which constitutes 80.75% of the outstanding Donnelley Financial Common Stock;

WHEREAS, each of RRD, LSC and Donnelley Financial has determined that it is necessary and desirable, on or prior to the Effective Time, to allocate and transfer to the applicable Party or its Subsidiaries those Assets, and to allocate and assign to the applicable Party or its Subsidiaries responsibility for those Liabilities, in respect of the applicable Businesses of such entities and those Assets and Liabilities in respect of other businesses and activities of RRD and its current and former Subsidiaries;


WHEREAS, it is the intention of the Parties that each of the contributions of Assets to, and the Assumption of Liabilities by, LSC and Donnelley Financial together with the corresponding distributions of the LSC Common Stock and the Donnelley Financial Common Stock, respectively, qualifies as a reorganization within the meaning of Sections 368(a)(1)(D) and 355 of the Internal Revenue Code of 1986, as amended (the “ Code ”); and

WHEREAS, each of RRD, LSC and Donnelley Financial has determined that it is necessary and desirable to set forth the principal corporate transactions required to effect the Plan of Reorganization and each Distribution and to set forth other agreements that will govern certain other matters following the Effective Time.

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 I

DEFINITIONS AND INTERPRETATION

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

(1) “ 2016 Donnelley Financial Solutions, Inc. Performance Incentive Plan ” shall mean the 2016 Donnelley Financial Solutions, Inc. Performance Incentive Plan, to be adopted by the Donnelley Financial Board and stockholders of Donnelley Financial prior to the Distribution Date.

(2) “ 2016 LSC Communications, Inc. Performance Incentive Plan ” shall mean the 2016 LSC Communications, Inc. Performance Incentive Plan, to be adopted by the LSC Board and stockholders of LSC prior to the Distribution Date.

(3) “ AAA ” shall have the meaning set forth in Section 10.2 .

(4) “ Action ” shall mean any demand, action, claim, suit, countersuit, arbitration, inquiry, subpoena, proceeding or investigation by or before any Governmental Entity or any arbitration or mediation tribunal.

(5) “ 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” (including the correlative meanings of the terms “controlled by” and “under common control with”), 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 or member of any Group shall be deemed to be an Affiliate of another Party or member of such other Party’s Group by reason of having one or more directors in common. For the avoidance of doubt, (a) LSC and Donnelley Financial shall not be considered Affiliate of RRD following the LSC Distribution and Donnelley Financial Distribution; (b) RRD and

 

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Donnelley Financial shall not be considered Affiliate of LSC following the LSC Distribution; and (c) RRD and LSC shall not be considered Affiliate of Donnelley Financial following the Donnelley Financial Distribution.

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

(7) “ Agreement Disputes ” shall have the meaning set forth in Section 10.1 .

(8) “ Allocable Portion of Insurance Proceeds ” shall have the meaning set forth in Section 11.4(c) .

(9) “ Ancillary Agreements ” shall mean all of the written Contracts, instruments, assignments, licenses or other arrangements (other than this Agreement and the Commercial Arrangements) entered into in connection with the transactions contemplated hereby, including the Transition Services Agreements, Tax Disaffiliation Agreements and Intellectual Property Agreements.

(10) “ Annual Reports ” shall have the meaning set forth in Section 5.3(c) .

(11) “ Applicable Donnelley Financial Percentage ” shall mean ten percent (10%).

(12) “ Applicable LSC Percentage ” shall mean thirty percent (30%).

(13) “ Applicable Percentage ” shall mean (i) as to RRD, the Applicable RRD Percentage, (ii) as to Donnelley Financial, the Applicable Donnelley Financial Percentage, and (iii) as to LSC, the Applicable LSC Percentage.

(14) “ Applicable Rate ” shall mean the Prime Rate plus three percent (3%) per annum.

(15) “ Applicable RRD Percentage ” shall mean sixty percent (60%).

(16) “ Assets ” shall mean assets, properties, claims and rights (including goodwill), wherever located (including in the possession of vendors or other third parties or elsewhere), of every kind, character and description, whether real, personal or mixed, tangible, intangible or contingent, in each case whether or not recorded or reflected or required to be recorded or reflected on the Records or financial statements of any Person, including the following:

(i) all accounting and other legal and business books, records, ledgers and files whether printed, electronic or written;

(ii) all apparatuses, computers and other electronic data processing and communications equipment, fixtures, machinery, equipment, furniture, office equipment, automobiles, trucks, aircraft and other transportation equipment, special and general tools, test devices, molds, tooling, dies, prototypes and models and other tangible personal property;

 

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(iii) all inventories of products, goods, materials, parts, raw materials and supplies;

(iv) all interests in real property of whatever nature, including easements, whether as owner, mortgagee or holder of a Security Interest in real property, lessor, sublessor, lessee, sublessee or otherwise;

(v) all interests in any capital stock or other equity interests of any Subsidiary or any other Person, all bonds, notes, debentures or other securities issued by any Subsidiary or any other Person, all loans, advances or other extensions of credit or capital contributions to any Subsidiary or any other Person and all other investments in securities of any Person;

(vi) all license Contracts, leases of personal property, open purchase orders for raw materials, supplies, parts or services, unfilled orders for the manufacture and sale of products and other Contracts or commitments;

(vii) all deposits, letters of credit and performance and surety bonds;

(viii) all written (including in electronic form) technical information, data, specifications, research and development information, engineering drawings and specifications, operating and maintenance manuals, and materials and analyses prepared by consultants and other third parties;

(ix) all Intellectual Property;

(x) all Software;

(xi) all cost information, sales and pricing data, customer prospect lists, supplier records, customer and supplier lists, customer and vendor data, correspondence and lists, product data and literature, artwork, design, development and business process files and data, vendor and customer drawings, specifications, quality records and reports and other books, records, studies, surveys, reports, plans and documents;

(xii) all prepaid expenses, trade accounts and other accounts and notes receivables;

(xiii) all rights under Contracts, all claims or rights against any Person, causes in action or similar rights, whether accrued or contingent;

(xiv) all rights under insurance Policies and all rights in the nature of insurance, indemnification or contribution;

(xv) all licenses, permits, approvals and authorizations which have been issued by any Governmental Entity;

 

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(xvi) all cash or cash equivalents, bank accounts, lock boxes and other third-party deposit arrangements; and

(xvii) all interest rate, currency, commodity or other swap, collar, cap or other hedging or similar Contracts or arrangements.

(17) “ Assume ” shall have the meaning set forth in Section 2.3 .

(18) “ Assumed RRD Contingent Liabilities ” shall mean any of the Liabilities set forth on Schedule 1.1(18) .

(19) “ Audited Party ” shall have the meaning set forth in Section 5.3(b) .

(20) “ Business ” shall mean the RRD Retained Business, the LSC Business or the Donnelley Financial Business, as applicable.

(21) “ Business Day ” shall mean any day that is not a Saturday, a Sunday or any other day on which banks are required or authorized by Law to be closed in The City of New York.

(22) “ Business Entity ” shall mean any corporation, partnership, limited liability company, joint venture or other entity which may legally hold title to Assets.

(23) “ Canadian Securities Regulators ” shall mean each of Alberta Securities Commission, Autorité des marchés financiers, British Columbia Securities Commission, The Manitoba Securities Commission, Financial and Consumer Services Commission, New Brunswick, Office of the Superintendent of Securities Service, Newfoundland and Labrador, Office of the Superintendent of Securities, Northwest Territories, Nova Scotia Securities Commission, Nunavut Securities Office, Ontario Securities Commission, Office of the Superintendent of Securities, Prince Edward Island, Financial and Consumer Affairs Authority of Saskatchewan and Office of Yukon Superintendent of Securities.

(24) “ Claim ” shall mean those Liabilities that, individually or in the aggregate, are covered by the terms and conditions of any Policy, whether or not subject to deductibles, co-insurance, self-insured retentions, or uncollectibility due to insurer insolvency.

(25) “ Claims Administration ” shall mean the processing of claims made under the Shared Policies, including the reporting of claims to the insurance carriers, management and defense of claims and providing for appropriate releases upon settlement of claims.

(26) “ COBRA ” shall mean the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.

(27) “ Code ” shall have the meaning set forth in the recitals hereto.

 

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(28) “ Commercial Arrangements ” shall mean those arrangements set forth on Schedule 1.1(28) and such other commercial arrangements among the Parties that are intended to survive and continue following the applicable Relevant Time; provided , however , that for the avoidance of doubt, Commercial Arrangements shall not apply to any of the following Contracts, arrangements, course of dealings or understandings (or to any of the provisions thereof):

(i) any agreements, arrangements, commitments or understandings, including the Transition Services Agreement, to which any Person other than the Parties and their respective Groups is a party thereto (it being understood that to the extent that the rights and obligations of the Parties and the members of their respective Groups under any such Contracts constitute LSC Assets or LSC Liabilities, Donnelley Financial Assets or Donnelley Financial Liabilities or RRD Retained Assets or RRD Retained Liabilities, such Contracts shall be assigned or retained pursuant to Article II ); and

(ii) any agreements, arrangements, commitments or understandings to which any non-wholly owned Subsidiary of RRD, LSC or Donnelley Financial, as the case may be, is a Party.

(29) “ Confidential Information ” shall mean all information concerning or belonging to a Party and/or its Subsidiaries or Business which, prior to or following the Effective Time, has been disclosed by a Party or its Subsidiaries to another Party or its Subsidiaries, in written, oral (including by recording), electronic, or visual form to, or otherwise has come into the possession of, the other, including pursuant to the access provisions of Section 9.1 or Section 9.2 or any other provision of this Agreement (except to the extent that such information can be shown to have been (i) in the public domain through no fault of such Party or its Subsidiaries or (ii) lawfully acquired by such Party or its Subsidiaries from other sources; provided , however , in the case of clause (ii) that, to the furnished Party’s knowledge, such furnishing sources did not provide such information in breach of any confidentiality obligations).

(30) “ Contract ” shall mean any agreement, contract, obligation, indenture, instrument, lease, promise, arrangement, release, warranty, commitment or undertaking (whether written or oral and whether express or implied).

(31) “ Conveyancing and Assumption Instruments ” shall mean, collectively, the various Contracts and other documents heretofore entered into and to be entered into to effect the Transfer of Assets and the Assumption of Liabilities in the manner contemplated by this Agreement and the Plan of Reorganization, or otherwise relating to, arising out of or resulting from the transactions contemplated by this Agreement, in such form or forms as the applicable Parties thereto agree.

(32) “ Consents ” shall mean any consents, waivers or approvals from, or notification requirements to, any Person other than a Governmental Entity.

 

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(33) “ Data ” shall mean any data, whether historical or operational or otherwise, including data with respect to pricing, customers, vendors, suppliers, distributors, employees, contractors and cost projections.

(34) “ D&O Tail Policies ” shall have the meaning set forth in Section 11.2(a) .

(35) “ Determination Date ” shall mean 12:01 a.m. Eastern Time on the Final Separation Date.

(36) “ Disclosure Documents ” shall mean any registration statement (including any registration statement on Form 10) filed with the SEC or any Canadian Securities Regulator by or on behalf of any Party or any of its controlled Affiliates, and also includes any information statement, prospectus, offering memorandum, offering circular (including franchise offering circular or any similar disclosure statement) or similar disclosure document, whether or not filed with the SEC, Canadian Securities Regulators or any other Governmental Entity, which offers for sale or registers the Transfer or distribution of any security of such Party or any of its controlled Affiliates.

(37) “ Dispute Notice ” shall have the meaning set forth in Section 10.1 .

(38) “ Distribution Agent ” shall mean Computershare Trust Company, N.A.

(39) “ Distribution Date ” shall mean (i) with respect to LSC, the LSC Distribution Date and (ii) with respect to Donnelley Financial, the Donnelley Financial Distribution Date.

(40) “ Distributions ” shall mean, collectively, the LSC Distribution and the Donnelley Financial Distribution.

(41) “ Donnelley Financial ” shall have the meaning set forth in the preamble.

(42) “ Donnelley Financial 10-Q ” shall have the meaning set forth in Section 3.4(d) .

(43) “ Donnelley Financial 10-Q Cash Balance ” shall have the meaning set forth in Section 3.4(f) .

(44) “ Donnelley Financial Accounts ” shall have the meaning set forth in Section 2.11(a) .

(45) “ Donnelley Financial Assets ” shall mean:

(i) the ownership interests in those Business Entities that are included in the definition of Donnelley Financial Group including those Business Entities set forth on Schedule 1.1(63) in the definition of Donnelley Financial Group;

 

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(ii) the offices, manufacturing facilities and other owned real property listed on Schedule 1.1(45)(ii) and the leases governing the leased real property (or subleases governing the subleased real property) listed on Schedule 1.1(45)(ii) ;

(iii) all Donnelley Financial Contracts, any rights or claims arising thereunder, and any other rights or claims or contingent rights or claims primarily relating to or arising from any Donnelley Financial Asset or the Donnelley Financial Business;

(iv) any and all Assets reflected on the Donnelley Financial Balance Sheet or the accounting records supporting such balance sheet and any Assets acquired by or for Donnelley Financial or any member of the Donnelley Financial Group subsequent to the date of such balance sheet which, had they been so acquired on or before such date and owned as of such date, would have been reflected on such balance sheet if prepared on a consistent basis, subject to any dispositions of any of such Assets subsequent to the date of such balance sheet;

(v) subject to Article XI , any rights of any member of the Donnelley Financial Group under any Policies, including any rights thereunder arising after the Donnelley Financial Distribution Date in respect of any Policies that are occurrence policies;

(vi) subject to Section 12.2 , any and all Assets owned or held immediately prior to the Relevant Time by RRD or any of its Subsidiaries (including, prior to the Relevant Time, LSC or any of its Subsidiaries) primarily relating to or used in the Donnelley Financial Business. The intention of this clause (vi) is only to rectify any inadvertent omission of Transfer of any Asset that, had the Parties given specific consideration to such Asset as of the date hereof, would have otherwise been classified as a Donnelley Financial Asset. Subject to Section 12.2 , no Asset shall be deemed a Donnelley Financial Asset solely as a result of this clause (vi) including with respect to any of the Assets described in Section 12.2 unless a claim with respect thereto is made by Donnelley Financial within the applicable time period(s) established by Section 2.6(d) ;

(vii) and any and all Assets that are expressly contemplated by this Agreement or any Ancillary Agreement as Assets which have been or are to be Transferred to Donnelley Financial or any other member of the Donnelley Financial Group;

(viii) any and all furnishings and office equipment and any other equipment located at a physical site or the portion thereof of which the ownership or leasehold interest is held by, or being Transferred to, Donnelley Financial; provided , that personal computers shall be Transferred to the Party who, following the Relevant Time, employs the applicable employee who, prior to the Relevant Time, used such personal computer; and

 

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(ix) the Applicable Donnelley Financial Percentage of any RRD Contingent Asset.

Notwithstanding the foregoing, the Donnelley Financial Assets shall not include any Assets that are expressly contemplated by this Agreement or any Ancillary Agreement (or the Schedules hereto or thereto) as Assets to be retained by or Transferred to any member of the RRD Group or LSC Group, as the case may be.

In the event of any inconsistency or conflict which may arise in the application or interpretation of any of the foregoing provisions, for the purpose of determining what is and is not a Donnelley Financial Asset, any item explicitly included on a Schedule referred to in this definition shall take priority over any provision of the text hereof including, for the avoidance of doubt, any interpretation of the definition of LSC Assets or RRD Retained Assets.

(46) “ Donnelley Financial Balance Sheet ” shall mean the combined balance sheet of the Donnelley Financial Group, including the notes thereto, as of June 30, 2016, as filed with the Donnelley Financial Form 10.

(47) “ Donnelley Financial Board ” shall have the meaning set forth in Section 3.2(b) .

(48) “ Donnelley Financial Business ” shall mean (i) the business and operations of the financial reporting unit of RRD’s Strategic Service segment as described in Donnelley Financial’s Form 10, (ii) any other business conducted primarily through the use of the Donnelley Financial Assets prior to the Relevant Time, and (iii) the businesses and operations of the Business Entities acquired or established by or for Donnelley Financial or any of its Subsidiaries after the date of this Agreement.

(49) “ Donnelley Financial Claim ” shall mean any Claim covered by a Donnelley Financial Policy or a Donnelley Financial Shared Policy.

(50) “ Donnelley Financial Common Stock ” shall have the meaning set forth in the recitals hereto.

(51) “ Donnelley Financial Contracts ” shall mean the following Contracts to which RRD or any of its Affiliates is a party or by which it or any of its Affiliates or any of their respective Assets is bound, whether or not in writing, except for any such Contract or part thereof (i) that is expressly contemplated not to be Transferred by any member of the RRD Group or the LSC Group to the Donnelley Financial Group or (ii) that is expressly contemplated to be Transferred to (or remain with) any member of the RRD Group or the LSC Group, in each case, pursuant to any provision of this Agreement or any Ancillary Agreement:

(i) any Contract entered into in the name of, or expressly on behalf of, any division, business unit or member of the Donnelley Financial Group;

 

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(ii) any Contract that relates primarily to the Donnelley Financial Business;

(iii) any Contract representing capital or operating equipment lease obligations reflected on the Donnelley Financial Balance Sheet;

(iv) any Contract or part thereof that is otherwise expressly contemplated pursuant to this Agreement (including pursuant to Section 2.2(c) ) or any of the Ancillary Agreements to be assigned to any member of the Donnelley Financial Group, including those set forth on Schedule 1.1(51)(iv) ; and

(v) any guarantee, indemnity, representation or warranty of or in favor of any member of the Donnelley Financial Group.

(52) “ Donnelley Financial Deferred Compensation Plans ” shall mean the nonqualified deferred compensation plans established or assumed by the Donnelley Financial Group as of the Donnelley Financial Distribution Date and listed in Schedule 6.5(b) .

(53) “ Donnelley Financial Defined Benefit Plans ” shall have the meaning set forth in Section 6.6(b) .

(54) “ Donnelley Financial Deferred Compensation and SERP Liabilities ” shall have the meaning set forth in Section 6.5(b)(i) .

(55) “ Donnelley Financial Defined Contribution Retirement Plans ” shall have the meaning set forth in Section 6.7(b)(i) .

(56) “ Donnelley Financial Distribution ” shall mean the distribution by RRD to holders of record of shares of RRD Common Stock as of the Donnelley Financial Distribution Record Date of 80.75% of the Donnelley Financial Common Stock owned by RRD on the basis of one share of Donnelley Financial Common Stock for every eight outstanding shares of RRD Common Stock.

(57) “ Donnelley Financial Distribution Date ” shall mean the date on which the Donnelley Financial Distribution is effected.

(58) “ Donnelley Financial Distribution Record Date ” shall mean such date as may be determined by the RRD Board as the record date for the Donnelley Financial Distribution.

(59) “ Donnelley Financial Employee ” shall mean an active employee or an employee on vacation or on approved leave of absence (including maternity, paternity, parental, family, short-term or long-term disability leave, qualified military service and other approved leaves) who immediately following the Donnelley Financial Distribution Date is employed by Donnelley Financial or any member of the Donnelley Financial Group. Donnelley Financial Employee shall also include any employee of an entity in the Donnelley Financial Group who, as of the Donnelley Financial Distribution Date, is receiving short-term or long-term disability benefits or workers’ compensation benefits.

 

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(60) “ Donnelley Financial Employment Practices Policy ” shall have the meaning set forth in Section 11.2(d) .

(61) “ Donnelley Financial Equity Award Exchange Ratio ” shall mean a fraction, (i) the numerator of which is Post-Distribution Donnelley Financial Stock Price multiplied by the Donnelley Financial Spin Ratio and (ii) the denominator of which is the sum of (A) the Post-Distribution RRD Stock Price, (B) the Post-Distribution LSC Stock Price multiplied by the LSC Spin Ratio, and (C) the Post-Distribution Donnelley Financial Stock Price multiplied by the Donnelley Financial Spin Ratio.

(62) “ Donnelley Financial Form 10 ” shall mean the registration statement on Form 10 filed by Donnelley Financial with the SEC in connection with the Donnelley Financial Distribution, including the Donnelley Financial Information Statement.

(63) “ Donnelley Financial Group ” shall mean Donnelley Financial and each Person (other than any member of the LSC Group or the RRD Group) that is a direct or indirect Subsidiary of Donnelley Financial immediately after the Effective Time, and each Person that becomes a Subsidiary of Donnelley Financial after the Effective Time, which shall include those entities identified as such on Schedule 1.1(63) .

(64) “ Donnelley Financial Indemnitees ” shall mean each member of the Donnelley Financial Group and each of their and their Affiliates and each of their respective Affiliates’ directors, officers, employees and agents.

(65) “ Donnelley Financial Information Statement ” shall mean the Information Statement attached as an exhibit to the Donnelley Financial Form 10 sent to the holders of shares of RRD Common Stock in connection with the Donnelley Financial Distribution, including any amendment or supplement thereto.

(66) “ Donnelley Financial Intellectual Property Agreements ” shall mean (i) the Patent Assignment and License Agreement, dated as of the date hereof, by and between RRD and Donnelley Financial, (ii) the Software, Copyright and Trade Secret Assignment and License Agreement, dated as of the date hereof, by and between RRD and Donnelley Financial, (iii) the Trademark Assignment and License Agreement, dated as of the date hereof, by and between RRD and Donnelley Financial, and (iv) the Data Assignment and License Agreement, dated as of the date hereof, by and between RRD and Donnelley Financial, in each case including any exhibits or schedules thereto, and including any amendments or supplements to any of the foregoing.

(67) “ Donnelley Financial Liabilities ” shall mean:

(i) any and all Liabilities that are expressly contemplated by this Agreement or any Ancillary Agreement (or the Schedules hereto or thereto, including Schedule 1.1(67)(vi) hereto) as Liabilities to be Assumed by any member of the Donnelley Financial Group, and all obligations and Liabilities expressly Assumed by any member of the Donnelley Financial Group under this Agreement or any of the Ancillary Agreements;

 

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(ii) any and all Liabilities primarily relating to, arising out of or resulting from:

(a) the operation or conduct of the Donnelley Financial Business, as conducted at any time prior to, on or after the Effective Time (including any Liability relating to, arising out of or resulting from any act or failure to act by any director, officer, employee, agent or representative (whether or not such act or failure to act is or was within such Person’s authority));

(b) the operation or conduct of any business conducted by any member of the Donnelley Financial Group at any time after the Effective Time (including any Liability relating to, arising out of or resulting from any act or failure to act by any director, officer, employee, agent or representative (whether or not such act or failure to act is or was within such Person’s authority));

(c) any Donnelley Financial Assets, whether arising before, on or after the Effective Time; or

(d) any Intellectual Property Transferred to Donnelley Financial or any of its Subsidiaries pursuant to any one or more of the Donnelley Financial Intellectual Property Agreements, in each case, whether arising before, on or after the Effective Time;

(iii) any Liabilities to the extent relating to, arising out of or resulting from any terminated or divested Business Entity, business or operation formerly and primarily related to the Donnelley Financial Group or the Donnelley Financial Business;

(iv) the Applicable Donnelley Financial Percentage of any Assumed RRD Contingent Liability;

(v) any Liabilities relating to any Donnelley Financial Employee or Former Donnelley Financial Employee in respect of the period prior to, on or after the Effective Time;

(vi) any Liabilities relating to, arising out of or resulting from any litigation set forth in Schedule 1.1(67)(vi) ;

(vii) any Liabilities relating to, arising out of or resulting from any indebtedness (including debt securities and asset-backed debt) of any member of the Donnelley Financial Group or any indebtedness (regardless of the issuer of such indebtedness) secured exclusively by any of the Donnelley Financial Assets (including any Liabilities relating to, arising out of or resulting from a claim by a holder of any such indebtedness, in its capacity as such);and

 

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(viii) all Liabilities reflected as liabilities or obligations on the Donnelley Financial Balance Sheet or the accounting records supporting such balance sheet, and all Liabilities arising or Assumed after the date of such balance sheet which, had they arisen or been Assumed on or before such date and been retained as of such date, would have been reflected on such balance sheet if prepared on a consistent basis, subject to any discharge of such Liabilities subsequent to the date of the Donnelley Financial Balance Sheet.

Notwithstanding anything to the contrary herein, the Donnelley Financial Liabilities shall not include:

(x) any Liabilities that are expressly contemplated by this Agreement or any Ancillary Agreement (or the Schedules hereto or thereto) as Liabilities to be retained or Assumed by any member of the RRD Group or the LSC Group or for which any such Party is liable;

(y) any Contracts expressly Assumed by any member of the RRD Group or the LSC Group under this Agreement or any of the Ancillary Agreements; and

(z) any Liabilities expressly discharged pursuant to Section 2.4 of this Agreement.

In the event of any inconsistency or conflict which may arise in the application or interpretation of any of the foregoing provisions, for the purpose of determining what is and is not a Donnelley Financial Liability, any item explicitly included on a Schedule referred to in this definition shall take priority over any provision of the text hereof.

(68) “ Donnelley Financial Misdirected Payment Process Policy ” shall have the meaning set forth in Section 2.7(a) .

(69) “ Donnelley Financial Non-US Deferred Compensation Plans and SERPs ” shall have the meaning set forth in Section 6.5(b)(i)(2) .

(70) “ Donnelley Financial Non-US Defined Benefit Plans ” shall have the meaning set forth in Section 6.6(b)(iii) .

(71) “ Donnelley Financial Option ” shall mean an option to purchase shares of Donnelley Financial Common Stock at a specific price as of the Donnelley Financial Distribution, which option shall be granted pursuant to the 2016 Donnelley Financial Solutions, Inc. Performance Incentive Plan as part of the adjustment to RRD Options in connection with the Donnelley Financial Distribution.

(72) “ Donnelley Financial Pension Plan Participants ” shall have the meaning set forth in Section 6.6(b)(ii)(B) .

 

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(73) “ Donnelley Financial Plans ” shall mean the employee benefit plans, policies, programs, payroll practices, and arrangements established or assumed by the Donnelley Financial Group under this Agreement for the benefit of Donnelley Financial Employees and, where applicable, Former Donnelley Financial Employees.

(74) “ Donnelley Financial Policies ” shall mean all Policies, current or past, which are owned or maintained by or on behalf of RRD or any Subsidiary of RRD, which relate exclusively to the Donnelley Financial Business and which Policies are either maintained by Donnelley Financial or a member of the Donnelley Financial Group or assignable to Donnelley Financial or a member of the Donnelley Financial Group including those Policies identified on Schedule 1.1(74) .

(75) “ Donnelley Financial Portion ” shall have the meaning set forth in Section 2.2(b) .

(76) “ Donnelley Financial Receivables ” shall have the meaning set forth in Section 2.7(a) .

(77) “ Donnelley Financial Restricted Stock Unit ” shall mean a unit granted by Donnelley Financial representing a general unsecured promise by Donnelley Financial to deliver a share of Donnelley Financial Common Stock, which unit is granted pursuant to the 2016 Donnelley Financial Solutions, Inc. Performance Incentive Plan as part of the adjustment to RRD Restricted Stock Units in connection with the Donnelley Financial Distribution.

(78) “ Donnelley Financial SERPs ” shall mean the nonqualified supplemental executive retirement plans established or assumed by the Donnelley Financial Group as of the Donnelley Financial Distribution Date and listed in Schedule 6.5(b) .

(79) “ Donnelley Financial Shared Policies ” shall mean all Policies, current or past, which are owned or maintained by or on behalf of RRD or any Subsidiary of RRD which relate to the Donnelley Financial Business, other than Donnelley Financial Policies, including those Policies identified on Schedule 1.1(79) .

(80) “ Donnelley Financial Spin Ratio ” shall mean the number of shares of Donnelley Financial Common Stock to be distributed in respect of each share of RRD Common Stock in the Distribution.

(81) “ Donnelley Financial Target Cash Balance ” shall have the meaning set forth in Section 3.4(h) .

(82) “ Donnelley Financial Tax Disaffiliation Agreement ” shall mean the Tax Disaffiliation Agreement, dated as of the date hereof, by and between RRD and Donnelley Financial.

(83) “ Donnelley Financial Transition Services Agreement ” shall mean the Transition Services Agreement, dated as of the date hereof, by and between RRD and Donnelley Financial.

 

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(84) “ Effective Time ” shall mean 12:01 a.m., Eastern Time, on the earlier to occur of the Donnelley Financial Distribution Date and the LSC Distribution Date.

(85) “ Employment Practices Policy ” shall have the meaning set forth in Section 11.2(d) .

(86) “ Equity Compensation ” means, collectively, the Donnelley Financial Options, Donnelley Financial Restricted Stock Units, LSC Options, LSC Restricted Stock Units, RRD Options and RRD Restricted Stock Units.

(87) “ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.

(88) “ Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC thereunder, all as the same shall be in effect at the time that reference is made thereto.

(89) “ Fiduciary Tail Policies ” shall have the meaning set forth in Section 11.2(b) .

(90) “ Final Separation Date ” shall mean the last to occur of the Donnelley Financial Distribution Date and the LSC Distribution Date; provided , that in the event RRD makes a public announcement that its board of directors has determined that the shares of either Donnelley Financial or LSC shall not be distributed by RRD to its stockholders, then the “Final Separation Date” shall be the date of the last Distribution to be made by RRD to its stockholders as contemplated by the Plan of Reorganization, as so amended.

(91) “ Financing Arrangements ” means (a) in the case of LSC and Donnelley Financial, the incurrence of indebtedness through a combination of either or both senior notes and term loans, as well as entry into a revolving credit facility and (b) in the case of RRD, tender offer and exchange offer to repurchase outstanding RRD senior notes.

(92) “ Force Majeure ” shall mean, with respect to a Party, an event beyond the control of such Party (or any Person acting on its behalf), which by its nature could not have been foreseen by such Party (or such Person), or, if it could have been foreseen, was unavoidable, and includes, without limitation, acts of God, storms, floods, riots, labor unrest, pandemics, nuclear incidents, fires, sabotage, civil commotion or civil unrest, interference by civil or military authorities, acts of war (declared or undeclared) or armed hostilities or other national or international calamity or one or more acts of terrorism or failure of energy sources or distribution facilities. Notwithstanding the foregoing, the receipt by a Party of a hostile takeover offer, even if unforeseen or unavoidable, and such Party’s response thereto shall not be deemed an event of Force Majeure.

(93) “ Former Donnelley Financial Employee ” shall mean any former employee who terminated employment with all members of the RRD controlled group of corporations before the Donnelley Financial Distribution Date and who was last employed by, or designated prior to the Distribution Date as having been employed by a member of

 

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the Donnelley Financial Group or any entity primarily carrying on the Donnelley Financial Business, including but not limited to the individuals listed on Schedule 1.1(93)(a) , but excluding the individuals listed on Schedule 1.1(93)(b) .

(94) “ Former LSC Employee ” shall mean any former employee who terminated employment with all members of the RRD controlled group of corporations before the LSC Distribution Date and who was last employed by, or designated prior to the Distribution Date as having been employed by a member of the LSC Group other than those members of the LSC Group or any entity primarily carrying on the LSC Business, including but not limited to the individuals listed on Schedule 1.1(94)(a) , but excluding the individuals listed on Schedule 1.1(94)(b) .

(95) “ Former RRD Employee ” shall mean any former employee who terminated employment with all members of the RRD controlled group of corporations before the Donnelley Financial Distribution Date or the LSC Distribution Date and who was last employed by, or designated prior to the Distribution Date as having been employed by a member of the RRD Group or any entity primarily carrying on the RRD Retained Business, including but not limited to the individuals listed on Schedule 1.1(95)(a) but excluding the individuals listed on Schedule 1.1(95)(b) .

(96) “ Governmental Approvals ” shall mean any notices or reports to be submitted to, or other filings to be made with, or any consents, registrations, approvals, permits or authorizations to be obtained from, any Governmental Entity.

(97) “ Governmental Entity ” shall mean any domestic or foreign governmental or regulatory authority, agency, commission, body, court or other legislative, executive or judicial governmental entity.

(98) “ Group ” shall mean (i) with respect to RRD, the RRD Group, (ii) with respect to LSC, the LSC Group, and (iii) with respect to Donnelley Financial, the Donnelley Financial Group.

(99) “ Guaranty Release ” shall have the meaning set forth in Section 2.10(b) .

(100) “ HIPAA ” shall have the meaning set forth in Section 6.10(d) .

(101) “ HR Committee ” shall have the meaning set forth in Section 6.10(j) .

(102) “ Illinois Courts ” shall have the meaning set forth in Section 12.19 .

(103) “ Indemnifiable Loss ” shall mean any and all damages, losses, deficiencies, Liabilities, obligations, penalties, judgments, settlements, claims, payments, fines, interest, costs and expenses (including the costs and expenses of any and all Actions and demands, assessments, judgments, settlements and compromises relating thereto and the reasonable costs and expenses of attorneys’, accountants’, consultants’ and other professionals’ fees and expenses incurred in the investigation or defense thereof or the enforcement of rights hereunder), excluding special, consequential, indirect, punitive damages (other than special, consequential, indirect and/or punitive damages awarded to any third party against an Indemnitee) and/or Taxes.

 

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(104) “ Indemnifying Party ” shall have the meaning set forth in Section 8.5(b) .

(105) “ Indemnitee ” shall have the meaning set forth in Section 8.5(b) .

(106) “ Indemnity Payment ” shall have the meaning set forth in Section 8.9(a) .

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

(108) “ Insurance Administration ” shall mean, with respect to each Shared Policy, the accounting for premiums, retrospectively-rated premiums, defense costs, indemnity payments, deductibles and retentions, as appropriate, under the terms and conditions of each of the Shared Policies; and the reporting to excess insurance carriers of any losses or claims which may cause the per-occurrence, per claim or aggregate limits of any Shared Policy to be exceeded, and the distribution of Insurance Proceeds as contemplated by this Agreement.

(109) “ Insurance Proceeds ” shall mean those monies (i) received by an insured person from an insurance carrier, including due to premium adjustments, whether or not retrospectively rated, or (ii) paid by an insurance carrier on behalf of an insured person, in either case net of any applicable premium deductible or self-insured retention. For the avoidance of doubt, “Insurance Proceeds” shall not include any costs or expenses incurred by a Party or its Affiliates in pursuing insurance coverage.

(110) “ Insured Claims ” shall mean those Liabilities that, individually or in the aggregate, are covered within the terms and conditions of any of the Shared Policies, whether or not subject to deductibles, co-insurance, self-insured retentions, or uncollectibility due to insurer insolvency.

(111) “ Intellectual Property ” shall mean all intellectual property and industrial property rights of any kind or nature, including all US and foreign (i) Patents, (ii) Trademarks, (iii) copyrights and copyrightable subject matter, (iv) rights of publicity, (v) moral rights and rights of attribution and integrity, (vi) rights in Software, (vii) trade secrets and all other Confidential Information, know-how, inventions, proprietary processes, formulae, models and methodologies, (viii) rights of privacy and rights to

 

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personal information, (ix) telephone numbers and Internet protocol addresses, (x) all rights in the foregoing and in other similar intangible assets, (xi) all applications and registrations for the foregoing, and (xii) all rights and remedies against past, present, and future infringement, misappropriation, or other violation of the foregoing.

(112) “ Intellectual Property Agreements ” mean the LSC Intellectual Property Agreements and the Donnelley Financial Intellectual Property Agreements.

(113) “ Internal Control Audit and Management Assessments ” shall have the meaning set forth in Section 5.3(a) .

(114) “ Transition Services Employee ” shall have the meaning set forth in Section 5.1(b) .

(115) “ Law ” shall mean any US or non-US federal, national, supranational, state, provincial, local or similar statute, law, ordinance, regulation, rule, code, income Tax treaty, stock exchange rule, order, requirement or rule of law (including common law).

(116) “ Legacy RRD Deferred Compensation Plans ” means the George Banta Corporation EP Incentive Compensation Plan, Bowne & Co., Inc. Deferred Sales Compensation Plan, Wallace Computer Services Inc. Deferred Compensation Capital Accumulation Plan, RRD Nonqualified Deferred Compensation Plan, and RRD Global Capital Markets and Global Investment Markets Business Units of the Financial Business Unit Sales Representatives Deferred Compensation Plan.

(117) “ Legacy RRD SERPs ” means the RRD Unfunded Supplemental Pension Plan and the Supplemental Executive Retirement Plan for Designated Executives-B.

(118) “ Liabilities ” shall mean any and all debts, liabilities, costs, expenses, interest and obligations, whether accrued or fixed, absolute or contingent, matured or unmatured, reserved or unreserved, or determined or determinable, including those arising under any Law, claim, demand, Action, whether asserted or unasserted, or order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Entity and those arising under any Contract or any fines, damages or equitable relief which may be imposed and including all costs and expenses related thereto.

(119) “ Liable Party ” shall have the meaning set forth in Section 2.9(b) .

(120) “ LSC ” shall have the meaning set forth in the preamble.

(121) “ LSC 10-Q ” shall have the meaning set forth in Section 3.4(c) .

(122) “ LSC 10-Q Cash Balance ” shall have the meaning set forth in Section 3.4(e) .

(123) “ LSC Accounts ” shall have the meaning set forth in Section 2.11(a) .

 

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(124) “ LSC Assets ” shall mean:

(i) the ownership interests in those Business Entities that are included in the definition of LSC Group, including those Business Entities set forth on Schedule 1.1(142) in the definition of LSC Group;

(ii) the offices, manufacturing facilities and other owned real property listed on Schedule 1.1(124)(ii) and the leases governing the leased real property (or subleases governing the subleased real property) listed on Schedule 1.1(124)(ii) .

(iii) all LSC Contracts, any rights or claims arising thereunder, and any other rights or claims or contingent rights or claims primarily relating to or arising from any LSC Asset or the LSC Business;

(iv) any and all Assets reflected on the LSC Balance Sheet or the accounting records supporting such balance sheet and any Assets acquired by or for LSC or any member of the LSC Group subsequent to the date of such balance sheet which, had they been so acquired on or before such date and owned as of such date, would have been reflected on such balance sheet if prepared on a consistent basis, subject to any dispositions of any of such Assets subsequent to the date of such balance sheet;

(v) subject to Article XI , any rights of any member of the LSC Group under any Policies, including any rights thereunder arising after the Distribution Date in respect of any Policies that are occurrence policies;

(vi) Subject to Section 12.2 , any and all Assets owned or held immediately prior to the Relevant Time by RRD or any of its Subsidiaries (including, prior to the Relevant Time, Donnelley Financial or any of their Subsidiaries) primarily relating to or used in the LSC Business. The intention of this clause (vi) is only to rectify any inadvertent omission of Transfer of any Asset that, had the Parties given specific consideration to such Asset as of the date hereof, would have otherwise been classified as a LSC Asset. Subject to Section 12.2 , no Asset shall be deemed a LSC Asset solely as a result of this clause (vi) unless a claim with respect thereto is made by LSC within the applicable time period(s) established by Section 2.6(d) ;

(vii) any and all Assets that are expressly contemplated by this Agreement or any Ancillary Agreement as Assets which have been or are to be Transferred to LSC or any other member of the LSC Group;

(viii) any and all furnishings and office equipment and any other equipment located at a physical site or the portion thereof of which the ownership or leasehold interest is held by, or is being Transferred to, LSC; provided , that personal computers shall be Transferred to the Party who, following the Relevant Time, employs the applicable employee who, prior to the Relevant Time, used such personal computer; and

 

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(ix) the Applicable LSC Percentage of any RRD Contingent Asset.

Notwithstanding the foregoing, the LSC Assets shall not include any Assets that are expressly contemplated by this Agreement or any Ancillary Agreement (or the Schedules hereto or thereto) as Assets to be retained by or Transferred to any member of the RRD Group or the Donnelley Financial Group, as the case may be.

In the event of any inconsistency or conflict which may arise in the application or interpretation of any of the foregoing provisions, for the purpose of determining what is and is not a LSC Asset, any item explicitly included on a Schedule referred to in this definition shall take priority over any provision of the text hereof including, for the avoidance of doubt, any interpretation of the definition of Donnelley Financial Assets and RRD Retained Assets.

(125) “ LSC Balance Sheet ” shall mean the combined balance sheet of the LSC Group, including the notes thereto, as of June 30, 2016, as filed with the LSC Form 10.

(126) “ LSC Board ” shall have the meaning set forth in Section 3.2(a) .

(127) “ LSC Business ” shall mean:

(i) substantially all of RRD’s current Publishing and Retail Services segment, as well as the office products reporting unit from RRD’s Variable Print segment;

(ii) certain publishing and e-book services currently within the digital and creative solutions reporting unit of RRD’s Strategic Services segment;

(iii) substantially all of the operations currently within the Europe reporting unit of RRD’s International segment;

(iv) certain Mexican operations currently within the Latin America reporting unit of RRD’s International segment;

(v) the co-mail and related list services operations currently within the logistics reporting unit of RRD’s Strategic Services segment;

(vi) any other business conducted primarily through the use of the LSC Assets prior to the Relevant Time; and

(vii) the businesses and operations of the Business Entities acquired or established by or for LSC or any of its Subsidiaries after the date of this Agreement.

(128) “ LSC Claim ” shall mean any Claim that is covered by an LSC Policy or an LSC Shared Policy.

(129) “ LSC Common Stock ” shall have the meaning set forth in the recitals hereto.

 

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(130) “ LSC Contracts ” shall mean the following Contracts to which RRD or any of its Affiliates is a party or by which it or any of its Affiliates or any of their respective Assets is bound, whether or not in writing, except for any such Contract or part thereof (i) that is expressly contemplated not to be Transferred by any member of the RRD Group or the Donnelley Financial Group to the LSC Group or (ii) that is expressly contemplated to be Transferred to (or remain with) any member of the RRD Group or the Donnelley Financial Group, in each case, pursuant to any provision of this Agreement or any Ancillary Agreement:

(i) any Contract entered into in the name of, or expressly on behalf of, any division, business unit or member of the LSC Group;

(ii) any Contract that relates primarily to the LSC Business;

(iii) any Contract representing capital or operating equipment lease obligations reflected on the LSC Balance Sheet;

(iv) any Contract or part thereof, that is otherwise expressly contemplated pursuant to this Agreement (including pursuant to Section 2.2(c) ) or any of the Ancillary Agreements to be assigned to any member of the LSC Group including those set forth on Schedule 1.1(130)(iv) ; and

(v) any guarantee, indemnity, representation or warranty of or in favor of any member of the LSC Group.

(131) “ LSC Deferred Compensation and SERP Liabilities ” shall have the meaning set forth in Section 6.5(a)(i) .

(132) “ LSC Deferred Compensation Plans ” shall mean the nonqualified deferred compensation plans established or assumed by the LSC Group as of the LSC Distribution Date and listed in Schedule 6.5(a) .

(133) “ LSC Defined Benefit Plans ” shall have the meaning set forth in Section 6.6(a)(i) .

(134) “ LSC Defined Contribution Retirement Plans ” shall have the meaning set forth in Section 6.7(a) .

(135) “ LSC Distribution ” shall mean the distribution by RRD to holders of record of shares of RRD Common Stock as of the LSC Distribution Record Date of 80.75% of the LSC Common Stock owned by RRD on the basis of one share of LSC Common Stock for every eight outstanding shares of RRD Common Stock.

(136) “ LSC Distribution Date ” shall mean the date on which the LSC Distribution is effected.

(137) “ LSC Distribution Record Date ” shall mean such date as may be determined by the RRD Board as the record date for the LSC Distribution.

 

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(138) “ LSC Employee ” shall mean an active employee or an employee on vacation or on approved leave of absence (including maternity, paternity, parental, family, short-term or long-term disability leave, qualified military service and other approved leaves) who immediately following the LSC Distribution Date is employed by LSC or any member of the LSC Group. LSC Employee shall also include any employee of an entity in the LSC Group who, as of the LSC Distribution Date, is receiving short-term or long-term disability benefits or workers’ compensation benefits.

(139) “ LSC Employment Practices Policy ” shall have the meaning set forth in Section 11.2(d) .

(140) “ LSC Equity Award Exchange Ratio ” shall mean a fraction, (i) the numerator of which is Post-Distribution LSC Stock Price multiplied by the LSC Spin Ratio and (ii) the denominator of which is the sum of (A) the Post-Distribution RRD Stock Price, (B) the Post-Distribution LSC Stock Price multiplied by the LSC Spin Ratio, and (C) the Post-Distribution Donnelley Financial Stock Price multiplied by the Donnelley Financial Spin Ratio.

(141) “ LSC Form 10 ” shall mean the registration statement on Form 10 filed by LSC with the SEC in connection with the LSC Distribution including the LSC Information Statement.

(142) “ LSC Group ” shall mean LSC and each Person (other than any member of the Donnelley Financial Group or the RRD Group) that is a direct or indirect Subsidiary of LSC immediately after the Effective Time, and each Person that becomes a Subsidiary of LSC after the Effective Time, which shall include those entities identified as such on Schedule 1.1(142) .

(143) “ LSC Indemnitees ” shall mean each member of the LSC Group and each of their Affiliates and each of their and their respective Affiliates’ respective directors, officers, employees and agents.

(144) “ LSC Information Statement ” shall mean the Information Statement attached as an exhibit to the LSC Form 10 sent to the holders of shares of RRD Common Stock in connection with the LSC Distribution, including any amendment or supplement thereto.

(145) “ LSC Intellectual Property Agreements ” shall mean (i) the Patent Assignment and License Agreement, dated as of the date hereof, between RRD and LSC, (ii) the Software, Copyright and Trade Secret Assignment and License Agreement, dated as of the date hereof, between RRD and LSC, (iii) the Trademark Assignment and License Agreement, dated as of the date hereof, by and between RRD and LSC, (iv) Data Assignment and License Agreement, dated as of the date hereof, by and between RRD and LSC, in each case including any exhibits or schedules thereto, and including any amendments or supplements to any of the foregoing.

 

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(146) “ LSC Liabilities ” shall mean:

(i) any and all Liabilities that are expressly contemplated by this Agreement or any Ancillary Agreement (or the Schedules hereto or thereto, including Schedule 1.1(146)(vi) hereto) as Liabilities to be Assumed by any member of the LSC Group, and all obligations and Liabilities expressly Assumed by any member of the LSC Group under this Agreement or any of the Ancillary Agreements;

(ii) any and all Liabilities primarily relating to, arising out of or resulting from:

(A) the operation or conduct of the LSC Business, as conducted at any time prior to, on or after the Effective Time (including any Liability relating to, arising out of or resulting from any act or failure to act by any director, officer, employee, agent or representative (whether or not such act or failure to act is or was within such Person’s authority));

(B) the operation or conduct of any business conducted by any member of the LSC Group at any time after the Effective Time (including any Liability relating to, arising out of or resulting from any act or failure to act by any director, officer, employee, agent or representative (whether or not such act or failure to act is or was within such Person’s authority));

(C) any LSC Assets, whether arising before, on or after the Effective Time; or

(D) any Intellectual Property Transferred to LSC or any of its Subsidiaries pursuant to any one or more of the LSC Intellectual Property Agreements, in each case whether arising before, on or after the Effective Time;

(iii) any Liabilities to the extent relating to, arising out of or resulting from any terminated or divested Business Entity, business or operation formerly and primarily related to the LSC Group or the LSC Business;

(iv) the Applicable LSC Percentage of any Assumed RRD Contingent Liability;

(v) any Liabilities relating to any LSC Employee or Former LSC Employee in respect of the period prior to, on or after the Effective Time;

(vi) any Liabilities relating to, arising out of or resulting from any litigation set forth on Schedule 1.1(146)(vi) ;

(vii) any Liabilities relating to, arising out of or resulting from any indebtedness (including debt securities and asset-backed debt) of any member of the LSC Group or any indebtedness (regardless of the issuer of such indebtedness)

 

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secured exclusively by any of the LSC Assets (including any Liabilities relating to, arising out of or resulting from a claim by a holder of any such indebtedness, in its capacity as such);and

(viii) all Liabilities reflected as liabilities or obligations on the LSC Balance Sheet or the accounting records supporting such balance sheet, and all Liabilities arising or Assumed after the date of such balance sheet which, had they arisen or been Assumed on or before such date and been retained as of such date, would have been reflected on such balance sheet if prepared on a consistent basis, subject to any discharge of such Liabilities subsequent to the date of the LSC Balance Sheet.

Notwithstanding anything to the contrary herein, the LSC Liabilities shall not include:

(x) any Liabilities that are expressly contemplated by this Agreement or any Ancillary Agreement (or the Schedules hereto or thereto) as Liabilities to be retained or Assumed by any member of the RRD Group or the Donnelley Financial Group or for which any such Party is liable;

(y) any Contracts expressly Assumed by any member of the RRD Group or the Donnelley Financial Group under this Agreement or any of the Ancillary Agreements; and

(z) any Liabilities expressly discharged pursuant to Section 2.4 of this Agreement.

In the event of any inconsistency or conflict which may arise in the application or interpretation of any of the foregoing provisions, for the purpose of determining what is and is not a LSC Liability, any item explicitly included on a Schedule referred to in this definition shall take priority over any provision of the text hereof.

(147) “ LSC Misdirected Payment Process Policy ” shall have the meaning set forth in Section 2.7(a) .

(148) “ LSC Non-US Deferred Compensation Plans and SERPs ” shall have the meaning set forth in Section 6.5(a)(i)(2) .

(149) “ LSC Non-US Defined Benefit Plans ” shall have the meaning set forth in Section 6.6(a)(iii) .

(150) “ LSC Non-US Defined Contribution Retirement Plans ” shall have the meaning set forth in Section 6.7(a)(iii) .

(151) “ LSC Option ” shall mean an option to purchase shares of LSC Common Stock at a specific price as of the LSC Distribution, which LSC Option shall be granted pursuant to the 2016 LSC Communications, Inc. Performance Incentive Plan as part of the adjustment to RRD Options in connection with the LSC Distribution.

 

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(152) “ LSC Pension Plan Participants ” shall have the meaning set forth in Section 6.6(a)(ii)(B) .

(153) “ LSC Plans ” shall mean the employee benefit plans, policies, programs, payroll practices, and arrangements established or assumed by the LSC Group under this Agreement for the benefit of LSC Employees and, where applicable, Former LSC Employees.

(154) “ LSC Policies ” shall mean all Policies, current or past, which are owned or maintained by or on behalf of RRD or any Subsidiary of RRD, which relate exclusively to the LSC Business and which Policies are either maintained by LSC or a member of the LSC Group or assignable to LSC or a member of the LSC Group, including those Policies identified on Schedule 1.1(154) .

(155) “ LSC Portion ” shall have the meaning set forth in Section 2.2(b) .

(156) “ LSC Receivables ” shall have the meaning set forth in Section 2.7(a) .

(157) “ LSC Restricted Stock Unit ” shall mean a unit granted by LSC representing a general unsecured promise by LSC to deliver a share of LSC Common Stock, which unit is granted pursuant to the 2016 LSC Communications, Inc. Performance Incentive Plan as part of the adjustment to RRD Restricted Stock Units in connection with the LSC Distribution.

(158) “LSC SERPs ” shall mean the nonqualified supplemental executive retirement plans established or assumed by the LSC Group as of the LSC Distribution Date and listed in Schedule 6.5(a) .

(159) “ LSC Shared Policies ” shall mean all Policies, current or past, which are owned or maintained by or on behalf of RRD or any Subsidiary of RRD which relate to the LSC Business, other than LSC Policies, including those Policies identified on Schedule 1.1(159) .

(160) “ LSC Spin Ratio ” shall mean the number of shares of LSC Common Stock to be distributed in respect of each share of RRD Common Stock in the Distribution.

(161) “LSC Target Cash Balance ” shall have the meaning set forth in Section 3.4(g) .

(162) “ LSC Tax Disaffiliation Agreement ” shall mean the Tax Disaffiliation Agreement, dated as of the date hereof, by and between RRD and LSC.

(163) “ LSC Transition Services Agreement ” shall mean the Transition Services Agreement, dated as of the date hereof, by and between RRD and LSC.

(164) “ Managing Party ” shall have the meaning set forth in Section 7.2(a) .

(165) “ Mediation Period ” shall have the meaning set forth in Section 10.2 .

 

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(166) “ Misdirected Donnelley Financial Deductions ” shall have the meaning set forth in Section 2.7(a) .

(167) “ Misdirected Donnelley Financial Payments ” shall have the meaning set forth in Section 2.7(a) .

(168) “ Misdirected LSC Deductions ” shall have the meaning set forth in Section 2.7(a) .

(169) “ Misdirected LSC Payments ” shall have the meaning set forth in Section 2.7(a) .

(170) “ Misdirected Payment Process Policy ” shall mean the Donnelley Financial Misdirected Payment Process Policy, the LSC Misdirected Payment Process Policy and the RRD Misdirected Payment Process Policy.

(171) “ Misdirected RRD Deductions ” shall have the meaning set forth in Section 2.7(a) .

(172) “ Misdirected RRD Payments ” shall have the meaning set forth in Section 2.7(a) .

(173) “ NYSE ” shall mean The New York Stock Exchange.

(174) “ Other Parties’ Auditors ” shall have the meaning set forth in Section 5.3(b) .

(175) “ Other Party ” shall have the meaning set forth in Section 2.9(a) .

(176) “ Outside Notice Date ” shall have the meaning set forth in Section 8.5(b) .

(177) “ Party ” shall have the meaning set forth in the preamble.

(178) “ Patents ” shall mean any patents, patent applications, patent disclosures, derivative patents and all related continuations, continuations-in-part, divisionals, reissues, re-examinations, substitutions and extensions thereof.

(179) “ Performance Share Units ” shall mean a unit granted by RRD pursuant to one of the RRD Equity Plans representing a general unsecured promise by RRD to deliver a share of RRD Common Stock, subject to performance-based vesting.

(180) “ Person ” shall mean 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.

(181) “ PHI ” shall have the meaning set forth in Section 6.10(d) .

 

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(182) “ Plan of Reorganization ” shall have the meaning set forth in the recitals hereto.

(183) “ Policies ” shall mean insurance policies and insurance Contracts of any kind (other than life and benefits policies or Contracts), including primary, excess and umbrella policies, comprehensive general liability policies, director and officer liability, fiduciary liability, automobile, aircraft, marine, property and casualty, workers’ compensation and employee dishonesty insurance policies, bonds and self-insurance and captive insurance company arrangements, together with the rights, benefits and privileges thereunder.

(184) “ Post-Distribution Donnelley Financial Stock Price ” shall mean the volume weighted average price during the regular trading session of Donnelley Financial Common Stock (NYSE – DFIN) for the ten trading days immediately following the Donnelley Financial Distribution Date.

(185) “ Post-Distribution Donnelley Financial Cash Transfer ” shall have the meaning set forth in Section 3.4(h) .

(186) “ Post-Distribution LSC Stock Price ” shall mean the volume weighted average price during the regular trading session of Donnelley Financial Common Stock (NYSE – LKSD) for the ten trading days immediately following the LSC Distribution Date.

(187) “ Post-Distribution LSC Cash Transfer ” shall have the meaning set forth in Section 3.4(g) .

(188) “ Post-Distribution RRD Stock Price ” shall mean the volume weighted average price during the regular trading session of RRD Common Stock (NYSE – RRD) for the ten trading days immediately following the Relevant Time, provided, however, if the RRD Reverse Stock Split has occurred, the Post-Distribution RRD Stock Price shall be determined as above, but shall be divided by three (3) to reflect the RRD Reverse Stock Split.

(189) “ Pre-Distribution Donnelley Financial Target Cash Balance ” shall have the meaning set forth in Section 3.4(b) .

(190) “ Pre-Distribution LSC Target Cash Balance ” shall have the meaning set forth in Section 3.4(a) .

(191) “ Prime Rate ” shall mean the rate per annum publicly announced by Citibank, N.A. (or successor thereto) from time to time as its prime rate in effect at its principal office in New York City. For purposes of this Agreement, any change in the Prime Rate shall be effective on the date such change in the Prime Rate is publicly announced as effective.

(192) “ Professional Tail Policy ” shall have the meaning set forth in Section 11.2(c) .

 

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(193) “Record Date ” shall mean such date as may be determined by the RRD Board as the record date for the applicable Distribution.

(194) “ Records ” shall mean any Contracts, documents, books, records or files whether written or electronic.

(195) “ Relevant Time ” shall mean 12:01 a.m., Eastern Time as between (i) RRD and LSC, on the LSC Distribution Date, (ii) RRD and Donnelley Financial, on the Donnelley Financial Distribution Date and (iii) LSC and Donnelley Financial, on the earlier to occur of the LSC Distribution Date and the Donnelley Financial Distribution Date.

(196) “ Restricted Period ” shall mean for each RRD Employee, LSC Employee and Donnelley Financial Employee who is subject to any Restrictive Covenants prior to the applicable Relevant Time, the number of months following such employee’s termination of employment during which such Restrictive Covenants apply; provided, however, that if an employee is subject to different Restrictive Covenants that apply for different lengths of time following such employee’s termination of employment, the Restricted Period shall equal the shortest such period during which any such Restrictive Covenant applies.

(197) “ Restricted Person ” shall have the meaning set forth in Section 5.1(a) .

(198) “ Restrictive Covenants ” shall have the meaning set forth in Section 6.9(h)(ii) .

(199) “ RRD ” shall have the meaning set forth in the preamble.

(200) “ RRD Accounts ” shall have the meaning set forth in Section 2.11(a) .

(201) “ RRD Balance Sheet ” shall mean the combined balance sheet of the RRD Group prepared to give effect to the transactions contemplated hereby, including the notes thereto, as of June 30, 2016, attached hereto as Schedule 1.1(201) ; provided , that to the extent any Assets or Liabilities are Transferred by any Party or any member of its Group to RRD or any member of the RRD Group or vice versa in connection with the Plan of Reorganization and prior to the Final Separation Date, such assets and/or liabilities shall be deemed to be included or excluded from the RRD Balance Sheet, as the case may be.

(202) “ RRD Board ” shall have the meaning set forth in the recitals hereto.

(203) “ RRD Common Stock ” shall mean the issued and outstanding shares of RRD common stock, par value $0.01 per share, of RRD.

(204) “ RRD Contingent Asset ” shall mean (i) any of the Assets set forth on Schedule 1.1(204) , (ii) any and all Assets relating to, arising out of or resulting from the business or operations of RRD or any of its predecessor companies or businesses or any of its Affiliates, Subsidiaries and divisions other than any claim or right that is specified as a LSC Asset, Donnelley Financial Asset and/or RRD Retained Asset (or otherwise specifically allocated to any Party or Parties under this Agreement or any Ancillary

 

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Agreement) (against any Person other than any member of the RRD Group, LSC Group or Donnelley Financial Group), if and to the extent such claim or other right has accrued as of the Determination Date (or relates to any events or circumstances prior to the Determination Date), or if such claim or other right were known and fixed prior to the Determination Date, would have been reflected on the consolidated balance sheet of RRD prior to the Determination Date or (iii) any Assets relating to, arising from or involving a general corporate matter of RRD, including any Assets to the extent relating to, arising out of or resulting from any terminated or divested Business Entity, business or operation formerly owned or managed by RRD or any of its Affiliates prior to the Determination Date (other than any Asset to the extent relating to any terminated Business Entity, business or operation formerly and primarily owned and managed by or associated with any member of the LSC Group, the Donnelley Financial Group or the RRD Group, as the case may be, or any of their respective Businesses), and, in each case of subclauses (i), (ii) and (iii), which is not otherwise specified to be a LSC Asset, Donnelley Financial Asset or RRD Retained Asset. An Asset meeting the foregoing definition shall be considered a RRD Contingent Asset regardless of whether there was any Action pending, threatened or contemplated as of the Determination Date with respect thereto. For purposes of the foregoing, an Asset shall be deemed to have accrued as of the Determination Date if all the elements of the claim necessary for its assertion shall have occurred on or prior to the Determination Date, such that the Asset were it asserted in an Action on or prior to the Determination Date, would not be dismissed by a court on ripeness or similar grounds.

Notwithstanding anything to the contrary in this definition of RRD Contingent Assets, RRD Contingent Assets shall not include any Assets related to or attributable to or arising in connection with Taxes or Tax Returns that are expressly governed by a Tax Disaffiliation Agreement.

The term “Contingent” as used in the definition of “RRD Contingent Asset” is a term of convenience only and shall not otherwise limit the type or manner of Assets that would otherwise be within the provisions of clauses (i) – (iii) of this definition.

(205) “ RRD Deferred Compensation Plans ” shall mean the nonqualified deferred compensation plans established or retained by the RRD Group as of the Relevant Time and listed in Schedule 6.5(c) , which shall include the Legacy RRD Deferred Compensation Plans to the extent the Liabilities therefor are not assumed by LSC and Donnelley Financial under the LSC Deferred Compensation Plans and the Donnelley Financial Deferred Compensation Plans, as applicable, as of the applicable Relevant Time.

(206) “ RRD Director Stock Unit ” shall mean a unit granted by RRD pursuant to one of the RRD Equity Plans representing a general unsecured promise by RRD to deliver a share of RRD Common Stock.

(207) “ RRD Employee ” shall mean an active employee or an employee on vacation or on approved leave of absence (including maternity, paternity, parental, family, short-term or long-term disability leave, qualified military service and other approved leaves) who immediately following the Final Separation Date is employed by RRD or any member of the RRD Group. RRD Employee shall also include any employee of an entity in the RRD Group who, as of the Final Separation Date, is receiving short-term or long-term disability benefits or workers’ compensation benefits.

 

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(208) “ RRD Employment Practices Policy ” shall have the meaning set forth in Section 11.2(d) .

(209) “ RRD Equity Award Exchange Ratio ” shall mean a fraction, (i) the numerator of which is the Post-Distribution RRD Stock Price and (ii) the denominator of which is the sum of (A) the Post-Distribution RRD Stock Price (B) the Post-Distribution LSC Stock Price multiplied by the LSC Spin Ratio, and (C) the Post-Distribution Donnelley Financial Stock Price multiplied by the Donnelley Financial Spin Ratio.

(210) “ RRD Equity Plans ” shall mean, collectively, the equity-based plans set forth on Schedule 1.1(209) .

(211) “ RRD ESPPs ” shall have the meaning set forth in Section 6.4 .

(212) “ RRD Group ” shall mean RRD and each Person (other than any member of the LSC Group or the Donnelley Financial Group) that is a direct or indirect Subsidiary of RRD immediately after the Effective Time, and each Business Entity that becomes a Subsidiary of RRD after the Effective Time, which shall include those entities identified as such on Schedule 1.1(212) .

(213) “ RRD Indemnitees ” shall mean RRD, each member of the RRD Group, each of their respective directors, officers, employees and agents and each of the heirs, executors, successors and assigns of any of the foregoing, except the LSC Indemnitees and the Donnelley Financial Indemnitees.

(214) [RESERVED]

(215) “ RRD Option ” shall mean an option to purchase shares of RRD Common Stock granted pursuant to one of the RRD Equity Plans.

(216) “ RRD Portion ” shall have the meaning set forth in Section 2.2(b) .

(217) “ RRD Master Trust ” means the Retirement Benefit Trust of RRD.

(218) “ RRD Misdirected Payment Process Policy ” shall have the meaning set forth in Section 2.7(a) .

(219) “ RRD Performance Share Unit ” shall mean a unit granted by RRD pursuant to one of the RRD Equity Plans representing a general unsecured promise by RRD to deliver a share of RRD Common Stock and which is subject to certain performance measures.

(220) “ RRD Receivables ” shall have the meaning set forth in Section 2.7(a) .

 

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(221) “ RRD Restricted Stock Unit ” shall mean a unit granted by RRD pursuant to one of the RRD Equity Plans representing a general unsecured promise by RRD to deliver a share of RRD Common Stock.

(222) “ RRD Retained Assets ” shall mean:

(i) the ownership interests in those Business Entities that are included in the definition of RRD Group, including those Business Entities set forth on Schedule 1.1(212) in the definition of RRD Group;

(ii) the offices, manufacturing facilities and other owned real property listed on Schedule 1.1 (222) (ii) and the leases governing the leased real property (or subleases governing the subleased real property) listed on Schedule 1.1 (222) (ii);

(iii) all RRD Retained Contracts, any rights or claims arising thereunder, and any other rights or claims or contingent rights or claims primarily relating to or arising from any RRD Retained Asset or the RRD Retained Business;

(iv) any and all Assets (other than cash) reflected on the RRD Balance Sheet or the accounting records supporting such balance sheet and any Assets acquired by or for RRD or any member of the RRD Group subsequent to the date of such balance sheet which, had they been so acquired on or before such date and owned as of such date, would have been reflected on such balance sheet if prepared on a consistent basis, subject to any dispositions of any of such Assets subsequent to the date of such balance sheet;

(v) subject to Article XI , any rights of any member of the RRD Group under any Policies, including any rights thereunder;

(vi) subject to Section 12.2 , any and all Assets owned or held immediately prior to the applicable Relevant Time by RRD or any of its Subsidiaries (including, prior to the Relevant Time, LSC or any of its Subsidiaries or Donnelley Financial or any of its Subsidiaries) primarily relating to or used in the RRD Retained Business. The intention of this clause (vi) is only to rectify any inadvertent omission of Transfer of any Asset that, had the Parties given specific consideration to such Asset as of the date hereof, would have otherwise been classified as a RRD Retained Asset. Subject to Section 12.2 , no Asset shall be deemed a RRD Retained Asset solely as a result of this clause (vi) unless a claim with respect thereto is made by RRD within the applicable time period(s) established by Section 2.6(d) ;

(vii) any and all Assets that are expressly contemplated by this Agreement or any Ancillary Agreement as Assets which are being retained by, or have been or are to be Transferred to, RRD or any other member of the RRD Group; and

(viii) any and all furnishings and office equipment and any other equipment located at a physical site or the portion thereof of which the ownership

 

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or leasehold interest is held by, being retained by or Transferred to, RRD; provided , that personal computers shall be Transferred to the Party who, following the Relevant Time, employs the applicable employee who, prior to the Relevant Time, used such personal computer.

Notwithstanding the foregoing, the RRD Retained Assets shall not include:

(x) any Assets that are expressly contemplated by this Agreement or any Ancillary Agreement (or the Schedules hereto or thereto) as Assets to be retained by or Transferred to any member of the LSC Group or Donnelley Financial Group, as the case may be; or

(y) the Assets set forth or described on Schedule 1.1(204) (in the definition of RRD Contingent Assets).

In the event of any inconsistency or conflict which may arise in the application or interpretation of any of the foregoing provisions, for the purpose of determining what is and is not a RRD Retained Asset, any item explicitly included on a Schedule referred to in this definition shall take priority over any provision of the text hereof including, for the avoidance of doubt, any interpretation of the definition of Donnelley Financial Assets or LSC Assets.

(223) “ RRD Retained Business ” shall mean:

(i) RRD’s current Variable Print segment, except for the office products reporting unit that will become part of LSC;

(ii) the logistics reporting unit within its current Strategic Services segment, except for the operations that will become part of LSC;

(iii) the sourcing and digital and creative solutions reporting units within its current Strategic Services segment, except for the operations that will become part of LSC;

(iv) its current International segment except for substantially all of the European reporting unit and certain Mexican operations that will become part of LSC;

(v) any other business conducted primarily through the use of the RRD Retained Assets prior to the Relevant Time; and

(vi) the businesses and operations of Business Entities acquired or established by or for RRD or any of its Subsidiaries in connection with the operation of the RRD Retained Business after the date of this Agreement.

(224) “ RRD Retained Claim ” shall mean any Claim that is retained by RRD under any Policy.

 

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(225) “ RRD Retained Contracts ” shall mean the following Contracts to which RRD or any of its Affiliates is a party or by which it or any of its Affiliates or any of their respective Assets is bound, whether or not in writing, except for any such Contract or part thereof (i) that is expressly contemplated not to be Transferred by any member of the LSC Group or the Donnelley Financial Group to RRD or (ii) that is expressly contemplated to be Transferred to (or remain with) any member of the LSC Group or the Donnelley Financial Group, in each case, pursuant to any provision of this Agreement or any Ancillary Agreement:

(i) any Contract entered into in the name of, or expressly on behalf of, any division, business unit or member of the RRD Group;

(ii) any Contract that relates primarily to the RRD Retained Business;

(iii) any Contract representing capital or operating equipment lease obligations reflected on the RRD Balance Sheet;

(iv) any Contract, or part thereof, that is otherwise expressly contemplated pursuant to this Agreement (including pursuant to Section 2.2(c) ) or any of the Ancillary Agreements to be assigned to any member of the RRD Group; and

(v) any guarantee, indemnity, representation or warranty of or in favor of any member of the RRD Group.

(226) “ RRD Retained Defined Benefit Plans ” shall have the meaning set forth in Section 6.6(c)(i) .

(227) “ RRD Retained Defined Contribution Retirement Plans ” shall have the meaning set forth in Section 6.7(c)(ii) .

(228) “ RRD Retained Liabilities ” shall mean:

(i) any and all Liabilities that are expressly contemplated by this Agreement or any Ancillary Agreement (or the Schedules hereto or thereto, including Schedule 1.1(228)(iii) hereto) as Liabilities to remain with or be Assumed by any member of the RRD Group, and all obligations and Liabilities expressly Assumed by any member of the RRD Group under this Agreement or any of the Ancillary Agreements;

(ii) any and all Liabilities primarily relating to, arising out of or resulting from:

(A) the operation or conduct of the RRD Retained Business, as conducted at any time prior to, on or after the Effective Time (including any Liability relating to, arising out of or resulting from any act or failure to act by any director, officer, employee, agent or representative (whether or not such act or failure to act is or was within such Person’s authority));

 

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(B) the operation or conduct of any business conducted by any member of the RRD Group at any time after the Effective Time (including any Liability relating to, arising out of or resulting from any act or failure to act by any director, officer, employee, agent or representative (whether or not such act or failure to act is or was within such Person’s authority));

(C) any RRD Retained Assets, whether arising before, on or after the Effective Time; or

(D) Any Intellectual Property retained by or Transferred to RRD or any of its Subsidiaries pursuant to any of the Intellectual Property Agreements, in each case, whether arising before, on or after the Effective Time

(iii) any Liabilities to the extent relating to, arising out of or resulting from any terminated or divested Business Entity, business or operation (A) formerly and primarily related to the RRD Retained Business or (B) set forth on Schedule 1.1(228)(iii) ;

(iv) any Liabilities relating to:

(A) employees of RRD who do not become either a LSC Employee or Donnelley Financial Employee, in each case, immediately following the Relevant Time and

(B) Former RRD Employees;

(v) any Liabilities relating to, arising out of or resulting from any indebtedness (including debt securities and asset-backed debt) of any member of the RRD Group or any indebtedness (regardless of the issuer of such indebtedness) secured exclusively by any of the RRD Retained Assets (including any Liabilities relating to, arising out of or resulting from a claim by a holder of any such indebtedness, in its capacity as such);and

(vi) all Liabilities reflected as Liabilities or obligations on the RRD Balance Sheet or the accounting records supporting such balance sheet, and all Liabilities arising or Assumed after the date of such balance sheet which, had they arisen or been Assumed on or before such date and been retained as of such date, would have been reflected on such balance sheet if prepared on a consistent basis, subject to any discharge of such Liabilities subsequent to the date of the RRD Balance Sheet.

Notwithstanding anything to the contrary herein, the RRD Retained Liabilities shall not include:

(x) any Liabilities that are expressly contemplated by this Agreement or any Ancillary Agreement (or the Schedules hereto or thereto) as Liabilities to be retained or Assumed by any member of the LSC Group or the Donnelley Financial Group or for which any such Party is liable;

 

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(y) any Contracts expressly Assumed by any member of the LSC Group or the Donnelley Financial Group under this Agreement or any of the Ancillary Agreements; and

(z) any Liabilities expressly discharged pursuant to Section 2.4 of this Agreement.

In the event of any inconsistency or conflict which may arise in the application or interpretation of any of the foregoing provisions, for the purpose of determining what is and is not a RRD Liability, any item explicitly included on a Schedule referred to in this definition shall take priority over any provision of the text hereof including, for the avoidance of doubt, any interpretation of the definition of Donnelley Financial Assets or LSC Assets.

For the sake of clarity, no Liability shall be a RRD Retained Liability solely as a result of RRD being named as party to or in any Action due to RRD’s status as the remaining and legacy Business Entity, or as a result of its status as the direct or indirect stockholder of any Business Entity (unless such entity is (A) a member of the RRD Group and (B) such Liability primarily relates to the RRD Retained Business or otherwise fits within one of the categories of RRD Retained Liabilities in clauses (i) through (vii) above).

(229) “ RRD Retained Plans ” shall mean the employee benefit plans, policies, programs, payroll practices, and arrangements retained by the RRD Group under this Agreement for the benefit of RRD Employees and, where applicable, Former RRD Employees.

(230) “ RRD Reverse Stock Split ” shall mean the reverse stock split to be effected by RRD following the Effective Time in which holders of RRD Common Stock will receive one (1) share of RRD Common Stock for every three (3) shares of RRD Common Stock held at such time.

(231) “ RRD Retiree Medical Plan ” shall have the meaning set forth in Section 6.8 .

(232) “ RRD SERPs ” shall mean the nonqualified supplemental executive retirement plans established or retained by the RRD Group as of the Relevant Time and listed in Schedule 6.5(c) , which shall include the Legacy RRD SERPs to the extent the Liabilities therefor are not assumed by LSC and Donnelley Financial under the LSC SERPs and the Donnelley Financial SERPs, as applicable, as of the applicable Relevant Time.

(233) “ Rules ” shall have the meaning set forth in Section 10.3 .

(234) “ SEC ” shall mean the United States Securities and Exchange Commission.

 

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(235) “ Securities Act ” shall mean the Securities Act of 1933, as amended, and the rules and regulations of the SEC thereunder, all as the same shall be in effect at the time that reference is made thereto.

(236) “ Security Interest ” shall mean any mortgage, security interest, pledge, lien, charge, claim, option, right to acquire, voting or other restriction, right-of-way, covenant, condition, easement, encroachment, restriction on transfer, or other encumbrance of any nature whatsoever, excluding restrictions on transfer under securities Laws.

(237) “ Separation Expenses ” shall have the meaning set forth in Section 12.5 .

(238) “ Shared Contract ” shall mean any Contract (a) listed on Schedule 1.1(238)(a) or that relates to a customer or supplier listed on Schedule 1.1(238)(a) , any Contract of any member of either Group (i) that relates to the Business of two or more Parties and (ii) either (A) that the Parties specifically intended to amend, divide, modify, partially assign or replicate (in whole or in part) the respective rights and obligations under and in respect of such Contract prior to the Relevant Time or (B) the existence of which either Party discovers prior to the date that is eighteen (18) months after the Relevant Time and had the Parties given specific consideration to such Contract they would have amended, divided, modified, partially assigned or replicated (in whole or in part) the respective rights and obligations under and in respect of such Contract. For the avoidance of doubt, any Contract relating to a Commercial Arrangement shall not be considered a Shared Contract for the any purpose under this Agreement.

(239) “ Shared Policies ” shall mean all Policies, current or past, which are owned or maintained by or on behalf of RRD or any of its Subsidiaries which relate to one or more of the RRD Retained Business, the LSC Business or the Donnelley Financial Business.

(240) “ Software ” shall mean all computer programs (whether in source code, object code, or other form), algorithms, databases, compilations and data, and technology supporting the foregoing, and all documentation, including flowcharts and other logic and design diagrams, technical, functional and other specifications, and user and training materials related to any of the foregoing.

(241) “ Spinco Transition Services Agreement ” shall mean the Transition Services Agreement, dated as of the date hereof, by and between Donnelley Financial and LSC.

(242) “ Subsidiary ” shall mean, with respect to any Person, any corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization or other entity in which such Person, directly or indirectly (i) beneficially owns more than fifty percent (50%) of (A) the total combined voting power of all classes of voting securities of such Person, (B) the total combined equity economic interest thereof or (C) the capital or profits thereof, in the case of a partnership, or (ii) otherwise has the power to elect or direct the election of more than fifty percent (50%) of the members of the governing body of such entity or otherwise has control over such entity (e.g., as the managing partner of a partnership).

 

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

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

(245) “ Tax Disaffiliation Agreements ” shall mean the Donnelley Financial Tax Disaffiliation Agreement and the LSC Tax Disaffiliation Agreement.

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

(247) “ Third Party Claim ” shall have the meaning set forth in Section 8.5(b) .

(248) “Third Party Claim Notice ” shall have the meaning set forth in Section 8.5(b) .

(249) “ Third Party Proceeds ” shall have the meaning set forth in Section 8.9(a) .

(250) “ Trademarks ” shall mean all US and foreign trademarks, service marks, corporate names, trade names, domain names, logos, slogans, designs, trade dress and other similar designations of source or origin, together with the goodwill symbolized by any of the foregoing.

(251) “ Transfer ” shall have the meaning set forth in Section 2.2(a)(i) .

(252) “ Transition Services Agreement ” shall mean the LSC Transition Services Agreement, the Donnelley Financial Transition Services Agreement and the Spinco Transition Services Agreement.

(253) “ Undisputed Amount ” shall have the meaning set forth in Section 3.4(i) .

(254) “ Wear Away Period ” shall mean, with respect to each individual RRD Employee, LSC Employee or Donnelley Financial Employee listed on Schedule 6.9(h)(ii) , the period beginning at the applicable Relevant Time and ending the number of months after the applicable Relevant Time equal to the number of months of such employee’s Restricted Period.

 

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Section 1.2 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 “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.

Section 1.3 Effective Time; Suspension .

(a) This Agreement shall be effective as of the Effective Time.

(b) Notwithstanding Section 1.3(a) above, as between any of the Parties that are Affiliates, the provisions of, and the obligations under, this Agreement shall be suspended as between such Parties until the applicable Relevant Time, other than for Section 2.1 , Section 2.2 , Section 2.3 and Section 2.8 , each of which will be effective as of the Effective Time.

ARTICLE II

THE SEPARATION

Section 2.1 General . Subject to the terms and conditions of this Agreement, in accordance with the Plan of Reorganization set forth on Schedule 2.1 and to the extent not previously effected pursuant to the steps set forth in the Plan of Reorganization, the Parties shall, and shall cause their respective Affiliates to, effect the transactions contemplated by the Plan of Reorganization. It is the intent of the Parties that after consummation of the transactions contemplated thereby RRD shall be reorganized, to the extent necessary, such that following the consummation of such reorganization, subject to Section 2.6 , (i) all of RRD’s and its Subsidiaries’ right, title and interest in and to the LSC Assets will be owned or held by a member of the LSC Group, the LSC Business will be conducted by the members of the LSC Group and all of the LSC Liabilities will be Assumed directly or indirectly by (or remain with) a member of the LSC Group, (ii) all of RRD’s and its Subsidiaries’ right, title and interest in and to the Donnelley Financial Assets will be owned or held by a member of the Donnelley Financial Group, the Donnelley Financial Business will be conducted by the members of the Donnelley Financial Group and all of the Donnelley Financial Liabilities will be Assumed directly or indirectly by (or remain with) a member of the Donnelley Financial Group, and (iii) all of RRD’s and its Subsidiaries’ right, title and interest in and to the RRD Retained Assets will be owned or held by a member of the RRD Group, the RRD Retained Business will be conducted by the members of the RRD Group and all of the RRD Retained Liabilities will be Assumed directly or indirectly by (or remain with) a member of the RRD Group.

 

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Section 2.2 Transfer of Assets .

(a) Subject to the terms and conditions of this Agreement, including those set forth in Section 12.2 , on or prior to the Relevant Time and to the extent not already completed (and it being understood that some of such Transfers may occur following the date hereof and prior to the applicable Relevant Time):

(i) RRD shall, on behalf of itself and its Subsidiaries, as applicable, transfer, contribute, assign and convey or cause to be transferred, contributed, assigned and conveyed (“ Transfer ”) to (A) LSC, or another member of the LSC Group, all of its and its Subsidiaries’ right, title and interest in and to the LSC Assets and (B) Donnelley Financial, or another member of the Donnelley Financial Group, all of its and its Subsidiaries’ right, title and interest in and to the Donnelley Financial Assets;

(ii) LSC shall, on behalf of itself and its Subsidiaries, as applicable, Transfer to (A) RRD, or another member of the RRD Group, all of its and its Subsidiaries’ right, title and interest in and to the RRD Retained Assets, and (B) Donnelley Financial, or another member of the Donnelley Financial Group, all of its and its Subsidiaries’ right, title and interest in and to the Donnelley Financial Assets; and

(iii) Donnelley Financial shall, on behalf of itself and its Subsidiaries, as applicable, Transfer to (A) RRD, or another member of the RRD Group, all of its and its Subsidiaries’ right, title and interest in and to the RRD Retained Assets, and (B) LSC, or another member of the LSC Group, all of its and its Subsidiaries’ right, title and interest in and to the LSC Assets.

(b) Treatment of Shared Contracts . Without limiting the generality of the obligations set forth in Section 2.2(a), the parties shall, and shall cause their respective Subsidiaries to, use their respective reasonable best efforts to work together (and, if necessary and desirable, to work with the third party to such Shared Contract) in an effort to divide, partially assign, modify and/or replicate (in whole or in part) the respective rights and obligations under and in respect of any Shared Contract, such that (a) a member of the Donnelley Financial Group is the beneficiary of the rights and is responsible for the obligations related to that portion of such Shared Contract relating to the Donnelley Financial Business (the “ Donnelley Financial Portion ”), which rights shall be Donnelley Financial Assets and which obligations shall be Donnelley Financial Liabilities, (b) a member of the LSC Group is the beneficiary of the rights and is responsible for the obligations related to such Shared Contract relating to the LSC Business (the “ LSC Portion ”), which rights shall be LSC Assets and which obligations shall be LSC Liabilities and (c) a member of the RRD Group is the beneficiary of the rights and is responsible for the obligations related to such Shared Contract relating to the RRD Business (the “ RRD Portion ”), which rights shall be RRD Retained Assets and which obligations shall be RRD

 

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Liabilities. If the Parties, or their respective Subsidiaries, as applicable, do not or are not able to enter into an arrangement to formally divide, partially assign, modify and/or replicate such Shared Contract as contemplated by the previous sentence, then the Parties shall, and shall cause their respective Subsidiaries to, cooperate in any lawful arrangement to provide that a member of the LSC Group shall receive the interest in the benefits and obligations of the LSC Portion under such Shared Contract, a member of the Donnelley Financial Group shall receive the interest in the benefits and obligations of the Donnelley Financial Portion under such Shared Contract and a member of the RRD Group shall receive the interest in the benefits and obligations of the RRD Portion under such Shared Contract; provided, however, that no Party shall be required to expend any money or take any action in furtherance of this Section 2.2(b) that would require the expenditure of money (other than any payment obligations under the applicable Shared Contract).

(c) Consents . The Parties shall use their reasonable best efforts to obtain the required licenses, permits and authorizations issued by any Governmental Entity or parts thereof as contemplated by this Agreement.

Section 2.3 Assumption and Satisfaction of Liabilities . Except as otherwise specifically set forth in any Ancillary Agreement, from and after the Relevant Time, (a) RRD shall, or shall cause a member of the RRD Group to, accept, assume (or, as applicable, retain) and perform, discharge and fulfill, in accordance with their respective terms (“ Assume ”), all of the RRD Retained Liabilities, (b) LSC shall, or shall cause a member of the LSC Group to, Assume all the LSC Liabilities and (c) Donnelley Financial shall, or shall cause a member of the Donnelley Financial Group to, Assume all the Donnelley Financial Liabilities, in each case, regardless of (i) when or where such Liabilities arose or arise, (ii) whether the facts upon which they are based occurred prior to, on or subsequent to the applicable Relevant Time, (iii) where or against whom such Liabilities are asserted or determined, or (iv) whether arising from or alleged to arise from negligence, recklessness, violation of Law, fraud or misrepresentation by any member of the RRD Group, the LSC Group or the Donnelley Financial Group, as the case may be, or any of their past or present respective directors, officers, employees, agents, Subsidiaries or Affiliates.

Section 2.4 Intercompany Accounts .

(a) Except as set forth in Section 2.4(b) , RRD (and/or any member of the RRD Group), LSC ((and/or any member of the LSC Group), and Donnelley Financial (and/or any member of the Donnelley Financial Group), hereby terminate, effective as of the Effective Time, any and all Contracts and intercompany Liabilities, whether or not in writing, between or among RRD (and/or any member of the RRD Group), LSC (and/or any member of the LSC Group), and Donnelley Financial (and/or any member of the Donnelley Financial Group), that are effective or outstanding as of immediately prior to the Effective Time. No such terminated Contract (including any provision thereof that purports to survive termination) or intercompany Liability shall be of any further force or effect from and after the Effective Time. Each Party shall, at the reasonable request of any other Party, take, or cause to be taken, such other actions as may be necessary to effect the foregoing.

 

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(b) The provisions of Section 2.4(a) shall not apply to any of the following Contracts (or to any of the provisions thereof):

(i) this Agreement and the other Ancillary Agreements (and each other Contract expressly contemplated by this Agreement or any other Ancillary Agreements to be entered into or continued by the Parties or any of the members of their respective Groups after the Effective Time);

(ii) any Contracts to which any Person, other than the Parties and their respective wholly owned Subsidiaries, is a Party (it being understood that (A) directors’ qualifying shares or similar interests will be disregarded for purposes of determining whether a Subsidiary is wholly owned and (B) to the extent that the rights and obligations of the Parties and the members of their respective Groups under any such Contracts constitute RRD Retained Assets, LSC Assets or Donnelley Financial Assets or RRD Retained Liabilities, LSC Liabilities or Donnelley Financial Liabilities, they shall be assigned pursuant to Section 2.1 );

(iii) any Shared Contracts;

(iv) any Commercial Arrangements; and

(v) any intercompany trade payables due or trade receivables owed solely between RRD and/or any member of the RRD Group, LSC and/or any member of the LSC Group and Donnelley Financial and/or any member of the Donnelley Financial Group that are effective or outstanding as of immediately prior to the applicable Relevant Time, which amounts shall be settled (and net amounts paid) as of the applicable Relevant Time or as promptly as practicable thereafter (with all invoices for such payables due to be delivered by the Parties within five (5) Business Days following the applicable Relevant Time and to be paid, in any event, within thirty (30) days of the receipt of such invoice) (except for any such intercompany payables or receivables arising pursuant to any Ancillary Agreements, which shall instead be settled in accordance with the terms of such Ancillary Agreements).

Section 2.5 Limitation of Liability .

(a) Except as provided in Section 3.4 or in the case of any knowing violation of Law, fraud or material misrepresentation, no Party shall have any Liability to any other Party in the event that any Information exchanged or provided pursuant to this Agreement which is an estimate or forecast, or which is based on an estimate or forecast, is found to be inaccurate.

(b) No Party or any Subsidiary thereof shall be liable to any other Party or any Subsidiary of any other Party based upon, arising out of or resulting from any Contract, arrangement, course of dealing or understanding existing on or prior to the applicable Relevant Time (other than this Agreement, any Ancillary Agreement, any Commercial Arrangements, any Contract entered into in connection herewith or in order to consummate the transactions contemplated hereby or thereby or by the Plan of Reorganization).

 

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Section 2.6 Transfers Not Effected on or Prior to the Effective Time; Transfers Deemed Effective as of the Effective Time .

(a) Subject to Section 12.2 , to the extent that any Transfers contemplated by this Article II shall not have been consummated on or prior to the Relevant Time, the Parties shall use reasonable best efforts to effect such Transfers as promptly following the Relevant Time as shall be practicable. Nothing herein shall be deemed to require the Transfer of any Assets or the Assumption of any Liabilities which by their terms or operation of Law cannot be Transferred; provided , however , that the Parties and their respective Subsidiaries shall cooperate and use reasonable best efforts to seek to obtain any necessary Governmental Approvals for the Transfer of all Assets and Assumption of all Liabilities contemplated to be Transferred and Assumed pursuant to this Article II . In the event that any such Transfer of Assets or Assumption of Liabilities has not been consummated, from and after the Relevant Time (i) the Party retaining such Asset shall thereafter hold such Asset for the use and benefit of the Party entitled thereto (at the expense of the Person entitled thereto) and (ii) the Party intended to Assume such Liability shall, or shall cause the applicable member of its Group to, pay or reimburse the Party retaining such Liability for all amounts paid or incurred in connection with the retention of such Liability. In addition, the Party retaining such Asset or Liability shall, insofar as reasonably possible and to the extent permitted by applicable Law, treat such Asset or Liability in the ordinary course of business and take such other actions as may be reasonably requested by the Party to which such Asset is to be Transferred or by the Party that is to Assume such Liability in order to place such Party, insofar as reasonably possible, in the same position as if such Asset or Liability had been Transferred or Assumed as contemplated hereby and so that all the benefits and burdens relating to such Asset or Liability, including possession, use, risk of loss, potential for gain, and dominion, control and command over such Asset or Liability, are to inure from and after the Relevant Time to the member or members of the RRD Group, the LSC Group or the Donnelley Financial Group entitled to the receipt of such Asset or required to Assume such Liability. In furtherance of the foregoing, subject to Section 12.2 , the Parties agree that, as of the Relevant Time, each Party shall be deemed to have acquired complete and sole beneficial ownership over all of the Assets, together with all rights, powers and privileges incident thereto, and shall be deemed to have Assumed in accordance with the terms of this Agreement all of the Liabilities, and all duties, obligations and responsibilities incident thereto, which such Party is entitled to acquire or required to Assume pursuant to the terms of this Agreement.

(b) If and when the Governmental Approvals and/or conditions, the absence or non-satisfaction of which caused the deferral of Transfer of any Asset or deferral of the Assumption of any Liability pursuant to Section 2.6(a) , are obtained or satisfied, the Transfer, assignment, Assumption or novation of the applicable Asset or Liability shall be effected in accordance with and subject to the terms of this Agreement and/or the applicable Ancillary Agreement.

 

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(c) The Party retaining any Asset or Liability due to the deferral of the Transfer of such Asset or the deferral of the Assumption of such Liability pursuant to Section 2.6(a) or otherwise shall not be obligated, in connection with the foregoing, to expend any money unless the necessary funds are advanced, assumed, or agreed in advance to be reimbursed by the Party entitled to such Asset or the Person intended to be subject to such Liability, other than reasonable attorneys’ fees and recording or similar fees, all of which shall be promptly reimbursed by the Party entitled to such Asset or the Person intended to be subject to such Liability.

(d) Subject to Section 12.2 , on and prior to the eighteen (18) month anniversary following the applicable Relevant Time, if any Party owns any Asset, that, although not Transferred pursuant to this Agreement, is agreed by such Party and the other applicable Party in their good faith judgment to be an Asset that more properly belongs to the other Party or a Subsidiary of the other Party, or an Asset that such other Party or Subsidiary was intended to have the right to continue to use (other than (for the avoidance of doubt), as between any two Parties, for any Asset acquired from an unaffiliated third party by a Party or member of such Party’s Group following the applicable Relevant Time), then the Party owning such Asset shall, as applicable (i) Transfer any such Asset to the Party identified as the appropriate transferee and following such Transfer, such Asset shall be a LSC Asset, Donnelley Financial Asset or RRD Retained Asset, as the case may be, or (ii) grant such mutually agreeable rights with respect to such Asset to permit such continued use, subject to, and consistent with this Agreement, including with respect to Assumption of associated Liabilities, in all events, subject to the relevant Parties’ agreement (I) as to the most cost efficient means of effecting such Transfer or grant of rights and (II) to share any incremental costs arising as a result of such Transfer.

(e) After the Relevant Time, each Party may receive mail, packages and other communications properly belonging to another Party. Accordingly, at all times after the Relevant Time, each Party authorizes the other applicable Party to receive and open all mail, packages and other communications received by such Party, and to the extent that they do not relate to the business of the receiving Party, the receiving Party shall promptly deliver such mail, packages or other communications (or, in case the same relate to both businesses, copies thereof) to the other Party as provided for in Section 12.6 . The provisions of this Section 2.6(e) are not intended to, and shall not, be deemed to constitute an authorization by any Party to permit the other to accept service of process on its behalf and no Party is or shall be deemed to be the agent of any other Party for service of process purposes.

(f) With respect to Assets and Liabilities described in Section 2.6(a) , each of RRD, LSC and Donnelley Financial shall, and shall cause the members of its respective Group to, (i) treat for all income Tax purposes (A) the deferred Assets as assets having been Transferred to and owned by the Party entitled to such Assets not later than the applicable Relevant Time and (B) the deferred Liabilities as liabilities having been Assumed and owned by the Person intended to be subject to such Liabilities not later than the applicable Relevant Time, and (ii) neither report nor take any income Tax position (on a Tax Return or otherwise) inconsistent with such treatment (unless required by a change in applicable Tax Law or good faith resolution of a Tax Contest relating to income Taxes).

 

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Section 2.7 Misdirected Customer Payments and Deductions .

(a) Subject to Schedule 2.7(a) , Schedule 2.7(b) and Schedule 2.7(c) , for so long as Cash Application and Credit Card Processing transition services are in effect between the applicable Parties pursuant to a Transition Services Agreement, on each Business Day during such period: (i) RRD shall notify LSC or Donnelley Financial of (A) the amount of customer payments that relate to accounts receivable of any member of the LSC Group or Donnelley Financial Group (“ LSC Receivables ” and “ Donnelley Financial Receivables ”, respectively) received by any member of the RRD Group (such payments, “ Misdirected LSC Payments ” and “ Misdirected Donnelley Financial Payments ,” respectively) in each case, in accordance with the RRD Misdirected Payment Process Policy set forth in Schedule 2.7(a) (the “ RRD Misdirected Payment Process Policy ”) and (B) the amount of any customer deductions that relate to LSC Receivables or Donnelley Financial Receivables made against payments owed to any member of the RRD Group (such deductions, “ Misdirected LSC Deductions ” and “ Misdirected Donnelley Financial Deductions ”, respectively) in each case, in accordance with the RRD Misdirected Payment Process Policy set forth in Schedule 2.7(a) , (ii) LSC shall notify RRD or Donnelley Financial of (A) the amount of customer payments that relate to accounts receivable of any member of the RRD Group (“ RRD Receivables ”) or Donnelley Financial Receivables received by any member of the LSC Group (such payments, “ Misdirected RRD Payments ”) or Misdirected Donnelley Financial Payments and in each case, in accordance with the LSC Misdirected Payment Process Policy set forth in Schedule 2.7(b) (the “ LSC Misdirected Payment Process Policy ”) and (B) the amount of any customer deductions that relate to RRD Receivables made against payments owed to any member of the LSC Group (such deductions, “ Misdirected RRD Deductions ”) in each case, in accordance with the LSC Misdirected Payment Process Policy, (iii) Donnelley Financial shall notify RRD or LSC of (A) the RRD Receivables or LSC Receivables received by any member of the Donnelley Financial Group, Misdirected RRD Payments or Misdirected Donnelley Financial Payments and (B) the amount of any customer deductions that relate to RRD Receivables or LSC Receivables made against payments owed to any member of the Donnelley Financial Group in each case, in accordance with the Donnelley Financial Misdirected Payment Process Policy set forth in Schedule 2.7(c) (the “ Donnelley Financial Misdirected Payment Process Policy ”) and (iv) each Party shall remit payment to the applicable Party in accordance with, and on the terms of, the applicable Misdirected Payment Process Policy. Each such notice shall include the name of each applicable customer and the amount of each applicable payment and deduction.

(b) As between RRD, LSC and Donnelley Financial (and the members of their respective Groups), except to the extent prohibited by applicable Law, all payments and reimbursements received after the Relevant Time by any Party (or member of its Group) to which another Party (or member of its Group) is entitled under this Agreement other than those covered by Section 2.7(a) , shall be held by such Party in trust for the use and benefit of the Party entitled thereto and, within fifteen (15) days of receipt by such Party of any such payment or reimbursement, such Party shall pay over, or shall cause the applicable member of its Group to pay over to the other Parties, the amount of such payment or reimbursement without right of setoff.

 

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Section 2.8 Conveyancing and Assumption Instruments . In connection with, and in furtherance of, the Transfers of Assets and Assumptions of Liabilities contemplated by this Agreement, subject to Section 12.2 , the Parties shall execute or cause to be executed, on or prior to the Relevant Time, by the appropriate entities, the Conveyancing and Assumption Instruments necessary to evidence the valid and effective Assumption by the applicable Party of its Assumed Liabilities and the valid Transfer to the applicable Party or member of such Party’s Group of all right, title and interest in and to its Assets, in substantially the form contemplated hereby for Transfers and Assumptions to be effected pursuant to Illinois Law, the Laws of the United States or the applicable Laws of one of the other states of the United States or pursuant to non-US Laws, as applicable, in such other form as the Parties shall reasonably agree, including the Transfer of real property with deeds as may be appropriate. The Transfer of capital stock shall be effected by means of executed stock powers and notation on the stock record books of the corporation or other legal entities involved, or by such other means as may be required in any non-US jurisdiction to Transfer title to stock and, only to the extent required by applicable Law, by notation on public registries.

Section 2.9 Novation of Liabilities .

(a) Each Party, at the request of another Party, shall use reasonable best efforts (i) to obtain, or to cause to be obtained, any Consent, substitution or amendment required to novate or assign all obligations under Contracts, licenses and other Liabilities for which a member of such Party’s Group and a member of another Party’s Group are prior to the Relevant Time jointly or severally liable and that do not constitute Liabilities of such other Party following the Relevant Time as provided in this Agreement (such other Party, the “ Other Party ”), or (ii) to obtain in writing the unconditional release of all parties to such arrangements (other than any member of the Group who Assumed or retained such Liability as set forth in this Agreement), so that, in any such case, the members of the applicable Group will be solely responsible for such Liabilities; provided , however , that no Party shall be obligated to pay any consideration therefor to any third party from whom any such Consent, substitution or amendment is requested (unless such Party is fully reimbursed by the requesting Party).

(b) If the Parties are unable to obtain, or to cause to be obtained, any such required Consent, release, substitution or amendment, the Other Party or a member of the Other Party’s Group shall continue to be bound by such Contract, license or other obligation that does not constitute a Liability of such Other Party and, unless not permitted by Law or the terms thereof, as agent or subcontractor for such Party, the Party or member of such Party’s Group who Assumed or retained such Liability as set forth in this Agreement (the “ Liable Party ”) shall, or shall cause a member of its Group to, pay, perform and discharge fully all the obligations or other Liabilities of such Other Party or member of the Other Party’s Group thereunder from and after the Effective Time. The Liable Party shall indemnify each Other Party and hold each of them harmless against any Liabilities (other than Liabilities of such Other Party) arising in connection therewith; provided , that the Liable Party shall have no obligation to indemnify any Other Party losses resulting from their gross negligence, willful misconduct or bad faith. The Other Party shall, without further consideration, promptly pay and remit, or cause to be promptly paid or remitted, to the Liable Party or any member of the Liable Party’s Group, any money, rights and other

 

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consideration received by it or any member of its Group in respect of such performance by the Liable Party (unless any such consideration is an Asset of such Other Party pursuant to this Agreement). If and when any such Consent, release, substitution or amendment shall be obtained or such agreement, lease, license or other rights or obligations shall otherwise become assignable or able to be novated, the Other Party shall promptly Transfer all rights and Liabilities thereunder of any member of such Other Party’s Group to the Liable Party, or to another member of the Liable Party’s Group, without payment of any further consideration and the Liable Party, or another member of the Liable Party’s Group, without the payment of any further consideration, shall Assume such rights and Liabilities.

Section 2.10 Guarantees .

(a) Except for those guarantees, surety bonds or other credit support instruments set forth on Schedule 2.10 where RRD shall remain as guarantor and the applicable Party shall indemnify and hold harmless the RRD Indemnitees for any Indemnifiable Loss arising from or relating thereto (in accordance with the provisions of Article VIII ) or as otherwise specified in any Ancillary Agreement, on or prior to the Effective Time or as soon as practicable thereafter, (i) RRD shall (with the reasonable cooperation of the relevant beneficiary) use its reasonable best efforts to have any member of the LSC Group and/or the Donnelley Financial Group removed as guarantor of or obligor for any RRD Retained Liability, including in respect of those guarantees set forth on Schedule 2.10 , to the extent that they relate to RRD Retained Liabilities, (ii) LSC shall (with the reasonable cooperation of the relevant beneficiary) use its reasonable best efforts to have any member of the RRD Group and/or the Donnelley Financial Group removed as guarantor of or obligor for any LSC Liability, including in respect of those guarantees set forth on Schedule 2.10 , to the extent that they relate to LSC Liabilities, and (iii) Donnelley Financial shall (with the reasonable cooperation of the relevant beneficiary) use its reasonable best efforts to have any member of the RRD Group and/or the LSC Group removed as guarantor of or obligor for any Donnelley Financial Liability, including in respect of those guarantees set forth on Schedule 2.10 , to the extent that they relate to Donnelley Financial Liabilities.

(b) On or prior to the Relevant Time, to the extent required to obtain a release from a guaranty, surety bond or other credit support instrument (a “ Guaranty Release ”):

(i) of any member of the RRD Group, LSC and/or Donnelley Financial shall, as applicable, execute a guaranty agreement in the form of the existing guaranty, surety bond or other credit support instrument, except to the extent that such existing guaranty, surety bond or other credit support instrument contains representations, covenants or other terms or provisions either (A) with which LSC or Donnelley Financial, as the case may be, would be reasonably unable to comply or (B) which would be reasonably expected to be breached;

(ii) of any member of the LSC Group, RRD and/or Donnelley Financial, shall, as applicable, execute a guaranty agreement in the form of the existing guaranty, surety bond or other credit support instrument, except to the extent that such existing guaranty, surety bond or other credit support instrument contains

 

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representations, covenants or other terms or provisions either (A) with which LSC or Donnelley Financial, as the case may be, would be reasonably unable to comply or (B) which would be reasonably expected to be breached; and

(iii) of any member of the Donnelley Financial Group, RRD and/or LSC shall, as applicable, execute a guaranty agreement in the form of the existing guaranty, surety bond or other credit support instrument, except to the extent that such existing guaranty, surety bond or other credit support instrument contains representations, covenants or other terms or provisions either (A) with which RRD or LSC, as the case may be, would be reasonably unable to comply or (B) which would be reasonably expected to be breached.

(c) If RRD, LSC or Donnelley Financial is unable to obtain, or to cause to be obtained, any such required removal as set forth in clauses (a) and (b) of this Section 2.10 , (i) the relevant beneficiary shall indemnify and hold harmless the guarantor or obligor for any Indemnifiable Loss arising from or relating thereto (in accordance with the provisions of Article VIII ) and shall or shall cause one of its Subsidiaries to pay, perform and discharge fully all the obligations or other Liabilities of such guarantor or obligor thereunder, and (ii) each of RRD, LSC and Donnelley Financial, on behalf of themselves and the members of their respective Groups, agree not to renew or extend the term of, increase its obligations under, or Transfer to a third party, any guarantee or other obligation for which another Party or member of such Party’s Group is or may be liable unless all obligations of such other Party and the members or member of such Party’s Group with respect thereto are thereupon terminated by documentation reasonably satisfactory in form and substance to such Party; provided , however , with respect to leases, in the event a Guaranty Release is not obtained and the relevant beneficiary wishes to extend the term of such guaranteed lease of such guaranteed lease, then such beneficiary shall have the option of extending the term if it provides such security as is reasonably satisfactory to the guarantor under such guaranteed lease.

Section 2.11 Bank Accounts .

(a) RRD, LSC and Donnelley Financial each agrees to take, or cause the respective members of their respective Groups to take, prior to the Relevant Time (or as soon as possible thereafter), all actions necessary to amend all Contracts governing each bank and brokerage account owned by LSC or Donnelley Financial or any other member of their respective Groups (collectively, the “ LSC Accounts ” and “ Donnelley Financial Accounts ”, respectively), including all LSC Accounts listed or described on Schedule 2.11(a)(i) and Donnelley Financial Accounts listed or described on Schedule 2.11(a)(ii) , so that such LSC Accounts or Donnelley Financial Accounts, if currently linked (whether by automatic withdrawal, automatic deposit or any other authorization to transfer funds from or to, hereinafter “linked”) to any bank or brokerage account owned by RRD or any other member of the RRD Group (collectively, the “ RRD Accounts ”), including all RRD Accounts listed or described on Schedule 2.11(a)(iii) , are de-linked from such RRD Accounts.

 

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(b) RRD, LSC and Donnelley Financial each agrees to take, or cause the respective members of their respective Groups to take, prior to the Relevant Time (or as soon as possible thereafter), all actions necessary to amend all Contracts governing the RRD Accounts so that such RRD Accounts, if currently linked to any LSC Accounts or Donnelley Financial Accounts, are de-linked from such LSC Accounts and Donnelley Financial Accounts.

(c) With respect to any outstanding checks issued by RRD, LSC or Donnelley Financial or any of their respective Subsidiaries prior to the Relevant Time, such outstanding checks shall be honored from and after the Relevant Time by the Person or Group owning the account on which the check is drawn, without limiting the ultimate allocation of Liability for such amounts under this Agreement or any other Ancillary Agreement.

Section 2.12 DISCLAIMER OF REPRESENTATIONS AND WARRANTIES . EACH OF RRD (ON BEHALF OF ITSELF AND EACH MEMBER OF THE RRD GROUP), LSC (ON BEHALF OF ITSELF AND EACH MEMBER OF THE LSC GROUP), AND DONNELLEY FINANCIAL (ON BEHALF OF ITSELF AND EACH MEMBER OF THE DONNELLEY FINANCIAL GROUP) UNDERSTANDS AND AGREES THAT, EXCEPT AS EXPRESSLY SET FORTH HEREIN, IN ANY ANCILLARY AGREEMENT OR IN ANY COMMERCIAL ARRANGEMENT, NO PARTY TO THIS AGREEMENT, ANY ANCILLARY AGREEMENT OR ANY OTHER AGREEMENT OR DOCUMENT CONTEMPLATED BY THIS AGREEMENT, ANY ANCILLARY AGREEMENTS OR OTHERWISE, IS REPRESENTING OR WARRANTING IN ANY WAY AS TO THE ASSETS, BUSINESSES OR LIABILITIES CONTRIBUTED, TRANSFERRED OR ASSUMED AS CONTEMPLATED HEREBY OR THEREBY, AS TO ANY CONSENTS OR GOVERNMENTAL APPROVALS REQUIRED IN CONNECTION HEREWITH OR THEREWITH, AS TO THE VALUE OR FREEDOM FROM ANY SECURITY INTERESTS OF, OR ANY OTHER MATTER CONCERNING, ANY ASSETS OF SUCH PARTY, OR AS TO THE ABSENCE OF ANY DEFENSES OR RIGHT OF SETOFF OR FREEDOM FROM COUNTERCLAIM WITH RESPECT TO ANY ACTION OR OTHER ASSET, INCLUDING ACCOUNTS RECEIVABLE, OF ANY PARTY, OR AS TO THE LEGAL SUFFICIENCY OF ANY CONTRIBUTION, ASSIGNMENT, DOCUMENT, CERTIFICATE OR INSTRUMENT DELIVERED HEREUNDER TO CONVEY TITLE TO ANY ASSET OR THING OF VALUE UPON THE EXECUTION, DELIVERY AND FILING HEREOF OR THEREOF. EXCEPT AS MAY EXPRESSLY BE SET FORTH HEREIN OR IN ANY ANCILLARY AGREEMENT OR COMMERCIAL ARRANGEMENT, ALL SUCH ASSETS ARE BEING TRANSFERRED ON AN “AS IS,” “WHERE IS” BASIS (AND, IN THE CASE OF ANY REAL PROPERTY, BY MEANS OF A QUITCLAIM OR SIMILAR FORM DEED OR CONVEYANCE) AND THE RESPECTIVE TRANSFEREES SHALL BEAR THE ECONOMIC AND LEGAL RISKS THAT (I) ANY CONVEYANCE SHALL PROVE TO BE INSUFFICIENT TO VEST IN THE TRANSFEREE GOOD TITLE, FREE AND CLEAR OF ANY SECURITY INTEREST AND (II) ANY NECESSARY CONSENTS OR GOVERNMENTAL APPROVALS ARE NOT OBTAINED OR THAT ANY REQUIREMENTS OF LAWS OR JUDGMENTS ARE NOT COMPLIED WITH.

 

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ARTICLE III

CERTAIN ACTIONS AT OR PRIOR TO THE DISTRIBUTIONS

Section 3.1 Certificate of Incorporation; By-laws .

(a) On or prior to the LSC Distribution Date, all necessary actions shall be taken to adopt the form of amended and restated certificate of incorporation and amended and restated by-laws filed by LSC with the SEC as exhibits to the LSC Form 10.

(b) On or prior to the Donnelley Financial Distribution Date, all necessary actions shall be taken to adopt the form of amended and restated certificate of incorporation and amended and restated by-laws filed by Donnelley Financial with the SEC as exhibits to the Donnelley Financial Form 10.

(c) On or prior to the Effective Time, all necessary actions shall be taken to adopt the amendments to RRD’s restated certificate of incorporation in a manner consistent with amendments to the RRD restated certificate of incorporation approved at the 2016 RRD Annual Meeting of Stockholders, and to the extent such amendment was discretionary, that the RRD Board has determined to effect such amendment.

Section 3.2 Directors .

(a) On or prior to the LSC Distribution Date, RRD shall take all necessary action to cause the Board of Directors of LSC (the “ LSC Board ”) to consist, as of or immediately following the LSC Distribution, of the individuals identified in the LSC Information Statement as director nominees of LSC, including causing the existing directors of LSC to appoint such individuals and, where applicable, to resign from the LSC Board.

(b) On or prior to the Donnelley Financial Distribution Date, RRD shall take all necessary action to cause the Board of Directors of Donnelley Financial (the “ Donnelley Financial Board ”) to consist, as of or immediately following the Donnelley Financial Distribution, of the individuals identified in the Donnelley Financial Information Statement as director nominees of Donnelley Financial, including causing the existing directors of Donnelley Financial to appoint such individuals and, where applicable, to resign from the Donnelley Financial Board.

(c) On or prior to the LSC Distribution Date, all necessary actions shall be taken to cause directors of the RRD Board who will become directors of LSC to resign from the RRD Board effective immediately prior to being appointed to the LSC Board.

(d) On or prior to the Donnelley Financial Distribution Date, all necessary actions shall be taken to cause directors of the RRD Board who will become directors of Donnelley Financial to resign from the RRD Board effective immediately prior to being appointed to the Donnelley Financial Board.

 

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Section 3.3 Resignations .

(a) On or prior to the LSC Distribution Date, (i) RRD shall cause all its employees and any employees of its Affiliates (excluding any employees of any member of the LSC Group) to resign, effective as of the LSC Distribution Date, from all positions as officers or directors of any member of the LSC Group in which they serve, and (ii) LSC shall cause all its employees and any employees of its Affiliates to resign, effective as of the LSC Distribution Date, from all positions as officers or directors of any members of the RRD Group or the Donnelley Financial Group in which they serve.

(b) On or prior to the Donnelley Financial Distribution Date, (i) RRD shall cause all its employees and any employees of its Affiliates (excluding any employees of any member of the Donnelley Financial Group) to resign, effective as of the Donnelley Financial Distribution Date, from all positions as officers or directors of any member of the Donnelley Financial Group in which they serve, and (ii) Donnelley Financial shall cause all its employees and any employees of its Affiliates to resign, effective as of the Donnelley Financial Distribution Date, from all positions as officers or directors of any members of the RRD Group or the LSC Group in which they serve.

Section 3.4 Cash Adjustment .

(a) Prior to the Effective Time, either (i) LSC will transfer funds to RRD or (ii) RRD will transfer funds to LSC, such that LSC’s cash balance in its accounts immediately prior to the Effective Time shall equal $30 million (net of any fees related to Financing Arrangements payable by LSC that have not yet been paid) (the “ Pre-Distribution LSC Target Cash Balance ”).

(b) Prior to the Effective Time, either (i) Donnelley Financial will transfer funds to RRD or (ii) RRD will transfer funds to Donnelley Financial, such that Donnelley Financial cash balance in its accounts immediately prior to the Effective Time shall equal $50 million (net of any fees related to Financing Arrangements payable by Donnelley Financial that have not yet been paid) (the “ Pre-Distribution Donnelley Financial Target Cash Balance ”).

(c) Following the LSC Distribution Date, in the normal course of business and in accordance with the rules and regulations of the SEC, LSC shall prepare and file its interim report on Form 10-Q for the fiscal quarter immediately preceding the LSC Distribution Date (the “ LSC 10-Q ”).

(d) Following the Donnelley Financial Distribution Date, in the normal course of business and in accordance with the rules and regulations of the SEC, Donnelley Financial shall prepare and file its interim report on Form 10-Q for the fiscal quarter immediately preceding the Donnelley Financial Distribution Date (the “ Donnelley Financial 10-Q ”).

(e) If the cash balance reflected in the LSC 10-Q (the “ LSC 10-Q Cash Balance ”) is greater than the Pre-Distribution LSC Target Cash Balance, then LSC shall be

 

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obligated to pay, or cause to be paid, to RRD, or its designee, the amount of such excess within five (5) Business Days following the filing of the LSC 10-Q to a U.S. bank account designated by RRD in writing. If the LSC 10-Q Cash Balance is less than the Pre-Distribution LSC Target Cash Balance, then RRD shall be obligated to pay, or cause to be paid, to LSC, or its designee, the amount of such deficiency within five (5) Business Days following the filing of the LSC 10-Q to a U.S. bank account designated by LSC in writing.

(f) If the cash balance reflected in the Donnelley Financial 10-Q (the “ Donnelley Financial 10-Q Cash Balance ”) is greater than the Pre-Distribution Donnelley Financial Target Cash Balance, then Donnelley Financial shall be obligated to pay, or cause to be paid, to RRD, or its designee, the amount of such excess within five (5) Business Days following the filing of the Donnelley Financial 10-Q to a U.S. bank account designated by RRD in writing. If the Donnelley Financial 10-Q Cash Balance is less than the Pre-Distribution Donnelley Financial Target Cash Balance, then RRD shall be obligated to pay, or cause to be paid, to Donnelley Financial, or its designee, the amount of such deficiency within five (5) Business Days following the filing of the Donnelley Financial 10-Q to a U.S. bank account designated by Donnelley Financial in writing.

(g) On or prior to April 1, 2017, RRD shall pay, or cause to be paid, to LSC, or its designee, $10 million to a U.S. bank account designated by LSC in writing (such payment the “ Post-Distribution LSC Cash Transfer ”). This payment, together with the Pre-Distribution LSC Target Cash Balance, equals the LSC Target Cash Balance (the “ LSC Target Cash Balance ”).

(h) On or prior to April 1, 2017, RRD shall pay, or cause to be paid, to Donnelley Financial, or its designee, $68 million to a U.S. bank account designated by Donnelley Financial in writing (such payment the “ Post-Distribution Donnelley Financial Cash Transfer ”). This payment, together with the Pre-Distribution Donnelley Financial Target Cash Balance, equals the Donnelley Financial Target Cash Balance (the “ Donnelley Financial Target Cash Balance ”).

(i) Any payments made pursuant to Section 3.4(e) , Section 3.4(f) , Section 3.4(g) and Section 3.4(h) shall be made by wire transfer of immediately available funds to the account designated in writing by the relevant Parties; provided that, to the extent the Parties dispute the obligation of a Party to make such payment of the amount thereof, then the Parties agree to treat such disagreement as an Agreement Dispute pursuant to Article X of this Agreement. Any amount that is not the subject of an Agreement Dispute (an “ Undisputed Amount ”) that is not paid when due shall be subject to a late payment fee computed daily at a rate equal to the Applicable Rate from the due date of such amount to the date such amount is paid (for example, if an Undisputed Amount were not paid for five days the late payment fee would be equal to 5/365 multiplied by the Applicable Rate).

(j) In the event that the cash balance reflected in the LSC 10-Q or the Donnelley Financial 10-Q is not indicative of the cash balance of the applicable Party as of the applicable Distribution Date because the balance sheet date in such LSC 10-Q or

 

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Donnelley Financial 10-Q is not reasonably close in time to the applicable Distribution Date, the Parties will use commercially reasonable efforts to provide balance sheet information as of the applicable Distribution Date and agree to negotiate in good faith to determine the proper mechanisms for delivering cash balances.

Section 3.5 Ancillary Agreements . On or prior to the Effective Time, each of RRD, LSC and Donnelley Financial shall enter into, and/or (where applicable) shall cause a member or members of their respective Group to enter into, the applicable Ancillary Agreements and any other Contracts in respect of the Distributions reasonably necessary or appropriate in connection with the transactions contemplated hereby and thereby.

Section 3.6 Commercial Arrangements . On or prior to the Relevant Time, each of RRD, LSC and Donnelley Financial shall enter into, and/or (where applicable) shall cause a member or members of their respective Group to enter into, the applicable Commercial Arrangements.

ARTICLE IV

THE DISTRIBUTIONS

Section 4.1 Stock Dividends by RRD .

(a) On the LSC Distribution Date, RRD will cause the Distribution Agent to distribute 80.75% of the outstanding shares of LSC Common Stock then owned by RRD to holders of RRD Common Stock on the LSC Distribution Record Date, and to credit the appropriate class and number of such shares of LSC Common Stock to book-entry accounts for each such holder of RRD Common Stock. For stockholders of RRD who own RRD Common Stock through a broker or other nominee, their shares of LSC Common Stock will be credited to their respective accounts by such broker or nominee. Each holder of RRD Common Stock on the LSC Distribution Record Date will be entitled to receive in the LSC Distribution one share of LSC Common Stock for every eight shares of RRD Common Stock held by such stockholder. No action by any such stockholder shall be necessary for such stockholder to receive the applicable number of shares of (and, if applicable, cash in lieu of any fractional shares pursuant to Section 4.2 hereof) LSC Common Stock such stockholder is entitled to in the LSC Distribution. In the event that the RRD Reverse Stock Split is not effected prior to the LSC Distribution Record Date, the number of shares of RRD Common Stock to be used in calculating the number of shares of LSC Common Stock to which RRD stockholders will be entitled pursuant to this Section 4.1 shall be determined before giving effect to the RRD Reverse Stock Split.

(b) On or prior to the Donnelley Financial Distribution Date, RRD will cause the Distribution Agent to distribute 80.75% of the outstanding shares of Donnelley Financial Common Stock then owned by RRD to holders of RRD Common Stock on the Donnelley Financial Distribution Record Date, and to credit the appropriate class and number of such shares of Donnelley Financial Common Stock to book-entry accounts for each such holder of RRD Common Stock. For stockholders of RRD who own RRD Common Stock through a broker or other nominee, their shares of Donnelley Financial Common Stock will be credited to their respective accounts by such broker or nominee.

 

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Each holder of RRD Common Stock on the Donnelley Financial Distribution Record Date will be entitled to receive in the Donnelley Financial Distribution one share of Donnelley Financial Common Stock for every eight shares of RRD Common Stock held by such stockholder. No action by any such stockholder shall be necessary for such stockholder to receive the applicable number of shares of (and, if applicable, cash in lieu of any fractional shares pursuant to Section 4.2 hereof) Donnelley Financial Common Stock such stockholder is entitled to in the Donnelley Financial Distribution. In the event that the RRD Reverse Stock Split is not effected prior to the Donnelley Financial Distribution Record Date, the number of shares of RRD Common Stock to be used in calculating the number of shares of Donnelley Financial Common Stock to which RRD stockholders will be entitled pursuant to this Section 4.1 shall be determined before giving effect to the RRD Reverse Stock Split.

Section 4.2 Fractional Shares . RRD stockholders holding a number of shares of RRD Common Stock, on the applicable Record Date, which would entitle such stockholders to receive less than one whole share of LSC Common Stock or Donnelley Financial Common Stock, as the case may be, in the applicable Distribution, will receive cash in lieu of fractional shares. Fractional shares of LSC Common Stock or Donnelley Financial Common Stock will not be distributed in the Distributions nor credited to book-entry accounts. The Distribution Agent shall, as soon as practicable after the applicable Distribution Date (a) determine the number of whole shares and fractional shares of LSC Common Stock or Donnelley Financial Common Stock allocable to each holder of record of RRD Common Stock as of the close of business on the applicable Record Date (or in accordance with the applicable procedures of The Depository Trust Company, to members thereof), (b) aggregate all such fractional shares into whole shares and sell the whole shares obtained thereby in open market transactions, in each case, at then prevailing trading prices on behalf of holders who would otherwise be entitled to fractional share interests, and (c) distribute to each such holder, or for the benefit of each beneficial owner, such holder or owner’s ratable share of the net proceeds of such sale, based upon the average gross selling price per share of LSC Common Stock or Donnelley Financial Common Stock, as the case may be, after making appropriate deductions for any amount required to be withheld for United States federal income Tax purposes. LSC and Donnelley Financial, as the case may be, shall bear the cost of brokerage fees incurred in connection with these sales of fractional shares, which sales shall occur as soon after the applicable Distribution Date as practicable and as determined by the Distribution Agent. None of RRD, LSC, Donnelley Financial or the Distribution Agent will guarantee any minimum sale price for the fractional shares of LSC Common Stock or Donnelley Financial Common Stock. None of RRD, LSC or Donnelley Financial will pay any interest on the proceeds from the sale of fractional shares. The Distribution Agent acting on behalf of the applicable Party will have the sole discretion to select the broker-dealers through which to sell the aggregated fractional shares and to determine when, how and at what price to sell such shares. Neither the Distribution Agent nor the broker-dealers through which the aggregated fractional shares are sold will be Affiliates of RRD, LSC or Donnelley Financial.

Section 4.3 Actions in Connection with the Distribution .

(a) Each of LSC and Donnelley Financial shall file such amendments and supplements to their respective Forms 10 as may be necessary or advisable in order to cause the same to become and remain effective as required by the SEC or federal, state or

 

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other applicable securities Laws. Each of LSC and Donnelley Financial shall mail to the holders of RRD Common Stock as of the applicable Record Date, on or prior to the applicable Distribution Date, the Information Statement included in its Form 10, as well as any other information concerning LSC or Donnelley Financial, as applicable, their business, operations and management, the Plan of Reorganization and such other matters as may be necessary or advisable or as may be required by Law.

(b) Each of LSC, Donnelley Financial and RRD shall cooperate in preparing, filing with the SEC or similar (US or international) authority and causing to become effective registration statements or amendments thereof which are required to reflect the establishment of, or amendments to, any employee benefit and other plans necessary or appropriate in connection with the Plan of Reorganization or other transactions contemplated by this Agreement and the Ancillary Agreements. Each of LSC and Donnelley Financial shall prepare and, in accordance with applicable Law, file with the SEC or similar authority any such documentation that is necessary or desirable to effectuate the applicable Distribution, and RRD, LSC and Donnelley Financial shall each use reasonable best efforts to obtain all necessary approvals from the SEC with respect thereto as soon as practicable.

(c) Each of LSC and Donnelley Financial shall prepare and file such prospectuses as may be necessary or advisable and shall obtain the relevant receipts in respect of same, which receipts shall not have been revoked, as required by the applicable Canadian Securities Regulators or Canadian securities laws to qualify the distribution of the LSC Common Stock and Donnelley Financial Common Stock to Canadian holders of RRD Common Stock.

(d) Each of LSC and Donnelley Financial shall prepare and file, and shall use reasonable best efforts to have approved and made effective, an application for the original listing of the LSC Common Stock and Donnelley Financial Common Stock, as applicable, to be distributed in the applicable Distribution on the NYSE, subject to official notice of distribution.

(e) Each Party shall provide all cooperation reasonably requested by the other Parties that is necessary or desirable in connection with the Financing Arrangements.

Section 4.4 Sole Discretion of RRD . The RRD Board shall, in its sole and absolute discretion, determine each Distribution Date and all terms of the Distributions, including the form, structure and terms of any transactions and/or offerings to effect each Distribution and the timing of and conditions to the consummation thereof. In addition, the RRD Board may at any time and from time to time until the completion of each Distribution decide to abandon any or all of the Distributions or modify or change the terms of each Distribution, including by accelerating or delaying the timing of the consummation of all or part of any Distribution.

 

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Section 4.5 Conditions to LSC Distribution . The LSC Distribution is subject to the satisfaction of the following conditions or the RRD Board’s waiver of the following conditions:

(a) the RRD Board will, in its sole and absolute discretion, have authorized and approved (i) the Plan of Reorganization, (ii) any other transfers of Assets and assumptions of Liabilities contemplated by this Agreement and any related agreements with respect to LSC and (iii) the LSC Distribution, and will not have withdrawn that authorization and approval;

(b) with respect to the LSC Distribution, the RRD Board will have declared the Distribution of 80.75% of the outstanding shares of LSC Common Stock to holders RRD Common Stock;

(c) the SEC will have declared LSC’s Registration Statement on Form 10 effective under the Exchange Act, no stop order suspending the effectiveness of the LSC Registration Statement will be in effect, and no proceedings for that purpose will be pending before or threatened by the SEC;

(d) each of the Canadian Securities Regulators will have issued (including having been deemed to have issued) a final receipt in connection with the filing of a prospectus prepared in accordance with applicable Canadian securities laws as required to qualify the distribution of LSC Common Stock to RRD’s Canadian stockholders, and no order, ruling or determination having the effect of prohibiting, ceasing or suspending the distribution or trading of the LSC Common Stock will have been issued by any Canadian Securities Regulators and no proceedings for that purpose will have been instituted or threatened by any Canadian Securities Regulators;

(e) the LSC common stock to be delivered in the LSC Distribution shall have been approved for listing on NYSE, subject to official notice of distribution;

(f) the Plan of Reorganization with respect to LSC and any members of the LSC Group will have been completed;

(g) RRD shall have received (i) a private letter ruling from the Internal Revenue Service satisfactory to the RRD Board regarding certain US federal income Tax matters relating to the LSC Distribution and related transactions and (ii) an opinion of Sullivan & Cromwell LLP, in form and substance satisfactory to the RRD Board, regarding the US federal income Tax treatment of the LSC Distribution and certain related transactions;

(h) no order, injunction or decree that would prevent the consummation of the LSC Distribution will be threatened, pending or issued (and still in effect) by any governmental entity of competent jurisdiction, no other legal restraint or prohibition preventing the consummation of the LSC Distribution will be in effect, and no other event outside the control of RRD will have occurred or failed to occur that prevents the consummation of the LSC Distribution;

(i) the LSC Financing Arrangement transactions described in the LSC Information Statement as occurring in connection with the LSC Distribution shall have been consummated in all material respects in the manner described therein on or prior to the LSC Distribution;

 

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(j) no events or developments will have occurred or shall exist prior to the LSC Distribution that, in the judgment of the RRD Board, would result in the LSC Distribution having a material adverse effect on RRD or its stockholders;

(k) RRD, LSC and, if a party to the applicable agreement with LSC, Donnelley Financial, will have executed and delivered this Agreement, the Tax Disaffiliation Agreement, the Intellectual Property Agreements, the applicable Transition Services Agreements and all other Ancillary Agreements related to the LSC Distribution; and

(l) the actions set forth in Section 3.1(a) , Section 3.2(a) , Section 3.2(c) and Section 3.3(a) shall have been completed.

Section 4.6 Conditions to Donnelley Financial Distribution . The Donnelley Financial Distribution is subject to the satisfaction of the following conditions or the RRD Board’s waiver of the following conditions:

(a) the RRD Board will, in its sole and absolute discretion, have authorized and approved (i) the Plan of Reorganization, (ii) any other transfers of Assets and assumptions of Liabilities contemplated by this Agreement and any related agreements with respect to Donnelley Financial and (iii) the Donnelley Financial Distribution, and will not have withdrawn that authorization and approval;

(b) with respect to the Donnelley Financial Distribution, the RRD Board will have declared the Distribution of 80.75% of the outstanding shares of Donnelley Financial Common Stock to holders of RRD Common Stock;

(c) the SEC will have declared Donnelley Financial’s Registration Statement on Form 10, effective under the Exchange Act, no stop order suspending the effectiveness of the Donnelley Financial Registration Statement will be in effect, and no proceedings for that purpose will be pending before or threatened by the SEC;

(d) each of the Canadian Securities Regulators will have issued (including having been deemed to have issued) a final receipt in connection with the filing of a prospectus prepared in accordance with applicable Canadian securities laws as required to qualify the distribution of Donnelley Financial Common Stock to RRD’s Canadian stockholders, and no order, ruling or determination having the effect of prohibiting, ceasing or suspending the distribution or trading of the Donnelley Financial Common Stock will have been issued by any Canadian Securities Regulators and no proceedings for that purpose will have been instituted or threatened by any Canadian Securities Regulators;

(e) the Donnelley Financial common stock to be delivered in the Donnelley Financial Distribution shall have been approved for listing on NYSE, subject to official notice of distribution;

 

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(f) the Plan of Reorganization with respect to Donnelley Financial and any members of the Donnelley Financial Group will have been completed;

(g) RRD shall have received (i) a private letter ruling from the Internal Revenue Service satisfactory to the RRD Board regarding certain US federal income Tax matters relating to the Donnelley Financial Distribution and related transactions and (ii) an opinion of Sullivan & Cromwell LLP, in form and substance satisfactory to the RRD Board, regarding the US federal income Tax treatment of the Donnelley Financial Distribution and certain related transactions;

(h) no order, injunction or decree that would prevent the consummation of the Donnelley Financial Distribution will be threatened, pending or issued (and still in effect) by any governmental entity of competent jurisdiction, no other legal restraint or prohibition preventing the consummation of the Donnelley Financial Distribution will be in effect, and no other event outside the control of RRD will have occurred or failed to occur that prevents the consummation of the Donnelley Financial Distribution;

(i) the Donnelley Financial Financing Arrangement transactions described in the Donnelley Financial Information Statement as occurring in connection with the Donnelley Financial Distribution shall have been consummated in all material respects in the manner described therein on or prior to the Donnelley Financial Distribution;

(j) no events or developments will have occurred or shall exist prior to the Distribution that, in the judgment of the RRD Board, would result in the Donnelley Financial Distribution having a material adverse effect on RRD or its stockholders;

(k) RRD, Donnelley Financial and, if a party to the applicable agreement with Donnelley Financial, LSC, will have executed and delivered this Agreement, the Tax Disaffiliation Agreement, the Intellectual Property Agreements, the applicable Transition Services Agreements and all other Ancillary Agreements related to the LSC Distribution; and

(l) the actions set forth in Section 3.1(b) , Section 3.2(b) , Section 3.2(d) and Section 3.3(b) shall have been completed.

ARTICLE V

CERTAIN COVENANTS

Section 5.1 No Solicit; No Hire .

(a) None of RRD, LSC or Donnelley Financial or any member of their respective Groups will without the prior written consent of the Senior Vice President of Human Resources of the other applicable Party, either directly or indirectly, on their own behalf or in the service or on behalf of others, for a period of two (2) years following the applicable Relevant Time, solicit or recruit, and for a period of one year following the applicable Relevant Time, hire, as an employee or independent contractor any individual who (x) is employed by any of the other Parties at a rank or level that is the equivalent of

 

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vice president or higher; (y) is employed in an information technology function by any of the other Parties at a rank or level that is the equivalent of director or higher; or (z) is listed on Schedule 5.1(a) (a “ Restricted Person ”); provided, however, that this Section 5.1 shall not prohibit (i) generalized solicitations that are not directed to employees of any other Party (provided, that this clause (i) shall not by itself permit the hiring of employees otherwise prohibited by this Section 5.1 ), (ii) the solicitation or hiring of a Restricted Person whose employment was terminated by the other applicable Party (excluding voluntary termination by such Restricted Person), (iii) the solicitation or hiring of any Restricted Person who has ceased to be employed by any applicable Party for at least six (6) months.

(b) None of RRD, LSC or Donnelley Financial or any member of their respective Groups will without the prior written consent of the Senior Vice President of Human Resources of the other applicable Party, either directly or indirectly, on their own behalf or in the service or on behalf of others, hire, as an employee or independent contractor any individual who is designated in writing by any Party as a transition services employee of such Party because such individual is providing transition services to another Party under a Transition Services Agreement (a “ Transition Services Employee ”), with the initial designations of such employees set forth in Schedule 5.1(b) with such designation to be updated, to the extent applicable, by the Parties prior to such second anniversary of the applicable Relevant Time; provided , however , that once an individual is removed from Schedule 5.1(b) in the course of an update, they are no longer considered a Transition Services Employee and their solicitation, recruitment or hiring is no longer prohibited. The Parties will update Schedule 5.1(b) to reflect the expiration or termination of any transition service under the Transition Services Agreements as promptly as practicable. For the avoidance of doubt, it shall not be a breach of this Agreement if one Party hires an individual listed on Schedule 5.1(b) if such individual is no longer performing transition services and such Schedule 5.1(b) has not been timely updated by the individual’s employer.

Section 5.2 Corporate Names . As of the Relevant Time and subject to the Intellectual Property Agreements, the Parties shall adopt and conduct business under their respective identities and Trademarks. Further, as of the Relevant Time, the Parties shall cease to hold themselves out as having any affiliation with any of the other Parties or such Parties’ Affiliates (except as permitted or required under any Ancillary Agreement or any Commercial Arrangement and except with respect to any RRD ownership interest in LSC or Donnelley Financial following the Distribution); provided , however , that the foregoing shall not prohibit any Party or any member of a Party’s Group from stating in any advertising or any other communication that it was formerly a RRD Affiliate.

Section 5.3 Financial Statements and Accounting . Each Party agrees to provide the following assistance and access set forth in subsections  (a) , (b)  and (c) of this Section 5.3 , (i) during the one year period following the applicable Relevant Time in connection with the preparation and audit of each of the Party’s financial statements for the year ended December 31, 2016, the preparation and review of each of the Party’s interim financial statements beginning with the nine (9) months ended September 30, 2016 the printing, filing and public dissemination of such financial statements, the audit of each Party’s internal control over financial reporting and

 

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management’s assessment thereof and management’s assessment of each Party’s disclosure controls and procedures, if required, in each case made as of December 31, 2016; (ii) following such initial one year period, with the consent of the other applicable Party (with such consent not to be unreasonably withheld, delayed or conditioned) for reasonable business purposes; (iii) in the event that any Party changes its auditors within two (2) years of the applicable Relevant Time, then such Party may request reasonable access on the terms set forth in this Section 5.3 for a period of up to one hundred eighty (180) days from the date of such change; and (iv) from time to time following the applicable Relevant Time, to the extent reasonably necessary to respond (and for the limited purpose of responding) to any written request or official comment from a Governmental Entity, such as in connection with responding to a comment letter from the SEC:

(a) Annual and Interim Financial Statements . Each Party shall provide or provide access to the other Party on a timely basis of all Information reasonably required to meet its schedule for the preparation, printing, filing, and public dissemination of its annual financial statements and for management’s assessment of the effectiveness of its disclosure controls and procedures and its internal control over financial reporting in accordance with Items 307 and 308, respectively, of Regulation S-K and, to the extent applicable to such Party, its auditor’s audit of its internal control over financial reporting and management’s assessment thereof in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 and the SEC’s and Public Company Accounting Oversight Board’s rules and auditing standards thereunder, if required (such assessments and audit being referred to as the “ Internal Control Audit and Management Assessments ”), and for the preparation, printing, filing and public dissemination of its interim financial statements. Without limiting the generality of the foregoing, each Party will provide all required financial and other Information with respect to itself and its Subsidiaries to its auditors in a sufficient and reasonable time and in sufficient detail to permit its auditors to take all steps and perform all reviews necessary to provide sufficient assistance to each other Party’s auditors with respect to Information to be included or contained in such other Party’s annual or interim financial statements and to permit such other Party’s auditors and management to complete the Internal Control Audit and Management Assessments, if required.

(b) Access to Personnel and Records . Each Party shall authorize its respective auditors to make reasonably available to each other Party’s auditors (each such other Party’s auditors, collectively, the “ Other Parties’ Auditors ”) both the personnel who performed or are performing the annual audits of such audited Party (each such Party with respect to its own audit, the “ Audited Party ”) and work papers related to the annual audits of such Audited Party, in all cases within a reasonable time prior to such Audited Party’s auditors’ opinion date, so that the Other Parties’ Auditors are able to perform the procedures they reasonably consider necessary to take responsibility for the work of the Audited Party’s auditors as it relates to their auditors’ report on such other Party’s financial statements, all within sufficient time to enable such other Party to meet its timetable for the printing, filing and public dissemination of its annual financial statements. Each Party shall make reasonably available to the Other Parties’ Auditors and management its personnel and Records in a reasonable time prior to the Other Parties’ Auditors’ opinion date and other Parties’ management’s assessment date so that the Other Parties’ Auditors and other Parties’ management are able to perform the procedures they reasonably consider necessary to conduct the Internal Control Audit and Management Assessments.

 

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(c) Annual Reports . Each Party will deliver to the other Parties a substantially final draft, as soon as the same is prepared, of the first report to be filed with the SEC (or otherwise) that includes their respective financial statements (in the form expected to be covered by the audit report of such Party’s independent auditors) for the year ended December 31, 2016 (such reports, collectively, the “ Annual Reports ”); provided , however , that each Party may continue to revise its respective Annual Report prior to the filing thereof, which changes will be delivered to the other Parties as soon as reasonably practicable; provided , further , that each Party’s personnel will actively consult with the other Party’s personnel regarding any material changes which they may consider making to its respective Annual Report and related disclosures prior to the anticipated filing with the SEC, with particular focus on any changes which could reasonably be expected to have an effect upon the other Party’s financial statements or related disclosures.

Nothing in this Section 5.3 shall require any Party to violate any agreement with any third party regarding the confidentiality of confidential and proprietary Information relating to that third party or its business; provided , however , that in the event that a Party is required under this Section 5.3 to disclose any such Information, such Party shall use reasonable best efforts to seek to obtain such third party’s written consent to the disclosure of such Information.

Section 5.4 Cooperation . For a period of up to two (2) years after the applicable Relevant Time, except as (a) otherwise set forth in a Transition Services Agreement or a Commercial Arrangement or (b) set forth in Section 7.3 hereof, the Parties shall, and shall cause each of their respective Affiliates and employees to (i) provide reasonable cooperation and assistance to each other Party in connection with the completion of the Plan of Reorganization (including assisting in the preparation of the Distributions), (ii) provide knowledge transfer regarding its applicable Business or RRD’s historical business and (iii) assist each Party in the orderly and efficient transition in becoming an independent company; in each case, except as may otherwise be agreed to by the Parties in writing, at no additional cost to the Party requesting such assistance other than for the actual out-of-pocket costs (which shall not include the costs of salaries and benefits of employees of such Party or any pro rata portion of overhead or other costs of employing such employees which would have been incurred by such employees’ employer regardless of the employees’ service with respect to the foregoing) incurred by any such Party, if applicable. The cooperation and assistance provided for in this Section 5.4 shall not be required to the extent such cooperation and assistance would result in an undue burden on any Party or would unreasonably interfere with any of its employees normal functions and duties. In furtherance of, and without limiting, the foregoing, each Party shall make reasonably available those employees with particular knowledge of any function or service of which another Party was not allocated the employees, agents or consultants involved in such function or service in connection with the Plan of Reorganization (including, employee benefits functions, risk management, etc.).

Section 5.5 Further Assurances .

(a) In addition to and without limiting the actions specifically provided for elsewhere in this Agreement, including Section 2.6 , each of the Parties shall cooperate with each other and use (and will cause their respective Subsidiaries and Affiliates to use) reasonable best efforts, on and after the Effective Time, to take, or to cause to be taken, all actions, and to do, or to cause to be done, all things reasonably necessary on its part under applicable Law or contractual obligations to consummate and make effective the transactions contemplated by this Agreement the Ancillary Agreements and Commercial Arrangements.

 

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(b) Without limiting the foregoing, on and after the Effective Time, each Party shall cooperate with the other Parties, and without any further consideration, but at the expense of the requesting Party from and after the Effective Time, to execute and deliver, or use reasonable best efforts to cause to be executed and delivered, all instruments, including instruments of Transfer, and to make all filings with, and to obtain all Governmental Approvals, any permit or license, and to take all such other actions as such Party may reasonably be requested to take by any other Party from time to time, consistent with the terms of this Agreement and the Ancillary Agreements, in order to effectuate the provisions and purposes of this Agreement and the Ancillary Agreements and the Transfers of the applicable Assets and the assignment and Assumption of the applicable Liabilities and the other transactions contemplated hereby and thereby. Without limiting the foregoing, each Party will, at the reasonable request, cost and expense of any other Party, take such other actions as may be reasonably necessary to vest in such other Party good and marketable title to the Assets allocated to such Party under this Agreement or any of the Ancillary Agreements, free and clear of any Security Interest, if and to the extent it is practicable to do so.

ARTICLE VI

EMPLOYEE MATTERS

Section 6.1 Stock Options .

(a) 2007 and 2008 Stock Options . Each vested and exercisable RRD Option granted in 2007 or 2008 that is outstanding immediately prior to the Relevant Time shall be adjusted as of 12:01 a.m. Eastern Time on the Relevant Time so that the RRD Option shall remain an RRD Option, with the number of shares subject to such RRD Option equal to the number of shares of RRD Common Stock subject to the original RRD Option, divided by the RRD Equity Award Exchange Ratio, which product shall be rounded down to the nearest whole number of shares. The per share exercise price shall be equal to the original exercise price multiplied by the RRD Equity Award Exchange Ratio, rounded up to the nearest cent. Each RRD Option shall otherwise be subject to the same terms and conditions (including with respect to vesting and expiration of exercise period, as applicable).

 

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(b) 2009, 2010, 2011 and 2012 Stock Options.

(i) Each vested and exercisable RRD Option granted in 2009, 2010, 2011 or 2012 that is outstanding immediately prior to the Relevant Time shall be converted as of 12:01 a.m. Eastern Time on the Relevant Time so that the holder has:

(1) An RRD Option with respect to the same number of shares of RRD Common Stock subject to the original RRD Option, and the per share exercise price shall be equal to the original exercise price multiplied by the RRD Equity Award Exchange Ratio, rounded up to the nearest cent; and

(2) An LSC Option with respect to a number of shares of LSC Common Stock equal to the number of shares of RRD Common Stock subject to the original RRD Option, multiplied by the LSC Spin Ratio, which product shall be rounded down to the nearest whole number of shares, and the per share exercise price shall be equal to (A) the original exercise price multiplied by the LSC Equity Award Exchange Ratio, divided by (B) the LSC Spin Ratio, rounded up to the nearest cent; and

(3) A Donnelley Financial Option with respect to a number of shares of Donnelley Financial Common Stock equal to the number of shares of RRD Common Stock subject to the original RRD Option, multiplied by the Donnelley Financial Spin Ratio, which product shall be rounded down to the nearest whole number of shares, and the per share exercise price shall be equal to (A) the original exercise price multiplied by the Donnelley Financial Equity Award Exchange Ratio, divided by (B) the Donnelley Financial Spin Ratio, rounded up to the nearest cent.

(c) In the event the LSC Distribution and the Donnelley Financial Distribution occur on different dates, the adjustment of RRD Options as of each such Distribution Date under this Section 6.1 shall be equitably adjusted by the HR Committee.

(d) Any adjustments to give effect to the RRD Reverse Stock Split shall be done pursuant to the terms of the 2004 RRD Performance Incentive Plan and 2012 RRD Performance Incentive Plan, as applicable.

Section 6.2 R estricted Stock Units, Performance Share Units and Director Stock Units .

(a) Restricted Stock Units.

(i) 2013 and 2014 Restricted Stock Units . Each RRD Restricted Stock Unit award granted in 2013 or 2014 that is outstanding immediately prior to the Relevant Time shall be converted as of 12:01 a.m. Eastern Time on the Relevant Time so that the holder has:

(1) An RRD Restricted Stock Unit award over the same number of shares of RRD Common Stock subject to the original RRD Restricted Stock Unit award; and

(2) An LSC Restricted Stock Unit award over a number of shares of LSC Common Stock equal to the number of shares of RRD Common Stock subject to the original RRD Restricted Stock Unit award, multiplied by the LSC Spin Ratio, which product shall be rounded down to the nearest whole number of shares; and

(3) A Donnelley Financial Restricted Stock Unit award over a number of shares of Donnelley Financial Common Stock equal to the number of shares of RRD Common Stock subject to the original RRD Restricted Stock Unit award, multiplied by the Donnelley Financial Spin Ratio, which product shall be rounded down to the nearest whole number of shares.

 

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(ii) 2015 and 2016 Restricted Stock Units .

(1) Each RRD Restricted Stock Unit award granted in 2015 or 2016 held by an RRD Employee or Former RRD Employee that is outstanding immediately prior to the Relevant Time shall be converted as of 12:01 a.m. Eastern Time on the Relevant Time so that the holder has an RRD Restricted Stock Unit award over a number of shares of RRD Common Stock equal (A) to the number of shares of Common Stock of RRD subject to the original RRD Restricted Stock Unit award, divided (B) by the RRD Equity Award Exchange Ratio, which product shall be rounded down to the nearest whole number of shares. Such award shall retain the vesting schedule associated with such original RRD Restricted Stock Unit award.

(2) Each RRD Restricted Stock Unit award granted in 2015 or 2016 held by an LSC Employee or Former LSC Employee that is outstanding immediately prior to the LSC Distribution Date shall be converted as of 12:01 a.m. Eastern Time on the LSC Distribution Date so that the holder has an LSC Restricted Stock Unit award over a number of shares of RRD Common Stock equal to (A) the number of shares of Common Stock of RRD subject to the original RRD Restricted Stock Unit award, multiplied by the LSC Spin Ratio, divided by (B) the LSC Equity Award Exchange Ratio, which product shall be rounded down to the nearest whole number of shares. Such award shall retain the vesting schedule associated with such original RRD Restricted Stock Unit award, except that references to continued employment with RRD shall refer to continued employment with the LSC Group following the LSC Distribution Date.

(3) Each RRD Restricted Stock Unit award granted in 2015 or 2016 held by an Donnelley Financial Employee or Former Donnelley Financial Employee that is outstanding immediately prior to the Donnelley Financial Distribution Date shall be converted as of 12:01 a.m. Eastern Time on the Donnelley Financial Distribution Date so that the holder has an a Donnelley Financial Restricted Stock Unit award over a number of shares of Donnelley Financial Common Stock equal to (A) the number of shares of Common Stock of RRD subject to the original RRD Restricted Stock Unit award, multiplied by the Donnelley Financial Spin Ratio, divided by (B) the Donnelley Financial Equity Award Exchange Ratio, which product shall be rounded down to the nearest whole number of shares. Such award shall retain the vesting schedule associated with such original RRD Restricted Stock Unit award, except that references to continued employment with RRD shall refer to continued employment with the Donnelley Financial Group following the Donnelley Financial Distribution Date.

(b) Performance Share Units .

(i) 2014 Performance Share Units . Each RRD Performance Share Unit award granted in 2014 pursuant to the RRD 2012 Performance Incentive Plan that is outstanding immediately prior to the LSC Distribution or the Donnelley Financial Distribution (with satisfaction of performance conditions permanently

 

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measured by the HR Committee through the LSC Distribution Date or the Donnelley Financial Distribution Date) shall be converted in the exact same manner and time as RRD Restricted Stock Units are converted pursuant to Section 6.2(a)(i) above and shall remain subject to time-based vesting for the remainder of the applicable performance period.

(ii) 2015 Performance Share Units . Except as set forth in Schedule 6.2(b)(ii) , each RRD Performance Share Unit award granted in 2015 pursuant to the RRD 2012 Performance Incentive Plan that is outstanding immediately prior to the LSC Distribution or the Donnelley Financial Distribution (with satisfaction of performance conditions permanently measured by the HR Committee through the LSC Distribution Date or the Donnelley Financial Distribution Date) shall be converted in the exact same manner and time as RRD Restricted Stock Units are converted pursuant to Section 6.2(a)(ii) above and shall remain subject to time-based vesting for the remainder of the applicable performance period.

(c) Director Stock Units; Director Plans .

(i) Director Stock Units . Each RRD Director Stock Unit that is outstanding immediately prior to the LSC Distribution or the Donnelley Financial Distribution shall be converted in the exact same manner and time as RRD Restricted Stock Units are converted pursuant to Section 6.2(a)(ii) above, except that references to continued services on the RRD Board shall refer to continued service on the LSC Board or the Donnelley Financial Board, as applicable. For the avoidance of doubt, any individual who is named in the LSC Information Statement as an individual to be named to the LSC Board as of or immediately following the LSC Distribution shall have their RRD Director Stock Units solely converted into LSC Restricted Stock Units, and any individual who is named in the Donnelley Financial Information Statement as an individual to be named to the Donnelley Financial Board as of or immediately following the Donnelley Financial Distribution shall have their RRD Director Stock Units solely converted into Donnelley Financial Restricted Stock Units. Such converted awards shall remain subject to the terms and conditions (including but not limited to any deferred elections) in effect with respect to the award immediately preceding the applicable Distribution Date. Individuals who are continuing on the RRD Board following the Relevant Time shall have their RRD Director Stock Units solely converted in RRD Restricted Stock Units pursuant to Section 6.2(a)(ii)(1) above. Notwithstanding the foregoing, to the extent a member of the RRD Board retires after Record Date and prior to the LSC Distribution Date or the Donnelley Financial Distribution Date, such director’s RRD Director Stock Units shall be converted in the exact same manner and time as RRD Restricted Stock Units are converted pursuant to Section 6.2(a)(i) above.

(ii) RRD Phantom Stock Plan. Each award that is outstanding immediately prior to the LSC Distribution or the Donnelley Financial Distribution shall be converted in the exact same manner and time as RRD Restricted Stock Units are converted pursuant to Section 6.2(a)(ii) above, except that any references

 

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to continued service on the RRD Board shall refer to continued service on the LSC Board or the Donnelley Financial Board, as applicable. Such converted awards shall remain subject to the terms and conditions (including but not limited to any deferral elections) in effect with respect to the award immediately preceding the applicable Distribution Date.

(iii) Wallace Director Retainer Fee Plan . Following the applicable Relevant Time, RRD shall retain sole responsibility for all benefits accrued prior to such Relevant Time, and any Assets and Liabilities for the Wallace Director Retainer Fee Plan and neither LSC nor Donnelley Financial shall have any obligation with respect thereto as of the applicable Relevant Time. Any notional investments in RRD Common Stock under such plan shall be converted in the exact same manner and time as RRD Restricted Stock Units are converted pursuant to Section 6.2(a)(ii) above. Such converted notional investments shall remain subject to the terms and conditions (including but not limited to any deferred elections) in effect with respect to the award immediately preceding the Relevant Time. Prior to the Relevant Time, RRD shall cause the rabbi trust underlying the Wallace Director Retainer Fee Plan to be amended to provide that as soon as practicable following the LSC Distribution and the Donnelley Financial Distribution, the trustee shall sell any LSC Common Stock and Donnelley Financial Common Stock in such trust in the open market and shall use the proceeds of such sales to purchase RRD Common Stock. Any investments in the Wallace Director Retainer Fee Plan following the applicable Relevant Time will be made solely in RRD Common Stock.

(iv) Wallace Director CAP Plan and Wallace Retirement Plan for Outside Directors . Following the applicable Relevant Time, RRD shall retain sole responsibility for all benefits accrued prior to such Relevant Time, and any Assets and Liabilities for the Wallace Director CAP Plan and Wallace Retirement Plan for Outside Directors and neither LSC nor Donnelley Financial shall have any obligation with respect thereto as of the applicable Relevant Time.

(d) Grant and Settlement of Awards . RRD shall assure that each RRD Option, RRD Restricted Stock Unit, RRD Performance Share Unit and RRD Director Stock Unit is converted into Donnelley Financial and LSC awards as set forth in Section 6.1 and this Section 6.2 as and when provided in this Agreement. All converted awards will be issued under the 2012 RRD Performance Incentive Plan, the 2016 LSC Communications, Inc. Performance Incentive Plan or the 2016 Donnelley Financial Solutions, Inc. Performance Incentive Plan, as applicable. Subject to the terms of this Agreement and any other agreement in force between the Parties from time to time, upon the vesting or payment of any such award, each of RRD, LSC and Donnelley Financial shall be solely responsible to issue its shares in settlement of the respective awards payable in its shares without reimbursement, recourse or other compensation from any other Party.

(e) In the event the LSC Distribution and the Donnelley Financial Distribution occur on different dates, the adjustment of RRD Restricted Stock Unit awards as of each such Distribution Date under this Section 6.2 shall be equitably adjusted by the HR Committee.

 

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(f) Any adjustments to give effect to the RRD Reverse Stock Split shall be done pursuant to the terms of the 2012 RRD Performance Incentive Plan.

Section 6.3 Cash Long Term Incentive Awards and Retention Awards . As of the applicable Distribution Date, each Party (or their applicable Affiliate or Subsidiary) shall Assume and be responsible for all Liabilities and shall fully perform, pay and discharge all obligations related to cash long-term incentive awards and retention awards granted under the 2012 RRD Performance Incentive Plan for their respective employees and former employees. Each such award shall retain the original vesting schedule associated therewith. The Parties have taken all necessary actions to amend any such cash retention award agreements to provide for immediate full vesting of cash retention awards upon a termination without cause by the applicable employer following the LSC Distribution Date or the Donnelley Financial Distribution Date.

Section 6.4 Employee Stock Purchase Plan . Effective as of the Effective Time, RRD shall discontinue the purchase of common shares under the RRD Employee Stock Purchase Plan and the RRD Canadian Employee Stock Purchase Plan (the “ RRD ESPPs ”). RRD ceased employee deductions under the RRD ESPPs as of the August 31, 2016 payroll date and the last purchase of common shares under the RRD ESPPs occurred on or about September 8, 2016.

Section 6.5 Nonqualified Deferred Compensation Plans and Supplemental Executive Retirement Plans .

(a) LSC Deferred Compensation Plans and LSC SERPs .

(i) Effective as of the LSC Distribution Date, LSC (or any member of the LSC Group) shall be solely responsible for the satisfaction of all Liabilities under the LSC Deferred Compensation Plans and the LSC SERPs listed in Schedule 6.5(a) (the “ LSC Deferred Compensation and SERP Liabilities ”).

(1) In connection therewith and except as set forth on Schedule 6.5(a)(i)(1) , the Liabilities of the applicable Legacy RRD Deferred Compensation Plans and Legacy RRD SERPs attributable to LSC Employees and Former LSC Employees shall be transferred to such LSC Deferred Compensation Plans and LSC SERPs as set forth on Schedule 6.5(a)(i)(1) . For the avoidance of doubt, following the LSC Distribution Date, in no event shall LSC (or any member of the LSC Group) be responsible for any Liabilities retained by RRD under Section 6.5(c) below or any Donnelley Financial Deferred Compensation and SERP Liabilities (as defined below).

(2) LSC Non-US Deferred Compensation Plans and LSC SERPs. Except as set forth on Schedule 6.5(a)(i)(2) , LSC Non-US Deferred Compensation Plans and LSC SERPs that are organized under non-US law (the “ LSC Non-US Deferred Compensation Plans and SERPs ”), shall continue to be sponsored and maintained by the local sponsoring entity and the Assets and Liabilities thereunder shall be retained by such local entities within the LSC Group.

(ii) All deferral and time and form of payment elections by LSC Employees and Former LSC Employees that were in effect under the terms of the

 

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applicable Legacy RRD Deferred Compensation Plans and Legacy RRD SERPs immediately prior to the LSC Distribution Date shall continue in effect under the applicable LSC Deferred Compensation Plan or LSC SERP from and after the LSC Distribution Date until a new election, if permitted, that by its terms supersedes the prior election is made by such LSC Employee or Former LSC Employee in accordance with the terms of the applicable LSC Deferred Compensation Plan or LSC SERP and consistent with the provisions of Section 409A of the Code to the extent applicable.

(iii) As of the LSC Distribution Date, LSC shall be solely responsible for the management and administration of the LSC Deferred Compensation Plans and the LSC SERPs.

(iv) Payments to LSC Employees and Former LSC Employees under the LSC Deferred Compensation Plans and the LSC SERPs shall be made in accordance with the terms of the applicable plan by either by LSC or any other member of the LSC Group as determined in the sole discretion of LSC.

(b) Donnelley Financial Deferred Compensation Plans and Donnelley Financial SERPs .

(i) Effective as of the Donnelley Financial Distribution Date, Donnelley Financial (or any member of the Donnelley Financial Group) shall be solely responsible for the satisfaction of all Liabilities under the Donnelley Financial Deferred Compensation Plans and Donnelley Financial SERPs listed in Schedule 6.5(b) (the “ Donnelley Financial Deferred Compensation and SERP Liabilities ”).

(1) In connection therewith, the Liabilities of the applicable Legacy RRD Deferred Compensation Plans and Legacy RRD SERPs attributable to Donnelley Financial Employees and Former Donnelley Financial Employees shall be transferred to such Donnelley Financial Deferred Compensation Plans and Donnelley Financial SERPs as set forth on Schedule 6.5(b)(i)(1) . For the avoidance of doubt, following the Donnelley Financial Distribution Date, in no event shall Donnelley Financial (or any member of the Donnelley Financial Group) be responsible for any Liabilities retained by RRD under Section 6.5(c) below or any LSC Deferred Compensation and SERP Liabilities.

(2) Donnelley Financial Non-US Deferred Compensation Plans and Donnelley Financial SERPs. Except as set forth on Schedule 6.5(b)(i)(2) , Donnelley Financial Non-US Deferred Compensation Plans and Donnelley Financial SERPs that are organized under non-US law (the “ Donnelley Financial Non-US Deferred Compensation Plans and SERPs ”), shall continue to be sponsored and maintained by the local sponsoring entity and the Assets and Liabilities thereunder shall be retained by such local entities within the Donnelley Financial Group.

(ii) All deferral and time and form of payment elections by Donnelley Financial Employees and Former Donnelley Financial Employees that were in

 

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effect under the terms of the applicable Legacy RRD Deferred Compensation Plans and Legacy RRD SERPs immediately prior to the Donnelley Financial Distribution Date shall continue in effect under the applicable Donnelley Financial Deferred Compensation Plan or Donnelley Financial SERP from and after the Donnelley Financial Distribution Date until a new election, if permitted, that by its terms supersedes the prior election is made by such Donnelley Financial Employee or Former Donnelley Financial Employee in accordance with the terms of the applicable Donnelley Financial Deferred Compensation Plan or Donnelley Financial SERP and consistent with the provisions of Section 409A of the Code to the extent applicable.

(iii) As of the Donnelley Financial Distribution Date, Donnelley Financial shall be solely responsible for the management and administration of the Donnelley Financial Deferred Compensation Plans and Donnelley Financial SERPs.

(iv) Payments to Donnelley Financial Employees and Former Donnelley Financial Employees under the Donnelley Financial Deferred Compensation Plans and Donnelley Financial SERPs shall be made in accordance with the terms of the applicable plan by either Donnelley Financial or any member of the Donnelley Financial Group as determined in the sole discretion of Donnelley Financial.

(c) RRD Deferred Compensation Plans and RRD SERPs .

(i) Effective as of the LSC Distribution Date, as between RRD and LSC, RRD (or any member of the RRD Group) shall be solely responsible for the satisfaction of all Liabilities under the RRD Deferred Compensation Plans and RRD SERPs listed in Schedule 6.5(c) , except to the extent that Liabilities thereunder have been assumed by, and transferred to, the LSC Deferred Compensation Plans or LSC SERPs under Section 6.5(a) . In connection therewith, the Liabilities of such applicable RRD Deferred Compensation Plans and RRD SERPs attributable to the RRD Employees and Former RRD Employees shall be retained by such RRD Deferred Compensation Plans and RRD SERPs. For the avoidance of doubt, following the LSC Distribution Date, in no event shall RRD (or any member of the RRD Group) be responsible for any LSC Deferred Compensation and SERP Liabilities.

(ii) Effective as of the Donnelley Financial Distribution Date, as between RRD and Donnelley Financial, RRD (or any member of the RRD Group) shall be solely responsible for the satisfaction of all Liabilities under the RRD Deferred Compensation Plans and RRD SERPs listed in Schedule 6.5(c) , except to the extent that Liabilities thereunder have been assumed by, and transferred to, the Donnelley Financial Deferred Compensation Plans or Donnelley Financial SERPs under Section 6.5(b) . In connection therewith, the Liabilities of such applicable RRD Deferred Compensation Plans and RRD SERPs attributable to the RRD Employees and Former RRD Employees shall be retained by such RRD Deferred Compensation Plans and RRD SERPs. For the avoidance of doubt, following the

 

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Donnelley Financial Distribution Date, in no event shall RRD (or any member of the RRD Group) be responsible for any Donnelley Financial Deferred Compensation and SERP Liabilities.

(iii) All deferral and time and form of payment elections by RRD Employees and Former RRD Employees that were in effect under the terms of the applicable Legacy RRD Deferred Compensation Plans and RRD SERPs immediately prior to the Effective Time shall continue in effect from and after the Effective Time until a new election, if permitted, that by its terms supersedes the prior election is made by such RRD Employee or Former RRD Employee consistent with the provisions of Section 409A of the Code to the extent applicable.

(iv) Effective as of the LSC Distribution Date, as between RRD and LSC, and effective as of the Donnelley Financial Distribution Date, as between RRD and Donnelley Financial, RRD shall be solely responsible for the management and administration of the RRD Deferred Compensation Plans and RRD SERPs and RRD shall determine in its discretion whether deferrals for 2017 and later years are permitted under the RRD Deferred Compensation Plans.

(v) Payments to RRD Employees and Former RRD Employees under the RRD Deferred Compensation Plans and the RRD SERPs shall be made in accordance with the terms of the applicable plan by either RRD or any member of the RRD Group as determined in the sole discretion of RRD.

(d) Continued Employment . Consistent with Section 409A of the Code, the Parties agree that LSC Employees and Donnelley Financial Employees who participate in the Legacy RRD Deferred Compensation Plans and the Legacy RRD SERPs immediately prior to the applicable Relevant Time and who are employed by LSC or Donnelley Financial, as applicable, immediately following the LSC Distribution Date or the Donnelley Financial Distribution Date, as applicable, shall not experience a termination of employment or separation from service as a result of the transactions contemplated herein.

Section 6.6 Defined Benefit Plans .

(a) LSC Defined Benefit Plans .

(i) As of the LSC Distribution Date, the LSC Group shall Assume, establish or retain, as applicable, sponsorship of and be solely responsible for the management and administration of, and except as otherwise provided below, be responsible for all Assets and Liabilities under the defined benefit pension plans at that time sponsored by members of the LSC Group (collectively, the “ LSC Defined Benefit Plans ”) and the LSC Group shall be solely responsible for the satisfaction of all Liabilities thereunder.

(ii) LSC Pension Plan. The LSC Pension Plan is intended to be a Tax-qualified defined benefit pension plan under Sections 401 and 501(a) of the Code. The members of the LSC Pension Plan as of October 1, 2016 are set forth on an exhibit to the LSC Pension Plan.

 

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(A) Effective prior to the LSC Distribution Date, LSC’s operating subsidiary shall (i) appoint or elect, as appropriate, a Treasurer and a Vice President Benefits to serve as the initial members of the Benefits Committees of the LSC Pension Plan and the Esselte Group US Retirement Income Plan. In addition, the plan sponsor shall appoint members to the committee for the Dover Publications, Inc. Retirement Income Plan. LSC’s operating subsidiary shall take all actions necessary to establish the LSC Pension Trust as a master trust to hold the assets of the LSC Pension Plan and the Esselte Group US Retirement Income Plan, which trust shall be designed to be Tax exempt under Section 501(a) of the Code.

(B) Effective on the LSC Distribution Date, the administrator of the Bowne Pension Plan shall cause approximately ninety percent (90%) of the Assets of the RRD Master Trust attributable to the individuals who will be participants in the LSC Pension Plan (the “ LSC Pension Plan Participants ”), (using values as of December 1, 2015) to be transferred to the LSC Pension Trust; the balance of the RRD Master Trust Assets attributable to the LSC Pension Plan Participants shall remain in the RRD Master Trust until transferred to the LSC Pension Trust, which shall occur by the date that is nine months after the LSC Distribution Date.

(C) LSC and RRD acknowledge and agree that such transfer of Assets and Liabilities will comply with Sections 401(a)(12), 414(l) and 411(d)(6) of the Code and the regulations thereunder using the assumptions and methodology which the Pension Benefit Guaranty Corporation would have used under Section 4044 of ERISA and that the value of the Assets to be transferred as determined under Section 414(l) of the Code and the regulations thereunder shall be adjusted for the period between the LSC Distribution Date and the transfer date to reflect the investment experience under the RRD Master Trust, the LSC Pension Plan’s allocable share of expenses and any benefit distributions made to LSC Pension Plan Participants. With respect to the transfer of Assets and Liabilities from the RRD Master Trust to the LSC Pension Trust, assumptions and methodology are set forth in Schedule 6.6(a)(ii)(C) .

(iii) LSC Non-US Defined Benefit Plans. Except as set forth on Schedule 6.6(a)(iii) , for LSC Defined Benefit Plans that are intended to be Tax-qualified under non-US law (the “ LSC Non-US Defined Benefit Plans ”), such plans shall not be divided, but rather shall continue to be sponsored and maintained by the local sponsoring entity and the Assets and Liabilities thereunder shall be retained by such local entities within the LSC Group.

(iv) Provisions Applicable to all LSC Defined Benefit Plans.

 

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(A) Following the LSC Distribution Date, eligible participants shall accrue benefits (to the extent that such LSC Defined Benefit Plans are not frozen) and receive service credit, as applicable, under the LSC Defined Benefit Plans in accordance with the terms and conditions of the relevant LSC Defined Benefit Plan; provided, however, that the foregoing shall in no way alter any right of LSC, subsequent to the LSC Distribution Date, to amend or terminate any of the LSC Defined Benefit Plans in accordance with their terms and applicable Law. LSC and RRD shall reasonably cooperate with each other in order to facilitate the foregoing provisions of this Section 6.6 .

(B) The applicable Claims fiduciaries shall continue to be solely responsible for the adjudication of Claims, and appeals of Claims, under all LSC Defined Benefit Plans, whether or not the benefit was accrued prior to or following the LSC Distribution Date.

(C) Notwithstanding any other provision set forth in this Agreement, LSC and the applicable LSC Defined Benefit Plan shall indemnify, defend and hold harmless RRD, the applicable RRD Retained Defined Benefit Plan, or, if applicable, Donnelley Financial and the applicable Donnelley Financial Defined Benefit Plan (and each of their respective Affiliates, Subsidiaries, officers, employees, agents and fiduciaries) with respect to any and all Liabilities in respect of the participants in such LSC Defined Benefit Plan relating to pension benefits under such LSC Defined Benefit Plan.

(b) Donnelley Financial Defined Benefit Plans .

(i) As of the Donnelley Financial Distribution Date, the Donnelley Financial Group shall establish and maintain the defined benefit pension plans at that time sponsored by members of the Donnelley Financial Group (collectively, the “ Donnelley Financial Defined Benefit Plans ”) and the Donnelley Financial Group shall be solely responsible for the satisfaction of all Liabilities thereunder.

(ii) Donnelley Financial Pension Plan. The Donnelley Financial Pension Plan is intended to be a Tax-qualified defined benefit pension plan under Sections 401 and 501(a) of the Code. The members of the Donnelley Financial Pension Plan as of October 1, 2016 are set forth on an exhibit to the Donnelley Financial Pension Plan.

(A) Effective prior to the Donnelley Financial Distribution Date, Donnelley Financial’s operating subsidiary shall (i) appoint or elect, as appropriate, a Treasurer and a Vice President Benefits to serve as the initial members of the Benefits Committee of the Donnelley Financial Pension Plan. Donnelley Financial’s operating subsidiary shall take all actions necessary to establish the Donnelley Financial Pension Trust to hold the assets of the Donnelley Financial Pension Plan, which trust shall be designed to be Tax exempt under Section 501(a) of the Code.

 

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(B) Effective on the Donnelley Financial Distribution Date, the administrator of the Bowne Pension Plan shall cause approximately ninety percent (90%) of the Assets of the RRD Master Trust attributable to the individuals who will be participants in the Donnelley Financial Pension Plan (the “ Donnelley Financial Pension Plan Participants ”) (using values as of December 1, 2015) to be transferred to the Donnelley Financial Pension Trust; the balance of the RRD Master Trust Assets attributable to the Donnelley Financial Pension Plan Participants shall remain in the RRD Master Trust until transferred to the Donnelley Financial Pension Trust, which shall occur by the date that is nine months after the Donnelley Financial Distribution Date.

(C) Donnelley Financial and RRD acknowledge and agree that such transfer of Assets and Liabilities will comply with Sections 401(a)(12), 414(l) and 411(d)(6) of the Code and the regulations thereunder using the assumptions and methodology which the Pension Benefit Guaranty Corporation would have used under Section 4044 of ERISA and that the value of the Assets to be transferred as determined under Section 414(l) of the Code and the regulations thereunder shall be adjusted for the period between the Donnelley Financial Distribution Date and the transfer date to reflect the investment experience under the RRD Master Trust, the Donnelley Financial Pension Plan’s allocable share of expenses and any benefit distributions made to Donnelley Financial Pension Plan Participants. With respect to the transfer of Assets and Liabilities from the Bowne Pension Plan to the Donnelley Financial Pension Plan, assumptions and methodologies are set forth in Schedule 6.6(b)(ii)(C) .

(iii) Donnelley Financial Non-US Defined Benefit Plans. Except as set forth on Schedule 6.6(b)(iii) , for Donnelley Financial Defined Benefit Plans that are intended to be Tax-qualified under non-US law (the “ Donnelley Financial Non-US Defined Benefit Plans ”), such plans shall not be divided, but rather shall continue to be sponsored and maintained by the local sponsoring entity and the Assets and Liabilities thereunder shall be retained by such local entities within the Donnelley Financial Group.

(iv) Provisions Applicable to all Donnelley Financial Defined Benefit Plans.

(A) Following the Donnelley Financial Distribution Date, eligible participants shall accrue benefits (to the extent that such Donnelley Financial Defined Benefit Plans are not frozen) and receive service credit, as applicable, under the Donnelley Financial Defined Benefit Plans in accordance with the terms and conditions of the relevant Donnelley Financial Defined Benefit Plan; provided, however, that the foregoing shall

 

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in no way alter any right of Donnelley Financial, subsequent to the Donnelley Financial Distribution Date, to amend or terminate any of the Donnelley Financial Defined Benefit Plans in accordance with their terms and applicable Law. Donnelley Financial and RRD shall reasonably cooperate with each other in order to facilitate the foregoing provisions of this Section 6.6 .

(B) The applicable Claims fiduciaries shall continue to be solely responsible for the adjudication of Claims, and appeals of Claims, all Donnelley Financial Defined Benefit Plans, whether or not the benefit was accrued prior to or following the Donnelley Financial Distribution Date.

(C) Notwithstanding any other provision set forth in this Agreement, Donnelley Financial and the applicable Donnelley Financial Defined Benefit Plan shall indemnify, defend and hold harmless RRD, the applicable RRD Retained Defined Benefit Plan, or, if applicable, LSC, the Dover Publications Pension Plan and the applicable LSC Defined Benefit Plan (and each of their respective affiliates, Subsidiaries, officers, employees, agents and fiduciaries) with respect to any and all Liabilities in respect of the participants in such Donnelley Financial Defined Benefit Plan relating to pension benefits under such Donnelley Financial Defined Benefit Plan.

(c) RRD Retained Defined Benefit Plans .

(i) Following the applicable Relevant Time, RRD shall retain sole responsibility for all Assets and Liabilities of defined benefit plans sponsored by the RRD Group at such applicable Relevant Time, except to the extent that Assets and Liabilities thereunder have been assumed by, and transferred to, the LSC Defined Benefit Plans and the Donnelley Financial Defined Benefit Plans under Section 6.6(a) or Section 6.6(b) (the “ RRD Retained Defined Benefit Plans ”), and neither LSC nor Donnelley Financial shall have any obligation with respect thereto as of the applicable Relevant Time. The members of the Bowne Pension Plan as of October 1, 2016 are set forth on an exhibit to the Bowne Pension Plan.

(ii) Following the applicable Relevant Time, eligible participants in the RRD Retained Defined Benefit Plans shall continue to accrue benefits (to the extent that such RRD Retained Defined Benefit Plans are not frozen) in accordance with the terms and conditions of the relevant RRD Retained Defined Benefit Plan. Nothing contained in this Agreement shall alter in any way the right of RRD, subsequent to any applicable Relevant Time, to amend or terminate any RRD Retained Defined Benefit Plan in accordance with its terms and applicable Law.

(iii) Notwithstanding any other provision set forth in this Agreement, RRD and each applicable RRD Retained Defined Benefit Plan shall indemnify, defend and hold harmless LSC, the applicable LSC Defined Benefit Plan, or, if applicable, Donnelley Financial and the applicable Donnelley Financial Defined

 

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Benefit Plan (and each of their respective Affiliates, Subsidiaries, officers, employees, agents and fiduciaries) with respect to any and all Liabilities in respect of the participants in such RRD Retained Defined Benefit Plan relating to the provision of pension benefits pursuant to such RRD Retained Defined Benefit Plan.

Section 6.7 Defined Contribution Retirement Plans .

(a) LSC Defined Contribution Retirement Plans .

(i) As of the LSC Distribution Date, the LSC Group shall retain, Assume or establish, as applicable, the defined contribution retirement plans at that time sponsored by the LSC Group (collectively, the “ LSC Defined Contribution Retirement Plans ”) and the LSC Group shall be solely responsible for the satisfaction of all Liabilities thereunder.

(ii) LSC Savings Plan. The LSC Savings Plan is intended to be a Tax-qualified defined contribution plan under Sections 401 and 501(a) of the Code. The members of the LSC Savings Plan on September 2, 2016 are identified on Schedule 6.7 .

(A) Effective prior to the LSC Distribution Date, LSC’s operating subsidiary shall (i) appoint or elect, as appropriate, a Treasurer and a Vice President Benefits to serve as the initial members of the Benefits Committee of the LSC Savings Plan and (ii) establish the LSC Savings Trust, which will be designed to be Tax exempt under Section 501 of the Code and hold the assets of the LSC Savings Plan.

(B) On September 2, 2016, and after the administrator of the RR Donnelley Savings Plan confirms that all of the actions described in Section 6.7(a)(ii)(A) have been completed, such administrator shall cause the value of Assets of the RR Donnelley Savings Plan attributable to the LSC Savings Plan Participants to be transferred to the LSC Savings Trust in a trust-to-trust “transfer of assets or liabilities” in accordance with Section 414(l) of the Code and Section 208 of ERISA and the respective rules and regulations promulgated thereunder. The Assets will be transferred in kind to the extent practicable. The RR Donnelley Savings Plan shall retain any forfeiture account balance under the RR Donnelley Savings Plan.

(iii) LSC Non-US Defined Contribution Retirement Plans. Except as set forth on Schedule 6.7(a)(iii) , LSC Defined Contribution Retirement Plans that are intended to be Tax-qualified under non-US law (the “ LSC Non-US Defined Contribution Retirement Plans ”), shall continue to be sponsored and maintained by the local sponsoring entity and the Assets and Liabilities thereunder shall be retained by such local entities within the LSC Group.

 

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(iv) Provisions Applicable to all LSC Defined Contribution Retirement Plans.

(A) The applicable Claims fiduciaries shall continue to be solely responsible for the adjudication of Claims under the LSC Defined Contribution Retirement Plans.

(B) Nothing contained in this Agreement shall alter in any way the right of the LSC Group, subsequent to the LSC Distribution Date, to amend or terminate any of the LSC Defined Contribution Retirement Plans in accordance with its terms and applicable Law.

(C) Notwithstanding any other provision set forth in this Agreement, LSC and each LSC Defined Contribution Retirement Plan shall indemnify, defend and hold harmless RRD, the applicable RRD Retained Defined Contribution Retirement Plan, or, if applicable, Donnelley Financial and the applicable Donnelley Financial Defined Contribution Retirement Plan (and each of their respective Affiliates, Subsidiaries, officers, employees, agents and fiduciaries) with respect to any and all Liabilities in respect of the participants in such LSC Defined Contribution Retirement Plan relating to the provision of benefits pursuant to such LSC Defined Contribution Retirement Plan.

(b) Donnelley Financial Defined Contribution Retirement Plans .

(i) As of the Donnelley Financial Distribution Date, Donnelley Financial shall retain, Assume or establish, as applicable, the defined contribution retirement plans at such time sponsored by the Donnelley Financial Group (collectively, the “ Donnelley Financial Defined Contribution Retirement Plans ”) and the Donnelley Financial Group shall be solely responsible for the satisfaction of all Liabilities thereunder.

(ii) Donnelley Financial Savings Plan. The Donnelley Financial Savings Plan is intended to be a Tax-qualified defined contribution plan under Sections 401 and 501(a) of the Code. The members of the Donnelley Financial Savings Plan on September 2, 2016 are identified on Schedule 6.7 .

(A) Effective prior to the Donnelley Financial Distribution Date, Donnelley Financial’s operating subsidiary shall (i) appoint or elect, as appropriate, a Treasurer and a Vice President Benefits to serve as the initial members of the Benefits Committee of the Donnelley Financial Savings Plan and (ii) establish the Donnelley Financial Savings Trust, which will be designed to be Tax exempt under Section 501 of the Code and hold the assets of the Donnelley Financial Savings Plan.

(B) On September 2, 2016 and after the administrator of the RR Donnelley Savings Plan confirms that all of the actions described in

 

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Section 6.7(b)(ii)(A) have been completed, such administrator shall cause the value of Assets of the RR Donnelley Savings Plan attributable to the Donnelley Financial Savings Plan Participants to be transferred to the Donnelley Financial Savings Trust in a trust-to-trust “transfer of assets or liabilities” in accordance with Section 414(l) of the Code and Section 208 of ERISA and the respective rules and regulations promulgated thereunder. The Assets will be transferred in kind to the extent practicable. The RR Donnelley Savings Plan shall retain any forfeiture account balance under the RR Donnelley Savings Plan.

(iii) Donnelley Financial Non-US Defined Contribution Retirement Plans. Except as set forth on Schedule 6.7(b)(iii) , Donnelley Financial Retirement Plans that are intended to be Tax-qualified under non-US law (the “ Donnelley Financial Non-US Defined Contribution Retirement Plans ”) shall continue to be sponsored and maintained by the local sponsoring entity and the Assets and Liabilities thereunder shall be retained by such local entities within the Donnelley Financial Group.

(iv) Provisions Applicable to all Donnelley Financial Defined Contribution Retirement Plans.

(A) The applicable Claims fiduciaries shall continue to be solely responsible for the adjudication of Claims under the Donnelley Financial Defined Contribution Retirement Plans.

(B) Nothing contained in this Agreement shall alter in any way the right of the Donnelley Financial Group, subsequent to the Donnelley Financial Distribution Date, to amend or terminate any of the Donnelley Financial Defined Contribution Retirement Plans in accordance with its terms and applicable Law.

(v) Notwithstanding any other provision set forth in this Agreement, Donnelley Financial and the applicable Donnelley Financial Defined Contribution Retirement Plan shall indemnify, defend and hold harmless RRD, the applicable RRD Retained Defined Contribution Retirement Plan, or, if applicable, LSC and the applicable LSC Defined Contribution Retirement Plan (and each of their respective Affiliates, Subsidiaries, officers, employees, agents and fiduciaries) with respect to any and all Liabilities in respect of the participants in such Donnelley Financial Defined Contribution Retirement Plan relating to the provision of benefits pursuant to such Donnelley Financial Defined Contribution Retirement Plan.

(c) RRD Defined Contribution Retirement Plans .

(i) RR Donnelley Savings Plan. The RR Donnelley Savings Plan is intended to be a Tax-qualified defined contribution plan under Sections 401 and 501(a) of the Code. The members of the RR Donnelley Savings Plan on September 2, 2016 are identified on Schedule 6.7 .

 

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(ii) Following the applicable Relevant Time, RRD shall retain sole responsibility for all benefit obligations and Liabilities under the defined contribution retirement plans sponsored by the RRD Group, except to the extent that Assets and Liabilities of the RR Donnelley Savings Plan have been assumed by, and transferred to, the LSC Savings Plan and Donnelley Financial Savings Plan under Section 6.7(a) or Section 6.7(b) (collectively, the “ RRD Retained Defined Contribution Retirement Plans ”).

(iii) Eligible RRD participants shall continue accruing benefits under the RRD Retained Defined Contribution Retirement Plans in accordance with the terms and conditions of the RRD Retained Defined Contribution Retirement Plans. Nothing contained in this Agreement shall alter in any way the right of RRD, subsequent to such Relevant Time, to amend or terminate the RRD Retained Defined Contribution Retirement Plans in accordance with its terms and applicable Law.

(iv) Notwithstanding any other provision set forth in this Agreement, RRD and each applicable RRD Retained Defined Contribution Retirement Plan shall indemnify, defend and hold harmless LSC, the applicable LSC Defined Contribution Retirement Plan, or, if applicable, Donnelley Financial and the applicable Donnelley Financial Defined Contribution Retirement Plan (and each of their respective Affiliates, Subsidiaries, officers, employees, agents and fiduciaries) with respect to any and all Liabilities in respect of the participants in such RRD Retained Defined Contribution Retirement Plan relating to the provision of benefits pursuant to such RRD Retained Defined Contribution Retirement Plan.

Section 6.8 Retiree Medical Benefits . Following the applicable Relevant Time, RRD shall retain and be solely responsible for the management and administration of and satisfaction of all retiree medical, prescription drug and retiree life insurance obligations under the R.R. Donnelley & Sons Company Retiree Welfare Benefits Plan and its associated trust (the “ RRD Retiree Medical Plan ”) and shall retain all Liabilities and Assets thereof. The Parties agree that the RRD Group (and each of the RRD Affiliates and Subsidiaries) shall indemnify, defend and hold harmless each other Party (and each of their respective Affiliates, Subsidiaries, officers, employees, agents and fiduciaries) with respect to any and all Liabilities with respect to retiree medical, prescription drug and retiree life insurance obligations under the RRD Retiree Medical Plan.

Section 6.9 Health, Welfare, Voluntary and Other Compensation or Benefit Plans .

(a) US Group Benefits Plans .

(i) Establishment. Effective July 1, 2016, (A) LSC established the LSC Group Benefits Plan and (B) Donnelley Financial established the Donnelley Financial Group Benefits Plan and, accordingly, as of July 1, 2016, LSC

 

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Employees and Donnelley Financial Employees ceased participating in the RR Donnelley Group Benefits Plan, except as otherwise provided herein. The newly established LSC Group Benefits Plan and Donnelley Financial Group Benefits Plan are substantially comparable to the RR Donnelley Group Benefits Plan.

(ii) Administration and Financial Responsibility for Employer Related Costs. Effective July 1, 2016, LSC Communications US, LLC and Donnelley Financial, LLC appointed or elected, as appropriate, a Treasurer and a Vice President Benefits to serve as the initial members of the Benefits Committees of the LSC Group Benefits Plan and the Donnelley Financial Group Benefits Plan, respectively. Effective July 1, 2016, (A) the Benefits Committee of the LSC Group Benefits Plan is solely responsible for the management and administration of the LSC Group Benefits Plan and LSC Communications US, LLC is solely responsible for the payment of all employer-related costs in establishing and maintaining the LSC Group Benefits Plan, and for the collection and remittance of participant contributions and premiums, (B) the Benefits Committee of the Donnelley Financial Group Benefits Plan is solely responsible for the management and administration of the Donnelley Financial Group Benefits Plan and Donnelley Financial, LLC is solely responsible for the payment of all employer-related costs in establishing and maintaining the Donnelley Financial Group Benefits Plan, and for the collection and remittance of participant contributions and premiums, and (C) RRD retains sole responsibility for all Liabilities under the RR Donnelley Group Benefits Plan and sole responsibility for the payment of all employer-related costs in maintaining the RR Donnelley Group Benefits Plan, and for the collection and remittance of participant contributions and premiums.

(iii) Claims and Appeals; Financial Responsibility for Self-Insured Benefits and Claims. (A) The applicable Claims fiduciary under the LSC Group Benefits Plan shall be solely responsible for the adjudication of any Claim, and any appeal of any Claim, (whether for eligibility or benefits) submitted under the LSC Group Benefits Plan. The members of LSC’s “controlled group” (as defined in Section 414(b) of the Code) shall bear sole financial responsibility for any Claim for (1) eligibility under the LSC Group Benefits Plan and (2) self-insured benefits of the sort covered by the LSC Group Benefits Plan on July 1, 2016, incurred by an LSC Employee (or his or her dependents or beneficiaries) if the date of service, or date of claimed eligibility, which is the subject of such Claim was on or after July 1, 2016. (B) The applicable Claims fiduciary under the Donnelley Financial Group Benefits Plan shall be solely responsible for the adjudication of any Claim, and any appeal of any Claim, (whether for eligibility or benefits) submitted under the Donnelley Financial Group Benefits Plan. The members of Donnelley Financial’s “controlled group” (as defined in Section 414(b) of the Code) shall bear sole financial responsibility for any Claim for (1) eligibility under the Donnelley Financial Group Benefits Plan and (2) self-insured benefits of the sort covered by the Donnelley Financial Group Benefits Plan on July 1, 2016, incurred by a Donnelley Financial Employee (or his or her dependents or beneficiaries) if the date of service, or date of claimed eligibility, which is the subject of such Claim was on or after July 1, 2016. (C) The applicable Claims fiduciary under the RR Donnelley

 

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Group Benefits Plan shall be solely responsible for the adjudication of any Claim, and any appeal of any Claim, (whether for eligibility or benefits) submitted under the RR Donnelley Group Benefits Plan. The members of RRD’s “controlled group” (as defined in Section 414(b) of the Code) shall bear sole financial responsibility for any Claim for (1) eligibility under the RR Donnelley Group Benefits Plan or (2) self-insured benefits of the sort covered by the RR Donnelley Group Benefits Plan on July 1, 2016, incurred by (x) a RRD Employee (or his or her dependents or beneficiaries) if, with respect to clauses (1) and (2) of this Subsection (C), the date of service, or date of claimed eligibility, which is the subject of such Claim was on or after July 1, 2016, and (y) an LSC Employee, Former LSC Employee, Donnelley Financial Employee, Former Donnelley Financial Employee, RRD Employee or Former RRD Employee (or any of their respective dependents or beneficiaries) if, with respect to clauses (1) and (2) of this Subsection (C), the date of service, or date of claimed eligibility, which is the subject of such Claim was before July 1, 2016.

(iv) Liability for Incurred But Not Reported Claims. As of June 30, 2016, (A) the reserve included in RRD’s financial statements for “Incurred But Not Reported” medical and prescription drug expenses attributable to an LSC Employee or Former LSC Employee will remain under the RR Donnelley Group Benefits Plan, and (B) the reserve included in RRD’s financial statements for “Incurred But Not Reported” medical and prescription drug expenses attributable to a Donnelley Financial Employee or Former Donnelley Financial Employee will remain under the RR Donnelley Group Benefits Plan.

(v) COBRA. Any COBRA Liabilities incurred based on any COBRA qualifying event occurring on or after July 1, 2016 that is (A) attributable to the LSC Group Benefits Plan shall be an LSC Communications US, LLC Liability and (B) attributable to the Donnelley Financial Group Benefits Plan shall be a Donnelley Financial, LLC Liability. Any COBRA Liabilities incurred based on any COBRA qualifying event occurring prior July 1, 2016 shall remain an RRD Liability.

(vi) Service Credit. Each eligible LSC Employee and Donnelley Financial Employee will receive credit under the LSC Group Benefits Plan or the Donnelley Financial Group Benefits Plan, as applicable, in 2016 for any co-payments and deductibles paid under the RR Donnelley Group Benefits Plan prior to July 1, 2016, in satisfying any applicable deductible or out-of-pocket requirements under the LSC Group Benefits Plan or the Donnelley Financial Group Benefits Plan, as applicable. The LSC Group Benefits Plan and the Donnelley Financial Group Benefits Plan shall each cover any pre-existing conditions that are covered under the RRD Group Benefits Plan.

(vii) Disability Benefits. Each LSC Employee and each Donnelley Financial Employee who is receiving long-term disability benefits under the RR Donnelley Group Benefits Plan on June 30, 2016 shall continue to participate in the Long Term Disability Benefit Program under the RR Donnelley Group Benefits

 

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Plan (subject to the terms of such Program) until such time, if any, as such employee either returns to work and commences employment with the LSC Group or Donnelley Financial Group, as applicable. Each LSC Employee and each Donnelley Financial Employee who is receiving short-term disability benefits under the RR Donnelley Group Benefits Plan on June 30, 2016 shall commence participation in the LSC or Donnelley Financial Group Benefits Plan (subject to the terms of such Plan), as applicable. On and after July 1, 2016, each of RRD, LSC Communications US, LLC and Donnelley Financial, LLC shall be solely responsible for providing disability coverage as required under New York State law for each applicable participant.

(b) Non-US Welfare Benefit Plans . Except as set forth on Schedule 6.9(b) , non-US welfare benefit plans covering LSC Employees, Former LSC Employees, Donnelley Financial Employees, Former Donnelley Financial Employees, RRD Employees and Former RRD Employees shall continue to be sponsored and maintained by the local sponsoring entity and any Assets and Liabilities thereunder shall be retained by such local entities within the LSC Group, Donnelley Financial Group or RRD Group, respectively.

(c) US Flexible Benefits Plans .

(i) Effective July 1, 2016, LSC Communications US, LLC established the LSC Flexible Benefits Plan and on and after that date LSC is solely responsible for the management and administration thereof.

(ii) Effective July 1, 2016, Donnelley Financial, LLC established the Donnelley Financial Flexible Benefits Plan and on and after that date Donnelley Financial, LLC is solely responsible for the management and administration thereof.

(iii) Effective July 1, 2016, the RR Donnelley Flexible Benefits Plan (A) transferred to the LSC Flexible Benefits Plan any remaining flexible spending account balance (positive or negative) and dependent care account balance of any LSC Employee who was participating in the RR Donnelley Flexible Benefits Plan as of June 30, 2016, and (B) transferred to the Donnelley Financial Flexible Benefits Plan any remaining flexible spending account balance (positive or negative) and dependent care account balance of any Donnelley Financial Employee who was participating in the RR Donnelley Flexible Benefits Plan as of June 30, 2016.

(d) Severance Plans.

(i) US Severance Plans. Effective July 1, 2016, (A) LSC Communications US, LLC established the LSC Separation Pay Plan and is solely responsible for any severance Liabilities to any LSC Employee whose employment terminates on or after July 1, 2016 and (B) Donnelley Financial, LLC established the Donnelley Financial Separation Pay Plan and is solely responsible for any

 

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severance Liabilities relating to any Donnelley Financial Employee whose employment terminates on or after July 1, 2016. RRD retained sole responsibility for any severance Liabilities relating to RRD Employees whose employment terminates on or after July 1, 2016 and Former RRD Employees, Former LSC Employees and Former Donnelley Financial Employees, in each case, whose employment terminated before July 1, 2016. In no event shall an employee receive a duplication of severance benefits.

(ii) Non-US Severance Plans. Except as set forth on Schedule 6.9(d)(ii) , Non-US Severance Plans covering LSC Employees, Former LSC Employees, Donnelley Financial Employees, Former Donnelley Financial Employees, RRD Employees and Former RRD Employees shall continue to be sponsored and maintained by the local sponsoring entity and any Assets and Liabilities thereunder shall be retained by such local entities within the LSC Group, Donnelley Financial Group or RRD Group, respectively.

(e) Voluntary Benefits . Effective as of July 1, 2016, LSC Communications US, LLC, Donnelley Financial, LLC and RRD each established, or maintained (as applicable), and will maintain its own voluntary benefit plans, policies and arrangements, which on July 1, 2016 included the Colonial Life Supplemental Short Term Disability Coverage, Hyatt Legal Plans, MetLife Auto & Home Insurance, VPI Pet Insurance, Wage Works Commuter Program and Purchasing Power, which are fully paid by employees. LSC shall be solely responsible for the collection and remittance of employee contributions for such voluntary benefits owed by LSC Employees on or after July 1, 2016; Donnelley Financial shall be solely responsible for collection and remittance of employee contributions for such voluntary benefits owed by Donnelley Financial Employees on or after July 1, 2016; and RRD shall retain all related responsibilities with respect to collection and remittance of employee contributions for such voluntary benefits owed by RRD Employees on or after July 1, 2016.

(f) Paid Time Off and Payroll . Following the applicable Relevant Time, each Party shall establish or retain their own paid time off policy and (i) any earned but unused paid time off (including vacation pay) that a LSC Employee is entitled to as of the LSC Distribution Date will be credited to the LSC Employee under the LSC paid time off policy and provided in accordance with that policy; (ii) any earned but unused paid time off (including vacation pay) that a Donnelley Financial Employee is entitled to as of the Donnelley Financial Distribution Date will be credited to the Donnelley Financial Employee under the Donnelley Financial paid time off policy and provided in accordance with that policy; and (iii) any earned but unused paid time off (including vacation pay) that a RRD Employee is entitled to as of each applicable Relevant Time will be continued by the RRD paid time off policy and provided in accordance with that policy. On and after the applicable Distribution Date, each Party shall have no liability for paid time off on behalf of another Party’s employees.

(g) Annual Bonus Plans . Following the applicable Relevant Time, each Party (or their applicable Affiliate or Subsidiary) shall Assume and be responsible for all Liabilities and fully perform, pay and discharge all annual bonus obligations relating to any

 

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annual incentive plan for their respective employees and former employees for 2016 and thereafter. With respect to the period beginning January 1, 2016 and ending on the LSC Distribution Date, LSC shall calculate the bonus for LSC Employees that participated in a RRD bonus program using the applicable performance criteria for such period and such calculation shall be in a manner consistent with the terms of RRD’s bonus programs. With respect to the period beginning January 1, 2016 and ending on the Donnelley Financial Distribution Date, Donnelley Financial shall calculate the bonus for Donnelley Financial Employees that participated in a RRD bonus program using the applicable performance criteria for such period and such calculation shall be in a manner consistent with the terms of RRD’s bonus programs. In no event shall any employee receive a duplication of such benefits hereunder.

(h) Employment and Restrictive Covenant Agreements .

(i) As of the applicable Relevant Time, (A) the LSC Group shall Assume, establish or retain, as applicable, and be solely responsible for the administration and enforcement of, and all Liabilities under, the employment and restrictive covenant agreements covering LSC Employees and Former LSC Employees, (B) the Donnelley Financial Group shall Assume, establish or retain, as applicable, and be solely responsible for the administration and enforcement of, and all Liabilities under, the employment and restrictive covenant agreements covering Donnelley Financial Employees and Former Donnelley Financial Employees, and (C) the RRD Group shall establish or retain, as applicable, and be solely responsible for the administration and enforcement of, and all Liabilities under, the employment and restrictive covenant agreements covering RRD Employees and Former RRD Employees.

(ii) As of the applicable Relevant Time, LSC Employees and Donnelley Financial Employees who are obligated to RRD under any non-compete, employee non-solicit or customer non-solicit covenants contained in any employment, severance or other agreement (together, the “ Restrictive Covenants ”) shall become obligated to LSC or Donnelley Financial, as applicable, under such Restrictive Covenants and shall cease to be obligated to RRD thereunder. RRD Employees shall remain obligated to RRD under their Restrictive Covenants. In addition, for each RRD Employee, LSC Employee and Donnelley Financial Employee listed on Schedule 6.9(h)(ii) , if such employee’s employment terminates during the Wear Away Period, he or she shall be obligated under his or her Restrictive Covenants to the other Parties who were not his or her post-spin employer for the period, if any, beginning on the date of termination and ending at the conclusion of the Wear Away Period.

(iii) For all RRD Employees, LSC Employees and Donnelley Financial Employees who are obligated to RRD prior to the applicable Relevant Time under any confidentiality or non-disparagement covenants, such covenants shall survive at all times, both during and after employment, with respect to each such employee’s post-spin employer, and shall survive and also apply to each of the other Parties at all times following each such employee’s termination of employment.

 

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(iv) The Parties agree they shall reasonably cooperate and work together to enforce the Restrictive Covenants and the provisions of this Section 6.9(h) .

Section 6.10 Cooperation and Administrative Provisions .

(a) Notwithstanding anything herein to the contrary, the Parties shall reasonably cooperate and work together to unify, consolidate and share (to the extent permissible under applicable privacy/data protection laws) all relevant documents, board resolutions, government filings, data, payroll and employment Information on regular timetables, make certain that each applicable entity’s data and records are correct and updated on a timely basis, and cooperate as needed with respect to (i) any litigation with respect to an employee benefit plan or arrangement contemplated by this Agreement, (ii) an audit of an employee benefit plan or arrangement contemplated by this Agreement by the Internal Revenue Service, Department of Labor or any other Governmental Entity, (iii) seeking a determination letter, private letter ruling or advisory opinion from the Internal Revenue Service or Department or Labor on behalf of any employee benefit plan or arrangement contemplated by this Agreement, and (iv) any filings that are required to be made or supplemented to the Internal Revenue Service, Pension Benefit Guaranty Corporation, Department of Labor or any other Governmental Entity; provided, however, that requests for cooperation must be reasonable and not interfere with daily business operations.

(b) Notwithstanding anything herein to the contrary, the Parties agree that they shall share all necessary data elements to administer the RRD, LSC and Donnelley Financial equity plans described in Section 6.1 and Section 6.2 for up to a period not to exceed ten (10) years following the Final Separation Date. This data shall be made available in the formats that exist at the time of the distribution or in any other mutually agreeable format. Data shall be transmitted to these administrators via a mutually agreeable method of data transmission. Each Party also agrees to ensure that their plan administrator will make available all necessary data elements required now or in the future including but not limited to, exercise, lapse and Tax data, in a timely fashion and to withhold appropriate Taxes at the direction of the employer company of the individual for the time period covered under this provision.

(c) With respect to any employees on temporary international assignment or outside of the U.S. as an ex-patriate who become LSC Employees or Donnelley Financial Employees, the Parties agree that they shall reasonably cooperate to finalize the transfer of any immigration documentation, including, but not limited to, sponsorship of visas, permanent resident cards or reentry permits. In addition, with respect to any employees who are subject to any immigration documentation sponsored by RRD and become an LSC Employee or Donnelley Financial Employee, the Parties agree they shall reasonably cooperate to finalize the transfer of such documentation to LSC or Donnelley Financial, as applicable. LSC shall be responsible for any costs and expenses incurred on behalf of any LSC Employee. Donnelley Financial shall be responsible for any costs and expenses incurred on behalf of any Donnelley Financial Employee.

 

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(d) The Parties shall share, or cause to be shared, all Information on participants in the LSC Plans, Donnelley Financial Plans and RRD Retained Plans that is necessary and appropriate for the efficient and accurate administration of the LSC Plans, Donnelley Financial Plans and RRD Retained Plans, including (but not limited to) Information reasonably necessary to timely respond to Claims for benefits made by participants and Information on expenses incurred by LSC Plans prior to the LSC Distribution Date and Donnelley Financial Plans prior to the Donnelley Financial Distribution Date so that LSC and Donnelley Financial may invoice and pay administrative expenses from their respective plan trusts as described in paragraph (g) below. The Parties and their respective authorized agents shall, subject to applicable laws of confidentiality and data protection and transfer, be given reasonable and timely access to, and may make copies of, all Information relating to the subjects of this Article VI to the extent necessary or appropriate for such administration. Each of the Parties agree, upon reasonable request, to provide financial, operational and other Information on each LSC Plan, Donnelley Financial Plan and RRD Retained Plan, including (but not limited to) Information on a plan’s assets and liabilities, at a level of detail reasonably necessary and appropriate for the efficient and accurate administration of each of the LSC Plans, Donnelley Financial Plans and RRD Retained Plans. Notwithstanding the foregoing, if any such Information described in this Section 6.10 . cannot be reasonably obtained without additional cost, the Parties shall agree to reimburse each of the other Parties for all additional third-party costs and such other reasonable costs of obtaining the Information. To the extent that the LSC Group Benefits Plan, the Donnelley Financial Group Benefits Plan and the RR Donnelley Group Benefits Plan share protected health Information (“ PHI ”), the LSC Group Benefits Plan, the Donnelley Financial Group Benefits Plan and the RR Donnelley Group Benefits Plan hereby agree to enter into appropriate business associate agreements to cover the sharing of PHI, as required by the Health Insurance Portability and Accountability Act of 1996 (“ HIPAA ”).

(e) Each of LSC and Donnelley Financial agrees to hold RRD harmless with respect to any Liabilities related to actions taken to establish the LSC Plans and the Donnelley Financial Plans (and related third party administrative agreements) prior to the applicable Relevant Time.

(f) To the extent not covered elsewhere in this Agreement, with respect to expenses and costs incurred on behalf of a LSC Plan, Donnelley Financial Plan or RRD Retained Plan: (i) LSC shall be responsible, through either direct payment or reimbursement to RRD or Donnelley Financial, as applicable, for its allocable share of actual third party and/or vendor costs and expenses incurred by any member of the LSC Group or the LSC Plans, (ii) Donnelley Financial shall be responsible, through either direct payment or reimbursement to RRD or LSC, as applicable, for its allocable share of actual third party and/or vendor costs and expenses incurred by any member of the Donnelley Financial Group or the Donnelley Financial Plans, and (iii) RRD shall be responsible, through either direct payment or reimbursement to LSC or Donnelley Financial, as applicable, for its allocable share of actual third party and/or vendor costs and expenses

 

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incurred by any member of the RRD Group or the RRD Retained Plans. An allocable share of any such costs and expenses will be determined in a manner consistent with the manner in which the allocable share of such costs and expenses was determined prior to the applicable Distribution Date. The Parties agree to pay for any third-party costs associated partially or entirely with their respective employee benefit plans associated with this Distribution following the applicable Distribution Date.

(g) To the extent not covered elsewhere in this Agreement, with respect to all employee benefit plans, policies, programs, payroll practices, and arrangements maintained outside of the United States, the Parties agree that they shall reasonably cooperate and work together to facilitate any transfer of employee benefit plans, policies, programs, payroll practices, and arrangements as necessary and in accordance with applicable Law.

(h) With respect to multinational insurance pools that the Parties’ entities participate in immediately prior to the applicable Relevant Time, any dividends attributable to each such pool as of the applicable Relevant Time shall be paid from each such pool to RRD. To the extent the Parties establish any multinational insurance pools following the applicable Relevant Time, dividends attributable to any such pool shall be paid from such pool to the applicable Party.

(i) To the extent not covered elsewhere in this Agreement, the Parties (and their Subsidiaries and Affiliates) are hereby authorized to implement the provisions of this Article VI , including by making appropriate adjustments to employee benefits provided for in this Agreement, provided such adjustments are intended for administrative or recordkeeping purposes to retain the value of benefits provided in accordance with the provisions of this Agreement.

(j) Code Sections 162(m)/409A . Notwithstanding anything in this Agreement to the contrary (including the treatment of supplemental and deferred compensation plans, Performance Share Units, outstanding long-term incentive awards and annual incentive awards as described herein), (i) to the extent that any Performance Share Units, long-term and annual incentive awards or other compensation awarded to LSC Employees and Donnelley Financial Employees that is intended to qualify as “performance based compensation” (within the meaning of Section 162(m) of the Code) requires certification of the level of achievement of the applicable performance goals by the Human Resources Committee of the RRD Board (the “ HR Committee ”) in order to so qualify, the HR Committee shall make such certification in accordance with Section 162(m) of the Code, and (ii) the Parties agree to negotiate in good faith regarding the need for any treatment different from that otherwise provided herein to ensure that (A) a federal income Tax deduction for the payment of any such Performance Share Units, long-term incentive award, annual incentive award or other compensation is not limited by reason of Section 162(m) of the Code, and (B) the treatment of such supplemental or deferred compensation or long-term incentive award, annual incentive award or other compensation does not cause the imposition of a Tax under Section 409A of the Code.

 

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Section 6.11 Approval of Plans; Terms of Participation by Employees in Plans .

(a) Approval of Plans . On or prior to the Relevant Time, the Parties shall take all actions as may be necessary to approve the stock-based employee compensation plans of LSC or Donnelley Financial, as applicable, in order to satisfy the requirements of Rule 16b-3 under the Exchange Act and the applicable rules and regulations of NYSE.

(b) Non-Duplication of Benefits . The LSC Plans, Donnelley Financial Plans and RRD Retained Plans shall not provide benefits that duplicate benefits provided to a participant by a corresponding LSC Plan, Donnelley Financial Plan, or RRD Retained Plans. The Parties shall agree on methods and procedures, including amending the respective plan documents, to prevent LSC Employees, Former LSC Employees, Donnelley Financial Employees, Former Donnelley Financial Employees, RRD Employees and Former RRD Employees from receiving duplicate benefits from the LSC Plans, Donnelley Financial Plans, and RRD Retained Plans; provided, that nothing shall prevent LSC from unilaterally amending the LSC Plans to avoid such duplication, nothing shall prevent Donnelley Financial from unilaterally amending the Donnelley Financial Plans to avoid such duplication, and nothing shall prevent RRD from unilaterally amending the RRD Retained Plans to avoid such duplication.

(c) Service Credit . The Parties shall jointly continue the engagement of Milliman, Inc., or agree on and engage a successor, to collect employment data from each of the Parties and provide appropriate reports to the plan administrators of the Bowne Pension Plan, the LSC Pension Plan and the Donnelley Financial Pension Plan to permit each such administrator to track employment service of its plan participants after the applicable Relevant Time with any of the Parties for purposes of determining service credit under such plan in accordance with its terms. Further, the Parties agree to continue to provide information and data requested by such vendor, in a format acceptable to such vendor, to permit such vendor to generate such reports. Each of RRD, LSC and Donnelley Financial shall be responsible for paying when due one-third of the fees and expenses of such vendor for providing such services, unless an alternative fee-sharing arrangement is agreed by the Parties.

(d) Plan Elections . Except as may be specifically provided otherwise under this Agreement or applicable Law, all participant elections (including, without limitation, deferral elections, payment elections, beneficiary designations, qualified domestic relations orders, qualified medical child support orders and loan agreements) with respect to the participation of a LSC Employee, Former LSC Employee, Donnelley Financial Employee, Former Donnelley Financial Employee, RRD Employee or Former RRD Employee in a RRD employee benefit arrangement shall be transferred to and be in full force and effect under the corresponding and applicable LSC Plan or Donnelley Financial Plan in accordance with the terms of each such applicable plan and to the extent permissible under such plan, until such elections are replaced or revoked by the employee who made such election.

 

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Section 6.12 Taxes and Withholding .

(a) Options .

(i) Exercise Price .

(A) Upon the exercise of a LSC Option, whether by a RRD Employee, Former RRD Employee, LSC Employee, Former LSC Employee, Donnelley Financial Employee, Former Donnelley Financial Employee, the Parties shall take steps to ensure that the exercise price is delivered to LSC, rounded up to the nearest whole cent.

(B) Upon the exercise of a Donnelley Financial Option, whether by a RRD Employee, Former RRD Employee, LSC Employee, Former LSC Employee, Donnelley Financial Employee, Former Donnelley Financial Employee, the Parties shall take steps to ensure that the exercise price is delivered to Donnelley Financial, rounded up to the nearest whole cent.

(C) Upon the exercise of a RRD Option, whether by a RRD Employee, Former RRD Employee, LSC Employee, Former LSC Employee, Donnelley Financial Employee, Former Donnelley Financial Employee, the Parties shall take steps to ensure that the exercise price is delivered to RRD, rounded up to the nearest whole cent.

(ii) Taxes .

(A) Upon the exercise of a LSC Option, Donnelley Financial Option or RRD Option, the employer or, in the case of a Former RRD Employee, Former LSC Employee or Former Donnelley Financial Employee, the former employer of such holder shall fund and be liable to the applicable Governmental Entity for any employer Taxes.

(B) Upon the exercise of a LSC Option, Donnelley Financial Option or RRD Option, the Parties shall take steps to ensure that the applicable withholding amount is remitted in cash to the employer or, in the case of a Former RRD Employee, Former LSC Employee or Former Donnelley Financial Employee, the former employer of such holder.

(b) Restricted Stock Units .

(i) Settlement .

(A) After the LSC Distribution Date, LSC shall be responsible for all liabilities under LSC Restricted Stock Units, whether such LSC Restricted Stock Units are held by LSC Employees, Former LSC Employees, Donnelley Financial Employees, Former Donnelley Financial Employees, RRD Employees, Former RRD Employees and individuals who received such LSC Restricted Stock Units in their capacity as LSC directors. LSC shall settle, and satisfy any dividend obligations with respect to, such LSC Restricted Stock Units in accordance with the terms of the 2016 LSC Communications, Inc. Performance Incentive Plan and the 2016 LSC Communications, Inc. Non-Employee Director Compensation Plan.

 

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(B) After the Donnelley Financial Distribution Date, Donnelley Financial shall be responsible for all liabilities under Donnelley Financial Restricted Stock Units, whether such Donnelley Financial Restricted Stock Units are held by Donnelley Financial Employees, Former Donnelley Financial Employees, LSC Employees, Former LSC Employees, RRD Employees, Former RRD Employees and individuals who received such Donnelley Financial Restricted Stock Units in their capacity as Donnelley Financial directors. Donnelley Financial shall settle, and satisfy any dividend obligations with respect to, such Donnelley Financial Restricted Stock Units in accordance with the terms of the 2016 Donnelley Financial Solutions, Inc. Performance Incentive Plan and the 2016 Donnelley Financial Solutions, Inc. Non-Employee Director Compensation Plan.

(C) RRD shall be responsible for all liabilities under RRD Restricted Stock Units, whether such RRD Restricted Stock Units are held by RRD Employees, Former RRD Employees, LSC Employees, Former LSC Employees, Donnelley Financial Employees, Former Donnelley Financial Employees and individuals who received such RRD Restricted Stock Units in their capacity as RRD directors. RRD shall settle, and satisfy any dividend obligations with respect to, such RRD Restricted Stock Units in accordance with the terms of the 2012 RRD Performance Incentive Plan and the RRD Non-Employee Director Compensation Plan.

(ii) Taxes .

(A) Upon settlement of any LSC Restricted Stock Unit, Donnelley Financial Restricted Stock Unit or RRD Restricted Stock Unit, other than a RRD Restricted Stock Unit that is held by an individual who received such RRD Restricted Stock Unit in his capacity as a RRD director, the employer, or, in the case of a Former LSC Employee, Former Donnelley Financial Employee or Former RRD Employee, the former employer, of such holder shall fund any employer Taxes.

(B) Upon settlement of any LSC Restricted Stock Unit, Donnelley Financial Restricted Stock Unit or RRD Restricted Stock Unit, other than a RRD Restricted Stock Unit that is held by an individual who received such RRD Restricted Stock Unit in his capacity as a RRD director, the Parties shall take steps to ensure that the applicable withholding amount is remitted in cash to the employer, or, in the case of a Former LSC Employee, Former Donnelley Financial Employee or Former RRD Employee, the former employer of such holder.

(C) RRD shall be responsible for any Tax reporting obligations associated with any RRD Restricted Stock Units that are held by an individual who received such RRD Restricted Stock Unit in his capacity as a RRD director.

 

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(c) Tax Deductions . With respect to the Equity Compensation held by individuals who are RRD Employees or RRD directors at the time the Equity Compensation becomes Taxable and individuals who are Former RRD Employees at such time, RRD shall claim any federal, state and/or local Tax deductions after the Final Separation Date, and LSC and Donnelley Financial shall not claim such deductions. With respect to the Equity Compensation held by individuals who are LSC Employees or LSC directors at the time the Equity Compensation becomes Taxable and individuals who are Former LSC Employees at such time, LSC shall claim any federal, state and/or local Tax deductions after the LSC Distribution Date, and RRD and Donnelley Financial shall not claim such deductions. With respect to the Equity Compensation held by individuals who are Donnelley Financial Employees or Donnelley Financial directors at the time the Equity Compensation becomes Taxable and individuals who are Former Donnelley Financial Employees at such time, Donnelley Financial shall claim any federal, state and/or local Tax deductions after the Donnelley Financial Distribution Date, and LSC and RRD shall not claim such deductions. If any of RRD, LSC or Donnelley Financial determines in its reasonable judgement that there is a substantial likelihood that a Tax deduction that was assigned to RRD, LSC or Donnelley Financial pursuant to this Section 6.12 will instead be available to another of the Parties (whether as a result of a determination by the Internal Revenue Service, a change in the Code or the regulations or guidance thereunder, or otherwise), it will notify the other Party and all Parties will negotiate in good faith to resolve the issue in accordance with the following principle: the Party entitled to the deduction shall pay to the other party an amount that places the other Party in a financial position equivalent to the financial position the Party would have been in had the Party received the deduction as intended under this Section 6.12 . Such amount shall be paid within ninety (90) days of filing the last Tax return necessary to make the determination described in the preceding sentence.

Section 6.13 International Regulatory Compliance . RRD shall have the authority to adjust the treatment otherwise described in this Article VI in order to ensure compliance with the applicable laws or regulations of countries outside the United States or to preserve the Tax benefits provided under local Tax law or regulation prior the Distributions.

ARTICLE VII

RRD CONTINGENT ASSETS AND ASSUMED RRD CONTINGENT LIABILITIES

Section 7.1 RRD Contingent Assets and Assumed RRD Contingent Liabilities .

(a) RRD Contingent Assets . To the extent that a Party or any member of its Group receives from a third party any proceeds of any kind arising out of a RRD Contingent Asset, to the extent necessary, such Party shall, or shall cause the applicable member of its Group to, promptly (but in no event later than thirty (30) days following receipt thereof, unless there is a good faith dispute as to whether such proceeds are in fact RRD Contingent Assets and the matter has been submitted for resolution pursuant to the

 

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terms of this Agreement, in which case, promptly following the final determination thereof) transfer such amounts to the other Parties pursuant to and in accordance with their respective Applicable Percentage. Transfers under this Section 7.1(a) are subject to the relevant Parties’ agreement (i) as to the most cost efficient means of effecting such Transfer and (ii) to share any incremental costs arising as a result of such Transfer.

(b) Assumed RRD Contingent Liabilities . Except as otherwise expressly set forth in this Article VII or a Tax Disaffiliation Agreement (with respect to Taxes) and without limiting the indemnification provisions of Article VIII , RRD, LSC and Donnelley Financial shall each be responsible for each such Party’s share of any indemnifiable losses in respect of any Assumed RRD Contingent Liabilities pursuant to and in accordance with the relevant provisions of Article VIII ; provided , that so long as any such Party is still an Affiliate of RRD, RRD shall be responsible for such Party’s Applicable Percentage of any such Assumed RRD Contingent Liability. Any amounts owed in respect of any Assumed RRD Contingent Liabilities (including reimbursement for the out-of-pocket costs and expenses of defending, managing or providing assistance to the Managing Party pursuant to Section 7.3(b) with respect to any Third Party Claim that is an Assumed RRD Contingent Liability, which shall include any amounts with respect to a bond, prepayment or similar security or obligation required (or determined to be advisable by the Managing Party) to be posted by the Managing Party in respect of any claim) shall be remitted promptly after the Party entitled to such amount provides an invoice (including reasonable supporting Information with respect thereto) to the Party or Parties owing such amount and such costs and expenses shall be included in the calculation of the amount of the applicable Assumed RRD Contingent Liability in determining the reimbursement obligations of the other Parties with respect thereto. In furtherance of the foregoing, the Managing Party (and the Party providing assistance to the Managing Party pursuant to Section 7.3(b) ) shall be entitled to reimbursement by the other Parties (in an amount equal to the Party’s Applicable Percentage) of any out-of-pocket costs and expenses (which shall include the costs of salaries and benefits of employees who are solely dedicated to the management or defense of such Assumed RRD Contingent Liability but less any pro rata portion of overhead or other costs of employing such employees which would have been incurred by such employees’ employer regardless of the employees’ service as managing the Assumed RRD Contingent Liability) related to or arising out of defending or managing any such Assumed RRD Contingent Liability from LSC and Donnelley Financial, as applicable, from time to time when invoiced, in advance of a final determination or resolution of any Action related to an Assumed RRD Contingent Liability. For US federal income Tax purposes, the Parties shall treat the payment of Assumed RRD Contingent Liabilities (and costs and expenses relating to Assumed RRD Contingent Liabilities, as the case may be) as set forth in a Tax Disaffiliation Agreement. It shall not be a defense to any obligation by any Party to pay any amounts, whether pursuant to this Article VII or in respect of Indemnifiable Losses pursuant to Article VIII , in respect of any Assumed RRD Contingent Liability that (i) such Party was not consulted in the defense or management thereof, (ii) that such Party’s views or opinions as to the conduct of such defense were not accepted or adopted, (iii) that such Party does not approve of the quality or manner of the defense thereof or (iv) that such Assumed RRD Contingent Liability was incurred by reason of a settlement rather than by a judgment or other determination of Liability (even if, subject in each case to Section 7.4 and Section 8.6 , such settlement was effected without the consent or over the objection of such Party).

 

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Section 7.2 Management of RRD Contingent Assets and Assumed RRD Contingent Liabilities .

(a) For purposes of this Article VII , “ Managing Party ” shall initially mean RRD; provided , however , that under certain circumstances another Party may become the Managing Party as may be otherwise agreed to in writing by the Parties.

(b) Except as provided in a Tax Disaffiliation Agreement (with respect to management of Tax audits), the Managing Party shall, on behalf of the other Parties, have sole and exclusive authority to commence, prosecute, manage, control, conduct or defend (or Assume the defense of) or otherwise determine all matters whatsoever (including, as applicable, litigation strategy and choice of legal counsel or other professionals) with respect to any RRD Contingent Asset and, on behalf of the other Parties, any Action or Third Party Claim with respect to an Assumed RRD Contingent Liability (including with respect to those RRD Contingent Assets and Assumed RRD Contingent Liabilities set forth on Schedule 1.1(204) and Schedule 1.1(18) ). The Managing Party shall use its reasonable best efforts to promptly notify the other Parties in the event that it commences an Action with respect to a RRD Contingent Asset; provided , that the failure to provide such notice shall not give rise to any rights on the part of the other Parties against the Managing Party or affect any other provision of this Section 7.2 . So long as the Managing Party has assumed and is actively and diligently conducting the defense of any Assumed RRD Contingent Liability in accordance with this Section 7.2(b) , the other Parties will not consent to the entry of any judgment or enter into any settlement with respect to the Assumed RRD Contingent Liability without the prior written consent of the Managing Party , with such consent not to be unreasonably withheld, delayed or conditioned.

(c) Each Party acknowledges that the Managing Party may elect not to pursue any RRD Contingent Asset for any reason whatsoever (including a different assessment of the merits of any Action, claim or right than the other Parties or any business reasons that may be in the best interests of the Managing Party or a member of such Managing Party Group, without regard to the best interests of any member of the other Groups) and that no member of the Managing Party Group shall have any Liability to any Person (including any member of the other Parties’ Groups) as a result of any such determination.

(d) The Managing Party shall on a quarterly basis, or if a material development occurs as soon as reasonably practicable thereafter, fully inform the other Parties of the status of and developments relating to any matter involving a RRD Contingent Asset or Assumed RRD Contingent Liability and provide copies of any material document, notices or other materials related to such matters. Each Party shall cooperate fully with the Managing Party in its management of any of such RRD Contingent Asset or Assumed RRD Contingent Liability and shall take such actions in connection therewith that the Managing Party reasonably requests (including providing access to such Party’s Records and employees as set forth in Section 7.3 ).

 

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(e) None of RRD, LSC or Donnelley Financial shall take, or permit any member of its respective Group to take, any action (including commencing any Action) or omit to take any action that may interfere with or that may adversely affect the rights and powers of the Managing Party pursuant to this Article VII .

(f) In the event of any dispute as to whether any Asset or Liability is a RRD Contingent Asset and/or an Assumed RRD Contingent Liability as set forth in Section 7.4(b) , the Managing Party may, but shall not be obligated to, commence prosecution or other assertion of such claim or right pending resolution of such dispute. In the event that the Managing Party commences any such prosecution or assertion and, upon resolution of the dispute (pursuant to Article X or otherwise), it is determined that such Asset or Liability is not a RRD Contingent Asset or an Assumed RRD Contingent Liability and that such Asset or Liability belongs to another Party, pursuant to the provisions of this Agreement or any Ancillary Agreement, the Managing Party shall have the right to cease the prosecution or assertion of such right or claim and the applicable Parties shall cooperate to transfer the control thereof to the applicable other Party. In such event, the applicable other Party, shall promptly reimburse the Managing Party for all out-of-pocket costs and expenses incurred to such date in connection with the prosecution or assertion of such claim or right.

Section 7.3 Access to Information; Certain Services; Expenses .

(a) Access to Information and Employees by the Managing Party . Unless otherwise prohibited by Law or more specifically provided in a Tax Disaffiliation Agreement with respect to Tax audits and access to information related thereto, in connection with the management and disposition of any RRD Contingent Asset and/or any Assumed RRD Contingent Liability, each of the Parties shall make readily available to and afford to the Managing Party and its authorized accountants, counsel and other designated representatives reasonable access, subject to appropriate restrictions for classified, privileged or Confidential Information, to the employees, properties, and Information of such Party and the members of such Party’s Group insofar as such access relates to the relevant RRD Contingent Asset or Assumed RRD Contingent Liability; it being understood by the Parties that such access as well as any services provided pursuant to Section 7.3(b) below may require a significant time commitment on the part of such Party’s employees and that any such commitment shall not otherwise limit any of the rights or obligations set forth in this Article VII ; it also being understood that such access and such services provided shall not unreasonably interfere with any of such Party’s employees’ normal functions. Nothing in this Section 7.3(a) shall require any Party to violate any agreement with any third party regarding the confidentiality of confidential and proprietary information relating to that third party or its business; provided , however , that in the event that a Party is required to disclose any such Information, such Party shall use commercially reasonable efforts to seek to obtain such third party’s written Consent to the disclosure of such Information or seek an appropriate protective order.

(b) Certain Services . Each of RRD, LSC and Donnelley Financial shall make available to the others, upon reasonable written request, its and its Subsidiaries’ officers, directors, employees and agents to assist in the management (including, if applicable, as

 

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witnesses in any Action) of any RRD Contingent Assets and Assumed RRD Contingent Liabilities to the extent that such Persons may reasonably be required in connection with the prosecution, defense or day-to-day management of any RRD Contingent Asset or Assumed RRD Contingent Liability. In respect of the foregoing, Schedule 1.1(204) and Schedule 1.1(18) set forth certain identified RRD Contingent Assets and Assumed RRD Contingent Liabilities, respectively, and identify (but does not limit) those employees and agents who shall assist the Managing Party in its management of the RRD Contingent Assets and Assumed RRD Contingent Liabilities.

(c) Costs and Expenses Relating to Access by the Managing Party . Except as otherwise provided in any Ancillary Agreement, the provision of access and other services pursuant to this Section 7.3 shall be at no additional cost or expense of the Managing Party or any other Party (other than for (i) actual out-of-pocket costs and expenses which are pre-paid or allocated as set forth in Section 7.1 and (ii) costs incurred directly or indirectly by such Party affording such access and other services which shall be the responsibility of such Party), unless such costs and expenses are incurred by RRD in connection with the provision of services and access due to its status as the remaining and legacy Business Entity (and not in its capacity as the parent company of the RRD Retained Business), in which case such costs and expenses shall be treated as Assumed RRD Contingent Liabilities (and shall be borne by the other Parties accordingly).

Section 7.4 Notice Relating to RRD Contingent Assets and Assumed RRD Contingent Liabilities; Disputes .

(a) In the event that any Party or any member of such Party’s Group or any of their respective Affiliates, becomes aware of (i) any Asset or Liability that may be a RRD Contingent Asset or Assumed RRD Contingent Liability, as the case may be (ii) any matter or occurrence that has given or could give rise to an RRD Contingent Asset or Assumed RRD Contingent Liability or (iii) any matter reasonably relevant to the Managing Party’s ongoing or future management, prosecution, defense and/or administration of any RRD Contingent Asset or Assumed RRD Contingent Liability, such Party shall promptly (but in any event within thirty (30) days of becoming aware, unless, by its nature the subject matter of such notice would require earlier notice) notify each of the relevant Managing Party and the other Party of any such matter (setting forth in reasonable detail the subject matter thereof); provided , however , that the failure to provide such notice shall not release any Party from any of its obligations under this Article VII except and solely to the extent that any such Party shall have been actually prejudiced as a result of such failure.

(b) In the event that any Party disagrees whether a claim, obligation, Asset and/or Liability is a RRD Contingent Asset or an Assumed RRD Contingent Liability or whether such claim, obligation, Asset or Liability is an Asset or Liability allocated to one of the Parties pursuant to this Agreement or any Ancillary Agreement, then such matter shall be resolved pursuant to and in accordance with the dispute resolution provisions set forth in Article X .

Section 7.5 Cooperation with Governmental Entity . If, in connection with any RRD Contingent Asset or Assumed RRD Contingent Liability, a Party is required by Law to respond to

 

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and/or cooperate with a Governmental Entity, such Party shall be entitled to cooperate and respond to such Governmental Entity after, to the extent practicable under the specific circumstances, consultation with the Managing Party of such RRD Contingent Asset or Assumed RRD Contingent Liability; provided , that to the extent such consultation was not practicable such Party shall promptly inform the Managing Party of such cooperation and/or response to the Governmental Entity and the subject matter thereof. In the event that any Party is requested or required by any Governmental Entity in connection with any RRD Contingent Asset or Assumed RRD Contingent Liability pursuant to written or oral question or request for Information or documents in any legal or administrative proceeding, review, interrogatory, subpoena, investigation, demand, or similar process, such Party will notify the Managing Party promptly of the request or requirement and such Party’s response thereto.

Section 7.6 Default . In the event that one or more of the Parties defaults in any full or partial payment in respect of any Assumed RRD Contingent Liability (as provided in this Article VII and in Article VIII ), including the payment of the costs and expenses of the Managing Party, then each non-defaulting Party (including RRD) shall be required to pay a pro rata portion of the amount in default based on the non-defaulting Parties’ relative Applicable Percentage; provided , however , that any such payment by a non-defaulting Party shall in no way release the defaulting Party from its obligations to pay its obligations in respect of such Assumed RRD Contingent Liability (both for past and future obligations) and any non-defaulting Party may exercise any available legal remedies available against such defaulting Party; provided , further , that interest shall accrue on any such defaulted amounts at a rate per annum equal to the then applicable Prime Rate plus three percent (3%) (or the maximum legal rate, whichever is lower). In connection with the foregoing, it is expressly understood that any defaulting Party’s share of the proceeds from any RRD Contingent Asset may be used via a right of offset to satisfy, in whole or in part, the obligations of such defaulting Party; such rights of offset shall be applied in favor of the non-defaulting Party or Parties in proportion to the additional amounts paid by any such non-defaulting Party.

ARTICLE VIII

INDEMNIFICATION

Section 8.1 Release of Pre-Distribution Claims .

(a) Except (i) as provided in Section 8.1(b) , (ii) as may be otherwise expressly provided in this Agreement or any Ancillary Agreement and (iii) for any matter for which any Party is entitled to indemnification or contribution pursuant to this Article VIII , each Party, for itself and each member of its respective Group, their respective Affiliates and all Persons who at any time prior to the Relevant Time were directors, officers, agents or employees of any member of their Group (in their respective capacities as such), in each case, together with their respective heirs, executors, administrators, successors and assigns, do hereby remise, release and forever discharge the other Parties and the other members of such other Parties’ Group, their respective Affiliates and all Persons who at any time prior to the Relevant Time were stockholders, directors, officers, agents or employees of any member of such other Parties (in their respective capacities as such), in each case, together with their respective heirs, executors, administrators, successors and assigns, from any and

 

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all Liabilities whatsoever, whether at Law or in equity (including any right of contribution), whether arising under any Contract, by operation of Law or otherwise, existing or arising from any acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur or any conditions existing or alleged to have existed on or before the Relevant Time, including in connection with the Plan of Reorganization and all other activities to implement the Distributions and any of the other transactions contemplated hereunder and under the Ancillary Agreements.

(b) Nothing contained in Section 8.1(a) and Section 2.4(a) shall impair or otherwise affect any right of any Party, and as applicable, a member of the Party’s Group to enforce this Agreement, any Ancillary Agreement or any agreements, arrangements, commitments or understandings contemplated in this Agreement or any Ancillary Agreement that continue in effect after the Relevant Time. In addition, nothing contained in Section 8.1(a) shall release any person from:

(i) any Liability Assumed, Transferred or allocated to a Party or a member of such Party’s Group pursuant to or contemplated by, or any other Liability of any member of such Group under, this Agreement or any Ancillary Agreement including (A) with respect to RRD, any RRD Retained Liability, (B) with respect to LSC, any LSC Liability, and (C) with respect to Donnelley Financial, any Donnelley Financial Liability;

(ii) any Liabilities that may arise out of the RRD Retained Assets, LSC Assets or Donnelley Financial Assets;

(iii) any Liability for the sale, lease, construction or receipt of goods, property or services purchased, obtained or used in the ordinary course of business by a member of one Group from a member of any other Group prior to the Relevant Time;

(iv) any Liability for unpaid amounts for products or services or refunds owing on products or services due on a value-received basis for work done by a member of one Group at the request or on behalf of a member of another Group;

(v) any Liability provided in or resulting from any other Contract or understanding that is entered into or in effect after the Relevant Time between any Party (and/or a member of such Party’s or Parties’ Group), on the one hand, and any other Party or Parties (and/or a member of such Party’s or Parties’ Group), on the other hand;

(vi) any Liability with respect to an Assumed RRD Contingent Liability or Liability that may arise out of RRD Contingent Assets pursuant to Article VII ;

(vii) any Liability with respect to any Commercial Arrangements set forth on Schedule 1.1(28) ;

(viii) any Liability that the Parties may have with respect to indemnification or contribution pursuant to this Agreement or otherwise for claims

 

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brought against the Parties by third Persons, which Liability shall be governed by the provisions of this Article VIII and, if applicable, the appropriate provisions of the Ancillary Agreements.

In addition, nothing contained in Section 8.1(a) shall release RRD from indemnifying any director, officer or employee of LSC and Donnelley Financial who was a director, officer or employee of RRD or any of its Affiliates on or prior to the Relevant Time or the Final Separation Date, as the case may be, to the extent such director, officer or employee is or becomes a named defendant in any Action with respect to which he or she was entitled to such indemnification pursuant to then existing obligations.

(c) Each Party shall not, and shall not permit any member of its Group to make, any claim, demand or offset, or commence any Action asserting any claim or demand, including any claim of contribution or any indemnification, against any other Party or any member of any other Party’s Group, or any other Person released pursuant to Section 7.1(a) , with respect to any Liabilities released pursuant to Section 8.1(a) .

(d) It is the intent of each Party, by virtue of the provisions of this Section 8.1 , to provide for a full and complete release and discharge of all Liabilities existing or arising from all acts and events occurring or failing to occur or alleged to have occurred or to have failed to occur and all conditions existing or alleged to have existed on or before the Relevant Time, whether known or unknown, between or among any Party (and/or a member of such Party’s Group), on the one hand, and any other Party or Parties (and/or a member of such Party’s or parties’ Group), on the other hand (including any contractual agreements or arrangements existing or alleged to exist between or among any such members on or before the Relevant Time), except as specifically set forth in Section 8.1(a) and Section 8.1(b) . At any time, at the reasonable request of any other Party, each Party shall cause each member of its respective Group and, to the extent practicable each other Person on whose behalf it released Liabilities pursuant to this Section 8.1 to execute and deliver releases reflecting the provisions hereof.

Section 8.2 Indemnification by RRD . Except as otherwise specifically set forth in any provision of this Agreement or of any Ancillary Agreement, following (a) the LSC Distribution Date (with respect to the LSC Indemnitees) and (b) the Donnelley Financial Distribution Date (with respect to the Donnelley Financial Indemnitees), RRD shall and shall cause the other members of the RRD Group to indemnify, defend and hold harmless the LSC Indemnitees and the Donnelley Financial Indemnitees from and against any and all Indemnifiable Losses of the LSC Indemnitees and the Donnelley Financial Indemnitees, respectively, arising out of, by reason of or otherwise in connection with (i) the RRD Retained Liabilities or alleged RRD Retained Liabilities, (ii) any Liabilities arising out of RRD Retained Assets or alleged RRD Retained Assets or (iii) any breach by RRD of any provision of this Agreement or any Ancillary Agreement unless such Ancillary Agreement expressly provides for separate indemnification therein, in which case any such indemnification claims shall be made thereunder.

Section 8.3 Indemnification by LSC . Except as otherwise specifically set forth in any provision of this Agreement or of any Ancillary Agreement, LSC shall and shall cause the other members of the LSC Group to indemnify, defend and hold harmless the RRD Indemnitees and the

 

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Donnelley Financial Indemnitees from and against any and all Indemnifiable Losses of the RRD Indemnitees and the Donnelley Financial Indemnitees, respectively, arising out of, by reason of or otherwise in connection with (a) the LSC Liabilities or alleged LSC Liabilities, (b) any Liabilities arising out of RRD Retained Assets or alleged RRD Retained Assets or (c) any breach by LSC of any provision of this Agreement or any Ancillary Agreement unless such Ancillary Agreement expressly provides for separate indemnification therein, in which case any such indemnification claims shall be made thereunder.

Section 8.4 Indemnification by Donnelley Financial . Except as otherwise specifically set forth in any provision of this Agreement or of any Ancillary Agreement, Donnelley Financial shall and shall cause the other members of the Donnelley Financial Group to indemnify, defend and hold harmless the RRD Indemnitees and the LSC Indemnitees from and against any and all Indemnifiable Losses of the RRD Indemnitees and the LSC Indemnitees, respectively, arising out of, by reason of or otherwise in connection with (a) the Donnelley Financial Liabilities or alleged Donnelley Financial Liabilities, (b) any Liabilities arising out of RRD Retained Assets or alleged RRD Retained Assets or (c) any breach by Donnelley Financial of any provision of this Agreement or any Ancillary Agreement unless such Ancillary Agreement expressly provides for separate indemnification therein, in which case any such indemnification claims shall be made thereunder.

Section 8.5 Procedures for Indemnification .

(a) An Indemnitee shall give the Indemnifying Party notice of any matter that an Indemnitee has determined has given or could give rise to a right of indemnification under this Agreement (other than a Third Party Claim which shall be governed by Section 8.5(b) ), within thirty (30) days of such determination, stating the amount of the Indemnifiable Loss claimed, if known, and method of computation thereof, and containing a reference to the provisions of this Agreement in respect of which such right of indemnification is claimed by such Indemnitee or arises; provided , however , that the failure to provide such written notice shall not release the Indemnifying Party from any of its obligations except and solely to the extent the Indemnifying Party shall have been actually prejudiced as a result of such failure.

(b) Third Party Claims . If a claim or demand is made against a RRD Indemnitee, a LSC Indemnitee or a Donnelley Financial Indemnitee (each, an “ Indemnitee ”) by any Person who is not a party to this Agreement (a “ Third Party Claim ”) as to which such Indemnitee is or may be entitled to indemnification pursuant to this Agreement, such Indemnitee shall notify the Party (and, if applicable, the Managing Party) which is or may be required pursuant to this Article VIII or pursuant to any Ancillary Agreement to make such indemnification (the “ Indemnifying Party ”) in writing, and in reasonable detail, of the Third Party Claim promptly and in any event by the date (the “ Outside Notice Date ”) that is the tenth Business Day after receipt by such Indemnitee of written notice of the Third Party Claim (such written notice, the “ Third Party Claim Notice ”). If any Party shall receive Third Party Claim Notice or otherwise learn of the assertion of a Third Party Claim which may reasonably be determined to be an Assumed RRD Contingent Liability, such Party, as appropriate, shall give the Managing Party (as determined pursuant to Article VI ) the Third Party Claim Notice thereof within ten (10) Business Days after such Person becomes aware of such Third Party Claim; provided ,

 

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however , that the failure to provide the Third Party Claim Notice of any such Third Party Claim pursuant to this or the preceding sentence shall not affect the indemnification provided hereunder except to the extent the Indemnifying Party shall have been actually prejudiced as a result of such failure (except that the Indemnifying Party shall not be liable for any expenses incurred during the period beginning immediately after the Outside Notice Date and ending on the date that the Indemnitee gives the required Third Party Claim Notice). Thereafter, the Indemnitee shall deliver to the Indemnifying Party, promptly (and in any event within ten (10) Business Days) after the Indemnitee’s receipt thereof, copies of all notices and documents (including court papers) received by the Indemnitee relating to the Third Party Claim.

(c) Other than in the case of (i) an Assumed RRD Contingent Liability (the defense of which shall be assumed and controlled by the Managing Party as provided for in Article VI ), (ii) indemnification pursuant to a Tax Disaffiliation Agreement or (iii) indemnification by a beneficiary Party of a guarantor Party pursuant to Section 2.10(c) (the defense of which shall be assumed and controlled by the beneficiary Party), an Indemnifying Party shall be entitled to participate in the defense thereof and, if it so chooses and acknowledges in writing its obligation to indemnify the Indemnitee therefor, to assume the defense thereof with counsel selected by the Indemnifying Party, provided, however, that such counsel is not reasonably objected to by the Indemnitee. Should the Indemnifying Party so elect to assume the defense of a Third Party Claim, the Indemnifying Party shall, within thirty (30) days following receipt of the Third Party Claim Notice (or sooner if the nature of the Third Party Claim so requires), notify the Indemnitee of its intent to do so, and the Indemnifying Party shall thereafter not be liable to the Indemnitee for legal or other expenses subsequently incurred by the Indemnitee in connection with the defense thereof; provided, however, that such Indemnitee shall have the right to employ counsel to represent such Indemnitee if, in such Indemnitee’s reasonable judgment, a conflict of interest between such Indemnitee and such Indemnifying Party exists in respect of such claim which would make representation of both such parties by one counsel inappropriate, and in such event the fees and expenses of such separate counsel shall be paid by such Indemnifying Party. If the Indemnifying Party assumes such defense, the Indemnitee shall have the right to participate in the defense thereof and to employ counsel, subject to the proviso of the preceding sentence, at its own expense, separate from the counsel employed by the Indemnifying Party, it being understood that the Indemnifying Party shall control such defense. The Indemnifying Party shall be liable for the fees and expenses of counsel employed by the Indemnitee for any period during which the Indemnifying Party has failed to or elected not to assume the defense thereof (other than during the period prior to the time the Indemnitee shall have given notice of the Third Party Claim as provided above); provided , further , that if (i) the Third Party Claim is not an Assumed RRD Contingent Liability and (ii) the Indemnifying Party has assumed the defense of the Third Party Claim but has specified, and continues to assert, any reservations or exceptions to such defense, then, in any such case, the reasonable fees and expenses of one separate counsel for all Indemnitees shall be borne by the Indemnifying Party.

(d) Other than in the case of an Assumed RRD Contingent Liability, if the Indemnifying Party acknowledges in writing responsibility under this Article VIII for a

 

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Third Party Claim, regardless of the Indemnifying Party’s election to assume the defense thereof or not in accordance with the provisions of Section 8.5(c) , then in no event will the Indemnitee admit any Liability with respect to, or settle, compromise or discharge, any Third Party Claim that is not an Assumed RRD Contingent Liability (with any Assumed RRD Contingent Liability handled in accordance with Article VII ) without the Indemnifying Party’s prior written consent; provided, however, that the Indemnitee shall have the right to settle, compromise or discharge such Third Party Claim without the consent of the Indemnifying Party if the Indemnitee releases the Indemnifying Party from its indemnification obligation hereunder in writing with respect to such Third Party Claim and such settlement, compromise or discharge would not otherwise adversely affect the Indemnifying Party. If the Indemnifying Party acknowledges in writing Liability for a Third Party Claim, the Indemnitee will agree to any settlement, compromise or discharge of a Third Party Claim that the Indemnifying Party may recommend and that by its terms obligates the Indemnifying Party to pay the full amount of the Liability in connection with such Third Party Claim and releases the Indemnitee completely in connection with such Third Party Claim and that would not otherwise adversely affect the Indemnitee or admit any wrongdoing by the Indemnitee. Other than in the case of an Assumed RRD Contingent Liability, if an Indemnifying Party elects not to assume the defense of a Third Party Claim, or fails to notify an Indemnitee of its election to do so as provided herein, or an Indemnifying Party refuses to acknowledge in writing or otherwise disputes its responsibility for such Third Party Claim, such Indemnitee may compromise, settle or defend such Third Party Claim.

(e) In the event and to the extent of payment by an Indemnifying Party to any Indemnitee in connection with any Third Party Claim, such Indemnifying Party shall be subrogated to and shall stand in the place of such Indemnitee as to any events or circumstances in respect of which such Indemnitee may have any right or claim relating to such Third Party Claim against any claimant or plaintiff asserting such Third Party Claim. Such Indemnitee shall cooperate with such Indemnifying Party in a reasonable manner, and at the cost and expense of such Indemnifying Party, in prosecuting any subrogated right or claim.

Section 8.6 Cooperation in Defense and Settlement .

(a) With respect to any Third Party Claim that is not an Assumed RRD Contingent Liability, the Parties shall cooperate as may reasonably be required in connection with the investigation, defense, prosecution and/or settlement of any Third Party Claim. In furtherance of this obligation, the Parties agree that if an Indemnifying Party chooses to assume the defense of, or to compromise or settle, any Third Party Claim, the Indemnitee shall use its commercially reasonable efforts to make available to the Indemnifying Party, upon written request, (x) their former and then current directors, officers, employees and agents and those of their subsidiaries as witnesses and (y) as soon as reasonably practicable following the receipt of such written request, any agreements, books, records, files or other documents within its control or which it otherwise has the ability to make available, to the extent that (i) any such Person, agreements, books, records, files or other documents may reasonably be required in connection with such defense, settlement, prosecution or compromise and (ii) making such Person, agreements, books

 

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records or other documents so available would not constitute a waiver of the attorney-client privilege of the Indemnitee. At the request of an Indemnifying Party, an Indemnitee shall enter into a reasonably acceptable joint defense agreement.

(b) Each of RRD, LSC and Donnelley Financial agrees that at all times from and after the Effective Time, if an Action is commenced by a third party with respect to which one or more named Parties (or any member of such Party’s respective Group) is a nominal defendant and/or such Action is otherwise not a Liability allocated to such named Party under this Agreement or any Ancillary Agreement, then the other Party or Parties shall use reasonable best efforts to cause such nominal defendant to be removed from such Action, as soon as reasonably practicable.

(c) Except in the case of fraud or willful misconduct, except as set forth in Section 12.20 , the remedies provided in this Article VIII shall be the exclusive remedy and shall preclude assertion by any Indemnitee of any other rights or the seeking of any and all other remedies against any Indemnifying Party.

Section 8.7 Indemnification Payments . Indemnification required by this Article VIII shall be made by periodic payments of the amount thereof in a timely fashion during the course of the investigation or defense, as and when bills are received or an Indemnifiable Loss or Liability is incurred.

Section 8.8 Contribution .

(a) If the indemnification provided for in Section 8.2(b)(ii) , Section 8.3(b) and Section 8.4(b) , including in respect of any Assumed RRD Contingent Liability, is unavailable to, or insufficient to hold harmless an Indemnitee under this Agreement or any Ancillary Agreement in respect of any Liabilities referred to herein or therein, then each Indemnifying Party shall contribute to the amount paid or payable by such Indemnitee as a result of such Liabilities in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and the Indemnitee in connection with the actions or omissions that resulted in Liabilities as well as any other relevant equitable considerations. With respect to the foregoing, the relative fault of such Indemnifying Party and Indemnitee shall be determined by reference to, among other things, the Information supplied by such Indemnifying Party or Indemnitee, and the parties’ relative intent, knowledge, access to Information and opportunity to correct or prevent any statement or omission.

(b) The Parties agree that it would not be just and equitable if contribution pursuant to this Section 8.8 were determined by a pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in Section 8.8(a) . The amount paid or payable by an Indemnitee as a result of the Liabilities referred to in Section 8.8(a) shall be deemed to include, subject to the limitations set forth above, any legal or other fees or expenses reasonably incurred by such Indemnitee in connection with investigating any claim or defending any Action. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.

 

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Section 8.9 Indemnification Obligations Net of Insurance Proceeds and Other Amounts .

(a) Any Indemnifiable Loss subject to indemnification or contribution pursuant to this Article VIII including, for the avoidance of doubt, in respect of any Assumed RRD Contingent Liability, will be calculated (i) net of Insurance Proceeds that actually reduce the amount of the Indemnifiable Loss, (ii) net of any proceeds received by the Indemnitee from any third party for indemnification for such Liability that actually reduce the amount of the Indemnifiable Loss (“ Third Party Proceeds ”), and (iii) net of any Tax benefits actually realized in accordance with, and subject to, the principles set forth or referred to in a Tax Disaffiliation Agreement, and increased in accordance with, and subject to, the principles set forth in a Tax Disaffiliation Agreement. Accordingly, the amount which any Indemnifying Party is required to pay pursuant to this Article VIII to any Indemnitee pursuant to this Article VIII will be reduced by any Insurance Proceeds or Third Party Proceeds theretofore actually recovered by or on behalf of the Indemnitee in respect of the related Indemnifiable Loss. If an Indemnitee receives a payment required by this Agreement from an Indemnifying Party in respect of any Indemnifiable Loss (an “ Indemnity Payment ”) and subsequently receives Insurance Proceeds or Third Party Proceeds, then the Indemnitee will pay to the Indemnifying Party an amount equal to the excess of the Indemnity Payment received over the amount of the Indemnity Payment that would have been due if the Insurance Proceeds or Third Party Proceeds had been received, realized or recovered before the Indemnity Payment was made.

(b) The Parties acknowledge that the indemnification and contributions hereof do not relieve any insurer who would otherwise be obligated to pay any claim to pay such claim. In furtherance of the foregoing, the Indemnitee shall use reasonable best efforts to seek to collect or recover any third-party Insurance Proceeds and any Third Party Proceeds (other than Insurance Proceeds under an arrangement where future premiums are adjusted to reflect prior claims in excess of prior premiums) to which the Indemnitee is entitled in connection with any Indemnifiable Loss for which the Indemnitee seeks contribution or indemnification pursuant to this Article VIII ; provided , that the Indemnitee’s inability to collect or recover any such Insurance Proceeds or Third Party Proceeds shall not limit the Indemnifying Party’s obligations hereunder.

Section 8.10 Additional Matters; Survival of Indemnities .

(a) The indemnity and contribution agreements contained in this Article VIII shall remain operative and in full force and effect, regardless of (i) any investigation made by or on behalf of any Indemnitee; (ii) the knowledge by the Indemnitee of Indemnifiable Losses for which it might be entitled to indemnification or contribution hereunder; and (iii) any termination of this Agreement.

(b) The rights and obligations of each Party and their respective Indemnitees under this Article VIII shall survive the sale or other Transfer by any Party or its respective Subsidiaries of any Assets or businesses or the assignment by it of any Liabilities.

 

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(c) Each Party shall, and shall cause the members of its respective Group to, preserve and keep their Records relating to financial reporting, internal audit, employee benefits, past acquisition or disposition transactions, claims, demands, actions, and email files and backup tapes regarding any of the foregoing as such pertains to any period prior to the Effective Time in their possession, whether in electronic form or otherwise, until the latest of, as applicable (i) ten (10) years following the Final Separation Date or (ii) the date on which such Records are no longer required to be retained pursuant to such Party’s applicable record retention policy and schedules as in effect immediately prior to the Final Separation Date; provided , however , to the extent a Tax Disaffiliation Agreement provides for a longer period of retention of Tax Records, such longer period as provided in a Tax Disaffiliation Agreement shall control.

ARTICLE IX

CONFIDENTIALITY; ACCESS TO INFORMATION

Section 9.1 Provision of Corporate Records . Other than in circumstances in which indemnification is sought pursuant to Article VIII (in which event the provisions of such Article will govern) or for matters related to provision of Tax records (in which event the provisions of the applicable Tax Disaffiliation Agreement will govern) and without limiting the applicable provisions of Article VII , and subject to appropriate restrictions for classified, privileged or Confidential Information:

(a) After the applicable Relevant Time, upon the prior written request by LSC or Donnelley Financial for specific and identified Information which relates to (x) LSC or Donnelley Financial or the conduct of the LSC Business or Donnelley Financial Business, as the case may be, up to the applicable Distribution Date, or (y) any Ancillary Agreement to which RRD and one or more of LSC and/or Donnelley Financial are parties, as applicable, RRD shall provide, as soon as reasonably practicable following the receipt of such request, appropriate copies of such Information (or the originals thereof if the Party making the request has a reasonable need for such originals) in the possession or control of RRD or any of its Affiliates or Subsidiaries, but only to the extent such items so relate and are not already in the possession or control of the requesting Party.

(b) After the LSC Distribution Date, upon the prior written request by RRD or Donnelley Financial for specific and identified Information which relates to (x) RRD or Donnelley Financial or the conduct of the RRD Retained Business or Donnelley Financial Business, as the case may be, up to the LSC Distribution Date, or (y) any Ancillary Agreement to which LSC and one or more of RRD and/or Donnelley Financial are parties, as applicable, LSC shall provide, as soon as reasonably practicable following the receipt of such request, appropriate copies of such Information (or the originals thereof if the Party making the request has a reasonable need for such originals) in the possession or control of LSC or any of its Subsidiaries, but only to the extent such items so relate and are not already in the possession or control of the requesting Party.

(c) After the Donnelley Financial Distribution Date, upon the prior written request by RRD or LSC for specific and identified Information which relates to (x) RRD or

 

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LSC or the conduct of the RRD Retained Business or LSC Business, as the case may be, up to the Donnelley Financial Distribution Date, or (y) any Ancillary Agreement to which Donnelley Financial and one or more of RRD and/or LSC are parties, as applicable, Donnelley Financial shall provide, as soon as reasonably practicable following the receipt of such request, appropriate copies of such Information (or the originals thereof if the Party making the request has a reasonable need for such originals) in the possession or control of Donnelley Financial or any of its Subsidiaries, but only to the extent such items so relate and are not already in the possession or control of the requesting Party.

Section 9.2 Access to Information . Other than in circumstances in which indemnification is sought pursuant to Article VIII (in which event the provisions of such Article will govern) or for access with respect to Tax matters (in which event the provisions of a Tax Disaffiliation Agreement will govern) and without limiting the applicable provisions of Article VII , from and after the applicable Relevant Time, each of RRD, LSC and Donnelley Financial shall afford to the other and its authorized accountants, counsel and other designated representatives reasonable access during normal business hours, subject to appropriate restrictions for classified, privileged or Confidential Information, to the personnel, properties, and Information of such Party and its Subsidiaries insofar as such access is reasonably required by the other Party and relates to (x) such other Party or the conduct of its business prior to the Relevant Time or (y) any Ancillary Agreement to which each of the Party requesting such access and the Party requested to grant such access are Parties. Nothing in this Section 9.2 shall require any Party to violate any agreement with any third party regarding the confidentiality of confidential and proprietary information relating to that third party or its business; provided , however , that in the event that a Party is required to disclose any such Information, such Party shall use reasonable best efforts to seek to obtain such third party Consent to the disclosure of such Information. Nothing herein shall alter or affect any confidentiality provisions of any of the Ancillary Agreements, or any Commercial Arrangement.

Section 9.3 Witness Services . At all times from and after the Relevant Time, each of RRD, LSC and Donnelley Financial shall use its reasonable best efforts to make available to the others, upon reasonable written request, its and its Subsidiaries’ officers, directors, employees, consultants and agents as witnesses to the extent that (i) such Persons may reasonably be required to testify in connection with the prosecution or defense of any Action in which the requesting Party may from time to time be involved (except for claims, demands or Actions between members of each Group) and (ii) there is no conflict in the Action between the requesting Party and RRD, LSC and Donnelley Financial, as applicable. A Party providing a witness to the other Party under this Section shall be entitled to receive from the recipient of such services, upon the presentation of invoices therefor, payments for such amounts, relating to disbursements and other out-of-pocket expenses (which shall not include the costs of salaries and benefits of employees who are witnesses or any pro rata portion of overhead or other costs of employing such employees which would have been incurred by such employees’ employer regardless of the employees’ service as witnesses), as may be reasonably incurred and properly paid under applicable Law.

Section 9.4 Reimbursement; Other Matters . Except to the extent otherwise contemplated by this Agreement (including Section 7.3 ) or any Ancillary Agreement a Party providing Information or access to Information to the other Party under this Article IX shall be entitled to receive from the recipient, upon the presentation of invoices therefor, payments for such amounts, relating to supplies, disbursements and other out-of-pocket expenses, as may be reasonably incurred in providing such Information or access to such Information.

 

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Section 9.5 Confidentiality .

(a) Notwithstanding any termination of this Agreement, for a period of three (3) years from the Effective Time the Parties shall hold, and shall cause each of their respective Subsidiaries to hold, and shall each cause their respective officers, employees, agents, consultants and advisors to hold, in strict confidence, and not to disclose or release or use, without the prior written consent of the other Party (which may be withheld in such Party’s sole and absolute discretion, except where disclosure is required by applicable Law), any and all Confidential Information (as defined herein) concerning any other Party; provided , that the Parties may disclose, or may permit disclosure of, Confidential Information (i) to their respective auditors, attorneys, financial advisors, bankers and other appropriate consultants and advisors who have a need to know such Information and are informed of their obligation to hold such Information confidential to the same extent as is applicable to the Parties and in respect of whose failure to comply with such obligations, the applicable Party will be responsible, (ii) if the Parties or any of their respective Subsidiaries are required or compelled to disclose any such Confidential Information by judicial or administrative process or by other requirements of Law or stock exchange rule, (iii) as required in connection with any legal or other proceeding by one Party against any other Party, or (iv) as necessary in order to permit a Party to prepare and disclose its financial statements, Tax Returns or other required disclosures. Notwithstanding the foregoing, in the event that any demand or request for disclosure of Confidential Information is made pursuant to clause (ii) above, each Party, as applicable, shall promptly notify the other of the existence of such request or demand and shall provide the other a reasonable opportunity to seek an appropriate protective order or other remedy, which such Parties will cooperate in obtaining. In the event that such appropriate protective order or other remedy is not obtained, the Party whose Confidential Information is required to be disclosed shall or shall cause the other applicable Party or Parties to furnish, or cause to be furnished, 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.

(b) Notwithstanding anything to the contrary set forth herein, (i) the Parties shall be deemed to have satisfied their obligations hereunder with respect to Confidential Information if they exercise the same degree of care (but no less than a reasonable degree of care) as they take to preserve confidentiality for their own similar Information and (ii) confidentiality obligations provided for in any agreement between each Party or its Subsidiaries and their respective employees shall remain in full force and effect. Notwithstanding anything to the contrary set forth herein, Confidential Information of any Party in the possession of and used by any other Party as of the Relevant Time may continue to be used by such Party in possession of the Confidential Information in and only in the operation of the LSC Business, the Donnelley Financial Business or the RRD Retained Business, as the case may be; provided , that such use is not competitive in nature, and may be used only so long as the Confidential Information is maintained in confidence and not disclosed in violation of Section 9.5(a) . Such continued right to use may not be transferred (directly or indirectly) to any third party without the prior written consent of the applicable Party, except pursuant to Section 12.9 .

 

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(c) Each of the Parties acknowledges that it and the other members of their respective Groups may have in their possession confidential or proprietary Information of third parties that was received under confidentiality or non-disclosure agreements with such third party while part of the RRD Group. Each of the Parties will hold, and will cause the other members of their respective Groups and their respective representatives to hold, in strict confidence the confidential and proprietary Information of third parties to which they or any other member of their respective Groups has access, in accordance with the terms of any agreements entered into prior to the Relevant Time between one or more members of the RRD Group (whether acting through, on behalf of, or in connection with, the separated Businesses) and such third parties.

Section 9.6 Privileged Matters .

(a) Pre-Separation Services . The Parties recognize that legal and other professional services that have been and will be provided prior to the Relevant Time have been and will be rendered for the collective benefit of each of the members of the RRD Group, the LSC Group and the Donnelley Financial Group, including with regard to the transactions contemplated herein, and that each of the members of the RRD Group, the LSC Group and the Donnelley Financial Group should be deemed to be the client with respect to such pre-separation services for the purposes of asserting all privileges which may be asserted under applicable Law.

(b) Post-Separation Services . The Parties recognize that legal and other professional services will be provided following the Relevant Time which will be rendered solely for the benefit of RRD, LSC or Donnelley Financial, as the case may be. With respect to such post-separation services, the Parties agree as follows:

(i) RRD shall be entitled, in perpetuity, to control the assertion or waiver of all privileges in connection with privileged Information which relates solely to the RRD Retained Business, whether or not the privileged Information is in the possession of or under the control of RRD, LSC or Donnelley Financial. RRD shall also be entitled, in perpetuity, to control the assertion or waiver of all privileges in connection with privileged Information that relates solely to the subject matter of any claims constituting RRD Retained Liabilities, now pending or which may be asserted in the future, in any lawsuits or other proceedings initiated against or by RRD, whether or not the privileged Information is in the possession of or under the control of RRD, LSC or Donnelley Financial;

(ii) LSC shall be entitled, in perpetuity, to control the assertion or waiver of all privileges in connection with privileged Information which relates solely to the LSC Business, whether or not the privileged Information is in the possession of or under the control of RRD, LSC or Donnelley Financial. LSC shall also be entitled, in perpetuity, to control the assertion or waiver of all privileges in connection with privileged Information that relates solely to the subject matter of

 

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any claims constituting LSC Liabilities, now pending or which may be asserted in the future, in any lawsuits or other proceedings initiated against or by LSC, whether or not the privileged Information is in the possession of or under the control of RRD, LSC or Donnelley Financial; and

(iii) Donnelley Financial shall be entitled, in perpetuity, to control the assertion or waiver of all privileges in connection with privileged Information which relates solely to the Donnelley Financial Business, whether or not the privileged Information is in the possession of or under the control of RRD, LSC or Donnelley Financial. Donnelley Financial shall also be entitled, in perpetuity, to control the assertion or waiver of all privileges in connection with privileged Information that relates solely to the subject matter of any claims constituting Donnelley Financial Liabilities, now pending or which may be asserted in the future, in any lawsuits or other proceedings initiated against or by Donnelley Financial, whether or not the privileged Information is in the possession of or under the control of RRD, LSC or Donnelley Financial.

(c) The Parties agree that they shall have a shared privilege, with equal right to assert or waive, subject to the restrictions in this Section 9.6 , with respect to all privileges not allocated pursuant to the terms of Section 9.6(b) . All privileges relating to any claims, proceedings, litigation, disputes, or other matters which involve two or more of RRD, LSC or Donnelley Financial in respect of which two or more of such Parties retain any responsibility or Liability under this Agreement, shall be subject to a shared privilege among them.

(d) No Party may waive any privilege which could be asserted under any applicable Law, and in which any other Party has a shared privilege, without the consent of the other Party, with such consent not to be unreasonably withheld, delayed or conditioned, or as provided in subsections  (e) or (f)  below. Consent shall be in writing, or shall be deemed to be granted unless written objection is made within twenty (20) days after notice upon the other Party requesting such consent.

(e) In the event of any litigation or dispute between or among any of the Parties, or any members of their respective Groups, either such Party may waive a privilege in which the other Party or member of such Group has a shared privilege, with regard to the matters at issue in the litigation or dispute, without obtaining the consent of the other Party; provided , that such waiver of a shared privilege shall be effective only as to the use of Information with respect to the litigation or dispute between the relevant Parties and/or the applicable members of their respective Groups, and (i) shall not constitute a subject matter waiver with regard to all topic similar to topics at issue in the litigation or dispute, and (ii) shall not operate as a waiver of the shared privilege with respect to third parties.

(f) In the event of any litigation or dispute between or among any of the Parties, or any members of their respective Groups, neither internal nor external counsel for the members of the RRD Group, the LSC Group and the Donnelley Financial Group, including with regard to the transactions contemplated herein, will be subject to disqualification. For the avoidance of doubt, in the event of any litigation or dispute between or among the

 

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Parties, or any members of their respective Groups, each Party agrees not to request disqualification of any employee of any Party from providing legal services to its employer on the basis that it was a former employee of RRD.

(g) If a dispute arises between or among the Parties or their respective Subsidiaries regarding whether a privilege should be waived to protect or advance the interest of any Party, each Party agrees that it shall negotiate in good faith, shall endeavor to minimize any prejudice to the rights of the other Parties, and shall not unreasonably withhold consent to any request for waiver by another Party. Each Party specifically agrees that it will not withhold consent to waiver for any purpose except to protect its own legitimate interests.

(h) Upon receipt by any Party or by any Subsidiary thereof of any subpoena, discovery or other request which arguably calls for the production or disclosure of Information subject to a shared privilege or as to which another Party has the sole right hereunder to assert a privilege, or if any Party obtains knowledge that any of its or any of its Subsidiaries’ current or former directors, officers, agents or employees have received any subpoena, discovery or other requests which arguably calls for the production or disclosure of such privileged Information, such Party shall promptly notify the other Party or Parties of the existence of the request and shall provide the other Party or Parties a reasonable opportunity to review the Information and to assert any rights it or they may have under this Section 9.6 or otherwise to prevent the production or disclosure of such privileged Information.

(i) The transfer of all Information pursuant to this Agreement is made in reliance on the agreement of RRD, LSC or Donnelley Financial as set forth in Section 9.5 and this Section 9.6 , to maintain the confidentiality of privileged Information and to assert and maintain all applicable privileges. The access to Information being granted pursuant to Section 7.3 , Section 8.6 , Section 9.1 and Section 9.2 hereof, the agreement to provide witnesses and individuals pursuant to Section 7.3 , Section 8.6 and Section 9.3 hereof, the furnishing of notices and documents and other cooperative efforts contemplated by Section 7.5 and Section 8.6 hereof, and the transfer of privileged Information between and among the Parties and their respective Subsidiaries pursuant to this Agreement shall not be deemed a waiver of any privilege that has been or may be asserted under this Agreement or otherwise.

(j) Notwithstanding any provision to the contrary in this Section 9.6 , the Audit Management Party (as defined in a Tax Disaffiliation Agreement) shall have the authority to disclose or not disclose, in its sole discretion, any and all privileged Information to (i) any Taxing Authority (as defined in a Tax Disaffiliation Agreement) conducting a Tax Audit (as defined in a Tax Disaffiliation Agreement) or (ii) to third parties in connection with connection with the defense of a Tax Audit, including, expert witnesses, accountants and other advisors, potential witnesses and other parties whose assistance is deemed, in the sole discretion of the Audit Management Party, to be necessary or beneficial to representing the interests of the Parties hereunder.

 

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Section 9.7 Ownership of Information . Any Information owned by one Party or any of its Subsidiaries that is provided to a requesting Party pursuant to this Article IX shall be deemed to remain the property of the providing Party. Unless specifically set forth herein, nothing contained in this Agreement shall be construed as granting or conferring rights of license or otherwise in any such Information.

Section 9.8 Record Retention .

(a) To facilitate the possible exchange of Information pursuant to this Article IX and other provisions of this Agreement, from and after the Effective Time, the Parties agree to use their commercially reasonable efforts to retain all Information in their respective possession or control in accordance with RRD’s current Record Retention Policy in effect on the date hereof and attached hereto as Schedule 9.8 or ordinary course practices of RRD in effect as of the Effective Time (including any Information that is subject to a “Litigation Hold” issued by any Party prior to the Effective Time) or such other document retention policies as may be reasonably adopted by the applicable party from and after the Effective Time (provided that such other document retention policies at least provide for the retention of documents until the expiration of any applicable statute of limitations and as otherwise required by applicable Law).

(b) Notwithstanding anything to the contrary herein, no Party will destroy, or permit any of its Subsidiaries to destroy, any Information contemplated by Section 9.2 without first offering to deliver such Information to the other Parties, at the other Parties’ cost and expense; provided that (i) in the case of any Information relating to a pending or threatened Action that is known to a member of the Group in possession of such Information, the Parties shall comply with the requirements of the applicable “Litigation Hold” (provided that with respect to any pending or threatened Action arising after the Effective Time, the requirements of this clause (i) shall apply only to the extent that the member of the RRD Group, LSC Group or Donnelley Financial Group that is in possession of such Information has been notified in writing pursuant to a “Litigation Hold” of such pending or threatened Action); and (ii) in no event shall a Party destroy, or permit any of its Subsidiaries to destroy, any Information required to be retained by applicable Law.

(c) In the event of any Party’s or any of its Subsidiaries’ inadvertent failure to comply with its applicable document retention policies as required under this Section 9.8 , such Party shall be liable to the other Party solely for the amount of any monetary fines or penalties imposed or levied against such other party by a governmental authority (which fines or penalties shall not include any Liabilities asserted in connection with the claims underlying the applicable Action, other than fines or penalties resulting from any claim of spoliation) as a result of such other Party’s inability to produce Information caused by such inadvertent failure and, notwithstanding Article VII, shall not be liable to such other party for any other Liabilities in connection therewith. Notwithstanding the foregoing, no party shall have any Liability to any other party if any Information is destroyed, provided that such party has used its reasonable best efforts to comply with Section 9.8(a) and Section 9.8(b) .

 

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Section 9.9 Liability for Information Provided . No Party shall have any Liability to any other Party in the event that any Information exchanged or provided pursuant to this Agreement is found to be inaccurate, in the absence of willful misconduct by the Party providing such Information.

Section 9.10 Other Agreements . The rights and obligations granted under this Article IX are subject to any specific limitations, qualifications or additional provisions on the sharing, exchange or confidential treatment of Information set forth in any Ancillary Agreement.

ARTICLE X

DISPUTE RESOLUTION

Section 10.1 Negotiation . In the event of a controversy, dispute or claim arising out of, in connection with, or in relation to the interpretation, performance, nonperformance, validity or breach of this Agreement or otherwise arising out of, or in any way related to this Agreement or the transactions contemplated hereby, including any claim based on contract, tort, statute or constitution (but excluding any controversy, dispute or claim arising out of any Contract relating to the use or lease of real property if any Third Party is a necessary party to such controversy, dispute or claim) (collectively, “ Agreement Disputes ”), the Party claiming such Agreement Dispute shall give written notice to the other Party setting forth the Agreement Dispute and a brief description thereof (a “ Dispute Notice ”) pursuant to the terms of the notice provisions of Section 12.6 hereof. Following delivery of a Dispute Notice, the general counsels of the relevant Parties and/or such other executive officer designated by the relevant Party shall negotiate for a reasonable period of time to settle such Agreement Dispute; provided , that such reasonable period shall not, unless otherwise agreed by the Parties in writing, exceed forty-five (45) calendar days from the time of receipt by a Party of a Dispute Notice; provided further , that in the event of any arbitration in accordance with Section 10.3 hereof, the relevant Parties shall not assert the defenses of statute of limitations and laches arising during the period beginning after the date of receipt of the Dispute Notice, and any contractual time period or deadline under this Agreement to which such Agreement Dispute relates occurring after the Dispute Notice is received shall not be deemed to have passed until such Agreement Dispute has been resolved.

Section 10.2 Mediation . If, within forty-five (45) calendar days (or such longer period as may be agreed in writing between the Parties) after receipt by a Party of a Dispute Notice, the Parties have not succeeded in negotiating a resolution of the Agreement Dispute, the Parties agree to submit the Agreement Dispute at the earliest possible date to mediation conducted in accordance with the Commercial Mediation Rules of the American Arbitration Association (“ AAA ”), and to bear equally the costs of the mediation; provided , however , that each Party shall bear its own costs in connection with such mediation. The parties agree to participate in good faith in the mediation and negotiations related thereto for a period of thirty (30) days or such longer period as they may mutually agree following the initial mediation session (the “ Mediation Period ”).

Section 10.3 Arbitration . If the Agreement Dispute has not been resolved for any reason after the Mediation Period, such Agreement Dispute shall be determined, at the request of either relevant Party, by arbitration conducted in Chicago, Illinois, before and in accordance with the

 

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then-existing Commercial Arbitration Rules of the AAA, except as modified herein (the “Rules”). There shall be three arbitrators. Each Party shall appoint one arbitrator within twenty (20) calendar days of receipt by respondent of a copy of the demand for arbitration. The two party-appointed arbitrators shall have twenty (20) calendar days from the appointment of the second arbitrator to agree on a third arbitrator who shall chair the arbitral tribunal. Any arbitrator not timely appointed by the Parties under this Section 10.3 shall be appointed by the AAA in accordance with the listing, ranking and striking method in the Rules, and in any such procedure, each Party shall be given a limited number of strikes, excluding strikes for cause. Any controversy concerning whether an Agreement Dispute is an arbitrable Agreement Dispute, whether arbitration has been waived, whether an assignee of this Agreement is bound to arbitrate, or as to the interpretation of enforceability of this Article X shall be determined by the arbitrators. In resolving any Agreement Dispute, the Parties intend that the arbitrators shall apply the substantive laws of the State of Illinois, without regard to any choice of law principles thereof that would mandate the application of the laws of another jurisdiction. The Parties intend that the provisions to arbitrate set forth herein be valid, enforceable and irrevocable, and any award rendered by the arbitrators shall be final and binding on the Parties. The Parties agree to comply with any award made in any such arbitration proceedings and agree to enforcement of or entry of judgment upon such award in the United States District Court for the Northern District of Illinois. The arbitrators shall be entitled, if appropriate, to award any remedy in such proceedings, including monetary damages, specific performance and all other forms of legal and equitable relief; provided, however, the arbitrators shall not be entitled to award punitive, exemplary, treble or any other form of non-compensatory damages except (i) in connection with indemnification for a Third Party Claim (and in such a case, only to the extent awarded in such Third Party Claim).

Section 10.4 Arbitration Period . Any arbitration proceeding shall be concluded in a maximum of six (6) months from the commencement of the arbitration. The parties involved in the proceeding may agree in writing to extend the arbitration period if necessary to appropriately resolve the Agreement Dispute.

Section 10.5 Treatment of Negotiations, Mediation and Arbitration . Without limiting the provisions of the Rules, unless otherwise agreed in writing by or among the relevant Parties or permitted by this Agreement, the relevant Parties shall keep confidential all matters relating to and any negotiation, mediation, conference, arbitration, discussion or arbitration award pursuant to this Article X shall be treated as compromise and settlement negotiations for purposes of Rule 408 of the Federal Rules of Evidence and comparable state rules; provided, that such matters may be disclosed (i) to the extent reasonably necessary in any proceeding brought to enforce the award or for entry of a judgment upon the award and (ii) to the extent otherwise required by Law or stock exchange. Nothing said or disclosed, nor any document produced, in the course of any negotiations, conferences and discussions that is not otherwise independently discoverable shall be offered or received as evidence or used for impeachment or for any other purpose in any current or future arbitration. Nothing contained herein is intended to or shall be construed to prevent any Party from applying to any court of competent jurisdiction for interim measures or other provisional relief in connection with the subject matter of any Agreement Disputes. Without prejudice to such provisional remedies as may be available under the jurisdiction of a court, the arbitral tribunal shall have full authority to grant provisional remedies and to direct the parties to request that any court modify or vacate any temporary or preliminary relief issued by such court, and to award damages for the failure of any Party to respect the arbitral tribunal’s orders to that effect.

 

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Section 10.6 Continuity of Service and Performance . Unless otherwise agreed in writing, the Parties will continue to provide Services and honor all other commitments under this Agreement and each Ancillary Agreement during the course of dispute resolution pursuant to the provisions of this Article X with respect to all matters not subject to such dispute resolution.

Section 10.7 Consolidation . The arbitrators may consolidate any Agreement Disputes under this Agreement if the subject of the Agreement Disputes thereunder arise out of or relate essentially to the same set of facts or transactions. Such consolidated arbitration shall be determined by the arbitrator appointed for the arbitration proceeding that was commenced first in time.

ARTICLE XI

INSURANCE

Section 11.1 Policies and Rights Included Within Assets .

(a) The LSC Assets shall include (i) any and all rights of an insured Party under each of the LSC Shared Policies, subject to the terms of such LSC Shared Policies and any limitations or obligations of LSC contemplated by this Article XI , specifically including rights of indemnity and the right to be defended by or at the expense of the insurer, with respect to all actual or alleged wrongful acts, occurrences, events, claims, suits, actions, proceedings, injuries, losses, liabilities, damages and expenses which occurred or are alleged to have occurred, in whole or in part, or were incurred or claimed to have been incurred prior to the LSC Distribution Date by any Party in or in connection with the conduct of the LSC Business, regardless of whether any suit, claim, action or proceeding is brought before or after the LSC Distribution Date or, to the extent any claim is made against LSC or any of its Subsidiaries, the conduct of the RRD Retained Business or the Donnelley Financial Business prior to the LSC Distribution Date, and which actual or alleged wrongful acts, occurrences, events, claims, suits, actions, proceedings, injuries, losses, liabilities, damages and expenses may arise out of an insured or insurable occurrence or wrongful act under one or more of such LSC Shared Policies; provided , however , that nothing in this clause shall be deemed to constitute (or to reflect) an assignment of such LSC Shared Policies, or any of them, to LSC, and (ii) the LSC Policies.

(b) The Donnelley Financial Assets shall include (i) any and all rights of an insured Party under each of the Donnelley Financial Shared Policies, subject to the terms of such Donnelley Financial Shared Policies and any limitations or obligations of Donnelley Financial contemplated by this Article XI , specifically including rights of indemnity and the right to be defended by or at the expense of the insurer, with respect to all actual or alleged wrongful acts, occurrences, events, claims, suits, actions, proceedings, injuries, losses, liabilities, damages and expenses which occurred or are alleged to have occurred, in whole or in part, prior to the Donnelley Financial Distribution Date by any Party in or in connection with the conduct of the Donnelley Financial Business, regardless of whether any suit, claim, action or proceeding is brought before or after the Donnelley Financial Distribution Date or, to the extent any claim is made against Donnelley Financial or any of its Subsidiaries, the conduct of the RRD Retained Business or the LSC Business, and

 

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which actual or alleged wrongful acts, occurrences, events, claims, suits, actions, proceedings, injuries, losses, liabilities, damages and expenses may arise out of an insured or insurable occurrence or wrongful act under one or more of such Donnelley Financial Shared Policies; provided , however , that nothing in this clause shall be deemed to constitute (or to reflect) an assignment of such Donnelley Financial Shared Policies, or any of them, to Donnelley Financial, and (ii) the Donnelley Financial Policies.

Section 11.2 Claims Made Tail Policies . The claims made tail policies provided for in this Section 11.2 will solely provide coverage for any Claim arising from any Wrongful Act occurring, in whole or in part, prior to the Final Separation Date. For purposes of this Section 11.2 , “Claim” and “Wrongful Act” shall have the respective meanings given to such terms in the current RRD insurance policies, as applicable.

(a) Subject to prevailing market conditions and underwriting, RRD shall purchase directors and officers liability insurance Policies having a policy period incepting at the Effective Time, or the expiration date of the current RRD directors’ and officers’ liability insurance Policies, whichever date is earlier, and ending on a date that is six (6) years after the applicable Distribution Date (“ D&O Tail Policies ”). The premium for the D&O Tail Policies shall be pre-paid for the full six-year term of the D&O Tail Policies. Such D&O Tail Policies shall cover RRD and all Persons who become officers, directors or employees of LSC or Donnelley Financial, or remain as officers, directors or employees of RRD, as the case may be, to the same extent as such Persons are currently covered under existing RRD Policies and shall have material terms and conditions no less favorable than those contained in the Policies comprising the RRD directors and officers liability insurance program in effect immediately prior to the Effective Time, except for the policy period, premium and provisions excluding coverage for wrongful acts, errors or omissions, following the Final Separation Date. RRD (i) shall provide LSC and Donnelley Financial with copies of the D&O Tail Policies within a reasonable time after the Policies are issued and (ii) shall not amend the terms of any such Policies without ninety (90) days’ prior written notice to LSC and Donnelley Financial, as applicable. For the avoidance of doubt, no Party shall have the right to cancel, or permit the cancellation of, the D&O Tail Policies, and the terms and conditions of such Policies shall expressly state that such Policy is not cancellable by any Person at any time.

(b) Subject to prevailing market conditions and underwriting, RRD shall purchase fiduciary liability insurance Policies having a policy period incepting at the Effective Time, or the expiration date of the current RRD fiduciary liability insurance Policies, whichever date is earlier, and ending on a date that is six (6) years after the applicable Distribution Date (“ Fiduciary Tail Policies ”). The premium for the Fiduciary Tail Policies shall be pre-paid for the full six-year term of the Fiduciary Tail Policies. Such Fiduciary Tail Policies shall cover RRD and all Persons who become officers, directors or employees of LSC or Donnelley Financial, or remain as officers, directors or employees of RRD, as the case may be, to the same extent as such Persons are currently covered under existing RRD Policies and shall have material terms and conditions no less favorable than those contained in the Policies comprising the RRD fiduciary liability insurance program in effect immediately prior to the Effective Time, except for the policy period, premium and provisions excluding coverage for wrongful acts, errors and omissions, post-dating the

 

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Final Separation Date. RRD (i) shall provide LSC and Donnelley Financial with copies of the Fiduciary Tail Policies within a reasonable time after the Policies are issued and (ii) shall not amend the terms or any such Policies without ninety (90) days prior written notice to LSC and Donnelley Financial, as applicable. For the avoidance of doubt, no Party shall have the right to cancel, or permit the cancellation of, the D&O Tail Policies, and the terms and conditions of such Policies shall expressly state that such Policy is not cancellable by any Person at any time.

(c) Subject to prevailing market conditions and underwriting, RRD shall purchase a professional liability insurance policy (or continue an existing professional liability insurance policy) having a policy period incepting no later than at the Effective Time, and ending on the first anniversary thereof (“ Professional Tail Policy ”). On the first anniversary of the Effective Time, and on each of the second, third, fourth, and fifth anniversaries of the Effective Time, RRD shall renew the Professional Tail Policy such that the terms and conditions in each renewal are consistent in all material respects with those in effect immediately following the Effective Time. The premium for the first year of the Professional Tail Policy shall be prepaid. RRD shall pay, or shall cause to be paid, the premium for each renewal of the Professional Tail Policy. Such Professional Tail Policy shall cover RRD, LSC and Donnelley Financial and all Persons who become officers, directors or employees of LSC or Donnelley Financial, or remain as officers, directors or employees of RRD, as the case may be, to the same extent as such Persons are currently covered under existing RRD Policies and shall have material terms and conditions no less favorable than those contained in the Policies comprising the RRD professional liability insurance program in effect immediately prior to the Effective Time, except for the policy period, premium and provisions excluding coverage for wrongful acts, errors and omissions, post-dating the Final Separation Date. RRD (i) shall provide LSC and Donnelley Financial with copies of the Professional Tail Policies within a reasonable time after the Policies are issued and (ii) shall not amend the terms or any such Policies without ninety (90) days prior written notice to LSC and Donnelley Financial, as applicable. For the avoidance of doubt, no Party shall have the right to cancel, or permit the cancellation of, the Professional Tail Policies, and the terms and conditions of such Policies shall expressly state that such Policy is not cancellable by any Person at any time. RRD shall be responsible for the administration of the Professional Tail Policy in accordance with the provisions of Section 11.4 .

(d) Subject to prevailing market conditions and underwriting, RRD shall purchase, or cause to be purchased, three employment practices liability insurance Policies (each an “ Employment Practices Policy ,” and collectively, the “ Employment Practices Policies ”): (i) one policy in the name of RRD having a policy period incepting at the Effective Time, and ending on the first anniversary thereof (the “ RRD Employment Practices Policy ”); (ii) one policy in the name of LSC having a policy period incepting on the LSC Distribution Date, and ending on the first anniversary thereof (the “ LSC Employment Practices Policy ”) and (iii) one policy in the name of Donnelley Financial having a policy period incepting on the Donnelley Financial Distribution Date, and ending on the first anniversary thereof (the “ Donnelley Financial Employment Practices Policy ”). The premium for each of the Employment Practices Policies shall be prepaid by each respective Party. Each Party shall be solely responsible for administering its Employment

 

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Practices Policy. Each of the Parties shall renew its Employment Practices Policy annually, and at no time shall any Party allow its Employment Practices Policy to lapse until the sixth anniversary of the Effective Time. Each Party shall pay, or shall cause to be paid, the premium for each renewal of its respective Employment Practices Policy. The Parties agree that (x) all Claims made by any RRD Employee or Former RRD Employee shall be made against the RRD Employment Practices Policy, regardless of the date or period of time for which such Claim relates; (y) all Claims made by any LSC Employee or any Former LSC Employee shall be made against the LSC Employment Practices Policy, regardless of the date or period of time for which such Claim relates; and (z) all Claims made by any Donnelley Financial Employee or Former Donnelley Financial Employee shall be made against the Donnelley Financial Employment Practices Policy, regardless of the date or period of time for which such Claim relates. To the extent that, after thirty (30) days’ negotiation, the Parties are unable to determine whether a former employee is a Former RRD Employee, Former LSC Employee or Former Donnelley Financial Employee for purposes of administering a Claim under the Employment Practices Policies, the Parties agree that, solely for purposes of this Section 11.2(d) and without prejudicing the Parties in any other respect, such former employee shall be considered a Former RRD Employee and any such Claim shall be made under the RRD Employment Practices Policy. Each of the Employment Practices Policies shall have material terms and conditions no less favorable than those contained in the Policies comprising the RRD employment practices program in effect immediately prior to the Effective Time, except for the policy period, premium and provisions excluding coverage for wrongful acts, errors and omissions. No Party shall amend the terms of any such Policies without ninety (90) days prior written notice to the other Parties. For the avoidance of doubt, no Party shall have the right to cancel, or permit the cancellation of, its Employment Practices Policy, and the terms and conditions of such Policy shall expressly state that such Policy is not cancellable by any Person at any time.

(e) Subject to prevailing market conditions and underwriting, to the extent that RRD is unable prior to the Final Separation Date or upon any renewal required under this Section 11.2 to obtain any of the policies as provided for in paragraphs (a), (b),(c) and (d) of this Section 11.2 , then, (i) with respect to suits or claims based on wrongful acts, errors or omissions on or before the Final Separation Date, RRD and (ii) with respect to any coverage to be renewed under paragraph (c) and (d), the party responsible for renewing such policy shall use reasonable best efforts to secure alternative insurance arrangements on the applicable standalone insurance policies for RRD, LSC and Donnelley Financial, as the case may be, to provide benefits on terms and conditions (including policy limits) in favor of RRD, LSC, Donnelley Financial and the insured persons thereof, as the case may be, no less favorable than the benefits (including policy limits) that were to be afforded by the policies described in paragraphs (a), (b), (c) and (d) of this Section 11.2 . With respect to such alternative insurance arrangements, RRD, LSC and Donnelley Financial shall be responsible for their own costs under their applicable standalone insurance policies. RRD shall not under any circumstances purchase any such alternative coverage containing an exclusion for suits or claims based on wrongful acts, errors or omissions up to and including the Final Separation Date to the extent such exclusion would preclude coverage for LSC and Donnelley Financial and/or the insured persons thereof, but would not preclude coverage for RRD and/or the insured persons thereof.

 

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Section 11.3 Occurrence Based Policies .

(a) With respect to known Claims, the Parties agree that: (i) the Claims identified on Schedule 11.3(a)(i) shall be RRD Retained Claims; (ii) the Claims identified on Schedule 11.3(a)(ii) shall be LSC Claims; and (iii) the Claims identified on Schedule 11.3(a)(iii) shall be Donnelley Financial Claims. The Parties agree to amend such schedules for known Claims through the Effective Time. With respect any suits or claims for workers’ compensation, excess workers’ compensation, automobile liability and general liability insurance that are filed on or after the Effective Time, with respect to occurrences which took place, in whole or in part, prior to the Effective Time, (x) to the extent such claim or suit relates to any LSC Employee, Former LSC Employee, LSC Asset or LSC Liability, whether or not such claim or suit is identified on Schedule 11.3(a)(ii) , such claim or suit shall be an LSC Claim; (y) to the extent such claim or suit relates to any Donnelley Financial Employee, Former Donnelley Financial Employee, Donnelley Financial Asset or Donnelley Financial Liability, whether or not such claim or suit is identified on Schedule 11.3(a)(iii) , such claim or suit shall be a Donnelley Financial Claim; and (iii) to the extent such claim or suit relates to any RRD Employee, Former RRD Employee, RRD Retained Asset or Assumed RRD Liability, whether or not such claim or suit is identified on Schedule 11.3(a)(i) , such claim or suit shall be a RRD Retained Claim. The Parties agree to negotiate in good faith with respect to classifying any claim or suit under this Section 11.3 . In the event that the Parties are unable to classify any claim or suit for a period of thirty (30) days after the date upon which a Party first discovers such claim or suit, then the Parties agree that such a dispute shall an RRD Retained Claim.

(b) For suits or claims that are filed or made based upon occurrences that occurred or are alleged to have occurred in whole or in part prior to the respective Distribution Dates, RRD LSC and Donnelley Financial, shall be responsible for bearing the full amount of the deductible and/or any claims, costs and expenses that are not covered under such insurance policies including that portion of any premium adjustments, Tax, assessment or similar regulatory surcharges, that relates to claims based on occurrences that predate the respective Distribution Dates. RRD shall invoice LSC or Donnelley Financial, as the case may be, for any deductible any claims, costs and expenses that are not covered under such insurance policies including that portion of any premium adjustments, Tax, assessment or similar regulatory surcharges, that relates to claims based on occurrences that predate the respective Distribution Dates, within thirty (30) days of the incurrence thereof, or in connection with any deductible, within thirty (30) days of the settlement of any Insured Claim.

Section 11.4 Administration; Other Matters .

(a) Administration . Except as otherwise provided in Section 11.3 hereof, from and after the Effective Time, RRD shall be responsible for (i) Insurance Administration of the Shared Policies and (ii) Claims Administration under such Shared Policies with respect to Assumed RRD Contingent Liabilities, RRD Retained Liabilities, LSC Liabilities and Donnelley Financial Liabilities; provided , that the retention of such responsibilities by RRD is in no way intended to limit, inhibit or preclude any right to insurance coverage for any Insured Claim of a named insured under such Policies as contemplated by the terms of

 

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this Agreement; and provided , further , that RRD’s retention of the administrative responsibilities for the Shared Policies shall not relieve the Party submitting any Insured Claim of the primary responsibility for reporting such Insured Claim accurately, completely and in a timely manner or of such Party’s authority to settle any such Insured Claim within any period or amount permitted or required by the relevant Policy. RRD may discharge its administrative responsibilities under this Section 11.4 by contracting for the provision of services by independent parties. Each of the applicable Parties shall pay any costs relating to defending its respective Insured Claims under Shared Policies to the extent such costs including defense, out-of-pocket expenses, and direct and indirect costs of employees or agents of RRD related to Claims Administration and Insurance Administration are not covered under such Policies. Each of the Parties shall be responsible for obtaining or reviewing the appropriateness of releases upon settlement of its respective Insured Claims under Shared Policies.

(b) Exceeding Policy Limits . Where LSC Liabilities and/or Donnelley Financial Liabilities, as applicable, are specifically covered under the same Shared Policy for occurrences, acts or events prior to the earlier of the LSC Distribution Date or the Donnelley Financial Distribution Date, regardless of whether the suit or claim is filed or made after the earlier of the LSC Distribution Date or the Donnelley Financial Distribution Date, then LSC and Donnelley Financial, or both, as the case may be, may claim coverage for Insured Claims under such Shared Policy as and to the extent that such insurance is available up to the full extent of the applicable limits of liability of such Shared Policy (and may receive any Insurance Proceeds with respect thereto as contemplated by Section 11.2 , Section 11.3 or Section 11.4(c) hereof), subject to the terms of this Section 11.4 . Except as set forth in this Section 11.4 , RRD, LSC and Donnelley Financial shall not be liable to one another for claims not reimbursed by insurers for any reason not within the control of RRD, LSC or Donnelley Financial, as the case may be, including coinsurance provisions, deductibles, quota share deductibles, self-insured retentions, bankruptcy or insolvency of an insurance carrier, Shared Policy limitations or restrictions, any coverage disputes, any failure to timely claim by RRD, LSC or Donnelley Financial or any defect in such claim or its processing. With respect to such coinsurance provisions, deductibles, quota share deductibles or self-insured retentions, LSC or Donnelley Financial, as the case may be, shall reimburse RRD for such coinsurance provisions, deductibles, quota share deductibles or self-insured retentions within thirty (30) days of receipt of an invoice from RRD relating to any Insured Claim; provided that, to the extent the Parties dispute the obligation of a Party to reimburse, then the Parties agree to treat such disagreement as an Agreement Dispute pursuant to Article X of this Agreement. It is expressly understood that the foregoing shall not limit any Party’s liability to any other Party for indemnification pursuant to Article VIII .

(c) Allocation of Insurance Proceeds . Except as otherwise provided in Section 11.3 , Insurance Proceeds received with respect to suits, occurrences, claims, costs and expenses covered under the Shared Policies shall be paid to RRD with respect to RRD Retained Liabilities, to LSC with respect to LSC Liabilities, and to Donnelley Financial with respect to Donnelley Financial Liabilities. In the event that the aggregate limits on any Shared Policies are exhausted by the payment of Insured Claims by the relevant Parties, such Parties agree to allocate the Insurance Proceeds received thereunder based upon their

 

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respective percentage of the total insured claim or claims which were covered under such Shared Policy (their “ Allocable Portion of Insurance Proceeds ”), and any Party who has received Insurance Proceeds in excess of such Party’s Allocable Portion of Insurance Proceeds shall pay to the other Party or Parties the appropriate amount so that each Party will have received its Allocable Portion of Insurance Proceeds. Each of the Parties agrees to use commercially reasonable efforts to maximize available coverage under those Shared Policies applicable to it for the benefit of all Parties, and to take all commercially reasonable steps to recover from all other responsible parties (except the Parties) in respect of an Insured Claim to the extent coverage limits under a Shared Policy have been exceeded or would be exceeded as a result of such Insured Claim.

(d) Allocation of Aggregate Deductibles . In the event that two or more Parties have insured claims under any Shared Policy for which an aggregate deductible is payable, the Parties agree that the aggregate amount of the total deductible paid shall be borne by the Parties in the same proportion which the Insurance Proceeds received by each such Party bears to the total Insurance Proceeds received under the applicable Shared Policy (their “ allocable share of the deductible ”), and any Party who has paid more than its allocable share of the deductible shall be entitled to receive from any other Party or Parties an appropriate amount such that each Party will only have to bear its allocable share of the deductible.

Section 11.5 Cooperation . The Parties agree to use their reasonable best efforts to cooperate with respect to the various insurance matters contemplated by this Agreement.

Section 11.6 Certain Matters Relating to RRD’s Organizational Documents . For a period of six (6) years from the Final Separation Date, the amended and restated certificate of incorporation and amended and restated by-laws of RRD shall contain provisions no less favorable with respect to indemnification than are set forth in the amended and restated certificate of incorporation and amended and restated by-laws of RRD in effect immediately after the Effective Time, which provisions shall not be amended, repealed or otherwise modified for a period of six (6) years from the Final Separation Date in any manner that would affect adversely the rights thereunder of individuals who, at or prior to the Relevant Time, were directors, officers, employees, fiduciaries or agents of any member of the RRD Group or the LSC Group, the Donnelley Financial Group, unless such modification shall be required by Law and then only to the minimum extent required by Law.

ARTICLE XII

MISCELLANEOUS

Section 12.1 Complete Agreement; Construction . This Agreement, including the Schedules and the Ancillary Agreements hereto, 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 Schedule hereto, the Schedule shall prevail. In the event and to the extent that there shall be a conflict between the provisions of this Agreement and the provisions of any Ancillary Agreement or continuing arrangement, such Ancillary Agreement or continuing

 

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arrangement shall control; provided , that with respect to any Conveyancing and Assumption Instrument, except as provided in Section 12.2 , this Agreement shall control unless specifically stated otherwise in such Conveyancing and Assumption Instrument. Except as expressly set forth in this Agreement or any Ancillary Agreement: (a) all matters relating to Taxes and Tax Returns of the Parties and their respective Subsidiaries shall be governed exclusively by a Tax Disaffiliation Agreement; and (b) for the avoidance of doubt, in the event of any conflict between this Agreement or any Ancillary Agreement, on the one hand, and a Tax Disaffiliation Agreement, on the other hand, with respect to such matters, the terms and conditions of a Tax Disaffiliation Agreement shall govern. The rights and remedies of the Parties herein provided shall be cumulative and in addition to any other or further remedies provided by law or equity.

Section 12.2 Ancillary Agreements . This Agreement is not intended to address, and should not be interpreted to address, the matters specifically and expressly covered by the Ancillary Agreements. Notwithstanding anything to the contrary in this Agreement, (a) only the Intellectual Property Agreements, and not this Agreement or any of the other Ancillary Agreements other than the Intellectual Property Agreements, shall govern any matter relating to the Transfer, recordation or registration of Transfer, maintenance, enforcement (including in any litigation, adversarial matter, interference or administrative proceeding), licensing or other rights to use or exploit all Intellectual Property of the type that is addressed in the Intellectual Property Agreements (including Patents, Trademarks, trade secrets, proprietary know-how and Data), and (b) no such Intellectual Property shall be Transferred or licensed (or other rights to use or exploit granted) pursuant to this Agreement (including for the avoidance of doubt, pursuant to Section 2.6 ).

Section 12.3 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 of the Parties and delivered to the other Parties.

Section 12.4 Survival of Agreements . Except as otherwise contemplated by this Agreement or any Ancillary Agreement, all covenants and agreements of the Parties contained in this Agreement and each Ancillary Agreement shall survive the Effective Time and remain in full force and effect in accordance with their applicable terms.

Section 12.5 Expenses . Except as otherwise provided (i) in this Agreement, or (ii) in any Ancillary Agreement, the Parties agree that all out-of-pocket fees and expenses incurred, or to be incurred and directly related to the Plan of Reorganization and transactions contemplated hereby (including third party professional fees, fees and expenses incurred in connection with the execution and delivery of this Agreement, such other third party fees and expenses incurred on a non-recurring basis directly as result of the Plan of Reorganization (“ Separation Expenses ”) shall (A) to the extent incurred and payable prior to the Final Separation Date be paid by RRD and (B) to the extent any such Separation Expenses arise and are payable by any Party following the Final Separation Date be paid by such Party. Notwithstanding the foregoing, each Party shall be responsible for its own internal fees (and reimburse any other Party to the extent such Party has paid such costs and expenses on behalf of the responsible Party), costs and expenses (e.g., salaries of personnel working in its respective Business) incurred in connection with the Plan of Reorganization, any costs and expenses relating to such Party’s (or any member of its Group’s)

 

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Disclosure Documents in connection with the Plan of Reorganization (including, printing, mailing and filing fees) or any costs and expenses incurred with the listing of such Party’s common stock on the NYSE in connection with any Distribution.

Section 12.6 Notices . All notices, requests, claims, demands and other communications under this Agreement and, to the extent applicable and unless otherwise provided therein, under each of the Ancillary Agreements, 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 (at a facsimile number to be provided by such Party to the other Party pursuant to the notice provisions of this Section 12.6 ) with receipt confirmed (followed by delivery of an original via overnight courier service), by email (at an email address to be provided by such Party to the other Party pursuant to the notice provisions of this Section 12.6 ) 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 12.6 ):

To RRD:

R. R. Donnelley & Sons Company

35 West Wacker Drive

Chicago, Illinois 60601

Attn: General Counsel

To LSC:

LSC Communications, Inc.

35 West Wacker Drive

Chicago, Illinois 60601

Attn: General Counsel

To Donnelley Financial:

Donnelley Financial Solutions, Inc.

35 West Wacker Drive

Chicago, Illinois 60601

Attn: General Counsel

Section 12.7 Waivers and Consents . The failure of any Party to require strict performance by any other Party of any provision in this Agreement will not waive or diminish that Party’s right to demand strict performance thereafter of that or any other provision hereof. Any consent required or permitted to be given by any Party to the other Parties under this Agreement shall be in writing and signed by the Party giving such consent.

Section 12.8 Amendments . Subject to the terms of Section 12.11 hereof, this Agreement may not be modified or amended except by an agreement in writing signed by a duly authorized representative of each of the Parties.

 

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Section 12.9 Assignment . Except as otherwise provided for in this Agreement, 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 Parties, 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 Parties, to be bound by the terms of this Agreement as if named as a “ Party ” hereto.

Section 12.10 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 12.11 Certain Termination and Amendment Rights . This Agreement (including Article VII hereof) may be terminated and each of the Distributions may be amended, modified or abandoned at any time prior to the earlier of the LSC Distribution Date or the Donnelley Financial Distribution Date by and in the sole discretion of RRD without the approval of LSC, Donnelley Financial or the stockholders of RRD. 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 RRD, LSC and Donnelley Financial. Notwithstanding the foregoing, Article VII shall not be terminated or amended after the Effective Time in a manner adverse to the third party beneficiaries thereof without the Consent of any such Person. Notwithstanding the foregoing, this Agreement may be terminated or amended as among any Parties that remain Affiliates, so long as such amendment does not adversely affect any Party that is no longer an Affiliate, in which case, only with the consent of such Party.

Section 12.12 Payment Terms .

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

(b) Except as expressly provided to the contrary in this Agreement (including with respect to certain default payments in accordance with Section 7.6 ) or in any Ancillary Agreement, any amount not paid when due pursuant to this Agreement (and any amount billed or otherwise invoiced or demanded and properly payable that is not paid within thirty (30) days of such bill, invoice or other demand) shall bear interest at a rate per annum equal to the Prime Rate plus three percent (3%) (or the maximum legal rate, whichever is lower), calculated for the actual number of days elapsed, accrued from the date on which such payment was due up to the date of the actual receipt of payment.

 

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Section 12.13 No Circumvention . The Parties agree not to directly or indirectly take any actions, act in concert with any Person who takes an action (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 or any Ancillary Agreement (including adversely affecting the rights or ability of any Party to successfully pursue indemnification, contribution or payment pursuant to Article VI ).

Section 12.14 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 Relevant Time.

Section 12.15 Third Party Beneficiaries . Except (i) as provided in Article VIII relating to Indemnitees and for the release under Section 8.1 of any Person provided therein, (ii) as provided in Section 11.2 relating to insured persons and Section 11.6 relating to the directors, officers, employees, fiduciaries or agents provided therein and (iii) as specifically provided in any Ancillary Agreement, 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 12.16 Titles 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 12.17 Exhibits and Schedules . The Exhibits and 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 12.18 Governing Law . This Agreement shall be governed by and construed in accordance with the laws of, but not the laws governing conflicts of laws of the State of Illinois.

Section 12.19 Consent to Jurisdiction . Subject to the provisions of Article X hereof, each of the Parties irrevocably submits to the jurisdiction of (a) the Circuit Court of the State of Illinois, Cook County, or (b) the United States District Court for the Northern District of Illinois (the “ Illinois Courts ”), for the purposes of any suit, Action or other proceeding to compel arbitration or for provisional relief in aid of arbitration in accordance with Article X or to prevent irreparable harm, and to the non-exclusive jurisdiction of the Illinois Courts for the enforcement of any award issued thereunder. Each of the Parties further agrees that service of any process, summons, notice or document by US 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 Illinois Courts with respect to any matters to which it has submitted to jurisdiction in this Section 12.19 . Each of the Parties irrevocably and unconditionally waives any objection to the laying of venue of any Action, suit or proceeding arising out of this Agreement or the transactions contemplated hereby in the Illinois 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.

 

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Section 12.20 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 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.

Section 12.21 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 12.21 .

Section 12.22 Severability . In the event any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby. The Parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions, the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

Section 12.23 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 or, unless otherwise expressly provided therein, any Ancillary 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 Section 1.1(92) ). 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 12.24 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 12.25 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 (including with respect to the rights, entitlements, obligations and recoveries that may arise out of one or more of the following Sections: Section 3.4 , Section 7.3 , Section 8.2 , Section 8.3, Section 8.4 and Section 8.5 ).

[Signature Page Follows]

 

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

 

R. R. DONNELLEY & SONS COMPANY
By:  

/s/ Daniel L. Knotts

Name:   Daniel L. Knotts
Title:   Chief Operating Officer
LSC COMMUNICATIONS, INC.
By:  

/s/ Thomas J. Quinlan III

Name:   Thomas J. Quinlan III
Title:   Chief Executive Officer
DONNELLEY FINANCIAL SOLUTIONS, INC.
By:  

/s/ Daniel N. Leib

Name:   Daniel N. Leib
Title:   Chief Executive Officer

 

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Exhibit 2.2

TRANSITION SERVICES AGREEMENT

by and between

R. R. DONNELLEY & SONS COMPANY

and

LSC COMMUNICATIONS, INC.

Dated as of September 14, 2016


TABLE OF CONTENTS

 

         Page  

ARTICLE I DEFINITIONS

     1   

Section 1.1

 

General

     1   

Section 1.2

 

References; Interpretation

     6   

ARTICLE II SERVICES

     6   

Section 2.1

 

Services

     6   

Section 2.2

 

Standard of Service

     6   

Section 2.3

 

Additional Services

     6   

ARTICLE III PERSONNEL

     7   

Section 3.1

 

Services Managers

     7   

Section 3.2

 

Services Personnel

     7   

ARTICLE IV PAYMENT

     8   

Section 4.1

 

General

     8   

Section 4.2

 

Additional Expenses

     8   

Section 4.3

 

Invoices

     9   

Section 4.4

 

Failure to Pay

     10   

Section 4.5

 

Termination of Services

     10   

Section 4.6

 

Extension of Services

     10   

ARTICLE V PROPRIETARY RIGHTS

     10   

Section 5.1

 

Equipment

     10   

Section 5.2

 

Intellectual Property

     11   

Section 5.3

 

Software Licenses at Conclusion of Services

     11   

ARTICLE VI INDEMNIFICATION

     12   

Section 6.1

 

Indemnification by Recipients

     12   

Section 6.2

 

Indemnification by Providers

     12   

Section 6.3

 

Third Party Claims

     12   

Section 6.4

 

Indemnification Payments

     14   

Section 6.5

 

Survival

     14   

ARTICLE VII COOPERATION; CONFIDENTIALITY

     15   

Section 7.1

 

Good Faith Cooperation; Consents

     15   

Section 7.2

 

Confidentiality

     15   

 

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ARTICLE VIII TERM

     15   

Section 8.1

 

Duration

     15   

Section 8.2

 

Suspension Due to Force Majeure

     16   

Section 8.3

 

Consequences of Termination

     17   

ARTICLE IX RECORDS; SECURITY TERMS

     17   

Section 9.1

 

Maintenance of Records

     17   

Section 9.2

 

Security Terms

     17   

ARTICLE X DISPUTE RESOLUTION

     17   

Section 10.1

 

Negotiation

     17   

Section 10.2

 

Mediation

     18   

Section 10.3

 

Arbitration

     18   

Section 10.4

 

Arbitration Period

     19   

Section 10.5

 

Treatment of Negotiations, Mediation and Arbitration

     19   

Section 10.6

 

Continuity of Service and Performance

     19   

Section 10.7

 

Consolidation

     19   

ARTICLE XI NOTICES

     19   

Section 11.1

 

Notices

     19   

ARTICLE XII MISCELLANEOUS

     20   

Section 12.1

 

Taxes

     20   

Section 12.2

 

Relationship of Parties

     20   

Section 12.3

 

Complete Agreement; Construction

     20   

Section 12.4

 

Other Agreements

     20   

Section 12.5

 

Counterparts

     21   

Section 12.6

 

Survival of Agreements

     21   

Section 12.7

 

Assignment

     21   

Section 12.8

 

Waivers and Consents

     21   

Section 12.9

 

Amendments

     21   

Section 12.10

 

Successors and Assigns

     21   

Section 12.11

 

No Circumvention

     21   

Section 12.12

 

Subsidiaries

     21   

Section 12.13

 

Third Party Beneficiaries

     21   

Section 12.14

 

Titles and Headings

     22   

Section 12.15

 

Exhibits and Schedules

     22   

Section 12.16

 

Governing Law

     22   

Section 12.17

 

Consent to Jurisdiction

     22   

Section 12.18

 

Specific Performance

     22   

Section 12.19

 

WAIVER OF JURY TRIAL

     22   

Section 12.20

 

Severability

     23   

Section 12.21

 

Interpretation

     23   

Section 12.22

 

No Duplication; No Double Recovery

     23   

Section 12.23

 

DISCLAIMER OF WARRANTIES

     23   

 

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List of Schedules

Schedule A-1

Schedule A-2

Schedule A-3

Schedule A-4

Schedule A-5

Schedule A-6

Schedule A-7

Schedule A-8

Schedule A-9

Schedule A-10

Schedule A-11

Schedule A-12

Schedule A-13

Schedule A-14

Schedule A-15

Schedule A-16

Schedule A-17

Schedule A-18

Schedule A-19

Schedule A-20

Schedule A-21

Schedule A-22

Schedule A-23

Schedule A-24

Schedule A-25

Schedule A-26

Schedule A-27

Schedule A-28

Schedule A-29

Schedule A-30

Schedule A-31

Schedule A-32

Schedule A-33

Schedule A-34

Schedule A-35

Schedule A-36

Schedule A-37

Schedule A-38

Schedule A-39

Schedule A-40

Schedule A-41

Schedule A-42

Schedule A-43

Schedule A-44

Schedule A-45

 

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Schedule A-46

Schedule B-1

Schedule B-2

Schedule B-3

Schedule B-4

Schedule B-5

Schedule B-6

Schedule B-7

Schedule B-8

Schedule B-9

Schedule B-10

Schedule B-11

Schedule C

 

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TRANSITION SERVICES AGREEMENT

This TRANSITION SERVICES AGREEMENT (this “ Agreement ”), dated as of September 14, 2016, is entered into by and between R. R. Donnelley & Sons Company, a Delaware corporation (“ RRD ”), and LSC Communications, Inc., a Delaware corporation (“ LSC ”). Each of RRD and LSC is referred to herein as a “ Party ” and together, as the “ Parties ”.

W I T N E S S E T H:

WHEREAS, RRD, LSC and Donnelley Financial Solutions, Inc., a Delaware corporation (“ Donnelley Financial ”), have entered into a Separation and Distribution Agreement, dated as of September 14, 2016 (the “ Separation and Distribution Agreement ”), pursuant to which RRD and its subsidiaries will undertake a series of transactions following which it will separate into three independent, publicly traded companies: (i) one business focused on publishing and retail-centric print services and office products, which shall be owned and conducted, directly or indirectly, by LSC (the “ LSC Distribution ”), (ii) one business focused on financial communications and data services, which shall be owned and conducted, directly or indirectly, by Donnelley Financial, and (iii) one business focused on customized multichannel communications management, which shall be owned and conducted, directly or indirectly, by RRD (the “ Separation ”); and

WHEREAS, in connection with the Separation and the LSC Distribution, and in order to ensure an orderly transition with respect to the transactions contemplated under the Separation and Distribution Agreement, it will be necessary for each of the Parties to provide to the other the Services (as defined herein) for a transitional period on the terms and subject to the conditions set forth herein.

NOW, THEREFORE, the Parties hereto, in consideration of the premises and the mutual covenants contained herein, agree as follows:

ARTICLE I

DEFINITIONS

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

(1) “ AAA ” shall have the meaning set forth in Section 10.2 .

(2) “ Action ” shall mean any demand, action, claim, suit, countersuit, arbitration, inquiry, subpoena, proceeding or investigation by or before any Governmental Entity or any arbitration or mediation tribunal.

(3) “ Additional Services ” shall have the meaning set forth in Section 2.3 .

(4) “ 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” (including the correlative meanings of the terms “controlled by”


and “under common control with”), 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. For the avoidance of doubt, for the purposes of this Agreement, RRD and Donnelley Financial shall not be considered “Affiliates” of LSC, nor shall LSC and Donnelley Financial be considered “Affiliates” of RRD.

(5) “ Agreement ” shall have the meaning set forth in the preamble hereto.

(6) “ Agreement Disputes ” shall have the meaning set forth in Section 10.1 .

(7) “ Ancillary Agreement ” shall have the meaning assigned to that term in the Separation and Distribution Agreement.

(8) “ Applicable LSC Service Fee ” shall have the meaning set forth in Section 4.1(b) .

(9) “ Applicable Rate ” shall mean the Prime Rate (as defined below) plus three percent (3%) per annum.

(10) “ Applicable RRD Service Fee ” shall have the meaning set forth in Section 4.1(a) .

(11) “ Applicable Service Fee ” shall mean either an Applicable LSC Service Fee or Applicable RRD Service Fee.

(12) “ Business Day ” shall mean any day that is not a Saturday, a Sunday or any other day on which banks are required or authorized by law to be closed in The City of New York.

(13) “ Dispute Notice ” shall have the meaning set forth in Section 10.1 .

(14) “ Donnelley Financial ” shall have the meaning set forth in the recitals hereto.

(15) “ Early Termination Date ” shall have the meaning set forth in Section 8.1(c) .

(16) “ Early Termination Notice Period ” shall have the meaning set forth in Section 8.1(c) .

(17) “ Extension Notice ” shall have the meaning set forth in Section 8.1(d) .

(18) “ Extension Period ” shall have the meaning set forth in Section 8.1(d) .

(19) “ Force Majeure Events ” shall have the meaning set forth in Section 8.2 .

 

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(20) “ Governmental Entity ” shall mean any domestic or foreign governmental or regulatory authority, agency, commission, body, court or other legislative, executive or judicial governmental entity.

(21) “ Identified Licensed Software ” shall mean, (i) with respect to software and associated documentation licensed to RRD, the “Assigned Software,” as such term is defined in the Software, Copyright and Trade Secret Assignment and License Agreement, and (ii) with respect to software and associated documentation licensed to LSC, the “Licensed Software,” as such term is defined in the Software, Copyright and Trade Secret Assignment and License Agreement.

(22) “ Illinois Courts ” shall have the meaning set forth in Section 12.17 .

(23) “ Improvements ” shall have the meaning set forth in Section 5.2(a) .

(24) “ Indemnifying Party ” shall have the meaning set forth in Section 6.3(a) .

(25) “ Indemnitee ” shall have the meaning set forth in Section 6.3(a) .

(26) “ Intellectual Property ” shall have the meaning set forth in the Separation and Distribution Agreement.

(27) “ Lead Services Manager ” shall have the meaning set forth in Section 3.1 .

(28) “ Liabilities ” shall mean any and all debts, liabilities, costs, expenses, interest and obligations, whether accrued or fixed, absolute or contingent, matured or unmatured, reserved or unreserved, or determined or determinable, including those arising under any law, claim, demand, action, whether asserted or unasserted, or order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Entity and those arising under any contract or any fines, damages or equitable relief which may be imposed and including all costs and expenses related thereto.

(29) “ Loss ” shall mean (i) any and all damages, losses, deficiencies, Liabilities, obligations, penalties, judgments, settlements, claims, payments, fines, interest, costs and expenses (including the costs and expenses of any and all Actions and demands, assessments, judgments, settlements and compromises relating thereto and the reasonable costs and expenses of attorneys’, accountants’, consultants’ and other professionals’ fees and expenses incurred in the investigation or defense thereof or the enforcement of rights hereunder), excluding special, consequential, indirect, punitive damages (other than special, consequential, indirect and/or punitive damages awarded to any third party against an indemnified party) and/or taxes and (ii) any consequential damages that are reasonably foreseeable.

(30) “ LSC ” shall have the meaning set forth in the preamble hereto.

(31) “ LSC Additional Expenses ” shall have the meaning set forth in Section 4.2(b) .

 

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(32) “ LSC Distribution ” shall have the meaning set forth in the recitals hereto.

(33) “ LSC Distribution Date ” shall mean the date on which the LSC Distribution is effected.

(34) “ LSC Opco ” shall mean LSC Communications US, LLC.

(35) “ LSC Service Schedule ” shall have the meaning set forth in Section 2.1(b) .

(36) “ LSC Services ” shall mean those transitional services, including any Additional Services, to be provided by LSC to RRD set forth on the LSC Service Schedules hereto to assist RRD in operating RRD’s business following the LSC Distribution.

(37) “ LSC Services Fee ” shall have the meaning set forth in Section 4.1(b) .

(38) “ Mediation Period ” shall have the meaning set forth in Section 10.2 .

(39) “ Outside Notice Date ” shall have the meaning set forth in Section 6.3(a) .

(40) “ Party ” or “ Parties ” shall have the meaning set forth in the preamble hereto.

(41) “ Person ” shall mean 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.

(42) “ Prime Rate ” shall mean the rate of interest per annum announced from time to time by Citibank, N.A., at its prime lending rate.

(43) “ Provider ” shall have the meaning set forth in Section 3.2(a) .

(44) “ Recipient ” shall have the meaning set forth in Section 3.2(a) .

(45) “ Representatives ” shall mean, with respect to any Person, any subsidiary of such Person and any officer, director, employee, agent or other representative of such Person or of such Person’s subsidiary.

(46) “ RRD ” shall have the meaning set forth in the preamble hereto.

(47) “ RRD Additional Expenses ” shall have the meaning set forth in Section 4.2(a) .

(48) “ RRD Service Schedule ” shall have the meaning set forth in Section 2.1(a) .

(49) “ RRD Services ” shall mean those transitional services, including any Additional Services, to be provided by RRD to LSC set forth on the RRD Service Schedules hereto to assist LSC in operating LSC’s business following the LSC Distribution.

 

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(50) “ RRD Services Fee ” shall have the meaning set forth in Section 4.1(a) .

(51) “ Rules ” shall have the meaning set forth in Section 10.3 .

(52) “ Separation ” shall have the meaning set forth in the recitals hereto.

(53) “ Separation and Distribution Agreement ” shall have the meaning set forth in the recitals hereto.

(54) “ Service Schedule ” shall have the meaning set forth in Section 2.1(b) .

(55) “ Services ” shall mean, collectively, the RRD Services and the LSC Services and “ Service ” means any of the RRD Services or LSC Services.

(56) “ Services Fee ” shall mean either of the RRD Services Fee or the LSC Services Fee.

(57) “ Services Manager ” shall have the meaning set forth in Section 3.1 .

(58) “ Subsidiary ” shall mean with respect to any Person any corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization or other entity in which such Person, directly or indirectly (i) beneficially owns more than fifty percent (50%) of (A) the total combined voting power of all classes of voting securities of such Person, (B) the total combined equity economic interest thereof or (C) the capital or profits thereof, in the case of a partnership, or (ii) otherwise has the power to elect or direct the election of more than fifty percent (50%) of the members of the governing body of such entity or otherwise has control over such entity (e.g., as the managing partner of a partnership).

(59) “ Software ” shall mean proprietary software programs owned by the applicable Provider (or an Affiliate thereof), in either or both object code forms as determined pursuant to Section 5.3(b) , together with documentation relating to the design and/or maintenance of such software programs, as applicable, in each case as such items exist as of the time the relevant request for such software and documentation is made pursuant to Section 5.3(b) .

(60) “ Software, Copyright and Trade Secret Assignment and License Agreement ” shall mean the Software, Copyright and Trade Secret Assignment and License Agreement, effective as of September 30, 2016, by and between RRD and LSC Opco.

(61) “ Termination Date ” shall have the meaning set forth in Section 8.1(a) .

(62) “ Third Party ” shall mean any Person who is not a party to this Agreement.

(63) “ Third Party Claim ” shall have the meaning set forth in Section 6.3(a) .

(64) “ Third Party Claim Notice ” shall have the meaning set forth in Section 6.3(a) .

(65) “ Undisputed Amount ” shall have the meaning set forth in Section 4.4 .

 

5


Section 1.2 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 “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. Other capitalized terms have the meanings set forth elsewhere in this Agreement. Any capitalized terms used but not defined in this Agreement have the meanings given to them in the Separation and Distribution Agreement.

ARTICLE II

SERVICES

Section 2.1 Services .

(a) RRD shall provide or cause to be provided to LSC each RRD Service for the term set forth in the description of such RRD Service (as such term may be extended pursuant to Article VIII hereof) in the applicable schedule of Schedules A-1 to A-46 (each an “ RRD Service Schedule ”). Additional Services may be provided by RRD to LSC as provided in Section 2.3 .

(b) LSC shall provide to RRD each LSC Service for the term set forth in the description of such LSC Service (as such term may be extended pursuant to Article VIII hereof) in the applicable schedule of Schedules B-1 to B-11 (each an “ LSC Service Schedule ”, and any of an RRD Service Schedule or an LSC Service Schedule, a “ Service Schedule ”). Additional Services may be provided by LSC to RRD as provided in Section 2.3 .

Section 2.2 Standard of Service . RRD and LSC shall maintain sufficient resources to perform their respective obligations hereunder. In performing the Services, RRD and LSC shall provide substantially the same level of service and use substantially the same degree of care as their respective personnel provided and used in providing such Services prior to completion of the LSC Distribution for itself (but in no event less than a reasonable degree of care), subject in each case to any provisions set forth on the applicable Service Schedule. Each Party shall provide reasonable assistance to the other Party in helping such other Party migrate the applicable Service to the recipient of such Service or a Third Party designated by such recipient at the end of the service period for such Service.

Section 2.3 Additional Services . From time to time after the date hereof, the Parties may identify additional services that one Party will provide to the other Party in accordance with the terms of this Agreement (the “ Additional Services ”). The Parties shall cooperate and act in

 

6


good faith to agree on the terms pursuant to which any such Additional Service shall be provided and to amend or supplement any of the Service Schedules, as applicable, in accordance with such terms. Notwithstanding the foregoing, no Party shall have any obligation to agree to provide Additional Services.

ARTICLE III

PERSONNEL

Section 3.1 Services Managers . Each Party will select (a) a Lead Services Manager (a “ Lead Services Manager ”) who will oversee the provision or receipt, as applicable, of all of the Services hereunder and (b) a separate Services Manager for each Service with each such Services Manager to be identified in the applicable Service Schedule (a “ Services Manager ”), to act as the primary contact person for the provision or receipt, as applicable, of the respective Services hereunder. All communications relating to the provision of the Services with respect to a particular Service will be directed to the Services Manager of the other Party for such Service, with a copy being sent to each Lead Services Manager. Each party shall have the right at any time and from time to time to replace its Lead Services Manager or Services Manager for a particular Service by giving notice in writing to the other party. The Services Managers of the Parties, together with the Lead Services Manager, will meet periodically, but no less than quarterly, at a mutually agreed upon time to discuss the status of the Services.

Section 3.2 Services Personnel .

(a) The Party providing any Service (the “ Provider ”) will make available to the Party receiving any such Service (the “ Recipient ”) such personnel as the Provider determines may be necessary to provide such Service. Except as otherwise set forth in a Service Schedule for a Service, the Provider will have the right, in its sole discretion, to (i) designate which personnel it will assign to perform such Service and (ii) remove and replace such personnel at any time; provided, further, that the Provider will use its commercially reasonable efforts to limit the disruption to the Recipient in the transition of the Services to different personnel.

(b) In the event that the provision of any Service by the Provider requires the cooperation and services of the personnel of the Recipient, the Recipient will make available to the Provider such personnel (who shall be appropriately qualified for purposes of so supporting the provision of such Service by the Provider) as may be necessary for the Provider to provide such Service. The Recipient will have the right, in its sole discretion, to (i) designate which personnel it will make available to the Provider in connection with the provision of such Service and (ii) remove and replace such personnel at any time; provided, further, that the Recipient will use its commercially reasonable efforts to limit the disruption to the Provider in the transition of such personnel.

(c) All Representatives of any Provider who provide Services under this Agreement shall be deemed for purposes of all compensation and employee benefits matters to be Representatives of such Provider and not employees or any other Representative of the Recipient or any of its Affiliates. In performing the Services, such

 

7


Representatives shall be under the direction, control and supervision of the Provider (and not the Recipient) and Provider shall have the sole right to exercise all authority with respect to the employment (including termination of employment), engagement, assignment and compensation of such Representatives.

(d) A Provider may hire or engage one or more subcontractors to perform any or all of its obligations under this Agreement; provided, however, that (i) such Provider shall use the same degree of care in selecting any such subcontractor as it would if such contractor were being retained to provide similar services to the Provider, and (ii) such Provider shall in all cases remain primarily responsible for all of its obligations under this Agreement with respect to the scope of the Services, the standard for services as set forth herein and the content of the Services provided to the Recipient.

(e) Nothing in this Agreement shall grant the Provider, or its Representatives and Third Party providers that are performing the Services, the right directly or indirectly to control or direct the operations of the Recipient or its Affiliates. Such Representatives and Third Party providers shall not be required to report to the management of the Recipient nor be deemed to be under the management or direction of the Recipient. The Recipient acknowledges and agrees that, except as may be expressly set forth herein as a Service (including any Additional Services) or otherwise expressly set forth in the Separation and Distribution Agreement, any Ancillary Agreements or any other applicable agreement, no Provider or its Affiliates shall be obligated to provide, or cause to be provided, any service or goods to any Recipient or its Affiliates.

ARTICLE IV

PAYMENT

Section 4.1 General .

(a) In consideration for the provision of each RRD Service, LSC shall pay to RRD the fee set forth for such RRD Service on the applicable RRD Service Schedule (such fee in the aggregate for all RRD Services, the “ RRD Services Fee ”, and each fee individually, the “ Applicable RRD Service Fee ”).

(b) In consideration for the provision of each LSC Service, RRD shall pay to LSC the fee set forth for such LSC Service on the applicable LSC Service Schedule (such fee in the aggregate for all LSC Services, the “ LSC Services Fee ”, and each fee individually, the “ Applicable LSC Service Fee ”).

Section 4.2 Additional Expenses .

(a) It is understood and agreed that the RRD Services Fee payable in accordance with Section 4.1(a) hereof includes all anticipated, reasonable and necessary out-of-pocket costs and expenses (including postage and other delivery costs, telephone and similar expenses) to be incurred by RRD in connection with the provision of the RRD Services to LSC or to be paid by RRD on behalf of LSC pursuant to the terms of this Agreement. The Parties agree that LSC shall reimburse RRD for any additional reasonable

 

8


and necessary out-of-pocket costs and expenses not included in the Applicable RRD Service Fee that are incurred by RRD in connection with the provision of RRD Services to LSC or paid by RRD on behalf of LSC pursuant to the terms of this Agreement (the “ RRD Additional Expenses ”), provided that prior to incurring any such RRD Additional Expenses, RRD shall obtain the written consent of LSC to the incurrence of such RRD Additional Expenses, with such consent not to be unreasonably withheld, delayed or conditioned; provided further that if the Parties agree such RRD Additional Expense is recurring in nature, if LSC consents to such RRD Additional Expense, the Applicable RRD Service Schedule shall be deemed amended accordingly; and if the Parties do not agree such RRD Additional Expense is recurring in nature, it shall be treated as a one-time expense and the Applicable RRD Service Schedule shall not be amended. All RRD Additional Expenses shall be invoiced by RRD to LSC in accordance with the provisions of Section 4.3 hereof.

(b) It is understood and agreed that the LSC Services Fee payable in accordance with Section 4.1(b) hereof includes all anticipated, reasonable and necessary out-of-pocket costs and expenses (including postage and other delivery costs, telephone and similar expenses) to be incurred by LSC in connection with the provision of the LSC Services to RRD or paid by LSC on behalf of RRD pursuant to the terms of this Agreement. The Parties agree that RRD shall reimburse LSC for any additional reasonable and necessary out-of-pocket costs and expenses not included in the Applicable LSC Service Fee that are incurred by LSC in connection with the provision of LSC Services to RRD or paid by LSC on behalf of RRD pursuant to the terms of this Agreement (the “ LSC Additional Expenses ”), provided that prior to incurring any such LSC Additional Expenses, LSC shall obtain the written consent of RRD to the incurrence of such LSC Additional Expenses, with such consent not to be unreasonably withheld, delayed or conditions; provided further that if such LSC Additional Expense is recurring in nature, if RRD consents to such LSC Additional Expense, the applicable LSC Service Schedule shall be deemed amended accordingly. All LSC Additional Expenses shall be invoiced by LSC to RRD in accordance with the provisions of (b) hereof.

Section 4.3 Invoices . The Provider will provide Recipient with one or more monthly invoices reflecting: (a) the Services provided during the preceding month, (b) the Applicable Service Fee owed for each such Service for the preceding month and the Services Fee for the preceding month, and (c) any other charges incurred during the preceding month (to the extent known at the time of the invoice) under the terms of this Agreement, no later than 15 days following the end of a month. Invoices will be sent in a format and containing a level of detail reasonably sufficient for Recipient to determine the accuracy of the computation of the amounts charged and that such amounts are being calculated in a manner consistent with this Agreement. Reasonable documentation will be provided for all out-of-pocket expenses consistent with the Provider’s practices. All amounts will be due and payable within 30 days of the date of invoice. Upon Recipient’s reasonable request, the Provider will provide explanations, answer questions, and provide additional documentation regarding invoiced amounts. Unless otherwise specifically agreed in writing by the Parties hereto, all payments due hereunder will be made by wire transfer of immediately available funds to an account designated in writing from time to time by the Provider.

 

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Section 4.4 Failure to Pay . Any amount that is not the subject of an Agreement Dispute (an “ Undisputed Amount ”) that is not paid when due shall be subject to a late payment fee computed daily at a rate equal to the Applicable Rate from the due date of such amount to the date such amount is paid (for example, if an Undisputed Amount were not paid for five days the late payment fee would be equal to 5/365 multiplied by the Applicable Rate). Recipient agrees to pay the Provider’s reasonable attorneys’ fees and other costs incurred in collection of any Undisputed Amounts owed to the Provider hereunder and not paid when due. Notwithstanding anything to the contrary contained herein, in the event Recipient fails to make a payment of any Undisputed Amount when due hereunder, and such failure continues for a period of sixty (60) days following delivery of notice to Recipient of such failure, the Provider shall have the right to cease provision to Recipient of the Services related to such Undisputed Amount until such overdue payment (and any applicable late payment fee accrued with respect thereto) is paid in full. Such right of the Provider shall not in any manner limit or prejudice any of the Provider’s other rights or remedies hereunder in the event of Recipient’s failure to make payments when due hereunder, including any rights or remedies pursuant to Articles VI , VIII and X .

Section 4.5 Termination of Services . In the event of a termination of a Service pursuant to Article VIII , the Recipient of such Service shall be obligated to pay the Applicable Service Fee for such Service calculated as set forth on the applicable Service Schedule through the end of the month on which such Service is terminated in accordance with the terms of this Agreement and the applicable Service Schedule. Terminations of services may not occur any time other than as of a month end. Notwithstanding the foregoing, to the extent expressly provided in any Service Schedule, upon early termination of any Service on or after the applicable Early Termination Date, the Recipient shall be obligated to pay the Provider the early termination fee contemplated in the applicable Service Schedule.

Section 4.6 Extension of Services . In the event of an extension of a Service pursuant to Article VIII , the Recipient of such Service shall be obligated to pay the Applicable Service Fee for such Service calculated as set forth on the applicable Service Schedule as the Applicable Service Fee payable during any period of extension. The Parties agree and acknowledge that fees payable for Services that are extended may be higher than during the initial term of such Service. For the avoidance of doubt, nothing herein shall constitute an obligation of any Party to extend the period for which it will provide any Service if such extension is not contemplated by the applicable Service Schedule.

ARTICLE V

PROPRIETARY RIGHTS

Section 5.1 Equipment . Except with respect to those items of equipment, systems, tools, facilities and other resources otherwise specifically allocated pursuant to the Separation and Distribution Agreement to the Recipient, all equipment, systems, tools, facilities and other resources used by the Provider and any of its Affiliates in connection with the provision of Services hereunder will remain the property of the Provider and its Affiliates and, except as otherwise provided in this Agreement, will at all times be under the sole direction and control of the Provider and its Affiliates.

 

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Section 5.2 Intellectual Property .

(a) Solely to the extent required for the provision or receipt of the Services pursuant to this Agreement, the Recipient, for itself and on behalf of its Affiliates, hereby grants to the Provider and its Affiliates, and the Provider, for itself and on behalf of its Affiliates, hereby grants to the Recipient and its Affiliates, a non-exclusive, royalty-free, non-sublicensable, non-transferable license during the term of this Agreement to internally use any Intellectual Property that is (i) owned or licensable (without requirement to pay fees to third parties) by the granting Party (or any of its Affiliates) to the other Party and its Affiliates, and (ii) required for the provision or receipt (as applicable) of the Services pursuant to this Agreement, but only to the extent and for the duration necessary for the Provider to provide or the Recipient to receive such Services pursuant to this Agreement. To the extent the license set forth in this Section 5.2(a) includes any Intellectual Property licensed to the granting Party (or any of its Affiliates) from third parties, such license is expressly conditioned upon, and subject to, any terms and conditions of any agreement pursuant to which such Intellectual Property is licensed to such granting Party (or any of its Affiliates). The foregoing license shall terminate immediately and automatically upon the expiration of the term hereof and shall be of no further force or effect.

(b) To the extent the Provider uses any Intellectual Property in providing the Services, such Intellectual Property (other than such Intellectual Property licensed to the Provider by Recipient or its Affiliates) and any derivative works of, or modifications or improvements to, such Intellectual Property conceived or created as part of the provision of Services (“ Improvements ”) will, as between the Parties, remain the sole property of the Provider unless (i) such Improvements were specifically created for Recipient or its Affiliates pursuant to a specific Service and the Parties agree that such Improvements are to be assigned to Recipient as specifically indicated in applicable Service Schedule, or (ii) such Intellectual Property is otherwise assigned to the Recipient pursuant to a separate written agreement between the Parties. The applicable Party will and hereby does assign to the applicable owner designated above, and agrees to assign automatically in the future upon first recordation in a tangible medium or first reduction to practice, all of such Party’s right, title and interest in and to all Improvements, if any. All rights not expressly granted herein are reserved. Notwithstanding the foregoing, if there is any conflict between the terms of this Section 5.2 and specific terms of the Separation and Distribution Agreement or any Ancillary Agreement, then the terms of the Separation and Distribution Agreement or such Ancillary Agreement, as applicable will prevail.

Section 5.3 Software Licenses at Conclusion of Services .

(a) Nothing in this Agreement shall be interpreted to prohibit the continued use of any Identified Licensed Software by the Recipient (or any of its Affiliates) as authorized under the Software, Copyright and Trade Secret Assignment and License Agreement or to otherwise alter the rights of the Recipient (or any of its Affiliates) as set forth in the Software, Copyright and Trade Secret Assignment and License Agreement.

(b) In the event that, upon conclusion of any particular Service, the Recipient requests a license to and copies of any Software that is (i) not Identified Licensed Software

 

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and (ii) used in or reasonably necessary to conduct the business of the Recipient, then the Provider agrees to consider such request and negotiate in good faith with the Recipient to provide a license to (upon commercially reasonable terms) and copies of (in a reasonable physical or electronic format) such Software. Such Software will be provided in either or both object code or source code forms, as reasonably agreed between the Provider and Recipient in good faith.

ARTICLE VI

INDEMNIFICATION

Section 6.1 Indemnification by Recipients .

(a) RRD agrees to indemnify, defend and hold LSC and its Representatives harmless from and against any Loss to which LSC may become subject arising out of, by reason of or otherwise in connection with the provision hereunder by LSC of LSC Services to RRD, other than Losses resulting from LSC’s or its Representative’s gross negligence, willful misconduct or bad faith.

(b) LSC agrees to indemnify, defend and hold RRD and its Representatives harmless from and against any Loss to which RRD may become subject arising out of, by reason of or otherwise in connection with the provision hereunder by RRD of RRD Services to LSC, other than Losses resulting from RRD’s or its Representative’s gross negligence, willful misconduct or bad faith.

Section 6.2 Indemnification by Providers .

(a) RRD agrees to indemnify, defend and hold LSC and its Representatives harmless from and against any Loss to which LSC may become subject arising out of, by reason of or otherwise in connection with, the provision hereunder by RRD of RRD Services to LSC where such Losses resulted from RRD’s or its Representative’s gross negligence, willful misconduct or bad faith.

(b) LSC agrees to indemnify, defend and hold RRD and its Representatives harmless from and against any Loss to which RRD may become subject arising out of, by reason of or otherwise in connection with, the provision hereunder by LSC of LSC Services to RRD where such Losses resulted from RRD’s or its Representative’s gross negligence, willful misconduct or bad faith.

Section 6.3 Third Party Claims .

(a) Except as otherwise provided in the Separation and Distribution Agreement, any Ancillary Agreement or this Agreement, if a claim or demand is made against RRD or LSC or their respective Representatives (each, an “ Indemnitee ”) by any Third Party (a “ Third Party Claim ”) as to which such Indemnitee is entitled to indemnification pursuant to this Agreement, such Indemnitee shall notify the party which is or may be required pursuant to Section 6.1 or Section 6.2 hereof to make such indemnification (the “ Indemnifying Party ”) in writing, and in reasonable detail, of the Third Party Claim

 

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promptly and in any event by the date (the “ Outside Notice Date ”) that is the tenth Business Day after receipt by such Indemnitee of written notice of the Third Party Claim (such written notice, the “ Third Party Claim Notice ”); provided, however, that failure to give such notification shall not affect the indemnification provided hereunder except to the extent the Indemnifying Party shall have been actually prejudiced as a result of such failure (except that the Indemnifying Party shall not be liable for any expenses incurred during the period beginning immediately after the Outside Notice Date and ending on the date that the Indemnitee gives the required notice). Thereafter, the Indemnitee shall deliver to the Indemnifying Party, promptly (and in any event within ten Business Days) after the Indemnitee’s receipt thereof, copies of all notices and documents (including court papers) received by the Indemnitee relating to the Third Party Claim.

(b) If a Third Party Claim is made against an Indemnitee, the Indemnifying Party shall be entitled to participate in the defense thereof and, if it so chooses and acknowledges in writing its obligation to indemnify the Indemnitee therefor, to assume the defense thereof with counsel selected by the Indemnifying Party, provided, however, that such counsel is not reasonably objected to by the Indemnitee. Should the Indemnifying Party so elect to assume the defense of a Third Party Claim, the Indemnifying Party shall, within thirty (30) days following receipt of the Third Party Claim Notice (or sooner if the nature of the Third Party Claim so requires), notify the Indemnitee of its intent to do so, and the Indemnifying Party shall thereafter not be liable to the Indemnitee for legal or other expenses subsequently incurred by the Indemnitee in connection with the defense thereof; provided, however, that such Indemnitee shall have the right to employ counsel to represent such Indemnitee if, in such Indemnitee’s reasonable judgment, a conflict of interest between such Indemnitee and such Indemnifying Party exists in respect of such claim which would make representation of both such parties by one counsel inappropriate, and in such event the fees and expenses of such separate counsel shall be paid by such Indemnifying Party. If the Indemnifying Party assumes such defense, the Indemnitee shall have the right to participate in the defense thereof and to employ counsel, subject to the proviso of the preceding sentence, at its own expense, separate from the counsel employed by the Indemnifying Party, it being understood that the Indemnifying Party shall control such defense. The Indemnifying Party shall be liable for the fees and expenses of counsel employed by the Indemnitee for any period during which the Indemnifying Party has failed to or elected not to assume the defense thereof (other than during the period prior to the time the Indemnitee shall have given notice of the Third Party Claim as provided above).

(c) If the Indemnifying Party acknowledges in writing responsibility under this Article VI for a Third Party Claim, regardless of the Indemnifying Party’s election to assume the defense thereof or not in accordance with the provisions of Section 6.3(b), then in no event will the Indemnitee admit any Liability with respect to, or settle, compromise or discharge, any Third Party Claim without the Indemnifying Party’s prior written consent; provided, however, that the Indemnitee shall have the right to settle, compromise or discharge such Third Party Claim without the consent of the Indemnifying Party if the Indemnitee releases the Indemnifying Party from its indemnification obligation hereunder in writing with respect to such Third Party Claim and such settlement, compromise or discharge would not otherwise adversely affect the Indemnifying Party. If the Indemnifying Party acknowledges in writing Liability for a Third Party Claim, the

 

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Indemnitee will agree to any settlement, compromise or discharge of a Third Party Claim that the Indemnifying Party may recommend and that by its terms obligates the Indemnifying Party to pay the full amount of the Liability in connection with such Third Party Claim and releases the Indemnitee completely in connection with such Third Party Claim and that would not otherwise adversely affect the Indemnitee or admit any wrongdoing by the Indemnitee. If an Indemnifying Party elects not to assume the defense of a Third Party Claim, or fails to notify an Indemnitee of its election to do so as provided herein, or an Indemnifying Party refuses to acknowledge in writing or otherwise disputes its responsibility for such Third Party Claim, such Indemnitee may compromise, settle or defend such Third Party Claim without limitation.

(d) In the event and to the extent of payment by an Indemnifying Party to any Indemnitee in connection with any Third Party Claim, such Indemnifying Party shall be subrogated to and shall stand in the place of such Indemnitee as to any events or circumstances in respect of which such Indemnitee may have any right or claim relating to such Third Party Claim against any claimant or plaintiff asserting such Third Party Claim. Such Indemnitee shall cooperate with such Indemnifying Party in a reasonable manner, and at the cost and expense of such Indemnifying Party, in prosecuting any subrogated right or claim.

(e) RRD and LSC shall cooperate as may reasonably be required in connection with the investigation, defense, prosecution and/or settlement of any Third Party Claim. In furtherance of this obligation, the Parties agree that if an Indemnifying Party chooses to assume the defense of, or to compromise or settle, any Third Party Claim, the Indemnitee shall use its commercially reasonable efforts to make available to the Indemnifying Party, upon written request, (x) their former and then current directors, officers, employees and agents and those of their subsidiaries as witnesses and (y) as soon as reasonably practicable following the receipt of such written request, any agreements, books, records, files or other documents within its control or which it otherwise has the ability to make available, to the extent that (i) any such Person, agreements, books, records, files or other documents may reasonably be required in connection with such defense, settlement, prosecution or compromise and (ii) making such Person, agreements, books records or other documents so available would not constitute a waiver of the attorney-client privilege of the Indemnitee. At the request of an Indemnifying Party, an Indemnitee shall enter into a reasonably acceptable joint defense agreement without regard to whether the Indemnifying Party chooses to assume the defense of, or to compromise or settle, any Third Party Claim.

(f) The remedies provided in this Article VI shall be cumulative and shall not preclude assertion by any Indemnitee of any other rights or the seeking of any and all other remedies against any Indemnifying Party.

Section 6.4 Indemnification Payments . Indemnification required by this Article VI shall be made by periodic payments of the amount thereof in a timely fashion during the course of the investigation or defense, as and when bills are received or Loss incurred.

Section 6.5 Survival . The Parties’ obligations under this Article VI shall survive the termination of this Agreement.

 

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ARTICLE VII

COOPERATION; CONFIDENTIALITY

Section 7.1 Good Faith Cooperation; Consents . Each Party shall use commercially reasonable efforts to cooperate with the other Party in all matters relating to the provision and receipt of the Services. Such cooperation shall include exchanging information, providing electronic access to systems used in connection with the Services, performing true-ups and adjustments and obtaining all consents, licenses, sublicenses or approvals necessary to permit each party to perform its obligations hereunder. RRD and LSC shall maintain reasonable documentation related to the Services and cooperate with each other in making such information available as needed.

Section 7.2 Confidentiality . Each Party shall keep confidential from Third Parties the Schedules to this Agreement and all non-public information received from the other Party regarding or in connection with the provision of the Services, including any information received with respect to the business or products and services of RRD and LSC, and to use such information only for the purposes set forth in this Agreement unless (i) otherwise agreed to in writing by the Party from which such information was received or (ii) required by applicable law (including or in order for a party to make disclosures to comply with applicable federal or state securities laws) or any securities exchange (in which case the Parties shall cooperate in seeking to obtain a protective order or other arrangement pursuant to which the confidentiality of such information is preserved). The covenants in this Article VII shall survive any termination of this Agreement for a period of three (3) years from the Termination Date, unless otherwise required by applicable law (including, for the avoidance of doubt, any laws governing the privacy of employee data and information).

ARTICLE VIII

TERM

Section 8.1 Duration .

(a) Except as provided in Section 6.5 , Section 7.2 and Section 8.3 , the term of this Agreement shall commence on the date hereof and shall continue in full force and effect with respect to each Service until the earlier of (i) the expiration of the initial service period in the description of such Service in the applicable Service Schedule, unless the Service is extended pursuant to Section 8.1(d) hereof or unless otherwise mutually agreed by the Parties and (ii) the termination of such Service in accordance with Section 4.5 and Section 8.1(c) . Except as provided in Section 6.5 , Section 7.2 and Section 8.3 , the term of this Agreement shall conclude on the earlier of (i) the date on which this Agreement is no longer in full force and effect with respect to any Service provided by any Party and (ii) October 1, 2018 (the “ Termination Date ”).

(b) Each Party acknowledges that the purpose of this Agreement is for RRD to provide the RRD Services to LSC on an interim basis until LSC can perform the RRD Services for themselves and for LSC to provide the LSC Services to RRD on an interim basis until RRD can perform the LSC Services for themselves.

 

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(c) To the extent specifically contemplated by a Service Schedule under the heading “Terms and Termination,” the Recipient of such Service may terminate any such Service, in its sole discretion, as of the Early Termination Date set forth in the applicable Service Schedule or on the last day of any calendar month thereafter (an “ Early Termination Date ”). In order to terminate any Service as of an Early Termination Date, Recipient shall be required to provide prior written notice to Provider in the time period specified in the applicable Service Schedule (an “ Early Termination Notice Period ”). Following the Early Termination Notice Period (or such shorter period as may be agreed by the Parties), Provider shall discontinue the provision of the Services specified in such notice and any such Services shall be excluded from this Agreement, and the applicable Service Schedule shall be deemed to be amended accordingly. Upon discontinuance of any Service pursuant to the foregoing sentence, the Recipient shall not be liable for payment of the Applicable Service Fee contemplated by the applicable Service Schedule for such Service for the period following the Early Termination Date. Notwithstanding the foregoing, nothing herein shall be construed to alleviate the obligation of a Recipient of such discontinued Service to pay the Applicable Service Fee for such Service for the period prior to the discontinuation. For the avoidance of doubt, to the extent any Service Schedule is silent with respect to the ability of the Recipient to terminate before the conclusion of the initial service period with respect to such Service, it shall be understood and agreed that the Recipient shall not have the right to terminate such Service prior to the conclusion of the initial service period for such Service.

(d) To the extent specifically contemplated by a Service Schedule under the heading “Terms and Termination,” the Recipient of such Service may extend the term of any such Service, in its sole discretion, from the last date of the initial service period for such Service set forth in the applicable Service Schedule for a period of time no longer than the extension date specified in the applicable Service Schedule (an “ Extension Period ”). In order to extend any Service, the Recipient is required to provide prior written notice to the Provider by the time period specified in the applicable Service Schedule stating that it elects to extend the applicable Service and the period for the applicable Service (an “ Extension Notice ”). Following delivery of the Extension Notice, the Provider shall continue to provide the Services specified in such Extension Notice, and the applicable Service Schedule shall be deemed to be amended accordingly. Recipient shall be liable for fees incurred for Services performed through the last date of the Extension Period. Notwithstanding the foregoing, to the extent any Service Schedule is silent with respect to the ability of the Recipient to extend a Service beyond the initial service period with respect to such Service, it shall be understood and agreed that the Recipient shall not have the right to extend such Service. For the avoidance of doubt, nothing herein shall obligate either Party to extend the provision of Services unless the applicable Service Schedule for such Service so provides.

Section 8.2 Suspension Due to Force Majeure . In the event the performance by either RRD or LSC of its duties or obligations hereunder is interrupted or interfered with by reason of any cause beyond its reasonable control including fire, storm, flood, earthquake, explosion, war, strike or labor disruption, rebellion, insurrection, quarantine, act of God, boycott, embargo, shortage or unavailability of supplies, riot, or governmental law, regulation or edict (collectively, “ Force Majeure Events ”), the Party affected by such Force Majeure Event shall not be deemed to

 

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be in default of this Agreement by reason of its non-performance due to such Force Majeure Event, but shall give notice to the other Parties of the Force Majeure Event and the fee provided for in Section 4.1 shall be equitably adjusted to reflect the reduced performance. In such event, the Party affected by such Force Majeure Event shall resume the performance of its duties and obligations hereunder as soon as reasonably practicable after the end of the Force Majeure Event.

Section 8.3 Consequences of Termination . Upon the expiration or termination of this Agreement in accordance with this Agreement or the Termination Date, then (a) all Services to be provided will promptly cease, (b) each of the Parties shall, upon request of the other Parties, promptly return or destroy all non-public confidential information received from the other Party in connection with this Agreement (including the return of all information received regarding or in connection with the provisions of the Services, including any information received with respect to the business or products of RRD or LSC, as the case may be), without retaining a copy thereof (other than one copy for records purposes), and (c) each of RRD and LSC shall honor all credits and make any accrued and unpaid payment to the other Parties as required pursuant to the terms of this Agreement, and no rights already accrued hereunder shall be affected.

ARTICLE IX

RECORDS; SECURITY TERMS

Section 9.1 Maintenance of Records . Each of the Parties shall create and maintain books and records in connection with the provision of the Services that are complete and accurate in all material respects, and upon reasonable notice from the other Party shall make available for inspection and copy by such other Party’s Representatives such books and records during reasonable business hours.

Section 9.2 Security Terms . Each party agrees to comply with the Data and Physical Security Requirements attached hereto as Schedule C . It shall be understood that for purposes of this Agreement, references in Schedule C to a “Seller” shall mean a Provider and references to a “Buyer” shall mean a Recipient.

ARTICLE X

DISPUTE RESOLUTION

Section 10.1 Negotiation . In the event of a controversy, dispute or claim arising out of, in connection with, or in relation to the interpretation, performance, nonperformance, validity or breach of this Agreement or otherwise arising out of, or in any way related to this Agreement or the transactions contemplated hereby, including any claim based on contract, tort, statute or constitution (but excluding any controversy, dispute or claim arising out of any agreement relating to the use or lease of real property if any Third Party is a necessary party to such controversy, dispute or claim) (collectively, “ Agreement Disputes ”), the Party claiming such Agreement Dispute shall give written notice to the other Party setting forth the Agreement Dispute and a brief description thereof (a “ Dispute Notice ”) pursuant to the terms of the notice provisions of Section 11.1 hereof. Following delivery of a Dispute Notice, the general counsels of the relevant Parties and/or such other executive officer designated by the relevant Party shall negotiate for a

 

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reasonable period of time to settle such Agreement Dispute; provided , that such reasonable period shall not, unless otherwise agreed by the Parties in writing, exceed forty-five (45) calendar days from the time of receipt by a Party of a Dispute Notice; provided further , that in the event of any arbitration in accordance with Section 10.3 hereof, the relevant Parties shall not assert the defenses of statute of limitations and laches arising during the period beginning after the date of receipt of the Dispute Notice, and any contractual time period or deadline under this Agreement to which such Agreement Dispute relates occurring after the Dispute Notice is received shall not be deemed to have passed until such Agreement Dispute has been resolved.

Section 10.2 Mediation . If, within forty-five (45) calendar days (or such longer period as may be agreed in writing between the Parties) after receipt by a Party of a Dispute Notice, the Parties have not succeeded in negotiating a resolution of the Agreement Dispute, the Parties agree to submit the Agreement Dispute at the earliest possible date to mediation conducted in accordance with the Commercial Mediation Rules of the American Arbitration Association (“ AAA ”), and to bear equally the costs of the mediation; provided , however , that each Party shall bear its own costs in connection with such mediation. The parties agree to participate in good faith in the mediation and negotiations related thereto for a period of thirty (30) days or such longer period as they may mutually agree following the initial mediation session (the “ Mediation Period ”).

Section 10.3 Arbitration . If the Agreement Dispute has not been resolved for any reason after the Mediation Period, such Agreement Dispute shall be determined, at the request of either relevant Party, by arbitration conducted in Chicago, Illinois, before and in accordance with the then-existing Commercial Arbitration Rules of the AAA, except as modified herein (the “ Rules ”). There shall be three arbitrators. Each Party shall appoint one arbitrator within twenty (20) calendar days of receipt by respondent of a copy of the demand for arbitration. The two party-appointed arbitrators shall have twenty (20) calendar days from the appointment of the second arbitrator to agree on a third arbitrator who shall chair the arbitral tribunal. Any arbitrator not timely appointed by the Parties under this Section 10.3 shall be appointed by the AAA in accordance with the listing, ranking and striking method in the Rules, and in any such procedure, each Party shall be given a limited number of strikes, excluding strikes for cause. Any controversy concerning whether an Agreement Dispute is an arbitrable Agreement Dispute, whether arbitration has been waived, whether an assignee of this Agreement is bound to arbitrate, or as to the interpretation of enforceability of this Article X shall be determined by the arbitrators. In resolving any Agreement Dispute, the Parties intend that the arbitrators shall apply the substantive laws of the State of Illinois, without regard to any choice of law principles thereof that would mandate the application of the laws of another jurisdiction. The Parties intend that the provisions to arbitrate set forth herein be valid, enforceable and irrevocable, and any award rendered by the arbitrators shall be final and binding on the Parties. The Parties agree to comply with any award made in any such arbitration proceedings and agree to enforcement of or entry of judgment upon such award in the United States District Court for the Northern District of Illinois. The arbitrators shall be entitled, if appropriate, to award any remedy in such proceedings, including monetary damages, specific performance and all other forms of legal and equitable relief; provided, however, the arbitrators shall not be entitled to award punitive, exemplary, treble or any other form of non-compensatory damages except (i) in connection with indemnification for a Third Party Claim (and in such a case, only to the extent awarded in such Third Party Claim) or (ii) for reasonably foreseeable consequential damages or losses.

 

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Section 10.4 Arbitration Period . Any arbitration proceeding shall be concluded in a maximum of six (6) months from the commencement of the arbitration. The parties involved in the proceeding may agree in writing to extend the arbitration period if necessary to appropriately resolve the Agreement Dispute.

Section 10.5 Treatment of Negotiations, Mediation and Arbitration . Without limiting the provisions of the Rules, unless otherwise agreed in writing by or among the relevant Parties or permitted by this Agreement, the relevant Parties shall keep confidential all matters relating to and any negotiation, mediation, conference, arbitration, discussion or arbitration award pursuant to this Article X shall be treated as compromise and settlement negotiations for purposes of Rule 408 of the Federal Rules of Evidence and comparable state rules; provided, that such matters may be disclosed (i) to the extent reasonably necessary in any proceeding brought to enforce the award or for entry of a judgment upon the award and (ii) to the extent otherwise required by Law or stock exchange. Nothing said or disclosed, nor any document produced, in the course of any negotiations, conferences and discussions that is not otherwise independently discoverable shall be offered or received as evidence or used for impeachment or for any other purpose in any current or future arbitration. Nothing contained herein is intended to or shall be construed to prevent any Party from applying to any court of competent jurisdiction for interim measures or other provisional relief in connection with the subject matter of any Agreement Disputes. Without prejudice to such provisional remedies as may be available under the jurisdiction of a court, the arbitral tribunal shall have full authority to grant provisional remedies and to direct the parties to request that any court modify or vacate any temporary or preliminary relief issued by such court, and to award damages for the failure of any Party to respect the arbitral tribunal’s orders to that effect.

Section 10.6 Continuity of Service and Performance . Except as provided in Section 4.4 , Section 8.1(c) or Section 8.2 or otherwise agreed in writing, the Parties will continue to provide Services and honor all other commitments under this Agreement, the Separation and Distribution Agreement and each Ancillary Agreement during the course of dispute resolution pursuant to the provisions of this Article X with respect to all matters not subject to such dispute resolution.

Section 10.7 Consolidation . The arbitrators may consolidate any Agreement Disputes under this Agreement if the subject of the Agreement Disputes thereunder arise out of or relate essentially to the same set of facts or transactions. Such consolidated arbitration shall be determined by the arbitrator appointed for the arbitration proceeding that was commenced first in time.

ARTICLE XI

NOTICES

Section 11.1 Notices . All notices, requests, claims, demands and other communications under this Agreement and, to the extent applicable and unless otherwise provided therein, under the Separation and Distribution Agreement and each of the Ancillary Agreements, 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 (at a facsimile number to be provided by such Party to the other Party pursuant to the notice provisions of this Section 11.1 ) with receipt confirmed (followed by delivery of an original via overnight

 

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courier service), by email (at an email address to be provided by such Party to the other Party pursuant to the notice provisions of this Section 11.1 ) 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 11.1 ):

To RRD:

R. R. Donnelley & Sons Company

35 West Wacker Drive

Chicago, Illinois 60601

Attn: General Counsel

To LSC:

LSC Communications, Inc.

35 West Wacker Drive

Chicago, Illinois 60601

Attn: General Counsel

ARTICLE XII

MISCELLANEOUS

Section 12.1 Taxes . Except as may otherwise be specifically provided herein, each Party shall bear all taxes, duties and other similar charges (and any related interest and penalties) imposed as a result of its receipt of Services under this Agreement.

Section 12.2 Relationship of Parties . Nothing in this Agreement shall be deemed or construed by the Parties or any Third Party as creating the relationship of principal and agent, partnership or joint venture between the Parties, it being understood and agreed that no provision contained herein, and no act of the Parties, shall be deemed to create any relationship between the Parties other than the relationship of independent contractor nor be deemed to vest any rights, interest or claims in any third parties.

Section 12.3 Complete Agreement; Construction . This Agreement, including the Schedules hereto, 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 Schedule, the Schedule shall prevail. The rights and remedies of the Parties herein provided shall be cumulative and in addition to any other or further remedies provided by law or equity.

Section 12.4 Other Agreements . This Agreement is not intended to address, and should not be interpreted to address, the matters specifically and expressly covered by the Separation and Distribution Agreement or the other Ancillary Agreements.

 

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Section 12.5 Counterparts . This Agreement may be executed in more than one counterpart, all of which shall be considered one and the same agreement, and shall become effective when one or more such counterparts have been signed by each of the Parties and delivered to the other Parties.

Section 12.6 Survival of Agreements . Except as otherwise contemplated by this Agreement, the Separation and Distribution Agreement or any Ancillary Agreement, all covenants and agreements of the Parties contained in this Agreement and each Ancillary Agreement shall survive the Termination Date and remain in full force and effect in accordance with their applicable terms.

Section 12.7 Assignment . This Agreement shall not be assignable, in whole or in part, by any Party without the prior written consent of the other Parties, and any attempt to assign any rights or obligations arising under this Agreement without such consent shall be void; provided that either party may assign this Agreement to a purchaser of all or substantially all of the properties and assets of such Party so long as such purchaser expressly assumes, in a written instrument in form reasonably satisfactory to the non-assigning party, the due and punctual performance or observance of this Agreement on the part of the assigning Party to be performed or observed.

Section 12.8 Waivers and Consents . The failure of any Party to require strict performance by any other Party of any provision in this Agreement will not waive or diminish that Party’s right to demand strict performance thereafter of that or any other provision hereof. Any consent required or permitted to be given by any Party to the other Parties under this Agreement shall be in writing and signed by the Party giving such consent.

Section 12.9 Amendments . This Agreement may not be modified or amended except by an agreement in writing signed by a duly authorized representative of each of the Parties.

Section 12.10 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 12.11 No Circumvention . The Parties agree not to directly or indirectly take any Actions, act in concert with any Person who takes an Action (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 or any Ancillary Agreement (including adversely affecting the rights or ability of any Party to successfully pursue indemnification, contribution or payment pursuant to Article VI ).

Section 12.12 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 LSC Distribution Date.

Section 12.13 Third Party Beneficiaries . This Agreement is solely for the benefit of the Parties and their Representatives entitled to indemnification under Article VI , 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.

 

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Section 12.14 Titles 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 12.15 Exhibits and Schedules . The Exhibits and 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 12.16 Governing Law . This Agreement shall be governed by and construed in accordance with the laws of, but not the laws governing conflicts of laws of the State of Illinois.

Section 12.17 Consent to Jurisdiction . Subject to the provisions of Article X hereof, each of the Parties irrevocably submits to the exclusive jurisdiction of (a) the Circuit Court of the State of Illinois, Cook County, or (b) the United States District Court for the Northern District of Illinois (the “ Illinois Courts ”), for the purposes of any suit, Action or other proceeding to compel arbitration or for provisional relief in aid of arbitration in accordance with Article X or to prevent irreparable harm, and to the non-exclusive jurisdiction of the Illinois Courts for the enforcement of any award issued thereunder. Each of the Parties further agrees that service of any process, summons, notice or document by 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 Illinois Courts with respect to any matters to which it has submitted to jurisdiction in this Section 12.17 . Each of the Parties irrevocably and unconditionally waives any objection to the laying of venue of any Action, suit or proceeding arising out of this Agreement or the transactions contemplated hereby in the Illinois Courts, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such Action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

Section 12.18 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 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.

Section 12.19 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

 

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AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS Section 12.19 .

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 and therein shall not in any way be affected or impaired thereby. The Parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions, the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

Section 12.21 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 12.22 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 (including with respect to the rights, entitlements, obligations and recoveries that may arise out of Section 6.1 or Section 6.2 ).

Section 12.23 DISCLAIMER OF WARRANTIES . EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT OR THE SCHEDULES ATTACHED HERETO, THE PARTIES ACKNOWLEDGE AND AGREE THAT THE SERVICES ARE PROVIDED AS-IS, THAT EACH RECIPIENT ASSUMES ALL RISKS AND LIABILITIES ARISING FROM OR RELATING TO ITS USE OF AND RELIANCE UPON THE SERVICES AND EACH PROVIDER, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, MAKES NO REPRESENTATION OR WARRANTY WITH RESPECT THERETO. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, EACH PROVIDER HEREBY EXPRESSLY DISCLAIMS ALL REPRESENTATIONS AND WARRANTIES REGARDING THE SERVICES, WHETHER EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, BY STATUTE OR OTHERWISE, INCLUDING ANY REPRESENTATION OR WARRANTY IN REGARD TO QUALITY, PERFORMANCE, NONINFRINGEMENT, COMMERCIAL UTILITY, MERCHANTABILITY OR FITNESS OF ANY SERVICE FOR A PARTICULAR PURPOSE.

[Signature Page Follows]

 

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

 

R. R. DONNELLEY & SONS COMPANY
By:  

/s/ Daniel L. Knotts

Name:   Daniel L. Knotts
Title:   Chief Operating Officer
LSC COMMUNICATIONS, INC.
By:  

/s/ Thomas J. Quinlan III

Name:   Thomas J. Quinlan III
Title:   Chief Executive Officer

Exhibit 2.3

TRANSITION SERVICES AGREEMENT

by and between

DONNELLEY FINANCIAL SOLUTIONS, INC.

and

LSC COMMUNICATIONS, INC.

Dated as of September 14, 2016


TABLE OF CONTENTS

 

         Page  
ARTICLE I DEFINITIONS      1   

Section 1.1

  General      1   

Section 1.2

  References; Interpretation      6   
ARTICLE II SERVICES      6   

Section 2.1

  Services      6   

Section 2.2

  Standard of Service.      6   

Section 2.3

  Additional Services.      7   
ARTICLE III PERSONNEL      7   

Section 3.1

  Services Managers.      7   

Section 3.2

  Services Personnel.      7   
ARTICLE IV PAYMENT      8   

Section 4.1

  General      8   

Section 4.2

  Additional Expenses.      9   

Section 4.3

  Invoices      9   

Section 4.4

  Failure to Pay.      10   

Section 4.5

  Termination of Services      10   

Section 4.6

  Extension of Services      10   
ARTICLE V PROPRIETARY RIGHTS      11   

Section 5.1

  Equipment      11   

Section 5.2

  Intellectual Property      11   

Section 5.3

  Software Licenses at Conclusion of Services      12   
ARTICLE VI INDEMNIFICATION      12   

Section 6.1

  Indemnification by Recipients      12   

Section 6.2

  Indemnification by Providers.      12   

Section 6.3

  Third Party Claims      13   

Section 6.4

  Indemnification Payments      15   

Section 6.5

  Survival      15   
ARTICLE VII COOPERATION; CONFIDENTIALITY      15   

Section 7.1

  Good Faith Cooperation; Consents      15   

Section 7.2

  Confidentiality      15   

 

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ARTICLE VIII TERM      15   

Section 8.1

  Duration      15   

Section 8.2

  Suspension Due to Force Majeure      17   

Section 8.3

  Consequences of Termination      17   
ARTICLE IX RECORDS; SECURITY TERMS      17   

Section 9.1

  Maintenance of Records      17   

Section 9.2

  Security Terms      17   
ARTICLE X DISPUTE RESOLUTION      18   

Section 10.1

  Negotiation      18   

Section 10.2

  Mediation      18   

Section 10.3

  Arbitration      18   

Section 10.4

  Arbitration Period      19   

Section 10.5

  Treatment of Negotiations, Mediation and Arbitration      19   

Section 10.6

  Continuity of Service and Performance      19   

Section 10.7

  Consolidation      20   
ARTICLE XI NOTICES      20   

Section 11.1

  Notices      20   
ARTICLE XII MISCELLANEOUS      20   

Section 12.1

  Taxes      20   

Section 12.2

  Relationship of Parties      20   

Section 12.3

  Complete Agreement; Construction      21   

Section 12.4

  Other Agreements      21   

Section 12.5

  Counterparts      21   

Section 12.6

  Survival of Agreements      21   

Section 12.7

  Assignment      21   

Section 12.8

  Waivers and Consents      21   

Section 12.9

  Amendments      21   

Section 12.10

  Successors and Assigns      21   

Section 12.11

  No Circumvention      22   

Section 12.12

  Subsidiaries      22   

Section 12.13

  Third Party Beneficiaries      22   

Section 12.14

  Titles and Headings      22   

Section 12.15

  Exhibits and Schedules      22   

Section 12.16

  Governing Law      22   

Section 12.17

  Consent to Jurisdiction      22   

Section 12.18

  Specific Performance      22   

Section 12.19

  WAIVER OF JURY TRIAL      23   

Section 12.20

  Severability      23   

Section 12.21

  Interpretation      23   

Section 12.22

  No Duplication; No Double Recovery      23   

Section 12.23

  DISCLAIMER OF WARRANTIES      23   

 

-ii-


List of Schedules

Schedule A

Schedule B-1

Schedule B-2

Schedule B-3

Schedule B-4

Schedule B-5

Schedule B-6

Schedule C

 

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TRANSITION SERVICES AGREEMENT

This TRANSITION SERVICES AGREEMENT (this “ Agreement ”), dated as of September 14, 2016, is entered into by and between Donnelley Financial Solutions, Inc., a Delaware corporation (“ Donnelley Financial ”) and LSC Communications, Inc., a Delaware corporation (“ LSC ”). Each of Donnelley Financial and LSC is referred to herein as a “ Party ” and together, as the “ Parties ”.

W I T N E S S E T H:

WHEREAS, Donnelley Financial, LSC and R. R. Donnelley & Sons Company, a Delaware corporation (“ RRD ”), have entered into a Separation and Distribution Agreement, dated as of September 14, 2016 (the “ Separation and Distribution Agreement ”), pursuant to which RRD and its subsidiaries will undertake a series of transactions following which it will separate into three independent, publicly traded companies: (i) one business focused on publishing and retail-centric print services and office products, which shall be owned and conducted, directly or indirectly, by LSC (the “ LSC Distribution ”), (ii) one business focused on financial communications and data services, which shall be owned and conducted, directly or indirectly, by Donnelley Financial (the “ Donnelley Financial Distribution ”), and (iii) one business focused on customized multichannel communications management, which shall be owned and conducted, directly or indirectly, by RRD (the “ Separation ”); and

WHEREAS, in connection with the Separation, the Donnelley Financial Distribution and the LSC Distribution, and in order to ensure an orderly transition with respect to the transactions contemplated under the Separation and Distribution Agreement, it will be necessary for each of the Parties to provide to the other the Services (as defined herein) for a transitional period on the terms and subject to the conditions set forth herein.

NOW, THEREFORE, the Parties hereto, in consideration of the premises and the mutual covenants contained herein, agree as follows:

ARTICLE I

DEFINITIONS

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

(1) “ AAA ” shall have the meaning set forth in Section 10.2 .

(2) “ Action ” shall mean any demand, action, claim, suit, countersuit, arbitration, inquiry, subpoena, proceeding or investigation by or before any Governmental Entity or any arbitration or mediation tribunal.

(3) “ Additional Services ” shall have the meaning set forth in Section 2.3 .

(4) “ 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” (including the correlative meanings of the terms “controlled by” and “under common control with”), 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. For the avoidance of doubt, for the purposes of this Agreement, RRD and Donnelley Financial shall not be considered “Affiliates” of LSC, nor shall RRD and LSC be considered “Affiliates” of Donnelley Financial.

(5) “ Agreement ” shall have the meaning set forth in the preamble hereto.

(6) “ Agreement Disputes ” shall have the meaning set forth in Section 10.1 .

(7) “ Ancillary Agreement ” shall have the meaning assigned to that term in the Separation and Distribution Agreement.

(8) “ Applicable Donnelley Financial Service Fee ” shall have the meaning set forth in Section 4.1(a) .

(9) “ Applicable LSC Service Fee ” shall have the meaning set forth in Section 4.1(b) .

(10) “ Applicable Rate ” shall mean the Prime Rate (as defined below) plus three percent (3%) per annum.

(11) “ Applicable Service Fee ” shall mean either an Applicable Donnelley Financial Service Fee or Applicable LSC Service Fee.

(12) “ Business Day ” shall mean any day that is not a Saturday, a Sunday or any other day on which banks are required or authorized by law to be closed in The City of New York.

(13) “ Dispute Notice ” shall have the meaning set forth in Section 10.1 .

(14) “ Donnelley Financial ” shall have the meaning set forth in the recitals hereto.

(15) “ Donnelley Financial Additional Expenses ” shall have the meaning set forth in Section 4.2(a) .

(16) “ Donnelley Financial Distribution ” shall have the meaning set forth in the recitals hereto.

(17) “ Donnelley Financial Distribution Date ” shall mean the date on which the Donnelley Financial Distribution is effected.

 

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(18) “ Donnelley Financial Service Schedule ” shall have the meaning set forth in Section 2.1(a) .

(19) “ Donnelley Financial Services ” shall mean those transitional services, including any Additional Services, to be provided by Donnelley Financial to LSC set forth on the Donnelley Financial Service Schedules hereto to assist LSC in operating LSC’s business following the Effective Time.

(20) “ Donnelley Financial Services Fee ” shall have the meaning set forth in Section 4.1(a) .

(21) “ Early Termination Date ” shall have the meaning set forth in Section 8.1(c) .

(22) “ Early Termination Notice Period ” shall have the meaning set forth in Section 8.1(c) .

(23) “ Effective Time ” shall mean 12:01 a.m., Eastern Time, on the earlier to occur of the Donnelley Financial Distribution Date and the LSC Distribution Date.

(24) “ Extension Notice ” shall have the meaning set forth in Section 8.1(d) .

(25) “ Extension Period ” shall have the meaning set forth in Section 8.1(d) .

(26) “ Force Majeure Events ” shall have the meaning set forth in Section 8.2 .

(27) “ Governmental Entity ” shall mean any domestic or foreign governmental or regulatory authority, agency, commission, body, court or other legislative, executive or judicial governmental entity.

(28) “ Illinois Courts ” shall have the meaning set forth in Section 12.17 .

(29) “ Improvements ” shall have the meaning set forth in Section 5.2(a) .

(30) “ Indemnifying Party ” shall have the meaning set forth in Section 6.3(a) .

(31) “ Indemnitee ” shall have the meaning set forth in Section 6.3(a) .

(32) “ Intellectual Property ” shall have the meaning set forth in the Separation and Distribution Agreement.

(33) “ Lead Services Manager ” shall have the meaning set forth in Section 3.1 .

(34) “ Liabilities ” shall mean any and all debts, liabilities, costs, expenses, interest and obligations, whether accrued or fixed, absolute or contingent, matured or unmatured, reserved or unreserved, or determined or determinable, including those arising under any law, claim, demand, action, whether asserted or unasserted, or order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Entity and those arising under any contract or any fines, damages or equitable relief which may be imposed and including all costs and expenses related thereto.

 

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(35) “ Loss ” shall mean (i) any and all damages, losses, deficiencies, Liabilities, obligations, penalties, judgments, settlements, claims, payments, fines, interest, costs and expenses (including the costs and expenses of any and all Actions and demands, assessments, judgments, settlements and compromises relating thereto and the reasonable costs and expenses of attorneys’, accountants’, consultants’ and other professionals’ fees and expenses incurred in the investigation or defense thereof or the enforcement of rights hereunder), excluding special, consequential, indirect, punitive damages (other than special, consequential, indirect and/or punitive damages awarded to any third party against an indemnified party) and/or taxes and (ii) any consequential damages that are reasonably foreseeable.

(36) “ LSC ” shall have the meaning set forth in the preamble hereto.

(37) “ LSC Additional Expenses ” shall have the meaning set forth in Section 4.2(b) .

(38) “ LSC Distribution ” shall have the meaning set forth in the recitals hereto.

(39) “ LSC Distribution Date ” shall mean the date on which the LSC Distribution is effected.

(40) “ LSC Service Schedule ” shall have the meaning set forth in Section 2.1(b) .

(41) “ LSC Services ” shall mean those transitional services, including any Additional Services, to be provided by LSC to Donnelley Financial set forth on the LSC Service Schedules hereto to assist Donnelley Financial in operating Donnelley Financial’s business following the Effective Time.

(42) “ LSC Services Fee ” shall have the meaning set forth in Section 4.1(b) .

(43) “ Mediation Period ” shall have the meaning set forth in Section 10.2 .

(44) “ Outside Notice Date ” shall have the meaning set forth in Section 6.3(a) .

(45) “ Party ” or “ Parties ” shall have the meaning set forth in the preamble hereto.

(46) “ Person ” shall mean 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.

(47) “ Prime Rate ” shall mean the rate of interest per annum announced from time to time by Citibank, N.A., at its prime lending rate.

(48) “ Provider ” shall have the meaning set forth in Section 3.2(a) .

 

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(49) “ Recipient ” shall have the meaning set forth in Section 3.2(a) .

(50) “ Representatives ” shall mean, with respect to any Person, any subsidiary of such Person and any officer, director, employee, agent or other representative of such Person or of such Person’s subsidiary.

(51) “ RRD ” shall have the meaning set forth in the preamble hereto.

(52) “ Rules ” shall have the meaning set forth in Section 10.3 .

(53) “ Separation ” shall have the meaning set forth in the recitals hereto.

(54) “ Separation and Distribution Agreement ” shall have the meaning set forth in the recitals hereto.

(55) “ Service Schedule ” shall have the meaning set forth in Section 2.1(b) .

(56) “ Services ” shall mean, collectively, the Donnelley Financial Services and the LSC Services and “ Service ” means any of the Donnelley Financial Services or LSC Services.

(57) “ Services Fee ” shall mean either of the Donnelley Financial Services Fee or the LSC Services Fee.

(58) “ Services Manager ” shall have the meaning set forth in Section 3.1 .

(59) “ Subsidiary ” shall mean with respect to any Person any corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization or other entity in which such Person, directly or indirectly (i) beneficially owns more than fifty percent (50%) of (A) the total combined voting power of all classes of voting securities of such Person, (B) the total combined equity economic interest thereof or (C) the capital or profits thereof, in the case of a partnership, or (ii) otherwise has the power to elect or direct the election of more than fifty percent (50%) of the members of the governing body of such entity or otherwise has control over such entity (e.g., as the managing partner of a partnership).

(60) “ Software ” shall mean proprietary software programs owned by the applicable Provider (or an Affiliate thereof), in either or both object code forms as determined pursuant to Section 5.3 , together with documentation relating to the design and/or maintenance of such software programs, as applicable, in each case as such items exist as of the time the relevant request for such software and documentation is made pursuant to Section 5.3 .

(61) “ Termination Date ” shall have the meaning set forth in Section 8.1(a) .

(62) “ Third Party ” shall mean any Person who is not a party to this Agreement.

(63) “ Third Party Claim ” shall have the meaning set forth in Section 6.3(a) .

 

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(64) “ Third Party Claim Notice ” shall have the meaning set forth in Section 6.3(a) .

(65) “ Undisputed Amount ” shall have the meaning set forth in Section 4.4 .

Section 1.2 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 “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. Other capitalized terms have the meanings set forth elsewhere in this Agreement. Any capitalized terms used but not defined in this Agreement have the meanings given to them in the Separation and Distribution Agreement.

ARTICLE II

SERVICES

Section 2.1 Services .

(a) Donnelley Financial shall provide or cause to be provided to LSC each Donnelley Financial Service for the term set forth in the description of such Donnelley Financial Service (as such term may be extended pursuant to Article VIII hereof) in the applicable schedule of Schedule A (“ Donnelley Financial Service Schedule ”). Additional Services may be provided by Donnelley Financial to LSC as provided in Section 2.3 .

(b) LSC shall provide to Donnelley Financial each LSC Service for the term set forth in the description of such LSC Service (as such term may be extended pursuant to Article VIII hereof) in the applicable schedule of Schedules B-1 to B-5 (each an “ LSC Service Schedule ”, and any of an Donnelley Financial Service Schedule or an LSC Service Schedule, a “ Service Schedule ”). Additional Services may be provided by LSC to Donnelley Financial as provided in Section 2.3 .

Section 2.2 Standard of Service . Donnelley Financial and LSC shall maintain sufficient resources to perform their respective obligations hereunder. In performing the Services, Donnelley Financial and LSC shall provide substantially the same level of service and use substantially the same degree of care as their respective personnel provided and used in providing such Services prior to the Effective Time for itself (but in no event less than a reasonable degree of care), subject in each case to any provisions set forth on the applicable Service Schedule. Each Party shall provide reasonable assistance to the other Party in helping such other Party migrate the applicable Service to the recipient of such Service or a Third Party designated by such recipient at the end of the service period for such Service.

 

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Section 2.3 Additional Services . From time to time after the date hereof, the Parties may identify additional services that one Party will provide to the other Party in accordance with the terms of this Agreement (the “ Additional Services ”). The Parties shall cooperate and act in good faith to agree on the terms pursuant to which any such Additional Service shall be provided and to amend or supplement any of the Service Schedules, as applicable, in accordance with such terms. Notwithstanding the foregoing, no Party shall have any obligation to agree to provide Additional Services.

ARTICLE III

PERSONNEL

Section 3.1 Services Managers . Each Party will select (a) a Lead Services Manager (a “ Lead Services Manager ”) who will oversee the provision or receipt, as applicable, of all of the Services hereunder and (b) a separate Services Manager for each Service with each such Services Manager to be identified in the applicable Service Schedule (a “ Services Manager ”), to act as the primary contact person for the provision or receipt, as applicable, of the respective Services hereunder. All communications relating to the provision of the Services with respect to a particular Service will be directed to the Services Manager of the other Party for such Service, with a copy being sent to each Lead Services Manager. Each party shall have the right at any time and from time to time to replace its Lead Services Manager or Services Manager for a particular Service by giving notice in writing to the other party. The Services Managers of the Parties, together with the Lead Services Manager, will meet periodically, but no less than quarterly, at a mutually agreed upon time to discuss the status of the Services.

Section 3.2 Services Personnel .

(a) The Party providing any Service (the “ Provider ”) will make available to the Party receiving any such Service (the “ Recipient ”) such personnel as the Provider determines may be necessary to provide such Service. Except as otherwise set forth in a Service Schedule for a Service, the Provider will have the right, in its sole discretion, to (i) designate which personnel it will assign to perform such Service and (ii) remove and replace such personnel at any time; provided, further, that the Provider will use its commercially reasonable efforts to limit the disruption to the Recipient in the transition of the Services to different personnel.

(b) In the event that the provision of any Service by the Provider requires the cooperation and services of the personnel of the Recipient, the Recipient will make available to the Provider such personnel (who shall be appropriately qualified for purposes of so supporting the provision of such Service by the Provider) as may be necessary for the Provider to provide such Service. The Recipient will have the right, in its sole discretion, to (i) designate which personnel it will make available to the Provider in connection with the provision of such Service and (ii) remove and replace such personnel at any time; provided, further, that the Recipient will use its commercially reasonable efforts to limit the disruption to the Provider in the transition of such personnel.

 

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(c) All Representatives of any Provider who provide Services under this Agreement shall be deemed for purposes of all compensation and employee benefits matters to be Representatives of such Provider and not employees or any other Representative of the Recipient or any of its Affiliates. In performing the Services, such Representatives shall be under the direction, control and supervision of the Provider (and not the Recipient) and Provider shall have the sole right to exercise all authority with respect to the employment (including termination of employment), engagement, assignment and compensation of such Representatives.

(d) A Provider may hire or engage one or more subcontractors to perform any or all of its obligations under this Agreement; provided, however, that (i) such Provider shall use the same degree of care in selecting any such subcontractor as it would if such contractor were being retained to provide similar services to the Provider, and (ii) such Provider shall in all cases remain primarily responsible for all of its obligations under this Agreement with respect to the scope of the Services, the standard for services as set forth herein and the content of the Services provided to the Recipient.

(e) Nothing in this Agreement shall grant the Provider, or its Representatives and Third Party providers that are performing the Services, the right directly or indirectly to control or direct the operations of the Recipient or its Affiliates. Such Representatives and Third Party providers shall not be required to report to the management of the Recipient nor be deemed to be under the management or direction of the Recipient. The Recipient acknowledges and agrees that, except as may be expressly set forth herein as a Service (including any Additional Services) or otherwise expressly set forth in the Separation and Distribution Agreement, any Ancillary Agreements or any other applicable agreement, no Provider or its Affiliates shall be obligated to provide, or cause to be provided, any service or goods to any Recipient or its Affiliates.

ARTICLE IV

PAYMENT

Section 4.1 General .

(a) In consideration for the provision of each Donnelley Financial Service, LSC shall pay to Donnelley Financial the fee set forth for such Donnelley Financial Service on the applicable Donnelley Financial Service Schedule (such fee in the aggregate for all Donnelley Financial Services, the “ Donnelley Financial Services Fee ”, and each fee individually, the “ Applicable Donnelley Financial Service Fee ”).

(b) In consideration for the provision of each LSC Service, Donnelley Financial shall pay to LSC the fee set forth for such LSC Service on the applicable LSC Service Schedule (such fee in the aggregate for all LSC Services, the “ LSC Services Fee ”, and each fee individually, the “ Applicable LSC Service Fee ”).

 

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Section 4.2 Additional Expenses .

(a) It is understood and agreed that the Donnelley Financial Services Fee payable in accordance with Section 4.1(a) hereof includes all anticipated, reasonable and necessary out-of-pocket costs and expenses (including postage and other delivery costs, telephone and similar expenses) to be incurred by Donnelley Financial in connection with the provision of the Donnelley Financial Services to LSC or to be paid by Donnelley Financial on behalf of LSC pursuant to the terms of this Agreement. The Parties agree that LSC shall reimburse Donnelley Financial for any additional reasonable and necessary out-of-pocket costs and expenses not included in the Applicable Donnelley Financial Service Fee that are incurred by Donnelley Financial in connection with the provision of Donnelley Financial Services to LSC or paid by Donnelley Financial on behalf of LSC pursuant to the terms of this Agreement (the “ Donnelley Financial Additional Expenses ”), provided that prior to incurring any such Donnelley Financial Additional Expenses, Donnelley Financial shall obtain the written consent of LSC to the incurrence of such Donnelley Financial Additional Expenses, with such consent not to be unreasonably withheld, delayed or conditioned; provided further that if the Parties agree such Donnelley Financial Additional Expense is recurring in nature, if LSC consents to such Donnelley Financial Additional Expense, the Applicable Donnelley Financial Service Schedule shall be deemed amended accordingly; and if the Parties do not agree such Donnelley Financial Additional Expense is recurring in nature, it shall be treated as a one-time expense and the Applicable Donnelley Financial Service Schedule shall not be amended. All Donnelley Financial Additional Expenses shall be invoiced by Donnelley Financial to LSC in accordance with the provisions of Section 4.3 hereof.

(b) It is understood and agreed that the LSC Services Fee payable in accordance with Section 4.1(b) hereof includes all anticipated, reasonable and necessary out-of-pocket costs and expenses (including postage and other delivery costs, telephone and similar expenses) to be incurred by LSC in connection with the provision of the LSC Services to Donnelley Financial or paid by LSC on behalf of Donnelley Financial pursuant to the terms of this Agreement. The Parties agree that Donnelley Financial shall reimburse LSC for any additional reasonable and necessary out-of-pocket costs and expenses not included in the Applicable LSC Service Fee that are incurred by LSC in connection with the provision of LSC Services to Donnelley Financial or paid by LSC on behalf of Donnelley Financial pursuant to the terms of this Agreement (the “ LSC Additional Expenses ”), provided that prior to incurring any such LSC Additional Expenses, LSC shall obtain the written consent of Donnelley Financial to the incurrence of such LSC Additional Expenses, with such consent not to be unreasonably withheld, delayed or conditions; provided further that if such LSC Additional Expense is recurring in nature, if Donnelley Financial consents to such LSC Additional Expense, the applicable LSC Service Schedule shall be deemed amended accordingly. All LSC Additional Expenses shall be invoiced by LSC to Donnelley Financial in accordance with the provisions of (b) hereof.

Section 4.3 Invoices . The Provider will provide Recipient with one or more monthly invoices reflecting: (a) the Services provided during the preceding month, (b) the Applicable Service Fee owed for each such Service for the preceding month and the Services Fee for the preceding month, and (c) any other charges incurred during the preceding month (to the extent known at the time of the invoice) under the terms of this Agreement, no later than 15 days following the end of a month. Invoices will be sent in a format and containing a level of detail

 

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reasonably sufficient for Recipient to determine the accuracy of the computation of the amounts charged and that such amounts are being calculated in a manner consistent with this Agreement. Reasonable documentation will be provided for all out-of-pocket expenses consistent with the Provider’s practices. All amounts will be due and payable within 30 days of the date of invoice. Upon Recipient’s reasonable request, the Provider will provide explanations, answer questions, and provide additional documentation regarding invoiced amounts. Unless otherwise specifically agreed in writing by the Parties hereto, all payments due hereunder will be made by wire transfer of immediately available funds to an account designated in writing from time to time by the Provider.

Section 4.4 Failure to Pay . Any amount that is not the subject of an Agreement Dispute (an “ Undisputed Amount ”) that is not paid when due shall be subject to a late payment fee computed daily at a rate equal to the Applicable Rate from the due date of such amount to the date such amount is paid (for example, if an Undisputed Amount were not paid for five days the late payment fee would be equal to 5/365 multiplied by the Applicable Rate). Recipient agrees to pay the Provider’s reasonable attorneys’ fees and other costs incurred in collection of any Undisputed Amounts owed to the Provider hereunder and not paid when due. Notwithstanding anything to the contrary contained herein, in the event Recipient fails to make a payment of any Undisputed Amount when due hereunder, and such failure continues for a period of sixty (60) days following delivery of notice to Recipient of such failure, the Provider shall have the right to cease provision to Recipient of the Services related to such Undisputed Amount until such overdue payment (and any applicable late payment fee accrued with respect thereto) is paid in full. Such right of the Provider shall not in any manner limit or prejudice any of the Provider’s other rights or remedies hereunder in the event of Recipient’s failure to make payments when due hereunder, including any rights or remedies pursuant to Articles VI , VIII and X .

Section 4.5 Termination of Services . In the event of a termination of a Service pursuant to Article VIII , the Recipient of such Service shall be obligated to pay the Applicable Service Fee for such Service calculated as set forth on the applicable Service Schedule through the end of the month on which such Service is terminated in accordance with the terms of this Agreement and the applicable Service Schedule. Terminations of services may not occur any time other than as of a month end. Notwithstanding the foregoing, to the extent expressly provided in any Service Schedule, upon early termination of any Service on or after the applicable Early Termination Date, the Recipient shall be obligated to pay the Provider the early termination fee contemplated in the applicable Service Schedule.

Section 4.6 Extension of Services . In the event of an extension of a Service pursuant to Article VIII , the Recipient of such Service shall be obligated to pay the Applicable Service Fee for such Service calculated as set forth on the applicable Service Schedule as the Applicable Service Fee payable during any period of extension. The Parties agree and acknowledge that fees payable for Services that are extended may be higher than during the initial term of such Service. For the avoidance of doubt, nothing herein shall constitute an obligation of any Party to extend the period for which it will provide any Service if such extension is not contemplated by the applicable Service Schedule.

 

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ARTICLE V

PROPRIETARY RIGHTS

Section 5.1 Equipment . Except with respect to those items of equipment, systems, tools, facilities and other resources otherwise specifically allocated pursuant to the Separation and Distribution Agreement to the Recipient, all equipment, systems, tools, facilities and other resources used by the Provider and any of its Affiliates in connection with the provision of Services hereunder will remain the property of the Provider and its Affiliates and, except as otherwise provided in this Agreement, will at all times be under the sole direction and control of the Provider and its Affiliates.

Section 5.2 Intellectual Property .

(a) Solely to the extent required for the provision or receipt of the Services pursuant to this Agreement, the Recipient, for itself and on behalf of its Affiliates, hereby grants to the Provider and its Affiliates, and the Provider, for itself and on behalf of its Affiliates, hereby grants to the Recipient and its Affiliates, a non-exclusive, royalty-free, non-sublicensable, non-transferable license during the term of this Agreement to internally use any Intellectual Property that is (i) owned or licensable (without requirement to pay fees to third parties) by the granting Party (or any of its Affiliates) to the other Party and its Affiliates, and (ii) required for the provision or receipt (as applicable) of the Services pursuant to this Agreement, but only to the extent and for the duration necessary for the Provider to provide or the Recipient to receive such Services pursuant to this Agreement. To the extent the license set forth in this Section 5.2(a) includes any Intellectual Property licensed to the granting Party (or any of its Affiliates) from third parties, such license is expressly conditioned upon, and subject to, any terms and conditions of any agreement pursuant to which such Intellectual Property is licensed to such granting Party (or any of its Affiliates). The foregoing license shall terminate immediately and automatically upon the expiration of the term hereof and shall be of no further force or effect.

(b) To the extent the Provider uses any Intellectual Property in providing the Services, such Intellectual Property (other than such Intellectual Property licensed to the Provider by Recipient or its Affiliates) and any derivative works of, or modifications or improvements to, such Intellectual Property conceived or created as part of the provision of Services (“ Improvements ”) will, as between the Parties, remain the sole property of the Provider unless (i) such Improvements were specifically created for Recipient or its Affiliates pursuant to a specific Service and the Parties agree that such Improvements are to be assigned to Recipient as specifically indicated in applicable Service Schedule, or (ii) such Intellectual Property is otherwise assigned to the Recipient pursuant to a separate written agreement between the Parties. The applicable Party will and hereby does assign to the applicable owner designated above, and agrees to assign automatically in the future upon first recordation in a tangible medium or first reduction to practice, all of such Party’s right, title and interest in and to all Improvements, if any. All rights not expressly granted herein are reserved. Notwithstanding the foregoing, if there is any conflict between the terms of this Section 5.2 and specific terms of the Separation and Distribution Agreement or any Ancillary Agreement, then the terms of the Separation and Distribution Agreement or such Ancillary Agreement, as applicable will prevail.

 

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Section 5.3 Software Licenses at Conclusion of Services . In the event that, upon conclusion of any particular Service, the Recipient requests a license to and copies of any Software that is used in or reasonably necessary to conduct the business of the Recipient, then the Provider agrees to consider such request and negotiate in good faith with the Recipient to provide a license to (upon commercially reasonable terms) and copies of (in a reasonable physical or electronic format) such Software. Such Software will be provided in either or both object code or source code forms, as reasonably agreed between the Provider and Recipient in good faith.

ARTICLE VI

INDEMNIFICATION

Section 6.1 Indemnification by Recipients .

(a) Donnelley Financial agrees to indemnify, defend and hold LSC and its Representatives harmless from and against any Loss to which LSC may become subject arising out of, by reason of or otherwise in connection with the provision hereunder by LSC of LSC Services to Donnelley Financial, other than Losses resulting from LSC’s or its Representative’s gross negligence, willful misconduct or bad faith.

(b) LSC agrees to indemnify, defend and hold Donnelley Financial and its Representatives harmless from and against any Loss to which Donnelley Financial may become subject arising out of, by reason of or otherwise in connection with the provision hereunder by Donnelley Financial of Donnelley Financial Services to LSC, other than Losses resulting from Donnelley Financial’s or its Representative’s gross negligence, willful misconduct or bad faith.

Section 6.2 Indemnification by Providers .

(a) Donnelley Financial agrees to indemnify, defend and hold LSC and its Representatives harmless from and against any Loss to which LSC may become subject arising out of, by reason of or otherwise in connection with, the provision hereunder by Donnelley Financial of Donnelley Financial Services to LSC where such Losses resulted from Donnelley Financial’s or its Representative’s gross negligence, willful misconduct or bad faith.

(b) LSC agrees to indemnify, defend and hold Donnelley Financial and its Representatives harmless from and against any Loss to which Donnelley Financial may become subject arising out of, by reason of or otherwise in connection with, the provision hereunder by LSC of LSC Services to Donnelley Financial where such Losses resulted from Donnelley Financial’s or its Representative’s gross negligence, willful misconduct or bad faith.

 

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Section 6.3 Third Party Claims .

(a) Except as otherwise provided in the Separation and Distribution Agreement, any Ancillary Agreement or this Agreement, if a claim or demand is made against Donnelley Financial or LSC or their respective Representatives (each, an “ Indemnitee ”) by any Third Party (a “ Third Party Claim ”) as to which such Indemnitee is entitled to indemnification pursuant to this Agreement, such Indemnitee shall notify the party which is or may be required pursuant to Section 6.1 or Section 6.2 hereof to make such indemnification (the “ Indemnifying Party ”) in writing, and in reasonable detail, of the Third Party Claim promptly and in any event by the date (the “ Outside Notice Date ”) that is the tenth Business Day after receipt by such Indemnitee of written notice of the Third Party Claim (such written notice, the “ Third Party Claim Notice ”); provided, however, that failure to give such notification shall not affect the indemnification provided hereunder except to the extent the Indemnifying Party shall have been actually prejudiced as a result of such failure (except that the Indemnifying Party shall not be liable for any expenses incurred during the period beginning immediately after the Outside Notice Date and ending on the date that the Indemnitee gives the required notice). Thereafter, the Indemnitee shall deliver to the Indemnifying Party, promptly (and in any event within ten Business Days) after the Indemnitee’s receipt thereof, copies of all notices and documents (including court papers) received by the Indemnitee relating to the Third Party Claim.

(b) If a Third Party Claim is made against an Indemnitee, the Indemnifying Party shall be entitled to participate in the defense thereof and, if it so chooses and acknowledges in writing its obligation to indemnify the Indemnitee therefor, to assume the defense thereof with counsel selected by the Indemnifying Party, provided, however, that such counsel is not reasonably objected to by the Indemnitee. Should the Indemnifying Party so elect to assume the defense of a Third Party Claim, the Indemnifying Party shall, within thirty (30) days following receipt of the Third Party Claim Notice (or sooner if the nature of the Third Party Claim so requires), notify the Indemnitee of its intent to do so, and the Indemnifying Party shall thereafter not be liable to the Indemnitee for legal or other expenses subsequently incurred by the Indemnitee in connection with the defense thereof; provided, however, that such Indemnitee shall have the right to employ counsel to represent such Indemnitee if, in such Indemnitee’s reasonable judgment, a conflict of interest between such Indemnitee and such Indemnifying Party exists in respect of such claim which would make representation of both such parties by one counsel inappropriate, and in such event the fees and expenses of such separate counsel shall be paid by such Indemnifying Party. If the Indemnifying Party assumes such defense, the Indemnitee shall have the right to participate in the defense thereof and to employ counsel, subject to the proviso of the preceding sentence, at its own expense, separate from the counsel employed by the Indemnifying Party, it being understood that the Indemnifying Party shall control such defense. The Indemnifying Party shall be liable for the fees and expenses of counsel employed by the Indemnitee for any period during which the Indemnifying Party has failed to or elected not to assume the defense thereof (other than during the period prior to the time the Indemnitee shall have given notice of the Third Party Claim as provided above).

(c) If the Indemnifying Party acknowledges in writing responsibility under this Article VI for a Third Party Claim, regardless of the Indemnifying Party’s election to assume the defense thereof or not in accordance with the provisions of Section 6.3(b), then in no event will the Indemnitee admit any Liability with respect to, or settle, compromise or

 

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discharge, any Third Party Claim without the Indemnifying Party’s prior written consent; provided, however, that the Indemnitee shall have the right to settle, compromise or discharge such Third Party Claim without the consent of the Indemnifying Party if the Indemnitee releases the Indemnifying Party from its indemnification obligation hereunder in writing with respect to such Third Party Claim and such settlement, compromise or discharge would not otherwise adversely affect the Indemnifying Party. If the Indemnifying Party acknowledges in writing Liability for a Third Party Claim, the Indemnitee will agree to any settlement, compromise or discharge of a Third Party Claim that the Indemnifying Party may recommend and that by its terms obligates the Indemnifying Party to pay the full amount of the Liability in connection with such Third Party Claim and releases the Indemnitee completely in connection with such Third Party Claim and that would not otherwise adversely affect the Indemnitee or admit any wrongdoing by the Indemnitee. If an Indemnifying Party elects not to assume the defense of a Third Party Claim, or fails to notify an Indemnitee of its election to do so as provided herein, or an Indemnifying Party refuses to acknowledge in writing or otherwise disputes its responsibility for such Third Party Claim, such Indemnitee may compromise, settle or defend such Third Party Claim without limitation.

(d) In the event and to the extent of payment by an Indemnifying Party to any Indemnitee in connection with any Third Party Claim, such Indemnifying Party shall be subrogated to and shall stand in the place of such Indemnitee as to any events or circumstances in respect of which such Indemnitee may have any right or claim relating to such Third Party Claim against any claimant or plaintiff asserting such Third Party Claim. Such Indemnitee shall cooperate with such Indemnifying Party in a reasonable manner, and at the cost and expense of such Indemnifying Party, in prosecuting any subrogated right or claim.

(e) Donnelley Financial and LSC shall cooperate as may reasonably be required in connection with the investigation, defense, prosecution and/or settlement of any Third Party Claim. In furtherance of this obligation, the Parties agree that if an Indemnifying Party chooses to assume the defense of, or to compromise or settle, any Third Party Claim, the Indemnitee shall use its commercially reasonable efforts to make available to the Indemnifying Party, upon written request, (x) their former and then current directors, officers, employees and agents and those of their subsidiaries as witnesses and (y) as soon as reasonably practicable following the receipt of such written request, any agreements, books, records, files or other documents within its control or which it otherwise has the ability to make available, to the extent that (i) any such Person, agreements, books, records, files or other documents may reasonably be required in connection with such defense, settlement, prosecution or compromise and (ii) making such Person, agreements, books records or other documents so available would not constitute a waiver of the attorney-client privilege of the Indemnitee. At the request of an Indemnifying Party, an Indemnitee shall enter into a reasonably acceptable joint defense agreement without regard to whether the Indemnifying Party chooses to assume the defense of, or to compromise or settle, any Third Party Claim.

 

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(f) The remedies provided in this Article VI shall be cumulative and shall not preclude assertion by any Indemnitee of any other rights or the seeking of any and all other remedies against any Indemnifying Party.

Section 6.4 Indemnification Payments . Indemnification required by this Article VI shall be made by periodic payments of the amount thereof in a timely fashion during the course of the investigation or defense, as and when bills are received or Loss incurred.

Section 6.5 Survival . The Parties’ obligations under this Article VI shall survive the termination of this Agreement.

ARTICLE VII

COOPERATION; CONFIDENTIALITY

Section 7.1 Good Faith Cooperation; Consents . Each Party shall use commercially reasonable efforts to cooperate with the other Party in all matters relating to the provision and receipt of the Services. Such cooperation shall include exchanging information, providing electronic access to systems used in connection with the Services, performing true-ups and adjustments and obtaining all consents, licenses, sublicenses or approvals necessary to permit each party to perform its obligations hereunder. Donnelley Financial and LSC shall maintain reasonable documentation related to the Services and cooperate with each other in making such information available as needed.

Section 7.2 Confidentiality . Each Party shall keep confidential from Third Parties the Schedules to this Agreement and all non-public information received from the other Party regarding or in connection with the provision of the Services, including any information received with respect to the business or products and services of Donnelley Financial and LSC, and to use such information only for the purposes set forth in this Agreement unless (i) otherwise agreed to in writing by the Party from which such information was received or (ii) required by applicable law (including or in order for a party to make disclosures to comply with applicable federal or state securities laws) or any securities exchange (in which case the Parties shall cooperate in seeking to obtain a protective order or other arrangement pursuant to which the confidentiality of such information is preserved). The covenants in this Article VII shall survive any termination of this Agreement for a period of three (3) years from the Termination Date, unless otherwise required by applicable law (including, for the avoidance of doubt, any laws governing the privacy of employee data and information).

ARTICLE VIII

TERM

Section 8.1 Duration .

(a) Except as provided in Section 6.5 , Section 7.2 and Section 8.3 , the term of this Agreement shall commence on the date hereof and shall continue in full force and effect with respect to each Service until the earlier of (i) the expiration of the initial service period in the description of such Service in the applicable Service Schedule, unless the

 

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Service is extended pursuant to Section 8.1(d) hereof or unless otherwise mutually agreed by the Parties and (ii) the termination of such Service in accordance with Section 4.5 and Section 8.1(c) . Except as provided in Section 6.5 , Section 7.2 and Section 8.3 , the term of this Agreement shall conclude on the earlier of (i) the date on which this Agreement is no longer in full force and effect with respect to any Service provided by any Party and (ii) October 1, 2018 (the “ Termination Date ”).

(b) Each Party acknowledges that the purpose of this Agreement is for Donnelley Financial to provide the Donnelley Financial Services to LSC on an interim basis until LSC can perform the Donnelley Financial Services for themselves and for LSC to provide the LSC Services to Donnelley Financial on an interim basis until Donnelley Financial can perform the LSC Services for themselves.

(c) To the extent specifically contemplated by a Service Schedule under the heading “Terms and Termination,” the Recipient of such Service may terminate any such Service, in its sole discretion, as of the Early Termination Date set forth in the applicable Service Schedule or on the last day of any calendar month thereafter (an “ Early Termination Date ”). In order to terminate any Service as of an Early Termination Date, Recipient shall be required to provide prior written notice to Provider in the time period specified in the applicable Service Schedule (an “ Early Termination Notice Period ”). Following the Early Termination Notice Period (or such shorter period as may be agreed by the Parties), Provider shall discontinue the provision of the Services specified in such notice and any such Services shall be excluded from this Agreement, and the applicable Service Schedule shall be deemed to be amended accordingly. Upon discontinuance of any Service pursuant to the foregoing sentence, the Recipient shall not be liable for payment of the Applicable Service Fee contemplated by the applicable Service Schedule for such Service for the period following the Early Termination Date. Notwithstanding the foregoing, nothing herein shall be construed to alleviate the obligation of a Recipient of such discontinued Service to pay the Applicable Service Fee for such Service for the period prior to the discontinuation. For the avoidance of doubt, to the extent any Service Schedule is silent with respect to the ability of the Recipient to terminate before the conclusion of the initial service period with respect to such Service, it shall be understood and agreed that the Recipient shall not have the right to terminate such Service prior to the conclusion of the initial service period for such Service.

(d) To the extent specifically contemplated by a Service Schedule under the heading “Terms and Termination,” the Recipient of such Service may extend the term of any such Service, in its sole discretion, from the last date of the initial service period for such Service set forth in the applicable Service Schedule for a period of time no longer than the extension date specified in the applicable Service Schedule (an “ Extension Period ”). In order to extend any Service, the Recipient is required to provide prior written notice to the Provider by the time period specified in the applicable Service Schedule stating that it elects to extend the applicable Service and the period for the applicable Service (an “ Extension Notice ”). Following delivery of the Extension Notice, the Provider shall continue to provide the Services specified in such Extension Notice, and the applicable Service Schedule shall be deemed to be amended accordingly. Recipient shall be liable for fees incurred for Services performed through the last date of the Extension Period.

 

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Notwithstanding the foregoing, to the extent any Service Schedule is silent with respect to the ability of the Recipient to extend a Service beyond the initial service period with respect to such Service, it shall be understood and agreed that the Recipient shall not have the right to extend such Service. For the avoidance of doubt, nothing herein shall obligate either Party to extend the provision of Services unless the applicable Service Schedule for such Service so provides.

Section 8.2 Suspension Due to Force Majeure . In the event the performance by either Donnelley Financial or LSC of its duties or obligations hereunder is interrupted or interfered with by reason of any cause beyond its reasonable control including fire, storm, flood, earthquake, explosion, war, strike or labor disruption, rebellion, insurrection, quarantine, act of God, boycott, embargo, shortage or unavailability of supplies, riot, or governmental law, regulation or edict (collectively, “ Force Majeure Events ”), the Party affected by such Force Majeure Event shall not be deemed to be in default of this Agreement by reason of its non-performance due to such Force Majeure Event, but shall give notice to the other Parties of the Force Majeure Event and the fee provided for in Section 4.1 shall be equitably adjusted to reflect the reduced performance. In such event, the Party affected by such Force Majeure Event shall resume the performance of its duties and obligations hereunder as soon as reasonably practicable after the end of the Force Majeure Event.

Section 8.3 Consequences of Termination . Upon the expiration or termination of this Agreement in accordance with this Agreement or the Termination Date, then (a) all Services to be provided will promptly cease, (b) each of the Parties shall, upon request of the other Parties, promptly return or destroy all non-public confidential information received from the other Party in connection with this Agreement (including the return of all information received regarding or in connection with the provisions of the Services, including any information received with respect to the business or products of Donnelley Financial or LSC, as the case may be), without retaining a copy thereof (other than one copy for records purposes), and (c) each of Donnelley Financial and LSC shall honor all credits and make any accrued and unpaid payment to the other Parties as required pursuant to the terms of this Agreement, and no rights already accrued hereunder shall be affected.

ARTICLE IX

RECORDS; SECURITY TERMS

Section 9.1 Maintenance of Records . Each of the Parties shall create and maintain books and records in connection with the provision of the Services that are complete and accurate in all material respects, and upon reasonable notice from the other Party shall make available for inspection and copy by such other Party’s Representatives such books and records during reasonable business hours.

Section 9.2 Security Terms . Each party agrees to comply with the Data and Physical Security Requirements attached hereto as Schedule C . It shall be understood that for purposes of this Agreement, references in Schedule C to a “Seller” shall mean a Provider and references to a “Buyer” shall mean a Recipient.

 

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ARTICLE X

DISPUTE RESOLUTION

Section 10.1 Negotiation . In the event of a controversy, dispute or claim arising out of, in connection with, or in relation to the interpretation, performance, nonperformance, validity or breach of this Agreement or otherwise arising out of, or in any way related to this Agreement or the transactions contemplated hereby, including any claim based on contract, tort, statute or constitution (but excluding any controversy, dispute or claim arising out of any agreement relating to the use or lease of real property if any Third Party is a necessary party to such controversy, dispute or claim) (collectively, “ Agreement Disputes ”), the Party claiming such Agreement Dispute shall give written notice to the other Party setting forth the Agreement Dispute and a brief description thereof (a “ Dispute Notice ”) pursuant to the terms of the notice provisions of Section 11.1 hereof. Following delivery of a Dispute Notice, the general counsels of the relevant Parties and/or such other executive officer designated by the relevant Party shall negotiate for a reasonable period of time to settle such Agreement Dispute; provided , that such reasonable period shall not, unless otherwise agreed by the Parties in writing, exceed forty-five (45) calendar days from the time of receipt by a Party of a Dispute Notice; provided further , that in the event of any arbitration in accordance with Section 10.3 hereof, the relevant Parties shall not assert the defenses of statute of limitations and laches arising during the period beginning after the date of receipt of the Dispute Notice, and any contractual time period or deadline under this Agreement to which such Agreement Dispute relates occurring after the Dispute Notice is received shall not be deemed to have passed until such Agreement Dispute has been resolved.

Section 10.2 Mediation . If, within forty-five (45) calendar days (or such longer period as may be agreed in writing between the Parties) after receipt by a Party of a Dispute Notice, the Parties have not succeeded in negotiating a resolution of the Agreement Dispute, the Parties agree to submit the Agreement Dispute at the earliest possible date to mediation conducted in accordance with the Commercial Mediation Rules of the American Arbitration Association (“ AAA ”), and to bear equally the costs of the mediation; provided , however , that each Party shall bear its own costs in connection with such mediation. The parties agree to participate in good faith in the mediation and negotiations related thereto for a period of thirty (30) days or such longer period as they may mutually agree following the initial mediation session (the “ Mediation Period ”).

Section 10.3 Arbitration . If the Agreement Dispute has not been resolved for any reason after the Mediation Period, such Agreement Dispute shall be determined, at the request of either relevant Party, by arbitration conducted in Chicago, Illinois, before and in accordance with the then-existing Commercial Arbitration Rules of the AAA, except as modified herein (the “ Rules ”). There shall be three arbitrators. Each Party shall appoint one arbitrator within twenty (20) calendar days of receipt by respondent of a copy of the demand for arbitration. The two party-appointed arbitrators shall have twenty (20) calendar days from the appointment of the second arbitrator to agree on a third arbitrator who shall chair the arbitral tribunal. Any arbitrator not timely appointed by the Parties under this Section 10.3 shall be appointed by the AAA in accordance with the listing, ranking and striking method in the Rules, and in any such procedure, each Party shall be given a limited number of strikes, excluding strikes for cause. Any controversy concerning whether an Agreement Dispute is an arbitrable Agreement Dispute, whether arbitration has been waived,

 

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whether an assignee of this Agreement is bound to arbitrate, or as to the interpretation of enforceability of this Article X shall be determined by the arbitrators. In resolving any Agreement Dispute, the Parties intend that the arbitrators shall apply the substantive laws of the State of Illinois, without regard to any choice of law principles thereof that would mandate the application of the laws of another jurisdiction. The Parties intend that the provisions to arbitrate set forth herein be valid, enforceable and irrevocable, and any award rendered by the arbitrators shall be final and binding on the Parties. The Parties agree to comply with any award made in any such arbitration proceedings and agree to enforcement of or entry of judgment upon such award in the United States District Court for the Northern District of Illinois. The arbitrators shall be entitled, if appropriate, to award any remedy in such proceedings, including monetary damages, specific performance and all other forms of legal and equitable relief; provided, however, the arbitrators shall not be entitled to award punitive, exemplary, treble or any other form of non-compensatory damages except (i) in connection with indemnification for a Third Party Claim (and in such a case, only to the extent awarded in such Third Party Claim) or (ii) for reasonably foreseeable consequential damages or losses.

Section 10.4 Arbitration Period . Any arbitration proceeding shall be concluded in a maximum of six (6) months from the commencement of the arbitration. The parties involved in the proceeding may agree in writing to extend the arbitration period if necessary to appropriately resolve the Agreement Dispute.

Section 10.5 Treatment of Negotiations, Mediation and Arbitration . Without limiting the provisions of the Rules, unless otherwise agreed in writing by or among the relevant Parties or permitted by this Agreement, the relevant Parties shall keep confidential all matters relating to and any negotiation, mediation, conference, arbitration, discussion or arbitration award pursuant to this Article X shall be treated as compromise and settlement negotiations for purposes of Rule 408 of the Federal Rules of Evidence and comparable state rules; provided, that such matters may be disclosed (i) to the extent reasonably necessary in any proceeding brought to enforce the award or for entry of a judgment upon the award and (ii) to the extent otherwise required by Law or stock exchange. Nothing said or disclosed, nor any document produced, in the course of any negotiations, conferences and discussions that is not otherwise independently discoverable shall be offered or received as evidence or used for impeachment or for any other purpose in any current or future arbitration. Nothing contained herein is intended to or shall be construed to prevent any Party from applying to any court of competent jurisdiction for interim measures or other provisional relief in connection with the subject matter of any Agreement Disputes. Without prejudice to such provisional remedies as may be available under the jurisdiction of a court, the arbitral tribunal shall have full authority to grant provisional remedies and to direct the parties to request that any court modify or vacate any temporary or preliminary relief issued by such court, and to award damages for the failure of any Party to respect the arbitral tribunal’s orders to that effect.

Section 10.6 Continuity of Service and Performance . Except as provided in Section 4.4 , Section 8.1(c) or Section 8.2 or otherwise agreed in writing, the Parties will continue to provide Services and honor all other commitments under this Agreement, the Separation and Distribution Agreement and each Ancillary Agreement during the course of dispute resolution pursuant to the provisions of this Article X with respect to all matters not subject to such dispute resolution.

 

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Section 10.7 Consolidation . The arbitrators may consolidate any Agreement Disputes under this Agreement if the subject of the Agreement Disputes thereunder arise out of or relate essentially to the same set of facts or transactions. Such consolidated arbitration shall be determined by the arbitrator appointed for the arbitration proceeding that was commenced first in time.

ARTICLE XI

NOTICES

Section 11.1 Notices . All notices, requests, claims, demands and other communications under this Agreement and, to the extent applicable and unless otherwise provided therein, under the Separation and Distribution Agreement and each of the Ancillary Agreements, 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 (at a facsimile number to be provided by such Party to the other Party pursuant to the notice provisions of this Section 11.1 ) with receipt confirmed (followed by delivery of an original via overnight courier service), by email (at an email address to be provided by such Party to the other Party pursuant to the notice provisions of this Section 11.1 ) 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 11.1 ):

To Donnelley Financial:

Donnelley Financial Solutions, Inc.

35 West Wacker Drive

Chicago, Illinois 60601

Attn: General Counsel

To LSC:

LSC Communications, Inc.

35 West Wacker Drive

Chicago, Illinois 60601

Attn: General Counsel

ARTICLE XII

MISCELLANEOUS

Section 12.1 Taxes . Except as may otherwise be specifically provided herein, each Party shall bear all taxes, duties and other similar charges (and any related interest and penalties) imposed as a result of its receipt of Services under this Agreement.

Section 12.2 Relationship of Parties . Nothing in this Agreement shall be deemed or construed by the Parties or any Third Party as creating the relationship of principal and agent,

 

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partnership or joint venture between the Parties, it being understood and agreed that no provision contained herein, and no act of the Parties, shall be deemed to create any relationship between the Parties other than the relationship of independent contractor nor be deemed to vest any rights, interest or claims in any third parties.

Section 12.3 Complete Agreement; Construction . This Agreement, including the Schedules hereto, 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 Schedule, the Schedule shall prevail. The rights and remedies of the Parties herein provided shall be cumulative and in addition to any other or further remedies provided by law or equity.

Section 12.4 Other Agreements . This Agreement is not intended to address, and should not be interpreted to address, the matters specifically and expressly covered by the Separation and Distribution Agreement or the other Ancillary Agreements.

Section 12.5 Counterparts . This Agreement may be executed in more than one counterpart, all of which shall be considered one and the same agreement, and shall become effective when one or more such counterparts have been signed by each of the Parties and delivered to the other Parties.

Section 12.6 Survival of Agreements . Except as otherwise contemplated by this Agreement, the Separation and Distribution Agreement or any Ancillary Agreement, all covenants and agreements of the Parties contained in this Agreement and each Ancillary Agreement shall survive the Termination Date and remain in full force and effect in accordance with their applicable terms.

Section 12.7 Assignment . This Agreement shall not be assignable, in whole or in part, by any Party without the prior written consent of the other Parties, and any attempt to assign any rights or obligations arising under this Agreement without such consent shall be void; provided that either party may assign this Agreement to a purchaser of all or substantially all of the properties and assets of such Party so long as such purchaser expressly assumes, in a written instrument in form reasonably satisfactory to the non-assigning party, the due and punctual performance or observance of this Agreement on the part of the assigning Party to be performed or observed.

Section 12.8 Waivers and Consents . The failure of any Party to require strict performance by any other Party of any provision in this Agreement will not waive or diminish that Party’s right to demand strict performance thereafter of that or any other provision hereof. Any consent required or permitted to be given by any Party to the other Parties under this Agreement shall be in writing and signed by the Party giving such consent.

Section 12.9 Amendments . This Agreement may not be modified or amended except by an agreement in writing signed by a duly authorized representative of each of the Parties.

Section 12.10 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.

 

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Section 12.11 No Circumvention . The Parties agree not to directly or indirectly take any Actions, act in concert with any Person who takes an Action (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 or any Ancillary Agreement (including adversely affecting the rights or ability of any Party to successfully pursue indemnification, contribution or payment pursuant to Article VI ).

Section 12.12 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 12.13 Third Party Beneficiaries . This Agreement is solely for the benefit of the Parties and their Representatives entitled to indemnification under Article VI , 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 12.14 Titles 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 12.15 Exhibits and Schedules . The Exhibits and 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 12.16 Governing Law . This Agreement shall be governed by and construed in accordance with the laws of, but not the laws governing conflicts of laws of the State of Illinois.

Section 12.17 Consent to Jurisdiction . Subject to the provisions of Article X hereof, each of the Parties irrevocably submits to the exclusive jurisdiction of (a) the Circuit Court of the State of Illinois, Cook County, or (b) the United States District Court for the Northern District of Illinois (the “ Illinois Courts ”), for the purposes of any suit, Action or other proceeding to compel arbitration or for provisional relief in aid of arbitration in accordance with Article X or to prevent irreparable harm, and to the non-exclusive jurisdiction of the Illinois Courts for the enforcement of any award issued thereunder. Each of the Parties further agrees that service of any process, summons, notice or document by 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 Illinois Courts with respect to any matters to which it has submitted to jurisdiction in this Section 12.17 . Each of the Parties irrevocably and unconditionally waives any objection to the laying of venue of any Action, suit or proceeding arising out of this Agreement or the transactions contemplated hereby in the Illinois Courts, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such Action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

Section 12.18 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 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.

 

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Section 12.19 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 12.19 .

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 and therein shall not in any way be affected or impaired thereby. The Parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions, the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

Section 12.21 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 12.22 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 (including with respect to the rights, entitlements, obligations and recoveries that may arise out of Section 6.1 or Section 6.2 ).

Section 12.23 DISCLAIMER OF WARRANTIES . EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT OR THE SCHEDULES ATTACHED HERETO, THE PARTIES ACKNOWLEDGE AND AGREE THAT THE SERVICES ARE PROVIDED AS-IS, THAT EACH RECIPIENT ASSUMES ALL RISKS AND LIABILITIES ARISING FROM OR RELATING TO ITS USE OF AND RELIANCE UPON THE SERVICES AND EACH PROVIDER, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, MAKES NO REPRESENTATION OR WARRANTY WITH RESPECT THERETO. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, EACH PROVIDER HEREBY EXPRESSLY DISCLAIMS ALL REPRESENTATIONS AND WARRANTIES REGARDING THE SERVICES, WHETHER EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF

 

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LAW, BY STATUTE OR OTHERWISE, INCLUDING ANY REPRESENTATION OR WARRANTY IN REGARD TO QUALITY, PERFORMANCE, NONINFRINGEMENT, COMMERCIAL UTILITY, MERCHANTABILITY OR FITNESS OF ANY SERVICE FOR A PARTICULAR PURPOSE.

[Signature Page Follows]

 

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

 

LSC COMMUNICATIONS, INC.
By:   /s/ Thomas J. Quinlan III
Name:   Thomas J. Quinlan III
Title:   Chief Executive Officer
DONNELLEY FINANCIAL SOLUTIONS, INC.
By:   /s/ Daniel N. Leib
Name:   Daniel N. Leib
Title:   Chief Executive Officer

Exhibit 2.4

 

 

 

TAX DISAFFILIATION AGREEMENT

BETWEEN

R. R. Donnelley & Sons Company

AND

LSC Communications, Inc.

dated as of September 14, 2016

 

 

 


TABLE OF CONTENTS

 

SECTION 1.

 

Definition of Terms

     2   

SECTION 2.

 

Allocation of Taxes and Tax-Related Losses

     9   
 

2.1

 

Allocation of Taxes

     9   
 

2.2

 

Allocation of Deconsolidation Taxes, Distribution Taxes and Transfer Taxes

     9   
 

2.3

 

Tax Payments

     10   

SECTION 3.

 

Preparation and Filing of Tax Returns

     10   
 

3.1

 

Combined Returns

     10   
 

3.2

 

Separate Returns

     10   
 

3.3

 

Agent

     10   
 

3.4

 

Provision of Information

     10   
 

3.5

 

Special Rules Relating to the Preparation of Tax Returns

     11   
 

3.6

 

Refunds, Credits, Offsets, Tax Benefits

     11   
 

3.7

 

Carrybacks

     12   
 

3.8

 

Amended Returns

     12   
 

3.9

 

Compensatory Equity Interests

     13   

SECTION 4.

 

Tax Payments

     13   
 

4.1

 

Payment of Taxes to Tax Authority

     13   
 

4.2

 

Indemnification Payments

     13   
 

4.3

 

Interest on Late Payments

     13   
 

4.4

 

Tax Consequences of Payments

     13   
 

4.5

 

Adjustments to Payments

     13   
 

4.6

 

Section 336(e) Election

     14   
 

4.7

 

Certain Final Determinations

     15   

SECTION 5.

 

Cooperation and Tax Contests

     15   
 

5.1

 

Cooperation

     15   
 

5.2

 

Notices of Tax Contests

     15   
 

5.3

 

Control of Tax Contests

     15   
 

5.4

 

Cooperation Regarding Tax Contests

     16   

SECTION 6.

 

Tax Records

     16   
 

6.1

 

Retention of Tax Records

     16   
 

6.2

 

Access to Tax Records

     16   
 

6.3

 

Confidentiality

     17   

 

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SECTION 7.

 

Representations and Covenants

     17   
 

7.1

 

Covenants of RRD and LSC

     17   
 

7.2

 

Private Letter Ruling

     17   
 

7.3

 

Covenants of LSC

     17   
 

7.4

 

Covenants of RRD

     18   
 

7.5

 

Exceptions

     19   
 

7.6

 

Injunctive Relief

     19   
 

7.7

 

Further Assurances

     20   

SECTION 8.

 

General Provisions

     20   
 

8.1

 

Construction

     20   
 

8.2

 

Ancillary Agreements

     20   
 

8.3

 

Counterparts

     20   
 

8.4

 

Notices

     20   
 

8.5

 

Amendments

     21   
 

8.6

 

Assignment

     21   
 

8.7

 

Successors and Assigns

     21   
 

8.8

 

Change in Law

     21   
 

8.9

 

Authorization, Etc

     21   
 

8.10

 

Termination

     21   
 

8.11

 

Subsidiaries

     21   
 

8.12

 

Third-Party Beneficiaries

     22   
 

8.13

 

Double Recovery

     22   
 

8.14

 

Titles and Headings

     22   
 

8.15

 

Governing Law

     22   
 

8.16

 

Waiver of Jury Trial

     22   
 

8.17

 

Severability

     22   
 

8.18

 

No Strict Construction; Interpretation

     23   

SCHEDULE A

      

SCHEDULE B

      

 

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TAX DISAFFILIATION AGREEMENT

THIS TAX DISAFFILIATION AGREEMENT (the “ Agreement ”) is dated as of September 14, 2016, by and between R. R. Donnelley & Sons Company, a Delaware corporation (“ RRD ”), and LSC Communications, Inc., a Delaware corporation and a direct wholly-owned subsidiary of RRD (“ LSC ” and, together with RRD, the “ Parties ”, and each, a “ Party ”). Unless otherwise indicated, all “Section” references in this Agreement are to sections of the Agreement.

RECITALS

WHEREAS, RRD, LSC and Donnelley Financial Solutions, Inc., a Delaware corporation (“ Donnelley Financial ”), have entered into a Separation and Distribution Agreement, dated as of September 14, 2016 (the “ Separation and Distribution Agreement ”), pursuant to which RRD and its subsidiaries will undertake a series of transactions following which it will separate into three independent, publicly traded companies: (i) one business focused on publishing and retail-centric print services and office products, which shall be owned and conducted, directly or indirectly, by LSC, (ii) one business focused on financial communications and data services, which shall be owned and conducted, directly or indirectly, by Donnelley Financial, and (iii) one business focused on customized multichannel communications management, which shall be owned and conducted, directly or indirectly, by RRD; and

WHEREAS, the Board of Directors of RRD determined that, based on the Corporate Business Purposes (as defined below), it is in the best interests of RRD and its stockholders to separate the business of LSC, as more fully described in LSC’s registration statement on Form 10, from RRD’s other businesses on the terms and conditions set forth in the Separation and Distribution Agreement;

WHEREAS, the Board of Directors of RRD has authorized the distribution to the holders of the issued and outstanding shares of Common Stock, par value $0.01 per share, of RRD ( RRD Common Stock ) as of the record date of at least eighty percent (80%) of the issued and outstanding shares of Common Stock, par value $0.01 per share, of LSC (the “ LSC Common Stock ”), on the basis of one share of LSC Common Stock for every eight shares of RRD Common Stock (the “ LSC Distribution ”);

WHEREAS, for federal income tax purposes, the LSC Distribution is intended to qualify for tax-free treatment under section 355 of the Internal Revenue Code of 1986, as amended (the “ Code ”);

WHEREAS, it is the intention of the parties hereto that the LSC Distribution qualify as tax-free to RRD under section 361(c) of the Code and that, except for cash received in lieu of any fractional LSC Shares, the LSC Distribution qualify as tax-free to RRD stockholders under section 355(a) of the Code;

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


WHEREAS, the Parties set forth in the Separation and Distribution Agreement the principal arrangements between them regarding the separation of the LSC Group (as defined below) from the RRD Group (as defined below) and the Donnelley Financial Group (as defined below); and

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

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

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

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

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

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

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

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

“Companies” means each of RRD and LSC.

“Company” means RRD or LSC, as the context requires.

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

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

 

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“Deconsolidation Taxes” means any Taxes imposed on any member of the RRD Group or the LSC Group as a result of or in connection with the Distribution, but excluding any Transfer Taxes and Distribution Taxes.

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

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

“Donnelley Financial Group” has the meaning ascribed to the term “Donnelley Financial Group” in the Separation and Distribution Agreement.

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

“Effective Time” means 12:01 a.m. Eastern time on the LSC Distribution Date.

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

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

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

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

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

 

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

“Group” means the RRD Group or the LSC Group, as the context requires.

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

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

“Interest Rate” means (x) the “Prime Rate” as set forth in the Separation and Distribution Agreement plus three percent (3%), or (y) if higher and if with respect to a payment to indemnify for a Tax to which the “large corporate underpayment” provision within the meaning of section 6621(c) of the Code applies, such interest rate that would be applicable at such time to such “large corporate underpayment.”

“IRS” means the Internal Revenue Service.

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

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

“LSC Common Stock” has the meaning set forth in the recitals to this Agreement.

“LSC Company Entities” means, collectively, the entities listed on Schedule A.

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

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

“LSC Group” has the meaning ascribed to the term “LSC Group” in the Separation and Distribution Agreement.

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

“LSC Restricted Action” means a breach of the covenant made by LSC in Section 7.1 of this Agreement or the taking of any action by LSC or any of its Subsidiaries inconsistent with the covenants set forth in Section 7.3; and, for the avoidance of doubt, an action shall be and remain a LSC Restricted Action even if LSC is permitted to take such an action pursuant to Section 7.5(a).

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

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

 

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

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

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

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

“Permitted Acquisition” means any acquisition of shares of LSC Common Stock in the LSC Distribution solely by reason of holding RRD Common Stock, but does not include such an acquisition if such RRD Common Stock, before such acquisition, was itself acquired in a manner to which the flush language of section 355(e)(3)(A) of the Code applies (thus causing, for the avoidance of doubt, section 355(e)(3)(A)(i), (ii), (iii) or (iv) of the Code not to apply).

“Person” means any 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.

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

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

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

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

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

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

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

 

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

“RRD Common Stock” has the meaning set forth in the recitals to this Agreement.

“RRD Group” has the meaning ascribed to the term in the Separation and Distribution Agreement.

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

“RRD Restricted Action” means any breach of a representation or covenant made by RRD in Section 7.1 of this Agreement or the taking of any action by RRD or any of its Subsidiaries inconsistent with the covenants set forth in Section 7.4(a); and, for the avoidance of doubt, an action shall be and remain a RRD Restricted Action even if RRD or any of its Subsidiaries is permitted to take such an action pursuant to Section 7.5(b).

“Ruling” means the private letter ruling that was issued to RRD in response to the Ruling Request.

“Ruling Request” means the request for ruling in connection with the LSC Distribution filed by RRD with the IRS, as amended or supplemented, including any appendices and exhibits attached thereto or included therewith and including so much of the pre-submission materials submitted by RRD to the IRS, as related to the LSC Distribution.

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

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

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

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

“Subsidiary” when used with respect to any Person, means any corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization or other entity in which such Person, directly or indirectly (i) beneficially owns more than fifty

 

6


percent (50%) of (A) the total combined voting power of all classes of voting securities of such Person, (B) the total combined equity economic interest thereof or (C) the capital or profits thereof, in the case of a partnership, or (ii) otherwise has the power to elect or direct the election of more than fifty percent (50%) of the members of the governing body of such entity or otherwise has control over such entity (e.g., as the managing partner of a partnership).

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

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

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

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

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

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

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

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

 

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

“Tax Opinion” means the opinion (or opinions) to be delivered by Tax Counsel to RRD in connection with the LSC Distribution to the effect that (i) RRD will not recognize gain or loss upon the Distribution under section 355(c) or section 361(c) of the Code, and (ii) shareholders of RRD will not recognize gain or loss upon the LSC Distribution under section 355(a) of the Code, except in respect of cash received in lieu of fractional shares of LSC.

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

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

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

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

“Transactions” means the transactions contemplated by the Separation and Distribution Agreement and includes, for the avoidance of doubt, the LSC Distribution.

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

“Transition Services Agreement” means the Transition Services Agreement, dated as of the date hereof, between RRD and LSC.

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

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

 

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SECTION 2. Allocation of Taxes .

2.1 Allocation of Taxes . Except as provided in Section 2.2 (Allocation of Deconsolidation Taxes, Distribution Taxes and Transfer Taxes), Taxes shall be allocated as follows:

(a) RRD shall be liable for and shall be allocated (i) any Taxes reported on a Separate Return attributable to any member of the RRD Group for any period, (ii) any Taxes reported on a Combined Return for any period, and (iii) any Taxes listed on Schedule B.1. For the avoidance of doubt, RRD shall not be liable for or allocated any Taxes shown on Schedule B.2.

(b) LSC shall be liable for and shall be allocated (i) any Taxes reported on a Separate Return attributable to any member of the LSC Group for any period and (ii) any Taxes listed on Schedule B.2. For the avoidance of doubt, LSC shall not be liable for or allocated any Taxes shown on Schedule B.1.

2.2 Allocation of Deconsolidation Taxes, Distribution Taxes and Transfer Taxes . Notwithstanding any other provision of this Agreement:

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

(b) Distribution Taxes .

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

(ii) RRD shall be liable for, shall be allocated, and shall indemnify and hold harmless each LSC Indemnified Party from and against any liability of LSC for Distribution Taxes to the extent that LSC is not liable for such Taxes pursuant to Section 2.2(b)(i).

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

 

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

SECTION 3. Preparation and Filing of Tax Returns .

3.1 Combined Returns . RRD shall be responsible for preparing and filing (or causing to be prepared or filed) all Combined Returns for any Tax Year. For any such return, LSC shall furnish any relevant information, including pro forma returns, disclosures, apportionment data and supporting schedules, relating to any member of the LSC Group, necessary for completing any such return in a format suitable for inclusion in such return.

3.2 Separate Returns .

(a) Tax Returns to be Prepared and Filed by RRD. RRD shall be responsible for (i) preparing and filing (or causing to be prepared and filed) all Separate Returns for which LSC is not responsible under Section 3.2(b)(i); and (ii) preparing all Separate Returns which relate to one or more members of the LSC Group for any periods that end on or before the LSC Distribution Date.

(b) Tax Returns to be Prepared and Filed by LSC. LSC shall be responsible for (i) preparing and filing (or causing to be prepared and filed) all Separate Returns which relate to one or more members of the LSC Group for any Tax Year that ends after the LSC Distribution Date and (ii) filing the Separate Returns prepared by RRD under Section 3.2(a)(ii).

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

3.4 Provision of Information .

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

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

 

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(c) Except as otherwise provided in the Separation and Distribution Agreement or any other Ancillary Agreement or as otherwise agreed to by the Parties in writing, the cooperation provided for in this Section 3.4 shall be at no additional cost to the Party requesting such assistance other than for the actual out-of-pocket costs (which shall not include the costs of salaries and benefits of employees of such Party or any pro rata portion of overhead or other costs of employing such employees which would have been incurred by such employees’ employer regardless of the employees’ service with respect to the foregoing) incurred by any such Party, if applicable. The cooperation and assistance provided for in this Section 3.4 shall not be required to the extent such cooperation and assistance would result in an undue burden on any Party or would unreasonably interfere with any of its employees normal functions and duties. In furtherance of, and without limiting, the foregoing, each Party shall make reasonably available those employees with particular knowledge of any function or service of which another Party was not allocated the employees, agents or consultants involved in such function or service in connection with the Transactions.

3.5 Special Rules Relating to the Preparation of Tax Returns .

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

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

3.6 Refunds, Credits, Offsets, Tax Benefits

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

 

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(b) RRD shall forward to LSC, or reimburse LSC, for, any such refunds, credits or offsets, plus any interest received thereon, net of any Taxes incurred with respect to the receipt or accrual thereof and any expenses incurred in connection therewith, that are for the account of LSC within thirty (30) Business Days from receipt thereof by RRD or any of its Affiliates. LSC shall forward to RRD, or reimburse RRD, for, any refunds, credits or offsets, plus any interest received thereon, net of any Taxes incurred with respect to the receipt or accrual thereof and any expenses incurred in connection therewith, that are for the account of RRD within thirty (30) Business Days from receipt thereof by LSC or any of its Affiliates. Any refunds, credits or offsets, plus any interest received thereon, or reimbursements not forwarded or made within the thirty (30) Business Day period specified above shall bear interest from the date received by the refunding or reimbursing party (or its Affiliates) through and including the date of payment at the Interest Rate (treating the date received as the Due Date for purposes of determining such interest). If, subsequent to a Tax Authority’s allowance of a refund, credit or offset, such Tax Authority reduces or eliminates such allowance, any refund, credit or offset, plus any interest received thereon, forwarded or reimbursed under this Section 3.6 shall be returned to the party who had forwarded or reimbursed such refund, credit or offset and interest upon the request of such forwarding party in an amount equal to the applicable reduction, including any interest received thereon.

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

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

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

 

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not be obtained if the Company filing the amended Tax Return by written notice to the other Company agrees to indemnify the other Company for the incremental Taxes allocated to, or the incremental Tax indemnity obligation resulting under this Agreement to, such other Company as a result of the filing of such amended Tax Return.

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

SECTION 4. Tax Payments .

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

4.2 Indemnification Payments .

(a) Tax Payments Made by the RRD Group. If any member of the RRD Group is required to make a payment after the Effective Time to a Tax Authority for Taxes allocated to LSC under this Agreement, then LSC will indemnify and hold harmless RRD from and will pay the amount of Taxes allocated to it to RRD not later than the later of (i) ten (10) Business Days after receiving notification requesting such amount, and (ii) ten (10) Business Days prior to the date such payment is required to be made to such Tax Authority.

(b) Tax Payments Made by the LSC Group. If any member of the LSC Group is required to make a payment after the Effective Time to a Tax Authority for Taxes allocated to RRD under this Agreement, then RRD will indemnify and hold harmless LSC from and will pay the amount of Taxes allocated to it to LSC not later than the later of (i) ten (10) Business Days after receiving notification requesting such amount, and (ii) ten (10) Business Days prior to the date such payment is required to be made to such Tax Authority.

4.3 Interest on Late Payments . Payments pursuant to this Agreement that are not made by the date prescribed in this Agreement or, if no such date is prescribed, not later than five (5) Business Days after demand for payment is made (the “ Due Date ”) shall bear interest for the period from and including the date immediately following the Due Date through and including the date of payment at the Interest Rate. Such interest will be payable at the same time as the payment to which it relates. Interest will be calculated on the basis of a year of 365 days and the actual number of days for which due.

4.4 Tax Consequences of Payments . For all Tax purposes and to the extent permitted by applicable Tax Law, the parties hereto shall treat any payment made pursuant to this Agreement as a capital contribution or a distribution, as the case may be, immediately prior to the Distribution.

 

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

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

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

4.6 Section 336(e) Election .

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

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

 

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

SECTION 5. Cooperation and Tax Contests .

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

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

5.3 Control of Tax Contests .

(a) Controlling Party. Subject to the limitations set forth in Section 5.3(b), each Indemnifying Party (or the appropriate member of its Group) shall, at its own cost and expense, be the Controlling Party with respect to any Tax Contest involving a Tax for which such Company is the Indemnifying Party (it being understood, for the avoidance of doubt but

 

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subject to the other provisions of this Section 5.3(a), that RRD shall be the Controlling Party with respect to any Tax Contest involving Distribution Taxes), in which case any Indemnified Party that could have liability under this Agreement for a Tax to which such Tax Contest relates shall be treated as the “ Non-Controlling Party .”

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

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

SECTION 6. Tax Records .

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

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

 

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

SECTION 7. Representations and Covenants .

7.1 Covenants of RRD and LSC .

(a) RRD hereby covenants that, to the fullest extent permissible under U.S. federal income and state Tax Laws, it will, and will cause the members of the RRD Group to, treat the Distribution in accordance with the Tax-Free Status. LSC hereby covenants that, to the fullest extent permissible under U.S. federal income and state Tax Laws, it will, and will cause each Subsidiary to, treat the Distribution in accordance with the Tax-Free Status.

(b) RRD further covenants that, as of and following the date hereof, RRD shall not and shall cause the members of the RRD Group not to take any action that (or fail to take any action the omission of which) would be inconsistent with the Distribution qualifying for Tax-Free Status or that would preclude the LSC Distribution from qualifying for Tax-Free Status.

(c) LSC further covenants that, as of and following the date hereof, it shall not and shall cause its Subsidiaries not to take any action that (or fail to take any action the omission of which) would be inconsistent with the LSC Distribution qualifying for Tax-Free Status or that would preclude the Distribution from qualifying for Tax-Free Status.

7.2 Private Letter Ruling . RRD represents that it has provided LSC with a copy of the Ruling and the Ruling Request submitted on or prior to the LSC Distribution Date, and agrees to provide LSC with copies of any additional documents submitted to the IRS relating to the Ruling Request and prepared after the LSC Distribution Date prior to the submission of such documents to the IRS in connection with the LSC Distribution.

7.3 Covenants of LSC .

(a) Without limiting the generality of the provisions of Section 7.1, LSC, on behalf of itself and its Subsidiaries, agrees and covenants that it and each of its Subsidiaries will not, directly or indirectly, during the Restriction Period, (i) take any action that would result in LSC’s ceasing to be engaged in the active conduct of the LSC Business, with the result that it is

 

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not engaged in the active conduct of a trade or business within the meaning of section 355(b)(2) of the Code, (ii) redeem or otherwise repurchase (directly or through an Affiliate) any of its outstanding stock, other than through stock purchases meeting the requirements of section 4.05(1)(b) of Revenue Procedure 96-30, 1996-1 C.B. 696 (but it being understood, for the avoidance of doubt, that no agreement or covenant under this Section 7.3(a)(ii) is being entered with respect to Compensatory Equity Net Share Settlements), (iii) amend its certificate of incorporation (or other organizational documents) that would affect the relative voting rights of separate classes of its capital stock or would convert one class of its capital stock into another class of its capital stock, (iv) liquidate (within the meaning of section 331 of the Code and the Treasury Regulations promulgated thereunder) or partially liquidate, (v) merge with any other corporation (other than in a transaction that does not affect the relative shareholding of its shareholders), sell or otherwise dispose of (other than in the ordinary course of business) its assets or the assets of its Subsidiaries, or take any other action or actions if such merger, sale, other disposition or other action or actions in the aggregate would have the effect that one or more Persons acquire (or have the right to acquire), directly or indirectly, as part of a plan or series of related transactions, assets representing one-half or more of the asset value of the LSC Group, or (vi) take any other action or actions that in the aggregate would have the effect that one or more Persons acquire (or have the right to acquire), directly or indirectly, as part of a plan or series of related transactions, capital stock of LSC representing a Fifty-Percent Equity Interest in LSC (as determined for purposes of section 355(e) of the Code), other than a Permitted Acquisition.

7.4 Covenants of RRD.

(a) Without limiting the generality of the provisions of Section 7.1, RRD, on behalf of itself and each member of the RRD Group, agrees and covenants that RRD and each member of the RRD Group will not, directly or indirectly, during the Restriction Period, (i) take any action that would result in RRD ceasing to be engaged in the active conduct of the RRD Business with the result that RRD is not engaged in the active conduct of a trade or business within the meaning of section 355(b)(2) of the Code, (ii) redeem or otherwise repurchase (directly or through an Affiliate of RRD) any of RRD’s outstanding capital stock, other than through stock purchases meeting the requirements of section 4.05(1)(b) of Revenue Procedure 96-30, 1996-1 C.B. 696 (but it being understood, for the avoidance of doubt, that no agreement or covenant under this Section 7.4(a)(ii) is being entered with respect to Compensatory Equity Net Share Settlements), (iii) amend the certificate of incorporation (or other organizational documents) of RRD that would affect the relative voting rights of separate classes of RRD’ capital stock or would convert one class of RRD’s capital stock into another class of its capital stock, (iv) liquidate (within the meaning of section 331 of the Code and the Treasury Regulations promulgated thereunder) or partially liquidate RRD, (v) merge RRD with any other corporation (other than in a transaction that does not affect the relative shareholding of RRD shareholders), sell or otherwise dispose of (other than in the ordinary course of business) the assets of RRD and its Subsidiaries, or take any other action or actions if such merger, sale, other disposition or other action or actions in the aggregate would have the effect that one or more Persons acquire (or have the right to acquire), directly or indirectly, as part of a plan or series of related transactions, assets representing one-half or more of the asset value of the RRD Group, or (vi) take any other action or actions that in the aggregate would have the effect that one or more Persons acquire (or

 

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have the right to acquire), directly or indirectly, as part of a plan or series of related transactions, stock of RRD representing a Fifty-Percent Equity Interest in RRD (as determined for purposes of section 355(e) of the Code).

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

7.5 Exceptions .

(a) Exceptions with Respect to LSC.

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

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

(b) Exceptions with Respect to RRD.

(i) Notwithstanding Section 7.4(a) above, RRD or any of its Subsidiaries may take a RRD Restricted Action (A) if LSC consents in writing to such RRD Restricted Action, (B) if RRD provides LSC with Satisfactory Guidance concluding that such RRD Restricted Action will not alter the Tax-Free Status of the LSC Distribution in respect of LSC and holders of LSC’s Common Stock, or (C) if there is no loss resulting to LSC and holders of LSC’s Common Stock from the taking of such RRD Restricted Action.

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

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

 

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

SECTION 8. General Provisions .

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

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

8.3 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 of the Parties and delivered to the other Party.

8.4 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 (at a facsimile number to be provided by such Party to the other Party pursuant to the notice provisions of this Section  8.4 ) with receipt confirmed (followed by delivery of an original via overnight courier service), by email (at an email address to be provided by such Party to the other Party pursuant to the notice provisions of this Section  8.4 ) 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  8.4 ):

To RRD:

R. R. Donnelley & Sons Company

35 West Wacker Drive

Chicago, Illinois 60601

Attn: General Counsel

 

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To LSC:

LSC Communications, Inc.

35 West Wacker Drive

Chicago, Illinois 60601

Attn: General Counsel

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

8.6 Assignment . This Agreement shall not be assignable, in whole or in part, directly or indirectly, by any Party without the prior written consent of the other Party, and any attempt to assign any rights or obligations arising under this Agreement without such consent shall be void; provided that, subject to compliance with Section 7, if applicable, either Party may assign this Agreement 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.

8.7 Successors and Assigns . The provisions to 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.

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

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

8.10 Termination . This Agreement may be terminated prior to the LSC Distribution Date by and in the sole discretion of RRD without the approval of LSC or the stockholders of RRD. 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 RRD and LSC.

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

 

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

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

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

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

8.16 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 8.16 .

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

 

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8.18 No Strict Construction; Interpretation .

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

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

 

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

 

R. R. DONNELLEY & SONS COMPANY
By:  

/s/ Daniel L. Knotts

Name:   Daniel L. Knotts
Title:   Chief Operating Officer
LSC COMMUNICATIONS, INC.
By:  

/s/ Thomas J. Quinlan III

Name:   Thomas J. Quinlan III
Title:   Chief Executive Officer

Exhibit 2.5

PATENT ASSIGNMENT AND LICENSE AGREEMENT

September 27, 2016

This PATENT ASSIGNMENT AND LICENSE AGREEMENT (this “ Agreement ”), effective as of September 30, 2016 (the “ Effective Date ”), by and between R. R. Donnelley & Sons Company, a Delaware corporation (“ RRD ”), and LSC Communications US, LLC, a limited liability company (“ LSC ”). Each of RRD and LSC is referred to herein as a “ Party ” and collectively as the “ Parties .”

W I T N E S S E T H:

WHEREAS, RRD, LSC Communications, Inc. and Donnelley Financial Solutions, Inc. (“ Donnelley Financial ”) have entered into a Separation and Distribution Agreement, dated as of September 14, 2016 (the “ Separation and Distribution Agreement ”), pursuant to which RRD and its subsidiaries will undertake a series of transactions following which RRD will separate into three independent, publicly traded companies: (i) one business focused on publishing and retail-centric print services and office products, which shall be owned and conducted, directly or indirectly, by LSC Communications, Inc., (ii) one business focused on financial communications and data services, which shall be owned and conducted, directly or indirectly, by Donnelley Financial, and (iii) one business focused on customized multichannel communications management, which shall be owned and conducted, directly or indirectly, by RRD; and

WHEREAS, in connection with the transactions contemplated by the Separation and Distribution Agreement, (i) RRD wishes to assign and transfer to LSC, and LSC wishes to receive, certain Assigned Patents (as defined herein); (ii) RRD wishes to grant, and LSC wishes to receive, a non-exclusive license under certain RRD Licensed Patents (as defined herein); and (iii) RRD wishes to retain and receive, and LSC wishes to grant, a non-exclusive license under certain LSC Licensed Patents (as defined herein), in each case, in accordance with the terms and conditions set forth in this Agreement.

NOW THEREFORE, in consideration of the premises and covenants set forth herein and in the Separation and Distribution Agreement (and other agreements entered into in connection with the Separation and Distribution Agreement), and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each of the Parties hereby agrees as follows:

ARTICLE I

DEFINITIONS; INTERPRETATION

Section 1.1 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 “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. Any capitalized terms used but not defined in this Agreement have the meanings given to them in the Separation and Distribution Agreement.

Section 1.2 Definitions . Capitalized terms used in this Agreement and not otherwise defined in this Agreement have the respective meanings assigned thereto in the Separation and Distribution Agreement. As used in this Agreement, the following terms have the following meanings:

(1) “ AAA ” shall have the meaning set forth in Section 6.2 .

(2) “ Agreement ” shall have the meaning set forth in the Preamble of this Agreement.

(3) “ Agreement Disputes ” shall have the meaning set forth in Section 6.1 .

(4) “ Assigned Patents ” means (i) the issued patents and patent applications listed on Schedule 2.1 attached hereto (“ Listed Assigned Patents ”), (ii) any patents that issue from any patent applications included in the Listed Assigned Patents, (iii) any patents or patent applications that claim priority from the Listed Assigned Patents, and (iv) any continuations, continuations-in-part, divisionals, continuing patent applications, counterparts, reissues, re-examinations, extensions, and renewals of any Listed Assigned Patents.

(5) “ Change of Control ” means, with respect to a Party (the “ Acquired Person ”), any transaction or series of related transactions, including any such transaction(s) in bankruptcy, in which a Person or group of related Persons, any one of which is not the Acquired Person, who do not Control such Acquired Person prior to such transaction or series of transactions, subsequently obtain(s) Control of the Acquired Person (or any Person with direct or indirect Control of such Acquired Person) by any means, whether by operation of Law, merger, contract, acquisition of securities or otherwise.

(6) “ Control ” (including the correlative meanings of the terms “Controlled by” and “under common Control with”), 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 or any of its Group Companies shall be deemed to be an Affiliate of another Party or any of its Group Companies by reason of having one or more directors in common.

(7) “ Dispute Notice ” shall have the meaning set forth in Section 6.1 .

(8) “ Divested Entity ” means a Group Company (as of the time immediately prior to the relevant divestment), business, product line, division, or organization that a Party or any of its Group Companies sells or transfers to another Person or otherwise divests.

 

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(9) “ DFS ” means Donnelley Financial, LLC, which is or shall be a Subsidiary of Donnelley Financial as of the Donnelley Financial Distribution Date.

(10) “ DFS Assigned Patents ” means the “Assigned Patents,” as defined in the Patent Assignment and License Agreement, effective as of September 30, 2016, by and between RRD and DFS.

(11) “ DFS Group Company ” means (i) DFS and any of DFS’s direct or indirect Subsidiaries immediately following the Donnelley Financial Distribution Date and any Person that becomes a direct or indirect Subsidiary of DFS after such time, and (ii) other than the Persons described in the foregoing clause (i), DFS Parent and any Subsidiary of DFS Parent. Notwithstanding the foregoing, (A) with respect to the foregoing clause (i), a direct or indirect Subsidiary of DFS shall not be an DFS Group Company if and when it ceases to be a direct or indirect Subsidiary of DFS, (B) with respect to the foregoing clause (ii), a direct or indirect Subsidiary of DFS Parent shall not be an DFS Group Company if and when it ceases to be a direct or indirect Subsidiary of DFS Parent, and (C) DFS Parent and its Subsidiaries (other than DFS and its Subsidiaries) shall not be DFS Group Companies if and when DFS Parent ceases to have Control over DFS.

(12) “ Donnelley Financial Distribution Date ” means the date on which the Donnelley Financial Distribution is effected.

(13) “ Encumbrances ” means the (i) Pre-Existing Rights and (ii) with respect to any LSC Licensed Patents, the licenses and other rights retained by or granted to RRD and its Group Companies as set forth in ARTICLE III .

(14) “ Excluded Entity ” means any Person listed on Schedule 3.5 , together with any Affiliate of such Person, and any successor to such Person or to such Affiliate.

(15) “ Group Company ” means, (i) with respect to LSC, any LSC Group Company, (ii) with respect to RRD, any RRD Group Company, and (iii) with respect to DFS, any DFS Group Company.

(16) “ Licensee ” shall have the meaning set forth in Section 3.3(a) .

(17) “ Licensor ” shall have the meaning set forth in Section 3.3(a) .

(18) “ LSC Distribution Date ” means the date on which the LSC Distribution is effected.

(19) “ LSC Group Company ” means (i) LSC and any of LSC’s direct or indirect Subsidiaries immediately following the LSC Distribution Date and any Person that becomes a direct or indirect Subsidiary of LSC after such time, and (ii) other than the Persons described in the foregoing clause (i), LSC Parent and any Subsidiary of LSC Parent. Notwithstanding the foregoing, (A) with respect to the foregoing clause (i), a

 

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direct or indirect Subsidiary of LSC shall not be an LSC Group Company if and when it ceases to be a direct or indirect Subsidiary of LSC, (B) with respect to the foregoing clause (ii), a direct or indirect Subsidiary of LSC Parent shall not be an LSC Group Company if and when it ceases to be a direct or indirect Subsidiary of LSC Parent, and (C) LSC Parent and its Subsidiaries (other than LSC and its Subsidiaries) shall not be LSC Group Companies if and when LSC Parent ceases to have Control over LSC.

(20) “ LSC Licensed Patents ” means (i) the issued patents and patent applications listed on Schedule 3.2 attached hereto (“ Listed LSC Licensed Patents ”), (ii) any patents that issue from any patent applications included in the Listed LSC Licensed Patents, (iii) any patents or patent applications that claim priority from the Listed LSC Licensed Patents, and (iv) any continuations, continuations-in-part, divisionals, continuing patent applications, counterparts, reissues, re-examinations, extensions, and renewals of any Listed LSC Licensed Patents.

(21) “ LSC Parent ” means the Person that is, as of the relevant time in question following the LSC Distribution Date, the ultimate parent of LSC with direct or indirect Control over LSC.

(22) “ Mediation Period ” shall have the meaning set forth in Section 6.2 .

(23) “ Pre-Existing Rights ” means all licenses, covenants not to sue or assert, covenants to delay suit, commitments to license (including any such commitments to standard-setting or similar organizations), releases, waivers, immunities, options, remedy limitations, rights to renew or extend any license or covenant, and other rights, in each case, (i) relating to the Assigned Patents, (ii) under any Contract existing as of the Effective Date, and (iii) whether or not disclosed to LSC, including the licenses and other rights granted pursuant to the agreements listed on Schedule 2.2 .

(24) “ Privileged Materials ” means any documents, materials or other information that (i) are protected by the attorney-client privilege, the attorney work product doctrine, and/or similar privileges, including any opinions of counsel, claim charts and communications to or from counsel, (ii) include confidential or proprietary information of any third Person, or (iii) include personally identifiable information of individuals.

(25) “ RRD Group Company ” means any of RRD’s direct or indirect Subsidiaries immediately following the later to occur of the LSC Distribution Date and the Donnelley Financial Distribution Date, and any Person that becomes a direct or indirect Subsidiary of RRD after such time. For the avoidance of doubt, a direct or indirect Subsidiary of RRD shall not be an RRD Group Company if and when it ceases to be a direct or indirect Subsidiary of RRD.

(26) “ RRD Licensed Patents ” means (i) the issued patents and patent applications listed on Schedule 3.1 attached hereto (“ Listed RRD Licensed Patents ”); (ii) any patents that may issue on any patent applications included in the Listed RRD Licensed Patents; (iii) any patents or patent applications that claim priority from the Listed RRD Licensed Patents; (iv) any continuations, continuations-in-part, divisionals, continuing patent applications, counterparts, reissues, re-examinations, extensions, and renewals of any Listed RRD Licensed Patents.

 

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(27) “ RRD Retained Patents ” means, other than any DFS Assigned Patents, (i) the issued patents and patent applications that are owned by RRD immediately following the consummation of the LSC Distribution, (ii) any patents that issue from any patent applications included in clause (i), (iii) any patents or patent applications that claim priority from a patent or patent application included in clause (i), and (iv) any continuations, continuations-in-part, divisionals, continuing patent applications, counterparts, reissues, re-examinations, extensions, and renewals of any patents or patent applications included in clause (i).

(28) “ Rules ” shall have the meaning set forth in Section 6.3 .

(29) “ Separation and Distribution Agreement ” shall have the meaning set forth in the Recitals to this Agreement.

(30) “ Transferee ” shall have the meaning set forth in Section 2.2 .

ARTICLE II

ASSIGNMENT OF ASSIGNED PATENTS

Section 2.1 Assignment . Subject to the Encumbrances, RRD, on behalf of itself and its Group Companies, hereby Transfers to LSC all of RRD’s and its Group Companies’ rights, title, and interest in and to the Assigned Patents, including the right to sue for past, present or future infringement of the Assigned Patents and to retain any damages due or accrued for any such past, present or future infringement.

Section 2.2 Encumbrances .

(a) LSC shall ensure that any assignee, transferee or successor (including the acquiring or surviving entity in connection with any Change of Control or similar corporate transaction involving LSC) of any of the Assigned Patents from LSC, or any other Person that is granted any exclusive license or any enforcement rights with respect thereto (each such assignee, transferee, successor or other such Person, a “ Transferee ”) agrees in writing, prior to or as part of such assignment, transfer, grant or other transaction, (i) that it acknowledges and confirms that the Assigned Patents are and shall remain subject to the Encumbrances, (ii) to be bound by Section 2.2 , and with respect to the LSC Licensed Patents, to be bound also by Sections 3.2 and 3.3 of this Agreement, (iii) to bind all subsequent or future Transferees of any of the Assigned Patents to Section 2.2 , and with respect to the LSC Licensed Patents, to be bound also by Sections 3.2 and 3.3 of this Agreement, and (iv) that RRD shall be an express intended third-party beneficiary of any such agreement, with a direct independent right to enforce such agreement against such Transferee.

 

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(b) If LSC intends to initiate or participate, directly or indirectly, in any Action, under any Assigned Patents against any Person, then LSC shall first inform RRD in writing of the identity of such Person and provide other information reasonably requested by RRD in connection therewith, and RRD shall, subject to any confidentiality obligations of RRD, reasonably cooperate with LSC to confirm the scope of any licenses, covenants or other rights granted by RRD or its Group Companies to such Person.

(c) LSC agrees not to, directly or indirectly, initiate, maintain, authorize, participate in or facilitate any Action (including the grant of an exclusive license or right to enforce to any other Person that, to LSC’s knowledge, intends to initiate, authorize, participate in or facilitate any Action), under any Assigned Patents, against any Person that it knows to be a licensee or other beneficiary of Encumbrances under such Assigned Patent(s), in each case, within the scope of the licenses or other rights of such licensee or other beneficiary.

(d) Without limiting Sections 2.2(a) through 2.2(c) , with respect to the Assigned Patents, LSC agrees to comply with all commitments made by RRD or any of its Group Companies to any standard-setting or similar organizations to the same extent as such commitments are binding upon RRD or the applicable Group Company.

Section 2.3 Disclosure of Office Actions . Within thirty (30) days after the Effective Date, RRD shall notify LSC of all due dates for responses to office actions related to the prosecution of the Assigned Patents that will occur within ninety (90) days after the Effective Date.

Section 2.4 Transfer of Files . Within ninety (90) days after the Effective Date, RRD will deliver or cause to be delivered to LSC or its designated counsel (a) for Assigned Patents subsisting in the United States, ribbon copies of such Assigned Patents if reasonably available in RRD’s files and copies of the prosecution files as maintained by RRD’s outside prosecution counsel, (b) docketing reports generated during the ninety (90) day period after the Effective Date for all Assigned Patents being prosecuted as of the Effective Date, and (c) the identity of all outside counsel responsible for prosecuting or maintaining an Assigned Patent, in each case of the foregoing (a) through (c), excluding any Privileged Materials. Notwithstanding the foregoing or anything to the contrary elsewhere in this Agreement, RRD will not, and will not be required to, deliver or have delivered to LSC any document or other material that contains any communication, work product or other information that are protected by or subject to any attorney-client privilege, work product doctrine, or any other similar professional privileges, rights or immunities.

Section 2.5 Cooperation; No Other Obligations or Liabilities .

(a) For a period of eighteen (18) months after the Effective Date, each of RRD and LSC shall, upon the reasonable request of the other Party, execute and deliver such documents and other papers and perform such acts as may be reasonably required to carry out the provisions of this Agreement and consummate and make effective the transactions contemplated by this Agreement. Notwithstanding anything to the contrary in this Agreement, recordation or registration of any document evidencing the assignment of the Assigned Patents from RRD to LSC shall be LSC’s sole responsibility; provided that RRD shall provide reasonable assistance to LSC in connection with such recordation or registration, at LSC’s sole cost and expense.

 

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(b) For a period of five (5) years after the Effective Date, RRD shall reasonably cooperate, at LSC’s written request and at LSC’s sole cost and expense, and subject to RRD’s confidentiality commitments to third parties, with LSC in the maintenance, enforcement, licensing and defense of the Assigned Patents, including by (i) executing and delivering any instruments and performing any other acts that may be reasonably necessary for LSC, (ii) disclosing relevant facts and delivering instruments and other documents reasonably requested by LSC, including materials evidencing or relating to the conception or reduction of practice of inventions, and (iii) providing technical consultations reasonably requested by LSC, including making best efforts to make the relevant inventors that were involved in prosecution of any Assigned Patents available and accessible to LSC, to the extent such inventors are employed by RRD at the time. LSC shall pay inventors a reasonable hourly rate for time expended and reasonable travel and subsistence expenses incurred in performing such technical consultations requested by LSC. LSC shall reimburse RRD for any and all out-of-pocket costs and expenses (including reasonable attorneys’ fees) incurred by RRD or any of its Group Companies, or any of its or their directors, officers, agents or employees, in connection with (i) the enforcement or licensing of any of the Assigned Patents by or on behalf of LSC or any of its Group Companies, or (ii) any Action brought against or in respect of the Assigned Patents after the Effective Date, including any reexamination, reissue, post-grant review, inter partes review, interference or opposition proceedings. For clarity, except as expressly set forth in Section 2.5(a) or (b) , nothing in this Agreement shall constitute an obligation of RRD or any of its Group Companies to assist LSC in any litigation, adversarial matter, interference or administrative proceeding relating to the Assigned Patents. Notwithstanding the foregoing, nothing in this Section 2.5 shall constitute an obligation of RRD or any of its Group Companies to become a party to any litigation, adversarial matter, interference or administrative proceeding.

(c) For a period of five (5) years after the Effective Date, LSC shall reasonably cooperate, at RRD’s written request and at RRD’s sole cost and expense, and subject to LSC’s confidentiality commitments to third parties, with RRD in the maintenance, enforcement, licensing and defense of the RRD Retained Patents, including by (i) executing and delivering any instruments and performing any other acts that may be reasonably necessary for RRD, (ii) disclosing relevant facts and delivering instruments and other documents reasonably requested by RRD, including materials evidencing or relating to the conception or reduction of practice of inventions, and (iii) providing technical consultations reasonably requested by RRD, including making best efforts to make the relevant inventors that were involved in prosecution of any RRD Retained Patents available and accessible to RRD, to the extent such inventors are employed by LSC at the time. RRD shall pay inventors a reasonable hourly rate for time expended and reasonable travel and subsistence expenses incurred in performing such technical consultations requested by RRD. RRD shall reimburse LSC for any and all out-of-pocket costs and expenses (including reasonable attorneys’ fees) incurred by LSC or any of its Group Companies, or any of its or their directors, officers, agents or employees, in

 

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connection with (i) the enforcement or licensing of any of the RRD Retained Patents by or on behalf of RRD or any of its Group Companies, or (ii) any Action brought against or in respect of the RRD Retained Patents after the Effective Date, including any reexamination, reissue, post-grant review, inter partes review, interference or opposition proceedings. For clarity, except as expressly set forth in Section 2.5(a) or (c) , nothing in this Agreement shall constitute an obligation of LSC or any of its Group Companies to assist RRD in any litigation, adversarial matter, interference or administrative proceeding relating to the RRD Retained Patents. Notwithstanding the foregoing, nothing in this Section 2.5 shall constitute an obligation of LSC or any of its Group Companies to become a party to any litigation, adversarial matter, interference or administrative proceeding.

(d) For a period of five (5) years after the Effective Date, LSC shall reasonably cooperate, at DFS’s written request and at DFS’s sole cost and expense, and subject to LSC’s confidentiality commitments to third parties, with DFS in the maintenance, enforcement, licensing and defense of the DFS Assigned Patents, including by (i) executing and delivering any instruments and performing any other acts that may be reasonably necessary for DFS, (ii) disclosing relevant facts and delivering instruments and other documents reasonably requested by DFS, including materials evidencing or relating to the conception or reduction of practice of inventions, and (iii) providing technical consultations reasonably requested by DFS, including making best efforts to make the relevant inventors that were involved in prosecution of any DFS Assigned Patents available and accessible to DFS, to the extent such inventors are employed by LSC at the time. LSC’s obligations under this Section 2.5(d) are conditioned on DFS’s express written agreement to, as applicable: (A) pay inventors employed by LSC a reasonable hourly rate for time expended and reasonable travel and subsistence expenses incurred in performing such technical consultations requested by DFS, and (B) reimburse LSC for any and all out-of-pocket costs and expenses (including reasonable attorneys’ fees) incurred by LSC or any of its Group Companies, or any of its or their directors, officers, agents or employees, in connection with (1) the enforcement or licensing of any of the DFS Assigned Patents by or on behalf of DFS or any of its Group Companies, or (2) any assistance requested by DFS with respect to any Action brought against or in respect of the DFS Assigned Patents after the Donnelley Financial Distribution Date, including any reexamination, reissue, post-grant review, inter partes review, interference or opposition proceedings. For clarity, except as expressly set forth in Section 2.5(a) or (d) , nothing in this Agreement shall constitute an obligation of LSC or any of its Group Companies to assist DFS in any litigation, adversarial matter, interference or administrative proceeding relating to the DFS Assigned Patents. Notwithstanding the foregoing, nothing in this Section 2.5 shall constitute an obligation of LSC or any of its Group Companies to become a party to any litigation, adversarial matter, interference or administrative proceeding. LSC and RRD hereby agree that DFS shall be an express intended third-party beneficiary of this Agreement solely with respect to this Section 2.5(d) , with a direct independent right to enforce the terms and conditions hereof.

(e) Except as expressly set forth in Sections 2.5(a) through (d) , neither Party nor any of their Group Companies shall have any liability or obligation to any other Party (or, for the purposes of Section 2.5(d) , to DFS) under this Agreement with respect to

 

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ownership, maintenance, enforcement or exploitation of the Assigned Patents, the RRD Retained Patents, or the DFS Assigned Patents, as applicable, including any such liabilities and obligations related to actions or claims brought against or in respect of such patents or patent applications, or any application, maintenance or annuity fees for any of such patents or patent applications due at the United States Patent and Trademark Office or any foreign, national or regional equivalent thereto, in each case, arising or due on or after the Effective Date. For clarity, all payments of application, maintenance and annuity fees with respect to the Assigned Patents that are due on or after the Effective Date are the sole responsibility of LSC.

ARTICLE III

LICENSES AND RETAINED RIGHTS

Section 3.1 License Grant by RRD to LSC . Subject to the terms and conditions of this Agreement, RRD, on behalf of itself its Group Companies, hereby grants to LSC a perpetual, irrevocable, non-terminable, royalty-free, fully paid-up, non-exclusive, non-transferable (except as permitted pursuant to ARTICLE V ), non-sublicensable (except as expressly permitted in Section 3.3 ) license, under the RRD Licensed Patents, to make, have made, use, import, sell, license, offer for sale and otherwise exploit and dispose of (in each case, directly or indirectly) any products or services, and to otherwise perform any method or process and practice any invention claimed in any of the RRD Licensed Patents.

Section 3.2 License Grant by LSC to RRD . Notwithstanding the Transfer by RRD to LSC of any LSC Licensed Patents included within the definition of Assigned Patents, RRD hereby retains for itself, and LSC hereby grants, and agrees to grant, to RRD, a worldwide, perpetual, irrevocable, non-terminable, royalty-free, fully paid-up, non-exclusive, non-transferable (except as permitted pursuant to ARTICLE V ), non-sublicensable (except as expressly permitted in Section 3.3 ) license, under the LSC Licensed Patents, to make, have made, use, import, sell, license, offer for sale and otherwise exploit and dispose of (in each case, directly or indirectly) any products or services, and to otherwise perform any method or process and practice any invention claimed in any of the LSC Licensed Patents.

Section 3.3 Sublicensing .

(a) Each Party in its capacity as a licensee under Section 3.1 or 3.2 , as applicable (such Party, “ Licensee ”) shall have the right, subject to the terms and conditions set forth in this Section 3.3 , to grant non-transferable sublicenses, solely within the scope of the licenses granted to Licensee by the other Party (such Party, “ Licensor ”) pursuant to Section 3.1 or 3.2 , as applicable, to (i) such Licensee’s Group Companies; provided that any sublicense granted to a Group Company shall, subject to clause (iv) below, automatically and immediately terminate once such Group Company ceases to be a Group Company of Licensee, (ii) independent contractors and consultants of Licensee or its Group Companies in connection with providing services to Licensee or any of its sublicensed Group Companies, (iii) customers of Licensee or its Group Companies solely in connection with such customers’ use of products or services provided by or on behalf of Licensee or its Group Companies, and (iv) a Divested Entity of Licensee as described in Section 3.4 . For the avoidance of doubt, any sublicense granted by a Licensee under this Agreement is subordinate to, and conditioned upon the survival of, the licenses granted to such Licensee.

 

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(b) The sublicensing rights granted under this ARTICLE III are conditioned upon the requirement that the Licensee granting any such sublicense shall enter into a written sublicense agreement with each permitted sublicensee on terms and conditions that are no less restrictive than the terms and conditions of this Agreement and that expressly prohibit and render void further sublicensing by the permitted sublicensee.

(c) Notwithstanding anything to the contrary in this Agreement, LSC does not have the right to, and shall not, grant any sublicense to any Excluded Entity without RRD’s express prior written consent, and any sublicense granted to an Excluded Entity by LSC without such consent shall be null and void ab initio .

Section 3.4 Divestitures . Upon any sale, transfer or other divestiture of a Divested Entity by Licensee, Licensee may grant a sublicense, solely within the scope of the licenses granted to Licensee pursuant to Section 3.1 or 3.2 , as applicable, to such Divested Entity (or if such Divested Entity is not a corporation, a limited liability company or other legal entity, to the successor, assignee, or acquirer thereof) with respect to (a) any products or services commercially released by such Divested Entity as of the effective date of the sale, transfer or divestiture, (b) any products or services under bona fide development by such Divested Entity as of such effective date, and (c) any natural evolutions of the products and services described in the foregoing clauses (a) or (b); provided that such sublicense shall not extend to any business, products or service of any Person(s) that has(ve) acquired such Divested Entity or any Affiliates of such Person(s) (other than the Divested Entity). Notwithstanding the foregoing, any sublicense granted to a Divested Entity shall terminate automatically and immediately if at any time such Divested Entity becomes an Affiliate of any Excluded Entity.

ARTICLE IV

TERM

Section 4.1 Term . The term of this Agreement shall commence on the Effective Date and shall continue until the later of (a) the expiration date of the last-to-expire of the RRD Licensed Patents or LSC Licensed Patents, or (b) the last date upon which the right to assert any claim of infringement based on any of the RRD Licensed Patents or LSC Licensed Patents expires.

Section 4.2 Termination . Except as provided in Section 5.1(c) , neither Party shall have any right to terminate this Agreement or any of the licenses or other rights granted hereunder for any reason.

 

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ARTICLE V

ASSIGNABILITY

Section 5.1 Assignment and Change of Control .

(a) Neither this Agreement nor the licenses, rights or obligations hereunder may be assigned or delegated, including by operation of Law, merger, consolidation, asset sale, acquisition of securities or otherwise, by any Party without the prior express written consent of the other Party (which consent may be granted or withheld in the sole discretion of such other Party); provided that (i) a Change of Control of a Party is not, and will be deemed not to be, an assignment or delegation, or purported assignment or delegation, of this Agreement or a breach of this Section 5.1 , and, subject to Section 5.1(c) , the licenses and other rights granted pursuant to ARTICLE III shall survive any Change of Control of either Party, and (ii) each Party may assign this Agreement in whole and without the other Party’s consent to any Person that acquires all or substantially all of the assets and business operations of such Party; provided further that LSC may not in any case assign or delegate this Agreement or any licenses, rights or obligations hereunder to any Excluded Entity.

(b) Upon any Change of Control of a Party, the Party undergoing such Change of Control shall, within fifteen (15) days following the consummation of such Change of Control, provide to the other Party written notice of such Change of Control describing the transaction or series of transactions giving rise to the Change of Control and, if the relevant Party undergoing a Change of Control is LSC, indicating in particular whether any Person obtaining direct or indirect Control of LSC is an Excluded Entity.

(c) Upon a Change of Control of LSC (including, for the avoidance of doubt, upon a Change of Control of any Person with direct or indirect Control of LSC) whereby the Person or any member of a group of related Persons obtaining Control of LSC (including by obtaining Control of a Person with direct or indirect Control of LSC) is an Excluded Entity, RRD may, at its sole discretion and at any time within the earlier of (A) ninety (90) days after RRD receives written notice pursuant to Section 5.1(b) of such a Change of Control or (B) one hundred and five (105) days following the consummation of such Change of Control, immediately terminate the licenses and other rights granted to LSC pursuant to ARTICLE III , including any sublicenses granted by LSC under such licenses or other rights, upon written notice to LSC.

(d) Any attempted assignment or delegation that is not in accordance with this Section 5.1 shall be null and void.

Section 5.2 Successors and Assigns . The provisions of this Agreement, and the licenses, rights and obligations 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.

 

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ARTICLE VI

DISPUTE RESOLUTION

Section 6.1 Negotiation . In the event of a controversy, dispute or claim arising out of, in connection with, or in relation to the interpretation, performance, nonperformance, validity or breach of this Agreement or otherwise arising out of, or in any way related to this Agreement or the transactions contemplated hereby, including any claim based on contract, tort, statute or constitution (collectively, “ Agreement Disputes ”), the Party claiming such Agreement Dispute shall give written notice to the other Party setting forth the Agreement Dispute and a brief description thereof (a “ Dispute Notice ”) pursuant to the terms of the notice provisions of Section 7.1 hereof. Following delivery of a Dispute Notice, the general counsels of the relevant Parties and/or such other executive officer designated by the relevant Party shall negotiate for a reasonable period of time to settle such Agreement Dispute; provided that such reasonable period shall not, unless otherwise agreed by the Parties in writing, exceed forty-five (45) calendar days from the time of receipt by a Party of a Dispute Notice; provided further , that in the event of any arbitration in accordance with Section 6.3 hereof, the relevant Parties shall not assert the defenses of statute of limitations and laches arising during the period beginning after the date of receipt of the Dispute Notice, and any contractual time period or deadline under this Agreement to which such Agreement Dispute relates occurring after the Dispute Notice is received shall not be deemed to have passed until such Agreement Dispute has been resolved.

Section 6.2 Mediation . If, within forty-five (45) calendar days (or such longer period as may be agreed in writing between the Parties) after receipt by a Party of a Dispute Notice, the Parties have not succeeded in negotiating a resolution of the Agreement Dispute, the Parties agree to submit the Agreement Dispute at the earliest possible date to mediation conducted in accordance with the Commercial Mediation Rules of the American Arbitration Association (“ AAA ”), and to bear equally the costs of the mediation; provided , however , that each Party shall bear its own costs in connection with such mediation. The parties agree to participate in good faith in the mediation and negotiations related thereto for a period of thirty (30) days or such longer period as they may mutually agree following the initial mediation session (the “ Mediation Period ”).

Section 6.3 Arbitration . If the Agreement Dispute has not been resolved for any reason after the Mediation Period, such Agreement Dispute shall be determined, at the request of either relevant Party, by arbitration conducted in Chicago, Illinois, before and in accordance with the then-existing Commercial Arbitration Rules of the AAA, except as modified herein (the “ Rules ”). There shall be three arbitrators. Each Party shall appoint one arbitrator within twenty (20) calendar days of receipt by respondent of a copy of the demand for arbitration. The two party-appointed arbitrators shall have twenty (20) calendar days from the appointment of the second arbitrator to agree on a third arbitrator who shall chair the arbitral tribunal. Any arbitrator not timely appointed by the Parties under this Section 6.3 shall be appointed by the AAA in accordance with the listing, ranking and striking method in the Rules, and in any such procedure, each Party shall be given a limited number of strikes, excluding strikes for cause. Any controversy concerning whether an Agreement Dispute is an arbitrable Agreement Dispute, whether arbitration has been waived, whether an assignee of this Agreement is bound to arbitrate, or as to the interpretation of enforceability of this ARTICLE VI shall be determined by the

 

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arbitrators. In resolving any Agreement Dispute, the Parties intend that the arbitrators shall apply the substantive laws of the State of Illinois, without regard to any choice of law principles thereof that would mandate the application of the laws of another jurisdiction. The Parties intend that the provisions to arbitrate set forth herein be valid, enforceable and irrevocable, and any award rendered by the arbitrators shall be final and binding on the Parties. The Parties agree to comply with any award made in any such arbitration proceedings and agree to enforcement of or entry of judgment upon such award in the United States District Court for the Northern District of Illinois. The arbitrators shall be entitled, if appropriate, to award any remedy in such proceedings, including monetary damages, specific performance and all other forms of legal and equitable relief; provided , however , the arbitrators shall not be entitled to award punitive, exemplary, treble or any other form of non-compensatory damages except (i) in connection with indemnification for a Third Party Claim (and in such a case, only to the extent awarded in such Third Party Claim) or (ii) for reasonably foreseeable consequential damages or losses.

Section 6.4 Arbitration Period . Any arbitration proceeding shall be concluded in a maximum of six (6) months from the commencement of the arbitration. The parties involved in the proceeding may agree in writing to extend the arbitration period if necessary to appropriately resolve the Agreement Dispute.

Section 6.5 Treatment of Negotiations, Mediation and Arbitration . Without limiting the provisions of the Rules, unless otherwise agreed in writing by or among the relevant Parties or permitted by this Agreement, the relevant Parties shall keep, and shall cause their respective Group Companies to keep, confidential all matters relating to this ARTICLE VI , and any negotiation, mediation, conference, arbitration, discussion or arbitration award pursuant to this ARTICLE VI shall be treated as compromise and settlement negotiations for purposes of Rule 408 of the Federal Rules of Evidence and comparable state rules; provided , that such matters may be disclosed (i) to the extent reasonably necessary in any proceeding brought to enforce the award or for entry of a judgment upon the award and (ii) to the extent otherwise required by Law or stock exchange. Nothing said or disclosed, nor any document produced, in the course of any negotiations, conferences and discussions that is not otherwise independently discoverable shall be offered or received as evidence or used for impeachment or for any other purpose in any current or future arbitration. Nothing contained herein is intended to or shall be construed to prevent any Party from applying to any court of competent jurisdiction for interim measures or other provisional relief in connection with the subject matter of any Agreement Disputes. Without prejudice to such provisional remedies as may be available under the jurisdiction of a court, the arbitral tribunal shall have full authority to grant provisional remedies and to direct the parties to request that any court modify or vacate any temporary or preliminary relief issued by such court, and to award damages for the failure of any Party to respect the arbitral tribunal’s orders to that effect.

Section 6.6 Continuity of Service and Performance . Unless otherwise agreed in writing, the Parties will continue to honor all commitments under this Agreement during the course of dispute resolution pursuant to the provisions of this ARTICLE VI with respect to all matters not subject to such dispute resolution.

Section 6.7 Consolidation . The arbitrators may consolidate any Agreement Disputes under this Agreement if the subject of the Agreement Disputes thereunder arise out of or relate essentially to the same set of facts or transactions. Such consolidated arbitration shall be determined by the arbitrator appointed for the arbitration proceeding that was commenced first in time.

 

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ARTICLE VII

NOTICES

Section 7.1 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 (at a facsimile number to be provided by such Party to the other Party pursuant to the notice provisions of this Section 7.1 ) with receipt confirmed (followed by delivery of an original via overnight courier service), by email (at an email address to be provided by such Party to the other Party pursuant to the notice provisions of this Section 7.1 ) 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 7.1 ):

To RRD:

R. R. Donnelley & Sons Company

35 West Wacker Drive

Chicago, Illinois 60601

Attn: General Counsel

To LSC:

LSC Communications US, LLC

35 West Wacker Drive

Chicago, Illinois 60601

Attn: General Counsel

ARTICLE VIII

MISCELLANEOUS

Section 8.1 Taxes . Except as may otherwise be specifically provided herein, each Party shall bear all taxes, duties and other similar charges (and any related interest and penalties) imposed as a result of its receipt of Services under this Agreement.

Section 8.2 Relationship of Parties . Nothing in this Agreement shall be deemed or construed by the Parties or any Third Party as creating the relationship of principal and agent, partnership or joint venture between the Parties, it being understood and agreed that no provision contained herein, and no act of the Parties, shall be deemed to create any relationship between the Parties other than the relationship of independent contractor nor be deemed to vest any rights, interest or claims in any third parties.

 

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Section 8.3 Complete Agreement; Construction . This Agreement, including the Schedules hereto, 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 Schedule, the Schedule shall prevail. The rights and remedies of the Parties herein provided shall be cumulative and in addition to any other or further remedies provided by law or equity.

Section 8.4 Counterparts . This Agreement may be executed in more than one counterpart, all of which shall be considered one and the same agreement, and shall become effective when one or more such counterparts have been signed by each of the Parties and delivered to the other Parties.

Section 8.5 Waivers and Consents . The failure of any Party to require strict performance by any other Party of any provision in this Agreement will not waive or diminish that Party’s right to demand strict performance thereafter of that or any other provision hereof. Any consent required or permitted to be given by any Party to the other Parties under this Agreement shall be in writing and signed by the Party giving such consent.

Section 8.6 Amendments . This Agreement may not be modified or amended except pursuant to Section 3.5 or by an agreement in writing signed by a duly authorized representative of each of the Parties.

Section 8.7 No Circumvention . The Parties agree not to directly or indirectly take any Actions, act in concert with any Person who takes an Action (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.

Section 8.8 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 LSC Distribution Date.

Section 8.9 Third Party Beneficiaries . Except as expressly provided in Section 2.5(d) , 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 8.10 Titles 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 8.11 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 8.12 Governing Law . This Agreement shall be governed by and construed in accordance with the laws of, but not the laws governing conflicts of laws of, the State of Illinois.

 

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Section 8.13 Consent to Jurisdiction . Subject to the provisions of ARTICLE VI hereof, each of the Parties irrevocably submits to the exclusive jurisdiction of (a) the Circuit Court of the State of Illinois, Cook County, or (b) the United States District Court for the Northern District of Illinois (the “ Illinois Courts ”), for the purposes of any suit, Action or other proceeding to compel arbitration or for provisional relief in aid of arbitration in accordance with ARTICLE VI or to prevent irreparable harm, and to the non-exclusive jurisdiction of the Illinois Courts for the enforcement of any award issued thereunder. Each of the Parties further agrees that service of any process, summons, notice or document by 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 Illinois Courts with respect to any matters to which it has submitted to jurisdiction in this Section 8.13 . Each of the Parties irrevocably and unconditionally waives any objection to the laying of venue of any Action, suit or proceeding arising out of this Agreement or the transactions contemplated hereby in the Illinois Courts, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such Action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

Section 8.14 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 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.

Section 8.15 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 8.15 .

Section 8.16 Severability . In the event any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby. The Parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions, the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

Section 8.17 Interpretation . The Parties have participated jointly in the negotiation and drafting of this Agreement. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the Party drafting or causing any instrument to be drafted.

 

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Section 8.18 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.

Section 8.19 Disclaimer of Representations and Warranties . EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT AND IN THE SEPARATION AND DISTRIBUTION AGREEMENT, THE PARTIES ACKNOWLEDGE AND AGREE THAT THE ASSIGNED PATENTS, LSC LICENSED PATENTS AND RRD LICENSED PATENTS, AS APPLICABLE, ARE ASSIGNED OR LICENSED UNDER THIS AGREEMENT AS-IS, THAT ANY COOPERATION OR ASSISTANCE PROVIDED UNDER THIS AGREEMENT IS PROVIDED AS-IS, THAT EACH RECIPIENT ASSUMES ALL RISKS AND LIABILITIES ARISING FROM OR RELATING TO THE USE AND ENFORCEMENT OF SUCH PATENT RIGHTS ASSIGNED OR LICENSED, AND COOPERATION OR ASSISTANCE PROVIDED, UNDER THIS AGREEMENT, AND EACH PARTY, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, MAKES NO REPRESENTATION OR WARRANTY WITH RESPECT THERETO, WHETHER EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, BY STATUTE OR OTHERWISE, INCLUDING ANY REPRESENTATION OR WARRANTY IN REGARD TO QUALITY, ACCURACY, COMPLETENESS, PERFORMANCE, NON-INFRINGEMENT, COMMERCIAL UTILITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, VALIDITY OR ENFORCEABILITY.

Section 8.20 Rights in Bankruptcy . All licenses, immunities, and other rights granted pursuant to ARTICLE III are conveyed and effective when granted, and each Party is entitled to the maximum protection of the licenses, immunities and other rights that it receives hereunder under applicable Law. Without limiting the generality of the foregoing, each Party, as recipient of licenses, immunities or other rights hereunder, (a) may assert without objection from the other Party (including its successors and assigns) that (i) those licenses, immunities, and other rights are not executory and not vulnerable to rejection under the United States Bankruptcy Code or the bankruptcy Laws of any other country, and (ii) if rejected, such rejection does not result in termination of those licenses, immunities, and other rights or a similar result or effect, and (b) will continue to have and may fully exercise any rights (and make any election) available under Section 365(n) of the United States Bankruptcy Code, the bankruptcy Laws of any other country, or this Agreement, and such other Party (including its successors and assigns) will not, in any event, interfere with such first Party’s licenses, immunities and other rights under this Agreement.

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Parties hereto have caused this Patent Assignment and License Agreement to be duly executed by their respective authorized officers as of the date first above written.

 

R. R. DONNELLEY & SONS COMPANY
By:   /s/ Daniel L. Knotts
Name:   Daniel L. Knotts
Title:   Chief Operating Officer
LSC COMMUNICATIONS US, LLC
By:   /s/ Thomas J. Quinlan III
Name:   Thomas J. Quinlan III
Title:   Chief Executive Officer

Exhibit 2.6

TRADEMARK ASSIGNMENT AND LICENSE AGREEMENT

September 27, 2016

This TRADEMARK ASSIGNMENT AND LICENSE AGREEMENT (this “ Agreement ”), effective as of September 30, 2016 (the “ Effective Date ”), by and between R. R. Donnelley & Sons Company, a Delaware corporation (“ RRD ”), and LSC Communications US, LLC, a limited liability company (“ LSC ”). Each of RRD and LSC is referred to herein as a “ Party ” and collectively as the “ Parties .”

W I T N E S S E T H:

WHEREAS, RRD, LSC Communications, Inc. (“ LSC Parent ”) and Donnelley Financial Solutions, Inc. (“ Donnelley Financial ”) have entered into a Separation and Distribution Agreement, dated as of September 14, 2016 (the “ Separation and Distribution Agreement ”), pursuant to which RRD and its subsidiaries will undertake a series of transactions following which RRD will separate into three independent, publicly traded companies: (i) one business focused on publishing and retail-centric print services and office products, which shall be owned and conducted, directly or indirectly, by the parent company of LSC, LSC Parent, (ii) one business focused on financial communications and data services, which shall be owned and conducted, directly or indirectly, by Donnelley Financial, and (iii) one business focused on customized multichannel communications management, which shall be owned and conducted, directly or indirectly, by RRD; and

WHEREAS, in connection with the transactions contemplated by the Separation and Distribution Agreement, (i) RRD wishes to assign and transfer to LSC, and LSC wishes to receive, certain Assigned Trademarks (as defined herein), (ii) RRD wishes to retain and receive, and LSC wishes to grant, a non-exclusive license under certain Indian Head Trademarks (as defined herein), and (iii) RRD wishes to grant, and LSC wishes to receive, a non-exclusive limited license under certain Ink Trademarks and RRD Transitional Trademarks (each as defined herein), in each case of clauses (i) through (iii), in accordance with the terms and conditions set forth in this Agreement.

NOW THEREFORE, in consideration of the premises and covenants set forth herein and in the Separation and Distribution Agreement (and other agreements entered into in connection with the Separation and Distribution Agreement), and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each of the Parties hereby agrees as follows:

ARTICLE I

DEFINITIONS; INTERPRETATION

Section 1.1 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 “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. Any capitalized terms used but not defined in this Agreement have the meanings given to them in the Separation and Distribution Agreement.

Section 1.2 Definitions . Capitalized terms used in this Agreement and not otherwise defined in this Agreement have the respective meanings assigned thereto in the Separation and Distribution Agreement. As used in this Agreement, the following terms have the following meanings:

(1) “ Assigned Trademarks ” means the issued trademarks, trademark applications and unregistered trademarks, in each case, listed on Schedule 2.1 attached hereto, and all goodwill associated therewith and symbolized thereby.

(2) “ Change of Control ” means, with respect to a Party (the “ Acquired Person ”), any transaction or series of related transactions, including any such transaction(s) in bankruptcy, in which a Person or group of related Persons, any one of which is not the Acquired Person, who do not Control such Acquired Person prior to such transaction or series of transactions, subsequently obtain(s) Control of the Acquired Person (or any Person with direct or indirect Control of such Acquired Person) by any means, whether by operation of Law, merger, contract, acquisition of securities or otherwise.

(3) “ Control ” (including the correlative meanings of the terms “Controlled by” and “under common Control with”), 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 or any of its Group Companies shall be deemed to be an Affiliate of another Party any of its Group Companies by reason of having one or more directors in common.

(4) “ Donnelley Financial Distribution Date ” means the date on which the Donnelley Financial Distribution is effected.

(5) “ Encumbrances ” means the (i) Pre-Existing Rights and (ii) licenses and other rights retained by or granted to RRD and its Group Companies as set forth in ARTICLE III .

(6) “ Group Company ” means, (i) with respect to LSC, any LSC Group Company, and (ii) with respect to RRD, any RRD Group Company.

(7) “ Indian Head Trademarks ” means the issued trademarks and trademark applications listed on Schedule 3.1 attached hereto, and all goodwill associated therewith and symbolized thereby.

 

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(8) “ Ink Trademarks ” means the issued trademarks, trademark applications and unregistered trademarks, in each case, listed on Schedule 3.2 attached hereto, and all goodwill associated therewith and symbolized thereby.

(9) “ LSC Distribution Date ” means the date on which the LSC Distribution is effected.

(10) “ LSC Group Company ” means (i) LSC, any of LSC’s direct or indirect Subsidiaries immediately following the LSC Distribution Date, and any Person that becomes a direct or indirect Subsidiary of LSC after such time, and (ii) other than the Persons described in the foregoing clause (i), LSC Parent, any of LSC Parent’s direct and indirect Subsidiaries immediately following the LSC Distribution Date, and any Person that becomes a direct or indirect Subsidiary of LSC Parent after such time. Notwithstanding the foregoing, (A) with respect to the foregoing clause (i), a direct or indirect Subsidiary of LSC shall not be an LSC Group Company if and when it ceases to be a direct or indirect Subsidiary of LSC, (B) with respect to the foregoing clause (ii), a direct or indirect Subsidiary of LSC Parent shall not be an LSC Group Company if and when it ceases to be a direct or indirect Subsidiary of LSC Parent, and (C) with respect to the foregoing clause (ii), LSC Parent and its Subsidiaries (other than LSC and its Subsidiaries) shall not LSC Group Companies if and when LSC Parent ceases to have Control over LSC.

(11) “ Potentially Omitted Trademark ” shall have the meaning set forth in Section 2.4 .

(12) “ Pre-Existing Rights ” means all licenses, covenants not to sue or assert, covenants to delay suit, commitments to license, releases, waivers, immunities, options, remedy limitations, rights to renew or extend any license or covenant, and other rights, in each case, (i) relating to the Assigned Trademarks, (ii) under any Contract existing as of the Effective Date, and (iii) whether or not disclosed to LSC.

(13) “ RRD Group Company ” means any of RRD’s direct or indirect Subsidiaries immediately following the later to occur of the LSC Distribution Date and the Donnelley Financial Distribution Date, and any Person that becomes a direct or indirect Subsidiary of RRD after such time. For the avoidance of doubt, a direct or indirect Subsidiary of RRD shall not be an RRD Group Company if and when it ceases to be a direct or indirect Subsidiary of RRD.

(14) “ RRD Transitional Trademarks ” means any issued trademarks, trademark applications and unregistered trademarks, not including any Ink Trademarks, that are (i) owned or controlled by RRD or any of RRD’s Group Companies immediately following the LSC Distribution Date, and (ii) displayed on any printed materials, web-based materials, signage or similar items of any LSC Group Company immediately following the LSC Distribution Date.

(15) “ Samples ” shall have the meaning set forth in Section 3.6(b) .

 

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(16) “ Transitional License Period ” means (i) with respect to any printed materials or web-based materials, the six (6) month period immediately following the LSC Distribution Date, and (ii) with respect to any signage or similar items other than as described in the foregoing clause (i), the twelve (12) month period immediately following the LSC Financial Distribution Date.

(17) “ Transferee ” shall have the meaning set forth in Section 2.2 .

ARTICLE II

ASSIGNMENT OF ASSIGNED TRADEMARKS

Section 2.1 Assignment . RRD, on behalf of itself and its Group Companies, hereby Transfers to LSC all of RRD’s and its Group Companies’ rights, title, and interest in and to the Assigned Trademarks, including the right to sue for past, present or future infringement of the Assigned Trademarks and to retain any damages due or accrued for any such past, present or future infringement.

Section 2.2 Encumbrances .

(a) LSC shall ensure that any assignee, transferee or successor (including the acquiring or surviving entity in connection with any Change of Control or similar corporate transaction involving LSC) of any of the Assigned Trademarks from LSC, or any other Person that is granted any exclusive license or any enforcement rights with respect thereto (each such assignee, transferee, successor or other such Person, a “ Transferee ”) agrees in writing, prior to or as part of such assignment, transfer, grant or other transaction, (i) that it acknowledges and confirms that the Assigned Trademarks are and shall remain subject to the Encumbrances, (ii) to be bound by this Section 2.2 , (iii) to bind all subsequent or future Transferees of any of the Assigned Trademarks to this Section 2.2 , and (iv) that RRD shall be an express intended third-party beneficiary of any such agreement, with a direct independent right to enforce such agreement against such Transferee.

(b) If LSC intends to initiate or participate, directly or indirectly, in any Action, under any of the Assigned Trademarks against any Person, then LSC shall first inform RRD in writing of the identity of such Person and provide other information reasonably requested by RRD in connection therewith, and RRD shall, subject to any confidentiality obligations of RRD, reasonably cooperate with LSC to confirm the scope of any licenses, covenants or other rights granted by RRD or its Group Companies to such Person.

(c) LSC agrees not to, directly or indirectly, initiate, maintain, authorize, participate in or facilitate any Action (including the grant of an exclusive license or right to enforce to any other Person that, to LSC’s knowledge, intends to initiate, authorize, participate in or facilitate any Action), under any of the Assigned Trademarks, against any Person that it knows to be a licensee or other beneficiary of Pre-Existing Rights under such Assigned Trademark, in each case, within the scope of the licenses or other rights of such licensee or other beneficiary.

 

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Section 2.3 Cooperation; No Other Obligations or Liabilities of RRD .

(a) For a period of eighteen (18) months after the EffectiveDate, each of RRD and LSC shall, upon the reasonable request of the other Party, execute and deliver such documents and other papers and perform such acts as may be reasonably required to carry out the provisions of this Agreement and consummate and make effective the transactions contemplated by this Agreement. Notwithstanding anything to the contrary in this Agreement, recordation or registration of any document evidencing the assignment of the Assigned Trademarks from RRD to LSC shall be LSC’s sole responsibility and at its sole cost and expense, provided that RRD agrees to reasonably cooperate with LSC in connection with such recordations or registrations, at LSC’s sole cost and expense.

(b) Except as expressly set forth in Section 2.3(a) , neither RRD nor any of its Group Companies shall have any liability or obligation under this Agreement with respect to ownership, maintenance, enforcement or exploitation of the Assigned Trademarks, including any such liabilities and obligations related to actions or claims brought against or in respect of the Assigned Trademarks, or any application, maintenance or annuity fees for any of the Assigned Trademarks due at the United States Patent and Trademark Office (“ USPTO ”) or any foreign, national or regional equivalent thereto, in each case, arising or due on or after the Effective Date. For clarity, all payments of application, maintenance and annuity fees with respect to the Assigned Trademarks that are due on or after the Effective Date, including those with initial due dates prior to the Effective Date but payable after the Effective Date, are the sole responsibility of LSC. LSC will reimburse RRD for any and all out-of-pocket costs and expenses (including reasonable attorneys’ fees) incurred by RRD or any of its Group Companies, or any of its or their directors, officers, agents or employees, in connection with (i) the enforcement or licensing of any of the Assigned Trademarks by or on behalf of LSC or any of its Group Companies, or (ii) any Action brought against or in respect of the Assigned Trademarks after the Effective Date, including any proceeding initiated by or before the Trademark Trial and Appeal Board of the USPTO or any foreign, national or regional equivalent thereto.

Section 2.4 Omitted Trademarks . If either Party discovers or determines in good faith, within eighteen (18) months after the Effective Date, that any trademarks or trademark applications that should have been assigned or licensed to such Party pursuant to this Agreement were not so assigned or licensed as of the Effective Date (such trademark or trademark application, a “ Potentially Omitted Trademark ”), then such Party may provide the other Party with a written request describing the Potentially Omitted Trademark(s) and an explanation (with a reasonable level of detail) as to why such Potentially Omitted Trademark(s) should have been assigned or licensed to such Party. Each Party agrees to consider any such request received from the other Party in a timely manner, and if such first Party agrees in good faith that such Potentially Omitted Trademark(s) should be assigned or licensed to the other Party, then such first Party shall, within a reasonable time, assign to, or grant a license under, such Potentially Omitted Trademark(s) to the other Party as such first Party deems appropriate in its reasonable good faith judgment.

 

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ARTICLE III

LICENSES AND RETAINED RIGHTS

Section 3.1 License Back Under Indian Head Trademarks .

(a) Notwithstanding the Transfer of the Assigned Trademarks by RRD to LSC, subject to the terms and conditions of this Agreement, RRD hereby retains for itself, and LSC hereby grants, and agrees to grant, to RRD a worldwide, perpetual, irrevocable, royalty-free, fully paid-up, non-exclusive, non-transferable (except as permitted pursuant to ARTICLE V ), non-sublicensable (except as expressly permitted in Section 3.4 ) license under the Indian Head Trademarks to use, reproduce and display such Indian Head Trademarks in connection with the businesses, products, services, facilities and systems of RRD or any of its Group Companies.

(b) The license and rights retained and granted pursuant to Section 3.1(a) shall include the right of RRD, upon LSC’s written consent not to be unreasonably withheld, conditioned or delayed, to use, reproduce and display any translations of any Indian Head Trademarks within the scope of the license granted pursuant to Section 3.1(a) as may be reasonably necessary or useful in jurisdictions worldwide.

Section 3.2 Ink Trademarks License to LSC . RRD, on behalf of itself and its Group Companies, hereby grants to LSC a worldwide, perpetual, irrevocable, royalty-free, fully paid-up, non-exclusive, non-transferable (except as permitted pursuant to ARTICLE V ), non-sublicensable (except as expressly permitted in Section 3.4 ) license under the Ink Trademarks to use, reproduce and display such Ink Trademarks in connection with the businesses, products, services, facilities and systems of LSC or any of its Group Companies.

Section 3.3 Limited License to LSC . RRD, on behalf of itself and its Group Companies, hereby grants to LSC, solely during the Transitional License Period, a limited, worldwide, royalty-free, fully paid-up, non-exclusive, non-transferable (except as permitted pursuant to ARTICLE V ), non-sublicensable (except as expressly permitted in Section 3.4 ) license to use and display the RRD Transitional Trademarks solely as such RRD Transitional Trademarks are already displayed on any printed materials, web-based materials, signage or similar items of any LSC Group Company which materials or items exist as of the LSC Distribution Date. For the avoidance of doubt, LSC’s right and license under each RRD Transitional Trademark shall automatically expire upon the expiration of the applicable Transitional License Period.

Section 3.4 Sublicensing .

(a) RRD shall have the right to grant non-transferable sublicenses, solely within the scope of the licenses retained by, and granted to, RRD pursuant to Section 3.1 , to any of (i) RRD’s Group Companies, provided that any sublicense granted to a Group

 

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Company shall, subject to clause (iii) below, automatically and immediately terminate once such Group Company ceases to be a Group Company of RRD, (ii) third parties solely in connection with providing products or services to RRD or any of its Group Companies, and (iii) in connection with sale, transfer or other divestiture of any RRD Group Company, business, product line, division or organization, in whole or in part.

(b) The sublicensing rights granted under Section 3.4(a) are conditioned upon the following requirements: (i) RRD, when granting any such sublicense shall enter into a written sublicense agreement with each permitted sublicensee on terms and conditions that are no less restrictive than the terms and conditions of this Agreement and that expressly prohibit and render void further sublicensing by the permitted sublicensee, and (ii) LSC shall be an express intended third-party beneficiary of each such agreement, with a direct independent right to enforce the terms and conditions thereof against the applicable permitted sublicensee.

(c) LSC shall have the right to grant non-transferable sublicenses, solely within the scope of the licenses granted to LSC pursuant to Section 3.2 , to (i) any of LSC’s Group Companies, provided that any sublicense granted to an LSC Group Company shall, subject to clause (iv) below, automatically and immediately terminate once such LSC Group Company ceases to be an LSC Group Company, (ii) third parties solely in connection with providing products or services to LSC or any of its Group Companies, (iii) customers of LSC or its Group Companies solely for such customers to use products or services provided by or on behalf of LSC or its Group Companies, and (iv) in connection with sale, transfer or other divestiture of any LSC Group Company, business, product line, division or organization, in whole or in part.

(d) LSC shall have the right to grant non-transferable sublicenses, solely within the scope of the licenses granted to LSC pursuant to Section 3.3 , to (i) any of LSC’s Group Companies, provided that any sublicense granted to an LSC Group Company shall automatically and immediately terminate once such LSC Group Company ceases to be an LSC Group Company, and (ii) third parties solely in connection with providing products or services to LSC or any of its Group Companies.

Section 3.5 Provisions with Respect to Indian Head Trademarks .

(a) RRD shall (and shall ensure that its Group Companies and any of its authorized sublicensees shall) use, reproduce and display the Indian Head Trademarks in a manner consistent with the use of such Indian Head Trademarks by RRD prior to the Effective Date.

(b) RRD agrees, on behalf of itself and its Group Companies, that all use or display of the Indian Head Trademarks shall be in compliance with all applicable Laws.

(c) If LSC believes in good faith that RRD’s use, reproduction or display of the Indian Head Trademarks breaches the foregoing Section 3.5(a) or 3.5(b) , LSC shall inform RRD in writing. RRD agrees to cooperate with LSC in a reasonable manner to resolve any such breach.

 

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Section 3.6 Provisions with Respect to Ink Trademarks .

(a) LSC shall (and shall ensure that its Group Companies and any of its authorized sublicensees shall) use, reproduce and display the Ink Trademarks in a manner consistent with the use of such Ink Trademarks by RRD prior to the Effective Date.

(b) LSC agrees, on behalf of itself and its Group Companies, that all use or display of the Ink Trademarks shall be in compliance with all applicable Laws.

(c) If RRD believes in good faith that LSC’s use, reproduction or display of the Ink Trademarks breaches the foregoing Section 3.6(a) or 3.6(b) , RRD shall inform LSC in writing. LSC agrees to cooperate with RRD in a reasonable manner to resolve any such breach.

Section 3.7 Provisions with Respect to RRD Transitional Trademarks .

(a) LSC shall (and shall ensure that its Group Companies and any of its authorized sublicensees shall) use, reproduce and display the RRD Transitional Trademarks (i) in compliance with reasonable quality standards and trademark use guidelines established by RRD and provided to LSC in writing from time to time, and (ii) in a manner consistent with how such trademarks or trademark applications were used, reproduced and displayed by RRD immediately prior to the Effective Date (clauses (i) and (ii) collectively, the “ Quality Standards ”); provided that in the event of any conflict between the foregoing clauses (i) and (ii), clause (i) shall control.

(b) Upon RRD’s request, LSC shall promptly submit to RRD, at no cost or expense to RRD, samples of any advertisements, sales and promotional materials and other works used by LSC, any LSC Group Company or any other permitted sublicensee using, reproducing or displaying any RRD Transitional Trademarks (such samples, “ Samples ”). If RRD determines in its sole discretion that any Sample does not comply with the Quality Standards, LSC shall promptly implement corrective measures to cure any non-compliance identified and resubmit a corrected Sample to RRD.

(c) LSC shall not, and shall ensure that the LSC Group Companies or any other of its other permitted sublicensees shall not, apply for, register, use, reproduce or display any trademark, trademark application or Internet domain name incorporating any of the RRD Transitional Trademarks, or any Internet domain name, trademark or trademark application that is confusingly similar thereto, in each case, except to the extent such use is expressly licensed under this ARTICLE III .

(d) LSC agrees, on behalf of itself, the LSC Group Companies and its other permitted sublicensees, that all use, reproduction and display of the RRD Transitional Trademarks (i) shall be in compliance with all applicable Laws, and (ii) shall not degrade, debase or bring into disrepute any RRD Transitional Trademarks, including any use that could reasonably be considered to reflect adversely upon or be harmful to any RRD Transitional Trademarks, or the goodwill associated therewith. LSC agrees that all goodwill that accrues based on the use, reproduction and display of the RRD Transitional Trademarks shall accrue solely for the benefit of RRD.

 

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(e) If LSC (or any of its permitted sublicensees) is in breach of Section 3.7(a) , 3.7(b) , 3.7(c) or 3.7(d) with respect to the RRD Transitional Trademarks and fails to cure such breach within ninety (90) days after RRD’s delivery of written notice of such breach, RRD may terminate the licenses and rights granted under Section 3.3 upon written notice to LSC by RRD, effective on the date that is ninety (90) days following the date of such notice. Upon receipt of such termination notice from RRD, LSC shall promptly, but in any case within a period not to exceed ninety (90) days following the date of such first notice of termination by RRD, cease all use, reproduction and display of the RRD Transitional Trademarks.

ARTICLE IV

TERM

Section 4.1 Term . The term of this Agreement shall commence on the Effective Date and shall continue in perpetuity.

Section 4.2 Termination . Except as set forth in Section 3.7 , neither Party may terminate this Agreement for any reason, except the licenses and other rights granted to LSC (and any corresponding sublicenses granted to any of its sublicensees) shall immediately and automatically terminate without notice in the event that LSC or any Person that Controls LSC (a) commences, or has commenced against it, liquidation or wind-down proceedings or any proceeding to sell all or substantially all of its assets under bankruptcy, insolvency or debtor’s relief laws or similar laws in any other jurisdiction, which proceedings are not dismissed within sixty (60) days, (b) makes a general assignment for the benefit of its creditors, or (c) ceases operations or is liquidated or dissolved.

ARTICLE V

ASSIGNABILITY

Section 5.1 Assignment . Neither this Agreement nor the licenses, rights or obligations hereunder may be assigned or delegated, including by operation of Law, merger, consolidation, asset sale, acquisition of securities or otherwise, by any Party without the prior express written consent of the other Party (which consent may not be unreasonably withheld, conditioned or delayed); provided that (a) a Change of Control of a Party is not, and will be deemed not to be, an assignment or delegation, or purported assignment or delegation, of this Agreement or a breach of this Section 5.1 , and the licenses and other rights granted pursuant to ARTICLE III shall survive any Change of Control of either Party, and (b) each Party may, without the other Party’s consent, assign this Agreement in whole to any Person that acquires all or substantially all of the assets and business operations of such Party. Any attempted assignment or delegation that is not in accordance with this Section 5.1 shall be null and void.

Section 5.2 Successors and Assigns . The provisions of this Agreement and the licenses, rights and obligations 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.

 

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ARTICLE VI

DISPUTE RESOLUTION

Section 6.1 Negotiation . In the event of a controversy, dispute or claim arising out of, in connection with, or in relation to the interpretation, performance, nonperformance, validity or breach of this Agreement or otherwise arising out of, or in any way related to this Agreement or the transactions contemplated hereby, including any claim based on contract, tort, statute or constitution (collectively, “ Agreement Disputes ”), the Party claiming such Agreement Dispute shall give written notice to the other Party setting forth the Agreement Dispute and a brief description thereof (a “ Dispute Notice ”) pursuant to the terms of the notice provisions of Section 7.1 hereof. Following delivery of a Dispute Notice, the general counsels of the relevant Parties and/or such other executive officer designated by the relevant Party shall negotiate for a reasonable period of time to settle such Agreement Dispute; provided that such reasonable period shall not, unless otherwise agreed by the Parties in writing, exceed forty-five (45) calendar days from the time of receipt by a Party of a Dispute Notice; provided further , that in the event of any arbitration in accordance with Section 6.3 hereof, the relevant Parties shall not assert the defenses of statute of limitations and laches arising during the period beginning after the date of receipt of the Dispute Notice, and any contractual time period or deadline under this Agreement to which such Agreement Dispute relates occurring after the Dispute Notice is received shall not be deemed to have passed until such Agreement Dispute has been resolved.

Section 6.2 Mediation . If, within forty-five (45) calendar days (or such longer period as may be agreed in writing between the Parties) after receipt by a Party of a Dispute Notice, the Parties have not succeeded in negotiating a resolution of the Agreement Dispute, the Parties agree to submit the Agreement Dispute at the earliest possible date to mediation conducted in accordance with the Commercial Mediation Rules of the American Arbitration Association (“ AAA ”), and to bear equally the costs of the mediation; provided , however , that each Party shall bear its own costs in connection with such mediation. The parties agree to participate in good faith in the mediation and negotiations related thereto for a period of thirty (30) days or such longer period as they may mutually agree following the initial mediation session (the “ Mediation Period ”).

Section 6.3 Arbitration . If the Agreement Dispute has not been resolved for any reason after the Mediation Period, such Agreement Dispute shall be determined, at the request of either relevant Party, by arbitration conducted in Chicago, Illinois, before and in accordance with the then-existing Commercial Arbitration Rules of the AAA, except as modified herein (the “ Rules ”). There shall be three arbitrators. Each Party shall appoint one arbitrator within twenty (20) calendar days of receipt by respondent of a copy of the demand for arbitration. The two party-appointed arbitrators shall have twenty (20) calendar days from the appointment of the second arbitrator to agree on a third arbitrator who shall chair the arbitral tribunal. Any arbitrator not timely appointed by the Parties under this Section 6.3 shall be appointed by the AAA in accordance with the listing, ranking and striking method in the Rules, and in any such procedure, each Party shall be given a limited number of strikes, excluding strikes for cause. Any controversy concerning whether an Agreement Dispute is an arbitrable Agreement Dispute, whether arbitration has been waived, whether an assignee of this Agreement is bound to arbitrate, or as to the interpretation of enforceability of this ARTICLE VI shall be determined by the

 

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arbitrators. In resolving any Agreement Dispute, the Parties intend that the arbitrators shall apply the substantive laws of the State of Illinois, without regard to any choice of law principles thereof that would mandate the application of the laws of another jurisdiction. The Parties intend that the provisions to arbitrate set forth herein be valid, enforceable and irrevocable, and any award rendered by the arbitrators shall be final and binding on the Parties. The Parties agree to comply with any award made in any such arbitration proceedings and agree to enforcement of or entry of judgment upon such award in the United States District Court for the Northern District of Illinois. The arbitrators shall be entitled, if appropriate, to award any remedy in such proceedings, including monetary damages, specific performance and all other forms of legal and equitable relief; provided , however , the arbitrators shall not be entitled to award punitive, exemplary, treble or any other form of non-compensatory damages except (i) in connection with indemnification for a Third Party Claim (and in such a case, only to the extent awarded in such Third Party Claim) or (ii) for reasonably foreseeable consequential damages or losses.

Section 6.4 Arbitration Period . Any arbitration proceeding shall be concluded in a maximum of six (6) months from the commencement of the arbitration. The parties involved in the proceeding may agree in writing to extend the arbitration period if necessary to appropriately resolve the Agreement Dispute.

Section 6.5 Treatment of Negotiations, Mediation and Arbitration . Without limiting the provisions of the Rules, unless otherwise agreed in writing by or among the relevant Parties or permitted by this Agreement, the relevant Parties shall keep, and shall cause their Group Companies to keep, confidential all matters relating to this ARTICLE VI , and any negotiation, mediation, conference, arbitration, discussion or arbitration award pursuant to this ARTICLE VI shall be treated as compromise and settlement negotiations for purposes of Rule 408 of the Federal Rules of Evidence and comparable state rules; provided , that such matters may be disclosed (i) to the extent reasonably necessary in any proceeding brought to enforce the award or for entry of a judgment upon the award and (ii) to the extent otherwise required by Law or stock exchange. Nothing said or disclosed, nor any document produced, in the course of any negotiations, conferences and discussions that is not otherwise independently discoverable shall be offered or received as evidence or used for impeachment or for any other purpose in any current or future arbitration. Nothing contained herein is intended to or shall be construed to prevent any Party from applying to any court of competent jurisdiction for interim measures or other provisional relief in connection with the subject matter of any Agreement Disputes. Without prejudice to such provisional remedies as may be available under the jurisdiction of a court, the arbitral tribunal shall have full authority to grant provisional remedies and to direct the parties to request that any court modify or vacate any temporary or preliminary relief issued by such court, and to award damages for the failure of any Party to respect the arbitral tribunal’s orders to that effect.

Section 6.6 Continuity of Service and Performance . Unless otherwise agreed in writing, the Parties will continue to honor all commitments under this Agreement during the course of dispute resolution pursuant to the provisions of this ARTICLE VI with respect to all matters not subject to such dispute resolution.

Section 6.7 Consolidation . The arbitrators may consolidate any Agreement Disputes under this Agreement if the subject of the Agreement Disputes thereunder arise out of or relate essentially to the same set of facts or transactions. Such consolidated arbitration shall be determined by the arbitrator appointed for the arbitration proceeding that was commenced first in time.

 

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ARTICLE VII

NOTICES

Section 7.1 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 (at a facsimile number to be provided by such Party to the other Party pursuant to the notice provisions of this Section 7.1 ) with receipt confirmed (followed by delivery of an original via overnight courier service), by email (at an email address to be provided by such Party to the other Party pursuant to the notice provisions of this Section 7.1 ) 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 7.1 ):

To RRD:

R. R. Donnelley & Sons Company

35 West Wacker Drive

Chicago, Illinois 60601

Attn: General Counsel

To LSC:

LSC Communications US, LLC

35 West Wacker Drive

Chicago, Illinois 60601

Attn: General Counsel

ARTICLE VIII

MISCELLANEOUS

Section 8.1 Taxes . Except as may otherwise be specifically provided herein, each Party shall bear all taxes, duties and other similar charges (and any related interest and penalties) imposed as a result of its receipt of Services under this Agreement.

Section 8.2 Relationship of Parties . Nothing in this Agreement shall be deemed or construed by the Parties or any Third Party as creating the relationship of principal and agent, partnership or joint venture between the Parties, it being understood and agreed that no provision contained herein, and no act of the Parties, shall be deemed to create any relationship between the Parties other than the relationship of independent contractor nor be deemed to vest any rights, interest or claims in any third parties.

 

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Section 8.3 Complete Agreement; Construction . This Agreement, including the Schedules hereto, 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 Schedule, the Schedule shall prevail. The rights and remedies of the Parties herein provided shall be cumulative and in addition to any other or further remedies provided by law or equity.

Section 8.4 Counterparts . This Agreement may be executed in more than one counterpart, all of which shall be considered one and the same agreement, and shall become effective when one or more such counterparts have been signed by each of the Parties and delivered to the other Parties.

Section 8.5 Waivers and Consents . The failure of any Party to require strict performance by any other Party of any provision in this Agreement will not waive or diminish that Party’s right to demand strict performance thereafter of that or any other provision hereof. Any consent required or permitted to be given by any Party to the other Parties under this Agreement shall be in writing and signed by the Party giving such consent.

Section 8.6 Amendments . This Agreement may not be modified or amended except by an agreement in writing signed by a duly authorized representative of each of the Parties.

Section 8.7 No Circumvention . The Parties agree not to directly or indirectly take any Actions, act in concert with any Person who takes an Action (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.

Section 8.8 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 LSC Distribution Date.

Section 8.9 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 8.10 Titles 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 8.11 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.

 

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Section 8.12 Governing Law . This Agreement shall be governed by and construed in accordance with the laws of, but not the laws governing conflicts of laws of, the State of Illinois.

Section 8.13 Consent to Jurisdiction . Subject to the provisions of ARTICLE VI hereof, each of the Parties irrevocably submits to the exclusive jurisdiction of (a) the Circuit Court of the State of Illinois, Cook County, or (b) the United States District Court for the Northern District of Illinois (the “ Illinois Courts ”), for the purposes of any suit, Action or other proceeding to compel arbitration or for provisional relief in aid of arbitration in accordance with ARTICLE VI or to prevent irreparable harm, and to the non-exclusive jurisdiction of the Illinois Courts for the enforcement of any award issued thereunder. Each of the Parties further agrees that service of any process, summons, notice or document by 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 Illinois Courts with respect to any matters to which it has submitted to jurisdiction in this Section 8.13 . Each of the Parties irrevocably and unconditionally waives any objection to the laying of venue of any Action, suit or proceeding arising out of this Agreement or the transactions contemplated hereby in the Illinois Courts, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such Action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

Section 8.14 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 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.

Section 8.15 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 8.15 .

Section 8.16 Severability . In the event any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby. The Parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions, the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

 

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Section 8.17 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 8.18 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.

Section 8.19 Disclaimer of Representations and Warranties . EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT AND IN THE SEPARATION AND DISTRIBUTION AGREEMENT, THE PARTIES ACKNOWLEDGE AND AGREE THAT THE ASSIGNED TRADEMARKS, INDIAN HEAD TRADEMARKS, INK TRADEMARKS AND RRD TRANSITIONAL TRADEMARKS, AS APPLICABLE, ARE ASSIGNED OR LICENSED UNDER THIS AGREEMENT AS-IS, THAT EACH RECIPIENT ASSUMES ALL RISKS AND LIABILITIES ARISING FROM OR RELATING TO THE USE AND ENFORCEMENT OF SUCH TRADEMARK RIGHTS ASSIGNED OR LICENSED UNDER THIS AGREEMENT, AND EACH PARTY, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, MAKES NO REPRESENTATION OR WARRANTY WITH RESPECT THERETO, WHETHER EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, BY STATUTE OR OTHERWISE, INCLUDING ANY REPRESENTATION OR WARRANTY IN REGARD TO QUALITY, ACCURACY, COMPLETENESS, PERFORMANCE, NON-INFRINGEMENT, COMMERCIAL UTILITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, VALIDITY OR ENFORCEABILITY.

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Parties hereto have caused this Trademark Assignment and License Agreement to be duly executed by their respective authorized officers as of the date first above written.

 

R. R. DONNELLEY & SONS COMPANY
By:   /s/ Daniel L. Knotts
Name:   Daniel L. Knotts
Title:   Chief Operating Officer

 

LSC COMMUNICATIONS US, LLC
By:   /s/ Thomas J. Quinlan III
Name:   Thomas J. Quinlan III
Title:   Chief Executive Officer

 

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Exhibit 2.7

DATA ASSIGNMENT AND LICENSE AGREEMENT

September 27, 2016

This DATA ASSIGNMENT AND LICENSE AGREEMENT (this “ Agreement ”), effective as of September 30, 2016 (the “ Effective Date ”), by and between R. R. Donnelley & Sons Company, a Delaware corporation (“ RRD ”), and LSC Communications US, LLC, a limited liability company (“ LSC ”). Each of RRD and LSC is referred to herein as a “ Party ” and collectively as the “ Parties .”

W I T N E S S E T H:

WHEREAS, RRD, LSC Communications, Inc. (“ LSC Parent ”) and Donnelley Financial Solutions, Inc. have entered into a Separation and Distribution Agreement, dated as of September 14, 2016 (the “ Separation and Distribution Agreement ”), pursuant to which RRD and its subsidiaries will undertake a series of transactions following which RRD will separate into three independent, publicly traded companies: (i) one business focused on publishing and retail-centric print services and office products, which shall be owned and conducted, directly or indirectly, by the parent company of LSC, LSC Parent, (ii) one business focused on financial communications and data services, which shall be owned and conducted, directly or indirectly, by Donnelley Financial Solutions, Inc., and (iii) one business focused on customized multichannel communications management, which shall be owned and conducted, directly or indirectly, by RRD; and

WHEREAS, in connection with the transactions contemplated by the Separation and Distribution Agreement, (i) RRD wishes to assign and transfer to LSC, and LSC wishes to receive, (A) an equal, undivided joint ownership interest in the Shared Data (as defined herein), and (B) sole ownership of Exclusive LSC Data (as defined herein), and (ii) LSC wishes to grant to RRD a limited license under Exclusive LSC Data, in each case, in accordance with the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the premises and covenants set forth herein and in the Separation and Distribution Agreement (and other agreements entered into in connection with the Separation and Distribution Agreement), and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each of the Parties hereby agrees as follows:

ARTICLE I

DEFINITIONS; INTERPRETATION

Section 1.1 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 “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. Any capitalized terms used but not defined in this Agreement have the meanings given to them in the Separation and Distribution Agreement.

Section 1.2 Definitions . Capitalized terms used in this Agreement and not otherwise defined in this Agreement have the respective meanings assigned thereto in the Separation and Distribution Agreement. As used in this Agreement, the following terms have the following meanings:

(1) “ AAA ” shall have the meaning set forth in Section 8.2 .

(2) “ Agreement ” shall have the meaning set forth in the Preamble of this Agreement.

(3) “ Agreement Disputes ” shall have the meaning set forth in Section 8.1 .

(4) “ Change of Control ” means, with respect to a Party (the “ Acquired Person ”), any transaction or series of related transactions, including any such transaction(s) in bankruptcy, in which a Person or group of related Persons, any one of which is not the Acquired Person, who do not Control such Acquired Person prior to such transaction or series of transactions, subsequently obtain(s) Control of the Acquired Person (or any Person with direct or indirect Control of such Acquired Person) by any means, whether by operation of Law, merger, contract, acquisition of securities or otherwise.

(5) “ Control ” (including the correlative meanings of the terms “Controlled by” and “under common Control with”), 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 or any of its Group Companies shall be deemed to be an Affiliate of another Party or any of its Group Companies by reason of having one or more directors in common.

(6) “ Data ” means any data, whether historical, operational or otherwise, including data with respect to pricing, customers, vendors, suppliers, distributors, employees, contractors, and cost projections. For clarity, “Data” does not include any rights in or to patents, patent applications, inventions, developments, Software or Trademarks.

(7) “ Data Separation Plan ” or “ DSP ” means that certain Data Separation Plan attached to this Agreement as Schedule 2.1 .

(8) “ Dispute Notice ” shall have the meaning set forth in Section 8.1 .

 

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(9) “ Donnelley Financial Distribution Date ” means the date on which the Donnelley Financial Distribution is effected.

(10) “ Erroneously Delivered Data ” shall have the meaning set forth in Section 2.3 .

(11) “ Group Company ” means, (i) with respect to LSC, any LSC Group Company, and (ii) with respect to RRD, any RRD Group Company.

(12) “ LSC Distribution Date ” means the date on which the LSC Distribution is effected.

(13) “ LSC Exclusive Data ” means any Data that (i) is or should be delivered to LSC pursuant to the Data Separation Plan, (ii) is owned and freely assignable by RRD or any of its Group Companies to LSC as of the Effective Date, and (iii) relates exclusively to the LSC Business (and does not relate to the RRD Retained Business or the Donnelley Financial Business).

(14) “ LSC Group Company ” means (i) LSC, any of LSC’s direct or indirect Subsidiaries immediately following the LSC Distribution Date, and any Person that becomes a direct or indirect Subsidiary of LSC after such time, and (ii) other than the Persons described in the foregoing clause (i), LSC Parent, any of LSC Parent’s direct and indirect Subsidiaries immediately following the LSC Distribution Date, and any Person that becomes a direct or indirect Subsidiary of LSC Parent after such time. Notwithstanding the foregoing, (A) with respect to the foregoing clause (i), a direct or indirect Subsidiary of LSC shall not be an LSC Group Company if and when it ceases to be a direct or indirect Subsidiary of LSC, (B) with respect to the foregoing clause (ii), a direct or indirect Subsidiary of LSC Parent shall not be an LSC Group Company if and when it ceases to be a direct or indirect Subsidiary of LSC Parent, and (C) with respect to the foregoing clause (ii), LSC Parent and its Subsidiaries (other than LSC and its Subsidiaries) shall not be LSC Group Companies if and when LSC Parent ceases to have Control over LSC.

(15) “ LSC Shared Data ” means any Data that (i) is or should be delivered to LSC pursuant to the Data Separation Plan, (ii) is owned and freely assignable by RRD or any of its Group Companies to LSC with respect to a joint ownership interest, as of the Effective Date, (iii) relates to the LSC Business, and (iv) is not LSC Exclusive Data.

(16) “ Mediation Period ” shall have the meaning set forth in Section 8.2 .

(17) “ Potentially Omitted Data ” shall have the meaning set forth in Section 2.2 .

(18) “ RRD Group Company ” means any of RRD’s direct or indirect Subsidiaries immediately following the later to occur of the LSC Distribution Date and the Donnelley Financial Distribution Date, and any Person that becomes a direct or indirect Subsidiary of RRD after such time. For the avoidance of doubt, a direct or indirect Subsidiary of RRD shall not be an RRD Group Company if and when it ceases to be a direct or indirect Subsidiary of RRD.

 

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(19) “ Rules ” shall have the meaning set forth in Section 8.3 .

(20) “ Separation and Distribution Agreement ” shall have the meaning set forth in the Recitals to this Agreement.

ARTICLE II

TRANSFER OF DATA

Section 2.1 Transfer and Delivery . RRD shall use commercially reasonable efforts to transfer and deliver to LSC all Data that, according to the DSP, should be transferred and delivered to LSC. Such transfer and delivery shall be made in an appropriate physical or electronic format as set forth in the DSP, and within the time schedules contemplated by the DSP. Each Party shall reasonably cooperate in good faith with the other Party to accomplish the transfer and delivery of Data contemplated in the DSP.

Section 2.2 Omitted Materials . If LSC discovers and determines in good faith, within eighteen (18) months after the Effective Date, that any Data that should have been delivered or transferred to LSC pursuant to the DSP was not so delivered or transferred as of the Effective Date (such data, “ Potentially Omitted Data ”), LSC may provide a written request to RRD describing the Potentially Omitted Data and an explanation (with a reasonable level of detail) as to why such Potentially Omitted Data should have been delivered and transferred to LSC pursuant to the DSP. RRD agrees to consider any such request in a timely manner, and if RRD agrees in good faith that such Potentially Omitted Data should be delivered and transferred to LSC pursuant to the DSP, then RRD shall deliver and transfer such Potentially Omitted Data to LSC within a reasonable time. If RRD determines in good faith that Potentially Omitted Data should not, pursuant to the DSP, be delivered and transferred to LSC, then RRD shall provide to LSC within a reasonable time written notification of such good faith determination, and any continued dispute between the Parties with respect to the correct or erroneous transfer or delivery of Potentially Omitted Data shall be governed under dispute resolution provisions of ARTICLE VIII . This Section 2.2 and ARTICLE VIII state the sole and exclusive remedies of LSC (or any of its Group Companies) for any failure by RRD or any of its Group Companies to transfer or deliver any Data to LSC pursuant to Section 2.1 hereof.

Section 2.3 Erroneously Delivered Materials . If either Party discovers and determines in good faith, within eighteen (18) months after the Effective Date, that any Data was delivered or transferred to LSC that should not have been so delivered or transferred (such Data, “ Erroneously Delivered Data ”), such Party shall provide a written notice to the other Party describing the Erroneously Delivered Data and an explanation (with a reasonable level of detail) as to why such Erroneously Delivered Data should not have been delivered or transferred to LSC pursuant to the DSP. If LSC determines in good faith, whether independently or within a reasonable time after receiving a request from RRD, that Erroneously Delivered Data should not have been delivered or transferred to LSC pursuant to the DSP, then LSC shall return and transfer such Erroneously Delivered Data back to RRD and, promptly thereafter, permanently delete all copies of such Erroneously Delivered Data (physical, electronic or otherwise) from all of its and its Group Companies’ records and systems. If any such Erroneously Delivered Data has been provided to a third Person by or behalf of LSC or any of its Group Companies, LSC

 

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shall use reasonable efforts to cause such third Person to promptly and permanently delete all copies of such Erroneously Delivered Data (physical, electronic or otherwise) from all of its records and systems. If, however, upon receiving a request from RRD for the return or deletion of Erroneously Delivered Data, LSC determines in good faith that such Erroneously Delivered Data was correctly transferred or delivered to LSC pursuant to the DSP, then LSC shall provide to RRD within a reasonable time written notification of such good faith determination, and any continued dispute between the Parties with respect to the correct or erroneous transfer of Erroneously Delivered Data shall be governed under dispute resolution provisions of ARTICLE VIII .

ARTICLE III

ASSIGNMENT AND OWNERSHIP OF DATA

Section 3.1 LSC Shared Data . RRD, on behalf of itself and its Group Companies, hereby Transfers to LSC an equal undivided fifty percent (50%) joint ownership interest in all of RRD’s and its Group Companies’ rights, title, and interest in and to the LSC Shared Data, including any database rights or other proprietary rights therein or thereto, without any duty of accounting, without any duty to obtain consent from the RRD or to pay any royalties or other remuneration to RRD in order to license, enforce or otherwise exploit such LSC Shared Data; provided that such Transfer is made expressly subject to any and all prior licenses, covenants not to sue or other rights granted by, or commitments of, RRD or any of its Group Companies with respect to the LSC Shared Data.

Section 3.2 LSC Exclusive Data . RRD, on behalf of itself and its Group Companies, hereby Transfers to LSC all of RRD’s and its Group Companies’ rights, title and interest in and to the LSC Exclusive Data, including any database rights or other proprietary rights therein or thereto; provided that such Transfer is made expressly subject to any and all prior licenses, covenants not to sue or other rights granted by, or commitments of, RRD or any of its Group Companies with respect to the LSC Exclusive Data, and is further subject to the licenses and other rights retained by and granted to RRD and its Group Companies pursuant to Section 4.1 hereof.

ARTICLE IV

LICENSE TO RRD

Section 4.1 License Back Under LSC Exclusive Data . RRD retains, and LSC hereby grants to RRD, a perpetual, irrevocable, non-terminable, royalty-free, fully paid-up, non-exclusive, worldwide, non-transferable (except as expressly permitted in Section 7.1 ) and non-sublicensable (except as expressly permitted in Section 4.2 ) license to maintain, copy, use, modify, create derivative works of, display, disclose and otherwise exploit the LSC Exclusive Data, including any database rights or other proprietary rights therein or thereto, for one or more of the following purposes:

(a) backup, storage or archival purposes, in each case, in RRD’s sole discretion;

 

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(b) to comply with any obligations of RRD or any of its Group Companies under this Agreement, the Transition Services Agreement, the Separation and Distribution Agreement, and any other Contract to which RRD or any of its Group Companies is a party or by which it is bound; and

(c) to comply with any applicable Laws or any demand or request by any Governmental Entity.

Section 4.2 Sublicensing . RRD has the right to grant non-transferable sublicenses, within the scope of the licenses retained or granted pursuant to Section 4.1 , to (a) its Group Companies, provided that any sublicense granted to a Group Company of RRD shall automatically and immediately terminate once such Group Company ceases to be a Group Company of RRD, and (b) independent contractors and consultants who are subject to confidentiality obligations.

ARTICLE V

CONFIDENTIALITY; ENFORCEMENT AND NON-USE

Section 5.1 LSC Exclusive Data . RRD shall use commercially reasonable efforts to (a) maintain the confidentiality of any LSC Exclusive Data that is in RRD’s or its Group Companies’ possession using at least the same degree of care as it uses for its own confidential information of similar nature, (b) limit access to any LSC Exclusive Data to those employees, independent contractors and consultants of RRD and its Group Companies who have a business reason to access such Data relating to the purposes permitted in Section 4.1 , (c) use data security measures with respect to such LSC Exclusive Data designed to ensure that other employees or contractors of RRD or its Group Companies do not have access to such data, (d) and otherwise refrain from using or accessing any LSC Exclusive Data except as expressly permitted pursuant to ARTICLE IV . Notwithstanding the foregoing, if RRD or any of its Group Companies is required by Law, or required pursuant to a demand or request by any Governmental Entity, to disclose any LSC Exclusive Data, RRD (or such Group Company) may do so without breaching any provision of this Agreement; provided that, unless prohibited by Law, RRD shall promptly notify LSC of the existence of any such requirement, request or demand, and shall provide LSC with a reasonable opportunity to seek an appropriate protective order or other remedy, and RRD shall reasonably cooperate with LSC in obtaining such protective order or other remedy.

Section 5.2 LSC Shared Data . Each Party and its Group Companies may use, access and disclose to third Persons the LSC Shared Data as may be necessary or desirable, as determined by such Party or its applicable Group Company in such Party’s sole discretion, in connection with bona fide business operations of such Party or its Group Companies.

Section 5.3 Enforcement . Each Party and its Group Companies shall have the independent right, but not the obligation, to assert claims for any past, present or future infringement, misappropriation, or other unlawful use of or access to any LSC Shared Data, against any third Person. Each Party (and its Group Companies) shall, to a commercially reasonable extent and upon written request by the other Party, cooperate with such other Party in any attempt to assert or enforce such other Party’s or its Group Companies’ rights with respect to

 

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any LSC Shared Data; provided that such other Party shall reimburse such first Party and its Group Companies for any out-of-pocket costs and expenses incurred by the first Party or its Group Companies in providing such cooperation. LSC and its Group Companies shall have the sole and exclusive right, but not the obligation, to assert claims of any past, present or future infringement, misappropriation, or other unlawful use of or access to any LSC Exclusive Data against any third Person.

ARTICLE VI

TERM

Section 6.1 Term . The term of this Agreement shall commence on the Effective Date and shall continue in perpetuity.

Section 6.2 Termination . Neither Party shall have any right to terminate this Agreement or any of the licenses or other rights granted hereunder for any reason.

ARTICLE VII

ASSIGNABILITY

Section 7.1 Assignment . Neither this Agreement nor the licenses, rights or obligations hereunder may be assigned or delegated, including by operation of Law, merger, consolidation, asset sale, acquisition of securities or otherwise, by any Party without the prior express written consent of the other Party (which consent may not be unreasonably withheld, conditioned or delayed); provided that (a) a Change of Control of a Party is not, and will be deemed not to be, an assignment or delegation, or purported assignment or delegation, of this Agreement or a breach of this Section 7.1 , and the licenses and other rights granted pursuant to ARTICLE IV shall survive any Change of Control of either Party, and (b) each Party may assign this Agreement in whole to any Person that acquires all or substantially all of the assets and business operations of such Party, without the other Party’s consent. Any attempted assignment or delegation that is not in accordance with this Section 7.1 shall be null and void.

Section 7.2 Successors and Assigns . The provisions of this Agreement and the licenses, rights and obligations 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.

ARTICLE VIII

DISPUTE RESOLUTION

Section 8.1 Negotiation . In the event of a controversy, dispute or claim arising out of, in connection with, or in relation to the interpretation, performance, nonperformance, validity or breach of this Agreement or otherwise arising out of, or in any way related to this Agreement or the transactions contemplated hereby, including any claim based on contract, tort, statute or constitution (collectively, “ Agreement Disputes ”), the Party claiming such Agreement Dispute

 

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shall give written notice to the other Party setting forth the Agreement Dispute and a brief description thereof (a “ Dispute Notice ”) pursuant to the terms of the notice provisions of Section 9.1 hereof. Following delivery of a Dispute Notice, the general counsels of the relevant Parties and/or such other executive officer designated by the relevant Party shall negotiate for a reasonable period of time to settle such Agreement Dispute; provided that such reasonable period shall not, unless otherwise agreed by the Parties in writing, exceed forty-five (45) calendar days from the time of receipt by a Party of a Dispute Notice; provided further , that in the event of any arbitration in accordance with Section 8.3 hereof, the relevant Parties shall not assert the defenses of statute of limitations and laches arising during the period beginning after the date of receipt of the Dispute Notice, and any contractual time period or deadline under this Agreement to which such Agreement Dispute relates occurring after the Dispute Notice is received shall not be deemed to have passed until such Agreement Dispute has been resolved.

Section 8.2 Mediation . If, within forty-five (45) calendar days (or such longer period as may be agreed in writing between the Parties) after receipt by a Party of a Dispute Notice, the Parties have not succeeded in negotiating a resolution of the Agreement Dispute, the Parties agree to submit the Agreement Dispute at the earliest possible date to mediation conducted in accordance with the Commercial Mediation Rules of the American Arbitration Association (“ AAA ”), and to bear equally the costs of the mediation; provided , however , that each Party shall bear its own costs in connection with such mediation. The parties agree to participate in good faith in the mediation and negotiations related thereto for a period of thirty (30) days or such longer period as they may mutually agree following the initial mediation session (the “ Mediation Period ”).

Section 8.3 Arbitration . If the Agreement Dispute has not been resolved for any reason after the Mediation Period, such Agreement Dispute shall be determined, at the request of either relevant Party, by arbitration conducted in Chicago, Illinois, before and in accordance with the then-existing Commercial Arbitration Rules of the AAA, except as modified herein (the “ Rules ”). There shall be three arbitrators. Each Party shall appoint one arbitrator within twenty (20) calendar days of receipt by respondent of a copy of the demand for arbitration. The two party-appointed arbitrators shall have twenty (20) calendar days from the appointment of the second arbitrator to agree on a third arbitrator who shall chair the arbitral tribunal. Any arbitrator not timely appointed by the Parties under this Section 8.3 shall be appointed by the AAA in accordance with the listing, ranking and striking method in the Rules, and in any such procedure, each Party shall be given a limited number of strikes, excluding strikes for cause. Any controversy concerning whether an Agreement Dispute is an arbitrable Agreement Dispute, whether arbitration has been waived, whether an assignee of this Agreement is bound to arbitrate, or as to the interpretation of enforceability of this ARTICLE VIII shall be determined by the arbitrators. In resolving any Agreement Dispute, the Parties intend that the arbitrators shall apply the substantive laws of the State of Illinois, without regard to any choice of law principles thereof that would mandate the application of the laws of another jurisdiction. The Parties intend that the provisions to arbitrate set forth herein be valid, enforceable and irrevocable, and any award rendered by the arbitrators shall be final and binding on the Parties. The Parties agree to comply with any award made in any such arbitration proceedings and agree to enforcement of or entry of judgment upon such award in the United States District Court for the Northern District of Illinois. The arbitrators shall be entitled, if appropriate, to award any remedy in such proceedings, including monetary damages, specific performance and all other forms of legal and

 

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equitable relief; provided , however , the arbitrators shall not be entitled to award punitive, exemplary, treble or any other form of non-compensatory damages except (i) in connection with indemnification for a Third Party Claim (and in such a case, only to the extent awarded in such Third Party Claim) or (ii) for reasonably foreseeable consequential damages or losses.

Section 8.4 Arbitration Period . Any arbitration proceeding shall be concluded in a maximum of six (6) months from the commencement of the arbitration. The parties involved in the proceeding may agree in writing to extend the arbitration period if necessary to appropriately resolve the Agreement Dispute.

Section 8.5 Treatment of Negotiations, Mediation and Arbitration . Without limiting the provisions of the Rules, unless otherwise agreed in writing by or among the relevant Parties or permitted by this Agreement, the relevant Parties shall keep, and shall cause their respective Group Companies to keep, confidential all matters relating to and any negotiation, mediation, conference, arbitration, discussion or arbitration award pursuant to this ARTICLE VIII shall be treated as compromise and settlement negotiations for purposes of Rule 408 of the Federal Rules of Evidence and comparable state rules; provided that such matters may be disclosed (i) to the extent reasonably necessary in any proceeding brought to enforce the award or for entry of a judgment upon the award and (ii) to the extent otherwise required by Law or stock exchange. Nothing said or disclosed, nor any document produced, in the course of any negotiations, conferences and discussions that is not otherwise independently discoverable shall be offered or received as evidence or used for impeachment or for any other purpose in any current or future arbitration. Nothing contained herein is intended to or shall be construed to prevent any Party from applying to any court of competent jurisdiction for interim measures or other provisional relief in connection with the subject matter of any Agreement Disputes. Without prejudice to such provisional remedies as may be available under the jurisdiction of a court, the arbitral tribunal shall have full authority to grant provisional remedies and to direct the parties to request that any court modify or vacate any temporary or preliminary relief issued by such court, and to award damages for the failure of any Party to respect the arbitral tribunal’s orders to that effect.

Section 8.6 Continuity of Service and Performance . Unless otherwise agreed in writing, the Parties will continue to honor all commitments under this Agreement during the course of dispute resolution pursuant to the provisions of this ARTICLE VIII with respect to all matters not subject to such dispute resolution.

Section 8.7 Consolidation . The arbitrators may consolidate any Agreement Disputes under this Agreement if the subject of the Agreement Disputes thereunder arise out of or relate essentially to the same set of facts or transactions. Such consolidated arbitration shall be determined by the arbitrator appointed for the arbitration proceeding that was commenced first in time.

ARTICLE IX

NOTICES

Section 9.1 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

 

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shall be deemed to have been duly given or made upon receipt) by delivery in person, by overnight courier service, by facsimile (at a facsimile number to be provided by such Party to the other Party pursuant to the notice provisions of this Section 9.1 ) with receipt confirmed (followed by delivery of an original via overnight courier service), by email (at an email address to be provided by such Party to the other Party pursuant to the notice provisions of this Section 9.1 ) 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 9.1 ):

To RRD:

R. R. Donnelley & Sons Company

35 West Wacker Drive

Chicago, Illinois 60601

Attn: General Counsel

To LSC:

LSC Communications US, LLC

35 West Wacker Drive

Chicago, Illinois 60601

Attn: General Counsel

ARTICLE X

MISCELLANEOUS

Section 10.1 Taxes . Except as may otherwise be specifically provided herein, each Party shall bear all taxes, duties and other similar charges (and any related interest and penalties) imposed as a result of its receipt of Services under this Agreement.

Section 10.2 Relationship of Parties . Nothing in this Agreement shall be deemed or construed by the Parties or any Third Party as creating the relationship of principal and agent, partnership or joint venture between the Parties, it being understood and agreed that no provision contained herein, and no act of the Parties, shall be deemed to create any relationship between the Parties other than the relationship of independent contractor nor be deemed to vest any rights, interest or claims in any third parties.

Section 10.3 Complete Agreement; Construction . This Agreement, including the Schedules hereto, 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 Schedule, the Schedule shall prevail. The rights and remedies of the Parties herein provided shall be cumulative and in addition to any other or further remedies provided by law or equity.

Section 10.4 Counterparts . This Agreement may be executed in more than one counterpart, all of which shall be considered one and the same agreement, and shall become effective when one or more such counterparts have been signed by each of the Parties and delivered to the other Parties.

 

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Section 10.5 Waivers and Consents . The failure of any Party to require strict performance by any other Party of any provision in this Agreement will not waive or diminish that Party’s right to demand strict performance thereafter of that or any other provision hereof. Any consent required or permitted to be given by any Party to the other Parties under this Agreement shall be in writing and signed by the Party giving such consent.

Section 10.6 Amendments . This Agreement may not be modified or amended except by an agreement in writing signed by a duly authorized representative of each of the Parties.

Section 10.7 No Circumvention . The Parties agree not to directly or indirectly take any Actions, act in concert with any Person who takes an Action (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 or any Ancillary Agreement.

Section 10.8 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 LSC Distribution Date.

Section 10.9 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 10.10 Titles 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 10.11 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 10.12 Governing Law . This Agreement shall be governed by and construed in accordance with the laws of, but not the laws governing conflicts of laws of, the State of Illinois.

Section 10.13 Consent to Jurisdiction . Subject to the provisions of ARTICLE VIII hereof, each of the Parties irrevocably submits to the exclusive jurisdiction of (a) the Circuit Court of the State of Illinois, Cook County, or (b) the United States District Court for the Northern District of Illinois (the “ Illinois Courts ”), for the purposes of any suit, Action or other proceeding to compel arbitration or for provisional relief in aid of arbitration in accordance with ARTICLE VIII or to prevent irreparable harm, and to the non-exclusive jurisdiction of the Illinois Courts for the enforcement of any award issued thereunder. Each of the Parties further agrees that service of any process, summons, notice or document by 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 Illinois Courts with respect to any matters to which it has submitted to jurisdiction in this Section 10.13 . Each of the Parties irrevocably and unconditionally waives

 

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any objection to the laying of venue of any Action, suit or proceeding arising out of this Agreement or the transactions contemplated hereby in the Illinois Courts, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such Action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

Section 10.14 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 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.

Section 10.15 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 10.15 .

Section 10.16 Severability . In the event any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby. The Parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions, the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

Section 10.17 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 10.18 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.

Section 10.19 Disclaimer of Representations and Warranties . EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT AND IN THE SEPARATION AND DISTRIBUTION AGREEMENT, THE PARTIES ACKNOWLEDGE AND AGREE THAT

 

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THE LSC EXCLUSIVE DATA AND THE LSC SHARED DATA ARE PROVIDED AS-IS, THAT EACH RECIPIENT ASSUMES ALL RISKS AND LIABILITIES ARISING FROM OR RELATING TO THE USE AND ENFORCEMENT OF SUCH DATA, AND EACH PARTY, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, MAKES NO REPRESENTATION OR WARRANTY WITH RESPECT THERETO, WHETHER EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, BY STATUTE OR OTHERWISE, INCLUDING ANY REPRESENTATION OR WARRANTY IN REGARD TO QUALITY, ACCURACY, COMPLETENESS, PERFORMANCE, NON-INFRINGEMENT, COMMERCIAL UTILITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, VALIDITY OR ENFORCEABILITY.

Section 10.20 Rights in Bankruptcy . All licenses, immunities, and other rights granted pursuant to ARTICLE IV are conveyed and effective when granted, and each Party is entitled to the maximum protection of the licenses, immunities and other rights that it receives hereunder under applicable Law. Without limiting the generality of the foregoing, each Party, as recipient of licenses, immunities or other rights hereunder, (a) may assert without objection from the other Party (including its successors and assigns) that (i) those licenses, immunities, and other rights are not executory and not vulnerable to rejection under the United States Bankruptcy Code or the bankruptcy Laws of any other country, and (ii) if rejected, such rejection does not result in termination of those licenses, immunities, and other rights or a similar result or effect, and (b) will continue to have and may fully exercise any rights (and make any election) available under Section 365(n) of the United States Bankruptcy Code, the bankruptcy Laws of any other country, or this Agreement, and such other Party (including its successors and assigns) will not, in any event, interfere with such first Party’s licenses, immunities and other rights under this Agreement.

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Parties hereto have caused this Data Assignment and License Agreement to be duly executed by their respective authorized officers as of the date first above written.

 

R. R. DONNELLEY & SONS COMPANY
By:       /s/ Daniel L. Knotts
Name:   Daniel L. Knotts
Title:   Chief Operating Officer

 

LSC COMMUNICATIONS US, LLC
By:       /s/ Thomas J. Quinlan III
Name:   Thomas J. Quinlan III
Title:   Chief Executive Officer

Exhibit 2.8

SOFTWARE, COPYRIGHT AND TRADE SECRET ASSIGNMENT AND LICENSE

AGREEMENT

September 27, 2016

This SOFTWARE, COPYRIGHT AND TRADE SECRET ASSIGNMENT AND LICENSE AGREEMENT (this “ Agreement ”), effective as of September 30, 2016 (the “ Effective Date ”), by and between R. R. Donnelley & Sons Company, a Delaware corporation (“ RRD ”), and LSC Communications US, LLC, a limited liability company (“ LSC ”). Each of RRD and LSC is referred to herein as a “ Party ” and collectively as the “ Parties .”

W I T N E S S E T H:

WHEREAS, RRD, LSC Communications, Inc. (“ LSC Parent ”) and Donnelley Financial Solutions, Inc. have entered into a Separation and Distribution Agreement, dated as of September 14, 2016 (the “ Separation and Distribution Agreement ”), pursuant to which RRD and its subsidiaries will undertake a series of transactions following which RRD will separate into three independent, publicly traded companies: (i) one business focused on publishing and retail-centric print services and office products, which shall be owned and conducted, directly or indirectly, by LSC Parent, (ii) one business focused on financial communications and data services, which shall be owned and conducted, directly or indirectly, by Donnelley Financial Solutions, Inc., and (iii) one business focused on customized multichannel communications management, which shall be owned and conducted, directly or indirectly, by RRD; and

WHEREAS, in connection with the transactions contemplated by the Separation and Distribution Agreement, (i) RRD wishes to assign and transfer to LSC, and LSC wishes to receive, certain Assigned Copyrights (as defined below), (ii) RRD wishes to assign and transfer to LSC, and LSC wishes to receive, certain Assigned Software (as defined below), (iii) RRD wishes to retain and receive, and LSC wishes to grant, a non-exclusive license under the Assigned Software, (iv) RRD wishes to grant, and LSC wishes to receive, a non-exclusive license under certain Licensed Software, and (v) each Party wishes to grant to the other Party a non-exclusive license under certain of the granting Party’s trade secrets, in each case, in accordance with the terms and conditions set forth in this Agreement.

NOW THEREFORE, in consideration of the premises and covenants set forth herein and in the Separation and Distribution Agreement (and other agreements entered into in connection with the Separation and Distribution Agreement), and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each of the Parties hereby agrees as follows:

ARTICLE I

DEFINITIONS; INTERPRETATION

Section 1.1 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 “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. Any capitalized terms used but not defined in this Agreement have the meanings given to them in the Separation and Distribution Agreement.

Section 1.2 Definitions . Capitalized terms used in this Agreement and not otherwise defined in this Agreement have the respective meanings assigned thereto in the Separation and Distribution Agreement. As used in this Agreement, the following terms have the following meanings:

(1) “ AAA ” shall have the meaning set forth in Section 6.2 .

(2) “ Agreement ” shall have the meaning set forth in the Preamble of this Agreement.

(3) “ Agreement Disputes ” shall have the meaning set forth in Section 6.1 .

(4) “ Assigned Copyrights ” means the issued copyrights and copyright applications, in each case, listed on Schedule 2.1(a) attached hereto.

(5) “ Assigned Software ” means the software programs listed on the attached Schedule 2.1(b) , in both source code and object code forms, together with all associated documentation relating to the design and maintenance of such software programs, in each case as such items exist as of the Effective Date, and including any copyright registrations and registration applications associated with any of the foregoing.

(6) “ Change of Control ” means, with respect to a Party (the “ Acquired Person ”), any transaction or series of related transactions, including any such transaction(s) in bankruptcy, in which a Person or group of related Persons, any one of which is not the Acquired Person, who do not Control such Acquired Person prior to such transaction or series of transactions, subsequently obtain(s) Control of the Acquired Person (or any Person with direct or indirect Control of such Acquired Person) by any means, whether by operation of Law, merger, contract, acquisition of securities or otherwise.

(7) “ Control ” (including the correlative meanings of the terms “Controlled by” and “under common Control with”), 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 any of its Group Companies shall be deemed to be an Affiliate of another Party any of its Group Companies by reason of having one or more directors in common.

(8) “ Dispute Notice ” shall have the meaning set forth in Section 6.1 .

 

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(9) “ Derivative Work ” means software developed by or on behalf of a Licensee that is a modification or derivative work of, (i) with respect to RRD in its capacity as a Licensee, any Assigned Software and (ii) with respect to LSC in its capacity as a Licensee, any Licensed Software, in each case, that is the product of a bona fide , at least moderate and more than de minimis degree of development in terms of time and effort devoted to such development and/or added functionality of the software.

(10) “ Divested Entity ” means a Group Company (as of the time immediately prior to the relevant divestment), business, product line, division, or organization that a Party or any of its Group Companies sells or transfers to another Person or otherwise divests.

(11) “ Donnelley Financial Distribution Date ” means the date on which the Donnelley Financial Distribution is effected.

(12) “ Encumbrances ” means all licenses, covenants not to sue or assert, covenants to delay suit, commitments to license, releases, waivers, immunities, options, remedy limitations, rights to renew or extend any license or covenant, and other rights, in each case, (i) relating to the Assigned Copyrights or Assigned Software, (ii) under any Contract existing as of the Effective Date, and (iii) whether or not disclosed to LSC.

(13) “ Group Company ” means, (i) with respect to LSC, any LSC Group Company, and (ii) with respect to RRD, any RRD Group Company.

(14) “ Licensed Software ” means the software programs listed on the attached Schedule 3.1 , in both source code and object code forms, together with all associated documentation relating to the design and maintenance of such software programs, in each case as such items exist as of the Effective Date.

(15) “ Licensee ” shall have the meaning set forth in Section 3.3 .

(16) “ Licensor ” shall have the meaning set forth in Section 3.3 .

(17) “ LSC Distribution Date ” means the date on which the LSC Distribution is effected.

(18) “ LSC Group Company ” means (i) LSC, any of LSC’s direct or indirect Subsidiaries immediately following the LSC Distribution Date, and any Person that becomes a direct or indirect Subsidiary of LSC after such time, and (ii) other than the Persons described in the foregoing clause (i), LSC Parent, any of LSC Parent’s direct and indirect Subsidiaries immediately following the LSC Distribution Date, and any Person that becomes a direct or indirect Subsidiary of LSC Parent after such time. Notwithstanding the foregoing, (A) with respect to the foregoing clause (i), a direct or indirect Subsidiary of LSC shall not be an LSC Group Company if and when it ceases to be a direct or indirect Subsidiary of LSC, (B) with respect to the foregoing clause (ii), a direct or indirect Subsidiary of LSC Parent shall not be an LSC Group Company if and when it ceases to be a direct or indirect Subsidiary of LSC Parent, and (C) with respect to the foregoing clause (ii), LSC Parent and its Subsidiaries (other than LSC and its

 

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Subsidiaries) shall not be LSC Group Companies if and when LSC Parent ceases to have Control over LSC.

(19) “ LSC Licensed Trade Secret ” means any trade secret (as such term is defined in the Uniform Trade Secrets Act, published in 1979 and amended in 1985), confidential information or other proprietary know-how that (i) is owned or controlled by LSC or any LSC Group Company immediately following the LSC Distribution Date and (ii) has been used by RRD or any RRD Group Companies as part of the RRD Retained Business prior to the LSC Distribution Date. Notwithstanding any of the foregoing, “LSC Licensed Trade Secrets” do not include, and shall be deemed not to include, any Data (as defined in the Data Assignment and License Agreement, effective as of September 30, 2016, by and between RRD and LSC).

(20) “ Mediation Period ” shall have the meaning set forth in Section 6.2 .

(21) “ Potentially Omitted Copyright ” shall have the meaning set forth in Section 2.5 .

(22) “ RRD Licensed Trade Secret ” means any trade secret (as such term is defined in the Uniform Trade Secrets Act, published in 1979 and amended in 1985), confidential information or other proprietary know-how that (i) is owned or controlled by RRD or any RRD Group Company immediately following the Effective Date, and (ii) has been used as part of the LSC Business prior to the Effective Date. Notwithstanding any of the foregoing, “RRD Licensed Trade Secrets” do not include any Data (as defined in the Data Assignment and License Agreement, effective as of September 30, 2016, by and between RRD and LSC).

(23) “ RRD Group Company ” means any of RRD’s direct or indirect Subsidiaries immediately following the later to occur of the LSC Distribution Date and the Donnelley Financial Distribution Date, and any Person that becomes a direct or indirect Subsidiary of RRD after such time. For the avoidance of doubt, a direct or indirect Subsidiary of RRD shall not be an RRD Group Company if and when it ceases to be a direct or indirect Subsidiary of RRD.

(24) “ Rules ” shall have the meaning set forth in Section 6.3 .

(25) “ Separation and Distribution Agreement ” shall have the meaning set forth in the Recitals to this Agreement.

(26) “ Transferee ” shall have the meaning set forth in Section 2.3 .

ARTICLE II

COPYRIGHT AND SOFTWARE ASSIGNMENT AND TRANSFER

Section 2.1 Copyright and Software Assignment . RRD, on behalf of itself and its Group Companies, hereby Transfers to LSC all of RRD’s and its Group Companies’ rights, title and interest in and to (a) the Assigned Copyrights, and (b) the Assigned Software, in each case of

 

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the foregoing (a) and (b), including the right to sue for past, present or future infringement of such Assigned Copyrights or Assigned Software and to retain any damages due or accrued for any such past, present or future infringement; provided that such Transfer is made expressly subject to any and all prior licenses, covenants not to sue or other rights granted by, or commitments of, RRD or any of its Group Companies as of the Effective Date with respect to the Assigned Copyrights or Assigned Software, as applicable.

Section 2.2 Transfer and Delivery of Assigned Software .

(a) To the extent not already in the possession of LSC immediately following the Effective Date, RRD shall use commercially reasonable efforts to transfer and deliver to LSC copies of tangible embodiments of the Assigned Software. Such transfer and delivery shall be made in a reasonable physical or electronic format, and within a reasonable amount of time following the Effective Date not to exceed sixty (60) days.

(b) To the extent not already in the possession of RRD immediately following the LSC Distribution Date, LSC shall use commercially reasonable efforts to transfer and deliver to RRD copies of tangible embodiments of the Assigned Software. Such transfer and delivery shall be made in a reasonable physical or electronic format, and within a reasonable amount of time following the LSC Distribution Date not to exceed sixty (60) days.

(c) Each Party shall reasonably cooperate in good faith with the other Party to effectuate the transfer and delivery of the Assigned Software as contemplated under this Section 2.2 .

Section 2.3 Encumbrances .

(a) LSC shall ensure that any assignee, transferee or successor (including the acquiring or surviving entity in connection with any Change of Control or similar corporate transaction involving LSC) of any of the Assigned Copyrights or Assigned Software from LSC, or any other Person that is granted any exclusive license or any enforcement rights with respect thereto (each such assignee, transferee, successor or other such Person, a “ Transferee ”) agrees in writing, prior to or as part of such assignment, transfer, grant or other transaction, (i) that it acknowledges and confirms that the applicable Assigned Copyrights and/or Assigned Software are and shall remain subject to the Encumbrances, (ii) to be bound by this Section 2.3 , (iii) to bind all subsequent or future Transferees of any of the Assigned Copyrights and/or Assigned Software, as applicable, to this Section 2.3 , and (iv) that RRD shall be an express intended third-party beneficiary of any such agreement, with a direct independent right to enforce such agreement against such Transferee.

(b) If LSC intends to initiate or participate, directly or indirectly, in any Action under any of the Assigned Copyrights or Assigned Software against any Person, then LSC shall first inform RRD in writing of the identity of such Person and provide other information reasonably requested by RRD in connection therewith, and RRD shall, subject to any confidentiality obligations of RRD, reasonably cooperate with LSC to

 

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confirm the scope of any licenses, covenants or other rights granted by RRD or its Group Companies to such Person.

(c) LSC agrees not to, directly or indirectly, initiate, maintain, authorize, participate in or facilitate any Action (including the grant of an exclusive license or right to enforce to any other Person that, to LSC’s knowledge, intends to initiate, authorize, participate in or facilitate any Action), under any of the Assigned Copyrights or Assigned Software, against any Person that it knows to be a licensee or other beneficiary of Encumbrances under such Assigned Copyright or Assigned Software, in each case, within the scope of the licenses or other rights of such licensee or other beneficiary.

Section 2.4 Cooperation; No Other Obligations or Liabilities .

(a) For a period of eighteen (18) months after the Effective Date, each of RRD and LSC shall, upon the reasonable request of the other Party, execute and deliver such documents and other papers and perform such acts as may be reasonably required to carry out the provisions of this Agreement and consummate and make effective the transactions contemplated by this Agreement. Notwithstanding anything to the contrary in this Agreement, recordation or registration of any document evidencing the assignment of the Assigned Copyrights or Assigned Software from RRD to LSC shall be LSC’s sole responsibility and at its sole cost and expense, provided that RRD agrees to reasonably cooperate with LSC in connection with such recordations or registrations, at LSC’s sole cost and expense.

(b) Except as expressly set forth in Section 2.4(a) , neither RRD nor any of its Group Companies shall have any liability or obligation under this Agreement with respect to ownership, maintenance, enforcement or exploitation of the Assigned Copyrights or Assigned Software, including any such liabilities and obligations related to actions or claims brought against or in respect of the Assigned Copyrights or Assigned Software, or any application, maintenance or annuity fees for any of the Assigned Copyrights or Assigned Software due at the United States Copyright Office (“ USCO ”) or any foreign, national or regional equivalent thereto, in each case, arising or due on or after the Effective Date. For clarity, all payments of application, maintenance and annuity fees with respect to the Assigned Copyrights or Assigned Software that are due on or after the Effective Date, including those with initial due dates prior to the Effective Date but payable after the Effective Date, are the sole responsibility of LSC. LSC will reimburse RRD for any and all out-of-pocket costs and expenses (including reasonable attorneys’ fees) incurred by RRD or any of its Group Companies, or any of its or their directors, officers, agents or employees, in connection with (i) the enforcement or licensing of any of the Assigned Copyrights or Assigned Software by or on behalf of LSC or any of its Group Companies, or (ii) any Action brought against or in respect of the Assigned Copyrights or Assigned Software after the Effective Date.

Section 2.5 Omitted Copyrights . If either Party discovers or determines in good faith, within eighteen (18) months after the Effective Date, that any copyrights or copyright applications that should have been assigned or licensed to such Party pursuant to this Agreement were not so assigned or licensed as of the Effective Date (such copyright or copyright application,

 

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a “ Potentially Omitted Copyright ”), then such Party may provide the other Party with a written request describing the Potentially Omitted Copyright(s) and an explanation (with a reasonable level of detail) as to why such Potentially Omitted Copyright(s) should have been assigned or licensed to such Party. Each Party agrees to consider any such request received from the other Party in a timely manner, and if such first Party agrees in good faith that such Potentially Omitted Copyright(s) should be assigned or licensed to the other Party, then such first Party shall, within a reasonable time, assign to, or grant a license under, such Potentially Omitted Copyright(s) to the other Party as such first Party deems appropriate in its reasonable good faith judgment.

ARTICLE III

LICENSES

Section 3.1 Software Licenses.

(a) Software License to RRD . Subject to the terms and conditions of this Agreement, RRD retains, and LSC, on behalf of itself and the LSC Group Companies, hereby grants to RRD, a perpetual, worldwide, irrevocable, non-terminable, royalty-free, fully paid-up, non-exclusive, non-transferable (except as expressly permitted in Section 5.1 ) and non-sublicensable (except as expressly permitted in Section 3.3 or Section 3.5 ) license to reproduce, use, modify, create derivative works of and otherwise exploit the Assigned Software, solely (i) for the benefit of RRD’s customers and those of its Group Companies and (ii) for the internal use of RRD and its Group Companies.

(b) Software License to LSC . Subject to the terms and conditions of this Agreement, RRD, on behalf of itself and the RRD Group Companies, hereby grants to LSC a perpetual, worldwide, irrevocable, non-terminable, royalty-free, fully paid-up, non-exclusive, non-transferable (except as expressly permitted in Section 5.1 ) and non-sublicensable (except as expressly permitted in Section 3.3 or Section 3.5 ) license to use, reproduce, modify, create derivative works and otherwise exploit the Licensed Software, solely (i) for the benefit of LSC’s customers and those of its Group Companies and (ii) for the internal use of LSC and its Group Companies.

(c) Licensed Software Delivery and Transfer . RRD shall use commercially reasonable efforts to transfer and deliver to LSC copies of tangible embodiments of the Licensed Software (to the extent not already in the possession of LSC immediately following the LSC Distribution Date). Such transfer and delivery shall be made in a reasonable physical or electronic format, and within a reasonable amount of time following the LSC Distribution Date not to exceed sixty (60) days. Each Party shall reasonably cooperate in good faith with the other Party to effectuate the transfer and delivery of the Licensed Software contemplated herein.

Section 3.2 Trade Secret Licenses .

(a) Trade Secret License to RRD . Subject to the terms and conditions of this Agreement, LSC, on behalf of itself and the LSC Group Companies, hereby grants to

 

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RRD a perpetual, worldwide, irrevocable, non-terminable, royalty-free, fully paid-up, non-exclusive, non-transferable (except as expressly permitted in Section 5.1 ) and non-sublicensable (except as expressly permitted in Section 3.3 ) license to use and otherwise exploit the LSC Licensed Trade Secrets.

(b) Trade Secret License to LSC . Subject to the terms and conditions of this Agreement, RRD, on behalf of itself and the RRD Group Companies, hereby grants to LSC a perpetual, worldwide, irrevocable, non-terminable, royalty-free, fully paid-up, non-exclusive, non-transferable (except as expressly permitted in Section 5.1 ) and non-sublicensable (except as expressly permitted in Section 3.3 ) license to use and otherwise exploit the RRD Licensed Trade Secrets.

Section 3.3 Sublicensing . Without limiting the terms set forth in Section 3.5 with respect to Derivative Works, each Party in its capacity as a licensee under Section 3.1 or Section 3.2 , as applicable (such Party, “ Licensee ”), shall have the right, subject to the terms and conditions set forth in this Section 3.3 , to grant non-transferable sublicenses, solely within the scope of the licenses granted to Licensee by the other Party (such Party, “ Licensor ”) pursuant to Section 3.1 or Section 3.2 , as applicable, to (a) such Licensee’s Group Companies; provided that any sublicense granted to a Group Company shall, subject to clause (d) below, automatically and immediately terminate once such Group Company ceases to be a Group Company of Licensee, (b) independent contractors and consultants of Licensee or its Group Companies in connection with providing services to Licensee or any of its sublicensed Group Companies, (c) customers of Licensee or its Group Companies solely to the extent necessary for such customers to use products or services provided by or on behalf of Licensee or its Group Companies, and (d) a Divested Entity of Licensee as described in Section 3.4 . For the avoidance of doubt, any sublicense granted by a Licensee under this Agreement is subordinate to, and conditioned upon the survival of, the licenses granted to such Licensee.

Section 3.4 Divestitures . Upon any sale, transfer or other divestiture of a Divested Entity by Licensee, Licensee may grant a sublicense, solely within the scope of the licenses granted to Licensee pursuant to Section 3.1 or Section 3.2 , as applicable, to such Divested Entity (or if such Divested Entity is not a corporation, a limited liability company or other legal entity, to the successor, assignee, or acquirer thereof) with respect to (a) any products or services commercially released by such Divested Entity as of the effective date of the sale, transfer or divestiture, (b) any products or services under bona fide development by such Divested Entity as of such effective date, and (c) any natural evolutions of the products and services described in the foregoing clauses (a) or (b); provided that such sublicense shall not extend to any business, products or service of any Person(s) that has acquired such Divested Entity or any Affiliates of such Person(s) (other than the Divested Entity).

Section 3.5 Rights Under Derivative Works . Notwithstanding any of the restrictions set forth in Section 3.3 or Section 3.4 , but subject to Section 3.6 , in the event that a Licensee creates a Derivative Work, such Licensee shall have an unrestricted right to use, reproduce, modify, create derivative works of, sublicense to any third party and otherwise exploit such Derivative Work, including with respect to any Assigned Software or Licensed Software incorporated into such Derivative Work (but solely as part of, and to the extent incorporated into, such Derivative Work).

 

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Section 3.6 Confidentiality of Software and Trade Secrets .

(a) Each Licensee shall, and shall cause its Group Companies and other permitted sublicensees to, maintain the confidentiality of, (i) with respect to RRD, its Group Companies and its other permitted sublicensees, the LSC Licensed Trade Secrets and Assigned Software (subject to Section 3.6(b) ) and (ii) with respect to LSC, its Group Companies and its other permitted sublicensees, the RRD Licensed Trade Secrets and Licensed Software (subject to Section 3.6(b) ), in each case of clauses (i) and (ii), in a manner that is appropriate and otherwise consistent with such Licensee’s treatment of its own source code, trade secrets, confidential information or other proprietary know-how of a similar nature, as applicable.

(b) Without limiting any of the foregoing, each Licensee agrees not to disclose or otherwise provide access to any source code with respect to Licensed Software or Assigned Software that is licensed to such Licensee under Section 3.1(a) or Section 3.1(b) , as applicable, to any third party, except pursuant to a written sublicense agreement that (i) is within the scope permitted under (and subject to the restrictions set forth in) Section 3.3 , and (ii) expressly prohibits any further disclosure of such source code to any Person other than the relevant sublicensee as permitted under Section 3.3 ; provided that a Licensee may disclose or provide access to source code with respect to Licensed Software or Assigned Software licensed to such Licensee under Section 3.1(a) or Section 3.1(b) , as applicable, solely to the extent that such Licensed Software or Assigned Software is disclosed (A) solely as part of, and to the extent incorporated into, a Derivative Work, and (B) pursuant to a written agreement binding all third parties to reasonable confidentiality obligations that are expressly designed to protect and preserve the value of such Licensed Software or Assigned Software, as applicable, that is disclosed to or accessed by such third parties.

ARTICLE IV

TERM

Section 4.1 Term . The term of this Agreement shall commence on the Effective Date and shall continue indefinitely.

Section 4.2 Termination . Neither Party shall have any right to terminate this Agreement or any of the licenses or other rights granted hereunder for any reason.

ARTICLE V

ASSIGNABILITY

Section 5.1 Assignment . Neither this Agreement nor the licenses, rights or obligations hereunder may be assigned or delegated, including by operation of Law, merger, consolidation, asset sale, acquisition of securities or otherwise, by any Party without the prior express written consent of the other Party (which consent may not be unreasonably withheld, delayed or conditioned); provided that (a) a Change of Control of a Party is not, and will be deemed not to

 

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be, an assignment or delegation, or purported assignment or delegation, of this Agreement or a breach of this Section 5.1 , and the licenses and other rights granted pursuant to ARTICLE III shall survive any Change of Control of either Party, and (b) each Party may assign this Agreement in whole to any Person that acquires all or substantially all of the assets and business operations of such Party, without the other Party’s consent. Any attempted assignment or delegation that is not in accordance with this Section 5.1 shall be null and void.

Section 5.2 Successors and Assigns . The provisions of this Agreement and the licenses, rights and obligations 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.

ARTICLE VI

DISPUTE RESOLUTION

Section 6.1 Negotiation . In the event of a controversy, dispute or claim arising out of, in connection with, or in relation to the interpretation, performance, nonperformance, validity or breach of this Agreement or otherwise arising out of, or in any way related to this Agreement or the transactions contemplated hereby, including any claim based on contract, tort, statute or constitution (collectively, “ Agreement Disputes ”), the Party claiming such Agreement Dispute shall give written notice to the other Party setting forth the Agreement Dispute and a brief description thereof (a “ Dispute Notice ”) pursuant to the terms of the notice provisions of Section 7.1 hereof. Following delivery of a Dispute Notice, the general counsels of the relevant Parties and/or such other executive officer designated by the relevant Party shall negotiate for a reasonable period of time to settle such Agreement Dispute; provided that such reasonable period shall not, unless otherwise agreed by the Parties in writing, exceed forty-five (45) calendar days from the time of receipt by a Party of a Dispute Notice; provided further , that in the event of any arbitration in accordance with Section 6.3 hereof, the relevant Parties shall not assert the defenses of statute of limitations and laches arising during the period beginning after the date of receipt of the Dispute Notice, and any contractual time period or deadline under this Agreement to which such Agreement Dispute relates occurring after the Dispute Notice is received shall not be deemed to have passed until such Agreement Dispute has been resolved.

Section 6.2 Mediation . If, within forty-five (45) calendar days (or such longer period as may be agreed in writing between the Parties) after receipt by a Party of a Dispute Notice, the Parties have not succeeded in negotiating a resolution of the Agreement Dispute, the Parties agree to submit the Agreement Dispute at the earliest possible date to mediation conducted in accordance with the Commercial Mediation Rules of the American Arbitration Association (“ AAA ”), and to bear equally the costs of the mediation; provided , however , that each Party shall bear its own costs in connection with such mediation. The parties agree to participate in good faith in the mediation and negotiations related thereto for a period of thirty (30) days or such longer period as they may mutually agree following the initial mediation session (the “ Mediation Period ”).

Section 6.3 Arbitration . If the Agreement Dispute has not been resolved for any reason after the Mediation Period, such Agreement Dispute shall be determined, at the request of

 

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either relevant Party, by arbitration conducted in Chicago, Illinois, before and in accordance with the then-existing Commercial Arbitration Rules of the AAA, except as modified herein (the “ Rules ”). There shall be three arbitrators. Each Party shall appoint one arbitrator within twenty (20) calendar days of receipt by respondent of a copy of the demand for arbitration. The two party-appointed arbitrators shall have twenty (20) calendar days from the appointment of the second arbitrator to agree on a third arbitrator who shall chair the arbitral tribunal. Any arbitrator not timely appointed by the Parties under this Section 6.3 shall be appointed by the AAA in accordance with the listing, ranking and striking method in the Rules, and in any such procedure, each Party shall be given a limited number of strikes, excluding strikes for cause. Any controversy concerning whether an Agreement Dispute is an arbitrable Agreement Dispute, whether arbitration has been waived, whether an assignee of this Agreement is bound to arbitrate, or as to the interpretation of enforceability of this ARTICLE VI shall be determined by the arbitrators. In resolving any Agreement Dispute, the Parties intend that the arbitrators shall apply the substantive laws of the State of Illinois, without regard to any choice of law principles thereof that would mandate the application of the laws of another jurisdiction. The Parties intend that the provisions to arbitrate set forth herein be valid, enforceable and irrevocable, and any award rendered by the arbitrators shall be final and binding on the Parties. The Parties agree to comply with any award made in any such arbitration proceedings and agree to enforcement of or entry of judgment upon such award in the United States District Court for the Northern District of Illinois. The arbitrators shall be entitled, if appropriate, to award any remedy in such proceedings, including monetary damages, specific performance and all other forms of legal and equitable relief; provided , however , the arbitrators shall not be entitled to award punitive, exemplary, treble or any other form of non-compensatory damages except (i) in connection with indemnification for a Third Party Claim (and in such a case, only to the extent awarded in such Third Party Claim) or (ii) for reasonably foreseeable consequential damages or losses.

Section 6.4 Arbitration Period . Any arbitration proceeding shall be concluded in a maximum of six (6) months from the commencement of the arbitration. The parties involved in the proceeding may agree in writing to extend the arbitration period if necessary to appropriately resolve the Agreement Dispute.

Section 6.5 Treatment of Negotiations, Mediation and Arbitration . Without limiting the provisions of the Rules, unless otherwise agreed in writing by or among the relevant Parties or permitted by this Agreement, the relevant Parties shall keep, and shall cause their respective Group Companies to keep, confidential all matters relating to this ARTICLE VI , and any negotiation, mediation, conference, arbitration, discussion or arbitration award pursuant to this ARTICLE VI shall be treated as compromise and settlement negotiations for purposes of Rule 408 of the Federal Rules of Evidence and comparable state rules; provided that such matters may be disclosed (i) to the extent reasonably necessary in any proceeding brought to enforce the award or for entry of a judgment upon the award and (ii) to the extent otherwise required by Law or stock exchange. Nothing said or disclosed, nor any document produced, in the course of any negotiations, conferences and discussions that is not otherwise independently discoverable shall be offered or received as evidence or used for impeachment or for any other purpose in any current or future arbitration. Nothing contained herein is intended to or shall be construed to prevent any Party from applying to any court of competent jurisdiction for interim measures or other provisional relief in connection with the subject matter of any Agreement Disputes. Without prejudice to such provisional remedies as may be available under the jurisdiction of a

 

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court, the arbitral tribunal shall have full authority to grant provisional remedies and to direct the parties to request that any court modify or vacate any temporary or preliminary relief issued by such court, and to award damages for the failure of any Party to respect the arbitral tribunal’s orders to that effect.

Section 6.6 Continuity of Service and Performance . Unless otherwise agreed in writing, the Parties will continue to honor all commitments under this Agreement during the course of dispute resolution pursuant to the provisions of this ARTICLE VI with respect to all matters not subject to such dispute resolution.

Section 6.7 Consolidation . The arbitrators may consolidate any Agreement Disputes under this Agreement if the subject of the Agreement Disputes thereunder arise out of or relate essentially to the same set of facts or transactions. Such consolidated arbitration shall be determined by the arbitrator appointed for the arbitration proceeding that was commenced first in time.

ARTICLE VII

NOTICES

Section 7.1 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 (at a facsimile number to be provided by such Party to the other Party pursuant to the notice provisions of this Section 7.1 ) with receipt confirmed (followed by delivery of an original via overnight courier service), by email (at an email address to be provided by such Party to the other Party pursuant to the notice provisions of this Section 7.1 ) 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 7.1 ):

To RRD:

R. R. Donnelley & Sons Company

35 West Wacker Drive

Chicago, Illinois 60601

Attn: General Counsel

To LSC:

LSC Communications US, LLC

35 West Wacker Drive

Chicago, Illinois 60601

Attn: General Counsel

 

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ARTICLE VIII

MISCELLANEOUS

Section 8.1 Taxes . Except as may otherwise be specifically provided herein, each Party shall bear all taxes, duties and other similar charges (and any related interest and penalties) imposed as a result of its receipt of Services under this Agreement.

Section 8.2 Relationship of Parties . Nothing in this Agreement shall be deemed or construed by the Parties or any Third Party as creating the relationship of principal and agent, partnership or joint venture between the Parties, it being understood and agreed that no provision contained herein, and no act of the Parties, shall be deemed to create any relationship between the Parties other than the relationship of independent contractor nor be deemed to vest any rights, interest or claims in any third parties.

Section 8.3 Complete Agreement; Construction . This Agreement, including the Schedules hereto, 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 Schedule, the Schedule shall prevail. The rights and remedies of the Parties herein provided shall be cumulative and in addition to any other or further remedies provided by law or equity.

Section 8.4 Counterparts . This Agreement may be executed in more than one counterpart, all of which shall be considered one and the same agreement, and shall become effective when one or more such counterparts have been signed by each of the Parties and delivered to the other Parties.

Section 8.5 Waivers and Consents . The failure of any Party to require strict performance by any other Party of any provision in this Agreement will not waive or diminish that Party’s right to demand strict performance thereafter of that or any other provision hereof. Any consent required or permitted to be given by any Party to the other Parties under this Agreement shall be in writing and signed by the Party giving such consent.

Section 8.6 Amendments . This Agreement may not be modified or amended except by an agreement in writing signed by a duly authorized representative of each of the Parties.

Section 8.7 No Circumvention . The Parties agree not to directly or indirectly take any Actions, act in concert with any Person who takes an Action (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.

Section 8.8 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 LSC Distribution Date.

 

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Section 8.9 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 8.10 Titles 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 8.11 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 8.12 Governing Law . This Agreement shall be governed by and construed in accordance with the laws of, but not the laws governing conflicts of laws of, the State of Illinois.

Section 8.13 Consent to Jurisdiction . Subject to the provisions of ARTICLE VI hereof, each of the Parties irrevocably submits to the exclusive jurisdiction of (a) the Circuit Court of the State of Illinois, Cook County, or (b) the United States District Court for the Northern District of Illinois (the “ Illinois Courts ”), for the purposes of any suit, Action or other proceeding to compel arbitration or for provisional relief in aid of arbitration in accordance with ARTICLE VI or to prevent irreparable harm, and to the non-exclusive jurisdiction of the Illinois Courts for the enforcement of any award issued thereunder. Each of the Parties further agrees that service of any process, summons, notice or document by 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 Illinois Courts with respect to any matters to which it has submitted to jurisdiction in this Section 8.13 . Each of the Parties irrevocably and unconditionally waives any objection to the laying of venue of any Action, suit or proceeding arising out of this Agreement or the transactions contemplated hereby in the Illinois Courts, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such Action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

Section 8.14 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 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.

Section 8.15 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

 

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(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 8.15 .

Section 8.16 Severability . In the event any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby. The Parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions, the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

Section 8.17 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 8.18 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.

Section 8.19 Disclaimer of Representations and Warranties . EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT AND IN THE SEPARATION AND DISTRIBUTION AGREEMENT, THE PARTIES ACKNOWLEDGE AND AGREE THAT THE ASSIGNED COPYRIGHTS, ASSIGNED SOFTWARE, LICENSED SOFTWARE, LSC LICENSED TRADE SECRETS AND RRD LICENSED TRADE SECRETS, AS APPLICABLE, ARE LICENSED UNDER THIS AGREEMENT AS-IS, THAT EACH RECIPIENT ASSUMES ALL RISKS AND LIABILITIES ARISING FROM OR RELATING TO THE USE AND ENFORCEMENT OF SUCH RIGHTS UNDER THIS AGREEMENT, AND EACH PARTY, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, MAKES NO REPRESENTATION OR WARRANTY WITH RESPECT THERETO, WHETHER EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, BY STATUTE OR OTHERWISE, INCLUDING ANY REPRESENTATION OR WARRANTY IN REGARD TO QUALITY, ACCURACY, COMPLETENESS, PERFORMANCE, NON-INFRINGEMENT, COMMERCIAL UTILITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, VALIDITY OR ENFORCEABILITY.

Section 8.20 Rights in Bankruptcy . All licenses, immunities, and other rights granted pursuant to ARTICLE III are conveyed and effective when granted, and each Party is entitled to the maximum protection of the licenses, immunities and other rights that it receives hereunder under applicable Law. Without limiting the generality of the foregoing, each Party, as recipient of licenses, immunities or other rights hereunder, (a) may assert without objection from the other Party (including its successors and assigns) that (i) those licenses, immunities, and other rights are not executory and not vulnerable to rejection under the United States Bankruptcy Code or the bankruptcy Laws of any other country, and (ii) if rejected, such rejection does not result in termination of those licenses, immunities, and other rights or a similar result or effect, and (b) will continue to have and may fully exercise any rights (and make any election) available

 

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under Section 365(n) of the United States Bankruptcy Code, the bankruptcy Laws of any other country, or this Agreement, and such other Party (including its successors and assigns) will not, in any event, interfere with such first Party’s licenses, immunities and other rights under this Agreement.

[ Signature Page Follows ]

 

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IN WITNESS WHEREOF, the Parties hereto have caused this Software, Copyright and Trade Secret Assignment and License Agreement to be duly executed by their respective authorized officers as of the date first above written.

 

R. R. DONNELLEY & SONS COMPANY
By:   /s/ Daniel L. Knotts
Name:  Daniel L. Knotts
Title:    Chief Operating Officer

 

LSC COMMUNICATIONS US, LLC
By:   /s/ Thomas J. Quinlan III
Name:  Thomas J. Quinlan III
Title:    Chief Executive Officer

Exhibit 3.1

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

OF

LSC COMMUNICATIONS, INC.

LSC Communications, Inc., a corporation organized and existing under the laws of the State of Delaware, hereby certifies as follows:

1. The name of the corporation is LSC Communications, Inc. The corporation was incorporated pursuant to an original Certificate of Incorporation filed with the Secretary of State of the State of Delaware on February 22, 2016.

2. This Amended and Restated Certificate of Incorporation amends, restates and integrates the provisions of the Certificate of Incorporation of said corporation and has been duly adopted in accordance with the provisions of Sections 242 and 245 of the General Corporation Law of the State of Delaware by written consent of the holder of all of the outstanding stock entitled to vote thereon in accordance with the provisions of Section 228 of the General Corporation Law of the State of Delaware. The effective time of this Amendment and Restatement shall be 5:00 p.m. Eastern Time on September 30, 2016.

3. The text of the Certificate of Incorporation is hereby amended and restated to read as herein set forth in full:

“AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF

LSC COMMUNICATIONS, INC.

FIRST. The name of the corporation is LSC Communications, Inc.

SECOND. The address of the corporation’s registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street in the City of Wilmington, County of New Castle, 19801. The name of its registered agent at such address is The Corporation Trust Company.

THIRD. The purpose of the corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware.

FOURTH. The total number of shares of all classes of stock which the corporation shall have authority to issue is 66,000,000, of which 65,000,000 shares of the par


value of $0.01 per share shall be designated as Common Stock and 1,000,000 shares of the par value of $0.01 per share shall be designated as Preferred Stock.

Shares of Preferred Stock may be issued in one or more series from time to time by the board of directors, and the board of directors is expressly authorized to fix by resolution or resolutions the designations and the powers, preferences and rights, and the qualifications, limitations and restrictions thereof, of the shares of each series of Preferred Stock, including without limitation the following:

(a) the distinctive serial designation of such series which shall distinguish it from other series;

(b) the number of shares included in such series;

(c) the dividend rate (or method of determining such rate) payable to the holders of the shares of such series, any conditions upon which such dividends shall be paid and the date or dates upon which such dividends shall be payable;

(d) whether dividends on the shares of such series shall be cumulative and, in the case of shares of any series having cumulative dividend rights, the date or dates or method of determining the date or dates from which dividends on the shares of such series will be cumulative;

(e) whether or not the holders of the shares of such series shall have voting rights, in addition to the voting rights provided by law, and if so the terms of such voting rights;

(f) the price or prices at which, the period or periods within which and the terms and conditions upon which the shares of such series may be redeemed, in whole or in part, at the option of the corporation or at the option of the holder or holders thereof or upon the happening of a specified event or events;

(g) the amount or amounts which shall be payable out of the assets of the corporation to the holders of the shares of such series upon voluntary or

 

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involuntary liquidation, dissolution or winding up of the corporation, and the relative rights of priority, if any, of payment of the shares of such series;

(h) the obligation, if any, of the corporation to purchase or redeem shares of such series pursuant to a sinking fund or otherwise and the price or prices at which, the period or periods within which and the terms and conditions upon which the shares of such series shall be redeemed or purchased, in whole or in part, pursuant to such obligation;

(i) whether the shares of such series shall be convertible into, or exchangeable for, at any time or times at the option of the holder or holders thereof or at the option of the corporation or upon the happening of a specified event or events, shares of any other class or classes or of any other series of the same or any other class or classes of stock of the corporation, and the price or prices or rate or rates of exchange or conversion and any adjustments applicable thereto; and

(j) any other powers, preferences and rights and qualifications, limitations and restrictions not inconsistent with the General Corporation Law of the State of Delaware.

Unless otherwise expressly provided in the resolution or resolutions of the board of directors or a duly authorized committee thereof establishing the terms of a series of Preferred Stock, no holder of any share of Preferred Stock shall be entitled as of right to vote on any amendment or alteration of this Amended and Restated Certificate of Incorporation to authorize or create, or increase the authorized amount of, any other class or series of Preferred Stock or any alteration, amendment or repeal of any provision of any other series of Preferred Stock that does not adversely affect in any material respect the rights of the series of Preferred Stock held by such holder.

Except as otherwise required by the General Corporation Law of the State of Delaware or expressly provided in the resolution or resolutions of the board of directors or a duly authorized committee thereof establishing the terms of a series of Preferred Stock, no holder of Common Stock, as such, shall be entitled to vote on any amendment or alteration of

 

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this Amended and Restated Certificate of Incorporation that alters, amends or changes the powers, preferences, rights or other terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together with the holders of one or more other series of Preferred Stock, to vote thereon pursuant to this Amended and Restated Certificate of Incorporation or pursuant to the General Corporation Law of the State of Delaware.

Subject to the rights of the holders of any series of Preferred Stock, the number of authorized shares of any class or series of Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the outstanding shares of such class or series, voting together as a single class, irrespective of the provisions of Section 242(b)(2) of the General Corporation Law of the State of Delaware or any corresponding provision hereafter enacted.

Unless otherwise expressly provided in the resolution or resolutions of the board of directors or a duly authorized committee thereof establishing the terms of a series of Preferred Stock, no holder of any share of Preferred Stock shall, in such capacity, be entitled to bring a derivative action, suit or proceeding on behalf of the corporation.

FIFTH. The board of directors of the corporation is expressly authorized to make, adopt, amend or repeal the by-laws of the corporation.

SIXTH. The number of directors of the corporation shall be fixed from time to time pursuant to the by-laws of the corporation. The board of directors shall initially be divided into three classes, as nearly equal in number as reasonably possible, as determined by the board of directors, with the term of office of Class I directors to expire at the 2017 annual meeting, as of which time such directors shall be elected annually, the term of office of Class II directors to expire at the 2018 annual meeting, as of which time such directors shall be elected annually, and the term of office of Class III directors to expire at the 2019 annual meeting, as of which time such directors shall be elected annually, with the effect that the board of directors shall be entirely unclassified as of the 2019 annual meeting. Each director shall hold office until such director’s successor is elected and qualified. No decrease in the number of directors may shorten the term of any incumbent director. Elections of directors

 

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need not be by written ballot except and to the extent provided in the by-laws of the corporation.

In the event that the holders of any class or series of stock of the corporation shall be entitled, voting separately as a class, to elect any directors of the corporation, then the number of directors that may be elected by such holders shall be in addition to the number fixed pursuant to the by-laws and, except as otherwise expressly provided in the terms of such class or series, the terms of the directors elected by such holders shall expire at the annual meeting of stockholders next succeeding their election without regard to the classification of the remaining directors.

SEVENTH. A director of the corporation shall not be liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent that such exemption from liability or limitation thereof is not permitted under the General Corporation Law of the State of Delaware as currently in effect or as the same may hereafter be amended. No amendment, modification or repeal of this Article SEVENTH, or the adoption of any provision of this Amended and Restated Certificate of Incorporation inconsistent with this Article SEVENTH, shall adversely affect any right or protection of a director that exists at the time of such amendment, modification, repeal or adoption.

EIGHTH. Unless otherwise expressly provided in the resolution or resolutions of the board of directors or a duly authorized committee thereof establishing the terms of a series of Preferred Stock in the terms of that series, no action of stockholders required or permitted to be taken at any annual or special meeting of stockholders shall be taken without a meeting of stockholders, without prior notice and without a vote, and the power of the stockholders to consent in writing to the taking of any action without a meeting is specifically denied.

 

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IN WITNESS WHEREOF, LSC Communications, Inc., has caused this certificate to be signed by Suzanne S. Bettman, its President, this 30 th day of September, 2016.

 

/s/ Suzanne S. Bettman
    Name:   Suzanne S. Bettman
    Title:   President

Exhibit 3.2

AMENDED & RESTATED BY-LAWS

OF

LSC COMMUNICATIONS, INC.

AMENDED AND RESTATED ON SEPTEMBER 30, 2016

ARTICLE I

Stockholders

Section 1.1. Annual Meetings . An annual meeting of stockholders shall be held for the election of directors and for the transaction of such other business as may properly come before the meeting, at such date and time as may be designated by the Board of Directors from time to time.

Section 1.2. Special Meetings .

(a) Special meetings of stockholders may be called at any time by the Board of Directors, the Chairperson of the Board of Directors, the Lead Director, if any, or the Chief Executive Officer, to be held at such date and time as may be stated in the notice of the meeting. A special meeting of stockholders shall be held solely for the purposes specified in the notice of the meeting.

(b) A special meeting of stockholders shall be called by the Secretary of the Corporation (the “ Secretary ”) if the Secretary receives a valid request or requests for a special meeting of stockholders from the record holders of shares representing at least twenty five percent (25%) (the “ Requisite Percentage ”) of the combined voting power of the then-outstanding shares of all classes and series of the Corporation’s capital stock entitled to vote on the matter or matters proposed to be voted on at such proposed special meeting. To be valid, the request or requests must (a) be written; (b) be delivered to the Secretary at the Corporation’s principal executive office; (c) include (i) the specific purpose(s) of the special meeting, and the text of the matter(s) proposed to be voted on at the special meeting (including the text of any resolutions to be proposed for consideration by stockholders) and for matters other than the election of directors, a brief written statement of the reasons why such stockholders favor the proposal, (ii) with respect to the stockholders requesting the special meeting and the beneficial owners of such shares, if any, at whose direction such request is being made, the information required to be included in the Stockholder Notice in Section 1.11(b) of these by-laws, (iii) the name and address, as they appear on the Corporation’s books, of each stockholder of record signing such request (or on whose behalf such request is signed) and of the beneficial owner, if any, on whose behalf such request is made and (iv) an agreement by the requesting stockholder(s) to notify the Corporation immediately in the case of any disposition prior to the Notice Record Date (as defined below) for the special meeting requested by stockholders of shares of common stock of the Corporation owned of record and an acknowledgement that any such disposition shall be deemed a revocation of such written


request to the extent of such disposition, such that the number of shares disposed of shall not be included in determining whether the Requisite Percentage has been reached; and (d) be signed and dated by the record holder(s). If signed by an authorized agent, such request shall not be valid unless documentary evidence is supplied to the Secretary at the time of delivery of such request (or within ten business days thereafter) of such signatory’s authority to execute the request on behalf of the record holder. The first date on which unrevoked valid requests constituting not less than the Requisite Percentage shall have been delivered to the Corporation is referred to herein as the “Delivery Date.” In determining whether a special meeting has been requested by the record holders of shares representing in the aggregate at least the Requisite Percentage, multiple requests delivered to the Secretary will be considered together only if each such request (i) identifies substantially the same purpose or purposes of the special meeting and substantially the same matters proposed to be acted on at the special meeting (in each case as determined in good faith by the Board of Directors), and (ii) has been dated and delivered to the Secretary within sixty days of the earliest dated of such requests. Any stockholder who submitted a written request for a special meeting may revoke that written request at any time by delivering a written revocation to the Secretary at the Corporation’s principal executive office and if, following such revocation, there are unrevoked requests from stockholders holding less than the Requisite Percentage, the Board of Directors, in its discretion, may cancel the special meeting. In addition, if none of the stockholders who submitted a request appears or sends a qualified representative to the special meeting to present such matter(s) to be voted on at the special meeting, the Board of Directors need not present such matter(s) for a vote at such meeting.

The Corporation is not required to call a special meeting pursuant to this Section 1.2(b) with respect to any matter if (i) an identical or substantially similar matter was included on the agenda of any annual or special meeting of stockholders held within sixty (60) days prior to the Delivery Date or will be included on the agenda at an annual or special meeting of stockholders to be held within ninety (90) days after the Delivery Date (for purposes of this clause (i), the election or removal of directors shall be considered an identical or substantially similar matter with respect to all matters involving election or removal of directors), (ii) the purpose of the special meeting is not a proper matter for stockholder action or is unlawful, or (iii) the written request for a special meeting violated applicable law(s) or was not made in accordance with these by-laws.

The business conducted at the special meeting of stockholders called in accordance with this Section 1.2(b) shall be limited to the business set forth in the notice of the special meeting; provided that the Board of Directors may submit additional matters to the stockholders at the special meeting by including those matters in the notice of the special meeting of stockholders.

(c) The chairperson of a special meeting shall determine all matters relating to the conduct of the meeting, including, but not limited to, determining whether any nomination or other item of business has been properly brought before the meeting in accordance with these by-laws, and if the chairperson should so determine and declare that any nomination or other item of business has not been properly brought before the special meeting, then such business shall not be transacted at such meeting.

 

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Section 1.3. Place of Meetings; Notice of Meetings .

(a) All meetings of the stockholders shall be held at such places as from time to time may be fixed by the Board of Directors, either within or without the State of Delaware. In addition to or instead of holding a meeting at a physical location, the Board of Directors may, in its sole discretion, determine that any meeting of stockholders shall be held solely by means of remote communications.

(b) Whenever stockholders are required or permitted to take any action at a meeting, a written notice of the meeting shall be given which shall state the place, if any, date and hour of the meeting, the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such meeting, the record date for determining the stockholders entitled to vote at the meeting (the “ Voting Record Date ”), if such date is different from the record date for determining stockholders entitled to notice of the meeting (the “ Notice Record Date ”), and, in the case of a special meeting, the purpose or purposes for which the meeting is called. Unless otherwise provided by law, the written notice of any meeting shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to vote at such meeting as of the Notice Record Date for such meeting. If mailed, such notice shall be deemed to be given when deposited in the United States mail, postage prepaid, directed to the stockholder at such stockholder’s address as it appears on the records of the Corporation. In addition, if stockholders have consented to receive notices by a form of electronic transmission, then such notice, by facsimile telecommunication, or by electronic mail, shall be deemed to be given when directed to a number or an electronic mail address, respectively, at which the stockholder has consented to receive notice. If such notice is transmitted by a posting on an electronic network together with separate notice to the stockholder of such specific posting, such notice shall be deemed to be given upon the later of (i) such posting, and (ii) the giving of such separate notice. If such notice is transmitted by any other form of electronic transmission, such notice shall be deemed to be given when directed to the stockholder. Notice shall be deemed to have been given to all stockholders of record who share an address if notice is given in accordance with the “householding” rules set forth in the rules of the Securities and Exchange Commission (the “ SEC ”) under the Securities Exchange Act of 1934 (the “ Exchange Act ”) and Section 233 of the General Corporation Law of the State of Delaware (the “ DGCL ”). For purposes of these by-laws, “electronic transmission” means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved and reviewed by a recipient thereof, and that may be directly reproduced in paper form through an automated process.

An affidavit of the mailing or other means of giving any notice of any stockholders’ meeting, executed by the Secretary, any Assistant Secretary of the Corporation (the “ Assistant Secretary ”) or any transfer agent or mailing agent of the Corporation giving the notice, will be prima facie evidence of the giving of such notice.

 

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Section 1.4. Adjournments and Postponements . Any meeting of stockholders, annual or special, may be adjourned from time to time, by the chairperson of the meeting, to reconvene at the same or some other place, and notice need not be given of any such adjourned meeting if the time, place, if any, thereof, and the means of remote communications, if any, thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting the Corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty (30) days, or if after the adjournment a new Notice Record Date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. In addition, any meeting of stockholders, annual or special, may be postponed by the Board of Directors at any time before such meeting has been convened, and such postponement shall be considered a cancellation of the originally noticed meeting. Notice of the postponed meeting shall be given to each stockholder of record entitled to vote at the meeting.

Section 1.5. Quorum . At each meeting of stockholders, except where otherwise provided by law or the certificate of incorporation or these by-laws, the holders of a majority of the outstanding shares of stock entitled to vote on a matter at the meeting, present in person or represented by proxy, shall constitute a quorum. In the absence of a quorum of the holders of any class of stock entitled to vote on a matter, either (i) the holders of such class so present or represented may, by majority vote, adjourn the meeting of such class from time to time in the manner provided by Section 1.4 of these by-laws until a quorum of such class shall be so present or represented or (ii) the chairperson of the meeting may on his or her own motion adjourn the meeting from time to time in the manner provided by Section 1.4 of these by-laws until a quorum of such class shall be so present and represented without the approval of the stockholders who are present in person or represented by proxy and entitled to vote, without notice other than announcement at the meeting. Shares of its own capital stock belonging on the Voting Record Date for the meeting to the Corporation or to another corporation, if a majority of the shares entitled to vote in the election of directors of such other corporation is held, directly or indirectly, by the Corporation, shall neither be entitled to vote nor be counted for quorum purposes; provided, however, that the foregoing shall not limit the right of the Corporation to vote stock, including but not limited to its own stock, held by it in a fiduciary capacity. If a quorum is initially present at a meeting of stockholders, the stockholders may continue to transact business until adjournment of such meeting, notwithstanding the withdrawal of enough stockholders to leave less than a quorum.

Section 1.6. Organization . Meetings of stockholders shall be presided over by the Chairperson of the Board of Directors, if any, or in the absence of the Chairperson by the Lead Director, if any, or in the absence of the Chairperson or Lead Director, by the Vice Chairperson of the Board of Directors, if any, or in the absence of the Vice Chairperson by the Chief Executive Officer, or in the absence of the foregoing persons by a chairperson designated by the Board of Directors, or in the absence of such designation by a chairperson chosen at the meeting. The Secretary, or in the absence of the Secretary, an Assistant Secretary, shall act as secretary of the meeting, but in the absence of the Secretary and any Assistant Secretary the chairperson of the meeting may appoint any person to act as secretary of the meeting.

 

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The order of business at each such meeting shall be as determined by the chairperson of the meeting. The chairperson of the meeting shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts and things as are necessary or desirable for the proper conduct of the meeting, including, without limitation, the establishment of procedures for the maintenance of order and safety, limitations on the time allotted to questions or comments on the affairs of the Corporation, restrictions on entry to such meeting after the time prescribed for the commencement thereof and the opening and closing of the voting polls, for each item on which a vote is to be taken.

Section 1.7. Inspectors . Prior to any meeting of stockholders, the Board of Directors or the Chief Executive Officer shall appoint one or more inspectors to act at such meeting and make a written report thereof and may designate one or more persons as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at the meeting of stockholders, the person presiding at the meeting shall appoint one or more inspectors to act at the meeting. Each inspector, before entering upon the discharge of his or her duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability. The inspectors shall ascertain the number of shares outstanding and the voting power of each, determine the shares represented at the meeting and the validity of proxies and ballots, count all votes and ballots, determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspectors and certify their determination of the number of shares represented at the meeting and their count of all votes and ballots. The inspectors may appoint or retain other persons to assist them in the performance of their duties. The date and time of the opening and closing of the polls for each matter upon which the stockholders will vote at a meeting shall be announced at the meeting. No ballot, proxy or vote, nor any revocation thereof or change thereto, shall be accepted by the inspectors after the closing of the polls. In determining the validity and counting of proxies and ballots, the inspectors shall be limited to an examination of the proxies, any envelopes submitted therewith, any information provided by a stockholder who submits a proxy by electronic transmission from which it can be determined that the proxy was authorized by the stockholder, any written ballot or, if authorized by the Board of Directors, a ballot submitted by electronic transmission together with any information from which it can be determined that the electronic transmission was authorized by the stockholder, any information provided in a record of a vote if such vote was taken at the meeting by means of remote communication along with any information used to verify that any person deemed present and permitted to vote at the meeting by means of remote communication is a stockholder, ballots and the regular books and records of the Corporation, and they may also consider other reliable information for the limited purpose of reconciling proxies and ballots submitted by or on behalf of banks, brokers, their nominees or similar persons which represent more votes than the holder of a proxy is authorized by the record owner to cast or more votes than the stockholder holds of record. If the inspectors

 

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consider other reliable information for such purpose, they shall, at the time they make their certification, specify the precise information considered by them, including the person or persons from whom they obtained the information, when the information was obtained, the means by which the information was obtained and the basis for the inspectors’ belief that such information is accurate and reliable.

Section 1.8. Voting; Proxies . Unless otherwise provided in the certificate of incorporation, each stockholder entitled to vote at any meeting of stockholders shall be entitled to one vote for each share of stock held by such stockholder which has voting power upon the matter in question. Each stockholder entitled to vote at a meeting of stockholders or, in the case of a series of preferred stock that expressly so provides, to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for such stockholder by proxy, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. A duly executed proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power, regardless of whether the interest with which it is coupled is an interest in the stock itself or an interest in the Corporation generally. A stockholder may revoke any proxy which is not irrevocable by attending the meeting and voting in person or by filing an instrument in writing revoking the proxy or another duly executed proxy bearing a later date with the Secretary of the Corporation. Voting at meetings of stockholders need not be by written ballot and need not be conducted by inspectors unless the holders of a majority of the outstanding shares of all classes of stock entitled to vote thereon present in person or represented by proxy at such meeting shall so determine.

Each director shall be elected by the vote of the majority of the votes cast (meaning the number of shares voted “for” a nominee must exceed the number of shares voted “against” such nominee) at any meeting for the election of directors at which a quorum is present, provided that the directors shall be elected by a plurality of the votes cast (instead of by votes cast “for” or “against” a nominee) at any meeting at which a quorum is present for which (i) the Secretary of the Corporation receives a notice pursuant to these by-laws that a stockholder intends to nominate a director or directors and (ii) such proposed nomination has not been withdrawn by such stockholder on or prior to the tenth day preceding the date the Corporation first mails its notice of meeting for such meeting to the stockholders.

In all other matters, unless otherwise provided by law, the certificate of incorporation or these by-laws the affirmative vote of the holders of a majority of the shares present in person or represented by proxy at the meeting and entitled to vote on the subject matter shall be the act of the stockholders. Where a separate vote by class or classes is required, the affirmative vote of the holders of a majority of the shares of such class or classes present in person or represented by proxy at the meeting shall be the act of such class or classes, except as otherwise provided by law or by the certificate of incorporation or these by-laws. For purposes of this Section 1.8, votes cast “for” or “against” and “abstentions” with respect to such matter shall be counted as shares of stock of the Corporation entitled to vote on such matter, while “broker non-votes” (or other shares of stock of the Corporation similarly not entitled to vote) shall not be counted as shares entitled to vote on such matter.

 

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Section 1.9. Fixing Date for Determination of Stockholders of Record . In order that the Corporation may determine the stockholders entitled to notice of any meeting of stockholders or any adjournment thereof, the Board of Directors may fix a Notice Record Date, which Notice Record Date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than sixty nor less than ten (10) days before the date of such meeting. If the Board of Directors so fixes a date, such date shall also be the Voting Record Date unless the Board of Directors determines, at the time it fixes such Notice Record Date, that a later date on or before the date of the meeting shall be the date for making the determination of the Voting Record Date. If no record date is fixed by the Board of Directors, the Notice Record Date and the Voting Record Date shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new Voting Record Date for the adjourned meeting, and in such case shall also fix the Notice Record Date for such adjourned meeting at the same or an earlier date as the Voting Record Date.

In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty (60) days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.

Section 1.10. List of Stockholders Entitled to Vote . The Secretary shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting; provided, however, if the Voting Record Date for such meeting is less than ten (10) days before the meeting date, the list shall reflect the stockholders entitled to vote as of the tenth day before the meeting date, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Nothing in this Section 1.10 shall require the Corporation to include electronic mail addresses or other electronic content information on such list. Such list shall be open to the examination of any stockholder for any purpose germane to the meeting for a period of at least ten (10) days prior to the meeting: (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (ii) during ordinary business hours, at the principal place of business of the Corporation. In the event that the Corporation determines to make the list available on an electronic network, the Corporation may take reasonable steps to ensure that such

 

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information is available only to stockholders of the Corporation. If the meeting is to be held at a place, then a list of stockholders entitled to vote at the meeting shall be produced and kept at the time and place of the meeting during the whole time thereof and may be examined by any stockholder who is present. If the meeting is to be held solely by means of remote communication, then such list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting.

Section 1.11. Advance Notice of Stockholder Nominees for Director and Other Stockholder Proposals.

(a) The matters to be considered and brought before any annual or special meeting of stockholders of the Corporation shall be limited to only such matters, including the nomination and election of directors, as shall be brought properly before such meeting in compliance with the procedures set forth in this Section 1.11 and Section 1.2(b), if applicable.

(b) For any matter to be brought properly before the annual meeting of stockholders, the matter must be (i) specified in the notice of the annual meeting given by or at the direction of the Board of Directors, (ii) otherwise brought before the annual meeting by or at the direction of the Board of Directors or (iii) brought before the annual meeting by a stockholder who is a stockholder of record of the Corporation on the date the notice provided for in this Section 1.11 is delivered to the Secretary of the Corporation, who is entitled to vote at the annual meeting and who complies with the procedures set forth in this Section 1.11. In addition to any other requirements under applicable law and the certificate of incorporation and these by-laws, written notice (the “ Stockholder Notice ”) of any nomination or other proposal must be timely and any proposal, other than a nomination, must constitute a proper matter for stockholder action. To be timely, the Stockholder Notice must be delivered to the Secretary of the Corporation at the principal executive office of the Corporation not less than ninety (90) nor more than one hundred and twenty (120) days prior to the first anniversary date of the annual meeting for the preceding year; provided, however, that if (and only if) no annual meeting was held in the previous year or the date of the annual meeting is not scheduled to be held within a period that commences thirty (30) days before such anniversary date and ends thirty (30) days after such anniversary date (an annual meeting date outside such period being referred to herein as an “ Other Meeting Date ”), the Stockholder Notice shall be given in the manner provided herein by the later of the close of business on (i) the date ninety (90) days prior to such Other Meeting Date or (ii) the tenth day following the date such Other Meeting Date is first publicly announced or disclosed. A Stockholder Notice must contain the following information: (i) whether the stockholder is providing the notice at the request of a beneficial holder of shares, whether the stockholder, any such beneficial holder or any nominee has any agreement, arrangement or understanding with (including without limitation any agreement, arrangement or understanding that would be required to be disclosed pursuant to Item 5 or Item 6 of the Exchange Act Schedule 13D (regardless of whether the requirement to file a Schedule 13D is applicable to the stockholder or beneficial owner)), or has received any financial assistance, funding or

 

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other consideration from, any other person with respect to the investment by the stockholder or such beneficial holder in the Corporation or the matter the Stockholder Notice relates to, and the details thereof, including the name of such other person (the stockholder, any beneficial holder on whose behalf the notice is being delivered, any nominees listed in the notice and any persons with whom such agreement, arrangement or understanding exists or from whom such assistance has been obtained are hereinafter collectively referred to as “ Interested Persons ”), (ii) the name and address of all Interested Persons, (iii) a complete listing of the record and beneficial ownership positions (including number or amount) of all equity securities and debt instruments, whether held in the form of loans or capital market instruments, of the Corporation or any of its subsidiaries held by all Interested Persons, (iv) whether and the extent to which any hedging, derivative or other transaction is in place or has been entered into within the prior six months preceding the date of delivery of the Stockholder Notice by or for the benefit of any Interested Person with respect to the Corporation or its subsidiaries or any of their respective securities, debt instruments or credit ratings, the effect or intent of which transaction is to give rise to gain or loss as a result of changes in the trading price of such securities or debt instruments or changes in the credit ratings for the Corporation, its subsidiaries or any of their respective securities or debt instruments (or, more generally, changes in the perceived creditworthiness of the Corporation or its subsidiaries), or to increase or decrease the voting power of such Interested Person, and if so, a summary of the material terms thereof, and (v) a representation that the stockholder is a holder of record of stock of the Corporation that would be entitled to vote at the meeting and intends to appear in person or by proxy at the meeting to propose the matter set forth in the Stockholder Notice. As used herein, “beneficially owned” has the meaning provided in Rules 13d-3 and 13d-5 under the Exchange Act. Any Stockholder Notice with respect to a matter other than the nomination of directors must contain (i) the text of the proposal to be presented, including the text of any resolutions to be proposed for consideration by stockholders and (ii) a brief written statement of the reasons why such stockholder favors the proposal. Any Stockholder Notice relating to the nomination of directors must also contain (i) the information regarding each nominee required by paragraphs (a), (e) and (f) of Item 401 of Regulation S-K adopted by the SEC (or the corresponding provisions of any successor regulation), (ii) each nominee’s signed consent to serve as a director of the Corporation if elected, and (iii) whether each nominee is eligible for consideration as an independent director under the relevant standards contemplated by Item 407(a) of Regulation S-K (or the corresponding provisions of any successor regulation). The Corporation may also require any proposed nominee to furnish such other information, including completion of the Corporation’s director’s questionnaire, as it may reasonably require to determine whether the nominee would be considered “independent” as a director or as a member of the audit committee of the Board of Directors under the various rules and standards applicable to the Corporation. The Stockholder Notice shall be updated not later than 10 days after the Voting Record Date to provide any material changes in the foregoing information as of the record date.

Notwithstanding anything in this Section 1.11(b) to the contrary, in the event that the number of directors to be elected to the Board of Directors is increased and

 

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either all of the nominees for director or the size of the increased Board of Directors is not publicly announced or disclosed by the Corporation at least one hundred (100) days prior to the first anniversary of the preceding year’s annual meeting, a Stockholder Notice shall also be considered timely hereunder, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary of the Corporation at the principal executive office of the Corporation not later than the close of business on the tenth day following the first date all of such nominees or the size of the increased Board of Directors shall have been publicly announced or disclosed.

(c) For any matter to be brought properly before a special meeting of stockholders, the matter must be set forth in the Corporation’s notice of the meeting given by or at the direction of the Board of Directors or by the Secretary pursuant to Section 1.2 of these by-laws. In the event that the Corporation calls a special meeting of stockholders for the purpose of electing one or more persons to the Board of Directors, any stockholder may nominate a person or persons (as the case may be), for election to such position(s) as specified in the Corporation’s notice of the meeting, if the Stockholder Notice required by Section 1.11(b) hereof shall be delivered to the Secretary of the Corporation at the principal executive office of the Corporation not later than the close of business on the tenth day following the day on which the date of the special meeting and of either the names of all nominees proposed by the Board of Directors or the number of directors to be elected at such meeting is publicly announced or disclosed.

(d) For purposes of this Section 1.11, a matter shall be deemed to have been “publicly announced or disclosed” if such matter is disclosed in a press release reported by GlobeNewswire, the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the Corporation with the SEC.

(e) Only persons who are nominated in accordance with the procedures set forth in this Section 1.11, or pursuant to Section 1.2(b) of these by-laws, shall be eligible for election as directors of the Corporation. In no event shall the postponement or adjournment of an annual meeting already publicly noticed, or any announcement of such postponement or adjournment, commence a new period (or extend any time period) for the giving of notice as provided in this Section 1.11. This Section 1.11 shall not apply to stockholders proposals made pursuant to Rule 14a-8 under the Exchange Act.

(f) The chairperson of the meeting, in addition to making any other determinations that may be appropriate to the conduct of the meeting, shall have the power and duty to determine whether notice of nominees and other matters proposed to be brought before a meeting has been duly given in the manner provided in this Section 1.11 and, if not so given, shall direct and declare at the meeting that such nominees and other matters are not properly before the meeting and shall not be considered. Notwithstanding the foregoing provisions of this Section 1.11, if the stockholder or a qualified representative of the stockholder does not appear at the annual or special meeting of stockholders of the Corporation to present any such nomination, or make any such proposal, such nomination or proposal shall be disregarded, notwithstanding that proxies in respect of such vote may have been received by the Corporation. For purposes

 

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of this Section 1.11 and for Section 1.2(b), to be considered a qualified representative of the stockholder, a person must be a duly authorized officer, manager, or partner of such stockholder or authorized by a writing executed by such stockholder (or a reliable reproduction or electronic transmission of the writing) delivered to the Corporation at the meeting by the stockholder stating that the person is authorized to act for the stockholder as proxy at the meeting of stockholders.

ARTICLE II

Board of Directors

Section 2.1. Powers; Number; Qualifications . The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors, except as may be otherwise provided by law or in the certificate of incorporation. The Board of Directors shall consist of one or more members, each of whom shall be a natural person, the exact number thereof to be determined from time to time pursuant to a resolution adopted by the Board of Directors. Directors need not be stockholders.

Section 2.2. Election; Term of Office; Resignation; Vacancies . Each director shall hold office until his or her successor is elected and qualified or until his or her earlier resignation or removal. Any director may resign at any time upon notice given in writing or by electronic transmission to the Board of Directors or to the Chief Executive Officer or the Secretary of the Corporation. Such resignation shall take effect at the time it is delivered unless the resignation specifies a later effective date or an effective date determined upon the happening of an event or events. Unless otherwise specified therein, no acceptance of such resignation shall be necessary to make it effective. Unless otherwise provided in the certificate of incorporation or these by-laws, vacancies and newly created directorships resulting from any increase in the authorized number of directors elected by all of the stockholders having the right to vote as a single class or from any other cause shall be filled by, and only by, a majority of the directors then in office, although less than a quorum, or by the sole remaining director. Any director elected or appointed to fill a vacancy shall hold office until the next election of the class of directors of the director which such director replaced, and until his or her successor is elected and qualified or until his or her earlier resignation or removal.

Section 2.3. Regular Meetings . Regular meetings of the Board of Directors may be held at such places within or without the State of Delaware and at such times as the Board of Directors may from time to time determine, and if so determined notice thereof need not be given.

Section 2.4. Special Meetings . Special meetings of the Board of Directors may be held at any time or place within or without the State of Delaware whenever called by or at the request of the Chairperson of the Board of Directors, the Lead Director, if any, the Vice Chairperson of the Board of Directors, if any, the Chief Executive Officer or any three directors. Notice of any special meeting of the Board of Directors stating the place, date and time of the special meeting shall be given to each

 

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director (i) by mail or overnight courier, addressed to his or her residence or usual place of business, not less than two (2) days before the date of such meeting, (ii) by facsimile or other form of electronic communication, not less than 24 hours before the time of the meeting or (iii) personally or by telephone, not less than 24 hours before the time of the meeting; provided, however, that notice of a special meeting may be given within such lesser period than those specified if circumstances so require in the reasonable judgment of the person calling the meeting.

Section 2.5. Participation in Meetings by Conference Telephone Permitted . Unless otherwise restricted by the certificate of incorporation or these by-laws, members of the Board of Directors, or any committee designated by the Board of Directors, may participate in a meeting of the Board of Directors or of such committee, as the case may be, by means of conference telephone, video conference or similar communications equipment by which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this by-law shall constitute presence in person at such meeting.

Section 2.6. Quorum; Vote Required for Action . A majority of the number of Directors fixed by resolution of the Board of Directors shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, and the affirmative vote of a majority of the Directors present at any such meeting shall be the act of the Board of Directors unless the certificate of incorporation or these by-laws require a vote of a greater number. In case at any meeting of the Board of Directors a quorum shall not be present, a majority of the directors present may adjourn the meeting from time to time until a quorum shall be present.

Section 2.7. Organization . The Chairperson, shall preside at all meetings of the Board of Directors and of stockholders, or in the absence of the Chairperson of the Board of Directors, the Lead Director, if any has been appointed by the Board of Directors with such powers as the Board of Directors may from time to time designate, or in the absence of any such Lead Director, the Vice Chairperson of the Board of Directors, if any, or in the absence of the Vice Chairperson of the Board of Directors by the Chief Executive Officer, or in their absence by a chairperson chosen at the meeting. The Secretary, or in the absence of the Secretary, an Assistant Secretary, shall act as secretary of the meeting, but in the absence of the Secretary and any Assistant Secretary the chairperson of the meeting may appoint any person to act as secretary of the meeting.

Section 2.8. Action by Directors Without a Meeting . Unless otherwise restricted by the certificate of incorporation or these by-laws, any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee thereof, may be taken without a meeting if all members of the Board of Directors or of such committee, as the case may be, consent thereto in writing or by electronic transmission, and the writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of the Board of Directors or committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.

 

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Section 2.9.  Compensation of Directors . Unless otherwise restricted by the certificate of incorporation or these by-laws, the Board of Directors shall have the authority to fix the compensation of directors. Nothing herein shall be construed to preclude any director from serving the Corporation in any other capacity and receiving compensation therefor.

ARTICLE III

Committees

Section 3.1. Committees . The Board of Directors may designate one or more committees, including but not limited to, an Audit Committee, Corporate Responsibility and Governance Committee and Human Resources Committee, each committee to consist of one or more of the directors of the Corporation. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board of Directors or in these by-laws, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to the following matters: (i) approving or adopting, or recommending to the stockholders, any action or matter (other than the election or removal of directors) expressly required by law to be submitted to stockholders for approval, (ii) adopting, amending or repealing these by-laws or (iii) indemnifying directors.

Section 3.2. Committee Rules . Unless the Board of Directors otherwise provides, each committee designated by the Board of Directors may adopt, amend and repeal rules for the conduct of its business. In the absence of a provision by the Board of Directors or a provision in the rules of such committee to the contrary, a majority of the entire authorized number of members of such committee shall constitute a quorum for the transaction of business, the vote of a majority of the members present at a meeting at the time of such vote if a quorum is then present shall be the act of such committee, and in other respects each committee shall conduct its business in the same manner as the Board of Directors conducts its business pursuant to Article II of these by-laws.

ARTICLE IV

Officers

Section 4.1.  Election and Designation . The officers of the Corporation shall be elected by the Board of Directors and may include a Chief Executive Officer, a

 

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President, a Chief Financial Officer of the Corporation, one or more Vice Presidents, a Controller of the Corporation, a Treasurer of the Corporation, a Secretary, and such other officers or assistant officers as the Board of Directors deems necessary or advisable and may give any of them such further designations or alternate titles as it considers desirable. The same person may hold any two or more offices.

Section 4.2. Appointment, Term of Office and Qualifications . The Board of Directors may authorize any duly elected officer to appoint one or more other officers or assistant officers. Unless the Board of Directors otherwise prescribes by resolution, each officer shall hold office until his or her respective successor shall have been duly chosen and qualified or until such officer’s resignation, death or removal.

Section 4.3.  Vacancies . If any vacancy shall occur among the officers or assistant officers of the Corporation, the Board of Directors, or any duly elected officer authorized by the Board of Directors to appoint such officer or assistant officer, may fill such vacancy.

Section 4.4. Removal . The Board of Directors may remove any officer or assistant officer at any time either with or without cause. Any officer or assistant officer appointed by another officer may likewise be removed by such officer. Any such removal shall be without prejudice to the contractual rights of such officer, if any, with the Corporation, but the election or appointment of an officer shall not of itself create contractual rights.

Section 4.5. Powers and Duties . The officers of the Corporation shall have such powers and duties in the management of the Corporation as shall be stated in these by-laws or in a resolution of the Board of Directors which is not inconsistent with these by-laws and, to the extent not so stated, as generally pertain to their respective offices, subject to the control of the Board. The Secretary shall have the duty to record the proceedings of the meetings of the stockholders, the Board and any committees in a book to be kept for that purpose. The Board may require any officer, agent or employee to give security for the faithful performance of his or her duties.

ARTICLE V

Stock

Section 5.1. Stock Certificates and Uncertificated Shares . The shares of stock in the Corporation may be certificated or uncertificated. Any certificates of stock of the Corporation shall be in such form as may be determined by the Board of Directors. Every holder of stock represented by certificates shall be entitled to have a certificate signed by or in the name of the Corporation by the Chairperson, the Chief Executive Officer, the President or a Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary, of the Corporation, representing the number of shares of stock registered in certificate form owned by such holder. If such certificate is manually signed by one officer or manually countersigned by a transfer agent or by a registrar, any other signature on the certificate may be a facsimile. In case any officer,

 

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transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if such person were such officer, transfer agent or registrar at the date of issue. The Corporation may not issue stock certificates in bearer form.

Except as otherwise expressly provided by law, the rights and obligations of the holders of uncertificated shares and the rights and obligations of the holders of certificates representing stock of the same class and series shall be identical.

Section 5.2. Lost, Stolen or Destroyed Stock Certificates; Issuance of New Certificates . The Corporation may issue a new certificate of stock or uncertificated shares in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed, and the Corporation may require the owner of the lost, stolen or destroyed certificate, or such owner’s legal representative, to give the Corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate or uncertificated shares.

ARTICLE VI

Miscellaneous

Section 6.1. Fiscal Year . The fiscal year of the Corporation shall be determined by the Board of Directors.

Section 6.2. Seal . The Corporation may have a corporate seal which shall have the name of the Corporation inscribed thereon and shall be in such form as may be approved from time to time by the Board of Directors. The corporate seal may be used by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced.

Section 6.3. Waiver of Notice of Meetings of Stockholders, Directors and Committees . Whenever notice is required to be given by law or under any provision of the certificate of incorporation or these by-laws, a written waiver thereof, signed by the person entitled to notice, or a waiver by electronic transmission by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders, directors or members of a committee of directors need be specified in any written waiver of notice or any waiver by electronic transmission unless so required by the certificate of incorporation or these by-laws.

 

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Section 6.4. Indemnification of Directors and Officers . Except as provided in this by-law, the Corporation shall indemnify Indemnitees to the full extent permitted by Delaware law. Expenses reasonably incurred by Indemnitee in defending any action, suit, or proceeding, as described in this by-law, shall be paid or reimbursed by the Corporation promptly upon receipt by it of an undertaking of Indemnitee to repay such Expenses if it shall ultimately be determined that he or she is not entitled to be indemnified by the Corporation.

Notwithstanding anything contained in this Section 6.4, except for proceedings to enforce rights provided in this Section 6.4, the Corporation shall not be obligated under this Section 6.4 to provide any indemnification or any payment or reimbursement of expenses to any person in connection with a proceeding (or part thereof) initiated by such person (which shall not include counterclaims or crossclaims initiated by others) unless the Board of Directors has authorized or consented to such proceeding (or part thereof) in a resolution adopted by the Board of Directors; it being understood, however, that this provision shall in no way prevent or prohibit the Corporation from indemnifying any person or paying or reimbursing any person’s expenses in connection with a proceeding initiated by such person pursuant to a contractual arrangement between the Corporation and such person.

No claim for indemnification shall be paid by the Corporation unless the Corporation has determined that Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interest of the Corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe that his or her conduct was unlawful. Unless ordered by a court, such determinations shall be made by (1) a majority vote of the directors who are not parties to the action, suit or proceeding for which indemnification is sought, even though less than a quorum, or (2) by a committee of such directors designated by a majority vote of directors, even though less than a quorum, or (3) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion, or (4) by stockholders.

Indemnitee shall promptly notify the Corporation in writing upon the sooner of (a) becoming aware of an action, suit or proceeding where indemnification or the advance payment or reimbursement of Expenses may be sought or (b) being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any matter which may be subject to indemnification or the advance payment or reimbursement of Expenses covered hereunder. The failure of Indemnitee to so notify the Corporation shall not relieve the Corporation of any obligation which it may have to Indemnitee pursuant to this by-law.

As a condition to indemnification or the advance payment or reimbursement of Expenses, any demand for payment by Indemnitee hereunder shall be in writing and shall provide reasonable accounting by Indemnitee’s legal counsel for the Expenses to be paid by the Corporation.

 

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For the purposes of this by-law, the term “Indemnitee” shall mean any person made or threatened to be made a party, or otherwise involved in any civil, criminal, administrative or investigative action, suit or proceeding by reason of the fact that such person or such person’s testator or intestate is or was a director or officer of the Corporation or serves or served at the request of the Corporation at any other enterprise as a director or officer; the term “Corporation” shall include any constituent corporation (including any constituent of a constituent) absorbed by the Corporation in a consolidation or merger; the term “other enterprise” shall include any corporation, limited liability company, public limited company, partnership, joint venture, trust, employee benefit plan, fund or other enterprise; service “at the request of the Corporation” shall include service as a director or officer at the request of the Corporation of an enterprise which imposes duties on, or involves services by, such person, including without limitation, with respect to an employee benefit plan, its participants or beneficiaries; the term “Expenses” shall include all reasonable expense, including without limitation, attorneys’ fees, retainers, court costs, transcript costs, fees and expenses of experts, including accountants and other advisors, travel expenses, duplicating costs, postage, delivery service fees, filing fees, and all other disbursements or expenses of the types typically paid or incurred in connection with investigating, defending, being a witness in, or participating (including on appeal), or preparing for an actual or threatened action, suit or proceeding (including Indemnitee’s counterclaims that directly respond to and negate the affirmative claim made against Indemnitee (“ Permitted Counterclaims ”) in such action, suit or proceeding, whether civil, criminal, administrative or investigative), but shall exclude the costs of (a) any of Indemnitee’s counterclaims, other than Permitted Counterclaims, (b) the costs of acquiring and maintaining an appeal or supersedeas bond or similar instrument or (c) the fees and costs of enforcing a right to indemnification or advance payment or reimbursement under this by-law.

Any action, suit or proceeding regarding indemnification or advance payment or reimbursement of Expenses arising out of these by-laws or otherwise shall only be brought and heard in the Court of Chancery of the State of Delaware. In the event of any payment under this by-law, the Corporation shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee (under any insurance policy or otherwise), who shall execute all papers required and shall do everything necessary to secure such rights, including but not limited to, the execution of such documents necessary to enable the Corporation to effectively bring suit to enforce such rights. Except as required by law or as otherwise becomes public, Indemnitee will keep confidential any information that arises in connection with this by-law, including but not limited to, claims for indemnification or the advance payment or reimbursement of Expenses, amounts paid or payable under this by-law and any communications between the parties. No amendment of the certificate of incorporation of the Corporation or this by-law shall impair the rights of any Indemnitee arising at any time with respect to events occurring at or prior to such amendment.

Section 6.5. Interested Directors; Quorum . No contract or transaction between the Corporation and one or more of its directors or officers, or between the Corporation and any other corporation, partnership, association or other organization in

 

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which one or more of its directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board of Directors or committee thereof which authorizes the contract or transaction, or solely because such director’s or officer’s votes are counted for such purpose, if: (1) the material facts as to director’s or officer’s relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee, and the Board of Directors or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or (2) the material facts as to director’s or officer’s relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (3) the contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified, by the Board of Directors, a committee thereof or the stockholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which authorizes the contract or transaction.

Section 6.6. Form of Records . Any records maintained by the Corporation in the regular course of its business, including its stock ledger, books of account and minute books, may be kept on, or by means of, or be in the form of, any information storage device, or method, provided that the records so kept can be converted into clearly legible paper form within a reasonable time. The Corporation shall so convert any records so kept upon the request of any person entitled to inspect such records in accordance with law.

Section 6.7. Distributions . Subject to the rights of any class or series of stock set forth in the certificate of incorporation, the Board of Directors may from time to time, in its discretion, declare payment of dividends or other distributions on its outstanding shares of capital stock in such manner and upon such terms and conditions as are permitted by the certificate of incorporation and the DGCL.

Section 6.8. Amendment of By-Laws . These by-laws may be amended or repealed, and new by-laws adopted, by the Board of Directors, but the stockholders entitled to vote may adopt additional by-laws and may amend or repeal any by-law whether or not adopted by them.

Section 6.9. Forum for Certain Actions . Unless the Corporation consents in writing to the selection of an alternative forum, a state court located within the State of Delaware (or, if no state court located within the State of Delaware has jurisdiction, the federal district court for the District of Delaware) shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action or proceeding asserting a claim of breach of a fiduciary duty owed by any director or officer or other employee or agent of the Corporation to the Corporation or the Corporation’s stockholders or debtholders, (iii) any action or proceeding asserting a claim against the Corporation or any director or officer or other employee or agent of the Corporation arising pursuant to any provision of the General Corporation Law of the State of Delaware or the certificate of incorporation or these by-laws (in each case, as they may be amended from time to time), or (iv) any action asserting a claim against the Corporation or any director or officer or other employee of the Corporation governed by the internal affairs doctrine other “internal corporate claim” as defined in Section 115 of the General Corporation Law of the State of Delaware.”

 

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Exhibit 4.1

 

 

 

Stockholder and Registration Rights Agreement

by and between

R. R. Donnelley & Sons Company

and

LSC Communications, Inc.

Dated as of September 14, 2016

 

 

 


TABLE OF CONTENTS

 

ARTICLE I   
Definitions   

Section 1.01

 

Definitions

     1   

Section 1.02

 

Interpretation

     6   
ARTICLE II   
Registration Rights   

Section 2.01

 

Registration

     7   

Section 2.02

 

Piggyback Registrations

     10   

Section 2.03

 

Registration Procedures

     12   

Section 2.04

 

Underwritten Offerings or Exchange Offers

     18   

Section 2.05

 

Registration Expenses Paid by LSC

     19   

Section 2.06

 

Indemnification

     19   

Section 2.07

 

Reporting Requirements; Rule 144

     21   
ARTICLE III   
Voting Restrictions   

Section 3.01

 

Voting of LSC Common Stock

     22   
ARTICLE IV   
Miscellaneous   

Section 4.01

 

Term

     22   

Section 4.02

 

Counterparts; Entire Agreement; Corporate Power

     22   

Section 4.03

 

Disputes

     23   

Section 4.04

 

Amendment

     23   

Section 4.05

 

Waiver of Default

     23   

Section 4.06

 

Successors, Assigns and Transferees

     24   

Section 4.07

 

Further Assurances

     25   

Section 4.08

 

Performance

     25   

Section 4.09

 

Notices

     25   

Section 4.10

 

Severability

     26   

Section 4.11

 

No Reliance on Other Party

     26   

Section 4.12

 

Registrations, Exchanges, Etc

     26   

Section 4.13

 

Mutual Drafting

     26   

 

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STOCKHOLDER AND REGISTRATION RIGHTS AGREEMENT

This Stockholder and Registration Rights Agreement (this “ Agreement ”) is made as of September 14, 2016, by and between R. R. Donnelley & Sons Company, a Delaware corporation (“ RRD ”), and LSC Communications, Inc., a Delaware corporation and wholly-owned subsidiary of RRD (“ LSC ”). Capitalized terms used herein and not otherwise defined shall have the respective meanings assigned to them in Section 1.01 .

RECITALS

A. Pursuant to the Separation and Distribution Agreement, dated as of September 14, 2016 (the “ Separation and Distribution Agreement ”), by and among RRD, LSC and Donnelley Financial Solutions, Inc., a Delaware corporation and wholly-owned subsidiary of RRD (“ Donnelley Financial ”), RRD will distribute 80.75% of the outstanding shares of common stock, par value $0.01 per share, of LSC (the “ Common Stock ”) to RRD’s stockholders (the “ LSC Distribution ”).

B. RRD may Sell those shares of Common Stock that are not distributed in the LSC Distribution (such shares not distributed in the LSC Distribution, the “ Retained Shares ”) through one or more transactions, including pursuant to one or more transactions registered under the Securities Act.

C. LSC desires to grant to RRD the Registration Rights for the Retained Shares and other Registrable Securities, subject to the terms and conditions of this Agreement.

D. RRD desires to grant LSC a proxy to vote the Retained Shares and other Registrable Securities in proportion to the votes cast by LSC’s other stockholders, subject to the terms and conditions of this Agreement.

AGREEMENTS

NOW, THEREFORE, in consideration of the mutual promises contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto hereby agree as follows:

ARTICLE I

Definitions

Section 1.01 Definitions . As used in this Agreement, the following terms shall have the following meanings:

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” (including the correlative meanings of the terms “controlled by” and “under common control


with”), 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 or member of any Group shall be deemed to be an Affiliate of another Party or member of such other Party’s Group by reason of having one or more directors in common. For the avoidance of doubt, (a) LSC and Donnelley Financial shall not be considered Affiliates of RRD following the LSC Distribution and Donnelley Financial Distribution; (b) RRD and Donnelley Financial shall not be considered Affiliates of LSC following the LSC Distribution; and (c) RRD and LSC shall not be considered Affiliates of Donnelley Financial following the Donnelley Financial Distribution.

Agreement ” has the meaning set forth in the preamble.

Ancillary Filings ” has the meaning set forth in Section 2.03(a)(i) .

Blackout Notice ” has the meaning set forth in Section 2.01(d).

Blackout Period ” has the meaning set forth in Section 2.01(d) .

Board ” means the board of directors of LSC.

Business Day ” means any day that is not a Saturday, Sunday or other day on which banking institutions doing business in New York, New York are authorized or obligated by law or required by executive order to be closed.

Common Stock ” has the meaning set forth in the recitals.

Debt ” means any indebtedness of RRD, including debt securities, notes, credit facilities, credit agreements and other debt instruments, including, in each case, any amounts due thereunder.

Demand Registration ” has the meaning set forth in Section 2.01(a) .

Disadvantageous Condition ” has the meaning set forth in Section 2.01(d) .

Dispute ” has the meaning set forth in Section 4.03(a) .

Donnelley Financial ” has the meaning set forth in the preamble and shall include Donnelley Financial’s successors by merger, acquisition, reorganization or otherwise.

Exchanges ” means one or more Public Exchanges or Private Exchanges.

Exchange Act ” means the U.S. Securities Exchange Act of 1934, as amended, and any successor thereto, and any rules and regulations promulgated thereunder, all as the same shall be in effect from time to time.

Exchange Offer ” means an exchange offer of Registrable Securities for outstanding securities of a Holder.

 

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

Holder ” means RRD, so long as RRD holds any Registrable Securities, and any Permitted Transferee, so long as such Person holds any Registrable Securities.

Indemnifying Party ” has the meaning set forth in Section 2.06(c) .

Indemnitee ” has the meaning set forth in Section 2.06(c) .

Initiating Holder ” has the meaning set forth in Section 2.01(a) .

Limited Transferee ” has the meaning set forth in Section 4.06(b) .

Loss ” and “ Losses ” have the meaning set forth in Section 2.06(a) .

LSC ” has the meaning set forth in the preamble and shall include LSC’s successors by merger, acquisition, reorganization or otherwise.

LSC Distribution ” has the meaning set forth in the recitals.

“LSC Distribution Date ” means the date and time at which the Distribution occurs.

LSC Group ” means LSC and each Subsidiary of LSC.

LSC Public Sale ” has the meaning set forth in Section 2.02(a) .

Offering Confidential Information ” means, with respect to a Piggyback Registration, (i) LSC’s plan to file the relevant Registration Statement and engage in the offering so registered, (ii) any information regarding the offering being registered (including the potential timing, price, number of shares, underwriters or other counterparties, selling stockholders or plan of distribution) and (iii) any other information (including information contained in draft supplements or amendments to offering materials) provided to any Holders by LSC (or by third parties) in connection with a Piggyback Registration; provided, that Offering Confidential Information shall not include information that (x) was or becomes generally available to the public (including as a result of the filing of the relevant Registration Statement) other than as a result of a disclosure by any Holder, (y) was or becomes available to any Holder from a source not bound by any confidentiality agreement with LSC or (z) was otherwise in such Holder’s possession prior to it being furnished to such Holder by LSC or on LSC’s behalf.

Other Holders ” has the meaning set forth in Section 2.01(f) .

 

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Participating Banks ” means such investment banks or other Persons that engage in any Exchange with RRD.

Permitted Transferee ” means any Transferee, any Subsequent Transferee and, for the limited purposes set forth in Section 4.06(b) , any Limited Transferee.

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

Piggyback Registration ” has the meaning set forth in Section 2.02(a) .

Private Exchange ” means a private exchange pursuant to which RRD shall Sell some or all of its Registrable Securities to one or more Participating Banks in exchange, directly or indirectly, for any equity interest of RRD or the satisfaction of Debt of RRD, in a transaction or series of transactions not required to be registered under the Securities Act.

Prospectus ” means the prospectus included in any Registration Statement, all amendments and supplements to such prospectus, including post-effective amendments, and all other material incorporated by reference in such prospectus.

Public Exchange ” means a public exchange pursuant to which RRD shall Sell some or all of its Registrable Securities to one or more Participating Banks in exchange, directly or indirectly, for any equity interest of RRD or the satisfaction of Debt of RRD, in a transaction or series of transactions registered under the Securities Act.

Registrable Securities ” means the Retained Shares and any shares of Common Stock or other securities issued with respect to, in exchange for, or in replacement of such Retained Shares; provided that the term “Registrable Securities” excludes any security (i) the offering and Sale of which has been effectively registered under the Securities Act and which has been Sold in accordance with a Registration Statement, (ii) beneficially owned by a Person who is not RRD that has been Sold by a Holder in a transaction or transactions exempt from the registration and prospectus delivery requirements of the Securities Act under Section 4(1) thereof (including transactions pursuant to Rule 144) such that the further Sale of such securities by the transferee or assignee is not restricted under the Securities Act or (iii) that has been Sold by a Holder in a transaction in which such Holder’s rights under this Agreement are not, or cannot be, assigned.

Registration ” means a registration with the SEC of the offer and Sale to the public of any Registrable Securities under a Registration Statement. The terms “ Register ” and “ Registering ” shall have correlative meanings.

Registration Expenses ” means all expenses incident to the LSC Group’s performance of or compliance with this Agreement, including all (i) registration, qualification and filing fees, (ii) fees and expenses of compliance with securities or blue sky laws (including reasonable fees and disbursements of counsel in connection with blue sky qualifications within the United States of any Registrable Securities being registered), (iii) printing expenses, messenger, telephone and delivery expenses, (iv) internal expenses of LSC Group (including all

 

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salaries and expenses of employees of members of LSC Group performing legal or accounting duties), (v) fees and disbursements of counsel for LSC and customary fees and expenses for independent certified public accountants retained by the LSC Group (including the expenses of any comfort letters or costs associated with the delivery by LSC Group members’ independent certified public accountants of comfort letters customarily requested by underwriters) and (vi) fees and expenses of listing any Registrable Securities on any securities exchange on which the shares of Common Stock are then listed and Financial Industry Regulatory Authority registration and filing fees; but Registration Expenses do not include (a) any fees or disbursements of any Holder, (b) all expenses incurred in connection with the printing, mailing and delivering of copies of any Registration Statement, any Prospectus, any other offering documents and any amendments and supplements thereto to any underwriters and dealers, (c) any underwriting discounts, fees or commissions attributable to the offer and Sale of any Registrable Securities, (d) any fees and expenses of the underwriters or dealer managers, (e) the cost of preparing, printing or producing any agreements among underwriters, underwriting agreements and blue sky or legal investment memoranda, any selling agreements and any other similar documents in connection with the offering, Sale, distribution or delivery of the Registrable Securities or other shares of Common Stock to be Sold, including any fees of counsel for any underwriters in connection with the qualification of the Registrable Securities or other shares of Common Stock to be Sold for offering and Sale or distribution under state securities laws, (f) any stock transfer taxes, out-of-pocket costs and expenses relating to any investor presentations on any “road show” presentations undertaken in connection with marketing of the Registrable Securities and (g) any fees and expenses of any counsel to the Holder or the underwriters or dealer managers.

Registration Period ” has the meaning set forth in Section 2.01(c).

Registration Rights ” means the rights of the Holders to cause LSC to Register Registrable Securities pursuant to Article II .

Registration Statement ” means any registration statement of LSC filed with, or as the context permits to be filed with, the SEC under the rules and regulations promulgated under the Securities Act, including the related Prospectus, amendments and supplements to such registration statement, including post-effective amendments, and all exhibits and all material incorporated by reference into such registration statement. For the avoidance of doubt, it is acknowledged and agreed that such Registration Statement may be on any form that shall be applicable, including Form S-1, Form S-3 or Form S-4 and may be a Shelf Registration Statement.

Retained Shares ” has the meaning set forth in the recitals.

RRD ” has the meaning set forth in the preamble and shall include RRD’s successors by merger, acquisition, reorganization or otherwise.

RRD Group ” means RRD and each Subsidiary of RRD.

Sale ” means the direct or indirect transfer, sale, assignment or other disposition of a security. The terms “ Sell ” and “ Sold ” shall have correlative meanings.

 

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SEC ” means the U.S. Securities and Exchange Commission.

Securities Act ” means the U.S. Securities Act of 1933, as amended, and any successor thereto, and any rules and regulations promulgated thereunder, all as the same shall be in effect from time to time.

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

Shelf Registration Statement ” means a Registration Statement of LSC for an offering of Registrable Securities to be made on a delayed or continuous basis pursuant to Rule 415 under the Securities Act (or similar provisions then in effect).

Subsequent Transferee ” has the meaning set forth in Section 4.06(b) .

Subsidiary ” means, with respect to any Person, any corporation, limited liability company, joint venture or partnership of which such Person (i) beneficially owns, either directly or indirectly, more than fifty percent (50%) of (x) the total combined voting power of all classes of voting securities of such Person, (y) the total combined equity interests or (z) the capital or profit interests, in the case of a partnership, or (ii) otherwise has the power to vote, either directly or indirectly, sufficient securities to elect a majority of the board of directors or similar governing body.

Transferee ” has the meaning set forth in Section 4.06(b) .

Underwritten Offering ” means a Registration in which Registrable Securities are Sold to an underwriter or underwriters on a firm commitment basis for reoffering to the public.

Section 1.02 Interpretation . In this Agreement, unless the context clearly indicates otherwise:

(a) words used in the singular include the plural, and words used in the plural include the singular;

(b) references to any Person include such Person’s successors and assigns but, if applicable, only if such successors and assigns are permitted by this Agreement, and a reference to such Person’s “Affiliates” or “Subsidiaries” shall be deemed to mean such Person’s Affiliates or Subsidiaries, as applicable, following the LSC Distribution;

(c) any reference to any gender includes the other gender and the neuter;

(d) the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation”;

(e) the words “shall” and “will” are used interchangeably and have the same meaning;

(f) the word “or” shall have the inclusive meaning represented by the phrase “and/or”;

 

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(g) any reference to any Article, Section, Exhibit or Schedule means such Article or Section of, or such Exhibit or Schedule to, this Agreement, as the case may be, and references in any Section or definition to any clause means such clause of such Section or definition;

(h) the words “herein,” “hereunder,” “hereof,” “hereto” and words of similar import shall be deemed references to this Agreement as a whole and not to any particular Section or other provision of this Agreement;

(i) any reference to any agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and by this Agreement;

(j) any reference to any law (including statutes and ordinances) means such law (including all rules and regulations promulgated thereunder) as amended, modified, codified or reenacted, in whole or in part, and in effect at the time of determining compliance or applicability;

(k) relative to the determination of any period of time, “from” means “from and including,” “to” means “to but excluding” and “through” means “through and including”;

(l) the table of contents and titles to Articles and headings of Sections contained in this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of or to affect the meaning or interpretation of this Agreement;

(m) any portion of this Agreement obligating a party to take any action or refrain from taking any action, as the case may be, shall mean that such party shall also be obligated to cause its relevant Subsidiaries to take such action or refrain from taking such action, as the case may be;

(n) the language of this Agreement shall be deemed to be the language the parties hereto have chosen to express their mutual intent, and no rule of strict construction shall be applied against any party; and

(o) except as otherwise indicated, all periods of time referred to herein shall include all Saturdays, Sundays and holidays; provided , however that if the date to perform the act or give any notice with respect to this Agreement shall fall on a day other than a Business Day, such act or notice may be performed or given timely if performed or given on the next succeeding Business Day.

ARTICLE II

Registration Rights

Section 2.01 Registration . (a) Prior to the third anniversary of the LSC Distribution Date, any Holder(s) of 10% or more of the then outstanding Registrable Securities

 

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(and any Holders acting together which collectively hold 10% or more of the then outstanding Registrable Securities) (collectively, the “ Initiating Holder ”; provided that the 10% ownership threshold shall not apply to any Holder that is a member of the RRD Group) shall have the right to request that LSC file a Registration Statement, on behalf of itself or, in the case of RRD, on behalf of the Participating Banks, with the SEC on the appropriate registration form for all or part of the Registrable Securities held by such Initiating Holder, by delivering a written request thereof to LSC specifying the number of shares of Registrable Securities such Initiating Holder wishes to register (a “ Demand Registration ”). LSC shall (i) within ten days of the receipt of a Demand Registration, give written notice of such Demand Registration to all Holders of Registrable Securities, (ii) use commercially reasonable efforts to prepare and file the Registration Statement as expeditiously as possible but in any event within 45 days of such request, and (iii) use commercially reasonable efforts to cause the Registration Statement to become effective in respect of each Demand Registration in accordance with the intended method of distribution set forth in the written request delivered by the Initiating Holder. LSC shall include in such Registration all Registrable Securities with respect to which LSC receives, within the 10 days immediately following the receipt by the Holder(s) of such notice from LSC, a request for inclusion in the Registration from the Holder(s) thereof. Each such request from a Holder of Registrable Securities for inclusion in the Registration shall also specify the aggregate amount of Registrable Securities proposed to be Registered and include the selling security holder information required by Items 507 and 508 of Regulation S-K, as applicable. The Initiating Holder may request that the Registration Statement be on any appropriate form, including Form S-4 in the case of an Exchange Offer or a Shelf Registration Statement, and LSC shall effect the Registration on the form so requested.

(b) The Holder(s) may collectively make a total of three Demand Registration requests pursuant to Section 2.01(a) (including any exercise of rights to Demand Registration transferred pursuant to Section 4.06 ; provided that the Holder(s) may not make more than one Demand Registration request in any six (6)-month period. LSC shall not be required to register the Registrable Securities requested to be included in the Demand Registration unless a Holder has requested to include in such Demand Registration either (i) together with all other Holders participating in the Demand Registration, Registrable Securities having an aggregate principal amount of at least $50 million or (ii) all of the Registrable Securities then held by such requesting Holder. In addition, and notwithstanding anything to the contrary, RRD shall be permitted to engage in up to four Private Exchanges during the first twelve months following the date hereof, and all Demand Registration requests made by the Participating Banks in such Private Exchanges shall collectively count only as one Demand Registration request (with such request date deemed to be the date of the first of the requests made pursuant to the applicable Private Exchanges) for purposes of the limitation on the number of Demand Registration requests set forth in the first sentence of this Section 2.01(b) (it being understood that RRD shall be permitted to engage in additional Private Exchanges outside such twelve-month period, but each Demand Registration request by the Participating Banks for such Private Exchange shall count as an additional Demand Registration request for purposes of the limitation on the number of Demand Registration requests set forth in the first sentence of this Section 2.01(b) ).

(c) LSC shall be deemed to have effected a Registration for purposes of this Section 2.01 if the Registration Statement is declared effective by the SEC or becomes effective upon filing with the SEC and remains effective until the earlier of (i) the date when all

 

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Registrable Securities thereunder have been Sold and (ii) 60 days from the effective date of the Registration Statement (or from the date the applicable Prospectus is filed with the SEC if LSC is satisfying a request for a Demand Registration by filing a Prospectus under an effective Shelf Registration Statement) (the “ Registration Period ”). No Registration shall be deemed to have been effective if the conditions to closing specified in the underwriting agreement or dealer manager agreement, if any, entered into in connection with such Registration are not satisfied by reason of a wrongful act, misrepresentation or breach of such applicable underwriting agreement or dealer manager agreement by any member of the LSC Group. If during the Registration Period, such Registration is interfered with by any stop order, injunction or other order or requirement of the SEC or other Governmental Authority or the need to update or supplement the Registration Statement, the Registration Period shall be extended on a day-for-day basis for any period in which the Holder(s) is unable to complete an offering as a result of such stop order, injunction or other order or requirement of the SEC or other Governmental Authority.

(d) With respect to any Registration Statement, whether filed or to be filed pursuant to this Agreement, if LSC shall reasonably determine, upon the advice of legal counsel, that maintaining the effectiveness of such Registration Statement or filing an amendment or supplement thereto (or, if no Registration Statement has yet been filed, filing such a Registration Statement) would require the public disclosure of material nonpublic information concerning any bona fide material financing transaction or any material transaction under consideration by the LSC Group that would materially adversely affect the LSC Group or materially interfere with such transaction (a “ Disadvantageous Condition ”), LSC may, for the shortest period reasonably practicable, and in any event for not more than 30 consecutive calendar days (a “ Blackout Period ”), notify the Holders whose offers and Sales of Registrable Securities are covered (or to be covered) by such Registration Statement (a “ Blackout Notice ”) that such Registration Statement is unavailable for use (or will not be filed as requested). Upon the receipt of any such Blackout Notice, the Holders shall forthwith discontinue use of the Prospectus contained in any effective Registration Statement; provided , that, if at the time of receipt of such Blackout Notice any Holder shall have Sold its Registrable Securities (or have signed a firm commitment underwriting agreement with respect to the purchase of such shares) and the Disadvantageous Condition is not of a nature that would require a post-effective amendment to the Registration Statement, then LSC shall use its commercially reasonable efforts to take such action as to eliminate any restriction imposed by federal securities laws on the timely delivery of such Registrable Securities. When any Disadvantageous Condition as to which a Blackout Notice has been previously delivered shall cease to exist, LSC shall as promptly as reasonably practicable notify the Holders and take such actions in respect of such Registration Statement as are otherwise required by this Agreement. The effectiveness period for any Demand Registration for which LSC has given notice of a Blackout Period shall be increased by the length of time of such Blackout Period. LSC shall not impose, in any 180-day period, Blackout Periods lasting, in the aggregate, in excess of 60 calendar days. If LSC declares a Blackout Period with respect to a Demand Registration for a Registration Statement that has not yet been declared effective, (i) the Holders may by notice to LSC withdraw the related Demand Registration request without such Demand Registration request counting against the number of Demand Registration requests permitted to be made under Section 2.01(b) and (ii) the Holders shall not be responsible for any of LSC’s related Registration Expenses.

 

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(e) If the Initiating Holder so indicates at the time of its request pursuant to Section 2.01(a) , such offering of Registrable Securities shall be in the form of an Underwritten Offering or an Exchange Offer, and LSC shall indicate this selection in the written notice to the Holders required under Section 2.01(a). In the event that the Initiating Holder intends to Sell the Registrable Securities by means of an Underwritten Offering or Exchange Offer, the right of any Holder to include Registrable Securities in such registration shall be conditioned upon such Holder’s participation in such Underwritten Offering or Exchange Offer and the inclusion of such Holder’s Registrable Securities in the Underwritten Offering or the Exchange Offer to the extent provided herein. The Holders of a majority of the outstanding Registrable Securities being included in any Underwritten Offering or Exchange Offer shall select the underwriter(s) in the case of an Underwritten Offering or the dealer manager(s) in the case of an Exchange Offer, provided that such underwriter(s) or dealer manager(s) are reasonably acceptable to LSC. LSC shall be entitled to designate counsel for such underwriter(s) or dealer manager(s) (subject to their approval), provided that such designated underwriters’ counsel shall be a firm of national reputation representing underwriters or dealer managers in capital markets transactions.

(f) If the managing underwriter or underwriters of a proposed Underwritten Offering of Registrable Securities included in a Registration pursuant to this Section 2.01 inform(s) in writing the Holders participating in such Registration that, in its or their opinion, the number of securities requested to be included in such Registration exceeds the number that can be Sold in such offering without being likely to have a significant adverse effect on the price, timing or distribution of the securities offered or the market for the securities offered, the number of Registrable Securities to be included in such Registration shall be reduced to the maximum number recommended by the managing underwriter or underwriters and allocated pro rata among the Holders, including the Initiating Holder, in proportion to the number of Registrable Securities each Holder has requested to be included in such Registration; provided, that in such circumstance the Initiating Holder may notify LSC in writing that the Registration Statement shall be abandoned or withdrawn, in which event LSC shall abandon or withdraw such Registration Statement. In the event the Initiating Holder notifies LSC that such Registration Statement shall be abandoned or withdrawn following such notification by the managing underwriter or underwriters, such Holder shall not be deemed to have requested a Demand Registration pursuant to Section 2.01(a) , and LSC shall not be deemed to have effected a Demand Registration pursuant to Section 2.01(b) . If the amount of Registrable Securities to be underwritten has not been limited in accordance with the first sentence of this Section 2.01(f) , LSC and the holders of Common Stock or, if the Registrable Securities include securities other than Common Stock, the holders of securities of the same class of those securities included in the Registrable Securities, in each case, other than the Holders (“ Other Holders ”), may include such securities for LSC’s own account or for the account of Other Holders in such Registration if the underwriter(s) so agree and to the extent that, in the opinion of such underwriter(s), the inclusion of such additional amount will not adversely affect the offering of the Registrable Securities included in such Registration.

Section 2.02 Piggyback Registrations . (a) Prior to the earlier to occur of the third anniversary of the LSC Distribution Date or the date on which the Registrable Securities then held by the Holder(s) represents less than 1% of LSC’s then-issued and outstanding Common Stock (or, if the Registrable Securities include securities other than Common Stock, less than 1% of LSC’s then-issued and outstanding securities of the same class as the securities

 

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included in the Registrable Securities), if LSC proposes to file a Registration Statement (other than a Shelf Registration) or a Prospectus supplement filed pursuant to a Shelf Registration Statement under the Securities Act with respect to any offering of such securities for its own account and/or for the account of any Other Holders (other than (i) a Registration under Section 2.01 , (ii) a Registration pursuant to a Registration Statement on Form S-8 or Form S-4 or similar form that relates to a transaction subject to Rule 145 under the Securities Act, (iii) any form that does not include substantially the same information, other than information relating to the selling holders or their plan of distribution, as would be required to be included in a Registration Statement covering the sale of the Registrable Securities, (iv) in connection with any dividend reinvestment or similar plan, (v) for the sole purpose of offering securities to another entity or its security holders in connection with the acquisition of assets or securities of such entity or any similar transaction or (vi) a Registration in which the only Common Stock being registered is Common Stock issuable upon conversion of debt securities that are also being registered) (a “ LSC Public Sale ”), then, as soon as practicable, but in any event not less than 15 days prior to the proposed date of filing such Registration Statement, LSC shall give written notice of such proposed filing to each Holder, and such notice shall offer such Holders the opportunity to Register under such Registration Statement such number of Registrable Securities as each such Holder may request in writing (a “ Piggyback Registration ”). Subject to Section 2.02(b) and Section 2.02(c) , if a Holder delivers a request for a Piggyback Registration in writing within five Business Days after the receipt of notice of any such LSC Public Sale, LSC shall use its commercially reasonable efforts to include in a Registration Statement with respect to a LSC Public Sale all Registrable Securities that are requested to be included therein; provided , however , that if, at any time after giving written notice of its intention to Register any securities and prior to the effective date of the Registration Statement filed in connection with such Registration, LSC shall determine for any reason not to Register or to delay Registration of the LSC Public Sale, LSC may, at its election, give written notice of such determination to each such Holder and, thereupon, (x) in the case of a determination not to Register, shall be relieved of its obligation to Register any Registrable Securities in connection with such Registration, without prejudice, however, to the rights of any Holder to request that such Registration be effected as a Demand Registration under Section 2.01 and (y) in the case of a determination to delay Registration, shall be permitted to delay Registering any Registrable Securities for the same period as the delay in Registering such other shares of Common Stock in the LSC Public Sale. No Registration effected under this Section 2.02 shall relieve LSC of its obligation to effect any Demand Registration under Section 2.01 . For purposes of clarification, LSC’s filing of a Shelf Registration Statement shall not be deemed to be a LSC Public Sale; provided , however, that any prospectus supplement filed pursuant to a Shelf Registration Statement with respect to an offering of LSC’s Common Stock for its own account and/or for the account of any other Persons will be a LSC Public Sale unless such offering qualifies for an exemption from the LSC Public Sale definition in this Section 2.02(a) .

(b) In the case of any Underwritten Offering, each Holder shall have the right to withdraw such Holder’s request for inclusion of its Registrable Securities in such Underwritten Offering pursuant to Section 2.02(a) at any time prior to the execution of an underwriting agreement with respect thereto by giving written notice to LSC of such Holder’s request to withdraw and, subject to the preceding clause, each Holder shall be permitted to withdraw all or part of such Holder’s Registrable Securities from a Piggyback Registration at any time prior to the effective date thereof.

 

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(c) If the managing underwriter or underwriters of any proposed Underwritten Offering of a class of Registrable Securities included in a Piggyback Registration informs LSC and each Holder in writing that, in its or their opinion, the number of securities of such class that such Holder and any other Persons intend to include in such offering exceeds the number that can be Sold in such offering without being likely to have an adverse effect on the price, timing or distribution of the securities offered or the market for the securities offered, then the securities to be included in such Registration shall be (i) first, all securities of LSC and any other Persons (other than LSC’s executive officers and directors) for whom LSC is effecting the Registration, as the case may be, proposes to Sell, (ii) second, the number, if any, of Registrable Securities of such class that, in the opinion of such managing underwriter or underwriters, can be Sold without having such adverse effect, with such number to be allocated pro rata among the Holders that have requested to participate in such Registration based on the relative number of Registrable Securities of such class requested by such Holder to be included in such Sale, (iii) third, the number of securities of executive officers and directors of LSC for whom LSC is effecting the Registration, as the case may be, with such number to be allocated pro rata among the executive officers and directors and (iv) fourth, any other securities eligible for inclusion in such Registration, allocated among the holders of such securities in such proportion as LSC and those holders may agree.

(d) After a Holder has been notified of its opportunity to include Registrable Securities in a Piggyback Registration, such Holder (i) shall treat the Offering Confidential Information as confidential information, (ii) shall not use any Offering Confidential Information for any purpose other than to evaluate whether to include its Registrable Securities (or other shares of Common Stock) in such Piggyback Registration and (iii) shall not disclose any Offering Confidential Information to any Person other than such of its agents, employees, advisors and counsel as have a need to know such Offering Confidential Information, and to cause such agents, employees, advisors and counsel to comply with the requirements of this Section 2.02(d) ; provided , that any such Holder may disclose Offering Confidential Information if such disclosure is required by legal process, but such Holder shall cooperate with LSC to limit the extent of such disclosure through protective order or otherwise, and to seek confidential treatment of the Offering Confidential Information.

Section 2.03 Registration Procedures . (a) In connection with LSC’s Registration obligations under Section 2.01 and Section 2.02 , LSC shall use commercially reasonable efforts to effect such Registration to permit the offer and Sale of such Registrable Securities in accordance with the intended method or methods of distribution thereof as expeditiously as reasonably practicable, and in connection therewith, LSC shall, and shall cause the members of the LSC Group to:

(i) prepare and file the required Registration Statement, including all exhibits and financial statements and, in the case of an Exchange Offer, any document required under Rule 425 or Rule 165 with respect to such Exchange Offer (collectively, the “ Ancillary Filings ”) required under the Securities Act to be filed therewith, and before filing with the SEC a Registration Statement or Prospectus, or any amendments or supplements thereto, (A) furnish to the underwriters or dealer managers, if any, and to the Holders, copies of all documents prepared to be filed, which documents shall be subject to the review and reasonable comment of such underwriters or dealer managers and such

 

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Holders and their respective counsel, and provide such underwriters or dealers managers, if any, and such Holders and their respective counsel reasonable time to review and comment thereon and (B) not file with the SEC any Registration Statement or Prospectus or amendments or supplements thereto or any Ancillary Filing to which the Holders or the underwriters or dealer managers, if any, shall reasonably object;

(ii) prepare and file with the SEC such amendments and post-effective amendments to such Registration Statement and supplements to the Prospectus and any Ancillary Filing as may be reasonably requested by the participating Holders;

(iii) promptly notify the participating Holders and the managing underwriters or dealer managers, if any, and, if requested, confirm such advice in writing and provide copies of the relevant documents, as soon as reasonably practicable after notice thereof is received by any member of the LSC Group (A) when the applicable Registration Statement or any amendment thereto has been filed or becomes effective, the applicable Prospectus or any amendment or supplement to such Prospectus has been filed, or any Ancillary Filing has been filed, (B) of any comments (written or oral) by the SEC or any request (written or oral) by the SEC or any other Governmental Authority for amendments or supplements to such Registration Statement, such Prospectus or any Ancillary Filing, or for any additional information, (C) of the issuance by the SEC of any stop order suspending the effectiveness of such Registration Statement, any order preventing or suspending the use of any preliminary or final Prospectus or any Ancillary Filing, or the initiation or threatening of any proceedings for such purposes, (D) if, at any time, the representations and warranties (written or oral) in any applicable underwriting agreement or dealer manager agreement cease to be true and correct in all material respects and (E) of the receipt by any member of the LSC Group of any notification with respect to the suspension of the qualification of the Registrable Securities for offering or Sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose;

(iv) (A) promptly notify each participating Holder and the managing underwriter(s) or dealer manager(s), if any, when LSC becomes aware of the occurrence of any event as a result of which the applicable Registration Statement, the Prospectus included in such Registration Statement (as then in effect) or any Ancillary Filing contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements therein (in the case of such Prospectus and any preliminary Prospectus, in light of the circumstances under which they were made) not misleading, or if for any other reason it shall be necessary during such time period to amend or supplement such Registration Statement, Prospectus or any Ancillary Filing in order to comply with the Securities Act, and (B) in either case, as promptly as reasonably practicable thereafter, prepare and file with the SEC, and furnish without charge to each participating Holder and the underwriter(s) or dealer manager(s), if any, an amendment or supplement to such Registration Statement, Prospectus or Ancillary Filing that will correct such statement or omission or effect such compliance;

(v) use commercially reasonable efforts to prevent or obtain the withdrawal of any stop order or other order suspending the use of any preliminary or final Prospectus;

 

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(vi) promptly (A) incorporate in a Prospectus supplement or post-effective amendment such information as the managing underwriter(s) or dealer manager(s), if any, and the Holders agree should be included therein relating to the plan of distribution with respect to such Registrable Securities and (B) make all required filings of such Prospectus supplement or post-effective amendment as soon as reasonably practicable after being notified of the matters to be incorporated in such Prospectus supplement or post-effective amendment;

(vii) furnish to each participating Holder and each underwriter or dealer manager, if any, without charge, as many conformed copies as such Holder or underwriter or dealer manager may reasonably request of the applicable Registration Statement and any amendment or post-effective amendment thereto, including financial statements and schedules, but excluding all documents and exhibits (i) incorporated therein by reference or (ii) that are available via the SEC’s EDGAR system;

(viii) deliver to each participating Holder and each underwriter or dealer manager, if any, without charge, as many copies of the applicable Prospectus (including each preliminary Prospectus) and any amendment or supplement thereto as such Holder or underwriter or dealer manager may reasonably request (it being understood that LSC consents to the use of such Prospectus or any amendment or supplement thereto by each participating Holder and the underwriter(s) or dealer manager(s), if any, in connection with the offering and Sale of the Registrable Securities covered by such Prospectus or any amendment or supplement thereto) and such other documents as such participating Holder or underwriter or dealer manager may reasonably request in order to facilitate the Sale of the Registrable Securities by such Holder or underwriter or dealer manager;

(ix) on or prior to the date on which the applicable Registration Statement is declared effective or becomes effective, use its commercially reasonable efforts to register or qualify, and cooperate with each participating Holder, the managing underwriter(s) or dealer manager(s), if any, and their respective counsel, in connection with the registration or qualification of, such Registrable Securities for offer and Sale under the securities or “blue sky” laws of each state and other jurisdiction of the United States as any participating Holder or managing underwriter(s) or dealer manager(s), if any, or their respective counsel reasonably request, and in any foreign jurisdiction mutually agreeable to LSC and the participating Holders, and do any and all other acts or things reasonably necessary or advisable to keep such registration or qualification in effect for so long as such Registration Statement remains in effect and so as to permit the continuance of offers and Sales and dealings in such jurisdictions for so long as may be necessary to complete the distribution of the Registrable Securities covered by the Registration Statement; provided that LSC will not be required to qualify generally to do business in any jurisdiction where it is not then so qualified, to take any action which would subject it to taxation or general service of process in any such jurisdiction where it is not then so subject or conform its capitalization or the composition of its assets at the time to the securities or blue sky laws of any such jurisdiction;

(x) in connection with any Sale of Registrable Securities that will result in such securities no longer being Registrable Securities, cooperate with each participating

 

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Holder and the managing underwriter(s) or dealer manager(s), if any, to (A) facilitate the timely preparation and delivery of book entry statements or certificates representing Registrable Securities to be Sold and not bearing any restrictive Securities Act legends and (B) register such Registrable Securities in such denominations and such names as such participating Holder or the underwriter(s) or dealer manager(s), if any, may request at least two Business Days prior to such Sale of Registrable Securities; provided that LSC may satisfy its obligations hereunder without issuing physical stock certificates through the use of the Depository Trust Company’s Direct Registration System;

(xi) cooperate and assist in any filings required to be made with the Financial Industry Regulatory Authority and each securities exchange, if any, on which any of LSC’s securities are then listed or quoted and on each inter-dealer quotation system on which any of LSC’s securities are then quoted, and in the performance of any due diligence investigation by any underwriter or dealer manager (including any “qualified independent underwriter”) that is required to be retained in accordance with the rules and regulations of each such exchange, and use commercially reasonable efforts to cause the Registrable Securities covered by the applicable Registration Statement to be registered with or approved by such other Governmental Authorities as may be necessary to enable the seller or sellers thereof or the underwriter(s) or dealer manager(s), if any, to consummate the Sale of such Registrable Securities;

(xii) not later than the effective date of the applicable Registration Statement, provide a CUSIP number for all Registrable Securities and provide the applicable transfer agent with printed certificates for the Registrable Securities which are in a form eligible for deposit with the Depository Trust Company; provided, that LSC may satisfy its obligations hereunder without issuing physical stock certificates through the use of the Depository Trust Company’s Direct Registration System;

(xiii) obtain for delivery to and addressed to the underwriter(s) or dealer manager(s), if any, opinions of external counsel for LSC, in each case dated the effective date of the Registration Statement or, in the event of an Underwritten Offering, the date of the closing under the underwriting agreement or, in the event of an Exchange Offer, the date of the closing under the dealer manager agreement or similar agreement or otherwise, and in each such case in customary form and content for the type of Underwritten Offering or Exchange Offer, as applicable;

(xiv) in the case of an Underwritten Offering or Exchange Offer, obtain for delivery to and addressed to LSC and the managing underwriter(s) or dealer manager(s), if any, and, to the extent requested, each participating Holder, a comfort letter from LSC’s independent registered public accounting firm in customary form and content for the type of Underwritten Offering or Exchange Offer, dated the date of execution of the underwriting agreement or dealer manager agreement or, if none, the date of commencement of the Exchange Offer, and brought down to the closing, whether under the underwriting agreement or dealer manager agreement, if applicable, or otherwise;

(xv) in the case of an Exchange Offer that does not involve a dealer manager, provide to each participating Holder such customary written representations and warranties or other covenants or agreements as may be requested by any participating Holder comparable to those that would be included in an underwriting or dealer manager agreement;

 

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(xvi) use commercially reasonable efforts to comply with all applicable rules and regulations of the SEC and make generally available to its security holders, as soon as reasonably practicable, but in any event no later than 90 days, after the end of the 12-month period beginning with the first day of LSC’s first quarter commencing after the effective date of the applicable Registration Statement, an earnings statement satisfying the provisions of Section 11(a) of the Securities Act and covering the period of at least 12 months, but not more than 18 months, beginning with the first month after the effective date of the Registration Statement;

(xvii) provide and cause to be maintained a transfer agent and registrar for all Registrable Securities covered by the applicable Registration Statement from and after a date not later than the effective date of such Registration Statement;

(xviii) cause all Registrable Securities covered by the applicable Registration Statement to be listed on each securities exchange on which such Registrable Securities are then listed or quoted and on each inter-dealer quotation system on which any of LSC’s securities are then quoted;

(xix) provide (A) each Holder participating in the Registration, (B) the underwriters (which term, for purposes of this Agreement, shall include any Person deemed to be an underwriter within the meaning of Section 2(11) of the Securities Act), if any, of the Registrable Securities to be registered, (C) the Sale or placement agent therefor, if any, (D) the dealer manager therefor, if any, (E) counsel for such Holder, underwriters, agent, or dealer manager and (F) any attorney, accountant or other agent or representative retained by such Holder or any such underwriter or dealer manager, as selected by such Holder, in each case, the opportunity to participate in the preparation of such Registration Statement, each Prospectus included therein or filed with the SEC, and each amendment or supplement thereto; and for a reasonable period prior to the filing of such Registration Statement, upon execution of a customary confidentiality agreement, make available for inspection upon reasonable notice at reasonable times and for reasonable periods, by the parties referred to in clauses (A) through (F) above, all pertinent financial and other records, pertinent corporate and other documents and properties of the LSC Group that are available to LSC, and cause all of the LSC Group’s officers, directors and employees and the independent public accountants who have certified its financial statements to supply all information available to LSC reasonably requested by any such Person in connection with such Registration Statement as shall be necessary to enable them to exercise their due diligence or other responsibility, subject to the foregoing; provided , that in no event shall any member of the LSC Group be required to make available any information which the LSC Group determines in good faith to be competitively sensitive with respect to such recipient.

The recipients of such information shall coordinate with one another so that the inspection permitted hereunder will not unnecessarily interfere with the LSC Group’s

 

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conduct of business. Each Holder agrees that information obtained by it as a result of such inspections shall be deemed confidential and acknowledges that it shall have an obligation not to, and agrees that it shall not, use such confidential information as the basis for any market transactions in the securities of LSC or its Affiliates unless and until such information is made generally available to the public by LSC or such Affiliate or for any reason not related to the Registration of Registrable Securities;

(xx) in the case of an Underwritten Offering or Exchange Offer registering 25% or more of the Retained Shares, cause the senior executive officers of LSC to participate at reasonable times and for reasonable periods in the customary “road show” presentations that may be reasonably requested by the managing underwriter(s) or dealer manager(s), if any, and otherwise to facilitate, cooperate with, and participate in each proposed offering contemplated herein and customary selling efforts related thereto, except to the extent that such participation materially interferes with the management of LSC’s business; provided that the effectiveness period for any Demand Registration shall be increased on a day-for-day basis by the period of time that management cannot participate;

(xxi) comply with all requirements of the Securities Act, Exchange Act and other applicable laws, rules and regulations, as well as all applicable stock exchange rules; and

(xxii) take all other customary steps reasonably necessary or advisable to effect the Registration and distribution of the Registrable Securities contemplated hereby.

(b) As a condition precedent to any Registration hereunder, LSC may require each Holder as to which any Registration is being effected to furnish to LSC such information regarding the distribution of such securities and such other information relating to such Holder, its ownership of Registrable Securities and other matters as LSC may from time to time reasonably request in writing. Each such Holder agrees to furnish such information to LSC and to cooperate with LSC as reasonably necessary to enable LSC to comply with the provisions of this Agreement.

(c) Each Holder shall, as promptly as reasonably practicable, notify LSC, at any time when a Prospectus is required to be delivered (or deemed delivered) under the Securities Act, of the occurrence of an event, of which such Holder has knowledge, relating to such Holder or its Sale of Registrable Securities thereunder requiring the preparation of a supplement or amendment to such Prospectus so that, as thereafter delivered (or deemed delivered) to the purchasers of such Registrable Securities, such Prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they are made, not misleading.

(d) RRD agrees, and any other Holder agrees by acquisition of such Registrable Securities, that, upon receipt of any written notice from LSC of the occurrence of any event of the kind described in Section 2.03(a)(iv) such Holder will forthwith discontinue Sale of Registrable Securities pursuant to such Registration Statement until such Holder’s receipt

 

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of the copies of the supplemented or amended Prospectus contemplated by Section 2.03(a)(iv) , or until such Holder is advised in writing by LSC that the use of the Prospectus may be resumed, and if so directed by LSC, such Holder will deliver to LSC, at LSC’s expense, all copies of the Prospectus covering such Registrable Securities current at the time of receipt of such notice. In the event LSC shall give any such notice, the period during which the applicable Registration Statement is required to be maintained effective shall be extended by the number of days during the period from and including the date of the giving of such notice through the date when each seller of Registrable Securities covered by such Registration Statement either receives the copies of the supplemented or amended Prospectus contemplated by Section 2.03(a)(iv) or is advised in writing by LSC that the use of the Prospectus may be resumed.

Section 2.04 Underwritten Offerings or Exchange Offers . (a) If requested by the managing underwriter(s) for any Underwritten Offering or dealer manager(s) for any Exchange Offer that is requested by Holders pursuant to a Demand Registration under Section 2.01 , LSC shall enter into an underwriting agreement or dealer manager agreement, as applicable, with such underwriter(s) or dealer manager(s) for such offering, such agreement to be reasonably satisfactory in substance and form to LSC and the underwriter(s) or dealer manager(s) and, if RRD is a participating Holder, to RRD. Such agreement shall contain such representations and warranties by LSC and such other terms as are generally prevailing in agreements of that type. Each Holder with Registrable Securities to be included in any Underwritten Offering or Exchange Offer by such underwriter(s) or dealer manager(s) shall enter into such underwriting agreement or dealer manager agreement at the request of LSC, which agreement shall contain such reasonable representations and warranties by the Holder and such other reasonable terms as are generally prevailing in agreements of that type.

(b) In the event of a LSC Public Sale involving an offering of Common Stock or other equity securities of LSC in an Underwritten Offering (whether in a Demand Registration or a Piggyback Registration, whether or not the Holders participate therein), the Holders hereby agree, and, in the event of a LSC Public Sale of Common Stock or other equity securities of LSC in an Underwritten Offering or an Exchange Offer, LSC shall agree, and it shall cause its executive officers and directors to agree, if requested by the managing underwriter or underwriters in such Underwritten Offering or by the Holder or the dealer manager or dealer managers, in an Exchange Offer, not to effect any Sale or distribution (including any offer to Sell, contract to Sell, short Sale or any option to purchase) of any securities (except, in each case, as part of the applicable Registration, if permitted hereunder) that are of the same type as those being Registered in connection with such public offering and Sale, or any securities convertible into or exchangeable or exercisable for such securities, during the period beginning five days before, and ending 90 days (or such lesser period as may be permitted by LSC or the participating Holder(s), as applicable, or such managing underwriter or underwriters) after, the effective date of the Registration Statement filed in connection with such Registration (or, if later, the date of the Prospectus), to the extent timely notified in writing by such selling Person or the managing underwriter or underwriters or dealer manager or dealer managers. The participating Holders and LSC, as applicable, also agree to execute an agreement evidencing the restrictions in this Section 2.04(b) in customary form and with customary exceptions (which, for the avoidance of doubt, shall permit any Sale pursuant to a plan that is in effect prior to such time and that complies with Rule 10b5-1 of the Exchange Act), which form is reasonably satisfactory to LSC or the participating Holder(s), as applicable, and the underwriter(s) or dealer manager(s),

 

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as applicable; provided that such restrictions may be included in the underwriting agreement or dealer manager agreement, if applicable. LSC may impose stop-transfer instructions with respect to the securities subject to the foregoing restriction until the end of the required stand-off period.

(c) No Holder may participate in any Underwritten Offering or Exchange Offer hereunder unless such Holder (i) agrees to Sell such Holder’s securities on the basis provided in any underwriting arrangements or dealer manager agreements approved by LSC or other Persons entitled to approve such arrangements and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements, dealer manager agreements and other documents reasonably required under the terms of such underwriting arrangements or dealer manager agreements or this Agreement.

Section 2.05 Registration Expenses Paid by LSC . In the case of any Registration of Registrable Securities required pursuant to this Agreement, LSC shall pay all Registration Expenses regardless of whether the Registration Statement becomes effective; provided , however , that LSC shall not be required to pay for any expenses of any Registration begun pursuant to Section 2.01 if the Demand Registration request is subsequently withdrawn at the request of the Holders of a majority of the Registrable Securities to be Registered (in which case all participating Holders shall bear such expenses), unless the Holders of a majority of the Registrable Securities agree to forfeit their right to one Demand Registration to which they have the right pursuant to Section 2.01(b) .

Section 2.06 Indemnification . (a) LSC agrees to indemnify and hold harmless, to the full extent permitted by law, each Holder whose shares are included in a Registration Statement and each Person, if any, who controls (within the meaning of the Securities Act or the Exchange Act) such Holder, from and against any and all losses, claims, damages, liabilities (or actions or proceedings in respect thereof, whether or not such indemnified party is a party thereto) and expenses, joint or several (including reasonable costs of investigation and legal expenses) (each, a “ Loss ” and collectively “ Losses ”) arising out of or based upon (i) any untrue or alleged untrue statement of a material fact contained in any Registration Statement under which the offering and Sale of such Registrable Securities was Registered under the Securities Act (including any final or preliminary Prospectus contained therein or any amendment thereof or supplement thereto or any documents incorporated by reference therein), or any such statement made in any free writing prospectus (as defined in Rule 405 under the Securities Act) that LSC has filed or is required to file pursuant to Rule 433(d) of the Securities Act or any Ancillary Filing, or (ii) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of a Prospectus, preliminary Prospectus or free writing prospectus, in light of the circumstances under which they were made) not misleading; provided , that with respect to any untrue statement or omission or alleged untrue statement or omission made in any Prospectus, the indemnity agreement contained in this paragraph shall not apply to the extent that any such liability or Loss results from or arises out of (A) the fact that a current copy of the Prospectus was not sent or given to the Person asserting any such liability at or prior to the written confirmation of the Sale of the Registrable Securities concerned to such Person if it is determined by a court of competent jurisdiction in a final and non-appealable judgment that LSC has provided such Prospectus and it was the responsibility of such Holder or its agents to provide such Person with a current copy of the Prospectus and such current copy of the Prospectus would have cured the defect giving rise

 

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to such liability, (B) the use of any Prospectus by or on behalf of any Holder after LSC has notified such Person (x) that such Prospectus contains an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, (y) that a stop order has been issued by the SEC with respect to a Registration Statement or (z) that a Disadvantageous Condition exists, or (C) information furnished in writing by such Holder or on such Holder’s behalf, in either case expressly for use in such Registration Statement, Prospectus, free writing prospectus or Ancillary Filing relating to such Holder’s Registrable Securities. This indemnity shall be in addition to any liability LSC may otherwise have, including under the Separation and Distribution Agreement. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Holder or any indemnified party and shall survive the Sale of such securities by such Holder.

(b) Each participating Holder whose Registrable Securities are included in a Registration Statement agrees (severally and not jointly) to indemnify and hold harmless, to the full extent permitted by law, LSC, its directors, officers, agents, advisors, employees and each Person, if any, who controls (within the meaning of the Securities Act and the Exchange Act) LSC from and against any and all Losses (i) arising out of or based upon information furnished in writing by such Holder or on such Holder’s behalf, in either case expressly for use in a Registration Statement, Prospectus, free writing prospectus or Ancillary Filing relating to such Holder’s Registrable Securities or (ii) resulting from (A) the fact that a current copy of the Prospectus was not sent or given to the Person asserting any such liability at or prior to the written confirmation of the Sale of the Registrable Securities concerned to such Person if it is determined by a court of competent jurisdiction in a final and non-appealable judgment that it was the responsibility of such Holder or its agent to provide such Person with a current copy of the Prospectus and such current copy of the Prospectus would have cured the defect giving rise to such liability, or (B) the use of any Prospectus by or on behalf of any Holder after LSC has notified such Person (x) that such Prospectus contains an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, (y) that a stop order has been issued by the SEC with respect to a Registration Statement or (z) that a Disadvantageous Condition exists. This indemnity shall be in addition to any liability the participating Holder may otherwise have, including under the Separation and Distribution Agreement. In no event shall the liability of any participating Holder hereunder be greater in amount than the dollar amount of the net proceeds received by such holder under the Sale of the Registrable Securities giving rise to such indemnification obligation. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of LSC or any indemnified party.

(c) If for any reason the indemnification provided for in Section 2.06(a) or Section 2.06(b) is unavailable to any Person entitled to indemnification hereunder (an “ Indemnitee ”) or insufficient to hold it harmless as contemplated by Section 2.06(a) or Section 2.06(b) , then any party which may be obligated to provide indemnification to such Indemnitee (an “ Indemnifying Party ”) shall contribute to the amount paid or payable by the Indemnitee as a result of such Loss in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party on the one hand and the Indemnitee on the other hand. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue

 

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statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Indemnifying Party or the Indemnitee and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. For the avoidance of doubt, the establishment of such relative fault, and any disagreements or disputes relating thereto, shall be subject to Section 4.03 . Notwithstanding anything in this Section 2.06(c) to the contrary, no Indemnifying Party (other than LSC) shall be required pursuant to this Section 2.06(c) to contribute any amount in excess of the amount by which the net proceeds received by such Indemnifying Party from the Sale of Registrable Securities in the offering to which the Losses of the Indemnitees relate (before deducting expenses, if any) exceeds the amount of any damages which such Indemnifying Party has otherwise been required to pay by reason of such untrue statement or omission. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 2.06(c) were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in this Section 2.06(c). No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. The amount paid or payable by an Indemnitee hereunder shall be deemed to include, for purposes of this Section 2.06(c) , any legal or other expenses reasonably incurred by such Indemnitee in connection with investigating, preparing to defend or defending against or appearing as a third party witness in respect of, or otherwise incurred in connection with, any such loss, claim, damage, expense, liability, action, investigation or proceeding. If indemnification is available under this Section 2.06 , the Indemnifying Parties shall indemnify each Indemnitee to the full extent provided in Section 2.06(a) and Section 2.06(b) without regard to the relative fault of said Indemnifying Parties or Indemnitee. Any Holders’ obligations to contribute pursuant to this Section 2.06(c) are several and not joint.

Section 2.07 Reporting Requirements; Rule 144 . Until the earlier of (a) the expiration or termination of this Agreement in accordance with its terms and (b) the date upon which RRD ceases to own any Registrable Securities, LSC shall use its commercially reasonable efforts to be and remain in compliance with the periodic filing requirements imposed under the SEC’s rules and regulations, including the Exchange Act, and any other applicable laws or rules, and thereafter shall timely file such information, documents and reports as the SEC may require or prescribe under Sections 13, 14 and 15(d), as applicable, of the Exchange Act so that LSC will qualify for registration on Form S-3 at such time as it may be first eligible (it being understood that as of the date hereof, LSC is not eligible to register securities on Form S-3) and to enable RRD to Sell Registrable Securities without registration under the Securities Act consistent with the exemptions from registration under the Securities Act provided by (i) Rule 144 or Regulation S under the Securities Act, as amended from time to time, or (ii) any similar SEC rule or regulation then in effect. From and after the date hereof through the earlier of the expiration or termination of this Agreement in accordance with its terms and the date upon which RRD ceases to own any Registrable Securities, LSC shall forthwith upon request furnish any Holder (x) a written statement by LSC as to whether it has complied with such requirements and, if not, the specifics thereof, (y) a copy of the most recent annual or quarterly report of LSC and (z) such other reports and documents filed by LSC with the SEC as such Holder may reasonably request in availing itself of an exemption for the offering and Sale of Registrable Securities without registration under the Securities Act.

 

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ARTICLE III

Voting Restrictions

Section 3.01 Voting of LSC Common Stock . (a) From the date of this Agreement and until the date that RRD ceases to own any Registrable Securities, RRD shall be present, in person or by proxy, at each and every LSC stockholder meeting, and otherwise to cause all Registrable Securities owned by it to be counted as present for purposes of establishing a quorum at any such meeting.

(b) From the date of this Agreement and until the date that RRD ceases to own any Registrable Securities, RRD hereby grants an irrevocable proxy, which shall be deemed coupled with an interest sufficient in law to support an irrevocable proxy to LSC or its designees, to vote, with respect to any matter (including waivers of contractual or statutory rights), all Registrable Securities owned by it, in proportion to the votes cast by the other holders of Common Stock on such matter, to the extent such Registrable Securities are entitled to vote or consent on any such matter; provided that (i) such proxy shall automatically be revoked as to a particular Registrable Security upon any Sale of such Registrable Security by RRD and (ii) nothing in this Section 3.01(b) shall limit or prohibit any such Sale.

(c) RRD acknowledges and agrees that LSC will be irreparably damaged in the event any of the provisions of this Article III are not performed by RRD in accordance with their terms or are otherwise breached. Accordingly, it is agreed that LSC shall be entitled to an injunction to prevent breaches of this Article III and to specific enforcement of the provisions of this Article III in any action instituted in any court of the United States or any state having subject matter jurisdiction over such action.

ARTICLE IV

Miscellaneous

Section 4.01 Term . This Agreement shall terminate upon the earlier of (a) three years after the LSC Distribution Date, (b) the time at which all Registrable Securities are held by Persons other than Holders and (c) the time at which all Registrable Securities have been Sold in accordance with one or more Registration Statements; provided , that the provisions of Section 2.05 and Section 2.06 and this Article IV shall survive any such termination.

Section 4.02 Counterparts; Entire Agreement; Corporate Power . (a) This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each party and delivered to each other party.

(b) This Agreement, the exhibit hereto and Article X of the Separation and Distribution Agreement contain the entire agreement between the parties with respect to the subject matter hereof, supersedes all previous agreements, negotiations, discussions, writings, understandings, commitments and conversations with respect to such subject matter and there are no agreements or understandings between the parties with respect to such subject matter other than those set forth or referred to herein.

 

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(c) RRD represents and LSC represents on behalf of itself and each other member of the LSC Group, as follows: (i) each such Person has the requisite corporate or other power and authority and has taken all corporate or other action necessary in order to execute, deliver and perform this Agreement and to consummate the transactions contemplated hereby, and (ii) this Agreement has been duly executed and delivered by it and constitutes a valid and binding agreement of it enforceable in accordance with the terms hereof.

(d) Each party hereto acknowledges that it and each other party hereto may execute this Agreement by facsimile, stamp or mechanical signature. Each party hereto expressly adopts and confirms each such facsimile, stamp or mechanical signature made in its respective name as if it were a manual signature, agrees that it shall not assert that any such signature is not adequate to bind such party to the same extent as if it were signed manually and agrees that at the reasonable request of any other party hereto at any time it shall as promptly as reasonably practicable cause this Agreement to be manually executed (any such execution to be as of the date of the initial date thereof).

Section 4.03 Disputes . (a) Any dispute, controversy or claim arising out of or relating to this Agreement, including the validity, interpretation, breach or termination hereof (a “ Dispute ”), shall be resolved in accordance with the procedures set forth in Article X of the Separation and Distribution Agreement, which shall be the sole and exclusive procedures for the resolution of any such Dispute unless otherwise specified in this Agreement or in Article X of the Separation and Distribution Agreement.

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

(c) THE PARTIES EXPRESSLY WAIVE AND FOREGO ANY RIGHT TO TRIAL BY JURY.

Section 4.04 Amendment . No provisions of this Agreement shall be deemed waived, amended, supplemented or modified by any party, unless such waiver, amendment, supplement or modification is in writing and signed by the authorized representative of LSC, if such waiver, amendment, supplement or modification is sought to be enforced against LSC, or the Holders of a majority of the Registrable Securities, if such waiver, amendment, supplement or modification is sought to be enforced against a Holder.

Section 4.05 Waiver of Default . Waiver by any party of any default by the other party of any provision of this Agreement shall not be deemed a waiver by the waiving party of any subsequent or other default, nor shall it prejudice the rights of such party. No failure or delay

 

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by any party in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof nor shall a single or partial exercise thereof prejudice any other or further exercise thereof or the exercise of any other right, power or privilege.

Section 4.06 Successors, Assigns and Transferees . (a) This Agreement and all provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. LSC may assign this Agreement to any member of the LSC Group or at any time in connection with a sale or acquisition of LSC, whether by merger, consolidation, sale of all or substantially all of LSC’s assets, or similar transaction, without the consent of the Holders; provided, that the successor or acquiring Person agrees in writing to assume all of LSC’s rights and obligations under this Agreement. RRD may assign this Agreement to any member of the RRD Group or at any time in connection with a sale or acquisition of RRD, whether by merger, consolidation, sale of all or substantially all of RRD ’s assets, or similar transaction, without the consent of LSC.

(b) It is acknowledged and agreed that on the date hereof, RRD is the only Holder for purposes of this Agreement. In connection with the Sale of Registrable Securities, RRD may assign its Registration-related rights and obligations under this Agreement relating to such Registrable Securities to the following transferees in such Sale: (i) a member of the RRD Group to which Registrable Securities are Sold, (ii) one or more Participating Banks to which Registrable Securities are Sold in an Exchange, (iii) any defined benefit plan of which RRD is the sponsor to which Registrable Securities are Sold, (iv) any other transferee to which Registrable Securities are Sold, if LSC provides prior written consent to the transfer of such Registration-related rights and obligations along with the Sale of Registrable Securities or (v) any other transferee to which Registrable Securities are Sold, unless (A) such Sale consists of Registrable Securities representing less than 1% of LSC’s then-issued and outstanding securities of the same class as the Registrable Securities or (B) such Registrable Securities are eligible for Sale pursuant to an exemption from the registration and prospectus delivery requirements of the Securities Act under Section 4(a) thereof (including transactions pursuant to Rule 144); provided , that in the case of clauses (i), (ii), (iii), (iv) or (v), (x) LSC is given written notice prior to or at the time of such Sale stating the name and address of the transferee and identifying the securities with respect to which the Registration-related rights and obligations are being Sold and (y) the transferee executes a counterpart in the form attached hereto as Exhibit A and delivers the same to LSC (any such transferee in such Sale, a “ Transferee ”). A Transferee that obtains Registrable Securities in compliance with the foregoing sentence shall be considered a Holder for purposes of this Agreement upon satisfaction of the procedures set forth in the foregoing sentence. In connection with the Sale of Registrable Securities, a Transferee or Subsequent Transferee (as defined below) may assign its Registration-related rights and obligations under this Agreement relating to such Registrable Securities to the following subsequent transferees: (A) an Affiliate of such Transferee or subsequent transferee, as the case may be, to which Registrable Securities are Sold, (B) any subsequent transferee to which Registrable Securities are Sold, if LSC provides prior written consent to the transfer of such Registration-related rights and obligations along with the Sale of Registrable Securities or (C) any other subsequent transferee to which Registrable Securities are Sold, unless (I) such Sale consists of Registrable Securities representing less than 1% of LSC’s then-issued and outstanding securities of the same class as the Registrable Securities or (II) such Registrable Securities are eligible for Sale pursuant to an exemption from the registration and prospectus delivery requirements of the Securities Act under

 

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Section 4(a) thereof (including transactions pursuant to Rule 144); provided , that in the case of clauses (A), (B) or (C), (x) LSC is given written notice prior to or at the time of such Sale stating the name and address of the subsequent transferee and identifying the securities with respect to which the Registration-related rights and obligations are being assigned and (y) the subsequent transferee executes a counterpart in the form attached hereto as Exhibit A and delivers the same to LSC (any such subsequent transferee, a “ Subsequent Transferee ”). A Subsequent Transferee that obtains Registrable Securities in compliance with the foregoing sentence shall be considered a Holder for purposes of this Agreement upon satisfaction of the procedures set forth in the foregoing sentence.

Section 4.07 Further Assurances . In addition to the actions specifically provided for elsewhere in this Agreement, each of the parties hereto shall use its commercially reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things reasonably necessary, proper or advisable on its part under applicable laws, regulations and agreements, to consummate and make effective the transactions contemplated by this Agreement.

Section 4.08 Performance . RRD shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth in this Agreement to be performed by any member of the RRD Group. LSC shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth in this Agreement to be performed by any member of the LSC Group. Each party (including its permitted successors and assigns) further agrees that it shall (a) give timely notice of the terms, conditions and continuing obligations contained in this Section 4.08 to all of the other members of its Group and (b) cause all of the other members of its Group not to take, or omit to take, any action which action or omission would violate or cause such party to violate this Agreement.

Section 4.09 Notices . All notices, requests, claims, demands and other communications under this Agreement and, to the extent applicable and unless otherwise provided therein, under the Separation and Distribution Agreement and each of the Ancillary Agreements, 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 (at a facsimile number to be provided by such Party to the other Party pursuant to the notice provisions of this Section 4.09 ) with receipt confirmed (followed by delivery of an original via overnight courier service), by email (at an email address to be provided by such Party to the other Party pursuant to the notice provisions of this Section 4.09 ) 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 4.09 ):

To RRD:

R. R. Donnelley & Sons Company

35 West Wacker Drive

Chicago, Illinois 60601

Attn: General Counsel

 

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To LSC:

LSC Communications, Inc.

35 West Wacker Drive

Chicago, Illinois 60601

Attn: General Counsel

Section 4.10 Severability . If any provision of this Agreement or the application hereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof, or the application of such provision to Persons or circumstances or in jurisdictions other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby. Upon such determination, the parties shall negotiate in good faith in an effort to agree upon such a suitable and equitable provision to effect the original intent of the parties.

Section 4.11 No Reliance on Other Party . The parties hereto represent to each other that this Agreement is entered into with full consideration of any and all rights which the parties hereto may have. The parties hereto have relied upon their own knowledge and judgment and have conducted such investigations they and their in-house counsel have deemed appropriate regarding this Agreement and their rights in connection with this Agreement. The parties hereto are not relying upon any representations or statements made by any other party, or any such other party’s employees, agents, representatives or attorneys, regarding this Agreement, except to the extent such representations are expressly set forth or incorporated in this Agreement. The parties hereto are not relying upon a legal duty, if one exists, on the part of any other party (or any such other party’s employees, agents, representatives or attorneys) to disclose any information in connection with the execution of this Agreement or its preparation, it being expressly understood that no party hereto shall ever assert any failure to disclose information on the part of any other party as a ground for challenging this Agreement or any provision hereof.

Section 4.12 Registrations, Exchanges, Etc . Notwithstanding anything to the contrary that may be contained in this Agreement, the provisions of this Agreement shall apply to the full extent set forth herein with respect to (a) any shares of Common Stock, now or hereafter authorized to be issued, (b) any and all securities of LSC into which the shares of Common Stock are converted, exchanged or substituted in any recapitalization or other capital reorganization by LSC and (c) any and all securities of any kind whatsoever of LSC or any successor or permitted assign of LSC (whether by merger, consolidation, sale of assets or otherwise) which may be issued on or after the date hereof in respect of, in conversion of, in exchange for or in substitution of, the shares of Common Stock, and shall be appropriately adjusted for any stock dividends, or other distributions, stock splits or reverse stock splits, combinations, recapitalizations, mergers, consolidations, exchange offers or other reorganizations occurring after the date hereof.

Section 4.13 Mutual Drafting . This Agreement shall be deemed to be the joint work product of the parties, and any rule of construction that a document shall be interpreted or construed against a drafter of such document shall not be applicable.

 

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

 

R. R. DONNELLEY & SONS COMPANY
By:  

/s/ Daniel L. Knotts

Name:   Daniel L. Knotts
Title:   Chief Operating Officer
LSC COMMUNICATIONS, INC.
By:  

/s/ Thomas J. Quinlan III

Name:   Thomas J. Quinlan III
Title:   Chief Executive Officer


Exhibit A

Form of Agreement to be Bound

This Agreement (the “ Agreement ”), is executed pursuant to the terms of the Stockholder and Registration Rights Agreement dated as of September 14, 2016 (the “ Stockholder Agreement ”), by and between R. R. Donnelley & Sons Company (“ RRD ”) and LSC Communications, Inc (“ LSC ”), by the undersigned (the “ Undersigned ”) executing this Agreement. By execution of this Agreement, the Undersigned agrees as follows:

 

  1. Acknowledgment . The Undersigned acknowledges that the Undersigned is acquiring certain Registrable Securities of LSC, subject to the terms of the Stockholder Agreement. Capitalized terms used herein without definition are defined in the Stockholder Agreement and are used herein with the same meanings set forth therein.

 

  2. Agreement . The Undersigned (i) agrees that the Registrable Securities acquired by the Undersigned, and any other Registrable Securities that may be acquired by the Undersigned in the future, shall be bound by and subject to the terms of the Stockholder Agreement, pursuant to the terms thereof, and (ii) hereby adopts the Stockholder Agreement with the same force and effect as if he were originally a party thereto.

 

  3. Notice . Any notice required as permitted by the Stockholder Agreement shall be given to the Undersigned at the address listed beside the Undersigned’s signature below.

IN WITNESS WHEREOF, the undersigned has executed this instrument on this      day of              , 20      .

 

 

(Signature of transferee)

(Insert Notice Address)

ACKNOWLEDGED AND AGREED:

 

 

LSC Communications, Inc.

Exhibit 4.2

INDENTURE

Dated as of September 30, 2016

Among

LSC COMMUNICATIONS, INC., as the Company,

the Subsidiary Guarantors from time to time party hereto

and

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Trustee and as Collateral Agent

8.750% SENIOR SECURED NOTES DUE 2023

THIS INDENTURE IS SUBJECT TO THE PROVISIONS OF THE INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT DATED AS OF SEPTEMBER 30, 2016 (AS AMENDED, RESTATED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME), AMONG LSC COMMUNICATIONS, INC., THE GRANTORS PARTY THERETO, BANK OF AMERICA, N.A., AS CREDIT AGREEMENT COLLATERAL AGENT, AND WELLS FARGO BANK, NATIONAL ASSOCIATION, AS NOTES COLLATERAL AGENT, AND EACH ADDITIONAL COLLATERAL AGENT FROM TIME TO TIME PARTY THERETO.


TABLE OF CONTENTS

 

         Page  
ARTICLE 1   
DEFINITIONS   

Section 1.01.

 

Definitions

     1   

Section 1.02.

 

Other Definitions

     29   

Section 1.03.

 

Concerning the Trust Indenture Act

     30   

Section 1.04.

 

Rules of Construction

     30   

Section 1.05.

 

Acts of Holders

     30   

Section 1.06.

 

Timing of Payment

     32   
ARTICLE 2   
THE NOTES   

Section 2.01.

 

Form and Dating; Terms

     32   

Section 2.02.

 

Execution and Authentication

     33   

Section 2.03.

 

Registrar, Transfer Agent and Paying Agent

     33   

Section 2.04.

 

Paying Agent to Hold Money in Trust

     34   

Section 2.05.

 

Holder Lists

     34   

Section 2.06.

 

Transfer and Exchange

     34   

Section 2.07.

 

Replacement Notes

     44   

Section 2.08.

 

Outstanding Notes

     45   

Section 2.09.

 

Treasury Notes

     45   

Section 2.10.

 

Temporary Notes

     45   

Section 2.11.

 

Cancellation

     45   

Section 2.12.

 

Defaulted Interest

     46   

Section 2.13.

 

CUSIP Numbers; ISINs

     46   
ARTICLE 3   
REDEMPTION   

Section 3.01.

 

Notices to Trustee

     46   

Section 3.02.

 

Selection of Notes to Be Redeemed

     46   

Section 3.03.

 

Notice of Redemption

     46   

Section 3.04.

 

Effect of Notice of Redemption

     47   

Section 3.05.

 

Deposit of Redemption Price

     47   

Section 3.06.

 

Notes Redeemed in Part

     48   

Section 3.07.

 

Optional Redemption

     48   

Section 3.08.

 

Mandatory Redemption

     48   
ARTICLE 4   
COVENANTS   

Section 4.01.

 

Payment of Principal, Premium and Interest

     49   

Section 4.02.

 

Maintenance of Office or Agency

     49   

Section 4.03.

 

[Reserved]

     49   

Section 4.04.

 

Existence; Activities

     49   

Section 4.05.

 

Maintenance of Properties

     49   

Section 4.06.

 

Payment of Taxes and Other Claims

     49   

Section 4.07.

 

Maintenance of Insurance

     50   

Section 4.08.

 

Limitation on Indebtedness and Issuance of Preferred Stock

     50   

Section 4.09.

 

Limitation on Restricted Payments

     54   

 

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         Page  

Section 4.10.

 

[Reserved]

     57   

Section 4.11.

 

Limitation on Transactions with Affiliates

     57   

Section 4.12.

 

Limitation on Liens

     58   

Section 4.13.

 

Change of Control

     58   

Section 4.14.

 

Disposition of Proceeds of Asset Sales

     59   

Section 4.15.

 

Limitation on Dividends and Other Payment Restrictions Affecting Restricted Subsidiaries

     61   

Section 4.16.

 

Additional Subsidiary Guarantors

     62   

Section 4.17.

 

Limitation on Designations of Unrestricted Subsidiaries

     63   

Section 4.18.

 

Reporting Requirements

     63   

Section 4.19.

 

Compliance Certificates

     64   

Section 4.20.

 

[Reserved]

     64   

Section 4.21.

 

Suspension of Covenants

     64   

Section 4.22.

 

Further Assurances

     65   

Section 4.23.

 

Impairment of Security Interests

     65   

Section 4.24.

 

After-Acquired Property

     66   

Section 4.25.

 

Post-Closing Obligations

     66   
ARTICLE 5   
CONSOLIDATION, MERGER, SALES OF ASSETS, ETC.   

Section 5.01.

 

Company May Consolidate, Etc. Only on Certain Terms

     66   

Section 5.02.

 

Successor Substituted

     67   
ARTICLE 6   
DEFAULTS AND REMEDIES   

Section 6.01.

 

Events of Default

     68   

Section 6.02.

 

Acceleration of Maturity; Rescission and Annulment

     69   

Section 6.03.

 

Collection of Indebtedness and Suits for Enforcement by Trustee

     70   

Section 6.04.

 

Trustee May File Proofs of Claim

     71   

Section 6.05.

 

Trustee May Enforce Claims Without Possession of Notes

     71   

Section 6.06.

 

Application of Money Collected

     71   

Section 6.07.

 

Limitation on Suits

     72   

Section 6.08.

 

Unconditional Right of Holders to Receive Principal, Premium and Interest

     72   

Section 6.09.

 

Restoration of Rights and Remedies

     72   

Section 6.10.

 

Rights and Remedies Cumulative

     72   

Section 6.11.

 

Delay or Omission Not Waiver

     72   

Section 6.12.

 

Control by Holders

     73   

Section 6.13.

 

Waiver of Defaults

     73   

Section 6.14.

 

Undertaking for Costs

     73   

Section 6.15.

 

Waiver of Stay or Extension Laws

     73   
ARTICLE 7   
TRUSTEE   

Section 7.01.

 

Certain Duties and Responsibilities

     74   

Section 7.02.

 

Notice of Defaults

     75   

Section 7.03.

 

Certain Rights of Trustee

     75   

Section 7.04.

 

Not Responsible for Recitals or Issuance of Notes

     76   

Section 7.05.

 

May Hold Notes

     77   

Section 7.06.

 

Money Held in Trust

     77   

Section 7.07.

 

Compensation and Reimbursement

     77   

Section 7.08.

 

Conflicting Interests

     78   

Section 7.09.

 

Corporate Trustee Required; Eligibility

     78   

 

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         Page  

Section 7.10.

 

Resignation and Removal; Appointment of Successor

     78   

Section 7.11.

 

Acceptance of Appointment by Successor

     79   

Section 7.12.

 

Merger, Conversion, Consolidation or Succession to Business

     80   

Section 7.13.

 

Preferential Collection of Claims Against the Company or a Subsidiary Guarantor

     80   

Section 7.14.

 

Appointment of Authenticating Agent

     80   

Section 7.15.

 

Intercreditor Agreement and the Notes Security Documents

     81   
ARTICLE 8   
LEGAL DEFEASANCE AND COVENANT DEFEASANCE   

Section 8.01.

 

Option to Effect Legal Defeasance or Covenant Defeasance

     81   

Section 8.02.

 

Legal Defeasance and Discharge

     81   

Section 8.03.

 

Covenant Defeasance

     81   

Section 8.04.

 

Conditions to Legal or Covenant Defeasance

     82   

Section 8.05.

 

Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions

     83   

Section 8.06.

 

Repayment to Company

     83   

Section 8.07.

 

Reinstatement

     83   
ARTICLE 9   
AMENDMENTS, WAIVERS; SUPPLEMENT INDENTURES   

Section 9.01.

 

Amendments, Waivers and Supplemental Indentures Without Consent of Holders

     83   

Section 9.02.

 

Modifications, Amendments and Supplemental Indentures with Consent of Holders

     84   

Section 9.03.

 

Execution of Supplemental Indentures

     85   

Section 9.04.

 

Effect of Supplemental Indentures

     86   

Section 9.05.

 

[Reserved]

     86   

Section 9.06.

 

Reference in Notes to Supplemental Indentures

     86   

Section 9.07.

 

[Reserved]

     86   

Section 9.08.

 

No Liability for Certain Persons

     86   
ARTICLE 10   
GUARANTEES   

Section 10.01.

 

Guarantee

     86   

Section 10.02.

 

Limitation on Liability

     88   

Section 10.03.

 

Execution and Delivery of Guarantees

     88   

Section 10.04.

 

Subsidiary Guarantors May Consolidate, Etc., on Certain Terms

     88   

Section 10.05.

 

Release of Subsidiary Guarantors

     88   

Section 10.06.

 

Successors and Assigns

     89   

Section 10.07.

 

No Waiver, etc.

     89   

Section 10.08.

 

Modification, etc.

     89   
ARTICLE 11   
NOTES SECURITY DOCUMENTS   

Section 11.01.

 

Collateral and Notes Security Documents

     89   

Section 11.02.

 

[Reserved]

     89   

Section 11.03.

 

Release of Collateral

     90   

Section 11.04.

 

[Reserved]

     91   

Section 11.05.

 

[Reserved]

     91   

Section 11.06.

 

Suits To Protect the Collateral

     91   

Section 11.07.

 

Authorization of Receipt of Funds by the Trustee Under the Notes Security Documents

     91   

Section 11.08.

 

Purchaser Protected

     91   

 

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         Page  

Section 11.09.

 

Powers Exercisable by Receiver or Trustee

     91   

Section 11.10.

 

Release Upon Termination of the Company’s Obligations

     91   

Section 11.11.

 

Collateral Agent

     92   

Section 11.12.

 

Designations

     94   
ARTICLE 12   
SATISFACTION AND DISCHARGE   

Section 12.01.

 

Satisfaction and Discharge

     94   

Section 12.02.

 

Application of Trust Money

     95   
ARTICLE 13   
MISCELLANEOUS   

Section 13.01.

 

Notices

     95   

Section 13.02.

 

Communication by Holders with Other Holders

     96   

Section 13.03.

 

Certificate and Opinion as to Conditions Precedent

     96   

Section 13.04.

 

Statements Required in Certificate or Opinion

     97   

Section 13.05.

 

Rules by Trustee and Agents

     97   

Section 13.06.

 

Governing Law

     97   

Section 13.07.

 

Waiver of Jury Trial

     97   

Section 13.08.

 

Force Majeure

     97   

Section 13.09.

 

No Adverse Interpretation of Other Agreements

     97   

Section 13.10.

 

Successors

     97   

Section 13.11.

 

Severability

     97   

Section 13.12.

 

Counterpart Originals

     98   

Section 13.13.

 

Table of Contents, Headings, etc.

     98   

Section 13.14.

 

USA Patriot Act

     98   

Section 13.15.

 

Intercreditor Agreement Governs

     98   

 

-iv-


EXHIBITS   
Exhibit A    FORM OF NOTE
Exhibit B    FORM OF CERTIFICATE OF TRANSFER
Exhibit C    FORM OF CERTIFICATE OF EXCHANGE
Exhibit D    FORM OF SUPPLEMENTAL INDENTURE TO BE DELIVERED BY SUBSEQUENT SUBSIDIARY GUARANTORS
SCHEDULES   
Schedule 4.25    MORTGAGED PROPERTY

 

-v-


INDENTURE, dated as of September 30, 2016, among LSC Communications, Inc., a Delaware corporation, the Subsidiary Guarantors (as defined herein) from time to time party hereto and Wells Fargo Bank, National Association, a national banking association, as Trustee and as Collateral Agent.

W I T N E S S E T H

WHEREAS, the Company (as defined herein) has duly authorized the creation of an issue of $450,000,000 aggregate principal amount of the Company’s 8.750% Senior Secured Notes due 2023 (the “ Initial Notes ”);

WHEREAS, the Company and each of the Subsidiary Guarantors has duly authorized the execution and delivery of this Indenture (as defined herein), the Initial Notes and the Subsidiary Guarantees;

NOW, THEREFORE, the Company, the Subsidiary Guarantors, the Trustee, and the Collateral Agent agree as follows for the benefit of each other and for the equal and ratable benefit of the Holders (as defined herein).

ARTICLE 1

DEFINITIONS

Section 1.01. Definitions .

144A Global Note ” means a Global Note substantially in the form of Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of, and registered in the name of, the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Notes sold in reliance on Rule 144A.

Acquired Indebtedness ” means Indebtedness of a Person:

(a) assumed in connection with an Asset Acquisition from such Person; or

(b) existing at the time such Person becomes a Subsidiary of any other Person and not incurred in connection with, or in contemplation of, such Asset Acquisition or such Person becoming a Subsidiary.

Act ” means any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent or proxy duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Company or a Subsidiary Guarantor, as applicable. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the “ Act ” of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent or proxy shall be sufficient for any purpose of this Indenture and conclusive in favor of the Trustee and the Company, if made in the manner provided in this definition. The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Trustee deems sufficient.

Additional Notes ” means any additional Notes (other than the Initial Notes) issued from time to time under this Indenture in accordance with Sections 2.01, 2.02 and 4.08 hereof.

Additional Secured Indebtedness ” means Secured Indebtedness in addition to the Notes, the Revolving Credit Facility and the Term Loan Credit Facility, which Secured Indebtedness is permitted by each applicable Secured Indebtedness Document to be secured equally and ratably with all previously existing and future Secured Indebtedness.


Adjusted EBITDA ” means, with respect to any Person for any period:

(i) the sum of, without duplication, the amounts for such period, taken as a single accounting period, of:

(a) Consolidated Net Income;

(b) Consolidated Non-cash Charges;

(c) Consolidated Interest Expense;

(d) Consolidated Income Tax Expense;

(e) any fees, expenses or charges related to the Senior Secured Credit Facilities, the Separation Transactions or to any Equity Offering, Investment, merger, acquisition, disposition, consolidation; recapitalization or the incurrence or repayment of Indebtedness permitted by this Indenture (including any refinancing or amendment of any of the foregoing) (whether or not consummated or incurred);

(f) the amount of any restructuring charges or reserves (which shall include retention, severance, systems establishment cost, excess pension charges, contract termination costs, including future lease commitments, costs related to start up, closure, relocation or consolidation of facilities, costs to relocate employees, consulting fees, one time information technology costs, one time branding costs and losses on the sale of excess fleet from closures); provided , however , that the aggregate amount of such charges or reserves added to Adjusted EBITDA for any period pursuant to this clause (f) (when taken together with any amounts added pursuant to clause (g) below) will not exceed the greater of 10.0% of Adjusted EBITDA of such Person for such period; and

(g) the amount of net cost savings and synergies projected by the Company in good faith to be realized (which shall be calculated on a pro forma basis as though such cost savings or synergies had been realized on the first day of such period), net of the amount of actual benefits realized during such period from such actions; provided that (A) such cost savings or synergies are reasonably identifiable and supportable, (B) such actions have been taken or are to be taken within 12 months after the date of determination to take such action and (C) the aggregate amount of any cost savings and synergies added pursuant to this clause (g) (when taken together with any amounts added pursuant to clause (f) above) shall not exceed 10.0% of Adjusted EBITDA for such period, less

(ii) (x) non-cash items increasing Consolidated Net Income and (y) all cash payments during such period relating to non-cash charges that were added back in determining Adjusted EBITDA in the most recent Four Quarter Period.

Adjusted Treasury Rate ” means, with respect to any Redemption Date, (i) the yield, under the heading which represents the average for the immediately preceding week, appearing in the most recently published statistical release designated “H.15(519)” or any successor publication which is published weekly by the Board of Governors of the Federal Reserve System and which establishes yields on actively traded United States Treasury securities adjusted to constant maturity under the caption “Treasury Constant Maturities,” for the maturity corresponding to the Comparable Treasury Issue (if no maturity is within three months before or after October 15, 2019, yields for the two published maturities most closely corresponding to the Comparable Treasury Issue shall be determined and the Adjusted Treasury Rate shall be interpolated or extrapolated from such yields on a straight-line basis, rounding to the nearest month, except that if the period from the redemption date to October 15, 2019 is less

 

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than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year shall be used) or (ii) if such release (or any successor release) is not published during the week preceding the calculation date or does not contain such yields, the rate per year equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date, in each case calculated on the third Business Day immediately preceding the Redemption Date, plus 0.50%.

Affiliate ” means with respect to any specified Person, any other Person directly or indirectly Controlling or Controlled by or under direct or indirect common Control with such specified Person.

After-Acquired Property ” means any and all assets or property acquired after the Issue Date, including any property or assets acquired by the Company or a Subsidiary Guarantor, which in constitutes Collateral or would have constituted Collateral had such assets or property been owned by the Company or such Subsidiary Guarantor on the Issue Date.

Agent ” means any Registrar, Custodian, Transfer Agent or Paying Agent.

Applicable Authorized Representative ” shall have the meaning assigned to it in the Intercreditor Agreement.

Applicable Premium ” means, with respect to any Notes at any Redemption Date, the greater of

(1) 1.00% of the principal amount of such Notes; and

(2) the excess of (a) the present value at such Redemption Date of (i) the redemption price of the Notes on October 15, 2019 as set forth in Section 3.07(a) hereof plus (ii) all required remaining scheduled interest payments due on such Notes through October 15, 2019 (but excluding accrued and unpaid interest to the Redemption Date), computed using a discount rate equal to the Adjusted Treasury Rate as of such Redemption Date, over (b) the principal amount of such Notes on such Redemption Date.

Applicable Procedures ” means, with respect to any payment, tender, redemption, transfer or exchange of or for beneficial interests in any Global Note, the rules and procedures of the Depositary, Euroclear and/or Clearstream that apply to such payment, tender, redemption, transfer or exchange.

Asset Acquisition ” means:

(a) an Investment by the Company or any Restricted Subsidiary in any other Person pursuant to which such Person shall become a Restricted Subsidiary, or shall be merged with or into the Company or any Restricted Subsidiary or a transaction pursuant to which the Company or a Restricted Subsidiary merges with or into any other Person and such Person assumes the obligations of the Company or such Restricted Subsidiary, as applicable, in accordance with Article 5; or

(b) the acquisition by the Company or any Restricted Subsidiary of the assets of any Person which constitute all or substantially all of the assets of such Person, any division or line of business of such Person or any other properties or assets of such Person.

Asset Sale ” means any sale, issuance, conveyance, transfer, lease or other disposition by the Company or any Restricted Subsidiary to any Person other than the Company or a Restricted Subsidiary of:

(a) any Capital Stock of any Restricted Subsidiary (other than directors qualifying shares or to the extent required by applicable law);

(b) all or substantially all of the properties and assets of any division or line of business of the Company or any Restricted Subsidiary; or

(c) any other properties or assets of the Company or any Restricted Subsidiary,

 

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other than, in the case of clauses (a), (b) or (c) above,

(i) sales, conveyances, transfers, leases or other dispositions of (x) obsolete, damaged or used equipment or (y) other equipment or inventory in the ordinary course of business;

(ii) sales, conveyances, transfers, leases or other dispositions of assets in one or a series of related transactions for an aggregate consideration of less than the greater of $20,000,000 and 5.0% of Pro Forma Adjusted EBITDA;

(iii) the lease, assignment, license, sublicense or sublease of any real or personal property in the ordinary course of business;

(iv) for purposes of Section 4.14 only, (i) a disposition that constitutes a Restricted Payment permitted by Section 4.09 or a Permitted Investment and (ii) a disposition governed by Article 5;

(v) any exchange of like property pursuant to or intended to qualify under Section 1031 (or any successor section) of the Code, and to be used in a Similar Business;

(vi) any disposition arising from foreclosure, condemnation or similar action with respect to any property or other assets, or exercise of termination rights under any lease, license, concession or agreement, or necessary or advisable (as determined by the Company in good faith) in order to consummate any acquisition of any Person, business or assets, or pursuant to buy/sell arrangements under any joint venture or similar agreement or arrangement;

(vii) any disposition of Cash Equivalents;

(viii) any disposition of Capital Stock, Indebtedness or other securities of an Unrestricted Subsidiary;

(ix) the sale or discount (with or without recourse, and on customary or commercially reasonable terms) of accounts receivable or notes receivable arising in the ordinary course of business, or the conversion or exchange of accounts receivable for notes receivable;

(x) a disposition of Capital Stock of a Restricted Subsidiary pursuant to an agreement or other obligation with or to a Person (other than a Company or a Restricted Subsidiary) from which such Restricted Subsidiary was acquired, or from whom such Restricted Subsidiary acquires its business and assets (having been newly formed in connection with such acquisition), entered into in connection with such acquisition;

(xi) the abandonment or other disposition of trademarks, copyrights, patents or other intellectual property that are, in the good faith determination of the Company, no longer economically practicable to maintain or useful in the conduct of the business of the Company and its subsidiaries taken as a whole; and

(xii) (x) non-exclusive licenses, sublicenses or cross-licenses of intellectual property or other general intangibles; and (y) exclusive licenses, sublicenses or cross-licenses of intellectual property or other general intangibles in the ordinary course of business or that are not material to the Company and its Subsidiaries taken as a whole.

Attributable Debt ” in respect of a Sale/Leaseback Transaction means, as at the time of determination, the present value (discounted at the interest rate borne by the Notes, compounded annually) of the total obligations of the lessee for rental payments during the remaining term of the lease included in such Sale/Leaseback Transaction (including any period for which such lease has been extended); provided , however , that if such Sale/Leaseback Transaction results in a Capitalized Lease Obligation, the amount of Indebtedness represented thereby will be determined in accordance with the definition of “Capitalized Lease Obligation.”

 

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Authenticating Agent ” means any Person authorized by the Trustee pursuant to Section 7.14 to act on behalf of the Trustee to authenticate Securities.

Average Life to Stated Maturity ” means, with respect to any Indebtedness, as at any date of determination, the quotient obtained by dividing:

(i) the sum of the products of:

(a) the number of years from such date to the date or dates of each successive scheduled principal payment (including any sinking fund requirements) of such Indebtedness; and

(b) the amount of each such principal payment; by

(ii) the sum of all such principal payments.

Bankruptcy Code ” means Title 11, United States Code, or any similar federal, state or foreign law for the relief of debtors.

Bankruptcy Law ” means the Bankruptcy Code or any similar federal or state law for the relief of debtors.

Board of Directors ” means the board of directors of a company or its equivalent, including managers of a limited liability company, general partners of a partnership or trustees of a business trust, or any duly authorized committee thereof.

Board Resolution ” means resolutions, or written consents, of the Board of Directors.

Business Day ” means each day which is not a Legal Holiday.

Capital Stock ” means, with respect to any Person, any and all shares, interests, participations, rights in or other equivalents (however designated) of such Person’s capital stock or equity participations, and any rights (other than debt securities convertible into capital stock), warrants or options exchangeable for or convertible into such capital stock and, including, with respect to partnerships, limited liability companies or business trusts, ownership interests (whether general or limited) and any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, such partnerships, limited liability companies or business trusts.

Capitalized Lease Obligation ” means any obligation under a lease of (or other agreement conveying the right to use) any property (whether real, personal or mixed) that is required to be classified and accounted for as a capital lease obligation under GAAP, and, for the purpose of this Indenture, the amount of such obligation at any date shall be the capitalized amount thereof at such date, determined in accordance with GAAP; provided , that if GAAP shall change after the Issue Date so that a lease (or other agreement conveying the right to use property) that would not be classified as a capital lease under GAAP as in effect as of the Issue Date would be classified as a capital lease, then the obligations under such lease (or other agreement conveying the right to use any property) shall not be considered to be a Capitalized Lease Obligation.

Cash Equivalents ” means, at any time:

(a) any evidence of Indebtedness, maturing not more than one year after such time, issued or guaranteed by the United States Government or any agency thereof;

 

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(b) commercial paper, maturing not more than one year from the date of issue, or corporate demand notes, in each case rated at least A-1 by S&P or P-1 by Moody’s;

(c) any certificate of deposit (or time deposits represented by such certificates of deposit) or bankers’ acceptance, maturing not more than one year after such time, or overnight federal funds transactions that are issued or sold by a commercial banking institution that is a member of the Federal Reserve System and has a combined capital and surplus and undivided profits of not less than $500,000,000;

(d) any repurchase agreement entered into with any commercial banking institution of the stature referred to in clause (c) which:

(i) is secured by a fully perfected security interest in any obligation of the type described in any of clauses (a) through (c); and

(ii) has a market value at the time such repurchase agreement is entered into of not less than 100% of the repurchase obligation of such commercial banking institution thereunder;

(e) investments in short-term asset management accounts managed by any bank party to a Credit Facility which are invested in indebtedness of any state or municipality of the United States or of the District of Columbia and which are rated under one of the two highest ratings then obtainable from S&P or by Moody’s or investments of the types described in clauses (a) through (d) above; and

(f) investments in funds investing primarily in investments of the types described in clauses (a) through (e) above.

Cash Management Arrangement ” means any agreement or arrangement to provide cash management services, including centralized operating accounts, automated clearing house transactions, controlled disbursement services, treasury, depository, overdraft and electronic funds transfer services, foreign exchange facilities, currency exchange transactions or agreements and options with respect thereto, credit card processing services, credit or debit cards, purchase cards and any indemnity given in connection with any of the foregoing.

Cash Management Obligations ” means, with respect to the Company or any Subsidiary Guarantor, all obligations of such party under all Cash Management Arrangements.

Change of Control ” means the occurrence of any of the following events:

(a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of more than 50% of the total Voting Stock of the Company;

(b) the Company consolidates with, or merges with or into, another Person or sells, assigns, conveys, transfers, leases or otherwise disposes of all or substantially all of its properties and assets as an entirety to any Person (other than to a Wholly Owned Restricted Subsidiary of the Company or a Subsidiary Guarantor), in any such event pursuant to a transaction in which the outstanding Voting Stock of the Company is converted into or exchanged for cash, securities or other property, other than any such transaction involving a merger or consolidation where:

(i) the outstanding Voting Stock of the Company is converted into or exchanged for Voting Stock (other than Redeemable Capital Stock) of the surviving or transferee corporation; and

(ii) immediately after such transaction no “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), is the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person shall be deemed to have

 

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“beneficial ownership” of all securities that such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time) of more than 50% of the total Voting Stock of the surviving or transferee corporation directly or indirectly through any of its direct or indirect parent holding companies; or

(c) the Company is liquidated or dissolved or adopts a plan of liquidation.

Clearstream ” means Clearstream Banking, Société Anonyme or any successor securities clearing agency.

Collateral ” means all property and assets in which Liens are from time to time purported to be granted to secure Obligations pursuant to the Notes Security Documents.

Collateral Agent ” means Wells Fargo Bank, National Association, until a successor replaces it in accordance with the applicable provisions of this Indenture and thereafter means the successor serving hereunder as Collateral Agent under the Notes Security Documents.

Company ” means LSC Communications, Inc., a Delaware corporation, and its successors.

Company Order ” or “ Company Request ” means a written request or order signed on behalf of the Company by an Officer of the Company, who must be the principal executive officer, the principal financial officer, the treasurer, an assistant treasurer, the secretary, an assistant secretary or the principal accounting officer of the Company, and delivered to the Trustee.

Comparable Treasury Issue ” means the United States Treasury security selected by the Quotation Agent as having a maturity most nearly equal to the period from the Redemption Date to October 15, 2019 that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of a maturity most nearly equal to October 15, 2019.

Comparable Treasury Price ” means, with respect to any Redemption Date, if clause (ii) of the Adjusted Treasury Rate is applicable, the average of three, or such lesser number as is given to the Company, Reference Treasury Dealer Quotations for such Redemption Date.

Consolidated Fixed Charge Coverage Ratio ” means, with respect to any Person, the ratio of the aggregate amount of Adjusted EBITDA of such Person for the four full fiscal quarters, treated as one period, for which financial information in respect thereof is available immediately preceding the date of the transaction giving rise to the need to calculate the Consolidated Fixed Charge Coverage Ratio (such four full fiscal quarter period being referred to herein as the “ Four Quarter Period ”) to the aggregate amount of Consolidated Fixed Charges of such Person for the Four Quarter Period.

The Consolidated Fixed Charge Coverage Ratio shall be calculated after giving pro forma effect to:

(a) the incurrence of Indebtedness requiring calculation of the Consolidated Fixed Charge Coverage Ratio and (if applicable) the application of the net proceeds therefrom, including to refinance other Indebtedness, as if such Indebtedness were incurred at the beginning of the Four Quarter Period (except that, in making such computation, the amount of Indebtedness under any revolving credit facility shall be computed based upon the average daily balance of such Indebtedness during the Four Quarter Period during the period from the date of creation of such facility to the date of such calculation);

(b) the incurrence, repayment, defeasance, retirement or discharge of any other Indebtedness by the Company and its Restricted Subsidiaries since the first day of the Four Quarter Period as if such Indebtedness was incurred, repaid, defeased, retired or discharged at the beginning of the Four Quarter Period (except that, in making such computation, the amount of Indebtedness under any revolving credit facility shall be computed based upon the average daily balance of such Indebtedness during the Four Quarter Period or such shorter period for which such facility was outstanding (or, if such facility was created after the end of the Four Quarter Period, based upon the average daily balance of such Indebtedness during the period from the date of creation of such facility to the date of such calculation or such shorter period)); and

(c) any Asset Sale or Asset Acquisition occurring since the first day of the Four Quarter Period (including to the date of calculation) as if such acquisition or disposition occurred at the beginning of such Four Quarter Period.

 

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For purposes of this definition, whenever pro forma effect is to be given to any Investment, acquisition, disposition or other transaction, or the amount of income or earnings relating thereto and the amount of Consolidated Interest Expense associated with any Indebtedness incurred or repaid, repurchased, redeemed, defeased or otherwise acquired, retired or discharged in connection therewith, the pro forma calculations in respect thereof (including in respect of anticipated cost savings or synergies relating to any such Investment, acquisition, disposition or other transaction that have been or are expected to be realized) shall be as determined in good faith by the Chief Financial Officer or an authorized officer of the Company. If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest expense on such Indebtedness shall be calculated as if the rate in effect on the date of determination had been the applicable rate for the entire period (taking into account any Interest Rate Protection Agreement applicable to such Indebtedness). If any Indebtedness bears, at the option of the Company or a Restricted Subsidiary, a rate of interest based on a prime or similar rate, a eurocurrency interbank offered rate or other fixed or floating rate, and such Indebtedness is being given pro forma effect, the interest expense on such Indebtedness shall be calculated by applying such optional rate as the Company or such Restricted Subsidiary may designate. If any Indebtedness that is being given pro forma effect was incurred under a revolving credit facility, the interest expense on such Indebtedness shall be computed based upon the average daily balance of such Indebtedness during the applicable period. Interest on a Capitalized Lease Obligation shall be deemed to accrue at an interest rate determined in good faith by a responsible financial or accounting officer of the Company to be the rate of interest implicit in such Capitalized Lease Obligation in accordance with GAAP, subject to the definition of “Capitalized Lease Obligation” hereunder.

If such Person or any of its Restricted Subsidiaries directly or indirectly guarantees Indebtedness of a third Person, this definition shall give effect to the incurrence of such guaranteed Indebtedness as if such Person or such Subsidiary had directly incurred or otherwise assumed such guaranteed Indebtedness.

Consolidated Fixed Charges ” means, with respect to any Person for any period, the sum of, without duplication, the amounts for such period of:

(i) Consolidated Interest Expense; and

(ii) the aggregate amount of dividends and other distributions paid in cash during such period in respect of Redeemable Capital Stock or Preferred Stock of such Person and its Restricted Subsidiaries on a consolidated basis.

Consolidated Income Tax Expense ” means, with respect to any Person for any period, the provision for federal, state, local and foreign taxes (whether or not paid, estimated or accrued) based on income, profits or capitalization of such Person and its Restricted Subsidiaries for such period as determined on a consolidated basis in accordance with GAAP.

Consolidated Interest Expense ” means, with respect to any Person for any period, without duplication, the sum of:

(i) the interest expense, net of any interest income, of such Person and its Restricted Subsidiaries for such period as determined on a consolidated basis in accordance with GAAP, including:

(a) any amortization of debt discount;

(b) the net payments made or received under Interest Rate Protection Obligations (including any amortization of discounts);

 

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(c) the interest portion of any deferred payment obligation;

(d) all commissions, discounts and other fees and charges owed with respect to letters of credit, bankers’ acceptance financing or similar facilities; and

(e) all accrued interest; and

(ii) the interest component of Capitalized Lease Obligations paid, accrued and/or scheduled to be paid or accrued by such Person and its Restricted Subsidiaries during such period as determined on a consolidated basis in accordance with GAAP, less

(iii) to the extent otherwise included in such interest expense referred to in clause (i) above, the amortization or write-off of financing costs, commissions, fees and expenses.

Consolidated Net Income ” means, with respect to any Person, for any period, the consolidated net income (or loss) of such Person and its Restricted Subsidiaries for such period as determined in accordance with GAAP, adjusted, to the extent included in calculating such net income, by excluding, without duplication:

(i) any extraordinary, unusual or non-recurring gain, loss, expense or charge (including fees, expenses and charges associated with the Senior Secured Credit Facilities, the Separation Transactions or any merger, acquisition, disposition or consolidation after the Issue Date);

(ii) (A) the portion of net income of such Person and its Restricted Subsidiaries allocable to minority interests in unconsolidated Persons or to Investments in Unrestricted Subsidiaries to the extent that cash dividends or distributions have not actually been received by such Person or one of its Restricted Subsidiaries and (B) the portion of net loss of such Person and its Restricted Subsidiaries allocable to minority interests in unconsolidated Persons or to Investments in Unrestricted Subsidiaries shall be included to the extent of the aggregate investment of the Company or any Restricted Subsidiary in such Person;

(iii) gains or losses in respect of any Asset Sales by such Person or one of its Restricted Subsidiaries (net of fees and expenses relating to the transaction giving rise thereto), on an after-tax basis;

(iv) the net income of any Restricted Subsidiary of such Person to the extent that the declaration of dividends or similar distributions by that Restricted Subsidiary of that income is not at the time permitted, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulations applicable to that Restricted Subsidiary or its stockholders (other than (x) restrictions that have been waived or otherwise released, (y) restrictions pursuant to the Notes or this Indenture and (z) restrictions in effect on the Issue Date with respect to a Restricted Subsidiary and other restrictions with respect to such Restricted Subsidiary that taken as a whole are not materially less favorable to the holders than such restrictions in effect on the Issue Date);

(v) any gain or loss realized as a result of the cumulative effect of a change in accounting principles;

(vi) the write-off of any issuance costs incurred by the Company in connection with the refinancing or repayment of any Indebtedness;

(vii) any net after-tax gain (or loss) attributable to the early repurchase, extinguishment or conversion of Indebtedness, hedging obligations or other derivative instruments (including any premiums paid);

(viii) any non-cash income (or loss) related to the recording of the Fair Market Value of any Hedging Obligations;

 

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(ix) any unrealized gains or losses in respect of Currency Agreements;

(x) (a) any non-cash compensation deduction as a result of any grant of stock or stock related instruments to employees, officers, directors or members of management and (b) any cash charges associated with the rollover, acceleration or payout on stock or stock-related instruments by management of the Company, or any of its Subsidiaries in connection with the Separation Transactions;

(xi) any income (or loss) from discontinued operations;

(xii) any unrealized foreign currency translation or transaction gains or losses in respect of Indebtedness or other obligations of any Person denominated in a currency other than the functional currency of such Person;

(xiii) to the extent covered by insurance and actually reimbursed, or, so long as the Company has made a determination that there exists reasonable evidence that such amount will in fact be reimbursed by the insurer and only to the extent that such amount is (a) not denied by the applicable carrier in writing within 180 days and (b) in fact reimbursed within 365 days of the date of such evidence (with a deduction for any amount so added back to the extent not so reimbursed within 365 days), expenses with respect to liability or casualty events or business interruption; provided that, to the extent included in Consolidated Net Income in a future period, reimbursements with respect to expenses excluded from the calculation of Consolidated Net Income pursuant to this clause (xiii) shall be excluded from Consolidated Net Income in such period up to the amount of such excluded expenses;

(xiv) any non-cash charge, expense or other impact attributable to application of the purchase method of accounting (including the total amount of depreciation and amortization, cost of sales or other non-cash expense resulting from the write-up of assets to the extent resulting from such purchase accounting adjustments);

(xv) any goodwill or other intangible asset impairment charge;

(xvi) effects of fair value adjustments in the merchandise inventory, property and equipment, goodwill, intangible assets, deferred revenue, deferred rent and debt line items in such Person’s consolidated financial statements pursuant to GAAP resulting from the application of acquisition accounting in relation to the Separation Transactions or any consummated acquisition and the amortization or write-off or removal of revenue otherwise recognizable of any amounts thereof, net of taxes, shall be excluded or added back in the case of lost revenue; and

(xvii) accruals and reserves established within 12 months after (a) the consummation of the Separation Transactions that were established as a result of the Separation Transactions and (b) the closing of any acquisition or investment required to be established as a result of such acquisition or investment in accordance with GAAP, or changes as a result of adoption or modification of accounting policies.

Consolidated Non-cash Charges ” means, with respect to any Person for any period, the aggregate depreciation, amortization (including amortization of goodwill and other intangibles) and other non-cash expenses of such Person and its Restricted Subsidiaries reducing Consolidated Net Income of such Person and its Restricted Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP (excluding any such charges constituting an extraordinary item or loss).

Control ” when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through ownership of voting securities, by contract or otherwise; and the terms “ Controlling ” and “ Controlled ” have meanings correlative to the foregoing.

Corporate Trust Office ” means the office of the Trustee at which any time its corporate trust business related to this Indenture shall be administered, which office at the date hereof is 150 East 42nd Street, 40th Floor, New York, New York 10017, Attn: Corporate, Municipal and Escrow Services, and for Agent services is 600 South

 

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Fourth Street, Minneapolis, MN 55402, Attn: Corporate Trust Operations, or such other address as the Trustee may designate from time to time by notice to the Holders and the Company, or the principal corporate trust office of any successor Trustee (or such other address as such successor Trustee may designate from time to time by notice to the Holders and the Company).

Credit Agreement ” means the Credit Agreement to be dated on or about September 30, 2016, by and among the Company, the lenders party thereto and Bank of America, N.A. as administrative agent, together with the related documents (including any term loans and revolving loans thereunder, any guarantees and any security documents, instruments and agreements executed in connection therewith), as amended, extended, renewed, restated, supplemented or otherwise modified (in whole or in part, and without limitation as to amount, terms, conditions, covenants and other provisions) from time to time, and any agreement, indenture or other instrument (and related documents) governing any form of Indebtedness incurred to refinance or replace, in whole or in part, the borrowings and commitments at any time outstanding or permitted to be outstanding under such Credit Agreement or a successor Credit Agreement, whether by the same or any other lender or holder of Indebtedness or group of lenders or holders of Indebtedness and whether to the same obligor or different obligors.

Credit Agreement Collateral Agent ” means Bank of America, N.A., as agent under the Credit Agreement, together with its successors and assigns in such capacity (or, in the case of a refinancing or replacement in full of the Credit Agreement, the Person serving at such time as the “Agent”, “Administrative Agent”, “Collateral Agent” or other similar representative of the lenders under the Credit Agreement, together with its successors and assigns in such capacity); provided, that if the Credit Agreement is refinanced or replaced in full by two or more Credit Agreements, the “Agent”, “Administrative Agent”, “Collateral Agent” or other similar representative of the lenders under each of the Credit Agreements shall select one Person from amongst themselves to serve as Credit Agreement Collateral Agent.

Credit Facility ” means one or more debt facilities or agreements (including the Credit Agreement), commercial paper facilities, securities purchase agreements, indentures or similar agreements, in each case, with banks or other institutional lenders or investors providing for, or acting as underwriters of, revolving loans, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables), notes, debentures, letters of credit or the issuance and sale of securities including any related notes, guarantees, collateral documents, instruments and agreements executed in connection therewith and in each case, as amended, extended, renewed, restated, supplemented or otherwise modified (in whole or in part, and without limitation as to amount, terms, conditions, covenants and other provisions) from time to time, and any agreements, indentures or other instruments (and related documents) governing any form of Indebtedness incurred to refinance or replace, in whole or in part, the borrowings and commitments at any time outstanding or permitted to be outstanding under such facility or agreement or successor facility or agreement whether by the same or any other lender or holder of Indebtedness or group of lenders or holders of Indebtedness and whether the same obligor or different obligors.

Currency Agreement ” means any foreign exchange contract, currency swap agreement or other similar agreement with respect to currency values.

Custodian ” means the Trustee, as custodian with respect to the Notes, each in global form, or any successor entity thereto.

Default ” means any event that is, or after notice or passage of time or both would be, an Event of Default.

Definitive Note ” means a certificated Note registered in the name of the Holder thereof and issued in accordance with Section 2.06(c) hereof, substantially in the form of Exhibit A except that such Note shall not bear the Global Note Legend and shall not have the “Schedule of Exchanges of Interests in the Global Note” attached thereto.

Depositary ” means, with respect to the Notes issuable or issued in whole or in part in global form, any Person specified in Section 2.03 hereof as the Depositary with respect to the Notes, and any and all successors thereto appointed as Depositary hereunder and having become such pursuant to the applicable provision of this Indenture.

 

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Designated Non-cash Consideration ” means the Fair Market Value of non-cash consideration received by the Company or one of its Restricted Subsidiaries in connection with an Asset Sale that is so designated as Designated Non-cash Consideration pursuant to an Officer’s Certificate which sets forth the Fair Market Value of the non-cash consideration at the time of its receipt and the basis for such valuation.

Disinterested Member of the Board of Directors of the Company ” means, with respect to any transaction or series of transactions, a member of the Board of Directors of the Company other than a member who has any material direct or indirect financial interest in or with respect to such transaction or series of transactions or is an Affiliate, or an officer, director or an employee of any Person (other than the Company or any Restricted Subsidiary) who has any direct or indirect financial interest in or with respect to such transaction or series of transactions.

Domestic Restricted Subsidiary ” means any Restricted Subsidiary other than a Foreign Subsidiary.

Equity Offering ” means a private or public sale for cash after the Issue Date by the Company of its common Capital Stock (other than Redeemable Capital Stock and other than to a Subsidiary of the Company) to the extent that the net proceeds therefrom are contributed to the common equity capital of the Company.

Event of Default ” has the meaning set forth in Section 6.01.

Euroclear ” means Euroclear Bank S.A./N.V., as operator of the Euroclear system, or any successor securities clearing agency.

Exchange Act ” means the Securities Exchange Act of 1934, as amended.

Existing Indebtedness ” means Indebtedness of the Company and its Subsidiaries (which, for the avoidance of doubt excludes Indebtedness under the Senior Secured Credit Facilities and the Notes) in existence on the Issue Date, until such amounts are repaid.

Expiration Date ” shall have the meaning set forth in the definition of “Offer to Purchase.”

ExpressMap ” means an aerial map issued by a survey provider that has been selected by the Company with respect to any Mortgaged Property, together with a written certificate executed by the Company stating that the material improvements utilized in connection with such Mortgaged Property (i) are located within such Mortgaged Property and (ii) are depicted on the aerial map relating to such Mortgaged Property and is otherwise sufficient to allow the issuance of the Mortgage Policy with respect to such Mortgaged Property without any exception (other than customary exceptions) for such matters as would be shown on an accurate survey of the Mortgaged Property and with a standard “land same as survey” and such other customary survey related endorsements.

Fair Market Value ” means, with respect to any asset, the fair market value of such asset as determined by the Board of Directors of the Company in good faith, whose determination shall be conclusive and, in the case of assets with a Fair Market Value in excess of $25,000,000, evidenced by a resolution of the Board of Directors of the Company.

First-Out Cash Management Obligations ” means all Cash Management Obligations secured on a pari passu basis with the Revolving Credit Facility or other First-Out Debt incurred under clause (4) of the definition of “First-Out Debt.”

First-Out Debt ” means (without duplication) (1) funded debt (including the undrawn amount of letters of credit whether or not then available to be drawn) and unfunded debt commitments under the Revolving Credit Facility and any guarantees thereof, (2) First-Out Cash Management Obligations, (3) First-Out Hedging Obligations and (4) additional funded debt (including the undrawn amount of letters of credit whether or not then available to be drawn) and unfunded debt commitments under any other First- Out Documents and any guarantees thereof that are secured equally and ratably with the First-Out Obligations by a First-Out Lien that is permitted to be incurred and so secured under the terms of each applicable Secured Indebtedness Document; provided, in the case of this clause (4),

 

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that (x) prior to the incurrence of such additional debt, such additional debt is designated by the Company, in an officers’ certificate delivered to the Credit Agreement Collateral Agent, the Collateral Agent and each other collateral agent party to the Intercreditor Agreement, as “First-Out Debt” for the purposes of the Secured Indebtedness Documents and (y) all requirements set forth in the Intercreditor Agreement with respect to Additional Secured Indebtedness have been complied with (and the satisfaction of such requirements and the other provisions of this clause (4) will be conclusively established, absent manifest error, if the Company delivers to the Collateral Agent an officers’ certificate stating that such requirements and other provisions have been satisfied and that such debt is “First-Out Debt”); provided, further, that the aggregate principal amount of First-Out Debt shall not exceed (other than First-Out Debt under clauses (2) and (3) above) the greater of (i) $400,000,000 and (ii) the amount of funded debt that would not cause the ratio of First-Out Debt to Adjusted EBITDA to exceed 1.00:1.00.

First-Out Documents ” means, collectively, the Revolving Credit Facility and any additional indenture, credit facility or other agreement constituting Additional Secured Indebtedness pursuant to which any First-Out Debt is incurred and secured in accordance with the terms of each applicable Secured Indebtedness Document and the security documents related thereto.

First-Out Hedging Obligations ” means all Hedging Obligations secured on a pari passu basis with the Revolving Credit Facility or other First-Out Debt incurred under clause (4) of the definition of “First-Out Debt.”

First-Out Lien ” means a Lien granted by a Notes Security Document to the Credit Agreement Collateral Agent, at any time, upon any property of the Company or any Subsidiary Guarantor to secure First-Out Obligations.

First-Out Obligations ” means the First-Out Debt and all other Obligations in respect thereof, including all First-Out Cash Management Obligations and all First-Out Hedging Obligations.

Foreign Subsidiary ” means any Restricted Subsidiary not created or organized under the laws of the United States or any state thereof or the District of Columbia.

Foreign Subsidiary Holding Company ” means any Subsidiary the primary assets of which consist of Capital Stock in (i) one or more Foreign Subsidiaries or (ii) one or more Foreign Subsidiary Holding Companies.

Four Quarter Period ” has the meaning set forth in the definition of “Consolidated Fixed Charge Coverage Ratio.”

GAAP ” means generally accepted accounting principles set forth in the Financial Accounting Standards Board codification (or by agencies or entities with similar functions of comparable stature and authority within the U.S. accounting profession) or in rules or interpretative releases of the SEC applicable to SEC registrants; provided that (a) if at any time the SEC permits or requires U.S. domiciled companies subject to the reporting requirements of the Exchange Act to use IFRS in lieu of GAAP for financial reporting purposes, the Company may irrevocably elect by written notice to the Trustee to so use IFRS in lieu of GAAP and, upon any such notice, references herein to GAAP shall thereafter be construed to mean (i) IFRS for periods beginning on and after the date of such notice or a later date as specified in such notice as in effect on such date and (ii) for prior periods, GAAP as defined in the first sentence of this definition and (b) GAAP is determined as of the date of any calculation or determination required hereunder; provided that (x) the Company, on any date, may, by providing notice thereof to the Trustee, elect to establish that GAAP shall mean GAAP as in effect on such date and (y) any such election, once made, shall be irrevocable. The Company shall give notice of any such election to the Trustee and the Holders.

Global Note Legend ” means the legend set forth in Section 2.06(g)(ii) hereof, which is required to be placed on all Global Notes issued under this Indenture.

Global Notes ” means, individually and collectively, each of the Restricted Global Notes and the Unrestricted Global Notes, substantially in the form of Exhibit A, issued in accordance with Section 2.01, 2.06(b) or 2.06(d) hereof.

Grantors ” means the Company and the Subsidiary Guarantors.

 

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guarantee ” means, as applied to any obligation:

(i) a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner, of any part or all of such obligation; and

(ii) an agreement, direct or indirect, contingent or otherwise, the practical effect of which is to assure in any way the payment or performance (or payment of damages in the event of nonperformance) of all or any part of such obligation, including, without limiting the foregoing, the payment of amounts available to be drawn down under letters of credit of another Person.

The term “ guarantee ” used as a verb has a corresponding meaning. The term “ guarantor ” shall mean any Person providing a guarantee of any obligation.

Guarantee ” means each guarantee of the Notes contained in Article 10 given by each Subsidiary Guarantor.

Guaranty Agreement ” means a supplemental indenture, substantially in the form attached as Exhibit D hereto, pursuant to which a Subsidiary Guarantor guarantees the Company’s obligations with respect to the Notes under the Notes Documents.

Hedging Obligations ” of any Person means the obligations of such Person pursuant to any Interest Rate Protection Agreement or Currency Agreement.

Holder ” means the Person in whose name a Note is registered on the Registrar’s books.

IFRS ” means International Financial Reporting Standards and applicable accounting requirements set by the International Accounting Standards Board or any successor thereto (or the Financial Accounting Standards Board or any successor to such Board, or the SEC, as the case may be), as in effect from time to time.

Indebtedness ” means, with respect to any Person, without duplication:

(a) the principal amount of all liabilities of such Person for borrowed money or for the deferred purchase price of property or services, excluding any trade payables and other accrued current liabilities incurred in the ordinary course of business, but including all obligations, contingent or otherwise, of such Person in connection with any letters of credit, banker’s acceptance or other similar credit transaction;

(b) the principal amount of all obligations of such Person evidenced by bonds, notes, debentures or other similar instruments;

(c) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even if the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), but excluding trade accounts payable arising in the ordinary course of business;

(d) all Capitalized Lease Obligations of such Person and all Attributable Debt in respect of Sale/Leaseback Transactions entered into by such Person;

(e) all Indebtedness referred to in the preceding clauses of other Persons, the payment of which is secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien upon property (including accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness (the amount of such obligation being deemed to be the lesser of the value of such property or asset (as determined in good faith by the Company) or the amount of the obligation so secured);

 

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(f) all guarantees of Indebtedness referred to in this definition by such Person;

(g) all Redeemable Capital Stock of such Person (which shall be valued at the greater of its voluntary or involuntary maximum fixed repurchase price (as defined below) excluding accrued dividends);

(h) all obligations under or in respect of Hedging Obligations of such Person (the amount of any such obligation to be equal at any time to the termination value of such agreement or arrangement giving rise to such Hedging Obligation that would be payable by such Person at such time); and

(i) any amendment, supplement, modification, deferral, renewal, extension, refinancing or refunding of any liability of the types referred to in clauses (a) through (h) above;

provided , however , that Indebtedness shall not include:

(x) any holdback or escrow of the purchase price of property, services, businesses or assets; or

(y) any contingent payment obligations incurred in connection with the acquisition of assets or businesses, which are contingent on the performance of the assets or businesses so acquired.

For purposes hereof, the “ maximum fixed repurchase price ” of any Redeemable Capital Stock which does not have a fixed repurchase price shall be calculated in accordance with the terms of such Redeemable Capital Stock as if such Redeemable Capital Stock were purchased on any date on which Indebtedness shall be required to be determined pursuant hereto, and if such price is based upon, or measured by, the fair market value of such Redeemable Capital Stock, such fair market value shall be determined in good faith by the Board of Directors of the issuer of such Redeemable Capital Stock.

Indenture ” means this Indenture, as amended, supplemented or otherwise modified from time to time.

Indirect Participant ” means a Person who holds a beneficial interest in a Global Note through a Participant.

Initial Notes ” has the meaning set forth in the recitals hereto.

Initial Purchasers ” means Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities LLC, Citigroup Global Markets Inc., Capital One Securities, Inc., Fifth Third Securities, Inc., ING Financial Markets LLC, MUFG Securities Americas Inc., PNC Capital Markets LLC, SunTrust Robinson Humphrey, Inc., U.S. Bancorp Investments, Inc., Wells Fargo Securities, LLC, Citizens Capital Markets, Inc., The Governor and Company of the Bank of Ireland, Loop Capital Markets LLC and CJS Securities, Inc.

Intercreditor Agreement ” means the Intercreditor and Collateral Agency Agreement, dated as of the Issue Date, among the Credit Agreement Collateral Agent and the Collateral Agent and acknowledged by the Company and each Subsidiary Guarantor, as it may be amended from time to time in accordance with the terms thereof.

Interest Payment Date ” means April 15 and October 15 of each year to stated maturity.

Interest Rate Protection Agreement ” means, with respect to any Person, any arrangement with any other Person whereby, directly or indirectly, such Person is entitled to receive from time to time periodic payments calculated by applying either a floating or a fixed rate of interest on a stated notional amount in exchange for periodic payments made by such Person calculated by applying a fixed or a floating rate of interest on the same notional amount and shall include, interest rate swaps, caps, floors, collars and similar agreements.

 

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Interest Rate Protection Obligations ” means the obligations of any Person pursuant to any Interest Rate Protection Agreements.

Investment ” means, with respect to any Person, any loan or other extension of credit (including a guarantee) or capital contribution to any other Person (by means of any transfer of cash or other property or any payment for property or services for consideration of Indebtedness or Capital Stock of any other Person), or any purchase or acquisition by such Person of any Capital Stock, bonds, notes, debentures or other securities or evidences of indebtedness issued by any other Person. The amount of any Investment outstanding at any time shall be the original cost of such Investment, reduced (at the Company’s option) by any dividend, distribution, interest payment, return of capital, repayment or other amount or value received in respect of such Investment; provided that to the extent that the amount of Restricted Payments outstanding at any time is so reduced by any portion of any such amount or value that would otherwise be included in the calculation of Consolidated Net Income, such portion of such amount or value shall not be so included for purposes of calculating the amount of Restricted Payments that may be made pursuant to the first paragraph of Section 4.09.

Investment Grade Rating ” means a rating equal to or higher than Baa3 (or the equivalent) by Moody’s and BBB- (or the equivalent) by S&P, or an equivalent rating by any other Rating Agency.

Issue Date ” means September 30, 2016.

Junior Indebtedness ” means any unsecured Indebtedness or Indebtedness secured by a Lien that ranks junior in priority to the Liens securing the Notes.

Legal Holiday ” means a Saturday, a Sunday or a day on which commercial banking institutions are not required to be open in the State of New York or at the place of payment. If a payment date is on a Legal Holiday, payment will be made on the next succeeding day that is not a Legal Holiday and no interest shall accrue for the intervening period.

Lien ” means any mortgage, charge, pledge, lien (statutory or other), security interest, hypothecation, assignment for security, claim, or preference or priority or other encumbrance upon or with respect to any property of any kind. A Person shall be deemed to own subject to a Lien any property which such Person has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement.

Material Real Property ” shall mean any parcel of real property located in the United States and having a Fair Market Value (on a per-property basis) greater than or equal to $15,000,000 as of (x) the Issue Date, for real property then owned or (y) the date of acquisition, for real property acquired after the Issue Date, in each case as determined by the Company in good faith.

Maturity Date ” means October 15, 2023.

Moody’s ” means Moody’s Investors Service, Inc. and any successor to its rating agency business.

Mortgage ” means any mortgage, deed of trust or other agreement which conveys or evidences a Lien in favor of the Collateral Agent and the Secured Parties on any Mortgaged Property, as the same may be amended, modified, restated, supplemented or replaced from time to time.

Mortgage Policy ” has the meaning set forth in Section 4.25 of this Indenture.

Mortgaged Property ” means the Material Real Properties that are identified as such on Schedule 4.25 and each After-Acquired Property that is a Material Real Property.

 

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Net Cash Proceeds ” means, with respect to any Asset Sale, the proceeds thereof in the form of cash or Cash Equivalents including payments in respect of deferred payment obligations when received in the form of cash or Cash Equivalents (except to the extent that such obligations are financed or sold with recourse to the Company or any Restricted Subsidiary) net of:

(i) brokerage commissions and other fees and expenses (including fees and expenses of legal counsel and investment bankers, recording fees, transfer fees and appraisers’ fees) related to such Asset Sale;

(ii) provisions for all taxes payable as a result of such Asset Sale;

(iii) amounts required to be paid to any Person (other than the Company or any Restricted Subsidiary) owning a beneficial interest in the assets subject to the Asset Sale;

(iv) payments made to retire Indebtedness which is secured by any assets subject to such Asset Sale (in accordance with the terms of any Lien upon such assets) or which must by its terms, or in order to obtain a necessary consent to such Asset Sale or by applicable law, be repaid out of the proceeds of such Asset Sale;

(v) the amount of any liability or obligations in respect of appropriate amounts to be provided by the Company or any Restricted Subsidiary, as the case may be, as a reserve required in accordance with GAAP against any liabilities associated with such Asset Sale and retained by the Company or any Restricted Subsidiary, as the case may be, after such Asset Sale, including pension and other post-employment benefit liabilities, liabilities related to environmental matters and liabilities under any indemnification obligations associated with such Asset Sale, all as reflected in an Officer’s Certificate delivered to the Trustee; and

(vi) the amount of any purchase price or similar adjustment claimed, owed or otherwise paid or payable by the Company or a Restricted Subsidiary in respect to such Asset Sale.

Non-U.S. Person ” means a Person who is not a U.S. Person.

Notes ” means the Initial Notes and more particularly means any Note authenticated and delivered under this Indenture. Unless the context requires otherwise, all references to “ Notes ” for all purposes of this Indenture shall include any Additional Notes that are actually issued. The Notes offered by the Company and any Additional Notes subsequently issued under this Indenture will be treated as a single class for all purposes under this Indenture, including waivers, amendments, redemptions and offers to purchase, except for certain waivers and amendments as set forth herein.

Notes Documents ” means the Notes, this Indenture and the Notes Security Documents.

Notes Security Documents ” means, collectively, the security agreements, pledge agreements, mortgages, collateral assignments, deeds of trust and all other pledges, agreements, financing statements, patent, trademark or copyright filings, Mortgages or other filings or documents that create or purport to create a Lien in the Collateral in favor of the Collateral Agent for the benefit of the Collateral Agent, the Trustee and the Holders of Notes, and the Intercreditor Agreement, in each case as they may be amended from time to time, and any instruments of assignment, control agreements, lockbox letters or other instruments or agreements executed pursuant to the foregoing.

Obligations ” means, with respect to any Indebtedness, any principal, premium (if any), interest (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization whether or not a claim for post-filing interest is allowed in such proceedings), fees, charges, expenses, reimbursement obligations, guarantees of such Indebtedness (or of Obligations in respect thereof), other monetary obligations of any nature and all other amounts payable thereunder or in respect thereof.

Offer ” means a Change of Control Offer or an Asset Sale Offer.

 

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Offer to Purchase ” means an Offer sent by or on behalf of the Company by electronic transmission or by first-class mail, to each Holder of Notes at its address appearing in the register for the Notes, or otherwise in accordance with the procedures of DTC, on the date of the Offer offering to purchase up to the principal amount of Notes specified in such Offer at the purchase price specified in such Offer (as determined pursuant to this Indenture). Unless otherwise provided in Sections 4.13 or 4.14 or otherwise required by applicable law, the Offer shall specify an expiration date (the “ Expiration Date ”) of the Offer to Purchase, which shall be not less than 30 days nor more than 60 days after the date of such Offer (or such later date as may be necessary for the Company to comply with the Exchange Act), and a settlement date (the “ Purchase Date ”) for purchase of Notes to occur no later than five Business Days after the Expiration Date. The Company shall notify the Trustee prior to the mailing or sending of the Offer of the Company’s obligation to make an Offer to Purchase, and the Offer shall be mailed or sent by the Company or, at the Company’s request at least 10 days (or such shorter period as is acceptable to the Trustee) prior to the mailing or sending of the Offer by the Trustee in the name and at the expense of the Company, or otherwise in accordance with the procedures of DTC. The Offer shall contain all the information required by applicable law to be included therein. The Offer shall contain all instructions and materials necessary to enable such Holders to tender Notes pursuant to the Offer to Purchase. The Offer shall also state:

(1) the Section of this Indenture pursuant to which the Offer to Purchase is being made;

(2) the Expiration Date and the Purchase Date;

(3) the purchase price to be paid by the Company for each $2,000 aggregate principal amount or $1,000 integral multiple in excess thereof of Notes accepted for payment (as specified pursuant to this Indenture) (the “ Purchase Price ”), and the amount of accrued and unpaid interest to be paid;

(4) that the Holder may tender all or any portion of the Notes registered in the name of such Holder and that any portion of a Note tendered must be tendered in principal amounts of $2,000 or an integral multiple of $1,000 in excess thereof;

(5) the place or places where Notes are to be surrendered for tender pursuant to the Offer to Purchase;

(6) that interest on any Note not tendered or tendered but not purchased by the Company pursuant to the Offer to Purchase will continue to accrue;

(7) that on the Purchase Date the Purchase Price will become due and payable upon each Note being accepted for payment pursuant to the Offer to Purchase and that interest thereon shall cease to accrue on and after the Purchase Date;

(8) that each Holder electing to tender all or any portion of a Note pursuant to the Offer to Purchase will be required to surrender such Note at the place or places specified in the Offer prior to the close of business on the Expiration Date (such Note being, if the Company or the Trustee so requires, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by the Holder thereof or his attorney duly authorized in writing);

(9) that Holders will be entitled to withdraw all or any portion of Notes tendered if the Company (or its Paying Agent) receives, not later than the close of business on the fifth Business Day next preceding the Expiration Date, a facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Note the Holder tendered, the certificate number of the Note the Holder tendered and a statement that such Holder is withdrawing all or a portion of his tender;

(10) that (a) if Notes purchasable at an aggregate Purchase Price less than or equal to the Purchase Amount are duly tendered and not withdrawn pursuant to the Offer to Purchase, the Company shall purchase all such Notes and (b) if Notes purchasable at an aggregate Purchase Price in excess of the Purchase Amount are tendered and not withdrawn pursuant to the Offer to Purchase (or the Asset Sale Offer Price with respect to Notes tendered into such Asset Sale Offer exceeds the Excess Proceeds

 

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allocable to the Notes), the Company shall purchase Notes on a pro rata basis based on the Purchase Price therefor, with such adjustments as may be deemed appropriate so that only Notes in denominations of $2,000 principal amount or integral multiples of $1,000 in excess thereof shall be purchased; notwithstanding the foregoing, if the Company is required to commence an Asset Sale Offer at any time when other Indebtedness of the Company ranking pari passu in right of payment with the Notes is outstanding containing provisions similar to those set forth in this Indenture with respect to offers to purchase or redeem with the proceeds of sales of assets, then the Company shall comply with the applicable provisions of Section 4.14 in connection with any offers to purchase such other Indebtedness; and

(11) that in the case of a Holder whose Note is purchased only in part, the Company shall execute and the Trustee shall authenticate and deliver to the Holder of such Note without service charge, a new Note or Notes, of any authorized denomination as requested by such Holder, in an aggregate principal amount equal to and in exchange for the unpurchased portion of the Note so tendered.

An Offer to Purchase shall be governed by and effected in accordance with the provisions of this Indenture pertaining to the type of Offer to which it relates.

Offering Memorandum ” means the confidential offering memorandum, dated September 23, 2016, relating to the sale of the Initial Notes.

Officer ” means the Chairman of the board of directors, the Chief Executive Officer, the Chief Financial Officer, the Chief Operating Officer, the President, any Executive Vice President, Senior Vice President or Vice President, the Chief Accounting Officer, the Controller, the Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary of any Person. Unless otherwise indicated, Officer shall refer to an Officer of the Company.

Officer’s Certificate ” means a certificate signed on behalf of a Person by an Officer of such Person that meets the requirements set forth in this Indenture. Unless otherwise indicated, Officer’s Certificate shall refer to a certificate of an Officer of the Company.

Opinion of Counsel ” means a written opinion from legal counsel. The counsel may be an employee of or internal or outside counsel to the Company.

Outstanding ,” when used with respect to Notes, means, as of the date of determination, all Notes theretofore authenticated and delivered under this Indenture, except:

(i) Notes theretofore cancelled by the Trustee or delivered to the Trustee for cancellation;

(ii) Notes for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders of such Notes; provided , however , that, if such securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made;

(iii) Notes which have been paid pursuant to Section 2.07 or in exchange for or in lieu of which other Notes have been authenticated and delivered pursuant to this Indenture, other than any such Notes in respect of which there shall have been presented to the Trustee proof satisfactory to it that such Notes are held by a bona fide purchaser in whose hands such Notes are valid obligations of the Company; and

(iv) Notes as to which (a) Legal Defeasance has been effected pursuant to Section 8.02 or (b) Covenant Defeasance has been effected pursuant to 8.03, to the extent set forth therein;

provided , however , that in determining whether the Holders of the requisite principal amount of the Outstanding Notes have given, made or taken any request, demand, authorization, direction, notice, consent, waiver or other action hereunder as of any date, Notes owned by the Company or any other obligor upon the Notes or any

 

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Affiliate of the Company or of such other obligor shall be disregarded and deemed not to be Outstanding (it being understood that Notes to be acquired by the Company pursuant to an Offer or other offer to purchase shall not be deemed to be owned by the Company until legal title to such Notes passes to the Company), except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent, waiver or other action, only Notes which a Responsible Officer of the Trustee actually knows to be so owned shall be so disregarded. Notes so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right so to act with respect to such Notes and that the pledgee is not the Company or any other obligor upon the Notes or any Affiliate of the Company or of such other obligor.

Parity Lien Debt ” means (1) the Notes and any guarantees thereof, (2) funded debt under the Term Loan Credit Facility and any guarantees thereof and (3) additional funded Indebtedness (including the undrawn amount of letters of credit whether or not then available to be drawn and the net termination amount (less fees, expenses and default interest) that would be payable under any agreement governing Cash Management Obligations or Hedging Obligations that are included in Parity Lien Obligations) and unfunded debt commitments under any other Parity Lien Documents and any guarantees thereof that are secured equally and ratably with the Parity Lien Obligations by a Lien that is permitted to be incurred and so secured under the terms of each applicable Secured Indebtedness Document; provided, in the case of any additional Indebtedness referred to in this clause (3), that: (x) prior to the incurrence of such additional Indebtedness by the Company or any Subsidiary Guarantor, such additional Indebtedness is designated by the Company, in an officer’s certificate or a designation of additional Secured Indebtedness delivered to the Credit Agreement Collateral Agent, the Collateral Agent and each other collateral agent party to the Intercreditor Agreement, as “Parity Lien Debt” for the purposes of the Secured Indebtedness Documents and (y) all applicable requirements under the Intercreditor Agreement have been complied with (and the satisfaction of such requirements and the other provisions of this clause (3) will be conclusively established, absent manifest error, if the Company delivers to the Collateral Agent an officer’s certificate stating that such requirements and other provisions have been satisfied and that such Indebtedness is “Parity Lien Debt”).

Parity Lien Documents ” means the Credit Agreement (as it pertains to the Term Loan Credit Facility), the Indenture and any additional indenture, credit agreement or other agreement constituting Additional Secured Indebtedness pursuant to which any Parity Lien Debt is incurred and secured in accordance with the terms of each applicable Secured Indebtedness Document and the security documents related thereto (other than any Notes Security Documents that do not secure Parity Lien Obligations).

Parity Lien Obligations ” means Parity Lien Debt and all other Obligations in respect thereof, including all Obligations under Parity Lien Documents and all Cash Management Obligations and Hedging Obligations that are secured by Parity Lien Documents (other than First-Out Obligations).

Participant ” means, with respect to the Depositary, a Person who has an account with the Depositary (and, with respect to DTC, shall include Euroclear and Clearstream).

Permitted Investments ” means any of the following:

(i) Investments in the Company or in a Restricted Subsidiary;

(ii) Investments in another Person, if as a result of such Investment:

(A) such other Person becomes a Restricted Subsidiary; or

(B) such other Person is merged or consolidated with or into, or transfers or conveys all or substantially all of its assets to, the Company or a Restricted Subsidiary;

(iii) Investments representing Capital Stock, obligations or securities issued to the Company or any of its Restricted Subsidiaries received in settlement of claims against any other Person or a reorganization or similar arrangement of any debtor of the Company or such Restricted Subsidiary, including upon the bankruptcy or insolvency of such debtor, or as a result of foreclosure, perfection or enforcement of any Lien;

 

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(iv) Investments in Hedging Obligations entered into by the Company or any of its Subsidiaries in connection with the operations of the business of the Company or its Restricted Subsidiaries and not for speculative purposes;

(v) Investments in any Indebtedness of the Company or its Restricted Subsidiaries (with respect to Subordinated Indebtedness or Junior Indebtedness, to the extent otherwise permitted under this Indenture);

(vi) Investments in Cash Equivalents;

(vii) Investments in receivables owing to the Company or any Restricted Subsidiary created or acquired in the ordinary course of business;

(viii) Investments consisting of purchases and acquisitions of inventory, supplies, materials and equipment or licenses, in any case, in the ordinary course of business and otherwise in accordance with this Indenture;

(ix) Investments acquired by the Company or any Restricted Subsidiary in connection with an Asset Sale permitted under Section 4.14 to the extent such Investments are non-cash proceeds as permitted under Section 4.14;

(x) advances to employees or officers of the Company in the ordinary course of business and additional loans to employees or officers in an aggregate amount, together with all other Permitted Investments made pursuant to this clause (x), at any time outstanding not to exceed $10,000,000;

(xi) any Investment to the extent that the consideration therefor is Capital Stock (other than Redeemable Capital Stock) of the Company;

(xii) guarantees (including Guarantees of the Notes) of Indebtedness permitted to be incurred under Section 4.08;

(xiii) any acquisition of assets to the extent made in exchange for the issuance of Capital Stock (other than Redeemable Capital Stock) of the Company;

(xiv) Investments in securities or other Investments received in settlement of debts created in the ordinary course of business and owing to, or of other claims asserted by, the Company or any Restricted Subsidiary, or as a result of foreclosure, perfection or enforcement of any Lien, or in satisfaction of judgments, including in connection with any bankruptcy proceeding or other reorganization of another Person;

(xv) Investments in existence or made pursuant to legally binding written commitments in existence on the Issue Date;

(xvi) Investments in pledges or deposits with respect to leases or utilities provided to third parties;

(xvii) [reserved];

(xviii) Investments in (w) Unrestricted Subsidiaries, (x) Similar Businesses, (y) less than all the business or assets of, or stock or other evidences of beneficial ownership of, any Person, or (z) any joint venture or similar arrangement, provided, however, that the aggregate amount of all Investments outstanding and made pursuant to this clause (xviii) shall not exceed the greater of $75,000,000 and 17.0% of Pro Forma Adjusted EBITDA at any one time; and

(xix) other Investments; provided that at the time any such Investment is made pursuant to this clause (xix), the amount of such Investment, together with all other Investments made pursuant to this clause (xix), does not exceed the greater of (i) $100,000,000 and (ii) 25% of Pro Forma Adjusted EBITDA; provided that, if an Investment is made pursuant to this clause (xix) in a Person that is not a Restricted Subsidiary and such Person subsequently becomes a Restricted Subsidiary, such Investment shall thereafter be deemed to have been made pursuant to clause (i) or (ii) of the definition of “Permitted Investments.”

 

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Permitted Liens ” means:

(a) any Lien existing as of the Issue Date;

(b) Liens securing Indebtedness permitted under Section 4.08(b)(i);

(c) any Lien securing Acquired Indebtedness created prior to (and not created in connection with, or in contemplation of) the incurrence of such Indebtedness by the Company or any Restricted Subsidiary, if such Lien does not attach to any property or assets of the Company or any Restricted Subsidiary other than the property or assets subject to the Lien prior to such incurrence (plus improvements, accessions, proceeds or dividends or distributions in respect thereof);

(d) Liens in favor of the Company or a Restricted Subsidiary;

(e) Liens on and pledges of the assets or Capital Stock of any Unrestricted Subsidiary securing any Indebtedness or other obligations of such Unrestricted Subsidiary and Liens on the Capital Stock or assets of Foreign Subsidiaries securing Indebtedness permitted under Section 4.08(b)(x);

(f) Liens for taxes not delinquent or statutory Liens for taxes, the nonpayment of which, individually or in the aggregate, would not reasonably be expected to have a material adverse effect on the Company and its Restricted Subsidiaries or that are being contested in good faith by appropriate proceedings and as to which the Company or its Restricted Subsidiaries shall have set aside on its books such reserves as may be required pursuant to GAAP;

(g) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, suppliers, materialmen, repairmen and other Liens imposed by law incurred in the ordinary course of business for sums not yet delinquent for a period of more than 60 days or being contested in good faith and by appropriate proceedings;

(h) Liens incurred or deposits made in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government or other contracts, performance and return-of-money bonds and other similar obligations (in each case, exclusive of obligations for the payment of borrowed money);

(i) (A) mortgages, liens, security interests, restrictions, encumbrances or any other matters of record that have been placed by any developer, landlord or other third party on property over which the Company or any Restricted Subsidiary has easement rights or on any leased property and subordination or similar agreements relating thereto and (B) any condemnation or eminent domain proceedings affecting any real property;

(j) judgment Liens not giving rise to an Event of Default so long as any appropriate legal proceedings which may have been duly initiated for the review or appeal of such judgment shall not have been finally terminated or the period within which such proceedings may be initiated shall not have expired;

 

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(k) easements, rights-of-way, zoning restrictions, utility agreements, covenants, restrictions and other similar charges, encumbrances or title defects or leases or subleases granted to others, in respect of real property not interfering in the aggregate in any material respect with the ordinary conduct of the business of the Company or any of its Restricted Subsidiaries;

(l) any interest or title of a lessor under any Capitalized Lease Obligation or operating lease;

(m) Liens securing Indebtedness incurred pursuant to Section 4.08(b)(viii);

(n) Liens securing Indebtedness incurred pursuant to Section 4.08(b)(iv) to finance the construction, purchase or lease of, or repairs, improvements or additions to, property, plant or equipment of the Company or any Restricted Subsidiary; provided , however , that the Lien may not extend to any other property owned by the Company or any Restricted Subsidiary at the time the Lien is incurred (other than assets and property affixed or appurtenant thereto), and the Indebtedness (other than any interest thereon) secured by the Lien may not be incurred more than 180 days after the later of the acquisition, completion of construction, repair, improvement, addition or commencement of full operation of the property subject to the Lien;

(o) Liens securing reimbursement obligations with respect to commercial letters of credit which encumber documents and other property relating to such letters of credit and products and proceeds thereof;

(p) Liens securing refinancing Indebtedness permitted under Section 4.08(b)(ix), provided that such Liens do not exceed the Liens replaced in connection with such refinanced Indebtedness or as provided for under the terms of the Indebtedness being replaced;

(q) Liens encumbering deposits made to secure obligations arising from statutory, regulatory, contractual, or warranty requirements of the Company or any of its Restricted Subsidiaries, including rights of offset and set-off;

(r) Liens securing Hedging Obligations, in each case which relate to Indebtedness that is secured by Liens otherwise permitted under this Indenture;

(s) [Reserved];

(t) any interest or title of a lessor, sublessor, licensee or licensor under any lease, sublease, sublicense or license agreement not prohibited by this Indenture;

(u) Liens attaching solely to cash earnest money deposits in connection with any letter of intent or purchase agreement in connection with an acquisition permitted under the terms of this Indenture;

(v) Liens on cash set aside at the time of the incurrence of any Indebtedness or government securities purchased with such cash, in either case to the extent that such cash or government securities prefund the payment of interest on such Indebtedness and are held in an escrow account or similar arrangement to be applied for such purpose;

(w) Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale of goods entered into in the ordinary course of business;

(x) any encumbrance or restriction (including, but not limited to, put and call agreements) with respect to Capital Stock of any joint venture or similar arrangement pursuant to any joint venture or similar agreement;

(y) Liens on insurance proceeds or unearned premiums incurred in the ordinary course of business in connection with the financing of insurance premiums;

 

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(z) Liens created in favor of the Trustee for the Notes;

(aa) Liens arising by operation of law in the ordinary course of business;

(bb) Liens on property or assets under construction (and related rights) in favor of a contractor or developer or arising from progress or partial payments by a third party relating to such property or assets;

(cc) Liens relating to pooled deposit or sweep accounts to permit satisfaction of overdraft, cash pooling or similar obligations incurred in the ordinary course of business;

(dd) Liens incurred by the Company or any Restricted Subsidiary; provided that at the time any such Lien is incurred, the obligations secured by such Lien, when added to all other obligations secured by Liens incurred pursuant to this clause (dd), shall not exceed the greater of $50,000,000 and 12% of Pro Forma Adjusted EBITDA;

(ee) Liens securing Indebtedness incurred in compliance with Section 4.08; provided that on the date of the incurrence of such Indebtedness after giving effect to such incurrence (or on the date of the initial borrowing of such Indebtedness after giving pro forma effect to the incurrence of the entire committed amount of such Indebtedness, in which case such committed amount may thereafter be borrowed and reborrowed, in whole or in part, from time to time, without further compliance with this clause (ee)), no Default or Event of Default shall have occurred and be continuing and the Senior Secured Indebtedness Leverage Ratio shall not exceed 2.00:1.00;

(ff) Liens upon specific items of inventory or other goods and proceeds of any Person securing such Person’s obligations in respect of bankers’ acceptances issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods;

(gg) Liens of a collection bank arising under Section 4-210 of the UCC on items in the course of collection; and

(hh) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods.

For purposes of determining compliance with this definition, (x) a Lien need not be incurred solely by reference to one category of Permitted Liens described in this definition but may be incurred under any combination of such categories (including in part under one such category and in part under any other such category), (y) in the event that a Lien (or any portion thereof) meets the criteria of one or more of such categories of Permitted Liens, the Company shall, in its sole discretion, classify or reclassify such Lien (or any portion thereof) in any manner that complies with this definition, and (z) in the event that a portion of Indebtedness or Preferred Stock secured by a Lien could be classified as secured in part pursuant to clause (ee) above (giving effect to the incurrence of such portion of such Indebtedness), the Company, in its sole discretion, may classify such portion of such Indebtedness (and any obligations in respect thereof) as having been secured pursuant to clause (ee) above and thereafter the remainder of such Indebtedness as having been secured pursuant to one or more of the other clauses of this definition.

Person ” means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof.

Preferred Stock ” as applied to any Person, means Capital Stock of any class or classes (however designated) which is preferred as to the payment of dividends or distributions, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such Person, over shares of Capital Stock of any other class of such Person.

 

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Private Placement Legend ” means the legend set forth in Section 2.06(g)(i) hereof to be placed on all Notes issued under this Indenture, except where otherwise permitted by the provisions of this Indenture.

Pro Forma Adjusted EBITDA ” means, with respect to the Company and its Subsidiaries on a consolidated basis, the Adjusted EBITDA for the Company and its Subsidiaries for the four full fiscal quarters, treated as one period, for which financial information in respect thereof is available immediately preceding the date of such calculation, in each case calculated with the pro forma adjustments as are appropriate and consistent with the pro forma adjustment provisions set forth in the definition of “Consolidated Fixed Charge Coverage Ratio.”

Purchase Amount ” means, with respect to an Offer to Purchase, the maximum aggregate amount payable by the Company for Securities under the terms of such Offer to Purchase, if such Offer to Purchase were accepted in respect of all Securities.

Purchase Date ” shall have the meaning set forth in the definition of “Offer to Purchase.”

Purchase Money Obligations ” means any Indebtedness incurred to finance or refinance the acquisition, leasing, construction or improvement of property (real or personal) or assets (including Capital Stock), and whether acquired through the direct acquisition of such property or assets or the acquisition of the Capital Stock of any Person owning such property or assets, or otherwise; provided that such Indebtedness is incurred within 180 days after such acquisition.

Purchase Price ” shall have the meaning set forth in the definition of “Offer to Purchase.”

QIB ” means a “qualified institutional buyer” as defined in Rule 144A.

Quotation Agent ” means a Reference Treasury Dealer selected by the Company.

Rating Agencies ” mean Moody’s and S&P or if Moody’s or S&P or both shall not make a rating on the Notes publicly available, a nationally recognized statistical rating agency or agencies, as the case may be, selected by the Company which shall be substituted for Moody’s or S&P or both, as the case may be.

Record Date ” for the interest payable on any applicable Interest Payment Date means the April 1 and October 1 (whether or not a Business Day) immediately preceding such Interest Payment Date.

Redeemable Capital Stock ” means any class or series of Capital Stock that, either by its terms, by the terms of any security into which it is convertible or exchangeable or by contract or otherwise, is or upon the happening of an event or passage of time would be, required to be redeemed prior to the Maturity Date or is redeemable at the option of the holder thereof at any time prior to the Maturity Date, or is convertible into or exchangeable for debt securities at any time prior to the Maturity Date; provided , however , that Capital Stock will not constitute Redeemable Capital Stock solely because the holders thereof have the right to require the Company to repurchase or redeem such Capital Stock upon the occurrence of a “change of control” or an “asset sale”.

Redemption Price ” when used with respect to any Note to be redeemed, means the price at which it is to be redeemed pursuant to this Indenture.

Reference Treasury Dealer ” means each of three nationally recognized investment banking firms selected by the Company that are primary U.S. Government securities dealers.

Reference Treasury Dealer Quotations ” means, with respect to each Reference Treasury Dealer and any Redemption Date, the average, as determined by the Company, of the bid and asked prices for the Comparable Treasury Issue, expressed in each case as a percentage of its principal amount, quoted in writing to the Quotation Agent by such Reference Treasury Dealer at 5:00 p.m., New York City time, on the third Business Day immediately preceding such Redemption Date.

Regulation S ” means Regulation S promulgated under the Securities Act.

 

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Regulation S Global Note ” means a Global Note in the form of Exhibit A bearing the Global Note Legend and the Private Placement Legend and the Regulation S Global Note Legend and deposited with or on behalf of, and registered in the name of, the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Regulation S Global Notes.

Regulation S Global Note Legend ” means the legend set forth in Section 2.06(g)(iii) hereof.

Responsible Officer ” means, when used with respect to the Trustee, any officer within the corporate trust department of the Trustee, including any vice president, assistant vice president, assistant secretary, assistant treasurer, trust officer or any other officer of the Trustee who customarily performs functions similar to those performed by the Persons who at the time shall be such officers, respectively, who shall have direct responsibility for the administration of this Indenture, or any other officer to whom any corporate trust matter is referred because of such Person’s knowledge of and familiarity with the particular subject.

Restricted Definitive Note ” means a Definitive Note bearing, or that is required to bear, the Private Placement Legend.

Restricted Global Note ” means a Global Note bearing, or that is required to bear, the Private Placement Legend.

Restricted Period ” means, in respect of any Note issued under Regulation S, the 40-day distribution compliance period as defined in Regulation S applicable to such Note.

Restricted Subsidiary ” means any Subsidiary of the Company that is not an Unrestricted Subsidiary.

Revolving Credit Facility ” means the $400,000,000 first lien secured revolving credit facility entered into pursuant to the terms of the Credit Agreement.

RRD ” means R. R. Donnelley & Sons Company, a Delaware corporation, and any permitted successor or assign

Rule 144 ” means Rule 144 promulgated under the Securities Act.

Rule 144A ” means Rule 144A promulgated under the Securities Act.

Rule 903 ” means Rule 903 promulgated under the Securities Act.

Rule 904 ” means Rule 904 promulgated under the Securities Act.

S&P ” means Standard & Poor’s Ratings Services and any successor to its rating agency business.

Sale/Leaseback Transaction ” means an arrangement relating to property owned by the Company or a Restricted Subsidiary on the Issue Date or thereafter acquired by the Company or a Restricted Subsidiary whereby the Company or a Restricted Subsidiary transfers such property to a Person and the Company or a Restricted Subsidiary leases it from such Person.

SEC ” means the Securities and Exchange Commission.

Secured Indebtedness ” means any Indebtedness of the Company or any of its Restricted Subsidiaries secured by a Lien.

Secured Indebtedness Documents ” means, collectively, the Notes Documents, the Parity Lien Documents, the First-Out Documents and any indenture, credit agreement or other agreement governing each other class of Secured Indebtedness.

 

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Secured Parties ” means (a) the Holders, (b) the Trustee, (c) the Collateral Agent, (d) the beneficiaries of each indemnification obligation undertaken by the Issuer or any Guarantor under this Indenture, the Notes, the Intercreditor Agreement or the other Notes Security Documents and (e) the successor and assigns of each of the foregoing.

Securities Act ” means the Securities Act of 1933, as amended.

Senior Secured Credit Facilities ” means the Revolving Credit Facility and the Term Loan Credit Facility entered into by the Company pursuant to the terms of the Credit Agreement.

Senior Secured Indebtedness Leverage Ratio ” means, with respect to any Person, on any date of determination, a ratio (i) the numerator of which is the aggregate principal amount (or accreted value, as the case may be) of Indebtedness that is secured by a Lien of such Person and its Restricted Subsidiaries on a consolidated basis outstanding on such date, less up to $150,000,000 of cash and Cash Equivalents that would be stated on the consolidated balance sheet of such Person and held by such Person or its Restricted Subsidiaries, as determined in accordance with GAAP, as of the date of determination, and (ii) the denominator of which is the Adjusted EBITDA of such Person for the four full fiscal quarters, treated as one period, for which financial information in respect thereof is available immediately preceding the date of such calculation, in each case calculated with the pro forma adjustments as are appropriate and consistent with the pro forma adjustment provisions set forth in the definition of “Consolidated Fixed Charge Coverage Ratio.”

Separation and Distribution Agreement ” means the Separation and Distribution Agreement, dated as of September 14, 2016, by and among RRD, the Company and Donnelley Financial Solutions, Inc.

Separation Transactions ” means the completion of the Plan of Reorganization and the LSC Distribution (each as defined in the Separation and Distribution Agreement).

Significant Subsidiary ” of any Person means a Restricted Subsidiary of such Person which would be a significant subsidiary of such Person as determined in accordance with the definition in Rule 1-02(w) of Article 1 of Regulation S-X promulgated by the SEC and as in effect on the Issue Date.

Similar Business ” means any businesses conducted or proposed to be conducted by the Company and its Restricted Subsidiaries on the Issue Date and any other activities that are related, complementary, ancillary or incidental to, or a reasonable extension, expansion or development thereof.

Stated Maturity ” means, when used with respect to any Note or any installment of interest thereon, the date specified in such Note as the fixed date on which the principal of such Note or such installment of interest is due and payable, and when used with respect to any other Indebtedness, means the date specified in the instrument governing such Indebtedness as the fixed date on which the principal of such Indebtedness, or any installment of interest thereon, is due and payable.

Subordinated Indebtedness ” means, with respect to a Person, Indebtedness of such Person (whether outstanding on the Issue Date or thereafter incurred) which is subordinate or junior in right of payment to the Notes or a Guarantee of the Notes by such Person, as the case may be, pursuant to a written agreement to that effect.

Subsidiary ” means, with respect to any Person:

(i) a corporation a majority of whose Voting Stock is at the time, directly or indirectly, owned by such Person, by one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries thereof; and

(ii) any other Person (other than a corporation), including a partnership, limited liability company, business trust or joint venture, in which such Person, one or more Subsidiaries thereof or such Person and one or more Subsidiaries thereof, directly or indirectly, at the date of determination thereof, has a majority ownership interest entitled to vote in the election of directors, managers or trustees thereof (or

 

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other Person performing similar functions). For purposes of this definition, any directors’ qualifying shares or investments by foreign nationals mandated by applicable law shall be disregarded in determining the ownership of a Subsidiary.

Subsidiary Guarantors ” means each of the Company’s Domestic Restricted Subsidiaries, and in each case, their respective successors and assigns, that guarantee the Company’s obligations under the Senior Secured Credit Facilities as of the Issue Date and executes this Indenture, and each of the Company’s Domestic Restricted Subsidiaries that thereafter executes a Guaranty Agreement pursuant to Section 4.16 of this Indenture.

Term Loan Credit Facility ” means the $375,000,000 first lien secured term loan b facility entered into pursuant to the terms of the Credit Agreement.

Title Insurer ” has the meaning set forth in Section 4.25 of this Indenture.

Total Indebtedness Leverage Ratio ” means, with respect to any Person, on any date of determination, a ratio (i) the numerator of which is the aggregate principal amount (or accreted value, as the case may be) of Indebtedness that of such Person and its Restricted Subsidiaries on a consolidated basis outstanding on such date, and (ii) the denominator of which is the Adjusted EBITDA of such Person for the four full fiscal quarters, treated as one period, for which financial information in respect thereof is available immediately preceding the date of such calculation, in each case calculated with the pro forma adjustments as are appropriate and consistent with the pro forma adjustment provisions set forth in the definition of “Consolidated Fixed Charge Coverage Ratio.”

Transactions ” means the Separation Transactions, the entry into the Senior Secured Credit Facilities and the issuance of the Notes.

Trust Indenture Act ” means the Trust Indenture Act of 1939, as amended (15 U.S.C. §§ 77aaa-77bbbb).

Trustee ” means Wells Fargo Bank, National Association, as trustee, until a successor replaces it in accordance with the applicable provisions of this Indenture and thereafter means the successor serving hereunder.

Uniform Commercial Code ” means the Uniform Commercial Code or any successor provision thereof as the same may from time to time be in effect in the State of New York; provided , however , that, at any time, if by reason of mandatory provisions of law, any or all of the perfection or priority of the Secured Parties’ security interest in any item or portion of the Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, the term “Uniform Commercial Code” shall mean the Uniform Commercial Code as in effect, at such time, in such other jurisdiction for purposes of the provisions hereof relating to such perfection or priority and for purposes of definitions relating to such provisions.

Unrestricted Definitive Note ” means one or more Definitive Notes that do not bear and are not required to bear the Private Placement Legend.

Unrestricted Global Note ” means a permanent Global Note, substantially in the form of Exhibit A that bears the Global Note Legend and that has the “Schedule of Exchanges of Interests in the Global Note” attached thereto, and that is deposited with or on behalf of and registered in the name of the Depositary, representing Notes that do not bear the Private Placement Legend.

Unrestricted Subsidiary ” ” means (a) work-bench ventures I LLC and (b) each Subsidiary of the Company designated as such pursuant to and in compliance with Section 4.17 and each Subsidiary of such Unrestricted Subsidiary.

U.S. Government Obligations ” means securities that are (a) direct obligations of the United States of America for the timely payment of which its full faith and credit is pledged or (b) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the timely payment of which are unconditionally guaranteed as full faith and credit obligations of the United States of America, which, in either case, are not callable or redeemable at the option of the issuer thereof, and shall also include a depositary

 

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receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act), as custodian with respect to any such U.S. Government Obligations or a specific payment of principal of or interest on any such U.S. Government Obligations held by such custodian for the account of the holder of such depositary receipt; provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depositary receipt from any amount received by the custodian in respect of the U.S. Government Obligations or the specific payment of principal of or interest on the U.S. Government Obligations evidenced by such depositary receipt.

U.S. Person ” means a U.S. person as defined in Rule 902(k) under the Securities Act.

Voting Stock ” means any class or classes of Capital Stock pursuant to which the holders thereof have the general voting power under ordinary circumstances to elect a majority of the board of directors, managers or trustees of any Person (irrespective of whether or not, at the time, stock of any other class or classes shall have, or might have, voting power by reason of the happening of any contingency).

Wholly Owned Restricted Subsidiary ” means any Restricted Subsidiary of which 100% of the outstanding Capital Stock is owned by the Company or another Wholly Owned Restricted Subsidiary. For purposes of this definition, any directors’ qualifying shares or investments by foreign nationals mandated by applicable law shall be disregarded in determining the ownership of a Subsidiary.

Section 1.02. Other Definitions .

 

Term

  

Defined
in Section

“Asset Sale Offer”

   4.14(c)

“Asset Sale Offer Price”

   4.14(d)

“Authentication Order”

   2.02

“Automatic Exchange”

   2.06(f)

“Automatic Exchange Date”

   2.06(f)

“Automatic Exchange Notice”

   2.06(f)

“Automatic Exchange Notice Date”

   2.06(f)

“Change of Control Offer”

   4.13(a)

“Change of Control Purchase Date”

   4.13(a)

“Change of Control Purchase Price”

   4.13(a)

“Covenant Defeasance”

   8.03

“Covenant Suspension Event”

   4.21(a)(y)

“Designation”

   4.17(a)

“Designation Amount”

   4.17(a)(ii)

“DTC”

   2.03

“Event of Default”

   6.01

“Excess Proceeds”

   4.14(b)(ii)

“Guaranty Obligations”

   10.01

“incur”

   4.08(a)

“Legal Defeasance”

   8.02

“Note Register”

   2.03

“Paying Agent”

   2.03

“Redemption Date”

   3.01

“Registrar”

   2.03

“Replacement Assets”

   4.14(b)(ii)

“Required Filing Dates”

   4.18

“Restricted Payments”

   4.09(d)

“Reversion Date”

   4.21(b)

“Revocation”

   4.17(d)

“Surviving Entity”

   5.01(1)(y)

“Suspended Covenants”

   4.21(a)

“Suspension Period”

   4.21(c)

“Transfer Agent”

   2.03

 

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Section 1.03. Concerning the Trust Indenture Act . Except with respect to specific provisions of the Trust Indenture Act expressly referenced in the provisions of this Indenture, the Trust Indenture Act shall not be applicable to, and shall not govern, this Indenture and the Notes.

Section 1.04. Rules of Construction . Unless the context otherwise requires:

(a) a term has the meaning assigned to it;

(b) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;

(c) “or” is not exclusive;

(d) the words “including,” “includes” and similar words shall be deemed to be followed by “without limitation”;

(e) words in the singular include the plural, and in the plural include the singular;

(f) “will” shall be interpreted to express a command;

(g) provisions apply to successive events and transactions;

(h) references to sections of, or rules under, the Securities Act or the Exchange Act shall be deemed to include substitute, replacement or successor sections or rules adopted by the SEC from time to time;

(i) unless the context otherwise requires, any reference to an “Article,” “Section” or “clause” refers to an Article, Section or clause, as the case may be, of this Indenture;

(j) the words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Indenture as a whole and not any particular Article, Section, clause or other subdivision;

(k) the principal amount of any non-interest bearing or other discount security at any date shall be the principal amount thereof that would be shown on a balance sheet of the Company dated such date prepared in accordance with GAAP;

(l) words used herein implying any gender shall apply to both genders;

(m) in the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including”; the words “to” and “until” each mean “to but excluding” and the word “through” means “to and including”; and

(n) the principal amount of any Preferred Stock at any time shall be (i) the maximum liquidation value of such Preferred Stock at such time or (ii) the maximum mandatory redemption or mandatory repurchase price with respect to such Preferred Stock at such time, whichever is greater.

Section 1.05. Acts of Holders .

(a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent or proxy duly appointed in writing.

 

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Except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Company. Proof of execution of any such instrument or of a writing appointing any such agent or proxy, or the holding by any Person of a Note, shall be sufficient for any purpose of this Indenture and (subject to Section 7.01 hereof) conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section 1.05.

(b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by the certificate of any notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by or on behalf of any legal entity other than an individual, such certificate or affidavit shall also constitute proof of the authority of the Person executing the same. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner that the Trustee deems sufficient.

(c) The ownership of Notes shall be proved by the Note Register.

(d) Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Note shall bind every future Holder of the same Note and the Holder of every Note issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof, in respect of any action taken, suffered or omitted by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Note.

(e) The Company may set a record date for purposes of determining the identity of Holders entitled to give any request, demand, authorization, direction, notice, consent, waiver or take any other act, or to vote or consent to any action by vote or consent authorized or permitted to be given or taken by Holders. Unless otherwise specified, if not set by the Company prior to the first solicitation of a Holder made by any Person in respect of any such action, or in the case of any such vote, prior to such vote, any such record date shall be the later of 10 days prior to the first solicitation of such consent or the date of the most recent list of Holders furnished to the Trustee prior to such solicitation.

(f) Without limiting the foregoing, a Holder entitled to take any action hereunder with regard to any particular Note may do so with regard to all or any part of the principal amount of such Note or by one or more duly appointed agents, each of which may do so pursuant to such appointment with regard to all or any part of such principal amount. Any notice given or action taken by a Holder or its agents with regard to different parts of such principal amount pursuant to this Section 1.05(f) shall have the same effect as if given or taken by separate Holders of each such different part.

(g) Without limiting the generality of the foregoing, a Holder, including DTC, that is a Holder of a Global Note, may make, give or take, by a proxy or proxies duly appointed in writing, any request, demand, authorization, direction, notice, consent, waiver or other action provided in this Indenture to be made, given or taken by Holders, and any Person, that is a Holder of a Global Note, including DTC, may provide its proxy or proxies to the beneficial owners of interests in any such Global Note through such Depositary’s standing instructions and customary practices.

(h) The Company may fix a record date for the purpose of determining the Persons who are beneficial owners of interests in any Global Note held by DTC entitled under the procedures of such Depositary to make, give or take, by a proxy or proxies duly appointed in writing, any request, demand, authorization, direction, notice, consent, waiver or other action provided in this Indenture to be made, given or taken by Holders. If such a record date is fixed, the Holders on such record date or their duly appointed proxy or proxies, and only such Persons, shall be entitled to make, give or take such request, demand, authorization, direction, notice, consent, waiver or other action, whether or not such Holders remain Holders after such record date. Nothing in this paragraph shall prevent the Company from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be cancelled and of no effect), nor shall anything in this paragraph be construed to render ineffective any action taken pursuant to or in accordance with any other provision of this Indenture by Holders of the requisite principal amount of Outstanding Notes on the date such action is taken. No such request, demand, authorization, direction, notice, consent, waiver or other action shall be valid or effective if made, given or taken more than 120 days after such record date.

 

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Section 1.06. Timing of Payment . Notwithstanding anything herein to the contrary, if the date on which any payment is to be made pursuant to this Indenture or the Notes is not a Business Day, the payment otherwise payable on such date shall be payable on the next succeeding Business Day with the same force and effect as if made on such scheduled date and ( provided such payment is made on such succeeding Business Day) no interest shall accrue on the amount of such payment from and after such scheduled date to the time of such payment on such next succeeding Business Day and the amount of any such payment that is an interest payment will reflect accrual only through the original payment date and not through the next succeeding Business Day.

ARTICLE 2

THE NOTES

Section 2.01. Form and Dating; Terms .

(a) General . The Notes and the Trustee’s certificate of authentication shall be substantially in the form of Exhibit A. The Notes may have notations, legends or endorsements required by law, stock exchange rules or usage. Each Note shall be dated the date of its authentication. The Notes shall be issued in minimum denominations of $2,000 and any integral multiples of $1,000 in excess of $2,000.

(b) Global Notes . Notes issued in global form shall be substantially in the form of Exhibit A hereto (including the Global Note Legend thereon and the “Schedule of Exchanges of Interests in the Global Note” attached thereto). Notes issued in definitive form shall be substantially in the form of Exhibit A hereto (but without the Global Note Legend thereon and without the “Schedule of Exchanges of Interests in the Global Note” attached thereto). Each Global Note shall represent such of the outstanding Notes as shall be specified in the “Schedule of Exchanges of Interests in the Global Note” attached thereto and each shall provide that it shall represent up to the aggregate principal amount of Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Notes represented thereby may from time to time be reduced or increased, as applicable, to reflect exchanges and redemptions. Any endorsement of a Global Note to reflect the amount of any increase or decrease in the aggregate principal amount of outstanding Notes represented thereby shall be made by the Trustee or the Custodian, at the direction of the Trustee, in accordance with instructions given by the Holder thereof as required by Section 2.06 hereof.

(c) Regulation S Global Notes . Notes offered and sold in reliance on Regulation S shall be issued initially in the form of the Regulation S Global Note, which shall be deposited on behalf of the purchasers of the Notes represented thereby with the Custodian and registered in the name of the Depositary or the nominee of the Depositary for the accounts of designated agents holding on behalf of Euroclear or Clearstream, duly executed by the Company and authenticated by the Trustee as hereinafter provided.

The Restricted Period will be terminated pursuant to Applicable Procedures.

The aggregate principal amount of a Regulation S Global Note may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depositary or its nominee, as the case may be, in connection with transfers of interest as hereinafter provided.

(d) Terms . The aggregate principal amount of Notes that may be authenticated and delivered under this Indenture is unlimited.

The terms and provisions contained in the Notes shall constitute, and are hereby expressly made, a part of this Indenture and the Company, the Subsidiary Guarantors from time to time party hereto and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. However, to the extent any provision of any Note conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling.

 

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The Notes shall be subject to repurchase by the Company pursuant to an Asset Sale Offer as provided in Section 4.14 hereof or a Change of Control Offer as provided in Section 4.13 hereof.

Additional Notes ranking pari passu with the Initial Notes may be created and issued from time to time by the Company without notice to or consent of the Holders and shall be consolidated with and form a single class with the Initial Notes and shall have the same terms as to status, redemption or otherwise as the Initial Notes except that interest may accrue on the Additional Notes from their date of issuance (or such other date specified by the Company); provided , that the Company’s ability to issue Additional Notes shall be subject to the Company’s compliance with Section 4.08 hereof and Section 4.12 hereof, if applicable. Any Additional Notes may be issued with the benefit of an indenture supplemental to this Indenture.

(e) Euroclear and Clearstream Applicable Procedures . The provisions of the “Operating Procedures of the Euroclear System” and “Terms and Conditions Governing Use of Euroclear” and the “General Terms and Conditions of Clearstream Banking” and “Customer Handbook” of Clearstream shall be applicable to transfers of beneficial interests in the Regulation S Global Notes that are held by Participants through Euroclear or Clearstream.

Section 2.02. Execution and Authentication . At least one Officer of the Company shall execute the Notes on behalf of the Company by manual, facsimile or electronic (including “.pdf”) signature.

If an Officer of the Company whose signature is on a Note no longer holds that office at the time the Trustee authenticates the Note, the Note shall nevertheless be valid.

A Note shall not be entitled to any benefit under this Indenture or be valid or obligatory for any purpose until authenticated substantially in the form of Exhibit A, by the manual signature of the Trustee. The signature shall be conclusive evidence that the Note has been duly authenticated and delivered under this Indenture.

On the Issue Date, the Trustee shall, upon receipt of a Company Order (an “Authentication Order”), authenticate and deliver the Initial Notes in the aggregate principal amount or amounts specified in such Authentication Order, provided that the Trustee shall be entitled to receive an Officer’s Certificate and an Opinion of Counsel addressing such matters as the Trustee may reasonably request. In addition, at any time, from time to time, the Trustee shall, upon receipt of an Authentication Order, authenticate and deliver any Additional Notes for an aggregate principal amount specified in such Authentication Order for such Additional Notes issued or increased hereunder.

The Trustee may appoint an authenticating agent acceptable to the Company to authenticate Notes. An authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with Holders or an Affiliate of the Company.

Section 2.03. Registrar, Transfer Agent and Paying Agent . The Company shall maintain (i) an office or agency where Notes may be presented for registration (“ Registrar ”), (ii) an office or agency where Notes may be presented for transfer or for exchange (“ Transfer Agent ”) and (iii) an office or agency where Notes may be presented for payment (“ Paying Agent ”). The Registrar shall keep a register of the Notes (“ Note Register ”) and of their transfer and exchange. The registered Holder of a Note will be treated as the owner of such Note for all purposes and only registered Holders shall have rights under this Indenture and the Notes. The Company may appoint one or more co-registrars, one or more co-transfer agents and one or more additional paying agents. The term “Registrar” includes any co-registrar, the term “Transfer Agent” includes any co-transfer agent and the term “Paying Agent” includes any additional paying agents. The Company may change any Paying Agent, Transfer Agent or Registrar without prior notice to any Holder. The Company shall notify the Trustee in writing of the name and address of any Agent not a party to this Indenture. If the Company fails to appoint or maintain another entity as Registrar, Transfer Agent or Paying Agent, the Trustee shall act as such. The Company or any of its Subsidiaries may act as Paying Agent, Transfer Agent or Registrar.

The Company initially appoints The Depository Trust Company, its nominees and successors (“ DTC ”) to act as Depositary with respect to the Global Notes. The Company has entered into a letter of representations with DTC in the form provided by DTC and the Trustee and each Agent are hereby authorized to act in accordance with such letter and Applicable Procedures.

 

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The Company initially appoints the Trustee to act as the Paying Agent, Transfer Agent and Registrar for the Notes and to act as Custodian with respect to the Global Notes.

The Company shall be responsible for making calculations called for under the Notes and this Indenture, including but not limited to determination of interest, redemption price, Applicable Premium, premium, if any, and any additional amounts or other amounts payable on the Notes. The Company will make the calculations in good faith and, absent manifest error, its calculations will be final and binding on the Holders.

Section 2.04. Paying Agent to Hold Money in Trust . The Company shall require each Paying Agent other than the Trustee to agree in writing that the Paying Agent shall hold in trust for the benefit of Holders or the Trustee all money held by the Paying Agent for the payment of principal, premium, if any, or interest on the Notes, and will notify the Trustee in writing of any default by the Company in making any such payment. While any such default continues, the Trustee may require a Paying Agent (other than the Trustee) to pay all money held by it to the Trustee. The Company at any time may require a Paying Agent (other than the Trustee) to pay all money held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the Company or a Subsidiary or the Trustee) shall have no further liability for the money. If the Company or a Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent. Upon any bankruptcy or reorganization proceedings relating to the Company, the Trustee shall serve as Paying Agent for the Notes.

Section 2.05. Holder Lists . The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of all Holders. If the Trustee is not the Registrar, the Company shall furnish to the Trustee at least five Business Days before each Interest Payment Date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of the Holders.

Section 2.06. Transfer and Exchange .

(a) Transfer and Exchange of Global Notes . Except as otherwise set forth in this Section 2.06, a Global Note may be transferred, in whole and not in part, only to another nominee of the Depositary or to a successor thereto or a nominee of such successor thereto. A beneficial interest in a Global Note may not be exchanged for a Definitive Note unless, and, if applicable, subject to the limitation on issuance of Definitive Notes set forth in Section 2.06(c)(ii), (i) the Depositary (x) notifies the Company that it is unwilling or unable to continue as Depositary for such Global Note or (y) has ceased to be a clearing agency registered under the Exchange Act, and, in either case, a successor Depositary is not appointed by the Company within 120 days, (ii) the Company, at its option, notifies the Trustee in writing that it elects to cause the issuance of Definitive Notes (although Regulation S Global Notes may not be exchanged for Definitive Notes prior to (A) the expiration of the applicable Restricted Period and (B) the receipt by the Registrar of any certification of beneficial ownership required pursuant to Rule 903(b)(3)(ii)(B)) or (iii) upon the request of a Holder if there shall have occurred and be continuing an Event of Default with respect to the Notes and the Trustee has received a written request from the Depositary to issue Definitive Notes. Upon the occurrence of any of the events described in clause (i), (ii) or (iii) above, Definitive Notes delivered in exchange for any Global Note or beneficial interests therein will be registered in the names, and issued in any approved denominations, requested by or on behalf of the Depositary (in accordance with its customary procedures). Global Notes also may be exchanged or replaced, in whole or in part, as provided in Sections 2.07 and 2.10 hereof. Every Note authenticated and delivered in exchange for, or in lieu of, a Global Note or any portion thereof, pursuant to this Section 2.06 or Sections 2.07 or 2.10 hereof, shall be authenticated and delivered in the form of, and shall be, a Global Note, except for Definitive Notes issued subsequent to any of the events described in clause (i), (ii) or (iii) above and pursuant to Section 2.06(c) hereof. A Global Note may not be exchanged for another Note other than as provided in this Section 2.06(a); provided , however , beneficial interests in a Global Note may be transferred and exchanged as provided in Section 2.06(b), (c) or (f) hereof.

(b) Transfer and Exchange of Beneficial Interests in the Global Notes . The transfer and exchange of beneficial interests in the Global Notes shall be effected through the Depositary in accordance with the provisions of

 

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this Indenture and the Applicable Procedures. Beneficial interests in the Restricted Global Notes shall be subject to restrictions on transfer comparable to those set forth herein to the extent required by the Securities Act. Transfers of beneficial interests in the Global Notes also shall require compliance with either subparagraph (i) or (ii) below, as applicable, as well as one or more of the other following subparagraphs, as applicable:

(i) Transfer of Beneficial Interests in the Same Global Note . Beneficial interests in any Restricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Restricted Global Note in accordance with the transfer restrictions set forth in the Private Placement Legend; provided , that prior to the expiration of the Restricted Period, transfers of beneficial interests in the Regulation S Global Note may not be made to a U.S. Person or for the account or benefit of a U.S. Person other than pursuant to Rule 144A. Beneficial interests in any Unrestricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note. No written orders or instructions shall be required to be delivered to the Registrar to effect the transfers described in this Section 2.06(b)(i).

(ii) All Other Transfers and Exchanges of Beneficial Interests in Global Notes . In connection with all transfers and exchanges of beneficial interests that are not subject to Section 2.06(b)(i) hereof, the transferor of such beneficial interest must deliver to the Registrar either (A) (1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to credit or cause to be credited a beneficial interest in another Global Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given in accordance with the Applicable Procedures containing information regarding the Participant account to be credited with such increase or (B) (1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to cause to be issued a Definitive Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given by the Depositary to the Registrar containing information regarding the Person in whose name such Definitive Note shall be registered to effect the transfer or exchange referred to in (1) above; provided , that in no event shall Definitive Notes be issued upon the transfer or exchange of beneficial interests in a Regulation S Global Note prior to (x) the expiration of the applicable Restricted Period therefor and (y) the receipt by the Registrar of any certification of beneficial ownership required pursuant to Rule 903(b)(3)(ii)(B). Upon satisfaction of all of the requirements for transfer or exchange of beneficial interests in Global Notes contained in this Indenture and the Notes or otherwise applicable under the Securities Act, the Trustee shall adjust the principal amount of the relevant Global Note(s) pursuant to Section 2.06(h) hereof.

(iii) Transfer of Beneficial Interests to Another Restricted Global Note . A beneficial interest in any Restricted Global Note may be transferred to a Person who takes delivery thereof in the form of a beneficial interest in another Restricted Global Note if the transfer complies with the requirements of Section 2.06(b)(ii) hereof and the Registrar receives the following:

(A) if the transferee will take delivery in the form of a beneficial interest in a 144A Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof; or

(B) if the transferee will take delivery in the form of a beneficial interest in a Regulation S Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof.

(iv) Transfer and Exchange of Beneficial Interests in a Restricted Global Note for Beneficial Interests in an Unrestricted Global Note . A beneficial interest in any Restricted Global Note may be exchanged by any holder thereof for a beneficial interest in an Unrestricted Global Note or transferred to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note if the exchange or transfer complies with the requirements of Section 2.06(b)(ii) hereof and:

(A) [Reserved];

 

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(B) such Notes are sold or exchanged pursuant to an effective registration statement under the Securities Act;

(C) [Reserved]; or

(D) the Registrar receives the following:

(1) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a beneficial interest in an Unrestricted Global Note, a certificate from such Holder substantially in the form of Exhibit C hereto, including the certifications in item (1)(a) thereof; or

(2) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;

and, in each such case set forth in this subparagraph (D), if the Company so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Company to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.

If any such transfer is effected pursuant to subparagraph (B) or (D) above at a time when an Unrestricted Global Note has not yet been issued, the Company shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the aggregate principal amount of beneficial interests transferred pursuant to subparagraph (B) or (D) above.

Beneficial interests in an Unrestricted Global Note cannot be exchanged for, or transferred to Persons who take delivery thereof in the form of, a beneficial interest in a Restricted Global Note.

(c) Transfer or Exchange of Beneficial Interests for Definitive Notes.

(i) Beneficial Interests in Restricted Global Notes to Restricted Definitive Notes . If any holder of a beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Restricted Definitive Note, then, upon the occurrence of any of the events described in clause (i), (ii) or (iii) of Section 2.06(a) hereof and receipt by the Registrar of the following documentation:

(A) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note, a certificate from such holder substantially in the form of Exhibit C hereto, including the certifications in item (2)(a) thereof;

(B) if such beneficial interest is being transferred to a QIB in accordance with Rule 144A, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (1) thereof;

(C) if such beneficial interest is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (2) thereof;

(D) if such beneficial interest is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (3)(a) thereof;

 

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(E) if such beneficial interest is being transferred to the Company or any of its Subsidiaries, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (3)(b) thereof; or

(F) if such beneficial interest is being transferred pursuant to an effective registration statement under the Securities Act, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (3)(c) thereof,

the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and the Company shall execute and, upon receipt of an Authentication Order, the Trustee shall authenticate and mail to the Person designated in the instructions a Definitive Note in the applicable principal amount. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall mail such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c)(i) (except transfers pursuant to clause (F) above) shall bear the Private Placement Legend and shall be subject to all restrictions on transfer contained therein.

(ii) Beneficial Interests in Regulation S Global Note to Definitive Notes . Notwithstanding Sections 2.06(c)(i)(A) and (C) hereof, a beneficial interest in the Regulation S Global Note may not be exchanged for a Definitive Note or transferred to a Person who takes delivery thereof in the form of a Definitive Note prior to (A) the expiration of the applicable Restricted Period therefor and (B) the receipt by the Registrar of any certifications of beneficial ownership required pursuant to Rule 903(b)(3)(ii)(B) of the Securities Act, except in the case of a transfer pursuant to an exemption from the registration requirements of the Securities Act other than Rule 903 or Rule 904.

(iii) Beneficial Interests in Restricted Global Notes to Unrestricted Definitive Notes . A holder of a beneficial interest in a Restricted Global Note may exchange such beneficial interest for an Unrestricted Definitive Note or may transfer such beneficial interest to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note only upon the occurrence of any of the events described in clause (i), (ii) or (iii) of Section 2.06(a) hereof and if:

(A) [Reserved];

(B) [Reserved];

(C) [Reserved]; or

(D) the Registrar receives the following:

(1) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for an Unrestricted Definitive Note, a certificate from such holder substantially in the form of Exhibit C hereto, including the certifications in item (1)(b) thereof; or

(2) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such holder substantially in the form of Exhibit B hereto, including the certifications in item (4) thereof;

and, in each such case set forth in this subparagraph (D), if the Company so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Company to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.

 

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(iv) Beneficial Interests in Unrestricted Global Notes to Unrestricted Definitive Notes . If any holder of a beneficial interest in an Unrestricted Global Note proposes to exchange such beneficial interest for a Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Definitive Note, then, upon the occurrence of any of the events described in clause (i), (ii) or (iii) of Section 2.06(a) hereof and satisfaction of the conditions set forth in Section 2.06(b)(ii) hereof, the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and the Company shall execute and the Trustee, upon receipt of an Authentication Order, shall authenticate and mail to the Person designated in the instructions a Definitive Note in the applicable principal amount. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(iv) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from or through the Depositary and the Participant or Indirect Participant. The Trustee shall mail such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(iv) shall not bear the Private Placement Legend.

(d) Transfer and Exchange of Definitive Notes for Beneficial Interests .

(i) Restricted Definitive Notes to Beneficial Interests in Restricted Global Notes . If any Holder of a Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note or to transfer such Restricted Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in a Restricted Global Note, then, upon receipt by the Registrar of the following documentation:

(A) if the Holder of such Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note, a certificate from such Holder substantially in the form of Exhibit C hereto, including the certifications in item (2)(b) thereof;

(B) if such Restricted Definitive Note is being transferred to a QIB in accordance with Rule 144A, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (1) thereof;

(C) if such Restricted Definitive Note is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (2) thereof;

(D) if such Restricted Definitive Note is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (3)(a) thereof;

(E) if such Restricted Definitive Note is being transferred to the Company or any of its Subsidiaries, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (3)(b) thereof; or

(F) if such Restricted Definitive Note is being transferred pursuant to an effective registration statement under the Securities Act, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (3)(c) thereof,

the Trustee shall cancel the Restricted Definitive Note and increase or cause to be increased the aggregate principal amount of, in the case of clause (A) above, the applicable Restricted Global Note, in the case of clause (B) above, the applicable 144A Global Note, and in the case of clause (C) above, the applicable Regulation S Global Note.

 

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(ii) Restricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes . A Holder of a Restricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Restricted Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note only if:

(A) [Reserved];

(B) [Reserved];

(C) [Reserved]; or

(D) Registrar receives the following:

(1) if the Holder of such Definitive Notes proposes to exchange such Notes for a beneficial interest in the Unrestricted Global Note, a certificate from such Holder substantially in the form of Exhibit C hereto, including the certifications in item (1)(c) thereof; or

(2) if the Holder of such Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of a beneficial interest in the Unrestricted Global Note, a certificate from such Holder substantially in the form of Exhibit B hereto, including the certifications in item (4) thereof;

and, in each such case set forth in this subparagraph (D), if the Company so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Company to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.

Upon satisfaction of the applicable conditions of this Section 2.06(d)(ii), the Trustee shall cancel the Restricted Definitive Note and increase or cause to be increased the aggregate principal amount of the Unrestricted Global Note.

(iii) Unrestricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes . A Holder of an Unrestricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note at any time. Upon receipt of a request for such an exchange or transfer, the Trustee shall cancel the applicable Unrestricted Definitive Note and increase or cause to be increased the aggregate principal amount of one of the Unrestricted Global Notes.

If any such exchange or transfer from a Definitive Note to a beneficial interest is effected pursuant to subparagraph (ii)(B), (ii)(D) or (iii) above at a time when an Unrestricted Global Note has not yet been issued, the Company shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of Definitive Notes so transferred.

(e) Transfer and Exchange of Definitive Notes for Definitive Notes . Upon request by a Holder of Definitive Notes and such Holder’s compliance with the provisions of this Section 2.06(e), the Registrar shall register the transfer or exchange of Definitive Notes. Prior to such registration of transfer or exchange, the requesting Holder shall present or surrender to the Registrar the Definitive Notes duly endorsed or accompanied by a written instruction of transfer or exchange in form satisfactory to the Registrar duly executed by such Holder or by its attorney, duly authorized in writing. In addition, the requesting Holder shall provide any additional certifications, documents and information, as applicable, required pursuant to the following provisions of this Section 2.06(e):

(i) Restricted Definitive Notes to Restricted Definitive Notes . Any Restricted Definitive Note may be transferred to and registered in the name of Persons who take delivery thereof in the form of a Restricted Definitive Note if the Registrar receives the following:

(A) if the transfer will be made to a QIB in accordance with Rule 144A, then the transferor must deliver a certificate substantially in the form of Exhibit B hereto, including the certifications in item (1) thereof;

 

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(B) if the transfer will be made pursuant to Rule 903 or Rule 904, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; or

(C) if the transfer will be made pursuant to any other exemption from the registration requirements of the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications required by item (3) thereof, if applicable.

(ii) Restricted Definitive Notes to Unrestricted Definitive Notes . Any Restricted Definitive Note may be exchanged by the Holder thereof for an Unrestricted Definitive Note or transferred to a Person or Persons who take delivery thereof in the form of an Unrestricted Definitive Note if:

(A) [Reserved];

(B) [Reserved];

(C) [Reserved]; or

(D) the Registrar receives the following:

(1) if the Holder of such Restricted Definitive Notes proposes to exchange such Notes for an Unrestricted Definitive Note, a certificate from such Holder substantially in the form of Exhibit C hereto, including the certifications in item (1)(d) thereof; or

(2) if the Holder of such Restricted Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such Holder substantially in the form of Exhibit B hereto, including the certifications in item (4) thereof;

and, in each such case set forth in this subparagraph (D), if the Company so requests, an Opinion of Counsel in form reasonably acceptable to the Company to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.

(iii) Unrestricted Definitive Notes to Unrestricted Definitive Notes . A Holder of Unrestricted Definitive Notes may transfer such Notes to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note. Upon receipt of a request to register such a transfer, the Registrar shall register the Unrestricted Definitive Notes pursuant to the instructions from the Holder thereof.

(f) A utomatic Exchange . Upon the Company’s satisfaction that the Private Placement Legend shall no longer be required in order to maintain compliance with the Securities Act, beneficial interests in a Restricted Global Note may be automatically exchanged into beneficial interests in an Unrestricted Global Note without any action required by or on behalf of the Holder (the “ Automatic Exchange ”) at any time on or after the date that is the 366th calendar day after (A) with respect to the Notes issued on the Issue Date, the Issue Date or (B) with respect to Additional Notes, if any, the issue date of such Additional Notes, or, in each case, if such day is not a Business Day, on the next succeeding Business Day (the “ Automatic Exchange Date ”). Upon the Company’s satisfaction that the Private Placement Legend shall no longer be required in order to maintain compliance with the Securities Act, the Company may (i) provide written notice to the Trustee at least 10 calendar days prior to the Automatic Exchange, instructing the Trustee to direct DTC to exchange all of the outstanding beneficial interests in a particular Restricted Global Note to the Unrestricted Global Note, which the Company shall have previously otherwise made eligible for exchange with the DTC, (ii) provide prior written notice (the “ Automatic Exchange Notice ”) to each Holder at such Holder’s address appearing in the register of Holders at least 10 calendar days prior to the Automatic Exchange (the “ Automatic Exchange Notice Date ”), which notice must include (w) the Automatic Exchange Date, (x) the

 

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section of the Indenture pursuant to which the Automatic Exchange shall occur, (y) the “CUSIP” number of the Restricted Global Note from which such Holder’s beneficial interests will be transferred and the (z) “CUSIP” number of the Unrestricted Global Note into which such Holder’s beneficial interests will be transferred, and (iii) on or prior to the date of the Automatic Exchange, deliver to the Trustee for authentication one or more Unrestricted Global Notes, duly executed by the Company, in an aggregate principal amount equal to the aggregate principal amount of Restricted Global Notes to be exchanged. At the Company’s request on no less than 5 calendar days’ notice, the Trustee shall deliver, in the Company’s name and at its expense, the Automatic Exchange Notice to each Holder at such Holder’s address appearing in the register of Holders. Notwithstanding anything to the contrary in this Section 2.06, during the 10 day period between the Automatic Exchange Notice Date and the Automatic Exchange Date, no transfers or exchanges other than pursuant to this Section 2.06(f) shall be permitted without the prior written consent of the Company. As a condition to any Automatic Exchange, the Company shall provide, and the Trustee shall be entitled to rely upon, an Officer’s Certificate and an Opinion of Counsel reasonably acceptable to the Trustee to the effect that the Automatic Exchange shall be effected in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend shall no longer be required in order to maintain compliance with the Securities Act, and that the aggregate principal amount of the particular Restricted Global Note may be transferred to the particular Unrestricted Global Note by adjustment made on the records of the Trustee, as Custodian to reflect the Automatic Exchange. Upon such exchange of beneficial interests pursuant to this Section 2.06(f), the aggregate principal amount of the Global Notes shall be increased or decreased by adjustments made on the records of the Trustee, as Custodian, to reflect the relevant increase or decrease in the principal amount of such Global Note resulting from the applicable exchange. The Restricted Global Note from which beneficial interests are transferred pursuant to an Automatic Exchange shall be canceled following the Automatic Exchange.

(g) Legends . The following legends shall appear on the face of all Global Notes and Definitive Notes issued under this Indenture unless specifically stated otherwise in the applicable provisions of this Indenture:

(i) Private Placement Legend .

(A) Except as permitted by subparagraph (B) below, each Global Note and each Definitive Note (and all Notes issued in exchange therefor or substitution thereof) shall bear the legend in substantially the following form:

“THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER OF THE SECURITY EVIDENCED HEREBY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.

THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE ISSUER THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (i) TO A PERSON WHO IS NOT, AND FOR A PERIOD OF AT LEAST THREE MONTHS IMMEDIATELY PRIOR TO SUCH TRANSFER HAS NOT BEEN, ONE OF THE ISSUER’S “AFFILIATES” (AS DEFINED IN RULE 144 UNDER THE SECURITIES ACT) NOR ACTING ON THE ISSUER’S BEHALF AND (a) IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A NON-U.S. PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT, OR (d) IN

 

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ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE ISSUER SO REQUESTS), (ii) TO THE ISSUER, OR (iii) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN CLAUSE (A) ABOVE. NO REPRESENTATION CAN BE MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144 FOR RESALE OF THE SECURITY EVIDENCED HEREBY.”

Except as permitted by subparagraph (B) below, each Global Note and Definitive Note issued in a transaction exempt from registration pursuant to Regulation S shall also bear the legend in substantially the following form:

“THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A TRANSACTION ORIGINALLY EXEMPT FROM REGISTRATION UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE TRANSFERRED IN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY U.S. PERSON EXCEPT PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ALL APPLICABLE STATE SECURITIES LAWS TERMS USED ABOVE HAVE THE MEANINGS GIVEN TO THEM IN REGULATION S UNDER THE SECURITIES ACT.”

(B) Notwithstanding the foregoing, any Global Note or Definitive Note issued pursuant to subparagraph (b)(iv), (c)(iii), (c)(iv), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) of this Section 2.06 (and all Notes issued in exchange therefor or substitution thereof) shall not bear the Private Placement Legend.

(ii) Global Note Legend . Each Global Note shall bear a legend in substantially the following form (with appropriate changes in the last sentence if DTC is not the Depositary):

“THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.06(h) OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE ISSUER. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (“DTC”) TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE

 

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OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

BY ACCEPTING THIS NOTE EACH HOLDER AND EACH TRANSFEREE IS DEEMED TO REPRESENT AND AGREE THAT AT THE TIME OF ITS ACQUISITION AND THROUGHOUT THE PERIOD THAT IT HOLDS THIS NOTE (I) IT IS NOT, AND IS NOT ACTING ON BEHALF OF, A PLAN (WHICH TERM INCLUDES (A) EMPLOYEE BENEFIT PLANS THAT ARE SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), (B) PLANS, INDIVIDUAL RETIREMENT ACCOUNTS AND OTHER ARRANGEMENTS THAT ARE SUBJECT TO SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), AND (C) ENTITIES THE UNDERLYING ASSETS OF WHICH ARE CONSIDERED TO INCLUDE “PLAN ASSETS” OF ANY PLANS DESCRIBED ABOVE IN CLAUSE (A) OR (B), OR (II) ITS PURCHASE AND HOLDING OF THIS NOTE OR ANY INTEREST THEREIN SHALL NOT RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER ERISA OR SECTION 4975 OF THE CODE.”

(iii) [ Reserved] .

(h) Cancellation and/or Adjustment of Global Notes . At such time as all beneficial interests in a particular Global Note have been exchanged for Definitive Notes or a particular Global Note has been redeemed, repurchased or cancelled in whole and not in part, each such Global Note shall be returned to or retained and cancelled by the Trustee in accordance with Section 2.11 hereof. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note or for Definitive Notes, the principal amount of Notes represented by such Global Note shall be reduced accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note, such other Global Note shall be increased accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such increase.

(i) General Provisions Relating to Transfers and Exchanges .

(i) To permit registrations of transfers and exchanges, the Company shall execute and the Trustee shall authenticate Global Notes and Definitive Notes upon receipt of an Authentication Order in accordance with Section 2.02 hereof or at the Registrar’s request.

(ii) No service charge shall be made to a holder of a beneficial interest in a Global Note or to a Holder of a Definitive Note for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Sections 2.07, 2.10, 3.06, 4.13, 4.14, and 9.06 hereof).

(iii) Neither the Registrar nor the Company shall be required (A) to issue, to register the transfer of or to exchange any Notes during a period beginning at the opening of business 15 days before the mailing of a notice of redemption of the Notes to be redeemed under Section 3.03 hereof and ending at the close of business on the day of such mailing, (B) to register the transfer of or to exchange any Note so selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part, (C) to register the transfer or exchange of a Note

 

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between a Record Date and the next succeeding Interest Payment Date or (D) to register the transfer or exchange of any Notes tendered (and not withdrawn) for repurchase in connection with a Change of Control Offer or an Asset Sale Offer.

(iv) Neither the Registrar nor the Company shall be required to register the transfer or exchange of any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part; provided , that new Notes will only be issued in minimum denominations of $2,000 and integral multiples of $1,000 in excess of $2,000.

(v) All Global Notes and Definitive Notes issued upon any registration of transfer or exchange of Global Notes or Definitive Notes shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Global Notes or Definitive Notes surrendered upon such registration of transfer or exchange.

(vi) Prior to due presentment for the registration of a transfer of any Note, the Trustee, any Agent and the Company shall deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of (and premium, if any) and interest on such Notes and for all other purposes, and none of the Trustee, any Agent or the Company shall be affected by notice to the contrary.

(vii) Upon surrender for registration of transfer of any Note at the office or agency of the Company designated pursuant to Section 4.02 hereof, the Company shall execute, and the Trustee shall authenticate and mail, in the name of the designated transferee or transferees, one or more replacement Notes of any authorized denomination or denominations of a like aggregate principal amount.

(viii) At the option of the Holder, subject to Section 2.06(a) hereof, Notes may be exchanged for other Notes of any authorized denomination or denominations of a like aggregate principal amount upon surrender of the Notes to be exchanged at such office or agency. Whenever any Global Notes or Definitive Notes are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and mail, the replacement Global Notes and Definitive Notes which the Holder making the exchange is entitled to in accordance with the provisions of Section 2.02 hereof.

(ix) All certifications, certificates and Opinions of Counsel required to be submitted pursuant to this Section 2.06 to effect a registration of transfer or exchange may be submitted by facsimile.

(x) Neither the Trustee nor the Registrar shall have any duty to monitor the Company’s compliance with or have any responsibility with respect to the Company’s compliance with any federal or state securities laws in connection with registrations of transfers and exchanges of the Notes. The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Notes (including any transfers between or among the Depository’s participants or beneficial owners of interests in any Global Note) other than to require delivery of such certificates and other documentation, as is expressly required by, and to do so if and when expressly required by, the terms of this Indenture or the Notes and to examine the same to determine substantial compliance as to form with the express requirements hereof.

(xi) The Company, the Trustee, and the Registrar reserve the right to require the delivery by any Holder or purchaser of a Note of such legal opinions, certifications or other evidence as may reasonably be required in order to determine that the proposed transfer of any Restricted Global Note or Restricted Definitive Note is being made in compliance with the Securities Act or the Exchange Act, or rules or regulations adopted by the Commission from time to time thereunder, and applicable state securities laws.

Section 2.07. Replacement Notes . If either (x) any mutilated Note is surrendered to the Trustee, the Registrar or the Company, or (y) the Company and the Trustee receive evidence to their satisfaction of the ownership and destruction, loss or theft of any Note, then the Company shall issue and the Trustee, upon receipt of an Authentication Order and satisfaction of any other requirements of the Trustee, shall authenticate a replacement Note. If required by the Trustee or the Company, an indemnity bond must be supplied by the Holder that is

 

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sufficient in the judgment of both (i) the Trustee to protect the Trustee and (ii) the Company to protect the Company, the Trustee, any Agent and any authenticating agent from any loss that any of them may suffer if a Note is replaced. The Company and the Trustee may charge the Holder for their expenses in replacing a Note.

Every replacement Note is a contractual obligation of the Company and shall be entitled to all of the benefits of this Indenture equally and proportionately with all other Notes duly issued hereunder.

Section 2.08. Outstanding Notes . The Notes outstanding at any time are all the Notes authenticated by the Trustee except for those cancelled by it, those delivered to it for cancellation, those reductions in the interest in a Global Note effected by the Trustee in accordance with the provisions hereof and those described in this Section 2.08 as not outstanding. Except as set forth in Section 2.09 hereof, a Note does not cease to be outstanding because the Company or a Subsidiary Guarantor or an Affiliate of the Company or a Subsidiary Guarantor holds the Note.

If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a protected purchaser (as defined in Section 8-303 of the Uniform Commercial Code).

Notes in exchange for or in lieu of which other Notes have been authenticated and delivered pursuant to this Indenture shall not be deemed to be outstanding for purposes hereof.

If the principal amount of any Note is considered paid under Section 4.01 hereof, such Note shall cease to be outstanding and interest thereon shall cease to accrue.

If the Paying Agent (other than the Company or a Subsidiary Guarantor or an Affiliate of the Company or a Subsidiary Guarantor) holds, on a Redemption Date or maturity date, money sufficient to pay Notes (or portions thereof) payable on that date, then on and after that date such Notes (or portions thereof) shall be deemed to be no longer outstanding (including for accounting purposes) and shall cease to accrue interest on and after such date.

Section 2.09. Treasury Notes . In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Company or by any Affiliate of the Company, shall be considered as though not outstanding, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes that a Responsible Officer of the Trustee actually knows are so owned shall be so disregarded. Notes so owned which have been pledged in good faith shall not be disregarded if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right to deliver any such direction, waiver or consent with respect to such pledged Notes and that the pledgee is not the Company or a Subsidiary Guarantor or any Affiliate of the Company or a Subsidiary Guarantor.

Section 2.10. Temporary Notes . Until certificates representing Notes are ready for delivery, the Company may prepare and the Trustee, upon receipt of an Authentication Order, shall authenticate temporary Notes. Temporary Notes shall be substantially in the form of certificated Notes but may have variations that the Company considers appropriate for temporary Notes. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate definitive Notes in exchange for temporary Notes.

Holders and beneficial holders, as the case may be, of temporary Notes shall be entitled to all of the benefits accorded to Holders, or beneficial holders, respectively, of Notes under this Indenture.

Section 2.11. Cancellation . The Company at any time may deliver Notes to the Trustee for cancellation. The Registrar and Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee or, at the direction of the Trustee, the Registrar or the Paying Agent and no one else shall cancel all Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and shall dispose of such cancelled Notes in its customary manner (subject to the record retention requirements of the Exchange Act). Certification of the cancellation of all cancelled Notes shall be delivered to the Company upon its written request therefor. The Company may not issue new Notes to replace Notes that it has paid or that have been delivered to the Trustee for cancellation.

 

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Section 2.12. Defaulted Interest . If the Company defaults in a payment of interest on the Notes, it shall pay the defaulted interest in any lawful manner plus, to the extent lawful, interest payable on the defaulted interest to the Persons who are Holders on a subsequent special record date, in each case at the rate provided in the Notes and in Section 4.01 hereof. The Company shall notify the Trustee in writing of the amount of defaulted interest proposed to be paid on each Note and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such defaulted interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such defaulted interest as provided in this Section 2.12. The Company shall fix or cause to be fixed any such special record date and payment date; provided , that no such special record date shall be less than 10 days prior to the related payment date for such defaulted interest. The Company shall promptly notify the Trustee of any such special record date. At least 15 days before any such special record date, the Company (or, upon the written request of the Company, the Trustee in the name and at the expense of the Company) shall mail or cause to be mailed, first-class postage prepaid, or otherwise deliver in accordance with the Applicable Procedures, to each Holder, with a copy to the Trustee, a notice at his or her address as it appears in the Note Register that states the special record date, the related payment date and the amount of such interest to be paid.

Subject to the foregoing provisions of this Section 2.12 and for greater certainty, each Note delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Note shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Note.

Section 2.13. CUSIP Numbers; ISINs . The Company in issuing the Notes may use CUSIP numbers and ISINs (in each case, if then generally in use) and, if so, the Trustee shall use CUSIP numbers and ISINs in notices as a convenience to Holders; provided , that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice and that reliance may be placed only on the other identification numbers printed on the Notes, and any such notice shall not be affected by any defect in or omission of such numbers. The Company will as promptly as practicable notify the Trustee in writing of any change in the CUSIP numbers and ISINs.

ARTICLE 3

REDEMPTION

Section 3.01. Notices to Trustee .   The election of the Company to redeem any Notes pursuant to Section 3.07 shall be evidenced by a Board Resolution. In the event of any redemption at the election of the Company pursuant to Section 3.07, the Company shall notify the Trustee at least five business days prior (or such shorter period as may be acceptable to the Trustee) to the date on which notice is required to be mailed or caused to be mailed to Holders pursuant to Section 3.03 of such date of redemption (the “ Redemption Date ”) and of the principal amount of Notes to be redeemed.

Section 3.02. Selection of Notes to Be Redeemed . In the event that less than all of the Notes are to be redeemed at any time, and the Notes are Global Notes, selection of such Notes for redemption will be made by lot by DTC in accordance with Applicable Procedures unless otherwise required by law or applicable stock exchange requirements; provided , however , that Notes shall only be redeemable in principal amounts of $2,000 or an integral multiple of $1,000 in excess thereof.

The Trustee shall promptly notify the Company and each Registrar in writing of the Notes selected for redemption and, in the case of any Notes selected for partial redemption, the principal amount thereof to be redeemed.

For all purposes of this Indenture and of the Notes, unless the context otherwise requires, all provisions relating to the redemption of Notes shall relate, in the case of any Notes redeemed or to be redeemed only in part, to the portion of the principal amount of such Notes which has been or is to be redeemed.

Section 3.03. Notice of Redemption . Notice of redemption shall be given by first class mail (or with respect to Global Notes, to the extent permitted or required by applicable DTC procedures or regulations, sent electronically), postage prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption Date, to

 

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each Holder of Notes to be redeemed, at his address appearing in the Note Register, except that redemption notices may be mailed or sent more than 60 days prior to the Redemption Date if the notice of redemption is issued in connection with (i) a satisfaction and discharge of Notes in accordance with Article 12 or (ii) a defeasance in accordance with Article 8.

All notices of redemption shall identify the Notes to be redeemed (including, if used, CUSIP or ISIN numbers and that no representation is made as to the correctness or accuracy of the CUSIP number, if any, listed in such notice or printed on the Notes) and shall state:

(i) the Redemption Date;

(ii) the Redemption Price (or manner of calculation if not then known);

(iii) if less than all the Outstanding Notes are to be redeemed, the identification (and, in the case of partial redemption, the principal amounts) of the particular Notes to be redeemed;

(iv) that on the Redemption Date the Redemption Price and accrued interest to, but excluding, the Redemption Date, will become due and payable upon each such Note to be redeemed and that interest thereon will cease to accrue on and after such Redemption Date unless the Company defaults;

(v) the place or places where such Notes are to be surrendered for payment of the Redemption Price and accrued interest to, but excluding, the Redemption Date; and

(vi) if the redemption is being made pursuant to the provisions of the Notes regarding an Equity Offering, a brief description of the transaction or transactions giving rise to such redemption, the aggregate purchase price thereof and the net cash proceeds therefrom available for such redemption, the date or dates on which such transaction or transactions were completed and the percentage of the aggregate principal amount of Outstanding Notes being redeemed, or description of any other condition precedent in reasonable detail.

Notice of redemption of Notes to be redeemed pursuant to Section 3.07 shall be given by the Company or, at the Company’s request and provision of such notice to be given to the Trustee five Business Days prior (or such shorter period as may be acceptable to the Trustee) to the mailing or sending of such notice, by the Trustee in the name and at the expense of the Company.

Notices of redemption pursuant to Section 3.07 may be subject to the satisfaction of one or more conditions precedent established by the Company in its sole discretion. In addition, the Company may provide in any notice of redemption for the Notes that payment of the Redemption Price and the performance of the Company’s obligations with respect to such redemption may be performed by another Person.

Section 3.04. Effect of Notice of Redemption . A notice of redemption, if delivered electronically, mailed or caused to be mailed in a manner herein provided, shall be conclusively presumed to have been given, whether or not the Holder receives such notice. In any case, failure to deliver such notice or any defect in the notice to the Holder of any Note designated for redemption in whole or in part shall not affect the validity of the proceedings for the redemption of any other Note. Subject to Section 3.05 hereof, on and after the Redemption Date, interest shall cease to accrue on Notes or portions of Notes called for redemption.

Section 3.05. Deposit of Redemption Price .

(a) Prior to 11:00 a.m. (New York City time) on the Redemption Date, the Company shall deposit with the Trustee or with the Paying Agent money sufficient to pay the Redemption Price of and accrued and unpaid interest on all Notes to be redeemed on that Redemption Date, subject to any condition precedent set forth in any notice of redemption. The Trustee or the Paying Agent shall promptly return to the Company any money deposited with the Trustee or the Paying Agent by the Company in excess of the amounts necessary to pay the Redemption Price of, and accrued and unpaid interest on, all Notes to be redeemed.

(b) If the Company complies with the provisions of the preceding paragraph (a), on and after the Redemption Date, interest shall cease to accrue on the Notes or the portions of Notes called for redemption. If a Note is redeemed on or after an applicable Record Date but on or prior to the related Interest Payment Date, then any accrued and unpaid interest to the Redemption Date shall be paid to the Person in whose name such Note was registered at the close of business on such Record Date. If any Note called for redemption shall not be so paid upon surrender for redemption because of the failure of the Company to comply with the preceding paragraph, interest shall be paid on the unpaid principal, from the Redemption Date until such principal is paid, and to the extent lawful on any interest accrued to the Redemption Date not paid on such unpaid principal, in each case at the rate provided in the Notes and in Section 4.01 hereof.

 

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Section 3.06. Notes Redeemed in Part . Any Note which is to be redeemed only in part shall be surrendered at an office or agency of the Company designated for that purpose pursuant to Section 4.02 (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or his attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and deliver (or cause to be transferred by book entry) to the Holder of such Note without service charge, a new Note or Notes, of any authorized denomination as requested by such Holder, in aggregate principal amount at Stated Maturity equal to and in exchange for the unredeemed portion of the principal amount at Stated Maturity of the Note so surrendered.

Section 3.07. Optional Redemption .

(a) The Company may redeem the Notes, in whole or in part, at any time on or after October 15, 2019, at the Redemption Prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest, if any, thereon to the Redemption Date (subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date), if redeemed during the twelve-month period beginning on October 15 of each of the years indicated below:

 

Year

   Redemption Price  

2019

     106.563

2020

     104.375

2021

     102.188

2022 and thereafter

     100.000

(b) In addition, at any time, or from time to time, on or prior to October 15, 2019, the Company may, at its option, use the net cash proceeds of one or more Equity Offerings to redeem up to an aggregate of 40% of the principal amount of the Notes at a Redemption Price equal to 108.750 % of the principal amount of the Notes, plus accrued and unpaid interest, if any, thereon to the Redemption Date; provided , however , that (1) at least 50% of the aggregate principal amount of Notes issued on the Issue Date (excluding Notes held by the Company and its Subsidiaries) remains outstanding immediately after the occurrence of such redemption and (2) the Redemption Date is within 120 days of the consummation of any such Equity Offering.

(c) Prior to October 15, 2019, the Company may at its option redeem the Notes, in whole or in part, at a Redemption Price equal to 100% of the principal amount of the Notes plus the Applicable Premium as of, and accrued and unpaid interest, if any, to, the Redemption Date (subject to the right of Holders on the relevant Record Date to receive interest due on the relevant Interest Payment Date). The Company and its Affiliates may acquire the Notes be means other than a redemption pursuant to this Section 3.07, whether by tender offer, open market purchases, negotiated transactions or otherwise.

(d) With respect to any redemption pursuant to this clause 3.07, the Company will notify the Trustee of the Applicable Premium promptly after the calculation. The Trustee will not be responsible for such calculation.

Section 3.08. Mandatory Redemption . The Company shall not be required to make any mandatory redemption or sinking fund payments with respect to the Notes.

 

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ARTICLE 4

COVENANTS

Section 4.01. Payment of Principal, Premium and Interest . The Company shall duly and punctually pay the principal of (and premium, if any) and interest on the Notes in accordance with the terms of the Notes and this Indenture. The Company will deposit or cause to be deposited with the Trustee or its nominee, no later than 11:00 a.m. New York City time on the date of the Stated Maturity of any Note or no later than 11:00 a.m. New York City time on the due date for any installment of interest, all payments so due, which payments shall be in immediately available funds on the date of such Stated Maturity or due date, as the case may be.

Section 4.02. Maintenance of Office or Agency . The Company shall maintain in the continental United States, an office or agency where Notes may be presented or surrendered for payment, where Notes may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company or any Subsidiary Guarantor in respect of the Notes, the Guarantees and this Indenture may be served. The Company shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at a Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands. In the event any such notice or demands are so made or served on the Trustee, the Trustee shall promptly forward copies thereof to the Company.

The Company may also from time to time designate one or more other offices or agencies (in or outside the Borough of Manhattan, The City of New York) where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided , however , that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the continental United States, for such purposes. The Company shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency.

The Company hereby designates the Corporate Trust Office as one such office or agency of the Company in accordance with Section 2.03 hereof.

Section 4.03. [Reserved] .

Section 4.04. Existence; Activities . Subject to Article 5, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect its existence, rights (charter and statutory) and material franchises; provided , however , that the Company shall not be required to preserve any such right or franchise if the Board of Directors of the Company in good faith shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and that the loss thereof is not disadvantageous in any material respect to the Holders.

Section 4.05. Maintenance of Properties . The Company shall cause all material properties used in the conduct of its business or the business of any Restricted Subsidiary, taken as a whole, to be maintained and kept in good condition, repair and working order (regular wear and tear excepted), in each case in all material respects, all as in the judgment of the Company may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided , however , that nothing in this Section 4.05 shall prevent the Company from disposing of any asset (subject to compliance with Section 4.14) or from discontinuing the operation or maintenance of any of such material properties if such discontinuance is, as determined by the Company in good faith, desirable in the conduct of its business or the business of any Restricted Subsidiary and not disadvantageous in any material respect to the Holders.

Section 4.06. Payment of Taxes and Other Claims . The Company shall pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (1) all material taxes, assessments and governmental charges levied or imposed upon the Company or any of its Restricted Subsidiaries or upon the income, profits or property of the Company or any of its Restricted Subsidiaries, and (2) all lawful material claims for labor, materials and supplies which, if unpaid, would by law become a lien upon property of the Company or any of its Restricted Subsidiaries that is not a Permitted Lien; provided , however , that the Company shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings.

 

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Section 4.07. Maintenance of Insurance . The Company shall, and shall cause its Restricted Subsidiaries to, keep at all times all of their material properties, taken as a whole, which are of an insurable nature insured to the extent consistent with the Company’s past practice against loss or damage with insurers believed by the Company to be responsible to the extent that property of similar character is usually so insured by corporations similarly situated and owning like properties in accordance with good business practice. The Company shall, and shall cause its Restricted Subsidiaries to, use the proceeds from any such insurance policy to repair, replace or otherwise restore all material properties to which such proceeds relate or to invest in Replacement Assets; provided , however , that the Company shall not be required to repair, replace or otherwise restore any such material property if the Company in good faith determines that such inaction is desirable in the conduct of the business of the Company or any Restricted Subsidiary and not disadvantageous in any material respect to the Holders.

Section 4.08. Limitation on Indebtedness and Issuance of Preferred Stock .

(a) The Company will not, and will not permit any Restricted Subsidiary to, directly or indirectly, create, incur, issue, assume, guarantee or in any manner become directly or indirectly liable, contingently or otherwise (in each case, to “ incur ”), for the payment of any Indebtedness (including any Acquired Indebtedness) and the Company will not permit any Restricted Subsidiary (other than a Subsidiary Guarantor) to issue any shares of Preferred Stock; provided , however , that the Company and any Restricted Subsidiary will be permitted to incur Indebtedness (including Acquired Indebtedness) and any Restricted Subsidiary that is not a Subsidiary Guarantor will be permitted to issue shares of Preferred Stock, in each case, if the Consolidated Fixed Charge Coverage Ratio of the Company and its Restricted Subsidiaries is at least 2.00:1.00.

(b) Paragraph (a) of this Section 4.08 will not prohibit the incurrence of any of the following items of Indebtedness:

(i) Indebtedness incurred by the Company and Restricted Subsidiaries pursuant to Credit Facilities; provided , however , that, immediately after giving effect to any such incurrence, the aggregate principal amount of all Indebtedness incurred under this clause (i) and then outstanding does not exceed $825,000,000;

(ii) Indebtedness of the Company and the Subsidiary Guarantors related to the Notes issued on the Issue Date and the Guarantees of the Notes;

(iii) the incurrence by the Company or any Restricted Subsidiary of the Existing Indebtedness;

(iv) Indebtedness incurred by the Company or any Restricted Subsidiary, and Preferred Stock issued by any Restricted Subsidiary, for equipment purchase or lines of credit, or for Capitalized Lease Obligations or Purchase Money Obligations; provided , that, immediately after giving effect to any such incurrence, the aggregate principal amount of Indebtedness incurred and Preferred Stock issued under this clause (iv) and then outstanding does not exceed the greater of $75,000,000 and 17% of Pro Forma Adjusted EBITDA;

(v) Indebtedness of the Company or any Restricted Subsidiary incurred in respect of (A) performance bonds, completion guarantees, surety bonds, bankers’ acceptances, letters of credit or other similar bonds, instruments or obligations in the ordinary course of business, including Indebtedness evidenced by letters of credit issued in the ordinary course of business to support the insurance or self-insurance obligations of the Company or any of its Restricted Subsidiaries (including to secure workers’ compensation and other similar insurance coverages), but excluding letters of credit issued in respect of or to secure money borrowed, (B) obligations under Hedging Obligations entered into for bona fide hedging purposes of the Company and not for speculative purposes, (C) financing of insurance premiums in the ordinary course of business or (D) cash management obligations and netting, overdraft protection and other similar facilities or arrangements, in each case arising under standard business terms of any bank at which the Company or any Restricted Subsidiary maintains such facility or arrangement;

 

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(vi) Indebtedness consisting of accommodation guarantees for the benefit of trade creditors of the Company or any Restricted Subsidiary;

(vii) Indebtedness of the Company or a Restricted Subsidiary owed to and held by the Company or another Restricted Subsidiary; provided , however , that:

(A) if the Company or any Subsidiary Guarantor is the obligor on such Indebtedness and the payee is not the Company or a Subsidiary Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all obligations then due with respect to the Notes, in the case of the Company, or the Guarantee of the Notes, in the case of a Subsidiary Guarantor; and

(B) any transfer of such Indebtedness by the Company or a Restricted Subsidiary (other than to the Company or another Restricted Subsidiary) or the sale, transfer or other disposition by the Company or any Restricted Subsidiary of Capital Stock of a Restricted Subsidiary (other than to the Company or a Restricted Subsidiary) that results in such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary shall, in each case, be deemed to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (vii);

(viii) Indebtedness arising from (A) the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; provided , however , that such Indebtedness is extinguished within five Business Days of incurrence and (B) customer deposits and advance payments received in the ordinary course of business from customers for goods or services purchased or rented in the ordinary course of business;

(ix) Indebtedness of:

(A) the Company, to the extent the proceeds thereof are used to renew, refund, refinance, amend, extend, defease or discharge any Indebtedness of the Company or any of its Restricted Subsidiaries (other than intercompany Indebtedness) that was permitted to be incurred by this Indenture pursuant to paragraph (a) of this Section 4.08 or pursuant to this clause (ix) or clauses (ii), (iii) or (xv) of this paragraph (b); and

(B) any Restricted Subsidiary, as well as Preferred Stock of any Restricted Subsidiary, to the extent the proceeds thereof are used to renew, refund, refinance, amend, extend, defease or discharge any Indebtedness incurred or Preferred Stock issued by such Restricted Subsidiary (other than intercompany Indebtedness) that was permitted to be incurred by this Indenture pursuant to paragraph (a) of this Section 4.08 or pursuant to this clause (ix) or clauses (ii), (iii) or (xv) of this paragraph (b); provided , however , that:

(1) the principal amount of Indebtedness incurred or Preferred Stock issued pursuant to this clause (ix) (or, if such Indebtedness provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the maturity thereof, the original issue price of such Indebtedness) shall not exceed the sum of the principal amount of Indebtedness or Preferred Stock so refinanced, plus the amount of any accrued and unpaid interest and any premium required to be paid in connection with such refinancing pursuant to the terms of such Indebtedness or Preferred Stock or the amount of any premium reasonably determined by the Company as necessary to accomplish such refinancing by means of a tender offer or privately negotiated purchase, plus the amount of expenses in connection therewith; and

 

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(2) in the case of Indebtedness incurred by the Company pursuant to this clause (ix) to refinance Subordinated Indebtedness, such Indebtedness;

(x) has no scheduled principal payment prior to the 91st day after the Maturity Date; and

(y) has an Average Life to Stated Maturity greater than the remaining Average Life to Stated Maturity of the Notes;

(x) Indebtedness of Foreign Subsidiaries incurred to finance the working capital of such Foreign Subsidiaries;

(xi) Indebtedness arising from agreements of the Company or any Restricted Subsidiary providing for guarantees, indemnification, obligations in respect of earnouts or other purchase price adjustments or holdback of purchase price or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Subsidiary for the purpose of financing such acquisition;

(xii) [Reserved];

(xiii) guarantees by the Company or a Restricted Subsidiary of Indebtedness that was permitted to be incurred by the Company or any Restricted Subsidiary under this Indenture; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the guarantee shall be subordinated or pari passu , as applicable, to the same extent as the Indebtedness guaranteed;

(xiv) guarantees or other Indebtedness in respect of Indebtedness of (A) an Unrestricted Subsidiary, (B) a Person in which the Company or a Restricted Subsidiary has a minority interest or (C) joint ventures or similar arrangements, provided , however , that at the time of incurrence of any Indebtedness pursuant to this clause (xiv) the aggregate principal amount of all guarantees and other Indebtedness incurred under this clause (xiv) and then outstanding does not exceed the greater of $100,000,000 and 25% of Pro Forma Adjusted EBITDA;

(xv) Indebtedness or Preferred Stock (only in the case of Restricted Subsidiaries) of (i) the Company or any Restricted Subsidiary incurred or issued to finance or refinance, or otherwise incurred or issued in connection with, any acquisition of assets (including capital stock), business or Person, or any merger or consolidation of any Person with or into the Company or any Restricted Subsidiary, or (ii) any Person that is acquired by or merged or consolidated with or into the Company or any Restricted Subsidiary (including Indebtedness or Preferred Stock thereof incurred in connection with any such acquisition, merger or consolidation); provided , that on the date of such acquisition, merger or consolidation, after giving effect thereto, either (x) the Company could incur at least $1.00 of additional Indebtedness pursuant to paragraph (a) of this Section 4.08 or (y) the Consolidated Fixed Charge Coverage Ratio of the Company would equal or be greater than the Consolidated Fixed Charge Coverage Ratio of the Company immediately prior to giving effect thereto;

(xvi) obligations of the Company or any Restricted Subsidiary in respect of customer advances received and held in the ordinary course of business;

(xvii) Indebtedness of the Company or any Restricted Subsidiary and Preferred Stock of any Restricted Subsidiary, in addition to that described in clauses (i) through (xvi) and (xviii) through (xx) of this paragraph (b); provided , that immediately after giving effect to any such incurrence, the aggregate principal amount of Indebtedness incurred or Preferred Stock issued pursuant to this clause (xvii) and then outstanding does not exceed the greater of $250,000,000 and 60% of Pro Forma Adjusted EBITDA;

 

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(xviii) Indebtedness owed to any future, present or former employee, director or officer of the Company or any of its Subsidiaries with respect to repurchase of Capital Stock pursuant to Section 4.09 ;

(xix) Indebtedness representing deferred compensation incurred in the ordinary course of business; and

(xx) shares of Preferred Stock of a Restricted Subsidiary issued to the Company or another Restricted Subsidiary; provided that any subsequent issuance or transfer of any Capital Stock or any other event which results in any Restricted Subsidiary that holds such shares of Preferred Stock of another Restricted Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such shares of Preferred Stock (except to the Company or another Restricted Subsidiary) shall be deemed, in each case, to be an issuance of shares of Preferred Stock not permitted by this clause (xx).

(c) For the purposes of determining compliance with, and the outstanding principal amount of Indebtedness incurred or Preferred Stock issued pursuant to and in compliance with, this Section 4.08, (i) in the event that Indebtedness or Preferred Stock meets the criteria of more than one of the types of Indebtedness or Preferred Stock described in paragraphs (a) and (b) of this Section 4.08, the Company, in its sole discretion, will classify, and may from time to time reclassify, such item of Indebtedness or Preferred Stock and only be required to include the amount and type of such Indebtedness or Preferred Stock in one or a combination of the clauses of Section 4.08(a) or Section 4.08(b); provided that (i) Indebtedness outstanding on the Issue Date under the Credit Agreement shall be treated as incurred pursuant to Section 4.08(b)(i) above and (ii) any other obligation of the obligor on such Indebtedness or Preferred Stock (or of any other Person who could have incurred such Indebtedness or issued such Preferred Stock under this Section 4.08) arising under any guarantee, Lien or letter of credit, bankers’ acceptance or other similar instrument or obligation supporting such Indebtedness or Preferred Stock shall be disregarded to the extent that such guarantee, Lien or letter of credit, bankers’ acceptance or other similar instrument or obligation secures the principal amount of such Indebtedness or Preferred Stock.

(d) Except as provided in Section 4.08(e) with respect to Indebtedness denominated in a foreign currency, the amount of any Indebtedness outstanding as of any date will be:

(i) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;

(ii) the principal amount of the Indebtedness, in the case of any other Indebtedness; and

(iii) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:

(a) the Fair Market Value of such assets at the date of determination; and

(b) the amount of the Indebtedness of the other Person.

(e) For purposes of determining compliance with any dollar-denominated restriction on the incurrence of Indebtedness denominated in a foreign currency, the dollar-equivalent principal amount of such Indebtedness incurred pursuant thereto shall be calculated based on the relevant currency exchange rate in effect on the date that such Indebtedness was incurred, in the case of term Indebtedness, or first committed, in the case of revolving credit Indebtedness; provided that (x) the dollar-equivalent principal amount of any such Indebtedness outstanding on the Issue Date shall be calculated based on the relevant currency exchange rate in effect on the Issue Date, (y) if such Indebtedness is incurred to refinance other Indebtedness denominated in a foreign currency (or in a different currency from such Indebtedness so being incurred), and such refinancing would cause the applicable dollar-denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such refinancing, such dollar-denominated restriction shall be deemed not to have been exceeded so long as the principal amount of such refinancing Indebtedness, calculated as described in the following sentence, does not exceed (i) the outstanding or committed principal amount (whichever is higher) of such Indebtedness being refinanced plus (ii) the aggregate amount of fees, underwriting discounts, premiums and other costs and expenses

 

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incurred in connection with such refinancing and (z) the dollar-equivalent principal amount of Indebtedness denominated in a foreign currency and incurred pursuant to a Credit Facility shall be calculated based on the relevant currency exchange rate in effect on, at the Company’s option, (i) the Issue Date, (ii) any date on which any of the respective commitments under such Credit Facility shall be reallocated between or among facilities or subfacilities thereunder, or on which such rate is otherwise calculated for any purpose thereunder or (iii) the date of such incurrence. The principal amount of any Indebtedness incurred to refinance other Indebtedness, if incurred in a different currency from the Indebtedness being refinanced, shall be calculated based on the currency exchange rate applicable to the currencies in which such respective Indebtedness is denominated that is in effect on the date of such refinancing.

Section 4.09. Limitation on Restricted Payments . The Company will not, and will not permit any Restricted Subsidiary to, directly or indirectly:

(a) declare or pay any dividend or make any other distribution or payment on or in respect of Capital Stock of the Company or any Restricted Subsidiary or make any payment to the direct or indirect holders (in their capacities as such) of Capital Stock of the Company or any Restricted Subsidiary (other than dividends or distributions payable solely in Capital Stock of the Company (other than Redeemable Capital Stock) or in options, warrants or other rights to purchase Capital Stock of the Company (other than Redeemable Capital Stock)) (other than the declaration or payment of dividends or other distributions to the extent declared or paid to the Company or any Restricted Subsidiary);

(b) purchase, redeem, defease or otherwise acquire or retire for value any Capital Stock of the Company or any options, warrants, or other rights to purchase any such Capital Stock of the Company or any direct or indirect parent of the Company (other than any such securities owned by the Company or a Restricted Subsidiary and any acquisition of Capital Stock deemed to occur upon the exercise of options if such Capital Stock represents a portion of the exercise price thereof);

(c) make any principal payment on, or purchase, defease, repurchase, redeem or otherwise acquire or retire for value, prior to any scheduled maturity, scheduled repayment, scheduled sinking fund payment or other Stated Maturity, any Subordinated Indebtedness or Junior Indebtedness (other than (A) any such Subordinated Indebtedness or Junior Indebtedness owned by the Company or a Restricted Subsidiary or (B) the purchase, repurchase, redemption, defeasance or other acquisition or retirement for value (collectively, for purposes of this clause (c), a “purchase”) of Subordinated Indebtedness or Junior Indebtedness in anticipation of satisfying a sinking fund obligation, principal installment, final maturity or exercise of a right to put on a set scheduled date (but not including any put right in connection with a change of control event), in each case due within one year of the date of such purchase; provided that, in the case of any such purchase in anticipation of the exercise of a put right, at the time of such purchase, it is more likely than not, in the good faith judgment of the Board of Directors of the Company, that such put right would be exercised if such put right were exercisable on the date of such purchase); or

(d) make any Investment (other than any Permitted Investment) in any Person,

(such payments or Investments described in the preceding clauses (a), (b), (c) and (d) are collectively referred to as “ Restricted Payments ”), unless, immediately after giving effect to the proposed Restricted Payment (the amount of any such Restricted Payment, if other than cash, shall be the Fair Market Value of the asset(s) proposed to be transferred by the Company or such Restricted Subsidiary, as the case may be, pursuant to such Restricted Payment):

(A) no Default or Event of Default shall have occurred and be continuing (or would result therefrom);

(B) the Company would be able to incur $1.00 of additional Indebtedness pursuant to Section 4.08(a); and

 

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(C) the aggregate amount of such Restricted Payment together with all other Restricted Payments (including the Fair Market Value of any non-cash Restricted Payments) declared or made since the Issue Date would not exceed the sum of (without duplication) of:

(1) 50% of the Consolidated Net Income of the Company accrued during the period (treated as one accounting period) from the Issue Date to the end of the Company’s most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such aggregate cumulative Consolidated Net Income of the Company for such period shall be a deficit, minus 100% of such deficit);

(2) the aggregate net cash proceeds and the Fair Market Value of property or assets received by the Company as capital contributions to the Company after the Issue Date or from the issuance or sale of Capital Stock (excluding Redeemable Capital Stock and Preferred Stock of the Company) of the Company to any Person (other than an issuance or sale to a Subsidiary of the Company and other than an issuance or sale to an employee stock ownership plan or to a trust established by the Company or any of its Subsidiaries for the benefit of their employees) after the Issue Date;

(3) the aggregate net cash proceeds received by the Company from any Person (other than a Subsidiary of the Company) upon the exercise of any options, warrants or rights to purchase shares of Capital Stock (other than Redeemable Capital Stock) of the Company;

(4) the aggregate net cash proceeds and the Fair Market Value of property or assets received after the Issue Date by the Company or any Restricted Subsidiary from any Person (other than a Subsidiary of the Company) for Indebtedness that has been converted or exchanged into or for Capital Stock (other than Redeemable Capital Stock) of the Company (to the extent such Indebtedness was originally sold by the Company for cash), plus the aggregate amount of cash and the Fair Market Value of any property received by the Company or any Restricted Subsidiary (other than from a Subsidiary of the Company) in connection with such conversion or exchange;

(5) in the case of the disposition or repayment of any Investment constituting a Restricted Payment made after the Issue Date, an amount equal to the proceeds or return of capital with respect to such Investment less the cost of the disposition of such Investment;

(6) the aggregate amount equal to the net reduction in Investments (other than Permitted Investments) in Unrestricted Subsidiaries resulting from dividends, distributions, interest payments, return of capital, repayments of Investments or other transfers of assets to the Company or any Restricted Subsidiary from any Unrestricted Subsidiary; and

(7) so long as the Designation thereof was treated as a Restricted Payment made after the Issue Date, with respect to any Unrestricted Subsidiary that has been redesignated as a Restricted Subsidiary in accordance with Section 4.17 hereof, the Fair Market Value of the Company’s interest in such Subsidiary.

None of the foregoing provisions will prohibit the following; provided that with respect to payments pursuant to clauses (i), (iv), (vi), (vii), (viii) and (xv) below, no Default or Event of Default has occurred and is continuing:

(i) the payment of any dividend or distribution within 60 days after the date of its declaration, if at the date of declaration such payment would be permitted by the first paragraph of this Section 4.09;

(ii) the making of any Restricted Payment in exchange for, or out of the net cash proceeds of, a substantially concurrent sale (other than to a Subsidiary of the Company) of Capital Stock of the Company (other than Redeemable Capital Stock) or from a substantially concurrent cash capital contribution to the Company; provided , however , that such cash proceeds are excluded from clause (C) of the first paragraph of this Section 4.09;

 

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(iii) any redemption, repurchase, defeasance or other acquisition or retirement of Subordinated Indebtedness or Junior Indebtedness by exchange for, or out of the net cash proceeds of, a substantially concurrent issue and sale of Indebtedness of the Company which:

(x) has no scheduled principal payment prior to the 91st day after the Maturity Date; and

(y) has an Average Life to Stated Maturity greater than the remaining Average Life to Stated Maturity of the Notes;

(iv) payments to purchase Capital Stock of the Company held by any future, present or former employee, director or officer of the Company or any of its Subsidiaries, or their authorized representatives, either pursuant to any management equity plan or stock option plan or any other management or employee benefit plan or agreement, upon the death, disability or termination of employment of such employees, directors or officers or otherwise, in an amount not to exceed $15,000,000 in any calendar year; provided that any unused amounts in any calendar year may be carried forward to one or more future periods subject to a maximum aggregate amount of payments made pursuant to this clause (iv) in any calendar year not to exceed $30,000,000;

(v) [Reserved];

(vi) within 60 days after the consummation of the Change of Control Offer with respect to a Change of Control described under Section 4.13 (including the purchase of the Notes tendered), any purchase or redemption of Subordinated Indebtedness or Junior Indebtedness or any Capital Stock of the Company or any Restricted Subsidiaries required pursuant to the terms thereof as a result of such Change of Control at a purchase or redemption price not to exceed 101% of the outstanding principal amount or liquidation amount thereof, plus accrued and unpaid interest or dividends (if any); provided, however, that at the time of such purchase or redemption no Default shall have occurred and be continuing (or would result therefrom);

(vii) within 60 days after the consummation of an Asset Sale Offer with respect to an Asset Sale described under Section 4.14 (including the purchase of the Notes tendered), any purchase or redemption of Subordinated Indebtedness or Junior Indebtedness or any Capital Stock of the Company or any Restricted Subsidiaries required pursuant to the terms thereof as a result of such Asset Sale; provided, however, that at the time of such purchase or redemption no Default shall have occurred and be continuing (or would result therefrom);

(viii) cash payments in lieu of the issuance of fractional shares in connection with the exercise of any warrants, options or other securities convertible into or exchangeable for Capital Stock of the Company or any Restricted Subsidiary;

(ix) the deemed repurchase of Capital Stock on the cashless exercise of stock options;

(x) the payment of any dividend or distribution by a Restricted Subsidiary to the holders of its Capital Stock on a pro rata basis;

(xi) payments in the form of dividends on the Company’s common stock in an aggregate amount in any calendar year not to exceed $1.54 per share; provided that the per share amount is subject to adjustments (as calculated in good faith by the Company) for any splits and reverse splits of the Company’s common stock or other reductions in the number of outstanding shares of the Company’s common stock; provided further that at the time of declaration of such dividend the Total Indebtedness Leverage Ratio determined on a pro forma basis is less than 3.25:1.00;

 

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(xii) any Restricted Payment made in connection with the consummation of the Separation Transactions, including a dividend from the Company to RRD of the net proceeds of the Notes necessary to consummate the Separation Transactions;

(xiii) Investments constituting Restricted Payments made as a result of the receipt of non-cash consideration from any Asset Sale or other sale of assets or property made pursuant to and in compliance with this Indenture;

(xiv) [Reserved]; and

(xv) any Restricted Payment in an amount which, when taken together with all Restricted Payments made after the Issue Date pursuant to this clause (xv), at the time made does not exceed the greater of (i) $25,000,000 and (ii) 6.0% of Pro Forma Adjusted EBITDA.

Any payments made pursuant to clauses (i) or (xv) of this paragraph shall be taken into account, and any payments made pursuant to other clauses of this paragraph shall be excluded, in calculating the amount of Restricted Payments pursuant to clause (C) of the first paragraph of this Section 4.09.

The Company, in its sole discretion, may classify or reclassify (x) any Permitted Investment as being made in whole or in part as a permitted Restricted Payment or (y) any Restricted Payment as being made in whole or in part as a Permitted Investment (to the extent such Restricted Payment qualifies as a Permitted Investment).

The Company, in its sole discretion, may classify any Investment or other Restricted Payment as being made in part under one of the provisions of this Section 4.09 (or, in the case of any Investment, the clauses of Permitted Investments) and in part under one or more other such provisions (or, as applicable, clauses).

Section 4.10. [Reserved] .

Section 4.11. Limitation on Transactions with Affiliates . The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, enter into any transaction or series of related transactions (including the sale, transfer, disposition, purchase, exchange or lease of assets, property or services) with, or for the benefit of, any of its Affiliates involving aggregate consideration in excess of $10,000,000, except: (a) on terms that are not materially less favorable to the Company or such Restricted Subsidiary, as the case may be, than those which could have been obtained in a comparable transaction at such time from Persons who are not Affiliates of the Company and (b) with respect to a transaction or series of related transactions involving aggregate payments or value equal to or greater than $25,000,000, such transaction or transactions shall have been approved by a majority of the Disinterested Members of the Board of Directors of the Company.

Notwithstanding the foregoing, the restrictions set forth in this Section 4.11 shall not apply to: (i) transactions with or among the Company and the Restricted Subsidiaries; (ii) transactions in the ordinary course of business, or approved by a majority of the Board of Directors of the Company, between the Company or any Restricted Subsidiary and any Affiliate of the Company that is a joint venture or similar entity; (iii) (A) customary directors’ fees, indemnification and similar arrangements, consulting fees, employee salaries, bonuses or employment agreements, collective bargaining agreements, compensation or employee benefit arrangements and incentive arrangements with any officer, director or employee of the Company or any Restricted Subsidiary entered into in the ordinary course of business and (B) any transaction with an officer or director in the ordinary course of business not involving more than $1,000,000 in any one year; (iv) Restricted Payments made in compliance with Section 4.09; (v) loans and advances to officers, directors and employees of the Company or any Restricted Subsidiary for travel, entertainment, moving and other relocation expenses, in each case made in the ordinary course of business; (vi) transactions pursuant to agreements in effect on the Issue Date; (vii) [Reserved]; (viii) transactions with customers, clients, suppliers, joint venture partners, joint ventures, including their members or partners, or purchasers or sellers of goods or services, in each case in the ordinary course of business, including pursuant to joint venture agreements, and otherwise in compliance with the terms of this Indenture which are, in the aggregate (taking into account all the costs and benefits associated with such transactions), materially no less favorable to the Company or the applicable Restricted Subsidiary than those that would have been obtained in a comparable

 

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transaction by the Company or that Restricted Subsidiary with an unrelated Person or entity, in the good faith determination of the Company’s Board of Directors or its senior management, or are on terms at least as favorable as might reasonably have been obtained at such time from an unaffiliated party; (ix) any issuance or sale of Capital Stock (other than Redeemable Capital Stock) of the Company or any capital contribution to the Company; (x) the Separation Transactions, including (i) all transactions pursuant to agreement necessary to effectuate the Separation Transactions and (ii) the payment of all fees and expenses relating thereto and a dividend from the Company to RRD of the net proceeds of the Notes to be made in connection therewith; and (xi) transactions in which a Restricted Subsidiary delivers to the Trustee a letter from an accounting, appraisal or investment banking firm of national standing stating that the financial terms of such transaction either (x) are fair to such Restricted Subsidiary from a financial point of view (or words of similar import) or (y) meet the requirements of clause (a) of the first paragraph of this Section 4.11.

Section 4.12. Limitation on Liens . The Company will not, and will not permit any Restricted Subsidiary to create, incur, assume or suffer to exist any Lien of any kind securing any Indebtedness on any asset owned on the Issue Date or thereafter acquired, except for Permitted Liens.

Section 4.13. Change of Control .

(a) On or before the 30th day after the date of the occurrence of a Change of Control, the Company shall make an Offer to Purchase (a “ Change of Control Offer ”) on a Business Day not more than 60 nor less than 30 days following the mailing (or with respect to Global Notes, to the extent permitted or required by applicable DTC procedures or regulations, sending electronically) to each Holder of the notice described in paragraph (b) below (the “ Change of Control Purchase Date ”), all of the then Outstanding Notes tendered at a purchase price in cash (the “ Change of Control Purchase Price ”) equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, thereon to but excluding the Change of Control Purchase Date. The Company shall be required to purchase all Notes tendered pursuant to the Change of Control Offer and not withdrawn. The Change of Control Offer shall remain open for at least 20 Business Days.

(b) Within 30 days following any Change of Control, the Company will mail or send a notice to each Holder, with a copy to the Trustee, describing the transaction or transactions that constitute the Change of Control and stating all other information as set forth in the definition of “Offer to Purchase.”

(c) On the Change of Control Purchase Date, the Company shall (i) accept for payment Notes or portions thereof (not less than $2,000 principal amount and integral multiples of $1,000 in excess thereof) tendered pursuant to the Change of Control Offer, (ii) deposit with the Paying Agent money, in immediately available funds, sufficient to pay the purchase price of all Notes or portions thereof so tendered and accepted and (iii) deliver to the Trustee the Notes so accepted together with an Officer’s Certificate setting forth the Notes or portions thereof tendered to and accepted for payment by the Company. The Paying Agent shall promptly mail or deliver to the Holders of Notes so accepted payment in an amount equal to the purchase price, and the Trustee shall promptly authenticate and make available for delivery to such Holders a new Note of like tenor equal in principal amount to any unpurchased portion of the Note surrendered. Any Notes not so accepted shall be promptly mailed or delivered by the Company to the Holder thereof. The Company shall publicly announce the results of the Change of Control Offer not later than the third Business Day following the Change of Control Purchase Date.

(d) The Company shall not be required to make a Change of Control Offer upon a Change of Control if (1) a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements applicable to a Change of Control Offer made by the Company and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer or (2) notice of redemption for all outstanding Notes has been given pursuant to Section 3.03, unless and until there is a default in payment of the applicable Redemption Price.

(e) The Company shall comply with Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder, to the extent such laws or regulations are applicable, in the event that a Change of Control occurs and the Company is required to purchase Notes as described above.

 

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(f) Notwithstanding anything to the contrary herein, a Change of Control Offer may be made in advance of a Change of Control, conditioned upon the consummation of such Change of Control, if a definitive agreement is in place for the Change of Control at the time the Change of Control Offer is made.

(g) If Holders of not less than 90% in aggregate principal amount of the outstanding Notes validly tender and do not withdraw such Notes in a Change of Control Offer and the Company, or any third party making a Change of Control Offer in lieu of the Company as described above, purchases all of the Notes validly tendered and not withdrawn by such Holders, the Company or such third party will have the right, upon not less than 30 nor more than 60 days’ prior notice, given not more than 30 days following such purchase pursuant to the Change of Control Offer described above, to redeem all Notes that remain outstanding following such purchase at a price in cash equal to 101% of the principal amount thereof plus accrued and unpaid interest to but excluding the date of redemption.

Section 4.14. Disposition of Proceeds of Asset Sales .

(a) The Company shall not, and shall not permit any Restricted Subsidiary to, make any Asset Sale unless:

(i) the Company or such Restricted Subsidiary, as the case may be, receives consideration (including by way of relief from, or by any other Person assuming responsibility for, any liabilities, contingent or otherwise) at the time of such Asset Sale at least equal to the Fair Market Value of the shares or assets sold or otherwise disposed of; and

(ii) at least 75% of such consideration consists of cash or Cash Equivalents; provided , however , that this limitation shall not apply to any Asset Sale in which the cash or Cash Equivalent portion of the consideration received therefrom, determined in accordance with the foregoing provision, is equal to or greater than what the after-tax proceeds would have been had such Asset Sale complied with the aforementioned 75% limitation.

(b) Within 365 days of the later of an Asset Sale and the date of receipt of Net Cash Proceeds from such Asset Sale, the Company or such Restricted Subsidiary, as the case may be, may apply the Net Cash Proceeds from such Asset Sale to:

(i) (a) retire, prepay or permanently reduce Secured Indebtedness that constitutes First-Out Debt or Parity Lien Debt and, in each case correspondingly reduce commitments with respect thereto; provided that if the Company or any Restricted Subsidiary shall so reduce Obligations under any Secured Indebtedness not constituting First-Out Obligations, the Company or such Restricted Subsidiary will, equally and ratably, reduce Obligations under the Notes by, at its option, (x) redeeming a pro rata amount of Notes as provided under Section 3.07, referred to as “Pro Rata Amount” (y) purchasing the Pro Rata Amount of Notes that may be repurchased through open-market purchases (to the extent such purchases are at or above 100% of the principal amount thereof) or (z) making an offer to purchase the Pro Rata Amount of Notes pursuant to an offer made to all Holders in accordance with the procedures set forth below for an Asset Sale Offer at 100% of the principal amount thereof, plus the amount of accrued but unpaid interest, if any, on the amount of Notes that would otherwise be prepaid or (b) to the extent the Net Cash Proceeds are attributable to an Asset Sale of assets or Capital Stock that do not constitute Collateral, prepay, repay or purchase Indebtedness secured by a Lien on such assets or Capital Stock and to correspondingly reduce commitments (if any) with respect thereto; or

(ii) invest in properties or assets that are used or useful in the business of the Company and its Restricted Subsidiaries conducted at such time or in businesses reasonably related thereto or in Capital Stock of a Person, the principal portion of whose assets consist of such property or assets (collectively, “ Replacement Assets ”); provided, however, that any such reinvestment in Replacement Assets made pursuant to a definitive binding agreement or commitment approved by the Board of Directors of the Company that is executed or approved within such time shall satisfy this requirement, so long as such investment is consummated within 180 days of such 365th day or within such longer period of time authorized by the Board of Directors of the Company as is necessary to consummate such investment; provided that in the event such binding agreement or commitment is later canceled or terminated for any

 

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reason before such Net Cash Proceeds are so applied, the Company or such Restricted Subsidiary may satisfy its obligations as to any Net Cash Proceeds by entering into another binding agreement or commitment within six months of such cancellation or termination of the prior binding agreement or commitment or treating such Net Cash Proceeds as Excess Proceeds; provided, further, that the Company or such Restricted Subsidiary may only enter into such an agreement or commitment under the foregoing provision one time with respect to each Asset Sale. Any Net Cash Proceeds from any Asset Sale that are not used in accordance with the preceding sentence constitute “ Excess Proceeds ” subject to disposition as provided in clause (c) below.

(c) When the aggregate amount of Excess Proceeds equals or exceeds $100,000,000, the Company shall make an Offer to Purchase (an “ Asset Sale Offer ”), from all Holders and, to the extent the Company is required by the terms thereof, all holders of other Indebtedness that is pari passu in right of payment with the Notes containing provisions similar to those set forth in this Indenture with respect to offers to purchase or redeem with the proceeds of sales of assets, pro rata in proportion to the respective principal amounts of the Notes and such other Indebtedness to be purchased or redeemed, the maximum principal amount of Notes and such other Indebtedness that may be purchased with the Excess Proceeds. A copy of each Asset Sale Offer will be delivered to the Trustee and the Collateral Agent at the time it is delivered to Holders.

(d) The offer price for the Notes in any Asset Sale Offer shall be equal to 100% of the principal amount of the Notes plus accrued and unpaid interest, if any, to the purchase date and the offer price for any other Indebtedness that is pari passu in right of payment with the Notes shall be as set forth in the documentation governing such Indebtedness (the “ Asset Sale Offer Price ”) and shall be payable in cash. If any Excess Proceeds remain after an Asset Sale Offer, the Company may use such Excess Proceeds for general corporate purposes. If the Asset Sale Offer Price with respect to Notes tendered into such Asset Sale Offer exceeds the Excess Proceeds allocable to the Notes, Notes to be purchased shall be selected by DTC pursuant to applicable DTC procedures as to Global Notes, and otherwise by lot or in a manner the Trustee deems fair and equitable. The Notes shall be purchased by the Company on a date that is not earlier than 30 days and not later than 60 days from the date the notice is given to Holders, or such later date as may be necessary for the Company to comply with the requirements under the Exchange Act. Upon completion of such Asset Sale Offer, the amount of Excess Proceeds shall be reset to zero.

(e) On the Purchase Date under this Section 4.14, the Company shall (i) accept for payment (subject to proration as described in the Offer to Purchase) Notes or portions thereof tendered pursuant to the Asset Sale Offer, (ii) deposit with the Paying Agent money, in immediately available funds, sufficient to pay the purchase price of all Notes or portions thereof so tendered and accepted and (iii) deliver to the Trustee the Notes so accepted together with an Officer’s Certificate setting forth the Notes or portions thereof tendered to and accepted for payment by the Company. The Paying Agent shall promptly mail or deliver to the Holders of Notes so accepted payment in an amount equal to the purchase price, and the Trustee shall promptly authenticate and make available for delivery to such Holders a new Note (or transfer by book entry) of like tenor equal in principal amount to any unpurchased portion of the Note surrendered. Any Notes not so accepted shall be promptly mailed or delivered by the Company to the Holder thereof. The Company shall publicly announce the results of the Asset Sale Offer not later than the third Business Day following the Asset Sale Offer Purchase Date.

(f) The Company shall comply with Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder, to the extent such laws and regulations are applicable, in the event that an Asset Sale occurs and the Company is required to purchase Notes as described above.

(g) For the purposes of Section 4.14(a)(ii), the following are deemed to be cash: (1) the assumption of Indebtedness of the Company or any Restricted Subsidiary to the extent the Company or such Restricted Subsidiary is released from all liability on payment of the principal amount of such Indebtedness in connection with such Asset Sale, (2) Indebtedness of any Restricted Subsidiary that is no longer a Restricted Subsidiary as a result of such Asset Sale to the extent that the Company and each other Restricted Subsidiary are released in full from any guarantee of payment of the principal amount of such Indebtedness in connection with such Asset Sale, (3) securities, notes or other obligations received by the Company or any Restricted Subsidiary from the transferee that are converted by the Company or such Restricted Subsidiary into cash within 180 days, (4) consideration consisting of Indebtedness of the Company or any Restricted Subsidiary ( provided that such Indebtedness is not expressly subordinated in right

 

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of payment to the Notes), (5) Replacement Assets or (6) any Designated Non-cash Consideration received by the Company or any of its Restricted Subsidiaries in an Asset Sale; provided , however , that the aggregate Fair Market Value of all Designated Non-cash Consideration received and treated as cash pursuant to this clause (6) is not to exceed, at any time, an aggregate amount outstanding equal to the greater of $100,000,000 and 25% of Pro Forma Adjusted EBITDA as of the date of the applicable Asset Sale, without giving effect to changes in value subsequent to the receipt of such Designated Non-cash Consideration.

Section 4.15. Limitation on Dividends and Other Payment Restrictions Affecting Restricted Subsidiaries . The Company shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to:

(a) pay dividends, in cash or otherwise, or make any other distributions on or in respect of its Capital Stock or any other interest or participation in, or measured by, its profits;

(b) pay any Indebtedness owed to the Company or any other Restricted Subsidiary;

(c) make loans or advances to the Company or any other Restricted Subsidiary; or

(d) transfer any of its properties or assets to the Company or any other Restricted Subsidiary

except for such encumbrances or restrictions existing under or by reason of:

(i) applicable law or any applicable rule, regulation or order;

(ii) (A) customary non-assignment provisions of any contract or any lease governing a leasehold interest of the Company or any Restricted Subsidiary and (B) pursuant to customary provisions restricting dispositions of real property interests set forth in any reciprocal easement agreements of the Company or any Restricted Subsidiary;

(iii) customary restrictions on transfers of property subject to a Lien permitted under this Indenture;

(iv) instruments governing Indebtedness as in effect on the Issue Date;

(v) any agreement or other instrument of a Person, or relating to Indebtedness or Capital Stock of a Person that becomes a Restricted Subsidiary, or which agreement or instrument is assumed by the Company or any Restricted Subsidiary in connection with an acquisition of assets from such Person, as in existence at the time of such acquisition (but not created in contemplation thereof), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired;

(vi) an agreement entered into for the sale or disposition of Capital Stock or assets of a Restricted Subsidiary or an agreement entered into for the sale of specified assets (in either case, so long as such encumbrance or restriction, by its terms, terminates on the earlier of the termination of such agreement or the consummation of such agreement and so long as such restriction applies only to the Capital Stock or assets to be sold);

(vii) any agreement in effect on the Issue Date;

(viii) any Indebtedness incurred pursuant to Section 4.08(b)(i), the Notes, this Indenture and the Guarantees;

 

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(ix) joint venture agreements and other similar agreements that prohibit actions of the type described in Sections 4.15(a), (b), (c) and (d), which prohibitions are applicable only to the entity or assets that are the subject of such arrangements;

(x) [Reserved];

(xi) restrictions relating to Foreign Subsidiaries contained in Indebtedness incurred pursuant to Section 4.08;

(xii) (A) on cash or other deposits or net worth imposed by customers or suppliers under agreements entered into in the ordinary course of business, (B) that arises or is agreed to in the ordinary course of business and does not detract from the value of property or assets of the Company or any Restricted Subsidiary in any manner material to the Company or such Restricted Subsidiary or adversely affect the ability of the Company to make interest and principal payments with respect to the Notes or (C) pursuant to Interest Rate Protection Agreements;

(xiii) an agreement or instrument relating to any Indebtedness permitted to be incurred subsequent to the Issue Date pursuant to Section 4.08 (A) if the encumbrances and restrictions contained in any such agreement or instrument taken as a whole are not materially less favorable to the Holders than the encumbrances and restrictions contained in instruments governing Indebtedness as in effect on the Issue Date (as determined in good faith by the Company), or (B) if such encumbrance or restriction is not materially more disadvantageous to the Holders than is customary in comparable financings (as determined in good faith by the Company) and either (x) the Company determines in good faith that such encumbrance or restriction will not materially affect the Company’s ability to make principal or interest payments on the Notes or (y) such encumbrance or restriction applies only if a default occurs in respect of a payment or financial covenant relating to such Indebtedness;

(xiv) Purchase Money Obligations with respect to property or assets acquired in the ordinary course of business that impose encumbrances or restrictions on the property or assets so acquired;

(xv) any agreement that amends, extends, refinances, renews or replaces any agreement described in the foregoing clauses; provided , however , that the terms and conditions of any such agreement are not materially less favorable, taken as a whole, to the Holders with respect to such dividend and payment restrictions than those under or pursuant to the agreement amended, extended, refinanced, renewed or replaced;

(xvi) encumbrances or restrictions under any agreement governing Capitalized Lease Obligations that constitute Permitted Liens, so long as such restrictions apply only to the assets subject to such Liens or relating to such Capitalized Lease Obligation, as the case may be; and

(xvii) with respect to Section 4.15(d) only, any encumbrance or restriction contained in security agreements or mortgages securing Indebtedness of a Restricted Subsidiary to the extent such encumbrance or restriction restricts the transfer of the property subject to such security agreements or mortgages.

For purposes of determining compliance with this Section 4.15, the priority of any Preferred Stock in receiving dividends shall not be deemed a restriction on the ability to make distributions on Capital Stock.

Section 4.16. Additional Subsidiary Guarantors . The Company will cause each Domestic Restricted Subsidiary (other than any Foreign Subsidiary Holding Company or Subsidiary of a Foreign Subsidiary, unless otherwise determined by the Company) that guarantees any Indebtedness of the Company or any other Restricted Subsidiary incurred under the Credit Agreement, any syndicated loan or capital markets indebtedness, in each case in a principal amount in excess of $75,000,000, within a reasonable time thereafter, execute and deliver to the Trustee a Guaranty Agreement pursuant to which such Domestic Restricted Subsidiary will Guarantee the obligations of the Company under this Indenture, the Notes Security Documents and payment of the Notes on the same terms and conditions as those set forth in this Indenture (subject to any limitations that apply to the guarantee

 

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of Indebtedness giving rise to the requirement to deliver a Guaranty Agreement pursuant to this Section 4.16). Any such Domestic Restricted Subsidiary will, substantially concurrently with the execution of such Guaranty Agreement, execute a joinder agreement to the Notes Security Documents or new Notes Security Documents and take all actions required thereunder to perfect the security interests created thereunder. This Section 4.16 shall not apply to any of the Company’s Subsidiaries that have been properly designated as an Unrestricted Subsidiary.

Section 4.17. Limitation on Designations of Unrestricted Subsidiaries .

(a) The Company may designate any Restricted Subsidiary as an “ Unrestricted Subsidiary ” under this Indenture (a “ Designation ”) only if:

(i) no Default shall have occurred and be continuing at the time of or after giving effect to such Designation;

(ii) the Company would be permitted to make an Investment at the time of Designation (assuming the effectiveness of such Designation) pursuant to Section 4.09 in an amount (the “ Designation Amount ”) equal to the Fair Market Value of the Company’s interest in such Subsidiary on such date; and

(iii) the Company would be permitted under this Indenture to incur $1.00 of additional Indebtedness pursuant to Section 4.08(a) at the time of such Designation (assuming the effectiveness of such Designation).

(b) In the event of any such Designation, the Company shall be deemed to have made an Investment constituting a Restricted Payment pursuant to Section 4.09 for all purposes of this Indenture in the Designation Amount.

(c) All Subsidiaries of Unrestricted Subsidiaries shall automatically be deemed to be Unrestricted Subsidiaries.

(d) The Company may revoke any Designation of a Subsidiary as an Unrestricted Subsidiary (a “ Revocation ”) if:

(i) no Default shall have occurred and be continuing at the time of and after giving effect to such Revocation; and

(ii) all Liens and Indebtedness of such Unrestricted Subsidiary outstanding immediately following such Revocation would, if incurred at such time, have been permitted to be incurred for all purposes of this Indenture.

(e) All Designations and Revocations must be evidenced by a Board Resolution of the Company delivered to the Trustee certifying compliance with the foregoing provisions.

Section 4.18. Reporting Requirements .   For so long as the Notes are outstanding, whether or not the Company is subject to Section 13(a) or 15(d) of the Exchange Act, or any successor provision thereto, the Company shall file with the SEC (if permitted by SEC practice and applicable law and regulations) the annual reports, quarterly reports and other documents which the Company would have been required to file with the SEC pursuant to such Section 13(a) or 15(d) or any successor provision thereto if the Company were so subject, such documents to be filed with the SEC on or prior to the respective dates (the “ Required Filing Dates ”) by which the Company would have been required to file such documents if the Company were so subject. If, notwithstanding the preceding sentence, filing such documents by the Company with the SEC is not permitted by SEC practice or applicable law or regulations, the Company shall transmit (or cause to be transmitted) to all Holders, as their names and addresses appear in the Note Register, copies of such documents within 30 days after the Required Filing Date (or make such documents available on a website maintained by the Company). Delivery of reports, information and documents to the Trustee pursuant to the Indenture is for informational purposes only and its receipt of such reports shall not constitute constructive notice of any information contained therein or determinable from information contained

 

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therein, including our compliance with any of our covenants under the indenture or the notes (as to which the Trustee is entitled to rely exclusively on officer’s certificates). The Trustee shall not be obligated to monitor or confirm, on a continuing basis or otherwise, our compliance with the covenants or with respect to any reports or other documents filed with the SEC under this Indenture, or participate in any conference calls.

Section 4.19. Compliance Certificates . The Company shall deliver to the Trustee and the Collateral Agent, prior to April 1 in each year commencing with the year beginning on January 1, 2017, an Officer’s Certificate, stating whether or not to the best knowledge of the signer thereof the Company is in default in the performance and observance of any of the terms, provisions and conditions of this Indenture and the Notes Security Documents (without regard to any period of grace or requirement of notice provided hereunder or thereunder), and if the Company shall be in default, specifying all such defaults and the nature and status thereof of which he may have knowledge. So long as any of the Notes are outstanding, the Company shall deliver to the Trustee, forthwith upon any Officer becoming aware of any Default or Event of Default, an Officer’s Certificate specifying such Default or Event of Default and what action the Company is taking or proposes to take with respect thereto.

Section 4.20. [Reserved] .

Section 4.21. Suspension of Covenants .

(a) During any period of time that:

(x) the Notes have Investment Grade Ratings from both Rating Agencies, and

(y) no Default has occurred and is continuing (the occurrence of the events described in the foregoing clause (x) and this clause (y) being collectively referred to as a “ Covenant Suspension Event ”),

the Company and its Restricted Subsidiaries shall not be subject to Sections 5.01(3), 4.08, 4.09, 4.11, 4.14, 4.15 and 4.16 of this Indenture (collectively, the “ Suspended Covenants ”).

(b) In the event that the Company and its Restricted Subsidiaries are not subject to the Suspended Covenants for any period of time as a result of the foregoing, and on any subsequent date (the “ Reversion Date ”) one or both of the Rating Agencies withdraw their Investment Grade Rating or downgrade the rating assigned to the Notes below an Investment Grade Rating, then the Company and its Restricted Subsidiaries shall thereafter again be subject to the Suspended Covenants with respect to future events, unless and until a subsequent Covenant Suspension Event occurs.

(c) The period of time between the occurrence of a Covenant Suspension Event and the Reversion Date is referred to in this Indenture as the “ Suspension Period .” Upon the occurrence of a Covenant Suspension Event, the amount of Excess Proceeds from Asset Sales shall be reset at zero. With respect to Restricted Payments made after the Reversion Date, the amount of Restricted Payments since the Issue Date made shall be calculated as though Section 4.09 had been in effect during the Suspension Period. No Subsidiary may be designated as an Unrestricted Subsidiary during the Suspension Period, unless such designation would have complied with Section 4.17 as if the Suspended Covenants were in effect during such period. In addition, all Indebtedness incurred or Preferred Stock issued, during the Suspension Period shall be classified as having been incurred pursuant to Section 4.08(b)(iii). In addition, for purposes of Section 4.11, all agreements and arrangements entered into by the Company and any Restricted Subsidiary during the Suspension Period prior to such Reversion Date shall be deemed to have been entered into on or prior to the Issue Date, and for purposes of Section 4.15, all contracts entered into during the Suspension Period prior to such Reversion Date that contain any of the restrictions contemplated by such Section shall be deemed to have been existing on the Issue Date.

(d) During the Suspension Period, any reference in the definition of “Permitted Liens” and Section 4.17 to any provision of Section 4.08 or any provision thereof shall be construed as if such Section had remained in effect since the Issue Date and during the Suspension Period.

 

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(e) During the Suspension Period, the obligation to grant further Guarantees shall be suspended. Upon the Reversion Date, the obligation to grant Guarantees pursuant to Section 4.16 shall be reinstated (and the Reversion Date shall be deemed to be the date on which any guaranteed Indebtedness was incurred for purposes of Section 4.16).

(f) During the Suspension Period, at the Company’s request, the Guarantee of a Subsidiary Guarantor shall be released from all obligations under its Guarantee pursuant to Section 10.05(vi). The Company and the Subsidiary Guarantors shall be required to enter into new Guarantees and take all actions required under this Indenture with respect to any Guarantees that were released pursuant to Section 10.05(vii) promptly and in no event later than 30 days after the Reversion Date to the extent such Guarantees would otherwise be required to be provided outside of the Suspension Period.

(g) During the Suspension Period, at the Company’s request, the Collateral Agent’s Liens on the Collateral will terminate and be discharged pursuant to Section 10.05(vii). The Company and the Subsidiary Guarantors shall be required to enter into new Notes Security Documents and take all actions required under this Indenture or any Notes Security Documents to perfect any Liens on Collateral that were terminated and discharged pursuant to Section 10.05(vii) promptly and in no event later than 30 days after the Reversion Date to the extent such Liens on Collateral would otherwise be required to be provided outside of the Suspension Period.

(h) Notwithstanding that the Suspended Covenants may be reinstated, no Default or Event of Default shall be deemed to have occurred as a result of any failure to comply with the Suspended Covenants during any Suspension Period and the Company and any subsidiary shall be permitted, following a Reversion Date, without causing a Default or Event of Default or breach of any of the Suspended Covenants (notwithstanding the reinstatement thereof), to honor, comply with or otherwise perform any contractual commitments or obligations entered into during a Suspension Period following a Reversion Date and to consummate the transactions contemplated thereby.

(i) The Company shall provide an Officer’s Certificate to the Trustee indicating the occurrence of any Covenant Suspension Event or Reversion Date. The Trustee shall have no obligation to independently determine or verify if such events have occurred or notify the Holders of the continuance and termination of any Suspension Period. The Trustee may provide a copy of such certificate to any Holder of Notes upon written request. Neither the Trustee nor any paying agent shall be responsible for monitoring our rating status, making any request upon any Rating Agency, or determining whether any rating event has occurred.

Section 4.22. Further Assurances .

(a) The Company shall promptly execute and deliver, or cause to be promptly executed and delivered to the Collateral Agent such documents and agreements, and shall promptly take or cause to be taken such actions, including the filing of any UCC continuation statements and amendments, as may be necessary or as the Collateral Agent may (without obligation), from time to time, reasonably request to grant, preserve, protect or perfect the Liens created or intended to be created by the Notes Security Documents or the validity, effectiveness or priority of any such Lien, subject to the limitations set forth in this Indenture and the Notes Security Documents.

(b) Upon the exercise by the Collateral Agent, Trustee or any Holder of any power, right, privilege or remedy under this Indenture or any of the Notes Security Documents which requires any consent, approval, recording, qualification or authorization of any governmental authority, the Company will use its reasonable best efforts to execute and deliver all applications, certifications, instruments and other documents and papers that may be reasonably required from the Company for such governmental consent, approval, recording, qualification or authorization.

Section 4.23. Impairment of Security Interests . Subject to the rights of the holders of Permitted Liens, the Company shall not, and shall not permit any of its Restricted Subsidiaries to take, or knowingly or negligently omit to take, any action which action or omission would or could reasonably be expected to have the result of materially impairing the security interest with respect to the Collateral for the benefit of the Collateral Agent, Trustee and Holders, except as otherwise permitted under this Indenture. Any release of the Collateral in accordance with the provisions of this Indenture shall not be deemed to impair the security hereunder, and any Person may rely

 

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on such provision in delivering a certificate requesting release so long as all other provisions of this Indenture with respect to such release have been complied with. The Company shall deliver to the Trustee and the Collateral Agent an Officer’s Certificate and an Opinion of Counsel stating that all conditions precedent under this Indenture and the Notes Security Documents relating to the execution and delivery of each such release have been complied with. The Company shall not amend, modify or supplement, or permit or consent to any amendment, modification or supplement of, the Notes Security Documents in any manner that would be adverse to the Holders in any material respect, except as permitted under Article 9 hereof.

Section 4.24. After-Acquired Property . Within the time periods (and subject to the thresholds) set forth in this Indenture or in the Security Documents following the acquisition by the Company or any Subsidiary Guarantor of any After-Acquired Property or as soon as practicable thereafter using commercially reasonable efforts, the Company or such Subsidiary Guarantor shall execute and deliver such mortgages, deeds of trust, security instruments, title insurance policies, financing statements, certificates, opinions of counsel and all ancillary documents thereto, as shall be reasonably necessary to vest in the Collateral Agent a perfected security interest (subject to Permitted Liens) in such After-Acquired Property and to have such After-Acquired Property added to the Collateral, and thereupon all provisions of this Indenture relating to the Collateral shall be deemed to relate to such After-Acquired Property to the same extent and with the same force and effect.

Section 4.25. Post-Closing Obligations .   Within 120 days after the Issue Date or as soon as practicable thereafter using commercially reasonable efforts (or such longer period as agreed by the Credit Agreement Collateral Agent), the Company shall deliver to the Initial Purchasers, the Trustee and the Collateral Agent each of the following documents:

(i) Mortgages.   Fully executed counterparts of each Mortgage to be entered into with respect to each such Mortgaged Property in form and substance comparable to those delivered by the Company to the Credit Agreement Collateral Agent for the benefit of the lenders under the Credit Agreement.

(ii) Title Insurance.   A policy or policies or binder of title insurance (“ Mortgage Policy ”) with respect to each Mortgaged Property in form and substance comparable to those delivered by the Company to the Credit Agreement Collateral Agent for the benefit of the lenders under the Credit Agreement.

(iii) Survey . Either (x) a survey of each Mortgaged Property or (y) if the Company elects an ExpressMap, in either case form and substance comparable to those delivered by the Company to the Credit Agreement Collateral Agent for the benefit of the lenders under the Credit Agreement.

(iv) Counsel Opinions . Opinions of local counsel regarding the due authorization, execution and delivery, the enforceability, and perfection of the Mortgages and such other matters customarily covered in real estate mortgage counsel opinions as addressed to the Initial Purchasers and the Collateral Agent for its benefit and for the benefit of the Trustee, in form and substance comparable to those delivered by to the Credit Agreement Collateral Agent for the benefit of the lenders under the Credit Agreement.

(v) Collateral Fees and Expenses. Evidence of payment by the Company of all Mortgage Policy premiums, search and examination charges, mortgage recording taxes, fees, charges, costs and expenses required for the recording of the Mortgages, fixture filings and other documents and issuance of the Mortgage Policies referred to above.

ARTICLE 5

CONSOLIDATION, MERGER, SALES OF ASSETS, ETC.

Section 5.01. Company May Consolidate, Etc. Only on Certain Terms . The Company will not, directly or indirectly, in any transaction or series of transactions, merge or consolidate with or into, or sell, assign, convey, transfer, lease or otherwise dispose of all or substantially all of its properties and assets as an entirety to, any Person

 

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or Persons, and the Company will not permit any Restricted Subsidiary to enter into any such transaction or series of transactions if such transaction or series of transactions, in the aggregate, would result in a sale, assignment, conveyance, transfer, lease or other disposition of all or substantially all of the properties and assets of the Company or the Company and its Restricted Subsidiaries, taken as a whole, to any other Person or Persons, unless at the time and after giving effect thereto:

(1) either:

(x) if the transaction or transactions is a merger or consolidation, the Company, or such Restricted Subsidiary, as the case may be, shall be the surviving Person of such merger or consolidation; or

(y) the Person formed by such consolidation or into which the Company, or such Restricted Subsidiary, as the case may be, is merged or to which the properties and assets of the Company or such Restricted Subsidiary, as the case may be, substantially as an entirety, are transferred (any such surviving Person or transferee Person being the “ Surviving Entity ”) shall be a corporation organized and existing under the laws of the United States of America, any state thereof or the District of Columbia and shall expressly assume pursuant to a supplemental indenture and such other necessary agreements executed and delivered to the Trustee and the Collateral Agent, in form and substance reasonably satisfactory to the Trustee and the Collateral Agent, all the obligations of the Company or such Restricted Subsidiary, as the case may be, under the Notes and the Notes Security Documents, and in connection therewith shall cause such instruments to be filed and recorded in such jurisdictions and take such other actions as may be required by applicable law to perfect or continue the perfection of the Lien created under the Notes Security Documents on the Collateral owned by or transferred to the Surviving Entity;

(2) immediately after giving effect to such transaction or series of transactions on a pro forma basis (including any Indebtedness incurred or anticipated to be incurred in connection with or in respect of such transaction or series of transactions), no Default or Event of Default shall have occurred and be continuing; and

(3) except in the case of any merger of the Company with any wholly owned Subsidiary of the Company or any merger of Restricted Subsidiaries (and, in each case, with no other Persons), (i) the Company or the Surviving Entity, as the case may be, after giving effect to such transaction or series of transactions on a pro forma basis (including any Indebtedness incurred or anticipated to be incurred in connection with or in respect of such transaction or series of transactions), could incur $1.00 of additional Indebtedness pursuant to Section 4.08(a) (assuming a market rate of interest with respect to such additional Indebtedness) or (ii) the Consolidated Fixed Charge Coverage Ratio of the Company (or, if applicable, the successor company with respect thereto) would equal or exceed the Consolidated Fixed Charge Coverage Ratio of the Company immediately prior to giving effect to such transaction.

In connection with any consolidation, merger, transfer, lease, assignment or other disposition contemplated by the foregoing provisions of this Section 5.01, the Company shall deliver, or cause to be delivered, to the Trustee, in form and substance reasonably satisfactory to the Trustee and the Collateral Agent, an Officer’s Certificate and an Opinion of Counsel, each stating that such consolidation, merger, transfer, lease, assignment or other disposition and the supplemental indenture in respect thereof (required under clause (1)(y) of this Section 5.01) comply with the requirements of this Indenture and the Notes Security Documents.

Section 5.02. Successor Substituted . Except as otherwise provided by Section 10.05, upon any consolidation or merger, or any sale, assignment, conveyance, transfer, lease or disposition of all or substantially all of the properties and assets of the Company in accordance with Section 5.01, the successor Person formed by such consolidation or into which the Company or a Restricted Subsidiary, as the case may be, is merged or the successor Person to which such sale, assignment, conveyance, transfer, lease or disposition is made shall succeed to, and be substituted for, and may exercise every right and power of the Company under the Notes and the Notes Security Documents with the same effect as if such successor had been named as the Company in the Notes and the Notes Security Documents and, except in the case of a lease, the Company or such Restricted Subsidiary shall be released and discharged from its obligations thereunder.

 

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For all purposes of this Indenture and the Notes (including the provisions of this Article 5 and Sections 4.08, 4.09 and 4.12), Subsidiaries of any Surviving Entity shall, upon consummation of such transaction or series of related transactions, become Restricted Subsidiaries unless and until designated Unrestricted Subsidiaries pursuant to and in accordance with Section 4.17 and all Indebtedness, and all Liens on property or assets, of the Company and the Restricted Subsidiaries in existence immediately after such transaction or series of related transactions will be deemed to have been incurred upon consummation of such transaction or series of related transactions.

ARTICLE 6

DEFAULTS AND REMEDIES

Section 6.01. Events of Default . “ Event of Default ,” wherever used herein, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):

(1) default in the payment of the principal of or premium, if any, when due and payable, on any of the Notes (at Stated Maturity, upon optional redemption, required purchase or otherwise);

(2) default in the payment of an installment of interest, if any, on any of the Notes, when due and payable, for 30 days;

(3) default in the performance of, or breach of, the provisions set forth in Article 5;

(4) failure to comply with any of its obligations set forth in Section 4.13 in connection with a Change of Control (other than a default with respect to the failure to purchase the Notes), for a period of 30 days after written notice of such failure has been given to the Company by the Trustee or to the Company and the Trustee by the holders of at least 25% in aggregate principal amount of the Outstanding Notes;

(5) default in the performance of, or breach of, any covenant or agreement of the Company or the Subsidiary Guarantors under this Indenture or any other Notes Document (other than a default in the performance or breach of a covenant or agreement which is specifically dealt with in clauses (1), (2), (3) or (4)) and such default or breach shall continue for a period of 60 days after written notice has been given, by certified mail or by overnight courier:

(A) to the Company by the Trustee; or

(B) to the Company and the Trustee by the Holders of at least 25% in aggregate principal amount of the Outstanding Notes;

(6) default or defaults under one or more agreements, instruments, mortgages, bonds, debentures or other evidences of Indebtedness under which the Company or any Restricted Subsidiary then has outstanding Indebtedness in excess of $75,000,000, in each case, either individually or in the aggregate, and either:

(A) such Indebtedness is already due and payable in full; or

(B) such default or defaults have resulted in the acceleration of the maturity of such Indebtedness;

provided that no Default or Event of Default will be deemed to occur with respect to any such accelerated Indebtedness that is paid or is otherwise acquired or retired within 20 Business Days after such acceleration;

 

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(7) one or more judgments, orders or decrees of any court or regulatory or administrative agency of competent jurisdiction for the payment of money in excess of $75,000,000, in each case, either individually or in the aggregate, shall be entered against the Company or any Restricted Subsidiary or any of their respective properties and shall not be discharged and there shall have been a period of 60 days after the date on which any period for appeal has expired and during which a stay of enforcement of such judgment, order or decree, shall not be in effect;

(8) the entry of a decree or order by a court having jurisdiction in the premises:

(A) for relief in respect of the Company or any Significant Subsidiary in an involuntary case or proceeding under the Bankruptcy Code or any other federal, state or foreign bankruptcy, insolvency, reorganization or similar law; or

(B) adjudging the Company or any Significant Subsidiary bankrupt or insolvent, or seeking reorganization, arrangement, adjustment or composition of or in respect of the Company or any Significant Subsidiary under the Bankruptcy Code or any other similar federal, state or foreign law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Company or any Significant Subsidiary or of any substantial part of any of their properties, or ordering the winding up or liquidation of any of their affairs, and the continuance of any such decree or order unstayed and in effect for a period of 60 consecutive days;

(9) the institution by the Company or any Significant Subsidiary of a voluntary case or proceeding under the Bankruptcy Code or any other similar federal, state or foreign law or any other case or proceedings to be adjudicated a bankrupt or insolvent, or the consent by the Company or any Significant Subsidiary to the entry of a decree or order for relief in respect of the Company or any Significant Subsidiary in any involuntary case or proceeding under the Bankruptcy Code or any other similar federal, state or foreign law or to the institution of bankruptcy or insolvency proceedings against the Company or any Significant Subsidiary, or the filing by the Company or any Significant Subsidiary of a petition or answer or consent seeking reorganization or relief under the Bankruptcy Code or any other similar federal, state or foreign law, or the consent by it to the filing of any such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee or sequestrator (or other similar official) of any of the Company or any Significant Subsidiary or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due;

(10) any of the Guarantees of the Notes by a Subsidiary Guarantor that is a Significant Subsidiary ceases to be in full force and effect or any of such Guarantees is declared to be null and void and unenforceable or any of such Guarantees is found to be invalid or any of the Subsidiary Guarantors denies its liability under its Guarantee (other than by reason of release of a Subsidiary Guarantor in accordance with the terms of this Indenture) and such event continues for five (5) Business Days; or

(11) (A) any Notes Security Document shall cease for any reason to be in full force and effect (other than in accordance with its terms or the terms hereof), or the Company or a Subsidiary Guarantor, in each case that is a party to any of the Notes Security Documents shall so assert in writing, or (B) the Lien created by any of the Notes Security Documents, shall cease to be perfected and enforceable in accordance with its terms or of the same effect as to perfection and priority purported to be created thereby with respect to any material portion of the Collateral (other than in connection with any termination of such Lien in respect of any Collateral as permitted by this Indenture or by any of the Notes Security Documents), and such failure of such Lien to be perfected and enforceable with such priority shall have continued unremedied for a period of 20 days.

Section 6.02. Acceleration of Maturity; Rescission and Annulment . If an Event of Default (other than those covered by clause (8) or (9) of Section 6.01 with respect to the Company, any Restricted Subsidiary that is a Significant Subsidiary, or any group of Restricted Subsidiaries, that, taken together, would constitute a Significant Subsidiary) shall occur and be continuing, the Trustee, by written notice to the Company, or the Holders of at least

 

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25% in aggregate principal amount of the Notes then Outstanding, by written notice to the Trustee and the Company, in each case specifying in such notice the respective Event of Default and that such notice is a “notice of acceleration,” may declare the principal of, premium, if any, and accrued and unpaid interest, if any, on all of the Outstanding Notes due and payable immediately. If an Event of Default specified in clause (8) or (9) of Section 6.01 with respect to the Company, any Restricted Subsidiary that is a Significant Subsidiary, or any group of Restricted Subsidiaries, that, taken together, would constitute a Significant Subsidiary, occurs and is continuing, then the principal of, premium, if any, and accrued and unpaid interest, if any, on all the Outstanding Notes shall become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder of Notes.

After a declaration of acceleration under this Indenture, but before a judgment or decree for payment of the money due has been obtained by the Trustee, the Holders of a majority in aggregate principal amount of the Outstanding Notes, by written notice to the Company and the Trustee, may rescind such declaration if:

(1) the Company or any Subsidiary Guarantor has paid or deposited with the Trustee a sum sufficient to pay:

(A) all sums paid or advanced by the Trustee under this Indenture and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel;

(B) all overdue interest on all Notes;

(C) the principal of and premium, if any, on any Notes which have become due otherwise than by such declaration of acceleration and interest thereon at the rate borne by the Notes; and

(D) to the extent that payment of such interest is lawful, interest upon overdue interest and overdue principal at the rate borne by the Notes which has become due otherwise than by such declaration of acceleration;

(2) the rescission would not conflict with any judgment or decree of a court of competent jurisdiction; and

(3) all Events of Default, other than the non-payment of principal of, premium, if any, and interest on the Notes that have become due solely by such declaration of acceleration, have been cured or waived.

No such rescission shall affect any subsequent default or impair any right consequent thereto.

Section 6.03. Collection of Indebtedness and Suits for Enforcement by Trustee . The Company and each Subsidiary Guarantor covenants that if

(i) default is made in the payment of any interest on any Note when such interest becomes due and payable and such default continues for a period of 30 days; or

(ii) default is made in the payment of the principal of (or premium, if any, on) any Note on the due date for payment thereof, including, with respect to any Note required to have been purchased pursuant to a Change of Control Offer or an Asset Sale Offer made by the Company, at the Purchase Date thereof, the Company or such Subsidiary Guarantor will, upon demand of the Trustee, pay to it, for the benefit of the Holders of such Notes, the whole amount then due and payable on such Notes for principal (and premium, if any) and interest, and, to the extent that payment of such interest shall be legally enforceable, interest on any overdue principal (and premium, if any) and on any overdue interest, at the rate provided by the Notes, and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel.

 

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If an Event of Default occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders by such appropriate judicial proceedings as the Trustee shall deem necessary to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or any of the other Notes Documents or in aid of the exercise of any power granted herein, or to enforce any other proper remedy.

Section 6.04. Trustee May File Proofs of Claim . In case of any judicial proceeding relative to the Company, a Subsidiary Guarantor (or any other obligor upon the Notes), any of their property or any of their creditors, the Trustee shall be entitled and empowered, by intervention in such proceeding or otherwise, to file such papers or documents as may be necessary or advisable in order to have the claims of the Holders and the Trustee allowed in any such proceeding. In particular, the Trustee shall be authorized to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same after the deduction of its charges and expenses; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in bankruptcy or reorganization and any other such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07. To the extent that the payment of any such compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07 hereof out of the estate in any such proceeding, shall be unpaid for any reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other properties that the Holders may be entitled to receive in such proceeding whether in liquidation or under any plan of reorganization or arrangement or otherwise.

No provision of this Indenture shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding; provided , however , that the Trustee may, on behalf of the Holders, vote for the election of a trustee in bankruptcy or similar official and be a member of a creditors’ or other similar committee.

Section 6.05. Trustee May Enforce Claims Without Possession of Notes . All rights of action and claims under this Indenture or the Notes may be prosecuted and enforced by the Trustee without the possession of any of the Notes or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, distributions and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Notes in respect of which such judgment has been recovered.

Section 6.06. Application of Money Collected . Subject to the terms of the Intercreditor Agreement, any money or property collected by the Trustee pursuant to this Article 6, and after an Event of Default any money or other property distributable in respect of the Company’s or the Subsidiary Guarantors’ obligations under this Indenture, shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal (or premium, if any) or interest, upon presentation of the Notes and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid:

FIRST: To the payment of all amounts due the Trustee under Section 7.07;

SECOND: To the payment of the amounts then due and unpaid for principal of (and premium, if any) and interest on the Notes in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Notes for principal (and premium, if any) and interest, respectively;

THIRD: To the payment of any and all other amounts due under this Indenture, the Notes or the Guarantees; and

FOURTH: To the Company (or such other Person as a court of competent jurisdiction may direct).

 

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The Trustee may fix a record date and payment date for any payment or distribution to Holders of Notes pursuant to this Section 6.06.

Section 6.07. Limitation on Suits . Subject to Section 6.08, no Holder of any Note shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless

(i) such Holder has previously given written notice to the Trustee of a continuing Event of Default;

(ii) the Holders of not less than 25% in principal amount of the Outstanding Notes shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder;

(iii) such Holder or Holders have offered to the Trustee security or indemnity satisfactory to the Trustee against the costs, expenses and liabilities to be incurred in compliance with such request;

(iv) the Trustee for 45 days after its receipt of such notice, request and offer of security or indemnity has failed to institute any such proceeding; and

(v) no direction inconsistent with such written request has been given to the Trustee during such 45-day period by the Holders of a majority in principal amount of the Outstanding Notes; it being understood and intended that no one or more Holders shall have any right in any manner whatsoever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders (it being understood that the Trustee does not have an affirmative duty to ascertain whether or not such actions or forbearances are unduly prejudicial to such Holders), or to obtain or to seek to obtain priority or preference over any other Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all the Holders.

Section 6.08. Unconditional Right of Holders to Receive Principal, Premium and Interest . Notwithstanding any other provision in this Indenture, the Holder of any Note shall have the right, which is absolute and unconditional, to receive payment of the principal of (and premium, if any) and (subject to Section 2.12) interest on such Note on the respective Stated Maturities expressed in such Note (or, in the case of redemption, on the Redemption Date or in the case of a Change of Control Offer or an Asset Sale Offer made by the Company and required to be accepted as to such Note, on the relevant Purchase Date) and to institute suit for the enforcement of any such payment, and such rights shall not be impaired without the consent of such Holder.

Section 6.09. Restoration of Rights and Remedies . If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Company, each Subsidiary Guarantor, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted, subject to the determination in such proceeding.

Section 6.10. Rights and Remedies Cumulative . Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes in the last paragraph of Section 3.06, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

Section 6.11. Delay or Omission Not Waiver . No delay or omission of the Trustee or of any Holder of any Note to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy

 

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or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article 6 or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be.

Section 6.12. Control by Holders . The Holders of a majority in principal amount of the Outstanding Notes shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee, provided that;

(i) such direction shall not be in conflict with any rule of law or with this Indenture that may involve the Trustee in personal liability, or that the Trustee determines may be unduly prejudicial to the rights of other Holders of Notes (it being understood that the Trustee does not have an affirmative duty to ascertain whether or not any such directions are unduly prejudicial to such Holders), and

(ii) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction.

Section 6.13. Waiver of Defaults . The Holders of not less than a majority in principal amount of the Outstanding Notes may on behalf of the Holders of all the Notes waive any default hereunder and its consequences, except a default:

(i) in the payment of the principal of (or premium, if any) or interest on any Note (including any Note which is required to have been purchased pursuant to a Change of Control Offer or an Asset Sale Offer which has been made by the Company); or

(ii) in respect of a covenant or provision hereof which under Article 9 cannot be modified or amended without the consent of the Holder of each Outstanding Note affected.

Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. In the case of any such waiver, the Company, the Subsidiary Guarantors or any other obligor under the Notes, the Trustee and the Holders shall be restored to their former positions and rights hereunder and under the Notes, respectively.

Section 6.14. Undertaking for Costs . In any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, a court may require any party litigant in such suit to file an undertaking to pay the costs of such suit (including reasonable counsel fees and expenses), and may assess costs against any such party litigant; provided that this Section 6.14 shall not be deemed to authorize any court to require such an undertaking or to make such an assessment in any suit instituted by the Company or a Subsidiary Guarantor, in any suit instituted by the Trustee, in any suit instituted by any Holder or group of Holders, holding in the aggregate more than 10% in principal amount of the Outstanding Notes, or in any suit instituted by any Holder for the enforcement of the payment of the principal of (or premium, if any) or interest on any Note on or after the Stated Maturity expressed in such Note (or, in the case of redemption, on or after the Redemption Date or, in the case of a Change of Control Offer or an Asset Sale Offer, made by the Company and required to be accepted as to such Note, on the applicable Purchase Date, as the case may be).

Section 6.15. Waiver of Stay or Extension Laws . The Company and each Subsidiary Guarantor covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any usury, stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company and each Subsidiary Guarantor (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.

 

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ARTICLE 7

TRUSTEE

Section 7.01. Certain Duties and Responsibilities .

(a) Except during the continuance of an Event of Default,

(i) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and

(ii) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions which by the provisions hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein).

(b) In case an Event of Default has occurred and is continuing of which a Responsible Officer of the Trustee has actual knowledge, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent Person would exercise or use under the circumstances in the conduct of such Person’s own affairs.

(c) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent misconduct, its own negligent failure to act or its own willful misconduct except that the Trustee shall not be liable for any error of judgment by a Responsible Officer unless it is proved that the Trustee was negligent in ascertaining the pertinent facts, and the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with the direction of the holders of not less than a majority in principal amount of the Notes Outstanding relating to the time, method, and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture. No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers under this Indenture, unless the Trustee has received security and indemnity satisfactory to it against any loss, liability or expense. The Trustee shall not be liable for any error of judgment unless it is proved that the Trustee was negligent in the performance of its duties hereunder.

(d) Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section 6.01.

(e) None of the Trustee or any agent of the Trustee or any other Agent shall have any responsibility or liability for any actions taken or not taken by the Depositary.

(f) The permissive rights or powers of the Trustee to do things enumerated in this Indenture shall not be construed as a duty of the Trustee.

(g) Upon the occurrence and continuance of an Event of Default, before taking any foreclosure action or any action which may subject the Trustee or the Collateral Agent, as applicable, to liability under any environmental law, statute, regulation or similar requirement, the Trustee or Collateral Agent, as applicable, may require that a satisfactory indemnity bond, indemnity or environmental impairment insurance be furnished for the payment or reimbursement of all expenses to which they may be put and to protect it against all liability resulting from any claims, judgments, damages, losses, penalties, fines, liabilities (including strict liability) and expenses which may result from such foreclosure or other action, and will not be required to foreclose if doing so will subject them to environmental liability or will require the approval of a governmental regulator that cannot be obtained.

 

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(h) The obligations of the Trustee or the Collateral Agent, as applicable, with respect to the Collateral shall be governed exclusively by the express terms of the Notes Documents and not by the UCC except to the extent required otherwise by law. Neither duties of, nor any adverse consequence to, a secured party under the UCC shall be implied as obligations against the Trustee or the Collateral Agent except to the extent expressly required by law.

(i) No provision of this Indenture or the Notes Documents shall require the Trustee or the Collateral Agent to be obligated to take any action in a jurisdiction that would cause it to pay any tax or obligate it to qualify to do business if it is not then so qualified.

Section 7.02. Notice of Defaults . If a Default or an Event of Default occurs and is continuing and is actually known to a Responsible Officer of the Trustee, the Trustee shall transmit by mail or send to all Holders, as their names and addresses appear in the Note Register, notice of such Default or Event of Default hereunder known to the Trustee within 90 days after obtaining such knowledge, unless such Default shall have been cured or waived; provided , however , that, except in the case of a Default or an Event of Default in the payment of the principal of, premium, if any, or interest on any Note, the Trustee shall be protected in withholding such notice if and so long as it in good faith determines that the withholding of such notice is in the interest of the Holders.

Section 7.03. Certain Rights of Trustee .

Subject to the provisions of Section 7.01:

(a) the Trustee may conclusively rely as to the truth of the statements and correctness of the opinions expressed therein and shall be fully protected in acting or refraining from acting upon any resolution, Officer’s Certificate, certificate of auditors or any other certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document (whether in its original or facsimile form) believed by it to be genuine and to have been signed or presented by the proper party or parties;

(b) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order, Officer’s Certificate or signed by an Officer, and any resolution of the Board of Directors of the Company may be sufficiently evidenced by a Board Resolution of the Company;

(c) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, require and conclusively rely upon an Officer’s Certificate or an Opinion of Counsel;

(d) the Trustee may consult with counsel of its selection and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon;

(e) the Trustee shall be under no obligation to take any action or exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee security or indemnity satisfactory to the Trustee against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction;

(f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled (subject to reasonable confidentiality arrangements as may be proposed by the Company or any Subsidiary Guarantor) to make reasonable examination (upon prior notice and during regular business hours) of the books, records

 

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and premises of the Company or a Subsidiary Guarantor, personally or by agent or attorney at the sole cost of the Company and shall incur no liability or additional liability of any kind by reason of such inquiry or investigation;

(g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys or custodians or nominees and the Trustee shall not be responsible for the supervision of, or any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder;

(h) the Trustee shall not be liable for any action taken, suffered, or omitted to be taken by it in good faith and reasonably believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture;

(i) the rights, privileges, protections, immunities and benefits given to the Trustee, including its right to be compensated, reimbursed and indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, including but not limited to its capacities as Collateral Agent, Custodian, Paying Agent and Registrar, and each agent, custodian and other Person employed to act hereunder or in any other Notes Document;

(j) the Trustee shall not be required to take notice or be deemed to have notice of any Default or Event of Default unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice by the Company or by the Holders of at least 25% of the aggregate principal amount of the Notes of any event which is in fact such a Default or Event of Default is received by the Trustee at the Corporate Trust Office of the Trustee, and such notice references the Notes and this Indenture;

(k) in no event shall the Trustee be responsible or liable for special, indirect, punitive or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action;

(l) the Trustee may request that the Company deliver a certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture; and

(m) the Trustee shall not be required to give any bond or surety in respect of the performance of its powers and duties hereunder.

Section 7.04. Not Responsible for Recitals or Issuance of Notes . The recitals contained herein and in the Notes, except the Trustee’s certificates of authentication, shall be taken as the statements of the Company and the Guarantors, and the Trustee or any Authenticating Agent makes no representation as to and assumes no responsibility for their correctness. The Trustee makes no representations as to and shall not be responsible for the validity or sufficiency of this Indenture or of the Notes, the Subsidiary Guarantees or any of the other Notes Documents or in the Offering Memorandum or any other document in connection with the sale of the Notes. The Trustee shall not be accountable for the use or application by the Company of Notes or the proceeds thereof, or any money paid to the Company or upon the Company’s direction under any provision of this Indenture, and it shall not be responsible for the use or application of any money received by any Paying Agent other than the Trustee. The Trustee shall not be bound to ascertain or inquire as to the performance, observance, or breach of any covenants, conditions, representations, warranties or agreements on the part of the Company or the Guarantors. Under no circumstances shall the Trustee be liable in its individual capacity for the obligations evidenced by the Notes or the Subsidiary Guarantees. The Trustee shall not be responsible for and makes no representation as to any act or omission of any Rating Agency or any rating with respect to the Notes.

The Trustee shall not be responsible for and makes no representation as to the Company’s or any Guarantor’s right, title, or ownership in any of the Collateral and shall have no obligation for any defects therein or to inquire or investigate the same in any manner. The Trustee shall not be responsible for and makes no

 

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representation as to the existence or sufficiency of the Collateral, the creation, perfection, priority, sufficiency or protection of any Liens securing the Notes and Obligations under the Notes Documents, or for any failure to demand, collect, foreclose, or realize upon or otherwise enforce any Lien or Notes Document. Neither the Trustee nor the Collateral Agent nor any of their respective officers, directors, employees and agents makes any representation as to, and shall not be responsible for the existence, condition, genuineness, value or protection of any Collateral, for the legality, enforceability, effectiveness or sufficiency of any Notes Security Document, or for the creation, perfection, priority, sufficiency or protection of any Liens securing the Notes and Obligations under the Notes Documents, or for any failure to demand, collect, foreclose, or realize upon or otherwise enforce any Notes Security Document. Neither the Trustee nor the Collateral Agent shall be responsible for and makes no representation as to the compliance by the Company or any Guarantor with any covenant or statutory or regulatory requirement related to the Collateral. Neither the Trustee nor the Collateral Agent shall be under any obligation to any Secured Party or any other Person to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, the Notes Documents, or to inspect the properties, books or records of, the Company or the Guarantors. The Trustee and the Collateral Agent shall have no duty to solicit any filing, delivery of possession or control of the Collateral, or any other action required of the Grantors under the Security Documents to perfect Liens in the Collateral. Neither the Collateral Agent nor any of its officers, directors, employees or agents shall be liable for failure to demand, collect or realize upon any of the Collateral or for any delay in doing so, except for the Collateral Agent’s gross negligence or willful misconduct if it was required to take such actions pursuant to provisions of the Notes Documents or instructions of the Holders or Secured Parties, as applicable.

The Trustee and the Collateral Agent make no representation as to, and shall not be responsible for, the recording or re-recording, filing or re-filing, or filing or re-filing any financing or continuation statements or recording any documents or instruments in any public office at any time or times or otherwise perfecting or maintaining the perfection of any Lien or security interest in the Collateral. The Trustee and the Collateral Agent shall not be responsible for perfecting, maintaining, monitoring, preserving or protecting the security interest or lien granted under the Notes Security Documents, the filing, re-filing, recording, re-recording or continuing of any document, financing statement, mortgage, assignment, notice, instrument of further assurance or other instrument in any public office at any time or times or providing, maintaining, monitoring or preserving insurance on or the payment of taxes with respect to any property subject to any of the Notes Security Documents. The Trustee shall not be liable or responsible for the failure of the Company or any Guarantor to maintain insurance on the Collateral, nor shall it be responsible for any loss due to the insufficiency of such insurance or by reason of the failure of any insurer to pay the full amount of any loss against which it may have insured to the Company, a Guarantor, the Trustee, the Collateral Agent, or any other Person.

Section 7.05. May Hold Notes . The Trustee, any Authenticating Agent, any Paying Agent, any Registrar, any Custodian or any other agent of the Company or any Subsidiary Guarantor, in its individual or any other capacity, may become the owner or pledgee of Notes and, subject to Sections 7.08 and 7.13, may otherwise deal with the Company or a Subsidiary Guarantor with the same rights it would have if it were not Trustee, Authenticating Agent, Paying Agent, Registrar, Custodian or such other agent.

Section 7.06. Money Held in Trust . Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed in writing with the Company, or be under any duty to invest such funds.

Section 7.07. Compensation and Reimbursement . The Company agrees (1) to pay to the Trustee from time to time such compensation as the Company and the Trustee shall from time to time agree in writing for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); and (2) to promptly reimburse the Trustee upon its request for all reasonable and documented expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable and documented compensation and the reasonable and documented expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may have been caused by its negligence or willful misconduct; as finally adjudicated by a court of competent jurisdiction. The Company and the Subsidiary Guarantors, jointly and severally, agree to indemnify the Trustee, its directors, officers, agents and employees for, and to hold them harmless against, any and all loss, damage, claim, liability or expense incurred without negligence or willful misconduct on its part as finally

 

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adjudicated by a court of competent jurisdiction, including taxes (other than taxes based upon, measured by or determined by the revenue or income of the Trustee), arising out of or in connection with the acceptance or administration of this trust, including the costs and expenses of defending itself against any claim (whether asserted by the Company, a Holder or any other Person) or liability in connection with the exercise or performance of any of its powers or duties hereunder.

To secure the Company’s payment obligations in this Section 7.07, the Trustee shall have a lien prior to the Notes as to all property and funds held by it hereunder for any amount owing to it pursuant to this Section 7.07, except with respect to funds held in trust for the benefit of the Holders of particular Notes.

When the Trustee incurs expenses or renders services in connection with an Event of Default specified in Section 6.01(8) or Section 6.01(9), the expenses (including the reasonable charges and expenses of its counsel) and the compensation for the services are intended to constitute expenses of administration under any applicable federal or state bankruptcy, insolvency or other similar law.

Notwithstanding any provisions of this Indenture, the provisions of this Section 7.07 shall survive the resignation or removal of the Trustee and any satisfaction and discharge of this Indenture. “Trustee” for the purposes of this Section 7.07 shall include any predecessor Trustee and the Trustee in each of its capacities hereunder and each agent, custodian and other person employed to act hereunder; provided, however, that the negligence or willful misconduct of any Trustee hereunder shall not affect the rights of any other Trustee hereunder.

Section 7.08. Conflicting Interests . If the Trustee has or shall acquire a conflicting interest within the meaning of the Trust Indenture Act, the Trustee shall either eliminate such interest, apply to the SEC for permission to continue or resign, to the extent and in the manner provided by, and subject to the provisions of, the Trust Indenture Act and this Indenture.

Section 7.09. Corporate Trustee Required; Eligibility . There shall at all times be a Trustee hereunder which shall be a Person that is eligible pursuant to the Trust Indenture Act to act as such and has, or is a wholly owned subsidiary of a bank holding company that has, a combined capital and surplus of at least $50,000,000 and a Corporate Trust Office in the continental United States. If such Person publishes reports of condition at least annually, pursuant to law or to the requirements of a federal or state supervising or examining authority, then for the purposes of this Section 7.09 and to the extent permitted by the Trust Indenture Act, the combined capital and surplus of such Person shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section 7.09, it shall resign immediately in the manner and with the effect hereinafter specified in this Article 7.

Section 7.10. Resignation and Removal; Appointment of Successor .

(a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article 7 shall become effective until the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of Section 7.11.

(b) The Trustee may resign at any time by giving 30 days’ written notice thereof to the Company. If an instrument of acceptance by a successor Trustee in accordance with the applicable requirements of Section 7.11 shall not have been delivered to the Company and the resigning Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition, at the expense of the Company, any court of competent jurisdiction for the appointment of a successor Trustee.

(c) The Trustee may be removed at any time upon 30 days’ written notice by Act of the Holders of a majority in principal amount of the Outstanding Notes, delivered to the Trustee and to the Company. If an instrument of acceptance by a successor Trustee in accordance with the applicable requirements of Section 7.11 shall not have been delivered to the Company and the Trustee being removed within 30 days after the giving of such notice of removal, the Trustee being removed may petition, at the expense of the Company, any court of competent jurisdiction for the appointment of a successor Trustee.

 

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(d) If at any time:

(i) the Trustee shall fail to comply with Section 7.08 after written request therefor by the Company or by any Holder who has been a bona fide Holder of a Note for at least six months, or

(ii) the Trustee shall cease to be eligible under Section 7.09 and shall fail to resign after written request therefor by the Company, any Subsidiary Guarantor or by any such Holder, or

(iii) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation;

then, in any such case, (A) the Company or any Subsidiary Guarantor, in each case by a Board Resolution, may remove the Trustee, or (B) subject to Section 6.14, any Holder who has been a bona fide Holder for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

(e) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, the Company, by a Board Resolution, shall promptly appoint a successor Trustee. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee shall be appointed by Act of the Holders of a majority in principal amount of the Outstanding Notes delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment in accordance with the applicable requirements of Section 7.11, become the successor Trustee and supersede the successor Trustee appointed by the Company. If no successor Trustee shall have been so appointed by the Company or the Holders and accepted appointment in accordance with the applicable requirements of Section 7.11, any Holder who has been a bona fide Holder for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee.

(f) The Company shall give notice of each resignation and each removal of the Trustee and each appointment of a successor Trustee to all Holders in the manner provided in Section 13.01. Each notice shall include the name of the successor Trustee and the address of its Corporate Trust Office.

(g) The resignation or removal of the Trustee pursuant to this Section 7.10 shall not affect the obligation of the Company to indemnify the Trustee pursuant to Section 7.07(3) in connection with the exercise or performance by the Trustee prior to its resignation or removal of any of its powers or duties hereunder.

(h) No Trustee under this Indenture shall be liable for any action or omission of any successor Trustee.

Section 7.11. Acceptance of Appointment by Successor . Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee, subject to the lien provided in Section 7.07 hereof; but, on request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder. Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts.

No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article 7. Promptly following the acceptance of the appointment of any successor Trustee or Collateral Agent, as applicable, the Company shall cause assignments related to the Collateral to be filed or recorded sufficient to reflect the successor Trustee or Collateral Agent, as applicable, as mortgagee or secured party of record in accordance with applicable law related to each portion of the Collateral.

 

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Section 7.12. Merger, Conversion, Consolidation or Succession to Business . Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided , however , that such corporation shall be otherwise qualified and eligible under this Article 7, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Notes shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Notes so authenticated with the same effect as if such successor Trustee had itself authenticated such Notes.

Section 7.13. Preferential Collection of Claims Against the Company or a Subsidiary Guarantor . If and when the Trustee shall be or become a creditor of the Company or a Subsidiary Guarantor (or any other obligor upon the Notes), the Trustee shall be subject to the provisions of the Trust Indenture Act regarding the collection of claims against the Company or such Subsidiary Guarantor (or any such other obligor).

Section 7.14. Appointment of Authenticating Agent . The Trustee may appoint an Authenticating Agent or Agents which shall be authorized to act on behalf of the Trustee to authenticate Notes issued upon original issue and upon exchange, registration of transfer or partial redemption or partial purchase or pursuant to Section 2.07, and Notes so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. Wherever reference is made in this Indenture to the authentication and delivery of Notes by the Trustee or the Trustee’s certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent shall be acceptable to the Company and shall at all times be a corporation organized and doing business under the laws of the United States of America, any State thereof or the District of Columbia, authorized under such laws to act as Authenticating Agent, having a combined capital and surplus of not less than $50,000,000 and subject to supervision or examination by federal or state authority. If such Authenticating Agent publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section 7.14, the combined capital and surplus of such Authenticating Agent shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section 7.14, such Authenticating Agent shall resign immediately in the manner and with the effect specified in this Section 7.14.

Any corporation into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any corporation succeeding to all or substantially all of the corporate agency or corporate trust business of an Authenticating Agent, shall continue to be an Authenticating Agent, provided that such corporation shall be otherwise eligible under this Section 7.14, without the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent.

An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee and to the Company. The Trustee may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section 7.14, the Trustee may appoint a successor Authenticating Agent which shall be acceptable to the Company and shall give notice of such appointment in the manner provided in Section 13.01, to all Holders as their names and addresses appear in the Note Register. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent. No successor Authenticating Agent shall be appointed unless eligible under the provisions of this Section 7.14.

The Company agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section 7.14.

 

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Section 7.15. Intercreditor Agreement and the Notes Security Documents . The Trustee is hereby directed and authorized by the Holders to execute and deliver, or cause the Collateral Agent to execute and deliver, the Intercreditor Agreement and any other Notes Security Documents to the extent it is named as a party therein, and any amendments or supplements entered into in accordance with the terms thereof. Whether or not so expressly stated therein, in entering into, or taking (or forbearing from) any action under or pursuant to, the Intercreditor Agreement or any other Notes Security Document, the Trustee and the Collateral Agent each shall have all of the rights, immunities, indemnities and other protections granted to it under this Indenture (in addition to those that may be granted to it under the terms of such other agreement or agreements). Each Holder, by its acceptance of a Note, hereby authorizes the Collateral Agent to execute and deliver the Intercreditor Agreement for the benefit of the Holders and agrees to be bound by all of the provisions of the Intercreditor Agreement, as it may be in effect or may be amended from time to time in accordance with its terms. In addition, each Holder acknowledges and agrees that the Collateral Agent has entered into the Intercreditor Agreement and other Notes Security Documents for the benefit of the Holders and agrees to be bound by all of the provisions thereof.

ARTICLE 8

LEGAL DEFEASANCE AND COVENANT DEFEASANCE

Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance . The Company may at any time, at the option of its Board of Directors evidenced by a Board Resolution set forth in an Officer’s Certificate, elect to have either Section 8.02 or 8.03 be applied to all Outstanding Notes upon compliance with the conditions set forth below in this Article 8.

Section 8.02. Legal Defeasance and Discharge . Upon the Company’s exercise under Section 8.01 of the option applicable to this Section 8.02, the Company and each of the Subsidiary Guarantors will, subject to the satisfaction of the conditions set forth in Section 8.04, be deemed to have been discharged from their obligations with respect to all Outstanding Notes (including the Guarantees) on the date the conditions set forth below are satisfied (hereinafter, “ Legal Defeasance ”). For this purpose, Legal Defeasance means that the Company and the Subsidiary Guarantors will be deemed to have paid and discharged the entire Indebtedness represented by the Notes (including the Guarantees), which will thereafter be deemed to be “outstanding” only for the purposes of Section 8.05 and the other Sections of this Indenture referred to in clauses (i) and (ii) below, and to have satisfied all their other obligations under such Notes, the Guarantees and this Indenture (and the Trustee, on written demand of and at the expense of the Company, shall execute proper instruments acknowledging the same), except for the following provisions which will survive until otherwise terminated or discharged hereunder:

(i) the rights of Holders of Outstanding Notes to receive payments in respect of the principal of, or interest or premium, if any, on, such Notes when such payments are due from the trust referred to in Section 8.04;

(ii) the Company’s obligations with respect to such Notes under Article 2 and this Section 8.02;

(iii) the rights, powers, trusts, duties and immunities of the Trustee hereunder and the Company’s and the Subsidiary Guarantors’ obligations in connection therewith; and

(iv) this Article 8.

Subject to compliance with this Article 8, the Company may exercise its option under this Section 8.02 notwithstanding the prior exercise of its option under Section 8.03.

Section 8.03. Covenant Defeasance . Upon the Company’s exercise under Section 8.01 of the option applicable to this Section 8.03, the Company and each of the Subsidiary Guarantors will, subject to the satisfaction of the conditions set forth in Section 8.04, be released from each of their obligations under the covenants contained in Sections 4.05, 4.06, 4.07, 4.08, 4.09, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16, 4.17, 4.18, 4.22, clause (3) of the first paragraph of Section 5.01 and any covenant provided pursuant to Section 9.01(ii) with respect to the Outstanding Notes on and after the date the conditions set forth in Section 4.04 are satisfied (hereinafter, “ Covenant

 

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Defeasance ”), and the Notes will thereafter be deemed not “outstanding” for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but will continue to be deemed “outstanding” for all other purposes hereunder (it being understood that such Notes will not be deemed outstanding for accounting purposes). For this purpose, Covenant Defeasance means that, with respect to the Outstanding Notes and Guarantees, the Company and the Subsidiary Guarantors may omit to comply with and will have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply will not constitute a Default or an Event of Default under Section 6.01, but, except as specified above, the remainder of this Indenture and such Notes and Guarantees will be unaffected thereby. In addition, upon the Company’s exercise under Section 8.01 of the option applicable to this Section 8.03, subject to the satisfaction of the conditions set forth in Section 8.04, Sections 6.01(3) through 6.01(5) will not constitute Events of Default.

Section 8.04. Conditions to Legal or Covenant Defeasance . In order to exercise either Legal Defeasance or Covenant Defeasance under either Section 8.02 or 8.03:

(i) the Company must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders, cash in U.S. dollars, non-callable U.S. Government Obligations, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized investment bank, appraisal firm or firm of independent public accountants delivered to the Trustee, to pay the principal of, or interest and premium, if any, on, the Outstanding Notes on the stated date for payment thereof or on the applicable Redemption Date, as the case may be, and the Company must specify whether the Notes are being defeased to such stated date for payment or to a particular Redemption Date;

(ii) in the case of an election under Section 8.02, the Company must deliver to the Trustee an Opinion of Counsel confirming that:

(1) the Company has received from, or there has been published by, the Internal Revenue Service a ruling; or

(2) since the date of this Indenture, there has been a change in the applicable federal income tax law,

(iii) in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders of the Outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;

(iv) in the case of an election under Section 8.03, the Company must deliver to the Trustee an Opinion of Counsel confirming that the Holders of the Outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;

(v) no Default or Event of Default shall have occurred and be continuing on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit) and the deposit will not result in a breach or violation of, or constitute a default under, any other instrument to which the Company or any Subsidiary Guarantor is a party or by which the Company or any Subsidiary Guarantor is bound;

(vi) such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under, any material agreement or instrument (other than this Indenture) to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound;

 

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(vii) the Company must deliver to the Trustee an Officer’s Certificate stating that the deposit was not made by the Company with the intent of preferring the Holders of Notes over the other creditors of the Company with the intent of defeating, hindering, delaying or defrauding any creditors of the Company or others; and

(viii) the Company must deliver to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that all conditions precedent relating to the Legal Defeasance or the Covenant Defeasance have been complied with.

Section 8.05. Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions . Subject to Section 8.06, all money and non-callable U.S. Government Obligations (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 8.05, the “ Trustee ”) pursuant to Section 8.04 in respect of the Outstanding Notes will be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as Paying Agent) as the Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal, premium and interest, but such money need not be segregated from other funds except to the extent required by law.

The Company will pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or non-callable U.S. Government Obligations deposited pursuant to Section 8.04 or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the Outstanding Notes.

Notwithstanding anything in this Article 8 to the contrary, the Trustee will deliver or pay to the Company from time to time upon the request of the Company any money or non-callable U.S. Government Obligations held by it as provided in Section 8.04 which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee (which may be the opinion delivered under Section 8.04(i)), are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.

Section 8.06. Repayment to Company . Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of, premium, if any, or interest on, any Note and remaining unclaimed for two years after such principal, premium or interest has become due and payable shall, subject to applicable abandoned property law, be paid to the Company on its request or (if then held by the Company) will be discharged from such trust; and the Holder of such Note will thereafter be permitted to look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, will thereupon cease.

Section 8.07. Reinstatement . If the Trustee or Paying Agent is unable to apply any U.S. dollars or non-callable U.S. Government Obligations in accordance with Section 8.02 or 8.03, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company’s and the Subsidiary Guarantors’ obligations under this Indenture and the Notes and the Guarantees will be revived and reinstated as though no deposit had occurred pursuant to Section 8.02 or 8.03 until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 8.02 or 8.03, as the case may be; provided , however , that, if the Company makes any payment of principal of or any premium or interest on any Note following the reinstatement of its obligations, the Company will be subrogated to the rights of the Holders of such Notes to receive such payment from the money held by the Trustee or Paying Agent.

ARTICLE 9

AMENDMENTS, WAIVERS; SUPPLEMENT INDENTURES

Section 9.01. Amendments, Waivers and Supplemental Indentures Without Consent of Holders . Without the consent of any Holders, the Company, the Subsidiary Guarantors, the Trustee and the Collateral Agent, at any time and from time to time, may together enter into any additional or supplemental Notes Security Documents, or amend, waive or supplement this Indenture, the Notes, the Guarantees or the Notes Security Documents for any of the following purposes:

(i) to evidence the succession of another Person to the Company or a Subsidiary Guarantor and the assumption by any such successor of the covenants of the Company or such Subsidiary Guarantor herein and in the Notes or such Subsidiary Guarantor’s Guarantee and to evidence the assumption of obligations under this Indenture and a Guarantee pursuant to Section 4.16;

 

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(ii) to add to the covenants of the Company or a Subsidiary Guarantor for the benefit of the Holders, or to surrender any right or power herein conferred upon the Company or a Subsidiary Guarantor;

(iii) to cure any ambiguity, omission or mistake, to correct or supplement any provision herein which may be defective or inconsistent with any other provision herein, or to make any other provisions with respect to matters or questions arising under this Indenture which shall not be inconsistent with the provisions of this Indenture;

(iv) to make any change that does not adversely affect the rights of the Holders or, as to the Notes Security Documents, in any manner that would be adverse to Holders in any material respect;

(v) to conform any provision of this Indenture to any provision under the heading “ Description of Notes ” in the Offering Memorandum;

(vi) to add Guarantees or Collateral, execute a Guaranty Agreement or additional Notes Security Documents, or release or discharge Guarantees or Collateral from the Lien of this Indenture or the Notes Security Documents, in accordance with the terms of this Indenture or the Notes Security Documents, as applicable;

(vii) to secure any Additional Secured Indebtedness to the extent permitted under this Indenture and the Notes Security Documents;

(viii) to make such amendments, waivers or supplements as are permitted or required by the terms of the Intercreditor Agreement;

(ix) to provide for uncertificated Notes in addition to or in place of certificated Notes;

(x) to make such provisions as necessary (as determined in good faith by the Company) for the issuance of Additional Notes; or

(xi) to evidence and provide for the acceptance and appointment under this Indenture of a successor Trustee pursuant to the requirements hereof or to provide for the accession by the Trustee to any Notes Security Document.

provided , however , that the Company shall have delivered to the Trustee an Opinion of Counsel and Officer’s Certificate stating that such action pursuant to clauses (i), (ii), (v), (vii), (viii) or (ix) above is permitted by this Indenture. The Trustee shall not be obligated to enter into any such amendment, waiver or supplemental indenture that adversely affects its own rights, duties or immunities under this Indenture or otherwise.

Section 9.02. Modifications, Amendments and Supplemental Indentures with Consent of Holders . With the consent of the Holders of a majority in principal amount of the Outstanding Notes, by act of said Holders delivered to the Company, the Trustee and the Collateral Agent, the Company and the Subsidiary Guarantors, when authorized by a Board Resolution, and the Trustee and the Collateral Agent may together modify, amend or supplement this Indenture, the Notes, the Guarantees or the Notes Security Documents for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture, the Notes, the Guarantees or the Notes Security Documents, or of modifying in any manner the rights of the Holders under this Indenture, the Notes, the Guarantees or the Notes Security Documents; provided , that without the consent of at least

 

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two-thirds in aggregate principal amount of the Outstanding Notes, an amendment, modification or supplemental indenture may not effect a release of all or substantially all of the Collateral from the Liens securing the Notes, except in accordance with the terms of this Indenture or the Notes Security Documents, as applicable;

Notwithstanding the foregoing, no such modification, amendment or supplemental indenture may, without the consent of the Holder of each Outstanding Note affected thereby:

(i) reduce the principal amount of, extend the Stated Maturity of or alter the redemption provisions of, the Notes;

(ii) change the currency in which any Notes or any premium or the interest thereon is payable;

(iii) reduce the percentage in principal amount of Outstanding Notes that must consent to an amendment, supplement or waiver or consent to take any action under this Indenture, the Notes, any Guarantee or the Notes Security Documents;

(iv) impair the right to institute suit for the enforcement of any payment on or with respect to the Notes or any Guarantee;

(v) waive a default in payment with respect to the Notes or any Guarantee;

(vi) reduce or change the rate or time for payment of interest on the Notes; or

(vii) except as expressly permitted under this Indenture, modify or change any provision of this Indenture affecting the ranking of the Notes or any Guarantee in a manner adverse to the Holders of the Notes.

It shall not be necessary for any Act of Holders under this Section 9.02 to approve the particular form of any proposed modification, amendment or supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof.

The Trustee and the Collateral Agent shall join with the Company and each Subsidiary Guarantor in the execution of such amended or supplemental indenture unless such amended or supplemental indenture affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion but shall not be obligated to enter into such amendment or supplemental indenture.

Section 9.03. Execution of Supplemental Indentures . Upon Company Request, accompanied by a Board Resolution, and if applicable upon the filing with the Trustee of evidence of the consent of the Note Holders, the Trustee and the Collateral Agent shall join with the Company in the execution of such amendment or supplemental indenture unless such amendment or supplemental indenture adversely affects the Trustee’s and the Collateral Agent’s own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee or the Collateral Agent may in its discretion, but shall not be obligated to, enter into such supplemental indenture. In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article 9 or the modifications thereby of the trusts created by this Indenture, the Trustee shall be given, and (subject to Section 7.01) shall be fully protected in conclusively relying upon, an Officer’s Certificate and an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture and that such supplemental indenture is the valid and legally binding obligation of the Company and the Subsidiary Guarantors, as applicable, enforceable in accordance with its terms, subject to customary limitations and exceptions. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture which affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise; provided that the Trustee shall enter into and execute all other supplemental indentures which satisfy all applicable conditions under this Article 9. The Company shall cause notice of any supplemental indenture to be given to Holders promptly following its execution.

 

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Section 9.04. Effect of Supplemental Indentures . Upon the execution of any supplemental indenture under this Article 9, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder theretofore or thereafter authenticated and delivered hereunder shall be bound thereby.

Section 9.05. [Reserved] .

Section 9.06. Reference in Notes to Supplemental Indentures Notes authenticated and delivered after the execution of any supplemental indenture pursuant to this Article 9 may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture, provided that any failure by the Trustee to make such notation shall not affect the validity of the matter provided for in such supplemental indenture or any Note or Guarantee hereunder. If the Company shall so determine, new Notes or Guarantees so modified as to conform, in the opinion of the Trustee, the Subsidiary Guarantors and the Company, to any such supplemental indenture may be prepared and executed by the Company or Subsidiary Guarantor and authenticated and delivered by the Trustee in exchange for Outstanding Notes.

Section 9.07. [Reserved] .

Section 9.08. No Liability for Certain Persons . No director, officer, employee, or stockholder of the Company, nor any director, officer or employee of any Subsidiary Guarantor, as such, shall have any liability for any obligations of the Company or any Subsidiary Guarantor under the Notes, the Guarantees, this Indenture or the Notes Security Documents based on or by reason of such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The foregoing waiver and release is an integral part of the consideration for the issuance of the Notes and the Guarantees.

ARTICLE 10

GUARANTEES

Section 10.01. Guarantee . Each Subsidiary Guarantor hereby unconditionally and irrevocably guarantees on a senior secured basis, jointly and severally, to each Holder, the Trustee and the Collateral Agent and their respective successors and assigns (a) the full and prompt payment (within applicable grace periods) of principal of and interest on the Notes when due, whether at maturity, by acceleration, by redemption or otherwise, and all other monetary obligations of the Company under this Indenture, the Notes and the Notes Security Documents and (b) the full and prompt performance within applicable grace periods of all other obligations of the Company under this Indenture, the Notes and the Notes Security Documents (all the foregoing being hereinafter collectively called the “ Guaranty Obligations ”). Each Subsidiary Guarantor further agrees that the Guaranty Obligations may be extended or renewed, in whole or in part, without notice or further assent from such Subsidiary Guarantor, and that such Subsidiary Guarantor will remain bound under this Article 10 notwithstanding any extension or renewal of any Guaranty Obligation.

To the extent that any Subsidiary Guarantor shall be required to pay any amounts on account of the Notes pursuant to a Guarantee in excess of an amount calculated as the product of (i) the aggregate amount payable by the Subsidiary Guarantors on account of the Notes pursuant to their respective Guarantees times (ii) the proportion (expressed as a fraction) that such Subsidiary Guarantor’s net assets (determined in accordance with GAAP) at the date enforcement of the Guarantees is sought bears to the aggregate net assets (determined in accordance with GAAP) of all Subsidiary Guarantors at such date, then such Subsidiary Guarantor shall be reimbursed by the other Subsidiary Guarantors for the amount of such excess, pro rata, based upon the respective net assets (determined in accordance with GAAP) of such other Subsidiary Guarantors at the date enforcement of the Guarantees is sought. This paragraph is intended only to define the relative rights of Subsidiary Guarantors as among themselves, and nothing set forth in this paragraph is intended to or shall impair the joint and several obligations of the Subsidiary Guarantors under their respective Guarantees.

The Subsidiary Guarantors shall have the right to seek contribution from any non-paying Subsidiary Guarantor so long as the exercise of such right does not impair the rights of the Holders under any Guarantee; provided , however , that if a Default has occurred and is continuing, the right to receive payment in respect of such right of contribution shall be suspended until the payment in full of all Guaranty Obligations hereunder.

 

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Each Subsidiary Guarantor waives presentation to, demand of payment from and protest to the Company of any of the Guaranty Obligations and also waives notice of protest for nonpayment. Each Subsidiary Guarantor waives notice of any default under the Notes or the Guaranty Obligations. The obligations of each Subsidiary Guarantor hereunder shall not be affected by (a) the failure of any Holder, the Trustee or the Collateral Agent to assert any claim or demand or to enforce any right or remedy against the Company or any other Person under this Indenture, the Notes Security Documents, the Notes or any other agreement or otherwise; (b) any extension or renewal of any thereof; (c) any rescission, waiver, amendment or modification of any of the terms or provisions of this Indenture, the Notes Security Documents, the Notes or any other agreement; (d) the release of any security held by any Holder, the Trustee or the Collateral Agent for the Guaranty Obligations or any of them; (e) the failure of any Holder, the Trustee or the Collateral Agent to exercise any right or remedy against any other guarantor of the Guaranty Obligations; or (f) any change in the ownership of any Subsidiary Guarantor (subject to Section 10.05).

Each Subsidiary Guarantor further agrees that its Guarantee herein constitutes a guaranty of payment, performance and compliance when due (and not a guaranty of collection) and waives any right to require that any resort be had by any Holder, the Trustee or the Collateral Agent to any security held for payment of the Guaranty Obligations.

To the fullest extent permitted by law, the obligations of each Subsidiary Guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any defense of setoff, counterclaim, recoupment or termination whatsoever or by reason of the invalidity, illegality or unenforceability of the Guaranty Obligations or otherwise. Without limiting the generality of the foregoing, to the fullest extent permitted by law, the obligations of each Subsidiary Guarantor herein shall not be discharged or impaired or otherwise affected by the failure of any Holder, the Trustee or the Collateral Agent to assert any claim or demand or to enforce any remedy under this Indenture, the Notes Security Documents, the Notes or any other agreement, by any waiver or modification of any thereof, by any default, failure or delay, willful or otherwise, in the performance of the Guaranty Obligations, or by any other act or thing or omission or delay to do any other act or thing which may or might in any manner or to any extent vary the risk of such Subsidiary Guarantor or would otherwise operate as a discharge of each Subsidiary Guarantor as a matter of law or equity.

Each Subsidiary Guarantor further agrees that its Guarantee herein shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of principal of or interest on any Guaranty Obligation is rescinded or must otherwise be restored by any Holder, the Trustee or the Collateral Agent upon the bankruptcy or reorganization of the Company or otherwise.

In furtherance of the foregoing and not in limitation of any other right which any Holder or the Trustee has at law or in equity against each Subsidiary Guarantor by virtue hereof, upon the failure of the Company to pay the principal of or interest on any Guaranty Obligation when and as the same shall become due, whether at maturity, by acceleration, by redemption or otherwise (within applicable grace periods), or to perform or comply with any other Guaranty Obligation (within applicable grace periods), each Subsidiary Guarantor hereby promises to and shall, upon receipt of written demand by the Trustee, forthwith pay, or cause to be paid, in cash, to the Holders or the Trustee an amount equal to the sum of (i) the unpaid principal amount of such Guaranty Obligations, (ii) accrued and unpaid interest on such Guaranty Obligations (but only to the extent not prohibited by law) and (iii) all other monetary Guaranty Obligations to the Holders and the Trustee.

Each Subsidiary Guarantor agrees that it shall not be entitled to any right of subrogation in relation to the Holders in respect of any Guaranty Obligations guaranteed hereby until payment in full of all Guaranty Obligations. Each Subsidiary Guarantor further agrees that, as between the Subsidiary Guarantors, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the Guaranty Obligations guaranteed hereby may be accelerated as provided in Article 6 for the purposes of its Guarantee herein, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Guaranty Obligations guaranteed hereby, and (y) in the event of any declaration of acceleration of such Guaranty Obligations as provided in Article 6, such Guaranty Obligations (whether or not due and payable) shall forthwith become due and payable by each Subsidiary Guarantor for the purposes of this Section 10.01.

 

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Each Subsidiary Guarantor also agrees to pay any and all costs and expenses (including reasonable attorneys’ fees and expenses) incurred by the Trustee, the Collateral Agent or any Holder in enforcing any rights under this Section 10.01.

Section 10.02. Limitation on Liability . Any term or provision of this Indenture to the contrary notwithstanding, the maximum aggregate amount of the obligations guaranteed hereunder by each Subsidiary Guarantor shall not exceed the maximum amount that can be hereby guaranteed without rendering this Indenture, as it relates to such Subsidiary Guarantor, voidable under applicable federal or state law relating to fraudulent conveyance or fraudulent transfer.

Section 10.03. Execution and Delivery of Guarantees . To evidence its Guarantee set forth in Section 10.01 hereof, each Subsidiary Guarantor hereby agrees that this Indenture or a Guaranty Agreement shall be executed on behalf of such Subsidiary Guarantor by one of its authorized officers.

Each Subsidiary Guarantor hereby agrees that its Guarantee set forth in Section 10.01 hereof shall remain in full force and effect notwithstanding the absence of the endorsement of any notation of such Guarantee on the Notes.

If an officer whose signature is on this Indenture or a Guaranty Agreement no longer holds that office at the time the Trustee authenticates a Note, the Guarantee of such Subsidiary Guarantor shall be valid nevertheless.

The delivery of any Note by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of the Guarantee set forth in this Indenture on behalf of the Subsidiary Guarantors.

If required by Section 4.16 hereof, the Company shall cause any newly created or acquired Restricted Subsidiary to comply with the provisions of Section 4.16 hereof and this Article 10, to the extent applicable.

Section 10.04. Subsidiary Guarantors May Consolidate, Etc., on Certain Terms . Nothing contained in this Indenture or in any of the Notes or any Guarantee shall prevent any consolidation or merger of a Subsidiary Guarantor with or into the Company or a Subsidiary Guarantor or the merger of a wholly owned Restricted Subsidiary with and into a Subsidiary Guarantor or shall prevent any sale or conveyance of the assets of a Subsidiary Guarantor as an entirety or substantially as an entirety or the Capital Stock of a Subsidiary Guarantor to the Company or a Subsidiary Guarantor.

Section 10.05. Release of Subsidiary Guarantors . The Guarantee of a Subsidiary Guarantor shall automatically be released from all obligations under its Guarantee endorsed on the Notes and under this Article 10 without need for any further act or the execution or delivery or any document: (i) upon the sale or other disposition (including by way of consolidation or merger) of all of the Capital Stock of such Subsidiary Guarantor to a Person that is not (either before or after giving effect to such transaction) the Company or a Restricted Subsidiary; provided such sale or disposition is permitted by this Indenture; (ii) upon the sale or disposition of all or substantially all of the assets of such Subsidiary Guarantor (including by way of merger or consolidation) to a Person that is not (either before or after giving effect to such transaction) the Company or a Restricted Subsidiary; provided such sale or disposition is permitted by this Indenture; (iii) upon the liquidation or dissolution of such Subsidiary Guarantor; provided that no Default or Event of Default shall occur as a result thereof or has occurred and is continuing; (iv) upon Legal Defeasance or Covenant Defeasance in accordance with Article 8 or satisfaction and discharge in accordance with Article 12; (v) if the Company properly designates any Restricted Subsidiary that is a Subsidiary Guarantor as an Unrestricted Subsidiary in accordance with Section 4.17; (vi) (A) if such Subsidiary Guarantor is released from its obligations under guarantees of payment by the Company of Indebtedness of the Company under the Credit Agreement or (B) at such time as such Subsidiary Guarantor does not have any other Indebtedness outstanding that would have required such Subsidiary Guarantor to enter into a Guaranty Agreement pursuant to Section 4.16, unless in the case of (A) or (B) the release is a result of the repayment in full of such Indebtedness other than in connection with a refinancing of such Indebtedness or (vii) at the Company’s request, during any Suspension Period. If the Subsidiary Guarantee of any Subsidiary Guarantor is deemed to be released or is automatically released, the Company shall deliver to the Trustee an Officer’s Certificate stating the identity of the released Subsidiary Guarantor, the basis for release in reasonable detail, and that such release complies with this

 

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Indenture. Upon Company Request and delivery by the Company to the Trustee of an Officer’s Certificate and an Opinion of Counsel to the effect that such transaction was made in accordance with the provisions hereof, the Trustee shall execute, without recourse, representation or warranty, any documents reasonably requested in order to evidence the release of such Subsidiary Guarantor from its obligations under its Guarantee and under this Article 10.

Section 10.06. Successors and Assigns . This Article 10 shall be binding upon each Subsidiary Guarantor and its successors and assigns and shall inure to the benefit of the successors and assigns of the Trustee, the Collateral Agent and the Holders and, in the event of any transfer or assignment of rights by any Holder, the Trustee or the Collateral Agent, the rights and privileges conferred upon that party in this Indenture, the Notes Security Documents and the Notes shall automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions of this Indenture and the Notes Security Documents.

Section 10.07. No Waiver, etc. Neither a failure nor a delay on the part of either the Trustee, the Collateral Agent or the Holders in exercising any right, power or privilege under this Article 10 shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise of any right, power or privilege. The rights, remedies and benefits of the Trustee, the Collateral Agent and the Holders herein expressly specified are cumulative and not exclusive of any other rights, remedies or benefits which either may have under this Article 10 at law, in equity, by statute or otherwise.

Section 10.08. Modification, etc. No modification, amendment or waiver of any provision of this Article 10, nor the consent to any departure by a Subsidiary Guarantor therefrom, shall in any event be effective unless the same shall be in writing and signed by the Trustee and the Collateral Agent, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice to or demand on a Subsidiary Guarantor in any case shall entitle such Subsidiary Guarantor or any other guarantor to any other or further notice or demand in the same, similar or other circumstances.

ARTICLE 11

NOTES SECURITY DOCUMENTS

Section 11.01. Collateral and Notes Security Documents .

(a) The due and punctual payment of the principal of and interest on the Notes when and as the same shall be due and payable, whether on an Interest Payment Date, at maturity, by acceleration, repurchase, redemption or otherwise, and interest on the overdue principal of and interest on the Notes and payment and performance of all other Obligations of the Company and the Subsidiary Guarantors to the Holders, the Trustee or the Collateral Agent under this Indenture, the Notes and the Notes Security Documents, according to the terms hereunder or thereunder, shall be secured as provided in the Notes Security Documents, which define the terms of the Liens that secure the Notes and such other Obligations, subject to the terms of the Intercreditor Agreement. The Trustee and the Company hereby acknowledge and agree that the Collateral Agent holds the Collateral in trust for its benefit and the benefit of the Trustee and the Holders, in each case pursuant to the terms of the Notes Security Documents. Each Holder, by accepting a Note, consents and agrees to the terms of the Notes Security Documents (including the provisions providing for the possession, use, release and foreclosure of Collateral) as the same may be in effect or may be amended from time to time in accordance with their terms and this Indenture, and authorizes and directs the Collateral Agent to enter into the Notes Security Documents and to perform its obligations and exercise its rights thereunder in accordance therewith. The Company shall deliver to the Collateral Agent copies of all documents filed pursuant to the Notes Security Documents, and shall do or cause to be done all such acts and things as may be reasonably required to assure and confirm to the Collateral Agent the security interest in the Collateral contemplated hereby, by the Notes Security Documents or any part thereof, as from time to time constituted (including the filing of UCC financing statements or continuation statements and any amendments to financing statements), so as to render the same available for the security and benefit of this Indenture and of the Notes secured hereby, according to the intent and purposes herein and therein expressed and subject to the Intercreditor Agreement.

Section 11.02. [Reserved] .

 

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Section 11.03. Release of Collateral .

(a) The Company and the Subsidiary Guarantors shall be entitled to a release of property and other assets included in the Collateral from the Liens securing the Notes and their obligations under this Indenture, and the Trustee (subject to its receipt of an Officer’s Certificate as provided below) shall release, or instruct the Collateral Agent to release, as applicable, the same from such Liens at the Company’s sole cost and expense, under one or more of the following circumstances:

(i) to enable the Company or any Subsidiary Guarantor to sell, exchange or otherwise dispose of any of the Collateral (other than any such disposition to the Company or a Subsidiary Guarantor) to the extent not prohibited under Section 4.14 hereof;

(ii) in the case of a Subsidiary Guarantor that is released from its Guarantee with respect to all of the Notes, the release of the property and assets of such Subsidiary Guarantor;

(iii) at the Company’s request, during any Suspension Period;

(iv) in the event of a sale of such Collateral as a result of the foreclosure or other exercise of remedies by the Applicable Authorized Representative;

(v) in whole or in part, if and to the extent required by the provisions of the Intercreditor Agreement;

(vi) pursuant to an amendment or waiver in accordance with Article 9 hereof;

(vii) if all of the Notes have been defeased pursuant to Article 8 hereof or satisfied and discharged pursuant to Article 12 hereof; or

(viii) upon payment in full of the principal of, together with accrued and unpaid interest on, all of the Notes and all other Obligations under this Indenture, the Guarantees and the Notes Security Documents with respect thereto, that are due and payable at or prior to the time such principal, together with accrued and unpaid interest are paid.

(b) Upon Company Request and receipt of an Officer’s Certificate and an Opinion of Counsel certifying that all conditions precedent under this Indenture and the Notes Security Documents, if any, to such release have been met and any necessary or proper instruments of termination, satisfaction or release have been prepared by the Company, the Trustee shall, or shall cause the Collateral Agent, to promptly execute, deliver or acknowledge (at the Company’s expense and without recourse, representation or warranty) such instruments or releases to evidence the release of any Collateral permitted to be released pursuant to this Indenture or the Notes Security Documents. Neither the Trustee nor the Collateral Agent shall be liable for any such release undertaken in good faith in reliance upon any such Officer’s Certificate or Opinion of Counsel, and notwithstanding any term hereof or in any Notes Security Document to the contrary, the Trustee and Collateral Agent shall not be under any obligation to execute and deliver any such instrument of release, satisfaction or termination, unless and until it receives such Officer’s Certificate and Opinion of Counsel. For the avoidance of doubt, the release of Liens on the Collateral pursuant to clause (a)(i) shall be automatic. All purchasers and grantees of any property or rights purporting to be released herefrom shall be entitled to rely upon any release executed by the Collateral Agent hereunder as sufficient for the purpose of this Indenture and as constituting a good and valid release of the property therein described from the Lien of this Indenture or the Notes Security Documents. No purchaser or grantee of any property or rights purporting to be released herefrom shall be bound to ascertain the authority of the Trustee or the Collateral Agent to execute the release or to inquire as to the existence of any conditions herein prescribed for the exercise of such authority; nor shall any purchaser or grantee of any property or rights permitted by this Indenture to be sold or otherwise disposed of by the Company be under any obligation to ascertain or inquire into the authority of the Company to make such sale or other disposition. Each Holder, by its acceptance of the Notes, consents to and authorizes the Collateral Agent to enter into any documentation as contemplated by this Section 11.03(b).

 

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Section 11.04. [Reserved] .

Section 11.05. [Reserved] .

Section 11.06. Suits To Protect the Collateral . Subject to the provisions of Article 7 hereof and the Intercreditor Agreement, the Trustee in its sole discretion and without the consent of the Holders, on behalf of the Holders, may direct the Collateral Agent to take all actions it deems necessary or appropriate in order to:

(i) enforce any of the terms of the Notes Security Documents; and

(ii) collect and receive any and all amounts payable in respect of the Obligations hereunder.

Subject to the provisions of the Notes Security Documents, the Trustee shall have power to institute and to maintain such suits and proceedings as it may deem expedient to prevent any impairment of the Collateral by any acts which may be unlawful or in violation of any of the Notes Security Documents or this Indenture, and such suits and proceedings as the Trustee, in its sole discretion, may deem expedient to preserve or protect its interests and the interests of the Holders in the Collateral (including power to institute and maintain suits or proceedings to restrain the enforcement of or compliance with any legislative or other governmental enactment, rule or order that may be unconstitutional or otherwise invalid if the enforcement of, or compliance with, such enactment, rule or order would impair the Lien on the Collateral or be prejudicial to the interests of the Holders or the Trustee). Nothing in this Section 11.06 shall be considered to impose any such duty or obligation to act on the part of the Trustee or the Collateral Agent.

Section 11.07. Authorization of Receipt of Funds by the Trustee Under the Notes Security Documents . Subject to the provisions of the Intercreditor Agreement, the Trustee is authorized to receive any funds for the benefit of the Holders distributed under the Notes Security Documents, and to make further distributions of such funds to the Holders according to the provisions of this Indenture.

Section 11.08. Purchaser Protected . In no event shall any purchaser in good faith of any property purported to be released hereunder be bound to ascertain the authority of the Collateral Agent or the Trustee to execute the release or to inquire as to the satisfaction of any conditions required by the provisions hereof for the exercise of such authority or to see to the application of any consideration given by such purchaser or other transferee; nor shall any purchaser or other transferee of any property or rights permitted by this Article 11 to be sold be under any obligation to ascertain or inquire into the authority of the Company or the applicable Subsidiary Guarantor to make any such sale or other transfer.

Section 11.09. Powers Exercisable by Receiver or Trustee . In case the Collateral shall be in the possession of a receiver or trustee, lawfully appointed, the powers conferred in this Article 11 upon the Company or a Subsidiary Guarantor with respect to the release, sale or other disposition of such property may be exercised by such receiver or trustee, and an instrument signed by such receiver or trustee shall be deemed the equivalent of any similar instrument of the Company or a Subsidiary Guarantor or of any officer or officers thereof required by the provisions of this Article 11; and if the Trustee shall be in the possession of the Collateral under any provision of this Indenture, then such powers may be exercised by the Trustee.

Section 11.10. Release Upon Termination of the Company s Obligations . In the event that the Company delivers to the Trustee, in form and substance reasonably acceptable to it, an Officer’s Certificate certifying that (i) payment in full of the principal of, together with accrued and unpaid interest on, all of the Notes and all other Obligations under this Indenture, the Guarantees and the Notes Security Documents, that are due and payable at or prior to the time such principal, together with accrued and unpaid interest, are paid or (ii) the Company shall have exercised its legal defeasance option or its covenant defeasance option, in compliance with the provisions of Article 8, or its satisfaction and discharge option, in compliance with the provisions of Article 12 hereof, in each case with respect to all of the Notes, the Trustee shall deliver to the Company and the Collateral Agent a notice stating that the Trustee, on behalf of the Holders, disclaims and gives up any and all rights it has in or to the Collateral (other than its rights under Section 7.07 and with respect to funds held by the Trustee pursuant to Article 8 and Article 12), and any rights it has under the Notes Security Documents, and upon receipt by the Collateral Agent of such notice, the

 

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Collateral Agent shall be deemed not to hold a Lien in the Collateral on behalf of the Trustee and upon request of and at the expense of the Company shall execute any release documents prepared by the Company and do or cause to be done all other acts reasonably necessary to release such Lien.

Section 11.11. Collateral Agent .

(a) The Trustee and each of the Holders by acceptance of the Notes hereby designates and appoints the Collateral Agent as its agent under this Indenture and the Notes Security Documents and the Trustee and each of the Holders by acceptance of the Notes hereby irrevocably authorizes the Collateral Agent to take such action on its behalf under the provisions of this Indenture and the Notes Security Documents and to exercise such powers and perform such duties as are expressly delegated to the Collateral Agent by the terms of this Indenture and the Notes Security Documents, together with such powers as are reasonably incidental thereto. The provisions of this Section 11.11 are solely for the benefit of the Collateral Agent and none of the Trustee, any of the Holders nor any of the Grantors shall have any rights as a third party beneficiary of any of the provisions contained herein other than as expressly provided in Section 11.03. Notwithstanding any provision to the contrary contained elsewhere in this Indenture and the Notes Security Documents, the Collateral Agent shall not have any duties or responsibilities hereunder nor shall the Collateral Agent have or be deemed to have any fiduciary relationship with the Trustee, any Holder or any Grantor, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Indenture and the Notes Security Documents or otherwise exist against the Collateral Agent. Without limiting the generality of the foregoing sentence, the use of the term “agent” in this Indenture with reference to the Collateral Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law. Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties. Except as expressly otherwise provided in this Indenture, the Collateral Agent shall have and may use its sole discretion with respect to exercising or refraining from exercising any discretionary rights or taking or refraining from taking any actions which the Collateral Agent is expressly entitled to take or assert under this Indenture, and the Notes Security Documents, including the exercise of remedies pursuant to Article 6, and any action so taken or not taken shall be deemed consented to by the Trustee and the Holders.

(b) None of the Collateral Agent or any of its respective Affiliates shall (i) be liable for any action taken or omitted to be taken by any of them under or in connection with this Indenture or the transactions contemplated hereby (except for its own gross negligence or willful misconduct as finally adjudicated by a court of competent jurisdiction) or under or in connection with any Notes Security Document or the transactions contemplated thereby (except for its own gross negligence or willful misconduct), or (ii) be responsible in any manner to any of the Trustee or any Holder for any recital, statement, representation, warranty, covenant or agreement made by the Company or any Grantor or Affiliate of any Grantor, or any officer or Affiliate thereof, contained in this or any Indenture, any Notes Security Document or in any certificate, report, statement or other document referred to or provided for in, or received by the Collateral Agent under or in connection with, this or any other Indenture or the Notes Security Documents, or the validity, effectiveness, genuineness, enforceability or sufficiency of this or any other Indenture or the Notes Security Documents, or for any failure of any Grantor or any other party to this Indenture or the Notes Security Documents to perform its obligations hereunder or thereunder. None of the Collateral Agent or any of its respective Affiliates shall be under any obligation to the Trustee or any Holder to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this or any other Indenture or the Notes Security Documents or to inspect the properties, books, or records of any Grantor or any Grantor’s Affiliates.

(c) The Collateral Agent and its Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in and generally engage in any kind of banking, trust, financial advisory, underwriting, or other business with the Company, any Subsidiary Guarantor and their Affiliates as though it was not the Collateral Agent hereunder and without notice to or consent of the Trustee. The Trustee and the Holders acknowledge that, pursuant to such activities, the Collateral Agent or its Affiliates may receive information regarding any Grantor or its respective Affiliates (including information that may be subject to confidentiality obligations in favor of, any such Grantor or such Affiliate) and acknowledge that the Collateral Agent shall not be under any obligation to provide such information to the Trustee or the Holders. Nothing herein shall impose or imply any obligation on the part of the Collateral Agent to advance funds.

 

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(d) The Collateral Agent is authorized and directed to (i) enter into the Notes Security Documents, (ii) bind the Holders on the terms as set forth in the Notes Security Documents and (iii) perform and observe its obligations under the Notes Security Documents.

(e) The Trustee agrees that it shall not (and shall not be obligated to), and shall not instruct the Collateral Agent to, unless specifically requested to do so by a majority of the Holders, take or cause to be taken any action to enforce its rights under this Indenture or against any Grantor, including the commencement of any legal or equitable proceedings, to foreclose any Lien on, or otherwise enforce any security interest in, any of the Collateral.

If at any time or times the Trustee shall receive (i) by payment, foreclosure, set-off or otherwise, any proceeds of Collateral or any payments with respect to the Obligations arising under, or relating to, this Indenture, except for any such proceeds or payments received by the Trustee from the Collateral Agent pursuant to the terms of this Indenture, or (ii) payments from the Collateral Agent in excess of the amount required to be paid to the Trustee pursuant to Article 6, the Trustee shall promptly turn the same over to the Collateral Agent, in kind, and with such endorsements as may be required to negotiate the same to the Collateral Agent.

(f) The Collateral Agent is each Holder’s agent for the purpose of perfecting the Holders’ security interest in assets which, in accordance with Article 9 of the Uniform Commercial Code can be perfected only by possession. Should the Trustee obtain possession of any such Collateral, upon request from the Company, the Trustee shall notify the Collateral Agent thereof, and, promptly upon the Collateral Agent’s request therefor shall deliver such Collateral to the Collateral Agent or otherwise deal with such Collateral in accordance with the Collateral Agent’s instructions. If required for the purpose of meeting the legal requirements of any jurisdiction in which any of the Collateral may at the time be located, subject to the terms of the Notes Security Documents, the Company, the Trustee and the Collateral Agent shall have the power to appoint, and shall take all reasonable action to appoint, one or more Persons approved by the Company to act as co-collateral agent with respect to any such Collateral, with such rights and powers limited to those deemed necessary for the Company, the Trustee or the Collateral Agent to comply with any such legal requirements with respect to such Collateral, and which rights and powers shall not be inconsistent with the provisions of this Indenture.

(g) The Collateral Agent shall have no obligation whatsoever to the Trustee or any of the Holders to assure that the Collateral exists or is owned by any Grantor or is cared for, protected, or insured or has been encumbered, or that the Collateral Agent’s Liens have been properly or sufficiently or lawfully created, perfected, protected, maintained or enforced or are entitled to any particular priority, or to determine whether all or the Company or any Subsidiary Guarantor’s property constituting collateral intended to be subject to the Lien and security interest of the Notes Security Documents has been properly and completely listed or delivered, as the case may be, or the genuineness, validity, marketability or sufficiency thereof or title thereto, or to exercise at all or in any particular manner or under any duty of care, disclosure, or fidelity, or to continue exercising, any of the rights, authorities, and powers granted or available to the Collateral Agent pursuant to this Indenture or any Notes Security Document, it being understood and agreed that in respect of the Collateral, or any act, omission, or event related thereto, the Collateral Agent may act in any manner it may deem appropriate, in its sole discretion given the Collateral Agent’s own interest in the Collateral and that the Collateral Agent shall have no other duty or liability whatsoever to the Trustee or any Holder as to any of the foregoing.

(h) No provision of this Indenture or any Notes Security Document shall require the Collateral Agent (or the Trustee) to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or thereunder or to take or omit to take any action hereunder or thereunder or take any action at the request or direction of Holders (or the Trustee in the case of the Collateral Agent) if it shall have reasonable grounds for believing that repayment of such funds is not assured to it.

(i) The Collateral Agent (i) shall not be liable for any action it takes or omits to take in good faith which it reasonably believes to be authorized or within its rights or powers, or for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the Collateral Agent was grossly negligent in ascertaining the pertinent facts, (ii) shall not be liable for interest on any money received by it except as the Collateral Agent may agree in writing with the Company (and money held in trust by the Collateral Agent need not be segregated from other funds except to the extent required by law) and (iii) may consult with counsel of its selection and the advice or opinion of such counsel as to matters of law shall be full and complete authorization and

 

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protection from liability in respect of any action taken, omitted or suffered by it in good faith and in accordance with the advice or opinion of such counsel. The grant of permissive rights or powers to the Collateral Agent shall not be construed to impose duties to act.

(j) Neither the Collateral Agent nor the Trustee shall be liable for delays or failures in performance resulting from acts beyond its control. Such acts shall include but not be limited to acts of God, strikes, lockouts, riots, acts of war, epidemics, governmental regulations superimposed after the fact, fire, communication line failures, computer viruses, power failures, earthquakes or other disasters. Neither the Collateral Agent nor the Trustee shall be liable for any indirect, special or consequential damages (included but not limited to lost profits) whatsoever, even if it has been informed of the likelihood thereof and regardless of the form of action.

Section 11.12. Designations . Except as provided in the next sentence, for purposes of the provisions hereof requiring the Company to designate Indebtedness for the purposes of the term “First-Out Obligations” or any other such designations hereunder, any such designation shall be sufficient if designated in accordance with the applicable provisions of the Intercreditor Agreement. For all purposes hereof and of the Intercreditor Agreement, the Company hereby designates the Obligations pursuant to the Revolving Credit Facility as “First-Out Obligations.”

ARTICLE 12

SATISFACTION AND DISCHARGE

Section 12.01. Satisfaction and Discharge . This Indenture shall be discharged and shall cease to be of further effect (except as to any surviving rights of registration of transfer or exchange of Notes herein expressly provided for), and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when:

(1) either:

(A) all Notes theretofore authenticated and delivered (other than (i) Notes which have been destroyed, lost or stolen and which have been replaced or repaid as provided in Section 2.07 and (ii) Notes for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in Section 2.04) have been delivered to the Trustee for cancellation; or

(B) all Notes not theretofore delivered to the Trustee for cancellation (other than Notes which have been destroyed, lost or stolen and which have been replaced or repaid as provided in Section 2.07),

(i) have become due and payable,

(ii) will become due and payable at their Stated Maturity within one year, or

(iii) will become due and payable within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company,

and the Company, in the case of (i), (ii) or (iii) above, has irrevocably deposited or caused to be deposited with the Trustee funds in an amount sufficient to pay and discharge the entire Indebtedness on such Notes not theretofore delivered to the Trustee for cancellation, for principal of and premium, if any, and interest on the Notes to the date of deposit (in the case of Notes which have become due and payable) or to the Stated Maturity or Redemption Date, as the case may be, together with irrevocable instructions from the Company directing the Trustee to apply such funds to the payment thereof at maturity or redemption, as the case may be;

 

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(3) the Company has paid or caused to be paid all other sums payable hereunder by the Company or the Subsidiary Guarantors; and

(4) the Company has delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with.

Notwithstanding the satisfaction and discharge of this Indenture pursuant to this Article 12, the obligations of the Company to the Trustee under Section 7.07, the obligations of the Company to any Authenticating Agent under Section 7.14 and, if money shall have been deposited with the Trustee pursuant to subclause (B) of clause (1) of this Section 12.01, the obligations of the Trustee under Sections 2.04 and 12.02 shall survive such satisfaction and discharge.

Section 12.02. Application of Trust Money . Subject to Section 2.04, all money deposited with the Trustee pursuant to Section 12.01 shall be held in trust and applied by it, in accordance with the provisions of the Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal (and premium, if any) and interest for whose payment such money has been deposited with the Trustee.

ARTICLE 13

MISCELLANEOUS

Section 13.01. Notices . Any notice or communication by the Company, any Subsidiary Guarantor, the Collateral Agent or the Trustee to the others is duly given if in writing and delivered in person or mailed by first-class mail (registered or certified, return receipt requested), facsimile, electronic mail or other electronic transmission or overnight air courier guaranteeing next day delivery, to the others’ address:

If to the Company and/or any Subsidiary Guarantor:

c/o LSC Communications, Inc.

35 West Wacker Drive

Chicago, Illinois 60601

Facsimile: (312) 326-8594

Attention: General Counsel

With a copy to:

Sullivan & Cromwell LLP

125 Broad Street

New York, New York 10004

Facsimile: (212) 291-9043

Attention: Robert W. Downes and S. Neal McKnight

If to the Trustee:

Wells Fargo Bank, National Association

150 East 42nd Street, 40th Floor

New York, New York 10017

Facsimile: (866) 297-2015

Attention: Corporate, Municipal and Escrow Services

If to the Collateral Agent:

Wells Fargo Bank, National Association

150 East 42nd Street, 40th Floor

New York, New York 10017

Facsimile: (866) 297-2015

Attention: Corporate, Municipal and Escrow Services

 

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The Company, any Subsidiary Guarantor, the Collateral Agent or the Trustee, by notice to the others, may designate additional or different addresses for subsequent notices or communications.

All notices and communications (other than those sent to Holders) shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five calendar days after being deposited in the mail, postage prepaid, if mailed by first-class mail; when receipt is acknowledged, if faxed or sent electronically; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery; provided , that any notice or communication delivered to the Trustee shall be deemed effective upon actual receipt thereof and on the final date on which publication is made, if given by publication. The Trustee and the Collateral Agent shall have the right, but shall not be required, to rely upon and comply with instructions and directions sent by e-mail, facsimile and other similar unsecured electronic methods by persons believed by the Trustee or the Collateral Agent to be authorized to give instructions and directions on behalf of the Company, the Guarantors or any Person. The Trustee and the Collateral Agent shall have no duty or obligation to verify or confirm that the Person who sent such instructions or directions is, in fact, a Person authorized to give instructions or directions on behalf of the Company or Guarantors; and the Trustee and the Collateral Agent shall have no liability for any losses, liabilities, costs or expenses incurred or sustained by the Company or Guarantors as a result of such reliance upon or compliance with such instructions or directions. The Company or Guarantors agree to assume all risks arising out of the use of such electronic methods to submit instructions and directions to the Trustee and the Collateral Agent, including, without limitation, the risk of the Trustee acting on unauthorized instructions, and the risk of interception and misuse by third parties.

Any notice or communication to a Holder shall be electronically delivered, mailed by first-class mail, certified or registered, return receipt requested, or by overnight air courier guaranteeing next day delivery to its address shown on the Note Register kept by the Registrar. Failure to deliver a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders.

If a notice or communication is mailed or otherwise delivered in the manner provided above within the time prescribed, such notice or communication shall be deemed duly given, whether or not the addressee receives it.

If the Company sends a notice or communication to Holders, it shall send a copy to the Trustee and each Agent at the same time.

Notwithstanding any other provision of this Indenture or any Note, where this Indenture or any Note provides for notice of any event or any other communication (including any notice of redemption or repurchase) to a holder of a Global Note (whether by mail or otherwise), such notice shall be sufficiently given if given to the Depositary (or its designee) pursuant to the standing instructions from the Depositary or its designee, including by electronic mail in accordance with accepted practices at the Depositary.

Section 13.02. Communication by Holders with Other Holders . Holders may communicate pursuant to Trust Indenture Act Section 312(b) with other Holders with respect to their rights under this Indenture or the Notes. The Company, the Trustee, the Registrar and anyone else shall have the protection of Trust Indenture Act Section 312(c).

Section 13.03. Certificate and Opinion as to Conditions Precedent . Upon any request or application by the Company or any of the Subsidiary Guarantors to the Trustee to take any action under this Indenture, the Company or such Subsidiary Guarantor, as the case may be, shall furnish to the Trustee in each case to the extent required pursuant to this Indenture, an Officer’s Certificate in form reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 13.04 hereof) stating that, in the opinion of the signers, all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have been satisfied; and an Opinion of Counsel in form reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 13.04 hereof) stating that, in the opinion of such counsel, all such conditions precedent and covenants have been satisfied. Each such certificate or opinion shall be given in the form of an Officer’s Certificate, if to be given by an officer of the Company or a Subsidiary Guarantor, or an Opinion of Counsel, if to be given by counsel, and shall comply with any requirements set forth in this Indenture.

 

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Section 13.04. Statements Required in Certificate or Opinion . Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than a certificate provided pursuant to Section 4.19 hereof) shall include:

(a) a statement that the Person making such certificate or opinion has read such covenant or condition;

(b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

(c) a statement that, in the opinion of such Person, he or she has made such examination or investigation as is necessary to enable such Person to express an informed opinion as to whether or not such covenant or condition has been complied with (and, in the case of an Opinion of Counsel, may be limited to reliance on an Officer’s Certificate as to matters of fact); and

(d) a statement as to whether or not, in the opinion of such Person, such condition or covenant has been complied with; provided , however , that with respect to matters of fact an Opinion of Counsel may rely on an Officer’s Certificate or certificates of public officials.

Section 13.05. Rules by Trustee and Agents . The Trustee may make reasonable rules for action by or at a meeting of Holders. The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions.

Section 13.06. Governing Law . EACH OF THE NOTES DOCUMENTS WILL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW.

Section 13.07. Waiver of Jury Trial . EACH OF THE COMPANY, THE SUBSIDIARY GUARANTORS, THE TRUSTEE, THE COLLATERAL AGENT AND EACH HOLDER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THE NOTES DOCUMENTS OR ANY TRANSACTION CONTEMPLATED HEREBY.

Section 13.08. Force Majeure . In no event shall the Trustee be responsible or liable for any failure or delay in the performance of its obligations under this Indenture arising out of or caused by, directly or indirectly, forces beyond its reasonable control, including without limitation strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software or hardware) services, or other unavailability of the Federal Reserve Bank wire or facsimile or other wire or communication facility.

Section 13.09. No Adverse Interpretation of Other Agreements . This Indenture may not be used to interpret any other indenture, loan or debt agreement of the Company or its Restricted Subsidiaries or of any other Person. Any such indenture, loan or debt agreement may not be used to interpret this Indenture.

Section 13.10. Successors . All agreements of the Company in this Indenture and the Notes shall bind its successors. All agreements of the Trustee in this Indenture shall bind its successors. All agreements of each Subsidiary Guarantor in this Indenture shall bind its successors, except as otherwise provided in Section 11.06 hereof.

Section 13.11. Severability . In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

 

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Section 13.12. Counterpart Originals . The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. This Indenture may be executed in multiple counterparts which, when taken together, shall constitute one instrument. The exchange of copies of this Indenture and of signature pages by facsimile or PDF transmissions shall constitute effective execution and delivery of this Indenture as to the parties hereto and may be used in lieu of the original Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.

Section 13.13. Table of Contents, Headings, etc. The Table of Contents and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part of this Indenture and shall in no way modify or restrict any of the terms or provisions hereof.

Section 13.14. USA Patriot Act . The parties hereto acknowledge that in accordance with Section 326 of the USA Patriot Act the Trustee, like all financial institutions and in order to help fight the funding of terrorism and money laundering, are required to obtain, verify, and record information that identifies each person or legal entity that establishes a relationship or opens an account. The parties to this agreement agree that they shall provide the Trustee with such information as they may request in order to satisfy the requirements of the USA Patriot Act.

Section 13.15. Intercreditor Agreement Governs . Each Holder, by its acceptance of a Note, (a) consents to the terms of the Intercreditor Agreement, including the priority of payment provisions of such Intercreditor Agreement, (b) agrees that it will be bound by and will take no actions contrary to the provisions of the Intercreditor Agreement and (c) authorizes and instructs the Collateral Agent to enter into the Intercreditor Agreement as “Collateral Agent,” and on behalf of such Holder. The foregoing provisions are intended as an inducement to the lenders under the Credit Agreement to extend credit and such lenders are intended third party beneficiaries of such provisions and the provisions of the Intercreditor Agreement.

[ Signatures on following page ]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the date first above written.

 

LSC COMMUNICATIONS, INC.
By:  

/s/ Suzanne S. Bettman

  Name:   Suzanne S. Bettman
  Title:   President
COURIER COMMUNICATIONS LLC
By:  

/s/ Suzanne S. Bettman

  Name:   Suzanne S. Bettman
  Title:   President
COURIER KENDALLVILLE, INC.
By:  

/s/ Suzanne S. Bettman

  Name:   Suzanne S. Bettman
  Title:   President
COURIER NEW MEDIA, INC.
By:  

/s/ Suzanne S. Bettman

  Name:   Suzanne S. Bettman
  Title:   President
DOVER PUBLICATIONS, INC.
By:  

/s/ Suzanne S. Bettman

  Name:   Suzanne S. Bettman
  Title:   President
LSC COMMUNICATIONS MM LLC
By:  

/s/ Suzanne S. Bettman

  Name:   Suzanne S. Bettman
  Title:   President

Signature page to Indenture


LSC COMMUNICATIONS US, LLC
By:  

/s/ Suzanne S. Bettman

  Name:   Suzanne S. Bettman
  Title:   President
LSC INTERNATIONAL HOLDINGS, INC.
By:  

/s/ Suzanne S. Bettman

  Name:   Suzanne S. Bettman
  Title:   President
NATIONAL PUBLISHING COMPANY
By:  

/s/ Suzanne S. Bettman

  Name:   Suzanne S. Bettman
  Title:   President


WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee and as Collateral Agent
By:  

/s/ Gregory S. Clarke

  Name:   Gregory S. Clarke
  Title:   Vice President


EXHIBIT A

[Face of Note]

[Insert the Global Note Legend, if applicable pursuant to the provisions of the Indenture]

[Insert the Private Placement Legend, if applicable pursuant to the provisions of the Indenture]

[Insert the Regulation S Global Note Legend, if applicable pursuant to the provisions of the Indenture]

 

A-1


CUSIP   [50218P AA5] [U54634 AA5]
ISIN   [US50218PAA57] [USU54634AA51]

[RULE 144A][REGULATION S] [GLOBAL] NOTE

representing up to

$[        ]

8.750% Senior Secured Notes due 2023

 

No.         [$        ]

LSC Communications, Inc., a Delaware corporation, promises to pay to [        ] or registered assigns the principal sum [set forth on the Schedule of Exchanges of Interests in the Global Note attached hereto] [of                      United States Dollars] on October 15, 2023.

Interest Payment Dates: April 15 and October 15, commencing on April 15, 2017

Record Dates: April 1 and October 1

 

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IN WITNESS HEREOF, the Company has caused this instrument to be duly executed.

Dated:                     

 

LSC COMMUNICATIONS, INC.
By:  

 

  Name:  
  Title:  

 

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    This is one of the Notes referred to in the within-mentioned Indenture:
    WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee
Date:                           
    By:  

 

      Authorized Signatory

 

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[Back of Note]

8.750% Senior Secured Notes due 2023

Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated.

1. Interest . LSC Communications, Inc., a Delaware corporation, promises to pay interest on the principal amount of this Note at a rate per annum of 8.750% from September 30, 2016 1 until maturity. The Company will pay interest on this Note semi-annually in arrears on April 15 and October 15 of each year, beginning April 15, 2017, or, if any such day is not a Business Day, on the next succeeding Business Day and no interest will accrue for the delay (each, an “ Interest Payment Date ”). The Company will make each interest payment to the Holder of record of this Note on the immediately preceding April 1 and October 1 (each, a “ Record Date ”). Interest on this Note will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from and including September 30, 2016. The Company will pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at the rate borne by this Note; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace periods) from time to time on demand at the rate borne by this Note. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months.

2. Method of Payment . The Company will pay interest on this Note to the Person who is the registered Holder of this Note at the close of business on the Record Date (whether or not a Business Day) next preceding the Interest Payment Date, even if this Note is cancelled after such Record Date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. Cash payments of principal of, premium, if any, and interest on the Notes will be payable at the office or agency of the Company maintained for such purpose pursuant to Section 4.02 of the Indenture or, at the option of the Company, cash payment of interest may be made through the Paying Agent by check mailed to the Holders at their respective addresses set forth in the Note Register of Holders, provided , that (a) all cash payments of principal, premium, if any, and interest with respect to the Notes represented by Global Notes registered in the name of or held by DTC or its nominee will be made through the Paying Agent by wire transfer of immediately available funds to the accounts specified by the registered Holder or Holders thereof and (b) all cash payments of principal, premium, if any, and interest with respect to certificated Notes will be made by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving written notice to the Trustee or the Paying Agent to such effect designating such account no later than 30 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion). Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.

3. Paying Agent, Transfer Agent and Registrar . Initially, Wells Fargo Bank, National Association, the Trustee under the Indenture, will act as Paying Agent, Transfer Agent and Registrar. The Company may change any Paying Agent, Transfer Agent or Registrar without prior notice to the Holders. The Company or any of its Subsidiaries may act in any such capacity.

4. Indenture . The Company issued the Notes under an Indenture, dated as of September 30, 2016 (as amended, supplemented or otherwise modified from time to time, the “ Indenture ”), among the Company, the Subsidiary Guarantors from time to time party thereto and the Trustee. This Note is one of a duly authorized issue of notes of the Company designated as its 8.750% Senior Secured Notes due 2023. The Company shall be entitled to issue Additional Notes pursuant to Sections 2.01 and 4.08 of the Indenture. The Notes are subject to all such terms, and Holders are referred to the Indenture for a statement of such terms. To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling.

 

1   In the case of Notes issued on the Issue Date.

 

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5. Optional Redemption .

(a) Except as set forth below and in Section 4.13(g) of the Indenture, the Company will not be entitled to redeem this Note at its option prior to October 15, 2019.

(b) The Company may redeem the Notes, in whole or in part, at any time on or after October 15, 2019, at the Redemption Prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest, if any, thereon to the Redemption Date (subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date), if redeemed during the twelve-month period beginning on October 15 of each of the years indicated below:

 

Year

   Redemption Price  

2019

     106.563

2020

     104.375

2021

     102.188

2022 and thereafter

     100.000

(c) In addition, at any time, or from time to time, on or prior to October 15, 2019, the Company may, at its option, use the net cash proceeds of one or more Equity Offerings to redeem up to an aggregate of 40% of the principal amount of the Notes at a Redemption Price equal to 108.750 % of the principal amount of the Notes, plus accrued and unpaid interest, if any, thereon to the Redemption Date; provided , however , that (1) at least 50% of the aggregate principal amount of Notes issued on the Issue Date (excluding Notes held by the Company and its Subsidiaries) remains outstanding immediately after the occurrence of such redemption and (2) the Redemption Date is within 120 days of the consummation of any such Equity Offering.

(d) Prior to October 15, 2019, the Company may at its option redeem the Notes, in whole or in part, at a Redemption Price equal to 100% of the principal amount of the Notes plus the Applicable Premium as of, and accrued and unpaid interest, if any, to, the Redemption Date (subject to the right of Holders on the relevant Record Date to receive interest due on the relevant Interest Payment Date).

(e) With respect to any redemption pursuant to this clause 3.07, the Company will notify the Trustee of the Applicable Premium promptly after the calculation. The Trustee will not be responsible for such calculation.

6. Mandatory Redemption . The Company shall not be required to make any mandatory redemption or sinking fund payments with respect to the Notes.

7. Notice of Redemption . Subject to Section 3.03 of the Indenture, notice of redemption shall be given by first class mail (or with respect to Global Notes, to the extent permitted or required by applicable DTC procedures or regulations, sent electronically), postage prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption Date, to each Holder of Notes to be redeemed, at his address appearing in the Note Register, except that redemption notices may be mailed or sent more than 60 days prior to the Redemption Date if the notice of redemption is issued in connection with (i) a satisfaction and discharge of Notes in accordance with Article 12 or (ii) a defeasance in accordance with Article 8 of the Indenture. No Notes of less than $2,000 and integral multiples of $1,000 in excess thereof can be redeemed or purchased in part, except that if all the Notes of a Holder are to be redeemed or purchased, the entire amount of Notes held by such Holder even if not in a principal amount of at least $2,000 or an integral multiple thereof, shall be redeemed or purchased. On and after the Redemption Date, interest ceases to accrue on this Note or portions thereof called for redemption.

8. Offers to Repurchase . Upon the occurrence of a Change of Control, the Company shall make a Change of Control Offer in accordance with Section 4.13 of the Indenture. In connection with certain Asset Sales, the Company shall make an Asset Sale Offer as and when provided in accordance with Section 4.14 of the Indenture.

9. Denominations, Transfer, Exchange . The Notes are in registered form without coupons in minimum denominations of $2,000 and any integral multiple of $1,000 in excess of $2,000. The transfer of Notes

 

A-6


shall be registered and Notes may only be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Company need not exchange or register the transfer of any Note or portion of a Note selected for redemption, except for the unredeemed portion of any Note being redeemed in part; provided , that new Notes will only be issued in minimum denominations of $2,000 and integral multiples of $1,000 in excess of $2,000. Also, the Company need not exchange or register the transfer of any Notes for a period of 15 days before the mailing of a notice of redemption of Notes to be redeemed.

10. Security . The Notes shall be secured by the Collateral on the terms and subject to the conditions set forth in the Indenture and the Notes Security Documents, subject to the Intercreditor Agreement. Each Holder, by accepting this Note, consents and agrees to the terms of the Notes Security Documents (including the provisions providing for the foreclosure and release of Collateral) as the same may be in effect or may be amended from time to time in accordance with their terms and the Indenture and authorizes and directs the Trustee and/or the Collateral Agent, as applicable, to enter into the Notes Security Documents, and to perform its obligations and exercise its rights thereunder in accordance therewith.

11. Persons Deemed Owners . The registered Holder of a Note shall be treated as its owner for all purposes. Only registered Holders shall have rights hereunder.

12. Amendment, Supplement and Waiver . The Indenture, the Guarantees or the Notes may be amended or supplemented as provided in the Indenture.

13. Defaults and Remedies . The Events of Default relating to the Notes are defined in Section 6.01 of the Indenture. If any Event of Default (other than an Event of Default of the type specified in clause (8) or (9) of Section 6.01 of the Indenture with respect to the Company, any Restricted Subsidiary that is a Significant Subsidiary, or any group of Restricted Subsidiaries, that, taken together, would constitute a Significant Subsidiary) occurs and is continuing under the Indenture, the Trustee, by written notice to the Company, or the Holders of at least 25% in aggregate principal amount of the Notes then Outstanding, by written notice to the Trustee and the Company, in each case specifying in such notice the respective Event of Default and that such notice is a “notice of acceleration,” may declare the principal of, premium, if any, and accrued and unpaid interest, if any, on all of the Outstanding Notes due and payable immediately. If an Event of Default specified in clause (8) or (9) of Section 6.01 of the Indenture with respect to the Company, any Restricted Subsidiary that is a Significant Subsidiary, or any group of Restricted Subsidiaries, that, taken together, would constitute a Significant Subsidiary, occurs and is continuing, then the principal of, premium, if any, and accrued and unpaid interest, if any, on all the Outstanding Notes shall become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder of Notes. Holders may not enforce the Indenture, the Notes or the Guarantees except as provided in the Indenture. Subject to certain limitations, Holders of a majority in aggregate principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. Except in the case of a Default or an Event of Default in the payment of the principal of, premium, if any, or interest on any Note, the Trustee shall be protected in withholding such notice if and so long as it in good faith determines that the withholding of such notice is in the interest of the Holders. The Holders of not less than a majority in principal amount of the Outstanding Notes may on behalf of the Holders of all the Notes waive any default hereunder and its consequences, except a default (i) in the payment of the principal of (or premium, if any) or interest on any Note (including any Note which is required to have been purchased pursuant to a Change of Control Offer or an Asset Sale Offer which has been made by the Company); or (ii) in respect of a covenant or provision hereof which under Article 9 of the Indenture cannot be modified or amended without the consent of the Holder of each Outstanding Note affected. The Company is required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Company is required to promptly to deliver to the Trustee a statement specifying such Default and the nature and status thereof.

14. Authentication . This Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose until authenticated by the manual signature of the Trustee.

15. Governing Law; Waiver of Jury Trial . EACH OF THE NOTES DOCUMENTS WILL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLES

 

A-7


OF CONFLICTS OF LAW. EACH OF THE COMPANY, THE SUBSIDIARY GUARANTORS, THE TRUSTEE, THE COLLATERAL AGENT AND EACH HOLDER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THE NOTES DOCUMENTS OR ANY TRANSACTION CONTEMPLATED HEREBY.

16. CUSIP Numbers and ISINs . Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers and ISINs to be printed on the Notes and the Trustee may use CUSIP numbers and ISINs in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon.

The Company will furnish to any Holder upon written request and without charge a copy of the Indenture, the Intercreditor Agreement and the other Notes Security Documents. Requests may be made to the Company at the following address:

c/o LSC Communications, Inc.

35 West Wacker Drive

Chicago, Illinois 60601

Facsimile: (312) 326-8594

Attention: General Counsel

With a copy to:

Sullivan & Cromwell LLP

125 Broad Street

New York, New York 10004

Facsimile: (212) 291-9043

Attention: Robert W. Downes and S. Neal McKnight

 

A-8


ASSIGNMENT FORM

To assign this Note, fill in the form below:

 

(I) or (we) assign and transfer this Note to:

  

 

  
   (Insert assignee’s legal name)   

 

(Insert assignee’s soc. sec. or tax I.D. no.)

 

 
 
(Print or type assignee’s name, address and zip code)

 

and irrevocably appoint  

 

to transfer this Note on the books of the Company. The agent may substitute another to act for him.

 

Date:  

 

 

     

Your Signature:

 

 

        (Sign exactly as your name appears on the face of this Note)

Signature Guarantee*:

 

 

     

 

* Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).

 

A-9


OPTION OF HOLDER TO ELECT PURCHASE

If you want to elect to have this Note purchased by the Company pursuant to Section 4.13 or 4.14 of the Indenture, check the appropriate box below:

 

  [    ] Section 4.13    [    ] Section 4.14

If you want to elect to have only part of this Note purchased by the Company pursuant to Section 4.13 or Section 4.14 of the Indenture, state the amount you elect to have purchased:

$                    

 

Date:

 

 

       
      Your Signature:  

 

        (Sign exactly as your name appears on the face of this Note)
      Tax Identification No.:
Signature Guarantee*:  

 

     

 

* Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).

 

A-10


SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE*

The initial outstanding principal amount of this Global Note is $                    . The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note for an interest in this Global Note, have been made:

 

Date of Exchange

   Amount of decrease
in Principal Amount
of this Global Note
     Amount of increase in
Principal Amount of
this Global Note
     Principal Amount of this
Global Note following
such decrease or
increase
     Signature of
authorized signatory
of Trustee or
Custodian
 
           
           
           

 

* This schedule should be included only if the Note is issued in global form.

 

A-11


EXHIBIT B

FORM OF CERTIFICATE OF TRANSFER

c/o LSC Communications, Inc.

35 West Wacker Drive

Chicago, Illinois 60601

Facsimile: (312) 326-8594

Attention: General Counsel

With a copy to:

Sullivan & Cromwell LLP

125 Broad Street

New York, New York 10004

Facsimile: (212) 291-9043

Attention: Robert W. Downes and S. Neal McKnight

Wells Fargo Bank, National Association

Attn: Corporate Trust-DAPS Reorg

600 South Fourth Street, MAC N9303-121

Minneapolis, MN 55402

Phone: 1-800-344-5128

Fax: 1-866-969-1290

Email: dapsreorg@wellsfargo.com

 

  Re: 8.750% Senior Secured Notes due 2023

Reference is hereby made to the Indenture, dated as of September 30, 2016 (as amended, supplemented or otherwise modified from time to time, the “ Indenture ”), among LSC Communications, Inc. (the “ Company ”), the Subsidiary Guarantors from time to time party thereto, the Trustee, and the Collateral Agent. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.

                     (the “ Transferor ”) owns and proposes to transfer the Note[s] or interest in such Note[s] specified in Annex A hereto, in the principal amount of $                     in such Note[s] or interests (the “ Transfer ”), to (the “ Transferee ”), as further specified in Annex A hereto. In connection with the Transfer, the Transferor hereby certifies that:

[CHECK ALL THAT APPLY]

1. [    ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE RELEVANT 144A GLOBAL NOTE OR RELEVANT DEFINITIVE NOTE PURSUANT TO RULE 144A. The Transfer is being effected pursuant to and in accordance with Rule 144A under the United States Securities Act of 1933, as amended (the “ Securities Act ”), and, accordingly, the Transferor hereby further certifies that the beneficial interest or Definitive Note is being transferred to a Person that the Transferor reasonably believes is purchasing the beneficial interest or Definitive Note for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a “qualified institutional buyer” within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A and such Transfer is in compliance with any applicable blue sky securities laws of any state of the United States.

 

B-1


2. [    ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE RELEVANT REGULATION S GLOBAL NOTE OR RELEVANT DEFINITIVE NOTE PURSUANT TO REGULATION S. The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 and, accordingly, the Transferor hereby further certifies that (i) the Transfer is not being made to a person in the United States and (x) at the time the buy order was originated, the Transferee was outside the United States or such Transferor and any Person acting on its behalf reasonably believed and believes that the Transferee was outside the United States or (y) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither such Transferor nor any Person acting on its behalf knows that the transaction was prearranged with a buyer in the United States, (ii) no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S, (iii) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act and (iv) if the proposed transfer is being made prior to the expiration of the applicable Restricted Period, the transfer is not being made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on Transfer enumerated in the Indenture and the Securities Act.

3. [    ] CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE RELEVANT DEFINITIVE NOTE PURSUANT TO ANY PROVISION OF THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S. The Transfer is being effected in compliance with the transfer restrictions applicable to beneficial interests in Restricted Global Notes and Restricted Definitive Notes and pursuant to and in accordance with the Securities Act and any applicable blue sky securities laws of any state of the United States, and accordingly the Transferor hereby further certifies that (check one):

(a) [    ] such Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act; or

(b) [    ] such Transfer is being effected to the Company or a subsidiary thereof;

(c) [    ] such Transfer is being effected pursuant to an effective registration statement under the Securities Act and in compliance with the prospectus delivery requirements of the Securities Act; or

(d) [    ] such Transfer is being effected pursuant to and in compliance with an exemption from the registration requirements of the Securities Act other than Rule 144, Rule 903 or Rule 904 and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any State of the United States.

4. [    ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE OR OF AN UNRESTRICTED DEFINITIVE NOTE.

(a) [    ] CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.

(b) [    ] CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.

 

B-2


(c) [    ] CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i) The Transfer is being effected pursuant to and in compliance with an exemption from the registration requirements of the Securities Act other than Rule 144, Rule 903 or Rule 904 and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any State of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will not be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes or Restricted Definitive Notes and in the Indenture.

 

B-3


This certificate and the statements contained herein are made for your benefit and the benefit of the Company.

 

      [Insert Name of Transferor]
      By:  

 

        Name:
        Title:
Dated:  

 

     

 

B-4


ANNEX A TO CERTIFICATE OF TRANSFER

 

1. The Transferor owns and proposes to transfer the following:

[CHECK ONE OF (a) OR (b)]

 

  (a) [    ] a beneficial interest in the:

 

  (i) [    ] 144A Global Note ([CUSIP:            ]), or

 

  (ii) [    ] Regulation S Global Note ([CUSIP:            ]), or

 

  (b) [    ] a Restricted Definitive Note.

 

2. After the Transfer the Transferee will hold:

[CHECK ONE]

 

  (a) [    ] a beneficial interest in the:

 

  (i) [    ] 144A Global Note ([CUSIP:            ]), or

 

  (ii) [    ] Regulation S Global Note ([CUSIP:            ])or

 

  (iii) [    ] Unrestricted Global Note ([        ] [            ]); or

 

  (b) [    ] a Restricted Definitive Note; or

 

  (c) [    ] an Unrestricted Definitive Note, in accordance with the terms of the Indenture.

 

B-5


EXHIBIT C

FORM OF CERTIFICATE OF EXCHANGE

c/o LSC Communications, Inc.

35 West Wacker Drive

Chicago, Illinois 60601

Facsimile: (312) 326-8594

Attention: General Counsel

With a copy to:

Sullivan & Cromwell LLP

125 Broad Street

New York, New York 10004

Facsimile: (212) 291-9043

Attention: Robert W. Downes and S. Neal McKnight

Wells Fargo Bank, National Association

Attn: Corporate Trust-DAPS Reorg

600 South Fourth Street, MAC N9303-121

Minneapolis, MN 55402

Phone: 1-800-344-5128

Fax: 1-866-969-1290

Email: dapsreorg@wellsfargo.com

 

  Re: 8.750% Senior Secured Notes due 2023

Reference is hereby made to the Indenture, dated as of September 30, 2016 (as amended, supplemented or otherwise modified from time to time, the “ Indenture ”), among LSC Communications, Inc. (the “ Company ”), the Subsidiary Guarantors from time to time party thereto, the Trustee, and the Collateral Agent.

                    (the “ Owner ”) owns and proposes to exchange the Note[s] or interest in such Note[s] specified herein, in the principal amount of $                    in such Note[s] or interests (the “ Exchange ”). In connection with the Exchange, the Owner hereby certifies that:

1. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN A RESTRICTED GLOBAL NOTE FOR UNRESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN AN UNRESTRICTED GLOBAL NOTE

(a) [    ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for a beneficial interest in an Unrestricted Global Note in an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Global Notes and pursuant to and in accordance with the United States Securities Act of 1933, as amended (the “ Securities Act ”), (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest in an Unrestricted Global Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

 

C-1


(b) [    ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Definitive Note is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

(c) [    ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with the Owner’s Exchange of a Restricted Definitive Note for a beneficial interest in an Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

(d) [    ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the Owner’s Exchange of a Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Unrestricted Definitive Note is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Unrestricted Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

2. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN RESTRICTED GLOBAL NOTES FOR RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN RESTRICTED GLOBAL NOTES

(a) [    ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE. In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for a Restricted Definitive Note with an equal principal amount, the Owner hereby certifies that the Restricted Definitive Note is being acquired for the Owner’s own account without transfer. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the Restricted Definitive Note issued will continue to be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Definitive Note and in the Indenture and the Securities Act.

(b) [    ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE. In connection with the Exchange of the Owner’s Restricted Definitive Note for a beneficial interest in the [CHECK ONE] [    ] 144A Global Note [    ] Regulation S Global Note in each case, with an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer and (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, and in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the beneficial interest issued will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the relevant Restricted Global Note and in the Indenture and the Securities Act.

 

C-2


This certificate and the statements contained herein are made for your benefit and the benefit of the Company and are dated

 

      [Insert Name of Transferor]
      By:  

 

        Name:
        Title:
Dated:  

 

     

 

C-3


EXHIBIT D

[FORM OF SUPPLEMENTAL INDENTURE

TO BE DELIVERED BY SUBSEQUENT SUBSIDIARY GUARANTORS]

Supplemental Indenture (this “ Supplemental Indenture ”), dated as of                     , among                      (the “ Guaranteeing Subsidiary ”), a subsidiary of LSC Communications, Inc., a Delaware corporation (the “ Company ”), and Wells Fargo Bank, National Association, a national banking association, as trustee (the “ Trustee ”), and as collateral agent (the “ Collateral Agent ”).

W I T N E S S E T H

WHEREAS, the Company and the Subsidiary Guarantors have heretofore executed and delivered to the Trustee and the Collateral Agent an Indenture (the “ Indenture ”), dated as of September 30, 2016, providing for the issuance of an unlimited aggregate principal amount of 8.750% Senior Secured Notes due 2023 (the “ Notes ”);

WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee and the Collateral Agent a supplemental indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally guarantee all of the Company’s Obligations under the Notes and the Indenture on the terms and conditions set forth herein and under the Indenture (the “ Guarantee ”); and

WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture.

NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties mutually covenant and agree for the benefit of each other for the equal and ratable benefit of the Holders as follows:

(1) Capitalized Terms . Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture.

(2) Agreement to Guarantee . The Guaranteeing Subsidiary acknowledges that it has received and reviewed a copy of the Indenture and all other documents it deems necessary to review in order to enter into this Supplemental Indenture, and acknowledges and agrees to (i) join and become a party to the Indenture as indicated by its signature below; (ii) be bound by the Indenture, as of the date hereof, as if made by, and with respect to, each signatory hereto; and (iii) perform all obligations and duties required of a Subsidiary Guarantor pursuant to the Indenture. The Guaranteeing Subsidiary hereby agrees to provide an unconditional Guarantee on the terms and subject to the conditions set forth in the Indenture, including, but not limited to, Article 10 thereof.

(3) Execution and Delivery . The Guaranteeing Subsidiary agrees that the Guarantee shall remain in full force and effect notwithstanding the absence of the endorsement of any notation of such Guarantee on the Notes.

(4) No Recourse Against Others . No past, present or future director, officer, employee, incorporator, member, partner or stockholder of the Company or any Guaranteeing Subsidiary (other than the Company and the Subsidiary Guarantors) shall have any liability for any obligations of the Company or the Subsidiary Guarantors (including the Guaranteeing Subsidiary) under the Notes, any Guarantees, the Indenture, the Notes Security Documents or this Supplemental Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting Notes waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes.

(5) Governing Law; Jury Trail Waiver . THIS SUPPLEMENTAL INDENTURE WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF


NEW YORK. EACH OF THE COMPANY, THE GUARANTEEING SUBSIDIARY, THE TRUSTEE AND THE COLLATERAL AGENT HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS SUPPLEMENTAL INDENTURE, THE INDENTURE, THE NOTES, THE SUBSIDIARY GUARANTEES OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

(6) Counterparts . The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. This Supplemental Indenture may be executed in multiple counterparts which, when taken together, shall constitute one instrument. The exchange of copies of this Supplemental Indenture and of signature pages by facsimile or PDF transmissions shall constitute effective execution and delivery of this Supplemental Indenture as to the parties hereto and may be used in lieu of the original Supplemental Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.

(7) Effect of Headings . The Section headings herein are for convenience only and shall not affect the construction hereof.

(8) The Trustee and the Collateral Agent . The Trustee and the Collateral Agent make no representation as to and shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture, the Subsidiary Guarantees, or for or in respect of the recitals contained herein, all of which recitals are made solely by the Company and the Guaranteeing Subsidiary. All of the provisions contained in the Indenture in respect of the rights, privileges, immunities, powers, and duties of the Trustee and the Collateral Agent shall be applicable in respect of this Supplemental Indenture as fully and with like force and effect as though fully set forth in full herein.

(9) Benefits Acknowledged . The Guaranteeing Subsidiary’s Guarantee is subject to the terms and conditions set forth in the Indenture. The Guaranteeing Subsidiary acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by the Indenture and this Supplemental Indenture and that the guarantee and waivers made by it pursuant to this Guarantee are knowingly made in contemplation of such benefits.

(10) Successors . All agreements of the Guaranteeing Subsidiary in this Supplemental Indenture shall bind its successors, except as otherwise provided in this Supplemental Indenture. All agreements of the Trustee in this Supplemental Indenture shall bind its successors.

 

C-2


IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed, all as of the date first above written.

 

[GUARANTEEING SUBSIDIARY]
By:  

 

  Name:
  Title:
[COMPANY]
By:  

 

  Name:
  Title:
WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee and as Collateral Agent
By:  

 

  Name:
  Title:

 

C-3

Exhibit 8.1

[Letterhead of Sullivan & Cromwell LLP]

September 29, 2016

R. R. Donnelley & Sons Company

35 West Wacker Drive

Chicago, IL 60601

Ladies and Gentlemen:

We have acted as U.S. tax counsel to R. R. Donnelley & Sons Company (“RRD”), in connection with the Distribution as described in the ruling request filed with the Internal Revenue Service by RRD, dated December 8, 2015 (the “Ruling Request”). 1 Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Information Statement.

In rendering our opinion, we have examined and relied upon the accuracy and completeness of the facts set forth in the Ruling Request and such other documents as we have deemed necessary or appropriate. In addition, we have relied upon the officer’s certificate to us from RRD. In connection with this opinion, we have assumed that the Distribution will be consummated in the manner described in the Ruling Request. Further, we have relied upon the ruling from the Internal Revenue Service to RRD with respect to the Distribution, as to matters covered by such ruling.

In rendering our opinion, we have considered the applicable provisions of the Internal Revenue Code of 1986, as amended, Treasury Regulations promulgated thereunder, pertinent judicial authorities, interpretive rulings of the Internal Revenue Service, and such other authorities as we have deemed appropriate under the circumstances. All such authorities are subject to change, and any of such changes could apply retroactively.

Based upon the foregoing, we are of the opinion that under current law,

 

  (1) The contribution of assets resulting in LSC Communications, Inc. (“LSC”) owning substantially all of the assets and liabilities of RRD’s current publishing and retail-centric print services and office products business pursuant to the Internal Reorganization (the “Contribution”) and Distribution, taken together, should qualify as a reorganization under Section 368(a)(1)(D) of the Code;

 

  (2) Neither RRD nor LSC should recognize gain or loss upon the Contribution;

 

  (3) RRD should not recognize gain or loss upon the Distribution under Section 355(c) or Section 361(c) of the Code; and

 

  (4) Stockholders of RRD should not recognize gain or loss upon the Distribution under Section 355(a) of the Code, and no amount should be included in such shareholders’ income, except in respect of cash received in lieu of fractional shares of LSC.

 

1   For the avoidance of doubt, “Ruling Request” shall include any supplemental information submissions to the original ruling request.


Our opinion is expressly conditioned upon the assumptions and statements of reliance set forth above. We express no other opinion as to the tax consequences (including any applicable state, local or foreign tax consequences) of the transactions referred to herein or in the Ruling Request.

 

Very truly yours,
/s/ Sullivan & Cromwell LLP

[Remainder of this page intentionally left blank.]

Exhibit 10.1

Published CUSIP No: 50219CAA3

 

 

CREDIT AGREEMENT

Dated as of September 30, 2016,

among

LSC COMMUNICATIONS, INC.,

as Borrower,

THE LENDERS PARTY HERETO,

and

BANK OF AMERICA, N.A.,

as Administrative Agent, Swing Line Lender and an Issuing Bank

 

 

BANK OF AMERICA, N.A.,

JPMORGAN CHASE BANK, N.A.,

CITIGROUP GLOBAL MARKETS INC.,

CAPITAL ONE SECURITIES, INC.,

FIFTH THIRD SECURITIES, INC.

ING BANK N.V.,

PNC CAPITAL MARKETS LLC,

SUNTRUST ROBINSON HUMPHREY, INC.,

THE BANK OF TOKYO-MITSUBISHI UFJ, LTD.,

U.S. BANK NATIONAL ASSOCIATION,

and

WELLS FARGO SECURITIES, LLC,

as Joint Lead Arrangers and Joint Bookrunners,

JPMORGAN CHASE BANK, N.A. and CITIGROUP GLOBAL MARKETS INC.,

as Co-Syndication Agents,

and

CAPITAL ONE SECURITIES, INC.,

FIFTH THIRD SECURITIES, INC.

ING BANK N.V.,

PNC CAPITAL MARKETS LLC,

SUNTRUST BANK,

THE BANK OF TOKYO-MITSUBISHI UFJ, LTD.,

U.S. BANK NATIONAL ASSOCIATION,

and

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Co-Documentation Agents

 

 

 


TABLE OF CONTENTS

 

     Page  

ARTICLE I

  

Definitions

  

Section 1.01

  Defined Terms      1   

Section 1.02

  Classification of Loans and Borrowings      38   

Section 1.03

  Terms Generally      38   

Section 1.04

  Accounting Terms; GAAP      39   

Section 1.05

  Rounding      39   

Section 1.06

  Times of Day      39   

Section 1.07

  Letter of Credit Amounts      39   

Section 1.08

  Currencies      39   

Section 1.09

  Limited Condition Acquisitions      39   

ARTICLE II

  

The Credits

  

Section 2.01

  Commitments      40   

Section 2.02

  Incremental Revolving Commitments and Incremental Term Loans      41   

Section 2.03

  Procedure for Borrowing      43   

Section 2.04

  Funding of Borrowings      43   

Section 2.05

  Interest Elections      44   

Section 2.06

  Termination and Reduction of Commitments      45   

Section 2.07

  Repayment of Loans; Evidence of Debt      45   

Section 2.08

  Prepayments      45   

Section 2.09

  Fees      47   

Section 2.10

  Interest      48   

Section 2.11

  Alternate Rate of Interest      49   

Section 2.12

  Increased Costs      49   

Section 2.13

  Break Funding Payments      50   

Section 2.14

  Taxes      50   

Section 2.15

  Pro Rata Treatment and Payments      53   

Section 2.16

  Mitigation Obligations; Replacement of Lenders      54   

Section 2.17

  Letters of Credit      55   

Section 2.18

  Defaulting Lenders      59   

Section 2.19

  Extensions of Commitments      61   

Section 2.20

  Refinancing Amendments      62   

Section 2.21

  Loan Repurchases      65   

Section 2.22

  Swing Line Loans      67   

ARTICLE III

  

Representations and Warranties

  

Section 3.01

  Organization; Powers      69   

Section 3.02

  Authorization; Enforceability      69   

Section 3.03

  Governmental Approvals; No Conflicts      69   

Section 3.04

  Financial Position      69   

Section 3.05

  Properties; Flood Documentation      69   

Section 3.06

  Litigation and Environmental Matters      70   

 

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Section 3.07

  Compliance with Laws and Agreements      70   

Section 3.08

  Investment Company Status      70   

Section 3.09

  Taxes      70   

Section 3.10

  ERISA      70   

Section 3.11

  Disclosure      70   

Section 3.12

  Liens; Security Interests in the Collateral      71   

Section 3.13

  No Change      71   

Section 3.14

  Subsidiaries      71   

Section 3.15

  Solvency      71   

Section 3.16

  No Default      72   

Section 3.17

  OFAC      72   

Section 3.18

  Anti-Corruption Laws      72   

Section 3.19

  EEA Financial Institutions      72   

Section 3.20

  Labor Matters      72   

Section 3.21

  Use of Proceeds      72   

Section 3.22

  Insurance      72   

Section 3.23

  USA PATRIOT Act      72   

ARTICLE IV

  

Conditions

  

Section 4.01

  Closing Date      73   

Section 4.02

  Each Credit Event      74   

ARTICLE V

  

Affirmative Covenants

  

Section 5.01

  Financial Statements; Other Information      75   

Section 5.02

  Notices of Material Events      77   

Section 5.03

  Existence; Conduct of Business      77   

Section 5.04

  Payment of Obligations      77   

Section 5.05

  Maintenance of Properties; Insurance      77   

Section 5.06

  Books and Records; Inspection Rights      78   

Section 5.07

  Compliance with Laws      79   

Section 5.08

  Use of Proceeds      79   

Section 5.09

  Guarantors and Collateral      79   

Section 5.10

  Further Assurances      81   

Section 5.11

  Ratings      81   

Section 5.12

  Post-Closing Requirements      81   

ARTICLE VI

  

Negative Covenants

  

Section 6.01

  Indebtedness      82   

Section 6.02

  Liens      84   

Section 6.03

  Fundamental Changes      86   

Section 6.04

  Disposition of Property      86   

Section 6.05

  Restricted Payments      87   

Section 6.06

  Transactions with Affiliates      88   

Section 6.07

  Changes in Fiscal Periods      89   

Section 6.08

  Sales and Leasebacks      89   

Section 6.09

  Clauses Restricting Subsidiary Distributions      89   

 

-ii-


Section 6.10

  Financial Maintenance Covenants      91   

Section 6.11

  Investments      91   

Section 6.12

  Restrictive Agreements      92   

Section 6.13

  Restrictions on Amendments of Certain Documents      92   

Section 6.14

  Lines of Business      92   

ARTICLE VII

  

Events of Default

  

Section 7.01

  Events of Default      93   

ARTICLE VIII

  

The Administrative Agent

  

Section 8.01

  Appointment and Authorization      95   

Section 8.02

  Administrative Agent and Affiliates      95   

Section 8.03

  Action by Administrative Agent      95   

Section 8.04

  Consultation with Experts      96   

Section 8.05

  Delegation of Duties      96   

Section 8.06

  Successor Administrative Agent      96   

Section 8.07

  Credit Decision      97   

Section 8.08

  Lead Arrangers; Co-Syndication Agent; Co-Documentation Agents      97   

Section 8.09

  Tax Indemnification by the Lenders      97   

Section 8.10

  Administrative Agent May File Proofs of Claim; Credit Bidding      98   

Section 8.11

  Obligations Under Cash Management Agreements and Specified Swap Agreements      99   

ARTICLE IX

  

Miscellaneous

  

Section 9.01

  Notices      99   

Section 9.02

  Waivers; Amendments      101   

Section 9.03

  No Waiver; Cumulative Remedies; Enforcement      102   

Section 9.04

  Expenses; Indemnity; Damage Waiver      102   

Section 9.05

  Successors and Assigns      104   

Section 9.06

  Survival      107   

Section 9.07

  Counterparts; Integration; Effectiveness      107   

Section 9.08

  Severability      107   

Section 9.09

  Right of Setoff      108   

Section 9.10

  Governing Law; Jurisdiction; Consent to Service of Process      108   

Section 9.11

  WAIVER OF JURY TRIAL      108   

Section 9.12

  Headings      109   

Section 9.13

  Confidentiality      109   

Section 9.14

  USA PATRIOT Act      109   

Section 9.15

  Collateral and Guarantee Matters      110   

Section 9.16

  No Advisory or Fiduciary Relationship      110   

Section 9.17

  Platform; Borrower Materials      111   

Section 9.18

  Electronic Execution of Assignments and Certain Other Documents      111   

Section 9.19

  Acknowledgement and Consent to Bail-In of EEA Financial Institutions      111   

 

-iii-


SCHEDULES:

 

Schedule 1.01A    —      Commitments and LC Sublimits
Schedule 1.01B    —      Mortgaged Properties
Schedule 3.06    —      Disclosed Matters
Schedule 3.12    —      Filings
Schedule 3.14    —      Guarantors
Schedule 3.22    —      Insurance
Schedule 4.01    —      UCC-3s
Schedule 5.12    —      Post-Closing Requirements
Schedule 6.01    —      Existing Indebtedness
Schedule 6.02    —      Existing Liens
Schedule 6.06    —      Affiliate Transactions
Schedule 6.09    —      Existing Restrictions
Schedule 6.11    —      Existing Investments
Schedule 6.12       Restrictive Agreements
Schedule 9.01    —      Notices

EXHIBITS:

 

Exhibit A   —      Form of Assignment and Assumption
Exhibit B   —      Form of Borrower Purchasing Party Assignment Agreement
Exhibit C   —      Form of Guarantee Agreement
Exhibit D   —      Form of Security Agreement
Exhibit E   —      Form of Secretary Certificate
Exhibit F   —      Form of Pari Intercreditor Agreement
Exhibit G-1   —      Form U.S. Tax Certificate (For Non-U.S. Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)
Exhibit G-2   —      Form U.S. Tax Certificate (For Non-U.S. Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)
Exhibit G-3   —      Form U.S. Tax Certificate (For Non-U.S. Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)
Exhibit G-4   —      Form U.S. Tax Certificate (For Non-U.S. Participants That Are Partnerships For U.S. Federal Income Tax Purposes)
Exhibit H   —      Form of Perfection Certificate
Exhibit I   —      Form of Solvency Certificate
Exhibit J   —      Auction Procedures
Exhibit K   —      Form of Committed Loan Notice
Exhibit L   —      Form of Swing Line Loan Notice

 

-iv-


CREDIT AGREEMENT, dated as of September 30, 2016 (as amended, restated, extended, supplemented or otherwise modified from time to time, this “ Agreement ”), among LSC COMMUNICATIONS, INC., a Delaware corporation (the “ Borrower ”), the LENDERS party hereto from time to time, BANK OF AMERICA, N.A., as administrative agent for the Lenders and as collateral agent for the Secured Parties (as defined herein) (in such capacities, the “ Administrative Agent ”), as Swing Line Lender and as an Issuing Bank and the other Issuing Banks party hereto from time to time.

The parties hereto agree as follows:

ARTICLE I

Definitions

Section 1.01 Defined Terms . As used in this Agreement, the following terms have the meanings specified below:

ABR ” when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Alternate Base Rate.

Act ” has the meaning assigned to such term in Section 9.14.

Accepting Term Lender ” has the meaning assigned to such term in Section 2.08(f).

Additional Mortgage ” has the meaning assigned to such term in Section 5.09(c).

Adjustment Date ” has the meaning assigned to such term in the definition of “Pricing Grid.”

Administrative Agent ” means Bank of America in its capacity as administrative agent under any of the Loan Documents, or any successor administrative agent.

Administrative Agent’s Office ” means the Administrative Agent’s address and, as appropriate, account as set forth on Schedule 9.01 , or such other address or account as the Administrative Agent may from time to time notify to the Borrower and the Lenders.

Administrative Questionnaire ” means an Administrative Questionnaire in a form supplied by the Administrative Agent.

Affiliate ” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.

Agent ” has the meaning assigned to such term in Section 2.21(c).

Agent Parties ” has the meaning assigned to such term in Section 9.01(c).

Aggregate Exposure ” means, with respect to any Lender at any time, the sum of (a) the aggregate then outstanding principal amount of such Lender’s Term Loans and (b) the amount of such Lender’s Revolving Commitment then in effect or, if such Revolving Commitment has been terminated, such Lender’s Outstanding Revolving Credit.

Agreement ” has the meaning assigned to such term in the preamble to this Credit Agreement.

All-in Yield ” means, as to any Loans (or other Indebtedness, if applicable), the yield thereon to Lenders (or other lenders, as applicable) providing such Loans (or other Indebtedness, if applicable) in the primary syndication thereof, as reasonably determined by the Administrative Agent in consultation with the Borrower, whether in the form of interest rate, margin, original issue discount, up-front fees, rate floors or otherwise; provided , that original issue discount and up-front fees shall be equated to interest rate based on an assumed four year average life; and provided , further , that “All-in Yield” shall not include arrangement, commitment, underwriting, structuring or similar fees and customary consent fees for an amendment paid generally to consenting lenders.


Alternate Base Rate ” means for any day a fluctuating rate per annum equal to the highest of (a) the Federal Funds Rate plus 1/2 of 1% (b) the rate of interest in effect for such day as publicly announced from time to time by the Administrative Agent as its “prime rate”, (c) the Eurodollar Rate plus 1.00%. The “prime rate” is a rate set by the Administrative Agent based upon various factors including the Administrative Agent’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any change in such rate announced by the Administrative Agent shall take effect at the opening of business on the day specified in the public announcement of such change.

Applicable Percentage ” means, with respect to any Lender at any time, the percentage of the Aggregate Exposure of all Lenders represented by the Aggregate Exposure of such Lender (or, if the Commitments have terminated in full, all Term Loans have been repaid and the Outstanding Revolving Credit has been reduced to zero, such percentage immediately prior to such termination, repayment and reduction).

Applicable Rate ” means (a) for each Revolving Loan, (i) prior to the first Adjustment Date occurring after the Closing Date, 3.00% for Eurodollar Loans and 2.00% for ABR Loans and (ii) on and after the first Adjustment Date occurring after the Closing Date, a percentage determined in accordance with the Pricing Grid, (b) for each Term B Loan, 6.00% for Eurodollar Loans and 5.00% for ABR Loans and (c) for each Type of Incremental Term Loan, such per annum rates as shall be agreed to by the Borrower and the applicable Incremental Term Lenders as shown in the applicable Incremental Assumption Agreement.

Approved Fund ” means any Person that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of its business and that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

Asset Acquisition ” means:

(1) an Investment by the Borrower or any Restricted Subsidiary in any other Person if, as a result of such Investment, such Person shall become a Restricted Subsidiary, or shall be merged with or into the Borrower or any Restricted Subsidiary, or

(2) the acquisition by the Borrower or any Restricted Subsidiary of all or substantially all of the assets or equity interests of any other Person or any division or line of business of any other Person.

Asset Sale ” means any sale, issuance, conveyance, transfer, lease, assignment or other disposition by the Borrower or any Restricted Subsidiary to any Person other than the Borrower or any Restricted Subsidiary (including by means of a sale and leaseback transaction or a merger or consolidation) (collectively, for purposes of this definition, a “ transfer ”), in one transaction or a series of related transactions, of any assets of the Borrower or any of its Restricted Subsidiaries other than dispositions of inventory in the ordinary course of business. For purposes of this definition, the term “Asset Sale” shall not include:

(1) transfers of cash or Cash Equivalents;

(2) transfers of assets (including Equity Interests) that are governed by, and made in accordance with, Section 6.03 (other than clause (iii) thereof);

(3) Restricted Payments not prohibited by Section 6.05 and Investments not prohibited by Section 6.11;

(4) the creation of any Lien permitted by Section 6.02;

 

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(5) transfers of assets that are (i) damaged, worn out or obsolete or (ii) replaced by or exchanged for assets of similar suitability and value;

(6) dispositions of property by any subsidiary to the Borrower or to a wholly owned subsidiary; provided that if the transferor of such property is a Guarantor, the transferee thereof must either be a Borrower or a Guarantor;

(7) Involuntary Dispositions;

(8) Asset Swaps (including assumption of liabilities or obligations in connection therewith) useful in the business of the Borrower and its Subsidiaries;

(9) sales or grants of licenses or sublicenses to use the patents, trade secrets, know-how and other intellectual property, and licenses, leases or subleases of other assets, of the Borrower or any Restricted Subsidiary to the extent not materially interfering with the business of the Borrower and the Restricted Subsidiaries; and

(10) any transfer or series of related transfers that, but for this clause, would be Asset Sales, if the aggregate Fair Market Value of the assets transferred in such transaction or any such series of related transactions does not exceed $10,000,000.

Asset Swap ” means any exchange of assets of the Borrower or any Restricted Subsidiary for assets of another Person (including Equity Interests of a Person whose primary business in a Related Business) that are intended to be used by the Borrower or any Restricted Subsidiary in a Related Business.

Assignment and Assumption ” means an assignment and assumption entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 9.05), and accepted by the Administrative Agent, in the form of Exhibit A or any other form (including electronic documentation generated by use of an electronic platform) approved by the Administrative Agent.

Auction Manager ” has the meaning assigned to such term in Section 2.21(a).

Auction Procedures ” means auction procedures with respect to Purchase Offers set forth in Exhibit J hereto.

Auto-Extension Letter of Credit ” has the meaning assigned to such term in Section 2.17(b).

Available Revolving Commitment ” means, as to any Revolving Lender at any time, an amount equal to the excess, if any, of (a) such Lender’s Revolving Commitment then in effect at such time over (b) the sum of such Lender’s Revolving Loans and LC Exposure at such time.

Bail-In Action ” means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.

Bail-In Legislation ” means, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.

Basel III ” means, collectively, those certain agreements on capital requirements, leverage ratios and liquidity standards contained in “Basel III: A Global Regulatory Framework for More Resilient Banks and Banking Systems,” “Basel III: International Framework for Liquidity Risk Measurement, Standards and Monitoring,” and “Guidance for National Authorities Operating the Countercyclical Capital Buffer,” each as published by the Basel Committee on Banking Supervision in December 2010 (as revised from time to time), and as implemented by a Lender’s primary U.S. federal banking regulatory authority or primary non-U.S. financial regulatory authority, as applicable.

 

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Board ” means the Board of Governors of the Federal Reserve System of the United States of America.

Board of Directors ” means the Board of Directors of the Borrower or any committee thereof duly authorized to act on behalf of such Board of Directors.

Borrower ” means LSC Communications, Inc., a Delaware corporation.

Borrower Materials ” has the meaning assigned to such term in Section 9.17.

Borrowing ” means a Loan of the same Class and Type, made, converted or continued on the same date and, in the case of Eurodollar Loans, as to which a single Interest Period is in effect.

Borrowing Date ” means any Business Day specified by the Borrower as a date on which the Borrower requests the relevant Lenders to make Loans hereunder.

Business Day ” means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed; provided that when used in connection with a Eurodollar Loan, the term “Business Day” shall also exclude any day on which banks are not open for dealings in Dollar deposits in the London interbank market.

Capital Expenditures ” means, for the Borrower and its Restricted Subsidiaries in respect of any period, the aggregate of all expenditures incurred by such person during such period that, in accordance with GAAP, are or should be included in “additions to property, plant or equipment” or similar items reflected in the statement of cash flows of such person; provided , however , that Capital Expenditures for the Borrower and its Restricted Subsidiaries shall not include:

(a) expenditures to the extent made with proceeds of the issuance of Qualified Equity Interests of the Borrower or capital contributions to the Borrower or funds that would have constituted Net Proceeds under clause (a) of the definition of the term “Net Proceeds” (but that will not constitute Net Proceeds as a result of the second or third proviso to such clause (a));

(b) expenditures of proceeds of insurance settlements, condemnation awards and other settlements in respect of lost, destroyed, damaged or condemned assets, equipment or other property to the extent such expenditures are made to replace or repair such lost, destroyed, damaged or condemned assets, equipment or other property or otherwise to acquire, maintain, develop, construct, improve, upgrade or repair assets or properties useful in the business of the Borrower and its Restricted Subsidiaries to the extent such proceeds are not then required to be applied to prepay Term Loans pursuant to Section 2.08(c);

(c) interest capitalized during such period;

(d) expenditures that are accounted for as capital expenditures of such person and that actually are paid for by a third party (excluding the Borrower or any Restricted Subsidiary) and for which none of the Borrower or any Restricted Subsidiary has provided or is required to provide or incur, directly or indirectly, any consideration or obligation to such third party or any other person (whether before, during or after such period);

(e) the book value of any asset owned by such person prior to or during such period to the extent that such book value is included as a capital expenditure during such period as a result of such person reusing or beginning to reuse such asset during such period without a corresponding expenditure actually having been made in such period; provided that (i) any expenditure necessary in order to permit such asset to be reused shall be included as a Capital Expenditure during the period that such expenditure actually is made and (ii) such book value shall have been included in Capital Expenditures when such asset was originally acquired;

 

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(f) the purchase price of equipment purchased during such period to the extent that the consideration therefor consists of any combination of (i) used or surplus equipment traded in at the time of such purchase, (ii) the proceeds of a concurrent sale of used or surplus equipment, in each case, in the ordinary course of business or (iii) any Asset Swap;

(g) Investments in respect of an Asset Acquisition; or

(h) the purchase of property, plant or equipment made with proceeds from any Asset Sale or Recovery Event to the extent such proceeds are not then required to be applied to prepay Term Loans pursuant to Section 2.08(c).

Capital Lease Obligations ” of any Person means the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP; provided , however , that any obligations relating to a lease that would have been accounted by such Person as an operating lease in accordance with GAAP as of the Closing Date shall be accounted for as an operating lease and not a Capital Lease Obligation for all purposes under this Agreement.

Cash Equivalents ” means (1) marketable direct obligations issued by, or unconditionally guaranteed by, the United States government or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within one year from the date of acquisition; (2) certificates of deposit, time deposits, eurodollar time deposits or overnight bank deposits having maturities of one year or less from the date of acquisition issued by any commercial bank organized under the laws of the United States or any state thereof; (3) commercial paper of an issuer rated at least A-1 by Standard & Poor’s or P-1 by Moody’s, or carrying an equivalent rating by a nationally recognized rating agency, if both of the two named rating agencies cease publishing ratings of commercial paper issuers generally, and maturing within one year from the date of acquisition; (4) repurchase obligations of any commercial bank satisfying the requirements of clause (2) of this definition with respect to securities issued or fully guaranteed or insured by the United States government; (5) securities with maturities of one year or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government, the securities of which state, commonwealth, territory, political subdivision, taxing authority or foreign government (as the case may be) are rated at least A by Standard & Poor’s or A by Moody’s; (6) securities with maturities of one year or less from the date of acquisition backed by standby letters of credit issued by any commercial bank satisfying the requirements of clause (2) of this definition; (7) money market mutual or similar funds that invest exclusively in assets satisfying the requirements of clauses (1) through (6) of this definition; (8) money market funds that (i) comply with the criteria set forth in SEC Rule 2a-7 under the Investment Company Act of 1940, as amended, (ii) are rated AAA by Standard & Poor’s or Aaa by Moody’s and (iii) have portfolio assets of at least $5,000,000,000; and (9) in the case of any Foreign Subsidiary, investments substantially comparable to any of the foregoing investments with respect to the country in which such Foreign Subsidiary is organized.

Cash Management Agreement ” means any agreement entered into from time to time by the Borrower or any Subsidiary Guarantor with a Cash Management Bank in connection with cash management services, including treasury, depository, overdraft, credit or debit card, electronic funds transfer and other cash management arrangements, unless, when entered into, such agreement is designated in writing by the Borrower and the relevant Cash Management Bank to the Administrative Agent to not be included as a Cash Management Agreement.

Cash Management Bank ” means any Person that (i) at the time it enters into a Cash Management Agreement or provides any cash management services, is a Lender or the Administrative Agent or an Affiliate of a Lender or the Administrative Agent or (ii) in the case of any Cash Management Agreement in effect on or prior to the Closing Date, is, as of the Closing Date, a Lender or the Administrative Agent or an Affiliate of a Lender or the Administrative Agent and a party to a Cash Management Agreement.

Cash Management Obligations ” means obligations owed by the Borrower or any Subsidiary Guarantor to any Cash Management Bank under any Cash Management Agreement.

 

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CFC ” means a “controlled foreign corporation” within the meaning of Section 957 of the Code.

Change in Law ” means (a) the adoption of any law, rule, regulation or treaty after the Closing Date, (b) any change in any law, rule, regulation or treaty or in the interpretation or application thereof by any Governmental Authority after the Closing Date or (c) compliance by any Lender (or, for purposes of Section 2.12(b), by any lending office of such Lender or by such Lender’s holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the Closing Date; provided that, notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives (including the rules for systemically important banks contained in “Global systemically important banks: assessment methodology and the additional loss absorbency requirement – Rules text” published by the Basel Committee on Banking Supervision in November 2011, as amended, supplemented or restated) promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law,” regardless of the date created, adopted or issued, but only to the extent it is the general policy of a Lender to impose applicable increased costs or costs in connection with capital adequacy and liquidity requirements similar to those described in clauses (a) and (b) of Section 2.12 generally on other similarly situated borrowers under similar circumstances under agreements permitting such impositions; provided that such Lender shall only be required to certify compliance with such requirement and shall not be obliged to provide any other information.

Change of Control ” means any of the following events:

(a) the sale, lease or transfer, in one or a series of related transactions, of all or substantially all of the assets of the Borrower and its subsidiaries, taken as a whole, to any Person;

(b) any person or group (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) (other than, solely on the Closing Date, RRD or any of its Subsidiaries) is or becomes the beneficial owner (as such term is defined in Rules 13d-3 and 13d-5 under the Exchange Act) of more than 35% of the aggregate voting power of all outstanding classes or series of the Borrower’s Voting Stock;

(c) the Borrower shall adopt a plan of liquidation or dissolution or any such plan shall be approved by the stockholders of the Borrower; or

(d) a “change of control triggering event” (or similar event) shall occur in any document pertaining to Material Indebtedness.

Notwithstanding the foregoing, (1) a transaction in which the Borrower becomes a subsidiary of another Person (other than a Person that is an individual) shall not constitute a Change of Control if the shareholders of the Borrower immediately prior to such transaction beneficially own, directly or indirectly through one or more intermediaries, the same proportion of voting power of the outstanding classes or series of the Borrower’s voting stock as such shareholders beneficially own immediately following the consummation of such transaction; provided that such Person shall become a Guarantor hereunder in accordance with the terms of Section 5.09(b) (assuming that the requirements thereunder that apply to newly acquired Restricted Subsidiaries apply to such Person) and thereafter (i) all covenants applicable to a Restricted Subsidiary shall apply to such Person, (ii) all financial calculations and financial statements made by reference to the Borrower shall be made by reference to such Person and (iii) the Administrative Agent and Borrower shall enter into an amendment to this Agreement (which shall not require the consent of any other Lender) to give effect to the foregoing; and (2) a transaction in which the Borrower consolidates with or merges into another U.S. Person shall not Constitute a Change of Control if (A) the outstanding Voting Stock of the Borrower is converted into or exchanged for the Voting Stock (other than Disqualified Equity Interests) of the surviving Person, and (B) immediately after such merger or consolidation, no person or group (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) is the beneficial owner (as such term is defined in Rules 13d-3 and 13d-5 under the Exchange Act) of more than 35% of the aggregate voting power of all outstanding classes or series of such surviving Person’s Voting Stock.

 

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For purposes of this definition, a Person shall not be deemed to have beneficial ownership of securities subject to a stock purchase agreement, merger agreement or similar agreement until the consummation of the transactions contemplated by such agreement.

CIM ” means the Confidential Information Memorandum dated September 2016 and made available to the Lenders in connection with this Agreement.

Class ” (a) when used in reference to any Loans or Borrowing, refers to whether such Loans or the Loans comprising such Borrowing, are Revolving Loans, Term B Loans, Incremental Term Loans established as a new Class of Loans, Extended Term Loans or Extended Revolving Loans established as a new Class of Loans or Refinancing Term Loans or Replacement Revolving Loans established as a new Class of Loans and (b) when used in reference to any Commitments, refers to whether such Commitment is in respect of a commitment to make Revolving Loans, Term B Loans, Incremental Term Loans of a given Class, Extended Term Loans or Extended Revolving Loans of a given Class or Refinancing Term Loans or Replacement Revolving Loans of a given Class.

Closing Date ” means the date on which the conditions precedent set forth in Section 4.01 shall have been satisfied (or waived in accordance with Section 9.02).

Code ” means the Internal Revenue Code of 1986, as amended from time to time.

Co-Documentation Agents ” means U.S. Bank National Association, Wells Fargo Bank, National Association, The Bank of Tokyo-Mitsubishi UFJ, Ltd., PNC Capital Markets LLC, Capital One Securities, Inc., SunTrust Bank, Fifth Third Securities, Inc. and ING Bank N.V.

Co-Syndication Agent ” means JPMorgan Chase Bank, N.A. and Citigroup Global Markets Inc.

Collateral ” has the meaning assigned to such term or a similar term in each of the Collateral Documents and shall also include the Mortgaged Properties and all property pledged or granted (or purported to be pledged or granted) as collateral pursuant to the Security Agreement and the other Collateral Documents on the Closing Date or thereafter pursuant to Section 5.09.

Collateral Documents ” means the Security Agreement and each other security document, Mortgage, pledge agreement or collateral agreement executed and delivered in connection with this Agreement and/or the other Loan Documents to grant a security interest in any property as collateral to secure the Obligations.

Commitment ” means, with respect to each Lender (to the extent applicable), such Lender’s Incremental Commitment, Revolving Commitment, Term Loan Commitment and Extended Revolving Commitment, as applicable.

Committed Loan Notice ” means a notice of (a) a Borrowing, (b) a conversion of Loans from one Type to the other, or (c) a continuation of Eurodollar Loans, pursuant to Section 2.05(a), which shall be substantially in the form of Exhibit K or such other form as may be approved by the Administrative Agent (including any form on an electronic platform or electronic transmission system as shall be approved by the Administrative Agent), appropriately completed and signed by a Responsible Officer of the Borrower.

Commodity Exchange Act ” means the Commodity Exchange Act (7 U.S.C. § 1 et seq .), as amended from time to time, and any successor statute.

Consolidated Amortization Expense ” for any Test Period means the amortization expense of the Borrower and its Restricted Subsidiaries for such Test Period, determined on a consolidated basis in accordance with GAAP.

Consolidated Cash Interest Expense ” means, for any Test Period, Consolidated Interest Expense for such Test Period minus, to the extent included in such Consolidated Interest Expense for such Test Period (i) amortization or write-off of deferred financing fees and (ii) any other amount that was not payable in cash during such Test Period or any future period.

 

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Consolidated Depreciation Expense ” for any Test Period means the depreciation expense of the Borrower and its Restricted Subsidiaries for such Test Period, determined on a consolidated basis in accordance with GAAP.

Consolidated EBITDA ” for any Test Period means, without duplication, the sum of the amounts for such Test Period of

(1) Consolidated Net Income, plus

(2) in each case only to the extent (and in the same proportion) deducted in determining Consolidated Net Income,

(a) Consolidated Income Tax Expense,

(b) Consolidated Amortization Expense,

(c) Consolidated Depreciation Expense,

(d) Consolidated Interest Expense,

(e) all non-cash compensation, as reported in the Borrower’s financial statements,

(f) any non-cash charges or losses or realized losses related to the write-offs, write-downs or mark-to-market adjustments or sales or exchanges of any investments in debt or equity securities by the Borrower or any Restricted Subsidiary,

(g) the aggregate amount of all other non-cash charges, expenses or losses reducing such Consolidated Net Income, including any impairment (including any impairment of intangibles and goodwill) (excluding any non-cash charge, expense or loss that results in an accrual of a reserve for cash charges in any future period and any non-cash charge, expense or loss relating to write-offs, write downs or reserves with respect to accounts receivable or inventory), for such Test Period,

(h) the amount of any cash charges in respect of restructuring, non-recurring or unusual items, provided that the aggregate amount added back pursuant to this clause (h) (excluding charges and expenses in connection with the Transactions that are accrued within 12 months of the Closing Date) shall not exceed 10% of Consolidated EBITDA for such Test Period prior to giving effect to such addback, minus

(3) in each case only to the extent (and in the same proportion) included in determining Consolidated Net Income, any non-cash or realized gains related to mark-to-market adjustments or sales or exchanges of any investments in debt or equity securities by the Borrower or any Restricted Subsidiary, in each case determined on a consolidated basis in accordance with GAAP.

Consolidated Income Tax Expense ” for any Test Period means the provision for taxes of the Borrower and its Restricted Subsidiaries for such Test Period, determined on a consolidated basis in accordance with GAAP.

Consolidated Interest Expense ” for any Test Period means the sum, without duplication, of the total interest expense of the Borrower and its Restricted Subsidiaries on a consolidated basis for such Test Period (including without limitation interest expense under Capital Lease Obligations that is treated as interest in accordance with GAAP), minus consolidated interest income of the Borrower and its Restricted Subsidiaries determined on a consolidated basis in accordance with GAAP.

 

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Consolidated Leverage Ratio ” means, on a Pro Forma Basis as of any date of determination, the ratio of (a) Consolidated Total Indebtedness of the Borrower and its Restricted Subsidiaries as of such date to (b) Consolidated EBITDA for the Test Period ending on such date (or, except for purposes of Section 6.10, the most recent Test Period ending prior to such date for which financial statements have been delivered to the Lenders pursuant to Section 4.01 or 5.01).

Consolidated Net Income ” for any Test Period means the net income (or loss) of the Borrower and the Restricted Subsidiaries for such Test Period determined on a consolidated basis in accordance with GAAP; provided that there shall be excluded from such net income (to the extent otherwise included therein), without duplication:

(1) the net income (or loss) of any Person that is not a Restricted Subsidiary, except to the extent such income has actually been distributed in cash to the Borrower or any Restricted Subsidiary during such period;

(2) gains and losses due solely to fluctuations in currency values and the related tax effects according to GAAP;

(3) gains and losses with respect to Hedging Obligations;

(4) the cumulative effect of any change in accounting principles;

(5) any extraordinary, unusual or nonrecurring gain or loss, together with any related provision for taxes on any such extraordinary, unusual or nonrecurring gain or loss (or the tax effect of any such extraordinary, unusual or nonrecurring loss), realized by the Borrower or any Restricted Subsidiary during such period;

(6) gains and losses from Asset Sales;

(7) any net after-tax income or loss from discontinued operations and any net after-tax gains or losses on disposal of discontinued operations; and

(8) any gain (or loss), together with any related provisions for taxes on any such gain (or the tax effect of any such loss), realized during such period by the Borrower or any Restricted Subsidiary upon (a) the acquisition of any securities, or the extinguishment of any Indebtedness, of the Borrower or any Restricted Subsidiary or (b) the sale of any financial or equity investment by the Borrower or any Restricted Subsidiary.

Consolidated Secured Indebtedness ” means, at any date, Consolidated Total Indebtedness as of such date minus any amount included in Consolidated Total Indebtedness that is not secured by a Lien on any asset of the Borrower or any of the Restricted Subsidiaries other than Indebtedness incurred in reliance on Section 6.01(t)(i)(x) and Refinancing Indebtedness in respect of Indebtedness incurred in reliance on Section 6.01(t)(i)(x).

Consolidated Secured Leverage Ratio ” means, on a Pro Forma Basis as of any date of determination, the ratio of (a) Consolidated Secured Indebtedness as of such date to (b) Consolidated EBITDA for the most recent Test Period ending prior to such date for which financial statements have been delivered to the Lenders pursuant to Section 4.01 or 5.01.

Consolidated Total Indebtedness ” means, at any date, the aggregate principal amount of Indebtedness of the Borrower and the Restricted Subsidiaries on a consolidated basis in accordance with GAAP of a type described in clause (1), (2), (3) (solely to the extent of any unreimbursed drawings), (4), (5) or (7) of the definition of “Indebtedness.”

Consolidated Working Capital ” means, with respect to the Borrower and its Restricted Subsidiaries on a consolidated basis at any date of determination, Current Assets at such date of determination minus Current Liabilities at such date of determination; provided that increases or decreases in Consolidated Working Capital shall be calculated without regard to any changes in Current Assets or Current Liabilities as a result of (a) any reclassification in accordance with GAAP of assets or liabilities, as applicable, between current and noncurrent or (b) the effects of purchase accounting.

 

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Contractual Obligation ” means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.

Control ” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “ Controlling ” and “ Controlled ” have meanings correlative thereto.

Current Assets ” means, with respect to the Borrower and its Restricted Subsidiaries on a consolidated basis at any date of determination, all assets (other than cash, Cash Equivalents or other cash equivalents) that would, in accordance with GAAP, be classified on a consolidated balance sheet of the Borrower and its Restricted Subsidiaries as current assets at such date of determination, other than amounts related to current or deferred taxes based on income or profits.

Current Liabilities ” means, with respect to the Borrower and its Restricted Subsidiaries on a consolidated basis at any date of determination, all liabilities that would, in accordance with GAAP, be classified on a consolidated balance sheet of the Borrower and its Restricted Subsidiaries as current liabilities at such date of determination, other than (a) the current portion of any Indebtedness, (b) accruals of Consolidated Interest Expense (excluding Consolidated Interest Expense that is due and unpaid), (c) accruals for current or deferred taxes based on income or profits, (d) accruals, if any, of transaction costs resulting from the Transactions, (e) accruals of any costs or expenses related to (i) severance or termination of employees prior to the Closing Date or (ii) bonuses, pension and other post-retirement benefit obligations, and (f) accruals for exclusions from Consolidated Net Income included in clause (5) of the definition of such term.

Debtor Relief Laws ” means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief laws of the United States or other applicable jurisdictions from time to time in effect.

Declined Prepayment Amount ” has the meaning assigned to such term in Section 2.08(f).

Declining Term Lender ” has the meaning assigned to such term in Section 2.08(f).

Default ” means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.

Defaulting Lender ” means, subject to the last paragraph of Section 2.18, any Lender that (a) has failed to (i) fund all or any portion of its Loans within two Business Days of the date such Loans were required to be funded hereunder unless such Lender notifies the Administrative Agent and the Borrower in writing that such failure is the result of such Lender’s determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied, or (ii) pay to the Administrative Agent, any Issuing Bank, the Swing Line Lender or any other Lender any other amount required to be paid by it hereunder (including in respect of its participation in Letters of Credit or Swing Line Loans) within two Business Days of the date when due, (b) has notified the Borrower, the Administrative Agent, an Issuing Bank or the Swing Line Lender in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied), (c) has failed, within three Business Days after written request by the Administrative Agent or the Borrower, to confirm in writing to the Administrative Agent and the Borrower that it will comply with its prospective funding obligations hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by

 

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the Administrative Agent and the Borrower), or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Relief Law, other than via an Undisclosed Administration, (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity or (iii) become the subject of a Bail-In Action; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any Equity Interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Any determination by the Administrative Agent that a Lender is a Defaulting Lender under any one or more of clauses (a) through (d) above, and of the effective date of such status, shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to the last paragraph of Section 2.18) as of the date established therefor by the Administrative Agent in a written notice of such determination, which shall be delivered by the Administrative Agent to the Borrower, each Issuing Bank, the Swing Line Lender and each other Lender promptly following such determination.

Designated Jurisdiction ” means any country or territory to the extent that such country or territory itself is the subject of any Sanction.

Designated Noncash Consideration ” means the Fair Market Value of noncash consideration received by the Borrower or a Restricted Subsidiary in connection with an Asset Sale that is so designated as Designated Noncash Consideration pursuant to an Officer’s Certificate, setting forth the basis of such valuation, less the amount of cash or Cash Equivalents received in connection with a subsequent sale of such Designated Noncash Consideration.

Designation ” has the meaning assigned to such term in the definition of “Unrestricted Subsidiary.”

Designation Amount ” has the meaning assigned to such term in the definition of “Unrestricted Subsidiary.”

Disclosed Matters ” means the actions, suits and proceedings and the environmental matters disclosed in Schedule 3.06.

Disposition ” means, with respect to any property, any sale, lease, license, sale and leaseback, assignment, conveyance, transfer or other disposition thereof. The terms “ Dispose ” and “ Disposed of ” shall have correlative meanings.

Disqualified Equity Interests ” of any Person means any class of Equity Interests of such Person that, by its terms, or by the terms of any related agreement or of any security into which it is convertible, puttable or exchangeable, is, or upon the happening of any event or the passage of time would be, required to be redeemed by such Person, whether or not at the option of the holder thereof, or matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, in whole or in part, in each case on or prior to the date that is 91 days after the Revolving Termination Date; provided , however , that any class of Equity Interests of such Person that, by its terms, authorizes such Person to satisfy in full its obligations with respect to the payment of dividends or upon maturity, redemption (pursuant to a sinking fund or otherwise) or repurchase thereof or otherwise by the delivery of Equity Interests that are not Disqualified Equity Interests, and that is not convertible, puttable or exchangeable for Disqualified Equity Interests or Indebtedness, will not be deemed to be Disqualified Equity Interests so long as such Person satisfies its obligations with respect thereto solely by the delivery of Equity Interests that are not Disqualified Equity Interests; provided , further , however , that any Equity Interests that would not constitute Disqualified Equity Interests but for provisions thereof giving holders thereof (or the holders of any security into or for which such Equity Interests are convertible, exchangeable or exercisable) the right to require the Borrower to redeem such Equity Interests upon the occurrence of a change of control or asset sale (with associated reinvestment rights no less favorable than those set forth in this Agreement and which do not require a prepayment from any Asset Sale from amounts required to prepay Term Loans) occurring prior to the 91 st  day after the Revolving Termination Date shall not constitute Disqualified Equity Interests if such Equity Interests specifically provide that the Borrower will not redeem any such

 

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Equity Interests pursuant to such provisions prior to the Obligations (other than (x) (i) Cash Management Obligations and (ii) Obligations under Specified Swap Agreements not yet due and payable, and (y) contingent obligations not yet accrued and payable) having been paid in full, all Letters of Credit having been cash collateralized or otherwise back-stopped or having been terminated, and all Commitments having been terminated.

Dollars ” or “ $ ” refers to lawful money of the United States of America.

Domestic Subsidiary ” means any Restricted Subsidiary of the Borrower that is not a Foreign Subsidiary.

EEA Financial Institution ” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a Subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.

EEA Member Country ” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.

EEA Resolution Authority ” means any public administrative authority or any Person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.

Environmental Law ” means all laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into by any Governmental Authority, relating in any way to the environment, preservation or reclamation of natural resources, the management, release or threatened release of any Hazardous Material.

Environmental Liability ” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the Borrower or any Restricted Subsidiary directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

Equity Interests ” means, of any Person, (1) any and all shares or other equity interests (including common stock, preferred stock, limited liability company interests and partnership interests) in such Person and (2) all rights to purchase, warrants or options (whether or not currently exercisable), participations or other equivalents of or interests in (however designated) such shares or other interests in such Person, but excluding any debt securities convertible into such shares or other interests.

ERISA ” means the Employee Retirement Income Security Act of 1974, as amended from time to time.

ERISA Affiliate ” means any trade or business (whether or not incorporated) that, together with the Borrower, is treated as a single employer under Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code.

ERISA Event ” means (a) any “reportable event” (as defined in Section 4043(c) of ERISA or the regulations issued thereunder) with respect to a Plan other than an event for which the 30-day notice period is waived; (b) any failure by any Plan to satisfy the minimum funding standards (within the meaning of Sections 412 or 430 of the Code or Section 302 of ERISA) applicable to such Plan, whether or not waived; (c) the filing pursuant to Section 412(c) of the Code or Section 302(c) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (d) the failure to make by its due date a required installment under Section 430(j) of the Code with respect to any Plan or the failure by the Borrower or any of its ERISA Affiliates to make any required contribution to a Multiemployer Plan; (e) the incurrence by the Borrower or any of its ERISA Affiliates of any liability under

 

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Title IV of ERISA with respect to the termination of any Plan, including but not limited to the imposition of any Lien in favor of the PBGC or any Plan; (f) a determination that any Plan is, or is expected to be, in “at risk” status (within the meaning of Section 430 of the Code or Title IV of ERISA); (g) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or to appoint a trustee to administer any Plan; (h) the incurrence by the Borrower or any of its ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal from any Plan (or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA) or Multiemployer Plan; or (i) the receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, Insolvent, in Reorganization or in endangered or critical status, within the meaning of Section 432 of the Code or Section 305 of ERISA.

EU Bail-In Legislation Schedule ” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.

Eurodollar ” when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Eurodollar Rate.

Eurodollar Rate ” means:

(a) for any Interest Period with respect to a Eurodollar Rate Loan, the rate per annum equal to the London Interbank Offered Rate (“ LIBOR ”) or a comparable or successor rate, which rate is approved by the Administrative Agent, as published on the applicable Bloomberg screen page (or such other commercially available source providing such quotations as may be designated by the Administrative Agent from time to time) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, for Dollar deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period; and

(b) for any interest calculation with respect to any loan bearing interest at the Alternate Base Rate on any date, the rate per annum equal to LIBOR, at or about 11:00 a.m., London time determined two Business Days prior to such date for U.S. Dollar deposits with a term of one month commencing that day; and

provided that (i) to the extent a comparable or successor rate is approved by the Administrative Agent in connection herewith, the approved rate shall be applied in a manner consistent with market practice; provided , further that to the extent such market practice is not administratively feasible for the Administrative Agent, such approved rate shall be applied in a manner as otherwise reasonably determined by the Administrative Agent and (ii) in the event that the Eurodollar Rate as determined above (x) for any Term B Loan would otherwise be less than 1.00%, such Eurodollar Rate shall be deemed to be 1.00% or (y) for any other Loan would otherwise be less than 0.00%, such Eurodollar Rate shall be deemed to be 0.00%.

Event of Default ” has the meaning assigned to such term in Section 7.01.

Excess Cash Flow ” means, for any period, an amount equal to the excess of:

(a) the sum, without duplication, of

(i) Consolidated Net Income for such period,

(ii) an amount equal to the amount of all non-cash charges to the extent deducted in arriving at such Consolidated Net Income and cash receipts included in clauses (1) through (8) of the definition of Consolidated Net Income and excluded in arriving at such Consolidated Net Income,

 

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(iii) decreases in Consolidated Working Capital for such period (other than any such decreases arising from dispositions outside the ordinary course of business by the Borrower and its Restricted Subsidiaries completed during such period),

(iv) cash receipts by the Borrower and its Restricted Subsidiaries in respect of Hedging Obligations during such fiscal year to the extent not otherwise included in such Consolidated Net Income; and

(v) the amount by which tax expense deducted in determining such Consolidated Net Income for such period exceeded taxes (including penalties and interest) paid in cash or tax reserves set aside or payable (without duplication) by the Borrower and its Restricted Subsidiaries in such period,

over (b) the sum, without duplication, of

(i) an amount equal to the amount of all non-cash credits included in arriving at such Consolidated Net Income and cash charges included in clauses (1) through (8) of the definition of Consolidated Net Income and included in arriving at such Consolidated Net Income,

(ii) without duplication of amounts deducted pursuant to clause (ix) below in prior years, the amount of Capital Expenditures or acquisitions of Intellectual Property made in cash during such period by the Borrower and its Restricted Subsidiaries, except to the extent that such Capital Expenditures or acquisitions were financed with the proceeds of Indebtedness of the Borrower or its Restricted Subsidiaries (other than under the Revolving Facility),

(iii) the aggregate amount of all principal payments of Indebtedness of the Borrower and its Restricted Subsidiaries (including (A) the principal component of payments in respect of Capital Lease Obligations and (B) the amount of any scheduled repayment of Term Loans, but excluding (x) all other prepayments of Term Loans, (y) all prepayments of Revolving Loans and (z) all prepayments in respect of any other revolving credit facility, except in the case of clauses (y) and (z) to the extent there is an equivalent permanent reduction in commitments thereunder), except to the extent financed with the proceeds of other Indebtedness (other than under the Revolving Facility) of the Borrower or its Restricted Subsidiaries,

(iv) increases in Consolidated Working Capital for such period (other than any such increases arising from acquisitions outside the ordinary course of business by the Borrower and its Restricted Subsidiaries completed during such period or the application of purchase accounting),

(v) payments by the Borrower and its Restricted Subsidiaries during such period in respect of long-term liabilities of the Borrower and the Subsidiaries other than Indebtedness, to the extent not already deducted from Consolidated Net Income, except to the extent financed with the proceeds of other Indebtedness (other than under the Revolving Facility of the Borrower or its Restricted Subsidiaries),

(vi) without duplication of amounts deducted pursuant to clause (ix) below in prior fiscal years, the aggregate amount of cash consideration paid by the Borrower and the Subsidiaries (on a consolidated basis) in connection with Investments (including acquisitions) made during such period pursuant to Section 6.11 (except for those Investments made under Sections 6.11(b), (d), (g), (i) and (m)) to the extent that such Investments were financed with internally generated cash flow of the Borrower and its Restricted Subsidiaries,

(vii) the amount of Restricted Payments during such period (on a consolidated basis) by the Borrower and its Restricted Subsidiaries made in compliance with Section 6.05 (other than Section 6.05(ii), (iv), (v), (vii), (ix) and (xii)) to the extent such Restricted Payments were financed with internally generated cash flow of the Borrower and its Restricted Subsidiaries,

 

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(viii) the aggregate amount of any premium, make-whole or penalty payments actually paid in cash by the Borrower and its Restricted Subsidiaries during such period that are made in connection with any prepayment of Indebtedness to the extent that such payments are not deducted in calculating Consolidated Net Income and were not funded with the proceeds of other Indebtedness (other than Indebtedness under the Revolving Facility) of the Borrower or its Restricted Subsidiaries,

(ix) without duplication of amounts deducted from Excess Cash Flow in prior periods, the aggregate consideration required to be paid in cash by the Borrower or any of its Restricted Subsidiaries pursuant to binding contracts (the “Contract Consideration”) entered into prior to or during such period relating to Asset Acquisitions, Capital Expenditures or acquisitions of intellectual property to be consummated or made during the period of four consecutive fiscal quarters of the Borrower following the end of such period, provided that to the extent the aggregate amount of internally generated cash actually utilized to finance such Asset Acquisition, Capital Expenditures or acquisitions of intellectual property during such period of four consecutive fiscal quarters is less than the Contract Consideration, the amount of such shortfall shall be added to the calculation of Excess Cash Flow at the end of such period of four consecutive fiscal quarters,

(x) the amount of taxes (including penalties and interest) paid in cash or tax reserves set aside or payable (without duplication) in such period to the extent they exceed the amount of tax expense deducted in determining Consolidated Net Income for such period, and

(xi) cash expenditures in respect of Hedging Obligations during such fiscal year to the extent not deducted in arriving at such Consolidated Net Income.

Excess Cash Flow Period ” means each fiscal year of the Borrower, commencing with the fiscal year of the Borrower ending December 31, 2017.

Exchange Act ” means the Securities Exchange Act of 1934, as amended.

Excluded Indebtedness ” means all Indebtedness permitted to be incurred under Section 6.01.

Excluded Property ” shall have the meaning assigned thereto in the Security Agreement.

Excluded Subsidiary ” means (a) any subsidiary that is not a Wholly Owned Subsidiary, (b) any subsidiary that is prohibited by applicable law or by Contractual Obligations existing on the Closing Date (or, in the case of any newly acquired subsidiary, in existence at the time of acquisition but not entered into in contemplation thereof) from guaranteeing the Obligations or if guaranteeing the Obligations would require governmental (including regulatory) consent, approval, license or authorization, (c) any subsidiary that is not a Material Domestic Subsidiary, (d) any Unrestricted Subsidiary, (e) any FSHCO and (f) any Domestic Subsidiary that is a direct or indirect subsidiary of a Foreign Subsidiary that is a CFC; provided that no Subsidiary of the Borrower that Guarantees Other First Lien Debt shall be deemed to be an Excluded Subsidiary.

Excluded Swap Obligation ” means, with respect to any Guarantor, any Swap Obligation if, and to the extent that, all or a portion of the Guarantee of such Guarantor of, or the grant by such Guarantor of a security interest to secure, such Swap Obligation (or any Guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of (a) such Guarantor’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act and the regulations thereunder or (b) in the case of a Swap Obligation subject to a clearing requirement pursuant to Section 2(h) of the Commodity Exchange Act (or any successor provision thereto), because such Guarantor is a “financial entity,” as defined in Section 2(h)(7)(C)(i) of the Commodity Exchange Act (or any successor provision thereto), in each case at the time the Guarantee of such Guarantor or the grant of such security interest becomes effective with respect to such Swap Obligation, unless otherwise agreed between the Administrative Agent and the Borrower. If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which such Guarantee or security interest is or becomes illegal.

 

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Excluded Taxes ” means (a) in the case of each Lender and the Administrative Agent, taxes imposed on its overall net income, and franchise taxes imposed on it in lieu of net income taxes, by a jurisdiction (including any political subdivision thereof) as a result of (i) such Lender or the Administrative Agent’s being organized under the laws of or having a principal office in such jurisdiction and, in the case of a Lender, having an applicable lending office in such jurisdiction or (ii) any other present or former connection between such Lender or the Administrative Agent and the jurisdiction (other than any connection arising solely from such Lender or the Administrative Agent having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to and/or enforced any Loan Document); (b) any tax in the nature of branch profits taxes imposed by any jurisdiction described in clause (a); (c) in the case of a Non-U.S. Lender, United States federal withholding tax imposed pursuant to laws in effect on the date on which (i) such Non-U.S. Lender becomes a Lender or (ii) such Non-U.S. Lender changes its lending office, except in each case to the extent that, pursuant to Section 2.14, additional amounts with respect to such taxes were payable either to such Non-U.S. Lender’s assignor immediately before such Non-U.S. Lender became a party hereto or to such Non-U.S. Lender immediately before it changed its lending office; (d) any taxes attributable to such Lender’s failure to comply with Section 2.14(e) and (e) any United States federal withholding taxes imposed under FATCA.

ExpressMap ” means an aerial map issued by a survey provider that has been selected by the Borrower and is reasonably acceptable to the Administrative Agent with respect to any Mortgaged Property, in form and substance reasonably acceptable to the Administrative Agent, together with a written certificate executed by a Responsible Officer of the Borrower stating that the material improvements utilized in connection with such Mortgaged Property (i) are located within such Mortgaged Property and (ii) are depicted on the aerial map relating to such Mortgaged Property and is otherwise sufficient to allow the issuance of the Mortgage Policy with respect to such Mortgaged Property without any exception (other than customary exceptions) for such matters as would be shown on an accurate survey of the Mortgaged Property and with a standard “land same as survey” and such other customary survey related endorsements as the Administrative Agent may reasonably request.

Extended Revolving Commitment ” shall have the meaning assigned to such term in Section 2.19(a).

Extended Revolving Loan ” shall have the meaning assigned to such term in Section 2.19(a).

Extended Term Loan ” shall have the meaning assigned to such term in Section 2.19(a).

Extending Lender ” shall have the meaning assigned to such term in Section 2.19(a).

Extension ” shall have the meaning assigned to such term in Section 2.19(a).

Extension Amendment ” shall have the meaning assigned to that term in Section 2.19(b).

Fair Market Value ” means, with respect to any asset, as determined by the Borrower, the price (after taking into account any liabilities relating to such assets) that would be negotiated in an arm’s-length transaction for cash between a willing seller and a willing and able buyer, neither of which is under any compulsion to complete the transaction.

Facility ” means any of (a) the Revolving Facility and (b) each Term Facility.

Facility Fee Rate ” means (a) prior to the first Adjustment Date occurring after the Closing Date, 0.50% and (b) on and after the first Adjustment Date occurring after the Closing Date, a rate determined in accordance with the Pricing Grid.

FATCA ” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the current Code (or any amended or successor version described above) and any intergovernmental agreements implementing the foregoing.

 

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Federal Funds Rate ” means, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to the Administrative Agent on such day on such transactions as determined by the Administrative Agent.

Financial Covenants ” means the covenants set forth in Section 6.10.

Financial Officer ” means the chief financial officer, principal accounting officer, treasurer or controller of the Borrower.

Flood Documentation ” shall mean with respect to each Mortgaged Property located in the United States of America or any territory thereof, (i) a completed “life-of-loan” Federal Emergency Management Agency standard flood hazard determination (to the extent a Mortgaged Property is located in a Special Flood Hazard Area, together with a notice about Special Flood Hazard Area status and flood disaster assistance duly executed by the applicable Loan Party relating thereto) and (ii) a copy of, or a certificate as to coverage under, and a declaration page relating to, the insurance policies, along with a copy of the underlying policies (if requested by the Administrative Agent) required by Section 5.05 hereof and the applicable provisions of the Collateral Documents, the property policy shall (A) be endorsed or otherwise amended to include a “standard” lender’s loss payable or mortgagee endorsement (as applicable), (B) the general liability policy shall name the Administrative Agent, on behalf of the Secured Parties, as additional insured, (C) identify the address of each property located in a Special Flood Hazard Area, the applicable flood zone designation and the flood insurance coverage and deductible relating thereto and (D) be otherwise in form and substance reasonably satisfactory to the Administrative Agent, subject to the provisions of Section 5.05.

Flood Insurance Laws ” shall mean, collectively, (i) the National Flood Insurance Act of 1968 as now or hereafter in effect or any successor statute thereto, (ii) the Flood Disaster Protection Act of 1973 as now or hereafter in effect or any successor statute thereto, (iii) the National Flood Insurance Reform Act of 1994 as now or hereafter in effect or any successor statute thereto, (iv) the Flood Insurance Reform Act of 2004 as now or hereafter in effect or any successor statute thereto and (v) the Biggert-Waters Flood Insurance Reform Act of 2012 as now or hereafter in effect or any successor statute thereto.

Foreign Lender ” means any Lender that is not a “United States person” as defined in Section 7701(a)(30) of the Code.

Foreign Subsidiary ” means any Restricted Subsidiary of the Borrower that is organized under the laws of any jurisdiction other than the United States, any State thereof or the District of Columbia.

Form 10 ” means Amendment No. 8 to Form 10, filed with the SEC on September 20, 2016.

Fronting Exposure ” means, at any time there is a Defaulting Lender, (a) with respect to any Issuing Bank, such Defaulting Lender’s Revolving Commitment Percentage of the outstanding LC Exposure other than LC Exposure as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or cash collateralized in accordance with the terms hereof, and (b) with respect to the Swing Line Lender, such Defaulting Lender’s Revolving Commitment Percentage of Swing Line Loans other than Swing Line Loans as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders in accordance with the terms hereof.

FSHCO ” means any Domestic Subsidiary that owns no material assets other than Equity Interests of one or more Foreign Subsidiaries that are CFCs or Equity Interests of one or more other FSHCOs.

GAAP ” means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the accounting profession of the United States, consistently applied.

 

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Governmental Authority ” means the government of the United States of America, any other nation or any political subdivision thereof, whether state, local, provincial or otherwise and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

Guarantee ” of or by any Person (the “ Guarantor ”) means a direct or indirect guarantee by any Person of any Indebtedness of any other Person and includes any obligation, direct or indirect, contingent or otherwise, of such Person (1) to purchase or pay (or advance or supply funds for the purchase or payment of) Indebtedness of such other Person (whether arising by virtue of partnership arrangements, or by agreements to keep well, to purchase assets, goods, securities or services (unless such purchase arrangements are on arm’s length terms and are entered into in the ordinary course of business), to take-or-pay, or to maintain financial statement conditions or otherwise); or (2) entered into for purposes of assuring in any other manner the obligee of such Indebtedness of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part); “ Guarantee ,” when used as a verb, and “ Guaranteed ” have correlative meanings.

Guarantee Agreement ” means the Guarantee Agreement to be executed and delivered by each Subsidiary Guarantor, substantially in the form of Exhibit C.

Guarantor ” has the meaning assigned to such term in the definition of “Guarantee.”

Hazardous Materials ” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.

Hedge Bank ” has the meaning assigned to such term in the definition of “Specified Swap Agreement.”

Hedging Obligations ” of any Person means the obligations of such Person under swap, cap, collar, forward purchase or similar agreements or arrangements dealing with interest rates, currency exchange rates or commodity prices, either generally or under specific contingencies.

HMT ” has the meaning assigned to such term in the definition of “Sanction(s).”

Incremental Amount ” means, at any time, the greater of:

(a) the excess (if any) of

(i) $50,000,000; provided that no net proceeds from any Incremental Facility incurred pursuant to this clause (i) may be used for Restricted Payments; over

(ii) the aggregate amount of all Incremental Term Loan Commitments and Incremental Revolving Commitments, in each case, established after the Closing Date and prior to such time pursuant to Section 2.02 and the aggregate principal amount of Indebtedness incurred in reliance on Section 6.01(t)(i)(x), Section 6.01(u)(i)(x) and Section 6.01(v)(i)(x); and

(b) any amounts so long as immediately after giving pro forma effect to the establishment of the commitments in respect thereof, any Asset Acquisition consummated concurrently therewith and the use of proceeds of the loans thereunder, the Consolidated Secured Leverage Ratio is equal to or less than 2.00 to 1.00 and calculated as if any Incremental Commitments were fully drawn on the effective date thereof.

 

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Incremental Assumption Agreement ” means an Incremental Assumption Agreement in form and substance reasonably satisfactory to the Administrative Agent, among the Borrower, the Administrative Agent and, if applicable, one or more Incremental Term Lenders and/or Incremental Revolving Lenders.

Incremental Assumption Amendment ” means any amendment to the Incremental Assumption Agreement.

Incremental Commitment ” means an Incremental Term Loan Commitment or an Incremental Revolving Commitment.

Incremental Facility ” means the Incremental Commitments and the Incremental Loans made thereunder.

Incremental Loan ” means an Incremental Term Loan or an Incremental Revolving Loan.

Incremental Revolving Commitment ” means the commitment of any Lender, established pursuant to Section 2.02, to make Incremental Revolving Loans to the Borrower.

Incremental Revolving Lender ” means a Lender with an Incremental Revolving Commitment or an outstanding Incremental Revolving Loan.

Incremental Revolving Loan ” means Revolving Loans made by one or more Revolving Lenders to the Borrower pursuant to an Incremental Revolving Commitment to make additional Revolving Loans.

Incremental Term Facility ” means the Incremental Term Loan Commitments and the Incremental Term Loans made thereunder.

Incremental Term Lender ” means a Lender with an Incremental Term Loan Commitment or an outstanding Incremental Term Loan.

Incremental Term Loan Commitment ” means the commitment of any Lender, established pursuant to Section 2.02, to make Incremental Term Loans to the Borrower.

Incremental Term Loans ” means any term loans borrowed in connection with an Incremental Assumption Agreement.

Indebtedness ” of any Person at any date means, without duplication:

(1) all liabilities, contingent or otherwise, of such Person for borrowed money;

(2) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments;

(3) all reimbursement obligations of such Person in respect of letters of credit, letters of guaranty, bankers’ acceptances and similar credit transactions;

(4) all obligations of such Person to pay the deferred and unpaid purchase price of property or services, except (i) trade payables and accrued expenses incurred by such Person in the ordinary course of business and (ii) amounts accrued associated with contingent consideration arrangements;

(5) all Capital Lease Obligations of such Person;

(6) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) a Lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person;

 

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(7) all Indebtedness of others Guaranteed by such Person to the extent of such Guarantee; provided that Indebtedness of the Borrower or its subsidiaries that is Guaranteed by the Borrower or the Borrower’s subsidiaries shall only be counted once in the calculation of the amount of Indebtedness of the Borrower and its subsidiaries on a consolidated basis; and

(8) all obligations of such Person under conditional sale or other title retention agreements relating to assets purchased by such Person (excluding obligations arising from inventory transactions in the ordinary course of business).

The amount of any Indebtedness which is incurred at a discount to the principal amount at maturity thereof as of any date shall be deemed to have been incurred at the accreted value thereof as of such date. The amount of Indebtedness of any Person at any date shall be the outstanding balance at such date of all unconditional obligations as described above, the maximum liability of such Person for any such contingent obligations at such date and, in the case of clause (6), the lesser of (a) the Fair Market Value of any asset subject to a Lien securing the Indebtedness of others on the date that the Lien attaches and (b) the amount of the Indebtedness secured.

Indemnified Taxes ” means all Taxes other than Excluded Taxes.

Indemnitee ” has the meaning assigned to such term in Section 9.04(b).

Ineligible Institution ” means (a) a Defaulting Lender, (b) except with respect to assignments made pursuant to Section 2.21, the Borrower, any of its Subsidiaries or any of its Affiliates, or (c) a company, investment vehicle or trust for, or owned and operated for the primary benefit of, a natural person or relative(s) thereof.

Information ” has the meaning assigned to such term in Section 9.13.

Insolvency or Liquidation Proceeding ” means:

(a) any voluntary or involuntary case or proceeding under any Debtor Relief Law with respect to any Loan Party;

(b) any other voluntary or involuntary insolvency, reorganization or bankruptcy case or proceeding, or any receivership, liquidation, reorganization or other similar case or proceeding with respect to any Loan Party or with respect to a material portion of their respective assets;

(c) any liquidation, dissolution, reorganization or winding up of any Loan Party, whether voluntary or involuntary, whether or not under a court’s jurisdiction or supervision, and whether or not involving insolvency or bankruptcy; or

(d) any general assignment for the benefit of creditors or any other marshalling of assets and liabilities of any Loan Party.

Insolvent ” with respect to any Multiemployer Plan means the condition that such Multiemployer Plan is insolvent within the meaning of Section 4245 of ERISA.

Intellectual Property ” means the collective reference to all rights, priorities and privileges relating to intellectual property, whether arising under United States, multinational or foreign laws or otherwise, including copyrights, patents, trademarks, service marks, trade dress, internet domain names, software, data, databases, technology, know-how, trade secrets, processes and other confidential or proprietary information, together with all registrations and applications for registration thereof, all licenses thereof or pertaining thereto, and all rights to sue at law or in equity for any infringement or other impairment thereof, including the right to receive all proceeds and damages therefrom.

 

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Interest Coverage Ratio ” means, on a Pro Forma Basis for any Test Period, the ratio of (a) Consolidated EBITDA of the Borrower and its Restricted Subsidiaries for such Test Period to (b) Consolidated Cash Interest Expense for such Test Period.

Interest Election Request ” means a request by the Borrower to convert or continue a Borrowing in accordance with Section 2.05.

Interest Payment Date ” means (a) with respect to any ABR Loan (including any Swing Line Loan), the last day of each March, June, September and December and (b) with respect to any Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurodollar Borrowing with an Interest Period of more than three months’ duration, each day prior to the last day of such Interest Period that occurs at intervals of three months’ duration after the first day of such Interest Period.

Interest Period ” means, as to any Eurodollar Loan, (a) initially, the period commencing on the borrowing or conversion date, as the case may be, with respect to such Eurodollar Loan and ending one week, one month, two months, three months or six months (or, if available to all Lenders under the applicable Facility, twelve months) thereafter, as selected by the Borrower in its Committed Loan Notice, as the case may be, given with respect thereto, and (b) thereafter, each period commencing on the last day of the next preceding Interest Period applicable to such Eurodollar Loan and ending one week, one month, two months, three months or six months (or, if agreed to by all Lenders under the applicable Facility, twelve months or such other, shorter period) thereafter, as selected by the Borrower by irrevocable Committed Loan Notice to the Administrative Agent not later than 12:00 noon, New York City time, on the date that is three Business Days prior to the last day of the then current Interest Period with respect thereto; provided that all of the foregoing provisions relating to Interest Periods are subject to the following:

(i) if any Interest Period would otherwise end on a day that is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless, in the case of a Eurodollar Rate Loan, the result of such extension would be to carry such Interest Period into another calendar month in which event such Interest Period shall end on the immediately preceding Business Day;

(ii) the Borrower may not select an Interest Period for a Revolving Loan that would extend beyond the Revolving Termination Date or an Interest Period for a Term Loan that would extend beyond the date the final payment is due on such Term Loan; and

(iii) any Interest Period relating to a Eurodollar Rate Loan of at least one month’s duration that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of a calendar month.

Investments ” has the meaning assigned to such term in Section 6.11.

Involuntary Disposition ” means any loss of, damage to or destruction of, or any condemnation or other taking for public use of, any property of any Borrower or any Subsidiary.

ISP ” means, with respect to any Letter of Credit, the “International Standby Practices 1998” published by the Institute of International Banking Law & Practice, Inc. (or such later version thereof as may be in effect at the time of issuance).

Issuing Document ” means with respect to any Letter of Credit, the Letter of Credit application and any other document, agreement and instrument created by the Issuing Bank and the Company or any subsidiary or in favor of the applicable Issuing Bank and relating to such Letter of Credit.

Issuing Bank ” means Bank of America, N.A., JPMorgan Chase Bank, N.A., Citibank, N.A. and each other Issuing Bank designated pursuant to Section 2.17(j), each in its capacity as an issuer of Letters of Credit, and its successors in such capacity as provided in Section 2.17(i). The Borrower may, with the consent of the Administrative Agent (which consent shall not be unreasonably withheld), arrange for one or more Letters of Credit to be issued by other Lenders, in which case the term “Issuing Bank” shall include such Lender with respect to the Letters of Credit issued by such Lender; provided that no such Lender shall have any obligation to be an Issuing Bank unless it agrees to do so in its sole discretion.

 

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Junior Debt ” means Indebtedness for borrowed money that is (x) unsecured, or (y) by its terms subordinated or junior in right of payment or security to the Obligations (including, for this purpose, the Secured Notes).

Junior Debt Restricted Payment ” means, any payment or other distribution (whether in cash, securities or other property), directly or indirectly made by the Borrower or any of its Restricted Subsidiaries, of or in respect of principal of or interest on any Junior Debt (or any Indebtedness incurred as Refinancing Indebtedness in respect thereof); provided , that the following shall not constitute a Junior Debt Restricted Payment:

(a) refinancings with any Refinancing Indebtedness permitted to be incurred under Section 6.01;

(b) payments of regularly scheduled interest and fees due thereunder, other non-principal payments thereunder, any mandatory prepayments of principal, interest and fees thereunder, scheduled payments thereon necessary to avoid the Junior Debt from constituting “applicable high yield discount obligations” within the meaning of Section 163(i)(l) of the Code, and principal on the scheduled maturity date of any Junior Debt;

(c) payments or distributions in respect of all or any portion of the Junior Debt with the proceeds from the issuance, sale or exchange by the Borrower of Qualified Equity Interests within eighteen months prior thereto; provided that such net cash proceeds are not included in any determination of the Retained Excess Cash Flow Amount; or

(d) the conversion of any Junior Debt to Qualified Equity Interests of the Borrower; provided that such amounts are not included in any determination of the Retained Excess Cash Flow Amount.

Latest Maturity Date ” means, at any date of determination, the latest of the latest Revolving Termination Date and the latest maturity date in respect of any Class of Term Loans, in each case then in effect on such date of determination.

LC Disbursement ” means a payment made by an Issuing Bank pursuant to a demand for payment or drawing under a Letter of Credit.

LC Exposure ” means, at any time, the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time plus (b) the aggregate amount of all LC Disbursements that have not yet been reimbursed by or on behalf of the Borrower at such time. The LC Exposure of any Lender at any time shall be its Revolving Commitment Percentage of the total LC Exposure at such time. For purposes of computing the amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.07. For all purposes of this Agreement, if on any date of determination a Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP, such Letter of Credit shall be deemed to be “outstanding” in the amount so remaining available to be drawn.

LC Sublimit ” means with respect to any Issuing Bank the amount set forth opposite such Issuing Bank’s name on Schedule 1.01A under the heading “LC Sublimit”; provided that the Borrower and any Issuing Bank may from time to time by written agreement delivered to the Administrative Agent vary the amount of any Issuing Bank’s LC Sublimit.

LCA Election ” has the meaning assigned to such term in Section 1.09.

LCA Test Date ” has the meaning assigned to such term in Section 1.09.

 

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Lead Arrangers ” means, collectively, Bank of America, N.A., JPMorgan Chase Bank, N.A., Citigroup Global Markets Inc., U.S. Bank National Association, Wells Fargo Securities, LLC, The Bank of Tokyo-Mitsubishi UFJ, Ltd., PNC Capital Markets LLC, Capital One Securities, Inc., SunTrust Robinson Humphrey, Inc., Fifth Third Securities, Inc. and ING Bank N.V., as joint lead arrangers and joint bookrunners.

Lender Presentations ” means the Lender Presentations, dated September 2016, made available to the Lenders in connection with the Revolving Facility, the Term B Facility or this Agreement.

Lenders ” means the Persons listed on Schedule 1.01A and any other Person that shall have become a party hereto pursuant to an Assignment and Assumption or any Incremental Assumption Agreement, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Assumption and, as the context requires, includes the Swing Line Lender.

Letter of Credit ” means any letter of credit issued pursuant to Section 2.17.

LIBOR ” has the meaning assigned to such term in the definition of “Eurodollar Rate.”

LIBOR floor ” has the meaning assigned to such term in Section 2.02(b)(v).

Lien ” means, with respect to any asset, any mortgage, deed of trust, lien (statutory or other), pledge, easement, charge, security interest or other encumbrance of any kind or nature in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset. “Lien” shall not, however, include any interest of a vendor in any inventory of the Borrower or any of its Restricted Subsidiaries arising out of such inventory being subject to a “sale or return” arrangement with such vendor or any consignment by any third party of any inventory to the Borrower or any of its Restricted Subsidiaries.

Limited Condition Acquisition ” means any acquisition, including by means of a merger, amalgamation or consolidation, by the Borrower or one or more of its Restricted Subsidiaries, the consummation of which is not conditioned upon the availability of, or on obtaining, third party financing or in connection with which any fee or expense would be payable by the Borrower or its Restricted Subsidiaries to the seller or target in the event financing to consummate the acquisition is not obtained as contemplated by the definitive acquisition agreement.

Loan Documents ” means the collective reference to this Agreement, the Guarantee Agreement, the Collateral Documents, the Pari Intercreditor Agreement, any Incremental Assumption Agreement, Extension Amendment or Refinancing Amendment, the Letters of Credit and any amendments or waivers to any of the foregoing.

Loan Parties ” means the collective reference to the Borrower and the Subsidiary Guarantors.

Loans ” means the loans made by the Lenders to the Borrower pursuant to this Agreement.

Material Adverse Effect ” means a material adverse effect on (a) the business, operations, property or condition, financial or otherwise, of the Borrower and its Restricted Subsidiaries taken as a whole or that results in a material impairment of the ability of the Borrower to perform any payment obligations hereunder or (b) the validity or enforceability of this Agreement or the other Loan Documents or the rights or remedies of the Administrative Agent or the Lenders hereunder or thereunder.

Material Domestic Subsidiary ” means any Wholly Owned Subsidiary that is a Domestic Subsidiary of the Borrower, as of the last day of the fiscal quarter of the Borrower most recently ended for which financial statements have been or are required to have been delivered, that has assets or revenues (including third party revenues but not including intercompany revenues) with a value in excess of 2.50% of the consolidated assets of the Borrower and its Wholly Owned Subsidiaries that are Domestic Subsidiaries or 2.50% of the consolidated revenues of the Borrower and its Wholly Owned Subsidiaries that are Domestic Subsidiaries; provided that in the event Wholly Owned Subsidiaries that are Domestic Subsidiaries that would otherwise not be Material Domestic Subsidiaries shall in the

 

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aggregate account for a percentage in excess of 7.50% of the consolidated assets of the Borrower and its Wholly Owned Subsidiaries that are Domestic Subsidiaries or 7.50% of the consolidated revenues of the Borrower and its Wholly Owned Subsidiaries that are Domestic Subsidiaries as of the end of and for the most recently completed fiscal quarter, then one or more of such Domestic Subsidiaries designated by the Borrower (or, if the Borrower shall make no designation, one or more of such Domestic Subsidiaries in descending order based on their respective contributions to the consolidated assets of the Borrower), shall be included as Material Domestic Subsidiaries to the extent necessary to eliminate such excess.

Material Indebtedness ” means Indebtedness (other than the Loans), or obligations in respect of a Swap Agreement, of any one or more of the Borrower and its Restricted Subsidiaries in an aggregate principal amount exceeding $50,000,000. For purposes of determining Material Indebtedness, the “principal amount” of the obligations of the Borrower or any Restricted Subsidiary in respect of any Swap Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that the Borrower or such Restricted Subsidiary would be required to pay if such Swap Agreement were terminated at such time.

Material Real Property ” shall mean any parcel of Real Property located in the United States and having a Fair Market Value (on a per-property basis) greater than or equal to $15,000,000 as of (x) the Closing Date, for Real Property then owned or (y) the date of acquisition, for Real Property acquired after the Closing Date, in each case as determined by the Borrower in good faith.

Material Subsidiary ” means any Restricted Subsidiary of the Borrower, as of the last day of the fiscal quarter of the Borrower most recently ended for which financial statements have been, or were required to be, delivered pursuant to Section 5.01, that has assets or revenues (including third party revenues but not including intercompany revenues) with a value in excess of 2.50% of the consolidated assets of the Borrower or 2.50% of the consolidated revenues of the Borrower; provided that in the event Restricted Subsidiaries that would otherwise not be Material Subsidiaries shall in the aggregate account for a percentage in excess of 7.50% of the consolidated assets of the Borrower or 7.50% of the consolidated revenues of the Borrower as of the end of and for the most recently completed fiscal quarter for which financial statements have been, or were required to be, delivered pursuant to Section 5.01, then one or more of such Restricted Subsidiaries designated by the Borrower (or, if the Borrower shall make no designation, one or more of such Restricted Subsidiaries in descending order based on their respective contributions to the consolidated assets of the Borrower), shall be included as Material Subsidiaries to the extent necessary to eliminate such excess.

Moody’s ” means Moody’s Investors Service, Inc.

Mortgage Policy ” has the meaning specified in Section 5.09(c).

Mortgaged Properties ” shall mean the Material Real Properties that are identified as such on Schedule 1.01B (the “ Closing Date Mortgaged Properties ”) and each additional Material Real Property encumbered by a Mortgage pursuant to Section 5.09.

Mortgages ” shall mean, collectively, the mortgages, trust deeds, deeds of trust, deeds to secure debt, assignments of leases and rents, debentures, and other security documents (including amendments to any of the foregoing) executed and delivered with respect to Mortgaged Properties (either as stand-alone documents or forming part of other Collateral Documents), each in form and substance reasonably satisfactory to the Administrative Agent and the Borrower, in each case, as amended, supplemented or otherwise modified from time to time.

Multiemployer Plan ” means a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

Net Proceeds ” means:

(a) 100% of the cash proceeds actually received by the Borrower or any Subsidiary (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or purchase price adjustment receivable or otherwise, but only as and when received) from any Asset Sale, net of (i) attorneys’ fees, accountants’ fees, investment banking fees, survey costs, title insurance

 

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premiums, and related search and recording charges, transfer Taxes, deed or mortgage recording Taxes, other customary expenses and brokerage, consultant and other customary fees actually incurred in connection therewith, (ii) required payments of Indebtedness that is secured by a Lien permitted hereunder (other than pursuant to the Loan Documents, Other First Lien Debt or obligations secured by a Lien that is junior to the Liens securing the Obligations), (iii) repayments of Other First Lien Debt (limited to its proportionate share of such prepayment, based on the amount of such then outstanding debt as a percentage of all then outstanding Term Loans and Other First Lien Debt), (iv) Taxes paid or payable (in the good faith determination of the Borrower) as a direct result thereof, and (v) the amount of any reasonable reserve established in accordance with GAAP against any adjustment to the sale price or any liabilities (other than any Taxes deducted pursuant to clause (i) or (iv) above) (x) related to any of the applicable assets and (y) retained by the Borrower or any of the Subsidiaries including, without limitation, pension and other post-employment benefit liabilities and liabilities related to environmental matters or against any indemnification obligations ( provided that (1) the amount of any reduction of such reserve (other than in connection with a payment in respect of any such liability), prior to the date occurring 18 months after the date of the respective Asset Sale, shall be deemed to be cash proceeds of such Asset Sale occurring on the date of such reduction and (2) the amount of any such reserve that is maintained as of the date occurring 18 months after the date of the applicable Asset Sale shall be deemed to be Net Proceeds from such Asset Sale as of such date); provided , that, if the Borrower shall deliver an Officer’s Certificate to the Administrative Agent promptly following receipt of any such proceeds setting forth the Borrower’s intention to use any portion of such proceeds, within 12 months of such receipt, to acquire, maintain, develop, construct, improve, upgrade or repair assets useful in the business of the Borrower and the Subsidiaries or to make Asset Acquisitions and other Investments permitted hereunder (excluding Cash Equivalents or intercompany Investments in Subsidiaries) or to reimburse the cost of any of the foregoing incurred on or after the date on which the Asset Sale giving rise to such proceeds was contractually committed (other than inventory), such portion of such proceeds shall not constitute Net Proceeds except to the extent not, within 365 days of such receipt, so used or contractually committed to be so used (it being understood that if any portion of such proceeds are not so used within such 365 day period but within such 365 day period are contractually committed to be used, then such remaining portion if not so used within 180 days following the end of such 365 day period shall constitute Net Proceeds as of such date without giving effect to this proviso); provided , further , that no net cash proceeds calculated in accordance with the foregoing realized in a single transaction or series of related transactions shall constitute Net Proceeds unless such net cash proceeds shall exceed $10,000,000;

(b) 100% of the cash proceeds actually received by the Borrower or any Subsidiary (including casualty insurance settlements and condemnation awards, but only as and when received) from any Recovery Event, net of (i) attorneys’ fees, accountants’ fees, transfer Taxes, deed or mortgage recording Taxes on such asset, other customary expenses and brokerage, consultant and other customary fees actually incurred in connection therewith, (ii) required payments of Indebtedness that is secured by a Lien permitted hereunder (other than pursuant to the Loan Documents, Other First Lien Debt or obligations secured by a Lien that is junior to the Liens securing the Obligations), (iii) repayments of Other First Lien Debt (limited to its proportionate share of such prepayment, based on the amount of such then outstanding debt as a percentage of all then outstanding Term Loans and Other First Lien Debt, and (iv) Taxes paid or payable (in the good faith determination of the Borrower) as a direct result thereof; provided , that, if the Borrower shall deliver an Officer’s Certificate to the Administrative Agent promptly following receipt of any such proceeds setting forth the Borrower’s intention to use any portion of such proceeds, within 365 days of such receipt, to acquire, maintain, develop, construct, improve, upgrade or repair assets useful in the business of the Borrower and the Subsidiaries or to make Asset Acquisitions and other Investments permitted hereunder (excluding Cash Equivalents or intercompany Investments in Subsidiaries) or to reimburse the cost of any of the foregoing incurred on or after the date on which the Recovery Event giving rise to such proceeds was contractually committed (other than inventory, except to the extent the proceeds of such Recovery Event are received in respect of inventory), such portion of such proceeds shall not constitute Net Proceeds except to the extent not, within 365 days of such receipt, so used or contractually committed to be so used (it being understood that if any portion of such proceeds are not so used within such 365 day period but within such 365 day period are contractually committed to be used, then such remaining portion if not so used within 180 days following the end of such 365 day period shall constitute Net Proceeds as of such date without giving effect to this proviso); provided , further , that no net cash proceeds calculated in accordance with the foregoing realized in a single transaction or series of related transactions shall constitute Net Proceeds unless such net cash proceeds shall exceed $10,000,000; and

 

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(c) 100% of the cash proceeds from the incurrence, issuance or sale by the Borrower or any Subsidiary of any Indebtedness (other than Excluded Indebtedness, except for Refinancing Term Loans), net of all fees (including investment banking fees), commissions, costs and other expenses, in each case incurred in connection with such issuance or sale.

Non-Conforming Plan of Reorganization ” shall mean any Plan of Reorganization that does not provide for payments pursuant to such Plan of Reorganization in respect of the Obligations to be made with the priority specified in Section 2.15(d) and the Pari Intercreditor Agreement and that has not been approved by the Required Revolving Lenders.

Non-Consenting Lender ” has the meaning assigned to such term in Section 2.16(c).

Non-Defaulting Lender ” means, at any time, each Lender that is not a Defaulting Lender at such time.

Non-Defaulting Revolving Lender ” means, at any time, each Revolving Lender that is not a Defaulting Lender at such time.

Non-Extension Notice Date ” has the meaning assigned to such term in Section 2.17(b).

Non-Loan Party ” means any Restricted Subsidiary other than a Loan Party.

Non-U.S. Lender ” means any Lender that is not a U.S. Lender.

Obligations ” means the unpaid principal of and interest on (including interest, fees and expenses accruing after the maturity of the Loans) the Loans, the obligations of the Loan Parties to reimburse the Issuing Bank for demands for payment or drawings under a Letter of Credit, and all other obligations and liabilities of the Borrower and the other Loan Parties to the Administrative Agent or to any Secured Party, whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, this Agreement, any other Loan Document, any Specified Swap Agreement, any Cash Management Agreement or any other document made, delivered or given in connection herewith or therewith, whether on account of principal, interest, fees, indemnities, costs, expenses or otherwise, including, in each case, (i) all fees, charges and disbursements of counsel to the Administrative Agent, the Lead Arrangers or to any Lender that are required to be paid by the Borrower pursuant hereto and (ii) interest, fees and expenses accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Borrower or any of its Subsidiaries, whether or not a claim for post-filing or post-petition interest, fees and expenses is allowed in such proceeding. Notwithstanding the foregoing, the Obligations with respect to any Subsidiary Guarantor shall not include any Excluded Swap Obligations of such Subsidiary Guarantor.

OFAC ” means the U.S. Department of the Treasury’s Office of Foreign Assets Control.

Officer’s Certificate ” means a certificate of a Responsible Officer in form and substance reasonably acceptable to the Administrative Agent.

Other First Lien Debt ” means the Secured Notes, Permitted Other First Lien Debt incurred pursuant to Section 6.01(u) and Refinancing Indebtedness of the foregoing that is secured by Liens on the Collateral that are equal and ratable with the Liens thereon securing the Term B Loans pursuant to the Pari Intercreditor Agreement.

Other Taxes ” means all present or future stamp or documentary Taxes or any other excise or property Taxes, charges or similar levies arising from any payment made under any Loan Document or from the execution, delivery or enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document.

 

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Outstanding Revolving Credit ” means, with respect to any Revolving Lender at any time, an amount equal to the sum of (a) the aggregate then outstanding principal amount of such Revolving Lender’s Revolving Loans, (b) such Revolving Lender’s LC Exposure and (c) such Revolving Lender’s Swing Line Exposure.

parent ” has the meaning assigned to such term in the definition of “subsidiary.”

Pari Intercreditor Agreement ” means that certain Intercreditor and Collateral Agency Agreement, dated as of the Closing Date, by and among the Administrative Agent, the collateral agent for the Secured Notes and the other parties thereto from time to time, substantially in the form of Exhibit F .

Participant ” has the meaning assigned to such term in Section 9.05(c).

Participant Register ” has the meaning assigned to such term in Section 9.05(c).

PBGC ” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions.

Perfection Certificate ” means a certificate in the form of Exhibit H or any other form approved by the Administrative Agent (acting reasonably), as the same shall be supplemented from time to time by any supplement thereto or otherwise.

Permitted Acquisition ” means any Asset Acquisition so long as, on a Pro Forma Basis, immediately after giving effect thereto (i) no Event of Default has occurred and is continuing and (ii) the Borrower is in compliance with Section 6.10 as of the last day of the most recent fiscal quarter of the Borrower for which such financial statements have been delivered pursuant to Section 5.01.

Permitted Encumbrances ” means:

(a) Liens imposed by law for taxes, assessments or governmental charges that are not yet due or are being contested in compliance with Section 5.04;

(b) landlord’s, carriers’, warehousemen’s, mechanics’, supplier’s, materialmen’s, repairmen’s and other like Liens imposed by law, arising in the ordinary course of business and securing obligations that are not overdue by more than 30 days or are being contested in compliance with Section 5.04;

(c) pledges and deposits made in the ordinary course of business in compliance with workers’ compensation (or pursuant to letters of credit issued in connection with such workers’ compensation compliance), unemployment insurance and other social security laws or regulations;

(d) deposits to secure the performance of tenders, bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds, leases, subleases, government contracts and return-of-money bonds, letters of credit and other obligations of a like nature, in each case in the ordinary course of business (exclusive of the obligation for the payment of borrowed money);

(e) judgment liens in respect of judgments that do not constitute an Event of Default under Section 7.01(j);

(f) easements, zoning restrictions, rights-of-way, survey exception, minor encumbrances, reservation of, licenses, electric lines, telegraph and telephone lines and similar encumbrances on real property imposed by law or arising in the ordinary course of business that do not secure any monetary obligations and do not materially detract from the value of the affected property or interfere with the ordinary conduct of business of the Borrower or any Restricted Subsidiary;

 

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(g) Liens securing obligations in respect of trade-related letters of credit and covering the goods (or the documents of title in respect of such goods) financed or the purchase of which is supported by such letters of credit and the proceeds and products thereof;

(h) Liens upon specific items of inventory or other goods and proceeds of any Person securing such Person’s obligations in respect of bankers’ acceptances issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods;

(i) Liens securing obligations in respect of letters of credit, bank guarantees, warehouse receipts or similar instruments issued to support performance obligations (other than Obligations in respect of Indebtedness) and trade-related letters of credit, in each case, outstanding on the Closing Date or issued thereafter in and covering the goods (or the documents of title in respect of such goods) financed by such letters of credit, banker’s acceptances or bank guarantees and the proceeds and products thereof;

(j) licenses, sublicenses, covenants not to sue, releases or other rights under Intellectual Property granted to others in the ordinary course of business or in the reasonable business judgment of the Borrower or any Restricted Subsidiary; and

(k) title defects, encroachments or irregularities which are of a minor nature and which in the aggregate do not materially impair the value of any real property or the use of the affected property for the purpose for which it is used by the Borrower or any Restricted Subsidiary.

Permitted Junior Lien Debt ” means Indebtedness of the Borrower so long as, (I) the maturity date of such Indebtedness shall be no earlier than 90 days following the Latest Maturity Date then in effect and such Indebtedness shall not require any mandatory prepayments other than Permitted Mandatory Prepayments, (II) such Indebtedness (x) shall not require scheduled amortization payments prior to the date that is 90 days after the then Latest Maturity Date, (y) shall have no financial maintenance covenants of a different type than those set forth in Section 6.10, and no financial maintenance covenants that are more restrictive than those set forth in Section 6.10, and (z) does not have negative covenants and/or default provisions that, taken as a whole, are materially more restrictive than those applicable to this Agreement as determined in good faith by the Borrower unless, in each case of clauses (y) and (z) such terms (A) if favorable to the Lenders, are, in consultation with the Administrative Agent, incorporated into this Agreement for the benefit of the Lenders in an amendment reasonable acceptable to the Administrative Agent or (B) become applicable only after the Revolving Facility shall have matured or been terminated and any Term Loans existing at such date have been paid in full and (III) such Indebtedness is not guaranteed by any subsidiaries of the Borrower that do not guarantee the Obligations and is secured on a junior lien basis by all or a portion of the Collateral (and no additional assets) securing the Obligations pursuant to an intercreditor agreement reasonably satisfactory to the Administrative Agent.

Permitted Liens ” means Liens permitted by Section 6.02.

Permitted Mandatory Prepayments ” means with respect to any Indebtedness, any requirement to prepay such Indebtedness (i) in connection with any asset sale or event of loss (with associated reinvestment rights no less favorable than those set forth in this Agreement and which do not require a prepayment from any Asset Sale or Recovery Event from amounts required to prepay Term Loans), (ii) from the proceeds of Indebtedness incurred in violation of the agreement governing such Indebtedness or (iii) in connection with any change of control.

Permitted Other First Lien Debt ” means Indebtedness of the Borrower in the form of debt securities (but not loans) so long as, (I) the maturity date of such Indebtedness shall be no earlier than 90 days following the Latest Maturity Date then in effect and such Indebtedness shall not require any mandatory prepayments other than Permitted Mandatory Prepayments, (II) such Indebtedness (x) shall not have a Weighted Average Life to Maturity that is shorter than the then longest remaining Weighted Average Life to Maturity of any then outstanding Term Loans, (y) shall have no financial maintenance covenants of a different type than those set forth in Section 6.10, and no financial maintenance covenants that are more restrictive than those set forth in Section 6.10, and (z) does not have negative covenants and/or default provisions that, taken as a whole, are materially more restrictive than those applicable to this Agreement as determined in good faith by the Borrower unless, in each case of clauses (y) and (z) such terms

 

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(A) if favorable to the Lenders, are, in consultation with the Administrative Agent, incorporated into this Agreement for the benefit of the Lenders in an amendment reasonable acceptable to the Administrative Agent or (B) become applicable only after the Revolving Facility shall have matured or been terminated and any Term Loans existing at such date have been paid in full and (III) such Indebtedness is not guaranteed by any subsidiaries of the Borrower that do not guarantee the Obligations and is secured on an equal and ratable or “second out” basis by all or a portion of the Collateral (and no additional assets) securing the Obligations and is subject to the Pari Intercreditor Agreement (with the same priority as the Term B Loans).

Permitted Unsecured Indebtedness ” means Indebtedness of the Borrower so long as, (I) the maturity date of such Indebtedness shall be no earlier than 90 days following the Latest Maturity Date then in effect and such Indebtedness shall not require any mandatory prepayments other than Permitted Mandatory Prepayments, (II) such Indebtedness (x) shall not require scheduled amortization payments prior to the date that is 90 days after the then Latest Maturity Date, (y) shall have no financial maintenance covenants of a different type than those set forth in Section 6.10, and no financial maintenance covenants that are more restrictive than those set forth in Section 6.10, and (z) does not have negative covenants and/or default provisions that, taken as a whole, are materially more restrictive than those applicable to this Agreement as determined in good faith by the Borrower unless, in each case of clauses (y) and (z) such terms (A) if favorable to the Lenders, are, in consultation with the Administrative Agent, incorporated into this Agreement for the benefit of the Lenders in an amendment reasonable acceptable to the Administrative Agent or (B) become applicable only after the Revolving Facility shall have matured or been terminated and any Term Loans existing at such date have been paid in full and (III) such Indebtedness is not guaranteed by any subsidiaries of the Borrower that do not guarantee the Obligations and is not secured by any Liens on any assets of the Borrower or any of its Restricted Subsidiaries.

person ” and “ group ” have the meanings given to them for purposes of Section 13(d) and 14(d) of the Exchange Act or any successor provisions, and the term “group” includes any group acting for the purpose of acquiring, holding or disposing of securities within the meaning of rule 13d-5(b)(1) under the Exchange Act, or any successor provision.

Person ” means any individual, corporation, partnership, limited liability company, joint venture, incorporated or unincorporated association, joint-stock company, trust, unincorporated organization or government or other agency or political subdivision thereof or other entity of any kind.

Plan ” means an employee pension benefit plan as defined in Section 3(2) of ERISA (other than a Multiemployer Plan), subject to the provisions of Section 302 and Title IV of ERISA or Section 412 of the Code, and in respect of which the Borrower or any ERISA Affiliate is (or if such plan were terminated, would under Section 4062 or 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

Plan of Reorganization ” means any plan of reorganization, plan of liquidation, agreement for composition, or other type of plan of arrangement proposed in or in connection with any proceeding under any Debtor Relief Law.

Platform ” has the meaning assigned to such term in Section 9.17.

Preferred Stock ” means, with respect to any Person, any and all preferred or preference stock or other equity interests (however designated) of such Person whether now outstanding or issued after the Closing Date.

Pricing Grid ” means the table below:

 

Consolidated Leverage Ratio

   Facility Fee Rate     Applicable Rate for
Eurodollar Loans
    Applicable Rate for
ABR Loans
 

< 1.75:1.00

     0.375     2.750     1.750

>  1.75:1.00 and < 2.25:1.00

     0.500     3.000     2.000

> 2.25:1.00

     0.500     3.250     2.250

 

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For the purposes of the Pricing Grid, changes in the Applicable Rate and Facility Fee Rate resulting from changes in the Consolidated Leverage Ratio shall become effective on the date (the “ Adjustment Date ”) on which financial statements are delivered to the Lenders pursuant to Section 5.01 and shall remain in effect until the next change to be effected pursuant to this paragraph. Notwithstanding the foregoing, (i) the first Adjustment Date shall be on the date of delivery of the financial statements and compliance certificate for the year ended December 31, 2016 pursuant to Section 5.01 and (ii) if any financial statements referred to above are not delivered within the time periods specified in Section 5.01, then, until the date on which such financial statements are delivered, the highest rate set forth in each column of the Pricing Grid shall apply. In addition, at all times while an Event of Default shall have occurred and be continuing, the highest rate set forth in each column of the Pricing Grid shall apply. Each determination of the Consolidated Leverage Ratio pursuant to the Pricing Grid shall be made in a manner consistent with the determination thereof pursuant to Section 6.10.

If, as a result of any restatement of or other adjustment to the financial statements of the Borrower or for any other reason, the Borrower, the Administrative Agent or the Lenders determine that (i) the Consolidated Leverage Ratio as calculated by the Borrower as of any applicable date was inaccurate and (ii) a proper calculation of the Consolidated Leverage Ratio would have resulted in higher pricing for such period, the Borrower shall immediately and retroactively be obligated to pay to the Administrative Agent for the account of the applicable Lenders or the Issuing Banks, as the case may be, promptly on demand by the Administrative Agent (or, after the occurrence of an actual or deemed entry of an order for relief with respect to the Borrower under any Debtor Relief Law, automatically and without further action by the Administrative Agent, any Lender or the Issuing Banks), an amount equal to the excess of the amount of interest and fees that should have been paid for such period over the amount of interest and fees actually paid for such period. This paragraph shall not limit the rights of the Administrative Agent, any Lender or the Issuing Banks under any other section of this Agreement. The Borrower’s obligations under this paragraph shall survive the termination of the Revolving Commitments and the repayment of all other Obligations hereunder.

Priority Payment Obligations ” means all (i) Obligations arising under any Revolving Commitment, Extended Revolving Commitment, Incremental Revolving Commitment or Replacement Revolving Facility Commitment (including in respect of principal of loans, letters of credit, interest and fees thereunder and indemnitees and expense reimbursement with respect thereto), (ii) Cash Management Obligations and (iii) Obligations arising under any Specified Swap Agreement, including, in each case, interest, fees and expenses accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Borrower, whether or not a claim for post-filing or post-petition interest, fees and expenses is allowed in such proceeding.

Pro Forma Basis ” means, with respect to the calculation of Consolidated EBITDA, the Consolidated Leverage Ratio, the Consolidated Secured Leverage Ratio, the Interest Coverage Ratio, or any other calculation under any applicable provision of the Loan Documents, as of any date, that (1) pro forma effect will be given to the Transactions, any Asset Acquisition, any issuance, incurrence, assumption or repayment of Indebtedness (including Indebtedness issued, incurred or assumed as a result of, or to finance, any relevant transaction and for which any such financial ratio or other calculation is being calculated but excluding ordinary course incurrences and repayments of indebtedness under any revolving credit facility), any Asset Sale or other transaction that would constitute an Asset Sale but for the operation of clause (2), (3), (8) or (9) of the definition thereof, or any conversion of a Restricted Subsidiary to an Unrestricted Subsidiary or of an Unrestricted Subsidiary to a Restricted Subsidiary, in each case that has occurred during the four consecutive fiscal quarter period of the Borrower being used to calculate such financial ratio (the “ Reference Period ”), or subsequent to the end of the Reference Period but prior to such date or prior to or simultaneously with the event for which a determination under this definition is made (including any such event occurring at a Person who became a Restricted Subsidiary after the commencement of the Reference Period), as if each such event occurred on the first day of the Reference Period, and (2) pro forma effect will be given to factually supportable and identifiable pro forma cost savings related to operational efficiencies, strategic initiatives or purchasing improvements and other synergies, in each case, reasonably expected by the Borrower and the Restricted Subsidiaries to be realized based upon actions taken or reasonably expected to be taken within 12 months of the date of any Asset Acquisition, Asset Sale or other transaction that would constitute an Asset Sale but for the operation of clause (2), (3), (8) or (9) of the definition thereof (without duplication of the amount of actual benefit realized during such period from such actions), which cost savings, improvements and synergies can be reasonably computed, as certified in writing by a Responsible Officer of the Borrower; provided that any such pro forma adjustments in respect of such cost savings, improvements and synergies in clause (2) shall not exceed 10% of Consolidated EBITDA (before giving effect to all such adjustments) for any Test Period.

 

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Pro Rata Extension Offer ” has the meaning assigned to such term in Section 2.19(a).

Public Lender ” has the meaning assigned to such term in Section 9.17.

Purchase Offer ” has the meaning assigned to such term in Section 2.21(a).

Qualified Equity Interests ” of any Person means Equity Interests of such Person other than Disqualified Equity Interests. Unless otherwise specified, Qualified Equity Interests refer to Qualified Equity Interests of the Borrower.

Real Property ” shall mean, collectively, all right, title and interest (including any leasehold estate) in and to any and all parcels of or interests in real property owned in fee simple or leased by any Loan Party, whether by lease, license or other means, together with, in each case, all easements, hereditaments and appurtenances relating thereto, all improvements and appurtenant fixtures and equipment, incidental to the ownership, lease or operation thereof.

Recovery Event ” means any event that gives rise to the receipt by the Borrower or any of its Subsidiaries of any insurance proceeds or condemnation awards in respect of any equipment, fixed assets or real property (including any improvements thereon).

refinance ” means, in respect of any Indebtedness, to refinance, extend, renew, refund, repay, prepay, or to issue other Indebtedness in exchange or replacement for, such Indebtedness.

Refinanced Indebtedness ” has the meaning assigned to such term in the definition of “Refinancing Indebtedness.”

Refinancing Amendment ” has the meaning assigned to such term in Section 2.20(e).

Refinancing Effective Date ” has the meaning assigned to such term in Section 2.20(a).

Refinancing Indebtedness ” means Indebtedness of the Borrower or a Restricted Subsidiary incurred in exchange for, or the proceeds of which are used to redeem or refinance in whole or in part, any Indebtedness of the Borrower or any Restricted Subsidiary (the “ Refinanced Indebtedness ”); provided that:

(a) the principal amount (and accreted value, in the case of Indebtedness issued at a discount) of the Refinancing Indebtedness does not exceed the principal amount (and accreted value, as the case may be) of the Refinanced Indebtedness plus the amount of accrued and unpaid interest on the Refinanced Indebtedness, any premium paid to the holders of the Refinanced Indebtedness and expenses incurred in connection with the incurrence of the Refinancing Indebtedness;

(b) the obligors of Refinancing Indebtedness do not include any Person (other than a Loan Party) that is not an obligor of the Refinanced Indebtedness;

(c) if the Refinanced Indebtedness was by its terms subordinated in right of payment to the Obligations, then such Refinancing Indebtedness, by its terms, is subordinate in right of payment to the Obligations, at least to the same extent as the Refinanced Indebtedness;

(d) the Refinancing Indebtedness has a final stated maturity either (a) no earlier than the Refinanced Indebtedness being redeemed or refinanced or (b) after the date that is 90 days after the Latest Maturity Date applicable at the time the Refinancing Indebtedness is incurred;

 

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(e) the portion, if any, of the Refinancing Indebtedness that is scheduled to mature on or prior to the Latest Maturity Date applicable at the time the Refinancing Indebtedness is incurred has a Weighted Average Life to Maturity at the time such Refinancing Indebtedness is incurred that is equal to or greater than the Weighted Average Life to Maturity of the portion of the Refinanced Indebtedness being redeemed or refinanced that is scheduled to mature on or prior to the Latest Maturity Date applicable at the time the Refinancing Indebtedness is incurred; and

(f) any collateral arrangements for such Refinancing Indebtedness shall be on terms not less favorable to the Secured Parties (and the holders of Priority Payment Obligations) than the terms applicable to the collateral for the Indebtedness being refinanced.

Refinancing Term Loans ” has the meaning assigned to such term in Section 2.20(a).

Register ” has the meaning assigned to such term in Section 9.05(b)(iv).

Related Business ” means any business in which the Borrower or any Restricted Subsidiary was engaged on the Closing Date or any reasonable extension of such business and any business related, ancillary or complementary to any business of the Borrower or any Restricted Subsidiary in which the Borrower or any Restricted Subsidiary was engaged on the Closing Date or any reasonable extension of such business.

Related Parties ” means, with respect to any specified Person, such Person’s Affiliates and the respective directors, officers, employees, agents and advisors of such Person and such Person’s Affiliates.

Reorganization ” means, with respect to any Multiemployer Plan, the condition that such plan is in reorganization within the meaning of Section 4241 of ERISA.

Replacement Revolving Facilities ” has the meaning assigned to such term in Section 2.20(c).

Replacement Revolving Facility Commitments ” has the meaning assigned to such term in Section 2.20(c).

Replacement Revolving Facility Effective Date ” has the meaning assigned to such term in Section 2.20(c).

Replacement Revolving Loans ” has the meaning assigned to such term in Section 2.20(c).

Repricing Event ” means (i) any prepayment or repayment of Term B Loans with the proceeds of, or conversion of all or any portion of the Term B Loans into, any new or replacement term loans bearing interest with an All-in Yield less than the All-in Yield applicable to the Term B Loans subject to such event (as such comparative yields are determined by the Administrative Agent); provided that in no event shall any prepayment or repayment of Term B Loans in connection with a Change of Control or asset sale constitute a Repricing Event and (ii) any amendment to this Agreement which reduces the All-in Yield applicable to the Term B Loans (it being understood that any prepayment premium with respect to a Repricing Event shall apply to any required assignment by a Non-Consenting Lender in connection with any such amendment pursuant to Section 2.16(c)).

Required Lenders ” means, at any time, Lenders having Aggregate Exposure that, taken together, represents more than 50% of the Aggregate Exposure of all Lenders at such time; provided , that the Aggregate Exposure of any Defaulting Lender shall be disregarded in determining Required Lenders at any time.

Required Percentage ” means, with respect to any Excess Cash Flow Period, 50%; provided , that, if the Consolidated Leverage Ratio as of the end of such Excess Cash Flow Period is (x) less than or equal to 1.75 to 1.00 but greater than 1.50 to 1.00, such percentage shall be 25% or (y) less than or equal to 1.50 to 1.00, such percentage shall be 0%.

Required Revolving Lenders ” means, at any time, Revolving Lenders having Revolving Commitments (or if the Revolving Commitments have terminated, Total Revolving Exposure outstanding) that, taken together, represent more than 50% of the sum of all Revolving Commitments (or, if the Revolving Commitments have terminated, Total Revolving Exposure outstanding at such time); provided , that the Revolving Commitments and Total Revolving Exposure outstanding of any Defaulting Lender shall be disregarded in determining Required Revolving Lenders at any time.

 

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Required Term Lenders ” means, at any time Lenders (other than Defaulting Lenders) holding a majority of the aggregate principal amount of the then outstanding Term Loans (excluding Term Loans held by Defaulting Lenders).

Requirements of Law ” means, as to any Person, the Certificate of Incorporation and By-Laws or other organizational or governing documents of such Person, and any law, treaty, rule, regulation or official administrative pronouncement or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.

Responsible Officer ” means the chief executive officer, president, chief financial officer, treasurer, assistant treasurer or controller of a Loan Party, and solely for purposes of the delivery of incumbency certificates pursuant to Section 4.01 , the secretary or any assistant secretary of a Loan Party and, solely for purposes of notices given to Article II, any other officer or employee of the applicable Loan Party so designated by any of the foregoing officers in a notice to the Administrative Agent or any other officer or employee of the applicable Loan Party designated in or pursuant to an agreement between the applicable Loan Party and the Administrative Agent. Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party.

Restricted Payment ” means (a) any dividend or other distribution (whether in cash, securities or other property) with respect to any Equity Interests in the Borrower or any Restricted Subsidiary, (b) any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such Equity Interests of the Borrower or any option, warrant or other right to acquire any such Equity Interests or (c) any Junior Debt Restricted Payment.

Restricted Subsidiary ” means any subsidiary of the Borrower other than Unrestricted Subsidiaries.

Retained Excess Cash Flow Amount ” means, as at any date of determination, an amount determined on a cumulative basis equal to, without duplication, (a) the cumulative amount of Excess Cash Flow for all Excess Cash Flow Periods completed prior to such date, plus (b) the cumulative amount of all Declined Prepayment Amounts, plus (c) the net cash proceeds of any sale of Qualified Equity Interests by, or capital contribution to the common equity of, the Borrower, minus (d) the amount of such Excess Cash Flow required to be applied to prepay the Loans pursuant to Section 2.08(d) during or with respect to such applicable Excess Cash Flow Periods (without giving effect to any reduction in respect of prepayments of Indebtedness as provided in clauses (ii)(a) and (b) thereof), minus (e) the cumulative amount of Restricted Payments made with Retained Excess Cash Flow from and after the Closing Date and on or prior to such time, minus (f) the cumulative amount of Investments made with Retained Excess Cash Flow from and after the Closing Date and on or prior to such time (net of any dividends, distributions, profits, returns or similar amounts in respect of any such Investments).

Revocation ” has the meaning assigned to such term in the definition of “Unrestricted Subsidiary.”

Revolving Borrowing ” has the meaning assigned to such term in Section 1.02.

Revolving Commitment ” means, as to any Revolving Lender, the obligation of such Revolving Lender to make Revolving Loans and purchase participation interests in Letters of Credit and Swing Line Loans in an aggregate principal amount not to exceed the amount set forth under the heading “Revolving Commitment” opposite such Lender’s name on Schedule 1.01A or in the Assignment and Assumption or Incremental Assumption Agreement pursuant to which such Revolving Lender became a party hereto, as the same may be changed from time to time pursuant to the terms of this Agreement (including as increased, extended or replaced as provided in Section 2.02, 2.19 and 2.20). The aggregate amount of all Revolving Commitments as of the Closing Date is $400,000,000.

 

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Revolving Commitment Percentage ” means, with respect to any Lender at any time, the ratio (expressed as a percentage) of such Lender’s Revolving Commitment at such time to the Total Revolving Commitments at such time.

Revolving Commitment Period ” means the period from and including the Closing Date to the Revolving Termination Date.

Revolving Facility ” means the credit facility constituted by the Revolving Commitments and the extensions of credit thereunder.

Revolving Fee Payment Date ” means (a) the last Business Day of each March, June, September and December during the Revolving Commitment Period and (b) the last day of the Revolving Commitment Period.

Revolving Lender ” means each Lender that has a Revolving Commitment or that holds Revolving Loans.

Revolving Loans ” has the meaning assigned to such term in Section 2.01(a).

Revolving Termination Date ” means the fifth anniversary of the Closing Date.

RRD ” means R. R. Donnelley & Sons Company, a Delaware corporation.

Sanction(s) ” means any sanction, law, rule or regulation administered or enforced by the United States Government (including without limitation, OFAC), the United Nations Security Council, the European Union, Her Majesty’s Treasury (“ HMT ”) or other relevant sanctions authority.

SEC ” means the Securities and Exchange Commission or any successor thereto.

SEC Filings ” means the Borrower’s Registration Statement on Form 10 filed with the SEC in connection with the Separation and all amendments thereto as in effect on the Closing Date.

Secured Notes ” means up to $450,000,000 aggregate principal amount of 8.750% Senior Secured Notes due 2023 issued by the Borrower, and any registered exchange notes issued in exchange therefor.

Secured Parties ” has the meaning assigned to such term in the Security Agreement.

Security Agreement ” means the Security Agreement by the Borrower and the Subsidiary Guarantors, substantially in the form of Exhibit D .

Separation Agreement ” means the Separation and Distribution Agreement, dated as of September 14, 2016, among RRD, the Borrower and Donnelley Financial Solutions, Inc.

Separation Distribution ” means the net cash distribution (after deducting certain interest, fees and other amounts) by the Borrower to RRD of up to $790,000,000 on the Closing Date immediately prior to the Spin-Off.

Special Flood Hazard Area ” shall have the meaning assigned to such term in Section 5.05(e).

Specified Representations ” means Section 3.01 (solely with respect to organizational existence of the Loan Parties), Section 3.02 (solely as it relates to (x) organizational power and authority of the Loan Parties to duly authorize, execute, deliver and perform the Loan Documents and (y) the due authorization, execution, delivery and enforceability of the Loan Documents), Section 3.03 (solely as it relates to no conflicts of the Loan Documents (with respect to the execution and delivery by the Borrower and the Subsidiary Guarantors of this Agreement, the incurrence of indebtedness hereunder and the granting of the guarantees and security interests hereunder) with the organizational documents of the Loan Parties), Section 3.12, Section 3.15, Section 3.17, Section 3.18 and Section 3.23.

 

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Specified Swap Agreement ” means any Swap Agreement in respect of interest rates or currency exchange rates entered into by the Borrower or any Subsidiary Guarantor and any Person (a “ Hedge Bank ”) that (i) at the time such Swap Agreement is entered into is a Lender or the Administrative Agent or an Affiliate of a Lender or the Administrative Agent or (ii) in the case of any such Swap Agreement in effect on or prior to the Closing Date, is, as of the Closing Date, a Lender or the Administrative Agent or an Affiliate of a Lender or the Administrative Agent, unless, when entered into, such Swap Agreement is designated in writing by the Borrower and such Lender or the Administrative Agent or Affiliate of a Lender or the Administrative Agent to the Administrative Agent to not be included as a Specified Swap Agreement.

Spin-Off ” means the distribution of not less than 80% of the shares of common stock of the Borrower to the shareholders of RRD on the Closing Date as described in the Form 10.

Standard & Poor’s ” means Standard & Poor’s Rating Services a division of The McGraw-Hill Companies, Inc.

subsidiary ” means, with respect to any Person (the “ parent ”):

(1) any corporation, limited liability company, association or other business entity of which more than 50% of the total voting power of the Equity Interests entitled (without regard to the occurrence of any contingency) to vote in the election of the board of directors thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other subsidiaries of such Person (or a combination thereof); and

(2) any partnership (a) the sole general partner or the managing general partner of which is such Person or a subsidiary of such Person or (b) the only general partners of which are such Person or one or more subsidiaries of such Person (or any combination thereof).

Subsidiary Guarantor ” means each Domestic Subsidiary that is a party to the Guarantee Agreement; provided that no Excluded Subsidiary shall be required to be a Subsidiary Guarantor of any obligations under this Agreement.

Survey ” has the meaning specified in Section 5.09(c).

Swap Agreement ” means any agreement with respect to any swap, forward, future or derivative transaction or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions; provided that no phantom stock or similar plan providing for payments only on account of services provided by current or former directors, officers, employees or consultants of the Borrower or the Restricted Subsidiaries shall be a Swap Agreement.

Swap Obligation ” means, with respect to any Guarantor, any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of Section 1a(47) of the Commodity Exchange Act.

Swing Line Borrowing ” means a borrowing of a Swing Line Loan pursuant to Section 2.22 .

Swing Line Exposure ” means, as to any Lender at any time, the aggregate principal amount at such time of such Lender’s participation in Swing Line Loans at such time.

Swing Line Lender ” means Bank of America, N.A. in its capacity as provider of Swing Line Loans, or any successor swing line lender hereunder.

Swing Line Loan ” has the meaning specified in Section 2.22(a) .

 

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Swing Line Loan Notice ” means a notice of a Swing Line Borrowing pursuant to Section 2.22(b) , which shall be substantially in the form of Exhibit M or such other form as approved by the Administrative Agent (including any form on an electronic platform or electronic transmission system as shall be approved by the Administrative Agent), appropriately completed and signed by a Responsible Officer of the Borrower.

Swing Line Sublimit ” means an amount equal to the lesser of (a) $40,000,000 and (b) the Total Revolving Commitment. The Swing Line Sublimit is part of, and not in addition to, the Revolving Commitment.

Taxes ” means all present or future taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

Term B Commitment ” means, as to any Term B Lender, the obligation of such Term B Lender to make Term B Loans in an aggregate principal amount not to exceed the amount set forth opposite such Lender’s name on Schedule 1.01A or in the Assignment and Assumption or Incremental Assumption Agreement pursuant to which such Term B Lender became a party hereto as the same may be changed from time to time pursuant to the terms of this Agreement (including as increased, extended or replaced as provided in Section 2.02, 2.19 and 2.20). The aggregate amount of all Term B Commitments as of the Closing Date is $375,000,000.

Term B Facility ” means the credit facility constituted by the Term B Commitments and the Term B Loans thereunder.

Term B Lender ” means each Lender that has a Term B Commitment or that holds Term B Loans.

Term B Loans ” means the Term Loans made pursuant to the Term B Commitment.

Term B Maturity Date ” means the date that is six years from the Closing Date.

Term Facility ” means a credit facility in respect of Term Loans hereunder including the Term B Facility.

Term Lender ” means each Lender that holds Term Loans.

Term Loan Commitment ” means any Commitment in respect of Term Loans including the Term B Commitments.

Term Loan Standstill Period ” has the meaning assigned to such term in Section 7.01(d).

Term Loans ” means the Term B Loans, any Incremental Term Loan, Extended Term Loan or Refinancing Term Loans incurred hereunder.

Term Yield Differential ” has the meaning assigned to such term in Section 2.02(b)(v).

Test Period ” means the four consecutive fiscal quarter period most recently ended.

Title Insurer ” has the meaning assigned to such term in Section 5.09(c)(iii)(A).

Total Assets ” means, as of any date of determination, the total assets of the Borrower and its Restricted Subsidiaries, determined on a consolidated basis in accordance with GAAP, as set forth on the most recent consolidated balance sheet of the Borrower as of such date (which calculation shall give pro forma effect to any Asset Acquisition, Asset Sale or other transaction that would constitute an Asset Sale but for the operation of clause (2), (3), (8) or (9) of the definition thereof by the Borrower or any of its Restricted Subsidiaries).

Total Revolving Commitments ” means, at any time, the aggregate principal amount of the Revolving Commitments then in effect.

 

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Total Revolving Exposure ” means, at any time, the sum of the Total Revolving Loans, LC Exposure and Swing Line Exposure outstanding at such time.

Total Revolving Loans ” means, at any time, the aggregate principal amount of the Revolving Loans of the Revolving Lenders outstanding at such time.

Transaction Agreements ” means the agreements described in the Form 10 to be entered into with RRD and certain Persons that were Subsidiaries of RRD prior to the Closing Date in connection with the Spin-Off.

Transactions ” means (i) the entry into the Loan Documents and the borrowings under this Agreement to occur on the Closing Date, (ii) the issuance of the Secured Notes, (iii) the Separation Distribution, (iv) the Spin-Off, (v) the entry into the Transaction Agreements, (vi) the other transactions in connection therewith as described in the Form 10 and (vii) the payment of fees and expenses in connection therewith.

Type ” means, as to any Loan, its nature as an ABR Loan or a Eurodollar Loan.

Undisclosed Administration ” means, in relation to a Lender or its direct or indirect parent company, the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian, or other similar official by a supervisory authority or regulator under or based on the law in the country where such Lender or such parent company is subject to home jurisdiction, if applicable law requires that such appointment not be disclosed.

Unrestricted Subsidiary ” means (a) any subsidiary of the Borrower that is designated as an Unrestricted Subsidiary by the Borrower after the Closing Date in a written notice to the Administrative Agent and (b) any subsidiary of any subsidiary described in clause (a) or (b) above; provided that (i) no Default shall have occurred and be continuing at the time of or after giving effect to the designation of a subsidiary as an Unrestricted Subsidiary (a “ Designation ”) and (ii) at the time of and immediately after giving effect to such Designation, the Borrower shall be in compliance on a Pro Forma Basis with Section 6.10; provided , further , that no subsidiary shall be designated as an Unrestricted Subsidiary unless (w) no creditor of such subsidiary shall have any claim (whether pursuant to a Guarantee or otherwise) against the Borrower or any of its Restricted Subsidiaries in respect of any Indebtedness or other obligation (except for obligations arising by operation of law, including joint and several liability for taxes, ERISA and similar items) of such subsidiary (collectively, “ Unrestricted Subsidiary Support Obligations ”), except with respect to the Equity Interests of such Unrestricted Subsidiary; (x) such subsidiary is not party to any transaction with the Borrower or any Restricted Subsidiary unless the terms of such transaction complies with Section 6.06 and (y) no Investments may be made in any such subsidiary by the Borrower or any Restricted Subsidiary except to the extent permitted under Section 6.11 (it being understood that, if a subsidiary is designated as an Unrestricted Subsidiary after the Closing Date, the aggregate Fair Market Value of all outstanding Investments owned by the Borrower and its Restricted Subsidiaries in the subsidiary so designated shall be deemed to be an Investment made as of the time of such designation and shall be subject to the limits set forth in Section 6.11)). It is understood that, other than with respect to clause (1) of the definition of Consolidated Net Income, Unrestricted Subsidiaries shall be disregarded for the purposes of any calculation pursuant to this Agreement relating to financial matters with respect to the Borrower.

The Borrower may revoke the designation of a subsidiary as an Unrestricted Subsidiary pursuant to a written notice to the Administrative Agent so long as, after giving pro forma effect to such revocation, (i) the Borrower shall be in compliance on a Pro Forma Basis with Section 6.10 and (ii) no Default shall be in existence (a “ Revocation ”). Upon any Revocation, such Unrestricted Subsidiary shall constitute a Restricted Subsidiary for all purposes of this Agreement and the Borrower shall comply with Section 5.09 if such subsidiary is a Material Domestic Subsidiary. In the case of any Revocation, if the designation of such subsidiary as an Unrestricted Subsidiary caused the available basket amount referred to in Section 6.11) to be utilized by an amount equal to the aggregate Fair Market Value of all outstanding Investments owned by the Borrower and its Restricted Subsidiaries in the subsidiary so designated (the amount so utilized, the “ Designation Amount ”), then, effective upon such Revocation, such available basket amount shall be increased by the lesser of (i) the Designation Amount and (ii) the aggregate Fair Market Value of all outstanding Investments owned by the Borrower and its Restricted Subsidiaries in such subsidiary at the time of such Revocation.

 

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Unrestricted Subsidiary Support Obligations ” has the meaning assigned to such term in the definition of “Unrestricted Subsidiary.”

U.S. Lender ” means any Lender that is a “United States person” within the meaning of Section 7701(a)(30) of the Code.

U.S. Tax Compliance Certificate ” has the meaning assigned to such term in Section 2.14(e)(ii)(B)(3).

Voting Stock ” means the stock of the class or classes pursuant to which the holders thereof have the general voting power under ordinary circumstances to elect at least a majority of the Board of Directors of the Borrower (irrespective of whether or not at the time stock of any other class or classes shall have or might have voting power by reason of the happening of any contingency).

Weighted Average Life to Maturity ” when applied to any Indebtedness at any date, means the number of years obtained by dividing (a) the sum of the products obtained by multiplying (i) the amount of each then remaining installment, sinking fund, serial maturity or other required payment of principal, including payment at final maturity, in respect thereof by (ii) the number of years (calculated to the nearest one-twelfth) that shall elapse between such date and the making of such payment by (b) the then outstanding principal amount of such Indebtedness.

Wholly Owned Subsidiary ” means a subsidiary of which 100% of the Equity Interests (except for directors’ qualifying shares or certain minority interests owned by other Persons solely due to local law requirements that there be more than one stockholder, but which interest is not in excess of what is required for such purpose) are owned directly by the Borrower or through one or more Wholly Owned Subsidiaries and, solely for the purpose of the definition of “Material Domestic Subsidiary,” excluding any subsidiary whose sole assets are Equity Interests in one or more subsidiaries that are not Wholly Owned Subsidiaries.

Withdrawal Liability ” means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.

Write-Down and Conversion Powers ” means, with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule.

Section 1.02 Classification of Loans and Borrowings . For purposes of this Agreement, Loans may be classified and referred to by Class ( e.g ., a “Revolving Loan”) or by Type ( e.g ., a “Eurodollar Loan”) or by Class and Type ( e.g ., a “Eurodollar Revolving Loan”). Borrowings also may be classified and referred to by Class ( e.g ., a “Revolving Borrowing”) or by Type ( e.g ., a “Eurodollar Borrowing”) or by Class and Type ( e.g ., a “Eurodollar Revolving Borrowing”).

Section 1.03 Terms Generally . The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to have the same meaning and effect as the word “shall.” Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented, restated, amended and restated, extended or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein,” “hereof” and “hereunder,” and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights. The foregoing standards shall also apply to the other Loan Documents.

 

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Section 1.04 Accounting Terms; GAAP . Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided that for purposes of any determinations associated with leases, including, without limitation, determinations of whether such leases are capital leases, whether obligations under such leases are Capital Lease Obligations, the amount of any Capital Lease Obligations associated with such leases, and the amount of operating expenses associated with such leases, Consolidated EBITDA, Consolidated Interest Expense, Indebtedness, the Consolidated Leverage Ratio, the Consolidated Secured Leverage Ratio and the Interest Coverage Ratio shall be determined based on generally accepted accounting principles in the United States of America in effect on the Closing Date; provided , further , that, if the Borrower notifies the Administrative Agent that the Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the Closing Date in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Borrower that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision is amended in accordance herewith.

Section 1.05 Rounding . Any financial ratios required to be maintained by the Borrower pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).

Section 1.06 Times of Day . Unless otherwise specified, all references herein to times of day shall be references to New York City time (daylight or standard, as applicable).

The Administrative Agent does not warrant, nor accept responsibility, nor shall the Administrative Agent have any liability with respect to the administration, submission or any other matter related to the rates in the definition of “Eurodollar Rate” or with respect to any comparable or successor rate thereto.

Section 1.07 Letter of Credit Amounts . Unless otherwise specified herein, the amount of a Letter of Credit at any time shall be deemed to be the stated amount of such Letter of Credit in effect at such time; provided , however , that with respect to any Letter of Credit that, by its terms or the terms of any Issuer Document related thereto, provides for one or more automatic increases in the stated amount thereof, the amount of such Letter of Credit shall be deemed to be the maximum stated amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is in effect at such time.

Section 1.08 Currencies . Unless otherwise specifically set forth in this Agreement, monetary amounts are in Dollars. Notwithstanding anything to the contrary herein, no Default or Event of Default will arise as a result of any limitation or threshold set forth in Dollars being exceeded solely as a result of changes in currency exchange rates.

Section 1.09 Limited Condition Acquisitions . Notwithstanding anything in this Agreement or any Loan Document to the contrary, when calculating any applicable ratio or determining other compliance with this Agreement (including the determination of compliance with any provision of this Agreement which requires that no Default or Event of Default has occurred and is continuing or would result therefrom) in connection with a transaction undertaken in connection with the consummation of a Limited Condition Acquisition (other than the establishment of Incremental Revolving Commitments and any extension of credit under the Revolving Commitments, Extended Revolving Commitments, Incremental Revolving Commitments or Replacement Revolving Credit Commitments), the date of determination of such ratio and determination of whether any Default or Event of Default (other than an Event of Default under Section 7.01(a), (b), (h) or (i)) has occurred, is continuing or would result therefrom and whether any representations or warranties are true and correct (other than the Specified Representations), at the option of the Borrower (the Borrower’s election to exercise such option in connection with any Limited Condition Acquisition, an “ LCA Election ”), be deemed to be the date the definitive agreements for such Limited Condition Acquisition are entered into (the “ LCA Test Date ”) and if, after such ratios and other provisions are measured on a Pro Forma Basis after giving effect to such Limited Condition Acquisition and the other transactions to be entered into in connection therewith (including any incurrence of Indebtedness and the use of proceeds thereof) as if they

 

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occurred at the beginning of the four consecutive fiscal quarter period being used to calculate such financial ratio ending prior to the LCA Test Date, the Borrower could have taken such action on the relevant LCA Test Date in compliance with such ratios and provisions, such provisions shall be deemed to have been complied with. For the avoidance of doubt, (x) if any of such ratios are exceeded as a result of fluctuations in such ratio (including due to fluctuations in Consolidated EBITDA of the Borrower) at or prior to the consummation of the relevant Limited Condition Acquisition, such ratios and other provisions will not be deemed to have been exceeded as a result of such fluctuations solely for purposes of determining whether the Limited Condition Acquisition is permitted hereunder and (y) such ratios and other provisions shall not be tested at the time of consummation of such Limited Condition Acquisition or related specified transactions. If the Borrower has made an LCA Election for any Limited Condition Acquisition, then in connection with any subsequent calculation of any ratio or basket availability with respect to any other transaction on or following the relevant LCA Test Date and prior to the earlier of the date on which such Limited Condition Acquisition (other than for purposes of determining whether an Event of Default has occurred under Section 6.10) is consummated or the date that the definitive agreement for such Limited Condition Acquisition is terminated or expires without consummation of such Limited Condition Acquisition, any such ratio or basket shall be calculated on (1) a Pro Forma Basis assuming such Limited Condition Acquisition and other transactions in connection therewith (including any incurrence of Indebtedness and the use of proceeds thereof) have been consummated and (2) on a Pro Forma Basis but without giving effect to such Limited Condition Acquisition and other transactions in connection therewith (including any incurrence of Indebtedness and use of proceeds thereof).

ARTICLE II

The Credits

Section 2.01 Commitments .

(a) Subject to the terms and conditions hereof, from time to time during the Revolving Commitment Period, each Revolving Lender severally agrees to make to the Borrower revolving credit loans denominated in Dollars (“ Revolving Loans ”) in an aggregate principal amount that will not result at the time of such Borrowing in the amount of such Lender’s Outstanding Revolving Credit exceeding such Lender’s Revolving Commitment; provided that no Revolving Loans and Swing Line Loans shall be permitted to be borrowed on the Closing Date other than up to $50.0 million aggregate principal amount to fund ordinary course working capital needs of the Borrower and its Restricted Subsidiaries. During the Revolving Commitment Period the Borrower may use the Revolving Commitments by borrowing, prepaying the Revolving Loans in whole or in part, and reborrowing, all in accordance with the terms and conditions hereof. The Revolving Loans may from time to time be Eurodollar Loans or, in the case of Revolving Loans in Dollars, ABR Loans, as determined by the Borrower and notified to the Administrative Agent in accordance with Sections 2.03 and 2.05. Each Revolving Loan under the Revolving Commitments shall be made as part of a Borrowing consisting of Revolving Loans made by the Revolving Lenders thereunder ratably in accordance with their respective Revolving Commitments. The failure of any Revolving Lender to make any Revolving Loan required to be made by it shall not relieve any other Revolving Lender of its obligations hereunder; provided that the Revolving Commitments of the Revolving Lenders are several and no Revolving Lender shall be responsible for any other Revolving Lender’s failure to make Revolving Loans as required.

(b) Subject to the terms and conditions hereof, each Term B Lender severally agrees to make to the Borrower Term B Loans denominated in Dollars on the Closing Date in an amount equal to such Term B Lender’s Term B Commitment. Term B Loans that are repaid or prepaid may not be reborrowed.

(c) At the commencement of each Interest Period for any Eurodollar Borrowing, such Borrowing shall be in an aggregate principal amount that is an integral multiple of $1,000,000 and not less than $5,000,000. At the time that each ABR Borrowing is made, such Borrowing shall be in an aggregate principal amount that is an integral multiple of $100,000 and not less than $500,000; provided that an ABR Borrowing may be in an aggregate principal amount that is equal to the entire unused balance of the applicable outstanding Commitment. Borrowings of more than one Type and Class may be outstanding at the same time; provided that there shall not at any time be more than a total of 10 Eurodollar Borrowings outstanding.

 

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Section 2.02 Incremental Revolving Commitments and Incremental Term Loans .

(a) The Borrower may, by written notice to the Administrative Agent from time to time, request Incremental Term Loan Commitments and/or Incremental Revolving Commitments, as applicable, in an amount not to exceed the Incremental Amount available at the time such Incremental Term Loans are funded or established (if commitments in respect of such Incremental Term Loans are established on a date prior to funding) or Incremental Revolving Commitments are established (except, in each case, as set forth in the final paragraph under Section 6.01) from one or more Incremental Term Lenders and/or Incremental Revolving Lenders (which, in each case, may include any existing Lender (but no such Lender shall be required to participate in any such Incremental Facility without its consent), but shall be required to be persons which would qualify as assignees of a Lender in accordance with Section 9.05) willing to provide such Incremental Term Loans and/or Incremental Revolving Commitments, as the case may be, in their sole discretion; provided that each Incremental Revolving Lender shall be subject to the approval of the Administrative Agent, each Issuing Bank and the Swing Line Lender (which approval shall not be unreasonably withheld, conditioned or delayed). Such notice shall set forth (i) the amount of the Incremental Term Loan Commitments and/or Incremental Revolving Commitments being requested (which shall be in minimum increments of $5,000,000 and a minimum amount of $10,000,000, or equal to the remaining Incremental Amount or, in each case, such lesser amount approved by the Administrative Agent) and (ii) the date on which such Incremental Term Loan Commitments and/or Incremental Revolving Commitments are requested to become effective.

(b) The Borrower and each Incremental Term Lender and/or Incremental Revolving Lender shall execute and deliver to the Administrative Agent an Incremental Assumption Agreement and such other documentation (including, without limitation, amendments to this Agreement) as the Administrative Agent shall reasonably specify to evidence the Incremental Term Loan Commitment of such Incremental Term Lender and/or Incremental Revolving Commitment of such Incremental Revolving Lender. Each Incremental Assumption Agreement shall specify the terms of the applicable Incremental Term Loans and/or Incremental Revolving Commitments; provided that:

(i) any Incremental Revolving Commitments shall have the same terms as the Revolving Commitments, shall require no scheduled amortization or mandatory commitment reduction prior to the Revolving Termination Date and shall be on the same terms (other than upfront fees) and pursuant to the same documentation applicable to the Revolving Commitments,

(ii) the Incremental Loans shall not be guaranteed by any subsidiaries of the Borrower that do not guarantee the Obligations and shall be secured on a pari passu basis by the same Collateral (and no additional Collateral) securing the Obligations, any Incremental Revolving Commitment shall have the same payment priority as the Revolving Commitments and any Incremental Term Facility shall have the same payment priority as the Term B Facility,

(iii) (a) the scheduled final maturity date of any Incremental Term Facility shall be no earlier than the Term B Maturity Date and (b) the Weighted Average Life to Maturity of any Incremental Term Facility shall be no shorter than the remaining Weighted Average Life to Maturity of the Term B Facility,

(iv) no Incremental Term Facility shall participate on a greater than pro rata basis with the Term B Facility in any mandatory prepayment

(v) any Incremental Facility shall be on terms (other than pricing, amortization, maturity, prepayment premiums and mandatory prepayments) and pursuant to documentation substantially similar to the Term B Facility or Revolving Facility, as applicable, or otherwise reasonably acceptable to the Administrative Agent; provided that such Incremental Facilities (x) shall have no financial maintenance covenants of a different type than the Financial Covenants, and no financial maintenance covenants that are more restrictive than the Financial Covenants and (y) shall not have negative covenants and/or default provisions that, taken as a whole, are materially more restrictive than those applicable to the Revolving Facility as determined in good faith by the Borrower unless, in each case of clauses (x) and (y) such terms (I) (if favorable to all then existing Lenders) are in consultation with the Administrative Agent, incorporated into this

 

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Agreement for the benefit of all then existing Lenders (without further amendment requirements); or (II) become applicable only after the Revolving Facility shall have matured or been terminated and any Term Loans existing at such date have been paid in full; provided , however , with respect to any Incremental Term Loans, the All-in Yield shall be as agreed by the respective Incremental Term Lenders and the Borrower, except that the All-in Yield in respect of any such Incremental Term Loans may exceed the All-in Yield in respect of the Term B Loans by no more than 0.50%, or if it does so exceed such All-in Yield (such difference, the “ Term Yield Differential ”) then the Applicable Rate (or the “LIBOR floor” as provided in the following proviso) applicable to such Term B Loans shall be increased such that after giving effect to such increase, the Term Yield Differential shall not exceed 0.50%; provided , that to the extent any portion of the Term Yield Differential is attributable to a higher “LIBOR floor” being applicable to such Incremental Term Loans, such floor shall only be included in the calculation of the Term Yield Differential to the extent such floor is greater than the adjusted LIBOR rate in effect for an Interest Period of three months’ duration at such time, and, with respect to such excess, the “LIBOR floor” applicable to the outstanding Term B Loans shall be increased to an amount not to exceed the “LIBOR floor” applicable to such Incremental Term Loans prior to any increase in the Applicable Rate applicable to such Term B Loans then outstanding; and

(vi) no Incremental Revolving Commitments may be established if, after giving effect thereto, the aggregate principal amount of Revolving Commitments, Extended Revolving Commitments, Incremental Revolving Commitments or Replacement Revolving Facility Commitments would exceed Consolidated EBITDA (determined on a Pro Forma Basis) for the most recent Test Period for which financial statements have been delivered pursuant to Section 5.01; provided that the Lenders providing Incremental Revolving Commitments shall be fully protected (and extensions of credit thereunder shall be included in Priority Payment Obligations) in relying on a certificate of a Responsible Officer of the Borrower as to whether the limitation set forth in this clause (vi) is exceeded.

(c) Each party hereto hereby agrees that, upon the effectiveness of any Incremental Assumption Agreement, this Agreement shall be amended or amended and restated to the extent (but only to the extent) necessary to reflect the existence and terms of the Incremental Term Loan Commitments and/or Incremental Revolving Commitments evidenced thereby as provided for in Section 9.02. Any amendment or amendment and restatement to this Agreement or any other Loan Document that is necessary to effect the provisions of this Section 2.02 (including, without limitation, to provide for the establishment of Incremental Term Loans) and any such collateral and other documentation shall be deemed “Loan Documents” hereunder and may be memorialized in writing between the Administrative Agent and the Borrower and furnished to the other parties hereto.

(d) Notwithstanding the foregoing, subject to Section 1.09, no Incremental Term Loan Commitment or Incremental Revolving Commitment shall become effective under this Section 2.02 unless (i) no Default or Event of Default shall exist after giving pro forma effect to such Incremental Term Loan Commitment or Incremental Revolving Commitment and the incurrence of Indebtedness thereunder and use of proceeds therefrom; (ii) the conditions set forth in Section 4.02 have been complied with whether or not a Borrowing is made under the Incremental Facility on such date (other than clause (c) thereof which shall only be required to be complied with if a Borrowing is made on such date); (iii) after giving pro forma effect to such Incremental Term Loan Commitment or Incremental Revolving Commitment and the incurrence of Indebtedness thereunder (assuming such commitments are fully drawn on such date) and use of proceeds therefrom the Borrower would be in compliance with Section 6.10 as of the last day of the most recently ended Test Period only on the date of the initial incurrence of (or commitment in respect of) such Indebtedness and (iv) the Administrative Agent shall have received documents and legal opinions as to such matters as are reasonably requested by the Administrative Agent. The Administrative Agent shall promptly notify each Lender as to the effectiveness of each Incremental Assumption Agreement.

(e) Upon each increase in the establishment of any Incremental Revolving Commitments pursuant to this Section 2.02, each Lender immediately prior to such increase will automatically and without further act be deemed to have assigned to each Incremental Revolving Lender providing a portion of the Incremental Revolving Commitments in respect of such increase, and each such Incremental Revolving Lender will automatically and without further act be deemed to have assumed, a portion of such Lender’s participations hereunder in outstanding

 

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Letters of Credit such that, after giving effect to each such deemed assignment and assumption of participations, the percentage of the aggregate outstanding participations hereunder in Letters of Credit held by each Lender (including each such Incremental Revolving Lender) will equal such Lender’s Revolving Commitment Percentage and if, on the date of such increase, there are any Revolving Loans outstanding, such Revolving Loans shall on or prior to the effectiveness of such Incremental Revolving Commitments either be prepaid from the proceeds of additional Revolving Loans made hereunder or assigned to an Incremental Revolving Lender (in each case, reflecting such Incremental Revolving Commitments, such that Revolving Loans are held ratably in accordance with each Lender’s pro rata share, after giving effect to such increase), which prepayment or assignment shall be accompanied by accrued interest on the Revolving Loans being prepaid. The Administrative Agent and the Lenders hereby agree that the minimum borrowing, pro rata borrowing and pro rata payment requirements contained elsewhere in this Agreement shall not apply to the transactions effected pursuant to the immediately preceding sentence. If there is a new Revolving Borrowing on such Incremental Revolving Commitment Closing Date, the Revolving Lenders after giving effect to such Incremental Revolving Commitments shall make such Revolving Loans in accordance with Section 2.01.

Section 2.03 Procedure for Borrowing .

(a) To request a Revolving Borrowing or a Term B Loan Borrowing on any Business Day, the Borrower shall notify the Administrative Agent of such request (x) in the case of ABR Loans, by telephone or Committed Loan Notice (which notice must be received by the Administrative Agent prior to 12:00 noon, New York City time on the requested Borrowing Date) or (y) in the case of Eurodollar Loans, by Committed Loan Notice (which notice must be received by the Administrative Agent prior to 12:00 noon, New York City time not less than three Business Days prior to the requested Borrowing Date). Any Committed Loan Notice shall be irrevocable (but may be conditioned on the occurrence of any event if the Committed Loan Notice includes a description of such event; provided that the relevant Lenders shall still be entitled to the benefits of Section 2.13) and any telephonic borrowing request must be confirmed immediately by delivery to the Administrative Agent of a Committed Loan Notice. Each such telephonic and written Committed Loan Notice shall specify the amount, Class and Type of Borrowing to be borrowed, the requested Borrowing Date and if applicable, the duration of the Interest Period with respect thereto. Upon receipt of such notice, the Administrative Agent shall promptly notify each relevant Lender thereof. For the avoidance of doubt, subject to Section 2.11, each Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request in accordance herewith.

(b) If no election as to the Type of Borrowing is specified for a Borrowing, then the requested Borrowing shall be an ABR Borrowing. If no Interest Period is specified with respect to any requested Eurodollar Borrowing, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration.

Section 2.04 Funding of Borrowings .

(a) Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds by 2:00 p.m. New York City time to the account of the Administrative Agent most recently designated by it for such purpose by notice to the Lenders. The Administrative Agent will make such Loans available to the Borrower by promptly crediting the amounts so received, in like funds, to an account of the Borrower maintained with the Administrative Agent in New York City or to any other account as shall have been designated by the Borrower in writing to the Administrative Agent in the applicable Committed Loan Notice. Each Lender at its option may make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of the Borrower to repay such Loan in accordance with the terms.

(b) Unless the Administrative Agent shall have received notice from a Lender prior to the proposed time of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with paragraph (a) of this Section and may, in reliance upon such assumption, make available to the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount with interest thereon, for

 

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each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (i) in the case of such Lender, a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation or (ii) in the case of the Borrower, the interest rate applicable to such Loans. If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender’s Loan included in such Borrowing.

(c) The obligations of the Lenders hereunder to make Loans, to fund participations in Letters of Credit and Swing Line Loans and to make payments pursuant to Sections 8.09 and 9.04(c) are several and not joint. The failure of any Lender to make any Loan or to fund any such participation or to make any payment under Sections 8.09 or 9.04(c) on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and, other than pursuant to Section 2.18, no Lender shall be responsible for the failure of any other Lender to so make its Loan or, to fund its participation or to make its payment under Sections 8.09 or 9.04(c).

Section 2.05 Interest Elections .

(a) Each Borrowing initially shall be of the Type specified in the applicable Committed Loan Notice, and each Eurodollar Borrowing shall have an initial Interest Period as specified in such Committed Loan Notice. Thereafter, the Borrower may elect to convert any Borrowing to a different Type or to continue such Borrowing as the same Type and may elect successive Interest Periods for any Eurodollar Borrowing, all as provided in this Section. The Borrower may elect different Types or Interest Periods, as applicable, with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the relevant Lenders holding the Loans comprising the relevant portion of such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing. Notwithstanding anything to the contrary herein, a Swing Line Loan may not be converted to a Eurodollar Loan.

(b) To make an election pursuant to this Section, the Borrower shall notify the Administrative Agent of such election by telephone by the time that a request for a Borrowing would be required under Section 2.03, if the Borrower were requesting a Borrowing of the Type resulting from such election to be made on the effective date of such election. Each such telephonic Interest Election Request shall be irrevocable and shall be confirmed promptly in writing.

(c) Each telephonic and written Interest Election Request shall specify (i) the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) below shall be specified for each resulting Borrowing), (ii) the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day, (iii) whether the resulting Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing, and (iv) if the resulting Borrowing is a Eurodollar Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of the term “Interest Period.” If any such Interest Election Request requests a Eurodollar Borrowing but does not specify an Interest Period, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration.

(d) Promptly following receipt of an Interest Election Request, the Administrative Agent shall advise each relevant Lender of the details thereof and of such Lender’s portion of each resulting Borrowing.

(e) If the Borrower fails to deliver a timely Interest Election Request with respect to a Eurodollar Borrowing prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be continued as such for an Interest Period of one month. Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing and the Administrative Agent, at the request of the Required Lenders, so notifies the Borrower, then, so long as an Event of Default is continuing (i) no outstanding Borrowing may be converted to or continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar Borrowing shall be converted to an ABR Borrowing at the end of the Interest Period applicable thereto.

 

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Section 2.06 Termination and Reduction of Commitments . The Borrower shall have the right, upon not less than three Business Days’ notice to the Administrative Agent, to terminate the Commitments of any Class or, from time to time, to reduce the amount of the Commitments of any Class; provided that no such termination or reduction of Revolving Commitments shall be permitted if, after giving effect thereto and to any prepayments of the Revolving Loans made on the effective date thereof, the Outstanding Revolving Credits would exceed the Total Revolving Commitments. Any such reduction shall be in an amount equal to an integral multiple of $1,000,000 and not less than $5,000,000 and shall reduce permanently the Commitments of such Class then in effect.

Section 2.07 Repayment of Loans; Evidence of Debt .

(a) Any Lender may request that Loans made by it be evidenced by a promissory note. In such event, the Borrower shall prepare, execute and deliver to such Lender a promissory note payable to the order of such Lender (or, if requested by such Lender, to such Lender and its registered assigns) and in a form approved by the Administrative Agent. Thereafter, the Loans evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 9.05) be represented by one or more promissory notes in such form payable to the order of the payee named therein (or, if such promissory note is a registered note, to such payee and its registered assigns).

(b) The Borrower unconditionally promises to pay the then unpaid principal amount of each Revolving Loan on the Revolving Termination Date.

(c) The Borrower shall repay principal of outstanding Term B Loans on the last Business Day of each March, June, September and December of each year (commencing on the applicable day of the first full fiscal quarter of the Borrower after the Closing Date) and on the Term B Maturity Date, in an aggregate principal amount of such Term B Loans equal to (A) in the case of first eight payments, an amount equal to $12,500,000, (B) thereafter, in the case of quarterly payments due prior to the Term B Maturity Date, an amount equal to $10,625,000 and (C) in the case of such payment due on the Term B Maturity Date, an amount equal to the then unpaid principal amount of such Term B Loans outstanding.

(d) The Borrower shall repay each Swing Line Loan on the earlier to occur of (i) the date ten Business Days after such Loan is made and (ii) the Revolving Termination Date.

(e) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.

(f) The Administrative Agent shall maintain accounts in which it shall record (i) the amount of each Loan made hereunder, Type thereof and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder for the account of the relevant Lenders and each relevant Lender’s share thereof.

(g) The entries made in the accounts maintained pursuant to paragraph (e) or (f) of this Section shall be conclusive absent manifest error of the existence and amounts of the obligations recorded therein; provided that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to repay the Loans in accordance with the terms of this Agreement.

Section 2.08 Prepayments .

(a) (i) The Borrower may at any time and from time to time prepay Loans, in whole or in part, without premium or penalty (except as specifically provided in the proviso of this sentence and in the penultimate sentence of this Section 2.08(a)(i)), upon notice delivered to the Administrative Agent no later than 12:00 noon, New York City time, not less than three Business Days prior thereto, in the case of Eurodollar Loans, no later than 12:00 noon, New York City time, on the date of such notice, in the case of ABR Loans, which notice shall specify

 

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the date and amount of prepayment and the Loans to be prepaid; provided that, if a Eurodollar Loan is prepaid on any day other than the last day of the Interest Period applicable thereto, the Borrower shall also pay any amounts owing pursuant to Section 2.13. Each such notice may be conditioned on the occurrence of one or more events (it being understood that the Administrative Agent and Lenders shall be entitled to assume that the Loans contemplated by such notice are to be made unless the Administrative Agent shall have received written notice revoking such notice of prepayment on or prior to the date of such prepayment). Upon receipt of any such notice the Administrative Agent shall promptly notify each relevant Lender thereof. If any such notice is given, the amount specified in such notice shall be due and payable on the date specified therein, together with accrued interest to such date on the amount prepaid. Partial prepayments of Loans shall be in an aggregate principal amount that is an integral multiple of $1,000,000 and not less than $5,000,000. In the case of each prepayment of Loans pursuant to this Section 2.08(a), the Borrower may in its sole discretion select the Loans (of any Class) to be repaid, and such prepayment shall be paid to the appropriate Lenders in accordance with their respective pro rata share of such Loans. If any Repricing Event occurs prior to the date occurring 12 months after the Closing Date, the Borrower agrees to pay to the Administrative Agent, for the ratable account of each Lender with Term B Loans that are subject to such Repricing Event (including any Lender which is replaced pursuant to Section 2.16(c) as a result of its refusal to consent to an amendment giving rise to such Repricing Event), a fee in an amount equal to 1.00% of the aggregate principal amount of the Term B Loans subject to such Repricing Event. Such fees shall be earned, due and payable upon the date of the occurrence of such Repricing Event.

(ii) The Borrower may, upon notice to the Swing Line Lender (with a copy to the Administrative Agent), at any time or from time to time, voluntarily prepay Swing Line Loans in whole or in part without premium or penalty; provided that (A) such notice must be received by the Swing Line Lender and the Administrative Agent not later than 1:00 p.m. on the date of the prepayment, and (B) any such prepayment shall be in a minimum principal amount of $100,000. Each such notice shall specify the date and amount of such prepayment. If such notice is given by the Borrower, the Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein.

(b) If at any time for any reason the sum of the Outstanding Revolving Credit of all Lenders exceeds the Total Revolving Commitments, the Borrower shall upon learning thereof, or upon the request of the Administrative Agent, immediately prepay the Revolving Loans and Swing Line Loans in an aggregate principal amount at least equal to the amount of such excess.

(c) Beginning on the Closing Date, the Borrower shall apply all Net Proceeds within five (5) Business Days after receipt thereof to prepay Term Loans in accordance with clauses (e) and (f) below.

(d) Not later than five (5) Business Days after the date on which the annual financial statements are, or are required to be, delivered under Section 5.01(a) with respect to each Excess Cash Flow Period, the Borrower shall calculate Excess Cash Flow for such Excess Cash Flow Period and, if and to the extent the amount of such Excess Cash Flow is greater than $0, the Borrower shall apply an amount to prepay Term Loans equal to (i) the Required Percentage of such Excess Cash Flow minus  (ii) the sum of (a) to the extent not financed using the proceeds of funded Indebtedness, the amount of any voluntary payments of Term Loans and amounts used to repurchase outstanding principal of Term Loans during such Excess Cash Flow Period ( plus , without duplication of any amounts previously deducted under this clause (ii), the amount of any such voluntary payments and amounts so used to repurchase principal of Term Loans after the end of such Excess Cash Flow Period but before the date of prepayment under this clause (d)) pursuant to Sections 2.08(a) and Section 2.21 (it being understood that the amount of any such payments pursuant to Section 2.21 shall be calculated to equal the amount of cash used to repay principal and not the principal amount deemed prepaid therewith) and (b) to the extent not financed using the proceeds of funded Indebtedness, the amount of any voluntary payments of Revolving Loans to the extent that Revolving Commitments are terminated or reduced pursuant to Section 2.06 by the amount of such payments. Such calculation will be set forth in an Officer’s Certificate delivered to the Administrative Agent setting forth the amount, if any, of Excess Cash Flow for such Excess Cash Flow Period, the amount of any required prepayment in respect thereof and the calculation thereof in reasonable detail.

 

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(e) Amounts to be applied in connection with prepayments of Term Loans pursuant to this Section 2.08 shall be applied to the prepayment of the Term Loans in accordance with Section 2.15(b) until paid in full. In connection with any mandatory prepayments by the Borrower of the Term Loans pursuant to this Section 2.08, such prepayments shall be applied on a pro rata basis to the then outstanding Term Loans being prepaid irrespective of whether such outstanding Term Loans are ABR Loans or Eurodollar Loans; provided that with respect to such mandatory prepayment, the amount of such mandatory prepayment shall be applied (i) first to Term Loans that are ABR Loans to the full extent thereof before application to Term Loans that are Eurodollar Loans in a manner that minimizes the amount of any payments required to be made by the Borrower pursuant to Section 2.13 and (ii) on a pro rata basis with respect to each Class of Term Loans except to the extent any Incremental Assumption Agreement, Extension Amendment or Refinancing Amendment provides that the Class of Term Loans incurred thereunder is to receive less than its pro rata share, in which case such prepayment shall be allocated to such Class of Term Loans as set forth in such Incremental Assumption Agreement, Extension Amendment or Refinancing Amendment and to the other Classes of Term Loans on a pro rata basis. Each prepayment of the Term Loans under this Section 2.08 shall be accompanied by accrued interest to the date of such prepayment on the amount prepaid.

(f) The Borrower shall notify the Administrative Agent in writing of any mandatory prepayment of Term Loans required to be made pursuant to Section 2.08(c) or 2.08(d) at least four (4) Business Days prior to the date of such prepayment. Each such notice shall specify the date of such prepayment and provide a reasonably detailed calculation of the amount of such prepayment. The Administrative Agent will promptly notify each Term Lender of the contents of any such prepayment notice and of such Term Lender’s ratable portion of such prepayment (based on such Lender’s pro rata share of each relevant Class of the Term Loans). Any Term Lender (a “ Declining Term Lender ,” and any Term Lender which is not a Declining Term Lender, an “ Accepting Term Lender ”) may elect, by delivering written notice to the Administrative Agent and the Borrower no later than 5:00 p.m. one (1) Business Day after the date of such Term Lender’s receipt of notice from the Administrative Agent regarding such prepayment, that the full amount of any mandatory prepayment otherwise required to be made with respect to the Term Loans held by such Term Lender pursuant to Section 2.08(c) or 2.08(d) not be made (the aggregate amount of such prepayments declined by the Declining Term Lenders, the “ Declined Prepayment Amount ”). If a Term Lender fails to deliver notice setting forth such rejection of a prepayment to the Administrative Agent within the time frame specified above or such notice fails to specify the principal amount of the Term Loans to be rejected, any such failure will be deemed an acceptance of the total amount of such mandatory prepayment of Term Loans. In the event that the Declined Prepayment Amount is greater than $0, such Declined Prepayment Amount shall be retained by the Borrower. For the avoidance of doubt, the Borrower may, at its option, apply any amounts retained in accordance with the immediately preceding sentence to prepay loans in accordance with Section 2.08(a).

(g) Any prepayment of Term Loans of any Class shall be applied (i) in the case of prepayments made pursuant to Section 2.08(a)(i), to reduce the subsequent scheduled repayments of the Term Loans of such Class to be made pursuant to Section 2.07 as directed by the Borrower, or as otherwise provided in any Extension Amendment, any Incremental Assumption Amendment or Refinancing Amendment as directed by the Borrower and if not directed by the Borrower, in direct order of maturity thereof, and (ii) in the case of prepayments made pursuant to Section 2.08(c) or Section 2.08(d), to reduce the subsequent scheduled repayments of the Term Loans of such Class to be made pursuant to this Section in direct order of maturity, or as otherwise provided in any Extension Amendment, any Incremental Assumption Amendment or Refinancing Amendment.

Section 2.09 Fees .

(a) The Borrower agrees to pay to the Administrative Agent for the account of each Revolving Lender a facility fee in Dollars for the period from and including the Closing Date to the last day of the Revolving Commitment Period, computed at the applicable Facility Fee Rate on the actual daily amount of the Total Revolving Commitment of such Lender regardless of usage (or, if the Total Revolving Commitments have been terminated, on the Outstanding Revolving Credit) during the period for which payment is made, payable quarterly in arrears on each Revolving Fee Payment Date, commencing with the first such date to occur after the Closing Date.

(b) The Borrower agrees to pay (i) to the Administrative Agent for the account of each Revolving Lender a participation fee with respect to its participations in Letters of Credit, which shall accrue at the same Applicable Rate used to determine the interest rate applicable to Eurodollar Loans on the actual daily amount of such

 

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Revolving Lender’s LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Closing Date to but excluding the later of the date on which such Revolving Lender’s Revolving Commitment terminates and the date on which such Revolving Lender ceases to have any LC Exposure, and (ii) to each Issuing Bank a fronting fee, which shall accrue at the rate of 0.125% per annum on the actual daily amount of the LC Exposure of the Letters of Credit issued by it (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Closing Date to but excluding the later of the date of termination of the Revolving Commitments and the date on which there ceases to be any such LC Exposure, as well as the fees agreed by the Issuing Bank and the Borrower with respect to the issuance, amendment, renewal or extension of any Letter of Credit or processing of drawings thereunder. Participation fees and fronting fees will be payable quarterly in arrears on each Revolving Fee Payment Date, commencing with the first such date to occur after the Closing Date; provided that any such fees accruing after the date on which the Revolving Commitments terminate shall be payable on demand. Any other fees payable to the Issuing Bank pursuant to this paragraph shall be payable within 10 days after demand. All participation fees and fronting fees shall be computed on the basis of a year of 365/366 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).

(c) The Borrower agrees to pay to the Administrative Agent the fees in the amounts and on the dates as set forth in any fee agreements with the Administrative Agent and to perform any other obligations contained therein.

(d) All fees payable hereunder shall be paid on the dates due, in immediately available funds in Dollars, to the Administrative Agent for distribution, in the case of facility fees, to the Revolving Lenders. Fees paid shall not be refundable under any circumstances. All per annum fees shall be computed on the basis of a year of 365/366 days for actual days elapsed; provided that facility fees shall be computed on the basis of a year of 360 days.

Section 2.10 Interest .

(a) The Loans comprising each ABR Borrowing and Swing Line Loans shall bear interest at the Alternate Base Rate plus the Applicable Rate.

(b) The Loans comprising each Eurodollar Borrowing in any currency shall bear interest at the Eurodollar Rate for such currency for the Interest Period in effect for such Borrowing plus the Applicable Rate.

(c) Notwithstanding the foregoing, if any principal of or interest on any Loan or any fee or other amount payable by the Borrower hereunder is not paid when due, whether at stated maturity, upon acceleration or otherwise, such overdue amount shall bear interest, after as well as before judgment, at a rate per annum equal to (i) in the case of overdue principal of any Loan, 2% plus the rate otherwise applicable to such Loan as provided in the preceding paragraphs of this Section or (ii) in the case of any other amount, 2% plus the rate applicable to ABR Loans as provided in paragraph (a) of this Section.

(d) Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan and, in addition, in the case of Revolving Loans, upon termination of the Revolving Commitments; provided that (i) interest accrued pursuant to paragraph (c) of this Section shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan, accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in the event of any conversion of any Eurodollar Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion.

(e) All interest hereunder shall be computed on the basis of a year of 360 days, except that interest computed by reference to the Alternate Base Rate when the Alternate Base Rate is calculated by reference to the Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year). The applicable Alternate Base Rate or Eurodollar Rate shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error.

 

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Section 2.11 Alternate Rate of Interest .

(a) If prior to the commencement of any Interest Period for a Eurodollar Borrowing:

(i) the Administrative Agent determines (which determination shall be conclusive and binding absent manifest error) that adequate and reasonable means do not exist for ascertaining the Eurodollar Rate for a Loan or for the applicable Interest Period; or

(ii) the Administrative Agent is advised by the Required Lenders that the Eurodollar Rate for a Loan or for the applicable Interest Period will not adequately and fairly reflect the cost to such Lenders (or Lender) of making or maintaining their Loans (or its Loan) included in such Borrowing for such Interest Period;

then the Administrative Agent shall give notice thereof to the Borrower and the Lenders by telephone or telecopy as promptly as practicable thereafter and, until the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, (i) any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective and the Loans shall be converted to an ABR Borrowing and (ii) if any borrowing request requests a Eurodollar Borrowing, such Borrowing shall be made as an ABR Borrowing.

Section 2.12 Increased Costs .

(a) If any Change in Law shall:

(i) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender (including any reserve for eurocurrency funding that may be established or reestablished under Regulation D of the Board);

(ii) impose on any Lender (including any Issuing Bank or the Swing Line Lender) any Taxes other than (A) Indemnified Taxes or Other Taxes indemnified under Section 2.14 or (B) Excluded Taxes; or

(iii) impose on any Lender or the London interbank market any other condition affecting this Agreement or Loans made by or participations held by such Lender;

and the result of any of the foregoing shall be to increase the cost to such Lender of making, continuing, converting into or maintaining any Loan (or of maintaining its obligation to make any such Loan) or to increase the cost to such Lender or Issuing Bank of participating in, issuing or maintaining any Letter of Credit or to reduce the amount of any sum received or receivable by such Lender hereunder (whether of principal, interest or otherwise), then the Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender for such additional costs incurred or reduction suffered.

(b) If any Lender determines that any Change in Law regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on such Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence of this Agreement or the Loans made by such Lender to a level below that which such Lender or such Lender’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s policies and the policies of such Lender’s holding company with respect to capital adequacy and liquidity), then from time to time the Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender or such Lender’s holding company for any such reduction suffered.

(c) A certificate of a Lender setting forth the amount or amounts necessary to compensate such Lender or its holding company, as the case may be, as specified in paragraph (a) or (b) of this Section shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within 10 days after receipt thereof.

 

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(d) Failure or delay on the part of any Lender to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender pursuant to this Section for any increased costs or reductions incurred more than 180 days prior to the date that such Lender notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s intention to claim compensation therefor; provided further that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof.

Section 2.13 Break Funding Payments . In the event of (a) the payment of any principal of any Eurodollar Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (b) the conversion of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Eurodollar Loan on the date specified in any notice delivered pursuant hereto or (d) the assignment of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto as a result of a request by the Borrower pursuant to Section 2.16, then, in any such event, the Borrower shall compensate each Lender for the loss, cost and expense attributable to such event. In the case of a Eurodollar Loan, such loss, cost or expense to any Lender shall be deemed to be an amount determined by such Lender to be the excess, if any, of (i) the amount of interest which would have accrued on the principal amount of such Loan had such event not occurred, at the Eurodollar Rate that would have been applicable to such Loan, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that would have been the Interest Period for such Loan), over (ii) the amount of interest which would accrue on such principal amount for such period at the interest rate which such Lender would bid were it to bid, at the commencement of such period, for deposits in the relevant currency of a comparable amount and period from other banks in the eurocurrency market (but not less than the available Eurodollar Rate quoted for the Eurodollar interest period equal to the period from the date of such event to the last day of the then current Interest Period, or if there is no such Eurodollar interest period, the lower of the Eurodollar Rates quoted for the closest Eurodollar interest periods that are longer and shorter than such period). A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within 10 days after receipt thereof.

Section 2.14 Taxes .

(a) All payments by or on account of any obligation of any Loan Party hereunder or under any other Loan Document shall be made free and clear of and without deduction for any Taxes unless required by applicable Requirements of Law; provided that if any applicable withholding agent shall be required by applicable Requirements of Law to deduct any Taxes in respect of any such payments, then (i) if such Tax is an Indemnified Tax or Other Tax, the sum payable shall be increased by the applicable Loan Party as necessary so that after all required deductions (including deductions applicable to additional sums payable under this Section 2.14) have been made the applicable Lender (or, in the case of a payment made to the Administrative Agent for its own account, the Administrative Agent) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the applicable withholding agent shall make such deductions and (iii) the applicable withholding agent shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable Requirements of Law.

(b) In addition, without duplication of any obligation set forth in subsection (a), the Borrower shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable Requirements of Law.

(c) Without duplication of any obligation set forth in subsection (a), the Loan Parties shall indemnify the Administrative Agent and each Lender, within 10 days after written demand therefor, for the full amount of any Indemnified Taxes paid by the Administrative Agent or such Lender, as the case may be, on or with respect to any payment by or on account of any obligation of any Loan Party hereunder or under any other Loan Document and any Other Taxes paid by the Administrative Agent or such Lender (including Indemnified Taxes or Other

 

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Taxes imposed on asserted on or attributable to amounts payable under this Section 2.14) and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender, or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error. If the Borrower determines that there is a reasonable basis to contest any Indemnified Tax or Other Tax for which it is responsible hereunder, without limiting Borrower’s indemnification obligations hereunder, such Administrative Agent or Lender (as applicable) shall reasonably cooperate in pursuing such contest (at Borrower’s expense) so long as pursuing such contest would not, in the sole reasonable determination of the Administrative Agent or Lender, result in any additional unreimbursed costs or expenses or be otherwise disadvantageous to the Administrative Agent or such Lender. This Section shall not be construed to require the Administrative Agent or Lender to make available its tax returns (or any other information relating to its Taxes which it deems confidential) to the Borrower or any other Person.

(d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes by any Loan Party to a Governmental Authority, the Borrower shall deliver to the Administrative Agent a copy, or if reasonably available to the Borrower a certified copy, of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

(e) (i) Each Lender shall deliver to the Borrower and the Administrative Agent, at the time or times reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation reasonably requested by the Borrower or the Administrative Agent as will permit such payments to be made without withholding Tax or at a reduced rate of withholding.

(ii) Without limiting the generality of the foregoing,

(A) any U.S. Lender shall deliver to the Borrower and the Administrative Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), properly executed originals of IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding Tax;

(B) any Non-U.S. Lender shall, to the extent it is legally eligible to do so, deliver to the Borrower and the Administrative Agent on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), whichever of the following is applicable to establish such Non-U.S. Lender’s entitlement to a reduced rate of, or exemption from, withholding:

(1) two properly executed originals of IRS Form W-8BEN or W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to an income tax treaty to which the United States is a party;

(2) two properly executed originals of IRS Form W-8ECI;

(3) (x) executed originals of a certificate substantially in the form of Exhibit G-1 to the effect that such Non-U.S. Lender is not (A) a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) of the Code, or (C) a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code, and that no payments to be received by such Lender will be effectively connected income (a “ U.S. Tax Compliance Certificate ”) and (y) two properly executed originals of IRS Form W-8BEN or W-8BEN-E; or

 

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(4) to the extent a Lender is not the beneficial owner (for example, where the Lender is a partnership, or has sold a participation), two properly executed originals of IRS Form W-8IMY, accompanied by properly executed IRS Form W-8ECI, IRS Form W-8BEN or W-8BEN-E, a U.S. Tax Compliance Certificate substantially in the form of Exhibit G-2 or Exhibit G-3 , IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Non-U.S. Lender is a partnership (and not a participating Lender), and one or more direct or indirect partners of such Non-U.S. Lender are claiming the portfolio interest exemption, such Non-U.S. Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit G-4 on behalf of such direct and indirect partner(s); and

(5) any Non-U.S. Lender shall, to the extent it is legally eligible to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Non-U.S. Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed originals of any other form prescribed by applicable Requirements of Law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable Requirements of Law to permit the Borrower or the Administrative Agent to determine the withholding or deduction required to be made.

(iii) If a payment made to a Lender under this Agreement or the other Loan Documents would be subject to U.S. Federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower or Administrative Agent, at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Administrative Agent, such documentation prescribed by applicable Requirements of Law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code)and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower or the Administrative Agent to comply with its obligations under FATCA, to determine whether such Lender has or has not complied with such Lender’s obligations under FATCA and, as necessary, to determine the amount, if any, to deduct and withhold from such payment. Solely for purposes of this Section 2.14(e)(iii), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

(iv) Each Lender agrees that if any documentation it previously delivered pursuant to this Section 2.14(e) expires or becomes obsolete or inaccurate in any respect, it shall update such documentation or promptly notify the Borrower and the Administrative Agent in writing of its legal ineligibility to do so. Notwithstanding anything to the contrary in this Section 2.14(e) , no lender shall be required to provide any documentation pursuant to this Section 2.14(e) that it is not legally eligible to provide.

(v) Each Lender hereby authorizes the Administrative Agent to deliver to the Loan Parties and to any successor Administrative Agent any documentation provided by such Lender to the Administrative Agent pursuant to this Section 2.14(e) .

(f) If the Administrative Agent or a Lender determines, in its reasonable discretion, that it has received a refund of any Taxes as to which it has been indemnified by a Loan Party or with respect to which the Loan Party has paid additional amounts pursuant to this Section 2.14, it shall pay over such refund to the Loan Party (but only to the extent of indemnity payments made, or additional amounts paid, by the Loan Party under this Section 2.14 with respect to the Taxes giving rise to such refund), net of all reasonable out-of-pocket expenses (including any Taxes) of the Administrative Agent or such Lender and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided that the Loan Party agrees to repay the amount paid over to the Loan Party (plus any penalties, interest or other charges imposed by the relevant

 

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Governmental Authority) to the Administrative Agent or such Lender in the event the Administrative Agent or such Lender is required to repay such refund to such Governmental Authority. This Section shall not be construed to require the Administrative Agent or any Lender to make available its tax returns (or any other information relating to its Taxes which it deems confidential) to the Borrower or any other Person.

(g) For the avoidance of doubt, for purposes of this Section 2.14 , the term “Lender” includes any Issuing Bank and the Swing Line Lender.

Section 2.15 Pro Rata Treatment and Payments .

(a) Each borrowing of Revolving Loans by the Borrower from the Revolving Lenders and any reduction of the Revolving Commitments of the Revolving Lenders shall be made pro rata according to the respective Revolving Commitments then held by the Revolving Lenders. Each payment by the Borrower on account of any facility fee or any letter of credit fee shall be paid ratably to the Revolving Lenders entitled thereto.

(b) Each prepayment by the Borrower on account of principal of any Loans of any Class shall be made pro rata according to the respective outstanding principal amounts of Loans of such Class then held by the Lenders entitled to such payment (subject in the case of Term B Loans to Section 2.08(f)). Subject to Section 2.15(d), all repayments of principal of any Loans at stated maturity or upon acceleration shall be allocated pro rata according to the respective outstanding principal amounts of the matured or accelerated Loans then held by the relevant Lenders. Subject to Section 2.15(d), all payments of interest in respect of any Loans shall be allocated pro rata according to the outstanding interest payable then owed to the relevant Lenders. Notwithstanding the foregoing, (A) any amount payable to a Defaulting Lender under this Agreement (whether on account of principal, interest, fees or otherwise but excluding any amount that would otherwise be payable to such Defaulting Lender pursuant to Section 2.16 and Section 9.05) shall, in lieu of being distributed to such Defaulting Lender, be retained by the Administrative Agent in a segregated interest-bearing account and, subject to any applicable Requirements of Law, be applied at such time or times as may be determined by the Administrative Agent: (1) first, to the payment of any amounts owing by such Defaulting Lender to the Administrative Agent, the Issuing Bank and the Swing Line Lender hereunder (including amounts owed under Section 2.09(b) or 9.04(c)), (2) second, to the funding of any Loan or LC Disbursement required by this Agreement, as determined by the Administrative Agent, (3) third, if so determined by the Administrative Agent and Borrower, held in such account as cash collateral for future funding obligations of the Defaulting Lender under this Agreement, (4) fourth, pro rata, to the payment of any amounts owing to the Borrower or the Lenders as a result of such Defaulting Lender’s breach of its obligations under this Agreement and (5) fifth, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction, and (B) if such payment is a prepayment of the principal amount of Loans, such payment shall be applied solely to prepay the Loans of all Non-Defaulting Lenders pro rata (based on the amounts owing to each) prior to being applied to the prepayment of any Loan of any Defaulting Lender.

(c) All payments (including prepayments) to be made by the Borrower hereunder, whether on account of principal, interest, fees or otherwise, shall be made without setoff or counterclaim and shall be made prior to 2:00 p.m., New York City time, on the date when due. All payments received by the Administrative Agent after 2:00 p.m., New York City time, may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest and fees thereon. All such payments shall be made to the Administrative Agent’s Office except that payments pursuant to Sections 2.12, 2.13, 2.14, 2.22 and 9.04 shall be made directly to the Persons entitled thereto. The Administrative Agent shall distribute such payments to the relevant Lenders promptly upon receipt in like funds as received. If any payment hereunder becomes due and payable on a day other than a Business Day, such payment shall be extended to the next succeeding Business Day. In the case of any extension of any payment of principal, interest thereon shall be payable at the then applicable rate during such extension.

(d) Subject to the terms of the Pari Intercreditor Agreement, after the exercise of remedies provided for in Section 7.01 (or after any Loans have automatically become immediately due and payable and the Letters of Credit have automatically been required to be cash collateralized as contemplated by Section 7.01) and irrespective of any other provision of any Loan Document to the contrary, any amounts (including cash, equity securities, debt securities or any other property; provided that if any such amounts are not in the form of cash, then the

 

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amount of such securities or other property applied to each of clauses First through Last below shall be an amount with a fair market value equal to the stated amount required to be applied pursuant to each such clause) received on account of the Collateral or in consideration of any waiver of any rights to receive any payment of the Obligations (whether received as a consequence of the exercise of such remedies or as a distribution under any Insolvency or Liquidation Proceeding including payments in respect of “adequate protection” for the use of Collateral during such proceeding or under any Plan of Reorganization or on account of any liquidation of any Loan Party) shall be turned over to the Administrative Agent (to the extent not received directly by the Administrative Agent) and applied by the Administrative Agent in the following order:

First , to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (other than principal, interest and fees with respect to the Loans and the Commitments, but including amounts payable under Section 9.04) payable to the Administrative Agent in its capacity as such (irrespective of when such amounts were incurred or accrued or whether any such amounts are allowed in any Insolvency or Liquidation Proceeding) until paid in full;

Second , ratably, (i) to payment of that portion of the Priority Payment Obligations then due and payable ratably among the Secured Parties in proportion to the amounts of such Priority Payment Obligations then due and payable held by the Secured Parties described in this clause Second until paid in full and (ii) to cash collateralize Letters of Credit in accordance with Section 2.17(k) until the Letters of Credit have been cash collateralized in full;

Third , to payment of that portion of all other Obligations ratably among the Secured Parties in proportion to the amount of such Obligations owing to the Secured Parties described in this Clause Third until paid in full;

Last , the balance, if any, after all of the Obligations have been indefeasibly paid in full, to the Borrower or as otherwise required by Law.

Subject to Section 2.17, amounts used to cash collateralize the aggregate undrawn amount of Letters of Credit pursuant to clause Second above shall be applied to satisfy drawings under such Letters of Credit as they occur. If any amount remains on deposit as cash collateral after all Letters of Credit have either been fully drawn or expired, such remaining amount shall be applied to the other Obligations, if any, in the order set forth above and, if no Obligations remain outstanding, to the Borrower.

In furtherance of the foregoing, each Secured Party hereby agrees that it will not support or agree to any Non-Conforming Plan of Reorganization. The parties to each Loan Document (including each Loan Party) irrevocably agree that this Agreement (including the provisions of this Section 2.15) constitutes a “subordination agreement” within the meaning of both New York law and Section 510(a) of the Bankruptcy Code of the United States, and that the terms hereof will survive, and will continue in full force and effect and be binding upon each of the parties hereto, in any Insolvency or Liquidation Proceeding.

(e) If any Lender shall, by exercising any right of set-off or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Loans or participations in Letters of Credit or fees owing hereunder, it shall turn such amount over to the Administrative Agent for application pursuant to Section 2.15(d).

Section 2.16 Mitigation Obligations; Replacement of Lenders .

(a) If any Lender requests compensation under Section 2.12, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.14, then such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.12 or 2.14, as the case may be, in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The

 

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Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment. Each Lender may designate a different lending office for funding or booking its Loans hereunder or assign its rights and obligations hereunder to another of its offices, branches or affiliates; provided that the exercise of this option shall not affect the obligations of the Borrower to repay the Loan in accordance with the terms of this Agreement.

(b) If any Lender requests compensation under Section 2.12, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.14, or if any Lender is a Defaulting Lender, then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 9.05), all its interests, rights and obligations under this Agreement to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that (i) the Borrower shall have received the prior written consent of the Administrative Agent (and if a Revolving Commitment is being assigned, the Issuing Banks and Swing Line Lender), which consent shall not unreasonably be withheld, (ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and participations in unreimbursed LC Disbursements and Swing Line Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts) and (iii) in the case of any such assignment resulting from a claim for compensation under Section 2.12 or payments required to be made pursuant to Section 2.14, such assignment will result in a reduction in such compensation or payments. A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.

(c) If any Lender (such Lender, a “ Non-Consenting Lender ”) has failed to consent to a proposed amendment, waiver, discharge or termination which pursuant to the terms of Section 9.02 requires the consent of all of the Lenders affected and with respect to which the Required Lenders shall have granted their consent, then the Borrower shall have the right (unless such Non-Consenting Lender grants such consent) to replace such Non-Consenting Lender by requiring such Non-Consenting Lender to assign its Loans, and its Revolving Commitments hereunder to one or more assignees reasonably acceptable to the Administrative Agent, provided that: (a) all amounts owing to such Non-Consenting Lender being replaced (other than principal and interest) shall be paid in full to such Non-Consenting Lender concurrently with such assignment, and (b) the replacement Lender (each such Lender, a “ Replacement Lender ”) shall purchase the foregoing by paying to such Non-Consenting Lender a price equal to the principal amount thereof plus accrued and unpaid interest thereon. In connection with any such assignment the Borrower, Administrative Agent, such Non-Consenting Lender and the Replacement Lender shall otherwise comply with Section 9.05.

(d) Notwithstanding anything herein to the contrary, each party hereto agrees that any assignment pursuant to the terms of Section 2.16(c) may be effected pursuant to an Assignment and Assumption executed by the Borrower, the Administrative Agent and the assignee and that the Lender making such assignment need not be a party thereto.

Section 2.17 Letters of Credit .

(a) General . Subject to the terms and conditions set forth herein, the Borrower may request that standby letters of credit denominated in Dollars be issued under this Agreement for its own account or the account of any Restricted Subsidiary, in a form reasonably acceptable to the Administrative Agent and the applicable Issuing Bank, at any time and from time to time during the Revolving Commitment Period. In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of credit application or other agreement submitted by the Borrower to, or entered into by the Borrower with, the Issuing Bank relating to any Letter of Credit, the terms and conditions of this Agreement shall control.

(b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions . To request the issuance of a Letter of Credit (or the amendment, renewal or extension of an outstanding Letter of Credit), the Borrower shall hand deliver or telecopy (or transmit by electronic communication, if arrangements for doing so have

 

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been approved by the Issuing Bank) to the Issuing Bank and the Administrative Agent (reasonably in advance of the requested date of issuance, amendment, renewal or extension, but in any event no later than three Business Days prior to such date unless otherwise agreed by the Issuing Bank and the Administrative Agent) a notice requesting the issuance of a Letter of Credit, or identifying the Letter of Credit to be amended, renewed or extended, and specifying the date of issuance, amendment, renewal or extension (which shall be a Business Day), the date on which such Letter of Credit is to expire (which shall comply with paragraph (c) of this Section), the amount of such Letter of Credit, the name and address of the beneficiary thereof and such other information as shall be necessary to prepare, amend, renew or extend such Letter of Credit. If requested by the Issuing Bank, the Borrower also shall submit a letter of credit application on the Issuing Bank’s standard form in connection with any request for a Letter of Credit. A Letter of Credit shall be issued, amended, renewed or extended only if, after giving effect to such issuance, amendment, renewal or extension (i) the LC Exposure shall not exceed $100,000,000, (ii) the total Outstanding Revolving Credits shall not exceed the Total Revolving Commitments and (iii) with respect to such Issuing Bank, the sum of the aggregate face amount of Letters of Credit issued by such Issuing Bank shall not, unless otherwise agreed by such Issuing Bank, exceed its LC Sublimit. If the Borrower so requests in any applicable letter of credit application, the Issuing Bank may, in its sole discretion, agree to issue a Letter of Credit that has automatic extension provisions (each, an “ Auto-Extension Letter of Credit ”); provided that any such Auto-Extension Letter of Credit must permit the Issuing Bank to prevent any such extension at least once in each twelve-month period (commencing with the date of issuance of such Letter of Credit) by giving prior notice to the beneficiary thereof not later than a day (the “ Non-Extension Notice Date ”) in each such twelve-month period to be agreed upon at the time such Letter of Credit is issued. Unless otherwise directed by the Issuing Bank, the Borrower shall not be required to make a specific request to the Issuing Bank for any such extension. Once an Auto-Extension Letter of Credit has been issued, the Lenders shall be deemed to have authorized (but may not require) the Issuing Bank to permit the extension of such Letter of Credit at any time to an expiry date not later than the Letter of Credit expiration date referenced in clause (c) below; provided , however , that the Issuing Bank shall not permit any such extension if (A) the Issuing Bank has determined that it would not be permitted at such time to issue such Letter of Credit in its revised form (as extended) under the terms hereof, or (B) it has received notice (which may be by telephone or in writing) on or before the day that is seven Business Days before the Non-Extension Notice Date (1) from the Administrative Agent that the Required Lenders have elected not to permit such extension or (2) from the Administrative Agent, any Lender or the Borrower that one or more of the applicable conditions specified in Section 4.02 is not then satisfied, and in each such case directing the Issuing Bank not to permit such extension. The Issuing Bank shall not be under any obligation to issue any Letter of Credit if: (A) any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain the Issuing Bank from issuing the Letter of Credit, or any Law applicable to the Issuing Bank or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over the Issuing Bank shall prohibit, or request that the Issuing Bank refrain from, the issuance of letters of credit generally or the Letter of Credit in particular or shall impose upon the Issuing Bank with respect to the Letter of Credit any restriction, reserve or capital requirement (for which the Issuing Bank is not otherwise compensated hereunder) not in effect on the Closing Date, or shall impose upon the Issuing Bank any unreimbursed loss, cost or expense which was not applicable on the Closing Date and which the Issuing Bank in good faith deems material to it; or (B) the issuance of the Letter of Credit would violate one or more policies of the Issuing Bank applicable to letters of credit generally.

(c) Expiration Date . Each Letter of Credit shall expire at or prior to the close of business on the earlier of (i) the date one year after the date of the issuance of such Letter of Credit (or, in the case of any renewal or extension thereof, one year after such renewal or extension) and (ii) the date that is five Business Days prior to the Revolving Termination Date.

(d) Participations . By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof) and without any further action on the part of the Issuing Bank or the Revolving Lenders, the Issuing Bank hereby grants to each Revolving Lender, and each Revolving Lender hereby acquires from the Issuing Bank, a participation in such Letter of Credit equal to such Revolving Lender’s Revolving Commitment Percentage of the aggregate amount available to be drawn under such Letter of Credit. In consideration and in furtherance of the foregoing, each Revolving Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of the Issuing Bank, such Revolving Lender’s Revolving Commitment Percentage of each LC Disbursement made by the Issuing Bank and not reimbursed by the Borrower on the

 

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date due as provided in paragraph (e) of this Section, or of any reimbursement payment required to be refunded to the Borrower for any reason. Such payment by the Lenders shall be made in Dollars. Each Revolving Lender acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit or the occurrence and continuance of a Default or reduction or termination of the Revolving Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.

(e) Reimbursement . If the Issuing Bank shall make any LC Disbursement in respect of a Letter of Credit, the Borrower shall reimburse such LC Disbursement by paying to the Administrative Agent in the currency of such LC Disbursement an amount equal to such LC Disbursement not later than 12:00 noon, New York City time, on the date that such LC Disbursement is made, if the Borrower shall have received notice of such LC Disbursement prior to 10:00 a.m., New York City time, on such date, or, if such notice has not been received by the Borrower prior to such time on such date, then not later than 12:00 noon, New York City time, on the Business Day immediately following the day that the Borrower receives such notice; provided that if such LC Disbursement is denominated in Dollars and is not less than $1,000,000, the Borrower may, subject to the conditions to borrowing set forth herein, request in accordance with Section 2.03 that such payment be financed with an ABR Revolving Borrowing in an equivalent amount and, to the extent so financed, the Borrower’s obligation to make such payment shall be discharged and replaced by the resulting ABR Revolving Borrowing. If the Borrower fails to make such payment when due, in the case of each LC Disbursement, the Administrative Agent shall notify each Revolving Lender of the applicable LC Disbursement, the payment then due from the Borrower in respect thereof and such Revolving Lender’s Revolving Commitment Percentage thereof. Promptly following receipt of such notice, each Revolving Lender shall pay to the Administrative Agent its Revolving Commitment Percentage of the payment then due from the Borrower, in the same manner as provided in Section 2.04 with respect to Loans made by such Revolving Lender (and Section 2.04 shall apply, mutatis mutandis , to such payment obligations of the Revolving Lenders), and the Administrative Agent shall promptly pay to the Issuing Bank the amounts so received by it from the Revolving Lenders. Promptly following receipt by the Administrative Agent of any payment from the Borrower pursuant to this paragraph, the Administrative Agent shall distribute such payment to the Issuing Bank or, to the extent that Revolving Lenders have made payments pursuant to this paragraph to reimburse the Issuing Bank, then to such Revolving Lenders and the Issuing Bank as their interests may appear. Any payment made by a Revolving Lender pursuant to this paragraph to reimburse the Issuing Bank for any LC Disbursement (other than the funding of ABR Loans as contemplated above) shall not constitute a Loan and shall not relieve the Borrower of its obligation to reimburse such LC Disbursement.

(f) Obligations Absolute . The Borrower’s obligation to reimburse LC Disbursements as provided in paragraph (e) of this Section shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit or this Agreement, or any term or provision therein, (ii) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect, (iii) payment by the Issuing Bank under a Letter of Credit against presentation of a draft or other document that does not comply with the terms of such Letter of Credit, or (iv) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of, or provide a right of setoff against, the Borrower’s obligations hereunder; provided that, subject to the penultimate sentence of this paragraph (f), reimbursement obligations of the Borrower with respect to a Letter of Credit may be subject to avoidance by the Borrower to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by the Borrower to the extent permitted by applicable law) suffered by the Borrower or any Restricted Subsidiary that are caused by the Issuing Bank’s failure to exercise care when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof. Neither the Administrative Agent, the Revolving Lenders nor the Issuing Bank, nor any of their Related Parties, shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising

 

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from causes beyond the control of the Issuing Bank; provided that the foregoing shall not be construed to excuse the Issuing Bank from liability to the Borrower to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by the Borrower to the extent permitted by applicable law) suffered by the Borrower that are caused by the Issuing Bank’s failure to exercise care when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof. The parties hereto expressly agree that, in the absence of gross negligence or willful misconduct on the part of the Issuing Bank (as finally determined by a court of competent jurisdiction), the Issuing Bank shall be deemed to have exercised care in each such determination. In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented which appear on their face to be in substantial compliance with the terms of a Letter of Credit, the Issuing Bank may, in its sole discretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit.

(g) Disbursement Procedures . The Issuing Bank shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit. The Issuing Bank shall promptly notify the Administrative Agent and the Borrower by telephone (confirmed by telecopy) of such demand for payment and whether the Issuing Bank has made or will make an LC Disbursement thereunder; provided that any delay in giving such notice shall not relieve the Borrower of its obligation to reimburse the Issuing Bank and the Revolving Lenders with respect to any such LC Disbursement.

(h) Interim Interest . If the Issuing Bank shall make any LC Disbursement, then, unless the Borrower shall reimburse such LC Disbursement in full on the date of such LC Disbursement, the unpaid amount thereof shall bear interest, for each day from and including the date such LC Disbursement is required to be reimbursed to but excluding the date that the Borrower reimburses such LC Disbursement, at the rate per annum set forth in Section 2.10(c)(ii). Interest accrued pursuant to this paragraph shall be for the account of the Issuing Bank, except that interest accrued on and after the date of payment by any Revolving Lender pursuant to paragraph (e) of this Section to reimburse the Issuing Bank shall be for the account of such Revolving Lender to the extent of such payment.

(i) Replacement of the Issuing Bank . The Issuing Bank may be replaced at any time by written agreement among the Borrower, the Administrative Agent, the replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent shall notify the Revolving Lenders of any such replacement of the Issuing Bank. At the time any such replacement shall become effective, the Borrower shall pay all unpaid fees accrued for the account of the replaced Issuing Bank pursuant to Section 2.09(b). From and after the effective date of any such replacement, (i) the successor Issuing Bank shall have all the rights and obligations of the Issuing Bank under this Agreement with respect to Letters of Credit to be issued thereafter and (ii) references herein to the term “Issuing Bank” shall be deemed to include such successor and any previous Issuing Bank, or such successor and all previous Issuing Banks, as the context shall require. After the replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto and shall continue to have all the rights and obligations of an Issuing Bank under this Agreement with respect to Letters of Credit issued by it prior to such replacement, but shall not be required to issue additional Letters of Credit.

(j) Additional Issuing Banks . From time to time, the Borrower may by notice to the Administrative Agent designate any Lender (in addition to the initial Issuing Bank) which agrees (in its sole discretion) to act in such capacity and is reasonably satisfactory to the Administrative Agent as an Issuing Bank. Each such additional Issuing Bank shall execute a counterpart of this Agreement upon the approval of the Administrative Agent (which approval shall not be unreasonably withheld) and shall thereafter be an Issuing Bank hereunder for all purposes.

(k) Cash Collateralization . If any Event of Default shall occur and be continuing, on the Business Day that the Borrower receives notice from the Administrative Agent or the Required Revolving Lenders demanding the deposit of cash collateral pursuant to this paragraph, the Borrower shall deposit in an account with the Administrative Agent, in the name of the Administrative Agent and for the benefit of the Revolving Lenders, an amount in Dollars equal to 102% of the LC Exposure as of such date plus any accrued and unpaid interest thereon; provided that the obligation to deposit such cash collateral shall become effective immediately, and such

 

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deposit shall become immediately due and payable, without demand or other notice of any kind, upon the occurrence of any Event of Default with respect to the Borrower described in clause (h) or (i) of Article VII. Such deposit shall be held by the Administrative Agent as collateral for the payment and performance of the obligations of the Borrower under this Agreement with respect to the Revolving Facility. The Administrative Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over such account. Other than any interest earned on the investment of such deposits, which investments shall be made at the option and sole discretion of the Administrative Agent and at the Borrower’s risk and expense, such deposits shall not bear interest. Interest or profits, if any, on such investments shall accumulate in such account. Moneys in such account shall be applied by the Administrative Agent to reimburse the Issuing Bank for LC Disbursements for which it has not been reimbursed and, to the extent not so applied, shall be held for the satisfaction of the reimbursement obligations of the Borrower for the LC Exposure at such time or, if the maturity of the Loans has been accelerated (but subject to the consent of Lenders with LC Exposure representing greater than 50% of the total LC Exposure), be applied to satisfy other obligations of the Borrower under this Agreement with respect to the Revolving Facility. If the Borrower is required to provide an amount of cash collateral hereunder as a result of the occurrence of an Event of Default, such amount (to the extent not applied as aforesaid) shall be returned to the Borrower within three Business Days after all Events of Default have been cured or waived.

(l) Applicability of ISP; Limitation of Liability . Unless otherwise expressly agreed by the Issuing Bank and the Borrower when a Letter of Credit is issued, the rules of the ISP shall apply to each standby Letter of Credit. Notwithstanding the foregoing, the Issuing Bank shall not be responsible to the Borrower for, and the Issuing Bank’s rights and remedies against the Borrower shall not be impaired by, any action or inaction of the Issuing Bank required or permitted under any law, order, or practice that is required or permitted to be applied to any Letter of Credit or this Agreement, including the Law or any order of a jurisdiction where the Issuing Bank or the beneficiary is located, the practice stated in the ISP, or in the decisions, opinions, practice statements, or official commentary of the ICC Banking Commission, the Bankers Association for Finance and Trade—International Financial Services Association (BAFT-IFSA), or the Institute of International Banking Law & Practice, whether or not any Letter of Credit chooses such law or practice.

(m) Conflict with Issuer Documents . In the event of any conflict between the terms hereof and the terms of any Letter of Credit or related document, the terms hereof shall control.

Section 2.18 Defaulting Lenders . Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender:

(a) Fees shall cease to accrue on the Available Revolving Commitment of such Defaulting Lender pursuant to Section 2.09(a).

(b) The Commitments, Loans and Outstanding Revolving Credit of such Defaulting Lender shall not be included in determining whether the Required Lenders or Required Revolving Lenders have taken or may take any action hereunder (including any consent to any amendment, waiver or other modification pursuant to Section 9.02 or Section 9.03); provided that this Section 2.18(b) shall not apply to the vote of a Defaulting Lender in the case of an amendment, waiver or other modification effecting (i) an increase or extension of such Defaulting Lender’s Revolving Commitment or (ii) the reduction or excuse of principal amount of, or interest or fees payable on, such Defaulting Lender’s Loans or the postponement of the scheduled date of payment of such principal amount, interest or fees to such Defaulting Lender.

(c) If any Letters of Credit or Swing Line Loans exist at the time such Lender becomes a Defaulting Lender then:

(i) Such Defaulting Lender’s LC Exposure and Swing Line Exposure shall be reallocated among the Non-Defaulting Revolving Lenders in accordance with their respective Revolving Commitment Percentages (but excluding the Revolving Commitments of all the Defaulting Lenders from both the numerator and the denominator) but only to the extent (w) the sum of all the Outstanding Revolving Credits owed to all Non-Defaulting Lenders does not exceed the total

 

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of all Non-Defaulting Lenders’ Available Revolving Commitments, (x) such reallocation does not cause the aggregate Outstanding Revolving Credits of any Non-Defaulting Lender to exceed such Non-Defaulting Lender’s Revolving Credit Commitment, (y) the representations and warranties of each Loan Party set forth in the Loan Documents to which it is a party are true and correct at such time, except to the extent that any such representation and warranty relates to an earlier date (in which case such representation and warranty shall be true and correct as of such earlier date), and (z) no Default shall have occurred and be continuing at such time;

(ii) If the reallocation described in clause (i) above cannot, or can only partially, be effected, the Borrower shall, within two Business Days following notice by the Administrative Agent, (x) first, prepay Swing Line Loans in an amount equal to the Swing Line Lenders’ Fronting Exposure and (y) second, cash collateralize for the benefit of the Issuing Bank such Defaulting Lender’s LC Exposure (after giving effect to any partial reallocation pursuant to clause (i) above) for so long as any Letters of Credit are outstanding;

(iii) If the Borrower cash collateralizes any portion of such Defaulting Lender’s LC Exposure pursuant clause (ii) above, the Borrower shall not be required to pay any fees to such Defaulting Lender pursuant to Section 2.09(b) with respect to such Defaulting Lender’s LC Exposure during the period such Defaulting Lender’s LC Exposure is cash collateralized by the Borrower;

(iv) If LC Exposures of the Non-Defaulting Lenders are reallocated pursuant to clause (i) above, then the fees payable to the Revolving Lenders pursuant to Section 2.09(a) and Section 2.09(b) shall be adjusted to reflect such Non-Defaulting Lenders’ LC Exposure as reallocated; and

(v) If any Defaulting Lender’s LC Exposure is neither cash collateralized nor reallocated pursuant to clauses (i) or (ii) above, then, without prejudice to any rights or remedies of the Issuing Bank or any Revolving Lender hereunder, all letter of credit fees payable under Section 2.09(b) with respect to such Defaulting Lender’s LC Exposure shall be payable to the Issuing Bank until such LC Exposure is cash collateralized and/or reallocated.

(d) So long as such Defaulting Lender is a Defaulting Lender, no Issuing Bank shall be required to issue, amend or increase any Letter of Credit, unless it is satisfied that the related LC Exposure will be 100% covered by the Available Revolving Commitments of the Non-Defaulting Lenders and/or cash collateral will be provided by the Borrower in accordance with Section 2.18(c)(ii), and the participating interests in any such newly issued or increased Letter of Credit shall be allocated among Non-Defaulting Lenders in a manner consistent with Section 2.18(c)(i) (and such Defaulting Lender shall not participate therein).

The rights and remedies against a Defaulting Lender under this Agreement are in addition to other rights and remedies that Borrower may have against such Defaulting Lender with respect to any funding default and that the Administrative Agent or any Lender may have against such Defaulting Lender with respect to any funding default. In the event that the Administrative Agent, the Borrower, the Swing Line Lender and the Issuing Banks each agrees that a Defaulting Lender has adequately remedied all matters that caused such Lender to be a Defaulting Lender, then the Total Revolving Exposure shall be readjusted to reflect the inclusion of such Lender’s Available Revolving Commitment and on such date such Lender shall purchase at par such of the Revolving Loans of the other Lenders or take such other actions as the Administrative Agent may determine to be necessary to cause such outstanding Revolving Loans and funded and unfunded participations in Letters of Credit to be held on a pro rata basis by the Revolving Lenders (including such Lender) in accordance with their applicable percentages, whereupon such Lender will cease to be a Defaulting Lender and will be a Non-Defaulting Lender and any applicable cash collateral shall be promptly returned to the Borrower and any LC Exposure of such Lender reallocated pursuant to the requirements above shall be reallocated back to such Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; provided that, except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Non-Defaulting Lender will constitute a waiver or release of any claim of any party hereunder arising from such Lender’s having been a Defaulting Lender.

 

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Section 2.19 Extensions of Commitments

(a) Notwithstanding anything to the contrary in this Agreement, pursuant to one or more offers made from time to time by the Borrower to all Lenders of any Class of Term Loans and/or Revolving Commitments on a pro rata basis (based, in the case of an offer to the Lenders under any Class of Term Loans, on the aggregate outstanding Term Loans of such Class and, in the case of an offer to the Lenders under any Revolving Facility, on the aggregate outstanding Revolving Commitments under such Revolving Facility, as applicable), and on the same terms to each such Lender (“ Pro Rata Extension Offers ”), the Borrower is hereby permitted to consummate transactions with individual Lenders, each acting in its sole and individual discretion, that agree to such transactions from time to time to extend the maturity date of such Lender’s Loans and/or Commitments of such Class and to otherwise modify the terms of such Lender’s Loans and/or Commitments of such Class pursuant to the terms of the relevant Pro Rata Extension Offer (including, without limitation, increasing the interest rate or fees payable in respect of such Lender’s Loans and/or Commitments and/or modifying the amortization schedule in respect of such Lender’s Loans). For the avoidance of doubt, the reference to “on the same terms” in the preceding sentence shall mean, (i) in the case of an offer to the Lenders under any Class of Term Loans, that all of the Term Loans of such Class are offered to be extended for the same amount of time and that the interest rate changes and fees payable with respect to such extension are the same and (ii) in the case of an offer to the Lenders under any Revolving Facility, that all of the Revolving Commitments of such Facility are offered to be extended for the same amount of time and that the interest rate changes and fees payable with respect to such extension are the same. Any such extension (an “ Extension ”) agreed to between the Borrower and any such Lender (an “ Extending Lender ”) will be established under this Agreement by implementing a Term Loan for such Lender if such Lender is extending an existing Term Loan (such extended Term Loan, an “ Extended Term Loan ”) or an Extended Revolving Commitment for such Lender if such Lender is extending an existing Revolving Commitment (such extended Revolving Commitment, an “ Extended Revolving Commitment ,” and any Revolving Loan made pursuant to such Extended Revolving Commitment, an “ Extended Revolving Loan ”). Each Pro Rata Extension Offer shall specify the date on which the Borrower proposes that the Extended Term Loan shall be made or the proposed Extended Revolving Commitment shall become effective, which shall be a date not earlier than five (5) Business Days after the date on which the Pro Rata Extension Offer is delivered to the Administrative Agent (or such shorter period agreed to by the Administrative Agent in its reasonable discretion).

(b) The Borrower and each Extending Lender shall execute and deliver to the Administrative Agent an amendment to this Agreement (an “ Extension Amendment ”) and such other documentation as the Administrative Agent shall reasonably specify to evidence the Extended Term Loans and/or Extended Revolving Commitments of such Extending Lender. Each Extension Amendment shall specify the terms of the applicable Extended Term Loans and/or Extended Revolving Commitments; provided , that (i) except as to interest rates, fees and any other pricing terms, and amortization, final maturity date and participation in prepayments and commitment reductions (which shall be determined by the Borrower and set forth in the Pro Rata Extension Offer), the Extended Term Loans shall, subject to clauses (ii) and (iii) of this proviso, have (x) the same terms as the existing Class of Term Loans from which they are extended or (y) such other terms as shall be reasonably satisfactory to the Administrative Agent, (ii) the final maturity date of any Extended Term Loans shall be no earlier than the Latest Maturity Date in effect on the date of incurrence, (iii) the Weighted Average Life to Maturity of any Extended Term Loans shall be no shorter than the remaining Weighted Average Life to Maturity of the Class of Term Loans to which such offer relates, (iv) except as to interest rates, fees, any other pricing terms and final maturity (which shall be determined by the Borrower and set forth in the Pro Rata Extension Offer), any Extended Revolving Commitment shall have (x) the same terms as the existing Class of Revolving Commitments from which they are extended or (y) have such other terms as shall be reasonably satisfactory to the Administrative Agent and, in respect of any other terms that would affect the rights or duties of any Issuing Bank, such terms as shall be reasonably satisfactory to such Issuing Bank, (v) any Extended Term Loans may participate on a pro rata basis or a less than pro rata basis (but not a greater than pro rata basis) than the Term Loans in any mandatory prepayment thereunder and (vi) such Extended Term Loans shall not have at any time (x) any financial maintenance covenants of a different type than the Financial Covenants, or any financial maintenance covenants that are more restrictive than the Financial Covenants or (y) negative covenants and/or default provisions that, taken as a whole, are materially

 

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more restrictive than those applicable to the Revolving Facility as determined in good faith by the Borrower unless, in each case of clauses (x) and (y) such terms (I) (if favorable to all then existing Lenders) are in consultation with the Administrative Agent, incorporated into this Agreement for the benefit of all then existing Lenders (without further amendment requirements) for so long as any such Extended Term Loans are outstanding or (II) become applicable only after the Revolving Facility shall have matured or been terminated. Upon the effectiveness of any Extension Amendment, this Agreement shall be amended to the extent (but only to the extent) necessary to reflect the existence and terms of the Extended Term Loans and/or Extended Revolving Commitments evidenced thereby as provided for in Section 9.02(c). Any such deemed amendment may be memorialized in writing by the Administrative Agent with the Borrower’s consent (not to be unreasonably withheld) and furnished to the other parties hereto. If provided in any Extension Amendment with respect to any Extended Revolving Commitments, and with the consent of each Issuing Bank, participations in Letters of Credit shall be reallocated to lenders holding such Extended Revolving Commitments in the manner specified in such Extension Amendment, including upon effectiveness of such Extended Revolving Commitment or upon or prior to the maturity date for any Class of Revolving Commitments.

(c) Upon the effectiveness of any such Extension, the applicable Extending Lender’s Term Loan will be automatically designated an Extended Term Loan and/or such Extending Lender’s Revolving Commitment will be automatically designated an Extended Revolving Commitment. For purposes of this Agreement and the other Loan Documents, (i) if such Extending Lender is extending a Term Loan, such Extending Lender will be deemed to have a Term Loan having the terms of such Extended Term Loan and (ii) if such Extending Lender is extending a Revolving Commitment, such Extending Lender will be deemed to have a Revolving Commitment having the terms of such Extended Revolving Commitment.

(d) Notwithstanding anything to the contrary set forth in this Agreement or any other Loan Document (including without limitation this Section 2.19), (i) the aggregate amount of Extended Term Loans and Extended Revolving Commitments will not be included in the calculation of clause (a) of the definition of Incremental Amount, (ii) no Extended Term Loan or Extended Revolving Commitment is required to be in any minimum amount or any minimum increment, (iii) any Extending Lender may extend all or any portion of its Term Loans and/or Revolving Commitment pursuant to one or more Pro Rata Extension Offers (subject to applicable proration in the case of over participation) (including the extension of any Extended Term Loan and/or Extended Revolving Commitment), (iv) there shall be no condition to any Extension of any Loan or Commitment at any time or from time to time other than notice to the Administrative Agent of such Extension and the terms of the Extended Term Loan or Extended Revolving Commitment implemented thereby, (v) all Extended Term Loans, Extended Revolving Commitments and all obligations in respect thereof shall be Obligations of the relevant Loan Parties under this Agreement and the other Loan Documents that rank equally and ratably in right of security with all other Obligations of the Class being extended, (iv) no Issuing Bank shall be obligated to issue Letters of Credit under such Extended Revolving Commitments unless it shall have consented thereto and (vii) there shall be no borrower (other than the Borrower) and no guarantors (other than the Guarantors) in respect of any such Extended Term Loans or Extended Revolving Commitments.

(e) Each Extension shall be consummated pursuant to procedures set forth in the associated Pro Rata Extension Offer; provided , that the Borrower shall cooperate with the Administrative Agent prior to making any Pro Rata Extension Offer to establish reasonable procedures with respect to mechanical provisions relating to such Extension, including, without limitation, timing, rounding and other adjustments.

Section 2.20 Refinancing Amendments .

(a) Notwithstanding anything to the contrary in this Agreement, the Borrower may by written notice to the Administrative Agent establish one or more additional tranches of term loans under this Agreement (such loans, “ Refinancing Term Loans ”), all proceeds of which are used to refinance in whole or in part any Class of Term Loans pursuant to Section 2.08(c). Each such notice shall specify the date (each, a “ Refinancing Effective Date ”) on which the Borrower proposes that the Refinancing Term Loans shall be made, which shall be a date not less than five (5) Business Days after the date on which such notice is delivered to the Administrative Agent (or such shorter period agreed to by the Administrative Agent in its sole discretion); provided , that:

 

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(i) before and after giving effect to the Borrowing of such Refinancing Term Loans on the Refinancing Effective Date each of the conditions set forth in Section 4.02 shall be satisfied;

(ii) the final maturity date of the Refinancing Term Loans shall be no earlier than the maturity date of the refinanced Term Loans;

(iii) the Weighted Average Life to Maturity of such Refinancing Term Loans shall be no shorter than the then-remaining Weighted Average Life to Maturity of the refinanced Term Loans;

(iv) the aggregate principal amount of the Refinancing Term Loans shall not exceed the outstanding principal amount of the refinanced Term Loans plus amounts used to pay fees, expenses, commissions, underwriting discounts and premiums and accrued interest associated therewith;

(v) all other terms applicable to such Refinancing Term Loans (other than provisions relating to original issue discount, upfront fees, interest rates and any other pricing terms (optional prepayment or mandatory prepayment or redemption terms shall be as agreed between the Borrower and the Lenders providing such Refinancing Term Loans) taken as a whole shall (as determined by the Borrower in good faith) be substantially similar to, or no more restrictive to the Borrower and its Restricted Subsidiaries than, the terms, taken as a whole, applicable to the Term Loans being refinanced (except to the extent such covenants and other terms apply solely to any period after the Latest Maturity Date or are otherwise reasonably acceptable to the Administrative Agent);

(vi) there shall be no borrower (other than the Borrower) and no guarantors (other than the Guarantors) in respect of such Refinancing Term Loans;

(vii) Refinancing Term Loans shall not be secured by any asset of the Borrower and its subsidiaries other than the Collateral;

(viii) Refinancing Term Loans may participate on a pro rata basis or on a less than pro rata basis (but not on a greater than pro rata basis) in any mandatory prepayments (other than as provided otherwise in the case of such prepayments pursuant to Section 2.08(c)) hereunder, as specified in the applicable Refinancing Amendment; and

(ix) Refinancing Term Loans shall not at any time have (x) any financial maintenance covenants of a different type than the Financial Covenants, or any financial maintenance covenants that are more restrictive than the Financial Covenants or (y) negative covenants and/or default provisions that, taken as a whole, are materially more restrictive than those applicable to the Revolving Facility as determined in good faith by the Borrower unless, in each of clauses (x) and (y) such terms (I) (if favorable to all then existing Lenders) are, in consultation with the Administrative Agent, incorporated into this Agreement for the benefit of all then existing Lenders (without further amendment requirements) for so long as any such Refinancing Term Loans are outstanding or (II) become applicable only after the Revolving Facility shall have matured or been terminated.

(b) The Borrower may approach any Lender or any other person that would be a permitted assignee pursuant to Section 9.05 to provide all or a portion of the Refinancing Term Loans; provided , that any Lender offered or approached to provide all or a portion of the Refinancing Term Loans may elect or decline, in its sole discretion, to provide a Refinancing Term Loan. Any Refinancing Term Loans made on any Refinancing Effective Date shall be designated an additional Class of Term Loans for all purposes of this Agreement; provided , further , that any Refinancing Term Loans may, to the extent provided in the applicable Refinancing Amendment governing such Refinancing Term Loans, be designated as an increase in any previously established Class of Term Loans made to the Borrower.

(c) Notwithstanding anything to the contrary in this Agreement, the Borrower may by written notice to the Administrative Agent establish one or more additional Facilities (“ Replacement Revolving Facilities ”) providing for revolving commitments (“ Replacement Revolving Facility Commitments ” and the revolving loans

 

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thereunder, “ Replacement Revolving Loans ”), which replace in whole or in part any Class of Revolving Commitments under this Agreement. Each such notice shall specify the date (each, a “ Replacement Revolving Facility Effective Date ”) on which the Borrower proposes that the Replacement Revolving Facility Commitments shall become effective, which shall be a date not less than five (5) Business Days after the date on which such notice is delivered to the Administrative Agent (or such shorter period agreed to by the Administrative Agent in its reasonable discretion); provided , that:

(i) before and after giving effect to the establishment of such Replacement Revolving Facility Commitments on the Replacement Revolving Facility Effective Date, each of the conditions set forth in Section 4.02 shall be satisfied;

(ii) after giving effect to the establishment of any Replacement Revolving Facility Commitments and any concurrent reduction in the aggregate amount of any other Revolving Commitments, the aggregate amount of Revolving Commitments shall not exceed the aggregate amount of the Revolving Commitments outstanding immediately prior to the applicable Replacement Revolving Facility Effective Date;

(iii) no Replacement Revolving Facility Commitments shall have a final maturity date (or require commitment reductions or amortizations) prior to the Revolving Termination Date for the Revolving Commitments being replaced;

(iv) all other terms applicable to such Replacement Revolving Facility (other than provisions relating to (x) fees, interest rates and other pricing terms and prepayment and commitment reduction and optional redemption terms which shall be as agreed between the Borrower and the Lenders providing such Replacement Revolving Facility Commitments and (y) the amount of any letter of credit sublimit under such Replacement Revolving Facility, which shall be as agreed between the Borrower, the Lenders providing such Replacement Revolving Facility Commitments, the Administrative Agent and the replacement issuing bank, if any, under such Replacement Revolving Facility Commitments) taken as a whole shall (as determined by the Borrower in good faith) be substantially similar to, or no more restrictive to the Borrower and its Restricted Subsidiaries than, those, taken as a whole, applicable to the Revolving Commitments so replaced (except to the extent such covenants and other terms apply solely to any period after the Revolving Termination Date or are otherwise reasonably acceptable to the Administrative Agent);

(v) there shall be no borrower (other than the Borrower) and no guarantors (other than the Guarantors) in respect of such Replacement Revolving Facility; and

(vi) Replacement Revolving Facility Commitments and extensions of credit thereunder shall not be secured by any asset of the Borrower and its subsidiaries other than the Collateral.

Solely to the extent that an Issuing Bank is not a replacement issuing bank, as the case may be, under a Replacement Revolving Facility, it is understood and agreed that such Issuing Bank shall not be required to issue any letters of credit under such Replacement Revolving Facility and, to the extent it is necessary for such Issuing Bank to withdraw as an Issuing Bank, as the case may be, at the time of the establishment of such Replacement Revolving Facility, such withdrawal shall be on terms and conditions reasonably satisfactory to such Issuing Bank, as the case may be, in its sole discretion. The Borrower agrees to reimburse each Issuing Bank, as the case may be, in full upon demand, for any reasonable and documented out-of-pocket cost or expense attributable to such withdrawal.

(d) The Borrower may approach any Lender or any other person that would be a permitted assignee of a Revolving Commitment pursuant to Section 9.05 to provide all or a portion of the Replacement Revolving Facility Commitments; provided , that any Lender offered or approached to provide all or a portion of the Replacement Revolving Facility Commitments may elect or decline, in its sole discretion, to provide a Replacement Revolving Facility Commitment. Any Replacement Revolving Facility Commitment made on any Replacement Revolving Facility Effective Date shall be designated an additional Class of Revolving Commitments for all purposes of this Agreement; provided , that any Replacement Revolving Facility Commitments may, to the extent provided in the applicable Refinancing Amendment, be designated as an increase in any previously established Class of Revolving Commitments.

 

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(e) The Borrower and each Lender providing the applicable Refinancing Term Loans shall execute and deliver to the Administrative Agent an amendment to this Agreement (a “ Refinancing Amendment ”) and such other documentation as the Administrative Agent shall reasonably specify to evidence such Refinancing Term Loans and/or Replacement Revolving Facility Commitments. For purposes of this Agreement and the other Loan Documents, (A) if a Lender is providing a Refinancing Term Loan, such Lender will be deemed to have a Term Loan having the terms of such Refinancing Term Loan and (B) if a Lender is providing a Replacement Revolving Facility Commitment, such Lender will be deemed to have a Revolving Commitment having the terms of such Replacement Revolving Facility Commitment. Notwithstanding anything to the contrary set forth in this Agreement or any other Loan Document (including without limitation this Section 2.20), (i) the aggregate amount of Refinancing Term Loans and Replacement Revolving Facility Commitments will not be included in the calculation of clause (a) of the definition of Incremental Amount, (ii) no Refinancing Term Loan or Replacement Revolving Facility Commitment is required to be in any minimum amount or any minimum increment, (iii) there shall be no condition to any incurrence of any Refinancing Term Loan or Replacement Revolving Facility Commitment at any time or from time to time other than those set forth in clause (a) or (c) above, as applicable and (iv) all Refinancing Term Loans, Replacement Revolving Facility Commitments and all obligations in respect thereof shall be Obligations under this Agreement and the other Loan Documents that rank equally and ratably in right of security with the Term Loans and other Obligations.

(f) Each party hereto hereby agrees that, upon the Refinancing Effective Date of any Refinancing Term Loans or Replacement Revolving Facility Commitments, this Agreement shall be amended to the extent (but only to the extent) necessary to reflect the existence and terms of the Refinancing Term Loans or Replacement Revolving Facility Commitments evidenced thereby as provided for in Section 9.02. Any amendment to this Agreement or any other Loan Document that is necessary to effect the provisions of this Section 2.20 (including, without limitation, to provide for the establishment of Incremental Term Loans) and any such collateral and other documentation shall be deemed “Loan Documents” hereunder and may be memorialized in writing between the Administrative Agent and the Borrower and furnished to the other parties hereto.

(g) No term loan established and outstanding under this Agreement pursuant to (i) any of Sections 2.02, 2.19 or 2.20 or (ii) an agreement or agreements in writing entered into by the Borrower and the Required Lenders or by the Borrower and the Administrative Agent with the consent of the Required Lenders shall at any time have (x) any financial maintenance covenants of a different type than the Financial Covenants, or any financial maintenance covenants that are more restrictive than the Financial Covenants or (y) have negative covenants and/or default provisions that, taken as a whole, are materially more restrictive than those applicable to the Revolving Facility as determined in good faith by the Borrower unless, in each case of clauses (x) and (y) such terms (I) (if favorable to all then existing Lenders) are in consultation with the Administrative Agent, incorporated into this Agreement for the benefit of all then existing Lenders (without further amendment requirements) for so long as any such term loans are outstanding or (II) become applicable only after the Revolving Facility shall have matured or been terminated. This Section 2.20(g) shall not be waived, amended, amended and restated or modified except pursuant to an agreement or agreements in writing entered into by the Borrower and the Required Revolving Lenders or by the Borrower and the Administrative Agent with the consent of the Required Revolving Lenders.

Section 2.21 Loan Repurchases .

(a) Subject to the terms and conditions set forth or referred to below, the Borrower may from time to time, at its discretion, conduct modified Dutch auctions in order to purchase its Term Loans of one or more Classes (as determined by the Borrower) (each, a “ Purchase Offer ”), each such Purchase Offer to be managed by a financial institution chosen by the Borrower and reasonably acceptable to the Administrative Agent (in such capacity, the “ Auction Manager ” (it being understood that the Administrative Agent shall be under no obligation to act as Auction Manager)), so long as the following conditions are satisfied:

(i) each Purchase Offer shall be conducted in accordance with the procedures, terms and conditions set forth in this Section 2.21 and the Auction Procedures;

 

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(ii) no Default or Event of Default shall have occurred and be continuing on the date of the delivery of each notice of an auction and at the time of (and immediately after giving effect to) the purchase of any Term Loans in connection with any Purchase Offer;

(iii) the principal amount (calculated on the face amount thereof) of each and all Classes of Term Loans that the Borrower offers to purchase in any such Purchase Offer shall be no less than $25,000,000 (unless another amount is agreed to by the Administrative Agent) (across all such Classes);

(iv) the aggregate principal amount (calculated on the face amount thereof) of all Term Loans of the applicable Class or Classes so purchased by the Borrower shall automatically be cancelled and retired by the Borrower on the settlement date of the relevant purchase (and may not be resold), and in no event shall the Borrower be entitled to any vote hereunder in connection with such Term Loans;

(v) no more than one Purchase Offer with respect to any Class may be ongoing at any one time;

(vi) any Purchase Offer with respect to any Class shall be offered to all Term Lenders holding Term Loans of such Class on a pro rata basis;

(vii) no Revolving Loan or Swing Line Loan shall be outstanding at the time of such Purchase Offer;

(viii) no more than 50% of the Term B Loans outstanding on the Closing Date shall be purchased pursuant to Purchase Offers or assignments pursuant to Section 9.05(e); and

(ix) the Borrower is in pro forma Compliance with the Financial Covenants.

(b) The Borrower must terminate any Purchase Offer if it fails to satisfy one or more of the conditions set forth above which are required to be met at the time which otherwise would have been the time of purchase of Term Loans pursuant to such Purchase Offer. If the Borrower commences any Purchase Offer (and all relevant requirements set forth above which are required to be satisfied at the time of the commencement of such Purchase Offer have in fact been satisfied), and if at such time of commencement the Borrower reasonably believes that all required conditions set forth above which are required to be satisfied at the time of the consummation of such Purchase Offer shall be satisfied, then the Borrower shall have no liability to any Lender for any termination of such Purchase Offer as a result of its failure to satisfy one or more of the conditions set forth above which are required to be met at the time which otherwise would have been the time of consummation of such Purchase Offer, and any such failure shall not result in any Default or Event of Default hereunder. With respect to all purchases of Term Loans of any Class or Classes made by the Borrower pursuant to this Section 2.21, the Borrower shall pay on the settlement date of each such purchase all accrued and unpaid interest (except to the extent otherwise set forth in the relevant offering documents), if any, on the purchased Term Loans of the applicable Class or Classes up to the settlement date of such purchase.

(c) The Administrative Agent and the Lenders hereby consent to the Purchase Offers and the other transactions effected pursuant to and in accordance with the terms of this Section 2.21; provided , that notwithstanding anything to the contrary contained herein, no Lender shall have an obligation to participate in any such Purchase Offer. For the avoidance of doubt, it is understood and agreed that the provisions of Sections 2.13, 2.15 and 9.05 will not apply to the purchases of Term Loans pursuant to Purchase Offers made pursuant to and in accordance with the provisions of this Section 2.21. The Auction Manager acting in its capacity as such hereunder shall be entitled to the benefits of the provisions of Article VIII and Section 9.04 to the same extent as if each reference therein to the “Agents” were a reference to the Auction Manager, and the Administrative Agent shall cooperate with the Auction Manager as reasonably requested by the Auction Manager in order to enable it to perform its responsibilities and duties in connection with each Purchase Offer.

 

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Section 2.22 Swing Line Loans .

(a) The Swing Line . Subject to the terms and conditions set forth herein, the Swing Line Lender, in reliance upon the agreements of the other Lenders set forth in this Section 2.22, agrees to make loans (each such loan, a “ Swing Line Loan ”) to the Borrower from time to time on any Business Day during the Revolving Commitment Period in an aggregate amount not to exceed at any time outstanding the amount of the Swing Line Sublimit, notwithstanding the fact that such Swing Line Loans, when aggregated with the Revolving Commitment Percentage of the Outstanding Revolving Credit of the Lender acting as Swing Line Lender, may exceed the amount of such Lender’s Revolving Commitment; provided , however , that after giving effect to any Swing Line Loan, (i) the Outstanding Revolving Credit shall not exceed the Total Revolving Commitments at such time, and (ii) the Outstanding Revolving Credit of any Revolving Lender shall not exceed such Lender’s Revolving Commitment, (y) the Borrower shall not use the proceeds of any Swing Line Loan to refinance any outstanding Swing Line Loan, and (z) the Swing Line Lender shall not be under any obligation to make any Swing Line Loan if it shall determine (which determination shall be conclusive and binding absent manifest error) that it has, or by such credit extension may have, Fronting Exposure. Within the foregoing limits and subject to the other terms and conditions hereof, the Borrower may borrow under this Section 2.22, prepay under Section 2.08, and reborrow under this Section 2.22. Each Swing Line Loan shall bear interest only at a rate based on the Alternate Base Rate. Immediately upon the making of a Swing Line Loan, each Revolving Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the Swing Line Lender a risk participation in such Swing Line Loan in an amount equal to the product of such Revolving Lender’s Revolving Commitment Percentage times the amount of such Swing Line Loan.

(b) Borrowing Procedures . Each Swing Line Borrowing shall be made upon the Borrower’s irrevocable notice to the Swing Line Lender and the Administrative Agent, which may be given by (A) telephone or (B) by a Swing Line Loan Notice; provided that any telephonic notice must be confirmed promptly by delivery to the Swing Line Lender and the Administrative Agent of a Swing Line Loan Notice. Each such notice must be received by the Swing Line Lender and the Administrative Agent not later than 2:00 p.m. on the requested borrowing date, and shall specify (i) the amount to be borrowed, which shall be a minimum of $100,000, and (ii) the requested borrowing date, which shall be a Business Day. Promptly after receipt by the Swing Line Lender of any Swing Line Loan Notice, the Swing Line Lender will confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has also received such Swing Line Loan Notice and, if not, the Swing Line Lender will notify the Administrative Agent (by telephone or in writing) of the contents thereof. Unless the Swing Line Lender has received notice (by telephone or in writing) from the Administrative Agent (including at the request of any Revolving Lender) prior to 2:00 p.m. on the date of the proposed Swing Line Borrowing (A) directing the Swing Line Lender not to make such Swing Line Loan as a result of the limitations set forth in the first proviso to the first sentence of Section 2.22(a) , or (B) that one or more of the applicable conditions specified in Article IV is not then satisfied, then, subject to the terms and conditions hereof, the Swing Line Lender will, not later than 4:00 p.m. on the borrowing date specified in such Swing Line Loan Notice, make the amount of its Swing Line Loan available to the Borrower at its office by crediting the account of the Borrower on the books of the Swing Line Lender in immediately available funds.

(c) Refinancing of Swing Line Loans . (i) The Swing Line Lender at any time in its sole and absolute discretion may request, on behalf of the Borrower (which hereby irrevocably authorizes the Swing Line Lender to so request on its behalf), that each Revolving Credit Lender make an ABR Loan in an amount equal to such Lender’s Revolving Commitment Percentage of the amount of Swing Line Loans then outstanding. Such request shall be made in writing (which written request shall be deemed to be a Committed Loan Notice for purposes hereof) and in accordance with the requirements of Section 2.03 , without regard to the minimum and multiples specified therein for the principal amount of ABR Loans, but subject to the unutilized portion of the Revolving Facility and the conditions set forth in Section 4.02 . The Swing Line Lender shall furnish the Borrower with a copy of the applicable Committed Loan Notice promptly after delivering such notice to the Administrative Agent. Each Revolving Lender shall make an amount equal to its Revolving Commitment Percentage of the amount specified in such Committed Loan Notice available to the Administrative Agent in immediately available funds (and the Administrative Agent may apply cash collateral available with respect to the applicable Swing Line Loan) for the account of the Swing Line Lender at the Administrative Agent’s Office not later than 1:00 p.m. on the day specified in such Committed Loan Notice, whereupon, subject to Section 2.22(c)(ii) , each Revolving Lender that so makes funds available shall be deemed to have made a ABR Loan to the Borrower in such amount. The Administrative Agent shall remit the funds so received to the Swing Line Lender.

 

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(ii) If for any reason any Swing Line Loan cannot be refinanced by such a Revolving Borrowing in accordance with Section 2.22(c)(i) , the request for ABR Loans submitted by the Swing Line Lender as set forth herein shall be deemed to be a request by the Swing Line Lender that each of the Revolving Lenders fund its risk participation in the relevant Swing Line Loan and each Revolving Lender’s payment to the Administrative Agent for the account of the Swing Line Lender pursuant to Section 2.22(c)(i) shall be deemed payment in respect of such participation.

(iii) If any Revolving Lender fails to make available to the Administrative Agent for the account of the Swing Line Lender any amount required to be paid by such Lender pursuant to the foregoing provisions of this Section 2.22(c) by the time specified in Section 2.22(c)(i) , the Swing Line Lender shall be entitled to recover from such Lender (acting through the Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to the Swing Line Lender at a rate per annum equal to the greater of the Federal Funds Rate and a rate determined by the Swing Line Lender in accordance with banking industry rules on interbank compensation, plus any administrative, processing or similar fees customarily charged by the Swing Line Lender in connection with the foregoing. If such Lender pays such amount (with interest and fees as aforesaid), the amount so paid shall constitute such Lender’s Revolving Loan included in the relevant Revolving Loan Borrowing or funded participation in the relevant Swing Line Loan, as the case may be. A certificate of the Swing Line Lender submitted to any Lender (through the Administrative Agent) with respect to any amounts owing under this clause (iii) shall be conclusive absent manifest error.

(iv) Each Revolving Lender’s obligation to make Revolving Loans or to purchase and fund risk participations in Swing Line Loans pursuant to this Section 2.22(c) shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any setoff, counterclaim, recoupment, defense or other right which such Lender may have against the Swing Line Lender, the Borrower or any other Person for any reason whatsoever, (B) the occurrence or continuance of a Default, or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing; provided , however , that each Revolving Lender’s obligation to make Revolving Loans pursuant to this Section 2.22(c) is subject to the conditions set forth in Section 4.02 . No such funding of risk participations shall relieve or otherwise impair the obligation of the Borrower to repay Swing Line Loans, together with interest as provided herein.

(d) Repayment of Participations . (i) At any time after any Revolving Lender has purchased and funded a risk participation in a Swing Line Loan, if the Swing Line Lender receives any payment on account of such Swing Line Loan, the Swing Line Lender will distribute to such Revolving Lender its Revolving Commitment Percentage thereof in the same funds as those received by the Swing Line Lender.

(ii) If any payment received by the Swing Line Lender in respect of principal or interest on any Swing Line Loan is required to be returned by the Swing Line Lender under any of the circumstances described in Section 9.09 (including pursuant to any settlement entered into by the Swing Line Lender in its discretion), each Revolving Lender shall pay to the Swing Line Lender its Revolving Commitment Percentage thereof on demand of the Administrative Agent, plus interest thereon from the date of such demand to the date such amount is returned, at a rate per annum equal to the Federal Funds Rate. The Administrative Agent will make such demand upon the request of the Swing Line Lender. The obligations of the Lenders under this clause shall survive the payment in full of the Obligations and the termination of this Agreement.

(e) Interest for Account of Swing Line Lender . The Swing Line Lender shall be responsible for invoicing the Borrower for interest on the Swing Line Loans. Until each Revolving Lender funds its ABR Loan or risk participation pursuant to this Section 2.22 to refinance such Revolving Lender’s Revolving Commitment Percentage of any Swing Line Loan, interest in respect of such Revolving Commitment Percentage shall be solely for the account of the Swing Line Lender.

 

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(f) Payments Directly to Swing Line Lender . The Borrower shall make all payments of principal and interest in respect of the Swing Line Loans directly to the Swing Line Lender.

ARTICLE III

Representations and Warranties

The Borrower represents and warrants to the Lenders that:

Section 3.01 Organization; Powers . Each of the Borrower and its Material Subsidiaries is duly organized, validly existing and, if applicable, in good standing under the laws of the jurisdiction of its organization, has all requisite power and authority to carry on its business as now conducted and is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required, except, in each case, where the failure to do so, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect.

Section 3.02 Authorization; Enforceability . The Transactions (including the performance of the Loan Documents) are within the corporate or other organizational powers of the Loan Parties and have been duly authorized by all necessary corporate or other organizational action. This Agreement has been and each other Loan Document will be duly executed and delivered by each Loan Party party thereto. This Agreement constitutes, and each other Loan Document when executed and delivered will constitute a legal, valid and binding obligation of each Loan Party party thereto, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights or remedies generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

Section 3.03 Governmental Approvals; No Conflicts . The Transactions (including the performance of the Loan Documents) (a) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except (i) such as have been obtained or made and are in full force and effect or those which the failure to obtain would not be reasonably expected to result in a Material Adverse Effect and (ii) the filings referred to in Section 3.12, (b) will not violate any applicable law or regulation or the charter, by-laws or other organizational documents of the Borrower or any other Loan Party or any order of any Governmental Authority except where any such violation would not reasonably expected to result in a Material Adverse Effect, (c) will not violate or result in a default under any indenture, agreement or other instrument (including the Separation Agreements) binding upon the Borrower or any other Loan Party or its assets except as would not reasonably expected to result in a Material Adverse Effect, and (d) will not result in the creation or imposition of any Lien on any asset of the Borrower or any of its Material Subsidiaries (other than any Permitted Lien).

Section 3.04 Financial Position . The Borrower has heretofore furnished to the Lenders its consolidated balance sheet and statements of income, stockholders’ equity and cash flows as of and for (a) the fiscal years ended December 31, 2015 and 2014 reported on by Deloitte & Touche LLP, independent public accountants and (b) the six months ended June 30, 2016. Such financial statements present fairly, in all material respects, the financial position and results of operations and cash flows of the Borrower and its consolidated subsidiaries as of such dates and for such periods in accordance with GAAP, subject to year-end audit adjustments and the absence of footnotes in the case of the statements referred to in clause (b) above.

Section 3.05 Properties; Flood Documentation .

(a) Each of the Borrower and its Material Subsidiaries has good title to, or valid leasehold interests in, all its real and personal property material to its business, except for minor defects in title and Permitted Liens that do not interfere with its ability to conduct its business as currently conducted or to utilize such properties for their intended purposes or as, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect.

(b) Each of the Borrower and its Material Subsidiaries owns, or is validity licensed to use, all Intellectual Property used or held for use by such entities or necessary to operate their respective business as currently conducted and contemplated to be conducted, and the operation of their respective businesses by the Borrower and its Material Subsidiaries does not infringe upon or otherwise violate the rights of any other Person, except for any such Intellectual Property or infringements or violations that, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect.

 

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(c) As to all improved Material Real Property located in the United States which is subject to a Mortgage, (i) the Administrative Agent has received the Flood Documentation with respect to such Material Real Property on or prior to the granting of such Mortgage thereon, and (ii) all flood hazard insurance policies required pursuant to Section 5.05 with respect to any such Material Real Property have been obtained and remain in full force and effect to the extent required by such Section.

Section 3.06 Litigation and Environmental Matters .

(a) There are no actions, suits or proceedings by or before any arbitrator or Governmental Authority pending against or, to the knowledge of the Borrower, threatened in writing against or affecting the Borrower or any of its Restricted Subsidiaries (i) that would reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect (other than the Disclosed Matters) or (ii) on the Closing Date, that involve this Agreement or the Transactions.

(b) Except for the Disclosed Matters and except with respect to any other matters that, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect, neither the Borrower nor any of its Restricted Subsidiaries (i) has failed to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Law, (ii) has become subject to any Environmental Liability, (iii) has received written notice of any claim with respect to any Environmental Liability or (iv) knows of any basis reasonably likely to result in Environmental Liability.

Section 3.07 Compliance with Laws and Agreements . Each of the Borrower and its Material Subsidiaries is in compliance with all laws, regulations and orders of any Governmental Authority applicable to it or its property and all indentures, agreements and other instruments binding upon it or its property, except where the failure to do so, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect.

Section 3.08 Investment Company Status . No Loan Party is an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940. No part of the proceeds of any Loan will be used, whether directly or indirectly, for any purpose that entails a violation of any of the Regulations of the Board, including Regulations T, U and X.

Section 3.09 Taxes . Each of the Borrower and its Material Subsidiaries has timely filed or caused to be filed all Tax returns and reports required to have been filed and has paid or caused to be paid all Taxes required to have been paid by it, except (a) Taxes that are being contested in good faith by appropriate proceedings and for which the Borrower or such Material Subsidiary, as applicable, has set aside on its books adequate reserves in accordance with GAAP or (b) to the extent that the failure to do so would not reasonably be expected to, individually or in the aggregate, result in a Material Adverse Effect.

Section 3.10 ERISA . No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events for which liability is reasonably expected to occur, would reasonably be expected to result in a Material Adverse Effect. The present value of all accumulated benefit obligations under each Plan (based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87) did not, as of the date of the most recent financial statements reflecting such amounts, exceed the fair market value of the assets of such Plan by an amount which, if it were to become due, would cause a Material Adverse Effect.

Section 3.11 Disclosure . To the best of the Borrower’s knowledge, neither the Lender Presentations, the CIM, nor any of the other reports, financial statements, certificates or other written information furnished by or on behalf of the Borrower to the Administrative Agent or any Lender in connection with the negotiation of this Agreement or delivered hereunder (as modified or supplemented by other information so furnished), taken as a whole, contained any material misstatement of fact or omitted to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading as of the date furnished; provided that with respect to projected financial information, the Borrower represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time.

 

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Section 3.12 Liens; Security Interests in the Collateral .

(a) The Security Agreement will (to the extent required thereby) create in favor of the Administrative Agent, for the benefit of the Secured Parties, a security interest in the Collateral described therein (subject to any limitations specified therein). In the case of the certificated pledged stock constituting securities described in Section 5.09(a) as of the Closing Date, when stock certificates representing such pledged stock are delivered to the Administrative Agent (together with a properly completed and signed stock power or endorsement), and in the case of the other Collateral described in the Security Agreement as of the Closing Date, when financing statements specified on Schedule 3.12 in appropriate form are filed in the offices specified on Schedule 3.12, the Administrative Agent shall have a perfected Lien on, and security interest in, all right, title and interest of the Loan Parties in such Collateral (subject to any limitations specified therein) to the extent perfection of such security interest can be perfected by control of securities or the filing of a financing statement, as security for the Obligations, in each case prior and superior in right to any other Person (except Permitted Liens).

(b) When the Security Agreement or an ancillary document thereunder is properly filed and recorded in the United States Patent and Trademark Office and the United States Copyright Office, and, with respect to Collateral in which a security interest cannot be perfected by such filings, upon the proper filing of the financing statements referred to in clause (a) above, the Administrative Agent (for the benefit of the Secured Parties) shall have a fully perfected Lien on, and security interest in, all right, title and interest of the Loan Parties thereunder in the United States Intellectual Property included in the Collateral listed in such ancillary document (it being understood that subsequent recordings in the United States Patent and Trademark Office and the United States Copyright Office may be necessary to perfect a Lien on material registered trademarks and patents, trademark and patent applications and registered copyrights acquired by the Loan Parties after the Closing Date).

(c) The Mortgages, if any, executed and delivered on the Closing Date are, and the Mortgages executed and delivered after the Closing Date pursuant to Section 5.09 shall be, effective to create in favor of the Administrative Agent (for the benefit of the Secured Parties) or, if so contemplated by the respective Mortgage, the Administrative Agent and the other Secured Parties, legal, valid and enforceable Liens on all of the Loan Parties’ rights, titles and interests in and to the Mortgaged Property thereunder and the proceeds thereof, and when such Mortgages are validly filed, registered or recorded in the proper real estate filing, registration or recording offices and any other required registrations have been validly completed by or on behalf of the Administrative Agent, and all relevant mortgage Taxes and recording and registration charges are duly paid, the Administrative Agent (for the benefit of the Secured Parties) shall have valid Liens with record or registered notice to third parties on, and security interests in, all rights, titles and interests of the Loan Parties in such Mortgaged Property and, to the extent applicable, subject to Section 9-315 of the Uniform Commercial Code, the proceeds thereof.

Section 3.13 No Change . Since December 31, 2015, there has been no event that has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

Section 3.14 Subsidiaries . Set forth on Schedule 3.14 is a list of all Subsidiary Guarantors on the Closing Date, together with the jurisdiction of organization, and ownership and ownership percentages of Equity Interests held by each such Subsidiary Guarantor in each direct subsidiary of such Subsidiary Guarantor as of the Closing Date.

Section 3.15 Solvency . Immediately after the consummation of the Transactions to occur on the Closing Date, including the making of each Loan to be made on the Closing Date and the application of the proceeds of such Loans, and after giving effect to the rights of subrogation and contribution under the Guarantee Agreement, (a) the fair value of the assets of the Borrower and its subsidiaries on a consolidated basis will exceed their debts and liabilities, subordinated, contingent or otherwise, (b) the present fair saleable value of the assets of the Borrower and its subsidiaries on a consolidated basis will be greater than the amount that will be required to pay the probable liability on their debts and other liabilities, subordinated, contingent or otherwise, as such debts and other liabilities

 

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become absolute and matured, (c) the Borrower and its subsidiaries on a consolidated basis will be able to pay their debts and liabilities, subordinated, contingent or otherwise, as such debts become due and liabilities become absolute and matured and (d) the Borrower and its subsidiaries on a consolidated basis will not have unreasonably small capital with which to conduct the business in which they are engaged, as such business is now conducted and is proposed to be conducted following the Closing Date.

Section 3.16 No Default . No Default or Event of Default has occurred and is continuing.

Section 3.17 OFAC . Neither the Borrower, nor any of its Subsidiaries, nor, to the knowledge of the Borrower and its Subsidiaries, any director, officer, employee, agent, affiliate or representative thereof, is an individual or entity that is, or is owned or controlled by any Person that is (i) the target of any Sanctions, (ii) included on OFAC’s List of Specially Designated nationals, HMT’s Consolidated List of Financial Sanctions Targets and the Investment Ban List, or any similar list enforced by any other relevant sanctions authority or (iii) located, organized or resident in a Designated Jurisdiction.

Section 3.18 Anti-Corruption Laws . The Borrower and its Subsidiaries have conducted their businesses in compliance in all material respects with the United States Foreign Corrupt Practices Act of 1977, the UK Bribery Act 2010, and other similar anti-corruption legislation in other jurisdictions and have instituted and maintained policies and procedures designed to promote and achieve compliance with such laws.

Section 3.19 EEA Financial Institutions . No Loan Party is an EEA Financial Institution.

Section 3.20 Labor Matters . Except as, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect: (a) there are no strikes or other labor disputes pending or, to the knowledge of Borrower and its subsidiaries, threatened against Borrower or any of the subsidiaries; (b) the hours worked and payments made to employees of Borrower and the subsidiaries have not been in violation of the Fair Labor Standards Act or any other applicable law dealing with such matters; and (c) all payments due from Borrower or any of the subsidiaries or for which any claim may be made against Borrower or any of the subsidiaries, on account of wages and employee health and welfare insurance and other benefits have been paid or accrued as a liability on the books of Borrower or such subsidiary to the extent required by GAAP. Except as, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect, the consummation of the Transactions will not give rise to a right of termination or right of renegotiation on the part of any union under any material collective bargaining agreement to which Borrower or any of the Subsidiaries (or any predecessor) is a party or by which Borrower or any of the subsidiaries (or any predecessor) is bound.

Section 3.21 Use of Proceeds . The Borrower will use the proceeds of the (i) Revolving Loans and (ii) Term B Loans to finance the Transactions, to pay fees and expenses in connection therewith, and for working capital and other general corporate purposes, including the financing of Investments permitted under this Agreement; provided that Borrowings of Revolving Loans up to an aggregate principal amount of $50,000,000 shall be available to be drawn on the Closing Date and such Revolving Loans drawn on the Closing Date shall be used only for working capital purposes and to finance fees and expenses in connection with the Transactions.

Section 3.22 Insurance . Schedule 3.22 sets forth a true, complete and correct description, in all material respects, of all material insurance maintained by or on behalf of Borrower or the Subsidiaries as of the Closing Date. As of such date, such insurance is in full force and effect.

Section 3.23 USA PATRIOT Act . Borrower and each of its subsidiaries is in compliance with the applicable provisions of the USA PATRIOT Act in all material respects.

 

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ARTICLE IV

Conditions

Section 4.01 Closing Date . The obligations of the Lenders to make the initial Loans hereunder shall not become effective until the date on which each of the following conditions is satisfied (or waived in accordance with Section 9.02):

(a) The Administrative Agent (or its counsel) shall have received (including by telecopy or email transmission) from each Loan Party party to the relevant Loan Document, a counterpart of such Loan Document signed on behalf of such Loan Party.

(b) The Administrative Agent shall have received a favorable written opinion (addressed to the Administrative Agent and the Lenders as of the Closing Date and dated the Closing Date) of (i) Sullivan & Cromwell LLP, counsel for the Borrower and certain of the Loan Parties and (ii) local counsel in each jurisdiction in which a Loan Party is organized and the laws of which are not covered by the opinion referred to in (i) above, in each case in form and substance reasonably satisfactory to the Administrative Agent.

(c) The Administrative Agent shall have received such documents and certificates as the Administrative Agent or its counsel may reasonably request relating to the organization, existence and good standing of the Loan Parties, the authorization of the Transactions and any other legal matters relating to the Loan Parties, this Agreement or the Transactions, including a certificate of each Loan Party substantially in the form of Exhibit E , all in form and substance reasonably satisfactory to the Administrative Agent and its counsel.

(d) The Administrative Agent shall have received a certificate, dated the Closing Date and signed by the Chief Executive Officer, a Vice President, a Financial Officer of the Borrower or any other executive officer of the Borrower who has specific knowledge of the Borrower’s financial matters and is satisfactory to the Administrative Agent, confirming that (a) the representations and warranties of each Loan Party set forth in the Loan Documents are true and correct as of the Closing Date and (b) as of the Closing Date, no Default has occurred and is continuing.

(e) There shall have been delivered to the Administrative Agent an executed Perfection Certificate.

(f) The Administrative Agent shall have received a solvency certificate in the form of Exhibit I, dated the Closing Date and signed by the Financial Officer of the Borrower.

(g) The Administrative Agent, the Lead Arrangers and the Lenders shall have received all reasonable accrued fees and other amounts due and payable on or prior to the Closing Date, including, to the extent invoiced, reimbursement or payment of all out-of-pocket expenses (including fees of legal counsel to the Administrative Agent, the Lead Arrangers and the Lenders) required to be reimbursed or paid by the Borrower hereunder.

(h) Since December 31, 2015, there shall have been no event that has had or would reasonably be expected to have a Material Adverse Effect.

(i) The Administrative Agent shall have received the results of a recent Lien search with respect to each Loan Party, and such search shall reveal no Liens on any of the assets of the Loan Parties except for Liens permitted by Section 6.02 or discharged on or prior to the Closing Date pursuant to documentation satisfactory to the Administrative Agent.

 

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(j) Other than as set forth in Section 5.12, the Administrative Agent shall have received the certificates representing the certificated Equity Interests pledged pursuant to the Security Agreement, together with an undated stock power for each such certificate executed in blank by a duly authorized officer of the pledgor thereof and all Indebtedness owing to any Loan Party, other than Excluded Property, shall have been pledged or assigned for security purposes pursuant to the Security Documents and the Administrative Agent shall have received instruments evidencing such Indebtedness, endorsed in blank.

(k) Each Uniform Commercial Code financing statement or other filing required by the Security Agreement shall be in proper form for filing.

(l) Each Loan Party shall have provided the documentation and other information requested by the Lenders that is required by regulatory authorities under applicable “know your customer” and anti-money-laundering rules and regulations, including without limitation, the Act, in each case as requested at least five (5) Business Days prior to the Closing Date.

(m) The Administrative Agent shall have received an executed promissory note payable to the order of each Lender that requested such promissory note at least one Business Day prior to the Closing Date (or, if requested by such Lender, to such Lender and its registered assigns) and in a form approved by the Administrative Agent.

(n) The Borrower shall have paid as of the Closing Date immediately after giving effect thereto to the Administrative Agent for the account of each of the Lenders, an upfront fee as separately agreed.

(o) (x) The Administrative Agent shall have received true and complete copies of any SEC Filings and the Separation Agreements, it being understood that any such documents filed with the SEC shall be deemed to have been delivered to the Administrative Agent and the Lenders and (y) the Administrative Agent shall be reasonably satisfied with the arrangements to ensure that the Separation shall be consummated on the Closing Date.

(p) The Administrative Agent shall have received copies of the UCC-3s set forth on Schedule 4.01.

(q) The Secured Notes shall have been consummated prior to or substantially concurrently with the effectiveness of this Agreement and the Pari Intercreditor Agreement shall have been executed by the parties thereto.

The Administrative Agent shall notify the Borrower and the Lenders of the Closing Date, and such notice shall be conclusive and binding.

Section 4.02 Each Credit Event . The obligation of each Lender to make a Loan on the occasion of any Borrowing (other than a continuation or conversion of an existing Borrowing), the obligation of the Issuing Bank to issue any Letter of Credit and any extension of credit pursuant to Section 2.02, 2.19 or 2.20 is subject to the satisfaction of the following conditions, subject to Section 1.09 with respect to Incremental Term Loans only:

(a) The representations and warranties of each Loan Party set forth in this Agreement shall be true and correct in all material respects (except to the extent that any such representation and warranty is qualified by materiality or Material Adverse Effect, in which case such representation and warranty shall be true and correct in all respects) on and as of the date of such Borrowing, except to the extent that any such representation and warranty relates to an earlier date (in which case such representation and warranty shall have been true and correct in all material respects (except to the extent that any such representation and warranty is qualified by materiality or Material Adverse Effect, in which case such representation and warranty shall be true and correct in all respects) as of such earlier date); provided that in the case of any Incremental Term Facility used to finance an acquisition permitted hereunder, to the extent the Lenders participating in such Incremental Term Facility agree, this Section 4.02(a) shall require only customary “specified representations” and “acquisition agreement representations” (i.e., those representations of the seller or the target (as applicable) in the applicable acquisition agreement that are material to the interests of the

 

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Lenders and only to the extent that the Borrower or its applicable subsidiary has the right to terminate its obligations under the applicable acquisition agreement as a result of the failure of such representations to be accurate) be true and correct in all material respects (except to the extent that any such representation and warranty is qualified by materiality or Material Adverse Effect, in which case such representation and warranty shall be true and correct in all respects).

(b) At the time of and immediately after giving effect to such Borrowing, no Default or Event of Default shall have occurred and be continuing.

(c) The Administrative Agent, applicable Issuing Bank or the Swing Line Lender shall have received a Committed Loan Notice in accordance with Section 2.03, a Letter of Credit request in accordance with Section 2.17(b) or a Swing Line Loan Notice in accordance with Section 2.22(b), as applicable.

Each Borrowing shall be deemed to constitute a representation and warranty by the Borrower or other applicable Loan Party on the date thereof as to the matters specified in paragraphs (a) and (b) of this Section.

ARTICLE V

Affirmative Covenants

Until the Revolving Commitments have expired or been terminated and the principal of and interest on each Loan and all fees payable hereunder shall have been paid in full and all Letters of Credit have expired or been cash collateralized, the Borrower covenants and agrees with the Lenders that:

Section 5.01 Financial Statements; Other Information . The Borrower will furnish to the Administrative Agent and each Lender:

(a) within 90 days after the end of each fiscal year of the Borrower (or within such time period as the Borrower is required to file its Annual Report on Form 10-K for such fiscal year with the SEC, with regard to any extension of time pursuant to Rule 12b-25 under the Exchange Act or any applicable successor rule, in any event not to exceed 15 days), its audited consolidated balance sheet and related statements of operations, stockholders’ equity and cash flows as of the end of and for such year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on by Deloitte & Touche LLP or other independent public accountants of recognized national standing (without a “going concern” or like qualification or exception (other than with respect to the impending maturity of any indebtedness under this Agreement) and without any qualification or exception as to the scope of such audit except as to the effectiveness of internal control over financial reporting with respect to any subsidiary acquired during such fiscal year in accordance with Regulation S-X under the Exchange Act, as interpreted by the implementation guidance of the U.S. Securities Exchange Commission) to the effect that such consolidated financial statements present fairly in all material respects the financial position and results of operations of the Borrower and its consolidated subsidiaries on a consolidated basis in accordance with GAAP consistently applied (except as approved by such accountants and disclosed therein), and a schedule eliminating Unrestricted Subsidiaries and reconciling to the financial statements in reasonable detail, as determined by the Borrower;

(b) within 45 days after the end of each of the first three fiscal quarters of each fiscal year of the Borrower (or within such time period as the Borrower is required to file its Quarterly Report on Form 10-Q for such fiscal quarter with the SEC, with regard to any extension of time pursuant to Rule 12b-25 under the Exchange Act or any applicable successor rule, in any event not to exceed five days), commencing with the fiscal quarter ending September 30, 2016, its consolidated balance sheet and related statement of operations as of the end of and for such fiscal quarter and the then elapsed portion of the fiscal year and the statements of stockholders’ equity and cash flows for the then elapsed portion of the fiscal year, setting forth in each case in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal year, all certified by one of its Financial Officers as presenting fairly in all material respects the financial position and results of operations of the Borrower

 

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and its consolidated subsidiaries on a consolidated basis in accordance with GAAP consistently applied (except as approved by such officer and disclosed therein), subject to normal year-end audit adjustments and the absence of footnotes, and a schedule eliminating Unrestricted Subsidiaries and reconciling to the financial statements;

(c) within 90 days after the end of each fiscal year of the Borrower, forecasts of the cash and cash equivalents and long-term debt line items on the consolidated balance sheets and forecasts of the statements of operations and cash flows, in each case of the Borrower and the Restricted Subsidiaries on a quarterly basis for the then current fiscal year, in each case prepared by management of Borrower and substantially in the form as the forecasts delivered by the Borrower to the Lead Arrangers prior to the Closing Date;

(d) concurrently with any delivery of financial statements under clause (a) or (b) above commencing with the financial statements delivered for the year ending December 31, 2016, a certificate of a Financial Officer of the Borrower (i) certifying as to whether a Default has occurred and, if a Default has occurred, specifying the details thereof and any action taken or proposed to be taken with respect thereto, (ii) setting forth reasonably detailed calculations demonstrating compliance with Section 6.10, (iii) stating whether any change in GAAP or in the application thereof that materially affects such financial statements has occurred since the date of the audited financial statements referred to in Section 3.04 and, if any such change has occurred, specifying the effect of such change on the financial statements accompanying such certificate, and (iv) setting forth a description of any change in the jurisdiction of organization of the Borrower or any Material Domestic Subsidiary since the date of the most recent certificate delivered pursuant to this paragraph (d) (or, in the case of the first such certificate so delivered, since the Closing Date);

(e) concurrently with any delivery of financial statements under clause (a) above, a certificate of the accounting firm that reported on such financial statements stating whether they obtained knowledge during the course of their examination of such financial statements of any Default (which certificate may be limited to the extent required by accounting rules or guidelines and may be limited to accounting matters and disclaim responsibility for legal interpretations);

(f) promptly following receipt thereof, copies of any documents described in Section 101(k) or 101(l) of ERISA that the Borrower or any ERISA Affiliate may request with respect to any Multiemployer Plan; provided that if the Borrower and/or any ERISA Affiliate has not requested such documents or notices from the administrator or sponsor of the applicable Multiemployer Plan then, upon reasonable request of the Administrative Agent, the Borrower and/or its ERISA Affiliates shall promptly make a request for such documents or notices from such administrator or sponsor and the Borrower shall provide copies of such documents and notices to the Administrative Agent (on behalf of each requesting Lender) promptly after receipt thereof; and

(g) promptly following any reasonable request therefor, such other information regarding the operations, business affairs and financial position of the Borrower or any Restricted Subsidiary, or compliance with the terms of this Agreement, as the Administrative Agent (on its own behalf or at the request of any Lender) may reasonably request.

Information required to be delivered pursuant to this Section 5.01 shall be deemed to have been delivered if such information (including, in the case of certifications required pursuant to clause (b) above, the certifications accompanying any such quarterly report pursuant to Section 302 of the Sarbanes-Oxley Act of 2002), or one or more annual or quarterly reports containing such information, shall (a) have been posted by the Administrative Agent on IntraLinks or a similar site to which the Lenders have been granted access or (b) shall be available on the website of the SEC at http://www.sec.gov; provided that the Borrower shall notify the Administrative Agent of the posting of such documents and provide to the Administrative Agent by electronic mail electronic versions (i.e. soft copies) of such documents. Information required to be delivered pursuant to this Section 5.01 may also be delivered by electronic communications pursuant to procedures approved by the Administrative Agent. In the event any financial statements delivered under clause (a) or (b) above shall be restated, the Borrower shall deliver, promptly after such restated financial statements become available, revised completed certificates with respect to the periods covered thereby that give effect to such restatement, signed by a Financial Officer.

 

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The Borrower acknowledges and agrees that all financial statements furnished pursuant to paragraphs (a) and (b) above are hereby deemed to be Borrower Materials suitable for distribution, and to be made available, to Public Lenders as contemplated by Section 9.17 and may be treated by the Administrative Agent and the Lenders as if the same had been marked “PUBLIC” in accordance with such paragraph.

Section 5.02 Notices of Material Events . The Borrower will furnish to the Administrative Agent for delivery to each Lender prompt written notice of the following:

(a) the occurrence of any Default;

(b) the filing or commencement of any action, suit or proceeding by or before any arbitrator or Governmental Authority against the Borrower or any Restricted Subsidiary thereof as to which there is a reasonable likelihood of an adverse determination that would reasonably be expected to result in a Material Adverse Effect;

(c) the occurrence of any ERISA Event that, alone or together with any other ERISA Events that have occurred, would reasonably be expected to result in liability of the Borrower or its Restricted Subsidiaries in an amount which would constitute a Material Adverse Effect; and

(d) any other development that to the knowledge of a Responsible Officer results in, or would reasonably be expected to result in, a Material Adverse Effect.

Each notice delivered under this Section shall be accompanied by a statement of a Financial Officer or other executive officer of the Borrower setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.

Section 5.03 Existence; Conduct of Business . The Borrower will, and will cause each of its Restricted Subsidiaries to, do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence and the rights, licenses, permits, privileges and franchises material to the conduct of its business except in each case (i) where the failure to do so would not reasonably be expected to result in a Material Adverse Effect or (ii) as such action is not prohibited under Sections 6.03, 6.04 or 6.05.

Section 5.04 Payment of Obligations . The Borrower will, and will cause each of its Restricted Subsidiaries to, pay its obligations, including Tax liabilities, that, if not paid, would, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect before the same shall become delinquent or in default, except where (a) the validity or amount thereof is being contested in good faith by appropriate proceedings, (b) the Borrower or such Restricted Subsidiary has set aside on its books adequate reserves with respect thereto in accordance with GAAP and (c) the failure to make payment pending such contest would not reasonably be expected to, individually or in the aggregate, result in a Material Adverse Effect.

Section 5.05 Maintenance of Properties; Insurance . The Borrower will, and will cause each of its Restricted Subsidiaries to:

(a) Keep and maintain all property material to the conduct of its business in good working order and condition, ordinary wear and tear excepted.

(b) Use commercially reasonable efforts to maintain, prosecute and enforce its material Intellectual Property, in each case except where the failure to do so would not reasonably be expected to result in a Material Adverse Effect.

 

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(c) Maintain, with financially sound and reputable insurance companies, or in accordance with acceptable self-insurance policies, insurance (subject to customary deductibles and retentions) in such amounts and against such risks as are customarily maintained by similarly situated companies engaged in the same or similar business as reasonably determined by the Borrower and cause the Administrative Agent to be listed as a loss payee and mortgagee, on property policy with respect to tangible personal property and assets constituting Collateral and as an additional insured on all liability policies. Notwithstanding the foregoing, Borrower and the subsidiaries may (i) maintain all such insurance with any combination of primary and excess insurance, and (ii) maintain any or all such insurance pursuant to master or so-called “blanket policies” insuring any or all Collateral and/or other Real Property which does not constitute Collateral (and in such event the loss payee endorsement shall be limited or otherwise modified accordingly).

(d) At the time of delivery of the applicable Mortgage (or such later date as may be agreed to by the Administrative Agent in its sole discretion), subject to Section 5.12, cause such property insurance policy with respect to the Mortgaged Property located in the United States of America to be endorsed or otherwise amended to include a “standard” lender’s loss payable endorsement, in form and substance reasonably satisfactory to the Administrative Agent; deliver a certificate of insurance with respect to each Mortgaged Property to the Administrative Agent; deliver to the Administrative Agent, prior to or concurrently with the cancellation or nonrenewal of any such policy of insurance covered by this clause (d), a copy of a renewal or replacement (or other evidence of renewal of a policy previously delivered to the Administrative Agent) insurance certificate with respect thereto;

(e) At least 45 days prior to the time of delivery of the applicable Mortgage, if any portion of any Mortgaged Property located in the United States is at any time located in an area identified by the Federal Emergency Management Agency (or any successor agency) as a special flood hazard area (each a “ Special Flood Hazard Area ”) with respect to which flood insurance has been made available under the Flood Insurance Laws (as now or hereafter in effect or successor act thereto), (i) maintain, or cause to be maintained, with a financially sound and reputable insurer, flood insurance in an amount and otherwise sufficient to comply with all applicable rules and regulations promulgated pursuant to the Flood Insurance Laws and (ii) deliver to the Administrative Agent evidence of such compliance in form and substance reasonably acceptable to the Administrative Agent.

In connection with the covenants set forth in this Section 5.05, it is understood and agreed that:

(i) the Administrative Agent, the Administrative Agent, the Lenders, the Issuing Banks, the Swing Line Lender and their respective agents or employees shall not be liable for any loss or damage insured by the insurance policies required to be maintained under this Section 5.05, it being understood that (A) the Loan Parties shall look solely to their insurance companies or any other parties other than the aforesaid parties for the recovery of such loss or damage and (B) such insurance companies shall have no rights of subrogation against the Administrative Agent, the Administrative Agent, the Lenders, any Issuing Bank, the Swing Line Lender or their agents or employees. If, however, the insurance policies, as a matter of the internal policy of such insurer, do not provide waiver of subrogation rights against such parties, as required above, then the Borrower, on behalf of itself and behalf of each of the subsidiaries, hereby agree, to the extent permitted by law, to waive, and further agree to cause each of the subsidiaries to waive, its right of recovery, if any, against the Administrative Agent, the Lenders, any Issuing Bank, the Swing Line Lender and their agents and employees; and

(ii) the designation of any form, type or amount of insurance coverage by the Administrative Agent (including acting in the capacity as the Administrative Agent) under this Section 5.05 shall in no event be deemed a representation, warranty or advice by the Administrative Agent or the Lenders that such insurance is adequate for the purposes of the business of Borrower and the subsidiaries or the protection of their properties.

Section 5.06 Books and Records; Inspection Rights . The Borrower will, and will cause each of its Restricted Subsidiaries to, keep proper books of record and account in which full, true and correct entries in all material respects are made of all dealings and transactions in relation to its business and activities. The Borrower will, and will cause each of its Restricted Subsidiaries to, upon reasonable notice from the Administrative Agent, permit any representatives designated by the Administrative Agent to visit and inspect its properties, upon reasonable notice to

 

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examine and make extracts from its books and records, and to discuss its affairs, finances and condition with its officers and independent accountants all at such reasonable times during normal business hours as are mutually agreed by the Borrower and as often as reasonably requested, provided that such visits, inspections, examinations and discussions shall, so long as no Default or Event of Default has occurred and is continuing, take place no more often than one time per fiscal year on a date to be determined by, and shall be coordinated by, the Borrower and the Administrative Agent; provided further , that the Administrative Agent shall have delivered a written request for such inspection to the Borrower prior to the date of any such inspection and that the information provided to the Lenders pursuant to this Section 5.06 shall be subject to the provisions of Section 9.13; provided further , that any Lender may request that the Administrative Agent exercise its rights to conduct such visits, inspections, examinations and discussions.

Section 5.07 Compliance with Laws . The Borrower will, and will cause each of its Restricted Subsidiaries to, comply with all applicable laws, rules, regulations and orders of any Governmental Authority applicable to it or its property, except where the failure to do so, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect.

Section 5.08 Use of Proceeds . The proceeds of the Loans will be used only to finance the general corporate purposes of the Borrower and its Restricted Subsidiaries, including to fund the Transactions. No proceeds of any Loan or any Letter of Credit will be used, directly or indirectly, or contributed or otherwise made available to any Subsidiary or other Person, to fund any activities of or business with any individual or entity, or in any Designated Jurisdiction, that, at the time of such funding, is the subject of Sanctions, or in any other manner that will result in a violation by an party to this Agreement or any of its Related Parties (including any individual or entity participating in the transaction, whether as Lender, Arranger, Administrative Agent, Issuing Bank, Swing Line Lender, or otherwise) of Sanctions.

Section 5.09 Guarantors and Collateral .

(a) On the Closing Date (or such longer period as the Administrative Agent may agree in its sole discretion) (x) each Restricted Subsidiary (other than an Excluded Subsidiary) will become a party to the Guarantee Agreement and (y) the Borrower and each Restricted Subsidiary (other than an Excluded Subsidiary) will (A) become a party to the Security Agreement and, subject to the exceptions set forth in the Security Agreement, pledge its assets, including all of the Equity Interests of any Restricted Subsidiary directly owned by such Restricted Subsidiary and any other shares, stock certificates, options, interests or rights of any nature whatsoever in respect of the Equity Interests of any Restricted Subsidiary that may be issued or granted to, or held by, such Restricted Subsidiary while this Agreement is in effect, but excluding any Excluded Property and (B) except as otherwise contemplated by the Collateral Documents, execute and deliver all such documents and instruments and take such actions to create and perfect the security interests required by the Collateral Documents.

(b) With respect to any Person that becomes a Restricted Subsidiary (other than an Excluded Subsidiary) after the Closing Date, or any Excluded Subsidiary that ceases to constitute an Excluded Subsidiary after the Closing Date, the Borrower will, within 30 days thereafter (or such longer period as the Administrative Agent may agree in its sole discretion) (i) cause such Restricted Subsidiary to (A) become a party to the Guarantee Agreement, (B) become a party to the Security Agreement or such other Collateral Document as may be reasonably requested by the Administrative Agent, (C) pledge all of the Equity Interests of any Restricted Subsidiary (other than Excluded Property) directly owned by such Restricted Subsidiary and any other shares, stock certificates, options, interests or rights of any nature whatsoever in respect of the Equity Interests of any Restricted Subsidiary (other than Excluded Property) that may be issued or granted to, or held by, such Restricted Subsidiary while this Agreement is in effect, (D) except as otherwise contemplated by the Collateral Documents, deliver to the Administrative Agent any and all certificates representing such Equity Interests (to the extent certificated), accompanied by undated stock powers or other appropriate instruments of transfer executed in blank, (E) deliver to the Administrative Agent a certificate of such Restricted Subsidiary substantially in the form of Exhibit E, with appropriate insertions and attachments, and (F) except as otherwise contemplated by the Collateral Documents, execute and deliver all such documents and instruments and take such actions to create and perfect the security interests required by the Collateral Documents and (ii) if requested by the Administrative Agent, deliver to the Administrative Agent one or more legal opinions relating to the matters described above, which shall be in form and substance, and from counsel, reasonably satisfactory to the Administrative Agent.

 

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(c) The Borrower will grant and cause each of the Subsidiary Guarantors to grant to the Administrative Agent security interests in, and mortgages on, any Material Real Property of such Loan Parties, as applicable, that are not Mortgaged Property as of the Closing Date, to the extent acquired after the Closing Date, within ninety (90) days after such acquisition (or such later date as the Administrative Agent may agree in its reasonable discretion) pursuant to documentation in form and substance reasonably satisfactory to the Administrative Agent and the Borrower (each, an “ Additional Mortgage ”), which security interest and mortgage shall constitute valid and enforceable Liens subject to no other Liens except Permitted Liens and record, register or file, and cause each such subsidiary to record, register or file, the Additional Mortgage or instruments related thereto in such manner and in such places as is required by law to establish, perfect, preserve and protect the Liens in favor of the Administrative Agent (for the benefit of the Secured Parties) required to be granted pursuant to the Additional Mortgages and pay, and cause each such Subsidiary to pay, in full, all Taxes, fees and other charges required to be paid in connection with such recording, registration or filing. Unless otherwise waived by the Administrative Agent or the applicable Lender (solely with respect to clause (i)(B) below), with respect to each such Additional Mortgage, the Borrowers shall cause the following requirements to be satisfied with respect to such Material Real Property:

(i) (A) the Administrative Agent shall have received with respect to each Mortgaged Property located in the United States of America or any State thereof, the Flood Documentation and (B) each Lender shall have received (through the Administrative Agent) any other reasonable documents or information reasonably requested by such Lender (through the Administrative Agent) to enable such Lender to comply, in the determination of the Administrative Agent, with any applicable Flood Insurance Laws and all applicable rules and regulations promulgated pursuant thereto;

(ii) the Administrative Agent shall have received:

(A) counterparts of each Mortgage to be entered into with respect to each such Mortgaged Property duly executed and delivered by the record owner of such Mortgaged Property and suitable for recording, registering or filing (together with any other forms or undertakings that are required or customary to effect such recording, registration or filing) in all filing, registration or recording offices that the Administrative Agent may reasonably deem necessary or desirable in order to create a valid and enforceable Lien subject to no other Liens except Permitted Liens, at the time of filing, registration or recordation thereof,

(B) with respect to the Mortgage encumbering each such Mortgaged Property, opinions of local counsel regarding the due authorization, execution and delivery, the enforceability, and perfection of the Mortgages and such other matters customarily covered in real estate mortgage counsel opinions as the Administrative Agent may reasonably request, if and to the extent, and in such form, as local counsel customarily provides such opinions as to such other matters, and

(C) such other documents as the Administrative Agent may reasonably request that are available to the Borrowers without material expense with respect to any such Mortgage or Mortgaged Property; and

(iii) the Administrative Agent shall have received:

(A) a policy or policies or marked up unconditional binder of title insurance (“ Mortgage Policy ”) with respect to properties located in the United States, or a date-down and modification endorsement, if available, paid for by the Borrower, in the amount of the Fair Market Value of the respective Mortgaged Property, issued by a nationally recognized title insurance company (“ Title Insurer ”) insuring the Lien of each Mortgage as a valid Lien on the Mortgaged Property described therein, free of any other Liens except Permitted Liens, together with such customary endorsements, coinsurance and reinsurance as the Administrative Agent may reasonably request and which are available at commercially reasonable rates in the jurisdiction where the applicable Mortgaged Property is located ( provided , however , that in lieu of a zoning endorsement, Administrative Agent shall accept a zoning report from a nationally recognized zoning report provider), and

 

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(B) either (x) a survey of each Mortgaged Property (including all improvements, easements and other customary matters thereon reasonably required by the Administrative Agent), as applicable, for which all necessary fees (where applicable) have been paid with respect to properties located in the United States, which (A) complies in all material respects with the minimum detail requirements of the American Land Title Association and American Congress of Surveying and Mapping as such requirements are in effect on the date of preparation of such survey and (B) is sufficient for such Title Insurer to remove all standard survey exceptions from the title insurance policy relating to such Mortgaged Property or otherwise reasonably acceptable to the Administrative Agent; provided , however , that so long as the Title Insurer shall accept the same to eliminate the standard survey exceptions from such policy or policies, in lieu of a new or revised survey Borrowers may provide a “no material change” affidavit with respect to any prior survey for the respective Mortgaged Property (which prior survey otherwise substantially complies with the foregoing survey requirements), or (y) if Borrower elects an ExpressMap (each of (x) and (y), a “Survey”).

Section 5.10 Further Assurances . Promptly upon the reasonable request by the Administrative Agent, or any Lender through the Administrative Agent, the Borrower shall, shall cause the Subsidiary Guarantors to (a) correct any material defect or error that may be discovered in the execution, acknowledgment, filing or recordation of any Loan Document, and (b) do, execute, acknowledge, deliver, record, re-record, file, re-file, register and re-register any and all such further acts, deeds, certificates, assurances and other instruments as the Administrative Agent, or any Lender through the Administrative Agent, may reasonably require from time to time in order to (i) carry out the purposes of the Loan Documents, (ii) to the fullest extent permitted by applicable law, subject any Loan Party’s assets, including Equity Interests to the Liens granted by the Security Agreement and the other Collateral Documents to the extent required thereunder and (iii) except as otherwise contemplated by the Collateral Documents, perfect and maintain the validity, effectiveness and priority of the Collateral Documents and any of the Liens created thereunder.

Section 5.11 Ratings . The Borrower shall use commercially reasonable efforts to obtain and to maintain public ratings from Moody’s and Standard & Poor’s for the Term B Loans; provided , however , that the Borrower shall not be required to obtain or maintain any specific rating.

Section 5.12 Post-Closing Requirements .

(a) Within 120 days following the Closing Date (or such longer period as may be agreed to by the Administrative Agent in its sole discretion), the Borrower shall, or shall cause the applicable Loan Party to, grant to the Administrative Agent a security interest in and Mortgage on each Real Property listed on Schedule 5.12 hereto in each case, in the amount set forth with respect to such Real Property on Schedule 5.12 hereto, which security interest and mortgage shall constitute valid and enforceable Liens subject to no other Liens except Permitted Liens and record, register or file, and cause each such subsidiary to record, register or file, the Mortgage or instruments related thereto in such manner and in such places as is required by law to establish, perfect, preserve and protect the Liens in favor of the Administrative Agent (for the benefit of the Secured Parties) required to be granted pursuant to the Mortgages and pay, and cause each such Subsidiary to pay, in full, all Taxes, fees and other charges required to be paid in connection with such recording, registration or filing. Unless otherwise waived by the Administrative Agent (and with respect to Section 5.09(c)(i)(B), the applicable Lender), with respect to each such Mortgage, the Borrowers shall satisfy the requirements set forth in Section 5.09(c)(i), (ii) and (iii) with respect to each applicable Real Property.

(b) Within 30 days following the Closing Date (or such longer period as may be agreed to by the Administrative Agent in its sole discretion), the Borrower shall deliver insurance certificates and endorsements contemplated by Section 5.05(c) , in form and substance reasonably satisfactory to the Administrative Agent.

 

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(c) No later than 90 days immediately following the Closing Date, Borrower shall use commercially reasonable efforts to file and record with the United States Patent and Trademark Office and the United States Copyright Office, as applicable, properly executed documents or instruments evidencing the release or termination of the security interests, liens or other encumbrances identified on Schedule 6.02 (iv).

(d) Within 20 Business Days following the Closing Date (or such longer period as may be agreed to by the Administrative Agent in its sole discretion), the Borrower shall (or shall cause its Subsidiaries to), to the extent required under the Security Agreement, deliver to the Administrative Agent all certificates, agreements or instruments representing or evidencing the Pledged Collateral (as defined in the Security Agreement) in existence on the Closing Date in suitable form for transfer by delivery or accompanied by duly executed instruments of transfer or assignment in blank, to the extent not delivered on the Closing date after commercially reasonable efforts.

ARTICLE VI

Negative Covenants

Until the Revolving Commitments have expired or terminated and the principal of and interest on each Loan and all fees payable hereunder have been paid in full and all Letters of Credit have expired or have been cash collateralized, the Borrower covenants and agrees with the Lenders that:

Section 6.01 Indebtedness . The Borrower will not, and will not permit any Restricted Subsidiary to, create, incur, assume or permit to exist any Indebtedness, except:

(a) Indebtedness incurred under the Loan Documents, including any Incremental Facility;

(b) Indebtedness in respect of the Secured Notes and any Refinancing Indebtedness thereof;

(c) (i) Indebtedness of the Borrower or any other subsidiary incurred to finance the acquisition, construction or improvement of any fixed or capital assets, including Capital Lease Obligations, and any Indebtedness assumed in connection with the acquisition of any such assets ( provided that such Indebtedness is incurred or assumed prior to or within 180 days after such acquisition or the completion of such construction or improvement and the principal amount of such Indebtedness does not exceed the cost of acquiring, constructing or improving such fixed or capital assets) in an aggregate amount under this clause (c) not to exceed the greater of $25,000,000 and 1.25% of Total Assets as of the time of incurrence and (ii) any Refinancing Indebtedness thereof;

(d) Indebtedness of Non-Loan Parties in an aggregate principal amount at any time outstanding not to exceed $50,000,000;

(e) Guarantees of any Indebtedness permitted pursuant to this Section 6.01 and any Refinancing Indebtedness thereof (other than Guarantees of Indebtedness of a Loan Party by a Non-Loan Party);

(f) Indebtedness of the Borrower owed to any Restricted Subsidiary or of a Restricted Subsidiary owed to any other Restricted Subsidiary or the Borrower; provided , however , that (i) any Indebtedness owing by a Loan Party to a Non-Loan Party pursuant to this clause (f) shall be subordinated in right of payment to the Obligations and (ii) upon any such Indebtedness being owed to any Person other than the Borrower or a Restricted Subsidiary, the Borrower or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (f);

(g) Indebtedness outstanding on the Closing Date and set forth on Schedule 6.01 and any Refinancing Indebtedness thereof;

 

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(h) (i) Indebtedness of any Person which becomes a Restricted Subsidiary after the Closing Date pursuant to a Permitted Acquisition or is merged with or into or consolidated or amalgamated with the Borrower or any Restricted Subsidiary after the Closing Date (or relating to assets acquired by the Borrower or a Restricted Subsidiary following the Closing Date) and Indebtedness expressly assumed in connection with the acquisition of an asset or assets from any other Person; provided that (A) such Indebtedness existed at the time such Person became a Restricted Subsidiary or of such merger, consolidation, amalgamation or acquisition and was not created in anticipation thereof and (B) immediately after such Person becomes a Restricted Subsidiary or such merger, consolidation, amalgamation or acquisition is consummated, on a Pro Forma Basis (x) no Event of Default shall have occurred and be continuing, (y) the Borrower shall be in compliance with Section 6.10 as of the most recently ended fiscal quarter for which financial statements have been delivered pursuant to Section 5.01 and (z) the Consolidated Leverage Ratio shall be at least 0.5x less than the level then-required by Section 6.10 and (ii) any Refinancing Indebtedness of such Indebtedness described in clause (h);

(i) [reserved];

(j) Indebtedness in respect of bid, performance, surety bonds or completion bonds issued for the account of the Borrower or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Borrower or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, surety or completion obligations;

(k) Indebtedness owed to any officers or employees of the Borrower or any Restricted Subsidiary with respect to repurchases of Equity Interests permitted by Section 6.05(iii);

(l) indemnification, adjustment of purchase price and earn-out provisions, in each case, incurred or assumed in connection with asset acquisitions or asset sales;

(m) obligations of the Borrower or any of its Restricted Subsidiaries to pay the deferred purchase price of goods or services or progress payments in connection with such goods and services; provided that such obligations are incurred in connection with open accounts extended by suppliers on customary trade terms (which require that all such payments be made within 90 days after the incurrence of the related obligations) in the ordinary course of business and not in connection with the borrowing of money;

(n) letters of credit, bank guarantees, warehouse receipts or similar instruments issued to support performance obligations and trade letters of credit (other than obligations in respect of other Indebtedness) in the ordinary course of business;

(o) Indebtedness arising (A) from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; provided , however , that such Indebtedness is extinguished within five Business Days of incurrence or (B) under any customary cash pooling or cash management agreement with a bank or other financial institution in the ordinary course of business;

(p) Indebtedness representing deferred compensation incurred in the ordinary course of business;

(q) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;

(r) Indebtedness constituting obligations in respect of Swap Obligations and hedging and swap arrangements, in each case, entered into for non-speculative purposes;

(s) Indebtedness supported by a Letter of Credit in a principal amount not in excess of the stated amount of such Letter of Credit;

 

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(t) (i) Permitted Unsecured Indebtedness so long as either (x) no Event of Default has occurred and is continuing, in an aggregate principal amount not to exceed the Incremental Amount and Refinancing Indebtedness in respect thereof, or (y) no Event of Default has occurred and is continuing and, on a Pro Forma Basis (I) the Borrower is in compliance with Section 6.10 as of the most recently ended fiscal quarter for which financial statements have been delivered pursuant to Section 5.01 and (II) the Consolidated Leverage Ratio shall be at least 0.5x less than the level then-required by Section 6.10 and (ii) Refinancing Indebtedness in respect of Indebtedness incurred pursuant to this clause (t);

(u) (i) Permitted Other First Lien Debt so long as either (x) no Event of Default has occurred and is continuing, in an aggregate principal amount not to exceed the Incremental Amount or (y) such Indebtedness is issued for cash consideration and the net cash proceeds therefrom are applied within three Business Days of receipt to prepay Term Loans and (ii) Refinancing Indebtedness in respect of Indebtedness incurred pursuant to this clause (u);

(v) (i) Permitted Junior Lien Debt (x) so long as no Event of Default has occurred and is continuing, in an aggregate principal amount not to exceed the Incremental Amount or (y) which is issued for cash consideration to the extent the net cash proceeds are applied within three Business Days of receipt to prepay Term Loans and (ii) Refinancing Indebtedness in respect of Indebtedness incurred pursuant to this clause (v);

(w) to the extent constituting Indebtedness, obligations of the Borrower and its Restricted Subsidiaries under the Transaction Agreements; and

(x) other Indebtedness of the Borrower and its Restricted Subsidiaries in an aggregate principal amount not to exceed the greater of $25,000,000 and 1.25% of Total Assets at any time outstanding.

Section 6.02 Liens . The Borrower will not, and will not permit any Restricted Subsidiary to, create, incur, assume or permit to exist any Lien on any property or asset now owned or hereafter acquired by it, or assign or sell any income or revenues (including accounts receivable) or rights in respect of any thereof, except:

(a) Permitted Encumbrances;

(b) any Lien on any property or asset of the Borrower or any Restricted Subsidiary (or any improvements or accession thereto or proceeds therefrom) existing on the Closing Date and set forth in Schedule 6.02; provided that (i) such Lien shall not apply to any other property or asset of the Borrower or any Restricted Subsidiary and (ii) such Lien shall secure only those obligations which it secures on the Closing Date and any Refinancing Indebtedness in respect thereof;

(c) any Lien existing on any property or asset prior to the acquisition thereof by the Borrower or any Restricted Subsidiary or existing on any property or asset of any Person that becomes a Restricted Subsidiary after the Closing Date prior to the time such Person becomes a Restricted Subsidiary; provided that (i) such Lien is not created in contemplation of or in connection with such acquisition or such Person becoming a Restricted Subsidiary, as the case may be, (ii) such Lien shall not apply to any other property or assets of the Borrower or any Restricted Subsidiary and (iii) such Lien shall secure only those obligations which it secures on the date of such acquisition or the date such Person becomes a Restricted Subsidiary, as the case may be, and any Refinancing Indebtedness in respect thereof;

(d) Liens securing Indebtedness of the Borrower or any Restricted Subsidiary incurred pursuant to Section 6.01(c); provided that, except in the case of Refinancing Indebtedness, (i) such Liens are incurred prior to or within 180 days after such acquisition or the completion of such construction and improvement with the acquisition of such fixed or capital assets, and (ii) such Liens do not at any time encumber any of its existing property other than the property financed by such Indebtedness;

(e) Liens created by the Collateral Documents securing the Obligations;

 

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(f) Liens on the Collateral securing Indebtedness incurred pursuant to Sections 6.01(b), (u) and (v);

(g) [reserved];

(h) licenses, sublicenses, covenants not to sue, releases or other rights under Intellectual Property granted to others in the ordinary course of business or in the reasonable business judgment of the Borrower or any Restricted Subsidiary;

(i) licenses, sublicenses, leases or subleases that do not interfere in any material respect with the business of the Borrower or any Restricted Subsidiary;

(j) any interest or title of a lessor or sublessor under, and Liens arising from Uniform Commercial Code financing statements (or equivalent filings, registrations or agreements in foreign jurisdictions) relating to, leases and subleases permitted hereunder;

(k) normal and customary rights of setoff upon deposits of cash or other Liens originating in the ordinary course of business solely by virtue of any contractual, statutory or common law provision relating to bankers liens, rights of setoff or similar rights in favor of banks or other depository institutions (including funds or other assets credited thereto and pooling and netting arrangements) and not securing any Indebtedness (other than Indebtedness permitted by Section 6.01(o));

(l) Liens of a collection bank arising under Section 4-210 of the Uniform Commercial Code on items in the course of collection;

(m) Liens solely on any cash earnest money deposits made by the Borrower or any Restricted Subsidiary in connection with any letter of intent or purchase agreement in respect of any acquisition or other investment by the Borrower or any Restricted Subsidiary;

(n) Liens on assets of Non-Loan Parties securing Indebtedness permitted pursuant to Sections 6.01(d);

(o) any extension, renewal or replacement (or successive renewals or replacements) in whole or in part of any Lien referred to in clause (b), (c), (d), and (l) above; provided that with respect to (b) ,(c) and (d) above, (x) the obligations secured thereby shall be limited to the obligations secured by the Lien so extended, renewed or replaced (and, to the extent provided in such clauses, extensions, renewals and replacements thereof) and (y) such Lien shall be limited to all or a part of the assets that secured the Lien so extended, renewed or replaced;

(p) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods and Liens in the ordinary course of business in favor of issuers of performance and surety bonds or bid bonds or with respect to health, safety and environmental regulations (other than for borrowed money) or letters of credit or bank guarantees issued to support such bonds or requirements pursuant to the request of and for the account of such Person in the ordinary course of business;

(q) Liens (i) on assets of a Loan Party in favor of a Loan Party or (ii) on assets of a Non-Loan Party in favor of the Borrower or any of its Restricted Subsidiaries;

(r) Liens on the Equity Interests of any Unrestricted Subsidiary;

(s) Liens on cash set aside at the time of the incurrence of any Indebtedness or government securities purchased with such cash, in either case to the extent that such cash or government securities prefund the payment of interest on such Indebtedness and are held in an escrow account or similar arrangement to be applied for such purpose;

 

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(t) any encumbrance or restriction (including, but not limited to, put and call agreements) with respect to Capital Stock of any joint venture or similar arrangement pursuant to any joint venture or similar agreement;

(u) Liens arising by operation of law in the ordinary course of business;

(v) Liens on property or assets under construction (and related rights) in favor of a contractor or developer or arising from progress or partial payments by a third party relating to such property or assets;

(w) Liens arising under any retention of title, hire, purchase or conditional sale arrangement or arrangements having similar effect in respect of goods supplied to the Borrower and its Restricted Subsidiaries in the ordinary course of trading and on the supplier’s standard or usual terms; and

(x) Liens securing other Indebtedness and obligations in an aggregate principal amount not to exceed the greater of $25,000,000 and 1.25% of Total Assets at any time outstanding.

Section 6.03 Fundamental Changes . The Borrower will not, and will not permit any Restricted Subsidiary to, merge into or consolidate with any other Person, or permit any other Person to merge into or consolidate with it, or Dispose of (in one transaction or in a series of related transactions) all or substantially all of its assets, or all or substantially all of the stock of any of its Restricted Subsidiaries (in each case, whether now owned or hereafter acquired), or liquidate or dissolve, except that, if at the time thereof and immediately after giving effect thereto no Event of Default shall have occurred and be continuing:

(i) any Person may merge or be consolidated with or into the Borrower in a transaction in which the Borrower is the continuing or surviving Person;

(ii) any Person (other than the Borrower) may merge or consolidate with or into any Restricted Subsidiary in a transaction in which the surviving entity is or becomes a Restricted Subsidiary; provided that, if such Person is a Subsidiary Guarantor, the surviving entity is the Borrower or a Domestic Subsidiary that is or substantially concurrently becomes a Subsidiary Guarantor;

(iii) any merger, consolidation, Disposition, liquidation or dissolution not prohibited by Sections 6.04, 6.05 and 6.11 shall be permitted; and

(iv) any Restricted Subsidiary may liquidate or dissolve if the Borrower determines in good faith that such liquidation or dissolution is in the best interests of the Borrower and is not materially disadvantageous to the Lenders.

Section 6.04 Disposition of Property . The Borrower will not, and will not permit any Restricted Subsidiary to, directly or indirectly, consummate any Asset Sale; provided that (a) the Borrower and its Restricted Subsidiaries may consummate Asset Sales involving assets with an aggregate Fair Market Value, net of the aggregate of amounts paid by the Borrower and its Restricted Subsidiaries as purchase price for Asset Acquisitions or to acquire, construct or develop fixed assets or Intellectual Property useful in their business, not to exceed (x) in any fiscal year of the Borrower, 15.00% of Total Assets or (y) in the aggregate, 35.00% of Total Assets, in each case, determined as of the date of such Asset Sale, and (b) after giving effect thereto and to the use of proceeds thereof, (i) no Event of Default shall have occurred and be continuing and (ii) the Borrower or such Restricted Subsidiary, as the case may be, receives consideration at least equal to the Fair Market Value of the assets sold or otherwise disposed of, and (iii) in the case of an Asset Sale other than an Asset Swap, at least 75% of the consideration therefor received by the Borrower or such Restricted Subsidiary, as the case may be, is in the form of cash or Cash Equivalents; provided , further , that the amount of:

 

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(i) any liabilities (as reflected in the Borrower’s or such Restricted Subsidiary’s most recent balance sheet or in the footnotes thereto, or if incurred or accrued subsequent to the date of such balance sheet, such liabilities that would have been shown on the Borrower’s or such Restricted Subsidiary’s balance sheet or in the footnotes thereto if such incurrence or accrual had taken place on the date of such balance sheet) of the Borrower or such Restricted Subsidiary other than liabilities that are by their terms subordinated in right of payment to the Loans, that are assumed by the transferee of any such assets and for which the Borrower and all of its Restricted Subsidiaries have been validly released by all creditors in writing,

(ii) any securities, notes or other similar obligations received by the Borrower or such Restricted Subsidiary from such transferee that are converted by the Borrower or such Restricted Subsidiary into cash or Cash Equivalents (to the extent so converted) within 180 days following the closing of such Asset Sale, and

(iii) any Designated Noncash Consideration received by the Borrower or any Restricted Subsidiary in such Asset Sale having an aggregate Fair Market Value, taken together with all other Designated Noncash Consideration received pursuant to this clause (iii) that is at that time outstanding, not to exceed $25,000,000 at the time of the receipt of such Designated Noncash Consideration, with the Fair Market Value of each item of Designated Noncash Consideration being measured at the time received and without giving effect to subsequent changes in value,

shall be deemed to be cash or Cash Equivalents for purposes of this provision and for no other purpose.

Section 6.05 Restricted Payments . The Borrower will not, and will not permit any of its Restricted Subsidiaries to, declare or make, directly or indirectly, any Restricted Payment, except:

(i) the payment by the Borrower or any Restricted Subsidiary of any dividend or the consummation of any irrevocable redemption within 60 days after the date of declaration thereof or giving the notice of the redemption, if on the date of declaration or notice the payment would have complied with this Section 6.05 (assuming, in the case of redemption, the giving of the notice would have been deemed to be a Restricted Payment at such time and such deemed Restricted Payment would have been permitted at such time); provided that any Restricted Payment pursuant to this clause (i) shall be deemed to have utilized capacity under the exception that such Restricted Payment would have been permitted to have been made in reliance of at the time of declaration or notice of redemption, as applicable;

(ii) the Borrower may declare or make a Restricted Payment with respect to its Equity Interest payable solely in Qualified Equity Interests or redeem any of its Equity Interests in exchange for, or out of the proceeds of the substantially concurrent issuance and sale of, Qualified Equity Interests or through accretion or accumulation of such dividends on such Equity Interests; provided that the issuance of such Equity Interests are not included in any determination of the Retained Excess Cash Flow Amount;

(iii) repurchase, redemption or other acquisition for value by the Borrower of, Equity Interests of the Borrower held by officers, directors or employees or former officers, directors or employees of the Borrower and any Restricted Subsidiary (or their transferees, estates or beneficiaries under their estates), upon their death, disability, retirement, severance or termination of employment or service; provided that the aggregate cash consideration paid for all such redemptions shall not exceed $10,000,000 during any twelve consecutive months (with unused amounts in any period being carried over to succeeding periods; provided , that the total amount of such purchases, redemptions or other acquisitions under this clause (iii) in any twelve consecutive months shall not exceed $20,000,000); provided , further , that cancellation of Indebtedness owing to the Borrower or any Restricted Subsidiary from any current or former officer, director or employee (or any permitted transferees thereof) of the Borrower or any of its Restricted Subsidiaries (or any direct or indirect parent company thereof), in connection with a repurchase of Equity Interests of the Borrower from such Persons will not be deemed to constitute a Restricted Payment for purposes of this Section 6.05;

 

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(iv) repurchases of Equity Interests deemed to occur (a) upon the exercise of stock options, warrants, or similar rights if the Equity Interests represent all or a portion of the exercise price thereof or (b) in connection with the satisfaction of any withholding Tax obligations incurred relating to the vesting or exercise of stock options, warrants, restricted stock units or similar rights;

(v) any Restricted Payment made out of the net cash proceeds of the substantially concurrent sale of, or made by exchange for, Qualified Equity Interests of the Borrower (other than Qualified Equity Interests issued or sold to a Restricted Subsidiary of the Borrower or an employee stock ownership plan or to a trust established by the Borrower or any of its Restricted Subsidiaries for the benefit of their employees) or a substantially concurrent cash capital contribution received by the Borrower from its stockholders; provided that such net cash proceeds are not included in any determination of the Retained Excess Cash Flow Amount;

(vi) payments or distributions to dissenting stockholders of a Person acquired by the Borrower or a Restricted Subsidiary pursuant to an Asset Acquisition permitted by Section 6.11;

(vii) any Restricted Subsidiary may declare or make a Restricted Payment with respect to the Equity Interests of such Restricted Subsidiary to the Borrower or any other Restricted Subsidiary (and, in the case of a Restricted Subsidiary that is not a Wholly Owned Subsidiary, to each owner of Equity Interests of such Restricted Subsidiary such that the Borrower or Restricted Subsidiary receives at least its pro rata share of such dividend or distribution);

(viii) Restricted Payments in the form of dividends on the Borrower’s common stock in an aggregate amount not to exceed in any 12-month period $50,000,000; provided that after giving effect thereto no Event of Default shall have occurred and be continuing;

(ix) Restricted Payments up to an aggregate amount not to exceed $25,000,000; provided that, at the time of, and after giving effect thereto on a pro forma basis no Event of Default shall have occurred and be continuing;

(x) prepayments and redemptions of Other First Lien Debt; provided that, at the time of, and after giving effect thereto on a pro forma basis (x) no Event of Default shall have occurred and be continuing, (y) the Borrower shall be in compliance with Section 6.10 as of the end of the most recently ended Test Period, and (z) no Revolving Loans are outstanding;

(xi) the Separation Distribution; and

(xii) Restricted Payments in an amount not to exceed the portion of the Retained Excess Cash Flow Amount on the date of such election that the Borrower elects to apply to this Section 6.05(xii) in a written notice of a Responsible Officer thereof, which notice shall set forth the Retained Excess Cash Flow Amount (and the calculation thereof in reasonable detail) immediately prior to such election and the amount thereof elected to be so applied; provided that after giving effect thereto on a pro forma basis (i) no Event of Default shall have occurred and be continuing and (ii) the Consolidated Leverage Ratio is equal to or less than 2.00 to 1.00.

Section 6.06 Transactions with Affiliates . The Borrower will not, and will not permit any of its Restricted Subsidiaries to, sell, lease or otherwise transfer any property or assets to, or purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any other transactions with, any of its Affiliates involving payment or consideration in excess of $5,000,000, except:

(a) for transactions at prices and on terms and conditions not less favorable to the Borrower or such Restricted Subsidiary than could be obtained on an arm’s-length basis from unrelated third parties, as determined by the Borrower;

(b) transactions between or among the Borrower and its Restricted Subsidiaries not involving any other Affiliate;

 

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(c) pursuant to, as determined by the Borrower, reasonable director, officer and employee compensation (including bonuses) and other benefits (including retirement, health, and stock compensation plans) and indemnification arrangements and performance of such arrangements;

(d) any Restricted Payment permitted by Section 6.05;

(e) the Transaction Agreements and any other agreement set forth on Schedule 6.06 and any amendment, modification or replacement of any of the forgoing that is not, taken as a whole, adverse to the Lenders in any material respect;

(f) any transaction with a joint venture which would be subject to this Section 6.06 solely because the Borrower or a Restricted Subsidiary owns an equity interest in or otherwise controls such joint venture;

(g) any transaction with an Affiliate where the only consideration paid by the Borrower or any Restricted Subsidiary is Qualified Equity Interests;

(h) any issuance of securities, or other payments, awards or grants in cash, securities or otherwise, in each case pursuant to, or the funding of, employment arrangements, stock options and stock ownership plans in the ordinary course of business;

(i) any employment agreements entered into by the Borrower or any of its Restricted Subsidiaries in the ordinary course of business and the transactions pursuant thereto; and

(j) any other transaction approved by a majority of the disinterested members of the Borrower as being fair to the Borrower and its Restricted Subsidiaries.

Section 6.07 Changes in Fiscal Periods . The Borrower will not, and will not permit any of its Restricted Subsidiaries to, change its fiscal year to end on a day other than December 31 or change its method of determining fiscal quarters without the Administrative Agent’s prior written consent (such consent not to be unreasonably withheld) and, in any event, no more than one (1) time while this Agreement is in effect.

Section 6.08 Sales and Leasebacks . The Borrower will not, and will not permit any of its Restricted Subsidiaries to, enter into any arrangement with any Person (other than the Borrower or a Restricted Subsidiary) providing for the leasing by the Borrower or any Restricted Subsidiary of real or personal property that has been or is to be sold or transferred by the Borrower or any Restricted Subsidiary to such Person or to any other Person to whom funds have been or are to be advanced by such Person on the security of such property or rental obligations of the Borrower or any Restricted Subsidiary unless (i) the lease is not prohibited pursuant to Section 6.01 and 6.02 and (ii) the disposition of such property is not prohibited by Section 6.04.

Section 6.09 Clauses Restricting Subsidiary Distributions . The Borrower will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, enter into or suffer to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to (a) pay dividends or make any other distributions on or in respect of its Equity Interests held by the Borrower or a Restricted Subsidiary, (b) make loans or advances or pay any Indebtedness or other obligation owed to the Borrower or any Subsidiary Guarantor or (c) transfer any of its assets to the Borrower or any Subsidiary Guarantor, except for such encumbrances or restrictions existing under or by reason of:

(i) any encumbrances or restrictions existing under this Agreement and the other Loan Documents;

(ii) encumbrances or restrictions with respect to a Restricted Subsidiary imposed pursuant to an agreement that has been entered into in connection with the Disposition of all or substantially all of the capital stock or assets of such Restricted Subsidiary;

 

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(iii) encumbrances or restrictions under any agreement governing Capital Lease Obligations secured by Liens permitted by Section 6.02, so long as such restrictions apply only to the assets subject to such Liens or relating to such Capital Lease Obligations, as the case may be;

(iv) encumbrances or restrictions under any agreement listed on Schedule 6.09 as in effect on the Closing Date;

(v) encumbrances or restrictions under any agreement of any Person that becomes a Restricted Subsidiary after the Closing Date that existed prior to the time such Person became a Restricted Subsidiary; provided that such restrictions are not created in contemplation of or in connection with such acquisition;

(vi) any other instrument or agreement entered into after the Closing Date that contains encumbrances and restrictions that, as determined by the Borrower, will not materially adversely affect the Borrower’s ability to make payments on the Loans;

(vii) encumbrances or restrictions existing under or by reason of applicable law, regulation or order;

(viii) non-assignment provisions of any contract or lease entered into in the ordinary course of business;

(ix) encumbrances or restrictions imposed under any agreement to sell assets, including Qualified Equity Interests of such Restricted Subsidiary, permitted under this Agreement to any Person pending the closing of such sale;

(x) encumbrances or restrictions relating to any Lien permitted under this Agreement imposed by the holder of such Lien that limit the right of the relevant obligor to transfer assets that are subject to such Lien;

(xi) encumbrances or restrictions relating to any Lien on any asset or property at the time of acquisition of such asset or property by the Borrower or any Restricted Subsidiary;

(xii) customary provisions in partnership agreements, limited liability company organizational governance documents, joint venture agreements, shareholder agreements and other similar agreements that restrict the transfer of ownership interests in such partnership, limited liability company, joint venture, corporation or similar Person;

(xiii) encumbrances or restrictions on cash or other deposits or net worth imposed by suppliers, customers or landlords under contracts entered into in the ordinary course of business;

(xiv) with respect to clause (c) only, any encumbrance or restriction consisting of customary non-assignment provisions in leases governing leasehold interests, licenses, joint venture agreements and agreements similar to any of the foregoing to the extent such provisions restrict the transfer of the property subject to such leases, licenses, joint venture agreements or similar agreements;

(xv) with respect to clause (c) only, any encumbrance or restriction contained in security agreements or mortgages securing Indebtedness of a Restricted Subsidiary to the extent such encumbrance or restriction restricts the transfer of the property subject to such security agreements or mortgages;

(xvi) any encumbrances or restrictions imposed by any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of the contracts, agreements, instruments or obligations referred to in this Section 6.09; provided that, as determined by the Borrower, such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings (a) are not materially more restrictive with respect to such encumbrances and restrictions than those prior to such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings or (b) will not materially adversely affect the Borrower’s ability to make payments on the Loans; and

 

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(xvii) encumbrances or restrictions imposed by the Secured Notes.

Section 6.10 Financial Maintenance Covenants .

(a) The Borrower will not permit the Consolidated Leverage Ratio as of the last day of any fiscal quarter of the Borrower, commencing with the fiscal quarter ending December 31, 2016 to exceed (i) with respect to any fiscal quarter ending prior to March 31, 2019, 3.25 to 1.00 and (ii) with respect to any fiscal quarter ending on or after March 31, 2019, 3.00 to 1.00; and

(b) For so long as any Revolving Commitments are outstanding or any Lender has any Outstanding Revolving Credit, the Borrower will not permit the Interest Coverage Ratio for any Test Period, commencing with the Test Period ending December 31, 2016 to be less than (i) with respect to any Test Period ending prior to March 31, 2018, 3.00 to 1.00, (ii) with respect to any Test Period ending on or after March 31, 2018 and prior to March 31, 2019, 3.25 to 1.00 and (iii) with respect to any Test Period ending on or after March 31, 2019, 3.50 to 1.00.

Section 6.11 Investments . The Borrower will not, and will not permit any of its Restricted Subsidiaries to, make any advance, loan, extension of credit (by way of Guarantee or otherwise) or capital contribution to, or purchase any Equity Interests, bonds, notes, debentures or other debt securities of, or any assets constituting a business unit of, or incur any Unrestricted Subsidiary Support Obligations with respect to, any other Person (all of the foregoing, “ Investments ”) except:

(a) extensions of trade credit and credit to customers in the ordinary course of business;

(b) Investments in cash and Cash Equivalents and Investments that were Cash Equivalents when made;

(c) loans and advances to directors, employees and officers of the Borrower or any Restricted Subsidiary in the ordinary course of business (including for travel, entertainment and relocation expenses) in an aggregate principal amount for the Borrower and its Restricted Subsidiaries not to exceed $10,000,000 at any one time outstanding;

(d) Investments made by the Borrower or any Restricted Subsidiary in the Borrower or any Restricted Subsidiary; provided that the aggregate outstanding amount of Investments by Loan Parties in Non-Loan Parties pursuant to this clause (d) shall not exceed $25,000,000 at any time;

(e) any Investment existing on, or made pursuant to binding commitments existing on, the Closing Date and set forth on Schedule 6.11;

(f) Investments to the extent that payment for such Investments is made with Qualified Equity Interests of the Borrower; provided that the issuance of such Equity Interests are not included in any determination of the Retained Excess Cash Flow Amount;

(g) accounts, chattel paper and notes receivable arising from the sale or lease of goods or the performance of services in the ordinary course of business;

(h) Investments received in connection with the bankruptcy or reorganization of suppliers and customers and in settlement of delinquent obligations of, and other disputes with, suppliers and customers arising in the ordinary course of business;

(i) Investments in an amount not to exceed at any one time outstanding $50,000,000;

 

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(j) Investments arising out of the receipt by the Borrower or a Restricted Subsidiary of noncash consideration for the sale of assets permitted under Section 6.04;

(k) lease, utility and other similar deposits in the ordinary course of business;

(l) to the extent constituting Investments, the Transactions;

(m) Investments in an amount not to exceed the portion of the Retained Excess Cash Flow Amount on the date of such election that the Borrower elects to apply to this Section 6.11(m) in a written notice of a Responsible Officer thereof, which notice shall set forth the Retained Excess Cash Flow Amount (and the calculation thereof in reasonable detail) immediately prior to such election and the amount thereof elected to be so applied; provided that after giving effect thereto no Event of Default shall have occurred and be continuing; and

(n) Permitted Acquisitions.

Section 6.12 Restrictive Agreements . The Borrower will not, and will not permit any Restricted Subsidiaries to, directly or indirectly, enter into, incur or permit to exist any agreement or other arrangement that prohibits or restricts the ability of the Borrower or any Restricted Subsidiary to create, incur or permit to exist any Lien upon any of its property or assets; provided that (A) the foregoing shall not apply to prohibitions, restrictions and conditions imposed by any Requirement of Law, Permitted Encumbrances, any subordinated Indebtedness, the documents governing any Indebtedness permitted to be incurred pursuant to Section 6.01(c) or (h) or by any Loan Document, (B) the foregoing shall not apply to prohibitions, restrictions and conditions contained in agreements relating to the disposition of any assets pending such disposition, provided such prohibitions, restrictions and conditions apply only to the assets or Restricted Subsidiary that is to be disposed of and such disposition is permitted hereunder, (C) the foregoing shall not apply to prohibitions, restrictions or conditions imposed by any agreement relating to Indebtedness permitted by this Agreement if such restrictions or conditions either (1) apply only to the property or assets securing such Indebtedness, or (2) do not restrict the granting of Liens by the Loan Parties to secure the maximum amount of the Revolving Commitments and Term B Loans in effect on the Closing Date, (D) the foregoing shall not apply to customary prohibitions, restrictions or conditions in joint venture agreements and other similar agreements applicable to joint ventures permitted by Section 6.11 and applicable solely to such joint venture and entered into in the ordinary course of business, (E) the foregoing shall not apply to customary prohibitions or restrictions in leases, subleases, licenses or asset sale agreements otherwise permitted hereby so long as such prohibitions or restrictions relate to the assets subject thereto or are customary provisions in leases and other contracts restricting the subletting or assignment thereof, and (F) the foregoing shall not apply to prohibitions, restrictions or conditions in agreements to which a Restricted Subsidiary is a party that are either (x) in effect on the Closing Date and identified on Schedule 6.12 or (y) binding on such Restricted Subsidiary at the time of acquisition thereof and not entered into in contemplation of such acquisition, and relating solely to such Restricted Subsidiary and the assets of the Restricted Subsidiary subject to such agreement.

Section 6.13 Restrictions on Amendments of Certain Documents .

(a) The Borrower will not, and will not permit any Restricted Subsidiary to amend their organizational documents in a manner that is materially adverse to the Lenders.

(b) The Borrower will not, and will not permit any Restricted Subsidiary to amend the terms of any Junior Debt in a manner that is materially adverse to the Lenders.

Section 6.14 Lines of Business . The Borrower and its Restricted Subsidiaries will not engage in any material line of business other than the lines of business conducted by the Borrower and its Restricted Subsidiaries on the Closing Date and any Related Business.

 

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ARTICLE VII

Events of Default

Section 7.01 Events of Default . If any of the following events (“ Events of Default ”) shall occur:

(a) the Borrower shall fail to pay any principal of any Loan or any LC Disbursement when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or otherwise;

(b) the Borrower shall fail to pay any interest on any Loan or any fee or any other amount (other than an amount referred to in clause (a) of this Section 7.01) payable under this Agreement, when and as the same shall become due and payable, and such failure shall continue unremedied for a period of five Business Days;

(c) any representation or warranty made or deemed made by or on behalf of the Borrower or any other Loan Party in this Agreement or any other Loan Document or any amendment, modification or waiver in respect thereof, or in any certificate furnished pursuant to this Agreement or any other Loan Document or any amendment, modification or waiver in respect thereof, shall prove to have been incorrect in any material respect when made or deemed made;

(d) any Loan Party shall fail to observe or perform any covenant, condition or agreement contained in Section 5.02, 5.03 (with respect to the Borrower’s existence) or 5.08 or in Article VI; provided that the Borrower’s failure to perform or observe the covenant set forth in Section 6.10(b) shall not constitute an Event of Default for purposes of any Term Facilities unless and until the Required Revolving Lenders have actually terminated the Revolving Commitments as a result thereof (the “ Term Loan Standstill Period ”);

(e) any Loan Party shall fail to observe or perform any covenant, condition or agreement contained in this Agreement or any other Loan Document to which it is a party (other than those specified in clause (a), (b), (c) or (d) of this Section 7.01), and such failure shall continue unremedied for a period of 30 days after written notice thereof from the Administrative Agent to the Borrower (which notice will be given at the request of any Lender);

(f) the Borrower or any Restricted Subsidiary shall fail to make any payment (whether of principal or interest and regardless of amount) in respect of any Material Indebtedness, when and as the same shall become due and payable after any applicable grace period therefor;

(g) any event or condition occurs that results in any Material Indebtedness becoming due prior to its scheduled maturity or that enables or permits (with or without the giving of notice) the holder or holders of any Material Indebtedness or any trustee or agent on its or their behalf to cause any Material Indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity; provided that this clause (g) shall not apply to secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness;

(h) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, reorganization or other relief in respect of the Borrower or any Material Subsidiary or its debts, or of a substantial part of its assets, under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or any Material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for 60 days or an order or decree approving or ordering any of the foregoing shall be entered;

 

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(i) the Borrower or any Material Subsidiary shall (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (h) of this Section 7.01, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or any Restricted Subsidiary or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effecting any of the foregoing;

(j) one or more judgments for the payment of money in an aggregate amount in excess of $50,000,000 (to the extent not adequately covered by insurance) shall be rendered against the Borrower, any Material Subsidiary or any combination thereof and the same shall remain undischarged for a period of 60 consecutive days during which execution shall not be effectively stayed;

(k) the occurrence of one or more ERISA Events in an aggregate amount in excess of $50,000,000;

(l) at any time, the Collateral Documents shall cease, for any reason, to be in full force and effect, or any Loan Party shall so assert in writing, or any material Lien created by the Collateral Documents shall cease to be enforceable and of the same effect and priority purported to be created thereby (except, in each case, as permitted under the Loan Documents); provided however that no Event of Default shall occur under this clause (l) if the aggregate book value of Collateral not subject to a first priority perfected security interest or Lien is at any time less than or equal to $25,000,000;

(m) this Agreement or the Guarantee Agreement shall cease, for any reason, to be in full force and effect, or any Loan Party shall so assert in writing, except as permitted under the Loan Documents; or

(n) a Change of Control shall occur;

then, and in every such event (other than an event with respect to the Borrower described in clause (h) or (i) of this Section 7.01), and at any time thereafter during the continuance of such event, the Administrative Agent, at the request of the Required Lenders (except, prior to the expiration of the Term Loan Standstill Period, with respect to an Event of Default arising solely from the Borrower’s failure to observe the covenant set forth in Section 6.10(b)) or, to the extent such Event of Default comprises an Event of Default arising from the Borrower’s failure to perform or observe the covenant set forth in Section 6.10(b), at the request of the Required Revolving Lenders only (and in such case only with respect to the Revolving Commitments, Revolving Loans and any Letters of Credit) shall, by notice to the Borrower, take any or all of the following actions, at the same or different times: (i) terminate the Revolving Commitments, and thereupon the Revolving Commitments shall terminate immediately, (ii) declare the Loans then outstanding to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable may thereafter be declared to be due and payable during the continuation of such event) by the Borrower, and thereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall become due and payable immediately, without presentment, demand, protest or other notice of any kind (other than notice from the Administrative Agent), all of which are hereby waived by the Borrower and (iii) require all outstanding Letters of Credit to be cash collateralized in accordance with Section 2.17(k); and in case of any event with respect to the Borrower described in clause (h) or (i) of this Section 7.01, the Revolving Commitments shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall automatically become due and payable and the Letters of Credit shall automatically be required to be cash collateralized in accordance with Section 2.17(k), without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower.

 

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ARTICLE VIII

The Administrative Agent

Section 8.01 Appointment and Authorization . Each of the Lenders and the Issuing Banks hereby irrevocably appoints the Administrative Agent as its agent and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof and the other Loan Documents, together with such actions and powers as are reasonably incidental thereto. The Administrative Agent shall also act as the “collateral agent” under the Loan Documents, and each of the Lenders (including in its capacities as a potential counterparty to a Specified Swap Agreement and a potential Cash Management Bank) and the Issuing Banks hereby irrevocably appoint and authorize the Administrative Agent to act as the agent of such Lender or Issuing Bank for purposes of acquiring, holding and enforcing any and all Liens on Collateral granted by any of the Loan Parties to secure any of the Obligations, together with such powers and discretion as are reasonably incidental thereto. In this connection, the Administrative Agent, as “collateral agent” and any co-agents, sub-agents and attorneys-in-fact appointed by the Administrative Agent for purposes of holding or enforcing any Lien on the Collateral (or any portion thereof) granted under the Collateral Documents, or for exercising any rights and remedies thereunder at the direction of the Administrative Agent), shall be entitled to the benefits of all provisions of this Article VIII and Article IX (including Section 9.04 , as though such co-agents, sub-agents and attorneys-in-fact were the “collateral agent” under the Loan Documents) as if set forth in full herein with respect thereto.

Section 8.02 Administrative Agent and Affiliates . The bank serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent, and such bank and its Affiliates may accept deposits from, lend money to and generally engage in any kind of business with the Borrower or any Restricted Subsidiary or other Affiliate thereof as if it were not the Administrative Agent hereunder.

Section 8.03 Action by Administrative Agent . The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and the other Loan Documents. Without limiting the generality of the foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing, (b) the Administrative Agent shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby that the Administrative Agent is required to exercise in writing as directed by the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 9.02 or 9.03), and (c) except as expressly set forth herein, the Administrative Agent shall not have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Restricted Subsidiaries that is communicated to or obtained by the bank serving as Administrative Agent or any of its Affiliates in any capacity. The Administrative Agent shall not be liable for any action taken or not taken by it with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 9.02 or 9.03) or otherwise, in the absence of its own gross negligence or willful misconduct. The Administrative Agent shall be deemed not to have knowledge of any Default unless and until written notice thereof is given to the Administrative Agent by the Borrower or a Lender, and the Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered under or in connection with this Agreement or any other Loan Document, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or in any other Loan Document, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, the other Loan Documents or any other agreement, instrument or document, (v) the creation, perfection or priority of any Lien purported to be created by the Collateral Documents or the value or sufficiency of any Collateral, or (vi) the satisfaction of any condition set forth in Article IV or elsewhere herein or in any other Loan Document, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.

 

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Section 8.04 Consultation with Experts . The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing believed by it to be genuine and to have been signed or sent by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to be made by the proper Person, and shall not incur any liability for relying thereon. The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

Section 8.05 Delegation of Duties . The Administrative Agent may perform any and all its duties and exercise its rights and powers by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any and all its duties and exercise its rights and powers through their respective Related Parties. The exculpatory provisions of the preceding paragraphs shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent. The Administrative Agent shall not be responsible for the negligence or misconduct of any sub-agents except to the extent that a court of competent jurisdiction determines in a final and non-appealable judgment that the Administrative Agent acted with gross negligence or willful misconduct with respect to the actions of such sub-agents or their selection.

Section 8.06 Successor Administrative Agent .

(a) The Administrative Agent may at any time give notice of its resignation to the Lenders, the Issuing Banks and the Borrower. Upon receipt of any such notice of resignation, the Required Lenders shall have the right, in consultation with the Borrower, to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation, (or such earlier day as shall be agreed by the Required Lenders) (the “ Resignation Effective Date ”), then the retiring Administrative Agent may (but shall not be obligated to) on behalf of the Lenders and the Issuing Banks, appoint a successor Administrative Agent meeting the qualifications set forth above, provided that in no event shall an such successor Administrative Agent be a Defaulting Lender. Whether or not a successor has been appointed, such resignation shall become effective in accordance with such notice on the Resignation Effective Date.

(b) If the Person serving as Administrative Agent is a Defaulting Lender pursuant to clause (d) of the definition thereof, the Required Lenders may, to the extent permitted by applicable law, by notice in writing to the Borrower and such Person remove such Person as Administrative Agent and, in consultation with the Borrower, appoint a successor. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days (or such earlier day as shall be agreed by the Required Lenders) (the “ Removal Effective Date ”), then such removal shall nonetheless become effective in accordance with such notice on the Removal Effective Date.

(c) With effect from the Resignation Effective Date or the Removal Effective Date (as applicable) (1) the retiring or removed Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except that in the case of any collateral security held by the Administrative Agent on behalf of the Lenders or the Issuing Banks under any of the Loan Documents, the retiring Administrative Agent shall continue to hold such collateral security until such time as a successor Administrative Agent is appointed) and (2) except for any indemnity payments or other amounts then owed to the retiring or removed Administrative Agent, all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender and the Issuing Banks directly, until such time, if any, as the Required Lenders appoint a successor Administrative Agent as provided for above. Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or removed) Administrative Agent (other than as provided in Section 9.06 and other than any rights to indemnity payments or other amounts owed to the retiring or removed Administrative Agent as of the Resignation Effective Date or the Removal Effective Date, as applicable), and the retiring or removed Administrative Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents (if not already discharged therefrom as provided above in this Section). The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor

 

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unless otherwise agreed between the Borrower and such successor. After the retiring or removed Administrative Agent’s resignation or removal hereunder and under the other Loan Documents, the provisions of this Article and Section 9.04 shall continue in effect for the benefit of such retiring or removed Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them (i) while the retiring or removed Administrative Agent was acting as Administrative Agent and (ii) after such resignation or removal for as long as any of them continues to act in any capacity hereunder or under the other Loan Documents, including (a) acting as collateral agent or otherwise holding any collateral security on behalf of any of the Lenders and (b) in respect of any actions taken in connection with transferring the agency to any successor Administrative Agent.

(d) Any resignation or removal by Bank of America, N.A. as Administrative Agent pursuant to this Section shall also constitute its resignation as Issuing Bank and Swing Line Lender. If Bank of America, N.A. resigns as an Issuing Bank, it shall retain all the rights, powers, privileges and duties of the Issuing Bank hereunder with respect to all Letters of Credit outstanding as of the effective date of its resignation as Issuing Bank and all LC Exposure with respect thereto, including the right to require the Lenders to make ABR Loans or fund risk participations. If Bank of America, N.A. resigns as Swing Line Lender, it shall retain all the rights of the Swing Line Lender provided for hereunder with respect to Swing Line Loans made by it and outstanding as of the effective date of such resignation, including the right to require the Lenders to make ABR Loans or fund risk participations in outstanding Swing Line Loans. Upon the appointment by the Borrower of a successor Issuing Bank or Swing Line Lender hereunder (which successor shall in all cases be a Lender other than a Defaulting Lender), (a) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring Issuing Bank or Swing Line Lender, as applicable, (b) the retiring Issuing Bank and Swing Line Lender shall be discharged from all of their respective duties and obligations hereunder or under the other Loan Documents, and (c) the successor Issuing Bank shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to Bank of America, N.A. to effectively assume the obligations of Bank of America, N.A. with respect to such Letters of Credit.

Section 8.07 Credit Decision . Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document, any related agreement or any document furnished hereunder or thereunder.

Section 8.08 Lead Arrangers; Co-Syndication Agent; Co-Documentation Agents . Notwithstanding anything to the contrary herein, none of the Lead Arrangers, the Co-Syndication Agent or Co-Documentation Agents shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, if applicable, as the Administrative Agent, a Lender, the Swing Line Lender or an Issuing Bank. Each Lender acknowledges that it has not relied, and will not rely, on any of the Lead Arrangers, the Co-Syndication Agent or the Co-Documentation Agents in deciding to enter into this Agreement or any other Loan Document or in taking or not taking any action hereunder or thereunder.

Section 8.09 Tax Indemnification by the Lenders . To the extent required by any applicable Requirements of Law, the Administrative Agent may withhold from any payment to any Lender an amount equivalent to any applicable withholding Tax. Without limiting or expanding the provisions of Section 2.14, each Lender shall indemnify and hold harmless the Administrative Agent against, and shall make payable in respect thereof within 10 days after demand therefor, any and all Taxes and any and all related losses, claims, liabilities and expenses (including fees, charges and disbursements of any counsel for the Administrative Agent) incurred by or asserted against the Administrative Agent by the Internal Revenue Service or any other Governmental Authority as a result of the failure of the Administrative Agent to properly withhold Tax from amounts paid to or for the account of such Lender for any reason (including, without limitation, because the appropriate form was not delivered or not properly executed, or because such Lender failed to notify the Administrative Agent of a change in circumstance that rendered the exemption from, or reduction of withholding Tax ineffective). A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender

 

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hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under this Agreement or any other Loan Document against any amount due the Administrative Agent under this Section 8.09. The agreements in this Section 8.09 shall survive the resignation and/or replacement of the Administrative Agent, any assignment of rights by, or the replacement of, a Lender, the termination of the commitments and the repayment, satisfaction or discharge of all other Obligations. For the avoidance of doubt, for purposes of this Section 8.09, the term “Lender” includes any Issuing Bank and the Swing Line Lender.

Section 8.10 Administrative Agent May File Proofs of Claim; Credit Bidding . In case of the pendency of any proceeding under any Debtor Relief Law or any other judicial proceeding relative to any Loan Party, the Administrative Agent (irrespective of whether the principal of any Loan or LC Exposure shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise

(a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans, LC Exposure and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders, the Issuing Banks and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders, the Issuing Banks and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders, the Issuing Banks and the Administrative Agent under this Agreement) allowed in such judicial proceeding; and

(b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender and the Issuing Banks to make such payments to the Administrative Agent and, if the Administrative Agent shall consent to the making of such payments directly to the Lenders and the Issuing Banks, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under this Agreement.

Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender or Issuing Bank any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or Issuing Bank to authorize the Administrative Agent to vote in respect of the claim of any Lender or Issuing Bank or in any such proceeding.

The Secured Parties hereby irrevocably authorize the Administrative Agent, at the direction of the Required Lenders (and, if Priority Payment Obligations are then outstanding, the Required Revolving Lenders), to credit bid all or any portion of the Obligations (including accepting some or all of the Collateral in satisfaction of some or all of the Obligations pursuant to a deed in lieu of foreclosure or otherwise) and in such manner purchase (either directly or through one or more acquisition vehicles) all or any portion of the Collateral (a) at any sale thereof conducted under the provisions of the Bankruptcy Code of the United States, including under Sections 363, 1123 or 1129 of the Bankruptcy Code of the United States, or any similar Laws in any other jurisdictions to which a Loan Party is subject, (b) at any other sale or foreclosure or acceptance of collateral in lieu of debt conducted by (or with the consent or at the direction of) the Administrative Agent (whether by judicial action or otherwise) in accordance with any applicable Law. In connection with any such credit bid and purchase, the Obligations owed to the Secured Parties shall be entitled to be, and shall be, credit bid on a ratable basis (with Obligations with respect to contingent or unliquidated claims receiving contingent interests in the acquired assets on a ratable basis that would vest upon the liquidation of such claims in an amount proportional to the liquidated portion of the contingent claim amount used in allocating the contingent interests) in the asset or assets so purchased (or in the Equity Interests or debt instruments of the acquisition vehicle or vehicles that are used to consummate such purchase). In connection with any such bid (i) the Administrative Agent shall be authorized to form one or more acquisition vehicles to make a bid, (ii) to adopt documents providing for the governance of the acquisition vehicle or vehicles (provided that any actions by the Administrative Agent with respect to such acquisition vehicle or vehicles, including any disposition of the assets or

 

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Equity Interests thereof shall be governed, directly or indirectly, by the vote of the Required Lenders, irrespective of the termination of this Agreement and without giving effect to the limitations on actions by the Required Lenders contained in Section 9.02 or Section 9.03 of this Agreement, and (iii) to the extent that Obligations that are assigned to an acquisition vehicle are not used to acquire Collateral for any reason (as a result of another bid being higher or better, because the amount of Obligations assigned to the acquisition vehicle exceeds the amount of debt credit bid by the acquisition vehicle or otherwise), such Obligations shall automatically be reassigned to the Lenders pro rata and the Equity Interests and/or debt instruments issued by any acquisition vehicle on account of the Obligations that had been assigned to the acquisition vehicle shall automatically be cancelled, without the need for any Secured Party or any acquisition vehicle to take any further action.

Section 8.11 Obligations Under Cash Management Agreements and Specified Swap Agreements . No Cash Management Bank or Hedge Bank that obtains the benefits of any Loan Document by virtue of the provisions hereof or of any other Loan Document shall have any right to notice of any action or to consent to, direct or object to any action hereunder or under any other Loan Document or otherwise in respect of the Collateral (including the release or impairment of any Collateral) other than in its capacity as a Lender and, in such case, only to the extent expressly provided in the Loan Documents. Notwithstanding any other provision of this Article VIII to the contrary, the Administrative Agent shall not be required to verify the payment of, or that other satisfactory arrangements have been made with respect to, Cash Management Obligations or Obligations arising under Specified Swap Agreements unless the Administrative Agent has received written notice of such Obligations, together with such supporting documentation as the Administrative Agent may request, from the applicable Cash Management Bank or Hedge Bank, as the case may be.

ARTICLE IX

Miscellaneous

Section 9.01 Notices .

(a) Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in clause (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by facsimile or electronic mail as follows, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows:

(i) if to the Borrower, the Administrative Agent, any Issuing Bank or the Swingline Lender, to the address, facsimile number, electronic mail address or telephone number specified for such Person on Schedule 9.01 ; and

(ii) if to any other Lender, to the address, facsimile number, electronic mail address or tele-phone number specified in its Administrative Questionnaire (including, as appropriate, notices delivered solely to the Person designated by a Lender on its Administrative Questionnaire then in effect for the delivery of notices that may contain material non-public information relating to the Borrower).

Notices and other communications sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices and other communications sent by facsimile shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient). Notices and other communications delivered through electronic communications to the extent provided in clause (b) below shall be effective as provided in such clause (b).

(b) Notices and other communications to the Lenders and the Issuing Banks hereunder may be delivered or furnished by electronic communication (including e-mail, FpML messaging, and Internet or intranet web-sites) pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices to any Lender or Issuing Bank pursuant to Article II if such Lender or the Issuing Bank, as applicable, has notified the Administrative Agent that it is incapable of receiving notices under such Article by

 

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electronic communication. The Administrative Agent, the Swingline Lender, any Issuing Bank or the Borrower may each, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications.

Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor; provided that, for both clauses (i) and (ii), if such notice, email or other communication is not sent during the normal business hours of the recipient, such notice, email or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient.

(c) THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM. In no event shall the Administrative Agent or any of its Related Parties (collectively, the “ Agent Parties ”) have any liability to the Borrower, any Lender, the Issuing Bank or any other Person for losses, claims, damages, liabilities or expenses of any kind (whether in tort, contract or otherwise) arising out of the Borrower’s, any Loan Party’s or the Administrative Agent’s transmission of Borrower Materials or notices through the Platform, any other electronic messaging service, or through the Internet.

(d) Each of the Borrower, the Administrative Agent, each Issuing Bank and the Swing Line Lender may change its address, facsimile or telephone number for notices and other communications hereunder by notice to the other parties hereto. Each other Lender may change its address, facsimile or telephone number for notices and other communications hereunder by notice to the Borrower, the Administrative Agent, each Issuing Bank and the Swing Line Lender. In addition, each Lender agrees to notify the Administrative Agent from time to time to ensure that the Administrative Agent has on record (i) an effective address, contact name, telephone number, facsimile number and electronic mail address to which notices and other communications may be sent and (ii) accurate wire instructions for such Lender. Furthermore, each Public Lender agrees to cause at least one individual at or on behalf of such Public Lender to at all times have selected the “Private Side Information” or similar designation on the content declaration screen of the Platform in order to enable such Public Lender or its delegate, in accordance with such Public Lender’s compliance procedures and Requirements of Law, including United States Federal and state securities Requirements of Law, to make reference to Borrower Materials that are not made available through the “Public Side Information” portion of the Platform and that may contain material non-public information with respect to the Borrower or its securities for purposes of United States Federal or state securities laws.

(e) The Administrative Agent, the Issuing Banks and the Lenders shall be entitled to rely and act upon any notices (including telephonic notices, Committed Loan Notices, notices with request to Letters of Credit under Section 2.17 and Swing Line Loan Notices) purportedly given by or on behalf of the Borrower even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. The Borrower shall indemnify the Administrative Agent, the Issuing Banks, each Lender and the Related Parties of each of them from all losses, costs, expenses and liabilities resulting from the reliance by such Per-son on each notice purportedly given by or on behalf of the Borrower. All telephonic notices to and other telephonic communications with the Administrative Agent may be recorded by the Administrative Agent, and each of the parties hereto hereby consents to such recording.

 

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Section 9.02 Waivers; Amendments .

(a) No failure or delay by the Administrative Agent or any Lender in exercising any right or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Administrative Agent and the Lenders hereunder are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or any other Loan Document or consent to any departure by any Loan Party therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan shall not be construed as a waiver of any Default, regardless of whether the Administrative Agent or any Lender may have had notice or knowledge of such Default at the time.

(b) Neither this Agreement nor any other Loan Document nor any provision hereof or thereof may be waived, amended, amended and restated or modified except as provided in Sections 2.02, 2.19 and 2.20 or pursuant to an agreement or agreements in writing entered into by the Borrower and the Required Lenders and acknowledged by the Administrative Agent or by the Borrower and the Administrative Agent with the consent of the Required Lenders; provided that no such agreement shall (i) increase the Commitment of any Lender without the written consent of such Lender, (ii) reduce or forgive the principal amount of any Loan or LC Disbursement or reduce or forgive the rate of interest thereon, or reduce or forgive any fees payable hereunder, without the written consent of each Lender directly affected thereby (it being understood that the waiver of (or amendment to the terms of) any obligation to pay amounts pursuant to Section 2.10(c) or any waiver or any change to the definition of “Consolidated Leverage Ratio,” “Interest Coverage Ratio” or “Consolidated Secured Leverage Ratio” or a defined term related thereto shall not constitute a reduction or forgiveness of principal, interest or fees), (iii) postpone the scheduled date of payment of the principal amount of any Loan, or any interest thereon, or any fees payable hereunder, or reduce the amount of, waive or excuse any such payment, or postpone the scheduled date of expiration of any Commitment, without the written consent of each Lender directly affected thereby, (iv) change Section 2.15, the definition of “Priority Payment Obligations” (if such change would exclude any previously included Obligations therefrom) or the Pari Intercreditor Agreement without the written consent of each Lender adversely affected thereby, (v) except as provided in Section 9.16, release all or substantially all of the Collateral securing the Obligations or all or substantially all of the value of the Guarantees provided by the Guarantors taken as a whole without the written consent of each Lender, or (vi) change any of the provisions of this Section or the definition of “Required Lenders,” “Required Revolving Lenders,” “Required Term Lenders” or any other provision hereof specifying the number or percentage of Lenders required to waive, amend or modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of each Lender; provided that such provisions may be amended or amended and restated pursuant to the establishment of Incremental Term Loans pursuant to Section 2.02 in order to restrict affiliated lenders and other persons from being included in such definitions; provided , further, that (A) no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent, the Swing Line Lender or any Issuing Bank hereunder without the prior written consent of the Administrative Agent, the Swing Line Lender or such Issuing Bank, as the case may be, (B) no such agreement shall amend, modify or waive the provisions of Section 6.02, 6.04, 6.10 (including, in each case, the component definitions thereof, solely to the extent such definitions are used in such Section (but not otherwise)) or 6.11 or remove or reduce any restriction on prepaying, redeeming or otherwise acquiring Junior Debt or Term Loans without the consent of the Required Revolving Lenders and (C) no such Agreement shall increase the amount of Obligations permitted by this Agreement and the Pari Intercreditor Agreement to be included in “Priority Payment Obligations” without the consent of the Required Revolving Lenders and the Required Term Lenders.

(c) Notwithstanding the foregoing, technical and conforming modifications to the Loan Documents may be made (including by amendment and restatement) with the consent of the Borrower and the Administrative Agent (but without the consent of any Lender) to the extent necessary (A) to effectuate any Incremental Facilities, Replacement Revolving Facility Commitments, Replacement Revolving Loans, Extended Revolving Commitments and Extended Revolving Loans in a manner consistent with Sections 2.02, 2.19 and 2.20 and as may be necessary to establish such Incremental Facilities, Extended Revolving Commitments, Term Loans, Replacement

 

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Revolving Facility Commitments, Replacement Revolving Loans or Extended Revolving Loans as a separate Class or tranche from any existing Term Loans, Revolving Commitments or Revolving Loans, as applicable, and, in the case of Extended Term Loans, to reduce the amortization schedule of the related existing Class of Term Loans proportionately, (B) to incorporate terms favorable to the Lenders in accordance with the definitions of “Permitted Junior Lien Debt”, “Permitted Other First Lien Debt” or “Permitted Unsecured Indebtedness” or (C) to cure any ambiguity, omission, error, defect or inconsistency and, in each case under this clause (C), such amendment shall become effective without any further action or consent of any other party to any Loan Document if the same is not objected to in writing by the Required Lenders within ten Business Days following receipt of notice thereof.

(d) Notwithstanding anything in this Agreement or the other Loan Documents to the contrary, only the consent of the Required Revolving Lenders shall be necessary to (1) waive or consent to a waiver of an Event of Default under Section 7.01(d) (solely with respect to Section 6.10(b)), (2) modify or amend Section 6.10(b) (including, in each case, the component definitions thereof, solely to the extent such definitions are used in such Section (but not otherwise)) or this clause (d) or (3) waive any conditions precedent to Revolving Borrowings required pursuant to Article IV.

Section 9.03 No Waiver; Cumulative Remedies; Enforcement . No failure by any Lender, the Issuing Bank or the Administrative Agent to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder or under any other Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided, and provided under each other Loan Document, are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

Notwithstanding anything to the contrary contained herein or in any other Loan Document (but subject to the terms of the Pari Intercreditor Agreement), the authority to enforce rights and remedies hereunder and under the other Loan Documents against the Loan Parties or any of them shall be vested exclusively in, and all actions and proceedings at law in connection with such enforcement shall be instituted and maintained exclusively by, the Administrative Agent in accordance with Section 8.01 for the benefit of all the Lenders and the Issuing Banks; provided , however , that the foregoing shall not prohibit (a) the Administrative Agent from exercising on its own behalf the rights and remedies that inure to its benefit (solely in its capacity as Administrative Agent) hereunder and under the other Loan Documents, (b) any Issuing Bank or the Swing Line Lender from exercising the rights and remedies that inure to its benefit (solely in its capacity as Issuing Bank or Swing Line Lender, as the case may be) hereunder and under the other Loan Documents, (c) any Lender from exercising setoff rights in accordance with Section 9.09 (subject to the terms of Section 2.15 and the Pari Intercreditor Agreement), or (d) any Lender from filing proofs of claim or appearing and filing pleadings on its own behalf during the pendency of a proceeding relative to any Loan Party under any Debtor Relief Law; and provided , further , that if at any time there is no Person acting as Administrative Agent hereunder and under the other Loan Documents, then (i) subject to the Pari Intercreditor Agreement, the Required Lenders shall have the rights otherwise ascribed to the Administrative Agent pursuant to Section 7.01 and (ii) in addition to the matters set forth in clauses (b), (c) and (d) of the preceding proviso and subject to the Pari Intercreditor Agreement and Section 2.15, any Lender may, with the consent of the Required Lenders, enforce any rights and remedies available to it and as authorized by the Required Lenders.

Section 9.04 Expenses; Indemnity; Damage Waiver .

(a) The Borrower shall pay (i) all reasonable, documented, out-of-pocket expenses incurred by the Administrative Agent and its Related Parties (including the reasonable fees, charges and disbursements of counsel for the Administrative Agent), in connection with the syndication of the credit facilities provided for herein, the preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents or any amendments, restatements, modifications or waivers (or any proposed amendments, restatements, modifications or waivers) of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable, documented, out-of-pocket expenses incurred by the Issuing Banks in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder and (iii) all reasonable, documented, out-of-pocket expenses incurred by the Administrative

 

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Agent, any Lender or any Issuing Bank (including the fees, charges and disbursements of any counsel for the Administrative Agent, any Lender or any Issuing Bank) in connection with the enforcement or protection of its rights (A) in connection with this Agreement and the other Loan Documents, including its rights under this Section, or (B) in connection with the Loans made or Letters of Credit issued hereunder, including all such reasonable, documented, out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit.

(b) The Borrower shall indemnify the Administrative Agent (and any sub-agent thereof), each Lender and each Issuing Bank, and each Related Party of any of the foregoing Persons (each such Person being called an “ Indemnitee ”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and reasonable, documented, out-of-pocket related expenses (including the reasonable, documented fees, charges and disbursements (A) one primary counsel for all Indemnitees in any one action and (B) one local counsel in each applicable jurisdiction unless, in each case, in the reasonable opinion of such counsel representation of all Indemnitees would be inappropriate due to the existence of an actual or potential conflict of interest owed to any unaffiliated third party) that may be incurred by any Indemnitee or asserted against any Indemnitee by any third party or by any Borrower or any other Loan Party arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby, or, in the case of the Administrative Agent (and any sub-agent thereof) and its Related Parties only, the administration of this Agreement and the other Loan Documents, (ii) any Loan or Letter of Credit or the use or proposed use of the proceeds therefrom (including any refusal by the applicable Issuing Bank to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by a Borrower or any of its Subsidiaries, or any action or proceeding relating to Environmental Laws related in any way to a Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by any Borrower or any other Loan Party or by any such persons directors, shareholders or creditors, and regardless of whether any Indemnitee is a party thereto, in all cases, whether or not caused by or arising, in whole or in part, out of the comparative, contributory or sole negligence of the Indemnitee; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee or (y) result from a claim brought by any Borrower against an Indemnitee for breach in bad faith or a material breach of such Indemnitee’s obligations hereunder or under any other Loan Document, if such Borrower has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction.

(c) To the extent that the Borrower for any reason fails to indefeasibly pay any amount required under subsection (a) or (b) of this Section to be paid by the Borrower to the Administrative Agent (or any sub-agent thereof), an Issuing Bank or any Related Party of any of the foregoing, each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent), such Issuing Bank or such Related Party, as the case may be, such Lender’s Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount, provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent (or any such sub-agent) or such Issuing Bank in its capacity as such, or against any Related Party of any of the foregoing acting for the Administrative Agent (or any such sub-agent) or an Issuing Bank in connection with such capacity.

(d) To the fullest extent permitted by applicable law, the parties shall not assert, and each hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or Letter of Credit or the use of the proceeds thereof; provided that the foregoing shall not in any way limit the indemnification obligations of the Borrower pursuant to clause (b) above to the extent that such special, indirect, consequential or punitive damages are included in any claim by a third

 

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party unaffiliated with the applicable Indemnitee with respect to which the applicable Indemnitee is entitled to indemnification pursuant to clause (b) above. No Indemnitee referred to in subsection (b) above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed to such unintended recipients by such Indemnitee through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby other than for direct or actual damages resulting from the gross negligence or willful misconduct of such Indemnitee as determined by a final and nonappealable judgment of a court of competent jurisdiction.

(e) All amounts due under this Section shall be payable not later than ten Business Days after demand therefor.

(f) The agreements in this Section shall survive the resignation of the Administrative Agent and any Issuing Bank, the replacement of any Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all the other Obligations.

Section 9.05 Successors and Assigns .

(a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that (i) the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by the Borrower without such consent shall be null and void) and (ii) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants (to the extent provided in paragraph (c) of this Section) and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(b) (i) Subject to the conditions set forth in paragraph (b)(ii) below, any Lender may assign to one or more assignees (“ assignee ” or “ assignees ”) all or a portion of its rights and obligations under this Agreement (including all or a portion of its Revolving Commitments and the Loans at the time owing to it) with the prior written consent of:

(A) the Borrower (such consent not to be unreasonably withheld or delayed); provided that no consent of the Borrower shall be required for an assignment (i) of a Term Loan to a Lender, an Affiliate of a Lender or an Approved Fund, (ii) of a Revolving Commitment or Revolving Loans to a Revolving Lender or an Affiliate of a Revolving Lender or (iii) if an Event of Default pursuant to Section 7.01(a), (b), (h) or (i) has occurred and is continuing, any other assignee; provided , further , that the Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within ten (10) Business Days after having received notice of the proposed assignment;

(B) the Administrative Agent (such consent not to be unreasonably withheld or delayed), provided that no consent of the Administrative Agent shall be required for an assignment of any Term Loan to an assignee that is a Lender, an Affiliate of a Lender or an Approved Fund; and

(C) in the case of an assignment of a Revolving Commitment, each Issuing Bank and the Swing Line Lender (each such consent not to be unreasonably withheld or delayed).

(ii) Assignments shall be subject to the following additional conditions:

 

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(A) except in the case of an assignment to a Lender or an Affiliate of a Lender or an assignment of the entire remaining amount of the assigning Lender’s Revolving Commitment or Loans of any Class, the amount of the Commitments or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent) shall not be less than (x) with respect to the Revolving Facility, $5,000,000 and (y) with respect to Term Loans, $1,000,000, in each case, unless each of the Borrower and the Administrative Agent otherwise consent, provided that no such consent of the Borrower shall be required if an Event of Default under clause (a), (b), (h) or (i) of Article VII has occurred and is continuing;

(B) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement, provided that this clause shall not be construed to prohibit the assignment of a proportionate part of all the assigning Lender’s rights and obligations in respect of its Revolving Commitments or Revolving Loans;

(C) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500 (unless waived by the Administrative Agent in its sole discretion);

(D) the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire; and

(E) the assignee shall not be (i) the Borrower or any of the Borrower’s Affiliates except in accordance with Section 2.21 and clause (e) below or (ii) a natural Person (or a holding company, investment vehicle or trust for, or owned and operated for the primary benefit of a natural Person); and

(F) no Ineligible Institution shall constitute a permitted assignee under this Agreement.

(iii) Subject to acceptance and recording thereof pursuant to paragraph (b)(v) of this Section, from and after the effective date specified in each Assignment and Assumption the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.12, 2.13, 2.14 and 9.04). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 9.05 shall be null and void.

(iv) The Administrative Agent, acting for this purpose as a non-fiduciary agent of the Borrower, shall maintain at one of its offices a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amount (and related interest) of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “ Register ”). The entries in the Register shall be conclusive absent manifest error, and the Borrower, the Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower and any Lender (with respect to such Lender’s own interests only), at any reasonable time and from time to time upon reasonable prior notice.

(v) Upon its receipt of a duly completed Assignment and Assumption with respect to a permitted assignment executed by an assigning Lender and an assignee, the assignee’s completed Administrative Questionnaire (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) of this Section (unless waived), and any written consent to such assignment required by paragraph (b) of this Section, the Administrative Agent shall accept such Assignment and Assumption and record the information contained therein in the Register. No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph.

 

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(c) (i) Any Lender may, without the consent of the Borrower or the Administrative Agent, sell participations to one or more banks, institutions or other entities (a “ Participant ”) in all or a portion of such Lender’s rights and obligations under this Agreement (including all or a portion of its Commitments and the Loans owing to it); provided that (A) such Lender’s obligations under this Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (C) the Borrower, the Administrative Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement and the other Loan Documents. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and the other Loan Documents and to approve any amendment, modification or waiver of any provision of this Agreement and the other Loan Documents; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in the first proviso to Section 9.02(b) or the first proviso to Section 9.03(b) that affects such Participant. Subject to paragraph (c)(ii) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.12, 2.13 and 2.14 (subject to the requirements and limitations of such Sections; provided that any documentation required to be provided pursuant to Section 2.14(e) shall be provided solely to the participating Lender) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 9.09 as though it were a Lender; provided that such Participant agrees to be subject to Section 2.15(e) as though it were a Lender. Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and related interest) of each Participant’s interest in the Loans or other obligations under the Loan Documents (the “ Participant Register ”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any commitments, loans, letters of credit or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary in connection with a Tax audit or other proceeding or other governmental inquiry to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and the parties hereto shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary.

(ii) A Participant shall not be entitled to receive any greater payment under Section 2.12 or 2.14 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, except to the extent such entitlement to receive a greater payment results from a Change in Law after the Participant becomes a Participant.

(d) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including without limitation any pledge or assignment to secure obligations to a Federal Reserve Bank or other applicable central bank that governs or regulates the activities of such Lender, and this Section shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

(e) Any Lender may, so long as no Event of Default has occurred and is continuing and no Revolving Loans or Swing Line Loans are outstanding after giving effect thereto, at any time, assign all or a portion of its rights and obligations with respect to Term Loans under this Agreement to the Borrower or one of its Subsidiaries through (x) Dutch auctions open to all Lenders on a pro rata basis in accordance with procedures of the type described in Section 2.21 or (y) notwithstanding any other provision in this Agreement, open market purchase on a non-pro rata basis; provided that in connection with assignments pursuant to clauses (x) and (y) above:

(i) if a Subsidiary is the assignee, upon such assignment, transfer or contribution, such Subsidiary shall automatically be deemed to have contributed the principal amount of such Term Loans, plus all accrued and unpaid interest thereon, to the Borrower; or

 

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(ii) if the assignee is the Borrower (including through contribution or transfers set forth in clause (i) above), (A) the principal amount of such Term Loans, along with all accrued and unpaid interest thereon, so contributed, assigned or transferred to the Borrower shall be deemed automatically cancelled and extinguished on the date of such contribution, assignment or transfer, (B) the aggregate outstanding principal amount of Term Loans of the remaining Lenders shall reflect such cancellation and extinguishing of the Term Loans then held by the Borrower and (C) the Borrower shall promptly provide notice to the Administrative Agent of such contribution, assignment or transfer of such Term Loans, and the Administrative Agent, upon receipt of such notice, shall reflect the cancellation of the applicable Term Loans in the Register;

(iii) the Borrower shall be in compliance with Section 6.10 on a pro forma basis;

(iv) the Borrower and its subsidiaries shall not purchase more than 50% of the aggregate principal amount of the Term Loans outstanding on the Closing Date;

(v) all parties to the relevant transactions shall render customary “big-boy” disclaimer letters; and

(vi) at the time any the Borrower or any of its Subsidiaries is making purchases of Term Loans it shall enter into an assignment and assumption agreement reasonably satisfactory to the Administrative Agent documenting the foregoing;

Section 9.06 Survival . All covenants, agreements, representations and warranties made by any Loan Parties herein, in the other Loan Documents and in the certificates or other instruments delivered in connection with or pursuant to this Agreement or the other Loan Documents shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of this Agreement and the other Loan Documents and the making of any Loans, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid and so long as the Revolving Commitments have not expired or terminated. The provisions of Sections 2.12, 2.13, 2.14 and 9.04 and Article VIII shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans, the expiration or termination of the Commitments, any assignment of rights by or replacement of a Lender or the termination of this Agreement or any provision hereof.

Section 9.07 Counterparts; Integration; Effectiveness . This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement, the other Loan Documents and any separate letter agreements with respect to fees payable to the Administrative Agent or the Lead Arranger constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. This Agreement shall become effective as provided in Section 4.01, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Delivery of an executed counterpart of a signature page of this Agreement by email or telecopy shall be effective as delivery of a manually executed counterpart of this Agreement.

Section 9.08 Severability . Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

 

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Section 9.09 Right of Setoff . If an Event of Default shall have occurred and be continuing, each Lender and each of its Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other obligations at any time owing by such Lender or Affiliate to or for the credit or the account of the Borrower against any of and all the obligations of the Borrower now or hereafter existing under this Agreement held by such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement and although such obligations may be unmatured. The rights of each Lender under this Section are in addition to other rights and remedies (including other rights of setoff) which such Lender may have. Each Lender agrees to notify the Administrative Agent promptly after any such setoff and application; provided that the failure to give such notice shall not affect the validity of such setoff and application.

Section 9.10 Governing Law; Jurisdiction; Consent to Service of Process .

(a) This Agreement and the other Loan Documents and any claims, controversy, dispute or cause of action (whether in contract or otherwise) based upon, arising out of or relating to this Agreement or any other Loan Document (except, as to any other Loan Document, as expressly set forth therein) and the transactions contemplated hereby (including any power of attorney set forth in the Loan Documents) and thereby shall be governed by and construed in accordance with the law of the State of New York.

(b) The Borrower and each other Loan Party irrevocably and unconditionally agrees that it will not commence any action, litigation or proceeding of any kind or description, whether in law or equity, whether in contract or in tort or otherwise, against the Administrative Agent, any Lender, any Issuing Bank or any Related Party of the foregoing in any way relating to this Agreement or any other Loan Document or the transactions relating hereto or thereto, in any forum other than the courts of the State of New York sitting in New York County, and of the United States District Court of the Southern District of New York sitting in New York County, and any appellate court from any thereof, and each of the parties hereto irrevocably and unconditionally submits to the jurisdiction of such courts and agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement or any other Loan Document shall affect any right that the Administrative Agent, any Lender, the Swing Line Lender or any Issuing Bank may otherwise have to bring any action or proceeding relating to this Agreement or the other Loan Documents against the Borrower or any other Loan Party or their respective properties in the courts of any jurisdiction.

(c) The Borrower and each other Loan Party hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or the other Loan Documents in any court referred to in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(d) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 9.01. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law.

Section 9.11 WAIVER OF JURY TRIAL . EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED TO IT, 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 AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

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Section 9.12 Headings . Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.

Section 9.13 Confidentiality . Each of the Administrative Agent and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates’ directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory or self-regulatory authority, (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party to this Agreement, (e) in connection with the exercise of any remedies hereunder or any other Loan Document or any suit, action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower and its obligations, (g) with the consent of the Borrower, (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section or an agreement described in clause (f) hereof or (ii) becomes available to the Administrative Agent or any Lender on a non-confidential basis from a source other than the Borrower, (i) on a confidential basis to (x) any rating agency in connection with rating the Borrower or any of its subsidiaries or the Loans hereunder, (y) the CUSIP Service Bureau or any similar agency in connection with the issuance and monitoring of CUSIP numbers with respect to the facilities or (z) market data collectors, similar service providers to the lending industry and service providers to the Administrative Agent in connection with the administration and management of this Agreement and the other Loan Documents or (j) subject to an agreement containing provisions substantially the same as those of this Section, to any Person to whom or for whose benefit that such Lender pledges or assigns a security interest pursuant to Section 9.05(d). For the purposes of this Section, “ Information ” means all information received from the Borrower or its Affiliates relating to the Borrower, its subsidiaries or their businesses, other than any such information that is available to the Administrative Agent or any Lender on a non-confidential basis prior to disclosure by the Borrower or its Affiliates and other than information pertaining to this Agreement routinely provided by arrangers to data service providers, including league table providers, that serve the lending industry. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would reasonably accord to its own confidential information.

Subject to Section 9.18, each Lender acknowledges that information furnished to it pursuant to this Agreement or the other Loan Documents may include material non-public information concerning the Borrower and its Affiliates and their related parties or their respective securities, and confirms that it has developed compliance procedures regarding the use of material non-public information and that it will handle such material non-public information in accordance with those procedures and applicable law, including Federal and state securities laws.

Subject to Section 9.18, all information, including requests for waivers and amendments, furnished by the Borrower or the Administrative Agent pursuant to, or in the course of administering, this Agreement or the other Loan Documents will be syndicate-level information, which may contain material non-public information about the Borrower and its Affiliates and their related parties or their respective securities. Accordingly, each Lender represents to the Borrower and the Administrative Agent that it has identified in its administrative questionnaire a credit contact who may receive information that may contain material non-public information in accordance with its compliance procedures and applicable law, including Federal and state securities laws.

Section 9.14 USA PATRIOT Act . Each Lender subject to the Act hereby notifies the Borrower that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “ Act ”), it is hereby required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow such Lender to identify the Borrower in accordance with the Act.

 

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Section 9.15 Collateral and Guarantee Matters .

(a) The Lenders irrevocably authorize the Administrative Agent to enter into the Pari Intercreditor Agreements and any other customary intercreditor agreement or arrangement in form and substance reasonably satisfactory to the Administrative Agent with the holders of any Indebtedness secured by Liens on the Collateral (or any agent thereof) permitted under this Agreement that in the good faith determination of the Administrative Agent is necessary to effectuate the incurrence of such Indebtedness.

(b) Any Lien on any property granted to or held by the Administrative Agent under any Loan Document shall automatically be released (i) upon all of the Obligations (other than (x) (A) Cash Management Obligations and (B) Obligations under Specified Swap Agreements not yet due and payable, and (y) contingent obligations not yet accrued and payable) having been paid in full, all Letters of Credit having been cash collateralized or otherwise back-stopped (including by “grandfathering” into any future credit facilities), in each case, on terms reasonably satisfactory to the relevant Issuing Bank in its sole discretion, or having expired or having been terminated, and the Total Revolving Commitments having expired or having been terminated, (ii) upon any sale, transfer or other disposition not prohibited hereunder or under any other Loan Document to any Person other than a Loan Party, (iii) subject to Section 9.02, if approved, authorized or ratified in writing by the Required Lenders, (iv) owned by a Subsidiary Guarantor upon (or substantially simultaneously with) release of such Subsidiary Guarantor from its obligations under its Guarantee Agreement pursuant to clause (c) below, or (v) as expressly provided in the Collateral Documents.

(c) Any Subsidiary Guarantor shall automatically be released from its obligations under the Guarantee Agreement (A) in the event of dissolution of such Person, (B) if such Person is designated as an Unrestricted Subsidiary or otherwise ceases to be a Restricted Subsidiary, in each case in accordance with the provisions of this Agreement, upon (or substantially simultaneously with) effectiveness of such designation or when it first ceases to be a Restricted Subsidiary, respectively, (C) if the obligations under this Agreement are discharged in accordance with the terms of this Agreement or (D) as otherwise expressly provided in the Guarantee Agreement.

(d) Upon request by the Administrative Agent at any time, the Required Lenders will confirm in writing the Administrative Agent’s authority to release its interest in particular types or items of property, release any Subsidiary Guarantor from its obligations under the Guarantee Agreement, or enter into an intercreditor agreement pursuant to this Section 9.15. In each case as specified in this Section 9.15, the Administrative Agent will, at the Loan Parties’ expense, execute and deliver to the applicable Loan Party such documents as such Loan Party may reasonably request to evidence the release of such item of Collateral from the assignment and security interest granted under the Collateral Documents, or to release such Subsidiary Guarantor from its obligations under the Guarantee Agreement, in each case in accordance with the terms of the Loan Documents and this Section 9.15; subject to receipt by the Administrative Agent of a certificate of an authorized officer of the Borrower certifying that such transaction and release are permitted under this Agreement and the other Loan Documents.

Section 9.16 No Advisory or Fiduciary Relationship . In connection with all aspects of each transaction contemplated hereby, the Borrower acknowledges and agrees for itself and on behalf of the Loan Parties that (i) the Revolving Facility provided for hereunder and any related arranging or other services in connection therewith (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document) are an arm’s-length commercial transaction between the Loan Parties, on the one hand, and the Agent Parties and the Lenders, on the other hand, and the Loan Parties are capable of evaluating and understanding and understand and accept the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents (including any amendment, waiver or other modification hereof or thereof); (ii) in connection with the process leading to such transaction, each of the Agent Parties and the Lenders is and has been acting solely as a principal and is not the agent or fiduciary for the Loan Parties; (iii) the Lead Arrangers, Agent Parties and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from, and may conflict with, those of the Borrower and its Affiliates, and none of the Lead Arrangers or the Agent Parties has any obligation to disclose any of such interests by virtue of any advisory, agency or fiduciary relationship; and (iv) the Agent Parties and the Lenders have not provided and will not provide any legal, accounting, regulatory or tax advice with respect to any of the transactions contemplated hereby (including any amendment, waiver or other modification hereof or of any other Loan Document) and the Loan Parties have consulted their own legal, accounting, regulatory and tax advisors to the extent they have deemed appropriate.

 

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Section 9.17 Platform; Borrower Materials . The Borrower hereby acknowledges that (a) the Administrative Agent and/or the Lead Arrangers may, but shall not be obligated to, make available to the Lenders and the Issuing Banks materials and/or information provided by or on behalf of the Borrower hereunder (collectively, “ Borrower Materials ”) by posting the Borrower Materials on IntraLinks, Syndtrak, ClearPar, or a substantially similar electronic transmission system (the “ Platform ”) and (b) certain of the Lenders (each, a “ Public Lender ”) may have personnel who do not wish to receive material non-public information with respect to the Borrower or its Affiliates, or the respective securities of any of the foregoing, and who may be engaged in investment and other market-related activities with respect to such Persons’ securities. The Borrower hereby agrees that it will use commercially reasonable efforts to identify that portion of the Borrower Materials that may be distributed to the Public Lenders and that (w) all such Borrower Materials shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (x) by marking Borrower Materials “PUBLIC,” the Borrower shall be deemed to have authorized the Administrative Agent, the Arranger, the Issuing Banks and the Lenders to treat such Borrower Materials as not containing any material non-public information (although it may be sensitive and proprietary) with respect to the Borrower or its securities for purposes of United States Federal and state securities laws ( provided , however , that to the extent such Borrower Materials constitute Information, they shall be treated as set forth in Section 9.13); (y) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated “Public Side Information;” and (z) the Administrative Agent and the Arranger shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not designated “Public Side Information.”

Section 9.18 Electronic Execution of Assignments and Certain Other Documents . The words “execution,” “execute”, “signed,” “signature,” and words of like import in or related to any document to be signed in connection with this Agreement and the transactions contemplated hereby (including without limitation Assignment and Assumptions, amendments or other loan notices, waivers and consents) shall be deemed to include electronic signatures, the electronic matching of assignment terms and contract formations on electronic platforms approved by the Administrative Agent, or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act; provided that notwithstanding anything contained herein to the contrary the Administrative Agent is under no obligation to agree to accept electronic signatures in any form or in any format unless expressly agreed to by the Administrative Agent pursuant to procedures approved by it.

Section 9.19 Acknowledgement and Consent to Bail-In of EEA Financial Institutions . Solely to the extent any Lender or Issuing Bank that is an EEA Financial Institution is a party to this Agreement and notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any Lender or Issuing Bank that is an EEA Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the write-down and conversion powers of an EEA Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:

(a) the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which may be payable to it by any Lender or Issuing Bank that is an EEA Financial Institution; and

(b) the effects of any Bail-In Action on any such liability, including, if applicable:

(A) a reduction in full or in part or cancellation of any such liability;

 

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(B) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or

(C) the variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of any EEA Resolution Authority.

Section 9.20 Pari Intercreditor Agreement

Section 9.21 . The provisions of the Pari Intercreditor Agreement shall at all times apply to the Obligations and Secured Parties even if the Pari Intercreditor Agreement is not in effect at such time.

[remainder of page intentionally left blank]

 

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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized officers as of the day and year first written above.

 

  LSC COMMUNICATIONS, INC.
By:  

/s/ Thomas J. Quinlan III

  Name: Thomas J. Quinlan III
  Title: Chief Executive Officer

 

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  BANK OF AMERICA, N.A., as Administrative Agent
By:  

/s/ William A. Bowen, Jr.

  Name: William A. Bowen, Jr.
  Title: Managing Director
  BANK OF AMERICA, N.A., as a Lender, Issuing Bank and Swing Line Lender
By:  

/s/ William A. Bowen, Jr.

  Name: William A. Bowen, Jr.
  Title: Managing Director

 

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  JPMorgan Chase Bank, N.A., as a Lender and Issuing Bank
By:  

/s/ Gene Riego de Dios

  Name: Gene Riego de Dios
  Title: Vice President

 


  CITIBANK, N.A., as a Lender and Issuing Bank
By:  

/s/ Scott Slavik

  Name: Scott Slavik
  Title: Vice President

 


  U.S. BANK NATIONAL ASSOCIATION, as a Lender
By:  

/s/ Barry Litwin

  Name: Barry Litwin
  Title: Senior Vice President


  WELLS FARGO BANK, NATIONAL ASSOCIATION, as a Lender
By:  

/s/ Kyle R. Holtz

  Name: Kyle R. Holtz
  Title: Director


  The Bank of Tokyo-Mitsubishi UFJ, Ltd., as a Lender
By:  

/s/ Victor Pierzchalski

  Name: Victor Pierzchalski
  Title: Authorized Signatory


  PNC BANK, NATIONAL ASSOCIATION, as a Lender
By:  

/s/ Patrick Flaherty

  Name: Patrick Flaherty
  Title: Managing Director


  Capital One, N.A., as a Lender
By:  

/s/ Sean C. Horridge

  Name: Sean C. Horridge
  Title: Vice President


  SunTrust Bank, as a Lender
By:  

/s/ Jonathan Hart

  Name: Jonathan Hart
  Title: Vice President


  Fifth Third Bank, as a Lender
By:  

/s/ Kurt Marsan

  Name: Kurt Marsan
  Title: Vice President


  ING Bank N.V., as a Lender
By:  

/s/ R.P. Boon

  Name: R.P. Boon
  Title: Director
  If a second signature block is required:
By:  

/s/ Koen Weehuizen

  Name: Koen Weehuizen
  Title: Managing Director


  The Northern Trust Company, as a Lender
By:  

/s/ Lisa DeCristofaro

  Name: Lisa DeCristofaro
  Title: SVP


  Bank of Ireland, as a Lender
By:  

/s/ Conor Linehan

  Name: Conor Linehan
  Title: Authorized Signatory
  If a second signature block is required:
By:  

/s/ D. O’Neill

  Name: D. O’Neill
  Title: Authorized Signatory


  Associated Bank, N.A., as a Lender
By:  

/s/ J. Eric Bergren

  Name: J. Eric Bergren
  Title: Senior Vice President


  CITIZENS BANK, N.A., as a Lender
By:  

/s/ Darran Wee

  Name: Darran Wee
  Title: Senior Vice President

Exhibit 10.2

LSC COMMUNICATIONS, INC.

2016 PERFORMANCE INCENTIVE PLAN

(as adopted by the Board of Directors on September 30, 2016)

I. General

1. Plan . To provide incentives to officers, other employees and other persons providing services to LSC Communications, Inc. (the “Company”) through rewards based upon the ownership or performance of the common stock, par value $0.01 per share, of the Company (“common stock”) or other performance measures, the Committee hereinafter designated may grant cash or bonus awards, stock options, stock appreciation rights (“SARs”), restricted stock, stock units or combinations thereof, to eligible participants, on the terms and subject to the conditions stated in this 2016 Performance Incentive Plan (the “Plan”). In addition, to provide incentives to members of the Board of Directors (the “Board”) who are not employees of the Company (“non-employee directors”), such non-employee directors are eligible to receive awards as set forth in Article V of the Plan. For purposes of the Plan, references to employment by or service to the Company also means employment by or service to a direct or indirect majority-owned subsidiary of the Company and employment by or service to any other entity designated by the Board or the Committee in which the Company has a direct or indirect equity interest.

2. Eligibility . Officers and other employees of, and other persons providing services to the Company (“participants”) shall be eligible, upon selection by the Committee, to receive cash or bonus awards, stock options, SARs, restricted stock and stock units, either singly or in combination, as the Committee, in its discretion, shall determine. In addition, non-employee directors shall receive awards on the terms and subject to the conditions stated in the Plan.

3. Limitation on Shares to be Issued . Subject to adjustment as provided in Section 5 of this Article I, 3,500,000 shares of common stock shall be available under the Plan, reduced by the aggregate number of shares of common stock which become subject to outstanding bonus awards, stock options, SARs which are not granted in tandem with or by reference to a stock option (“free-standing SARs”), restricted stock awards and stock unit awards. Shares subject to a grant or award under the Plan which are not issued or delivered, by reason of the expiration, termination, cancellation or forfeiture of all or a portion of the grant or award or the settlement of the grant or award in cash shall again be available for future grants and awards under the Plan; provided, however , that for purposes of this sentence, stock options and SARs granted in tandem with or by reference to a stock option granted prior to the grant of such SARs (“tandem SARs”) shall be treated as one grant. Shares tendered or withheld upon exercise of an option, vesting of restricted stock or stock units, settlement of an SAR or upon any other event to pay exercise price or tax withholding shall not be available for future issuance under the Plan. In addition, upon exercise of an SAR, the total number of shares remaining available for issuance under the Plan shall be reduced by the gross number of shares for which the SAR is exercised.

For the purpose of complying with Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), and the rules and regulations thereunder, the maximum number of shares of common stock with respect to which options or SARs or a combination thereof may be


granted during any calendar year to any person shall be 1,500,000, subject to adjustment as provided in Section 5 of this Article I; provided, however , that for purposes of this sentence, stock options and tandem SARs shall be treated as one grant. If the Plan becomes effective, no new grants shall be made under any equity plan of the Company that is in effect as of the date immediately prior to the date of stockholder approval of the Plan (the “Existing Company Plans”) and all such Existing Company Plans shall be terminated, provided, however , that such termination shall have no effect on any outstanding awards granted under any Existing Company Plan.

Shares of common stock to be issued may be treasury shares reacquired by the Company or authorized and unissued shares, or a combination of both.

4. Administration of the Plan . The Plan shall be administered by a Committee designated by the Board (the “Committee”), provided that the Board may designate a separate committee, also meeting the requirements set forth in the following sentence, to administer Article V hereof. Each member of the Committee shall be a director that the Board has determined to be (i) an “outside director” within the meaning of Section 162(m) of the Code, (ii) a “Non-Employee Director” within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and (iii) “independent” within the meaning of the rules of the principal stock exchange on which the common stock is traded. The Committee shall, subject to the terms of the Plan, select eligible participants for grants and awards; determine the form of each grant and award, either as cash, bonus awards, stock options, SARs, restricted stock awards, stock unit awards or a combination thereof; and determine the number of shares or units subject to the grant or award, the fair market value of the common stock or units when necessary, the timing and conditions of vesting, exercise or settlement, whether dividends or dividend equivalents accrue under any award, and all other terms and conditions of each grant and award, including, without limitation, the form of instrument evidencing the grant or award. Notwithstanding the foregoing and subject to Article V, all stock option awards, SARs, restricted stock awards and stock unit awards, other than awards that are subject to performance-based vesting conditions over a performance period of at least one year, shall have a minimum vesting period of at least three years from the date of grant (such vesting may, in the discretion of the Committee, occur in full at the end of such period or may occur in specified installments over such period, provided that no more than 40% of any particular award may vest by the end of the first year following the date of grant and no more than 80% of any particular award may vest by the end of the second year following the date of grant); provided, however , that the Committee may provide for early vesting upon the death, permanent and total disability, retirement or termination of service of the award recipient. The Committee may also waive this minimum vesting-period requirement (A) with respect to awards made to newly hired employees, (B) to accelerate vesting of awards made to existing employees affected by workforce reductions, (C) in similar circumstances, as determined by the Committee in the exercise of its discretion and (D) as otherwise required by law or the terms of the Plan. The Committee may establish rules and regulations for the administration of the Plan, interpret the Plan, and impose, incidental to a grant or award, conditions with respect to competitive employment or other activities not inconsistent with the Plan. All such rules, regulations, interpretations and conditions shall be conclusive and binding on all parties. Notwithstanding anything in this Plan to the contrary and subject to Section 5 of this Article I, to the extent required by the New York Stock

 

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Exchange, or any other stock exchange on which shares of Common Stock are traded, the Committee will not amend or replace any previously granted option or SAR in a transaction that constitutes a repricing, without the approval of the stockholders of the Company.

Each grant and award shall be evidenced by a written instrument and no grant or award shall be valid until an agreement is executed by the Company and such grant or award shall be effective as of the effective date set forth in the agreement. The Committee may delegate some or all of its power and authority hereunder to the chief executive officer or other executive officer of the Company as the Committee deems appropriate; provided, however , that the Committee may not delegate its power and authority with regard to (i) the selection for participation in the Plan of (A) a person who is a “covered employee” within the meaning of Section 162(m) of the Code or who, in the Committee’s judgment, is likely to be a covered employee at any time during the period a grant or award hereunder to such participant would be outstanding, (B) an officer or other person subject to Section 16 of the Exchange Act or (C) a person who is not an employee of the Company or (ii) decisions concerning the time, pricing or amount of a grant or award to a participant, officer or other person described in clause (i) above. A majority of the Committee shall constitute a quorum. The acts of the Committee shall be either (i) acts of a majority of the members of the Committee present at any meeting at which a quorum is present or (ii) acts approved in writing by all of the members of the Committee without a meeting.

Notwithstanding anything to the contrary contained herein, the Board may, in its sole discretion, at any time and from time to time, grant Awards or administer the Plan. In any such case, the Board will have all of the authority and responsibility granted to the Committee herein.

5. Adjustments . In the event of any stock split, stock dividend, recapitalization, reorganization, merger, consolidation, combination, exchange of shares, liquidation, spin-off or other similar change in capitalization or event affecting the Company or its common stock, or any distribution to holders of the Company’s common stock other than a regular cash dividend, the number, class and kind of securities (including, for this purpose, securities of any other entity that is a party to such transaction) available under the Plan, the specific share limitations otherwise set forth in the Plan, the number, class and kind of securities (including, for this purpose, securities of any other entity that is a party to such transaction) subject to each outstanding bonus award, the number, class and kind of securities (including, for this purpose, securities of any other entity that is a party to such transaction) subject to each outstanding stock option and the purchase price per security and the terms of each outstanding SAR shall be appropriately adjusted by the Committee, such adjustments to be made in the case of outstanding stock options and SARs without an increase in the aggregate purchase price or base price. For purposes of the Plan, the fair market value of the common stock on a specified date shall be the closing market price of the common stock on such date, or, if no such trading in the common stock occurred on such date, then on the next preceding date when such trading occurred, or as otherwise determined by the Committee.

6. Effective Date and Term of Plan . The Plan shall be submitted to the stockholders of the Company for approval at the next meeting of stockholders held following the Board’s adoption of the Plan and, if approved, shall become effective on the date of such stockholder approval. The Plan shall terminate on the date on which shares are no longer available for grants

 

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or awards under the Plan, unless terminated prior thereto by action of the Board; provided, however that if the Plan itself has not previously terminated, Section 1 of Article V shall terminate on the date that is ten years from the date of stockholder approval of the Plan. No further grants or awards shall be made under the Plan after termination, but termination shall not affect the rights of any participant under any grants or awards made prior to termination.

7. Amendments . The Plan may be amended or terminated by the Board in any respect except that no amendment may be made without stockholder approval if stockholder approval is required by applicable law, rule or regulation, including Section 162(m) of the Code, or such amendment would increase (subject to Section 5 of this Article I) the number of shares available under the Plan or would amend the prohibition on repricing of awards set forth in Section 4 of this Article I or otherwise permit the repricing of awards granted hereunder. No amendment may impair the rights of a holder of an outstanding grant or award without the consent of such holder.

II. Bonus Awards

1. Form of Award . Bonus awards, whether performance awards or fixed awards, may be made to eligible participants in the form of (i) cash, whether in an absolute amount or as a percentage of compensation, (ii) stock units, each of which is substantially the equivalent of a share of common stock but for the power to vote and, if the Committee so determines, in its sole discretion, the entitlement to an amount equal to dividends or other distributions otherwise payable on a like number of shares of common stock, (iii) shares of common stock issued to the participant but forfeitable and with restrictions on transfer in any form as hereinafter provided or (iv) any combination of the foregoing.

2. Performance Awards . (a) Awards may be made in terms of a stated potential maximum dollar amount, percentage of compensation or number of units or shares, with such actual amount, percentage or number to be determined by reference to the level of achievement of corporate, sector, business unit, division, individual or other specific performance goals over a performance period of not less than one nor more than ten years, as determined by the Committee.

(b) In no event shall any participant receive a payment with respect to any performance award if the minimum threshold performance goals requirement applicable to the payment is not achieved during the performance period.

(c) If the Committee desires that compensation payable pursuant to performance awards be “qualified performance-based compensation” within the meaning of Section 162(m) of the Code, then with respect to such performance awards, for any calendar year (i) the maximum compensation payable pursuant to any such performance awards granted during such year, to the extent payment thereunder is determined by reference to shares of common stock (or the fair market value thereof), shall not exceed 900,000 shares of common stock (or the fair market value thereof), subject to adjustment as set forth in Section 5 of Article I, and (ii) the maximum compensation payable pursuant to any such performance awards granted during such year, to the extent payment is not determined by reference to shares of common stock, shall not exceed $9,000,000.

 

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The limits set forth in this Section (c) of Article II shall be proportionately increased for performance periods that are longer than 12 months.

(d) The Committee may provide in any agreement evidencing a performance award under the Plan that the Committee shall retain sole discretion to reduce the amount of or eliminate any payment otherwise payable to a participant with respect to any performance award. If so provided in any agreement evidencing a performance award, the Committee may exercise such discretion by establishing conditions for payments in addition to the performance goals, including the achievement of financial, strategic or individual goals, which may be objective or subjective, as it deems appropriate.

(e) For purposes of the Plan, “performance goals” means the objectives established by the Committee which shall be satisfied or met during the applicable performance period as a condition to a participant’s receipt of all or a part of a performance-based award under the Plan. The performance goals shall be tied to one or more of the following business criteria, determined with respect to the Company or the applicable sector, business unit or division: net sales; cost of sales; gross profit; earnings from operations; earnings before interest, taxes, depreciation and amortization; earnings before income taxes; earnings before interest and taxes; cash flow measures; return on equity; return on assets; return on net assets employed; return on capital; working capital; leverage ratio; stock price measures; enterprise value; safety measures; net income per common share (basic or diluted); EVA™ (Economic Value Added, which represents the cash operating earnings of the Company after deducting a charge for capital employed); cost reduction objectives or, in the case of awards not intended to be “qualified performance-based compensation” within the meaning of Section 162(m) of the Internal Revenue Code, any other similar criteria established by the Plan Committee for the applicable performance period. The Committee may provide in any agreement evidencing a performance award under the Plan that the Committee shall amend or adjust the performance goals or other terms or conditions of an outstanding award in recognition of unusual or nonrecurring events. If the Committee desires that compensation payable pursuant to any award subject to performance goals be “qualified performance-based compensation” within the meaning of Section 162(m) of the Code, the performance goals (i) shall be established by the Committee no later than 90 days after the beginning of the applicable performance period (or such other time designated by the Internal Revenue Service) and (ii) shall satisfy all other applicable requirements imposed under Treasury Regulations promulgated under Section 162(m) of the Code, including the requirement that such performance goals be stated in terms of an objective formula or standard.

3. Fixed Awards . Awards may be made which are not contingent on the achievement of specific objectives, but are contingent on the participant’s continuing in the Company’s employ for a period specified in the award.

4. Rights with Respect to Restricted Shares . If shares of restricted common stock are subject to an award, the participant shall have the right, unless and until such award is forfeited or unless otherwise determined by the Committee at the time of grant, to vote the shares and to receive dividends thereon from the date of grant and the right to participate in any capital adjustment applicable to all holders of common stock; provided, however , that (i) a distribution

 

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with respect to shares of common stock, other than a regular quarterly cash dividend, and (ii) a regular cash dividend with respect to shares of common stock that are subject to performance-based vesting conditions, in each case shall be deposited with the Company and shall be subject to the same restrictions as the shares of common stock with respect to which such distribution was made.

During the restriction period, the shares subject to a restricted stock award shall be held in book entry form, with the restrictions, terms and conditions duly noted, or alternatively a certificate or certificates representing restricted shares shall be registered in the holder’s name or the name of a nominee of the Company and may bear a legend, in addition to any legend which may be required under applicable laws, rules or regulations, indicating that the ownership of the shares of common stock represented by such certificate is subject to the restrictions, terms and conditions of the Plan and the agreement relating to the shares of restricted common stock. All such certificates shall be deposited with the Company, together with stock powers or other instruments of assignment (including a power of attorney), each endorsed in blank with a guarantee of signature if deemed necessary or appropriate, which would permit transfer to the Company of all or a portion of the shares of common stock subject to the award in the event such award is forfeited in whole or in part. Upon termination of any applicable restriction period, including, if applicable, the satisfaction or achievement of applicable objectives, and subject to the Company’s right to require payment of any taxes, the requisite number of shares of common stock shall be delivered to the holder of such award.

5. Rights with Respect to Stock Units . If stock units are credited to a participant pursuant to an award, then, except as otherwise provided by the Committee in its sole discretion, amounts equal to dividends and other distributions otherwise payable on a like number of shares of common stock after the crediting of the units (unless the record date for such dividends or other distributions precedes the date of grant of such award) shall be credited to an account for the participant and held until the award is forfeited or paid out and interest may be credited on the account at a rate determined by the Committee.

6. Events Upon Vesting . At the time of vesting of an award made pursuant to this Article II, (i) the award (and any dividend equivalents, other distributions and interest which have been credited), if in units, shall be paid to the participant either in shares of common stock equal to the number of units, in cash equal to the fair market value of such shares, or in such combination thereof as the Committee shall determine, (ii) the award, if a cash bonus award, shall be paid to the participant either in cash, or in shares of common stock with a then fair market value equal to the amount of such award, or in such combination thereof as the Committee shall determine and (iii) shares of restricted common stock issued pursuant to an award shall be released from the restrictions.

III. Stock Options

1. Options for Eligible Participants . Options to purchase shares of common stock may be granted to such eligible participants as may be selected by the Committee. These options may, but need not, constitute “incentive stock options” under Section 422 of the Code. To the extent that the aggregate fair market value (determined as of the date of grant) of shares of common stock with respect to which options designated as incentive stock options are

 

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exercisable for the first time by an optionee during any calendar year (under the Plan or any other plan of the Company, or any parent or subsidiary) exceeds the amount (currently $100,000) established by the Code, such options shall not constitute incentive stock options. No incentive stock options may be granted under the Plan after the earlier of the tenth anniversary of (a) the date the Plan is approved by the Board or (b) the effective date of the Plan.

2. Number of Shares and Purchase Price . The number of shares of common stock subject to an option and the purchase price per share of common stock purchasable upon exercise of the option shall be determined by the Committee; provided, however , that the purchase price per share of common stock shall not be less than 100% of the fair market value of a share of common stock on the date of grant of the option; provided, further , that if an incentive stock option shall be granted to any person who, on the date of grant of such option, owns capital stock possessing more than ten percent of the total combined voting power of all classes of capital stock of the Company (or of any parent or subsidiary) (a “Ten Percent Holder”), the purchase price per share of common stock shall be the price (currently 110% of fair market value) required by the Code in order to constitute an incentive stock option.

3. Exercise of Options . The period during which options granted hereunder may be exercised shall be determined by the Committee; provided, however , that no stock option shall be exercised later than ten years after its date of grant; provided further , that if an incentive stock option shall be granted to a Ten Percent Holder, such option shall not be exercisable more than five years after its date of grant. The Committee may, in its discretion, establish performance measures which shall be satisfied or met as a condition to the grant of an option or to the exercisability of all or a portion of an option. The Committee shall determine whether an option shall become exercisable in cumulative or non-cumulative installments and in part or in full at any time. An exercisable option, or portion thereof, may be exercised only with respect to whole shares of common stock.

An option may be exercised (i) by giving written notice to the Company (or following other procedures designated by the Company) specifying the number of whole shares of common stock to be purchased and accompanied by payment therefor in full (or arrangement made for such payment to the Company’s satisfaction) either (A) in cash, (B) in previously owned whole shares of common stock (for which the optionee has good title free and clear of all liens and encumbrances) having a fair market value, determined as of the date of exercise, equal to the aggregate purchase price payable by reason of such exercise, (C) by authorizing the Company to withhold whole shares of Common Stock that would otherwise be delivered having a fair market value, determined as of the date of exercise, equal to the aggregate purchase price payable by reason of such exercise, (D) in cash by a broker-dealer acceptable to the Company to whom the optionee has submitted an irrevocable notice of exercise, (E) to the extent expressly authorized by the Committee, via a cashless exercise arrangement with the Company or (F) a combination of (A) and (B), (ii) if applicable, by surrendering to the Company any SARs which are canceled by reason of the exercise of the option and (iii) by executing such documents as the Company may reasonably request. The Committee shall have the sole discretion to disapprove of an election pursuant to clause (D). Any fraction of a share of common stock which would be required to pay such purchase price shall be disregarded and the remaining amount due shall be paid in cash by the optionee. No shares of common stock shall be delivered until the full purchase price therefor has been paid.

 

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IV. Stock Appreciation Rights

1. Grants . Free-standing SARs entitling the grantee to receive cash or shares of common stock having a fair market value equal to the appreciation in market value of a stated number of shares of common stock from the date of grant to the date of exercise of such SARs, or in the case of tandem SARs, from the date of grant of the related stock option to the date of exercise of such tandem SARs, may be granted to such participants as may be selected by the Committee. The holder of a tandem SAR may elect to exercise either the option or the SAR, but not both. Tandem SARs shall be automatically canceled upon exercise of the related stock option.

2. Number of SARs and Base Price . The number of SARs subject to a grant shall be determined by the Committee. Any tandem SAR related to an incentive stock option shall be granted at the same time that such incentive stock option is granted. The base price of a tandem SAR shall be the purchase price per share of common stock of the related option. The base price of a free-standing SAR shall be determined by the Committee; provided, however , that such base price shall not be less than 100% of the fair market value of a share of common stock on the date of grant of such SAR.

3. Exercise of SARs . The agreement relating to a grant of SARs may specify whether such grant shall be settled in shares of common stock (including restricted shares of common stock) or cash or a combination thereof. Upon exercise of an SAR, the grantee shall be paid the excess of the then fair market value of the number of shares of common stock to which the SAR relates over the base price of the SAR. Such excess shall be paid in cash or in shares of common stock having a fair market value equal to such excess or in such combination thereof as the Committee shall determine. The period during which SARs granted hereunder may be exercised shall be determined by the Committee; provided, however , no SAR shall be exercised later than ten years after the date of its grant; and provided, further , that no tandem SAR shall be exercised if the related option has expired or has been canceled or forfeited or has otherwise terminated. The Committee may, in its discretion, establish performance measures which shall be satisfied or met as a condition to the grant of an SAR or to the exercisability of all or a portion of an SAR. The Committee shall determine whether an SAR may be exercised in cumulative or non-cumulative installments and in part or in full at any time. An exercisable SAR, or portion thereof, may be exercised, in the case of a tandem SAR, only with respect to whole shares of common stock and, in the case of a free-standing SAR, only with respect to a whole number of SARs. If an SAR is exercised for restricted shares of common stock, the restricted shares shall be issued in accordance with Section 4 of Article II and the holder of such restricted shares shall have such rights of a stockholder of the Company as determined pursuant to such Section. Prior to the exercise of an SAR for shares of common stock, including restricted shares, the holder of such SAR shall have no rights as a stockholder of the Company with respect to the shares of common stock subject to such SAR.

A tandem SAR may be exercised (i) by giving written notice to the Company (or following other procedures designated by the Company) specifying the number of whole SARs which are being exercised, (ii) by surrendering to the Company any options which are canceled by reason of the exercise of such SAR and (iii) by executing such documents as the Company may reasonably request. A free-standing SAR may be exercised (i) by giving written notice to

 

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the Company specifying the whole number of SARs which are being exercised and (ii) by executing such documents as the Company may reasonably request.

V. Awards to Non-Employee Directors

1. Annual Grants to Non-Employee Directors . On the date of the Company’s 2017 annual meeting of stockholders, and on the date of each subsequent annual meeting prior to the termination of this Section 1, the Company shall make an award under the Plan to each individual who is, immediately following such annual meeting, a non-employee director. Awards granted pursuant to this Section 1 of Article V shall be in the form of stock options, restricted stock, stock units or SARs. The form of such awards, and the number of shares subject to each such award, shall be determined by a committee meeting the requirements for the Committee described above in Section 4 of Article I in the exercise of its sole discretion. Notwithstanding anything to the contrary set forth elsewhere in the Plan, an award granted to a non-employee director pursuant to this Section 1 of Article V shall have a minimum vesting period of one year from the date of grant.

2. Elective Options for Non-Employee Directors . Each non-employee director may from time to time elect, in accordance with procedures to be specified by the Committee, to receive in lieu of all or part of any annual base cash retainer fee for services as a director of the Company, any fees for attendance at meetings of the Board or any committee of the Board and any fees for serving as a member or chairman of any committee of the Board that would otherwise be payable to such non-employee director (“Fees”), an option to purchase shares of common stock, which option shall have a value (as determined in accordance with the Black-Scholes stock option valuation method) as of the date of grant of such option equal to the amount of such Fees and which shall be subject to all of the terms and conditions set forth in Article III of the Plan. Notwithstanding anything to the contrary set forth elsewhere in the Plan, an option granted to a non-employee director pursuant to this Section 2 of Article V shall become exercisable in full on the first anniversary of the date of grant.

VI. Other

1. Non-Transferability of Options and Stock Appreciation Rights . No option or SAR shall be transferable other than (i) by will, the laws of descent and distribution or pursuant to beneficiary designation procedures approved by the Company or (ii) as otherwise set forth in the agreement relating to such option or SAR. Each option or SAR may be exercised during the participant’s lifetime only by the participant or the participant’s guardian, legal representative or similar person or the permitted transferee of the participant. Except as permitted by the second preceding sentence, no option or SAR may be sold, transferred, assigned, pledged, hypothecated, encumbered or otherwise disposed of (whether by operation of law or otherwise) or be subject to execution, attachment or similar process. Upon any attempt to so sell, transfer, assign, pledge, hypothecate, encumber or otherwise dispose of any option or SAR, such award and all rights thereunder shall immediately become null and void.

2. Tax Withholding . The Company shall have the right to require, prior to the issuance or delivery of any shares of common stock or the payment of any cash pursuant to a grant or award hereunder, payment by the holder thereof of any federal, state, local or other taxes

 

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which may be required to be withheld or paid in connection therewith. An agreement may provide that (i) the Company shall withhold whole shares of common stock which would otherwise be delivered to a holder, having an aggregate fair market value determined as of the date the obligation to withhold or pay taxes arises in connection therewith (the “Tax Date”), or withhold an amount of cash which would otherwise be payable to a holder, in the amount necessary to satisfy any such obligation or (ii) the holder may satisfy any such obligation by any of the following means: (A) a cash payment to the Company, (B) delivery to the Company of previously owned whole shares of common stock (which the holder has held for at least six months prior to the delivery of such shares or which the holder purchased on the open market and for which the holder has good title, free and clear of all liens and encumbrances) having an aggregate fair market value determined as of the Tax Date, equal to the amount necessary to satisfy any such obligation, (C) authorizing the Company to withhold whole shares of common stock which would otherwise be delivered having an aggregate fair market value determined as of the Tax Date or withhold an amount of cash which would otherwise be payable to a holder, equal to the amount necessary to satisfy any such liability, (D) in the case of the exercise of an option, a cash payment by a broker-dealer acceptable to the Company to whom the optionee has submitted an irrevocable notice of exercise or (E) any combination of (A), (B) and (C); provided, however , that the Committee shall have sole discretion to disapprove of an election involving clause (D). An agreement relating to a grant or award hereunder may not provide for shares of common stock to be withheld having an aggregate fair market value in excess of the minimum amount of taxes required to be withheld. Any fraction of a share of common stock which would be required to satisfy such an obligation shall be disregarded and the remaining amount due shall be paid in cash by the holder.

3. Acceleration Upon Change in Control . If while (i) any performance award or fixed award granted under Article II is outstanding, (ii) any stock option granted under Article III of the Plan or SAR granted under Article IV of the Plan is outstanding or (iii) any award made to non-employee directors pursuant to Article V (“nonemployee director awards”) is outstanding:

(a) any “person,” as such term is defined in Section 3(a)(9) of the Exchange Act, as modified and used in Section 13(d) and 14(d) thereof (but not including (i) the Company or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its subsidiaries, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company) (hereinafter a “Person”) is or becomes the beneficial owner, as defined in Rule 13d-3 of the Exchange Act, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its affiliates, excluding an acquisition resulting from the exercise of a conversion or exchange privilege in respect of outstanding convertible or exchangeable securities) representing 50% or more of the combined voting power of the Company’s then outstanding securities; or

(b) during any period of two (2) consecutive years beginning on the date that stockholders approve the Plan, individuals who at the beginning of such period constitute the Board and any new director (other than a director designated by a Person who has

 

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entered into any agreement with the Company to effect a transaction described in Clause (a), (c) or (d) of this Section) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof; or

(c) a merger or consolidation of the Company with any other corporation (hereinafter, a “Corporate Transaction”) is consummated, other than (i) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving or acquiring entity), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company, at least 50% of the combined voting power of the voting securities of the Company or such surviving or acquiring entity outstanding immediately after such merger or consolidation, or (ii) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person acquires more than 50% of the combined voting power of the Company’s then outstanding securities; or

(d) the stockholders of the Company approve a plan of complete liquidation of the Company or for the consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets,

(any of such events being hereinafter referred to as a “Change in Control”), then upon the date of such Change in Control, (i) with respect to such performance awards, the highest level of achievement specified in the award shall be deemed met and the award shall be immediately and fully vested, (ii) with respect to such fixed awards, the period of continued employment specified in the award upon which the award is contingent shall be deemed completed and the award shall be immediately and fully vested, (iii) with respect to such options and SARs, all such options and SARs, whether or not then exercisable in whole or in part, shall be immediately and fully exercisable and (iv) with respect to such non-employee director awards, all conditions with respect to vesting or exercisability shall be deemed to be satisfied and such awards shall be immediately and fully vested and exercisable. In connection with such Change in Control, the Board (as constituted prior to the Change in Control) may, in its discretion:

(i) require that shares of capital stock of the corporation resulting from or succeeding to the business of the Company pursuant to such Change in Control, or a parent corporation thereof, be substituted for some or all of the shares of common stock subject to an outstanding award, with an appropriate and equitable adjustment to such award as determined by the Committee in accordance with Section 5 of Article I; and/or

(ii) require outstanding awards, in whole or in part, to be surrendered to the Company by the holder, and to be immediately cancelled by the Company, and to provide for the holder to receive (a) a cash payment in an amount equal to (1) in the case of an option or an SAR, the number of shares of common stock

 

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then subject to the portion of such option or SAR surrendered multiplied by the excess, if any, of the fair market value of a share of common stock as of the date of the Change in Control, over the exercise price or base price per share of common stock subject to such option or SAR, (2) in the case of a restricted stock award, stock unit award or bonus award denominated in shares of common stock, the number of shares of common stock then subject to the portion of such award surrendered, multiplied by the fair market value of a share of common stock as of the date of the Change in Control, and (3) in the case of a bonus award denominated in cash, the value of the bonus award then subject to the portion of such award surrendered; (b) shares of capital stock of the corporation resulting from or succeeding to the business of the Company pursuant to such Change in Control, or a parent corporation thereof, having a fair market value not less than the amount determined under clause (a) above; or (c) a combination of the payment of cash pursuant to clause (a) above and the issuance of shares pursuant to clause (b) above.

4. Restrictions on Shares . Each grant and award made hereunder shall be subject to the requirement that if at any time the Company determines that the listing, registration or qualification of the shares of common stock subject thereto upon any securities exchange or under any law, or the consent or approval of any governmental body, or the taking of any other action is necessary or desirable as a condition of, or in connection with, the delivery of shares thereunder, such shares shall not be delivered unless such listing, registration, qualification, consent, approval or other action shall have been effected or obtained, free of any conditions not acceptable to the Company. The Company may require that certificates evidencing shares of common stock delivered pursuant to any grant or award made hereunder bear a legend indicating that the sale, transfer or other disposition thereof by the holder is prohibited except in compliance with the Securities Act of 1933, as amended, and the rules and regulations thereunder.

5. No Right of Participation or Employment . No person (other than non-employee directors to the extent provided in Article V) shall have any right to participate in the Plan. Neither the Plan nor any grant or award made hereunder shall confer upon any person any right to employment or continued employment by the Company, any subsidiary or any affiliate of the Company or affect in any manner the right of the Company, any subsidiary or any affiliate of the Company to terminate the employment of any person at any time without liability hereunder.

6. Rights as Stockholder . No person shall have any right as a stockholder of the Company with respect to any shares of common stock or other equity security of the Company which is subject to a grant or award hereunder unless and until such person becomes a stockholder of record with respect to such shares of common stock or equity security.

7. Awards Subject to Clawback . The awards and any cash payment or securities delivered pursuant to an award are subject to forfeiture, recovery by the Company or other action pursuant to the applicable award agreement or any clawback or recoupment policy which the Company may adopt from time to time, including without limitation any such policy which the Company may be required to adopt under the Dodd-Frank Wall Street Reform and Consumer Protection Act and implementing rules and regulations thereunder, or as otherwise required by law.

 

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8. Governing Law . The Plan, each grant and award hereunder and the related agreement, and all determinations made and actions taken pursuant thereto, to the extent not otherwise governed by the Code or the laws of the United States, shall be governed by the laws of the State of Delaware and construed in accordance therewith without giving effect to principles of conflicts of laws.

9. Foreign Participants . Notwithstanding any provision of the Plan to the contrary the Committee may, with a view to both promoting achievement of the purposes of the Plan and complying with (i) provisions of laws in countries outside the United States in which the Company or its subsidiaries operate or have employees and (ii) the rules of any foreign stock exchange upon which the common stock may be listed, determine which persons outside the United States shall be eligible to participate in the Plan on such terms and conditions different from those specified in the Plan as may in the judgment of the Committee be necessary or advisable and, to that end, the Committee may establish sub-plans, modified option exercise procedures and other terms and procedures.

10. Insider Limits . Notwithstanding any other provision of the Plan, (i) the maximum number of shares of common stock which may be reserved for issuance to insiders (as defined in the Ontario Securities Act) under the Plan, together with any other previously established or proposed incentive plan, shall not exceed 10% of the outstanding shares of common stock, (ii) the maximum number of shares of common stock which may be issued to insiders under the Plan, together with any other previously established or proposed incentive plan, within any one year period shall not exceed 10% of the outstanding shares of common stock, and (iii) the maximum number of shares of common stock which may be issued to any one insider and his or her associates under the Plan, together with any other previously established or proposed incentive plan, within a one-year period, shall not exceed 5% of the outstanding shares of common stock.

11. Approval of Plan . The Plan and all grants and awards made hereunder shall be null and void if the adoption of the Plan is not approved by the affirmative vote of a majority of the shares of common stock present in person or represented by proxy at the next meeting of stockholders following the Board’s adoption of the Plan.

 

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Exhibit 10.3

LSC Communications, Inc.

Non-Employee Director Compensation Plan

Each director shall receive (A) an annual cash retainer (a “Cash Retainer”) and (B) an annual equity retainer (an “Equity Retainer”) to be paid in the form of a grant of Restricted Stock Units (“RSUs”) each on the date of the Company’s Annual Meeting of Stockholders, as described further below and pursuant to the Company’s Performance Incentive Plan in effect on such date (the “Plan”).

 

1) Cash Retainer .

 

  a) Each director shall be entitled to a Cash Retainer equal to $90,000.

 

  b) Any director in a leadership role shall be entitled to an additional Cash Retainer in the applicable amount described in the table below:

 

Lead Director

   $ 62,500   

Chairman of the Audit Committee

   $ 25,000   

Chairman of the Human Resources Committee

   $ 25,000   

Chairman of the Corporate Responsibility & Governance Committee

   $ 20,000   

 

2) Equity Retainer .

 

  a) Each director shall be entitled to an Equity Retainer equal to $135,000.

 

  b) The Lead Director shall be entitled to an additional Equity Retainer equal to $62,500.

 

  c) The number of shares granted shall be calculated pursuant to the terms of the Plan and shall be rounded down to the nearest share.

 

  d) RSUs will vest and be payable on the first anniversary of the grant date, but will be payable in full on the earlier of (i) the date the director ceases to be a Director of the Company and (ii) a Change in Control (as defined in the Plan).

 

  e) Dividend equivalents on the RSUs issued hereunder are deferred, credited with interest quarterly at the same rate as five-year U.S. government bonds and paid out in cash at the same time the corresponding portion of the award becomes payable.

 

  f) The Company shall make payment of the RSUs in Company common stock.

 

3) General .

 

  a) If any director joins the Board on a date other than the date of the Company’s Annual Meeting, then a pro-rata portion of each of the applicable Cash Retainer and Equity Retainer from the date joined to the next Annual Meeting date shall be granted; provided, however, that any director of R.R. Donnelley & Sons Company (“RRD”) who joins the Board in connection with the spin-off of the Company from RRD shall not be entitled to such pro-rata portion of the Cash Retainer or Equity Retainer.

 

  b) Each director is expected to comply with the terms of any stock ownership guidelines for non-employee directors that are established by the Company, as in effect from time to time.

 

Effective as of October 1, 2016

Exhibit 10.4

LSC Deferred Compensation Plan

effective October 1, 2016


LSC COMMUNICATIONS, INC.

NONQUALIFIED DEFERRED COMPENSATION PLAN

TABLE OF CONTENTS

 

         Page  
ARTICLE I PURPOSE      1   
ARTICLE II DEFINITIONS      1   
ARTICLE III ELIGIBILITY, ENROLLMENT, PARTICIPATION      11   

Section 3.1.

  Eligibility      11   

Section 3.2.

  Enrollment and Commencement of Participation      11   

Section 3.3.

  Termination of Eligibility      13   
ARTICLE IV DEFERRALS, COMPANY CONTRIBUTIONS, DEEMED INVESTMENTS, TAXES, ETC.      14   

Section 4.1.

  Participant Annual Deferral Amounts      14   

Section 4.2.

  FBU Participant and CSR Participant Deferral Amounts      14   

Section 4.3.

  Short Plan Year      15   

Section 4.4.

  Deferral Elections      16   

Section 4.5.

  Withholding and Crediting of Deferral Amounts, FBU Deferral Amounts and CSR Deferral Amounts, etc.      17   

Section 4.6.

  Leave of Absence      21   

Section 4.7.

  Company Contribution Amount      22   

Section 4.8.

  Vesting      23   

Section 4.9.

  Deemed Investments      26   

Section 4.10.

  No Crediting to Accounts After Distribution      30   

Section 4.11.

  FICA and Other Taxes      30   

Section 4.12.

  Spin-Off.      32   
ARTICLE V RETIREMENT BENEFIT      32   

Section 5.1.

  Retirement Benefit      32   

Section 5.2.

  Time and Form of Retirement Benefit Payment      33   
ARTICLE VI SEPARATION FROM SERVICE BENEFIT      34   

Section 6.1.

  Separation from Service Benefit      34   

Section 6.2.

  Time and Form of Separation from Service Benefit Payment      34   
ARTICLE VII CHANGE IN CONTROL BENEFIT      36   

Section 7.1.

  Change in Control Benefit      36   

Section 7.2.

  Time and Form of Change in Control Benefit Payment .      36   

 

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ARTICLE VIII SCHEDULED DISTRIBUTIONS; UNFORESEEABLE EMERGENCY PAYMENTS      37   

Section 8.1.

  Scheduled Distributions      37   

Section 8.2.

  Other Payments Take Precedence Over Scheduled Distributions      37   

Section 8.3.

  Unforeseeable Emergency      38   
ARTICLE IX CHANGES IN THE FORM OR TIMING OF PAYMENTS      39   

Section 9.1.

  Election Changes      39   

Section 9.2.

  Other Changes      40   
ARTICLE X DEATH BENEFIT      41   

Section 10.1.

  Death Benefit      41   

Section 10.2.

  Payment of Death Benefit      42   
ARTICLE XI BENEFICIARY DESIGNATION      42   

Section 11.1.

  Beneficiary Designation      42   

Section 11.2.

  Spousal Consent      42   

Section 11.3.

  Acknowledgment      43   

Section 11.4.

  No Beneficiary Designation      43   

Section 11.5.

  Discharge of Obligations      43   
ARTICLE XII PLAN AMENDMENT, TERMINATION OR LIQUIDATION      44   

Section 12.1.

  Amendment      44   

Section 12.2.

  Termination and Liquidation of Plan      44   

Section 12.3.

  Effect of Payment      47   
ARTICLE XIII ADMINISTRATION      47   

Section 13.1.

  Benefits Committee      47   

Section 13.2.

  Administration Upon Change In Control      48   

Section 13.3.

  Agents      48   

Section 13.4.

  Binding Effect of Decisions      49   

Section 13.5.

  Indemnity      49   

Section 13.6.

  Employer Information      49   
ARTICLE XIV COORDINATION WITH OTHER BENEFITS      50   
ARTICLE XV CLAIMS AND APPEALS PROCEDURES      50   

Section 15.1.

  Authority to Submit Claims      50   

Section 15.2.

  Procedure for Filing a Claim      50   

Section 15.3.

  Initial Claim Review      51   

Section 15.4.

  Claim Determination      51   

 

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Section 15.5.

  Manner and Content of Notification of Adverse Determination of a Claim      52   

Section 15.6.

  Procedure for Filing an Appeal of an Adverse Determination      52   

Section 15.7.

  Appeal Procedure      52   

Section 15.8.

  Timing and Notification of the Determination of an Appeal      53   

Section 15.9.

  Manner and Content of Notification of Adverse Determination of Appeal      54   

Section 15.10.

  Delivery and Receipt      54   

Section 15.11.

  Limitation on Actions      55   

Section 15.12.

  Failure to Exhaust Administrative Remedies      55   
ARTICLE XVI TRUST      55   

Section 16.1.

  Establishment of the Trust      55   

Section 16.2.

  Investment of Trust Assets      55   

Section 16.3.

  Interrelationship of the Plan and the Trust      56   

Section 16.4.

  Distributions From the Trust      56   
ARTICLE XVII MISCELLANEOUS      56   

Section 17.1.

  Status of Plan      56   

Section 17.2.

  Unsecured General Creditor      56   

Section 17.3.

  Employer’s Liability      57   

Section 17.4.

  Nonassignability      57   

Section 17.5.

  Withholding for Taxes      58   

Section 17.6.

  Immunity of Benefits Committee Members      58   

Section 17.7.

  Not a Contract of Employment      58   

Section 17.8.

  Furnishing Information      59   

Section 17.9.

  Terms      59   

Section 17.10.

  Captions      60   

Section 17.11.

  Governing Law      60   

Section 17.12.

  Notice      60   

Section 17.13.

  Successors      60   

Section 17.14.

  Spouse’s Interest      61   

Section 17.15.

  Validity      61   

Section 17.16.

  Incompetent      61   

Section 17.17.

  Court Order      61   

Section 17.18.

  Insurance      62   

Section 17.19.

  Legal Fees To Enforce Rights After Change in Control      62   

 

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LSC COMMUNICATIONS, INC.

NONQUALIFIED DEFERRED COMPENSATION PLAN

(effective October 1, 2016)

ARTICLE I

PURPOSE

The purpose of the Plan is to provide specified payments to a select group of management or highly compensated Employees who contribute materially to the continued growth, development and success of LSC Communications, Inc., a Delaware corporation, and its subsidiaries that participate in the Plan. The Plan shall be unfunded for tax purposes and for purposes of Title I of ERISA. This Plan is a continuation for Employees of R.R. Donnelley & Sons Company Nonqualified Deferred Compensation Plan (the “RRD Plan”) as of the Effective Date, and all deferrals and all other benefits accrued by the Employees under the RRD Plan shall continue under the terms of this Plan.

ARTICLE II

DEFINITIONS

For the purposes of the Plan, unless otherwise clearly apparent from the context, the following phrases or terms shall have the meanings set forth below.

 

2.1 “Account” shall mean an account established on the Company’s books and records on behalf of a Participant equal to the sum of the Participant’s (i) Deferral Account and (ii) Company Contribution Account.

 

2.2 “Administrator” shall be the person appointed pursuant to Section 13.2 to administer the Plan upon a Change in Control.

 

2.3 “Adverse Determination” means a Determination that is a denial, reduction or termination of, or a failure to provide or make payment (in whole or in part) with respect to a Claim, including any such denial, reduction, termination or failure to provide or make payment that is based on a determination of an Employee’s or former Employee’s eligibility to participate in the Plan.

 

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2.4 “Affiliate” shall mean (a) a corporation that is a member of the same controlled group of corporations (within the meaning of section 414(b) of the Code) as an Employer, (b) a trade or business (whether or not incorporated) under common control (within the meaning of section 414(c) of the Code) with an Employer, (c) any organization (whether or not incorporated) that is a member of an affiliated service group (within the meaning of section 414(m) of the Code) that includes (i) an Employer, (ii) a corporation described in clause (a) of this definition or (iii) a trade or business described in clause (b) of this definition, or (d) any other entity that is required to be aggregated with an Employer pursuant to regulations promulgated under section 414(o) of the Code by the U.S. Treasury Department. A corporation, trade or business or entity shall be an Affiliated employer only for such period or periods of time during which such corporation, trade or business or entity is described in the preceding sentence.

 

2.5 “Annual Bonus” shall mean compensation relating to services performed during a calendar year, regardless of whether such compensation is paid in such calendar year or included on an IRS Form W-2 for such calendar year, that is earned by a Participant as an Employee under any Employer’s annual cash bonus plan or annual cash incentive plan, provided that such compensation has been designated by the Benefits Committee to be eligible for deferral under the Plan.

 

2.6 “Annual Deferral Amount” shall mean that portion of a Participant’s Base Salary and Annual Bonus that the Participant defers for a Plan Year and is withheld from the Participant’s compensation in accordance with Article IV.

 

2.7 “Appeal” shall mean a request by a Claimant to the Benefits Committee to review an Adverse Determination.

 

2.8 “Base Salary” shall mean the cash compensation of a Participant, an FBU Participant or a CSR Participant for a calendar year relating to services performed during such calendar year, excluding bonuses, commissions, overtime, fringe benefits, stock options, relocation expenses, incentive payments (other than under an annual cash incentive plan designated by the Benefits Committee to be eligible for deferral under the Plan, as described in Section 2.5), non-monetary awards, and other fees, and automobile and other allowances paid to the Participant, FBU Participant or CSR Participant. Base Salary shall also include compensation voluntarily deferred or contributed by a Participant, an FBU Participant or a CSR Participant pursuant to all qualified and nonqualified plans of his or her Employer and amounts not otherwise included in his or her gross income under sections 125 and 402(e)(3) of the Code pursuant to plans established or maintained by his or her Employer; provided, however, that all such amounts shall be considered Base Salary only to the extent that had there been no such plan, the amount would have been payable in cash to the Participant, FBU Participant or CSR Participant.

 

2.9 “Beneficial Owner” shall have the meaning defined in Rule 13d-3 under the Securities Exchange Act of 1934.

 

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2.10 “Beneficiary” shall mean one or more persons, trusts, estates or other entities, designated in accordance with Article XI, entitled to receive benefits under the Plan upon the death of a Participant, an FBU Participant or a CSR Participant.

 

2.11 “Benefits Committee” shall mean the committee described in Section 13.1.

 

2.12 “Board” shall mean the board of directors of the Company.

 

2.13 “Change in Control” shall be deemed to have occurred with respect to a Participant, an FBU Participant or a CSR Participant on the date the conditions set forth in any one of the following subparagraphs shall have been satisfied.

 

  (a) Change in Ownership. Any Person, or more than one Person acting as a group, is or becomes the Beneficial Owner, directly or indirectly, of the Participant’s, FBU Participant’s or CSR Participant’s Employer’s securities representing more than fifty percent (50%) of the total fair market value or total voting power of such Employer’s then outstanding securities.

 

  (b) Change in Effective Control. Any Person, or more than one Person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition of the Participant’s, FBU Participant’s or CSR Participant’s Employer’s securities by such Person or Persons) ownership of fifty percent (50%) or more of the total voting power of such Employer’s then outstanding securities.

 

  (c) Change in Board Composition. A majority of the members of the board of directors of the Participant’s, FBU Participant’s or CSR Participant’s Employer is replaced during any 12-month period by directors whose appointment or election is not endorsed by at least two-thirds (2/3) of the directors before such appointment or election.

 

  (d) Change in Asset Ownership. Any Person, or more than one Person acting as a group, who is not a Related Person acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition of assets of the Employer of the Participant, FBU Participant or CSR Participant by such Person or Persons) all or substantially all of the assets of such Employer having a total gross fair market value equal to or more than fifty percent (50%) of the total gross fair market value of all of the assets of such Employer immediately before such acquisition or acquisitions. “Related Person” shall mean (i) a stockholder of the Participant’s, FBU Participant’s or CSR Participant’s Employer who receives assets of such Employer in exchange for the stockholder’s stock; (ii) a Person, or more than one Person acting as a group, in which the Employer owns directly or indirectly at least fifty percent (50%) of the total value or voting power; or (iii) an entity at least fifty percent (50%) owned, directly or indirectly, by a Person or Persons described in clause (ii).

 

    

A Change in Control shall also occur if any of the four circumstances described in clause (a), (b), (c) or (d) above shall occur with respect to (i) the Company and any other

 

-3-


  corporation that is a direct or indirect owner of more than fifty percent (50%) of the total fair market value and total voting power of the Employer of the Participant, FBU Participant or CSR Participant or (ii) the corporation(s) that are liable for the payment of the Participant’s vested Account balance, the FBU Participant’s vested FBU Account balance or CSR Participant’s CSR Account balance, as the case may be. The foregoing to the contrary notwithstanding, a Change in Control shall not occur with respect to a Participant, an FBU Participant or a CSR Participant if (i) a Potential Change in Control related to such Change in Control involves a publicly announced transaction or publicly announced proposed transaction which at the time of the announcement has not been previously approved by the Board and (ii) the Participant, FBU Participant or CSR Participant is part of the purchasing group proposing such a transaction. A Change in Control also shall not occur with respect to a Participant, an FBU Participant or a CSR Participant if he or she is part of a purchasing group which consummates the Change in Control transaction. A Participant, an FBU Participant or a CSR Participant shall be a part of the purchasing group for purposes of the two preceding sentences if he or she is an equity participant, or has agreed to become an equity participant, in the purchasing group (except for passive ownership of less than five percent (5%) of the equity of the purchasing group).

 

     Notwithstanding the foregoing, the Benefits Committee shall interpret all provisions relating to a Change in Control in a manner that is consistent with applicable tax law.

 

2.14 “Change in Control Benefit” shall have the meaning set forth in Article VII.

 

2.15 “Claim” shall mean an initial request to the Benefits Committee for a payment or for a request of a determination of eligibility to participate in the Plan. If the procedure described in Section 15.2 is not followed by a Claimant, then the Claimant’s request shall not be considered.

 

2.16 “Claimant” shall have the meaning set forth in Section 15.1.

 

2.17 “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

 

2.18 “Company” shall mean LSC Communications, Inc., a Delaware corporation, and any successor to all or substantially all of the Company’s assets or business.

 

2.19 “Company Contribution Account” shall mean an account established on the Company’s books and records on behalf of a Participant or an FBU Participant to which amounts are credited in accordance with Section 4.7, as adjusted for earnings and losses and distributions made pursuant to the Plan.

 

2.20 “Company Contribution Amount” shall mean, for any Plan Year, the amount described in Section 4.7.

 

2.21 “Crediting Date” shall mean the date that is on or before the forty-fifth (45 th ) day occurring immediately after the end of the twelve-month period in which the annual compensation of a Participant or an FBU Participant is payable as set forth in the participant’s employment agreement with an Employer.

 

-4-


2.22 “CSR Account” shall mean an account established on the Company’s books and records on behalf of a CSR Participant equal to the CSR Participant’s CSR Deferral Account.

 

2.23 “CSR Deferral Account” shall mean an account established on the Company’s books and records on behalf of a CSR Participant, to which account amounts are credited in accordance with Section 4.5(d) or Section 4.5(e), as adjusted for earnings and losses and distributions pursuant to the Plan.

 

2.24 “CSR Deferral Amount” shall mean the portion of a CSR Participant’s (i) Base Salary or draw payments and (ii) commissions that the CSR Participant defers for a Plan Year and is withheld from the CSR Participant’s compensation in accordance with Article IV.

 

2.25 “CSR Participant” shall mean a commissioned Sales Representative within the meaning of clause (ii) of Section 2.50 who satisfies the criteria established by the Benefits Committee to be eligible to participate in the Plan as a CSR Participant and who has elected to participate in the Plan pursuant to Section 3.2(b).

 

2.26 “Deferral Account” shall mean an account established on the Company’s books and records on behalf of a Participant, to which account amounts are credited in accordance with Section 4.5(a), as adjusted for earnings and losses and distributions pursuant to the Plan.

 

2.27 “Determination” means the Claims Administrator’s decision with respect to a Claim or an Appeal.

 

2.28 “Director” shall mean the Company’s Director of Executive Compensation. In the event of the temporary absence of the Director, whether due to illness, disability or otherwise, or upon the resignation or removal of the Director, the individual who performs substantially similar duties with respect to the Plan (regardless of the individual’s title with the Company) shall be deemed to be the Director.

 

2.29 “Distribution Date” shall mean the date on which a Participant’s vested Account balance, an FBU Participant’s vested FBU Account balance and FBU Transferred Account balance, if any, or a CSR Participant’s CSR Account balance shall become distributable. Subject to Section 9.2, the Distribution Date shall be:

 

  (a) in the case of a Participant or a CSR Participant whose vested account balance first becomes (or became) distributable on or after January 1, 2011, the later of (i) the first day of the Plan Year immediately following the Plan Year in which he or she has a Separation from Service or Retirement, and (ii) the next day after the expiration of the six-month period immediately following the date on which he or she has a Separation from Service or Retirement, if he or she is a Specified Employee on such date;

 

  (b) in the case of a Participant or a CSR Participant, the first day of the Plan Year immediately following the Plan Year in which he or she has a Separation from Service or Retirement, if he or she is not a Specified Employee on such date;

 

-5-


  (c) in the case of an FBU Participant, the second anniversary of his or her Retirement;

 

  (d) in the case of an FBU Participant who has a Separation from Service other than by reason of his or her death, the date that is the second anniversary of his or her Separation from Service date;

 

  (e) notwithstanding Section 2.29(a), (b), (c) or (d), if (i) the Participant, FBU Participant or CSR Participant, as the case may be, has elected a Change in Control Benefit and (ii) a Change in Control occurs before his or her Separation from Service or Retirement, the date on which the Change in Control occurs;

 

  (f) notwithstanding Section 2.29(a), (b), (c) or (d), in the case of a Scheduled Distribution, the business day occurring immediately before the date of the Scheduled Distribution; or

 

  (g) if the Participant, FBU Participant or CSR Participant, as the case may be, dies before the distribution of his or her vested Account balance, vested FBU Account balance and any FBU Transferred Account or CSR Account balance, as applicable, occurs or commences, the date on which the Benefits Committee is provided with evidence satisfactory to the Benefits Committee of his or her death.

 

2.30 “Election Form” shall mean the form established from time to time by the Benefits Committee that each Participant, FBU Participant and CSR Participant must complete, sign and return to the Benefits Committee in order to make a valid deferral and distribution election under the Plan. Initial investment elections applicable to such elective deferrals shall also be made on the Election Form. Such term shall also refer to any electronic means of making deferral or distribution elections that is approved by the Benefits Committee.

 

2.31 “Employee” shall mean an individual (i) whose employment relationship with an Employer is, under common law, that of an employee and (ii) who has not experienced a Separation from Service.

 

2.32 “Employer” shall mean the Company or any subsidiary of the Company that participates in the Plan.

 

2.33 “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time.

 

2.34 “FBU Account” shall mean an account established on the Company’s books and records on behalf of an FBU Participant equal to the sum of the FBU Participant’s (i) FBU Deferral Account, (ii) FBU Bonus Account and (iii) Company Contribution Account.

 

2.35 “FBU Bonus Account” shall mean an account established on the Company’s books and records on behalf of an FBU Participant, to which account amounts are credited in respect of his or her Signing Credit(s) and Paid Billing Bonus(es) awarded pursuant to employment agreements between the FBU Participant and an Employer, as adjusted for earnings and losses and distributions pursuant to the Plan.

 

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2.36 “FBU Deferral Account” shall mean an account established on the Company’s books and records on behalf of a FBU Participant, to which account amounts are credited in accordance with Section 4.5(b) or Section 4.5(c), as adjusted for earnings and losses and distributions pursuant to the Plan.

 

2.37 “FBU Deferral Amount” shall mean that portion of an FBU Participant’s (i) Base Salary or draw payments and (ii) commissions that the FBU Participant defers for a Plan Year and is withheld from the FBU Participant’s compensation in accordance with Article IV.

 

2.38 “FBU Participant” shall mean either (i) a Sales Representative in the Global Capital Markets Unit of the Company or the Global Investment Markets Business Unit of the Finance Business Unit of the Company or (ii) any other management or highly compensated Employee who satisfies the eligibility criteria established by the Benefits Committee to be eligible to participate in the Plan as an FBU Participant and who has elected to participate in the Plan pursuant to Section 3.2(b).

 

2.39 “FBU Transferred Account” shall mean an account established on the Company’s books and records on behalf of an FBU Participant that was credited to the R.R. Donnelley & Sons Company Nonqualified Deferred Compensation Plan with the balance as of February 28, 2009 of the FBU Participant’s account under the R.R. Donnelley & Sons Company Global Capital Markets and Global Investment Markets Business Units of the Financial Business Unit Sales Representative Deferred Compensation Plan.

 

2.40 “Measurement Fund” shall mean a common trust fund, mutual fund or other collective investment vehicle selected by the Benefits Committee to serve as a benchmark for determining the rate of return on a Participant’s Account, an FBU Participant’s FBU Account and FBU Transferred Account, if any, or a CSR Participant’s CSR Account, to the extent such account is deemed to be invested in such Measurement Fund in accordance with Section 4.9.

 

2.41 “Paid Billings Bonus” shall mean the bonus awarded to an FBU Participant in connection with his or her entering into an employment agreement with an Employer, which bonus, pursuant to the FBU Participant’s employment agreement, may be earned over the term of the employment agreement if certain billings targets are achieved. When a portion of the bonus is earned because a billings target has been achieved, such portion is credited to the FBU Participant’s FBU Bonus Account as of the FBU Participant’s Crediting Date or relevant anniversary thereof.

 

2.42 “Participant” shall mean any Employee who satisfies the eligibility criteria established by the Benefits Committee to be eligible to participate in the Plan as a Participant and who has elected to participate in the Plan pursuant to Section 3.2(a). In connection with the spin-off and distribution of the Company by R.R. Donnelley & Sons Company (the “Spin-Off”) and pursuant to the terms of the Separation and Distribution Agreement by and among R.R. Donnelley & Sons Company, the Company and Donnelley Financial Solutions, Inc. (the “Separation Agreement”), each Employee as of the Effective Date who was participating in the RRD Plan as of the Effective Date (each, a “Transferred LSC Participant”) shall automatically become a participant as of the Effective Date.

 

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2.43 “Person” shall have the meaning given in section 3(a)(9) of the Securities Exchange Act of 1934, as modified and used in sections 13(d) and 14(d) thereof; provided, however , that a Person shall not include (i) the Company or any of its Affiliates, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.

 

2.44 “Plan” shall mean the LSC Deferred Compensation Plan, effective October 1, 2016, which shall be evidenced by this instrument, as it may be amended from time to time.

 

2.45 “Plan Agreement” shall mean a written agreement in a form approved by the Benefits Committee, as may be amended from time to time, which is entered into by and between (i) an Employer and (ii) a Participant, an FBU Participant or a CSR Participant. Each Plan Agreement shall apply to the entire benefit to which such an individual is entitled under the Plan. If more than one Plan Agreement has been entered into by an individual and any Employer, then the Plan Agreement bearing the latest date of acceptance by an Employer shall be the governing instrument and it shall supersede all previous Plan Agreements in their entirety. The terms of any Plan Agreement may be different then the terms of any other Plan Agreement, and any Plan Agreement may provide additional benefits not set forth in the Plan or limit the benefits otherwise provided under the Plan; provided, however , that any such additional benefits or benefit limitations must be agreed to by both parties and be clearly set forth in such Plan Agreement.

 

2.46 “Plan Year” shall mean a period beginning on January 1 of each calendar year and continuing through December 31 of such calendar year.

 

2.47 “Potential Change in Control” shall be deemed to have occurred if the conditions set forth in any one of the following paragraphs shall have been satisfied:

 

  (a) the Employer of a Participant, an FBU Participant or a CSR Participant enters into an agreement, the consummation of which would result in the occurrence of a Change in Control;

 

  (b) the Employer of a Participant, an FBU Participant or a CSR Participant or any other Person publicly announces an intention to take or to consider taking actions which, if consummated, would constitute a Change in Control; or

 

  (c)

any Person who is or becomes the Beneficial Owner, directly or indirectly, of securities of the Employer of a Participant, an FBU Participant or a CSR Participant representing 9  1 2  % or more of the combined voting power of such Employer’s then outstanding securities increases such Person’s beneficial ownership of such securities by 5% or more over the percentage so owned by such Person on the date hereof.

 

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2.48 “Quarterly Installment Method” shall be payments of quarterly installments over the number of years selected by a Participant, an FBU Participant or a CSR Participant in accordance with the Plan, calculated as follows: (i) for the first quarterly installment, the Participant’s vested Account balance, the FBU Participant’s vested FBU Account balance and FBU Transferred Account balance, if any, or the CSR Participant’s CSR Account balance, as the case may be, shall be calculated as of the close of business on the business day immediately preceding his or her Distribution Date by multiplying such balance by a fraction, the numerator of which is one and the denominator of which is the number of quarterly installments to be paid; and (ii) for remaining quarterly installments, the Participant’s vested Account balance, the FBU Participant’s vested FBU Account balance and FBU Transferred Account balance, if any, or the CSR Participant’s CSR Account balance, as the case may be, shall be calculated on the last business day of the applicable remaining calendar quarter by multiplying the then balance by a fraction, the numerator of which is one and the denominator of which is the number of remaining quarterly installments to be paid (including the then current payment). Notwithstanding the foregoing provisions of this Section 2.48, if at any time after quarterly installments payments have commenced on or after January 1, 2011, the Participant’s vested Account balance, the FBU Participant’s vested FBU Account balance and FBU Transferred Account balance, if any, or the CSR Participant’s CSR Account balance, as the case may be, when added together with his or her interests under all other plans and arrangements of the same type within the meaning of Treasury Regulation § 1.409A-1(c)(2) is not greater than the then applicable dollar limit under section 402(g)(1)(B) of the Code, then the Participant’s Account balance, the FBU Participant’s FBU Account and FBU Transferred Account, if any, or the CSR Participant’s CSR Account, as the case may be, shall be paid in a cash lump sum on the next quarterly installment payment date.

 

2.49 “Retirement” shall mean an Employee’s separation from service with the Employers, as described in Treasury Regulation § 1.409A-1(h), on or after age 55 with five Years of Service for any reason other than a leave of absence or death.

 

2.50 “Sales Representative” shall mean any Employee who is a sales representative (i) in the Global Capital Markets Unit or the Global Investments Markets Business Unit of the Company and who is eligible to participate in the Global Capital Markets Sales Compensation Plan or the Global Investments Markets Commission Plan or (ii) eligible to earn commissions under another Company commission plan.

 

2.51 “Scheduled Distribution” shall mean the first day of the Plan Year designated by a Participant, an FBU Participant or a CSR Participant who elects on an Election Form to receive all or a portion of his or her vested Account balance, vested FBU Account balance and any FBU Transferred Account or CSR Account balance, as applicable, in the form of a Scheduled Distribution. The Plan Year so designated may not be earlier than the first Plan Year beginning after the expiration of three Plan Years after the end of the Plan Year to which the deferral election relates. For example, if a Participant elects a Scheduled Distribution of his or her vested Account balance attributable to the Annual Deferral Amount earned in the Plan Year commencing January 1, 2017, the earliest Plan Year that may be elected by the Participant for the Scheduled Distribution is 2021 and the Scheduled Distribution would become payable on January 1, 2021.

 

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2.52 “Separation from Service” shall mean an Employee’s separation from service with the Employers, as described in Treasury Regulation § 1.409A-1(h) or in Section 4.6, whichever is later, other than a Retirement.

 

2.53 “Signing Credit” shall mean the dollar amount awarded to an FBU Participant in connection with entering into an employment agreement with an Employer, which amount is credited to his or her FBU Bonus Account within thirty (30) days of the effective date of the employment agreement.

 

2.54 “Specified Employee” shall mean any individual who is determined to be a “specified employee” within the meaning of section 409A(a)(2)(B)(i) of the Code, in accordance with the terms of the document entitled “Section 409A: Policy of LSC Communications, Inc. and its Affiliates Regarding Specified Employees.”

 

2.55 “Treasurer” shall mean the Treasurer of the Company. In the event of the temporary absence of the Treasurer, whether due to illness, disability or otherwise, or upon the resignation or removal of the Treasurer, the individual who performs substantially similar duties with respect to the Plan (regardless of the individual’s title with the Company) shall be deemed to be the Treasurer for purposes of the Plan.

 

2.56 “Trust” shall mean one or more trusts established pursuant to the Master Trust Agreement dated as of September 6, 2016 between the Company and the Trustee.

 

2.57 “Trustee” shall have the same meaning as that term is defined in the Trust, as amended from time to time.

 

2.58 “Unforeseeable Emergency” shall mean a severe financial hardship to a Participant, an FBU Participant or a CSR Participant resulting from (i) an illness or accident of such an individual or his or her spouse, dependent or Beneficiary, (ii) a loss of such Participant’s, FBU Participant’s or CSR Participant’s property due to casualty (or the need to rebuild a home following damage not otherwise covered by insurance), or (iii) other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of such Participant, FBU Participant or CSR Participant, all as determined in the sole discretion of the Benefits Committee.

 

2.59 “Years of Service” shall mean the total number of full years in which a Participant, an FBU Participant or a CSR Participant has been employed by one or more Employers. For purposes of this definition, a year of employment shall be a 365 day period (or 366 day period in the case of a leap year) that, for the first year of employment, commences on the hire date of such Participant, FBU Participant or CSR Participant and that, for any subsequent year, commences on an anniversary of that hire date. The Benefits Committee may make a determination as to whether any partial year of employment of an Employee shall be counted as a Year of Service. If the Benefits Committee does not make a determination, partial years of employment shall be disregarded.

 

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ARTICLE III

ELIGIBILITY, ENROLLMENT, PARTICIPATION

Section 3.1. Eligibility . The Benefits Committee shall establish criteria for participation in the Plan whereby a select group of management or highly compensated Employees (i) will be eligible to participate in the Plan as Participants, and (ii) who are Sales Representatives will be eligible to participate in the Plan either as FBU Participants or as CSR Participants.

Section 3.2. Enrollment and Commencement of Participation .

(a) Participants . An Employee who is eligible to participate in the Plan as a Participant who first elects to participate in the Plan for a Plan Year shall complete, execute and return to the Benefits Committee, no later than the date selected by the Benefits Committee in its sole discretion, an Election Form and a Beneficiary designation form before the first day of such Plan Year. The Employee shall indicate on the Election Form the percentages of his or her Base Salary and Annual Bonus, or both, that will be earned by the Employee in such Plan Year that he or she elects to defer the receipt thereof in accordance with his or her election and the terms of the Plan, including Section 4.4(a).

(b) FBU Participants and CSR Participants . A Sales Representative who is eligible to participate in the Plan either as an FBU Participant or a CSR Participant who first elects to participate in the Plan for a Plan Year shall complete, execute and return to the Benefits Committee, no later than the date selected by the Benefits Committee in its sole discretion, an Election Form and a Beneficiary designation form before the first day

 

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of such Plan Year. A Sales Representative who is eligible to participate in the Plan as a CSR Participant shall indicate on the Election Form the percentages of his or her (i) Base Salary or draw payments or (ii) commissions, or both, that will be earned by such Sales Representative in such Plan Year that he or she elects to defer the receipt thereof in accordance with his or her election and Plan terms, including Section 4.4(a). A Sales Representative who is eligible to participate in the Plan as an FBU Participant shall indicate on the Election Form the percentages or dollar amounts of his or her (i) Base Salary or draw payments, (ii) commissions, or both, and (iii) any Paid Billings Bonus that may be earned in such Plan Year that he or she elects to defer the receipt thereof in accordance with his or her election and Plan terms, including Section 4.4(a). An FBU Participant who expects to enter into a new employment agreement with an Employer in such Plan Year shall also elect on the Election Form, the percentage or dollar amount of any Paid Billings Bonus that may be awarded in such employment agreement for the first year of the term of such new employment agreement if the FBU Participant wishes to defer any such Paid Billings Bonus, even though the FBU Participant does not know (i) whether he or she will in fact enter into a new employment agreement, (ii) whether any Paid Billings Bonus will be awarded in the employment agreement, (iii) if a Paid Billings Bonus is awarded, what the amount thereof would be, and (iv) whether the portion of the Paid Billings Bonus awarded in such Plan Year will be earned.

(c) Initial Eligibility . An Employee who first is selected to participate in the Plan after the first day of a Plan Year must complete the requirements described in Section 3.2(a) or Section 3.2(b), as applicable, within 30 days after he or she first becomes eligible to participate in the Plan, or earlier, as may be required by the Benefits

 

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Committee, in its sole discretion, in order to participate in the Plan for such Plan Year. Such an Employee shall not be permitted to defer receipt of any portion of his or her compensation that is earned for services performed before the Employee commences participation in the Plan. In addition, the Benefits Committee shall establish from time to time such other enrollment requirements as it determines, in its sole discretion, are necessary or desirable.

(d) Participation . Each Employee who enrolls in the Plan pursuant to Section 3.2 shall commence participation in the Plan on the date that the Benefits Committee determines, in its sole discretion, that the Employee has met all enrollment requirements set forth in the Plan and as required by the Benefits Committee, including returning all required documents to the Benefits Committee within the specified time period. If an Employee fails to meet all requirements contained in this Section 3.2 within the period required, then the Employee shall not be eligible to participate in the Plan during the relevant Plan Year.

Section 3.3. Termination of Eligibility . If the Benefits Committee determines that a Participant, an FBU Participant or a CSR Participant no longer qualifies as a member of a select group of management or highly compensated employees (within the meaning of sections 201(2), 301(a)(3) and 401(a)(l) of ERISA), then, to the extent permitted under section 409A of the Code, the Benefits Committee shall (i) terminate any deferral election that such Participant, FBU Participant or CSR Participant has made for the remainder of the Plan Year in which the Benefits Committee makes such determination and (ii) take any further action that the Benefits Committee deems appropriate. In the event that a Participant, an FBU Participant or a CSR Participant becomes ineligible to defer compensation under the Plan, his or her account balance(s) shall continue to be governed by the terms of the Plan until such time as the vested portion of such account balance(s) is paid in accordance with the terms of the Plan.

 

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ARTICLE IV

DEFERRALS, COMPANY CONTRIBUTIONS, DEEMED INVESTMENTS, TAXES, ETC.

Section 4.1. Participant Annual Deferral Amounts . A Participant may elect to defer for a Plan Year the receipt of (i) any whole percentage of his or her Base Salary or (ii) any whole percentage of his or her Annual Bonus, or (iii) both, provided that the percentage of Base Salary that may be deferred cannot exceed 50% of Base Salary and the percentage of Annual Bonus that may be deferred cannot exceed 90% of the Annual Bonus. The minimum Annual Deferral Amount is $2,000, in any combination of whole percentages of Base Salary and Annual Bonus. The Participant’s election shall apply to Base Salary earned in the Plan Year with respect to which the election applies and the Base Salary earned in the immediately succeeding Plan Year to the extent that the last payroll period beginning in the Plan Year to which the Participant’s election applies extends into such succeeding Plan Year.

Section 4.2. FBU Participant and CSR Participant Deferral Amounts . Each FBU Participant and each CSR Participant may elect to defer for a Plan Year (i) any whole percentage of his or her Base Salary or draw payments or (ii) any whole percentage of his or her commissions under the Global Capital Markets Sales Compensation Plan, the Global Investments Markets Commission Plan or other Company commission plan pursuant to which such individual may earn commissions, or (iii) both, provided that the percentage of Base Salary or draw payments cannot exceed 50% of the Base Salary or draw payments and the percentage of commissions that may be deferred cannot exceed (a) 90% of such commissions earned by an FBU Participant and (b) 75% of such commissions earned by a CSR Participant. The minimum

 

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FBU Deferral Amount and the minimum CSR Deferral Amount is $2,000, each in any combination of whole percentages of Base Salary or draw payments and commissions otherwise payable in the Plan Year. Notwithstanding the previous provisions of this Section 4.2, FBU Participants also have the right to specify his or her deferrals in dollar amounts or in whole percentages. Each election with respect to Base Salary or draw payments and commissions shall apply to that earned (i) in the Plan Year with respect to which the election applies and (ii) in the immediately succeeding Plan Year to the extent that the last payroll period beginning in the Plan Year to which the election applies extends into such succeeding Plan Year.

Section 4.3. Short Plan Year . Notwithstanding Section 4.1, except the last sentence thereof, if an Employee becomes a Participant after the first day of a Plan Year, the minimum Annual Deferral Amount shall be an amount equal to $2,000, in any combination of whole percentages of Base Salary and Annual Bonus earned in the Plan Year multiplied by a fraction, the numerator of which is the number of complete months remaining in the Plan Year after the Employee becomes a Participant and the denominator of which is 12 (the “Partial Year Fraction”). Notwithstanding Section 4.2, except the last sentence thereof, if an Employee becomes an FBU Participant or a CSR Participant after the first day of a Plan Year, the minimum FBU Deferral Amount or the minimum CSR Deferral Amount, as applicable, is $2,000, in any combination of whole percentages of Base Salary or draw payments and commissions earned in the Plan Year, multiplied by the Partial Year Fraction. Notwithstanding the previous provisions of this Section 4.3, FBU Participants also have the right to specify his or her deferrals in dollar amounts or in whole percentages.

 

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Section 4.4. Deferral Elections .

(a) First Plan Year . In connection with a Participant’s commencement of participation in the Plan, the Participant shall make an irrevocable election on an Election Form specifying the whole percentages of Base Salary or Annual Bonus, or both, (to the maximum percentages set forth in Section 4.1) for the Plan Year in which participation commences that the Participant wishes to defer that are earned after the date the election is made. In connection with an FBU Participant’s or a CSR Participant’s commencement of participation in the Plan, the participant shall make an irrevocable election on an Election Form specifying the whole percentages of Base Salary or draw payments and commissions (to the maximum percentages set forth in Section 4.2) for the Plan Year in which participation commences that the participant wishes to defer that are earned after the date the election is made. Notwithstanding the previous provisions of this Section 4.4(a), FBU Participants also have the right to specify his or her deferrals in dollar amounts or in whole percentages. Each Participant, FBU Participant and CSR Participant also shall specify on the Election Form the payment form in which his or her vested account balance(s) shall be paid on account of his or her Separation from Service and the form in which the payment shall be made on account of his or her Retirement. For an election to be valid, the Election Form must be completed and signed by the Participant, the FBU Participant or the CSR Participant, as the case may be, timely delivered to the Benefits Committee (in accordance with Section 3.2), and accepted by the Benefits Committee.

(b) Subsequent Plan Years . For each succeeding Plan Year with respect to which an Employee is a Participant, an FBU Participant or a CSR Participant, an irrevocable deferral election for such a Plan Year, and such other elections as the Benefits

 

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Committee deems necessary or desirable under the Plan, shall be made by timely delivering a new Election Form to the Benefits Committee, in accordance with its rules and procedures, before the end of the Plan Year preceding the Plan Year with respect to which the election applies with respect to an Employee. If no valid election applies with respect to an Employee for a Plan Year, then no compensation earned by the Employee in such Plan Year amount shall be deferred. An FBU Participant who expects to enter into a new employment agreement with an Employer in a Plan Year shall also elect on the Election Form, the percentage or dollar amount of any Paid Billings Bonus that may be awarded in such employment agreement for the first year of the term of such new employment agreement if the FBU Participant wishes to defer any such Paid Billings Bonus, even though the FBU Participant does not know (i) whether he or she will in fact enter into a new employment agreement, (ii) whether any Paid Billings Bonus will be awarded in the employment agreement, (iii) if a Paid Billings Bonus is awarded, what the amount thereof would be, and (iv) whether the portion of the Paid Billings Bonus awarded in such Plan Year will be earned.

Section 4.5. Withholding and Crediting of Deferral Amounts, FBU Deferral Amounts and CSR Deferral Amounts, etc .

(a) Annual Deferral Amounts . For each Plan Year, the Base Salary portion of a Participant’s Annual Deferral Amount shall be withheld from each of the Participant’s regularly scheduled Base Salary payments in substantially equal amounts, as adjusted from time to time for increases and decreases in his or her Base Salary, and a credit to the Participant’s Deferral Account shall be made equal to such amount on the applicable Base Salary payment date. The Annual Bonus portion of the Annual Deferral Amount shall be withheld on the date the Annual Bonus is or otherwise would be paid to the Participant and a credit to the Participant’s Deferral Account shall be made equal to each amount on such date.

 

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(b) FBU Deferral Amounts when an FBU Participant Receives Base Salary; Signing Credit and Paid Billings Bonus . When an FBU Participant’s compensation is payable in the form of Base Salary, the Base Salary portion of his or her FBU Deferral Amount for a Plan Year shall be withheld from the FBU Participant’s Base Salary and credited to his or her FBU Deferral Account in accordance with this Section 4.5(b). Such Base Salary portion shall be withheld in substantially equal installments, adjusted from time to time to correspond to increases and decreases in Base Salary, on each regularly scheduled Base Salary payment date. A credit shall be made to the FBU Participant’s FBU Deferral Account equal to the amount withheld on each scheduled payment date. The commissions portion of an FBU Participant’s FBU Deferral Amount shall be withheld in substantially equal installments on the dates the commissions would otherwise be paid and a credit shall be made to his or her FBU Deferral Account equal to the amount withheld on date of the withholding. A credit shall be automatically made to the FBU Participant’s FBU Bonus Account on the FBU Participant’s Crediting Date or applicable anniversary thereof equal to the portion of the FBU Participant’s Paid Billings Bonus that is earned because a billings target set forth in his or her employment agreement has been achieved. A credit shall be automatically made to an FBU Participant’s FBU Bonus Account equal to his or her Signing Credit on the FBU Participant’s Crediting Date.

 

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(c) FBU Deferral Amounts when an FBU Participant Receives Draw Payments; Signing Credit and Paid Billings Bonus . When an FBU Participant’s compensation is payable in the form of draw payments rather than Base Salary, his or her FBU Deferral Amount for a Plan Year that applies to his or her draw payments shall be withheld from such FBU Participant’s draw payments and credited to his or her FBU Deferral Account in accordance with this Section 4.5(c). The draw portion of an FBU Participant’s FBU Deferral Amount for a Plan Year shall be withheld from his or her draw payments in substantially equal installments, adjusted from time to time to correspond to increases and decreases in the FBU Participant’s gross draw payments, on each draw payment date. A credit shall be made to the FBU Participant’s FBU Deferral Account equal to the amount withheld on each draw payment date. The commission portion of an FBU Participant’s FBU Deferral Amount shall be withheld in substantially equal installments on the dates the commissions would otherwise be paid and a credit shall be made to the FBU Participant’s FBU Deferral Account on each date of withholding equal to the amount of commissions withheld on such date. A credit shall be automatically made to the FBU Participant’s FBU Bonus Account on his or her Crediting Date or applicable anniversary thereof equal to the portion of the FBU Participant’s Paid Billings Bonus that is earned because a billings target set forth in his or her employment agreement has been achieved. A credit shall automatically be made to an FBU Participant’s FBU Bonus Account equal to his or her Signing Credit on the FBU Participant’s Crediting Date.

(d) CSR Deferral Amounts when a CSR Participant Receives Base Salary . When a CSR Participant’s compensation is payable in the form of Base Salary, his or her

 

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CSR Deferral Amount for a Plan Year that applies to his or her Base Salary shall be withheld from the CSR Participant’s Base Salary and credited to his or her CSR Deferral Account in accordance with this Section 4.5(d). The Base Salary portion of a CSR Participant’s CSR Deferral Amount for a Plan Year shall be withheld in substantially equal installments, adjusted from time to time to correspond to increases and decreases in Base Salary, on each regularly scheduled Base Salary payment date. A credit shall be made to the CSR Participant’s CSR Deferral Account equal to the amount withheld on each scheduled payment date. The commissions portion of a CSR Participant’s CSR Deferral Amount shall be withheld in substantially equal installments on the dates the commissions would otherwise be paid and a credit shall be made to his or her CSR Deferral Account equal to the amount withheld on the date of the withholding.

(e) CSR Deferral Amounts when a CSR Participant Receives Draw Payments . When a CSR Participant’s compensation is payable in the form of draw payments rather than Base Salary, his or her CSR Deferral Amount for a Plan Year that applies to his or her draw payments shall be withheld from such CSR Participant’s draw payments and credits shall be made to his or her CSR Deferral Account in accordance with this Section 4.5(e). The draw portion of a CSR Participant’s CSR Deferral Amount for a Plan Year shall be withheld from his or her draw payments in substantially equal installments, adjusted from time to time to correspond to increases and decreases in the CSR Participant’s gross draw payments on each draw payment date. A credit shall be made to the CSR Participant’s CSR Deferral Account equal to the amount withheld on each draw payment date. The commission portion of a CSR Participant’s CSR Deferral Amount shall be withheld in substantially equal installments on the dates the commissions would otherwise be paid, and a credit shall be made to the CSR Participant’s CSR Deferral Account on each date of the withholding equal to the amount of commissions withheld on such date.

 

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Section 4.6. Leave of Absence .

(a) Paid Leave . If a Participant, an FBU Participant or a CSR Participant is authorized by his or her Employer to take a paid leave of absence from employment, the Annual Deferral Amount, FBU Deferral Amount or CSR Deferral Amount, as applicable, shall continue to be withheld during such paid leave of absence in accordance with Section 4.5 for a period not to exceed six months or, if longer, the period of such leave of absence as set forth in a written agreement between the Participant, FBU Participant or CSR Participant, as the case may be, and his or her Employer. Upon the expiration of such relevant period, the participant shall be deemed to have a Separation from Service if he or she has not returned to employment before such expiration.

(b) Unpaid Leave . If a Participant, an FBU Participant or a CSR Participant is authorized by his or her Employer to take an unpaid leave of absence from the employment of the Employer for any reason, his or her deferral election shall be cancelled for the remainder of the Plan Year. The Participant, FBU Participant or CSR Participant, as applicable, shall be deemed to have a Separation from Service six months after the beginning of such leave of absence if the duration of the leave is six months or longer, except that if the maximum period of the leave of absence is set forth in a written agreement between the Participant, FBU Participant or CSR Participant, as the case may be, and his or her Employer, the participant shall not have a Separation from Service due to the leave unless he or she does not return to work with an Employer before the expiration of the maximum leave of absence set forth in such agreement.

 

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Section 4.7. Company Contribution Amount .

(a) Employment Agreements . For each Plan Year, the Company shall credit amounts to a Participant’s or an FBU Participant’s Company Contribution Account in accordance with an employment or other agreement entered into between such an individual and his or her Employer. If such an agreement provides that such amounts are subject to a vesting schedule, such amounts credited under the Plan shall be subject to such vesting schedule. Such amounts shall be credited to a participant’s Company Contribution Account on the date or dates prescribed by the applicable agreement. If no Crediting Date is prescribed by an agreement, an amount deferred in a Plan Year shall be credited as of the last day of such Plan Year.

(b) Discretionary . For each Plan Year, the Company, in its sole discretion, may, but is not required to, credit any amount it desires to the Company Contribution Account of any Participant or FBU Participant. The amount so credited may be smaller or larger than the amount credited to the Company Contribution Account of any other Participant or FBU Participant, and the amount credited to any participant’s Company Contribution Account for a Plan Year may be zero, even though one or more other participants are credited with a Company Contribution Amount for that Plan Year. A Company Contribution Amount described in this Section 4.7(b), if any, shall be credited as of the last day of the Plan Year. If a Participant or an FBU Participant is not employed by an Employer as of the last day of a Plan Year, then the Company Contribution

 

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Amount for that Plan Year for such participant shall be zero. Notwithstanding the previous sentence, if a participant’s Retirement occurs within a Plan Year or if he or she dies within a Plan Year, then a pro-rated portion of the Company Contribution Amount for that Plan Year for such participant shall be credited as of the last day of the Plan Year.

Section 4.8. Vesting .

(a) Deferral Account . A Participant shall at all times be 100% vested in his or her Deferral Account.

(b) FBU Deferral Account . An FBU Participant shall at all times be 100% vested in his or her FBU Deferral Account.

(c) CSR Deferral Account . A CSR Participant shall at all times be 100% vested in his or her CSR Deferral Account.

(d) FBU Bonus Account . Except as provided in Section 4.8(i), Section 5.1 and Article VII, an FBU Participant shall become vested in a Signing Credit and the portion(s) of Paid Billings Bonus that are credited to his or her FBU Bonus Account on the date that is the fifth anniversary of the FBU Participant’s Crediting Date that applies to the employment agreement between the FBU Participant and the Employer pursuant to which such Signing Credit and Paid Billings Bonus were awarded, provided, however , that if the FBU Participant is not employed by an Employer on the fifth anniversary of such Crediting Date, then all amounts credited to the FBU Participant’s FBU Bonus Account in respect of such credit and bonus shall be forfeited. An FBU Participant who has a Separation from Service other than by reason of his or her disability (as determined under Section 4.8(f)) or death before he or she becomes vested in amounts attributable to any Signing Credit or Paid Billings Bonus shall forfeit such unvested amounts.

 

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(e) Company Contribution Account . Participants shall become vested in the amounts credited to their Company Contribution Accounts as determined by the Company at the time the amount is so credited. Except as provided in Section 4.8(i), Section 5.1 and Article VII, FBU Participants shall become 100% vested in the amount credited to their Company Contribution Accounts for a Plan Year on the first day of the fifth anniversary of the date such amount was so credited.

(f) FBU Transferred Accounts . FBU Transferred Accounts shall vest in accordance with the terms applicable to such accounts as established under the R.R. Donnelley & Sons Global Capital Markets and Global Investment Markets Business Units of the Financial Business Unit Sales Representative Deferred Compensation Plan.

(g) Disability . Notwithstanding Section 4.8(d) and (e), a Participant or FBU Participant who becomes permanently disabled, as determined by the Benefits Committee in its sole discretion, shall become fully vested 60 days after the date he or she begins receiving long term disability benefits under the Company’s long term disability program.

(h) Other Accelerated Vesting . In the event of a Change in Control or upon the Retirement or death of a Participant while such participant is employed by an Employer, his or her Company Contribution Account shall immediately become 100% vested, except to the extent that the Benefits Committee determines in the case of a Change in Control that the acceleration of vesting would cause the deduction limitations

 

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of section 280G of the Code to apply. In the event of a Change in Control or upon an FBU Participant’s Retirement or death while such participant is employed by an Employer, his or her FBU Deferral Account, FBU Bonus Account and Company Contribution Account shall immediately become 100% vested, except to the extent that the Benefits Committee determines in the case of a Change in Control that the acceleration of vesting would cause the deduction limitations of section 280G of the Code to apply. Any participant may request independent verification of the Benefits Committee’s calculations with respect to the application of the deduction limitations of section 280G of the Code. If a participant requests an independent verification, the Benefits Committee must provide him or her within 90 days of such a request an opinion, along with supporting calculations, from a nationally recognized accounting firm (the “Accounting Firm”) selected by the participant, stating that it is the Accounting Firm’s opinion that the vesting of the Company Contribution Account would cause the deduction limitations of section 280G of the Code to apply. The cost of such opinion and calculations shall be paid for by the Company.

(i) Forfeiture for Termination of Employment for Cause or Competition with the Company . Notwithstanding any other provisions of the Plan, all unvested amounts credited to an FBU Participant’s Company Contribution Account and all earnings thereon and all earnings credited to his or her FBU Deferral Account and FBU Bonus Account shall be forfeited (i) if the FBU Participant directly or indirectly becomes employed by or does any work for a competitor of the Company’s financial printing business in the twelve-month period beginning on the first date of the month occurring after the month in which his or her termination of employment with the Company and its affiliates occurs or (ii) the FBU Participant’s employment with the Company or an affiliate is terminated for cause (as determined by the Company in its sole discretion).

 

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Section 4.9. Deemed Investments .

(a) Investment Elections . Each Participant in connection with his or her deferral elections pursuant to Section 4.4 shall elect on the Election Form the percentage, in increments of 1%, of his or her Annual Deferral Amount and Company Contribution Amount that shall be deemed to be invested in one or more Measurement Funds. Each FBU Participant in connection with his or her deferral elections pursuant to Section 4.4 shall elect on the Election Form the percentage, in increments of 1%, of the Base Salary or draw payments and commissions deferred by the FBU Participant, and the Company Contribution Amount credited to his or her Company Contribution Account that shall be deemed to be invested in one or more Measurement Funds. Notwithstanding the foregoing sentence, until an FBU Participant becomes 100% vested in his or her Company Contribution Account, such account shall be credited with earnings periodically throughout the Plan Year based upon the applicable percentage of the annual yield on the first business day of the Plan Year of U.S. Treasury Notes with a maturity of five years, as posted on the Federal Reserve’s website. Prior to the fifth anniversary of the FBU Participant’s Crediting Date that applies to the employment agreement between the FBU Participant and the Employer pursuant to which a Signing Credit or a Paid Billings Bonus was awarded, the FBU Participant shall elect, on the form and at the time and manner determined solely by the Committee in its discretion, the whole percentage or dollar amounts of such Signing Bonus and Paid Billings Bonus that shall be deemed to be invested in one or more Measurement Funds. Each CSR Participant in connection with

 

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his or her deferral elections pursuant to Section 4.4 shall elect on the Election Form the percentage, in increments of 1%, of the Base Salary or draw payments and commissions deferred by the CSR Participant that shall be deemed invested in one or more Measure Funds. If a Participant, an FBU Participant or a CSR Participant does not elect any Measurement Fund, such amounts credited to his or her account(s) shall automatically be deemed invested in the lowest-risk Measurement Fund (the “default Measurement Fund”), as determined by the Benefits Committee in its sole discretion.

(b) Changing Investments . A Participant, an FBU Participant or a CSR Participant may elect, by use of any medium approved by the Benefits Committee, to change the portion of the balance(s) of his or her account(s) that is deemed to be invested in one or more Measurement Funds by specifying the whole percentage of such amounts or account balances that is to be deemed invested in each Measurement Fund. Any such election shall apply as of the first business day deemed reasonably practicable by the Benefits Committee, in its sole discretion, and shall continue to apply thereafter for each subsequent day in which the participant participates in the Plan, unless changed in accordance with the previous sentence.

(c) Selection of Measurement Funds . The Benefits Committee may, in its sole discretion, discontinue, substitute or add a Measurement Fund at any time. Each discontinuance, substitution or addition of a Measurement Fund shall take effect as of the first day of the first calendar month that begins at least 30 days after the day on which the Benefits Committee gives Participants, FBU Participants and CSR Participants written notice of such discontinuance, substitution or addition.

 

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(d) Crediting or Debiting Method . The performance of each Measurement Fund (either positive or negative) shall be determined by the Director of Global Trust Investments, in its reasonable discretion, based on the performance of the investment vehicles upon which the Measurement Funds are based. In determining the value of each Measurement Fund, the Benefits Committee may establish the value of the Measurement Fund at a lower amount than the investment vehicle upon which such Measurement Fund is based to take into account expenses incurred in the administration of the Plan. Each Participant’s Account, each FBU Participant’s FBU Account and each CSR Participant’s CSR Account shall be credited or debited on each business day to the extent values are available for the investments upon which the Measurement Funds elected (or the default Measurement Fund deemed elected) by him or her are based.

(e) No Actual Investment . Notwithstanding any other provision of the Plan that may be interpreted to the contrary, the Measurement Funds, as well as the rate based upon the U.S. Treasury Notes with a maturity of five years in the case of Company Contribution Accounts of FBU Participants who are not 100% vested in such accounts, are to be used for measurement purposes only and shall not be considered or construed in any manner as an actual investment of a Participant’s Account, an FBU Participant’s FBU Account or a CSR Participant’s CSR Account. In the event that the Company or the Trustee decides to invest funds of the Trust in any or all of the investments on which the Measurement Funds are based or in U.S. Treasury Notes with a maturity of five years, no Participant, FBU Participant or CSR Participant shall have any rights in or to such investments. Without limiting the foregoing, each Participant’s Account, each FBU Participant’s FBU Account and each CSR Participant’s CSR Account shall at all times be a bookkeeping entry only and shall not represent any investment made on his or her behalf by the Company or the Trust.

 

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(f) FBU Transferred Accounts . Earnings shall be credited to the balance of each FBU Transferred Account periodically throughout the Plan Year based upon the applicable percentage of the annual yield on the first business day of the Plan Year of United States Treasury Notes with a maturity of five years, as posted on the Federal Reserve’s website. If an FBU Account is distributed to an accountholder as of any day other than January 1 st , then the FBU Account shall be credited with an amount representing earnings based upon the number of whole months during the Plan Year prior to the date of distribution. Each FBU Transferred Account shall at all times be a bookkeeping entry only and shall not represent any investment made on behalf of the accountholder.

(g) Unvested Signing Bonuses and Paid Billings Bonuses . Until an FBU Participant’s Signing Credit(s) and earned Paid Billings Bonus(es) become vested pursuant to Section 4.8, an amount representing earnings in respect of such Signing Credit(s) and Paid Billings Bonus(es) shall be credited to his or her FBU Bonus Account periodically throughout the Plan Year based upon the applicable percentage of the annual yield on the first business day of the Plan Year of United States Treasury Notes with a maturity of five years, as posted on the Federal Reserve’s website. If an FBU Bonus Account is distributed to an accountholder as of any day other than January 1 st , then the FBU Bonus Account shall be credited with an amount representing earnings based upon the number of whole months during the Plan Year prior to the date of distribution.

 

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(h) Unsecured Creditors . Participants, FBU Participants and CSR Participants shall at all times be unsecured creditors of the Employers.

Section 4.10. No Crediting to Accounts After Distribution . Notwithstanding any provision in the Plan to the contrary, should the complete distribution of a Participant’s vested Account balance, an FBU Participant’s vested FBU Account balance or a CSR Participant’s vested CRS Account balance occur before the date on which any amount would otherwise be credited to such account, such amount, other than a Company Contribution Amount, shall be paid to the former Participant, former FBU Participant or former CSR Participant, as the case may be, on or before the March 15 th occurring immediately after the end of the Plan Year in which such amount would have been credited to the account. Any Company Contribution Amount that otherwise would have been credited to a Company Contribution Account of a Participant or FBU Participant and any amount representing earnings that would otherwise have been credited to a Company Contribution Account, a Deferral Account, FBU Deferral Account, an FBU Transferred Account or a CSR Deferral Account after the Distribution Date shall be forfeited.

Section 4.11. FICA and Other Taxes .

(a) Annual Deferral Amounts, FBU Deferral Amounts and CSR Deferral Amounts . For each Plan Year in which an Annual Deferral Amount is being withheld from a Participant’s current compensation, the Participant’s Employer shall withhold, in a manner determined by the Company, from the Participant’s Base Salary and Annual Bonus that are not being deferred, as applicable, the Participant’s share of FICA and other taxes on such Annual Deferral Amount. For each Plan Year in which an FBU

 

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Deferral Amount is being withheld from an FBU Participant’s current compensation, the FBU Participant’s Employer shall withhold, in a manner determined by the Company, from the FBU Participant’s Base Salary or draw payments that are not being deferred the FBU Participant’s share of FICA and other taxes on such FBU Deferral Amount. For each Plan Year in which a CSR Deferral Amount is being withheld from a CSR Participant’s current compensation, the CSR Participant’s Employer shall withhold, in a manner determined by the Company, from the CSR Participant’s Base Salary or draws payments that are not being deferred the CSR Participant’s share of FICA and other taxes on such CSR Deferral Amount. If deemed necessary, the Benefits Committee may reduce any Annual Deferral Amount, FBU Deferral Amount or CSR Deferral Amount in order to comply with this Section 4.11(a).

(b) Company Contribution Account . When a Participant or an FBU Participant becomes vested in a Company Contribution Amount that had been credited to his or her Company Contribution Account for a Plan Year, his or her Employer shall withhold from the portion of his or her current compensation that is not deferred his or her share of FICA and other taxes due on such vested amount. If deemed necessary, the Benefits Committee may reduce the vested portion of such Company Contribution Account in order to satisfy the taxes due as a result of such vesting.

(c) Distributions . Each Participant’s, FBU Participant’s and CSR Participant’s Employer, or the Trustee, shall withhold from any payments under the Plan made to such Participant, FBU Participant or CSR Participant, as the case may be, all federal, state and local income, employment and other taxes required to be withheld by the Employer or the Trustee, in connection with such payments, in amounts and in a manner to be determined in the sole discretion of the Company or the Trustee.

 

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Section 4.12. Spin-Off . Pursuant to the terms of the Separation Agreement, as of the Effective Date, the Company assumed, and transferred to the Plan, all assets, liabilities and obligations of R.R. Donnelley & Sons Company under the RRD Plan with respect to any Transferred LSC Participant, and any such obligations shall be administered and paid under the terms of this Plan; provided, however, that all deferral, investment and distribution elections made by such Transferred LSC Participants under the RRD Plan with respect to any Plan Year occurring prior to the Effective Date and the Plan Year in which the Effective Date occurs will continue to apply and shall be administered under this Plan. All service and compensation that would be taken into account for purposes of determining the amount of a Transferred LSC Participant’s benefit under the RRD Plan as of the Effective Date shall be taken into account for the same purposes under this Plan. For the avoidance of doubt, no Transferred LSC Participant shall be treated as incurring a Separation from Service, Retirement or similar event for purposes of determining the right to a distribution, benefits or any other purpose under the Plan as a result of the Spin-Off or the transfer of the Transferred LSC Participant’s employment to the Company or any subsidiary of the Company. As of the Effective Date, the Plan shall assume and honor the terms of all domestic relations orders in effect under the RRD Plan in respect of Transferred LSC Participants.

ARTICLE V

RETIREMENT BENEFIT

Section 5.1. Retirement Benefit . Notwithstanding Section 4.8(e), each Participant shall become fully vested in his or her Company Contribution Account balance as of the first day

 

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of the Plan Year immediately following the Plan Year in which the date of his or her Retirement occurs. Notwithstanding Section 4.8(d) and (e), each FBU Participant shall become fully vested in his or her FBU Deferral Account, FBU Bonus Account and Company Contribution Account upon his or her Retirement. A Participant’s or an FBU Participant’s Company Contribution Account balance shall be determined as of the close of business on the business day immediately preceding the Distribution Date.

Section 5.2. Time and Form of Retirement Benefit Payment . Each Participant, FBU Participant and CSR Participant, in connection with his or her commencement of participation in the Plan, shall elect on an Election Form to receive his or her Account balance, FBU Account balance or CSR Account balance, as applicable, and with respect to an FBU Participant, any FBU Transferred Account balance, on account of Retirement in a cash lump sum or pursuant to the Quarterly Installment Method for a maximum period of 15 years. Subject to Section 9.2, payment of a Participant’s Account balance, an FBU Participant’s FBU Account balance or a CSR Participant’s CSR Account balance, and, with respect to an FBU Participant, any FBU Transferred Account balance, on account of such participant’s Retirement shall be made, or shall commence, within 60 days of the Distribution Date according to his or her direction on the most recently filed Election Form, provided that the conditions set forth in Article IX are satisfied, and provided further that if the amount of such Account, FBU Account or CSR Account and, with respect to an FBU Participant any FBU Transferred Account, added together with the interests of the Participant, FBU Participant or CSR Participant, as the case may be, under all other plans and arrangements of the same type within the meaning of Treasury Regulation § 1.409A-1(c)(2), is not greater than the then applicable dollar limit under section 402(g)(1)(B) of the Code, then the Participant’s Account balance, the FBU Participant’s FBU Account or the CSR Participant’s

 

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CSR Account, as the case may be, and, with respect to an FBU Participant, any FBU Transferred Account, shall be paid in a cash lump sum on the applicable Distribution Date. If there is no valid election regarding the form of payment on account of Retirement (or the election does not satisfy the conditions set forth in Article IX), then the account balance(s) shall be paid, subject to Section 9.2, in a cash lump sum within 60 days of the applicable Distribution Date.

ARTICLE VI

SEPARATION FROM SERVICE BENEFIT

Section 6.1. Separation from Service Benefit . Each Participant who has a Separation from Service shall be entitled to receive his or her vested Account balance calculated as of the close of business on the business day immediately preceding the Participant’s Distribution Date. Each FBU Participant who has a Separation from Service shall be entitled to receive his or her vested FBU Account balance and FBU Transferred Account balance, if any, on the second anniversary of his or her date of Separation from Service, except that if an FBU Participant performs services for a competitor of the Company before such second anniversary, then the FBU Participant shall be entitled to receive his or her vested FBU Account balance and FBU Transferred Account balance, if any, on the later of (i) the second anniversary of his or her date of Separation from Service and (ii) the date on which he or she attains age 55. Each CSR Participant who has a Separation from Service shall be entitled to receive his or her CSR Account balance, calculated as of the close of business on the business day immediately preceding the CSR Participant’s Distribution Date.

Section 6.2. Time and Form of Separation from Service Benefit Payment . Each Participant, FBU Participant and CSR Participant in connection with his or her commencement of participation in the Plan, shall elect on an Election Form to receive his or her vested Account

 

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balance, vested FBU Account balance or CSR Account balance, as the case may be, and, with respect to an FBU Participant, any FBU Transferred Account, on account of his or her Separation from Service in a cash lump sum or pursuant to the Quarterly Installment Method for a maximum period of five years. Subject to Section 9.2, payment of a Participant’s vested Account balance, an FBU Participant’s vested FBU Account balance or a CSR Participant’s CSR Account balance, and, with respect to an FBU Participant, any FBU Transferred Account balance, on account of his or her Separation from Service shall be made, or shall commence, within 60 days of the Distribution Date according to his or her direction on the most recently filed Election Form, provided that the conditions set forth in Article IX are satisfied, and provided further that if the amount of such Account, FBU Account or CSR Account and, with respect to an FBU Participant, any FBU Transferred Account, added together with the interests of the Participant, FBU Participant or CSR Participant, as applicable, under all other plans and arrangements of the same type within the meaning of Treasury Regulation § 1.409A-1(c)(2), is not greater than the then applicable dollar limit under section 402(g)(1)(B) of the Code, then the Participant’s Account balance, the FBU Participant’s FBU Account balance or the CSR Participant’s CSR Account balance, as the case may be, and, with respect to an FBU Participant, any FBU Transferred Account, shall be paid in a cash lump sum on the applicable Distribution Date. If there is no valid election regarding the form of payment on account of his or her Separation from Service (or the election does not satisfy the conditions set forth in Article IX), then the vested account balance(s) shall be paid, subject to Section 9.2, in a cash lump sum within 60 days of the applicable Distribution Date.

 

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ARTICLE VII

CHANGE IN CONTROL BENEFIT

Section 7.1. Change in Control Benefit . Each Participant, FBU Participant and CSR Participant, in connection with his or her commencement of participation in the Plan, shall elect on an Election Form whether to (i) receive a Change in Control Benefit or (ii) have his or her account balance(s) remain in the Plan, subject to its terms and conditions, upon the occurrence of a Change in Control. If a Participant, an FBU Participant or a CSR Participant does not timely submit an election with respect to the payment of the Change in Control Benefit, then such Participant’s, FBU Participant’s or CSR Participant’s account balance(s) shall remain in the Plan upon a Change in Control and shall continue to be subject to the terms and conditions of the Plan.

Section 7.2. Time and Form of Change in Control Benefit Payment . The Change in Control Benefit for a Participant or a CSR Participant shall be equal to the Participant’s Account balance or the CSR Participant’s CSR Account balance, as applicable, calculated as of the close of business on the date of the Change in Control, and shall be paid in a cash lump sum within 60 days of the Participant’s or CSR Participant’s Distribution Date. A FBU Participant’s Change in Control Benefit shall be equal to the FBU Participant’s FBU Account balance and FBU Transferred Account balance, if any, calculated at the same time and paid in the same form and within the same time period as the vested Account balance of a Participant with respect to whom a Change in Control occurred.

 

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ARTICLE VIII

SCHEDULED DISTRIBUTIONS; UNFORESEEABLE EMERGENCY PAYMENTS

Section 8.1. Scheduled Distributions . In connection with each election to defer an Annual Deferral Amount, a Participant may irrevocably elect to receive a Scheduled Distribution from the Plan with respect to all or a portion of such Annual Deferral Amount, adjusted for deemed earnings and losses. In connection with each election to defer an FBU Deferral Amount, an FBU Participant may irrevocably elect to receive a Scheduled Distribution from the Plan with respect to all or a portion of such FBU Deferral Amount, adjusted for deemed earnings and losses. In connection with each election to defer a CSR Deferral Amount, a CSR Participant may irrevocably elect to receive a Scheduled Distribution from the Plan with respect to all or a portion of such CSR Deferral Amount, adjusted for deemed earnings and losses. A Scheduled Distribution shall be paid in cash lump sum, calculated as of the close of business on the Distribution Date, in an amount equal to the portion of the Annual Deferral Amount, FBU Deferral Amount or CSR Deferral Amount that the participant elected to have distributed in a Scheduled Distribution. Subject to the other terms and conditions of the Plan, including Section 9.2, each Scheduled Distribution shall be paid within 60 days of the date of the Distribution Date.

Section 8.2. Other Payments Take Precedence Over Scheduled Distributions . If a Distribution Date occurs that triggers a payment under Article V, VI, VII or X or a payment is to be made pursuant to Section 8.3, then any amount subject to a Scheduled Distribution election shall not be paid in accordance with Section 8.1, to the extent it is payable pursuant to such other applicable Article or Section 8.3. If a payment on account of an Unforeseeable Emergency is to be made pursuant to Section 8.3, then, to the extent necessary to satisfy the Unforeseeable

 

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Emergency, any amount subject to a Scheduled Distribution election shall not be paid in accordance with Section 8.1, but shall be paid in accordance with Section 8.3. Notwithstanding the foregoing, the Benefits Committee shall interpret this Section 8.2 in a manner that is consistent with applicable law.

Section 8.3. Unforeseeable Emergency .

(a) In General . A Participant, an FBU Participant or a CSR Participant who experiences an Unforeseeable Emergency may file a request with the Benefits Committee to receive a distribution from his or her vested Account balance, vested FBU Account balance or CSR Account balance, as the case may be, equal to an amount reasonably necessary to satisfy his or her emergency financial need and pay any taxes and penalties reasonably anticipated as a result of the distribution. The Executive Vice President, Chief Human Resource Officer, in his or her sole discretion, shall determine whether the Participant, FBU Participant or CSR Participant, as applicable, has experienced an Unforeseeable Emergency. The Benefits Committee shall not make a distribution on account of an Unforeseeable Emergency to the extent that the Executive Vice President, Chief Human Resource Officer determines that the emergency need may be relieved through reimbursement or compensation from insurance or otherwise, by liquidation of the assets of the Participant, FBU Participant or CSR Participant, as the case may be (to the extent such liquidation would not cause severe financial hardship), or by cessation of the participant’s deferrals under the Plan. In making his or her determination, the Executive Vice President, Chief Human Resource Officer is not required to consider any amounts that are available under a tax-qualified plan (including any amount that may be available by obtaining a loan under such a plan) or under another nonqualified deferred

 

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compensation plan. The payment of any amount under this Section 8.3 shall be subject to Section 9.2. If the Executive Vice President, Chief Human Resource Officer, grants a request for a payment on account of an Unforeseeable Emergency, then the deferral election of the requesting participant shall be cancelled for the remainder of the Plan Year or, if longer, for six months.

(b) Coordination with 401(k) Plan . If a Participant, an FBU Participant or a CSR Participant receives a hardship distribution within the meaning of Treasury Regulation § 1.401(k)-1(d)(3) under the RR Donnelley & Sons Company Savings Plan or any other plan with a cash or deferred arrangement within the meaning of section 401(k) of the Code that is maintained by an Employer or an Affiliate, then his or her deferral election under the Plan shall be cancelled, and he or she shall not be permitted to defer any amounts under the Plan for a period of six months after the receipt of the hardship distribution. The Employee shall be again eligible to defer compensation under the Plan upon the expiration of such six-month period if he or she is then eligible to participate.

ARTICLE IX

CHANGES IN THE FORM OR TIMING OF PAYMENTS

Section 9.1. Election Changes . Each Participant, FBU Participant and CSR Participant may change the form or timing of a payment of his or her vested account balance(s) only in accordance with this Section 9.1. Such an individual who wishes to change the time or form of a previously elected payment must submit a new Election Form to the Benefits Committee, in accordance with any rules and procedures established by the Benefits Committee, at least 12 months before the payment would otherwise be made, except that any change in the form of Retirement payment must be made before the individual attains age 50. The first payment pursuant to a new election must be at least five years after the time the payment would otherwise have been made, and the new election shall have no effect until at least 12 months after the date on which such election is made.

 

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Section 9.2. Other Changes .

(a) Section 162(m) . The Company shall delay a payment to a Participant, an FBU Participant or a CSR Participant to the extent the Company reasonably anticipates that if the payment were made as scheduled, the Employer of such individual would not be permitted fully to deduct the payment under section 162(m) of the Code, provided that the payment is made, at the Company’s discretion, either (i) during the first taxable year of the individual in which the Company reasonably anticipates that the payment would be deductible for such year or (ii) during the period beginning with the date of the Separation from Service or Retirement of the individual and ending on the later of (w) the last day of the Employer’s taxable year in which the such Separation from Service or Retirement occurs and (x) the fifteenth day of the third month following such Separation from Service or Retirement. If a payment is delayed to a date on or after such Separation from Service or Retirement, however, and the individual is a Specified Employee on the date of his or her Separation from Service or Retirement, then the payment shall be treated as a payment on account of the his or her Separation from Service or Retirement. Thus, in the case of a delayed payment to such an individual, the payment shall be made during the period beginning with the date that is six months after such Separation from Service or Retirement and ending on the later of (y) the last day of the Employer’s taxable year in which occurs the last day of the sixth month period beginning on the date after such Separation from Service or Retirement and (z) the fifteenth day of the third

 

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month following the last day of the sixth month beginning on the date after such Separation from Service or Retirement. The Participant’s Account, the FBU Participant’s FBU Account and any FBU Transferred Account, or the CSR Participant’s CSR Account, as applicable, shall continue to be adjusted in accordance with Section 4.9 until it is fully paid.

(b) Payment upon Income Inclusion Under Section 409A . To the extent an amount deferred under the Plan is included in the income of a Participant, an FBU Participant or a CSR Participant as a result of a failure to comply with section 409A of the Code, the Plan shall distribute to the Participant, FBU Participant or CSR Participant, as the case may be, in the year of inclusion an amount equal to the lesser of the amount included in his or her income and the amount of the Participant’s vested Account balance, the FBU Participant’s vested FBU Account balance and any FBU Transferred Account or the CSR Participant’s CSR Account, as applicable.

(c) Payments That Would Violate Applicable Law . If the Company reasonably anticipates that a payment would violate a federal securities law or other applicable law, then the payment shall be delayed until the earliest date the Company reasonably anticipates that the payment can be made without a violation of law.

ARTICLE X

DEATH BENEFIT

Section 10.1. Death Benefit . In the case of a Participant, an FBU Participant or a CSR Participant who dies before his or her vested account balance(s) have been paid in full, his or her Beneficiary shall be entitled to receive the remainder of such vested account balance(s), calculated as of the close of business of the business day immediately preceding the Distribution Date of such Participant, FBU Participant or CSR Participant.

 

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Section 10.2. Payment of Death Benefit . The Death Benefit in respect of a Participant, an FBU Participant or a CSR Participant shall be paid to his or her Beneficiary in a cash lump sum within 60 days of the Distribution Date.

ARTICLE XI

BENEFICIARY DESIGNATION

Section 11.1. Beneficiary Designation . Each Participant, FBU Participant and CSR Participant shall have the right, at any time, to designate his or her Beneficiary (primary, as well as contingent) to receive his or her vested account balance(s) upon such participant’s death. Each participant shall designate his or her Beneficiary by completing and signing the Beneficiary designation form and returning it to the Benefits Committee or its designated agent. Each participant shall have the right to change a Beneficiary by completing, signing and otherwise complying with the terms of the Beneficiary designation form and the Benefits Committee’s rules and procedures, as in effect from time to time. If a participant designates more than one person to be his or her primary Beneficiary and one or more of those persons predeceases such participant, then the share of such deceased person(s) shall be allocated pro rata to such surviving persons.

Section 11.2. Spousal Consent . If a Participant, an FBU Participant or a CSR Participant names someone other than his or her spouse as a Beneficiary, then the Benefits Committee may, in its sole discretion, determine that spousal consent is required to be provided in a form designated by the Benefits Committee, executed by such spouse and returned to the

 

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Benefits Committee. Upon the acceptance by the Benefits Committee of a new Beneficiary designation form from a participant, all Beneficiary designations previously filed by such participant shall be canceled. The Benefits Committee shall be entitled to rely on the last Beneficiary designation form filed by a participant and accepted by the Benefits Committee prior to his or her death.

Section 11.3. Acknowledgment . No designation or change in designation of a Beneficiary shall be effective until received and acknowledged in writing by the Benefits Committee or its designated agent.

Section 11.4. No Beneficiary Designation . If a Participant, an FBU Participant or a CSR Participant fails to designate a Beneficiary or, if no Beneficiary survives the participant (or if no Beneficiary survives until the complete distribution of the Participant’s vested Account balance, the FBU Participant’s vested FBU Account balance and any FBU Transferred Account balance or the CSR Participant’s CSR Account balance), then the participant’s Beneficiary shall be deemed to be his or her surviving spouse. If the deceased Participant, FBU Participant or CSR Participant has no surviving spouse, then the Participant’s vested Account balance, the FBU Participant’s vested FBU Account balance and any vested FBU Transferred Account balance or the CSR Participant’s CSR Account balance, as the case may be, shall be payable to the executor or personal representative of the deceased participant’s estate.

Section 11.5. Discharge of Obligations . The payment of a deceased Participant’s vested Account balance, a deceased FBU Participant’s FBU Account and any FBU Transferred Account or a deceased CSR Participant’s CSR Account balance to his or her Beneficiary shall fully and completely discharge all Employers and the Benefits Committee from all obligations under the Plan with respect to such Participant, FBU Participant or CSR Participant.

 

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ARTICLE XII

PLAN AMENDMENT, TERMINATION OR LIQUIDATION

Section 12.1. Amendment . The Company shall have the right, at any time, to amend the Plan in whole or in part by the action of its board of directors, its Human Resources Committee or the Benefits Committee; provided , however , that: (i) no amendment shall be effective to decrease the value of a Participant’s Account balance, an FBU Participant’s FBU Account balance and the balance of any FBU Transferred Account or a CSR Participant’s CSR Account balance (the value of such balance(s) calculated as if the participant had experienced a Separation from Service as of the effective date of the amendment) and (ii) no amendment to this Section 12.1 or Section 13.2 after a Change in Control shall be effective, and provided further , that the Company’s Executive Vice President, Chief Human Resources Officer shall have the right to amend the Plan, but only to the extent that such amendment: (i) is required or deemed advisable as the result of legislation or regulation; (ii) concerns solely routine ministerial or administrative matters; or (iii) does not concern routine ministerial or administrative matters but does not materially increase any cost to any Employer. No amendment to the Plan shall affect any Participant, FBU Participant, CSR Participant or Beneficiary who has become entitled to the payments under the Plan on or before the earlier of (i) the date of the amendment and (ii) the effective date of the amendment.

Section 12.2. Termination and Liquidation of Plan . The Plan may be terminated and payments hereunder may be accelerated in connection with the termination of the Plan (such payment acceleration referred to herein as a “liquidation” of the Plan) only if the conditions of

 

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subsection (a), (b), (c) or (d) of this Section 12.2 are satisfied. Until 60 days before the Plan is completely liquidated, or such other time reasonably anticipated by the Benefits Committee to permit an orderly liquidation of the Plan, the Measurement Funds available to Participants, FBU Participants and CSR Participants immediately before the termination of the Plan shall be comparable in number and type to those Measurement Funds available in the Plan Year preceding the Plan Year in which the termination of the Plan becomes effective.

(a) Corporate Dissolution or Bankruptcy Court Approval . The Company may terminate and liquidate the Plan with respect to Participants, FBU Participants and CSR Participants who are Employees of one or more Employers (i) within 12 months of the dissolution of such Employer(s) that is taxed to stockholders under section 331 of the Code or (ii) with the approval of a bankruptcy court pursuant to 11 U.S.C. § 503(b)(1)(A), provided that all payments to each affected Participant, FBU Participant and CSR Participant are included in his or her gross income at the earlier of (x) the taxable year in which the payment is actually or constructively received by him or her and (y) the latest of the following: (1) the calendar year in which the Plan termination and liquidation occurs; (2) the first calendar year in which the amount of the payment is no longer subject to a substantial risk of forfeiture; and (3) the first calendar year in which the payment is administratively practicable.

(b) Change in Control . The Plan may be terminated and liquidated with respect to Participants, FBU Participants and CSR Participants who are Employees of an Employer that experiences a Change in Control at any time within 30 days before and 12 months after such Change in Control by the person who after the Change in Control is primarily liable for the payments under the Plan, provided that all plans, agreements and

 

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other arrangements that are of the same type (within the meaning of Treasury Regulation § 1.409A-1(c)(2)) as the Plan are terminated and liquidated with respect to each Participant, FBU Participant and CSR Participant affected by the Change in Control, and provided further that all such Participants, FBU Participants and CSR Participants receive all compensation deferred under the Plan and all plans, agreements and other arrangements of the same type as the Plan within 12 months of the date all necessary actions to terminate and liquidate the Plan and such other plans, agreements and arrangements are irrevocably taken by the person primarily responsible for the payments thereunder.

(c) No New Plan for Three Years . The Company may liquidate and terminate the Plan with respect to one or more Employers only if the following five conditions are satisfied: (i) there is not a downturn in the financial health of such Employer(s); (ii) all plans, programs and arrangements of the same type (within the meaning of Treasury Regulation § 1.409A-1(c)(2)) as the Plan in which any Participant, FBU Participant or CSR Participant employed by such Employer(s) participates are also terminated and liquidated; (iii) no payments are made under the Plan within 12 months following the date the Company terminates the Plan with respect to such Employer(s), other than payments that would be made if the Plan had not been terminated with the intent to liquidate the Plan; (iv) all payments are made within 24 months following the date of Plan termination; and (v) such Employer(s) do not establish a new plan of the same type for those Employees of such Employer(s) who had participated in the Plan within the three year period following the date the Company takes all necessary action to terminate and liquidate the Plan with respect to such Employer(s).

 

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(d) Other Permissible Events . The Company may terminate and liquidate the Plan upon any other event or condition that the Internal Revenue Service may provide in a regulation, ruling or notice or other publication in the Internal Revenue Bulletin.

Section 12.3. Effect of Payment . The full payment of a Participant’s vested Account balance, an FBU Participant’s vested FBU Account and any FBU Transferred Account and a CSR Participant’s CSR Account balance shall completely discharge all obligations to such Participant, FBU Participant or CSR Participant and his or her Beneficiary under the Plan, and the Participant’s, FBU Participant’s or CSR Participant’s Plan Agreement shall terminate.

ARTICLE XIII

ADMINISTRATION

Section 13.1. Benefits Committee . Except as otherwise provided in this Article XIII, the Plan shall be administered by the Benefits Committee.

(a) Members . Treasurer and Vice President shall be members of the Benefits Committee. The Benefits Committee may appoint additional members to the Benefits Committee and may replace vacancies pursuant to procedures established in its by-laws.

(b) Benefits Committee Duties and Actions . The Benefits Committee shall have the authority to (i) make, amend, interpret and enforce all appropriate rules and regulations for the administration of the Plan, (ii) decide or resolve any and all questions, including interpretations of the Plan, as may arise in connection with the Plan, and (iii) take any action as may be required or advisable for the proper administration of the Plan. Any individual serving on the Benefits Committee who is a Participant, an FBU Participant or a CSR Participant shall not vote or act on any matter relating solely to

 

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himself or herself. When making a determination or calculation, the Benefits Committee shall be entitled to rely on information furnished by a Participant, an FBU Participant, a CSR Participant or the Company. Any action taken by the Benefits Committee with respect to any one or more Participants, FBU Participants or CSR Participants shall not be binding on the Benefits Committee as to any action to be taken with respect to any other participant. Each determination required or permitted under the Plan shall be made by the Benefits Committee in its sole and absolute discretion. The members of the Benefits Committee may allocate their responsibilities and may designate any other person or committee, including employees of the Company, to carry out any of their responsibilities with respect to administration of the Plan.

Section 13.2. Administration Upon Change In Control . Upon and after the occurrence of a Change in Control, the Plan shall be administered by an independent third party selected by the Trustee and approved by the individual who, immediately prior to the Change in Control, was the Company’s highest ranking officer (the “Ex-CEO”). Such independent third party (the “Administrator”) shall have the discretionary power to determine all questions arising in connection with the administration of the Plan and the interpretation of the Plan and Trust including, but not limited to benefit entitlement determinations. Upon a Change in Control and for a period of three years thereafter, the Administrator may be terminated (and a replacement appointed) by the Trustee only with the approval of the Ex-CEO. Upon a Change in Control and for a period of three years thereafter, the Company may not terminate the services of the Administrator.

Section 13.3. Agents . In the administration of the Plan, the Benefits Committee or, if applicable, the Administrator, may from time to time employ agents and delegate to them such administrative duties as it sees fit (including acting through a duly appointed representative) and may from time to time consult with counsel who may be counsel to any Employer.

 

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Section 13.4. Binding Effect of Decisions . Any decision or action of the Benefits Committee or, if applicable, the Administrator, with respect to any matter arising out of or in connection with the administration, interpretation and application of the Plan shall be final, binding and conclusive upon all persons having any interest in the Plan and all persons claiming under any Participant, FBU Participant, CSR Participant, former Participant, former FBU Participant, former CSR Participant or Beneficiary.

Section 13.5. Indemnity . The Company shall: (i) pay all reasonable administrative expenses and fees of the Benefits Committee or, if any, the Administrator; and (ii) indemnify and hold harmless the Benefits Committee or, if any, the Administrator (or any agent or delegate of either the Benefits Committee or the Administrator) against any and all claims, losses, damages, costs, expenses and liabilities including, without limitation, attorney’s fees and expenses arising in connection with the performance of its duties hereunder, except with respect to matters resulting from the gross negligence or willful misconduct of the Benefits Committee or, as applicable, the Administrator, or the employees, delegates or agents of either.

Section 13.6. Employer Information . To enable the Benefits Committee or, as the case may be, the Administrator, to perform its functions, the Company and each Employer shall supply full and timely information to the Benefits Committee or the Administrator as requested, on all matters relating to the compensation of the Participants, FBU Participants and CSR Participants, the date and circumstances of the Retirement, disability, death or Separation from Service of the Participants, FBU Participants and CSR Participants, and such other pertinent information as the Benefits Committee or Administrator may reasonably require.

 

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ARTICLE XIV

COORDINATION WITH OTHER BENEFITS

The benefits provided to a Participant, an FBU Participant or a CSR Participant or to his or her Beneficiary under the Plan are in addition to any other benefits available to such Participant, FBU Participant, CSR Participant or Beneficiary under any other plan or program for employees of such Participant’s, FBU Participant’s or CSR Participant’s Employer. The Plan shall supplement and shall not supersede, modify or amend any other such plan or program except as may otherwise be expressly provided.

ARTICLE XV

CLAIMS AND APPEALS PROCEDURES

Section 15.1. Authority to Submit Claims . Any Participant, FBU Participant, CSR Participant or Beneficiary who believes that he or she is entitled to a payment under the Plan, including a payment greater than the payment initially determined by the Benefits Committee, may (or his or her duly authorized representative may) file a Claim in writing with the Benefits Committee. The Benefits Committee shall determine whether an individual is duly authorized to act on behalf of a Participant, FBU Participant, CSR Participant or Beneficiary in connection with the Claim and may establish reasonable procedures for making such a determination. Any such Participant, FBU Participant, CSR Participant, Beneficiary or duly authorized representative is referred to in the Plan as a Claimant.

Section 15.2. Procedure for Filing a Claim . In order for a communication from a Claimant to constitute a valid Claim, the communication must be delivered to the Benefits Committee in writing on the form designated by the Benefits Committee or in such other form as may be acceptable to the Benefits Committee.

 

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Section 15.3. Initial Claim Review . The initial Claim review shall be conducted by the Benefits Committee, with or without the presence of the Claimant, as determined by the Benefits Committee in its discretion. The Benefits Committee shall consider the applicable terms and provisions of the Plan, information and evidence that is presented by the Claimant and any other information the Benefits Committee deems relevant. In reviewing the Claim, the Benefits Committee shall also consider determinations made within the immediately preceding 24 months of Claims of similarly situated Claimants.

Section 15.4. Claim Determination .

(a) The Benefits Committee shall make a Determination regarding a Claim and notify the Claimant of such Determination within a reasonable period of time, but in any event (except as described in Section 15.4(b) below) within 90 days after the Benefits Committee receives the Claim.

(b) The Benefits Committee may extend the period for making a Determination to a maximum of 90 additional days if the Benefits Committee determines that circumstances require an extension of time. The Benefits Committee shall notify the Claimant before the end of the initial 90-day period of the circumstances requiring the extension of time and the date by which the Benefits Committee expects to render a Determination.

 

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Section 15.5. Manner and Content of Notification of Adverse Determination of a Claim . The Benefits Committee shall provide a Claimant with written or electronic notice of an Adverse Determination. Such notice shall:

 

  (i) specify the specific reason or reasons for the Adverse Determination;

 

  (ii) reference the specific provision(s) of the Plan on which the Adverse Determination is based;

 

  (iii) describe any additional material or information necessary for the Claimant to perfect the Claim and explain of why such material or information is necessary; and

 

  (iv) describe the Plan’s appeal procedure and the time limits applicable to such procedure, and include a statement describing the Claimant’s right to bring a civil action under section 502(a) of ERISA after an Adverse Determination of an appeal of a Claim.

Section 15.6. Procedure for Filing an Appeal of an Adverse Determination . In order for a communication from a Claimant to constitute a valid appeal, the communication must be submitted by a Claimant in writing on the form designated by the Benefits Committee, or in such other form as may be acceptable to the Benefits Committee, and delivered to the Benefits Committee within 60 days of the Claimant’s receipt of the notice of the Adverse Determination on the Claim. If the Benefits Committee does not receive a valid appeal within 60 days of the delivery to the Claimant of the notice of the Adverse Determination for the related Claim, the Claimant shall be barred from filing an appeal of such Claim and he or she shall be deemed to have failed to exhaust all administrative remedies under the Plan.

Section 15.7. Appeal Procedure . An appeal of an Adverse Determination shall be conducted by the Benefits Committee, with or without the presence of the Claimant, as determined by the Benefits Committee in its discretion. The Benefits Committee shall consider the applicable terms and provisions of the Plan, information and evidence that is presented by the

 

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Claimant (including all comments, documents, records and other information submitted by the Claimant without regard to whether such information was submitted or considered in the initial Determination) and any other information the Benefits Committee deems relevant. The Claimant shall be provided, upon request and free of charge, reasonable access to and copies of all relevant documents and shall be allowed to submit any supporting comments, documents, records and other information.

Section 15.8. Timing and Notification of the Determination of an Appeal .

(a) The Benefits Committee shall make a Determination regarding an appeal and notify the Claimant of its Determination within a reasonable period of time, but in any event (except as described in Section 15.8(b) below) within 60 days after the Benefits Committee receives the appeal.

(b) The Benefits Committee may extend the period for making the Determination of the appeal of denied Claim to a maximum of 60 additional days if the Benefits Committee determines that circumstances require an extension of time. The Benefits Committee shall notify the Claimant before the end of the initial 60-day period of the circumstances requiring the extension of time and the date by which the Benefits Committee expects to render a decision. If such an extension is due to a failure of the Claimant to submit information necessary to decide the appeal, the period in which the Benefits Committee is required to make a decision shall be tolled by the Benefits Committee from the date on which the Benefits Committee notifies the Claimant until the date the Benefits Committee has received the requested information from the Claimant. If the Claimant fails to respond to the Benefits Committee’s request for additional information within a reasonable time, the Benefits Committee may, in its discretion, render a Determination on the appeal based on the record before the Benefits Committee.

 

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Section 15.9. Manner and Content of Notification of Adverse Determination of Appeal . The Benefits Committee shall provide a Claimant with written or electronic notice of any Adverse Determination of an appeal of a denial of a Claim. Such notice shall:

 

  (i) specify the reason or reasons for the Adverse Determination;

 

  (ii) reference the specific provision(s) of the Plan on which the Adverse Determination is based;

 

  (iii) state that the Claimant is entitled to receive, upon request and free of charge, reasonable access to and copies of all relevant documents; and

 

  (iv) state that the Claimant has a right to bring a civil action under section 502(a) of ERISA.

Section 15.10. Delivery and Receipt . For purposes of the Article XV, any notice, Claim or document may be delivered in person; provided, however , that any notice sent by the Benefits Committee related to a Claim may be sent by facsimile or by electronic mail if there is a verifiable confirmation that such notice was received and the facsimile or electronic mail is followed by a hard copy sent by next business day courier service no later than the next business day. Any Claim or document sent to a Claimant shall be sent to the Claimant’s last known address. Any Claim or document that satisfies the requirements described in this Section 15.10 shall be deemed delivered and received on the earlier of (a) the date of its actual receipt, if receipt is evidenced in writing, (b) 10 days after deposit in the United States Mail, first class postage prepaid and return receipt requested, and (c) the date of confirmation of successful transmission of a facsimile or electronic mail. If the requirements described in this Section 15.10 are not satisfied, then the notice, Claim or document shall be deemed not delivered or received and not be effective.

 

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Section 15.11. Limitation on Actions . No legal action, including without limitation any lawsuit, may be brought by a Claimant more than two years after the date the Claimant has received an Adverse Determination of his or her appeal of a Claim denial.

Section 15.12. Failure to Exhaust Administrative Remedies . No legal action may be brought by a Claimant who has not timely filed a Claim and an appeal of the denial of such Claim and otherwise exhausted all administrative remedies under the Plan.

ARTICLE XVI

TRUST

Section 16.1. Establishment of the Trust . The Company shall maintain the Trust, and each Employer shall at least annually transfer over to the Trust such assets as the Company determines, in its sole discretion, are necessary to provide for the Employer’s liabilities created with respect to the Annual Deferral Amounts, FBU Deferral Amounts, CSR Deferral Amounts and Company Contribution Amounts for such Employer’s Participants, FBU Participants and CSR Participants, taking into consideration the value of the assets in the Trust attributable to such Employer’s liabilities at the time of the transfer.

Section 16.2. Investment of Trust Assets . The Trustee of the Trust shall be authorized, upon written instructions received from the Benefits Committee or investment manager appointed by the Benefits Committee, to invest and reinvest the assets of the Trust in accordance with the Trust Agreement.

 

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Section 16.3. Interrelationship of the Plan and the Trust . The provisions of the Plan shall govern the rights of each Participant, FBU Participant and CSR Participant to receive distributions pursuant to the Plan. The provisions of the Trust shall govern the rights of the Employers and the creditors of the Employers to the assets transferred to the Trust. Each Employer shall at all times remain liable to carry out its obligations under the Plan and Trust.

Section 16.4. Distributions From the Trust . Each Employer’s obligations under the Plan may be satisfied with Trust assets distributed pursuant to the terms of the Trust, and any such distribution shall reduce the Employer’s obligations under the Plan.

ARTICLE XVII

MISCELLANEOUS

Section 17.1. Status of Plan . The Plan is intended to be a plan that is not qualified within the meaning of section 401(a) of the Code and that “is unfunded and is maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees” within the meaning of sections 201(2), 301(a)(3) and 401(a)(l) of ERISA. The Plan is also intended to comply with section 409A of the Code and the regulations promulgated thereunder. The Plan shall be administered and interpreted to the extent possible in a manner consistent with the intent expressed in this Section 17.1.

Section 17.2. Unsecured General Creditor . Participants, FBU Participants, CSR Participants and their Beneficiaries, heirs, successors and assigns shall have no legal or equitable rights, interests or claims in any property or assets of any Employer. For purposes of the payment of benefits under the Plan, any and all of an Employer’s assets shall be, and remain, the

 

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general, unpledged unrestricted assets of the Employer. An Employer’s obligation under the Plan shall be merely that of an unfunded and unsecured promise to pay money in the future, and Participants, FBU Participants, CSR Participants and their Beneficiaries, heirs, successors and assigns shall at all times be unsecured creditors of the Employers.

Section 17.3. Employer’s Liability . An Employer’s liability for the payment of benefits shall be defined only by the Plan and the Plan Agreements. An Employer shall have no obligation to a Participant, an FBU Participant, a CSR Participant or any Beneficiary under the Plan except as expressly provided in the Plan or in a Plan Agreement.

Section 17.4. Nonassignability . No Participant, FBU Participant, a CSR Participant, Beneficiary or any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate, alienate or convey in advance of actual receipt, the amounts, if any, payable hereunder, or any part thereof, which are, and all rights to which are expressly declared to be, unassignable and non-transferable. No part of the amounts payable shall, prior to actual payment, be subject to seizure, attachment, garnishment or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant, FBU Participant, CSR Participant, Beneficiary or any other person, be transferable by operation of law in the event of his or her bankruptcy or insolvency or be transferable to a spouse as a result of a property settlement or otherwise. Any attempt to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate, alienate or convey in advance of actual receipt, except as specifically permitted under the Plan, shall be null and void and without legal effect.

 

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Section 17.5. Withholding for Taxes . Notwithstanding anything contained in the Plan to the contrary, the Employers shall withhold from payments to be made under the Plan such amount or amounts as may be required for purposes of complying with the tax withholding provisions of the Code or any applicable State law for purposes of paying any tax attributable to any amounts payable or creditable under the Plan. The Company may reduce a Participant’s Account, an FBU Participant’s FBU Account and any FBU Transferred Account or a CSR Participant’s CSR Account in the amount of employment taxes payable with respect to compensation deferred before the Participant’s, FBU Participant’s or CSR Participant’s Separation from Service.

Section 17.6. Immunity of Benefits Committee Members . The members of the Benefits Committee may rely upon any information, report or opinion supplied to them by any officer of the Company or any legal counsel, independent public accountant or actuary, and shall be fully protected in relying upon any such information, report or opinion. No member of the Benefits Committee shall have any liability to the Company or any Participant, FBU Participant, CSR Participant, former Participant, former FBU Participant, former CSR Participant, any Beneficiary, or to any person claiming under or through any Participant, FBU Participant, CSR Participant, former Participant, former FBU Participant, former CSR Participant or any Beneficiary or other person interested or concerned in connection with any decision made by such member of the Benefits Committee pursuant to the Plan which was based upon any such information, report or opinion if such member of the Benefits Committee relied thereon in good faith.

Section 17.7. Not a Contract of Employment . The terms and conditions of the Plan shall not be deemed to constitute a contract of employment between any Employer and a

 

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Participant, an FBU Participant or a CSR Participant. Employment of a Participant, an FBU Participant or a CSR Participant is hereby acknowledged to be an “at will” employment relationship that can be terminated at any time for any reason, or no reason, with or without cause, and with or without notice, unless expressly provided otherwise in a written employment agreement. Nothing in the Plan shall be deemed to give a Participant, an FBU Participant or a CSR Participant the right to be retained in the service of any Employer or to interfere with the right of any Employer to discipline or discharge the Participant, FBU Participant or CSR Participant at any time.

Section 17.8. Furnishing Information . A Participant, an FBU Participant or a CSR Participant or his or her Beneficiary will cooperate with the Benefits Committee by furnishing any and all information requested by the Benefits Committee and take such other actions as may be requested in order to facilitate the administration of the Plan and payments hereunder, including but not limited to taking such physical examinations as the Benefits Committee may deem necessary in connection with the purchase of insurance, as described in Section 17.18.

Section 17.9. Terms . Whenever any words are used herein in the masculine, they shall be construed as though they were in the feminine in all cases where they would so apply. Whenever any word is used herein in the singular, it shall be construed as though it was used in the plural, in all cases where it would reasonably so apply; and whenever any word is used herein in the plural, it shall be construed as though it was used in the singular, in all cases where it would so reasonably apply.

 

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Section 17.10. Captions . The captions of the articles, sections and paragraphs of the Plan are for convenience only and shall not control or affect the meaning or construction of any of its provisions.

Section 17.11. Governing Law . The provisions of the Plan shall be construed and interpreted according to the internal laws of the State of Illinois without regard to its conflicts of laws principles, to the extent not preempted by any applicable federal law.

Section 17.12. Notice . Any notice or filing required or permitted to be given to the Benefits Committee under the Plan shall be sufficient if in writing and hand-delivered, or sent by registered or certified mail, to the address below:

LSC Communications, Inc.

Attn: Director of Compensation

4101 Winfield Road

Warrenville, IL 60555

Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification.

Any notice or filing required or permitted to be given to a Participant, FBU Participant or CSR Participant, any former participant or any Beneficiary under the Plan shall be sufficient if in writing and hand-delivered, or sent by mail, to his or her last known address.

Section 17.13. Successors . The provisions of the Plan shall bind and inure to the benefit of the Employers and their successors and assigns and to the Participants, FBU Participants and CSR Participants and their Beneficiaries.

 

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Section 17.14. Spouse’s Interest . The interest in the benefits hereunder of a spouse of a Participant, FBU Participant or CSR Participant who has predeceased such Participant, FBU Participant or CSR Participant shall automatically pass to the Participant, FBU Participant or CSR Participant, as applicable, and shall not be transferable by such spouse in any manner, including but not limited to such spouse’s will, nor shall such interest pass under the laws of intestate succession.

Section 17.15. Validity . In case any provision of the Plan shall be illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but the Plan shall be construed and enforced as if such illegal or invalid provision had never been inserted herein.

Section 17.16. Incompetent . If the Benefits Committee determines in its discretion that a payment under the Plan is to be made to a minor, a person declared incompetent or to a person incapable of handling the disposition of such person’s property, the Benefits Committee may direct that such payment be made to the guardian, legal representative or person having the care and custody of such minor, incompetent or incapable person. The Benefits Committee may require proof of minority, incompetence, incapacity or guardianship, as it may deem appropriate prior to such payment. Any payment made shall be for the account of the Participant, FBU Participant or CSR Participant, as the case may be, or his or her Beneficiary, and shall be a complete discharge of any liability under the Plan for such payment.

Section 17.17. Court Order . The Benefits Committee is authorized to comply with any court order in any action in which the Plan or the Benefits Committee has been named as a party, including any action involving a determination of a Participant’s, FBU Participant’s or CSR

 

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Participant’s rights or interests under the Plan. Notwithstanding the foregoing, the Benefits Committee shall interpret this provision in a manner that is consistent with applicable tax law, including but not limited to guidance issued after the effective date of the Plan or any amendment or restatement thereof.

Section 17.18. Insurance . The Employers, on their own behalf or on behalf of the Trustee, and, in their sole discretion, may apply for and procure insurance on the life of a Participant, an FBU Participant or a CSR Participant, in such amounts and in such forms as the Trust may choose. The Employers or the Trustee, as the case may be, shall be the sole owner and beneficiary of any such insurance. Such Participant, FBU Participant or CSR Participant shall have no interest whatsoever in any such policy or policies, and at the request of his or her Employer shall submit to medical examinations and supply such information and execute such documents as may be required by the insurance company or companies to whom the Employers have applied for insurance.

Section 17.19. Legal Fees To Enforce Rights After Change in Control . The Company and each Employer are aware that upon the occurrence of a Change in Control, the Board or the board of directors of an Employer (which might then be composed of new members) or a shareholder of the Company or an Employer, or of any successor corporation might then cause or attempt to cause the Company, an Employer or such successor to refuse to comply with its obligations under the Plan and might cause or attempt to cause the Company or an Employer to institute, or may institute, litigation seeking to deny Participants, FBU Participants or CSR Participants the payments intended under the Plan. In these circumstances, the purpose of the Plan could be frustrated. Accordingly, if, following a Change in Control, it should appear to any Participant, FBU Participant or CSR Participant that the Company, his or her Employer or any

 

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successor corporation has failed to comply with any of its obligations under the Plan or any Plan Agreement thereunder or, if the Company, such Employer or any other person takes any action to declare the Plan void or unenforceable or institutes any litigation or other legal action designed to deny, diminish or to recover from any Participant, FBU Participant or CSR Participant the payments intended to be provided, then the Company and his or her Employer irrevocably authorize such Participant, FBU Participant or CSR Participant to retain counsel of his or her choice at the expense of the Company and his or her Employer (who shall be jointly and severally liable) to represent such Participant, FBU Participant or CSR Participant in connection with the initiation or defense of any litigation or other legal action, whether by or against the Company, his or her Employer or any director, officer, shareholder or other person affiliated with the Company, his or her Employer or any successor thereto in any jurisdiction.

IN WITNESS WHEREOF, the Company has signed this Plan document as of September 22, 2016.

 

LSC Communications, Inc.
By:   /s/ Suzanne S. Bettman
Title:  

Suzanne S. Bettman

President

 

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Exhibit 10.5

ASSIGNMENT OF EMPLOYMENT AGREEMENT

Assignment of Employment Agreement (“Assignment Agreement”), dated as of September 29, 2016, by and between R.R. Donnelley & Sons Company (“RRD”), a Delaware corporation, and LSC Communications, Inc., a Delaware corporation (“LSC”).

Recitals

WHEREAS, RRD has entered into an employment agreement with Thomas J. Quinlan III of RRD (the “Executive”), amended and restated as of November 30, 2008 (the “Employment Agreement”). A copy of the Employment Agreement is attached as to this Assignment Agreement as Annex A ; and

WHEREAS, RRD desires to assign the Employment Agreement to LSC, and LSC desires to acquire all of RRD’s right, title and interest in the Employment Agreement; and

WHEREAS, the Executive has acknowledged and acquiesced to the assignment of his Employment Agreement and the transfer of his employment to LSC.

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

Agreement

 

  1. Assignment of Employment Agreement . Effective as of the LSC Distribution Date, as defined in the Separation and Distribution Agreement by and among RRD, LSC and Donnelley Financial Solutions, Inc. (the “Distribution Date”), RRD hereby irrevocably, absolutely and unconditionally assigns, transfers, conveys and delivers to LSC and its successors and assigns all of RRD’s right, title and interest in, to and under the Employment Agreement.

 

  2. Acceptance of Assignment . From and after the Distribution Date, LSC hereby irrevocably, absolutely and unconditionally assumes, undertakes and agrees to pay, perform and discharge in full any and all claims and obligations arising under and/or in connection with the Employment Agreement.

 

  3. References . From and after the Distribution Date, all references in the Employment Agreement to “Donnelley” or the “Company” shall be deemed to be references to LSC, including, but not limited to, with respect to any triggers such as those relating to a Change in Control or related events.

 

  4. Executive Acknowledgement . The Executive acknowledges and agrees that the transfer of his employment as described in this letter will not constitute a termination of the Executive’s employment (whether or not without “cause” by RRD), nor grounds for leaving with “good reason”, as such terms may be defined under the Employment Agreement as in effect through the Distribution Date. This acknowledgement and agreement is without limitation on the Executive’s rights in the event that he is subsequently terminated without “cause” or would be allowed to leave for “good reason” by LSC.

 

1


  5. Restrictive Covenants . The Executive also acknowledges and agrees that he will be fully obligated to LSC under the non-compete, employee non-solicit and customer non-solicit covenants (together, the “Restrictive Covenants”) of the Employment Agreement. In addition, beginning on the Distribution Date and ending on the day twenty-four (24) months following the Distribution Date (the “Wear Away Period”), if the Executive terminates employment for any reason, he shall be fully obligated to each of RRD and Donnelley Financial under the Restrictive Covenants for the period, if any, beginning on the date of the Executive’s termination and ending at the conclusion of the Wear Away Period. The Executive acknowledges and agrees that the confidentiality and non-disparagement covenants shall survive at all times, both during and after employment, with respect to LSC, and shall survive and apply to each of RRD and Donnelley Financial at all times after employment. The Executive, LSC and RRD acknowledge that Donnelley Financial is a third party beneficiary for purposes of enforcement of this Section 5.

 

  6. Miscellaneous . This Assignment Agreement shall inure to the benefit of the LSC, its successors and assigns. In the event any provision hereof is determined to be unenforceable or invalid such provision or such part thereof as may be unenforceable or invalid shall be deemed severed from this Assignment Agreement and the remaining provisions carried out with the same force and effect as if the severed provisions or part thereof had not been made a part hereof.

[ signature page follows ]

 

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IN WITNESS WHEREOF , the parties hereto have executed this Assignment Agreement on the date first above written.

 

R.R. DONNELLEY & SONS COMPANY     LSC COMMUNICATIONS, INC.
By:   /s/ Daniel L. Knotts     /s/ Suzanne S. Bettman
  Daniel L. Knotts     Suzanne S. Bettman
  Chief Operating Officer     President and Director

Acceptance of Assignment by Executive

I, Thomas J. Quinlan III, do hereby consent to the assignment of my Employment Agreement by and between R.R. Donnelley & Sons Company and LSC Communications, Inc.

Dated: September 29, 2016

 

By:   /s/ Thomas J. Quinlan, III
  Thomas J. Quinlan, III


ANNEX A

[ Copy of Employment Agreement ]

 

4


R.R. Donnelley & Sons Company

111 South Wacker Drive

Chicago, IL 60606-4301

Amended and Restated as of November 30, 2008

Mr. Thomas J. Quinlan III

[address]

Dear Tom:

The purpose of this letter is to amend and restate in its entirety the Employment Agreement, dated as of April 30, 2007, between you and R.R. Donnelley & Sons Company (the “Company”), and to bring the terms of your employment into compliance with the requirements of section 409A of the Internal Revenue Code of 1986, as amended (the “Code”). You are currently the President and Chief Executive Officer of the Company and, effective as of the date hereof, the terms of your employment shall be governed by the terms and provisions of this Agreement as well as any employment and other policies applicable to employees of the Company and its subsidiaries from time to time during the term of your employment. All capitalized terms used but not defined in the text of this letter shall have the meanings assigned to such terms in Annex A.

We and you hereby acknowledge that your employment with the Company constitutes “at-will” employment and that either party may terminate this Agreement at any time, upon written notice of termination within a reasonable period of time before the effective date of the termination. With respect to the terms of your employment with the Company, you will have the customary duties, responsibilities and authorities of a president and chief executive officer at a corporation of a similar size and nature. You will report to the board of directors of the Company (the “Board”).

I. Compensation

You will receive the following compensation and benefits, from which the Company may withhold any amounts required by applicable law:

(i) The Company will pay you a base salary (“Base Salary”) at the rate of $1,000,000 per year. This Base Salary will be paid in accordance with the normal payroll practices of the Company.

(ii) You will be eligible to receive an annual bonus (the “Annual Bonus”) at a target level of 150% of Base Salary in respect of each fiscal year of the Company in accordance with the Company’s annual incentive compensation plan and payable if the Company achieves the performance objectives set forth by the Board (or any designated committee thereof) from time to time. The Annual Bonus shall be approved by the Board. Any Annual Bonus which you become entitled to receive shall be paid to you no later than the 15th day of the third month following the end of the calendar year in which the bonus was earned, unless you timely elect to defer all or a portion of such bonus pursuant to the Company’s deferred compensation plan.


(iii) In addition, you will continue to be eligible to participate in any nonqualified pension plans and qualified plans in the same manner as you currently participate or may elect to participate from time to time after the date of this Agreement.

(iv) You shall be eligible for four (4) weeks vacation annually.

(v) You shall be eligible for a car allowance pursuant to policies applicable to senior officers of the Company from time to time during the term of your employment.

(vi) You shall be eligible for an allowance for financial planning (including tax advice and legal fees related thereto) pursuant to policies applicable to senior officers of the Company from time to time during the term of your employment.

(vii) You shall be eligible for supplemental term life insurance benefits and supplemental long-term disability benefits pursuant to policies applicable to senior officers of the Company from time to time during the term of your employment, provided that you are insurable in accordance with standard underwriting requirements (including passing any physical exams and providing any information necessary to obtain such insurance coverage).

II. Severance

(i) Separation from Service Not Following a Change in Control  

If, prior to a Change in Control, your separation from service within the meaning of Treasury Regulation § 1.409A-1(h) (a “Separation from Service”) with the Company (and its at least 80% owned subsidiaries and affiliated) is initiated by the Company without Cause or if your Separation from Service is initiated by you for Good Reason:

(A) the Company will pay you an amount equal to two times your Annualized Total Compensation, subject to the prompt execution by you of a customary release, which amount shall be payable in equal installments on the 15th and last days of each of the twenty-four (24) months following the thirtieth (30th) day after the date of your Separation from Service (the “Termination Date”) (if the 15th or last day of a month is not a business day, on the closest business day to such date);

(B) the Company will provide to you a continuation of all benefits, including a car allowance and other related benefits, if any, which you were eligible to receive immediately prior to your Separation from Service, for the twenty-four (24) months following the Termination Date (the value of a benefit available in any year that is not used in that year may not be carried over and made available in any other year); and

(C) all outstanding stock options, restricted stock or restricted stock unit awards or other equity grants (other than performance shares or performance share units) issued to you will vest 100% immediately as of the Termination Date. Upon any termination of your employment prior to a Change in Control, any performance shares or performance share units will vest in accordance with the applicable award agreement. Your rights of indemnification under the Company’s and any of its subsidiaries organizational documents, any plan or agreement at law or of otherwise and your rights thereunder to director’s and officer’s liability insurance coverage for, in both cases, actions as an officer and director of the Company and its affiliates shall survive any termination of your employment. In the event of any termination, you agree to resign as an officer and director of the Company and its subsidiaries and affiliates.


(ii) Separation from Service Following a Change in Control  

If, following a Change in Control, you have a Separation from Service initiated by the Company without Cause or if you have a Separation from Service initiated by you for Good Reason:

(A) the Company will pay you an amount equal to three times your Annualized Total Compensation, subject to the prompt execution by you of a customary release, which amount shall be paid to you in a lump sum as soon as is reasonably practicable following the Termination Date; , but only if the Termination Date occurs within two years of the Change in Control; provided, however, that if the Change in Control is not a “change in control event,” within the meaning of section 409A of the Code, then such amount shall be payable in equal installments over the twenty-four (24) months following your Termination Date at the same times described in Section II(i)(A);

(B) the Company will provide to you a continuation of all benefits, including a car allowance and other related benefits, if any, which you were eligible to receive immediately prior to such Separation from Service, until and including the last day of the second calendar year following the calendar year in which the Termination Date occurs (the value of a benefit available in any year that is not used in that year may not be carried over and made available in any other year);

(C) the Company will make the additional payments provided in Annex B, if applicable;

(D) all outstanding stock options, restricted stock or restricted stock unit awards or other equity grants (other than performance shares or performance share units) issued to you will vest 100% immediately as of the Termination Date and any performance shares or performance share units will vest in accordance with the applicable award agreement;

(E) you shall be entitled to a pro rata bonus under the Company’s annual bonus program in effect for the year in which the Termination Date occurs, which pro rata bonus shall be paid at the same time as annual bonuses for such year are paid to the Company’s senior executives, but in no event later than the end of the 21/2 month period occurring after the year in which the Termination Date occurs, and such pro rata bonus shall be equal to the amount, if any, which you would have received under such plan (without regard to any executive-specific objectives), on the basis of the Company’s actual performance for the year, had you not had a Separation from Service, multiplied by a fraction, the numerator of which is the number of days in the year elapsed prior to the Termination Date and the denominator of which is 365; and

(F) the Company will pay you a lump sum of $75,000, payable six months and one day following your Separation from Service.


Your rights of indemnification under the Company’s and any of its subsidiaries’ organizational documents, any plan or agreement at law or otherwise and your rights thereunder to director’s and officer’s liability insurance coverage for, in both cases, actions as an officer and director of the Company and its affiliates shall survive your Separation from Service. In the event of your Separation from Service, you agree to resign as an officer and director of the Company and its subsidiaries and affiliates.

Notwithstanding the foregoing, your Separation from Service initiated by the Company without Cause or your Separation from Service initiated by you for Good Reason which takes place within six (6) months prior to a “change in control event,” within the meaning of section 409A of the Code, shall be, presumptively, a Separation from Service following a Change in Control.

III. Compliance with Section 409A of the Internal Revenue Code.

If you are a “specified employee” within the meaning set forth in the document entitled “409A: Policy of R.R. Donnelley & Sons Company and its Affiliates Regarding Specified Employees” on your Termination Date, then any amounts payable pursuant to this Agreement or otherwise that (i) become payable as a result of your Separation from Service and (ii) are subject to section 409A of the Code as a result of your Separation from Service shall not be paid until the earlier of (x) the first business day of the sixth month occurring after the month in which the Termination Date occurs and (y) the date of your death. Notwithstanding the immediately preceding sentence, amounts payable to you as a result of your Separation from Service that do not exceed two times the lesser of (i) your annualized compensation based upon your annual rate of Base Salary for the year prior to the year in which the date of your Separation from Service occurs and (ii) the maximum amount that may be taken into account under section 401(a)(17) of the Code in the year in which the date of your Separation from Service occurs may be paid as otherwise scheduled. If any compensation or benefits provided by this Agreement may result in the application of section 409A of the Code, then the Company shall, in consultation with you, modify this Agreement to the extent permissible under section 409A of the Code in the least restrictive manner as necessary to exclude such compensation and benefits from the definition of “deferred compensation” within the meaning of such section 409A of the Code or in order to comply with the provisions of section 409A of the Code. By signing this Agreement you acknowledge that if any amount paid or payable to you becomes subject to section 409A of the Code, you are solely responsible for the payment of any taxes and interest due as a result.


IV. General

You agree (i) that at all times both during and after your employment, you will respect the confidentiality of Company’s and its subsidiaries and affiliates’ confidential information and will not disparage the Company and its subsidiaries and affiliates or their officers, directors or employees, and (ii) during your employment and for twenty-four (24) months thereafter, you will not (a) accept a position with, or provide material services to, an entity that competes with a portion of the Company’s business representing more than $25 million of the Company’s revenues on the date of your departure, (b) solicit or hire, or assist others in the solicitation or hiring of, the Company’s employees or (c) interfere with the Company’s business relationships with any material customers or suppliers.

All notices or communications under this Agreement must be in writing, addressed; (i) if to the Company, to the attention of the Chief Human Resources Officer at the Company’s address first written above and (ii) if to you, at your address first written above (or to any other addresses as either party may designate in a notice duly delivered as described in this paragraph). Any notice or communication shall be delivered by telecopy, by hand or by courier. Notices and communications may also be sent by certified or registered mail, return receipt requested, postage prepaid, addressed as above and the third business day after the actual date of mailing shall constitute the time at which notice was given.

Any controversy or claim arising out of or relating to this Agreement or the breach of this Agreement that cannot be resolved by you and the Company, including any dispute as to the calculation of any payments hereunder, and the terms of this Agreement, shall be determined by a single arbitrator in Chicago, Illinois, in accordance with the rules of the American Arbitration Association. The decision of the arbitrator shall be final and binding and may be entered in any court of competent jurisdiction. The arbitrator may award the party he determines has prevailed in the arbitration any legal fees and other fees and expenses that may be incurred in respect of enforcing its respective rights under this Agreement. This Agreement shall be interpreted in accordance with the laws of Illinois.

This Agreement sets forth the entire agreement between us with respect to the matters set forth herein, and fully supersedes any prior agreements or understandings between us. This Agreement may be executed in counterparts. This Agreement may not be modified or terminated orally.

* * * * *


If the foregoing terms and conditions are acceptable and agreed to by you, please sign on the line provided below to signify such acceptance and agreement and return the executed copy to the Chief Human Resources Officer of the Company, at the Company’s address first written above.

 

R.R. Donnelley & Sons Company
By:  

/s/ Thomas M. Carroll

Name:   Thomas M. Carroll
Title:   EVP, Chief Human Resources Officer

Accepted and Agreed as of this 30 th day of November, 2008

/s/ Thomas J. Quinlan III

Thomas J. Quinlan III


Annex A

Definitions

a. “Annualized Total Compensation” means Base Salary plus Annual Bonus (as if all necessary targets and objectives were met at target level) for one year at the rate in effect immediately before the Termination Date.

b. “Cause” means (i) the willful and continued failure of Executive to perform substantially his duties with the Company (other than any such failure resulting from Executive’s incapacity due to physical or mental illness or any such failure subsequent to Executive being delivered a notice of termination without Cause by the Company or delivering a notice of termination for Good Reason to the Company) after a written demand for substantial performance is delivered to Executive by the Chairman or the Board that specifically identifies the manner in which the Chairman or the Board believes that Executive has not substantially performed Executive’s duties, (ii) the willful engaging by Executive in illegal conduct or misconduct which is demonstrably and materially injurious (monetarily or otherwise) to the Company or its subsidiaries and affiliates, (iii) conviction of or the pleading of nolo contendere with regard to, a felony or any crime involving fraud, dishonesty or moral turpitude, or (iv) refusal or failure to attempt in good faith to follow the written direction of the Chairman or the Board (provided that such written direction is consistent with Executive’s duty and station) promptly upon receipt of such written direction. A termination for Cause after a Change in Control shall be based only on events occurring after such Change in Control; provided, however , the foregoing limitation shall not apply to an event constituting Cause which was not discovered by the Company prior to a Change in Control. For purpose of this paragraph (ab), no act or failure to act by Executive shall be considered “willful” unless done or omitted to be done by Executive in bad faith and without reasonable belief that Executive’s action or omission was in the best interests of the Company or its subsidiaries and affiliates. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by Executive in good faith and in the best interests of the Company. Notwithstanding the foregoing, the Company shall provide Executive a reasonable amount of time, after a notice and demand for substantial performance is delivered to Executive, to cure any failure to perform, and if such failure is so cured within a reasonable amount of time thereafter, such failure shall not be deemed to have occurred.

c. “Change in Control” means the occurrence of any one of the following events:

(i) individuals who, on the date of this Agreement, constitute the Board (the “Incumbent Directors”) cease for any reason to constitute at least a majority of the Board, provided that any person becoming a director subsequent to the date of this Agreement, whose election or nomination for election was approved by a vote of at least two-thirds of the Incumbent Directors then on the Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without written objection to such nomination) shall be an Incumbent Director; provided, however , that no individual initially elected or nominated as a director of the Company as a result of an actual or threatened election contest with respect to directors or as a result of any other actual or threatened solicitation of proxies or consents by or on behalf of any person other than the Board shall be deemed to be an Incumbent Director;

 

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(ii) any “person” (as such term is defined in Section 3(a)(9) of the Securities Exchange Act of 1934 (the “Exchange Act”) and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 35% or more of the combined voting power of the Company’s then outstanding securities eligible to vote for the election of the Board (the “Company Voting Securities”); provided, however, that the event described in this paragraph (ii) shall not be deemed to be a Change in Control by virtue of any of the following acquisitions: (A) by the Company or any subsidiary, (B) by any employee benefit plan (or related trust) sponsored or maintained by the Company or any subsidiary, (C) by any underwriter temporarily holding securities pursuant to an offering of such securities, or (D) pursuant to a Non-Qualifying Transaction (as defined in paragraph (iii));

(iii) the consummation of a merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Company or any of its Subsidiaries that requires the approval of the Company’s stockholders, whether for such transaction or the issuance of securities in the transaction (a “Business Combination”), unless immediately following such Business Combination: (A) more than 50% of the total voting power of (x) the corporation resulting from such Business Combination (the “Surviving Corporation”), or (y) if applicable, the ultimate parent corporation that directly or indirectly has beneficial ownership of 100% of the voting securities eligible to elect directors of the Surviving Corporation (the “Parent Corporation”), is represented by Company Voting Securities that were outstanding immediately prior to such Business Combination (or, if applicable, is represented by shares into which such Company Voting Securities were converted pursuant to such Business Combination), and such voting power among the holders thereof is in substantially the same proportion as the voting power of such Company Voting Securities among the holders thereof immediately prior to the Business Combination, (B) no person (other than any employee benefit plan (or related trust) sponsored or maintained by the Surviving Corporation or the Parent Corporation), is or becomes the beneficial owner, directly or indirectly, of 35% or more of the total voting power of the outstanding voting securities eligible to elect directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) other than persons set forth in (A) through (D) of paragraph (ii) and (C) at least a majority of the members of the board of directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) following the consummation of the Business Combination were Incumbent Directors at the time of the Board’s approval of the execution of the initial agreement providing for such Business Combination (any Business Combination which satisfies all of the criteria specified in (A), (B) and (C) above shall be deemed to be a “Non-Qualifying Transaction”);

(iv) the closing of a sale of all or substantially all of the Company’s assets, other than to an entity or in a manner where the voting securities immediately prior to such sale represent directly or indirectly after such sale at least 50% of the voting securities of the entity acquiring such assets in approximately the same proportion as prior to such sale; or

(v) the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company.

 

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Notwithstanding the foregoing, a Change in Control of the Company shall not be deemed to occur solely because any person acquires beneficial ownership of more than 35% of the Company Voting Securities as a result of the acquisition of Company Voting Securities by the Company which reduces the number of Company Voting Securities outstanding; provided, that if after such acquisition by the Company such person becomes the beneficial owner of additional Company Voting Securities that increases the percentage of outstanding Company Voting Securities beneficially owned by such person, a Change in Control of the Company shall then occur.

d. “Good Reason” means, without Executive’s express written consent, the occurrence of any of the following events:

(i) a change in the Executive’s duties or responsibilities (including reporting responsibilities) that taken as a whole represents a material and adverse diminution of the Executive’s duties, responsibilities or status with the Company (other than a temporary change that results from or relates to the incapacitation of the Executive due to physical or mental illness);

(ii) a material reduction by the Company in Executive’s rate of annual base salary or annual target bonus opportunity (including any material and adverse change in the formula for such annual bonus target) as the same may be increased from time to time thereafter;

(iii) any requirement of the Company that Executive’s office be more than seventy-five (75) miles from Executive’s place of residence as of the date of this Agreement; or

(iv) any material breach of the Agreement by the Company.

Notwithstanding the foregoing, a Good Reason event shall not be deemed to have occurred if the Company cures such action, failure or breach within ten (10) days after receipt of notice thereof given by Executive. Executive’s right to terminate employment for Good Reason shall not be affected by Executive’s incapacities due to mental or physical illness and Executive’s continued employment shall not constitute consent to, or a waiver of rights with respect to, any event or condition constituting Good Reason; provided, however, that Executive must provide notice of termination of employment within ninety (90) days following the initial existence of an event constituting Good Reason or such event shall not constitute Good Reason under this Agreement.

 

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Annex B

Gross-Up Payments

(a) Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment, award, benefit or distribution (or any acceleration of any payment, award, benefit or distribution) by the Company (or any of its affiliated entities) or any entity which effectuates a Change in Control (or any of its affiliated entities) to or for the benefit of Executive (whether pursuant to the terms of this Agreement or otherwise, but determined without regard to any additional payments required under this Annex B) (the “Payments”) would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), or any interest or penalties are incurred by Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Company shall pay to Executive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by Executive of all taxes (including any Excise Tax) imposed upon the Gross-Up Payment, Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. For purposes of determining the amount of the Gross-up Payment, the Executive shall be deemed to (i) pay federal income taxes at the highest marginal rates of federal income taxation for the calendar year in which the Gross-up Payment is to be made, and (ii) pay applicable state and local income taxes at the highest marginal rate of taxation for the calendar year in which the Gross-up Payment is to be made, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes. Notwithstanding the foregoing provisions of this Annex B, if it shall be determined that Executive is entitled to a Gross-Up Payment, but that the Payments would not be subject to the Excise Tax if the Payments were reduced by an amount that is less than 10% of the portion of the Payments that would be treated as “parachute payments” under Section 280G of the Code, then the amounts payable to Executive under this Agreement shall be reduced (but not below zero) to the maximum amount that could be paid to Executive without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Payment shall be made to Executive. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Section II(ii)(A), unless an alternative method of reduction is elected by Executive. For purposes of reducing the Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provision.

(b) Subject to the provisions of paragraph (a) of this Annex B, all determinations required to be made under this Annex B, including whether and when a Gross-Up Payment is required, the amount of such Gross-Up Payment, the reduction of the Payments to the Safe Harbor Cap and the assumptions to be utilized in arriving at such determinations, shall be made by the public accounting firm that is retained by the Company as of the date immediately prior to the Change in Control (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and Executive within fifteen (15) business days of the receipt of notice from the Company or the Executive that there has been a Payment, or such earlier time as is requested by

 

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the Company (collectively, the “Determination”). In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change in Control, Executive may appoint another nationally recognized public accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company and the Company shall enter into any agreement requested by the Accounting Firm in connection with the performance of the services hereunder. The Gross-up Payment under this Annex B with respect to any Payments shall be made no later than thirty (30) days following such Payment. If the Accounting Firm determines that no Excise Tax is payable by Executive, it shall furnish Executive with a written opinion to such effect, and to the effect that failure to report the Excise Tax, if any, on Executive’s applicable federal income tax return will not result in the imposition of a negligence or similar penalty. In the event the Accounting Firm determines that the Payments shall be reduced to the Safe Harbor Cap, it shall furnish Executive with a written opinion to such effect. The Determination by the Accounting Firm shall be binding upon the Company and Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the Determination, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”) or Gross-up Payments are made by the Company which should not have been made (“Overpayment”), consistent with the calculations required to be made hereunder. In the event that the Executive thereafter is required to make payment of any Excise Tax or additional Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code) shall be promptly paid by the Company to or for the benefit of Executive. In the event the amount of the Gross-up Payment exceeds the amount necessary to reimburse the Executive for his Excise Tax, the Accounting Firm shall determine the amount of the Overpayment that has been made and any such Overpayment (together with interest at the rate provided in Section 1274(b)(2) of the Code) shall be promptly paid by Executive (to the extent he has received a refund if the applicable Excise Tax has been paid to the Internal Revenue Service) to or for the benefit of the Company. Executive shall cooperate, to the extent his expenses are reimbursed by the Company, with any reasonable requests by the Company in connection with any contests or disputes with the Internal Revenue Service in connection with the Excise Tax and the Executive shall permit the Company to control issues related to the Excise Tax (at its expense) to permit a representative of the Company to accompany the Executive to any conference with any taxing authority and to promptly deliver to the Company copies of any written communications and summaries of any verbal communications with any taxing authority regarding the Excise Tax. The Company, to the extent it has agreed to reimburse such expenses, shall reimburse the Executive for such expenses no later than the end of the calendar year following the calendar year in which the Excise Tax is paid or, if no Excise Tax is due, by the end of the calendar year summaries of any verbal communications with any taxing authority regarding the Excise Tax in which the contest or dispute with the Internal Revenue Service is settled or finally adjudicated.

Exhibit 10.6

ASSIGNMENT OF EMPLOYMENT AGREEMENT

Assignment of Employment Agreement (“Assignment Agreement”), dated as of September 29, 2016, by and between R.R. Donnelley & Sons Company (“RRD”), a Delaware corporation, and LSC Communications, Inc., a Delaware corporation (“LSC”).

Recitals

WHEREAS, RRD has entered into an employment agreement with Andrew B. Coxhead of RRD (the “Executive”), dated November 21, 2008 (the “Employment Agreement”). A copy of the Employment Agreement is attached as to this Assignment Agreement as Annex A ; and

WHEREAS, RRD desires to assign the Employment Agreement to LSC, and LSC desires to acquire all of RRD’s right, title and interest in the Employment Agreement; and

WHEREAS, the Executive has acknowledged and acquiesced to the assignment of his Employment Agreement and the transfer of his employment to LSC.

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

Agreement

 

  1. Assignment of Employment Agreement . Effective as of the LSC Distribution Date, as defined in the Separation and Distribution Agreement by and among RRD, LSC and Donnelley Financial Solutions, Inc. (the “Distribution Date”), RRD hereby irrevocably, absolutely and unconditionally assigns, transfers, conveys and delivers to LSC and its successors and assigns all of RRD’s right, title and interest in, to and under the Employment Agreement.

 

  2. Acceptance of Assignment . From and after the Distribution Date, LSC hereby irrevocably, absolutely and unconditionally assumes, undertakes and agrees to pay, perform and discharge in full any and all claims and obligations arising under and/or in connection with the Employment Agreement.

 

  3. References . From and after the Distribution Date, all references in the Employment Agreement to “Donnelley” or the “Company” shall be deemed to be references to LSC, including, but not limited to, with respect to any triggers such as those relating to a Change in Control or related events.

 

  4. Executive Acknowledgement . The Executive acknowledges and agrees that the transfer of his employment as described in this letter will not constitute a termination of the Executive’s employment (whether or not without “cause” by RRD), as such term may be defined under the Employment Agreement as in effect through the Distribution Date. This acknowledgement and agreement is without limitation on the Executive’s rights in the event that he is subsequently terminated without “cause” or would be allowed to leave for “good reason” by LSC.

 

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  5. Restrictive Covenants . The Executive also acknowledges and agrees that he will be fully obligated to LSC under the non-compete, employee non-solicit and customer non-solicit covenants (together, the “Restrictive Covenants”) of the Employment Agreement. In addition, beginning on the Distribution Date and ending on the day twelve (12) months following the Distribution Date (the “Wear Away Period”), if the Executive terminates employment for any reason, he shall be fully obligated to each of RRD and Donnelley Financial under the Restrictive Covenants for the period, if any, beginning on the date of the Executive’s termination and ending at the conclusion of the Wear Away Period. The Executive acknowledges and agrees that the confidentiality and non-disparagement covenants shall survive at all times, both during and after employment, with respect to LSC, and shall survive and apply to each of RRD and Donnelley Financial at all times after employment. The Executive, LSC and RRD acknowledge that Donnelley Financial is a third party beneficiary for purposes of enforcement of this Section 5.

 

  6. Miscellaneous . This Assignment Agreement shall inure to the benefit of the LSC, its successors and assigns. In the event any provision hereof is determined to be unenforceable or invalid such provision or such part thereof as may be unenforceable or invalid shall be deemed severed from this Assignment Agreement and the remaining provisions carried out with the same force and effect as if the severed provisions or part thereof had not been made a part hereof.

[ signature page follows ]

 

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IN WITNESS WHEREOF , the parties hereto have executed this Assignment Agreement on the date first above written.

 

R.R. DONNELLEY & SONS COMPANY     LSC COMMUNICATIONS, INC.
By:   /s/ Daniel L. Knotts     /s/ Thomas J. Quinlan, III
  Daniel L. Knotts     Thomas J. Quinlan, III
  Chief Operating Officer     Chief Executive Officer

Acceptance of Assignment by Executive

I, Andrew B. Coxhead, do hereby consent to the assignment of my Employment Agreement by and between R.R. Donnelley & Sons Company and LSC Communications, Inc.

Dated: September 29, 2016

 

By:   /s/ Andrew B. Coxhead
  Andrew B. Coxhead


ANNEX A

[ Copy of Employment Agreement ]

 

4


RR Donnelley     

Global Headquarters

111 South Wacker Drive

Chicago, Illinois 60606-4301

Telephone (312) 326 8000

November 21, 2008

Andrew Coxhead

[address]

Dear Drew:

The purpose of this letter is to amend and restate in its entirety the employment agreement dated October 29, 2007 between you and R.R. Donnelley & Sons Company (“Donnelley” or “Company”) to bring the terms of the employment agreement into compliance with section 409A of the Internal Revenue Code of 1986, as amended (the “Code”). All capitalized terms used but not defined in the text of this agreement (“Agreement”) shall have the meanings assigned to such terms in Annex A.

The terms of this Agreement are as follows:

 

  1. Title and Responsibilities . You will continue to serve as Senior Vice President, Controller in accordance with the terms and provisions of this Agreement as well as any employment and other policies applicable to employees of the Company and its subsidiaries from time to time during the term of your employment. You will have the customary duties, responsibilities and authorities of such position. You will also receive such office, staffing and other assistance as is commensurate with that received by other executives at your level in the Company.

 

  2. Employment at Will . You and we hereby acknowledge that your employment with the Company constitutes “at-will” employment and that either party may terminate your employment at any time upon written notice of termination within a reasonable period of time before the effective date of your Separation from Service.

 

  3. Compensation . You will receive the following compensation and benefits, from which the Company may withhold any amounts required by applicable law.

 

  a. Base Salary . The Company will pay you a base salary (“Base Salary”) at the rate of $300,000 per year. This Base Salary will be paid in accordance with the normal payroll practices of the Company.

 

  b. Annual Bonus . In respect of each calendar year of the Company, you will be eligible to receive an annual bonus (the “Annual Bonus”) in accordance with the Company’s annual incentive compensation plan (“Plan”) with a target bonus opportunity of 75% of Base Salary. The performance objectives for your Annual Bonus with respect to each calendar year will be determined as provided for in the Plan. Any Annual Bonus which you become entitled to receive shall be paid to you no later than the 15 th day of the third month following the end of the calendar year in which the bonus was earned, unless you timely elect to defer all or a portion of such bonus pursuant to the Company’s deferred compensation plan.

 

  c. Vacation . You will be eligible for four weeks vacation annually.

 

  d. Benefits . You will continue to be eligible to participate in the employee benefit plan and programs generally applicable to Donnelley employees.


  4. Severance . If your Separation from Service with the Company (and its at least 80% owned subsidiaries and affiliates) is initiated by the Company without Cause, the following will apply:

 

  a. Severance Pay . The Company will pay you an amount equal to one times your Annualized Total Compensation (“Severance Pay”), subject to the prompt execution by you of the Company’s customary release, which amount shall be payable in equal installments on the 15 th and last days of each of the 12 months following the thirtieth (30 th ) day after the date of your Separation from Service (if the 15 th or last day of a month is not a business day, on the closest business day to such day).

 

  b. Benefits . Your medical, dental and vision insurance coverage in effect immediately before the date of your Separation from Service will continue to be available to you under the group health plan continuation coverage laws (“COBRA”) for a period of 18 months following the date of your Separation from Service (the “COBRA Period”). If you elect COBRA coverage, it will be available to you for the first 12 months of the COBRA Period at the same cost your insurance coverage is available to active employees. After the first 12 months of COBRA coverage, the Company will no longer subsidize the cost of your COBRA coverage and, thus, insurance coverage for the remainder of the COBRA Period will be available to you only at the full COBRA rates then in effect. Your short-term and long-term disability, group life insurance and accidental death and dismemberment insurance end on the date of your Separation from Service.

 

  c. Resignations . You shall resign from such offices and directorships, if any, of the Company that you may hold from time to time.

 

  d. Indemnification . Your rights of indemnification under the Company’s organizational documents, any plan or agreement at law or otherwise and your rights thereunder to director’s and officer’s liability insurance coverage for, in both cases, actions as an officer of the Company shall survive your Separation from Service.

 

  e. Section 409A . If you are a “specified employee” within the meaning set forth in the document entitled “409A: Policy of R. R. Donnelley & Sons Company and its Affiliates Regarding Specified Employees” on the date of your Separation from Service, then any amounts payable pursuant to this Agreement or otherwise that (i) become payable as a result of your Separation from Service and (ii) are subject to section 409A of the Code as a result of your Separation from Service shall not be paid until the earlier of (x) the first business day of the sixth month occurring after the month in which the date of your Separation from Service occurs and (y) the date of your death. Notwithstanding the immediately preceding sentence, amounts payable to you as a result of your Separation from Service that do not exceed two times the lesser of (i) your annualized compensation based upon your annual rate of Base Salary for the year prior to the year in which the date of your Separation from Service occurs and (ii) the maximum amount that may be taken into account under section 401(a)(17) of the Code in the year in which the date of your Separation from Service occurs may be paid as otherwise scheduled. If any compensation or benefits provided by this Agreement may result in the application of section 409A of the Code, then the Company shall, in consultation with you, modify this Agreement to the extent permissible under section 409A of the Code in the least restrictive manner as necessary to exclude such compensation and benefits from the definition of “deferred compensation” within the meaning of such section 409A of the Code or in order to comply with the provisions of section 409A of the Code. By signing this Agreement you acknowledge that if any amount paid or payable to you becomes subject to section 409A of the Code, you are solely responsible for the payment of any taxes and interest due as a result.


  5. Restrictive Covenants . You and Donnelley recognize that due to the nature of your employment and relationship with Donnelley, you will have access to and develop confidential business information, proprietary information, and trade secrets relating to the business and operations of Donnelley and its affiliates. You acknowledge that such information is valuable to the business of Donnelley and its affiliates, and that disclosure to, or use for the benefit of, any person or entity other than Donnelley or its affiliates, would cause substantial damage to Donnelley. You further acknowledge that your duties for Donnelley include the opportunity to develop and maintain relationships with Donnelley customers, employees, representatives and agents on behalf of Donnelley and that access to and development of those close relationships with Donnelley customers render your services special, unique and extraordinary. In recognition that the good will and relationships described herein are assets and extremely valuable to Donnelley, and that loss of or damage to those relationships would destroy or diminish the value of Donnelley, you agree as follows:

 

  a. Noncompetition . In consideration of the covenants and agreements of the Company herein contained, the payments to be made by the Company pursuant to this Agreement, the positions of trust and confidence you occupy and have occupied with the Company and the information of a highly sensitive and confidential nature obtained as a result of such positions, you agree that, from the date of your Separation from Service for any reason, including a Separation from Service initiated by Donnelley with or without Cause, and for 12 months thereafter, you will not, directly or indirectly, either as an employee, employer, consultant, agent, principal, partner, stockholder, corporate officer, director or in any other individual or representative capacity, worldwide, engage in any business which is competitive with the business of Donnelley. You may, however, own stock or the rights to own stock in a company covered by this paragraph that is publicly owned and regularly traded on any national exchange or in the over-the-counter market, so long as your holdings of stock or rights to own stock do not exceed the lesser of (i) 1% of the capital stock entitled to vote in the election of directors and (ii) the combined value of the stock or rights to acquire stock does not exceed your gross annual earnings from the Company.

 

  b. Importance of Customer Relationships . You recognize that Donnelley’s relationship with the customer or customers you serve, and with other employees, is special and unique, based upon the development and maintenance of good will resulting from the customers’ and other employees’ contacts with Donnelley and its employees, including you. As a result of your position and customer contacts, you recognize that you will gain valuable information about (i) Donnelley’s relationship with its customers, their buying habits, special needs, purchasing policies, (ii) the skills, capabilities and other employment-related information about Donnelley employees, and (iii) other matters which you would not otherwise know and which is not otherwise readily available. Such knowledge is essential to the business of Donnelley and you recognize that your Separation from Service shall require Donnelley to rebuild that customer relationship to retain the customer’s business. You recognize that during a period following your Separation from Service, Donnelley is entitled to protection from your using the information and customer and employee relationships with which you have been entrusted by Donnelley during your employment.

 

  c.

Nonsolicitation of Customers . You shall, not while employed by Donnelley and for a period of 12 months from the date of your Separation from Service with Donnelley for any reason, including your Separation from Service initiated by Donnelley with or without Cause, directly or indirectly, either on your own behalf or on behalf of any other person, firm or entity, solicit or provide services which are the same as or similar to the services Donnelley provided or offered while you were employed by Donnelley to any customer or prospective customer of Donnelley (i) with whom you had direct contact in the course of your employment with Donnelley or about whom you learned confidential information as a


  result of your employment with Donnelley or (ii) with whom any person over whom you had supervisory authority at any time had direct contact during the course of his or her employment with Donnelley or about whom such person learned confidential information as a result of his or her employment with Donnelley.

 

  d. Nonsolicitation of Employees . You shall not while employed by Donnelley and for a period of two years from the date of your Separation from Service with Donnelley for any reason, including your Separation from Service initiated by Donnelley, with or without Cause, either directly or indirectly solicit, induce or encourage any Donnelley employee(s) to terminate their employment with Donnelley or to accept employment with any entity, including but not limited to a competitor, supplier or customer of Donnelley, nor shall you cooperate with any others in doing or attempting to do so. As used herein, the term “solicit, induce or encourage” includes, but is not limited to, (a) initiating communications with a Donnelley employee relating to possible employment, (b) offering bonuses or additional compensation to encourage Donnelley employees to terminate their employment with Donnelley and accept employment with a competitor, supplier or customer of Donnelley, or (c) referring Donnelley employees to personnel or agents employed by competitors, suppliers or customers of Donnelley.

 

  e. Confidential Information . You are prohibited from, at any time during your employment with the Company or thereafter, disclosing or using any Confidential Information for your benefit or any other person or entity, unless directed or authorized in writing by the Company to do so, until such time as the information becomes generally known to the public without your fault. “Confidential Information” means information (i) disclosed to or known by you as a consequence of your employment with the Company, (ii) not generally known to others outside the Company, and (iii) that relates to the Company’s marketing, sales, finances, operations, processes, methods, techniques, devices, software programs, projections, strategies and plans, personnel information, industry contacts made during your employment, and customer information, including customer needs, contacts, particular projects, and pricing. These restrictions are in addition to any confidentiality restrictions in any other agreement you may have signed with the Company.

 

  f. Obligation upon Subsequent Employment . If you accept employment with any future employer during the time period that equals the greater of one year following the date of your Separation from Service with Donnelley and the Severance Period (regardless of whether you actually receive severance benefits during that period), you will deliver a copy of this Agreement to such employer and advise such employer concerning the existence of your obligations under this Agreement.

 

  g. Company’s Right to Injunctive Relief . By execution of this Agreement, you acknowledge and agree that the Company would be damaged irreparably if any provision under this Section 5 were breached by you and money damages would be an inadequate remedy for any such nonperformance or breach. Accordingly, the Company and its successors or permitted assigns in order to protect its interests, shall pursue, in addition to other rights and remedies existing in its favor, an injunction or injunctions to prevent any breach or threatened breach of any of such provisions and to enforce such provisions specifically (without posting a bond or other security). With respect to such enforcement, the prevailing party in such litigation shall be entitled to recover from the other party any and all attorneys’ fees, costs and expenses incurred by or on behalf of that party in enforcing or attempting to enforce any provision under this Section 5 or any other rights under this Agreement.


  6. General .

 

  a. Acknowledgement of Reasonableness and Severability. You acknowledge and agree that the provisions of this Agreement, including Section 5, are reasonable and valid in geographic, temporal and subject matter scope and in all other respects, and do not impose limitations greater than are necessary to protect the goodwill, Confidential Information and other business interests of the Company. If any court subsequently determines that any part of this Agreement, including Section 5, is invalid or unenforceable, the remainder of the Agreement shall not be affected and shall be given full effect without regard to the invalid portions. Further, any court invalidating any provision of this Agreement shall have the power to revise the invalidated provisions such that the provision is enforceable to the maximum extent permitted by applicable law.

 

  b. Non-duplication of Severance Pay . If, upon ultimate termination of employment, the separation pay for which you would be eligible under the R.R. Donnelley & Sons Company Separation Pay Plan applicable to employees generally, if any, would be greater than the separation pay payable under to this Agreement, then your Severance Pay shall be increased to correspond to the pay you would have been eligible for under such Plan. To avoid duplicate payments, if you are eligible to receive severance under this Agreement, you hereby waive any payments under the R.R. Donnelley & Sons Company Separation Pay Plan.

 

  c. Employee Breach . If you breach this Agreement or any other agreement you have signed with the Company, the Company may, in its complete discretion, stop making any of the payments provided for in this Agreement.

 

  d. Arbitration . Any controversy arising out of or relating to this Agreement or the breach of this Agreement that cannot be resolved by you and the Company, including any dispute as to the calculation of any payments hereunder, and the terms of this Agreement, shall be determined by a single arbitrator in New York, New York, in accordance with the rules of JAMS; provided , however , that either party may seek preliminary injunctive relief to maintain or restore the status quo pending a decision of the arbitrator, and the parties consent to the exclusive jurisdiction of the courts of the State of Delaware or the Federal courts of the United States of America located in the District of Delaware in connection therewith. The decision of the arbitrator shall be final and binding and may be entered in any court of competent jurisdiction. The arbitrator may award the party he determines has prevailed in the arbitration any legal fees and other fees and expenses that may be incurred in respect of enforcing its respective rights.

 

  e. Governing Law . All disputes arising under or related to this Agreement shall at all times be governed by and construed in accordance with the internal laws (as opposed to the conflict of law provisions) and decisions of the State of Delaware as applied to agreements executed in and to be fully performed within that State.

 

  f. Notice and Execution . This Agreement may be executed in counterparts. Any notice or request required or permitted to be given hereunder shall be sufficient if in writing and deemed to have been given if delivered personally or sent by certified mail, return receipt requested, to you at the address above, and to the Company at its Corporate Headquarters (Attn: Corporate Secretary).

 

  g. Entire Agreement . This Agreement shall constitute the entire agreement between the parties with respect to the subject matter contained herein, and fully supersedes any prior agreements or understandings between us. This Agreement may not be changed or amended orally, but only in writing signed by both parties.


  h. Waiver . The failure of either party hereto to enforce at any time any provision of this Agreement shall not be construed as a waiver of such provision nor in any way to affect the validity of this Agreement or any part hereof or the right of such party thereafter to enforce each and every such provision. No waiver of any breach of this Agreement shall be held to constitute a waiver of any other or subsequent breach.

 

  i. Assignments and Successors . The rights and obligations of the Company under this Agreement shall inure to the benefit of and be binding upon its successors and assigns. Your rights and obligations under this Agreement shall inure to the benefit of and be binding upon your designated beneficiary or legal representative, provided, however , that you may not assign any of your rights and obligations hereunder.

If the foregoing terms and conditions are acceptable and agreed to by you, please sign on the line provided below to signify such acceptance and agreement and return the executed copy to the Chief Human Resources Officer.

 

Very truly yours,
R. R. Donnelley & Sons Company
By:   /s/ Thomas J. Quinlan, III
 

 

  Thomas J. Quinlan, III
  President & Chief Executive Officer
ACCEPTED AND AGREED to this 24 th day of November
/s/ Andrew Coxhead

 

Andrew Coxhead


Annex A

Definitions

 

1. Annualized Total Compensation ” means Base Salary plus Annual Bonus (at the target level) for one year at the rate in effect immediately before the date of your Separation from Service, but, for these calculations only, your Base Salary and target bonus percentage shall not be less than the amount set forth in Section 3, above.

 

2. Cause ” means (i) your willful and continued failure to perform substantially your duties with the Company (other than any such failure resulting from your incapacity due to physical or mental illness or any such failure subsequent to your being delivered a notice of termination without Cause) after a written demand for substantial performance is delivered to you by the Chief Financial Officer, the Chief Executive Officer, or the Board that identifies the manner in which you have not performed your duties, (ii) your willful engaging in conduct which is demonstrably and materially injurious (monetarily or otherwise) to the business, reputation, character or community standing of the Company, (iii) conviction of or the pleading of nolo contendere with regard to a felony or any crime involving fraud, dishonesty or moral turpitude, or (iv) refusal or failure to attempt in good faith to follow the written direction of the Chief Financial Officer, the Chief Executive Officer, or the Board (provided that such written direction is consistent with your duty and station) promptly upon receipt of such written direction. For the purposes of this definition, no act or failure to act by you shall be considered “willful” unless done or omitted to be done by you in bad faith and without reasonable belief that your action or omission was in the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or based upon the advice of the Company’s principal outside counsel shall be conclusively presumed to be done, or omitted to be done, by you in good faith and in the best interests of the Company. Notwithstanding the foregoing, the Company shall provide you with a reasonable amount of time, after a notice and demand for substantial performance is delivered to you, to cure any such failure to perform, and if such failure is so cured within a reasonable time thereafter, such failure shall not be deemed to have occurred.

 

3. Committee ” means a committee designated by the Chief Human Resources Officer of the Company.

 

4. Separation from Service ” means a termination of employment with the Company within the meaning of Treasury Regulation § 1.409A-1(h).

Exhibit 10.7

ASSIGNMENT OF EMPLOYMENT AGREEMENT

Assignment of Employment Agreement (“Assignment Agreement”), dated as of September 29, 2016, by and between R.R. Donnelley & Sons Company (“RRD”), a Delaware corporation, and LSC Communications, Inc., a Delaware corporation (“LSC”).

Recitals

WHEREAS, RRD has entered into an employment agreement with Suzanne S. Bettman of RRD (the “Executive”), dated December 18, 2008 (the “Employment Agreement”). A copy of the Employment Agreement is attached as to this Assignment Agreement as Annex A ; and

WHEREAS, RRD desires to assign the Employment Agreement to LSC, and LSC desires to acquire all of RRD’s right, title and interest in the Employment Agreement; and

WHEREAS, the Executive has acknowledged and acquiesced to the assignment of her Employment Agreement and the transfer of her employment to LSC.

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

Agreement

 

  1. Assignment of Employment Agreement . Effective as of the LSC Distribution Date, as defined in the Separation and Distribution Agreement by and among RRD, LSC and Donnelley Financial Solutions, Inc. (the “Distribution Date”), RRD hereby irrevocably, absolutely and unconditionally assigns, transfers, conveys and delivers to LSC and its successors and assigns all of RRD’s right, title and interest in, to and under the Employment Agreement.

 

  2. Acceptance of Assignment . From and after the Distribution Date, LSC hereby irrevocably, absolutely and unconditionally assumes, undertakes and agrees to pay, perform and discharge in full any and all claims and obligations arising under and/or in connection with the Employment Agreement.

 

  3. References . From and after the Distribution Date, all references in the Employment Agreement to “Donnelley” or the “Company” shall be deemed to be references to LSC, including, but not limited to, with respect to any triggers such as those relating to a Change in Control or related events.

 

  4. Executive Acknowledgement . The Executive acknowledges and agrees that the transfer of her employment as described in this letter will not constitute a termination of the Executive’s employment (whether or not without “cause” by RRD), nor grounds for leaving with “good reason”, as such terms may be defined under the Employment Agreement as in effect through the Distribution Date. This acknowledgement and agreement is without limitation on the Executive’s rights in the event that she is subsequently terminated without “cause” or would be allowed to leave for “good reason” by LSC.

 

1


  5. Restrictive Covenants . The Executive also acknowledges and agrees that she will be fully obligated to LSC under the non-compete, employee non-solicit and customer non-solicit covenants (together, the “Restrictive Covenants”) of the Employment Agreement. In addition, beginning on the Distribution Date and ending on the day eighteen (18) months following the Distribution Date (the “Wear Away Period”), if the Executive terminates employment for any reason, she shall be fully obligated to each of RRD and Donnelley Financial under the Restrictive Covenants for the period, if any, beginning on the date of the Executive’s termination and ending at the conclusion of the Wear Away Period. The Executive acknowledges and agrees that the confidentiality and non-disparagement covenants shall survive at all times, both during and after employment, with respect to LSC, and shall survive and apply to each of RRD and Donnelley Financial at all times after employment. The Executive, LSC and RRD acknowledge that Donnelley Financial is a third party beneficiary for purposes of enforcement of this Section 5.

 

  6. Miscellaneous . This Assignment Agreement shall inure to the benefit of the LSC, its successors and assigns. In the event any provision hereof is determined to be unenforceable or invalid such provision or such part thereof as may be unenforceable or invalid shall be deemed severed from this Assignment Agreement and the remaining provisions carried out with the same force and effect as if the severed provisions or part thereof had not been made a part hereof.

[ signature page follows ]

 

2


IN WITNESS WHEREOF , the parties hereto have executed this Assignment Agreement on the date first above written.

 

R.R. DONNELLEY & SONS COMPANY     LSC COMMUNICATIONS, INC.
By:   /s/ Daniel L. Knotts     /s/ Thomas J. Quinlan, III
  Daniel L. Knotts     Thomas J. Quinlan, III
  Chief Operating Officer     Chief Executive Officer

Acceptance of Assignment by Executive

I, Suzanne S. Bettman, do hereby consent to the assignment of my Employment Agreement by and between R.R. Donnelley & Sons Company and LSC Communications, Inc.

Dated: September 29, 2016

 

By:   /s/ Suzanne S. Bettman
  Suzanne S. Bettman


ANNEX A

[ Copy of Employment Agreement ]

 

4


RR Donnelley      Global Headquarters
     111 South Wacker Drive
     Chicago, Illinois 60606-4301
     Telephone (312) 326 8000

December 18, 2008

Suzanne Bettman

[address]

Dear Sue:

The purpose of this letter is to amend and restate in its entirety the employment agreement dated October 29, 2007 between you and R.R. Donnelley & Sons Company (“Donnelley” or “Company”) and to bring the terms of the employment agreement into compliance with section 409A of the Internal Revenue Code of 1986, as amended (the “Code”). All capitalized terms used but not defined in the text of this letter (“Agreement”) shall have the meanings assigned to such terms in Annex A.

The terms of this Agreement are as follows:

 

  1. Title and Responsibilities . You will continue to serve as Executive Vice President, General Counsel, Corporate Secretary and Chief Compliance Officer of the Company, reporting to the Chief Executive Officer, in accordance with the terms and provisions of this Agreement as well as any employment and other policies applicable to employees of the Company and its subsidiaries from time to time during the term of your employment. You will have the customary duties, responsibilities and authorities of such position. You will also receive such office, staffing and other assistance as is commensurate with that received by other executives at your level in the Company.

 

  2. Employment at Will . You and we hereby acknowledge that your employment with the Company constitutes “at-will” employment and that either party may terminate your employment at any time upon written notice of termination within a reasonable period of time before the effective date of your Separation from Service.

 

  3. Compensation . You will receive the following compensation and benefits, from which the Company may withhold any amounts required by applicable law:

 

  a. Base Salary . The Company will pay you a base salary (“Base Salary”) at the rate of $400,000 per year. This Base Salary will be paid in accordance with the normal payroll practices of the Company.

 

  b. Annual Bonus . In respect of each calendar year of the Company, you will be eligible to receive an annual bonus (the “Annual Bonus”) in accordance with the Company’s annual incentive compensation plan (“Plan”) with a target bonus opportunity of 150% of Base Salary. The performance objectives for your Annual Bonus with respect to each calendar year will be determined as provided for in the Plan. Any Annual Bonus which you become entitled to receive shall be paid to you no later than the 15 th day of the third month following the end of the calendar year in which the bonus was earned, unless you timely elect to defer all or a portion of such bonus pursuant to the Company’s deferred compensation plan.


  c. Vacation . You will be eligible for four weeks vacation annually.

 

  d. Benefits . You will continue to be eligible to participate in the employee benefit plan and programs generally applicable to RR Donnelley employees.

 

  e. Car Allowance . You will receive a car allowance in the amount of $1,000 per month.

 

  f. Financial Planning, Supplemental Life and Disability . You will be entitled to a Financial Planning allowance, and Supplemental Life and Disability Insurance consistent with other executives at your level in the Company.

 

  4. Severance . If your Separation from Service with the Company (and its at least 80% owned subsidiaries and affiliates) is initiated by the Company without Cause or your Separation from Service is initiated by you for Good Reason, the following will apply:

 

  a. Severance Pay . The Company will pay you an amount equal to one and one-half times your Annualized Total Compensation (“Severance Pay”), subject to the prompt execution by you of the Company’s customary release, which amount shall be payable in equal installments on the 15 th and last days of each of the 18 months following the 30 th day after the date of your Separation from Service (if the 15 th or last day of a month is not a business day, on the closest business day to such day).

 

  b. Benefits . The Company will provide to you a continuation of all benefits that you were eligible to receive immediately prior to the date of your Separation from Service, for a period of 18 months following the date of your Separation from Service (the value of a benefit available in any year that is not used in that year may not be carried over and made available in any other year).

 

  c. Resignations . You shall resign from such offices and directorships, if any, of the Company that you may hold from time to time.

 

  d. Indemnification . Your rights of indemnification under the Company’s organizational documents, any plan or agreement at law or otherwise and your rights thereunder to director’s and officer’s liability insurance coverage for, in both cases, actions as an officer of the Company shall survive your Separation from Service.

 

  e. Gross-up Payment . You will be entitled to receive a gross-up payment as provided in Annex B.


  f. Vesting of Equity Grants . Any outstanding stock options, grants, restricted stock awards or other equity grants issued to you from time to time, will vest 100% immediately as of the date of your Separation from Service.

 

  g. Section 409A . If you are a “specified employee” within the meaning set forth in the document entitled “409A: Policy of R. R. Donnelley & Sons Company and its Affiliates Regarding Specified Employees” on the date of your Separation from Service, then any amounts payable pursuant to this Agreement or otherwise that (i) become payable as a result of your Separation from Service and (ii) are subject to section 409A of the Code as a result of your Separation from Service shall not be paid until the earlier of (x) the first business day of the sixth month occurring after the month in which the date of your Separation from Service occurs and (y) the date of your death. Notwithstanding the immediately preceding sentence, amounts payable to you as a result of your Separation from Service that do not exceed two times the lesser of (i) your annualized compensation based upon your annual rate of Base Salary for the year prior to the year in which the date of your Separation from Service occurs and (ii) the maximum amount that may be taken into account under section 401(a)(17) of the Code in the year in which the date of your Separation from Service occurs may be paid as otherwise scheduled. If any compensation or benefits provided by this Agreement may result in the application of section 409A of the Code, then the Company shall, in consultation with you, modify this Agreement to the extent permissible under section 409A of the Code in the least restrictive manner as necessary to exclude such compensation and benefits from the definition of “deferred compensation” within the meaning of such section 409A of the Code or in order to comply with the provisions of section 409A of the Code. By signing this Agreement you acknowledge that if any amount paid or payable to you becomes subject to section 409A of the Code, you are solely responsible for the payment of any taxes and interest due as a result.

 

  5. Restrictive Covenants . You and Donnelley recognize that, due to the nature of your employment and relationship with Donnelley, you will have access to and develop confidential business information, proprietary information, and trade secrets relating to the business and operations of Donnelley and its affiliates. You acknowledge that such information is valuable to the business of Donnelley and its affiliates, and that disclosure to, or use for the benefit of, any person or entity other than Donnelley or its affiliates, would cause substantial damage to Donnelley. You further acknowledge that your duties for Donnelley include the opportunity to develop and maintain relationships with Donnelley customers, employees, representatives and agents on behalf of Donnelley and that access to and development of those close relationships with Donnelley customers render your services special, unique and extraordinary. In recognition that the good will and relationships described herein are assets and extremely valuable to Donnelley, and that loss of or damage to those relationships would destroy or diminish the value of Donnelley, you agree as follows:

 

  a. Noncompetition . In consideration of the covenants and agreements of the Company herein contained, the payments to be made by the Company pursuant to this Agreement, the positions of trust and confidence you occupy and have occupied with the Company and the information of a highly sensitive and confidential nature obtained as a result of such positions, you agree that, from the date of your Separation from Service for any reason, including a Separation from Service initiated by Donnelley with or without Cause, and for 18 months thereafter, you will not, directly or indirectly, either as an employee, employer, consultant, agent, principal, partner, stockholder, corporate officer, director or in any other individual or representative capacity, worldwide, engage in any business which is competitive with the business of Donnelley. You may, however, own stock or the rights to own stock in a company covered by this paragraph that is publicly owned and regularly traded on any national exchange or in the over-the-counter market, so long as your holdings of stock or rights to own stock do not exceed the lesser of (i) 1% of the capital stock entitled to vote in the election of directors or (ii) the combined value of the stock or rights to acquire stock does not exceed your gross annual earnings from the Company.


  b. Importance of Customer Relationships . You recognize that Donnelley’s relationship with the customer or customers you serve, and with other employees, is special and unique, based upon the development and maintenance of good will resulting from the customer’s and other employees’ contacts with Donnelley and its employees, including you. As a result of your position and customer contacts, you recognize that you will gain valuable information about (i) Donnelley’s relationship with its customers, their buying habits, special needs, purchasing policies, (ii) the skills, capabilities and other employment-related information about Donnelley employees, and (iii) other matters which you would not otherwise know and which is not otherwise readily available. Such knowledge is essential to the business of Donnelley and you recognize that your Separation from Service shall require Donnelley to rebuild that customer relationship to retain the customer’s business. You recognize that during a period following your Separation from Service, Donnelley is entitled to protection from your using the information and customer and employee relationships with which you have been entrusted by Donnelley during your employment.

 

  c. Nonsolicitation of Customers . You shall not, while employed by Donnelley and for a period of 18 months from the date of your Separation from Service with Donnelley for any reason, including your Separation from Service initiated by Donnelley with or without Cause, directly or indirectly, either on your own behalf or on behalf of any other person, firm or entity, solicit or provide services which are the same as or similar to the services Donnelley provided or offered while you were employed by Donnelley to any customer or prospective customer of Donnelley (i) with whom you had direct contact in the course of your employment with Donnelley or about whom you learned confidential information as a result of your employment with Donnelley or (ii) with whom any person over whom you had supervisory authority at any time had direct contact during the course of his or her employment with Donnelley or about whom such person learned confidential information as a result of his or her employment with Donnelley.


  d. Nonsolicitation of Employees . You shall not, while employed by Donnelley and for a period of two years from the date of your Separation from Service with Donnelley for any reason, including your Separation from Service initiated by Donnelley with or without Cause, either directly or indirectly solicit, induce or encourage any Donnelley employee(s) to terminate their employment with Donnelley or to accept employment with any entity, including but not limited to a competitor, supplier or customer of Donnelley, nor shall you cooperate with any others in doing or attempting to do so. As used herein, the term “solicit, induce or encourage” includes, but is not limited to, (a) initiating communications with a Donnelley employee relating to possible employment, (b) offering bonuses or additional compensation to encourage Donnelley employees to terminate their employment with Donnelley and accept employment with a competitor, supplier or customer of Donnelley, or (c) referring Donnelley employees to personnel or agents employed by competitors, suppliers or customers of Donnelley.

 

  e. Confidential Information . You are prohibited from, at any time during your employment with the Company or thereafter, disclosing or using any Confidential Information for your benefit or any other person or entity, unless directed or authorized in writing by the Company to do so, until such time as the information becomes generally known to the public without your fault. “Confidential Information” means information (i) disclosed to or known by you as a consequence of your employment with the Company, (ii) not generally known to others outside the Company, and (iii) that relates to the Company’s marketing, sales, finances, operations, processes, methods, techniques, devices, software programs, projections, strategies and plans, personnel information, industry contacts made during your employment, and customer information, including customer needs, contacts, particular projects, and pricing. These restrictions are in addition to any confidentiality restrictions in any other agreement you may have signed with the Company.

 

  f. Obligation upon Subsequent Employment . If you accept employment with any future employer during the time period that equals the greater of one year following the date of your Separation from Service and the Severance Period (regardless of whether you actually receive severance benefits during that period), you will deliver a copy of this Agreement to such employer and advise such employer concerning the existence of your obligations under this Agreement.

 

  g. Company’s Right to Injunctive Relief . By execution of this Agreement, you acknowledge and agree that the Company would be damaged irreparably if any provision under this Section 5 were breached by you and money damages would be an inadequate remedy for any such nonperformance or breach. Accordingly, the Company and its successors or permitted assigns in order to protect its interests, shall pursue, in addition to other rights and remedies existing in its favor, an injunction or injunctions to prevent any breach or threatened breach of any of such provisions and to enforce such provisions specifically (without posting a bond or other security). With respect to such enforcement, the prevailing party in such litigation shall be entitled to recover from the other party any and all attorneys’ fees, costs and expenses incurred by or on behalf of that party in enforcing or attempting to enforce any provision under this Section 5 or any other rights under this Agreement.


  6. General .

 

  a. Acknowledgement of Reasonableness and Severability . You acknowledge and agree that the provisions of this Agreement, including Section 5, are reasonable and valid in geographic, temporal and subject matter scope and in all other respects, and do not impose limitations greater than are necessary to protect the goodwill, Confidential Information and other business interests of the Company. If any court subsequently determines that any part of this Agreement, including Section 5, is invalid or unenforceable, the remainder of the Agreement shall not be affected and shall be given full effect without regard to the invalid portions. Further, any court invalidating any provision of this Agreement shall have the power to revise the invalidated provisions such that the provision is enforceable to the maximum extent permitted by applicable law.

 

  b. Non-duplication of Severance Pay . If, upon ultimate Separation from Service, the separation pay for which you would be eligible under the R.R. Donnelley & Sons Company Separation Pay Plan applicable to employees generally, if any, would be greater than the separation pay payable under to this Agreement, then your Severance Pay shall be increased to correspond to the pay you would have been eligible for under such Plan. To avoid duplicate payments, if you arc eligible to receive severance under this Agreement, you hereby waive any payments under the R.R. Donnelley & Sons Company Separation Pay Plan.

 

  c. Employee Breach . If you breach this Agreement or any other agreement you have signed with the Company, the Company may, in its complete discretion, stop making any of the payments provided for in this Agreement.

 

  d. Arbitration . Any controversy arising out of or relating to this Agreement or the breach of this Agreement that cannot be resolved by you and the Company, including any dispute as to the calculation of any payments hereunder, and the terms of this Agreement, shall be determined by a single arbitrator in New York, New York, in accordance with the rules of JAMS; provided, however , that either party may seek preliminary injunctive relief to maintain or restore the status quo pending a decision of the arbitrator, and the parties consent to the exclusive jurisdiction of the courts of the State of Delaware or the Federal courts of the United States of America located in the District of Delaware in connection therewith. The decision of the arbitrator shall be final and binding and may be entered in any court of competent jurisdiction. The arbitrator may award the party he determines has prevailed in the arbitration any legal fees and other fees and expenses that may be incurred in respect of enforcing its respective rights.

 

  e. Governing Law . All disputes arising under or related to this Agreement shall at all times be governed by and construed in accordance with the internal laws (as opposed to the conflict of law provisions) and decisions of the State of Delaware as applied to agreements executed in and to be fully performed within that State.


  f. Notice and Execution . This Agreement may be executed in counterparts. Any notice or request required or permitted to be given hereunder shall be sufficient if in writing and deemed to have been given if delivered personally or sent by certified mail, return receipt requested, to you at the address above, and to the Company at its Corporate Headquarters (Attn: Corporate Secretary).

 

  g. Entire Agreement . This Agreement shall constitute the entire agreement between the parties with respect to the subject matter contained herein, and fully supersedes any prior agreements or understandings between us. This Agreement may not be changed or amended orally, but only in writing signed by both parties.

 

  h. Waiver . The failure of either party hereto to enforce at any time any provision of this Agreement shall not be construed as a waiver of such provision nor in any way to affect the validity of this Agreement or any part hereof or the right of such party thereafter to enforce each and every such provision. No waiver of any breach of this Agreement shall be held to constitute a waiver of any other or subsequent breach.

 

  i. Assignments and Successors . The rights and obligations of the Company under this Agreement shall inure to the benefit of and be binding upon its successors and assigns. Your rights and obligations under this Agreement shall inure to the benefit of and be binding upon your designated beneficiary or legal representative, provided, however , that you may not assign any of your rights and obligations hereunder.

If the foregoing terms and conditions are acceptable and agreed to by you, please sign on the line provided below to signify such acceptance and agreement and return the executed copy to the Chief Human Resources Officer.

 

Very truly yours,
R. R. Donnelley & Sons Company
By:  

/s/ Thomas J. Quinlan, III

  Thomas J. Quinlan, III
  President & Chief Executive Officer
ACCEPTED AND AGREED to this 18th day of December, 2008
 

/s/ Suzanne S. Bettman

  Suzanne S. Bettman


Annex A

Definitions

 

1. Annualized Total Compensation ” means Base Salary plus Annual Bonus (at the target level) for one year at the rate in effect immediately before the date of your Separation from Service, but, for these calculations only, your Base Salary and target bonus percentage shall not be less than the amount set forth in Section 3, above

 

2. Cause ” means (i) your willful and continued failure to perform substantially your duties with the Company (other than any such failure resulting from your incapacity due to physical or mental illness or any such failure subsequent to you being delivered a notice of termination without Cause by the Company) after a written demand for substantial performance is delivered to employee by the Chief Executive Officer or the Board that specifically identifies the manner in which the Chief Executive Officer or the Board believes that you have not substantially performed your duties, (ii) the willful engaging by you in conduct which is demonstrably and materially injurious (monetarily or otherwise) to the business, reputation, character or community standing of the Company or its subsidiaries and affiliates, (iii) conviction of or the pleading of nolo contendere with regard to, a felony or any crime involving fraud, dishonesty or moral turpitude, or (iv) refusal or failure to attempt in good faith to follow the written direction of the Chief Executive Officer or the Board (provided that such written direction is consistent with your duty and station) promptly upon receipt of such written direction. A termination for Cause after a Change in Control shall be based only on events occurring after such Change in Control, provided, however, the foregoing limitation shall not apply to an event constituting Cause which was not discovered by the Company prior to a Change in Control. For purpose of this paragraph (a), no act or failure to act by you shall be considered “willful” unless done or omitted to be done by you in bad faith and without reasonable belief that your action or omission was in the best interests of the Company or its subsidiaries and affiliates. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or based upon the advice of the Company’s principal outside counsel shall be conclusively presumed to be done, or omitted to be done, by you in good faith and in the best interests of the Company. Notwithstanding the foregoing, the Company shall provide you a reasonable amount of time, after a notice and demand for substantial performance is delivered to the employee, to cure any such failure to perform, and if such failure is so cured within a reasonable time thereafter, such failure shall not be deemed to have occurred.

 

3. Committee ” means a committee designated by the Chief Human Resources Officer of the Company.

 

4. Good Reason ” means, without your express written consent, the occurrence of any of the following events:

 

  i. A change in your duties or responsibilities (including reporting responsibilities) that taken as a whole represents a material and adverse diminution of your duties, responsibilities or status with the Company (other than a temporary change that results from or relates to your incapacitation due to physical or mental illness);


  ii. A material reduction by the Company in your rate of annual base salary or annual target bonus opportunity (including any material and adverse change in the formula for such annual bonus target) as the same may be increased from time to time;

 

  iii. Any requirement of the Company that your office be more than seventy-five (75) miles from Chicago, Illinois; and

 

  iv. Any material breach of the Agreement by the Company.

Notwithstanding the foregoing, a Good Reason event shall not be deemed to have occurred if the Company cures such action, failure or breach within ten (10) days after receipt of notice thereof given by you. Your right to terminate employment for Good Reason shall not be affected by your incapacities due to mental or physical illness and your continued employment shall not constitute consent to, or a waiver of rights with respect to, any event or condition constituting Good Reason, provided, however, that you must provide notice of termination of employment within ninety (90) days following the initial existence of the event constituting Good Reason or such event shall not constitute Good Reason under this Agreement.

 

5. Separation from Service means a termination of employment with the Company within the meaning of Treasury Regulation § 1.409A-1(h).

 

6. Change in Control ” means the occurrence of any one of the following events:

 

  i. individuals who, on the date of this Agreement, constitute the Board (the “Incumbent Directors”) cease for any reason to constitute at least a majority of the Board, provided that any person becoming a director subsequent to the date of this Agreement, whose election or nomination for election was approved by a vote of at least two-thirds of the Incumbent Directors then on the Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without written objection to such nomination) shall be an Incumbent Director; provided, however, that no individual initially elected or nominated as a director of the Company as a result of an actual or threatened election contest with respect to directors or as a result of any other actual or threatened solicitation of proxies or consents by or on behalf of any person other than the Board shall be deemed to be an Incumbent Director;

 

  ii. any “person” (as such term is defined in Section 3(a)(9) of the Securities Exchange Act of 1934 (the “ Exchange Act ”) and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 35% or more of the combined voting power of the Company’s then outstanding securities eligible to vote for the election of the Board (the “ Company Voting Securities ”); provided, however, that the event described in this paragraph (ii) shall not be deemed to be a Change in Control by virtue of any of the following acquisitions: (A) by the Company or any subsidiary, (B) by any employee benefit plan (or related trust) sponsored or maintained by the Company or any subsidiary, (C) by any underwriter temporarily holding securities pursuant to an offering of such securities, or (D) pursuant to a Non-Qualifying Transaction (as defined in paragraph iii);


  iii. the consummation of an arrangement, amalgamation, merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Company or any of its Subsidiaries that requires the approval of the Company’s stockholders, whether for such transaction or the issuance of securities in the transaction (a “ Business Combination ”), unless immediately following such Business Combination: (A) more than 50% of the total voting power of (x) the corporation resulting from such Business Combination (the “ Surviving Corporation ”), or (y) if applicable, the ultimate parent corporation that directly or indirectly has beneficial ownership of 100% of the voting securities eligible to elect directors of the Surviving Corporation (the “ Parent Corporation ”), is represented by Company Voting Securities that were outstanding immediately prior to such Business Combination (or, if applicable, is represented by shares into which such Company Voting Securities were converted pursuant to such Business Combination), and such voting power among the holders thereof is in substantially the same proportion as the voting power of such Company Voting Securities among the holders thereof immediately prior to the Business Combination, (B) no person (other than any employee benefit plan (or related trust) sponsored or maintained by the Surviving Corporation or the Parent Corporation), is or becomes the beneficial owner, directly or indirectly, of 35% or more of the total voting power of the outstanding Voting securities eligible to elect directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) other than persons set forth in (A) through (D) of paragraph (ii) and (C) at least a majority of the members of the board of directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) following the consummation of the Business Combination were Incumbent Directors at the time of the Board’s approval of the execution of the initial agreement providing for such Business Combination (any Business Combination which satisfies all of the criteria specified in (A), (B) and (C) above shall be deemed to be a “ Non-Qualifying Transaction ”);

 

  iv. the closing of a sale of all or substantially all of the Company’s assets, other than to an entity or in a manner where the voting securities immediately prior to such sale represent directly or indirectly after such sale at least 50% of the voting securities of the entity acquiring such assets in approximately the same proportion as prior to such sale; or

 

  v. the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company.

Notwithstanding the foregoing, a Change in Control of the Company shall not be deemed to occur solely because any person acquires beneficial ownership of more than 35% of the Company Voting Securities as a result of the acquisition of Company Voting Securities by the Company which reduces the number of Company Voting Securities outstanding; provided, that if after such acquisition by the Company such person becomes the beneficial owner of additional Company Voting Securities that increases the percentage of outstanding Company Voting Securities beneficially owned by such person, a Change in Control of the Company shall then occur. In addition, notwithstanding the foregoing, the consummation of (or any other action pursuant to the consummation of) the transaction contemplated by the Combination Agreement shall not be a Change in Control.


Annex B

Gross-Up Payments

a. Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment, award, benefit or distribution (or any acceleration of any payment, award, benefit or distribution) by the Company (or any of its affiliated entities) or any entity which effectuates a Change in Control (or any of its affiliated entities) to or for the benefit of employee (whether pursuant to the terms of this Agreement or otherwise, but determined without regard to any additional payments required under this Annex B) (the “ Payments ”) would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the “ Code ”), or any interest or penalties are incurred by employee with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “ Excise Tax ”), then the Company shall pay to employee an additional payment (a “ Gross-Up Payment ”) in an amount such that after payment by employee of all taxes (including any Excise Tax) imposed upon the Gross-Up Payment, employee retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. For purposes of determining the amount of the Gross-up Payment, the employee shall be deemed to (i) pay federal income taxes at the highest marginal rates of federal income taxation for the calendar year in which the Gross-up Payment is to be made, and (ii) pay applicable state and local income taxes at the highest marginal rate of taxation for the calendar year in which the Gross-up Payment is to be made, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes. Notwithstanding the foregoing provisions of this Annex B, if it shall be determined that employee is entitled to a Gross-Up Payment, but that the Payments would not be subject to the Excise Tax if the Payments were reduced by an amount that is less than 10% of the portion of the Payments that would be treated as “parachute payments” under Section 280G of the Code, then the amounts payable to employee under this Agreement shall be reduced (but not below zero) to the maximum amount that could be paid to employee without giving rise to the Excise Tax (the “ Safe Harbor Cap ”), and no Gross-Up Payment shall be made to employee. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Section 4.a, unless an alternative method of reduction is elected by employee. For purposes of reducing the Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provision.

b. Subject to the provisions of paragraph (a) of this Annex B, all determinations required to be made under this Annex B, including whether and when a Gross-Up Payment is required, the amount of such Gross-Up Payment, the reduction of the Payments to the Safe Harbor Cap and the assumptions to be utilized in arriving at such determinations, shall be made by the public accounting firm that is retained by the Company as of the date immediately prior to the Change in Control (the “ Accounting Firm” ) which shall provide detailed supporting calculations both to the Company and employee within fifteen (15) business days of the receipt of notice from the Company or the employee that there has been a Payment, or such earlier time as is requested by the Company (collectively, the “ Determination ”). In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change in Control, employee may appoint another nationally recognized public accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be


borne solely by the Company and the Company shall enter into any agreement reasonably requested by the Accounting Firm in connection with the performance of the services hereunder. The Gross-Up Payment under this Annex B with respect to any Payments shall be made no later than thirty (30) days following such Payment. If the Accounting Firm determines that no Excise Tax is payable by employee, it shall furnish employee with a written opinion to such effect, and to the effect that failure to report the Excise Tax, if any, on employee’s applicable federal income tax return will not result in the imposition of a negligence or similar penalty. In the event the Accounting Firm determines that the Payments shall be reduced to the Safe Harbor Cap, it shall furnish employee with a written opinion to such effect. The determination by the Accounting Firm shall be binding upon the Company and employee, except as provided below. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the determination, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“ Underpayment ”) or Gross-up Payments are made by the Company which should not have been made (“ Overpayment ”), consistent with the calculations required to be made hereunder. In the event that the employee thereafter is required to make payment of any Excise Tax or additional Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code) shall be promptly) paid by the Company to or for the benefit of employee. In the event the amount of the Gross-up Payment exceeds the amount necessary to reimburse the employee for his Excise Tax, the Accounting Firm shall determine the amount of the Overpayment that has been made and any such Overpayment (together with interest at the rate provided in Section 1373(b)(2) of the Code) shall be promptly paid by employee (to the extent he has received a refund if the applicable Excise Tax has been paid to the Internal Revenue Service) to or for the benefit of the Company. Employee shall cooperate, to the extent his expenses are reimbursed by the Company, with any reasonable requests by the Company in connection with any contests or disputes with the Internal Revenue Service in connection with the Excise Tax and the employee shall permit the Company to control issues related to the Excise Tax (at its expense) to permit a representative of the Company to accompany the employee to any conference with any taxing authority and to promptly deliver to the Company copies of any written communications and summaries of any verbal communications with any taxing authority regarding the Excise Tax. The Company, to the extent it has agreed to reimburse such expenses, shall reimburse the Executive for such expenses no later than the end of the calendar year following the calendar year in which the Excise Tax is paid or, if no Excise Tax is due, by the end of the calendar year in which the contest or dispute with the Internal Revenue Service is settled or finally adjudicated.

Exhibit 10.8

ASSIGNMENT OF EMPLOYMENT AGREEMENT

Assignment of Employment Agreement (“Assignment Agreement”), dated as of September 30, 2016, by and between R.R. Donnelley & Sons Company (“RRD”), a Delaware corporation, and LSC Communications, Inc., a Delaware corporation (“LSC”).

Recitals

WHEREAS, RRD has entered into an employment agreement with Richard T. Lane of RRD (the “Executive”), dated January 14, 2013 (the “Employment Agreement”). A copy of the Employment Agreement is attached as to this Assignment Agreement as Annex A ; and

WHEREAS, RRD desires to assign the Employment Agreement to LSC, and LSC desires to acquire all of RRD’s right, title and interest in the Employment Agreement; and

WHEREAS, the Executive has acknowledged and acquiesced to the assignment of his Employment Agreement and the transfer of his employment to LSC.

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

Agreement

 

  1. Assignment of Employment Agreement . Effective as of the LSC Distribution Date, as defined in the Separation and Distribution Agreement by and among RRD, LSC and Donnelley Financial Solutions, Inc. (the “Distribution Date”), RRD hereby irrevocably, absolutely and unconditionally assigns, transfers, conveys and delivers to LSC and its successors and assigns all of RRD’s right, title and interest in, to and under the Employment Agreement.

 

  2. Acceptance of Assignment . From and after the Distribution Date, LSC hereby irrevocably, absolutely and unconditionally assumes, undertakes and agrees to pay, perform and discharge in full any and all claims and obligations arising under and/or in connection with the Employment Agreement.

 

  3. References . From and after the Distribution Date, all references in the Employment Agreement to “Donnelley” or the “Company” shall be deemed to be references to LSC, including, but not limited to, with respect to any triggers such as those relating to a Change in Control or related events.

 

  4. Executive Acknowledgement . The Executive acknowledges and agrees that the transfer of his employment as described in this letter will not constitute a termination of the Executive’s employment (whether or not without “cause” by RRD) as such term may be defined under the Employment Agreement as in effect through the Distribution Date. This acknowledgement and agreement is without limitation on the Executive’s rights in the event that he is subsequently terminated without “cause” or would be allowed to leave for “good reason” by LSC.

 

1


  5. Restrictive Covenants . The Executive also acknowledges and agrees that he will be fully obligated to LSC under the non-compete, employee non-solicit and customer non-solicit covenants (together, the “Restrictive Covenants”) of the Employment Agreement. In addition, beginning on the Distribution Date and ending on the day twelve (12) months following the Distribution Date (the “Wear Away Period”), if the Executive terminates employment for any reason, he shall be fully obligated to each of RRD and Donnelley Financial under the Restrictive Covenants for the period, if any, beginning on the date of the Executive’s termination and ending at the conclusion of the Wear Away Period. The Executive acknowledges and agrees that the confidentiality and non-disparagement covenants shall survive at all times, both during and after employment, with respect to LSC, and shall survive and apply to each of RRD and Donnelley Financial at all times after employment. The Executive, LSC and RRD acknowledge that Donnelley Financial is a third party beneficiary for purposes of enforcement of this Section 5.

 

  6. Miscellaneous . This Assignment Agreement shall inure to the benefit of the LSC, its successors and assigns. In the event any provision hereof is determined to be unenforceable or invalid such provision or such part thereof as may be unenforceable or invalid shall be deemed severed from this Assignment Agreement and the remaining provisions carried out with the same force and effect as if the severed provisions or part thereof had not been made a part hereof.

[ signature page follows ]

 

2


IN WITNESS WHEREOF , the parties hereto have executed this Assignment Agreement on the date first above written.

 

R.R. DONNELLEY & SONS COMPANY       LSC COMMUNICATIONS, INC.
By:   

/s/ Daniel L. Knotts

     

/s/ Suzanne S. Bettman

  

Daniel L. Knotts

Chief Operating Officer

     

Suzanne S. Bettman

President and Director

Acceptance of Assignment by Executive

I, Richard T. Lane, do hereby consent to the assignment of my Employment Agreement by and between R.R. Donnelley & Sons Company and LSC Communications, Inc.

Dated: September 30, 2016

 

By:  

/s/ Richard T. Lane

  Richard T. Lane

 

[ Signature Page to Assignment of Employment Agreement ]


ANNEX A

[ Copy of Employment Agreement ]

 

4


RR D ONNELLEY   

Global Headquarters

111 South Wacker Drive

Chicago, Illinois 60606-4301

Telephone (312) 326 8000

January 14, 2013

Rick Lane

Dear Rick:

In recognition of your importance to R.R. Donnelley & Sons Company, its officers, directors, subsidiaries, affiliates, and successors or assigns (“Donnelley” or “Company”) and to further the Company’s interests, we are pleased to extend this severance agreement to you. All previous employment agreements will be superseded by this agreement and are of no further force and effect. All capitalized terms used but not defined in the text of this Agreement shall have the meanings assigned to such terms in Annex A.

The terms of this Agreement are set forth below.

 

  1. Employment Relationship . It is agreed and understood that your employment with RR Donnelley is to be at will, and either you or RR Donnelley may terminate the employment relationship at any time, with or without cause, and with or without notice to the other.

 

  2. Severance . If your Separation from Service with the Company (and the members of the Company’s controlled group within the meaning of section 414(b) and (c) of the Code) is initiated by the Company without Cause the following provisions will apply.

 

  a. Severance Pay . The Company will pay you eighteen months of your Annualized Total Compensation (“Severance Pay”), subject to your prompt execution of the Company’s customary release, which amount shall be payable in equal installments on the 15th and last days of each of the 18 months following the 30th day after the date of your Separation from Service (if the 15th or last day of a month is not a business day, on the closest business day to such date. This amount constitutes “Separation Pay” under the terms of the R.R. Donnelley  & Sons Company Separation Pay Plan (“SPP”) and all provisions of the SPP shall apply thereto and no other amount shall be payable under the SPP.


Any disputes regarding Severance Pay will be governed by the claims and appeals procedures of the SPP.

All payments made pursuant to this Agreement shall be reduced by applicable tax withholdings.

 

  b. Benefits . Your medical insurance coverage in effect immediately before the date of your Separation from Service will continue to be available to you under the group health plan continuation coverage laws (“COBRA”) for a period of 18 months following your Separation Date (the “COBRA Period”), Your medical coverage will be subsidized for 12 months. The subsidy will ensure you pay the normal employee’s rates for medical insurance.

 

  c. Section 409A If you are a “specified employee” within the meaning set forth in the document entitled “409A: Policy of R.R. Donnelley & Sons Company and its Affiliates Regarding Specified Employees” on your Termination Date, then any amounts payable pursuant to this Agreement or otherwise that (i) become payable as a result of your Separation from Service and (ii) are subject to Code Section 409A as a result of your Separation from Service shall not be paid until the earlier of (x) the first business day of the sixth month occurring after the month in which the Termination Date occurs and (y) the date of your death. Notwithstanding the immediately preceding sentence, amounts payable to you as a result of your Separation from Service that do not exceed two times the lesser of (i) your annualized compensation based upon your annual rate of Base Salary for the year prior to the year in which the date of your Separation from Service occurs and (ii) the maximum amount that may be taken into account under Code Section 401(a)(17) in the year in which the date of your Separation from Service occurs may be paid as otherwise scheduled. If any compensation or benefits provided by this letter may result in the application of Code Section 409A, then the Company shall, in consultation with you, modify this Agreement to the extent permissible under Code Section 409A in the least restrictive manner necessary in order to exclude such compensation and benefits from the definition of “deferred compensation” within the meaning of such Code Section 409A or in order to comply with the provisions of Code Section 409A. By signing this Agreement you acknowledge that if any amount paid or payable to you becomes subject to Code Section 409A, you are solely responsible for the payment of any taxes and interest due as a result.

 

  3. Restrictive Covenants . You and Donnelley recognize that, due to the nature of your employment and relationship with Donnelley, you will have access to and develop confidential business information, proprietary information, and trade secrets relating to the business and operations of Donnelley and its affiliates. You acknowledge that such information is valuable to the business of Donnelley and its affiliates, and that disclosure to, or use for the benefit of, any person or entity other than Donnelley or its affiliates, would cause substantial damage to Donnelley. You further acknowledge that your duties for Donnelley include the

 


  opportunity to develop and maintain relationships with Donnelley customers, employees, representatives and agents on behalf of Donnelley and that access to and development of those close relationships with Donnelley customers render your services special, unique and extraordinary. In recognition that the goodwill and relationships described herein are assets and extremely valuable to Donnelley, and that loss of or damage to those relationships would destroy or diminish the value of Donnelley, you agree as follows:

 

  a. Noncompetition. In consideration of the covenants and agreements of the Company herein contained, the payments to be made by the Company pursuant to this Agreement, the positions of trust and confidence you occupy and have occupied with the Company and the information of a highly sensitive and confidential nature obtained as a result of such positions, you agree that, from the date of your Separation from Service, initiated by Donnelley without Cause, and for 12 months thereafter, you will not, directly or indirectly, either as an employee, employer, consultant, agent, principal, partner, stockholder, corporate officer, director or in any other individual or representative capacity, worldwide, engage in any business which is competitive with the business of Donnelley. You may, however, own stock or the rights to own stock in a company covered by this paragraph that is publicly owned and regularly traded on any national exchange or in the over-the-counter market, so long as your holdings of stock or rights to own stock do not exceed the lesser of (i) 1% of the capital stock entitled to vote in the election of directors and (ii) the combined value of the stock or rights to acquire stock does not exceed your gross annual earnings from the Company.

 

  b. Importance of Customer Relationships . You recognize that Donnelley’s relationship with the customer or customers you serve, and with other employees, is special and unique, based upon the development and maintenance of goodwill resulting from the customers’ and other employees’ contacts with Donnelley and its employees, including you. As a result of your position and customer contacts, you recognize that you will gain valuable information about (i) Donnelley’s relationship with its customers, their buying habits, special needs, purchasing policies, (ii) the skills, capabilities and other employment-related information about Donnelley employees, and (iii) other matters which you would not otherwise know and which is not otherwise readily available. Such knowledge is essential to the business of Donnelley and you recognize that if your employment terminates, Donnelley will be required to rebuild that customer relationship to retain the customer’s business. You recognize that during a period following the date of your Separation from Service, Donnelley is entitled to protection from your using the information and customer and employee relationships with which you have been entrusted by Donnelley during your employment.


  c. Nonsolicitation of Customers . While employed by Donnelley and for a period of 12 months from the date of your Separation from Service with Donnelley for any reason, including your Separation from Service initiated by Donnelley with or without Cause, you shall not, directly or indirectly, either on your own behalf or on behalf of any other person, firm or entity, solicit or provide services which are the same as or similar to the services Donnelley provided or offered while you were employed by Donnelley to any customer or prospective customer of Donnelley (i) with whom you had direct contact in the course of your employment with Donnelley or about whom you learned confidential information as a result of your employment with Donnelley.

 

  d. Nonsolicitation of Employees . While employed by Donnelley and for a period of two years from the date of your Separation from Service with Donnelley for any reason, including your Separation from Service initiated by Donnelley with or without Cause, you shall not either directly or indirectly solicit, induce or encourage any Donnelley employee(s) to terminate their employment with Donnelley or to accept employment with any entity, including but not limited to a competitor, supplier or customer of Donnelley, nor shall you cooperate with any others in doing or attempting to do so. As used herein, the term “solicit, induce or encourage” includes, but is not limited to, (a) initiating communications with a Donnelley employee relating to possible employment, (b) offering bonuses or additional compensation to encourage Donnelley employees to terminate their employment with Donnelley and accept employment with a competitor, supplier or customer of Donnelley, or (c) referring Donnelley employees to personnel or agents employed by competitors, suppliers or customers of Donnelley.

 

  e. Confidential Information . You are prohibited from, at any time during your employment with the Company or thereafter, disclosing or using any Confidential Information for your benefit or any other person or entity, unless directed or authorized in writing by the Company to do so, until such time as the information becomes generally known to the public without your fault. “Confidential Information” means information (i) disclosed to or known by you as a consequence of your employment with the Company, (ii) not generally known to others outside the Company, and (iii) that relates to the Company’s marketing, sales, finances, operations, processes, methods, techniques, devices, software programs, projections, strategies and plans, personnel information, industry contacts made during your employment, and customer information, including customer needs, contacts, particular projects, and pricing. These restrictions are in addition to any confidentiality restrictions in any other agreement you may have signed with the Company.

 

  f. Obligation upon Subsequent Employment . If you accept employment with any future employer during the time period that equals the greater of one year following the date of your Separation from Service and the Severance Period (regardless of whether you actually receive severance benefits during that period), you will deliver a copy of this Agreement to such employer and advise such employer concerning the existence of your obligations under this Agreement.


  g. Geographic Scope . You understand that the Company has sales and manufacturing facilities throughout the United States and in a number of foreign countries, that it purchases equipment and materials from suppliers located throughout the world, and that it expects to expand the scope of its international activities in the future. You therefore agree that your obligations under Section 3 shall extend worldwide.

 

  h. Other Agreements . In the event a covenant in this Agreement covers the same subject matter of a provision contained in one or more other agreements between you and the Company, you agree that the provision containing the greatest enforceable time, territorial, and/or prohibited activity restriction(s) shall control.

 

  i. Company’s Right to Injunctive Relief . By execution of this Agreement, you acknowledge and agree that the Company would be damaged irreparably if any provision under this Section 3 were breached by you and money damages would be an inadequate remedy for any such nonperformance or breach. Accordingly, in order to protect its interests, the Company shall be entitled to pursue, in addition to other rights and remedies existing in its favor, an injunction or injunctions to prevent any breach or threatened breach of any of such provisions and to enforce such provisions specifically (without posting a bond or other security). With respect to such enforcement, the prevailing party in such litigation shall be entitled to recover from the other party any and all attorneys’ fees, costs and expenses incurred by or on behalf of that party in enforcing or attempting to enforce any provision under this Section 3 or any other rights under this Agreement.

 

  4. General

 

  a. Acknowledgement of Reasonableness and Severability . You acknowledge and agree that the provisions of this Agreement, including Section 3, are reasonable and valid in geographic, temporal and subject matter scope and in all other respects, and do not impose limitations greater than are necessary to protect the goodwill, Confidential Information and other business interests of the Company. If any court subsequently determines that any part of this Agreement, including Section 3, is invalid or unenforceable, the remainder of the Agreement shall not be affected and shall be given full effect without regard to the invalid portions. Further, any court invalidating any provision of this Agreement shall have the power to revise the invalidated provisions such that the provision is enforceable to the maximum extent permitted by applicable law.

 

  b. Non-duplication of Severance Pay . By signing this Agreement, you hereby waive any right to any “Benefits” under the SPP, other than those specified in this Agreement.


  c. Employee Breach . If you breach this Agreement or any other agreement you have signed with the Company, the Company may, in its complete discretion, stop making any of the payments provided for in this Agreement.

 

  d. Arbitration . Any controversy arising out of or relating to this Agreement or the breach of this Agreement that cannot be resolved by you and the Company, including any dispute as to the calculation of any payments hereunder, and the terms of this Agreement, shall be determined by a single arbitrator in New York, New York, in accordance with the rules of JAM S;_provided, however, that either party may seek preliminary injunctive relief to maintain or restore the status quo pending a decision of the arbitrator, and the parties consent to the exclusive jurisdiction of the courts of the State of Delaware or the Federal courts of the United States of America located in the District of Delaware in connection therewith. The decision of the arbitrator shall be final and binding and may be entered in any court of competent jurisdiction. The arbitrator may award the party he determines has prevailed in the arbitration any legal fees and other fees and expenses that may be incurred in respect of enforcing its respective rights.

 

  e. Governing Law . All disputes arising under or related to this Agreement shall at all times be governed by and construed in accordance with the internal laws (as opposed to the conflict of law provisions) and decisions of the State of Delaware as applied to agreements executed in and to be fully performed within that State.

 

  f. Notice and Execution . This Agreement may be executed in counterparts. Any notice or request required or permitted to be given hereunder shall be sufficient if in writing and deemed to have been given if delivered personally or sent by certified mail, return receipt requested, to you at the address above, and to the Company at its Corporate Headquarters (Attn: Corporate Secretary).

 

  g. Entire Agreement . This Agreement shall constitute the entire agreement between the parties with respect to the subject matter contained herein, and fully supersedes any prior agreements or understandings between us. This Agreement may not be changed or amended orally, but only in writing signed by both parties.

 

  h. Waiver . The failure of either party hereto to enforce at any time any provision of this Agreement shall not be construed as a waiver of such provision nor in any way to affect the validity of this Agreement or any part hereof or the right of such party thereafter to enforce each and every such provision. No waiver of any breach of this Agreement shall be held to constitute a waiver of any other or subsequent breach.


  i. Severability . If any provision contained in this Separation Agreement is finally held to be invalid, illegal or unenforceable (whether in whole or in part), such provision shall be deemed modified, but only to the extent necessary, to make such provision valid, legal and enforceable. In any event, the remainder of this Agreement shall continue to be valid and enforceable to the fullest extent permitted by law.

 

  j. Assignments and Successors. The rights and obligations of the Company under this Agreement may be assigned by the Company without consent or notice and shall inure to the benefit of and be binding upon its successors and assigns. You may not assign any of your rights and obligations hereunder.

You agree to keep the existence and terms of this Agreement confidential, and you will not disclose its terms to anyone, except to your attorneys, accountants, or if required to do so by law. To the extent you do disclose to anyone as permitted by this paragraph, you will obtain his or her agreement to keep the existence and terms of this Agreement confidential. If the Agreement or the contents are disclosed by you it will be considered .breach of the terms outlined in the agreement and jeopardize the continuation of this agreement. This Agreement may, however, be used as evidence in a judicial proceeding in which any of the parties allege a breach of this Agreement.

If the foregoing terms and conditions are acceptable and agreed to by you, please sign on the line provided below to signify such acceptance and agreement and return the executed copy to Tom Carroll.

Very truly yours,

 

R. R. Donnelley & Sons Company

By:

 

/s/ Tom Carroll

Tom Carroll

EVP and Chief HR Office

 

ACCEPTED AND AGREED to this 14 day of January, 2013:

/s/ Rick Lane

Rick Lane

Exhibit 99.1

LSC Communications Launches as an Independent Company Following Spin-Off From

R.R. Donnelley & Sons Company

CHICAGO, October 3, 2016 – LSC Communications, Inc. (“LSC” or “the Company”), a global leader in traditional and digital print, print-related services and office products with $3.7 billion in annual revenues, today announced that it has begun operating as a standalone public company following the completion of its tax-free spin-off from R.R. Donnelley & Sons Company (NYSE: RRD). Starting today, LSC will begin “regular-way” trading on the New York Stock Exchange (“NYSE”) under the ticker symbol “LKSD.”

“We are excited about the future of LSC and the opportunities we have as an independent company,” said Thomas J. Quinlan III, LSC’s Chairman and Chief Executive Officer. “LSC has a strong heritage, and we look forward to creating an even better future by continuing to leverage our competitive advantages, including significant scale, long-standing customer relationships and a track record of innovation within our diverse product and service profile. We believe our separation from RR Donnelley will benefit all aspects of LSC’s business and enable us to further refine our focus on our customers’ distinct strategic priorities, as well as our own.”

The Company is focused on creating stockholder value through business strategies and objectives that include further expansion into end-to-end supply chain management; driving growth in core and related businesses; building on market positions through expansion of office products brands; maintaining focus on cost structure and selectively pursuing strategic acquisitions.

With a portfolio of customer-focused solutions that serve the needs of publishers, merchandisers and retailers worldwide, LSC’s offerings include print, office products, e-services, warehousing, fulfillment services and supply chain management. The Company’s robust platform provides the scale to maximize efficiencies and lower total overall costs for customers.

Since September 21, 2016, LSC shares have been traded on a “when issued” basis under the symbol “LKSD.WI.” The “when issued” trading of LSC shares ended at the close of the market Friday, September 30 th . LSC currently has approximately 32.4 million shares outstanding.

The Company also announced that its Board of Directors has set May 18, 2017 as the date for the 2017 Annual Meeting of Stockholders. Additional information about the time, place and record date for this meeting will be announced by LSC in early 2017.

About LSC Communications, Inc.

LSC Communications (NYSE: LKSD) is a global leader in traditional and digital print, print-related services and office products with $3.7 billion in annual revenues that serves the needs of publishers, merchandisers and retailers. The Company’s service offering includes e-services, warehousing and fulfillment and supply chain management. LSC utilizes a broad portfolio of technology capabilities coupled with consultative attention to clients’ needs to increase speed to market, reduce costs, provide postal savings to customers and improve efficiencies. Strategically located operations provide local service and responsiveness while leveraging the economic, geographic and technological advantages of an international organization. For more information about LSC Communications, visit: www.lsccom.com


Forward-Looking Statements

This news release may contain “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and the U.S. Private Securities Litigation Reform Act of 1995. Readers are cautioned not to place undue reliance on these forward-looking statements and any such forward-looking statements are qualified in their entirety by reference to the following cautionary statements. All forward-looking statements speak only as of the date of this news release and are based on current expectations and involve a number of assumptions, risks and uncertainties that could cause the actual results to differ materially from such forward-looking statements, including risks associated with the ability of LSC Communications to perform as expected as a separate, independent entity and risks associated with the volatility and disruption of the capital and credit markets, and adverse changes in the global economy. Readers are strongly encouraged to read the full cautionary statements contained in LSCs filings with the SEC. LSC disclaims any obligation to update or revise any forward-looking statements.

Contact:

Janet Halpin, Treasurer and Investor Relations

Email: Janet.Halpin@lsccom.com

Phone: 312-326-8742