Page
SECTION 1.	DEFINITION OF TERMS	2
SECTION 2.	ALLOCATION OF PRE-DISTRIBUTION PERIOD TAX LIABILITIES	13
Section 2.01	General Rule	13
Section 2.02	Attribution of Taxes	13
SECTION 3.	PREPARATION AND FILING OF TAX RETURNS	14
Section 3.01	General	14
Section 3.02	Responsibility for Preparation and Filing and Payment of Taxes Shown Due	14
Section 3.03	Tax Reporting Practices	15
Section 3.04	Consolidated or Combined Tax Returns	16
Section 3.05	Right to Review Tax Returns	16
Section 3.06	Refunds, Carrybacks and Amended Tax Returns	17
Section 3.07	Apportionment of Tax Attributes	19
SECTION 4.	TAX PAYMENTS	19
Section 4.01	Payment of Taxes	19
Section 4.02	Indemnification Payments	20
SECTION 5.	TAX BENEFITS AND HOUSTON TAX ATTRIBUTES	21
Section 5.01	Tax Benefits	21
Section 5.02	VAT Credits	22
Section 5.03	Pension Deductions	22
SECTION 6.	EMPLOYEE BENEFITS MATTERS	22
Section 6.01	Houston and Seattle Income Tax Deductions in Respect of Certain Equity Awards and Compensation	22
Section 6.02	Withholding and Reporting	23
SECTION 7.	TAX-FREE STATUS	23
Section 7.01	Restrictions on Seattle	23
Section 7.02	Liability for Distribution Tax-Related Losses	25
Section 7.03	Procedures Regarding Ruling Requests	25
SECTION 8.	COOPERATION AND RELIANCE	26
Section 8.01	Assistance and Cooperation	26
Section 8.02	Income Tax Return Information	27
Section 8.03	Non-Performance	27
Section 8.04	Costs	27

SECTION 9.	TAX RECORDS	27
Section 9.01	Retention of Tax Records	27
Section 9.02	Access to Tax Records	28
SECTION 10.	TAX CONTESTS	28
Section 10.01	Notice	28
Section 10.02	Control of Tax Contests	28
SECTION 11.	EFFECTIVE DATE; TERMINATION OF PRIOR INTERCOMPANY TAX ALLOCATION AGREEMENTS	30
SECTION 12.	SURVIVAL OF OBLIGATIONS	31
SECTION 13.	TREATMENT OF PAYMENTS; TAX GROSS UP	31
Section 13.01	Treatment of Tax Indemnity and Tax Benefit Payments	31
Section 13.02	Tax Gross Up	31
Section 13.03	Interest Under This Agreement	31
SECTION 14.	DISAGREEMENTS	32
Section 14.01	Discussion	32
Section 14.02	Escalation	32
Section 14.03	Referral to Tax Advisor for Computational Disputes	32
Section 14.04	Injunctive Relief	32
SECTION 15.	EXPENSES	33
SECTION 16.	GENERAL PROVISIONS	33
Section 16.01	Notices	33
Section 16.02	Binding Effect	34
Section 16.03	Waiver	34
Section 16.04	Severability	34
Section 16.05	Authority	34
Section 16.06	Further Action	35
Section 16.07	Integration	35
Section 16.08	Rules of Construction	35
Section 16.09	No Double Recovery	35
Section 16.10	Counterparts	35
Section 16.11	Governing Law	36
Section 16.12	Jurisdiction	36
Section 16.13	Amendment	36
Section 16.14	Houston or Seattle Affiliates	36
Section 16.15	Successors	36
Section 16.16	Injunctions	36

 

This TAX MATTERS AGREEMENT (this “ Agreement ”) is entered into by and among Hewlett Packard Enterprise Company, a Delaware corporation (“ Houston ”), Seattle SpinCo, Inc., a Delaware corporation and wholly owned subsidiary of Houston (“ Seattle ,” and together with Houston, the “ Companies ,” and each a “ Company ”), and Micro Focus International plc, a company organized under the laws of England and Wales (“ Miami ,” and together with Houston and Seattle, the “ Parties ,” and each a “ Party ”).

 

RECITALS

 

WHEREAS, the Board of Directors of Houston has determined that it is in the best interests of Houston and its shareholders to separate the Seattle Business from the Houston Business and to divest the Seattle Business in the manner contemplated by the Separation and Distribution Agreement by and between Houston and Seattle (the “ Separation and Distribution Agreement ”) and the Merger Agreement;

 

WHEREAS, the Board of Directors of Houston and the Board of Directors of Seattle have approved the transfer of the Seattle Assets (as defined in the Separation and Distribution Agreement) to Seattle and its Affiliates and the assumption by Seattle and its Affiliates of the Seattle Liabilities (as defined in the Separation and Distribution Agreement), all as more fully described in the Separation and Distribution Agreement and the other Transaction Documents;

 

WHEREAS, Houston will (a) distribute to the holders of the outstanding shares of common stock, $0.01 par value, of Houston (the “ Houston Common Shares ”) as of the close of business on the Record Date all of the issued and outstanding shares of the Class A common stock, $0.01 par value, of Seattle (the “ Seattle Common Stock ”) (i) by means of a pro rata distribution and in accordance with a distribution ratio to be determined by the Board of Directors of Houston or (ii) by way of an offer to exchange shares of Seattle Common Stock for outstanding Houston Common Shares (followed by a Clean-Up Spin-Off) and (b) pursuant to the Subsidiary Stock Exchange, exchange all of the issued and outstanding shares of the Class B common stock, par value $0.01 per share, of Seattle (the “ Seattle Class B Stock ”) for shares of Common-Equivalent Houston Preferred Stock held by the Seattle-Bound Subsidiary (the transactions described in clause (a) (in each case of clause (i) or (ii)) and clause (b), the “ Distribution ”);

 

WHEREAS, for U.S. federal income tax purposes, the Contribution and the Distribution, taken together, are intended to qualify as a “reorganization” within the meaning of Sections 355 and 368(a)(1)(D) of the Code;

 

WHEREAS, for U.S. federal income tax purposes, it is the intention of the Companies that the Distribution, except for cash received in lieu of any fractional shares, will qualify as tax-free under Section 355(a) of the Code to Houston stockholders and as tax-free to Houston under Section 361(c) of the Code;

 

WHEREAS, for U.S. federal income tax purposes, it is the intention of the Companies that the Subsidiary Stock Recapitalization qualify as a “reorganization” within the meaning of Section 368(a)(1)(E) of the Code;

WHEREAS, pursuant to the Agreement and Plan of Merger, dated as of the date hereof (the “ Merger Agreement ”), by and among Houston, Seattle, Miami, and Merger Sub, a Delaware corporation (“ Merger Sub ”), immediately following the Distribution, Merger Sub will merge with and into Seattle (the “ Merger ”) and all shares of Seattle Common Stock will be converted into the right to receive ordinary shares of £0.10 each in the capital of Miami represented by American Depository Shares, upon the terms and subject to the conditions set forth in the Merger Agreement;

 

WHEREAS, for U.S. federal income tax purposes, it is the intention of the Parties that the Merger qualify as a “reorganization” within the meaning of Section 368(a) of the Code;

 

WHEREAS, in connection with the Contribution, the Distribution and the Merger, the Parties desire to set forth their agreement with respect to tax matters for taxable periods prior to and including the Distribution Date.

 

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

 

Section 1.              Definition of Terms. For purposes of this Agreement (including the recitals hereof), the following terms have the following meanings:

 

“ Active Business ” means the business conducted by each of (i) in the aggregate, Entco Bulgaria EOOD, Entco Costa Rica Limitada, Entco Denmark ApS, Entco Software India Pvt Ltd., Entsoft Ireland Limited, Entco Interactive (Israel) Ltd, Entco Software Services Middle East FZ-LLC, Entco Nederland B.V., Entco Software Romania SRL, Entco International S.a.r.l., Entco Singapore (Sales) Pte. Ltd., Entco Sverige AB, and Entco Marigalante Ltd., and (ii) Entco Brasil Servicos de Tecnologia Ltda., in each case as of the Distribution Date.

 

“ Active Business Entities ” means Entco Foreign HoldCo Limited and Entco Brasil Servicos de Tecnologia Ltda., along with their successors or assigns.

 

 

“ Affiliate ” means any entity that is directly or indirectly Controlled by either the person in question or an Affiliate of such person. As used in this paragraph, “ Control ” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through ownership of voting securities, by contract or otherwise. The term Affiliate shall refer to Affiliates of a person as determined immediately after the Merger.

 

“ Agreement ” means this Tax Matters Agreement.

 

“ Austin TMA ” means the Tax Matters Agreement dated October 31, 2015, between Houston and Austin.

 

“ Benefited Party ” shall have the meaning set forth in Section 3.06(a).

 

“ Business Day ” means any day other than a Saturday, Sunday or a day on which the Federal Reserve Bank of New York or the Bank of England is closed.

 

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

 

“ Claiming Company ” shall have the meaning set forth in Section 3.06(a) of this Agreement.

 

“ Clean-Up Spin-Off ” has the meaning set forth in the Separation and Distribution Agreement.

 

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

 

“ Common-Equivalent Houston Preferred Stock ” has the meaning set forth in the Separation and Distribution Agreement.

 

“ Companies ” and “ Company ” have the meanings set forth in the first sentence of this Agreement.

 

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

 

“ Controlling Company ” shall have the meaning set forth in Section 10.02(a) of this Agreement.

 

“ Correlative Detriment ” means an increase in a Tax of a Company (or its Affiliates) that occurs as a result of the Tax position that is the basis for a claim for Refund by the Claiming Company or for a Final Determination, utilizing the assumptions set forth in the description of Houston Full Taxpayer or Seattle Full Taxpayer, as the case may be.

 

“ Dispute ” shall have the meaning set forth in Section 14.01 of this Agreement.

 

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

 

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

 

“ Distribution Taxes ” means any and all Taxes (a) required to be paid by or imposed on a Company or any of its Affiliates resulting from, or directly arising in connection with, the failure of the Contribution and Distribution (including the Subsidiary Stock Exchange), taken together, to qualify as a reorganization described in Sections 355(a) and 368(a)(1)(D) of the Code (or the failure to qualify under or the application of corresponding provisions of the Tax Laws of other jurisdictions); (b) required to be paid by or imposed on a Company or any of its Affiliates resulting from, or directly arising in connection with, the failure of the stock distributed in the Distribution (including the Subsidiary Stock Exchange) to constitute “ qualified property ” for purposes of Sections 355(d), 355(e) and 361(c) of the Code (or any corresponding provision of the Tax Laws of other jurisdictions); or (c) required to be paid by or imposed on a Company or any of its Affiliates resulting from the failure of any Separation Transaction to qualify for the intended tax treatment as set forth in the Tax Opinions/Rulings.

“ Distribution Tax-Related Losses ” means (a) all Distribution Taxes imposed pursuant to any Final Determination and (b) all reasonable accounting, legal and other professional fees and court costs incurred in connection with such Distribution Taxes, in each case, resulting from the failure of the Contribution and the Distribution to have Tax-Free Status or from the failure of a Separation Transaction to qualify for the intended tax treatment as set forth in the Tax Opinions/Rulings.

 

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

 

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

 

“ Employee Matters Agreement ” means the Employee Matters Agreement by and between Houston, Seattle and Miami dated as of September 1, 2017.

 

“ Extraordinary Transaction ” means any action that is not in the ordinary course of business, but shall not include any action expressly required or otherwise contemplated by the Separation and Distribution Agreement, the Merger Agreement or any Transaction Document or that is undertaken pursuant to the Contribution, the Distribution or the Separation Transactions.

 

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

 

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

“ Group ” means the Houston Group or the Seattle Group, or both, as the context requires.

 

“ Houston ” has the meaning set forth in the first sentence of this Agreement.

 

“ Houston Adjustment ” means any proposed adjustment by a Tax Authority or claim for refund asserted in a Tax Contest to the extent Houston would be solely responsible for any resulting Tax or solely entitled to receive any resulting Tax Benefit under this Agreement.

 

“ Houston Business ” has the meaning provided in the Separation and Distribution Agreement.

 

“ Houston Common Shares ” has the meaning set forth in the Recitals.

 

“ Houston Consolidated Affiliate Return ” means any U.S. federal consolidated Income Tax Return filed by a member of the Seattle Group as the “common parent” of an “affiliated group” (in each case, within the meaning of Section 1504 of the Code), and any consolidated, combined, unitary or similar Income Tax Return required to be filed by a member of the Seattle Group under a similar or analogous provision of state, local or non-U.S. Law, in each case, with respect to a taxable period ending on or before the Distribution Date.

 

“ Houston Consolidated Return ” means any U.S. federal consolidated Income Tax Return required to be filed by Houston as the “common parent” of an “affiliated group” (in each case, within the meaning of Section 1504 of the Code), and any consolidated, combined, unitary or similar Income Tax Return required to be filed by Houston under a similar or analogous provision of state, local or non-U.S. Law.

 

“ Houston Consolidated Taxes ” means any Taxes attributable to any Houston Consolidated Return or any Houston Consolidated Affiliate Return.

 

“ Houston Full Taxpayer ” means the assumption that each relevant member of the Houston Group (a) is subject to the highest marginal regular statutory Income Tax rate, (b) in the case of a Tax Benefit, has sufficient taxable income to permit the realization or receipt of the relevant Tax Benefit at the earliest possible time, (c) in the case of an Adjustment, will not utilize any Tax Attribute other than a Tax Attribute arising from the Adjustment at issue, and (d) is not subject to the alternative minimum tax.

 

“ Houston Group ” means Houston and its Affiliates, excluding any entity that is a member of the Seattle Group.

 

“ Houston Tainting Act ” means (a) any action (or the failure to take any action) within its control by Houston or any member of the Houston Group (including entering into any agreement, understanding or arrangement or any negotiations with respect to any transaction or series of transactions) that, (b) any event (or series of events) involving the capital stock of Houston, any assets of Houston or any assets of any member of the Houston Group that, or (c) any breach by Houston or any member of the Houston Group of any representation, warranty or covenant made by them in this Agreement that, in each case, would affect the Tax-Free Status or otherwise cause a Separation Transaction to fail to qualify for its intended tax treatment as set forth in the Tax Opinions/Rulings; provided , however , the term “Houston Tainting Act” shall not include any action expressly required or permitted by the Separation and Distribution Agreement, the Merger Agreement or any Transaction Documents or undertaken pursuant to the Distribution.

“ Houston Taxes ” means, without duplication, (a) any Houston Consolidated Taxes, (b) any Taxes imposed (i) on gain recognized under Treasury Regulations Section 1.1502-19(b) in connection with an excess loss account with respect to the stock of Seattle or any member of the Seattle Group at the time of the Distribution, (ii) on net deferred gains taken into account under Treasury Regulations Section 1.1502-13(d) with respect to deferred intercompany transactions between a Seattle Group member and a Houston Group member and (iii) under similar or corresponding provisions of state, local or non-U.S. Law, (c) any Taxes imposed on Seattle or any member of the Seattle Group (i) as a result of Seattle or any such member of the Seattle Group being or having been included as part of or owned by, or ceasing to be part of or owned by, any affiliated, consolidated, combined, unitary or similar Tax group with one or more members of the Houston Group on or prior to the Distribution Date (including under Treasury Regulations Section 1.1502-6 or any similar provision of state, local, or non-U.S. Law) or (ii) pursuant to any tax sharing, tax allocation or other similar agreement (excluding commercial agreements entered into the ordinary course of business) entered into by Seattle or any such member of the Seattle Group prior to the Distribution, (d) any Taxes of Houston or Seattle or any Subsidiary or former Subsidiary of Houston or Seattle or other member of the Houston Group or Seattle Group, in each case, for any Pre-Distribution Period (in the case of a Straddle Period, determined in accordance with Section 2.02(b)), (e) any Taxes attributable to a Houston Tainting Act, (f) any Taxes with respect to the Separation Transactions, (g) any Transaction Taxes, and (h) any Transfer Taxes, in the case of each of clauses (a) through (f), other than Seattle Taxes.

 

“ Income Taxes ” means:

 

(a)

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

 

(b)

any related interest and any penalties, additions to such Tax or additional amounts imposed with respect thereto by any Tax Authority.

 

“ Income Tax Returns ” means all Tax Returns that relate to Income Taxes.

 

“ Joint Adjustment ” means any proposed adjustment by a Tax Authority or claim for refund asserted in a Tax Contest which is neither a Seattle Adjustment nor a Houston Adjustment.

 

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

 

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

 

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

 

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

 

“ Merger Sub ” has the meaning set forth in the Recitals.

 

“ Miami ” has the meaning set forth in the first sentence of this Agreement.

 

“ Mixed Business Tax Return ” means any Tax Return, including any consolidated, combined or unitary Tax Return, that reflects or reports Taxes that relate to at least one asset or activity that is part of the Houston Business, on the one hand, and at least one asset or activity that is part of the Seattle Business, on the other hand.

 

“ Non-Controlling Company ” shall have the meaning set forth in Section 10.02(b) of this Agreement.

 

“ Parties ” and “ Party ” have the meanings set forth in the first sentence of this Agreement.

 

“ Past Practices ” shall have the meaning set forth in Section 3.03(a) of this Agreement.

 

“ Payment Date ” means (i) with respect to any Houston federal consolidated Income Tax Return, the due date for any required installment of estimated taxes determined under Section 6655 of the Code, the due date (determined without regard to extensions) for filing the return determined under Section 6072 of the Code, and the date the return is filed, and (ii) with respect to any other Tax Return, the corresponding dates determined under the applicable Tax Law.

 

“ Payor ” shall have the meaning set forth in Section 4.02(a) of this Agreement.

 

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

 

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

 

“ Post-Distribution Ruling ” shall have the meaning set forth in Section 7.01 of this Agreement.

 

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

“ Preliminary Tax Advisor ” shall have the meaning set forth in Section 14.03 of this Agreement.

 

 

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

 

“ Refund ” means any refund (or credit in lieu thereof) of Taxes (including any overpayment of Taxes that can be refunded or, alternatively, applied to other Taxes payable), including any interest paid on or with respect to such refund of Taxes; provided , however , the amount of the refund of Taxes shall be net of any Taxes imposed by any Tax Authority on the receipt of the refund.

 

“ Required Company ” shall have the meaning set forth in Section 4.02(a) of this Agreement.

 

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

 

“ Restricted Period ” means the period beginning at the Effective Time and ending on the two (2)-year anniversary of the day after the Distribution Date.

 

“ Retention Date ” shall have the meaning set forth in Section 9.01 of this Agreement.

 

“ Ruling Request ” means any letter filed by Houston with the IRS or other Tax Authority requesting a ruling regarding the Tax-Free Status or any intended tax treatment of a Separation Transaction that is described on Schedule 2 attached hereto (including all attachments, exhibits, and other materials submitted with such ruling request letter and any amendment or supplement to such ruling request letter).

 

“ Seattle ” has the meaning set forth in the first sentence of this Agreement.

 

“ Seattle Adjustment ” means any proposed adjustment by a Tax Authority or claim for refund asserted in a Tax Contest to the extent Seattle would be solely responsible for any resulting Tax or solely entitled to receive any resulting Tax Benefit under this Agreement.

 

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

 

“ Seattle Common Stock ” has the meaning set forth in the Recitals.

 

“ Seattle Full Taxpayer ” means the assumption that each relevant member of the Seattle Group (a) is subject to the highest marginal regular statutory Income Tax rate, (b) in the case of a Tax Benefit, has sufficient taxable income to permit the realization or receipt of the relevant Tax Benefit at the earliest possible time, (c) in the case of an Adjustment, will not utilize any Tax Attribute other than a Tax Attribute arising from the Adjustment at issue, and (d) is not subject to the alternative minimum tax.

 

“ Seattle Group ” means Seattle and its Affiliates, as determined immediately after the Distribution.

 

“ Seattle Tainting Act ” means (a) any action (or the failure to take any action) within its control by Seattle or any member of the Seattle Group (including entering into any agreement, understanding or arrangement or any negotiations with respect to any transaction or series of transactions) that, (b) any event (or series of events) involving the capital stock of Seattle, any assets of Seattle or any assets of any member of the Seattle Group that, or (c) any breach by Seattle or any member of the Seattle Group of any representation, warranty or covenant made by them in this Agreement that, in each case, would affect the Tax-Free Status or otherwise cause a Separation Transaction to fail to qualify for its intended tax treatment as set forth in the Tax Opinions/Rulings; provided , however , that the term “Seattle Tainting Act” shall not include any action expressly required or permitted by the Separation and Distribution Agreement, the Merger Agreement or any Transaction Documents (other than any action described in Section 7.01, including those actions set forth on Schedule 3, undertaken after the Effective Time) or undertaken pursuant to, or prior to, the Distribution.

“ Seattle Taxes ” means, without duplication, (a) any Taxes for any Post-Distribution Period of (i) Houston or any Subsidiary or former Subsidiary of Houston or other member of the Houston Group, in each case, attributable to assets or activities of the Seattle Business (in the case of a Straddle Period, determined in accordance with Section 2.02(b)) or (ii) Seattle or a member of the Seattle Group, but excluding, in either case, any Taxes included in clause (c) of the definition of Houston Taxes, (b) any Taxes attributable to a Seattle Tainting Act, (c) any Taxes attributable to an Extraordinary Transaction effected after the Effective Time on the Distribution Date by Seattle or a member of the Seattle Group, (d) any Taxes to the extent such amounts are taken into account as a liability in computing amounts payable pursuant to Section 2.10 of the Separation and Distribution Agreement, and (e) any Taxes set forth on Schedule 1 attached hereto.

 

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

 

“ Separation Plan ” means the step plan attached hereto as Exhibit A .

 

“ Separation Transactions ” means those transactions undertaken by the Companies and their Affiliates pursuant to the Separation Plan to separate ownership of the Seattle Business from ownership of the Houston Business (including, for the avoidance of doubt, the Subsidiary Stock Recapitalization and transactions undertaken directly between the Houston Group, on the one hand, and Miami and its Affiliates, on the other hand).

 

“ Single Business Tax Return ” means any Tax Return including any consolidated, combined or unitary Tax Return that reflects or reports Tax Items relating only to the Houston Business, on the one hand, or the Seattle Business, on the other (but not both).

 

“ Straddle Period ” means any Tax Period that begins on or before and ends after the Distribution Date.

 

“ Subsidiary Stock Exchange” has the meaning set forth in the Separation and Distribution Agreement.

 

“ Subsidiary Stock Recapitalization” has the meaning set forth in the Separation and Distribution Agreement.

 

“ Tainting Act ” “ means a Houston Tainting Act or a Seattle Tainting Act.

“ Tax ” or “ Taxes ” means (a) any income, gross income, gross receipts, profits, capital stock, franchise, withholding, payroll, social security, workers compensation, unemployment, disability, property, ad valorem, stamp, excise, severance, occupation, service, sales, use, license, lease, transfer, import, export, value added, escheat or unclaimed property liability, alternative minimum, estimated or other tax (including any fee, assessment, or other charge in the nature of or in lieu of any tax) imposed by any governmental entity or political subdivision thereof, and any interest, penalties, additions to tax, or additional amounts in respect of the foregoing; provided , however , the term “ Tax ” or “ Taxes ” shall not include customs duties, and (b) all liabilities in respect of any items described in clause (a) payable by reason of assumption, transferee or successor liability, operation of Law or Treasury Regulations Section 1.1502-6(a) (or any predecessor or successor thereof or any analogous or similar provision under Law), in each case, including any Taxes resulting from an Adjustment.

 

“ Tax Advisor ” means a tax counsel or accountant of recognized standing in the relevant jurisdiction.

 

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

 

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

 

“ Tax Benefit ” means any refund, credit, or other reduction in otherwise required Tax payments (determined on a “with and without” basis) that is actually received or recognized.

 

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

 

“ Tax-Free Status ” means the following U.S. federal income Tax consequences in connection with the Distribution (including the Subsidiary Stock Exchange) and certain related transactions, (a) the qualification of the Contribution and Distribution, taken together, as a “reorganization” described in Sections 355(a) and 368(a)(1)(D) of the Code, (b) the Distribution as a transaction in which the Seattle Common Stock and Seattle Class B Common Stock distributed to holders of Houston Common Stock and Common-Equivalent Houston Preferred Stock, respectively, is “ qualified property ” for purposes of Sections 355(c) and 361(c) of the Code (and neither Section 355(d) nor Section 355(e) of the Code cause such Seattle Common Stock or Seattle Class B Common Stock to be treated as other than “qualified property” for such purposes), (c) the nonrecognition of income, gain or loss by Houston and Seattle upon the Contribution and the Distribution under Sections 355, 361 and/or 1032 of the Code, as applicable, other than intercompany items or excess loss accounts taken into account pursuant to the Treasury Regulations promulgated pursuant to Section 1502 of the Code, (d) the nonrecognition of income, gain or loss by the holders of Houston Common Stock and Common-Equivalent Houston Preferred Stock upon the receipt of Seattle Common Stock and Seattle Class B Common Stock, respectively, in the Distribution (except with respect to the receipt of cash in lieu of fractional shares of Seattle Common Stock or Seattle Class B Common Stock, if any) and (e) the qualification of the Subsidiary Stock Recapitalization as a “reorganization” under Section 368(a)(1)(E) of the Code.

“ Tax Item ” means any item of income, gain, loss, deduction, expense, or credit, or other attribute that may have the effect of increasing or decreasing any Tax.

 

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

 

“ Tax Opinions/Rulings ” means (x) the formal written opinions or similar memoranda of a Tax Advisor regarding the Tax-Free Status or any intended tax treatment of a Separation Transaction that is described on Schedule 2 attached hereto and/or (y) the rulings by the IRS or other Tax Authority received in respect of a Ruling Request delivered to Houston (and made available to Seattle or, if prior to the Effective Time, Miami), in each case, in connection with the Contribution, the Distribution or the Merger or otherwise with respect to the Separation Transactions, including, for the avoidance of doubt, the Houston Tax Opinion.

 

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

 

“ Tax Records ” means any Tax Returns, Tax Return work papers, documentation relating to any Tax Contests, and any other books of account or records (whether or not in written, electronic or other tangible or intangible forms and whether or not stored on electronic or any other medium) required to be maintained under the Code or other applicable Tax Laws or under any record retention agreement with any Tax Authority.

 

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

 

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

 

“ Transaction Taxes ” mean any Taxes other than Distribution Taxes (a) imposed on or by reason of the Contribution and Distribution, or (b) imposed on the distribution of cash or any other property from Seattle to Houston.

 

“ Transfer Pricing Adjustment ” means any proposed or actual allocation by a Tax Authority of any Tax Item between or among any member of the Houston Group and any member of the Seattle Group with respect to any Pre-Distribution Period.

 

“ Transfer Tax ” means any sales, use, privilege, transfer (including real property transfer), intangible, recordation, registration, documentary, stamp, duty or similar Tax imposed with respect to the Separation Transactions.

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

 

“ Unqualified Tax Opinion ” means an unqualified “will” opinion of a Tax Advisor, on which the Companies may rely to the effect that a transaction will not affect the Tax-Free Status or otherwise cause any Separation Transaction to fail to qualify for the intended tax treatment as set forth in the Tax Opinions/Rulings. Any such opinion must assume that the Contribution and Distribution would have qualified for Tax-Free Status and that other Separation Transactions would have qualified for the intended tax treatment as set forth in the Tax Opinions/Rulings if the transaction in question did not occur.

 

“ VAT ” means: (i) any tax imposed in compliance with the Council Directive of 28 November 2006 on the common system of value added tax (EC Directive 2006/112), including in the United Kingdom in accordance with VATA 1994; and (ii) any other tax of a similar nature, whether imposed in a member state of the European Union in substitution for, or levied in addition to, such tax referred to in clause (i), or imposed elsewhere.

 

“ VAT Credit ” means any credit, offset or receivable arising out of a payment of VAT where liability for such VAT is allocated to Houston under this Agreement (and is actually paid by Houston), excluding such credits, offsets or receivables to the extent such amounts are taken into account in computing amounts payable pursuant to Section 2.10 of the Separation and Distribution Agreement.

 

Section 2.              Allocation of Pre-Distribution Period Tax Liabilities.

 

Section 2.01         General Rule.

 

(a)           Houston Liability. Houston shall be liable for, and shall indemnify and hold harmless the Seattle Group from and against (x) any liability for Houston Taxes and (y) any Distribution Tax-Related Losses for which Houston is responsible pursuant to Section 7.02.

 

(b)           Seattle Liability. Seattle shall be liable for, and shall indemnify and hold harmless the Houston Group from and against (x) any liability for Seattle Taxes and (y) any Distribution Tax-Related Losses for which Seattle is responsible pursuant to Section 7.02.

 

Section 2.02         Attribution of Taxes.

 

(a)          General. For all purposes of this Agreement, a Tax and any Tax Items shall be considered attributable to the Seattle Business on the one hand and the Houston Business on the other (but not both) to the extent that such Tax and/or Tax Item would result if such Tax Return were prepared on a separate basis taking into account only the operations and assets of the Seattle Business on the one hand and only the operations and assets of the Houston Business on the other hand (but not both), as applicable. With respect to U.S. federal Income Taxes, such amount shall be as determined by Houston in good faith (in consultation with Seattle) on a separate pro forma Seattle Group consolidated return prepared: (i) including only Tax Items of members of the Seattle Group that were included in the relevant Houston Consolidated Return; (ii) using all elections, accounting methods and conventions used on such Houston Consolidated Return; and (iii) applying the highest statutory marginal corporate income Tax rate in effect for such taxable period. The amount of other Income Taxes attributable to the Seattle Business shall be determined by Houston using similar principles. With respect to any other Tax Items, Houston shall determine in good faith (in consultation with Seattle) and otherwise in accordance with this Agreement which Tax Items are properly attributable to assets or activities of the Seattle Business (and in the case of a Tax Item that is properly attributable to both the Seattle Business and the Houston Business, the allocation of such Tax Item between the Seattle Business and the Houston Business).

(b)           Straddle Period Tax Allocation. Houston and Seattle shall take all actions necessary or appropriate to close the taxable year of Seattle and each member of the Seattle Group for all Tax purposes as of the close of the Distribution Date to the extent permissible or required under applicable Law. If applicable Law does not require or permit Seattle or any member of the Seattle Group, as the case may be, to close its taxable year on the Distribution Date, then the allocation of income or deductions required to determine any Taxes or other amounts attributable to the portion of the Straddle Period ending on, or beginning after, the Distribution Date shall be made by means of a closing of the books and records of Seattle or such member of the Seattle Group as of the close of the Distribution Date; provided that exemptions, allowances or deductions that are calculated on an annual or periodic basis shall be allocated between such portions in proportion to the number of days in each such portion ; provided , further , that real property and other property or similar periodic Taxes shall be apportioned on a per diem basis.

 

Section 3.              Preparation and Filing of Tax Returns.

 

Section 3.01         General. Tax Returns shall be prepared and filed when due (including extensions) in accordance with this Section 3. The Companies shall provide, and shall cause their Affiliates to provide, assistance and cooperation to one another in accordance with Section 8 with respect to the preparation and filing of Tax Returns, including providing information required to be provided in Section 8.

 

Section 3.02         Responsibility for Preparation and Filing and Payment of Taxes Shown Due.

 

(a)         Houston Consolidated Return. Houston shall prepare and file all Houston Consolidated Returns for a Pre-Distribution Period or a Straddle Period. Notwithstanding anything to the contrary in this Agreement, for all Tax purposes, the Parties shall report any Extraordinary Transactions that are effected by the Seattle Group on the Distribution Date after the Effective Time as occurring on the day after the Distribution Date to the extent permitted by Treasury Regulations Section 1.1502-76(b)(1)(ii)(B) or any similar or analogous provision of state, local or non-U.S. Law.

 

(b)          Mixed Business Tax Returns

 

(i)            Houston shall prepare and file (or cause to be prepared and filed) any Mixed Business Tax Return for a Pre-Distribution Period or a Straddle Period required by Law to be filed by the Houston Group.

(ii)           Seattle shall prepare and file (or cause to be prepared and filed) any Mixed Business Tax Return for a Pre-Distribution Period or a Straddle Period required by Law to be filed by the Seattle Group after the Distribution Date.

 

(c)          Single Business Tax Returns.

 

(i)            Houston shall prepare and file (or cause to be prepared and filed) any Single Business Tax Return for a Pre-Distribution Period or a Straddle Period required by Law to be filed by the Houston Group, as well as any Single Business Tax Return set forth on Schedule 4.

 

(ii)           Seattle shall prepare and file (or cause to be prepared and filed) any Single Business Tax Return for a Pre-Distribution Period or a Straddle Period required by Law to be filed by the Seattle Group after the Distribution Date, excluding those Single Business Tax Returns set forth on Schedule 4.

 

(d)          Notwithstanding anything to the contrary in this Section 3, (i) the portion of any Tax Return that relates to any Taxes attributable to a Houston Tainting Act shall be prepared by the Responsible Company in the manner determined by Houston in its sole discretion, and (ii) the portion of any Tax Return not described in the foregoing clause (i) that relates to any Taxes attributable to a Seattle Tainting Act shall be prepared by the Responsible Company in the manner determined by Seattle in its sole discretion. For the avoidance of doubt, the foregoing sentence shall apply only to the extent that the Parties shall be aware of the Houston Tainting Act or the Seattle Tainting Act at the time such Tax Return is prepared.

 

Section 3.03         Tax Reporting Practices.

 

(a)          General Rule. With respect to any Tax Return that either Company has the obligation and right to prepare and file, or cause to be prepared and filed, under Section 3.02, for any Pre-Distribution Period or any Straddle Period (or Post-Distribution Period to the extent items reported on such Tax Return might reasonably be expected to affect items as reported on any Tax Return for any Pre-Distribution Period or any Straddle Period), such Tax Return shall be prepared in accordance with past practices, accounting methods, elections or conventions (“ Past Practices ”), including, for example, the methodology historically adopted by the Companies for the accrual of non-U.S. Taxes for purposes of computing any foreign tax credit for U.S. tax purposes, used with respect to the Tax Returns in question (unless there is no reasonable basis for the use of such Past Practices), and to the extent any items are not covered by Past Practices (or in the event that there is no reasonable basis for the use of such Past Practices), in accordance with reasonable Tax accounting practices selected by the Company preparing and filing the Tax Return.

 

(b)          Reporting of Separation Transactions. The Tax treatment reported on any Tax Return of the Separation Transactions shall be consistent with the treatment thereof in the Ruling Requests and the Tax Opinions/Rulings, unless there is no reasonable basis for such Tax treatment. The Tax treatment of the Separation Transactions reported on any Tax Return for which Seattle is the Responsible Company shall be consistent with that on any Tax Return filed or to be filed by Houston or any member of the Houston Group or caused or to be caused to be filed by Houston, unless there is no reasonable basis for such Tax treatment. In the event that a Company shall determine that there is no reasonable basis for the Tax treatment described in either of the preceding two sentences, such Company shall notify the other Company twenty (20) Business Days prior to filing the relevant Tax Return and the Companies shall attempt in good faith to agree on the manner in which the relevant portion of the Separation Transactions shall be reported.

Section 3.04         Consolidated or Combined Tax Returns.

 

(a)          Seattle will elect and join and will cause its Affiliates to elect and join, in filing any consolidated, combined or unitary Tax Returns that Houston determines in good faith are required to be filed or that Houston chooses to file pursuant to Section 3.02 with respect to any Pre-Distribution Period.

 

(b)          With respect to all Houston Consolidated Returns for the taxable year which includes the Distribution Date, Houston shall use the closing of the books method under Treasury Regulations Section 1.1502-76.

 

Section 3.05         Right to Review Tax Returns.

 

(a)          Except as otherwise agreed by the Companies, in the case of any material Tax Returns provided for by Section 3.02, to the extent not previously filed, no later than thirty (30) days prior to the Due Date of each such Tax Return (reduced to fifteen (15) days for state or local Tax Returns), the Responsible Company shall make available or cause to be made available drafts of such Tax Return (together with all related work papers) to the other Company. The other Company shall have access to any and all data and information necessary for the preparation of all such Tax Returns and the Companies shall cooperate fully in the preparation and review of such Tax Returns. Subject to the preceding sentence, no later than fifteen (15) days after receipt of such Tax Returns (reduced to ten (10) days for state or local Tax Returns), the other Company shall have a right to object to such Tax Return (or items with respect thereto) by written notice to the Responsible Company; such written notice shall contain such disputed item (or items) and the basis for its objection. For purposes of this Section 3.05(a), a Tax Return is “material” with respect to a Company who is not the Responsible Company if it could reasonably be expected to reflect, with respect to such Company, (A) Tax liability equal to or in excess of Ten Million Dollars ($10,000,000), (B) a credit or credits equal to or in excess of Ten Million Dollars ($10,000,000), (C) a loss or losses equal to or in excess of Ten Million Dollars ($10,000,000) or (D) could otherwise be expected to materially adversely affect a Tax position with respect to the Company or its Group. Unless otherwise agreed by the Companies, all Tax Returns set forth on Schedule 4 shall be deemed to be “material” with respect to Seattle.

 

(b)          If a Company does object by proper written notice described in Section 3.05(a), the Companies shall act in good faith to resolve any such dispute as promptly as practicable; provided , however , that, notwithstanding anything to the contrary contained herein, if the Companies have not resolved the disputed item or items by the day five (5) days prior to the Due Date of such Tax Return, such Tax Return shall be filed as prepared pursuant to this Section 3.05 (revised to reflect all initially disputed items that the Companies have agreed upon prior to such date) .

(c)          In the event a Tax Return is filed that includes any disputed item for which proper notice was given pursuant to Section 3.05(a) that was not finally resolved and agreed upon, such disputed item (or items) shall be resolved in accordance with Section 14. In the event that the resolution of such disputed item (or items) in accordance with Section 14 with respect to a Tax Return is inconsistent with such Tax Return as filed, the Responsible Company (with cooperation from the other Company) shall, as promptly as practicable, amend such Tax Return to properly reflect the final resolution of the disputed item (or items). In the event that the amount of Taxes shown to be due and owing on a Tax Return is adjusted as a result of a resolution pursuant to Section 14, proper adjustment shall be made to the amounts previously paid or required to be paid in accordance with Section 4 in a manner that reflects such resolution .

 

Section 3.06         Refunds, Carrybacks and Amended Tax Returns.

 

(a)          Refunds.

 

(i)            Each Company (and its Affiliates) (the “ Claiming Company ”) shall be entitled to Refunds that relate to Taxes for which it (or its Affiliates) is liable hereunder. For the avoidance of doubt, to the extent that a particular Refund of Taxes may be allocable to a Straddle Period with respect to which the Parties may share responsibility pursuant to Sections 2 and 3, the portion of such Refund to which each Party will be entitled shall be determined by comparing the amount of payments made by a Party to a Tax Authority or to the other Party (and reduced by the amount of payments received from the other Party) pursuant to Sections 2 and 3 with the Tax liability of such Party as determined under Section 2.01, taking into account the facts as utilized for purposes of claiming such Refund.

 

(ii)           Notwithstanding Section 3.06(a)(i), to the extent a claim for a Refund results in a Correlative Detriment to the other Company (or its Affiliates), any such Refund that is received by the Claiming Company (or its Affiliates) shall, and only to the extent thereof, be paid to the other Company (or its Affiliates) that incurs such Correlative Detriment.

 

(iii)          In the event of an adjustment relating to Taxes pursuant to a Final Determination for which one Party is responsible under this Agreement which would have given rise to a Refund but for an offset against the Taxes for which the other Party is or may be responsible pursuant to this Agreement (the “ Benefited Party ”), then the Benefited Party shall pay to the other Party, within ten (10) days of the Final Determination of such adjustment an amount equal to the amount of such reduction in the Taxes of the Benefited Party plus interest at the Prime Rate on such amount for the period from the filing date of the Tax Return that would have given rise to such Refund to the payment date.

 

(iv)          Any Refund or portion thereof to which a Claiming Company is entitled pursuant to this Section 3.06(a) that is received or deemed to have been received as described herein by the other Company (or its Affiliates) shall be paid by such other Company to the Claiming Company in immediately available funds in accordance with Section 4. To the extent a Company (or its Affiliates) applies or causes to be applied an overpayment of Taxes as a credit toward or a reduction in Taxes otherwise payable (or a Tax Authority requires such application in lieu of a Refund) and such Refund, if received, would have been payable by such Company to the Claiming Company pursuant to this Section 3.06(a), such Company shall be deemed to have actually received a Refund to the extent thereof on the date on which the overpayment is applied to reduce Taxes otherwise payable.

(v)           Notwithstanding anything to the contrary in this Agreement, any Company that has claimed (or caused one or more of its Affiliates to claim) a Refund shall be liable for any Taxes that become due and payable as a result of the subsequent adjustment, if any, to the Refund claim.

 

(b)          Carrybacks.

 

(i)            Each of the Companies shall be permitted (but not required) to carry back (or to cause its Affiliates to carry back) a Tax Attribute realized in a Post-Distribution Period or a Straddle Period to a Pre-Distribution Period or a Straddle Period only if such carryback cannot reasonably result in the other Company (or its Affiliates) being liable for additional Taxes. If a carryback could reasonably result in the other Company (or its Affiliates) being liable for additional Taxes, such carryback shall be permitted only if such other Company consents to such carryback.

 

(ii)           Notwithstanding anything to the contrary in this Agreement, any Company that has claimed (or caused one or more of its Affiliates to claim) a Tax Attribute carryback shall be liable for any Taxes that result from such carryback claim or become due and payable as a result of the subsequent adjustment, if any, to the carryback claim.

 

(iii)          A Company shall be entitled to any Refund that is attributable to, and would not have arisen but for, a carryback of a Tax Attribute by such Company pursuant to the provisions set forth in Section 3.06(b).

 

(iv)          A Company shall be entitled to any Tax Benefit actually recognized by the other Company or its Affiliates as a result of any carryback of a Tax Attribute by such first Company.

 

(c)           Amended Tax Returns.

 

(i)            Notwithstanding Section 3.01, a Company (or its Affiliates) that is entitled to file an amended Tax Return for a Pre-Distribution Period or a Straddle Period shall be permitted to prepare and file such amended Tax Return at its own cost and expense; provided , however , that such amended Tax Return shall be prepared in a manner (i) consistent with the past practice of the Companies (and their Affiliates) unless otherwise modified by a Final Determination or required by applicable Tax Law; and (ii) consistent with (and the Companies and their Affiliates shall not take any position inconsistent with) the Tax Opinions/Rulings. Notwithstanding anything to the contrary contained herein, if such amended Tax Return could reasonably result in the other Company becoming responsible for a payment of (or otherwise becoming liable for) Taxes under this Agreement, or could otherwise have a material adverse impact on the Taxes of the other Company, then such amended Tax Return shall be permitted only if the consent of such other Company is obtained. The consent of such other Company shall be deemed to be obtained in the event that a Company (or its Affiliate) is required by Law to file an amended Tax Return as a result of an adjustment.

(ii)           A Company (or its Affiliate) that is entitled to file an amended Tax Return for a Post-Distribution Period shall be permitted to do so without the consent of the other Company.

 

(iii)          A Company that is permitted (or whose Affiliate is permitted) to file an amended Tax Return shall not be relieved of any liability for payments pursuant to this Agreement notwithstanding that the other Company consented to the filing of such amended Tax Return giving rise to such liability.

 

Section 3.07         Apportionment of Tax Attributes. Houston shall reasonably determine in good faith, and advise Seattle in writing, of the amount of any Tax Attributes arising in a Pre-Distribution Period that shall be allocated or apportioned to the Seattle Group under applicable Law, provided that this Section 3.07 shall not be construed as obligating Houston to undertake an “earnings & profits study” or similar determinations. Houston shall consult in good faith with Seattle regarding such determinations, and shall provide such information and otherwise cooperate in good faith as reasonably requested by Seattle. In the event that Seattle disagrees with any such determination, Houston and Seattle shall endeavor in good faith to resolve such disagreement, and, failing that, the allocations and apportionments under this Section 3.07 shall be determined in accordance with the disagreement resolution provisions of Section 14 as promptly as practicable. The Houston Group and the Seattle Group agree to compute all Taxes for Post-Distribution Periods consistently with the determination of the allocation of Tax Attributes pursuant to this Section 3.07 unless otherwise required by a Final Determination. To the extent that the amount of any Tax Attribute is later reduced or increased as a result of a Final Determination, such reduction or increase shall be allocated to the Party to which such Tax Attribute was allocated pursuant to this Section 3.07.

 

Section 4.              Tax Payments.

 

Section 4.01         Payment of Taxes.

 

(a)          Computation and Payment of Tax Due. At least three (3) Business Days prior to any Payment Date for any Tax Return, the Responsible Company shall compute the amount of Tax required to be paid to the applicable Tax Authority (taking into account the requirements of Section 3.03 relating to consistent reporting practices, as applicable) with respect to such Tax Return on such Payment Date. The Responsible Company shall pay such amount to such Tax Authority on or before such Payment Date. The Responsible Company shall provide notice to the other Company setting forth such other Company’s responsibility for the amount of Taxes paid to the Tax Authority and provide proof of payment of such Taxes.

(b)          Computation and Payment of Liability with Respect to Tax Due. Within thirty (30) Business Days following the earlier of (i) the due date (including extensions) for filing any such Tax Return (excluding any Tax Return with respect to payment of estimated Taxes or Taxes due with a request for extension of time to file) or (ii) the date on which such Tax Return is filed, if Houston is the Responsible Company, then Seattle shall pay to Houston the amount allocable to the Seattle Group under the provisions of this Agreement, and if Seattle is the Responsible Company, then Houston shall pay to Seattle the amount allocable to the Houston Group under the provisions of this Agreement, in each case, plus interest computed at the Prime Rate on the amount of the payment based on the number of days from the earlier of (i) the due date of the Tax Return (including extensions) or (ii) the date on which such Tax Return is filed, to the date of payment. For the avoidance of doubt, however, the thirty (30) Business Day period described herein shall not commence unless and until the Responsible Company notifies the other Company pursuant to Section 4.01(a) hereof, nor shall interest accrue during any time period where such notification has not been received.

 

(c)           Adjustments Resulting in Underpayments. In the case of any adjustment pursuant to a Final Determination with respect to any such Tax Return, the Responsible Company shall pay to the applicable Tax Authority when due any additional Tax due with respect to such Tax Return required to be paid as a result of such adjustment pursuant to such Final Determination. The Responsible Company shall compute the amount attributable to the Seattle Group or the Houston Group (as the case may be) in accordance with this Agreement and Seattle shall pay to Houston any amount due Houston (or Houston shall pay Seattle any amount due Seattle) under this Agreement within thirty (30) Business Days from the later of (i) the date the additional Tax was paid by the Responsible Company or, in an instance where no cash payment is due to a Tax Authority, the date of such Final Determination, or (ii) the date of receipt of a written notice and demand from the Responsible Company for payment of the amount due, accompanied by evidence of payment and a statement detailing the Taxes paid and describing in reasonable detail the particulars relating thereto. Any payments required under this Section 4.01(c) shall include interest computed at the Prime Rate based on the number of days from the date the additional Tax was paid by the Responsible Company (or, in an instance where no cash payment is due to a Tax Authority, the date of such Final Determination) to the date of the payment under this Section 4.01(c).

 

Section 4.02         Indemnification Payments.

 

(a)          If any Company (the “ Payor ”) is required under applicable Tax Law to pay to a Tax Authority a Tax that another Company (the “ Required Company ”) is liable for under this Agreement, the Payor shall provide notice to the Required Company for the amount due, accompanied by evidence of payment and a statement detailing the Taxes paid and describing in reasonable detail the particulars relating thereto. Such Required Company shall have a period of thirty (30) days after the receipt of notice to respond thereto. Unless the Required Company disputes the amount it is liable for under this Agreement, the Required Company shall reimburse the Payor within forty-five (45) Business Days of delivery by the Payor of the notice described above. To the extent the Required Company does not agree with the amount the Payor claims the Required Company is liable for under this Agreement, the dispute shall be resolved in accordance with Section 14. Any reimbursement shall include interest on the Tax payment computed at the Prime Rate based on the number of days from the date of the payment to the Tax Authority to the date of reimbursement under this Section 4.02 .

(b)          Any Tax indemnity payment required to be made by the Required Company pursuant to this Agreement shall be reduced by any corresponding Tax Benefit payment required to be made to the Required Company by the other Company pursuant to Section 5. For the avoidance of doubt, a Tax Benefit payment is treated as corresponding to a Tax indemnity payment to the extent the Tax Benefit realized is directly attributable to the same Tax Item (or adjustment of such Tax Item pursuant to a Final Determination) that gave rise to the Tax indemnity payment .

 

(c)           All indemnification payments under this Agreement shall be made by Houston directly to Seattle and by Seattle directly to Houston; provided , however , that if the Companies mutually agree with respect to any such indemnification payment, any member of the Houston Group, on the one hand, may make such indemnification payment to any member of the Seattle Group, on the other hand, and vice versa . All indemnification payments shall be treated in the manner described in Section 13 .

 

Section 5.              Tax Benefits and Houston Tax Attributes.

 

Section 5.01         Tax Benefits.

 

(a)          If a member of the Seattle Group recognizes any Tax Benefit as a result of an adjustment pursuant to a Final Determination to any Taxes for which a member of the Houston Group is liable hereunder and such Tax Benefit would not have arisen but for such adjustment (determined on a “with and without” basis), or if a member of the Houston Group recognizes any Tax Benefit as a result of an adjustment pursuant to a Final Determination to any Taxes for which a member of the Seattle Group is liable hereunder and such Tax Benefit would not have arisen but for such adjustment (determined on a “with and without” basis), Seattle or Houston, as the case may be, shall make a payment to the other company within one hundred twenty (120) Business Days following such actual recognition of the Tax Benefit, in an amount equal to such Tax Benefit, plus interest on such amount computed at the Prime Rate based on the number of days from the date of such actual realization of the Tax Benefit to the date of payment of such amount under this Section 5.01(a).

 

(b)          No later than one hundred twenty (120) Business Days after a Tax Benefit described in Section 5.01(a) is actually recognized by a member of the Houston Group or a member of the Seattle Group, Houston (if a member of the Houston Group recognizes such Tax Benefit) or Seattle (if a member of the Seattle Group recognizes such Tax Benefit) shall provide the other Company with notice of the amount payable to such other Company by Houston or Seattle pursuant to this Section 5. In the event that Houston or Seattle disagrees with any such calculation described in this Section 5.01(b), Houston or Seattle shall so notify the other Company in writing within thirty (30) Business Days of receiving the written calculation set forth above in this Section 5.01(b). Houston and Seattle shall endeavor in good faith to resolve such disagreement, and, failing that, the amount payable under this Section 5 shall be determined in accordance with the disagreement resolution provisions of Section 14 as promptly as practicable .

For the avoidance of doubt, this Section 5 shall apply to any adjustment under Section 482 of the Code or any similar provisions by any Tax Authority increasing the amount of payments received or deemed received by (1) any member of the Houston Group from any member of the Seattle Group or (2) any member of the Seattle Group from any member of the Houston Group.

 

Section 5.02         VAT Credits. In the event that Seattle recognizes a Tax Benefit arising from a VAT Credit in a Post-Distribution Period, Seattle shall make a payment to Houston of the amount of such Tax Benefit within 30 Business Days.

 

Section 5.03         Pension Deductions. In the event that Seattle recognizes a Tax Benefit in a Post-Distribution Period with respect to which a payment by Houston to Austin is required pursuant to Section 6.03 of the Austin TMA, Seattle shall make a payment to Houston of the amount of such recognized Tax Benefit within 30 Business Days.

 

Section 6.              Employee Benefits Matters.

 

Section 6.01         Houston and Seattle Income Tax Deductions in Respect of Certain Equity Awards and Compensation .

 

(a)          The provisions of Section 5.2(e) of the Employee Matters Agreement and Schedule 5.2(e) of the Employee Matters Agreement shall govern with respect to the responsibility for applicable Taxes (including withholding and excise taxes) and Tax reporting obligations and related mechanics for Non-Assumed Awards (as defined in the Employee Matters Agreement) described therein. With respect to such Non-Assumed Awards:

 

(i)            The Houston Group shall be entitled to claim any Income Tax deduction in respect of (A) all Non-Assumed Awards in the form of Houston RSUs, Houston PARSUs and Houston DEU Accounts (each as defined in the Employee Matters Agreement) and (B) all Non-Assumed Awards in the form of Houston Options and Houston SARs (each as defined in the Employee Matters Agreement) other than those for which the Seattle Group shall be entitled to claim the applicable Income Tax deduction under Section 6.01(a)(ii); and

 

(ii)           The Seattle Group shall be entitled to claim any Income Tax deduction in respect of the Non-Assumed Awards in the form of Houston Options and Houston SARs that are (A) held by Seattle Employees, Indent Employees and Delayed Indent Employees (each as defined in the Employee Matters Agreement) and (B) exercised after the Distribution Date (or, in the case of such Non-Assumed Awards that are held by Delayed Indent Employees, exercised after the Delayed Indent Transfer Date), provided that, for the avoidance of doubt, any such deduction shall be reported for a Tax period of the relevant member of the Seattle Group, or portion thereof, beginning after the Distribution Date.

 

(b)           Except as set forth above, unless otherwise required by applicable Law, solely the member of the Group for which the relevant individual is currently employed or, if such individual is not currently employed by a member of the Group, was most recently employed at the time of the vesting, exercise, disqualifying disposition, payment or other relevant taxable event, as appropriate, in respect of compensation shall be entitled to claim any Income Tax deduction in respect of such compensation on its respective Tax Return associated with such event.

Section 6.02         Withholding and Reporting . Except as set forth in Section 6.01, the Company (or its Affiliate) that claims the deduction described in Section 6.01 shall be responsible for all applicable Taxes (including withholding and excise taxes) and shall satisfy, or shall cause to be satisfied, all applicable Tax reporting obligations in respect of compensation that gives rise to the deduction. The Companies shall cooperate (and shall cause their Affiliates to cooperate) so as to permit the responsible Company (or Affiliate thereof) to discharge any applicable Tax withholding and Tax reporting obligations assigned to it pursuant to this Article VI, including the appointment of the responsible Company (or its Affiliate) as the withholding and reporting agent if that Company (or any of its Affiliates) is not otherwise required or permitted to withhold or report under applicable Law.

 

Section 7.              Tax-Free Status.

 

Section 7.01         Restrictions on Seattle. During the Restricted Period, Seattle and Miami shall not:

 

(a)          enter into any Proposed Acquisition Transaction, approve any Proposed Acquisition Transaction for any purpose, or allow any Proposed Acquisition Transaction to occur with respect to Seattle;

 

(b)          merge or consolidate with any other Person (other than (i) pursuant to the Merger or (ii) any merger or consolidation in which Seattle merges with an entity wholly-owned, directly or indirectly, by Miami and is the surviving or consolidated corporation) or liquidate or partially liquidate; or approve or allow any merger, consolidation, liquidation, or partial liquidation of any of the Active Business Entities;

 

(c)           approve or allow the discontinuance, cessation, or sale or other transfer of, or a material change in, any Active Business;

 

(d)          approve or allow the sale, issuance, or other disposition, directly or indirectly, of any share of, or other equity interest or an instrument convertible into an equity interest in, any of the Active Business Entities;

 

(e)           sell or otherwise dispose of more than thirty-five percent (35%) percent of its consolidated gross or net assets, or approve or allow the sale or other disposition (to an Affiliate or otherwise) of more than thirty-five percent (35%) of its consolidated gross or net assets or more than thirty-five percent (35%) of the consolidated gross or net assets of the Active Business conducted by a particular Active Business Entity (in each case excluding sales or other dispositions (i) in the ordinary course of business or (ii) to a Person that is a disregarded entity separate from the transferor for U.S. federal income tax purposes, and measured based on fair market values as of the Distribution Date);

 

(f)            amend its certificate of incorporation (or other organizational documents), or take any other action or approve or allow the taking of any action, whether through a stockholder vote or otherwise, affecting the voting rights of Seattle stock;

(g)          issue shares of a new class of non-voting stock;

 

(h)          purchase, directly or through any Affiliate, any of Miami’s outstanding stock, other than through stock purchases meeting the requirements of Section 4.05(1)(b) of Revenue Procedure 96-30 (without regard to the effect of Revenue Procedure 2003-48 on Revenue Procedure 96-30);

 

(i)           with respect to the Distribution, take any action or fail to take any action, or permit any member of the Seattle Group to take any action or fail to take any action, that is inconsistent with any representation or covenant made in the Tax Opinions/Rulings or the Ruling Request; or

 

(j)            take any action or permit any other member of the Seattle Group to take any action (including any transactions with a third-party or any transaction with any Company) that, individually or in the aggregate (taking into account other transactions described in this Section 7.01) would be reasonably likely to adversely affect (A) the Tax-Free Status of the Contribution and Distribution, or (B) any Separation Transaction’s qualification for its intended tax treatment as set forth in the Tax Opinions/Rulings;

 

provided , however , that Seattle or Miami shall be permitted to take such action or one or more actions set forth in the foregoing clauses (a) through (j) if, prior to taking any such actions, Seattle or Miami shall (1) have received a favorable private letter ruling from the IRS, or a ruling from another Tax Authority that confirms that such action or actions will not result in Distribution Taxes, taking into account such actions and any other relevant transactions in the aggregate (a “ Post-Distribution Ruling ”), in form and substance satisfactory to Houston in its discretion, which discretion shall be reasonably exercised in good faith to prevent the imposition on Houston, or responsibility for payment by Houston, of Distribution Taxes (which discretion shall include consideration of the reasonableness of any representations made in connection with such Post-Distribution Ruling) or (2) have received an Unqualified Tax Opinion, taking into account such actions and any other relevant transactions in the aggregate, in form and substance satisfactory to Houston (including any representations or assumptions that may be included in such Unqualified Tax Opinion), acting reasonably and in good faith solely to prevent the imposition on Houston, or responsibility for payment by Houston, of Distribution Taxes. Seattle and Miami shall provide a copy of the Post-Distribution Ruling or the Unqualified Tax Opinion described in this paragraph to Houston as soon as practicable prior to taking or failing to take any action set forth in the foregoing clause (a) through (j). Houston’s evaluation of a Post-Distribution Ruling or Unqualified Tax Opinion may consider, among other factors, the appropriateness of any underlying assumptions, representations, and covenants made in connection with such Post-Distribution Ruling or Unqualified Tax Opinion. Seattle shall bear all costs and expenses of securing any such Post-Distribution Ruling or Unqualified Tax Opinion and shall reimburse Houston for all reasonable out-of-pocket costs and expenses that Houston may incur in good faith in seeking to obtain or evaluate any such Post-Distribution Ruling or Unqualified Tax Opinion. Notwithstanding anything to the contrary herein, this Section 7.01 shall not prohibit (or require a Post-Distribution Ruling or Unqualified Tax Opinion as a condition to effect) any of the actions set forth on Schedule 3 attached hereto, provided that there is no change in relevant facts (as set forth in the draft opinion described in the following sentence) and no change in Law following the date hereof that would, in either case, adversely impact the tax conclusions set forth in the draft tax opinion described in the following sentence. Miami has provided to Houston a draft opinion from its tax advisor regarding the impact of the actions set forth on Schedule 3 on the intended treatment of the Distribution as set forth in the Tax Opinions/Rulings.  Following the Closing, Miami shall provide an executed final opinion described in the immediately preceding sentence, which shall be in substantially the same form as such draft opinion, subject to any changes in fact or Law.   Seattle shall reimburse Houston for all reasonable out-of-pocket costs and expenses that Houston has occurred or may incur in good faith in evaluating the transactions set forth on Schedule 3. In addition, notwithstanding anything to the contrary herein, this Section 7.01 shall not prohibit (or require a Post-Distribution Ruling or Unqualified Tax Opinion as a condition to effect) any action that may impact a Separation Transaction’s qualification for its intended tax treatment as set forth in the Tax Opinions/Rulings in cases where the potential Taxes attributable to the failure to achieve such intended tax treatment could not reasonably be expected to exceed fifteen million dollars ($15,000,000), with such threshold computed by aggregating Taxes payable to various Tax Authorities and disregarding any potential Tax Benefits resulting therefrom. For purposes of determining whether this $15,000,000 threshold would be exceeded with respect to the transactions described in a particular Tax Opinion/Ruling, Seattle may rely on the designation set forth on Schedule 2.

Section 7.02         Liability for Distribution Tax-Related Losses. In the event that Distribution Taxes become due and payable to a Tax Authority pursuant to a Final Determination, then, notwithstanding anything to the contrary in this Agreement:

 

(a)          if such Distribution Taxes are attributable to a Houston Tainting Act, then Houston shall be responsible for any Distribution Tax-Related Losses;

 

(b)          if such Distribution Taxes are attributable to a Seattle Tainting Act, then Seattle shall be responsible for any Distribution Tax-Related Losses; and

 

(c)           if such Distribution Taxes are not attributable to a Houston Tainting Act or a Seattle Tainting Act, then Houston shall be one hundred percent (100%) responsible for any Distribution Tax-Related Losses.

 

Section 7.03         Procedures Regarding Ruling Requests. Miami acknowledges and agrees that Houston may file a Ruling Request. In connection with any Ruling Request, Houston shall (i) inform Miami of its decision to file such Ruling Request and keep Miami informed of all material actions taken or proposed to be taken by Houston or the IRS or other applicable Taxing Authority; (ii) provide Miami with drafts of all written submissions reasonably in advance of filing, and consider in good faith Miami’s comments to such draft submissions; (iii) provide Miami with copies of all written items sent by Houston to the IRS or other applicable Taxing Authority and received by Houston from the IRS or other applicable Taxing Authority with respect to the request; and (iv) promptly provide Miami with detailed information concerning any material telephonic, email, in person communications or other contacts with the IRS or other applicable Taxing Authority concerning the request.

Section 8.              Cooperation and Reliance.

 

Section 8.01         Assistance and Cooperation.

 

(a)           The Companies shall cooperate (and cause their respective Affiliates to cooperate) with each other and with each other’s agents, including accounting firms and legal counsel, in connection with Tax matters relating to the Companies and their Affiliates including (i) preparation and filing of Tax Returns, (ii) determining the liability for and amount of any Taxes due (including estimated Taxes) or the right to and amount of any refund of Taxes, (iii) examinations of Tax Returns, and (iv) any administrative or judicial proceeding in respect of Taxes assessed or proposed to be assessed. Such cooperation shall include making all information and documents in their possession relating to the other Company and its Affiliates available to such other Company as provided in Section 9. Each of the Companies shall also make available to the other, as reasonably requested and available, personnel (including officers, directors, employees and agents of the Companies or their respective 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. In the event that a member of the Houston Group, on the one hand, or a member of the Seattle Group, on the other hand, suffers a Tax detriment as a result of a Transfer Pricing Adjustment, the Companies shall cooperate pursuant to this Section 8 to seek any competent authority relief that may be available with respect to such Transfer Pricing Adjustment.

 

(b)          Houston acknowledges and agrees that Miami may seek from one or more of its tax advisors an opinion regarding the application of Section 7874(b) of the Code to Miami as a result of the Merger.  Each Party shall (and shall cause its respective Affiliates to) reasonably cooperate with each other and with each other’s agents and advisors in connection with obtaining such tax opinion and any tax opinion set forth on Schedule 2 (to the extent not delivered prior to the date of this Agreement), including by providing any materials or information reasonably requested by the tax advisors rendering such opinion and by executing a representation letter containing representations and covenants (subject to customary assumptions and conditions) regarding such facts and actions within such Party’s control that are reasonably necessary for the rendering of such tax opinion.

 

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

Section 8.02         Income Tax Return Information. Seattle and Houston acknowledge that time is of the essence in relation to any request for information, assistance or cooperation made by Houston or Seattle pursuant to Section 8.01 or this Section 8.02. Each Company shall provide to the other Company information and documents relating to its Group required by the other Company to prepare Tax Returns. Any information or documents the Responsible Company requires to prepare such Tax Returns shall be provided in such form as the Responsible Company reasonably requests and in sufficient time for the Responsible Company to file such Tax Returns on a timely basis.

 

Section 8.03         Non-Performance. If a Company (or any of its Affiliates) fails to comply with any of its obligations set forth in this Section 8 upon reasonable request and notice by the other Company (or any of its Affiliates) and such failure results in the imposition of additional Taxes, the non-performing Company shall be liable in full for such additional Taxes.

 

Section 8.04         Costs . Each Company shall devote the personnel and resources necessary in order to carry out this Section 8 and shall make its employees available on a mutually convenient basis to provide explanations of any documents or information provided hereunder. Each Company shall carry out its responsibilities under this Section 8 at its own cost and expense.

 

Section 9.              Tax Records.

 

Section 9.01         Retention of Tax Records. Each Company shall preserve and keep all Tax Records exclusively relating to the assets and activities of its Group for Pre-Distribution Periods, and Houston shall preserve and keep all other Tax Records relating to Taxes of the Groups for Pre-Distribution Periods, for so long as the contents thereof may become material in the administration of any matter under the Code or other applicable Tax Law, but in any event until the later of (i) the expiration of any applicable statutes of limitations, or (ii) seven (7) years after the Distribution Date (such later date, the “ Retention Date ”). After the Retention Date, each Company may dispose of such Tax Records upon ninety (90) Business Days’ prior written notice to the other Company. If, prior to the Retention Date, (a) a Company reasonably determines that any Tax Records which it would otherwise be required to preserve and keep under this Section 9 are no longer material in the administration of any matter under the Code or other applicable Tax Law and the other Company agrees, then such first Company may dispose of such Tax Records upon ninety (90) Business Days’ prior notice to the other Company. Any notice of an intent to dispose given pursuant to this Section 9.01 shall include a list of the Tax Records to be disposed of describing in reasonable detail each file, book, or other record accumulation being disposed. The notified Company shall have the opportunity, at its cost and expense, to copy or remove, within such ninety (90)-day period, all or any part of such Tax Records. If, at any time prior to the Retention Date, a Company determines to decommission or otherwise discontinue any computer program or information technology system used to access or store any Tax Records, then such Company may decommission or discontinue such program or system upon ninety (90) Business Days’ prior notice to the other Company and the other Company shall have the opportunity, at its cost and expense, to copy, within such ninety (90)-day period, all or any part of the underlying data relating to the Tax Records accessed by or stored on such program or system.

Section 9.02         Access to Tax Records. The Companies and their respective Affiliates shall make available to each other for inspection and copying during normal business hours upon reasonable notice all Tax Records (and, for the avoidance of doubt, any pertinent underlying data accessed or stored on any computer program or information technology system) in their possession and shall permit the other Company and its Affiliates, authorized agents and representatives and any representative of a Tax Authority or other Tax auditor direct access during normal business hours upon reasonable notice to any computer program or information technology system used to access or store any Tax Records, in each case to the extent reasonably required by the other Company in connection with the preparation of Tax Returns or financial accounting statements, audits, litigation, or the resolution of items under this Agreement. To the extent any Tax Records are required to be or are otherwise transferred by the Companies or their respective Affiliates to any person other than an Affiliate, the Company or its respective Affiliate shall transfer such records to the other Company at such time.

 

Section 10.            Tax Contests.

 

Section 10.01       Notice. Each of the Companies shall provide prompt notice to the other Company of any written communication from a Tax Authority regarding any pending or threatened Tax audit, assessment or proceeding or other Tax Contest of which it becomes aware related to Taxes for which it is indemnified by the other Company hereunder. Such notice shall attach copies of the pertinent portion of any written communication from a Tax Authority and contain factual information (to the extent known) describing any asserted Tax liability in reasonable detail and shall be accompanied by copies of any notice and other documents received from any Tax Authority in respect of any such matters. If an indemnified Company has knowledge of an asserted Tax liability with respect to a matter for which it is entitled to indemnification hereunder and such Company fails to give the indemnifying Company prompt notice of such asserted Tax liability and the indemnifying Company is entitled under this Agreement to contest the asserted Tax liability, then (i) if the indemnifying Company is precluded from contesting the asserted Tax liability in any forum as a result of the failure to give prompt notice, the indemnifying Company shall have no obligation to indemnify the indemnified Company for such Tax liability or any other Taxes arising from such failure, and (ii) if the indemnifying Company is not precluded from contesting the asserted Tax liability in any forum, but such failure to give prompt notice results in a material monetary detriment to the indemnifying Company, then any amount which the indemnifying Company is otherwise required to pay the indemnified Company pursuant to this Agreement shall be reduced by the amount of such detriment.

 

Section 10.02       Control of Tax Contests.

 

(a)          Controlling Company. In the case of any Tax Contest with respect to any Tax Return, the Company that would be primarily liable under this Agreement to pay the applicable Tax Authority the Taxes resulting from such Tax Contest shall administer and control such Tax Contest (the “ Controlling Company ”).

(b)           Settlement Rights. The Controlling Company must obtain the prior consent of the other non-controlling Company (the “ Non-Controlling Company ”) prior to contesting, litigating, compromising or settling any Tax Contest related to an adjustment which the Non-Controlling Company may reasonably be expected to become liable to make any indemnification payment under this Agreement (or any payment under Section 5). Unless waived by the Companies in writing, in connection with any potential adjustment in a Tax Contest as a result of which adjustment the Non-Controlling Company may reasonably be expected to become liable to make any indemnification payment under this Agreement (or any payment under Section 5) to the Controlling Company under this Agreement: (i) the Controlling Company shall keep the Non-Controlling Company informed in a timely manner of all actions taken or proposed to be taken by the Controlling Company with respect to such potential adjustment in such Tax Contest; (ii) the Controlling Company shall provide the Non-Controlling Company copies of any written materials relating to such potential adjustment in such Tax Contest received from any Tax Authority; (iii) the Controlling Company shall timely provide the Non-Controlling Company with copies of any correspondence or filings submitted to any Tax Authority or judicial authority in connection with such potential adjustment in such Tax Contest; (iv) the Controlling Company shall consult with the Non-Controlling Company (including, without limitation, regarding the use of outside advisors to assist with the Tax Contest) and offer the Non-Controlling Company a reasonable opportunity to comment before submitting any written materials prepared or furnished in connection with such potential adjustment in such Tax Contest; and (v) the Controlling Company shall defend such Tax Contest diligently and in good faith. The failure of the Controlling Company to take any action specified in the preceding sentence with respect to the Non-Controlling Company shall not relieve the Non-Controlling Company of any liability and/or obligation which it may have to the Controlling Company under this Agreement except to the extent that the Non-Controlling Company was actually harmed by such failure, and in no event shall such failure relieve the Non-Controlling Company from any other liability or obligation which it may have to the Controlling Company.

 

(c)           Tax Contest Participation. Unless waived by the Companies in writing, the Controlling Company shall provide the Non-Controlling Company with written notice reasonably in advance of, and the Non-Controlling Company shall have the right to attend, any formally scheduled meetings with Tax Authorities or hearings or proceedings before any judicial authorities in connection with any potential adjustment in a Tax Contest pursuant to which the Non-Controlling Company may reasonably be expected to become liable to make any indemnification payment (or any payment under Section 5) to the Controlling Company under this Agreement. The failure of the Controlling Company to provide any notice specified in this Section 10.02(c) to the Non-Controlling Company shall not relieve the Non-Controlling Company of any liability and/or obligation which it may have to the Controlling Company under this Agreement except to the extent that the Non-Controlling Company was actually harmed by such failure, and in no event shall such failure relieve the Non-Controlling Company from any other liability or obligation which it may have to the Controlling Company.

 

(d)           Power of Attorney. Each member of the Seattle Group shall execute and deliver to Houston (or such member of the Houston Group as Houston shall designate) any power of attorney or other similar document reasonably requested by Houston (or such designee) in connection with any Tax Contest (as to which Houston is the Controlling Company) described in this Section 10. Each member of the Houston Group shall execute and deliver to Seattle (or such member of the Seattle Group as Seattle shall designate) any power of attorney or other similar document requested by Seattle (or such designee) in connection with any Tax Contest (as to which Seattle is the Controlling Company) described in this Section 10.

(e)           Costs. All external out-of-pocket costs and expenses that are incurred by the Controlling Company with respect to a Tax Contest related to an adjustment which the Non-Controlling Company may reasonably be expected to become liable to make any indemnification payment under this Agreement shall be shared by the Companies according to each Company’s relative share of the potential Tax liability with respect to the Tax Contest as determined under this Agreement; provided , however , that a Non-Controlling Company shall not be liable for fees payable to outside advisors to the extent that the Controlling Company failed to consult with the Non-Controlling Company pursuant to Section 10.02(b). If the Controlling Company incurs out-of-pocket costs and expenses to be shared under this Section 10.02(e) during a fiscal quarter, such Controlling Company shall provide notice to the Non-Controlling Company within thirty (30) days after the end of such fiscal quarter for the amount due from such Non-Controlling Company pursuant to this Section 10.02(e), describing in reasonable detail the particulars relating thereto. Such Non-Controlling Company shall have a period of thirty (30) days after the receipt of notice to respond thereto. Unless the Non-Controlling Company disputes the amount it is liable for under this Section 10.02(e), the Non-Controlling Company shall reimburse the Controlling Company within forty-five (45) Business Days of delivery by the Controlling Company of the notice described above. To the extent the Non-Controlling Company does not agree with the amount the Controlling Company claims the Non-Controlling Company is liable for under this Section 10.02(e), the dispute shall be resolved in accordance with Section 14. Any reimbursement shall include interest computed at the Prime Rate based on the number of days from the end of the relevant fiscal quarter to the date of reimbursement under this Section 10.02(e). During the first month of each fiscal quarter in which it expects to incur costs for which reimbursement may be sought under this Section 10.02(e), the Controlling Company will provide the Non-Controlling Company with a good faith estimate of such costs.

 

(f)            Coordination with Austin TMA . Notwithstanding anything to the contrary herein, the Parties shall take all reasonable actions and otherwise cooperate in good faith to ensure that Austin is able to exercise Houston’s rights under this Agreement to participate in any Tax Contest to the extent such participation by Austin is required to comply with Section 10 of the Austin TMA. To the extent of such participation by Austin in a Tax Contest, the Parties shall take all reasonable actions and otherwise cooperate in good faith to ensure that Seattle is able to exercise Houston’s rights under the Austin TMA with respect to such Tax Contest.

 

Section 11.            Effective Date; Termination of Prior Intercompany Tax Allocation Agreements. This Agreement shall be effective as of the date hereof. As of the date hereof, (i) all prior intercompany Tax allocation agreements or arrangements between one or more members of the Houston Group, on the one hand, and one or more members of the Seattle Group, on the other hand, shall be terminated; and (ii) amounts due under such agreements as of the date hereof shall be settled as of the date hereof. Upon such termination and settlement, no further payments by or to Houston or by or to Seattle with respect to such agreements shall be made, and all other rights and obligations resulting from such agreements between the Companies and their Affiliates shall cease at such time.

Section 12.           Survival of Obligations. The representations, warranties, covenants and agreements set forth in this Agreement shall be unconditional and absolute and shall remain in effect without limitation as to time.

 

Section 13.            Treatment of Payments; Tax Gross Up.

 

Section 13.01       Treatment of Tax Indemnity and Tax Benefit Payments. In the absence of any change in Tax treatment under the Code or other applicable Tax Law,

 

(a)          any Tax indemnity payments made by a Company under this Agreement shall be treated for Tax purposes by the Payor and the recipient as distributions or capital contributions, as appropriate, occurring immediately before the Distribution (but only to the extent the payment does not relate to a Tax allocated to the Payor in accordance with Section 1552 of the Code or the Treasury Regulations thereunder or Treasury Regulations Section 1.1502-33(d) (or under corresponding principles of other applicable Tax Laws)) or as payments of an assumed or retained liability, and

 

(b)          any Tax Benefit payments made by a Company under Section 5, shall be treated for Tax purposes by the Payor and the recipient as distributions or capital contributions, as appropriate, occurring immediately before the Distribution (but only to the extent the payment does not relate to a Tax allocated to the Payor in accordance with Section 1552 of the Code or the Treasury Regulations thereunder or Treasury Regulations Section 1.1502-33(d) (or under corresponding principles of other applicable Tax Laws)) or as payments of an assumed or retained liability.

 

Section 13.02       Tax Gross Up. If notwithstanding the manner in which Tax indemnity payments and Tax Benefit payments were reported, there is an adjustment to the Tax liability of a Company as a result of its receipt of a payment pursuant to this Agreement (disregarding for these purposes any such adjustment which arises solely as a result of a failure of the recipient Company to distribute such payment in the manner described in Section 361(b)(1)(A) of the Code) such payment shall be appropriately adjusted so that the amount of such payment, reduced by all Income Taxes payable with respect to the receipt thereof (but taking into account all correlative Tax Benefits resulting from the payment of such Income Taxes), shall equal the amount of the payment which the Company receiving such payment would otherwise be entitled to receive pursuant to this Agreement.

 

Section 13.03       Interest Under This Agreement. Anything herein to the contrary notwithstanding, to the extent one Company (“ Indemnitor ”) makes a payment of interest to another Company (“ Indemnitee ”) under this Agreement with respect to the period from the date that the Indemnitee made a payment of Tax to a Tax Authority to the date that the Indemnitor reimbursed the Indemnitee for such Tax payment, the interest payment shall be treated as interest expense to the Indemnitor (deductible to the extent provided by law) and as interest income by the Indemnitee (includible in income to the extent provided by law). The amount of the payment shall not be adjusted to take into account any associated Tax Benefit to the Indemnitor or increase in Tax to the Indemnitee.

Section 14.           Disagreements.

 

Section 14.01       Discussion. The Companies mutually desire that friendly collaboration will continue between them. Accordingly, they will try, and they will cause their respective Group members to try, to resolve in an amicable manner all disagreements and misunderstandings connected with their respective rights and obligations under this Agreement, including any amendments hereto. In furtherance thereof, in the event of any dispute or disagreement (a “ Dispute ”) between any member of the Houston Group and any member of the Seattle Group as to the interpretation of any provision of this Agreement or the performance of obligations hereunder, the Tax departments of the Companies shall negotiate in good faith to resolve the Dispute.

 

Section 14.02       Escalation. If such good faith negotiations do not resolve the Dispute, then the matter, upon written request of either Company, will be referred for resolution to representatives of the Companies at a senior level of management of the Companies pursuant to the procedures set forth in Section 8.2 of the Separation and Distribution Agreement.

 

Section 14.03       Referral to Tax Advisor for Computational Disputes. Notwithstanding anything to the contrary in Section 14, with respect to any Dispute under this Agreement involving computational matters, if the Companies are not able to resolve the Dispute through the discussion process set forth in Section 14.01, then the Companies shall not refer the dispute to the escalation process set forth in Section 14.02, but rather the Dispute will be referred to a Tax Advisor acceptable to each of the Companies to act as an arbitrator in order to resolve the Dispute. In the event that the Companies are unable to agree upon a Tax Advisor within fifteen (15) Business Days following the completion of the discussion process, the Companies shall each separately retain an independent, nationally recognized law or accounting firm (each, a “ Preliminary Tax Advisor ”), which Preliminary Tax Advisors shall jointly select a Tax Advisor on behalf of the Companies to act as an arbitrator in order to resolve the Dispute. The Tax Advisor may, in its discretion, obtain the services of any third-party appraiser, accounting firm or consultant that the Tax Advisor deems necessary to assist it in resolving such disagreement. The Tax Advisor shall furnish written notice to the Companies of its resolution of any such Dispute as soon as practical, but in any event no later than thirty (30) Business Days after its acceptance of the matter for resolution. Any such resolution by the Tax Advisor will be conclusive and binding on the Companies. Following receipt of the Tax Advisor’s written notice to the Companies of its resolution of the Dispute, the Companies shall each take or cause to be taken any action necessary to implement such resolution of the Tax Advisor. Each Company shall pay its own fees and expenses (including the fees and expenses of its representatives) incurred in connection with the referral of the matter to the Tax Advisor (and the Preliminary Tax Advisors, if any). All fees and expenses of the Tax Advisor (and the Preliminary Tax Advisors, if any) in connection with such referral shall be shared equally by the Companies.

 

Section 14.04       Injunctive Relief. Nothing in this Section 14 will prevent either Company from seeking injunctive relief if any delay resulting from the efforts to resolve the Dispute through the process set forth above could result in serious and irreparable injury to either Company. Notwithstanding anything to the contrary in this Agreement, Houston and Seattle are the only members of their respective Group entitled to commence a dispute resolution procedure under this Agreement, and each of Houston and Seattle will cause its respective Group members not to commence any dispute resolution procedure other than as provided in this Section 14.

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

 

Section 16.           General Provisions.

 

Section 16.01     Notices. All notices, requests, claims, demands and other communications under this Agreement shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by overnight courier service, by facsimile or electronic transmission with receipt confirmed (followed by delivery of an original via overnight courier service) or by registered or certified mail (postage prepaid, return receipt requested) to the respective Parties at the following addresses (or at such other address for a Party as shall be specified in a notice given in accordance with this Section 16.01):

 

 

A Party may change the address for receiving notices under this Agreement by providing written notice of the change of address to the other Parties.

 

Section 16.02     Binding Effect. This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their successors and assigns.

 

Section 16.03     Waiver. The Parties may waive a provision of this Agreement only by a writing signed by the Party intended to be bound by the waiver. A Party is not prevented from enforcing any right, remedy or condition in the Party’s favor because of any failure or delay in exercising any right or remedy or in requiring satisfaction of any condition, except to the extent that the Party specifically waives the same in writing. A written waiver given for one matter or occasion is effective only in that instance and only for the purpose stated. A waiver once given is not to be construed as a waiver for any other matter or occasion. Any enumeration of a Party’s rights and remedies in this Agreement is not intended to be exclusive, and a Party’s rights and remedies are intended to be cumulative to the extent permitted by law and include any rights and remedies authorized in law or in equity.

 

Section 16.04     Severability. If any provision of this Agreement or the application thereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof or thereof, or the application of such provision to Persons or circumstances or in jurisdictions other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby. Upon such determination, the Parties shall negotiate in good faith in an effort to agree upon such a suitable and equitable provision to effect the original intent of the parties.

 

Section 16.05     Authority. Each of the Parties represents to the other that (a) it has the corporate or other requisite power and authority to execute, deliver and perform this Agreement, (b) the execution, delivery and performance of this Agreement have been duly authorized by all necessary corporate or other action, (c) it has duly and validly executed and delivered this Agreement, and (d) this Agreement is a legal, valid and binding obligation, enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and general equity principles.

Section 16.06     Further Action. The Parties shall execute and deliver all documents, provide all information, and take or refrain from taking action as may be necessary or appropriate to achieve the purposes of this Agreement, including the execution and delivery to the other Parties and their Affiliates and representatives of such powers of attorney or other authorizing documentation as is reasonably necessary or appropriate in connection with Tax Contests (or portions thereof) under the control of such other Parties in accordance with Section 10.

 

Section 16.07     Integration. This Agreement, together with each of the exhibits and schedules appended hereto constitutes the final agreement among the Parties, and is the complete and exclusive statement of the Parties’ agreement on the matters contained herein. All prior and contemporaneous negotiations and agreements among the Parties with respect to the matters contained herein are superseded by this Agreement, as applicable. In the event of any inconsistency between this Agreement and the Separation and Distribution Agreement, or any other agreements relating to the transactions contemplated by the Separation and Distribution Agreement, with respect to matters addressed herein, the provisions of this Agreement shall control.

 

Section 16.08     Rules of Construction. Interpretation of this Agreement shall be governed by the following rules of construction: (a) words in the singular shall be held to include the plural and vice versa, and words of one gender shall be held to include the other gender as the context requires; (b) references to the terms “Section,” “paragraph,” “clause,” “Exhibit” and “Schedule” are references to the Sections, paragraphs, clauses, Exhibits and Schedules of this Agreement unless otherwise specified; (c) the terms “hereof,” “herein,” “hereby,” “hereto,” and derivative or similar words refer to this entire Agreement, including the Schedules and Exhibits hereto; (d) references to “$” shall mean U.S. dollars; (e) the word “including” and words of similar import when used in this Agreement shall mean “including without limitation,” unless otherwise specified; (f) the word “or” shall not be exclusive; (g) references to “written” or “in writing” include in electronic form; (h) provisions shall apply, when appropriate, to successive events and transactions; (i) 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; (j) Houston, Seattle and Miami have each participated in the negotiation and drafting of this Agreement and if an ambiguity or question of interpretation should arise, this Agreement shall be construed as if drafted jointly by the parties and no presumption or burden of proof shall arise favoring or burdening a Party by virtue of the authorship of any of the provisions in this Agreement or any interim drafts of this Agreement; and (k) a reference to any Person includes such Person’s successors and permitted assigns.

 

Section 16.09     No Double Recovery. No provision of this Agreement shall be construed to provide an indemnity or other recovery for any costs, damages, or other amounts for which the damaged Party has been fully compensated under any other provision of this Agreement or under any other agreement or action at law or equity. Unless expressly required in this Agreement, a Party shall not be required to exhaust all remedies available under other agreements or at law or equity before recovering under the remedies provided in this Agreement.

Section 16.10     Counterparts. This Agreement may be executed in one (1) or more counterparts (including by electronic or .pdf transmission), and by each Party in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. Delivery of any signature page by facsimile, electronic or .pdf transmission shall be binding to the same extent as an original signature page.

 

Section 16.11     Governing Law. This Agreement shall be governed by and construed and interpreted in accordance with the Laws of the State of Delaware without giving effect to the principles of conflicts of law thereof.

 

Section 16.12     Jurisdiction. If any dispute arises out of or in connection with this Agreement, except as expressly contemplated by another provision of this Agreement, the Parties irrevocably (and the Parties will cause each other member of their respective Group to irrevocably) (i) agrees that any dispute shall be subject to the exclusive jurisdiction of the state and federal courts located in the State of Delaware, (ii) waives any claims of forum non conveniens and agrees to submit to the jurisdiction of such courts and (iii) agrees that service of any process, summons, notice or document by U.S. registered mail to its respective address set forth in Section 16.01 shall be effective service of process for any litigation brought against it in any such court or for the taking of any other acts as may be necessary or appropriate in order to effectuate any judgment of said courts.

 

Section 16.13     Amendment. No provision of this Agreement (except as otherwise provided therein) may be amended or modified except by a written instrument signed by each of the parties hereto or thereto, as applicable.

 

Section 16.14     Houston or Seattle Affiliates. If, at any time, Houston or Seattle acquires or creates one or more Affiliates that are includable in the Houston Group or Seattle Group, as the case may be, they shall be subject to this Agreement and all references to the Houston Group or Seattle Group, as the case may be, herein shall thereafter include a reference to such Affiliates.

          

Section 16.15     Successors. This Agreement shall be binding on and inure to the benefit of any successor by merger, acquisition of assets, or otherwise, to any of the Parties hereto (including but not limited to any successor of Houston or Seattle succeeding to the Tax attributes of either under Section 381 of the Code), to the same extent as if such successor had been an original Party to this Agreement. As of the Effective Time, this Agreement shall be binding on Miami and Miami shall be subject to the obligations and restrictions imposed on Seattle hereunder and, for the avoidance of doubt, any restrictions applicable to Seattle shall apply to Miami mutatis mutandis.

 

Section 16.16     Injunctions. The Parties acknowledge that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with its specific terms or were otherwise breached. The Parties hereto shall be entitled to an injunction or injunctions to prevent breaches of the provisions of this Agreement and to enforce specifically the terms and provisions hereof in any court having jurisdiction, such remedy being in addition to any other remedy to which they may be entitled at law or in equity.

 

[Signature page follows.]

IN WITNESS WHEREOF, each Party has caused this Agreement to be executed on its behalf by a duly authorized officer on the date first set forth above.

 

HEWLETT PACKARD ENTERPRISE COMPANY, a Delaware corporation

 

 

SEATTLE SPINCO, INC., a Delaware corporation

 

 

MICRO FOCUS INTERNATIONAL PLC, a company organized under the laws of England and Wales

 

 

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Exhibit 2.2

 

STRICTLY CONFIDENTIAL

EXECUTION VERSION

INTELLECTUAL PROPERTY MATTERS AGREEMENT

This INTELLECTUAL PROPERTY MATTERS AGREEMENT (this “ IPMA ”), dated as of September 1, 2017 (“ Effective Date ”), is made by and between Hewlett Packard Enterprise Company, a Delaware corporation (“ Houston Company ”), and Hewlett Packard Enterprise Development LP, a Texas limited partnership (“ Houston Development ” and, together with Houston Company, collectively “ Houston ”), on the one hand, and Seattle SpinCo, Inc., a Delaware corporation and wholly owned subsidiary of Houston Company (“ Seattle ”), on the other hand.  Houston Company, Houston Development and Seattle are sometimes collectively referred to as the “ Parties ” and each is individually referred to as a “ Party .”

RECITALS

WHEREAS, Houston Company and Seattle have entered into the Separation Agreement pursuant to which the Parties have set out the terms on which, and the conditions subject to which, they wish to implement the Reorganization; and

WHEREAS, this IPMA is a Transaction Document under the Separation Agreement and by its terms will allocate rights and interests in certain Intellectual Property Rights used in the conduct of the Seattle Business prior to the Distribution Date.

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

ARTICLE I

DEFINITIONS

The following capitalized terms used in this IPMA shall have the meanings set forth below:

“ Affiliate ” means an Affiliate (as defined in the Separation Agreement) existing as of the Effective Date or at any time thereafter.

“ Acquiror ” has the meaning set forth in Section 10.2 (Sale of All or Part of a Business (Assignment)).

“ Assigning Party ” has the meaning set forth in Section 10.1 (Assignment).

“ Assert ” means to bring, initiate or prosecute, or in any way knowingly aid, knowingly participate (directly or indirectly) or knowingly assist in the bringing, initiation or prosecution of, an action of infringement or misappropriation before any legal, judicial, arbitration, administrative, executive or other type of body or tribunal that has or claims to have authority to adjudicate such action in whole or in part, but shall exclude any action taken in response to or as required by any Governmental Authority, Law, or such body or tribunal, including any court order, statute, or regulation requiring production of documents or testimony.  Examples of such body or tribunal include, without limitation, State and Federal Courts in the United States, the United States International Trade Commission and any foreign counterparts of any of the foregoing.

“ Autonomy Acquisition ” means that series of transactions that was consummated in 2011 in which the Hewlett-Packard Company group acquired Autonomy Corporation PLC and its subsidiaries.

“ Autonomy IP ” means collectively (a) the Autonomy Patents, (b) the Autonomy Other Registered IP, and (c) Autonomy Unregistered IP.

“ Autonomy IP Transferee ” has the meaning set forth in Section 11.2 (Obligation to Transfer).

“ Autonomy Other Registered IP ” means only those Copyrights specifically identified in Exhibit C-2 as Autonomy IP.

“ Autonomy Patents ” means only those Transferred Patents specifically identified in Exhibit B‑2 .

“ Autonomy Unregistered IP ” means the Transferred Unregistered IP that originated with Autonomy Corporation PLC or any of its subsidiaries prior to the Autonomy Acquisition.

“ Change of Control ” means with respect to either Party, a transaction in which any of the following occurs, whether directly or indirectly:  (a) a Third Party acquires greater than fifty percent (50%) ownership interest, direct or indirect, in the outstanding shares or stock entitled to vote for the election of directors of such Party, or (b) a Third Party otherwise acquires the ability to control or direct the management, policies, or affairs of such Party.

“ CNTS ” has the meaning set forth in Section 11.1 (Covenant Not to Sue).

“ Copyright Assignment Agreement ” has the meaning set forth in Section 2.1(a) (Assignment of Transferred IP).

“ Copyrights ” has the meaning set forth in the definition of Intellectual Property Rights.

“ Confidential Information ” shall mean proprietary or confidential technical, financial or business information of the disclosing Party, including Source Code, as well as information about product plans and strategies, promotions and customers as such information is related to the subject matter of this IPMA, which should be reasonably understood by the receiving Party as the confidential or proprietary information of the disclosing Party.  Without regard to the timing of any disclosure or the identity of the disclosing Person, all Source Code embodying any Houston Licensed IPR shall be deemed to be Houston Confidential Information, and Source Code embodying any Transferred IP shall be deemed to be Seattle Confidential Information.

“ Database Rights ” has the meaning set forth in the definition of Intellectual Property Rights.

“ Dispute ” has the meaning set forth in Section 8.6 (Dispute Resolution).

“ Domain Names ” has the meaning set forth in the definition of Intellectual Property Rights.

“ Effective Date ” has the meaning set forth in the preamble.

“ Exclusively Related to the Seattle Business ” means, with respect to any Intellectual Property Right, that such Intellectual Property Right is (a) owned, as of immediately prior to the Distribution Date, by any member of the Houston Group, and (b) used or held for use exclusively in, or exclusively related to, the operation of the Seattle Business.

“ Houston ” has the meaning set forth in the preamble.

“ Houston Business ” means the Houston Business (as defined in the Separation Agreement).

“ Houston Company ” has the meaning set forth in the preamble.

“ Houston Confidential Information ” means Confidential Information of the Houston Group.

“ Houston Development ” has the meaning set forth in the preamble.

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

“ Houston Licensed Activities ” means (a) the operation of the Houston Business as conducted prior to the Distribution Date and natural evolutions, expansions, and extensions thereof, (b) the design, development, manufacture, having manufactured (subject to Section 4.2 (Have Made Rights)), use, importation, exportation, Sale, Service, and other exploitation of Houston Licensed Products, and (c) the practice of the Houston Licensed Processes in connection with any of the foregoing clauses (a) and (b).

“ Houston Licensed IPR ” means (a) the Houston Patents, and (b) all Intellectual Property Rights (other than Transferred IP, Patents, Marks (notwithstanding that Marks may be separately licensed to Seattle or any of its Affiliates), and Domain Names) that (i) are, as of immediately after the Distribution Time, owned or Licensable by a member of the Houston Group, and (ii) are or were, as of, or prior to, the Distribution Time, used or developed for use in the Seattle Business.

“ Houston Licensed Processes ” means any methods, processes, or procedures (including of manufacture, assembly or testing) in use by any member of the Houston Group, including those for Houston Licensed Products.

“ Houston Licensed Products ” means (a) the products and services of the Houston Business as conducted by any member of the Houston Group that are commercially available and existing or that are under development, in each case as of immediately after the Distribution Time, (b) the products and services of the Houston Business that were made commercially available and existing or that were under development, in each case prior to the Distribution Date, and (c) Natural Evolutions of the products and services referenced in clauses (a) and (b).

“ Houston Patents ” means all Patents (excluding the Transferred Patents) (a) that are, as of immediately after the Distribution Time, owned or Licensable by Houston or any other member of the Houston Group and (b) that, in the absence of a license thereto, would be infringed by the conduct of any of the Seattle Licensed Activities.

“ Houston Third Party Conditions ” has the meaning set forth in Section 3.1(g) (Third‑Party Licenses).

“ Improvement ” to any Intellectual Property Right or Technology means (a) with respect to Copyrights, any modifications, derivative works, enhancements and translations of works of authorship in any medium, (b) with respect to Database Rights, any database that is created by extraction or re-utilization of another database, (c) with respect to Patents, any patentable improvement or modification to any Patents, and (d) with respect to Technology, any adaptation, derivative, enhancement, improvement or modification of or incorporated into Technology.

“ Industrial Designs ” has the meaning set forth in the definition of Intellectual Property Rights.

“ Intellectual Property Assignment Agreements ” has the meaning set forth in Section 2.1(a) (Assignment of Transferred IP).

“ Intellectual Property Rights ” means all rights, title and interest in and to intellectual property arising throughout the world, including all:  (a) copyrights and registrations and applications therefor, and rights in published and unpublished works of authorship (collectively, “ Copyrights ”); (b) domain names, websites and uniform resource locators (collectively, “ Domain Names ”); (c) trademarks, service marks, corporate names, trade names, logos, slogans, designs, trade dress, and other similar identifiers of source or origin (registered and unregistered), together with the goodwill associated with any of the foregoing and registrations and applications to register any of the foregoing (collectively, “ Marks ”); (d) patents and utility models, design registrations, and applications for any of the foregoing, together with all counterparts, reissues, continuations, continuations-in-part, divisionals, and reexaminations thereof (collectively, “ Patents ”); (e) trade secrets, invention disclosures, know-how, inventions, discoveries, methods, processes, technical data, specifications, research and development information and other proprietary or confidential information, but excluding any Copyrights in or Patents on any of the foregoing (collectively, “ Trade Secrets ”); (f) mask works and registrations and applications therefor (“ Mask Works ”); (g) data rights, databases and data collections (including knowledge databases, customer lists and customer databases) under the laws of any jurisdiction, whether registered or unregistered, and any applications for registration therefor (“ Database Rights ”); (h) industrial design rights and any registrations and applications therefor (“ Industrial Designs ”); (i) intellectual property rights in Software; and (j) any and all similar, corresponding or equivalent rights to any of the foregoing.  For the avoidance of doubt, registrations and applications shall include all renewals, restorations, corrections, reversions and modifications of the same, as applicable.  The term “Intellectual Property Rights” excludes (i) Technology and (ii) for the purpose of this IPMA only (and not for the purpose of any other Transaction Document), unless expressly provided in this IPMA, contractual rights (including license grants from Third Parties but not rights granted by registrars in respect of domain names).

“ IPMA ” has the meaning set forth in the preamble.

“ IT Software ” means any Software that (a) is used to provide information technology-related infrastructure for an enterprise that is not used directly to provide commercial products or services to customers or related to the development related therefor, and (b) constitutes TSA‑Licensed Software (as defined in the Transition Services Agreement).

“ Licensable ” means, with respect to a Party, Intellectual Property Rights that (a) are owned by a Third Party (not including (i) an Affiliate of such Party or (ii) the other Party or any Affiliate of that Party) and (b) such Party or any of its Affiliates has (to the extent which and for such time that such Party or Affiliates has) the right to grant the licenses or sublicenses to such Intellectual Property Rights granted by it as set forth in this IPMA without (1) subject to Section 3.1(g) (Third-Party Licenses) or Section 4.1(h) (Third-Party Licenses), the approval of or payment of royalties or other consideration to such Third Party or (2) adversely affecting the exercise of such Party’s license rights granted by that Third Party or otherwise causing a detriment to such Party under such Party’s applicable license agreement with such Third Party.

“ Marks ” has the meaning set forth in the definition of Intellectual Property Rights.

“ Mask Works ” has the meaning set forth in the definition of Intellectual Property Rights.

“ Mistakenly Omitted Transferred IP ” has the meaning set forth in Section 8.2(a) (Further Transfer and Transfer Back).

“ Mistakenly Transferred Registered IP ” has the meaning set forth in Section 8.2(a) (Further Transfer and Transfer Back).

“ Natural Evolutions ” means successors and replacements of a product or service, as well as natural evolutions, expansions, extensions, enhancements, additions, adaptations, derivatives and modifications of a product or service, including error corrections, bug fixes, new features, new functions, translations and ports to new or additional platforms or operating systems.  Nothing in this definition shall be interpreted to limit or affect the definition or interpretation of any other references in this IPMA to natural evolutions, expansions, or extensions.

“ Non-Assigning Party ” has the meaning set forth in Section 10.1 (Assignment).

“ Object Code ” means programming statements, code, or computer instructions, in each case in machine-readable form (whether or not in executable form, generated by compilation, assembly or other translation of Source Code, or contained in a medium which permits it to be loaded into and operated on or by a computer). The term “Object Code” includes (a) statements, code, or instructions readable in a virtual machine, (b) partially compiled or intermediate code that may result from the compilation, assembly, or other translation of Source Code, and (c) firmware, compiled or interpreted programmable logic, libraries, objects, bytecode, machine code, and middleware.

“ Party ” and “ Parties ” have the respective meanings set forth in the preamble.

“ Patent Assignment Agreement ” has the meaning set forth in Section 2.1(a) (Assignment of Transferred IP).

“ Patents ” has the meaning set forth in the definition of Intellectual Property Rights.

“ Registered Intellectual Property ” means (a) issued Patents and pending applications for issuance of Patents, (b) registered Marks and applications for registration of Marks, (c) registered Copyrights and applications for the registration of Copyrights, (d) registered Mask Works and applications for registration of Mask Works, (e) registered Industrial Designs and applications for registration of Industrial Designs, and (f) Domain Names.

“ Registered Intellectual Property Schedule ” has the meaning set forth in Section 2.1(d)(i) (Creation).

“ Seattle ” has the meaning set forth in the preamble.

“ Seattle Business ” means the Seattle Business (as defined in the Separation Agreement).

“ Seattle Confidential Information ” means Confidential Information of Seattle or any of its Affiliates.

“ Seattle Designee ” means such other member of the Seattle Group designed by Seattle to be the applicable assignee of a particular item of Transferred IP.

“ Seattle Existing Products ” means the products and services of the Seattle Business that are commercially available and existing or that are under development, in each case as of immediately after the Distribution Time.

“ Seattle Licensed Activities ” means (a) the operation of the Seattle Business as conducted prior to the Distribution Date and natural evolutions, expansions, and extensions thereof, (b) the design, development, manufacture, having manufactured (subject to Section 3.2 (Have Made Rights)), use, importation, exportation, Sale, Service, and other exploitation of Seattle Licensed Products, and (c) the practice of the Seattle Licensed Processes in connection with any of the foregoing clauses (a) and (b).

“ Seattle Licensed Entities ” has the meaning set forth in Section 3.1 (License Grants).

“ Seattle Licensed IPR ” means (a) the Seattle Licensed Patents and (b) the Seattle Licensed Other IPR, in each case including those that are owned or Licensable by Seattle or any of its Subsidiaries; provided, that, subject to Section 11.3 (Springing License), the Seattle Licensed IPR shall not include any Autonomy IP.

“ Seattle Licensed Other IPR ” means (a) all Transferred Other Registered IP and (b) all Transferred Unregistered IP, in each case that are or were, as of, or prior to, the Distribution Time, used or developed for use in the Houston Business; provided, that, the Seattle Licensed Other IPR shall not include any Patents, Domain Names, Marks, or, subject to Section 11.3 (Springing License), Autonomy IP.

“ Seattle Licensed Patents ” means all Transferred Patents that, in the absence of a license thereto, would be infringed by the conduct of any of the Houston Licensed Activities; provided, that, subject to Section 11.3 (Springing License), the Seattle Licensed Patents shall not include any Autonomy IP.

“ Seattle Licensed Processes ” means any methods, processes, or procedures (including of manufacture, assembly or testing) in use by Seattle or any of its Affiliates, including those for Seattle Licensed Products.

“ Seattle Licensed Products ” means (a) Seattle Existing Products, (b) the products and services of the Seattle Business that were made commercially available and existing or that were under development, in each case prior to the Distribution Date, and (c) Natural Evolutions of the products and services referenced in clauses (a) and (b).

“ Sell ” (including with correlative meanings, the terms “ Sale ” and “ Sold ”) means to license, sell, resell, transfer, distribute, lease or otherwise dispose of, or offer to do any of the foregoing, with respect to a product or service.

“ Separation Agreement ” means that certain Separation and Distribution Agreement dated as of September 7, 2016, by and between Houston Company and Seattle (as amended, modified or supplemented from time to time in accordance with its terms).

“ Service ” means to support, repair, refurbish, fix, perform any maintenance or otherwise review a product or to diagnose any operational issues with a product.

“ Software ” means computer programs and software, including any and all software implementations of algorithms, models and methodologies, whether in Source Code, Object Code or other form, databases and compilations of data in electronic form, including flow-charts and other work product used to design, plan, organize and develop any of the foregoing, all translations, ported versions, and modifications of any of the foregoing, and all related documentation, including user manuals and training materials.

“ Source Code ” means one or more programming statements, code, or computer instructions, in each case written in a human-readable programming language contained in any format, including human and machine-readable formats and including comments and annotations.

“ Subsidiary ” means a Subsidiary (as defined in the Separation Agreement) existing as of the Effective Date or at any time thereafter.

“ Technology ” means all tangible embodiments or applications of Copyrights, Trade Secrets, Mask Works, Database Rights, Industrial Designs, and other Intellectual Property Rights (other than Patents, Marks and Domain Names), including Software, and all related documentation (including related bills of material, build instructions, test reports, manuals, schematics, technical and user documentation, and lab notebooks), whether in electronic, written or other media.  Technology does not include Intellectual Property Rights.

“ Third Party ” means any Person other than a member of the Houston Group, Seattle, or an Affiliate of Seattle.

“ Trade Secrets ” has the meaning set forth in the definition of Intellectual Property Rights.

“ Trademark Assignment Agreement ” has the meaning set forth in Section 2.1(a) (Assignment of Transferred IP).

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

“ Transferred Domain Names ” means the Domain Names set forth on Exhibit A .

“ Transferred IP ” means the Transferred Registered IP, Transferred Domain Names, and Transferred Unregistered IP.

“ Transferred Other Registered IP ” means the Copyrights, Mask Works, and Industrial Designs set forth on Exhibit C-1 or Exhibit C-2 .

“ Transferred Patents ” means the Patents set forth on Exhibit B-1 or Exhibit B-2 .

“ Transferred Registered IP ” means, collectively, the (a) Transferred Patents, (b) Transferred Other Registered IP, and (c) Transferred Registered Trademarks.

“ Transferred Registered Trademarks ” means the Marks set forth on Exhibit D .

“ Transferred Unregistered IP ” means, other than the Transferred Registered IP, all Intellectual Property Rights (including Trade Secrets, unregistered Copyrights, unregistered Mask Works, unregistered Industrial Designs, and Database Rights embodied in any Technology) that are Exclusively Related to the Seattle Business.  For clarity and without limiting the foregoing, “Transferred Unregistered IP” shall expressly exclude unregistered Marks to the extent containing (and to the extent of) any HPE Mark, where the term “ HPE Mark ” means “HPE”, “HEWLETT PACKARD”, “HEWLETT PACKARD ENTERPRISE”, “HEWLETT PACKARD ENTERPRISE COMPANY”, the “Element” logo (i.e., ) or the HEWLETT PACKARD ENTERPRISE logo (i.e., ) names/marks or any variations or acronyms thereof), other corporate branding and house Marks that are not Exclusively Related to the Seattle Business , and all other Marks that are not Exclusively Related to the Seattle Business.

Unless otherwise defined in this IPMA, all capitalized terms used in this IPMA shall have the meanings set forth in the Separation Agreement.

ARTICLE II

ASSIGNMENT

Section 2.1               Transferred IP .

(a)             Assignment of Transferred IP .  Houston hereby irrevocably assigns, transfers, conveys, and delivers, and shall cause the other members of the Houston Group to irrevocably assign, transfer, convey, and deliver, to Seattle (or a Seattle Designee) all of their respective rights, title and interest in and to the Transferred IP, subject to (i) licenses and encumbrances entered into by Houston or any other member of the Houston Group with a Third Party prior to the Distribution Date in the ordinary course of business consistent with past practice and (ii) the licenses and CNTS granted to Houston in this IPMA.  Houston hereby irrevocably assigns, transfers, conveys, and delivers (and shall cause the other members of the Houston Group to do the same) to Seattle any and all waivers granted to any member of the Houston Group of any moral rights, including rights of attribution, integrity and disclosure, arising from all or any part of any Intellectual Property Rights that constitute Transferred IP.  The Transferred IP includes the right, title, and interest of any member of the Houston Group in and to any and all proceeds, causes of action, and rights of recovery and collection against, and rights to sue (and recover damages from), Third Parties for past and future infringement, misappropriation, dilution, or other violation or impairment of any of the Transferred IP.  The Parties shall execute the Patent Assignment Agreement in substantially the form attached hereto as Exhibit E-1 (the “ Patent Assignment Agreement ”), the Trademark Assignment Agreement in substantially the form attached hereto as Exhibit E-2 (the “ Trademark Assignment Agreement ”), the Copyright Assignment Agreement in substantially the form attached hereto as Exhibit E-3 (the “ Copyright Assignment Agreement ”), as well as such additional assignments (including for foreign Transferred IP) as reasonably requested by Seattle to carry out the intent of the Parties and otherwise in furtherance of the assignment of the Transferred IP (collectively the “ Intellectual Property Assignment Agreements ”).  Houston shall cause the applicable members of the Houston Group to do as appropriate to document the transfer of the Transferred IP.  For the avoidance of doubt, when determining whether an Intellectual Property Right is Exclusively Related to the Seattle Business, the fact that a standalone product or service of the Seattle Business that is made commercially available by the Seattle Business as of the Distribution Date is used in its entirety or Sold in its entirety by or on behalf of the Houston Business as of the Distribution Date, shall not be taken into account.

(b)             Recording Change of Ownership of the Transferred IP .  Seattle shall have the sole responsibility, at Seattle’s sole cost and expense, to file the Intellectual Property Assignment Agreements and any other forms or documents as required to record the assignment of the Transferred IP from Houston or the applicable member of the Houston Group to Seattle; provided, however, that, upon request, Houston shall provide commercially reasonable assistance to Seattle to support Seattle recording the assignment, at Seattle’s sole cost and expense.

(c)             Responsibility for Transferred Registered IP .  With respect to the Transferred Patents, Transferred Registered Trademarks, Transferred Other Registered IP and Transferred Domain Names, Houston shall pay all fees incurred and respond to all office actions due prior and up to and including the Distribution Date, and Seattle shall, in its sole discretion, pay all fees incurred and respond to all office actions due subsequent to the Distribution Date.  Houston shall promptly forward to Seattle all patent office correspondence received by the Houston Group and all patent attorney and agent correspondence received by the Houston Group related to the Transferred Patents for three hundred and sixty-five (365) days after the Distribution Date.  Houston shall promptly forward to Seattle Group all trademark office correspondence received by the Houston Group and all trademark attorney and agent correspondence received by the Houston Group related to the Transferred Registered Trademarks for three hundred and sixty-five (365) days after the Distribution Date.  Houston shall promptly forward to Seattle all other correspondence received by the Houston Group from any Intellectual Property Rights agency, office, or registrar and all attorney and agent correspondence received by the Houston Group related to any Transferred Other Registered IP for three hundred and sixty-five (365) days after the Distribution Date.  Houston shall: (x) within ten (10) days after the Distribution Date, provide to Seattle a report from Houston’s docketing system regarding all digitally stored files relating to the Transferred Patents, the Transferred Registered Trademarks, Transferred Other Registered IP, or the Transferred Domain Names; and (y) promptly thereafter, (i) provide to Seattle complete copies of all of the following with respect to the Transferred Registered IP to the extent included in Houston’s electronic prosecution files or otherwise digitally stored in Houston’s docketing system for the Transferred Registered IP, Transferred Domains, and invention disclosures constituting Transferred IP:  file histories and notes (where such notes are regarding, with respect to Transferred Registered IP, Transferred Domains, or invention disclosures constituting Transferred IP, actual or potential disclosure dates or prior art dates and correspondence with inventors, outside legal counsel, foreign agents and the applicable Governmental Authorities for such Intellectual Property), lists of Patents specifically identified as subject to royalty-free terms in a declaration submitted prior to the Distribution Date by any member of the Houston Group or Seattle Group to a standards-setting organization, patent pool, or similar organization, and (ii) upon Seattle’s reasonable request, provide copies of any prosecution and docketing information (including any such notes) with respect to Transferred Registered IP stored in physical or hard copy form solely to the extent that any Houston Group member has such information in physical or hard copy form.

(d)             Registered Intellectual Property Schedules .

(i)               Creation .  Promptly following the execution of the Separation Agreement, Houston shall, in consultation with Seattle Business management and Miami (to the extent such consultation is not prohibited by applicable Laws), commence the creation of a list of all Registered Intellectual Property that is Exclusively Related to the Seattle Business.  Houston shall regularly provide Miami with a copy of the then-current list.  Houston shall, without limiting anything set forth in Section 2.14 (Cooperation) of the Separation Agreement, and as reasonably requested by Miami (and to the extent not prohibited by applicable Laws), consult with, and provide updates and other information reasonably requested by Seattle or Miami to, Seattle Business management and Miami with respect to such list and the content thereof, and give due consideration in good faith to Miami’s and Seattle Business management’s input with respect thereto.  If Miami or Seattle Business management disagrees with any decision made by Houston regarding such list or content, Houston, on the one hand, and Miami and Seattle management, on the other hand, shall escalate such disagreement to successively more senior-levels of executives (up to and including their respective CEOs).  Houston shall deliver to Seattle as soon as reasonably practicable (but no later than ninety (90) days prior to the Projected Closing Date (as defined in the Merger Agreement)) a substantially final and complete list of Registered Intellectual Property that is Exclusively Related to the Seattle Business (such list, the “ Registered Intellectual Property Schedule ”).

(ii)              Assignment .  The list of Domain Names set forth on the Registered Intellectual Property Schedule as of the Effective Date shall be deemed to be Exhibit A to this IPMA.  The list of Patents set forth on the Registered Intellectual Property Schedule as of the Effective Date (other than the Autonomy Patents) shall be deemed to be Exhibit B-1 to this IPMA.  The lists of Copyrights, Mask Works, and Industrial Designs set forth on the Registered Intellectual Property Schedule as of the Effective Date (other than the Autonomy Other Registered IP) shall be deemed to be Exhibit C-1 to this IPMA.  The list of Marks set forth on the Registered Intellectual Property Schedule as of the Effective Date shall be deemed to be Exhibit D to this IPMA.  Houston shall (and shall cause the other members of the Houston Group to) irrevocably assign, transfer, convey, and deliver to, as of the Effective Date, Seattle (or a Seattle designee) all right, title, and interest in and to the Intellectual Property Rights set forth on the Registered Intellectual Property Schedule as of the Distribution Time pursuant to Section 2.1 (Transferred IP).   For the purposes of this Section 2.1(d)(ii) (Assignment), the Autonomy Patents and Autonomy Other Registered IP shall be deemed to be set forth on the Registered Intellectual Property Schedule.

ARTICLE III

LICENSES FROM HOUSTON TO SEATTLE

Section 3.1              License Grants .  Houston (on behalf of itself and the other members of the Houston Group) hereby grants, agrees to grant, and agrees to cause the other members of the Houston Group to grant, to Seattle, Miami, and their respective Subsidiaries (Seattle, Miami, and such Subsidiaries, the “ Seattle Licensed Entities ”) the following personal, non-exclusive, worldwide, perpetual, irrevocable, royalty-free, fully paid-up, non‑sublicensable (except as provided in Section 3.3 (Sublicenses)) and non‑transferable (except as provided in Article X (Transferability and Assignment)) licenses under Houston Licensed IPR, which licenses shall be effective as of immediately after the Distribution Time, as set forth below.

(a)             Patents .  Under the Houston Patents, to engage in any Seattle Licensed Activities.  The foregoing patent license shall expire, with respect to each individual Houston Patent, upon the expiration of the term of such Houston Patent.

(b)             Copyrights .  Under the Copyrights that are included in the Houston Licensed IPR, to engage in any Seattle Licensed Activities, including (i) to reproduce and have reproduced the works of authorship included therein and derivative works thereof prepared by or on behalf of any Seattle Licensed Entity, in whole or in part, in connection with any Seattle Licensed Activities, (ii) to prepare derivative works or have derivative works prepared for it based upon such works of authorship in connection with any Seattle Licensed Activities, (iii) to distribute (by any means and using any technology, whether now or hereafter known or unknown) copies of the works of authorship included therein (and derivative works thereof prepared by or on behalf of any Seattle Licensed Entity) to the public by Sale, in connection with any Seattle Licensed Activities, (iv) to perform (by any means and using any technology, whether now or hereafter known or unknown, including electronic transmission) and display the works of authorship included therein (and derivative works thereof prepared by or on behalf of any Seattle Licensed Entity), in all cases in connection with any Seattle Licensed Activities, and (v) to use such works of authorship (and derivative works thereof prepared by or on behalf of any Seattle Licensed Entity) in connection with any Seattle Licensed Activities.

(c)             Database Rights .  Under the Database Rights included in the Houston Licensed IPR, to engage in any Seattle Licensed Activities, including in connection therewith, to extract data from the databases and data collections included therein and to re-utilize such data (and Improvements thereof prepared by or on behalf of any Seattle Licensed Entity).

(d)             Mask Work Rights .  Under the Mask Work Rights included in the Houston Licensed IPR, to engage in any Seattle Licensed Activities, including (i) to reproduce and have reproduced (subject to Section 3.2 (Have Made Rights)), by optical, electronic, lithographic or any other means, mask works and semiconductor topologies embodied in Seattle Licensed Products and (ii) to import or distribute a product in which any such mask work or semiconductor topology is embodied.

(e)             Trade Secrets and Industrial Designs .  Under the Trade Secrets and Industrial Designs included in the Houston Licensed IPR, to engage in any Seattle Licensed Activities.

(f)              Other IP .  Under all other Houston Licensed IPR (other than the Houston Patents), to engage in any Seattle Licensed Activities.

(g)             Third-Party Licenses .  With respect to Intellectual Property Rights licensed to a member of the Houston Group by a Third Party that are part of the Houston Licensed IPR, the sublicense of such Third Party Intellectual Property Rights to the Seattle Licensed Entities shall be subject to all of the conditions set forth in the relevant license agreement between the applicable member of the Houston Group and such Third Party that are applicable to the exercise of such sublicense under this IPMA to the extent such conditions are provided or otherwise described to Seattle in writing (such conditions, the “ Houston Third Party Conditions ”), in addition to all of the terms, conditions and restrictions set forth herein.  To the extent Houston so provides or describes any such Houston Third Party Conditions after the Distribution Date, the applicable sublicense hereunder shall be subject to such Houston Third Party Conditions as of Seattle’s receipt thereof.  If at any time Seattle notifies Houston that it does not wish to thereafter sublicense the applicable Third Party Intellectual Property Rights subject to any Houston Third Party Conditions, the applicable Third Party Intellectual Property Rights to which such Houston Third Party Conditions apply shall thereafter cease to be sublicensed to the Seattle Licensed Entities under this IPMA.  To the extent any sublicense of any Third Party Intellectual Property Rights to the Seattle Licensed Entities under this IPMA requires the approval of or payment of royalties or other consideration (in excess of any royalties or other consideration that would have been required in the absence of such sublicense) to such Third Party, subject to and without limiting anything set forth in Section 2.16 (Certain Contracts) of the Separation Agreement:  (i) the grant of such sublicense shall be subject to the acquisition of such approval or payment of such royalties or other consideration, (ii) Houston shall use commercially reasonable efforts to obtain such approval, and (iii) to the extent any such payment of royalties or other consideration is required, Seattle shall have the option (but not the obligation) to make such payments; provided, however, that if Seattle elects not to make such payment Seattle will not receive the applicable sublicense.  Sublicenses granted hereunder to Seattle under any Intellectual Property Rights owned by a Third Party shall expire on (A) the expiration of the term of the corresponding license agreement between such Third Party and the applicable member of the Houston Group, or (B) termination by the applicable third party licensor of such member’s right to sublicense such Intellectual Property Rights; provided that Houston provides Seattle with at least ninety (90) days prior notice of expiration in the case of clause (A) and prompt written notice upon becoming aware of termination (or an intended termination) in the case of clause (B).

(h)             Termination of Licenses to a Non-Subsidiary .  Any and all licenses granted by Houston to a Subsidiary of Seattle or Miami hereunder shall terminate with respect to such Subsidiary immediately at the time such Subsidiary is no longer a Subsidiary of Seattle or Miami, as the case may be, provided that (i) such termination shall not affect any sublicenses granted by such Subsidiary to any customer or end user pursuant to Section 3.3 (Sublicenses) prior to the date on which such Subsidiary ceased to be a Subsidiary of Seattle or Miami, which sublicenses shall remain in full force and effect, and (ii) no such termination shall occur with respect to any Subsidiary of Seattle that ceases to be a Subsidiary of Seattle but remains a Subsidiary of Miami.

Section 3.2              Have Made Rights .  The licenses granted in Section 3.1 (License Grants) above shall include the right to have contract manufacturers, foundries, and other Third Parties manufacture Seattle Licensed Products for any Seattle Licensed Entity (including private label or OEM versions of such products), and are not intended to include foundry or contract manufacturing activities that a Seattle Licensed Entity may undertake on behalf of Third Parties, whether directly or indirectly.

Section 3.3              Sublicenses .  The licenses granted in Section 3.1 (License Grants) above shall not include any right to grant any sublicenses except as provided in this Section 3.3 (Sublicenses).  A Seattle Licensed Entity may grant sublicenses (including through multiple tiers) to (a) its OEM’s, distributors, resellers, system integrators and other channels of distribution, and to its or their end users or customers, with respect to Seattle Licensed Activities and solely within the scope of the licenses set forth in Section 3.1 (License Grants) above, and (b) any Third Party (including OEM’s and manufacturers) for the purpose of, and to the extent necessary for such Third Party to perform any service that constitutes a Seattle Licensed Activity (including any service with respect to the design, manufacture, import, export, or supply of any product) for that Seattle Licensed Entity, and not for the direct benefit of such Third Party or any other Third Party.

Section 3.4              Improvements .  As between Seattle, on the one hand, and Houston Group, on the other hand, Seattle hereby retains all right, title and interest, including all Intellectual Property Rights, in and to any Improvements made by Seattle or on its behalf from and after the Distribution Time (a) to any of the Houston Licensed IPR and Technology embodying any of Houston Licensed IPR, or (b) in the exercise of the licenses granted to it by any member of the Houston Group in this Article III (Licenses from Houston to Seattle), subject in each case only to the ownership interests of the applicable members of the Houston Group and Third Parties in the underlying Intellectual Property Rights that are improved.  Seattle shall not have any obligation under this IPMA to notify any member of the Houston Group of any such Improvements made by or on behalf of Seattle or to disclose or license any such Improvements to the other members of the Houston Group.

Section 3.5              No Support Obligations .  Except as otherwise set forth in this IPMA or any other Transaction Document, Houston has no obligation to deliver to Seattle any Technology or any other materials that are not in the possession of the Seattle Business as of immediately after the Distribution Time and no obligation to provide any technical, consulting, support or other services to Seattle except as expressly provided in the Transition Services Agreement.  Specifically, Houston has no obligation under this IPMA to provide any updates or upgrades or other enhancements or improvements of or to any Houston Licensed IPR or Technology embodying Houston Licensed IPR licensed to Seattle under this IPMA.  Any rights to access or use any IT Software owned by Houston or any other member of the Houston Group as of the Distribution Date pursuant to the Transition Services Agreement will be subject to the terms and conditions of the Transition Services Agreement.

ARTICLE IV

LICENSES FROM SEATTLE TO HOUSTON

Section 4.1              License Grants .  Seattle (on behalf of itself and its Subsidiaries) hereby grants, agrees to grant, and agrees to cause its Subsidiaries to grant, to Houston and each of the other members of the Houston Group the following personal, non-exclusive, perpetual, irrevocable, non-transferable (except as provided in Article X (Transferability and Assignment)), non‑sublicensable (except as provided in Section 4.3 (Sublicenses)), worldwide, fully paid-up, and royalty-free licenses under the Seattle Licensed IPR, which licenses shall be effective as of immediately after the Distribution Time, as set forth below, and with respect to the licenses granted in Sections 4.1(b)-(f), subject to Section 4.1(g) (Limited Use Only).

(a)             Patents .  Under the Seattle Licensed Patents, to engage in any Houston Licensed Activities.  The foregoing patent license shall expire, with respect to each individual Seattle Licensed Patent, upon the expiration of the term of such Seattle Licensed Patent.

(b)             Copyrights .  Under the Copyrights that are included in the Seattle Licensed IPR, to engage in any Houston Licensed Activities, including (i) to reproduce and have reproduced the works of authorship included therein and derivative works thereof prepared by or on behalf of any member of the Houston Group, in whole or in part, in connection with any Houston Licensed Activities, (ii) to prepare derivative works or have derivative works prepared for it based upon such works of authorship in connection with any Houston Licensed Activities, (iii) to distribute (by any means and using any technology, whether now or hereafter known or unknown) copies of the works of authorship included therein (and derivative works thereof prepared by or on behalf of any member of the Houston Group) to the public by Sale, in connection with any Houston Licensed Activities, (iv) to perform (by any means and using any technology, whether now or hereafter known or unknown, including electronic transmission) and display the works of authorship included therein (and derivative works thereof prepared by or on behalf of any member of the Houston Group), in all cases in connection with any Houston Licensed Activities, and (v) to use such works of authorship (and derivative works thereof prepared by or on behalf of any member of the Houston Group) in connection with any Houston Licensed Activities.

(c)             Database Rights .  Under the Database Rights included in Seattle Licensed IPR, to engage in the Houston Licensed Activities, including in connection therewith, to extract data from the databases and data collections included therein and to re-utilize such data (and Improvements thereof prepared by or on behalf of any member of the Houston Group).

(d)             Mask Work Rights .  Under the Mask Work Rights included in the Seattle Licensed IPR, to engage in any Houston Licensed Activities, including (i) to reproduce and have reproduced (subject to Section 4.2 (Have Made Rights)), by optical, electronic, lithographic or any other means, mask works and semiconductor topologies embodied in Houston Licensed Products and (ii) to import or distribute a product in which any such mask work or semiconductor topology is embodied.

(e)             Trade Secrets and Industrial Designs .  Under Trade Secrets and the Industrial Designs included in the Seattle Licensed IPR, to engage in any Houston Licensed Activities.

(f)              Other IP .  Under all other Seattle Licensed IPR (other than the Transferred Patents), to engage in any Houston Licensed Activities.

(g)            Limited Use Only .  Notwithstanding the scope of any of the rights granted pursuant to any of Sections 4.1(b)-(f), the licenses granted pursuant to such Sections do not include any rights (including any rights to Sell or license) with respect to any product or service to the extent that such product or service constitutes, contains, or comprises (i) all or substantially all of a Seattle Existing Product or (ii) any material feature or functionality of any Seattle Existing Product.  For the avoidance of doubt, the foregoing sentence does not (A) limit the exercise of any rights granted in this Section 4.1 (License Grants) exercised solely for the internal use purposes of Houston or any member of the Houston Group (and not for the benefit of any other Person) or (B) limit any rights granted under Section 4.1(a) (Patents).

(h)             Third-Party Licenses .  With respect to Intellectual Property Rights licensed to Seattle by a Third Party under a Contract transferred, assigned and assumed by Seattle under the Separation Agreement that are part of the Seattle Licensed IPR, the sublicense of such Third Party Intellectual Property Rights to the Houston Group shall be subject to all of the conditions set forth in the relevant license agreement between the Third Party and Seattle that are applicable to the exercise of such sublicense under this IPMA, in addition to all of the terms, conditions and restrictions set forth herein.  To the extent any sublicense of any Third Party Intellectual Property Rights to Houston or a member of the Houston Group under this IPMA requires the approval of or payment of royalties or other consideration (in excess of any royalties or other consideration that would have been required in the absence of such sublicense) to such Third Party:  (i) the grant of such sublicense shall be subject to the acquisition of such approval or payment of such royalties or other consideration, (ii) Seattle shall use commercially reasonable efforts to obtain such approval, and (iii) to the extent any such payment of royalties or other consideration is required, Houston shall have the option (but not the obligation) to make such payments; provided, however, that if Houston elects not to make such payment Houston will not receive the applicable sublicense.  Sublicenses granted hereunder to Houston under any Intellectual Property Rights owned by a Third Party shall expire on (A) the expiration of the term of the corresponding license agreement between such Third Party and the applicable Seattle Licensed Entity, or (B) termination by the applicable third party licensor of such member’s right to sublicense such Intellectual Property Rights; provided that, in the case of clause (B), Seattle provides Houston with prompt written notice upon becoming aware of termination (or an intended termination).

(i)              Termination of Licenses to a Non-Subsidiary .  Any and all licenses granted by Seattle to a member of the Houston Group hereunder shall terminate immediately at the time such member is no longer a member of the Houston Group, provided that such termination shall not affect any sublicenses granted by such member to any customer or end user pursuant to Section 4.3 (Sublicenses) prior to the date on which such member ceased to be a member of the Houston Group, which sublicenses shall remain in full force and effect.

Section 4.2              Have Made Rights .  The licenses granted in Section 4.1 (License Grants) above shall include the right to have contract manufacturers, foundries, and other Third Parties manufacture Houston Licensed Products for any member of the Houston Group (including private label or OEM versions of such products), and are not intended to include foundry or contract manufacturing activities that any member of the Houston Group may undertake on behalf of Third Parties, whether directly or indirectly.

Section 4.3              Sublicenses .  The licenses granted in Section 4.1 (License Grants) above shall not include any right to grant any sublicenses except as provided in this Section 4.3 (Sublicenses).  Any member of the Houston Group may grant sublicenses (including through multiple tiers) to (a) its OEMs, distributors, resellers, customers, system integrators and other channels of distribution and to its or their end users or customers, with respect to Houston Licensed Activities and solely within the scope of the licenses set forth in Section 4.1 (License Grants) above, and (b) any Third Party (including OEMs and manufacturers) for the purpose of, and to the extent necessary for such Third Party to perform any service that constitutes a Houston Licensed Activity (including any service with respect to the design, manufacture, import, export, or supply of any product) for a member of the Houston Group, and not for the direct benefit of such Third Party or any other Third Party.

Section 4.4              Improvements .  As between Seattle, on the one hand, and the Houston Group, on the other hand, the applicable member of the Houston Group hereby retains all right, title and interest, including all Intellectual Property Rights, in and to any Improvements made by or on behalf of them from and after the Distribution Time (a) to any of the Seattle Licensed IPR and any Technology embodying any of the Seattle Licensed IPR, or (b) in the exercise of the licenses granted to it by the Seattle in this Article IV (Licenses from Seattle to Houston), subject in each case only to the ownership interests of Seattle or any of its Subsidiaries and Third Parties in the underlying Intellectual Property Rights that are improved.  Houston shall not have any obligation under this IPMA to notify Seattle of any such Improvements made by or on behalf of the Houston Group or to disclose or license any such Improvements to Seattle.

Section 4.5              No Support Obligations .  Except as otherwise set forth in any other Transaction Document, neither Seattle nor any of its Affiliates has any obligation to deliver to the Houston Group any Technology or any other tangible materials that are not in the possession of the Houston Business immediately after the Distribution Time and no obligation to provide any technical, consulting, support or other services to Houston except as expressly provided in the Transition Services Agreement.  Specifically, neither Seattle nor any of its Affiliates has any obligation under this IPMA to provide any updates or upgrades or other enhancements or improvements of or to any Transferred IP or Technology embodying Transferred IP licensed to Houston under this IPMA or any Transferred Technology.  Any rights to access or use of any IT Software owned by Seattle or any of its Affiliates immediately following the Distribution Date pursuant to the Transition Services Agreement will be subject to the terms and conditions of the Transition Services Agreement.

ARTICLE V

DISCLAIMERS

Section 5.1              Disclaimer of Warranties .

(a)             EXCEPT AS OTHERWISE PROVIDED IN ANY OTHER TRANSACTION DOCUMENT, (i) THE ASSIGNMENTS OF THE TRANSFERRED IP AND LICENSES TO HOUSTON LICENSED IPR GRANTED BY HOUSTON HEREUNDER ARE GRANTED ON AN “AS-IS” BASIS AND (ii) HOUSTON HEREBY DISCLAIMS ALL REPRESENTATIONS OR WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OR ANY OTHER MATTER WITH RESPECT TO THE INTELLECTUAL PROPERTY RIGHTS ASSIGNED OR LICENSED HEREUNDER.  HOUSTON MAKES NO REPRESENTATION OR WARRANTY AS TO ANY ABILITY TO PASS THROUGH OR EXTEND ANY THIRD PARTY RIGHTS IN THE HOUSTON LICENSED IPR.

(b)             (i) THE LICENSES TO SEATTLE LICENSED IPR GRANTED BY SEATTLE HEREUNDER ARE GRANTED ON AN “AS-IS” BASIS AND (ii) SEATTLE HEREBY DISCLAIMS ALL REPRESENTATIONS OR WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OR ANY OTHER MATTER WITH RESPECT TO THE INTELLECTUAL PROPERTY RIGHTS ASSIGNED OR LICENSED HEREUNDER.  SEATTLE MAKES NO REPRESENTATION OR WARRANTY AS TO ANY ABILITY TO PASS THROUGH OR EXTEND ANY THIRD PARTY RIGHTS IN THE TRANSFERRED IP.

(c)             The Parties agree and acknowledge that neither the concept of being granted on an “as-is” basis nor a disclaimer of representations and warranties are applicable with respect to the CNTS.  Nothing in this IPMA shall be construed as a representation or warranty by Seattle of any kind (either express or implied) with respect to any Autonomy IP.

Section 5.2              No Implied Rights, CNTS, or Licenses .  Other than as expressly stated in this IPMA or any other Transaction Document, no other rights, covenants not to Assert, or licenses are granted by any Party under this IPMA or the Separation Agreement, by implication, estoppel or otherwise, with respect to any Intellectual Property Rights or Technology owned or controlled by any Party or any of its Subsidiaries.   Without limiting the generality of the foregoing and without limiting anything set forth in any other Transaction Document, the rights granted in Section 3.1 (License Grants), and the rights granted in Section 4.1 (License Grants) and the CNTS granted in Article XI (Covenant Not to Sue), do not extend to any standalone Software products of Houston or any other member of the Houston Group or Seattle or other member of the Seattle Group, respectively, that are made generally commercially available by Houston or any other member of the Houston Group or Seattle or any other member of the Seattle Group, respectively.  Upon request by a Party, the other Party will use, and shall cause any member of its Group to use, good faith efforts to enter into standard customer or other commercial agreements with the requesting Party or its customers with respect to such Software products.  By way of example, if Houston used the Seattle Business’s Cloud Services Automation (CSA) product in the Houston Business prior to the Distribution Date, the licenses granted in Section 4.1 (License Grants) and the CNTS granted in Article XI (Covenant Not to Sue) would not extend to such product.  Further, nothing in this IPMA shall restrict the Parties from entering into one or more separate and independent licenses of, or covenants not to Assert with respect to, other Software products or Intellectual Property Rights; provided, however, that neither Party has the obligation to enter into any such license or covenant.

ARTICLE VI

CONFIDENTIALITY

Section 6.1              Confidentiality .  Each Party agrees that the other Party’s Confidential Information shall be used, disclosed, and copied by such Party only in furtherance of the exercise of the rights granted under this IPMA.  All Houston Confidential Information used, disclosed, or copied by any Seattle Licensed Entity as of or prior to the Distribution Time in the ordinary course of business consistent with past practice shall be deemed to be so used, disclosed, or copied in furtherance of the exercise of the rights granted under this IPMA, provided that such use, disclosure, or copying is consistent with the licenses granted under this IPMA.  All Seattle Confidential Information used, disclosed, or copied by the Houston Group as of or prior to the Distribution Time in the ordinary course of business consistent with past practice shall be deemed to be so used, disclosed, or copied in furtherance of the exercise of the rights granted under this IPMA, provided that such use, disclosure, or copying is consistent with the licenses granted under this IPMA.  Each Party shall use, as a minimum, the same degree of care as it uses to protect its own Confidential Information of a similar nature, but no less than reasonable care, to prevent the unauthorized use, disclosure or publication of the other Party’s Confidential Information.  Without limiting the generality of the foregoing:

(a)             Each Party shall only disclose the other Party’s Confidential Information to its employees or any individual or entity that (i) is a sublicensee to which rights are sublicensed as permitted under this IPMA, or (ii) has a bona fide need to access the other Party’s Confidential Information consistent with such Party’s rights under this IPMA, in each case, (A) pursuant to confidentiality obligations no less restrictive than the obligations imposed by the Seattle Business prior to the Distribution Date and (B) to the extent necessary to exercise its rights or perform its obligations under this IPMA in accordance with the terms and conditions of this IPMA.

(b)             Each Party shall affix to any copies it makes of any of the other Party’s Confidential Information, all proprietary notices or legends affixed to the other Party’s Confidential Information as they appear on the copies of the other Party’s Confidential Information originally received from the other Party.

Section 6.2              Exclusions .  Each Party shall not be bound by obligations restricting disclosure set forth in this IPMA with respect to any of the other Party’s Confidential Information which:

(a)             was lawfully in the public domain prior to its disclosure, or lawfully becomes publicly available other than through a breach of this IPMA or any other confidentiality obligation in respect of such information;

(b)             was disclosed to the recipient by a third party, provided such third party, or any other party from whom such third party receives such information, is not in breach of any confidentiality obligation in respect of such information; or

(c)             is independently developed by the recipient without the use of or reference to any of such other Party’s Confidential Information, as evidenced by its business records.

Section 6.3              Court Compelled Disclosures .  Each Party shall be excused from the confidentiality obligations with respect to disclosure of the other Party’s Confidential Information solely to the extent such disclosure is compelled pursuant to legal, judicial, or administrative proceedings, or otherwise required by law, but solely to the extent required thereby, provided that such Party advises the other Party of any such disclosure in a timely manner prior to making any such disclosure (so that the other Party can apply for such legal protection as may be available with respect to the confidentiality of the information which is to be disclosed), and provided that such Party shall apply for such legal protection as may be reasonably available with respect to the confidentiality of the other Party’s Confidential Information which is required to be disclosed.  Notwithstanding such compelled disclosure, the applicable Confidential Information of the other Party shall remain subject to the confidentiality obligations in this Article VI (Confidentiality) in all other contexts.

ARTICLE VII

TERM AND TERMINATION

Section 7.1              Term .  This IPMA shall be effective during the term commencing on the Effective Date hereof and shall continue perpetually unless terminated by mutual agreement between the Parties.

Section 7.2              No Right to Terminate .  Except as otherwise expressly agreed by the Parties in writing, each Party acknowledges and agrees that the rights granted under this IPMA are not terminable (including for breach), but nothing in this IPMA shall limit a Party’s rights to seek damages or any other remedies available at law (other than a termination of any such rights) for a breach of this IPMA.

Section 7.3              Effect of Termination .  Upon termination under Section 7.1 (Term) pursuant to the mutual express written agreement of the Parties, all rights and licenses that may be granted to the Parties in Article III (Licenses from Houston to Seattle) and Article IV (Licenses from Seattle to Houston), and the CNTS granted in Article XI (Covenant Not to Sue), shall immediately terminate, provided that, except as otherwise agreed by the Parties in writing, any such termination shall not affect any sublicenses granted to any customer or end user pursuant to Section 3.3 (Sublicenses) or Section 4.3 (Sublicenses), as applicable, prior to the date on which this IPMA is terminated pursuant to Section 7.1 (Term).

Section 7.4              Survival .  Sections 2.1(d)(ii) (Assignment), 7.3 (Effect of Termination), 7.4 (Survival), and Articles I (Definitions), V (Disclaimers), VI (Confidentiality), VIII (Additional Intellectual Property Related Matters) (to the extent set forth in the sections therein), IX (Limitation of Liability), 11.3 (Indemnification) and XII (Miscellaneous) shall survive and continue after any termination of this IPMA.

ARTICLE VIII

ADDITIONAL INTELLECTUAL PROPERTY RELATED MATTERS

Section 8.1              No Obligation to Prosecute Patents .  Except as expressly set forth elsewhere in this IPMA, including in the Exhibits, no Party shall have any obligation to seek, perfect, or maintain any protection for any of its Intellectual Property Rights.  Without limiting the generality of the foregoing, except as expressly set forth elsewhere in this IPMA, including in the Exhibits, no Party shall have any obligation to file any Patent application, to prosecute any Patent, or secure any Patent rights or to maintain any Patent in force.

Section 8.2              Reconciliation .

(a)             Further Transfer and Transfer Back .  Subject to Sections 8.1 (No Obligation to Prosecute Patents) and 8.7 (Transfer of Intellectual Property Rights), if (i) any particular item of Transferred Registered IP (other than Transferred Registered Marks for Seattle Existing Products) set forth on the Registered Intellectual Property Schedule was, as of immediately prior to the Distribution Time, not used exclusively in, not held for use exclusively in, and not exclusively related to, the operation of the Seattle Business (such Transferred Registered IP, “ Mistakenly Transferred Registered IP ”) and (ii) such item was not assigned, transferred, conveyed, or delivered (or agreed or required to be assigned, transferred, conveyed, or delivered) to Seattle or any of its Subsidiaries pursuant to Section 2.14 (Cooperation) of the Separation Agreement, and (iii) Houston requests in writing that the item of Mistakenly Transferred Registered IP be transferred back to Houston (or the member of the Houston Group designated by Houston), then, (A) Seattle shall (and shall cause the other members of the Seattle Group to) irrevocably assign, transfer, convey, and deliver all of their respective right, title, and interest in and to such item of Mistakenly Transferred Registered IP to Houston (or the member of the Houston Group designated by Houston), and (B) such Mistaken Transferred Registered IP shall be deemed to be Houston Licensed IPR to the extent it, (I) with respect to Patents, would be infringed by the conduct of any of the Seattle Licensed Activities, or (II) with respect to any other Intellectual Property Rights (other than Marks), was as of or prior to the Distribution Time, used or developed for use in the Seattle Business. To the extent any Registered Intellectual Property (but expressly excluding Marks to the extent containing (and to the extent of) any HPE Mark) (i) was, as of immediately prior to the Distribution Time, used or held for use exclusively in, or exclusively related to, the operation of the Seattle Business, (ii) was owned by any member of the Houston Group immediately after the Distribution Time, and (iii) was not included on the Registered Intellectual Property Schedule, then, from and after the Distribution Time, (A) Houston shall (and shall cause the other members of the Houston Group to) irrevocably assign, transfer, convey, and deliver to Seattle (or a subsidiary of Seattle or Miami designed by Seattle) all right, title, and interest in and to such Registered Intellectual Property (the “ Mistakenly Omitted Transferred IP ”) on the terms and conditions set forth in Section 2.1 (Transferred IP), and (B) such Mistaken Omitted Transferred IP shall be deemed to be Seattle Licensed IPR to the extent it, (I) with respect to Patents, would be infringed by the conduct of any of the Houston Licensed Activities, or (II) with respect to any other Intellectual Property Rights, was as of or prior to the Distribution Time, used or developed for use in the Houston Business.  This Section 8.2(a) (Further Transfer and Transfer Back) shall survive and continue for two (2) years following the Distribution Date.

(b)             Further Assurances .  In furtherance of the assignments, transfers, conveyances, and deliveries of Intellectual Property Rights pursuant to this IPMA, each Party, as assignor, shall, at the other Party’s reasonable request, (i) as applicable, execute or cause to be executed and deliver or cause to be delivered such further instruments and documents, and (ii) take such other reasonable action or cause such action to be taken, in each case of (i) and (ii) as are necessary or requested to perfect all rights, title, and interest in and to, and to otherwise effect the assignments, transfers, conveyances and deliveries of, Intellectual Property Rights pursuant to this IPMA.  In addition to the foregoing, each Party shall provide the other Party with reasonable assistance by and through its employees, officers, directors, contractors, agents, attorneys, and inventors in connection with patent prosecution or other necessary activities of such other Party relating to the Transferred IP, including prompt cooperation in preparing and executing oaths, declarations, affidavits, or other sworn statements with respect thereto.

Section 8.3              Third-Party Infringement .  Except as expressly set forth elsewhere in this IPMA, no Party shall have any obligation hereunder to institute or maintain any action or suit against Third Parties for infringement or misappropriation of any Intellectual Property Rights in or to any Technology licensed to the other Party hereunder or any Intellectual Property Rights subject to the CNTS granted in Article XI (Covenant Not to Sue), or to defend any action or suit brought by a Third Party which challenges or concerns the validity or enforceability of any of such Intellectual Property Rights or which claims that any Technology licensed to the other Party hereunder infringes or constitutes a misappropriation of any Intellectual Property Rights of any Third Party.

Section 8.4              Copyright Notices .  Notwithstanding anything to the contrary herein, as to works in which Seattle owns the Copyright, to the extent any such works contain Copyright notices which indicate a different entity as the Copyright owner, Seattle may change such notices.

Section 8.5              No Challenge to Title .  Each Party agrees that it shall not (and shall cause its Subsidiaries not to), for any reason, after the Distribution Time (regardless of whether this IPMA is subsequently terminated pursuant to Section 7.1 (Term)), either itself do or authorize any Third Party to do any of the following anywhere in the world with respect to any Intellectual Property Rights licensed to such Party or its Subsidiaries (including in the case of the licenses granted to Seattle, Miami and its Subsidiaries) hereunder or, in the case of Houston and the members of the Houston Group, the Intellectual Property Rights subject to the CNTS granted in Article XI (Covenant Not to Sue):  (a) represent to any Third Party in any manner that it owns or has any ownership rights in such Intellectual Property Rights; (b) apply for any registration of such Intellectual Property Rights (including federal, state, and national registrations); or (c) impair, dispute or contest the validity or enforceability of, or any of the other Party’s (or any of such other Party’s Subsidiaries’, including, in the case of Seattle, Miami’s or its Subsidiaries’) right, title and interest in and to, such Intellectual Property Rights.  Nothing in this Section 8.5 (No Challenge) shall preclude either Party or any of its Subsidiaries from providing documents, information, and/or testimony in compliance with any subpoena duly served upon such Party or such Subsidiary or any order by a Governmental Authority with jurisdiction over such Party or such Subsidiary.

Section 8.6              Dispute Resolution .  In the event of any controversy, dispute or claim (a “ Dispute ”) arising out of or relating to any Party’s rights or obligations under this IPMA (whether arising in contract, tort or otherwise) (including the interpretation or validity of this IPMA), such Dispute shall be resolved in accordance with the dispute resolution process referred to in Article VIII (Dispute Resolution) of the Separation Agreement (other than Section 8.7 (Limitation on Certain Damages) thereof).

Section 8.7              Transfer of Intellectual Property Rights .  Nothing herein shall prevent either Party from selling, assigning, or transferring, in whole or in part, any of the Intellectual Property Rights licensed to the other Party hereunder or the Intellectual Property Rights subject to the CNTS granted in Article XI (Covenant Not to Sue), provided that, any such sale, assignment, or transfer shall be subject to the license granted to the other Party hereunder, and with respect to transfers by Seattle of any Autonomy IP, subject to the CNTS granted in and as required by Article XI (Covenant Not to Sue).

ARTICLE IX

LIMITATION OF LIABILITY

Section 9.1              Limitation of Liability .  IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY SPECIAL, CONSEQUENTIAL, INDIRECT, INCIDENTAL OR PUNITIVE DAMAGES OR LOST PROFITS, HOWEVER CAUSED AND BASED ON ANY THEORY OF LIABILITY (INCLUDING NEGLIGENCE) ARISING IN ANY WAY OUT OF THIS IPMA, WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.  THE FOREGOING SHALL NOT, HOWEVER, LIMIT THE DAMAGES AVAILABLE TO A PARTY FOR (A) INFRINGEMENT OR MISAPPROPRIATION OF ITS INTELLECTUAL PROPERTY RIGHTS BY THE OTHER PARTY OR (B) BREACHES OF ARTICLE VI (CONFIDENTIAL INFORMATION) OR (C) OTHER REMEDIES THAT MAY BE PROVIDED UNDER THE SEPARATION AGREEMENT.

ARTICLE X

TRANSFERABILITY AND ASSIGNMENT

Section 10.1            Assignment .  Except as otherwise provided in this Article X (Transferability and Assignment), neither Party may assign or transfer any of the Intellectual Property Rights licenses granted pursuant to this IPMA (and in the case of Houston, the CNTS in Article XI (Covenant Not to Sue)), nor this IPMA as a whole, whether by operation of law or otherwise, without the prior written consent of the other Party (which consent such Party shall not unreasonably withhold, condition, or delay), except that a Party (the “ Assigning Party ”, and the other Party, the “ Non‑Assigning Party ”) may, upon notice to the Non-Assigning Party, (a) assign or transfer this IPMA in whole to (i) a Subsidiary (or, in the case of Seattle, to Miami or any of its Subsidiaries (including in connection with any restructuring, reorganization, or similar transaction), (ii) a lender as collateral security, or (iii) subject to Section 10.2 (Sale of All or Part of a Business (Assignment)), to a Third Party acquiror of all or substantially all of the assets or business of the Assigning Party or to a Third Party in connection with a Change of Control of the Assigning Party; or (b) subject to Section 10.2 (Sale of All or Part of a Business (Assignment)), assign or transfer this IPMA in part to a Third Party acquiror of all or substantially all of the assets of a business or product line (in each case to which this IPMA relates) of the Assigning Party or any of its Subsidiaries (or, in the case of Seattle, Miami or any of its Subsidiaries), solely as and to the extent this IPMA applies to such business or product line.  Any purported assignment or transfer made in violation of this Section 10.1 (Assignment) shall be void and of no effect.  Unless otherwise agreed in writing by the Parties, no assignment or transfer made pursuant to this Section 10.1 (Assignment) shall release the Assigning Party from any of its liabilities under this IPMA that accrued prior to the assignment or transfer of this IPMA.  This IPMA shall be binding upon, inure to the benefit of and be enforceable by (and against) each Party and its successors and permitted transferees and assigns.

Section 10.2            Sale of All or Part of a Business (Assignment) .  If an Assigning Party assigns or transfers this IPMA to any Person (the “ Acquiror ”) in whole pursuant to Section 10.1(a)(iii) or in part pursuant to Section 10.1(b), such assignment shall be subject to all of the following conditions and restrictions:

(a)             the Acquiror shall agree to be bound, in advance in writing, by the terms of this IPMA;

(b)             the effective date of the application of the licenses and CNTS under this IPMA to such Acquiror shall be the effective date of the assignment or transfer;

(c)             the licenses and CNTS granted to the Acquiror and its Subsidiaries under this IPMA shall not, as a result of such assignment or transfer, extend to the Acquiror or any of its Affiliates with respect to any of their past, then‑current or (other than as contemplated by clause (d) below) future products, services, or processes or any conduct engaged in by any of them prior to such effective date;

(d)             except to the extent, following the assignment or transfer, the business or business or product line, as applicable, is operated as a separate business from the then‑existing business of the Acquiror (in which case such separate business shall be subject to all the restrictions on license scope as provided in Article III (Licenses from Houston to Seattle), or the license scope as provided in Article IV (Licenses from Seattle to Houston) and the scope of the CNTS as provided in Article XI (Covenant Not to Sue), as the case may be, and the other subsections of this Section 10.2 (Sale of All or Part of a Business (Assignment)) (but not this Section 10.2(d))), the licenses and CNTS granted to the Acquiror and its Subsidiaries as a result of such assignment or transfer shall be limited to:

(i)             the operation of the Assigning Party’s and its Subsidiaries’ business or the business or product line, respectively, as conducted as of the effective date of the assignment or transfer, and natural evolutions, expansions, and extensions thereof; and

(ii)            the products, services and processes of the Assigning Party’s and its Subsidiaries’ business or business or product line, respectively:

(A)           that are included within or covered by the Seattle Licensed Activities or Houston Licensed Activities, as applicable, as of the effective date of the assignment or transfer; and

(B)           (x) that are commercially released or available by or on behalf of the Assigning Party or any of its Subsidiaries as of such date, (y) that are under development by or on behalf of the Assigning Party as of such date and are released, made available, or otherwise commercialized within twelve (12) months thereafter, or (z) for which the Assigning Party or any of its Subsidiaries has otherwise taken substantial steps to commercialize as of the such date, in each case of clauses (x) through (z), including Natural Evolutions of such products, services and processes;

(e)             the Intellectual Property Rights of the Non-Assigning Party that are subject to the license (or, in the case of Houston, the CNTS) granted to the Acquiror shall be limited to Intellectual Property Rights licensed to the Assigning Party pursuant to Article III (Licenses from Houston to Seattle) or licensed to the Assigning Party pursuant to Article IV (Licenses from Seattle to Houston) or subject to the CNTS granted in Article XI (Covenant Not to Sue), as the case may be; and

(f)              if the Acquiror and the Non-Assigning Party are, as of the effective date of the assignment or transfer, party to an active litigation, arbitration, or other formal dispute resolution proceeding pursuant to which the Acquiror alleges that the Non-Assigning Party is infringing or misappropriating any Intellectual Property Rights owned by the Acquiror, then the licenses (and, in the case of Houston, the CNTS) granted to the Acquiror pursuant to this IPMA following such assignment or transfer shall be suspended and not effective; provided, however, that (i) such licenses (and, in the case of Houston, CNTS) shall cease to be so suspended and not effective (and shall become effective, automatically and without further action) immediately upon the cessation of such litigation, arbitration, or proceeding (whether by settlement, entry of a final, non-appealable order, or otherwise)), provided, that, for the avoidance of doubt, such CNTS shall not apply with respect to the period of such suspension, and (ii) this Section 10.2(f) shall in no way affect or otherwise result in the suspension of any rights or part of this IPMA not assigned or transferred to the Acquiror.

ARTICLE XI

COVENANT NOT TO SUE

Section 11.1             Covenant Not to Sue .  Effective as of immediately after the Distribution Time, Seattle (on behalf of itself and its Subsidiaries) hereby agrees not to Assert against Houston or any other member of the Houston Group any of the Autonomy IP that would have been licensed to Houston under Article IV (Licenses from Seattle to Houston) if and to the extent the Autonomy IP were included in the Seattle Licensed IPR (and the Autonomy Patents were included in the Seattle Licensed Patents), subject to the terms and conditions of Article IV (Licenses from Seattle to Houston) with respect to such Autonomy IP, mutatis mutandis , and, for the avoidance of doubt, solely with respect to and to the extent of the conduct and scope that would have otherwise been licensed under Article IV (Licenses from Seattle to Houston) at the time thereof had such Autonomy IP been so licensed as part of the Seattle Licensed IPR and for the period of time such license would have been granted (such agreement not to Assert, the “ CNTS ”).

Section 11.2            Obligation to Transfer .  If Miami, Seattle, or any of their respective Subsidiaries transfers, assigns, sells, or divests any of the Autonomy IP, then Seattle shall (or shall cause Miami or such Subsidiary, as applicable) ensure that the transferee, assignee, buyer, or divestee (whether or not such Person is Miami, Seattle, or any of their respective Subsidiaries) agrees in writing, on behalf of itself and each of its Affiliates who may have any right to Assert such Autonomy IP, to assume all the obligations of Section 11.1 (Covenant Not to Sue)  (including the agreement not to Assert in Section 11.1 (Covenant Not to Sue)) and this Section 11.2 (Obligation to Transfer) with respect to such Autonomy IP for the benefit of Houston and each other member of the Houston Group.  In addition to Miami’s, Seattle’s and their respective Subsidiaries’ obligations in the preceding sentence, each and every subsequent and successive transfer, assignment, sale or divestment of any of the Autonomy IP by any Person other than Miami, Seattle, or any of their respective Subsidiaries (such Person in each and every subsequent and successive transfer, assignment, sale or divestment, an “ Autonomy IP Transferee ”) is conditioned on the Autonomy IP Transferee obtaining the subsequent Autonomy IP Transferee’s agreement in writing, on behalf of itself and each of such subsequent Autonomy IP Transferee’s Affiliates who may have any right to Assert such Autonomy IP, to assume all the obligations of Section 11.1 (Covenant Not to Sue) (including the agreement not to Assert in Section 11.1 (Covenant Not to Sue)) and this Section 11.2 (Obligation to Transfer) (other than the first sentence thereof) with respect to such Autonomy IP for the benefit of Houston and each other member of the Houston Group.  For the avoidance of doubt, (a) Seattle’s sole and exclusive liability, and Houston’s sole and exclusive remedy, for any breach of this Section 11.2 (Obligation to Transfer) by Miami, Seattle, or any of their respective Subsidiaries shall be one, or more or all of the following:  (i) the right to the assert the CNTS as a defense to any claim of infringement or misappropriation Asserted by Seattle, Miami, or any of their respective Subsidiaries, (ii) the exercise of Section 11.3 (Indemnification), to the extent applicable, and (iii) the exercise of Section 11.4 (Springing License), to the extent applicable and (b) none of Miami, Seattle, or any of their respective Subsidiaries shall be responsible or liable for any act or omission of any Autonomy IP Transferee in connection with (i) this Article XI (Covenant Not to Sue), (ii) any failure of the CNTS to transfer with or encumber any Autonomy IP notwithstanding any such written agreement, or (iii) any failure of any Autonomy IP to be licensed in accordance with Section 11.4 (Springing License).

Section 11.3            Indemnification .  Seattle shall (a) defend each of the Houston Indemnified Parties from and against any and all third party claims by an Autonomy IP Transferee against a Houston Indemnified Party alleging that a Houston Indemnified Party is, following the Effective Date, infringing or misappropriating any Autonomy IP, but only if a Seattle Trigger (as defined in Section 11.4 (Springing License)) has occurred, and (b) indemnify and hold harmless such Houston Indemnified Party by paying all awarded attorneys’ fees, judgments (including interest and penalties), and settlement amounts incurred by such Houston Indemnified Party that directly arise out any such third party claim, but only if such Springing License was so triggered and both the CNTS and Springing License are held to be unenforceable.  Article VI (Indemnification, Guarantees and Litigation) of the Separation Agreement shall apply to this Section 11.3 (Indemnification), mutatis mutandis , as applicable.

Section 11.4            Springing License .  Solely in the event (a) Miami, Seattle, or any of their respective Subsidiaries breaches their respective obligations under the first sentence of Section 11.2 (Obligation to Transfer) (the “ Seattle Trigger ”), (b) any subsequent or successive Autonomy IP Transferee breaches its obligations under Section 11.2 (Obligation to Transfer), (c) the CNTS otherwise fails to transfer with any Autonomy IP or otherwise be enforceable, or (d) of any breach of Section 11.1 (Covenant Not to Sue), such Autonomy IP will be deemed licensed to Houston and each of the other members of the Houston Group as a part of (and with the same scope and in accordance with all of the terms and conditions of) the licenses granted pursuant to Article IV (Licenses from Seattle to Houston), with such license of such Autonomy IP effective as of immediately prior to the date that Miami, Seattle or any of their Subsidiaries transferred, assigned, sold or divested such Autonomy IP and with the Autonomy Patents being deemed to be Seattle Licensed Patents for the purposes of such licenses (the “ Springing License ”).  For the avoidance of doubt, (A) such Springing License is deemed to be (i) granted by Seattle (on behalf of itself and its Subsidiaries) under all of the terms and conditions of this IPMA applicable to the licenses granted pursuant to Article IV (Licenses from Seattle to Houston) and (ii) an encumbrance that attaches to the Autonomy IP, and (B) in the event that Miami, Seattle or any of their respective Subsidiaries breaches the first sentence of Section 11.1 (Covenant Not to Sue) in any respect, the Springing License shall not be construed as a waiver of Houston or any member of the Houston Group’s right to assert the CNTS as a defense to any claim of infringement or misappropriation Asserted by Seattle, Miami, or any of their respective Subsidiaries.

ARTICLE XII

MISCELLANEOUS

Section 12.1             Incorporation by Reference .  Other than Sections 8.7 (Limitation on Certain Damages), 9.6 (Termination), and 9.9 (Assignment; No Third-Party Beneficiaries) of the Separation Agreement, this IPMA is subject to all of the terms, conditions and limitations set forth in Section 7.1 (Further Assurances) of the Separation Agreement and Articles VIII (Dispute Resolution) and IX (Miscellaneous) of the Separation Agreement, which by this reference are hereby incorporated into and made a part of this IPMA, mutatis mutandis , as if they were set forth in their entirety herein; provided, however, that for the purposes of this IPMA, the terms, conditions and limitations with respect to Section 7.1 (Further Assurances) of the Separation Agreement shall apply at all times following the Distribution Time (and not just for twelve (12) months thereafter, to the extent such time limitation applies).

Section 12.2            Entire Agreement .  Subject to Section 12.3 (Order of Precedence), this IPMA, the other Transaction Documents, the Merger Agreement and the Schedules and Exhibits hereto and thereto constitutes the entire agreement of the Parties with respect to the subject matter of this IPMA and supersedes all prior agreements and undertakings, both written and oral, between or on behalf of the Parties with respect to the subject matter of this IPMA.

Section 12.3            Order of Precedence .  In the event of any conflict between the provisions of this IPMA and any other provision in the Separation Agreement or any other Transaction Document, the provisions of this IPMA shall control with respect to Intellectual Property Rights and Technology.

Section 12.4            Rights in Bankruptcy .  All rights and licenses granted under or pursuant to this IPMA, including those in Article III (Licenses from Houston to Seattle) and Article IV (Licenses from Seattle to Houston), are, and shall otherwise be deemed to be, for purposes of Section 365(n) of the U.S. Bankruptcy Code or analogous provisions of applicable Law outside the United States, licenses of rights to “intellectual property” as defined under Section 101 of the U.S. Bankruptcy Code or analogous provisions of applicable Law outside the United States.  The Parties agree that each licensee of rights under this IPMA shall retain and may fully exercise all of their respective rights and elections under the U.S. Bankruptcy Code or any other provisions of applicable Law outside the United States that provide similar protections for Intellectual Property Rights.

IN WITNESS WHEREOF, the Parties have caused this IPMA to be executed and delivered by their respective duly authorized officers, all as of the Effective Date.

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Exhibit 2.3

 

TRANSITION SERVICES AGREEMENT

 

This TRANSITION SERVICES AGREEMENT, dated as of September 1, 2017 (this “ Agreement ”), is by and between Hewlett Packard Enterprise Company, a Delaware corporation (“ Houston ”), and Seattle SpinCo, Inc., a Delaware corporation (“ Seattle ”). Houston and Seattle are sometimes collectively referred to as the “ Parties ” and each is individually referred to as a “ Party .” Unless otherwise defined in this Agreement, all capitalized terms used in this Agreement shall have the meaning set forth in the Separation and Distribution Agreement, dated as of September 7, 2016, by and between the Parties (as amended, modified or supplemented from time to time in accordance with its terms, the “ Separation Agreement ”).

 

RECITALS

 

WHEREAS, the Board of Directors of Houston has determined that it is in the best interests of Houston and its shareholders to separate the Seattle Business from the Houston Business and to create a new publicly traded company to operate the Seattle Business;

 

WHEREAS, Houston and Seattle have entered into the Separation Agreement;

 

WHEREAS, in order to facilitate and provide for an orderly transition under the Separation Agreement, the Parties desire to enter into this Agreement to set forth the terms and conditions pursuant to which each of the Parties shall provide to the other certain Services (as defined herein); and

 

WHEREAS, the Separation Agreement requires execution and delivery of this Agreement by Houston and Seattle on or prior to the Distribution Date.

 

NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained in this Agreement, the Parties, intending to be legally bound, hereby agree as follows:

 

ARTICLE I

DEFINITIONS

 

The following capitalized terms used in this Agreement shall have the meanings set forth below:

 

“ Additional Services ” shall have the meaning set forth in Section 2.3(a) .

 

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

 

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

 

“ Automatic Transfer Regulations ” means the Transfer of Undertakings (Protection of Employment) Regulations 2006 (as amended), any legislation in any European jurisdiction implementing the Acquired Rights Directive ( 2001/23/EC ) (“ ARD ”), or any other legislation, regulations, or applicable Law in any other jurisdiction that has the same or similar effect to the ARD and/or seeks to automatically transfer the employment of individuals on the transfer of the business or part of the business in which they work or on the outsourcing, insourcing, or retendering of services in which they are engaged in providing.

“ Data Processing Agreement ” shall have the meaning set forth in Section 3.4 .

 

“ Designated System ” shall have the meaning set forth in Section 3.5(e) .

 

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

 

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

 

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

 

“ Employee Transfer Date ” means the date on which any contract of employment of any employee of the Provider has effect or is alleged to have effect as if originally made between the Recipient and such employee pursuant to any Automatic Transfer Regulations.

 

“ Governmental Authority ” shall have the meaning set forth in the Separation Agreement.

 

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

 

“ Houston ” shall have the meaning set forth in the Preamble.

 

“ Houston Business ” shall have the meaning set forth in the Separation Agreement.

 

“ Houston Confidential Information ” shall have the meaning set forth in the Separation Agreement.

 

“ Houston Employee ” shall mean any employee employed by Houston or any member of the Houston Group.

 

“ Houston Group ” shall have the meaning set forth in the Separation Agreement.

 

“ Houston Indemnified Parties ” shall have the meaning set forth in the Separation Agreement.

 

“ Houston Services ” shall have the meaning set forth in Section 2.1 .

 

“ Houston TSA Manager ” shall have the meaning set forth in Section 2.5(a) .

 

“ Indemnified Parties ” shall mean the Houston Indemnified Parties and the Seattle Indemnified Parties.

 

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

 

“ Initial Term ” has the meaning set forth in Section 7.1(b) .

 

“ Intellectual Property Rights ” shall have the meaning set forth in the Separation Agreement.

“ Interest Rate ” shall mean an annual rate equal to the lesser of (i) the prime rate (as published by the Wall Street Journal or, if no longer published, such other similar source as reasonably selected by Houston) applicable on the date such payment is due and on each date thereafter that interest is compounded, plus six (6) percentage points and (ii) the highest rate then permitted by applicable Law.

 

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

 

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

 

 

“ Miami Entities ” shall have the meaning set forth in the Merger Agreement.

 

“ Non-Registering Party ” shall have the meaning set forth in Section 3.6(c) .

 

“ Omitted Houston Services ” shall have the meaning set forth in Section 2.3(a) .

 

“ Omitted Services ” shall have the meaning set forth in Section 2.3(a) .

 

“ Party ” and “ Parties ” shall have the respective meanings set forth in the Preamble.

 

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

 

“ Provider ” shall mean the Party or its Subsidiary providing a Service under this Agreement.

 

“ Quarterly Caps ” shall have the meaning set forth in Section 4.1(a) .

 

“ Recipient ” shall mean the Party or its Affiliate to whom a Service is provided under this Agreement.

 

“ Registering Party ” shall have the meaning set forth in Section 3.6(c) .

 

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

 

“ Seattle ” shall have the meaning set forth in the Preamble.

 

“ Seattle Business ” shall have the meaning set forth in the Separation Agreement.

 

“ Seattle Confidential Information ” shall have the meaning set forth in the Separation Agreement.

 

“ Seattle Employee ” shall mean any employee employed by Seattle or any member of the Miami Entities.

“ Seattle Group ” shall have the meaning set forth in the Separation Agreement.

 

“ Seattle Indemnified Parties ” shall have the meaning set forth in the Separation Agreement.

 

“ Seattle Services ” shall have the meaning set forth in Section 2.1 .

 

“ Seattle TSA Manager ” shall have the meaning set forth in Section 2.5(a) .

 

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

 

“ Service Adjustments ” shall have the meaning set forth in Section 2.3(b) .

 

“ Service Charge ” shall have the meaning set forth in Section 4.1(a) .

 

“ Service Extension ” means an extension of the duration of a Service for three (3) months beyond the then-current Service duration, as may be requested by the Recipient and provided by the Provider in accordance with Section 7.1(b) .

 

“ Service Schedule ” means a Schedule to this Agreement that is included in Schedule A or Schedule B hereto as such Service Schedule is updated in accordance herewith and that sets forth terms of specific Services to be provided hereunder.

 

 

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

 

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

 

“ Term ” shall have the meaning set forth in Section 7.1(a) .

 

“ Termination Charges ” shall have the meaning set forth in Section 7.1(c)(iii) .

 

“ Transaction Documents ” shall have the meaning set forth in the Separation Agreement.

 

“ Transaction Taxes ” shall have the meaning set forth in Section 4.2(a) .

 

“ TSA-Licensed Software ” shall have the meaning set forth in Section 3.5(a) .

 

“ TSA Managers ” means the Seattle TSA Manager and the Houston TSA Manager.

 

“ TSA Owner ” shall have the meaning set forth in Section 2.5(c) .

 

 “ VAT ” shall have the meaning set forth in Section 4.2(a) .

 

“ Work Product ” shall have the meaning set forth in Section 3.7 .

 

“ Workstream Representative ” shall have the meaning set forth in Section 2.5(b) .

ARTICLE II
SERVICES, DURATION AND CONTRACT MANAGEMENT

 

Section 2.1            Services . Subject to the terms and conditions of this Agreement, Houston shall provide or cause to be provided to Seattle, Miami and their respective Subsidiaries, as applicable, the services listed on Schedule A to this Agreement, which will be provided pursuant to the Service Schedules incorporated therein, and (collectively, the “ Houston Services ”), and Seattle shall provide or cause to be provided to Houston and Houston’s Subsidiaries, as applicable, the services listed on Schedule B to this Agreement, which will be provided pursuant to the Service Schedules incorporated therein (collectively, the “ Seattle Services ,” and, collectively with the Houston Services, any Additional Services and any Service Adjustments, the “ Services ”). All Services shall be for the sole use and benefit of the respective Recipient and its respective Affiliates. Except as otherwise provided in this Agreement, including Schedules A and B , Provider shall be required to provide Services to Recipient only in connection with the Recipient’s operation of the Houston Business or the Seattle Business (as applicable for the Recipient) substantially as conducted on or prior to the Distribution Date. Except to the extent Recipient did so prior to the Distribution Date and except to the extent with respect to Services included in customer-facing products and services, Recipient shall not resell any Services to any Person whatsoever or permit the use of the Services by any Person other than its Affiliates in connection with Recipient’s operation of the Houston Business or the Seattle Business (as applicable for the Recipient).

 

Section 2.2            Duration of Services . Subject to the terms of this Agreement, each of Houston and Seattle shall provide or cause to be provided to the respective Recipients or their Affiliates, as applicable, each Service from the start date specified in the applicable Service Schedule until the earliest to occur of, with respect to each such Service, (a) the expiration of the term for such Service (or, subject to the terms of Section 7.1(b) , the expiration of any Service Extension) as set forth on the applicable Service Schedule; (b) the date on which such Service is terminated under Section 7.1(c) ; or (c) the expiration or termination of this Agreement.

 

Section 2.3            Additional Services and Service Adjustments .

 

(a)           If, within ninety (90) days after the Distribution Date, either Party (i) identifies a service that (A)(1) the Houston Group or Seattle Group provided to the Seattle Group prior to the Distribution Date that Seattle reasonably needs in order for the Seattle Business to continue to operate in substantially the same manner in which the Seattle Business operated prior to the Distribution Date, or (2) is not of the type described in clause (1) but that Seattle reasonably believes is necessary for Seattle to operate the Seattle Business in substantially the same manner in which the Seattle Business operated prior to the Distribution Date, and in each case, such service was not included on Schedule A (other than because the Parties specifically agreed in writing that such particular service shall not be provided) (the services referenced in clause (A)(1), the “ Omitted Houston Services ” and in clause (A)(2), the “ Additional Services ”), or (B) the Seattle Group provided to the Houston Group prior to the Distribution Date that Houston reasonably needs in order for the Houston Business to continue to operate in substantially the same manner in which the Houston Business operated prior to the Distribution Date, and such service was not included on Schedule B (other than because the Parties specifically agreed in writing that such particular service shall not be provided) (together with the Omitted Houston Services, the “ Omitted Services ”), and (ii) provides a written change request (in the form agreed by the Parties) to the other Party requesting such Omitted Service or Additional Service within ninety (90) days after the Distribution Date, then such other Party shall provide such requested Omitted Service or negotiate in good faith to provide such requested Additional Service, as applicable; provided , however , that neither Party shall be obligated to provide any Additional Service if it does not, in its reasonable judgment, have adequate resources to provide such Additional Service. The Service Charges associated with any such Additional Services or Omitted Services will be determined in accordance with the terms set forth in Section 4.1(a) . The Parties shall document such terms in a Service Schedule to be incorporated in Schedule A or Schedule B , as applicable. The Service Schedule shall describe in reasonable detail the nature, scope, service period(s), and other terms applicable to such Additional Services or Omitted Services. Each such Service Schedule shall be deemed part of this Agreement as of the date of such agreement and the Additional Services or Omitted Services set forth therein shall be deemed “Services” provided under this Agreement, in each case subject to the terms and conditions of this Agreement.

(b)           After the Distribution Date, if a Provider or Recipient desires to adjust any Services or change the manner in which Services are provided (such adjustments and changes other than the addition of Additional Services, “ Service Adjustments ”), then such Provider or Recipient, as applicable, will provide a written change request (in the form agreed by the Parties) to the other Party, and the Parties shall negotiate in good faith to make such Service Adjustments; provided , however , that the Provider shall not be obligated to provide any Service Adjustment if the Provider and Recipient are unable to reach agreement on the terms thereof (including with respect to Service Charges therefor) unless such Service Adjustment (i) is a decrease in the volume, amount, level, or frequency, as applicable, of a Service provided to the Recipient, or (ii) is required by a change in any Law applicable to the affected Services. If the Parties agree to any Service Adjustment, then the Parties shall document such terms in an amendment to the applicable Service Schedule. Each amended Service Schedule, as agreed to in writing by the Parties, shall be deemed part of this Agreement as of the date of such agreement and the Service Adjustments set forth therein shall be deemed “Services” provided under this Agreement, in each case subject to the terms and conditions of this Agreement.

 

(c)           Notwithstanding Section 2.3(b) , but subject to the terms and conditions of this Agreement, including Section 5.1 , Provider shall be entitled to make changes from time to time in the manner in which it performs any of the Services; provided that (i) Provider has furnished Recipient advance written notice (the same notice Provider provides its own business) thereof; (ii) Provider changes such practices and procedures for its own business units at the same time; and (iii) Provider gives Recipient a reasonable period of time for Recipient to adapt its operations to accommodate such changes or (B) reject such changes. In the event Recipient fails to accept or reject a proposed change on or before a reasonable date specified in such notice of change, such failure shall be deemed to be an acceptance of such change. In the event Recipient rejects a proposed change, it may (i) terminate any affected Services upon thirty (30) days’ notice to the Provider, with such termination effective as of the end of the calendar month in which such notice period ends, or (ii) if it does not terminate an affected Service, Recipient agrees to pay any reasonable expenses resulting from Provider’s need to maintain different or multiple versions of the same system, procedures, technologies, or services or resulting from requirements of their third-party vendors.

 

Section 2.4            Services Not Included . No Services provided under this Agreement shall be construed as accounting, legal or tax advice or shall create any fiduciary obligations on the part of any Provider or any of its Affiliates to any Person, including to the Recipient or any of its Affiliates, and the Recipient shall not rely on, or construe, any Services rendered by or on behalf of the Provider as such professional advice.

 

Section 2.5            Contract Management .

 

(a)           TSA Managers . Houston and Seattle will each designate the respective individual set forth in Schedule C to act as its initial services manager (the “ Houston TSA   Manager ” and “ Seattle TSA Manager ,” respectively). The TSA Managers will be directly responsible for coordinating and managing the delivery of the Services provided by the applicable Party and have authority to act on such Party’s behalf with respect to matters relating to the provision of Services under this Agreement. The TSA Managers will work with the personnel of their respective Group, including the Workstream Representatives, to periodically address issues and matters raised by such personnel relating to the provision of the Services. Notwithstanding the requirements of Section 9.6 ( Notices ) of the Separation Agreement (incorporated by reference in Section 8.1 ), communications between the Parties regarding routine matters under this Agreement shall be made through the Parties’ TSA Managers. Each Party shall notify the other of the appointment of a different TSA Manager in accordance with Section 9.6 of the Separation Agreement.

(b)          Workstream Representatives . Each Party will designate a representative for each workstream within which Services are provided to such Party (e.g., finance, go to market, human resources, information technology, marketing, supply chain, support and services, tax) (each, a “ Workstream Representative ”). The Workstream Representatives will work with their respective TSA Owners to address issues relating to the Services, and will keep the TSA Managers informed of such issues. Each Party shall notify the other of the appointment of a different Workstream Representative in accordance with Section 9.6 of the Separation Agreement.

 

(c)           TSA Owners . Each Service Schedule sets forth a representative of each of Houston and Seattle (each, a “ TSA Owner ”) who will be responsible for the coordination of the Services provided under the applicable Service Schedule. The TSA Owners will keep their respective Workstream Representatives reasonably informed of any issues that arise with respect to the Services provided under their applicable Service Schedule. Each Party shall notify the other of the appointment of a different TSA Owner in accordance with Section 9.6 of the Separation Agreement.

 

Section 2.6            Personnel .

 

(a)           The Provider of any Service will make available to the Recipient of such Service such personnel (who shall be appropriately qualified for purposes of providing the applicable Service) as Provider determines may be necessary to provide such Service. Except as otherwise set forth in a Service Schedule, 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 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 , however , that the Recipient will use its commercially reasonable efforts to limit the disruption to the Provider in the transition of such personnel.

 

(c)           All employees and representatives of any Provider who provide Services under this Agreement shall be deemed for purposes of all compensation and employee benefits matters to be employees or representatives of such Provider and not employees or representatives of the Recipient or any of its Affiliates. In performing the Services, such employees and 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), assignment and compensation of such employees and representatives.

 

(d)           A Provider may hire or engage one or more subcontractors to perform any or all of its obligations under this Agreement only if the Recipient has granted prior written consent to such subcontractor, such consent not to be unreasonably withheld, conditioned or delayed; provided , however , that (i) such Provider shall use the same degree of care in selecting any such subcontractor as it would if such contractor was being retained to provide similar services to the Provider, but in no event less than a reasonable degree of care, and (ii) such Provider shall in all cases remain 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, the acts and omissions of each subcontractor and the content of the Services provided to the Recipient (whether or not such subcontractor is operating within the scope of employment, agency, or contract). Notwithstanding the foregoing, the Recipient’s consent to a subcontractor shall not be required to the extent (A) such subcontractor was performing for the Provider services substantially similar to or the same as the applicable Services as of the date of this Agreement or (B) such subcontractor will perform for Provider and its Subsidiaries services that are the same as or substantially the same as the applicable Services and, in each case of clause (A) and (B), Provider provides Recipient with reasonable advance notice of such subcontractor.

 

(e)           Nothing in this Agreement shall grant the Provider, or its employees, agents and third-party providers that are performing the Services, the right directly or indirectly to control or direct the operations of the Recipient or any member of its Group. Such employees, agents 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 Service Adjustments) or otherwise expressly set forth in the Separation Agreement, another Transaction Document or any other applicable agreement, no Provider or any member of its Group shall be obligated to provide, or cause to be provided, any service or goods to any Recipient or any member of its Group.

 

Section 2.7            Non-Exclusivity . Nothing in this Agreement shall preclude any Recipient from obtaining, in whole or in part, services of any nature that may be obtainable from the Provider, from its own employees or from providers other than the Provider.

 

ARTICLE III
ADDITIONAL ARRANGEMENTS

 

Section 3.1            Computer-Based and Other Resources . Each Party and its Subsidiaries shall cause all of their personnel having access to the computer software, networks, hardware, technology or computer-based resources of the other Party and its Subsidiaries in connection with the performance, receipt or delivery of a Service, to comply with all generally applicable security guidelines (including physical security, network access, internet security, confidentiality and personal data security guidelines) of such other Party and its Affiliates of which written notice is provided by such other Party. Each Party shall ensure that the access contemplated by this Section 3.1  shall be used by its personnel only for the purposes contemplated by, and subject to the terms of, this Agreement. Except as expressly provided in the Separation Agreement, any other Transaction Document or any other applicable agreement or as required in connection with the performance, receipt or delivery of a Service, each of the Parties and its Affiliates shall cease using (and shall cause their employees to cease using) the services made available by the other Party and its Affiliates prior to the Distribution Date.

 

Section 3.2            Access Rights .

 

(a)           Seattle shall, and shall cause its Subsidiaries to, allow Houston and its Subsidiaries and their respective Representatives and contractors, invitees, and licensees reasonable access to the facilities of Seattle and its Subsidiaries necessary for Houston to fulfill its obligations under this Agreement.

 

(b)           Houston shall, and shall cause its Subsidiaries to, allow Seattle and its Subsidiaries and their respective Representatives and contractors, invitees, and licensees reasonable access to the facilities of Houston and its Subsidiaries necessary for Seattle to fulfill its obligations under this Agreement.

 

(c)           Notwithstanding the other rights of access of the Parties under this Agreement, each Party shall, and shall cause its Subsidiaries to, afford, following not less than five (5) business days’ prior written notice (or in the case of access required by a Governmental Authority or applicable Law, with reasonable notice to the extent possible) from the other Party and during normal business hours, (i) the other Party, its Subsidiaries and Representatives and contractors, invitees, and licensees escorted access to the facilities and personnel of the relevant Providers and (ii) a third party designated by the other Party and approved by the relevant Provider (such approval not to be unreasonably withheld), reasonable access to the information, systems and infrastructure of the Provider, in each case as reasonably necessary for the other Party to verify the Provider’s compliance with its obligations hereunder and the adequacy of internal controls over information technology, reporting of financial data and related processes employed in connection with the Services, including in connection with verifying compliance with Section 404 of the Sarbanes-Oxley Act of 2002; provided , however , (A) such access shall not unreasonably interfere with any of the business or operations of such Provider, (B) if a Party determines that providing such access could violate any applicable Law or agreement or waive any attorney-client privilege, then the Parties shall use commercially reasonable efforts to permit such access in a manner that avoids each of such harm and consequence, (C) if a Party determines that providing such access requires a third-party consent, such access shall be subject to the receipt of such third-party consent, and (D) any third party that is provided access pursuant to this Section will be required to execute a non-disclosure agreement that restricts such third party from disclosing confidential information of the audited Provider to the Party that engaged such third party, except to the extent required to report on the extent to which the audited Provider is not in compliance with its obligations or its controls are not adequate. Notwithstanding anything to the contrary contained herein, Provider shall provide the access referenced in clauses (i) and (ii) in connection with any audit or access to the extent required by a Governmental Authority or applicable Law.

 

(d)           Except as otherwise permitted by the other Party in writing, each Party shall permit only its authorized Representatives, contractors, invitees or licensees to access the other Party’s facilities.

 

Section 3.3            Cooperation . It is understood that it will require the significant efforts of both Parties to implement this Agreement and to ensure performance of this Agreement by the Parties at the agreed-upon levels in accordance with all of the terms and conditions of this Agreement. The Parties will cooperate, acting in good faith and using commercially reasonable efforts, to effect a smooth and orderly transition of the Services provided under this Agreement from the Provider to the Recipient (including, as may be agreed by the Parties, with respect to the assignment or transfer of the rights and obligations under any third-party contracts relating to the Services). Each Party shall (and shall cause other members of its Group) to provide to the other Party’s Group assistance reasonably necessary for such other Party’s Group to transition and migrate the Services provided to such other Party’s Group under this Agreement (including any terminated or expired Services) from such Party’s Groups’ systems, facilities and hosting environment to the systems, facilities and hosting environment of the other Party’s Group. Without limiting the foregoing, each Party shall assist the other Party with any migration of the data of such other Party’s Group as is reasonably necessary for such other Party’s Group to effect the separation of the Seattle Business and the Houston Business and to effect each Group’s transition to such systems, facilities and hosting environment. Notwithstanding any other provision of this Agreement, upon Seattle’s reasonable request, Houston shall promptly make available to Seattle (except as may otherwise be set forth in a Service Schedule, at Seattle’s expense for any reasonable actual, third-party out-of-pocket costs of Houston incurred in connection therewith) any and all Seattle Group data (complete and unaltered) possessed by or under the control of any member of the Houston Group as a result of its performance of any Services hereunder. Nothing in this Section 3.3  shall require either Party to incur any out-of-pocket costs or expenses unless and except as expressly provided in a Service Schedule or elsewhere in this Agreement or otherwise agreed to in writing by the Parties or agreed to be reimbursed by the other Party.

Section 3.4            Data Protection . Concurrently with the execution and delivery hereof, the Parties will execute and deliver the Data Processing Agreement attached as Schedule D (the “ Data Processing Agreement ”), the terms of which are hereby incorporated by reference.

 

Section 3.5            Software License Terms .

 

(a)           Software owned by a Third Party (as defined in the Intellectual Property Matters Agreement) that is made available by a Provider to Recipient in connection with any Service (any such Software being referred to herein as “ TSA-Licensed Software ”) provided hereunder will be subject to the terms set forth in this Section 3.5 except as otherwise provided in the applicable Service Schedule, provided that no Software made available to any Party or its Affiliates pursuant to the Intellectual Property Matters Agreement, the License Agreement or another Transaction Document will be considered TSA-Licensed Software under this Agreement. If and to the extent that any TSA-Licensed Software includes third-party Software subject to additional terms and conditions, those additional terms and conditions will be set forth in the applicable Service Schedule. The Provider hereby grants to the Recipient a non-exclusive, non-transferable license to use, in object code form, any TSA-Licensed Software that is made available by the Provider pursuant to a Service Schedule. For the avoidance of doubt, the Provider that makes available any TSA-Licensed Software in connection with the provision of any Service retains the unrestricted right to enhance or otherwise modify such TSA-Licensed Software at any time; provided that such enhancements or other modifications do not disrupt or otherwise materially adversely affect the provision of such Service to, or the receipt of the Service by, the Recipient.

 

(b)           The Recipient may not exceed the number of licenses, agents, tiers, nodes, seats, or other use restrictions or authorizations, if any, specified in the applicable Service Schedule, provided that such restrictions or authorizations shall in no event be more restrictive than those applicable to the Recipient’s use of the applicable TSA-Licensed Software prior to the Distribution Date. Some TSA-Licensed Software may require license keys or contain other technical protection measures, in each case which shall be specified in the applicable Service Schedule. The Recipient acknowledges that the Provider may monitor the Recipient’s compliance with use restrictions and authorizations remotely, or otherwise. If the Provider makes a license management program available which records and reports license usage information, the Recipient agrees to appropriately install, configure and execute such license management program.

 

(c)           Unless otherwise permitted by the Provider or set forth in the applicable Service Schedule, the Recipient may only make copies or adaptations of the TSA-Licensed Software for archival purposes or when copying or adaptation is an essential step in the authorized use of TSA-Licensed Software. If the Recipient makes a copy for backup purposes and installs such copy on a backup device, the Recipient may not operate such backup installation of the TSA-Licensed Software without paying an additional license fee, except in cases where the original device becomes inoperable. If a copy is activated on a backup device in response to failure of the original device, the use on the backup device must be discontinued when the original or replacement device becomes operable. The Recipient may not copy the TSA-Licensed Software on to or otherwise use or make it available on, to, or through any public or external distributed network. TSA-Licensed Software that allows use over the Recipient’s intranet requires restricted access by authorized users only.

(d)           The Recipient must reproduce all copyright notices that appear in or on the TSA-Licensed Software (including documentation) on all permitted copies or adaptations. Copies of documentation are limited to internal use.

 

(e)           Notwithstanding anything to the contrary herein, certain TSA-Licensed Software may be licensed under the applicable Service Schedule for use only on a computer system owned, controlled, or operated by or solely on behalf of the Recipient which shall be further identified by the Provider in such Service Schedule by the combination of a unique number and a specific system type (“ Designated System ”) and such license will terminate in the event of a change in either the system number or system type, an unauthorized relocation, or if the Designated System ceases to be within the possession or control of the Recipient.

 

(f)            The Recipient will not modify, reverse engineer, disassemble, decrypt, decompile, or make derivative works of the TSA-Licensed Software. Where the Recipient has other rights mandated under statute, the Recipient will provide the Provider with reasonably detailed information regarding any intended modifications, reverse engineering, disassembly, decryption, or decompilation and the purposes therefor.

 

(g)           The Recipient may permit a consultant or subcontractor or other third party to use TSA-Licensed Software at the licensed location for the sole purpose of providing services to or on behalf of the Recipient.

 

(h)           Upon expiration or termination of the Service Schedule under which TSA-Licensed Software is made available, the Recipient will destroy the TSA-Licensed Software. The Recipient will remove and destroy or return to the Provider any copies of the TSA-Licensed Software that are merged into adaptations, except for individual pieces of data in the Recipient’s database. The Recipient will provide certification of the destruction of TSA-Licensed Software, and copies thereof, to the Provider. The Recipient may retain one copy of the TSA-Licensed Software subsequent to expiration or termination solely for archival purposes.

 

(i)            The Recipient may not sublicense, assign, transfer, rent, or lease the TSA-Licensed Software to any other person except as permitted in this Section 3.5 .

 

(j)            The Recipient agrees that the Provider may engage a third party designated by the Provider and approved by the Recipient (such approval not to be unreasonably withheld, it being understood that such approval may be reasonably withheld in the event the proposed third party is a direct competitor of the Recipient) to audit the Recipient’s compliance with the software license terms for any TSA-Licensed Software. Any such audit will be at the Provider’s expense, require reasonable advance written notice, and will be performed during normal business hours. Such third party will be required to execute a non-disclosure agreement that restricts such third party from using or disclosing to the Provider or any third party any confidential information of the Recipient, except to the extent required to report on the extent to which the Recipient is not in compliance with the software license terms.

Section 3.6            Reserved .

 

Section 3.7            Ownership of Work Product . In the event the Provider or any of its Affiliates creates, conceives, or develops any Technology or Intellectual Property Rights solely in connection with providing the Services to the Recipient (collectively, “ Work Product ”), then such creation, conception, or development shall be considered a “work made for hire” under applicable Law and shall be owned by the Recipient. To the extent such creation, conception, or development is not considered a “work made for hire” under applicable Law, then the Provider (on behalf of itself and its Affiliates) hereby assigns, transfers, conveys, and delivers, and shall cause its Affiliates to assign, transfer, convey, and deliver, to the Recipient, without further consideration, all of the Provider’s worldwide right, title, and interest in and to the Work Product (including all Intellectual Property Rights therein and thereto).

 

Section 3.8            Cybersecurity Services Standards and Policies . Each of the Parties agrees that, in connection with the receipt or performance of Services during the Term, it and its Affiliates will adhere to the Houston Information Security Standards and Houston Information Security Policy existing as of the Effective Date and attached as Schedule E hereto, in each case as they may hereafter be amended from time to time by written agreement of the Parties.

 

Section 3.9            Shared Applications . The Parties acknowledge that they or their respective Affiliates may be required in connection with the provision or receipt of any Service to access or use a software application and related data that is being accessed or used concurrently by the other Party or the other Party’s Affiliates. The Parties agree to reasonably cooperate to ensure that such concurrent use or access of such applications and related data does not result in the disruption of either Party’s or its Affiliates’ business activities.

 

Section 3.10          Cooperation Regarding Routine Requests for Information and   Certain Services .

 

(a)           The Parties acknowledge and agree that the Parties and their Affiliates may require in connection with the provision or receipt of any Service documents or Information in the possession of the other Party or the other Party’s Affiliates from time to time during the Term. During the Term and for two years thereafter, Provider shall keep books and records relating to the provision of the Services in a manner consistent with how such books and records were kept by Provider (or its predecessor) with respect to the Houston Business or the Seattle Business (as applicable for the Provider) as of the Effective Date, subject to Provider’s records retention policies (as such policies may be amended or otherwise modified from time to time). Without limiting any Party’s obligations under any other provision of this Agreement with respect to cooperation and the provision of information or access to books and records, each Party agrees that it and its Affiliates will reasonably cooperate with the other Party and the other Party’s Affiliates with respect to routine requests for documents or Information that the other Party and the other Party’s Affiliates reasonably may make from time to time in connection with the provision or receipt of any Service, including promptly responding to any telephonic requests for Information that the other Party or the other Party’s Affiliates may make from time to time. For the avoidance of doubt, nothing in this Section 3.10(a)  requires a Party to provide any consulting or other services to the requesting Party or the requesting Party’s Affiliates or to incur any expenses (other than the expense associated with its personnel responding to requests for Information).

(b)           If and to the extent either Party requests additional routine services or support from the other Party that requires the other Party to make available its personnel to the other Party or its Affiliates, including the provision of Information, and the other Party is not obligated to provide such additional services or support under the obligations it may have under this Agreement (including any Service Schedule) or the Separation Agreement, and if the amount of time expended by any individual providing such services and support represents or is expected to represent more than twenty percent (20%) of such individual’s work time during a calendar month, then the Parties will enter into a Service Schedule to be incorporated in Schedule A or Schedule B , as applicable, that will describe in reasonable detail the nature, scope, service period(s), payment and other terms applicable thereto. None of the services and support, including the provision of Information, provided under this Section 3.10(b)  shall include the licensing or assignment of any Intellectual Property Rights except to the extent expressly provided in a Service Schedule entered into pursuant to this Section 3.10(b) .

 

ARTICLE IV
SERVICE FEES; TAXES

 

Section 4.1            Costs and Disbursements .

 

(a)           Except as otherwise provided in the applicable Service Schedule, the Recipient of a Service shall pay to the Provider of such Service a fee (each fee constituting a “ Service Charge ”) for the Service equal to the Provider’s actual cost in providing such Service, plus the applicable markup provided for in Schedule F under the heading “Service Charges Markup” (the “ Markup ”). The Provider’s actual cost to provide the Services will be determined in accordance with the methodology (e.g., time and materials) set forth in the applicable Service Schedule. In no event will the Provider’s actual cost include any indirect overhead costs, including overhead costs for global functions, IT or real estate, except to the extent that recovery of such costs is expressly permitted under the applicable Service Schedule. The aggregate Service Charges and Markup paid by a Recipient with respect to a particular quarterly period during the Term (measured on a calendar basis and pro rated for any portion of a quarter in which the Term commences and ends) shall not exceed the applicable amount set forth under the heading “Quarterly Caps” on Schedule F (the “ Quarterly Caps ”).

 

(b)           The actual costs incurred by the Provider will be determined on a monthly basis or on such other frequency as may be provided in the applicable Service Schedule or mutually agreed by the Parties, and the Provider shall provide with the applicable invoice all substantiation of actual costs that the Recipient may reasonably request.

 

(c)           During the Term, the amount of a Service Charge for any Service may increase or decrease to the extent of: (i) any increases or decreases mutually agreed to by the Parties, (ii) any increases or decreases in the Service Charges applicable to any Additional Services or Service Adjustments, (iii) any increase in the applicable Service Charge during a Service Extension, in accordance with Section 7.1(b) , and (iv) any increase or decrease in the rates or charges imposed by any unaffiliated third-party provider that is providing Services. Together with any invoice for Service Charges, the Provider shall provide the Recipient with appropriate documentation to support such increase or decrease to the Service Charges.

(d)           Except as set forth in Section 4.1(a)  or Section 4.1(g) , the Provider shall be responsible for all out-of-pocket costs and expenses incurred by the Provider or its Affiliates in connection with providing the Services (including necessary travel-related expenses) to the extent that such costs and expenses are not reflected in the Service Charge for such Services.

 

(e)           Unless otherwise agreed in writing by the Parties prior to the provision of the applicable Services, the amounts payable under this Agreement (i) for Services provided in the United States will be invoiced by the Party that is the Provider of the Services and paid by the Party that is the Recipient of the Services and (ii) for Services provided outside the United States will be invoiced by an Affiliate designated by the Party that is the Provider of the Services and paid by an Affiliate designated by the Party that is the Recipient of the Services. Except as otherwise set forth in this Section, the Provider will provide an invoice to the Recipient no later than the 25th day of each month for the Service Charges and Transaction Taxes payable for, and reimbursable expenses incurred during, the prior month. If the total Service Charges, Transaction Taxes and reimbursable expenses that would be invoiced under a Service Schedule in a month total less than $5,000, then such amounts will be aggregated and invoiced on a quarterly basis, and the Provider will provide an invoice to the Recipient no later than the 25th day of each quarter for such amounts incurred during the prior quarter; provided , however , that if the total aggregate Service Charges under such Service Schedule for the applicable quarter are less than $5,000, then no amounts will be due under such Service Schedule for such quarter.  The Recipient shall pay the undisputed amounts stated as due in each invoice by wire transfer (or such other method of payment as may be agreed between the Parties) to the Provider within thirty (30) days of the receipt of each such invoice, including appropriate documentation as described herein, as instructed by the Provider. The Recipient shall notify the Provider promptly, and in no event later than thirty (30) days following receipt of the Provider’s invoice, of any amounts disputed in good faith and may withhold from the Recipient’s payment of the relevant invoice any such amounts. If the Recipient does not notify the Provider of any disputed amounts within such thirty (30)-day period, then Recipient will be deemed to have accepted the Provider’s invoice. Any such Dispute shall be resolved in accordance with Article VIII ( Dispute Resolution ) of the Separation Agreement (incorporated by reference in Section 8.1 ). Any invoiced undisputed amounts not paid within such thirty (30) day period shall be subject to interest from the due date until the date of payment, compounded monthly, at the Interest Rate. All amounts due and payable hereunder shall be invoiced and paid in (A) U.S. dollars or (B) if the Parties so agree, a foreign currency agreed by the Parties. With respect to any Provider that is domiciled outside of the United States that provides Services to a Recipient that is domiciled outside the United States, if required by any applicable Law or otherwise reasonably requested by a Party or an Affiliate thereof, any such Provider and such Recipient will enter into a local country agreement providing for the performance of such Services. Section 4.2  shall apply to these invoices accordingly.

 

(f)           Subject to the confidentiality provisions applicable pursuant to Section 5.4 , each Party shall, and shall cause its Subsidiaries to, provide, upon thirty (30) days’ prior written notice from the other Party, any information within such Party’s or its Subsidiaries’ possession that the requesting Party reasonably requests in connection with any Services being provided to such requesting Party by an unaffiliated third-party provider, including any applicable invoices, agreements documenting the arrangements between such third-party provider and the Provider and other supporting documentation; provided , however , that each Party shall make no more than one (1) such request during any fiscal quarter.

(g)           Any costs and expenses incurred by either Party in connection with obtaining any third-party consent contemplated by Section 5.1(b)  that is required to allow the Provider to perform or cause to be performed any Service shall be borne by the Recipient.

 

(h)           If at any time after the Effective Date, any change in applicable Law or other material unanticipated change in the operating environment of the Houston Business or the Seattle Business materially decreases or increases (directly or indirectly) Provider’s cost of providing the Services, Provider shall notify Recipient of such decreased or increased cost and the Parties shall promptly negotiate in good faith to adjust the Service Charges for each Service to accurately and fairly account for such decreased or increased cost to Provider.

 

Section 4.2            Tax Matters .

 

(a)           Without limiting any provisions of this Agreement, the Service Charges are exclusive of, and the Recipient shall be responsible for and bear the economic burden of, (i) all excise, sales, use, transfer, stamp, documentary, filing, recordation and other similar transaction Taxes, (ii) any value added, goods and services or similar transaction Taxes (“ VAT ”) and (iii) any related interest and penalties (collectively, “ Transaction Taxes ”), in each case, that Provider is not at fault for causing and that are imposed or assessed as a result of the provision of Services by the Provider. To the extent that cross-border Services to be performed hereunder fall within Article 44 of the EU VAT Directive or the relevant equivalent national provision and the Provider is not required to charge VAT with respect thereto, the Recipient agrees that it will (if required by applicable Law) itself account for such VAT in its own jurisdiction on the performance of such cross-border Services supplied to it hereunder and will provide to the Provider a valid VAT registration number (or equivalent documentation) in the jurisdiction with respect to the country or region of receipt of such cross-border Services. The Provider will issue legally compliant invoices to the Recipient usable by the Recipient to recover (by way of credit, input VAT, rebate or refund) Transaction Taxes in jurisdictions where they are recoverable. In the event the Tax authorities question the Transaction Tax treatment of the Services provided, the Provider and the Recipient will work together to issue corrected invoices where applicable. The Recipient and the Provider agree to utilize commercially reasonable efforts to collaborate regarding any requests for information, audit, controls or similar requests of the Tax authorities concerning Transaction Taxes with respect to the Services provided under this Agreement. The Provider and the Recipient agree to take commercially reasonable actions to cooperate in obtaining any refund, return or rebate, or applying exemption or zero-rating for Services giving rise to any Transaction Taxes, including filing any necessary exemption or other similar forms or providing valid VAT identification numbers or other relevant registration numbers, certificates or other similar documents. The Recipient shall promptly reimburse the Provider for any costs incurred by the Provider or its Affiliates in connection with the Recipient obtaining a refund, credit, return, rebate or the like of any Transaction Tax. For the avoidance of doubt, any applicable gross receipts-based or net income-based Taxes imposed on payments received by the Provider hereunder shall be borne by the Provider unless the Provider is required by Law to collect or obtain, or allowed to separately invoice for and collect or obtain, reimbursement of such Taxes from the Recipient.

 

(b)           If the Parties agree that the Service Charges will be invoiced and paid centrally by the Parties, then no non-recoverable Taxes will be invoiced by the Provider as a result of such invoicing and payment arrangement.

(c)           The Recipient shall be entitled to deduct and withhold Taxes required by applicable Law to be withheld on payments made to the Provider pursuant to this Agreement. To the extent any amounts are so withheld, the Recipient shall (i) pay such deducted and withheld amount to the proper Governmental Authority and (ii) promptly provide to the Provider evidence of such payment to such Governmental Authority. The Provider shall not “gross up” any amounts invoiced to the Recipient to account for any Taxes required to be withheld by applicable Law. The Provider shall, prior to the date of any payment to be made pursuant to this Agreement, make commercially reasonable efforts to provide the Recipient any certificate or other documentary evidence (A) required by any applicable Law or (B) which the Provider is entitled by any applicable Law to provide in order to reduce the amount of any Taxes that may be deducted or withheld from such payment, and the Recipient agrees to accept and act in reliance on any such duly and properly executed certificate or other applicable documentary evidence.

 

(d)           If Provider becomes aware that any of its personnel’s performance of the Services on-site at any Recipient location is likely to exceed one (1) year, Provider will promptly provide Recipient with written notice thereof, and Parties shall cooperate in good faith to limit the duration of such personnel’s assignment at such Recipient site to less than one (1) year.

 

Section 4.3            No Right to Set-Off . The Recipient shall timely pay the full amount of undisputed Service Charges and shall not set off, counterclaim or otherwise withhold any amount owed to the Provider under this Agreement on account of any obligation owed by the Provider to the Recipient.

 

ARTICLE V
STANDARD FOR SERVICE

 

Section 5.1            Standard for Service .

 

(a)           Each Provider agrees (i) to perform any Services that it provides hereunder at substantially the same levels as those Services were provided by Provider prior to the Distribution Date and with substantially the same nature, quality, standard of care and service levels at which the same or similar services were performed by or on behalf of such Provider prior to the Distribution Date or, if not so previously provided, then substantially similar to those which are applicable to similar services provided to the Provider’s Affiliates or other business units; (ii) if specific target performance metrics are set forth in a particular Service Schedule, it will provide the applicable Services in accordance with such metrics; and (iii) upon receipt of written notice from the Recipient identifying any outage, interruption or other failure of any Service, to respond to such outage, interruption or other failure of such Service in a manner that is substantially similar to the manner in which such Provider or its Affiliates responded to any outage, interruption or other failure of the same or similar services prior to the Distribution Date or, with respect to services for which same or similar services were not provided prior to the Distribution Date, in a manner that is substantially similar to the manner in which such Provider or its Affiliates responds with respect to internally provided services. The Parties acknowledge that an outage, interruption or other failure of any Service shall not be deemed to be a breach of this Section 5.1(a)  so long as the applicable Provider complies with the foregoing clause (iii), provided that the Recipient shall be excused from its obligation to pay any applicable Service Charges during the continuance of such outage, interruption, or other failure.

(b)           Nothing in this Agreement shall require the Provider to perform or cause to be performed any Service to the extent that the manner of such performance would constitute a violation of applicable Law or any existing contract or agreement with a third party. If the Provider is or becomes aware of any such potential violation on the part of the Provider, the Provider shall promptly send a written notice to the Recipient of any such potential violation. The Parties each agree to cooperate and use commercially reasonable efforts to obtain any necessary third-party consents required under any existing contract or agreement with a third party to allow each Provider to perform or cause to be performed any Service, subject to Section   4.1(g) . If, with respect to a Service, the Parties, despite the use of commercially reasonable efforts, are unable to obtain a required third-party consent or the performance of such Service by the Provider would continue to constitute a violation of applicable Law, the Provider shall use commercially reasonable efforts in good faith to provide such Services in a manner as closely as possible to the standards described in Section 5.1(a)  that would apply absent the exception provided for in the first sentence of this Section 5.1(b) .

 

Section 5.2            Disclaimer of Warranties . EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, 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 THAT 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.

 

Section 5.3            Compliance with Laws and Regulations . Each Party shall comply and cause its subcontractors to comply, and shall be responsible for its own compliance and its subcontractors’ compliance, with any and all Laws applicable to its performance under this Agreement. No Party shall knowingly take any action in violation of any such applicable Law that results in liability being imposed on the other Party.

 

Section 5.4            Treatment of Confidential Information . Except as otherwise set forth in this Section 5.4 , Houston Confidential Information or Seattle Confidential Information that is disclosed by the respective Party or any of its Subsidiaries in connection with the provision or receipt of Services shall be subject to the confidentiality and use restrictions set forth in Section 7.2 ( Confidentiality ) of the Separation Agreement. Notwithstanding the foregoing: (a) neither Party, acting as the Provider, shall be permitted to use or disclose the other Party’s, acting as the Recipient, Confidential Information except to the extent required for the Provider to perform the Services for the Recipient, but not to perform services for itself or its subsidiaries; (b) without limiting anything set forth Section 7.2 ( Confidentiality ) of the Separation Agreement, the Software owned by Seattle or Houston shall constitute Seattle Confidential Information or Houston Confidential Information, respectively; and (c) upon the expiration of the Term or termination of this Agreement in its entirety, each Party shall, at the other Party’s option, either return to such other Party or destroy, the other Party’s Confidential Information then in its possession or under its control, provided that such obligation to destroy shall not extend to either Party’s Confidential Information that the other Party is entitled to possess under another Transaction Document.

ARTICLE VI

LIABILITY LIMITATIONS AND INDEMNIFICATION

 

Section 6.1            Consequential and Other Damages . Notwithstanding anything to the contrary contained in the Separation Agreement or this Agreement, except for (a) breaches of confidentiality obligations or Section 3.8 , (b) claims arising from fraud, gross negligence, or willful misconduct and (c) intentional breaches of this Agreement, no Party shall be liable to the other Party or any of its Affiliates or Representatives, whether in contract, tort (including negligence and strict liability) or otherwise, at law or equity, for any special, indirect, incidental, punitive or consequential damages whatsoever (including lost profits or damages calculated on multiples of earnings approaches), which in any way arise out of, relate to or are a consequence of, the performance or nonperformance by such Party (including any Affiliates and Representatives and any unaffiliated third-party providers, in each case, providing any applicable Services) under this Agreement or the provision of, or failure to provide, any Services under this Agreement, including with respect to business interruptions or claims of customers, even if such Party has been advised of the possibility of such damages. This Section 6.1  shall not apply to any special, indirect, punitive, or consequential damages (including any such lost profits or damages calculated on multiples of earnings approaches) awarded to any third party for which a Party would otherwise be responsible under any of its indemnification obligations under this Agreement.

 

Section 6.2            Limitation of Liability . Except for (a) payment of Service Charges, (b) breaches of confidentiality obligations or Section 3.8 , (c) claims arising from fraud, gross negligence, or willful misconduct, (d) intentional breaches of this Agreement, and (e) liability for indemnification with respect to third-party claims pursuant to Section 6.4 , Section 6.5 , Section 6.11 , or Section 6.12 , the liability of a Party and its Affiliates and Representatives, collectively, for any act or failure to act in connection with a Service Schedule (including the performance or breach of such Service Schedule), or from the sale, delivery, provision or use of any Services provided under or contemplated by a Service Schedule, whether in contract, tort (including negligence and strict liability) or otherwise, at law or equity, shall not exceed the sum of the Quarterly Caps for the first three quarters of the Term.

 

Section 6.3            Obligation to Re-perform; Liabilities . In the event of any breach of this Agreement by any Provider with respect to the provision of any Services (with respect to which the Provider can reasonably be expected to re-perform in a commercially reasonable manner), the Provider shall promptly correct in all material respects such error, defect or breach or promptly re-perform in all material respects such Services at the request of the Recipient and at the sole cost and expense of the Provider. The remedy set forth in this Section 6.3  shall be the sole and exclusive remedy of the Recipient for any such breach of this Agreement; provided , however , that, with respect to any such breach, if Provider fails to so correct such error, defect or breach in re-performing such Services for the first time, such remedy shall, subject to the remaining provisions of this Article VI , cease to be Recipient’s sole and exclusive remedy for such breach. Any request for re-performance in accordance with this Section 6.3  by the Recipient must be in writing and specify in reasonable detail the particular error, defect or breach, and such request must be made as soon as reasonably practicable, the date such error, defect, or breach becomes apparent or should have reasonably become apparent to the Recipient.

Section 6.4            Houston Indemnity .

 

(a)           From and after the Distribution Date, Houston, in its capacity as a Recipient and on behalf of each of the other members of the Houston Group in their capacity as Recipients, shall indemnify, defend and hold harmless Seattle and the other Seattle Indemnified Parties from and against any and all liabilities, losses, damages, claims, costs, expenses, interest, awards, judgments and penalties (including reasonable fees for outside counsel, accountants and other outside consultants) (collectively, “ Losses ”) suffered or incurred by the Seattle Indemnified Parties in connection with a third-party claim against such Seattle Indemnified Parties, which Losses result from any Houston Group member’s fraud, gross negligence, or willful misconduct in receiving the Services.

 

(b)           From and after the Distribution Date, Houston, in its capacity as a Provider and on behalf of each of the other members of the Houston Group in their capacity as Providers, shall indemnify, defend and hold harmless Seattle and the other Seattle Indemnified Parties from and against any and all Losses suffered or incurred by the Seattle Indemnified Parties in connection with a third-party claim against such Seattle Indemnified Parties, which Losses result from (i) any Houston Group member’s violation of Laws applicable to its performance under this Agreement, (ii) infringement or misappropriation of any third party’s Intellectual Property Rights in connection with any provision or receipt of Services, or (iii) any Houston Group member’s fraud, gross negligence, or willful misconduct in providing the Services; provided , however , that Houston shall not be deemed to have been grossly negligent or to have engaged in willful misconduct to the extent that Losses arise as a result of information provided by or on behalf of any Seattle Indemnified Party to any member of the Houston Group or any actions taken or omitted to be taken by the Houston or any other member of the Houston Group upon the written direction or instruction of the Seattle Indemnified Parties.

 

Section 6.5            Seattle Indemnity .

 

(a)           From and after the Distribution Date, Seattle, in its capacity as a Recipient and on behalf of each of the other members of the Seattle Group in their capacity as Recipients, shall indemnify, defend and hold harmless Houston and the other Houston Indemnified Parties from and against any and all Losses suffered or incurred by the Houston Indemnified Parties in connection with a third-party claim against such Houston Indemnified Parties, which Losses result from any Seattle Group member’s fraud, gross negligence, or willful misconduct in receiving the Services.

 

(b)           From and after the Distribution Date, Seattle, in its capacity as a Provider and on behalf of each of the other members of the Seattle Group in their capacity as Providers, shall indemnify, defend and hold harmless Houston and the other Houston Indemnified Parties from and against any and all Losses suffered or incurred by the Houston Indemnified Parties in connection with a third-party claim against such Houston Indemnified Parties, which Losses result from the gross negligence or willful misconduct of Seattle or any other member of the Seattle Group in its performance of its obligations hereunder; provided , however , that Seattle shall not be deemed to have been grossly negligent or to have engaged in willful misconduct to the extent that Losses arise as a result of information provided by or on behalf of any Houston Indemnified Party to any member of the Seattle Group or any actions taken or omitted to be taken by Seattle or any other member of the Seattle Group upon the written direction or instruction of the Houston Indemnified Parties.

Section 6.6            Indemnification Procedures . The provisions of Section 6.6 ( Certain Matters Relating to Indemnification of Third-Party Claims ) of the Separation Agreement shall govern claims for indemnification under this Agreement, provided that, for purposes of this Section 6.6 , in the event of any conflict between the provisions of the Separation Agreement and this Article VI , the provisions of this Agreement shall control.

 

Section 6.7            Liability for Payment Obligations . Nothing in this Article VI  shall be deemed to eliminate or limit, in any respect, Houston’s or Seattle’s express obligation in this Agreement to pay Service Charges for Services rendered in accordance with this Agreement.

 

Section 6.8            Exclusion of Other Remedies . Except to the extent provided in Section 6.3 , the provisions of Sections 6.3 , 6.4  and 6.5  shall, to the maximum extent permitted by applicable Law, be the sole and exclusive remedies of the Houston Group and the Seattle Group, as applicable, for any Liability with respect to breaches referenced in Section 6.3  and third party claims referenced in Sections 6.4  and 6.5 , respectively, whether arising from statute, principle of common or civil law, principles of strict liability, tort, contract or otherwise under this Agreement.

 

Section 6.9            Other Indemnification Obligations Unaffected . For avoidance of doubt, this Article VI  applies solely to the specific matters and activities covered by this Agreement (and not to matters specifically covered by the Separation Agreement or the other Transaction Documents).

 

Section 6.10          Liability Relating to Employees . The Parties do not anticipate any transfer of employees pursuant to any Automatic Transfer Regulations as a result of the provision of Services, the expiration or termination of this Agreement or the termination of one or more of the Services.

 

Section 6.11          Seattle Indemnity Regarding Seattle Employees . If, as a result of the provision of Seattle Services or the expiration or termination of this Agreement or the termination of one or more of the Seattle Services, any contract of employment of any Seattle Employee has effect or is alleged to have effect as if originally made between Houston (or any member of the Houston Group) and such person as a result of the application of any Automatic Transfer Regulations, then:

 

(a)           Houston or the relevant member of the Houston Group may, within thirty (30) days after becoming aware of the application or alleged application of the Automatic Transfer Regulations to such contract, give notice to such person to terminate such contract;

 

(b)          Seattle shall indemnify, defend and hold harmless Houston or the relevant member of the Houston Group against any and all Losses arising in respect of: (i) the employment of any such person (whether arising before, on, or after the Employee Transfer Date); or (ii) the termination of the employment of such person, provided , in each case, that the termination takes effect within the timeframe referred to in Section 6.11(a)  (or such longer period as may be necessary pursuant to applicable Law); and

 

(c)           if Houston or the relevant member of the Houston Group does not terminate such contract in accordance with Section 6.11(a) , Seattle shall indemnify, defend and hold harmless Houston or the relevant member of the Houston Group against any and all Losses arising in respect of any breach or default by the relevant member of the Miami Entities relating to the employment of any such person whether on or before the Employee Transfer Date.

Section 6.12          Houston Indemnity Regarding Houston Employees . If, as a result of the provision of Houston Services or the expiration or termination of this Agreement or the termination of one or more of the Houston Services, any contract of employment of any Houston Employee has effect or is alleged to have effect as if originally made between Seattle (or any member of the Miami Entities) and such person as a result of the application of any Automatic Transfer Regulations, then:

 

(a)           Seattle or the relevant member of the Miami Entities may, within thirty (30) days after becoming aware of the application or alleged application of the Automatic Transfer Regulations to such contract, give notice to such person to terminate such contract;

 

(b)           Houston shall indemnify, defend and hold harmless Seattle or the relevant member of the Miami Entities against any and all Losses arising in respect of: (i) the employment of any such person (whether arising before, on, or after the Employee Transfer Date); or (ii) the termination of the employment of such person, provided, in each case, that the termination takes effect within the timeframe referred to in Section 6.12(a)  (or such longer period as may be necessary pursuant to applicable Law); and

 

(c)           if Seattle or the relevant member of the Miami Entities does not terminate such contract in accordance with Section 6.12(a) , Houston shall indemnify, defend and hold harmless Seattle or the relevant member of the Miami Entities against any and all Losses arising in respect of any breach or default by the relevant member of the Houston Group relating to the employment of any such person whether on or before the Employee Transfer Date.

 

ARTICLE VII

TERM AND TERMINATION

 

Section 7.1            Term and Termination .

 

(a)           This Agreement shall be effective as of the Effective Time and shall terminate upon the earlier to occur of: (i) the last date on which either Party is obligated to provide any Service to the other Party in accordance with the terms of this Agreement (including as extended pursuant to Section 7.1(b) ) and (ii) the mutual written agreement of the Parties to terminate this Agreement in its entirety (the “ Term ”).

 

(b)           Except as otherwise specified in the applicable Service Schedule, the duration of the Services provided in each Service Schedule will be nine (9) months (the “ Initial   Term ”). If the Recipient reasonably determines that it will require a Service to continue beyond the duration identified in the applicable Service Schedule or the end of a subsequent extension period, the Recipient may request the Provider to extend such Service for three (3) months by written notice to the Provider no less than sixty (60) days prior to end of the then-current Service duration. The Provider shall comply with each Service Extension request; provided , however , that (i) the Recipient may request no more than two (2) Service Extensions for any applicable Service; and (ii) the applicable Service Extension is not prohibited under applicable Law. The Service Charge payable during any Service Extension shall increase as specified in Schedule F and the applicable Service Schedule. The Parties shall amend the terms of the applicable Service Schedule to reflect the new Service duration within five (5) days following the Recipient’s request for a Service Extension, subject to the conditions set forth in this Section 7.1(b) . Each such amended Service Schedule, as agreed to in writing by the Parties, shall be deemed part of this Agreement as of the date of such agreement.

(c)           (i)           A Recipient may from time to time terminate this Agreement with respect to the entirety or any part of any individual Service provided (or to be provided) by Provider:

 

           (A)            for any reason or no reason, effective as of the end of a calendar month, upon providing (i) with respect to a Service being terminated prior to six (6) months after the effective date thereof, at least ninety (90) days’ prior written notice to the Provider, (ii) with respect to a Service being terminated following six (6) months after the effective date thereof, thirty (30) days’ prior written notice to the Provider, or (iii) notice in accordance with such other notice period as may be specified in the applicable Service Schedule, provided that this provision will not prevent the expiration of any Service with a duration that is less than ninety (90) days; or

 

           (B)            if the Provider of such Service has failed to perform any of its material obligations under this Agreement with respect to such Service, and such failure shall continue to exist thirty (30) days after receipt by the Provider of written notice of such failure from the Recipient.

 

             (ii)            A Provider may terminate this Agreement with respect to one or more Services provided (or to be provided) by Provider, in whole but not in part, at any time upon prior written notice to the Recipient if the Recipient has materially breached any of its obligations under this Agreement relating to such Services, including making payment of Service Charges when due in accordance with this Agreement, and such failure shall continue uncured for a period of sixty (60) days after receipt by the Recipient of a written notice of such failure from the Provider.

 

             (iii)           In the event of a termination under Section 7.1(c)(i)  or (ii) , the Recipient shall pay to the Provider any breakage or termination fees and costs specified in the applicable Service Schedules or, with respect to the termination by the Recipient of a part of an individual Service, any costs incurred by the Provider in connection with such termination that would not have otherwise been incurred but for the termination to the extent such costs cannot reasonably be mitigated or eliminated (“ Termination Charges ”). Provider shall provide Recipient with a good faith estimate of such costs upon Recipient’s request. The Provider will provide to the Recipient an invoice for the Termination Charges within thirty (30) days following the date of any termination of this Agreement under Section 7.1(c)(i)  or (ii) .

 

             (iv)           The relevant Service Schedule shall be updated to remove any Service terminated under Section 7.1(c)(i)  or (ii) .

 

             (v)           In the event that any Service is terminated other than at the end of a month, and the Service Charge associated with such Service is a fixed fee, such Service Charge shall be pro-rated appropriately. The Parties acknowledge that there may be interdependencies among the Services being provided under this Agreement that may not be identified on the applicable Service Schedules and agree that if the Provider’s ability to provide a particular Service in accordance with this Agreement is materially and adversely affected by the termination of another Service in accordance with Section 7.1(c)(i)(A) , then the Parties shall negotiate in good faith to amend the Service Schedule relating to such affected continuing Service.

 

Section 7.2            Effect of Termination . Upon termination of any Service pursuant to this Agreement, the Provider of the terminated Service will have no further obligation to provide the terminated Service, and the applicable Recipient will have no obligation to pay any future Service Charges relating to any such Service; provided , however , that the Recipient shall remain obligated to the relevant Provider for (a) the Service Charges owed and payable in respect of Services provided prior to the effective date of termination and (b) any applicable Termination Charges payable in accordance with Section 7.1(c)(iii) . In connection with the termination of any Service, the provisions of this Agreement not relating solely to such terminated Service shall survive any such termination, and in connection with a termination of this Agreement, Article I ,  Article VI (including liability in respect of any indemnifiable Liabilities under this Agreement arising or occurring on or prior to the date of termination), this Section 7.2 ,  Article VIII , all confidentiality obligations under this Agreement and liability for all due and unpaid Service Charges and Termination Charges shall continue to survive indefinitely.

ARTICLE VIII
MISCELLANEOUS

 

Section 8.1            Incorporation by Reference . Except for Sections 8.7 ( Limitation on Certain Damages ), 9.6 ( Termination ), and 9.9 ( Assignment; No Third-Party Beneficiaries ) of the Separation Agreement, this Agreement is subject to all of the terms, conditions and limitations set forth in Article VIII ( Dispute Resolution ) and Article IX ( Miscellaneous ) of the Separation Agreement, which by this reference are hereby incorporated into and made a part of this Agreement, mutatis mutandis , as if they were set forth in their entirety herein.

 

Section 8.2            Assignment; No Third-Party Beneficiaries . This Agreement shall not be assigned by any Party without the prior written consent of the other Party, except that a Party may assign any or all of its rights and obligations under this Agreement (a) to any member of its Group (including in connection with any restructuring, reorganization, or similar transaction), or (b) to a lender as collateral security; provided , however , that no such assignment with respect to clauses (a) and (b) shall release such Party from any liability or obligation under this Agreement. The provisions of this Agreement and the obligations and rights under this Agreement 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. Except as provided in Article VI with respect to Indemnified Parties and the Miami Entities, this Agreement is for the sole benefit of the Parties and members of their respective Groups and their permitted successors and assigns, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

 

Section 8.3            No Agency . Nothing in this Agreement shall be deemed in any way or for any purpose to constitute any Party an agent of the other Party in the conduct of such other Party’s business. The Provider of any Service under this Agreement shall act as an independent contractor and not as the agent of the Recipient in performing such Service, maintaining control over its employees, its subcontractors and their employees and complying with all withholding of income at source requirements, whether federal, national, state, local, or foreign.

 

Section 8.4            Further Assurances . Each Party hereto shall take, or cause to be taken, any and all reasonable actions, including the execution, acknowledgment, filing, and delivery of any and all documents and instruments that any other Party hereto may reasonably request in order to effect the intent and purpose of this Agreement and the transactions contemplated hereby.

 

Section 8.5            Audit Assistance . Each of the Parties and their respective Subsidiaries are or may be subject to regulation and audit by Governmental Authorities (including taxing authorities), standards organizations, customers, or other parties to contracts with such Parties or their respective Subsidiaries under applicable Law, standards, or contract provisions. If a Governmental Authority, standards organization, customer, or other Party to a contract with a Party or its Subsidiary exercises its right to examine or audit such Party’s or its Subsidiary’s books, records, documents, or accounting practices and procedures pursuant to such applicable Law, standards, or contract provisions, and such examination or audit relates to the Services, then the other Party shall provide, at the sole cost and expense of the requesting Party, all assistance reasonably requested by the Party that is subject to the examination or audit in responding to such examination or audits or requests for Information, to the extent that such assistance or Information is within the reasonable control of the cooperating Party and is related to the Services.

 

Section 8.6            Title to Intellectual Property . Except as expressly provided for under the terms of this Agreement, the Recipient acknowledges that it shall acquire no right, title, or interest (including any license rights or rights of use) in any Intellectual Property Rights which are owned or licensed by the Provider, by reason of the provision of the Services provided hereunder.

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed and delivered by their respective duly authorized officers, all as of the Effective Time.

 

[ Signature Page to Transition Services Agreement ]

 

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STRICTLY CONFIDENTIAL

REAL ESTATE MATTERS AGREEMENT

This Real Estate Matters Agreement (this “ Agreement ”) is entered into on September 1, 2017, by and between HEWLETT PACKARD ENTERPRISE COMPANY, a Delaware corporation (“ Houston ”) and SEATTLE SPINCO, INC., a Delaware corporation (“ Seattle ”).

R E C I T A L S:

WHEREAS, effective as of the Go Live Date and in accordance with the Separation and Distribution Agreement dated as of September 7, 2016, by and between the parties (the “ Separation Agreement ”), Houston has transferred or will transfer to Seattle, certain assets owned by Houston but necessary to the Seattle Business;

WHEREAS, effective as of the Go Live Date and in accordance with the Separation Agreement, Seattle has transferred or will transfer to Houston, certain assets owned by Seattle but necessary to the Houston Business; and

WHEREAS, the parties desire to set forth certain agreements regarding real estate matters.

NOW, THEREFORE, in consideration of the foregoing, the covenants and agreements set forth below, and other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1              Definitions . The following terms, as used herein, shall have the meanings stated below. Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to such terms in the Separation Agreement.

(a)             “ Actual Completion Date ” means, with respect to each Houston Property and each Seattle Property, the date upon which completion of the transfer, assignment, lease or sublease of that property actually takes place.

(b)             “ Additional Properties ” means any leased or owned properties acquired by Houston or Seattle after the date of the Separation Agreement and before the Go Live Date.

(c)             “ Allocation Principle ” means the principle that: (1) (A) any properties that are over 50% occupied by one party will be allocated in full to such party, except (B) sites where significant investments in infrastructure by one party ( e.g. , labs, data centers) may prompt an alternative strategy; and (2) the party with less than 50% occupancy is generally proposed to move to another location to enable consolidation of other operations by the majority occupier.

(d)             “ Colocation Sites Spreadsheet ” means the spreadsheet prepared by Houston entitled “Colocation Sites” and attached as Schedule 2 , as updated from time to time prior to the Go Live Date by mutual written agreement of the parties.

(e)             “ Damaged Property ” has the meaning ascribed to such term in Section 2.14(a) .

(f)              “ Employee Matters Agreement ” means that certain Employee Matters Agreement, dated as of September 7, 2016, by and among Houston, Seattle and Miami.

(g)             “ Excluded Personal Property ” means that certain equipment, office equipment, trade fixtures, furniture and any other personal property located at each Property but which does not form part of the Property which is scheduled as excluded personal property on any assignment, lease or sublease entered into between Houston and Seattle.

(h)             “ Go Live Date ” means September 1, 2017.

(i)              “ Houston Lease ” means, in relation to each Houston Property, the lease(s) or sublease(s) or license(s) under which Houston or its applicable Subsidiary holds such Houston Property and any other supplemental document completed prior to the Actual Completion Date.

(j)              “ Houston Leaseback Properties ” means each of (a) those Houston Owned Properties identified as “Owned” by Houston and identified in the “Leaseback Properties” column of the Owned and Leased Properties Spreadsheet, with respect to part of which Seattle is to grant a lease back to Houston and (b) those Houston Leased Properties identified as “Leased” by Houston and identified in the “Leaseback Properties” column of the Owned and Leased Properties Spreadsheet, with respect to part of which Seattle is to sublease back to Houston. Houston Leaseback Properties will be transferred through deed transfer or lease assignment (as applicable) by Houston (or its Subsidiaries) to Seattle (or its Subsidiaries) and a portion of which will then be leased or subleased (as applicable) back to Houston (or its Subsidiaries) as of the Go Live Date.

(k)             “ Houston Leased Properties ” means those Properties identified as “Leased” by Houston and its Subsidiaries (other than Seattle and Seattle’s Subsidiaries) and listed in the Owned and Leased Properties Spreadsheet, which Properties are currently held under lease by Houston (or its Subsidiaries) and will be transferred by lease assignment to Seattle (or its Subsidiaries) as of the Go Live Date subject to obtaining the necessary Lease Consent.

(l)              “ Houston New Lease Properties ” means those Properties identified as “Owned” by Houston and its Subsidiaries (other than Seattle and Seattle’s Subsidiaries) and listed in the “Sublease and New Lease Properties” area of the Colocation Sites Spreadsheet, which Properties are currently owned by Houston (or its Subsidiaries) and a portion of which will be leased to Seattle (or its Subsidiaries) as of the Go Live Date.

(m)            “ Houston Owned Properties ” means those Properties identified as “Owned” by Houston and its Subsidiaries (other than Seattle and Seattle’s Subsidiaries) and listed in the Owned and Leased Properties Spreadsheet, which Properties are currently owned by Houston (or its Subsidiaries) and will transfer by deed to Seattle (or its Subsidiaries) as of the Go Live Date.

(n)             “ Houston Property ” means the Houston Owned Properties, the Houston Leased Properties, the Houston Sublease Properties, the Houston New Lease Properties, the Houston Leaseback Properties and any Additional Properties.

(o)             “ Houston Sublease Property ” means those Properties identified as “Leased” by Houston and its Subsidiaries and listed in the “Sublease and New Lease Properties” area of the Colocation Sites Spreadsheet, which Properties are currently leased by Houston (or its Subsidiaries) and a portion of which will be subleased to Seattle (or its Subsidiaries) as of the Go Live Date subject to obtaining the necessary Lease Consents.

(p)             “ Landlord ” means the landlord or sublandlord under a Houston Lease or Seattle Lease, and its successors and assigns, and includes the holder of any other interest which is superior to the interest of the landlord or sublandlord under such Houston Lease or Seattle Lease.

(q)             “ Lease Assignment Form ” means the form of lease assignment attached hereto as Exhibit 2 .

(r)              “ Lease Consents ” means all consents, waivers or amendments required from the Landlord or other third parties under the Relevant Leases to assign the Relevant Leases to Seattle or Houston, as applicable, or to sublease the Sublease Properties to Seattle or Houston, as applicable, or to lease or sublease the Leaseback Properties to Seattle or Houston, as applicable, including, for the avoidance of doubt, any consents, waivers or amendments required to permit the Distribution and Merger.

(s)             “ Lease Form ” means the form of lease attached hereto as Exhibit 3 .

(t)              “ Leaseback Properties ” means the Seattle Leaseback Properties and the Houston Leaseback Properties.

(u)             “ New Lease Properties ” means the Seattle New Lease Properties and the Houston New Lease Properties.

(v)             “ Notice Date ” has the meaning ascribed to such term in Section 2.12(c) .

(w)            “ Owned and Leased Properties Spreadsheet ” means the spreadsheet prepared by Houston entitled “Owned & Leased Properties to be Transferred” and attached as Schedule 1, as updated from time to time prior to the Go Live Date by mutual written agreement of the parties.

(x)              “ Properties ” means the Houston Properties and the Seattle Properties.

(y)             “ Real Estate Services ” means any services relating to the occupation or use of a Houston Property or the carrying out of either the Seattle Business or Houston’s other businesses at a Houston Property, including, without limitation, cleaning, garbage disposal, repair, maintenance, receptionist services, utilities, mail delivery, copying and facsimile services.

(z)              “ Relevant Leases ” means those of Houston Leases or Seattle Leases with respect to which the Landlord’s consent is required for assignment or sublease to a third party or which prohibit assignments or subleases.

(aa)         “ Responsible Party ” has the meaning ascribed to such term in Section 2.9(a) .

(bb)        “ Retained Parts ” means each of those parts of (i) the Houston Owned Properties and the Houston Leased Properties which, following transfer or assignment to Seattle, are intended to be leased or subleased to Houston, (ii) the Seattle Owned Properties and the Seattle Leased Properties which, following the Go Live Date, are intended to be leased or subleased to Seattle and (iii) those parts of the Sublease Properties and the Houston New Lease Properties which will not, and which are not intended to, be leased or subleased to Seattle in accordance with this Agreement.

(cc)         “ Seattle Lease ” means, in relation to each Seattle Property, the lease(s) or sublease(s) or license(s) under which Seattle or its applicable Subsidiary holds such Seattle Property and any other supplemental document completed prior to the Actual Completion Date.

(dd)         “ Seattle Leaseback Properties ” means each of (a) those Seattle Owned Properties identified as “Owned” by Seattle and identified in the “Leaseback Properties” column of the Owned and Leased Properties Spreadsheet, with respect to part of which Houston is to grant a lease back to Seattle and (b) those Seattle Leased Properties identified as “Leased” by Seattle and identified in the “Leaseback Properties” column of the Owned and Leased Properties Spreadsheet, with respect to part of which Houston is to sublease back to Seattle. Seattle Leaseback Properties will be transferred through deed transfer or lease assignment (as applicable) by Seattle (or its Subsidiaries) to Houston (or its Subsidiaries) and a portion of which will then be leased or subleased (as applicable) back to Seattle (or its Subsidiaries) as of the Go Live Date, subject to obtaining the necessary Lease Consents.

(ee)         “ Seattle Leased Properties ” means those Properties identified as “Leased” by Seattle and its Subsidiaries and listed in the Owned and Leased Properties Spreadsheet, which Properties are currently held under lease by Seattle (or its Subsidiaries) and will be transferred by lease assignment to Houston (or its Subsidiaries) as of the Go Live Date subject to obtaining the necessary Lease Consents.

(ff)            “ Seattle New Lease Properties ” means those Properties identified as “Owned” by Seattle and its Subsidiaries and listed in the “Sublease and New Lease Properties” area of the Colocation Sites Spreadsheet, which Properties are currently owned by Seattle (or its Subsidiaries) and a portion of which will be leased to Houston (or its Subsidiaries) as of the Go Live Date.

(gg)         “ Seattle Owned Properties ” means those Properties identified as “Owned” by Seattle and its Subsidiaries and listed in the Owned and Leased Properties Spreadsheet, which Properties are currently owned by Seattle (or its Subsidiaries) and will transfer by deed to Houston (or its Subsidiaries) as of the Go Live Date.

(hh)         “ Seattle Property ” means the Seattle Owned Properties, the Seattle Leased Properties, the Seattle Sublease Properties, the Seattle New Lease Properties and the Seattle Leaseback Properties and any Additional Properties.

(ii)           “ Seattle Sublease Property ” means those Properties identified as “Leased” by Seattle and its Subsidiaries and listed in the “Sublease and New Lease Properties” area of the Colocation Sites Spreadsheet, which Properties are currently leased by Seattle (or its Subsidiaries) and a portion of which will be subleased to Houston (or its Subsidiaries) as of the Go Live Date subject to obtaining the necessary Lease Consents.

(jj)           “ Sublease Form ” means the form of sublease attached hereto as Exhibit 4 .

(kk)         “ Sublease Properties ” means the Seattle Sublease Properties and the Houston Sublease Properties.

ARTICLE II

 

PROPERTY IN THE UNITED STATES

 

Section 2.1              Houston Owned Property .

(a)             Houston shall convey or cause its applicable Subsidiary to convey each of the Houston Owned Properties (together with all rights and easements appurtenant thereto) to Seattle or its applicable Subsidiary, subject to the other provisions of this Agreement and (to the extent not inconsistent with the provisions of this Agreement) the terms of the Separation Agreement and the other Transaction Documents. Such conveyance shall be completed on the Go Live Date.

(b)             Subject to the completion of the conveyance to Seattle or its applicable Subsidiary of the relevant Houston Owned Property, with respect to each Houston Owned Property which is a Houston Leaseback Property, Seattle shall grant to Houston or its applicable Subsidiary a lease of that part of the relevant Houston Owned Property identified in the Colocation Sites Spreadsheet and Houston or its applicable Subsidiary shall accept the same. Such lease shall be completed immediately following completion of the transfer of the relevant Houston Owned Property to Seattle or its applicable Subsidiary subject to obtaining the necessary Lease Consents.

Section 2.2              Seattle Owned Property .

(a)             Seattle shall convey or cause its applicable Subsidiary to convey each of the Seattle Owned Properties (together with all rights and easements appurtenant thereto) to Houston or its applicable Subsidiary, subject to the other provisions of this Agreement and (to the extent not inconsistent with the provisions of this Agreement) the terms of the Separation Agreement and the other Transaction Documents. Such conveyance shall be completed on the Go Live Date.

(b)            Subject to the completion of the conveyance to Houston or its applicable Subsidiary of the relevant Seattle Owned Property, with respect to each Seattle Owned Property which is a Seattle Leaseback Property, Houston shall grant to Seattle or its applicable Subsidiary a lease of that part of the relevant Seattle Owned Property identified in the Colocation Sites Spreadsheet and Seattle or its applicable Subsidiary shall accept the same. Such lease shall be completed immediately following completion of the transfer of the relevant Seattle Owned Property to Houston or its applicable Subsidiary subject to obtaining the necessary Lease Consents.

Section 2.3              Houston Leased Property .

(a)             Houston shall assign or cause its applicable Subsidiary to assign, and Seattle or its applicable Subsidiary shall accept and assume, Houston’s or its Subsidiary’s interest in the Houston Leased Properties, subject to the other provisions of this Agreement and (to the extent not inconsistent with the provisions of this Agreement) the terms of the Separation Agreement and the other Transaction Documents. Such assignment shall be completed on the later of: (i) the Go Live Date; and (ii) the earlier of (A) the tenth (10th) Business Day after the relevant Lease Consent has been granted and (B) the date agreed upon by the parties in accordance with Section 2.12(a) .

(b)             Subject to the completion of the assignment to Seattle or its applicable Subsidiary of the relevant Houston Leased Property, with respect to each Houston Leased Property which is also a Houston Leaseback Property, Seattle or its applicable Subsidiary shall grant to Houston or its applicable Subsidiary a sublease of that part of the relevant Houston Leased Property identified in the Colocation Sites Spreadsheet and Houston or its applicable Subsidiary shall accept the same. Such sublease shall be completed immediately following completion of the transfer of the relevant Houston Leased Property to Seattle or its applicable Subsidiary.

Section 2.4              Seattle Leased Property .

(a)             Seattle shall assign or cause its applicable Subsidiary to assign, and Houston or its applicable Subsidiary shall accept and assume, Seattle’s or its Subsidiary’s interest in the Seattle Leased Properties, subject to the other provisions of this Agreement and (to the extent not inconsistent with the provisions of this Agreement) the terms of the Separation Agreement and the other Transaction Documents. Such assignment shall be completed on the later of: (i) the Go Live Date; and (ii) the earlier of (A) the tenth (10th) Business Day after the relevant Lease Consent has been granted and (B) the date agreed upon by the parties in accordance with Section 2.12(a).

(b)             Subject to the completion of the assignment to Houston or its applicable Subsidiary of the relevant Seattle Leased Property, with respect to each Seattle Leased Property which is also a Seattle Leaseback Property, Houston or its applicable Subsidiary shall grant to Seattle or its applicable Subsidiary a sublease of that part of the relevant Seattle Leased Property identified in the Colocation Sites Spreadsheet and Seattle or its applicable Subsidiary shall accept the same. Such sublease shall be completed immediately following completion of the transfer of the relevant Seattle Leased Property to Houston or its applicable Subsidiary.

Section 2.5              Houston Sublease Properties .

(a)             Houston shall grant or cause its applicable Subsidiary to grant to Seattle or its applicable Subsidiary a sublease of that part of the relevant Houston Sublease Property identified in the Colocation Sites Spreadsheet and Seattle or its applicable Subsidiary shall accept the same, subject to the other provisions of this Agreement and (to the extent not inconsistent with the provisions of this Agreement) the terms of the Separation Agreement and the other Transaction Documents. Such sublease shall be completed on the later of: (a) the Go Live Date; and (b) the earlier of (i) the tenth (10th) Business Day after the relevant Lease Consent has been granted and (ii) the date agreed upon by the parties in accordance with Section 2.12(a) .

Section 2.6              Seattle Sublease Properties . Seattle shall grant or cause its applicable Subsidiary to grant to Houston or its applicable Subsidiary a sublease of that part of the relevant Seattle Sublease Property identified in the Colocation Sites Spreadsheet and Houston or its applicable Subsidiary shall accept the same, subject to the other provisions of this Agreement and (to the extent not inconsistent with the provisions of this Agreement) the terms of the Separation Agreement and the other Transaction Documents. Such sublease shall be completed on the later of: (a) the Go Live Date; and (b) the earlier of (i) the tenth (10th) Business Day after the relevant Lease Consent has been granted and (ii) the date agreed upon by the parties in accordance with Section 2.12(a) .

Section 2.7              Houston New Lease Properties . Houston shall grant or cause its applicable Subsidiary to grant to Seattle or its applicable Subsidiary a lease of those parts of the Houston New Lease Properties identified in the Colocation Sites Spreadsheet and Seattle or its applicable Subsidiary shall accept the same, subject to the other provisions of this Agreement and (to the extent not inconsistent with the provisions of this Agreement) the terms of the Separation Agreement and the other Transaction Documents. Such lease shall be completed on the Go Live Date.

Section 2.8              Seattle New Lease Properties . Seattle shall grant or cause its applicable Subsidiary to grant to Houston or its applicable Subsidiary a lease of those parts of the Seattle New Lease Properties identified in the Colocation Sites Spreadsheet and Houston or its applicable Subsidiary shall accept the same, subject to the other provisions of this Agreement and (to the extent not inconsistent with the provisions of this Agreement) the terms of the Separation Agreement and the other Transaction Documents. Such lease shall be completed on the Go Live Date.

Section 2.9              Obtaining the Lease Consents .

(a)             Except with respect to any Properties which the parties agree should be dealt with by the Service Level Agreements referred to in Section 2.16 , Houston and Seattle confirm that, with respect to each Houston Leased Property, Seattle Leased Property, Houston Sublease Property, Houston Leaseback Property which is a Houston Leased Property, Seattle Sublease Property and Seattle Leaseback Property which is a Seattle Leased Property, to the extent required by the Relevant Lease, an application has been made or will be made to the relevant Landlord for the Lease Consents required with respect to the transactions contemplated by this Agreement as soon as reasonably practicable following the date of this Agreement to enable sufficient time for the relevant Landlord to properly consider such application in advance of the Go Live Date. For purposes of this Section 2.9 , (i) for any Property requiring a Lease Consent where the tenant, subtenant or licensee (as the case may be) prior to the Go Live Date is Houston or its Subsidiaries (other than Seattle and its Subsidiaries), Houston will have primary responsibility for requesting, negotiating and obtaining the Lease Consent and (ii) for any Property requiring a Lease Consent where the tenant, subtenant or licensee (as the case may be) prior to the Go Live Date is Seattle or its Subsidiaries, Seattle will have primary responsibility for requesting, negotiating and obtaining the Lease Consent (each party having primary responsibility of a Relevant Lease being the “ Responsible Party ”).

(b)             Houston and Seattle will each use commercially reasonable efforts to obtain the Lease Consents, but the Responsible Party shall not be required to commence judicial proceedings for a declaration that a Lease Consent has been unreasonably withheld or delayed, nor shall the Responsible Party be required to pay any consideration in excess of that required by the Relevant Lease or that which is typical in the open market to obtain the relevant Lease Consent.

(c)             Seattle and Houston will promptly satisfy the lawful requirements of the Landlord, and Houston and Seattle (as applicable) will take all reasonable steps to assist the Responsible Party in obtaining the Lease Consents, including, without limitation:

(i)             if properly required by the Landlord, entering into an agreement with the relevant Landlord to observe and perform the tenant’s obligations contained in the Relevant Lease throughout the remainder of the term of the Relevant Lease, subject to any statutory limitations of such liability;

(ii)             if properly required by the Landlord, providing a guarantee, surety or other security (including, without limitation, a security deposit) for the obligations of Seattle or Houston, as applicable, or its applicable Subsidiary as tenant under the Relevant Lease, and otherwise taking all steps which are reasonably necessary and which Seattle or Houston, as applicable, is capable of doing to meet the lawful requirements of the Landlord so as to ensure that the Lease Consents are obtained; and

(iii)            using all commercially reasonable efforts to assist the Responsible Party with obtaining the Landlord’s consent to the release of any guarantee, surety or other security which Responsible Party or its Subsidiary may have previously provided to the Landlord and, if required, offering the same or equivalent security to the Landlord in order to obtain such release.

Notwithstanding the foregoing, (1) except with respect to guarantees, sureties or other security referenced in Section 2.9(c)(ii) , Seattle or Houston, as applicable, shall not be required to obtain a release of any obligation entered into by the Responsible Party or its Subsidiary with any Landlord or other third party with respect to any Property and (2) Seattle or Houston, as applicable, shall not communicate directly with any of the Landlords for which it is not the Responsible Party unless Seattle or Houston, as applicable, can show the Responsible Party reasonable grounds for doing so.

(d)             If, with respect to any Leased Properties, Houston and Seattle are unable to obtain a release by the Landlord of any guarantee, surety or other security which the Responsible Party or its Subsidiary has previously provided to the Landlord, Seattle or Houston, as applicable, shall indemnify, defend, protect and hold harmless the Responsible Party and its Subsidiary from and after the Go Live Date against all losses, costs, claims, damages, or liabilities incurred by the Responsible Party or its Subsidiary as a result of such guarantee, surety or other security.

(e)             Houston, for itself and on behalf of its Subsidiaries, consents to any transfer or change of control where such consent is related to an internal group reorganisation or internal change in shareholdings of either of Miami or its applicable Subsidiaries, provided that such consent is conditioned upon Miami’s representation and warranty in each instance that: (1) the applicable tenant can be reasonably expected to pay rent when due under the applicable lease or sublease, (2) notwithstanding such transfer or change of control, all of the terms and conditions of the applicable lease or sublease shall continue unmodified, shall remain in full force and effect, and in the event of a transfer, shall be applicable to the transferee to the same extent as if the transferee were the original tenant; and (3) at the time of such transfer or change of control, the applicable tenant is not in default or breach under the applicable lease or sublease.

Section 2.10            Occupation by Seattle .

(a)             Subject to compliance with Section 2.10(b) , in the event that the Actual Completion Date for any Houston Owned Property, Houston New Lease Property, Houston Leased Property or Houston Sublease Property does not occur on the Go Live Date, Seattle shall, commencing on the Go Live Date, be entitled to occupy and receive the rental income from the relevant Houston Property (except to the extent that the same is a Retained Part) as a licensee upon the terms and conditions contained in the Houston Lease (as to Houston Leased Properties), upon the terms and conditions contained in the Sublease Form (as to Houston Sublease Properties) or upon the terms and conditions contained in the Lease Form (as to Houston Owned Properties and Houston New Lease Properties). Such license shall not be revocable prior to the date for completion as provided in Section 2.1(a) , Section 2.3(a) or Section 2.5(a) unless an enforcement action or forfeiture by the relevant Landlord due to Seattle’s occupation of the Houston Property constituting a breach of the Houston Lease cannot, in the reasonable opinion of Houston, be avoided other than by requiring Seattle to immediately vacate the relevant Houston Property, in which case Houston may by notice to Seattle immediately require Seattle to vacate the relevant Houston Property. Seattle will be responsible for all costs, expenses and liabilities incurred by Houston or its applicable Subsidiary as a consequence of such occupation, except for any losses, claims, costs, demands and liabilities incurred by Houston or its Subsidiary as a result of any enforcement action or forfeiture taken by the Landlord against Houston or its Subsidiary with respect to any breach by Houston or its Subsidiary of the Relevant Lease in permitting Seattle to so occupy the Houston Property without obtaining the required Lease Consent, for which Houston or its Subsidiary shall be solely responsible.

(b)             In the event that the Actual Completion Date for any Houston Owned Property, Houston New Lease Property, Houston Leased Property or Houston Sublease Property does not occur on the Go Live Date, whether or not Seattle occupies a Houston Property as licensee as provided in Section 2.10(a) , Seattle shall, effective as of the Go Live Date, (i) pay Houston all rents, service charges, insurance premiums and other sums payable by Houston or its applicable Subsidiary under any Relevant Lease (as to Houston Leased Properties), under the Lease Form (as to Houston Owned Properties or Houston New Lease Properties) or under the Sublease Form (as to Houston Sublease Properties), (ii) observe the tenant’s covenants, obligations and conditions contained in the Houston Lease (as to Houston Leased Properties) or in the Sublease Form (as to Houston Sublease Properties) and (iii) indemnify, defend, protect and hold harmless Houston and its applicable Subsidiary from and against all losses, costs, claims, damages and liabilities arising on account of any breach thereof by Seattle.

(c)             Houston shall supply promptly to Seattle copies of all invoices, demands, notices and other communications received by Houston or its or its applicable Subsidiaries or agents in connection with any of the matters for which Seattle may be liable to make any payment or perform any obligation pursuant to Section 2.10(b) , and shall, at Seattle’s cost, take any steps and pass on any objections which Seattle may have in connection with any such matters. Seattle shall promptly supply to Houston any notices, demands, invoices and other communications received by Seattle or its agents from any Landlord while Seattle occupies any Houston Property without the relevant Lease Consent.

Section 2.11            Occupation by Houston .

(a)             Subject to compliance with Section 2.11(b) , in the event that the Actual Completion Date for any Seattle Owned Property, Seattle New Lease Property, Seattle Leased Property or Seattle Sublease Property does not occur on the Go Live Date, Houston shall, commencing on the Go Live Date, be entitled to occupy and receive the rental income from the relevant Seattle Property (except to the extent that the same is a Retained Part) as a licensee upon the terms and conditions contained in the Seattle Lease (as to Seattle Leased Properties) or upon the terms and conditions contained in the Sublease Form (as to Seattle Sublease Properties) or upon the terms and conditions contained in the Lease Form (as to Seattle Owned Properties or Seattle New Lease Properties). Such license shall not be revocable prior to the date for completion as provided in Section 2.2(a) , 2.4(a) or 2.6(a) unless an enforcement action or forfeiture by the relevant Landlord due to Houston’s occupation of the Seattle Property constituting a breach of the Seattle Lease cannot, in the reasonable opinion of Seattle, be avoided other than by requiring Houston to immediately vacate the relevant Seattle Property, in which case Seattle may by notice to Houston immediately require Houston to vacate the relevant Seattle Property. Houston will be responsible for all costs, expenses and liabilities incurred by Seattle or its applicable Subsidiary as a consequence of such occupation, except for any losses, claims, costs, demands and liabilities incurred by Seattle or its Subsidiary as a result of any enforcement action or forfeiture taken by the Landlord against Seattle or its Subsidiary with respect to any breach by Seattle or its Subsidiary of the Relevant Lease in permitting Houston to so occupy the Seattle Property without obtaining the required Lease Consent, for which Seattle or its Subsidiary shall be solely responsible. Houston shall not be entitled to make any claim or demand against, or obtain reimbursement from, Seattle or its applicable Subsidiary with respect to any costs, losses, claims, liabilities or damages incurred by Houston as a consequence of being obliged to vacate the Seattle Property or in obtaining alternative premises, including, without limitation, any enforcement action which a Landlord may take against Houston.

(b)             In the event that the Actual Completion Date for any Seattle Owned Property, Seattle New Lease Property, Seattle Leased Property or Seattle Sublease Property does not occur on the Go Live Date, whether or not Houston occupies a Seattle Property as licensee as provided in Section 2.11(a) , Houston shall, effective as of the Go Live Date, (i) pay Seattle all rents, service charges, insurance premiums and other sums payable by Seattle or its applicable Subsidiary under any Relevant Lease (as to Seattle Leased Properties), under the Lease Form (as to Seattle Owned Properties or Seattle New Lease Properties) or under the Sublease Form (as to Seattle Sublease Properties), (ii) observe the tenant’s covenants, obligations and conditions contained in the Seattle Lease (as to Seattle Leased Properties) or in the Sublease Form (as to Seattle Sublease Properties) and (iii) indemnify, defend, protect and hold harmless Seattle and its applicable Subsidiary from and against all losses, costs, claims, damages and liabilities arising on account of any breach thereof by Houston.

(c)             Seattle shall supply promptly to Houston copies of all invoices, demands, notices and other communications received by Seattle or its or its applicable Subsidiaries or agents in connection with any of the matters for which Houston may be liable to make any payment or perform any obligation pursuant to Section 2.11(b) , and shall, at Houston’s cost, take any steps and pass on any objections which Houston may have in connection with any such matters. Houston shall promptly supply to Seattle any notices, demands, invoices and other communications received by Houston or its agents from any Landlord while Houston occupies any Seattle Property without the relevant Lease Consent.

Section 2.12            Obligation to Complete .

(a)             If, with respect to any Houston Leased Property, Seattle Leased Property, Houston Sublease Property or Seattle Sublease Property, at any time the relevant Lease Consent is lawfully formally and unconditionally refused in writing, Houston, Miami and Seattle shall commence good faith negotiations and use commercially reasonable efforts to determine how to allocate the applicable Property, based on the relative importance of the applicable Property to the operations of each party, the size of the applicable Property, the number of employees of each party at the applicable Property, the value of assets associated with each business, the cost to relocate, and the potential risk and liability to each party in the event any enforcement action is brought by the applicable Landlord. Such commercially reasonable efforts shall include consideration of alternate structures to accommodate the needs of each party and the allocation of the costs thereof, including entering into amendments of the size, term or other terms of the Relevant Lease, restructuring a proposed lease assignment to be a sublease and relocating one party. If the parties are unable to agree upon an allocation of the Property within fifteen (15) days after commencement of negotiations between the parties as described above, then either party may, by delivering written notice to the other, require that the matter be referred to the Chief Financial Officers of each party. In such event, the Chief Financial Officers shall use commercially reasonable efforts to determine the allocation of the Property, including having a meeting or telephone conference within ten (10) days thereafter. If the parties are unable to agree upon the allocation of an applicable Property within fifteen (15) days after the matter is referred to the Chief Financial Officers of the parties as described above, the disposition of the applicable Property and the risks associated therewith shall be allocated between the parties as set forth in Section 2.12(b) and (c) .

(b)             If, with respect to any Houston Leased Property or Seattle Leased Property, the parties are unable to agree upon the allocation of a Property as set forth in Section 2.12(a) , the Responsible Party may by written notice to the other party elect to apply to the relevant Landlord for consent to sublease all of the relevant Property to the other party for the remainder of the Relevant Lease term less one (1) day at a rent equal to the rent from time to time under the Relevant Lease, but otherwise on substantially the same terms and conditions as the Relevant Lease. If the Responsible Party makes such an election, until such time as the relevant Lease Consent is obtained and a sublease is completed, the provisions of Section 2.10 and Section 2.11 , as applicable, will apply and, on the grant of the Lease Consent required to sublease the Property in question, the Responsible Party shall sublease or cause its applicable Subsidiary to sublease to the other party or its Subsidiary the relevant Property in accordance with Section 2.5 .

(c)             If the parties are unable to agree upon the allocation of a Property as set forth in Section 2.12(a) and the Responsible Party does not make an election pursuant to Section 2.12(b) , the Responsible Party may elect by written notice to the other party to require the other party to vacate the relevant Property by such reasonable date, which date shall allow a reasonable opportunity to make the appropriate practical arrangements to vacate the Property (considering the impact to both the Responsible Party and the other party involved), as may be specified in the notice served by the Responsible Party (the “ Notice Date ”), in which case the other party shall vacate the relevant Property on the Notice Date.

Section 2.13             Form of Transfer .

(a)             The conveyance to Seattle or its Subsidiary of each relevant Houston Owned Property or to Houston or its Subsidiary of each relevant Seattle Owned Property shall be in substantially the form attached as Exhibit 1 , with such amendments as are reasonably required by Houston or Seattle, respectively, with respect to a particular Property, including, without limitation, those required by any covenant, condition, restriction, easement, lease or other encumbrance to which the Property is subject.

(b)             The assignment to Seattle or its Subsidiary of each relevant Houston Leased Property or to Houston or its Subsidiary of each relevant Seattle Leased Property shall be in substantially the form of the Lease Assignment Form attached as Exhibit 2 , with such amendments as are reasonably required by Houston or Seattle, respectively, with respect to a particular Property, including, without limitation, in all cases where a relevant Landlord has required a guarantor or surety to guarantee the obligations of Seattle or Houston, respectively, contained in the relevant Lease Consent or any other document which Seattle or Houston, respectively, is required to complete, the giving of such guarantee by a guarantor or surety, and the giving by Seattle or Houston, respectively, and any guarantor or surety of Seattle’s or Houston’s, respectively, of direct obligations to Houston or Seattle, respectively, or third parties where required under the terms of any of the Lease Consent or any covenant, condition, restriction, easement, lease or other encumbrance to which the Property is subject.

(c)             The subleases to be granted to Seattle or its Subsidiary or Houston or its Subsidiary with respect to the relevant Houston Sublease Properties or Seattle Sublease Property shall be substantially in the form of the Sublease Form and shall include such amendments which in the reasonable opinion of Houston are necessary with respect to a particular Property or the relevant Lease Consent. Such amendments shall be submitted to Seattle for approval, which approval shall not be unreasonably withheld or delayed.

(d)             The leases and subleases to be granted by Seattle to Houston or its Subsidiary with respect to the Houston Leaseback Properties or by Houston to Seattle or its Subsidiary with respect to the Seattle Leaseback Properties shall be substantially in the form of the Lease Form or the Sublease Form, as applicable, with such amendments as are, in the reasonable opinion of Houston, necessary with respect to a particular Property. Such amendments shall be submitted to Seattle for approval, which approval shall not be unreasonably withheld or delayed.

(e)             The leases to be granted to Seattle or its Subsidiary with respect to the Houston New Lease Properties or to Houston or its Subsidiary with respect to the Seattle New Lease Properties shall be substantially in the form of the Lease Form and shall include such amendments which in the reasonable opinion of Houston are necessary with respect to a particular Property. Such amendments shall be submitted to Seattle for approval, which approval shall not be unreasonably withheld or delayed.

(f)              Houston and Seattle agree that to the extent either party desires to pursue the separation of the master lease to a Houston Sublease Property, Seattle Sublease Property, Houston Leaseback Property that is a Houston Leased Property or Seattle Leaseback Property that is a Seattle Leased Property instead of pursuing a sublease, the other party will cooperate in such separation of master lease; provided that all costs relating thereto will be the sole responsibility of the party requesting the separation of the master lease. To the extent that the parties pursue separation of a master lease rather than a sublease but such separation of master lease has not occurred by the Go Live Date, Houston and Seattle will equitably share the space and cost of the space, pursuant to the process described in Section 2.10 and Section 2.11 for Houston Sublease Properties and Seattle Sublease Properties, respectively, that have not yet received the necessary Lease Consent.

Section 2.14            Casualty; Lease Termination .

(a)             If, prior to the Actual Completion Date (but not after the Closing Date (as defined in the Merger Agreement)), any Houston Property (or any part thereof) shall be substantially damaged or destroyed by a fire or other casualty (a “ Casualty ”, and any property subject to such Casualty, a “ Damaged Property ”), then, in any such event, (i) Houston shall promptly notify Seattle, and (ii) at Houston’s option, exercisable on or before the Actual Completion Date by written notice to Seattle, Houston shall elect in its reasonable discretion to (1) proceed to effectuate the transfer of the Damaged Property under all the terms of this Agreement; subject , however , to the following: (A) unless Houston chooses to repair the Damaged Property pursuant to clause (B) below, Seattle shall accept such Damaged Property subject to the damage or destruction in question; (B) prior to the Actual Completion Date, Houston shall have the right (but not the obligation) to repair or restore any such damage or destruction at Houston’s sole cost and expense, subject to the terms and provisions of any applicable Houston Lease, and (C) if Houston chooses not to repair or restore any such damage or destruction, Houston shall assign all of its rights and promptly make available to Seattle all insurance proceeds due or received by Houston in connection with the Casualty, or (2) substitute a substantially comparable replacement property (which may be another Houston Property or a third property, in Houston’s discretion) for the Damaged Property.

(b)             If, prior to the Actual Completion Date (but not after the Closing Date (as defined in the Merger Agreement)), any Seattle Property (or any part thereof) shall be substantially damaged or destroyed by Casualty, then, in any such event, (i) Seattle shall promptly notify Houston, and (ii) at Seattle’s option, exercisable on or before the Actual Completion Date by written notice to Houston, Seattle shall elect in its reasonable discretion to (1) proceed to effectuate the transfer of the Damaged Property under all the terms of this Agreement; subject , however , to the following: (A) unless Seattle chooses to repair the Damaged Property pursuant to clause (B) below, Houston shall accept such Damaged Property subject to the damage or destruction in question; (B) prior to the Actual Completion Date, Seattle shall have the right (but not the obligation) to repair or restore any such damage or destruction at Seattle’s sole cost and expense, subject to the terms and provisions of any applicable Seattle Lease, and (C) if Seattle chooses not to repair or restore any such damage or destruction, Seattle shall assign all of its rights and promptly make available to Houston all insurance proceeds due or received by Seattle in connection with the Casualty, or (2) substitute a substantially comparable replacement property (which may be another Seattle Property or a third property, in Seattle’s discretion) for the Damaged Property.

(c)             In addition, in the event that a Houston Lease with respect to a Houston Leased Property or a Houston Sublease Property or a Seattle Lease with respect to a Seattle Leased Property or a Seattle Sublease Property is terminated prior to the Go Live Date, (i) Houston and Seattle, respectively, shall not be required to assign or sublease such Property, (ii) Seattle and Houston, respectively, shall not be required to accept an assignment or sublease of such Property and (iii) neither party shall have any further liability with respect to such Property hereunder; provided that Seattle shall have the right to lease or sublease, as applicable, a comparable Houston Lease.

Section 2.15             Fixtures and Fittings . The provisions of the Separation Agreement and the other Transaction Documents shall apply to any equipment, office equipment, trade fixtures, furniture and any other personal property located at each Property (excluding any equipment, office equipment, trade fixtures, furniture and any other personal property owned by third parties), except for the applicable scheduled Excluded Personal Property.

Section 2.16            Services .

(a)             As necessary, Houston and Seattle each agree that, on or about the Go Live Date, they shall enter into a facility services agreement (a “ Service Level Agreement ” ) w hereby, with respect to any of the Sublease Properties, the New Lease Properties and the Leaseback Properties, each party shall agree to supply to, or perform for the benefit of, the other party (and the other party shall accept) such Real Estate Services as each party currently supplies to or performs for the benefit of the other with respect to such Properties, on the same terms and conditions as currently apply, and at the cost and other terms as set forth in the Service Level Agreements.

(b)             Notwithstanding anything to the contrary elsewhere herein, the parties agree and acknowledge that there may be circumstances in which the parties mutually agree that a formal lease or sublease will not be entered into in order to establish shared occupancy of a Property, in which case such occupancy shall be (and the Service Level Agreement referenced in Section 2.16(a) shall provide that the applicable party may occupy the relevant Property on a temporary basis) on the relevant terms and conditions set forth in the Lease Form or the Sublease Form, as applicable.

Section 2.17            Adjustments .

(a)             Houston and Seattle each acknowledge and agree that Additional Properties may be acquired by Houston or Seattle prior to the Go Live Date. Such Additional Properties shall be treated hereunder as Houston Owned Properties, Houston Leased Properties, Houston Sublease Properties, Houston New Lease Properties and/or Houston Leaseback Properties or Seattle Owned Properties, Seattle Leased Properties, Seattle Sublease Properties, Seattle New Lease Properties and/or Seattle Leaseback Properties by mutual agreement of the parties based on whether the Additional Property was acquired by or for the Seattle Business or the Houston Business. In the event that the parties are unable to agree by the Go Live Date as to how any Additional Property is to be treated, the matter shall be determined in accordance with the procedure set forth in Section 2.12(a) . In the event that the parties are unable to agree within ten (10) Business Days of the Go Live Date as to the allocation of an Additional Property, the matter in dispute shall be determined in accordance with the following guidelines:

(i)              Properties which are occupied as to fifty percent (50%) or more of the total area for the purposes of the Seattle Business shall be treated as Houston Owned Properties, Houston Leased Properties, Seattle Sublease Properties or Seattle New Lease Properties (as appropriate) and the part which is not occupied by the Seattle Business or a third party shall be treated as a Houston Leaseback Property, if applicable; and

(ii)             Properties which are occupied as to less than fifty percent (50%) for the purposes of the Seattle Business shall be treated as Seattle Owned Properties, Seattle Leased Properties, Houston Sublease Properties or Houston New Lease Properties (as appropriate) and the part which is occupied by the Seattle Business or a third party shall be treated as a Seattle Leaseback Property, if applicable.

(b)             Following agreement or determination with respect to the Additional Properties, the parties shall enter into and complete all such documents as may be required to give effect to such agreement or determination.

(c)             Houston and Seattle each acknowledge and agree that their respective requirements with regard to each of the Properties may alter between the date of this Agreement and the Go Live Date, in which case the parties may mutually agree in writing to recharacterize the relevant Property as an Houston Owned Property, Houston Leased Property, Houston Sublease Property, Houston New Lease Property and/or Houston Leaseback Property or Seattle Owned Property, Seattle Leased Property, Seattle Sublease Property, Seattle New Lease Property and/or Seattle Leaseback Property, as appropriate.

Section 2.18            Costs . The Responsible Party shall pay all reasonable costs and expenses incurred in connection with obtaining the Lease Consents, including, without limitation, Landlord’s consent fees and attorneys’ fees and any costs and expenses relating to renegotiation of Houston Leases and Seattle Leases, as applicable. The owner of the relevant Property shall also pay all reasonable costs and expenses in connection with the transfer of the Property, including title insurance premiums, escrow fees, recording fees, and any transfer taxes arising as a result of the transfers.

Section 2.19            Signing and Ratification . Houston and Seattle hereby ratify and authorize all signatures to any document entered into in connection with this Agreement by Houston and Seattle, or each’s respective Subsidiaries, and the parties agree that to the extent any challenges arise to the authority of any such signature from and after the date hereof, Houston and Seattle will cooperate to ratify such signatures and prepare any corporate authorizations or resolutions necessary therefor.

Section 2.20            Allocation of Properties . Houston hereby represents and warrants to Seattle that the Owned and Leased Properties Spreadsheet and the Colocation Site Spreadsheet each were prepared in accordance with clauses (1)(A) and (2) of the Allocation Principle in all material respects, subject to changes reasonably necessary as a result of the final allocation of employees among the Houston Group (on the one hand) and the Seattle Group (on the other hand) in accordance with the Employee Matters Agreement in order to remain consistent in all material respects with such allocation principles. Any amendments or revisions to the Owned and Leased Properties Spreadsheet and the Colocation Site Spreadsheet prior to the Distribution Date will be made in accordance with clauses (1)(A) and (2) of the Allocation Principle in all material respects, subject to changes reasonably necessary as a result of the final allocation of employees among the Houston Group (on the one hand) and the Seattle Group (on the other hand) in accordance with the Employee Matters Agreement in order to remain consistent in all material respects with such allocation principles.

ARTICLE III

PROPERTY OUTSIDE THE UNITED STATES

With respect to each of the Properties located outside the United States listed in the Owned and Leased Property Spreadsheet and the Colocation Sites Spreadsheet, as well as any additional properties acquired by Houston, Seattle or a Subsidiary prior to the Go Live Date, Houston and Seattle will use the appropriate form document attached hereto, translated into the local language, if customary under local practice, and modified to comply with local legal requirements to cause the appropriate transfers, assignments, leases, subleases, licenses or leasebacks to occur. Such transfers, assignments, leases, subleases licenses or leasebacks shall, so far as the law in the jurisdiction in which such property is located permits, be on the same terms and conditions as provided in Article II . In the event of a conflict between the terms of this Agreement and the terms of such local agreements, the terms of the local agreements shall prevail.

ARTICLE IV

MISCELLANEOUS

Section 4.1             Entire Agreement . This Agreement, the Separation Agreement, the other Transaction Documents and the Exhibits and Schedules referenced or attached hereto and thereto, constitutes the entire agreement between the parties with respect to the subject matter hereof and shall supersede all prior written and oral and all contemporaneous oral agreements and understandings with respect to the subject matter hereof.

Section 4.2              Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware as to all matters regardless of the laws that might otherwise govern under principles of conflicts of laws applicable thereto. Notwithstanding the foregoing, the applicable Property transfers shall be performed in accordance with the laws of the jurisdiction in which the applicable Property is located.

Section 4.3              Notices . Any notice, demand, offer, request or other communication required or permitted to be given by either party pursuant to the terms of this Agreement shall be in writing and shall be deemed effectively given the earlier of (i) when received, (ii) when delivered personally, (iii) upon delivery of e-mail (with delivery receipt confirmation requested) provided that a hard copy of the notice is sent via overnight delivery, (iv) one (1) Business Day after being deposited with an overnight courier service or (v) four (4) days after being deposited in the U.S. mail, First Class with postage prepaid, and addressed to the attention of the party’s General Counsel at the address of its principal executive office or such other address as a party may request by notifying the other in writing.

Section 4.4              Parties in Interest . This Agreement, including the Schedules and Exhibits hereto, and the other documents referred to herein, shall be binding upon and inure solely to the benefit of each party hereto and their legal representatives and successors, and nothing in this Agreement, express or implied, is intended to confer upon any other Person any rights or remedies of any nature whatsoever under or by reason of this Agreement.

Section 4.5              Counterparts . This Agreement, including the Schedules and Exhibits hereto, and the other documents referred to herein, may be executed in counterparts, each of which shall be deemed to be an original but all of which shall constitute one and the same agreement.

Section 4.6              Binding Effect; Assignment . This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective legal representatives and successors. This Agreement may not be assigned by any party hereto. The Schedules and/or Exhibits attached hereto or referred to herein are an integral part of this Agreement and are hereby incorporated into this Agreement and made a part hereof as if set forth in full herein.

Section 4.7              Severability . If any term or other provision of this Agreement or the Schedules or Exhibits attached hereto is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the fullest extent possible.

Section 4.8              Failure or Indulgence Not Waiver . No failure or delay on the part of any party hereto in the exercise of right hereunder shall impair such right or be construed to be a waiver of, or acquiescence in, any breach of any representation, warranty or agreement herein, nor shall any single or partial exercise of any such right preclude other or further exercise thereof or of any other right.

Section 4.9              Amendment . No change or amendment will be made to this Agreement except by an instrument in writing signed on behalf of each of the parties hereto.

Section 4.10            Authority . Each of the parties hereto represents to the other that (a) it has the corporate or other requisite power and authority to execute, deliver and perform this Agreement, (b) the execution, delivery and performance of this Agreement by it have been duly authorized by all necessary corporate or other action, (c) it has duly and validly executed and delivered this Agreement, and (d) this Agreement is a legal, valid and binding obligation, enforceable against it in accordance with its terms subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and general equity principles.

Section 4.11            Interpretation . Interpretation of this Agreement shall be governed by the following rules of construction: (a) words in the singular shall be held to include the plural and vice versa, and words of one gender shall be held to include the other gender as the context requires; (b) references to the terms “Article,” “Section,” “paragraph,” “clause,” “Exhibit” and “Schedule” are references to the Articles, Sections, paragraphs, clauses, Exhibits and Schedules of this Agreement unless otherwise specified; (c) the terms “hereof,” “herein,” “hereby,” “hereto” and derivative or similar words refer to this entire Agreement, including the Schedules and Exhibits hereto; (d) references to “ $ ” shall mean U.S. dollars; (e) the word “ including ” and words of similar import when used in this Agreement shall mean “including without limitation,” unless otherwise specified; (f) the word “or” shall not be exclusive; (g) references to “written” or “in writing” include in electronic form; (h) provisions shall apply, when appropriate, to successive events and transactions; (i) 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; (j) Houston and Seattle have each participated in the negotiation and drafting of this Agreement and if an ambiguity or question of interpretation should arise, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or burdening either Party by virtue of the authorship of any of the provisions in this Agreement or any interim drafts of this Agreement; and (k) a reference to any Person includes such Person’s successors and permitted assigns. The headings contained in this Agreement, in any Exhibit or Schedule hereto and in the table or contents to this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Any capitalized term used in any Schedule or Exhibit but not otherwise defined therein, shall have the meaning assigned to such term in this Agreement. When a reference is made in this Agreement to an Article or a Section, Exhibit or Schedule, such reference shall be to an Article or Section of, or an Exhibit or Schedule to, this Agreement unless otherwise indicated.

Section 4.12            Dispute Resolution . Any dispute, controversy or claim arising out of or relating to this Agreement, to the extent not specified in this Agreement, shall be resolved in accordance with Article VIII ( Dispute Resolution ) of the Separation Agreement.

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IN WITNESS WHEREOF, each of the parties hereto has caused this Real Estate Matters Agreement to be executed on its behalf by its officers thereunto duly authorized on the day and year first above written.

[Signature Page to Real Estate Matters Agreement]