8-K
--12-31 false 0001803696 0001803696 2022-10-01 2022-10-01

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15 (d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): October 1, 2022

 

 

Adeia Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-39304   84-4734590

(State or Other Jurisdiction

of Incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

 

3025 Orchard Parkway

San Jose, California

  95134
(Address of principal executive offices)   (Zip Code)

(408) 321-6000

(Registrant’s telephone number, including area code)

Xperi Holding Corporation

(Former name or former address, if changed since last report)

 

 

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

 

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

 

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

 

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

 

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

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange

on which registered

Common Stock (par value $0.001 per share)   ADEA   Nasdaq Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 


Item 1.01.

Entry into a Material Definitive Agreement

Completion of Separation of Xperi Inc. from Adeia Inc.

On October 1, 2022 (the “Distribution Date”), the previously-announced spin-off (the “Spin-Off”) of the product business of Adeia Inc. (formerly known as Xperi Holding Corporation) (the “Company,” “Adeia,” “we,” “our” or “us”) into Xperi Inc. (“Xperi Inc.”), a wholly owned subsidiary of the Company, was completed. The Spin-Off was achieved through the Company’s distribution (the “Distribution”) of 100% of the shares of Xperi Inc.’s common stock to holders of Adeia’s common stock as of the close of business on the record date of September 21, 2022 (the “Record Date”). Each Adeia stockholder of record received four shares of Xperi Inc. common stock for every ten shares of Adeia common stock that it held on the Record Date. Following the Distribution, Xperi Inc. became an independent, publicly-traded company, and Adeia retains no ownership interest in Xperi Inc.

In connection with the Spin-Off, Xperi Inc. entered into several agreements with Adeia on the Distribution Date, that, among other things, effect the Spin-Off and provide a framework for Xperi Inc.’s relationship with Adeia after the Spin-Off, including the following agreements:

 

   

Separation and Distribution Agreement;

 

   

Tax Matters Agreement;

 

   

Employee Matters Agreement;

 

   

Cross Business License Agreement;

 

   

Transition Services Agreement; and

 

   

Data Sharing Agreement.

Separation and Distribution Agreement

The separation and distribution agreement (“Separation and Distribution Agreement”) governs the overall terms of the Spin-Off. Generally, the Separation and Distribution Agreement includes Adeia’s and Xperi Inc.’s agreement relating to the principal actions taken to complete the Spin-Off, including the assets and rights transferred, liabilities assumed and related matters. It also sets forth other agreements that govern certain aspects of Adeia’s relationship with Xperi Inc. following the Spin-Off. The description of the Separation and Distribution Agreement set forth under this Item 1.01 is qualified in its entirety by reference to the complete terms and conditions of the Separation and Distribution Agreement attached hereto as Exhibit 2.1, which is incorporated by reference herein.

Transfer of Assets and Assumption of Liabilities. The Separation and Distribution Agreement identifies assets and liabilities to be allocated to each of Adeia and Xperi Inc. as part of the separation. The allocation of employee-related liabilities (including pension liabilities) and related assets is set forth in the employee matters agreement (see the section below entitled “Employee Matters Agreement” for a summary of such allocation) and the allocation of tax liabilities and assets is set forth in the tax matters agreement (see the section below entitled “Tax Matters Agreement” for a summary of such allocation). In particular, the Separation and Distribution Agreement provides that, subject to the terms and conditions contained in the Separation and Distribution Agreement:

Assets

 

   

Generally, assets primarily related to the product business are assigned to or retained by Xperi Inc.;

 

   

Xperi Inc. is allocated the equity interests of subsidiaries that are intended to be Xperi Inc.’s subsidiaries after the distribution;

 

   

Xperi Inc. accepts or retains certain real property set forth on a schedule and Adeia accepts or retains certain real property set forth on a schedule;


   

Generally, Xperi Inc. is allocated all of the financial assets that are related to the product business and financial assets of Adeia that are not related to the IP licensing business;

 

   

Generally, Adeia is allocated all of the financial assets that are related to the IP licensing business and financial assets of Adeia that are not related to the product business; and

 

   

Xperi Inc. is allocated the Xperi and TiVo name and all Xperi and TiVo brands and Adeia is allocated the Adeia name and all Adeia brands, subject to certain licenses to use certain trademark names and for purposes of publicity, and those cross business licenses set forth in the cross business license agreement (see the section below entitled “Cross Business License Agreement” for a summary of such allocation).

Liabilities

 

   

Generally, liabilities primarily related to the product business are assigned to or retained by Xperi Inc.; Each of Xperi Inc. and Adeia generally retains or assumes any liabilities (including under applicable federal and state securities laws) relating to any disclosure document filed or furnished with the U.S. Securities and Exchange Commission (the “SEC”) in connection with the Spin-Off based on information supplied by Adeia;

 

   

Adeia liabilities for borrowed money that were incurred or guaranteed by Adeia are retained or assumed by Adeia;

 

   

Adeia liabilities for borrowed money that were incurred or guaranteed by Xperi Inc. are retained or assumed by Xperi Inc. or the applicable subsidiary;

 

   

Generally, Adeia is allocated all of the financial liabilities that are related to the IP licensing business and the financial liabilities of Adeia that are not related to the product business;

 

   

Generally, Xperi Inc. is allocated all of the financial liabilities that are related to the product business and the financial liabilities of Adeia that are not related to the IP licensing business;

 

   

Xperi Inc. is allocated 25% and Adeia is allocated 75% of certain general corporate liabilities of Adeia, in each case incurred on or prior to the Distribution Date, including liabilities of Adeia related to (i) Adeia’s filings with the SEC (other than actions arising out of disclosure documents distributed or filed relating to the Distribution), (ii) documents distributed or filed by Adeia relating to indebtedness of the product business or the IP licensing business, (iii) Adeia’s corporate and legal compliance and other corporate level actions, (iv) claims made by or on behalf of holders of any of Adeia’s securities and (v) separation expenses that are not allocated to any specific party in connection with the Spin-Off under the Separation and Distribution Agreement.

Except as may expressly be set forth in the Separation and Distribution Agreement or any ancillary agreement, all assets were transferred on an “as is,” “where is” basis and the transferee bears the economic and legal risks that (i) any conveyance will prove to be insufficient to vest in the transferee good title, free and clear of any security interest, and (ii) any necessary consents or governmental approvals are not obtained or that any requirements of laws or judgments are not complied with. In general, each of Xperi Inc. and Adeia made no representations or warranties regarding any assets or liabilities transferred or assumed, any consents or governmental approvals that may be required in connection with such transfers or assumptions, or any other matters.

Certain of the liabilities and obligations to be assumed by a party or for which a party has an indemnification obligation under the Separation and Distribution Agreement and the other agreements relating to the Spin-Off are, and following the Spin-Off may continue to be, the legal or contractual liabilities or obligations of another party. Such party that continues to be subject to such legal or contractual liability or obligation will rely on the other party that assumed the liability or obligation or the other party that undertook an indemnification obligation with respect to the liability or obligation, as applicable, under the Separation and Distribution Agreement, to satisfy the performance and payment obligations or indemnification obligations with respect to such legal or contractual liability or obligation.


Tax Matters Agreement

The tax matters agreement (“Tax Matters Agreement”) governs the parties’ respective rights, responsibilities and obligations with respect to taxes, including taxes arising in the ordinary course of business, and taxes, if any, incurred as a result of the failure of the Distribution (and certain related transactions) to qualify for tax-free treatment for U.S. federal income tax purposes. The Tax Matters Agreement also sets forth the respective obligations of the parties with respect to the filing of tax returns, the administration of tax contests and assistance and cooperation on tax matters. The description of the Tax Matters Agreement set forth under this Item 1.01 is qualified in its entirety by reference to the complete terms and conditions of the Tax Matters Agreement attached hereto as Exhibit 10.1, which is incorporated by reference herein.

In general, the Tax Matters Agreement governs the rights and obligations of Adeia, on the one hand, and Xperi Inc., on the other hand, after the Distribution with respect to taxes for both pre-Distribution and post-Distribution periods. Under the Tax Matters Agreement, (a) each party is responsible for any taxes imposed on either party or its respective subsidiaries that arise from the failure of the Distribution and/or certain related transactions to qualify as tax-free transactions to the extent that such failure is attributable to certain actions taken by such party or such party’s subsidiaries, (b) Adeia is generally responsible for (i) taxes payable by Adeia and any of its subsidiaries after the Distribution (including any taxes imposed due to an adjustment of taxes due and payable prior to the Distribution), and (ii) to the extent not otherwise described in clause (b)(i), taxes required to be paid with respect to any U.S. federal consolidated income tax return and any other consolidated, combined, unitary, or similar income tax return for any taxable period (or portion thereof) ending on or before the Distribution Date that is required to be filed by any member of the Adeia or Xperi Inc. affiliated groups as common parent, in each case other than any such taxes for which Xperi Inc. is responsible pursuant to (a), and (c) Xperi Inc. is generally responsible for taxes payable by Xperi Inc. and any of its subsidiaries after the Distribution (including any taxes imposed due to an adjustment of taxes due and payable prior to the Distribution), other than any such taxes for which Adeia is responsible pursuant to (a).

The Tax Matters Agreement also assigns responsibilities for administrative matters, such as the filing of returns, retention of records, and conduct of audits, examinations, or similar proceedings. In addition, the Tax Matters Agreement provides for cooperation and information sharing with respect to tax matters.

Adeia is generally responsible for preparing and filing any tax return that is required to be filed by Adeia or any of its subsidiaries (as determined immediately after the Distribution) under applicable law, which tax returns may include Xperi Inc. and/or certain of its subsidiaries to the extent such tax returns relate to periods prior to the Distribution. Xperi Inc. is generally responsible for preparing and filing any tax return that is required to be filed by Xperi Inc. or any of its subsidiaries (as determined immediately after the Distribution) under applicable law, which tax returns may include certain of Adeia’s subsidiaries to the extent such tax returns relate to periods prior to the Distribution.

The party that would be primarily responsible for taxes resulting from an audit, examination, or similar proceeding will generally have exclusive authority to control such audit, examination, or similar proceeding, with customary participation and settlement rights for the other party.

Adeia and Xperi Inc. are generally entitled to any tax refund to the extent that Adeia or Xperi Inc., respectively, is responsible for the underlying tax that is refunded.

In addition, during the two-year period following the Distribution, the Tax Matters Agreement generally prohibits Xperi Inc. and its subsidiaries from taking certain actions that could cause the Distribution and certain related transactions, including a series of reorganization transactions (the “Internal Reorganization”) and transfers and conveyances (the “Business Realignment”), to fail to qualify as tax-free transactions. If Xperi Inc. or its subsidiaries intend to take an action that is otherwise prohibited as described above, Xperi Inc. is generally required to first obtain a favorable IRS ruling or an unqualified tax opinion, in each case in form and substance reasonably satisfactory to Adeia, that such action will not affect the tax-free status of the Distribution and/or relevant related


transactions, as the case may be. If Xperi Inc. or its subsidiaries take any of the actions described above and such action results in losses to Adeia, Xperi Inc. generally is required under the Tax Matters Agreement to indemnify Adeia for such losses, without regard to whether Adeia has given prior consent to such action and without regard to whether Xperi Inc. obtains an IRS ruling or an unqualified tax opinion with respect to such action.

Xperi Inc.’s indemnity obligations under the Tax Matters Agreement are not subject to a cap.

Employee Matters Agreement

The employee matters agreement (“Employee Matters Agreement”) governs each company’s respective compensation and benefit obligations with respect to current and former employees, directors and consultants. The Employee Matters Agreement identifies employees and employee-related liabilities (and attributable assets) allocated (either retained, transferred, and accepted, or assigned and assumed, as applicable) to Adeia and Xperi Inc. as part of the separation of Adeia into two companies, and describes when and how the relevant transfers and assignments occur. The description of the Employee Matters Agreement set forth under this Item 1.01 is qualified in its entirety by reference to the complete terms and conditions of the Employee Matters Agreement attached hereto as Exhibit 10.2, which is incorporated by reference herein. The terms described in this summary are also subject to exceptions with respect to applicable law and certain other situations.

With some exceptions, upon the Distribution, Adeia and Xperi Inc. have caused the employees identified to Adeia or Xperi Inc., as applicable, to commence or continue participation in employee benefit plans, as in effect on or prior to the date of the Distribution, and recognize prior years of service.

With some exceptions, Adeia and Xperi Inc. have assumed or retained or will assume or retain, as applicable, liabilities arising out of or in connection with the employment or termination of the employees identified to Adeia or Xperi Inc., as applicable, including under any employee benefit plans, whether arising before or after the Distribution.

With some exceptions, the Employee Matters Agreement does not provide for any transfer of assets or liabilities between or in respect of any defined benefit pension plan, nonqualified deferred compensation plan or other post-employment pension benefit plan, but provides for the transfer of Adeia’s 401(k) retirement plan and all applicable accounts, underlying assets, and related trusts and agreements to Xperi Inc.

The Employee Matters Agreement provides for the equitable adjustment of existing equity awards denominated in the common stock of Adeia to reflect the occurrence of the Distribution and for the treatment of Adeia’s employee stock purchase plan.

With some exceptions, Adeia and Xperi Inc. have assumed or will assume, in each case, effective as of the Distribution Date, liabilities for accrued but unused vacation benefits for employees identified to Adeia or Xperi Inc., as applicable.

None of the transactions contemplated or undertaken by the Employee Matters Agreement is intended to, and will not, constitute or give rise to an “employment loss” or employment separation within the meaning of the federal Worker Adjustment and Retraining Notification (WARN) Act, or any other federal, state or local law or legal requirement addressing mass employment separations.

Cross Business License Agreement

The cross-business license agreement (“CBLA”) sets forth the terms under which Adeia licenses to Xperi Inc. certain patents owned by Adeia or its affiliates that are necessary or useful in Xperi Inc.’s business. There are no restrictions preventing Adeia from establishing operations in entertainment-related products or services or on Xperi Inc. from establishing operations in intellectual property licensing activities after the separation. This summary of the CBLA is qualified in its entirety by reference to the full text of the CBLA attached hereto as Exhibit 10.3, which is incorporated by reference herein.


Licenses. Xperi Inc. and its affiliates have a non-exclusive license under certain existing, developed, and acquired patents of Adeia to make and have made, sell, offer for sale, lease, offer for lease, import, export, license, or otherwise transfer directly or indirectly to Xperi Inc. and its affiliates’ customers, and use, and permit Xperi Inc. and its affiliates’ customers to use (a) media licensed products, including (i) certain video entertainment software platforms and the hardware on which such video entertainment software platforms run, to the extent such hardware is used to execute the functions of such video entertainment software platforms and (ii) certain products and services acquired by Xperi Inc. pursuant to an acquisition of a line of business (except, in each case, for such products sold to certain excluded customers), and (b) non-media licensed products, including certain products and services not specifically for use in the field of video or other digital media consumption or delivery. Xperi Inc. and its affiliates may grant to manufacturers, suppliers, distributors, and resellers of licensed products, limited non- exclusive sublicenses under the licensed patents solely for the purpose of allowing such persons to make, have made, sell, offer for sale, lease, offer for lease, import, export, license or otherwise transfer and/or use licensed products on behalf of and for the benefit of Xperi Inc. and its affiliates as licensed under the CBLA.

Fees. For Pay-TV products, Xperi Inc. may have to pay certain recurring monthly license fees or annual license fees depending on the territory in which the products are provided to subscribers or customers. For non-Pay-TV products, Xperi Inc. may have to pay certain per unit or annual license fees depending on the territory in which the products are provided to customers.

Liability Limitation. Except for certain indemnification obligations of Adeia and for a party’s breach of its confidentiality obligations, neither party is liable to the other party for any special, indirect, incidental or consequential damages. There is no aggregate liability cap under the CBLA.

Term and Termination. The term of the CBLA is 10 years from the effective date. Subject to certain exceptions, Adeia may terminate the CBLA if any of Xperi Inc.’s entities directly or indirectly challenges the validity or enforceability of any licensed patent in any court or administrative agency or provides financing or direction for such challenge by a third party. Either party may terminate the CBLA for material breach by the other party. There is no termination for convenience right by either party. Subject to a number of exceptions (including with respect to certain license grants), if either party terminates the CBLA prior to the end of the term, all of the terms of the CBLA survive for the remainder of the term.

Xperi Inc.’s Services. As further consideration for Adeia’s grants and obligations under the CBLA, in the context of the broader separation and consideration between Adeia and Xperi Inc., including the rights and the value of the assets retained by Adeia under the separation agreement, Xperi Inc. will provide certain unique services to Adeia under the CBLA, including inventor support and litigation support.

Acquisitions and Divestitures. The CBLA addresses scenarios where Xperi Inc. may acquire or divest certain entities or be acquired by a third party and where Adeia may sell certain Adeia patents, divest certain entities, or acquire certain entities and outlines the ramifications of each such event.

Indemnification. The CBLA includes an indemnity from Adeia to Xperi Inc. for infringement claims in limited circumstances.

Patent Pick Rights. The parties have the option, in certain circumstances, to purchase certain patents from each other.

Dispute Resolution. Except as otherwise set forth in the CBLA, if a dispute arises between Adeia and Xperi Inc. under the CBLA, the general counsel of the parties and such other executive officers as the parties may designate will negotiate to resolve any disputes for a reasonable period of time. If the parties are unable to resolve the dispute in this manner, then the dispute will be resolved through binding arbitration.

Transition Services Agreement

The transition services agreement (“Transition Services Agreement”) sets forth the terms under which Xperi Inc. and its subsidiaries will provide to Adeia and its subsidiaries various services for a transitional period. The services to be provided include back office functions and assistance with regard to administrative tasks relating to day-to-day


activities as needed, including finance, accounting and tax activities, IT services, customer support, facilities services, human resources, and general corporate support, as well as pass-through services provided by certain vendors. The transition services are specified in a schedule to the agreement, and additional services may be added by mutual agreement of the parties. This summary of the Transition Services Agreement is qualified in its entirety by reference to the full text of the Transition Services Agreement attached hereto as Exhibit 10.4, which is incorporated by reference.

Data Sharing Agreement

The data sharing agreement (“Data Sharing Agreements”) entered into between Adeia and Xperi Inc. provides a binding framework for the sharing of data between Xperi Inc. and its respective subsidiaries and Adeia and its subsidiaries. The Data Sharing Agreement sets forth the rights and obligations of the parties with respect to the retention and care of records, the handling of requests for information and the sharing of data in a legally compliant manner. This summary of the Data Sharing Agreement is qualified in its entirety by reference to the full text of the Data Sharing Agreement attached hereto as Exhibit 10.5, which is incorporated by reference.

 

Item 2.01.

Completion of Acquisition or Disposition of Assets.

On the Distribution Date, Adeia completed the Spin-Off effective as of 12:01 a.m. Eastern Time and the common stock of Xperi Inc. was distributed, on a pro rata basis, to Adeia’s stockholders of record as of the close of business on the Record Date. On the Distribution Date, each of the stockholders of Adeia received four shares of Xperi Inc.’s common stock for every ten shares of Adeia’s common stock held by such stockholder on the Record Date. Fractional shares of Xperi Inc. common stock were not delivered in the Distribution. Any fractional share of Xperi Inc. common stock otherwise issuable to an Adeia stockholder was sold in the open market on such stockholder’s behalf, and such stockholder will receive a cash payment for the fractional share based on the stockholder’s pro rata portion of the net cash proceeds from sales of all fractional shares.

The Spin-Off was completed pursuant to the Separation and Distribution Agreement. The description of the Separation and Distribution Agreement is included under Item 1.01 of this Current Report on Form 8-K and the Separation and Distribution Agreement attached as Exhibit 2.1 to this Current Report on Form 8-K is incorporated by reference in this Item 2.01.

 

Item 5.03.

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

Name Change

On September 30, 2022, Adeia filed with the Secretary of State of the State of Delaware an amendment to its Amended and Restated Certificate of Incorporation (the “Charter Amendment”) to change its corporate name from “Xperi Holding Corporation” to “Adeia Inc.,” effective as of 12:01 a.m. Eastern Time on the Distribution Date (the “Company Name Change”). Additionally, Adeia’s board of directors adopted the Amended and Restated Bylaws to reflect the Company Name Change, effective as of 12:01 a.m. Eastern Time on the Distribution Date. The foregoing descriptions of these amendments are not complete and are subject to, and qualified in their entirety by, the complete text of the Charter Amendment and the Amended and Restated Bylaws which are filed as Exhibits 3.1 and 3.2, respectively, to this Current Report on Form 8-K and incorporated by reference in this Item 5.03.

New Nasdaq Ticker Symbol and CUSIP

Effective at the open of business on October 3, 2022, Adeia’s shares of common stock, par value $0.001 per share, began trading on the Nasdaq Global Select Market under the new ticker symbol “ADEA” and the new CUSIP number “00676P107.”

 

Item 8.01.

Other Events.

On October 3, 2022, Adeia issued a press release announcing the completion of the Spin-Off. The full text of the press release is filed as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference in this Item 8.01.


Item 9.01.

Financial Statements and Exhibits.

(b) The unaudited pro forma condensed consolidated financial information of the Company after giving effect to the Spin-Off, consisting of the condensed consolidated statements of operations of Adeia for the six months ended June 30, 2022, and for the years ended December 31, 2021, 2020 and 2019 and the unaudited pro forma condensed consolidated balance sheet of Adeia as of June 30, 2022, is filed as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated by reference in this Item 9.01.

(d) Exhibits.

 

Exhibit

    No.    

  

Description

  2.1*    Separation and Distribution Agreement by and between Adeia Inc. and Xperi Inc., dated October 1, 2022.
  3.1    Certificate of Amendment of the Amended and Restated Certificate of Incorporation of Adeia Inc.
  3.2    Amended and Restated Bylaws of Adeia Inc., adopted as of October 1, 2022.
10.1    Tax Matters Agreement by and between Adeia Inc. and Xperi Inc., dated October 1, 2022.
10.2*    Employee Matters Agreement by and between Adeia Inc. and Xperi Inc., dated October 1, 2022.
10.3*    Cross Business License Agreement by and between Adeia Inc. and Xperi Inc., dated October 1, 2022.
10.4*    Transition Services Agreement by and between Adeia Inc. and Xperi Inc., dated October 1, 2022.
10.5*    Data Sharing Agreement by and between Adeia Inc. and Xperi Inc, dated October 1, 2022.
99.1    Press release issued by Adeia Inc., dated October 3, 2022.
99.2    Unaudited pro forma condensed consolidated financial information.
104    Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

*

Schedules and certain portions of this exhibit have been omitted pursuant to Item 601(a)(5) and Item 601(b)(10)(iv) of Regulation S-K.


SIGNATURES

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

 

    ADEIA INC.
Date: October 6, 2022     By:  

/s/ Keith Jones

    Name:   Keith Jones
    Title:   Chief Financial Officer
EX-2.1

Exhibit 2.1

SEPARATION AND DISTRIBUTION AGREEMENT

by and between

ADEIA INC.

and

XPERI INC.

Dated as of October 1, 2022


TABLE OF CONTENTS

 

       Page  
ARTICLE I   
DEFINITIONS AND INTERPRETATION   

Section 1.1

  General      2  

Section 1.2

  References; Interpretation      27  

Section 1.3

  Effective Time; Suspension      28  
ARTICLE II   
THE SEPARATION   

Section 2.1

  General      28  

Section 2.2

  Transfer of Assets and Liabilities      28  

Section 2.3

  Intercompany Accounts      35  

Section 2.4

  Limitation of Intercompany Liabilities; Intergroup Contracts      37  

Section 2.5

  Transfers Not Effected On or Prior to the Effective Time; Transfers Deemed Effective as of the Effective Time      38  

Section 2.6

  Wrong Pockets; Mail & Other Communications; Payments      41  

Section 2.7

  Conveyancing and Assumption Instruments      43  

Section 2.8

  Further Assurances      43  

Section 2.9

  Disclaimer of Representations and Warranties      44  
ARTICLE III   
CERTAIN ACTIONS AT OR PRIOR TO THE DISTRIBUTION   

Section 3.1

  Certificate of Incorporation; Bylaws      45  

Section 3.2

  Directors      45  

Section 3.3

  Officers      45  

Section 3.4

  Resignations      45  

Section 3.5

  Wire Transfers      45  

Section 3.6

  Ancillary Agreements      45  
ARTICLE IV   
THE DISTRIBUTION   

Section 4.1

  Stock Dividends to IP RemainCo      46  

Section 4.2

  Fractional Shares      46  

Section 4.3

  Sole Discretion of IP RemainCo      47  

Section 4.4

  Conditions to Distribution      47  

Section 4.5

  Effectiveness of Distribution      49  

 

i


ARTICLE V   
CERTAIN COVENANTS   

Section 5.1

  Covenants      49  

Section 5.2

  Financial Statements      50  

Section 5.3

  Separation of Information      52  

Section 5.4

  Nonpublic Information      53  

Section 5.5

  Inventor Remuneration      53  

Section 5.6

  License to Use Certain Trademark Names      54  

Section 5.7

  Publicity      55  
ARTICLE VI   
SPECIFIED SHARED ASSETS AND SPECIFIED SHARED LIABILITIES   

Section 6.1

  Specified Shared Assets and Specified Shared Liabilities      55  

Section 6.2

  Management of Specified Shared Assets and Specified Shared Liabilities      57  

Section 6.3

  Cooperation with Governmental Entity      57  
ARTICLE VII   
INDEMNIFICATION   

Section 7.1

  Release of Pre-Distribution Claims      57  

Section 7.2

  Indemnification by IP RemainCo      59  

Section 7.3

  Indemnification by Product SpinCo      59  

Section 7.4

  Procedures for Third Party Claims      60  

Section 7.5

  Procedures for Direct Claims      62  

Section 7.6

  Cooperation in Defense and Settlement      63  

Section 7.7

  Indemnification Payments      64  

Section 7.8

  Indemnification Obligations Net of Insurance Proceeds and Other Amounts      65  

Section 7.9

  Additional Matters; Survival of Indemnities      66  

Section 7.10

  Certain Other Limits on Indemnification      66  
ARTICLE VIII   
CONFIDENTIALITY; ACCESS TO INFORMATION   

Section 8.1

  Preservation of Corporate Records      67  

Section 8.2

  Provision of Corporate Records      67  

Section 8.3

  Disposition of Information      70  

Section 8.4

  Witness Services      71  

Section 8.5

  Reimbursement; Other Matters      71  

Section 8.6

  Confidentiality; Non-Use      71  

Section 8.7

  Privileged Matters      73  

 

ii


Section 8.8

  Conflicts Waiver      76  

Section 8.9

  Ownership of Information      76  

Section 8.10

  Prior Contracts      76  
ARTICLE IX   
DISPUTE RESOLUTION   

Section 9.1

  Negotiation and Arbitration      77  

Section 9.2

  Continuity of Service and Performance      80  
ARTICLE X   
INSURANCE   

Section 10.1

  Insurance Matters      81  

Section 10.2

  Liability Policies      83  

Section 10.3

  Cooperation      84  

Section 10.4

  No Assignment of Entire Insurance Policies      85  

Section 10.5

  Agreement for Waiver of Conflict and Shared Defense      85  

Section 10.6

  Certain Matters Relating to Organizational Documents      85  

Section 10.7

  Directors and Officers Liability Insurance      85  
ARTICLE XI   
MISCELLANEOUS   

Section 11.1

  Complete Agreement; Construction      87  

Section 11.2

  Ancillary Agreements      87  

Section 11.3

  Counterparts      87  

Section 11.4

  Survival of Agreements      87  

Section 11.5

  Expenses      88  

Section 11.6

  Notices      88  

Section 11.7

  Waivers      89  

Section 11.8

  Amendments      89  

Section 11.9

  Assignment      89  

Section 11.10

  Successors and Assigns      89  

Section 11.11

  Payment Terms      90  

Section 11.12

  No Circumvention      91  

Section 11.13

  Subsidiaries      91  

Section 11.14

  Third Party Beneficiaries      91  

Section 11.15

  Title and Headings      91  

Section 11.16

  Exhibits and Schedules      91  

Section 11.17

  Governing Law      91  

Section 11.18

  Specific Performance      91  

Section 11.19

  Severability      92  

Section 11.20

  No Duplication; No Double Recovery      92  

 

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Section 11.21

  Public Announcements      92  

Section 11.22

  Tax Treatment of Payments      93  

Exhibits

 

Exhibit A    Internal Reorganization and Business Realignment Steps Plan

 

 

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SEPARATION AND DISTRIBUTION AGREEMENT

This SEPARATION AND DISTRIBUTION AGREEMENT (this “Agreement”), dated as of October 1, 2022, by and between Adeia Inc. (f/k/a Xperi Holding Corporation), a Delaware corporation (“IP RemainCo”) and Xperi Inc. (f/k/a TiVo Product HoldCo Corporation), a Delaware corporation (“Product SpinCo”). Each of IP RemainCo and Product SpinCo is sometimes referred to herein as a “Party” and collectively, as the “Parties.”

W I T N E S S E T H:

WHEREAS, IP RemainCo, acting through its direct and indirect Subsidiaries, currently conducts (i) the Product Business (as defined herein) and (ii) the IP Business (as defined herein);

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

WHEREAS, in order to effect such separation, the Board has determined that it is appropriate, desirable and in the best interests of IP RemainCo and its stockholders (i) to enter into a series of transactions whereby (A) IP RemainCo and/or one or more members of the IP RemainCo Group will, collectively, own all of the IP Assets, assume (or retain) all of the IP Liabilities and, except as provided in any Ancillary Agreement, operate the IP Business and (B) Product SpinCo and/or one or more members of the Product SpinCo Group will, collectively, own all of the Product Assets, assume (or retain) all of the Product Liabilities and, except as provided in any Ancillary Agreement, operate the Product Business and (ii) for IP RemainCo to distribute to the holders of IP RemainCo Common Stock by way of a pro rata dividend (in each case without consideration being paid by such stockholders) all of the then issued and outstanding shares of common stock, par value $0.001 per share, of Product SpinCo (the “Product SpinCo Common Stock”);

WHEREAS, in order to effect such separation, the Board has determined that it is appropriate, desirable and in the best interests of IP RemainCo and its stockholders for IP RemainCo to undertake the Internal Reorganization and the Business Realignment;

WHEREAS, it is the intention of the Parties that the Contribution and the Distribution (each as defined herein), taken together, will qualify as a transaction that is tax-free for U.S. federal income tax purposes under Section 355 and Section 368(a)(1)(D) of the Code (as defined herein); and

WHEREAS, each of IP RemainCo and Product SpinCo has determined that it is necessary and desirable to agree to the principal corporate transactions required to effect the Internal Reorganization and the Business Realignment (to the extent not already effected prior to the date hereof) and the Distribution and to agree to other agreements that will govern certain other matters following the Effective Time.

 

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

ARTICLE I

DEFINITIONS AND INTERPRETATION

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

(1) “2021/2022 Internal Control Audit and Management Assessments” shall have the meaning set forth in Section 5.2(a)(i).

(2) “AAA” shall have the meaning set forth in Section 9.1(c).

(3) “Acceptable Alternative Arrangement” shall have the meaning set forth in Section 2.2(d)(i).

(4) “Action” shall mean any demand, action, claim, cause of action, suit, countersuit, arbitration, inquiry, case, litigation, subpoena, proceeding or investigation (whether civil, criminal or administrative) by or before any court or grand jury, any Governmental Entity or any arbitration or mediation tribunal or authority.

(5) “Affiliate” shall mean, when used with respect to a specified Person, a Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with such specified Person. For the purposes of this definition, “control” (including the terms “controlled by” and “under common control with”), when used with respect to any specified Person shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or other interests, by Contract or otherwise. It is expressly agreed that no Party or member of any Group shall be deemed to be an Affiliate of the other Party or member of such other Party’s Group solely by reason of having one or more directors in common or by reason of having been under common control of IP RemainCo or IP RemainCo’s stockholders prior to, or in case of IP RemainCo’s stockholders, after the Effective Time.

(6) “Agent” shall mean Computershare Trust Company, N.A. and Computershare Inc.

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

(8) “Ancillary Agreements” shall mean all of the written Contracts, instruments, assignments or other arrangements (other than this Agreement) entered into in connection with the transactions contemplated hereby, including the Tax Matters Agreement, the Transition Services Agreement, the Employee Matters Agreement, the Cross Business License Agreement and any other agreements to be entered into by and among any member of the Product SpinCo Group and any member of the IP RemainCo Group, at, prior to or after the Distribution in connection with the Distribution, but shall exclude the Continuing Arrangements and the Conveyancing and Assumption Instruments.

 

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(9) “Applicable IP Percentage” shall mean seventy-five percent (75%).

(10) “Applicable Percentage” of a particular Group shall mean (i) the Applicable Product Percentage or (iii) Applicable IP Percentage, as applicable.

(11) “Applicable Product Percentage” shall mean twenty-five percent (25%).

(12) “Arbitral Tribunal” shall have the meaning set forth in Section 9.1(c)(i).

(13) “Assets” shall mean all right, title and ownership interests in and to all properties, claims, Contracts, businesses, or assets (including goodwill), wherever located (including in the possession of vendors or other third parties or elsewhere), of every kind, character and description, whether real, personal or mixed, tangible or intangible, whether accrued, contingent or otherwise, in each case, whether or not recorded or reflected or required to be recorded or reflected on the books and records or financial statements of any Person. Except as otherwise specifically set forth herein or in the Tax Matters Agreement or the Employee Matters Agreement, the rights and obligations of the Parties with respect to (a) Taxes shall be governed by the Tax Matters Agreement and (b) any assets of the nature described in the preceding sentence of this definition that are allocated pursuant to the Employee Matters Agreement shall be governed by the Employee Matters Agreement, and, therefore, Taxes (including any Tax items, attributes or rights to receive any Tax Refunds (as defined in the Tax Matters Agreement)) and such assets shall not be treated as Assets.

(14) “Assume” shall have the meaning set forth in Section 2.2(c).

(15) “Audited Party” shall have the meaning set forth in Section 5.2(b).

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

(17) “Business” shall mean (i) with respect to Product SpinCo, the Product Business, or (ii) with respect to IP RemainCo, the IP Business.

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

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

(20) “Business Realignment” shall mean the transfer or conveyance of legal entities that will comprise the Product SpinCo Group to Product SpinCo and the transfer or conveyance of legal entities that will comprise the IP RemainCo Group to IP RemainCo.

(21) “Business Realignment Time” shall mean the time at which the Business Realignment has been completed.

(22) “Cash and Cash Equivalents” shall mean (i) cash and (ii) checks, certificates of deposit having a maturity of less than one year, money orders, marketable securities, money market funds, commercial paper, short term instruments, funds in time and demand deposits or similar accounts, and any evidence of indebtedness issued or guaranteed by any Governmental Entity, minus the amount of any outbound checks, plus the amount of any deposits in transit.

 

 

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(23) “Change of Control” shall mean, as applicable, the occurrence after the Distribution of any of the following: (A) the sale, conveyance, transfer or other disposition (however accomplished), in one or a series of related transactions, of all or substantially all of the assets of such party’s Group to a third Person that is not an Affiliate of such party prior to such transaction or the first of such related transactions; (B) the consolidation, merger or other business combination of such party with or into any other entity, immediately following which the stockholders of such party immediately prior to such transaction fail to own in the aggregate at least a majority of the voting power in the election of directors of all the outstanding voting securities of the surviving party in such consolidation, merger or business combination or of its ultimate publicly traded parent entity; (C) a transaction or series of transactions in which any Person or “group” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) acquires at least thirty-five percent (35%) of the outstanding voting securities of such party and effective control of such party (other than (I) a reincorporation, holding company merger or similar corporate transaction in which each of such party’s stockholders owns, immediately thereafter, interests in the new parent company in substantially the same percentage as such stockholder owned in such party immediately prior to such transaction, or (II) in connection with a transaction described in clause (B), which shall be governed by such clause (B)); or (D) a majority of the board of directors of such party ceasing to consist of individuals who have become directors as a result of being nominated or elected by a majority of such party’s directors. For the avoidance of doubt, the previous determination that a “Change of Control” has occurred shall not prejudice the determination as to whether any other subsequent events, on one or more occasions, meet the definition of “Change of Control.”

(24) “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, or any successor statute thereto. Reference to any provision of the Code shall mean such provision as in effect from time to time, as the same may be amended, and any successor provision thereto, as interpreted by any applicable regulations as in effect from time to time.

(25) “Collective Benefit Services” shall have the meaning set forth in Section 8.7(a).

(26) “Commercial Insurance Policies” shall mean all insurance policies of the Parties and their respective Subsidiaries.

(27) “Commercial Insurer” shall mean the insuring entity issuing and/or subscribing to one or more Commercial Insurance Policies.

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

(29) “Confidential Information” shall mean all non-public, confidential or proprietary Information concerning a Party and/or its Subsidiaries or with respect to Product SpinCo, the Product Business, any Product Assets or any Product Liabilities, or with respect to IP RemainCo, the IP Business, any IP Assets or any IP Liabilities, which, prior to or following the Effective

 

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Time, has been disclosed by a Party or its Subsidiaries to the other Party or its Subsidiaries, or otherwise has come into the possession of, the other, including pursuant to the access provisions of Sections 8.1 or 8.2 or any other provision of this Agreement, including any data or documentation resident, existing or otherwise provided in a database or in a storage medium, permanent or temporary, intended for confidential, proprietary and/or privileged use by a Party (except to the extent that such Information can be shown to have been (i) in the public domain or known to the public through no fault of the receiving Party or its Subsidiaries, (ii) lawfully acquired by the receiving Party or its Subsidiaries from other sources not known to be subject to confidentiality obligations with respect to such Confidential Information or (iii) independently developed by the receiving Party or its Affiliates after the Relevant Time without reference to or use of any Confidential Information). As used herein, by example and without limitation, Confidential Information shall mean any information of a Party marked as confidential, proprietary and/or privileged.

(30) “Consents” shall mean any consents, waivers, notices, reports or other filings obtained, made or to be obtained from or made, including with respect to any Contract, or any registrations, licenses, permits, approvals, authorizations obtained or to be obtained from, or approvals from, or notification requirements to, any Person including a Governmental Entity.

(31) “Continuing Arrangements” shall mean those arrangements set forth on Schedule 1.1(31).

(32) “Contract” shall mean any agreement, contract, subcontract, obligation, note, indenture, instrument, option, lease, sublease, promise, arrangement, release, warranty, license, sublicense, insurance policy, purchase order or legally binding commitment or undertaking of any nature (whether written or oral and whether express or implied).

(33) “Contribution” means any contribution to Product SpinCo by IP RemainCo in connection with, or in anticipation of, the Distribution (including, for the avoidance of doubt, any deemed contribution from IP RemainCo to Product SpinCo for U.S. federal income tax purposes occurring by reason of the conversion of Product SpinCo to a corporation upon August 8, 2022).

(34) “Conveyancing and Assumption Instruments” shall mean, collectively, the various Contracts and other documents entered into prior to the Effective Time and to be entered into to effect the Transfer of Assets and the Assumption of Liabilities in the manner contemplated by this Agreement and the Internal Reorganization and the Business Realignment or otherwise relating to, arising out of or resulting from the Transfer of Assets and/or Assumption of Liabilities between members of two Groups, in such form or forms as the applicable parties thereto agree, which shall be on an “as is,” “where is,” and “with all faults” basis, and in the case of Conveyancing and Assumption Instruments relating to real property, subject to the further provisions of Section 2.7.

(35) “Covered” means, with respect to any Patent, in the absence of a license granted under an unexpired claim that has not been adjudicated, to be invalid or unenforceable by a final, binding decision of a court or other Governmental Entity of competent jurisdiction that is unappealable or unappealed within the time permitted for appeal of such Patent (or if such Patent is a patent application, a claim in such patent application if such patent application were to issue

 

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as a patent), the practice of the applicable invention or technology, or performance of the applicable process, would infringe such claim. For clarity, and by way of example, an issued Patent Covers a product if, in the absence of a license granted under such a claim of such Patent, making, using, selling, offering for sale, importing or exporting such product infringes such claim.

(36) “Credit Support Instruments” shall mean any letters of credit, performance bonds, surety bonds, bankers acceptances, or other similar arrangements.

(37) “Cross Business License Agreement” shall mean the Cross Business License Agreement effective as of the date of the Distribution, by and among members of the Product SpinCo Group and members of the IP RemainCo Group.

(38) “Damages” shall mean any loss, damage, injury, claim, demand, settlement, judgment, award, fine, penalty, Tax, fee (including reasonable out of pocket attorneys’ or advisors’ fees), charge, cost (including reasonable costs of investigation) or expense of any nature, including any incidental, indirect, special, exemplary, punitive or consequential damages (including lost revenues or profits), and including amounts paid or payable to third parties in respect of any third-party claim for which indemnification hereunder is otherwise required.

(39) “De Minimis Amount” shall have the meaning set forth in Section 7.10(a)(i).

(40) “Decision on Interim Relief” shall have the meaning set forth in Section 9.1(c)(viii).

(41) “Dispute” shall have the meaning set forth in Section 9.1(a).

(42) “Dispute Notice” shall mean (i) the General Dispute Notice, (ii) the Privilege Waiver Objection Notice, or (iii) Indemnification Notice, as applicable.

(43) “Distribution” shall mean the distribution on the Distribution Date to holders of shares of IP RemainCo Common Stock as of the Distribution Record Date of the Product SpinCo Common Stock on the basis of a to-be-determined number of shares of Product SpinCo Common Stock (to be determined by the board of directors of IP RemainCo prior to the Distribution) for every one (1) outstanding share of IP RemainCo Common Stock.

(44) “Distribution Date” shall mean the date, as shall be determined by the Board, on which IP RemainCo distributes all of the issued and outstanding shares of Product SpinCo Common Stock to the holders of IP RemainCo Common Stock.

(45) “Distribution Disclosure Documents” shall mean any registration statement (including any registration statement on Form 10 and all exhibits thereto (including the Product SpinCo Information Statement) or on Form S-8 related to securities to be offered under any employee benefit plan) and any current reports on Form 8-K filed or furnished with the Commission by Product SpinCo in connection with the Distribution or by IP RemainCo solely to the extent such documents relate to the Distribution, but excluding the Financing Disclosure Documents.

 

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(46) “Distribution Record Date” shall mean such date as may be determined by the Board as the record date for determining the holders of IP RemainCo Common Stock entitled to receive Product SpinCo Common Stock in the Distribution.

(47) “Effective Time” shall mean 12:01 a.m. Eastern Time on October 1, 2022.

(48) “Emergency Arbitrator” shall mean an emergency arbitrator appointed by the AAA in accordance with the AAA Rules, as specified in Section 9.1.

(49) “Employee Matters Agreement” shall mean the Employee Matters Agreement effective as of October 1, 2022, by and among IP RemainCo and Product SpinCo.

(50) “Engineering Models and Databases” shall mean (a) physical property databases, (b) empirical or mathematical dynamic or steady state models of processes, equipment and/or reactions and databases containing data resulting from such models, (c) computations of equipment or unit operation operating conditions including predictive or operational behavior and (d) databases with historical operational data.

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

(52) “Final Determination” shall have the meaning set forth in the Tax Matters Agreement.

(53) “Financing Disclosure Documents” shall mean any prospectus, offering memorandum, offering circular (including franchise offering circular or any similar disclosure statement) or similar disclosure document, whether or not filed with the Commission or any other Governmental Entity, which offers for sale or registers the Transfer or distribution of securities or indebtedness of IP RemainCo.

(54) “Force Majeure Event” shall mean, with respect to a Party, an event beyond the control of such Party (or any Person acting on its behalf), which by its nature could not have been foreseen by such Party (or such Person), or, if it could have been foreseen, was unavoidable, and includes acts of God, storms, floods, riots, pandemics, fires, sabotage, civil commotion or civil unrest, interference by civil or military authorities, acts of war (declared or undeclared) or armed hostilities or other national or international calamity or one or more acts of terrorism or failure of energy sources or distribution facilities.

(55) “General Dispute Notice” shall have the meaning set forth in Section 9.1(b)(i).

(56) “General Negotiation Period” shall have the meaning set forth in Section 9.1(b)(i).

(57) “Governmental Entity” shall mean any nation or government, any state, municipality or other political subdivision thereof and any entity, body, agency, commission, department, board, bureau or court, whether domestic, foreign, multinational or supranational exercising executive, legislative, judicial, regulatory, self-regulatory or administrative functions of or pertaining to government and any executive official thereof.

 

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(58) “Group” shall mean (i) with respect to IP RemainCo, the IP RemainCo Group and (ii) with respect to Product SpinCo, the Product SpinCo Group.

(59) “Guaranty Release” shall have the meaning set forth in Section 2.3(b)(ii).

(60) “Historical Xperi” shall mean IP RemainCo and its past and then current Subsidiaries immediately prior to the Business Realignment Time.

(61) “Historical Xperi Counsel” shall have the meaning set forth in Section 8.8(a).

(62) “Indebtedness” shall mean, with respect to any Person, (i) the principal value, prepayment and redemption premiums and penalties and other breakage costs (if any), unpaid fees and other monetary obligations (including interest) in respect of any indebtedness for borrowed money, whether short term (including overdrawn bank accounts) or long term, and all obligations evidenced by bonds, debentures, notes, other debt securities or similar instruments, (ii) any indebtedness arising under any capital leases (excluding, for the avoidance of doubt, any real estate leases), whether short term or long term, (iii) all liabilities secured by any Security Interest on any assets of such Person, (iv) all liabilities under any interest rate protection agreement, interest rate future agreement, interest rate option agreement, interest rate swap agreement or other similar agreement designed to protect such Person against fluctuations in interest rates, (v) all interest bearing indebtedness for the deferred purchase price of property or services, (vi) all liabilities under any Credit Support Instruments, (vii) all interest, fees and other expenses owed with respect to indebtedness described in the foregoing clauses (i) through (vi), and (viii) without duplication, all guarantees of indebtedness referred to in the foregoing clauses (i) through (vii).

(63) “Indemnifiable Loss” and “Indemnifiable Losses” shall mean any and all Damages, losses, deficiencies, Liabilities, obligations, penalties, judgments, settlements, claims, payments, fines, interest, costs and expenses (including the costs and expenses of any and all Actions and demands, assessments, judgments, settlements and compromises relating thereto and the reasonable costs and expenses of attorneys’, accountants’, consultants’ and other professionals’ fees and expenses incurred in the investigation or defense thereof or the enforcement of rights hereunder).

(64) “Indemnification Notice” shall mean any notice delivered to the Indemnifying Party by the Indemnitee pursuant to Section 7.4(a) or Section 7.5.

(65) “Indemnifying Party” shall have the meaning set forth in Section 7.4(a).

(66) “Indemnitee” shall have the meaning set forth in Section 7.4(a).

(67) “Indemnity Payment” shall have the meaning set forth in Section 7.8(a).

 

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(68) “Information” shall mean information, content, and data in written, oral, electronic, computerized, digital or other tangible or intangible media, including (i) books and records, whether accounting, legal or otherwise; ledgers, studies, reports, surveys, designs, specifications, drawings, blueprints, diagrams, models, prototypes, samples and flow charts; marketing plans, customer names and information (including prospects); technical information, including such information relating to the design, operation, maintenance, testing, test results, development, and manufacture of either Party’s or its Group’s product or facilities (including product or facility specifications and documentation; engineering, design, and manufacturing drawings, diagrams, layouts, maps and illustrations; formulations and material specifications; laboratory studies and benchmark tests; quality assurance policies procedures and specifications; maintenance and inspection procedures and records; evaluation and/validation studies; process control and/or shop-floor control strategy, logic or algorithms; assembly code, Software, firmware, programming data, databases, and all information referred to in the same); product costs, margins and pricing; product marketing studies and strategies; product stewardship and safety; all other Know-How related to research, engineering, development and manufacturing; communications, correspondence, materials, product literature, artwork, files and documents, (ii) information contained in Patents and other Know-How; (iii) financial and business information, including earnings reports and forecasts, macro-economic reports and forecasts, all cost information (including supplier records and lists), sales and pricing data, business plans, market evaluations, surveys, credit-related information, and other such information as may be needed for reasonable compliance with reporting, disclosure, filing or other requirements, including under applicable securities laws or regulations of securities exchanges; and (iv) periodic statements, reports, or other information or notices received from the other contracting party under a Specified Licensing Shared Contract.

(69) “Insurance Proceeds” shall mean those monies (i) received by an insured from an insurer or (ii) paid by an insurer on behalf of an insured, in either case net of any applicable premium adjustment, retrospectively-rated premium, deductible, retention, or cost of reserve paid or held by or for the benefit of such insured.

(70) “Intellectual Property” shall mean all intellectual property and industrial property rights of any kind or nature, including all U.S. and foreign (i) patents, patent applications, and all related continuations, continuations-in-part, divisionals, reissues, re-examinations, substitutions, priority rights and extensions thereof (collectively, “Patents”), (ii) trademarks, service marks, corporate names, trade names, Internet domain names, social media accounts or handles, logos, slogans, trade dress and other similar designations of source or origin, together with the goodwill symbolized by any of the foregoing (collectively, “Trademarks”), (iii) copyrights and copyrightable subject matter (collectively, “Copyrights”), (iv) rights of privacy and publicity, (v) moral rights and rights of attribution and integrity, (vi) trade secrets and rights in all other confidential and proprietary information, including know-how, inventions, algorithms, logic, standard operating conditions and procedures, proprietary processes, formulae, data, databases and other compilations of data, drawings, models and methodologies, including confidential information set forth in laboratory notebooks, laboratory reports, plant operating documents, and Engineering Models and Databases (except to the extent such information is Covered by any Patents), in each case of the foregoing, to the extent confidential and proprietary (collectively, “Know-How”), (vii) all applications and registrations for the foregoing and (viii) all rights and remedies against past, present, and future infringement, misappropriation, or other violation of the foregoing, in each case (with respect to the foregoing clauses (i) through (viii)), excluding all IT Assets.

 

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(71) “Intergroup Accounts” shall have the meaning set forth in Section 2.3(a).

(72) “Interim Relief” shall have the meaning set forth in Section 9.1(c)(viii)

(73) “Internal Reorganization and Business Realignment” shall mean the allocation and transfer or assignment of Assets and Liabilities, including by means of the Conveyancing and Assumption Instruments, resulting in (i) the Product SpinCo Group owning and operating the Product Business and Product Assets and assuming the Product Liabilities and (ii) the IP RemainCo Group owning and operating the IP Business and the IP Assets and assuming the IP Liabilities, in each case, clauses (i)–(ii), as described in the Steps Plan.

(74) “Inventor Remuneration” means any employee inventor consideration, remuneration or compensation that is required under applicable law for work-for-hire inventions acquired by the employer.

(75) “IP Assets” shall mean any and all right, title and interest in and to the following Assets of (x) any member of the Product SpinCo Group at the Relevant Time, and (y) any member of the IP RemainCo Group at the Relevant Time (provided, however, that IP Assets shall not include Tax Assets (as defined in the Tax Matters Agreement), which shall be governed by the Tax Matters Agreement, or Assets allocated pursuant to the Employee Matters Agreement, which shall be governed thereby):

(i) all interests in the capital stock of, or any other equity interests in the members of the IP RemainCo Group (other than IP RemainCo) and any and all rights related thereto;

(ii) the Assets set forth on Schedule 1.1(75)(ii);

(iii) any and all rights and interests of the IP RemainCo Group under this Agreement;

(iv) (A) all rights, title and interest in and to the owned real property set forth on Schedule 1.1(75)(iv)(A), including, in each case, all land and land improvements, structures, buildings and building improvements, tidelands or other marine leases, other improvements, fixtures, rights of ingress and egress, rights under any covenants, conditions and/or restrictions, all contract rights, if any, relating to the operation of the land or any improvements thereon, all riparian rights, surface and underground water rights, and any and all other water rights pertaining to the land, and any and all licenses, permits, registrations, approvals and authorizations which have been issued by any Governmental Entity related to the land and all easements and rights of way pertaining thereto or accruing to the benefit thereof and appurtenances located thereon or associated therewith (except to the extent otherwise set forth on Schedule 1.1(75)(iv)(A) under the heading “Other Party in Possession”) (the “IP Specified Owned Real Property”) and (B) all rights, title and interest in, and to and under the leases or subleases of the real property set forth on Schedule 1.1(75)(iv)(B) including, in each case, to the extent provided for in such leases, any land and land improvements, structures, buildings and building improvements, tidelands or other marine leases, other improvements, fixtures, rights of ingress and egress, rights under any covenants, conditions and/or restrictions, all

 

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contract rights, if any, relating to the operation of the land or any improvements thereon, all riparian rights, surface and underground water rights, and any and all other water rights pertaining to the land, and any and all licenses, permits, registrations, approvals and authorizations which have been issued by any Governmental Entity related to the land and all easements and rights of way pertaining thereto or accruing to the benefit thereof and appurtenances (the “IP Specified Leased Real Property”);

(v) any and all IP Shared Contracts; provided; however, that any such IP Shared Contracts shall be subject to Section 2.2(d);

(vi) (A) the Patents and Patent applications and registrations set forth on Schedule 1.1(75)(vi)(A), (B)(I) the Adeia name and any and all Adeia brands, related Trademarks and related Trademark applications and registrations, , and any and all derivations, abbreviations, translations, localizations and other variations of any of the foregoing and any confusingly similar Trademark and Trademark application and registration and (II) the Trademarks and Trademark applications and registrations set forth on Schedule 1.1(75)(vi)(B)(II), (C) the Copyrights and Copyright applications and registrations set forth on Schedule 1.1(75)(vi)(C) and (D) the Know-How set forth on Schedule 1.1(75)(vi)(D);

(vii) any and all Assets in respect of accruals, counterclaims, insurance claims, rights to coverage under applicable insurance policies, warranties, contractual indemnities, control rights and other rights similar to the foregoing, in each case, to the extent related to any IP Liability;

(viii) the IT Assets set forth on Schedule 1.1(75)(viii);

(ix) all IP Contracts;

(x) other than Intellectual Property and IT Assets, any and all (a) Information to the extent Related to any IP Asset or IP Liability and (b) corporate or similar legal entity books and records of any Person described in clause (i) of this definition of IP Assets;

(xi) the Applicable IP Percentage of any Specified Shared Asset (clauses (i)–(xi), the “Specified IP Assets”);

(xii) unless constituting a Specified Product Asset under clauses (i)–(xi) of the definitions thereof:

(a) any and all rights, title and interest in, and to, any Asset (excluding IT Assets and excluding Intellectual Property) of Historical Xperi that is not related to any Business (other than in a de minimis respect) (e.g. corporate or enterprise-wide Assets) owned by a member of the IP RemainCo Group,;

(b) all Intellectual Property owned by Historical Xperi that is not related to any Business (other than in a de minimis respect);

 

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(c) (I) all Cash and Cash Equivalents, notes, interest receivables and other financial assets owned by any member of the IP RemainCo Group and (II) all derivative instruments of Historical Xperi owned by any member of the IP RemainCo Group;

(d) (I) all accounts and notes receivable to the extent related to the IP Business and any proceeds from the factoring of any such accounts receivable with a payment date on or after the Distribution (“IP Factoring Proceeds”);

(e) all credits, prepaid expenses, rebates, deferred charges, advance payments, security deposits and prepaid items, in each case to the extent they are used or held for use in, or arise out of, the operation or conduct of (I) the IP Business (including, for the avoidance of doubt, such portion of any credits, prepaid expenses, rebates, deferred charges, advance payments, security deposits and prepaid items of the Product SpinCo Group to the extent they are used or held for use in, or arise out of, the operation or conduct of the IP Business) and (II) Historical Xperi to the extent such credits, prepaid expenses, rebates, deferred charges, advance payments, security deposits and prepaid items are owned by a member of the IP RemainCo Group, and are not related to any Business (other than in a de minimis respect);

(f) except for furniture, all tangible personal property and interests therein (including machinery, tools, equipment and vehicles), in each case, that is not related to any Business (other than in a de minimis respect) for which the relevant historical use of such Asset was at any IP Specified Owned Real Property, IP Specified Leased Real Property or IP Real Property, other than at any portion leased or subleased by any member of the Product SpinCo Group pursuant to an intergroup lease;

(g) all furniture that is not related to any Business (other than in a de minimis respect) to the extent that the relevant historical use of such furniture was at (I) any IP Specified Owned Real Property, IP Specified Leased Real Property (except as provided pursuant to the terms of an intergroup lease or lease with any Person other than the Parties and their respective Group members and Affiliates) or IP Real Property; and

(h) any and all Information of Historical Xperi (other than (x) Intellectual Property, (y) Information described in clause (xii) of the definition of “Product Assets” and (z) IT Assets) that is not related to any Business (other than in a de minimis respect) owned by a member of the IP RemainCo Group; and

 

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(xiii) any and all Assets Related to the IP Business, including in the following categories, but, in each case, excluding IT Assets, the Specified Product Assets and the Assets described in clause (xi) of each of the definitions of Product Assets and IP Assets:

(a) (1) all rights, title and interest in and to the owned real property Related to the IP Business, including, in each case, all land and land improvements, structures, buildings and building improvements, tidelands or other marine leases, other improvements, fixtures, rights of ingress and egress, rights under any covenants, conditions and/or restrictions, all contract rights, if any, relating to the operation of the land or any improvements thereon, all riparian rights, surface and underground water rights, and any and all other water rights pertaining to the land, and any and all licenses, permits, registrations, approvals and authorizations which have been issued by any Governmental Entity related to the land and all easements and rights of way pertaining thereto or accruing to the benefit thereof and appurtenances located thereon or associated therewith and (2) all rights, title and interest in, and to and under the leases or subleases of the real property Related to the IP Business, , including, in each case, to the extent provided for in such leases, any land and land improvements, structures, buildings and building improvements, tidelands or other marine leases, other improvements, fixtures, rights of ingress and egress, rights under any covenants, conditions and/or restrictions, all contract rights, if any, relating to the operation of the land or any improvements thereon, all riparian rights, surface and underground water rights, and any and all other water rights pertaining to the land, and any and all licenses, permits, registrations, approvals and authorizations which have been issued by any Governmental Entity related to the land and all easements and rights of way pertaining thereto or accruing to the benefit thereof and appurtenances (the “IP Real Property”);

(b) except for IT Assets and IP RemainCo Inventory, any and all tangible personal property and interests therein, including machinery, furniture, tools, equipment, vehicles, in each case that are Related to the IP Business,;

(c) any and all raw materials, works-in-process, supplies, ingredients, inputs, parts, packaging, finished goods and products and other inventories, (I) related to, or held for the benefit of, the IP Business and not related (other than in a de minimis respect) to any other Business, (II) related to the IP Business (other than in a de minimis respect) and held at any IP Specified Owned Real Property, IP Specified Leased Real Property or IP Real Property (unless at a portion of such site leased to a different Group pursuant to an intergroup lease) that is not subject to any manufacturing product agreement, (III) Related to the IP Business, held at any Product Specified Owned Real Property, Product Specified Leased Real Property or Product Real Property, other than any portion thereof leased by the IP RemainCo Group pursuant to an intergroup lease (other than those subject to any manufacturing product agreement), and not related (other than in a de minimis respect) to the Business of the Group to which such real property was allocated, and (IV) Related to the IP Business and not held at a real property constituting Product Specified Owned Real Property, Product Specified Leased Real Property, IP Specified Owned Real Property, IP Specified Leased Real Property or IP Real Property (the “IP RemainCo Inventory”) (it being understood and agreed that any and all raw materials, works-in-process, supplies, ingredients, inputs, parts, packaging and finished goods referred to under clause (II) shall constitute an Asset Related to the IP Business);

 

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(d) all Intellectual Property Related to the IP Business;

(e) any and all Consents, registrations and Regulatory Data, in each case, that is Related to the IP Business;

(f) any and all Information (other than Intellectual Property and IT Assets) that is Related to the IP Business; and

(g) any and all interests in the capital stock of, or other equity interests in, any Person that is not a member of the IP RemainCo Group or Product SpinCo Group that is Related to the IP Business.

(76) “IP Business” shall mean (i) the intellectual property licensing business, (ii) any other business conducted primarily through the use of the IP Assets prior to the Relevant Time (other than that described in clause (i) of the definition of “Product Business”) and (iii) the businesses and operations of Business Entities acquired or established by or for IP RemainCo or any of its Subsidiaries after the date of this Agreement (other than that described in clause (i)—(iii) of the definition of “Product Business”).

(77) “IP Contracts” shall mean Contracts to which IP RemainCo or any of its Subsidiaries is a party or by which it or any of its Subsidiaries or any of their respective Assets is bound that relate exclusively to the IP Business, the IP Assets and/or the IP Liabilities and are not related (other than in a de minimis respect) to any other Business, any Product Asset or any Product Liability.

(78) “IP Liabilities” shall mean any and all Liabilities of (x) any member of the Product SpinCo Group at the Relevant Time and/or (y) any member of the IP RemainCo Group at the Relevant Time, in the following categories, in each case, regardless of (i) when or where such Liabilities arose or arise, (ii) where or against whom such Liabilities are asserted or determined, (iii) regardless of whether arising from or alleged to arise from negligence, gross negligence, recklessness, violation of Law, fraud or misrepresentation by any member of the Product SpinCo Group or IP RemainCo Group, as the case may be, or any of their past or present respective directors, officers, employees, agents, Subsidiaries or Affiliates and (iv) which entity is named in any Action associated with any Liability (except for Liabilities related to Taxes which are governed exclusively by the Tax Matters Agreement, and Liabilities allocated pursuant to the Employee Matters Agreement, which are governed exclusively thereby):

(i) any and all Liabilities that are expressly assumed by or allocated to the IP RemainCo Group pursuant to this Agreement, including any obligations and Liabilities of any member of the IP RemainCo Group under this Agreement, including those pursuant to Section 11.5 hereof;

(ii) any and all Liabilities arising out of Inventor Remuneration to the extent related to the discrete and reasonably identifiable part thereof solely attributable to the use or sublicense of Intellectual Property constituting a Product Asset by a member of the IP RemainCo Group as Licensees (as such term is defined in the Cross Business License Agreement) under the Cross Business License Agreement;

 

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(iii) the Applicable IP Percentage of any Specified Shared Liability;

(iv) any of the Liabilities set forth on Schedule 1.1(78)(iv);

(v) any and all Liabilities for Indebtedness of the type described in clauses (i), (iv) and (vii) of the definition of Indebtedness of Historical Xperi that was incurred by any member of the IP RemainCo Group (and any such Indebtedness guaranteed by any member of Historical Xperi that is a member of the IP RemainCo Group) (clauses (i)-(v) of this Section 1.1(78), the “Specified IP Liabilities”);

(vi) unless constituting a Specified Product Liability, (i) any and all checks issued but not drawn and accounts payable to the extent related to the IP Business, and (ii) all accounts payable represented by an invoice to the extent related to the IP Business; and

(vii) any and all Liabilities Related to the IP Business, including in the following categories, but in each case, excluding the Specified Product Liabilities, the Liabilities described in clause (vii) of the definition of Product Liabilities and the Liabilities described in clause (vi) of the definition of IP Liabilities:

(a) any and all Liabilities arising out of or resulting from any Action Related to the IP Business; and

(b) any and all Liabilities arising under any of the IP Contracts.

(79) “IP RemainCo” shall have the meaning set forth in the preamble.

(80) “IP RemainCo Common Stock” shall mean the issued and outstanding shares of common stock, par value $0.001 per share, of IP RemainCo.

(81) “IP RemainCo CSIs” shall have the meaning set forth in Section 2.3(b)(iv).

(82) “IP RemainCo Group” shall mean IP RemainCo and each Person (other than any member of the Product SpinCo Group) that is a direct or indirect Subsidiary of IP RemainCo immediately after the Business Realignment Time.

(83) “IP RemainCo Indemnitees” shall mean each member of the IP RemainCo Group and each of their Affiliates from and after the Effective Time and each member of the IP RemainCo Group’s and their respective Affiliates’ respective current, former and future directors, officers, employees and agents and each of the heirs, executors, successors and assigns of any of the foregoing.

(84) “IP RemainCo Liability Policies” shall have the meaning set forth in Section 10.2.

(85) “IP Shared Contracts” shall mean any and all Shared Contracts that are primarily related to the IP Business including those set forth on Schedule 2.2(d).

 

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(86) “IT Assets” shall mean all (i) Software (including any Copyrights therein), computer systems, public Internet protocol address blocks, telecommunications equipment and other information technology infrastructure (including servers and server equipment, computers (including laptop computers), computer equipment and hardware, printers, telephones (including cell phones and smartphones) and telephone equipment (including headsets), network devices and equipment (including routers, wireless access points, switches and hubs), fiber and backbone cabling and other telecommunications wiring, demarcation points and rooms, computer rooms and telecommunications closets), (ii) documentation, reference, resource and training materials to the extent relating thereto, and (iii) Contracts to the extent relating to any of the foregoing clauses (i) and (ii) (including Software license agreements, source code escrow agreements, support and maintenance agreements, electronic database access contracts, domain name registration agreements, public Internet protocol address block agreements, website hosting agreements, Software or website development agreements, outsourcing agreements, service provider agreements, interconnection agreements and telecommunications agreements); provided, that, notwithstanding the foregoing, IT Assets shall exclude Know-How contained or stored in any of the items described in the foregoing subsections (i) through (iii) and Patents that claim any such Know-How.

(87) “Law” shall mean any U.S. or non-U.S. federal, national, supranational, state, provincial, local or similar statute, constitution, law, ordinance, regulation, rule, code, income tax treaty, order, requirement or rule of law (including common law) or other binding directives promulgated, issued, entered into or taken by any Governmental Entity.

(88) “Liabilities” shall mean any and all Indebtedness, liabilities, costs, expenses, interest and obligations, whether accrued or fixed, absolute or contingent, matured or unmatured, known or unknown, foreseen or unforeseen, reserved or unreserved, or determined or determinable, including those arising under any Law, Action, whether asserted or unasserted, or order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Entity and those arising under any Contract or any fines, Damages or equitable relief which may be imposed and including all costs and expenses related thereto. Except as otherwise specifically set forth herein or in the Tax Matters Agreement or Employee Matters Agreement, the rights and obligations of the Parties with respect to Taxes and with respect to liabilities of the nature described in the preceding sentence of this definition that are allocated pursuant to the Employee Matters Agreement (“Employee Related Liabilities”) shall be governed by the Tax Matters Agreement and Employee Matters Agreement, respectively, and, therefore, Taxes and Employee Related Liabilities shall not be treated as Liabilities governed by this Agreement other than for purposes of indemnification related to the Distribution Disclosure Documents.

(89) “Liable Party” shall have the meaning set forth in Section 2.2(c)(ii).

(90) “Negotiation Period” shall mean the General Negotiation Period or the Privilege Waiver Negotiation Period, as applicable.

(91) “Non-Assumable Third Party Claims” shall have the meaning set forth in Section 7.4(b).

 

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(92) “Non-Shared Contract” shall mean all Contracts of istHistorical Xperi transferred in accordance with this Agreement other than any Shared Contracts.

(93) “Notice Recipient” shall have the meaning set forth in Section 2.2(d)(vi).

(94) “Notifying Party” shall have the meaning set forth in Section 2.2(d)(vi).

(95) “NYSE” shall mean the New York Stock Exchange.

(96) “Other Party’s Auditor” shall have the meaning set forth in Section 5.2(a)(i).

(97) “Other Party” shall have the meaning set forth in Section 2.2(c)(i).

(98) “Other Surviving Intergroup Accounts” shall have the meaning set forth in Section 2.3(a).

(99) “Partial Assignment” shall have the meaning set forth in Section 2.2(d)(i).

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

(101) “Person” shall mean any natural person, firm, individual, corporation, business trust, joint venture, association, bank, land trust, trust company, company, limited liability company, partnership or other organization or entity, whether incorporated or unincorporated, or any Governmental Entity.

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

(103) “Privilege” shall have the meaning set forth in Section 8.7(a).

(104) “Privilege Waiver Negotiation Period” shall have the meaning set forth in Section 8.7(c)(iv).

(105) “Privilege Waiver Objection Notice” shall have the meaning set forth in Section 8.7(c)(i).

(106) “Privileged Information” shall have the meaning set forth in Section 8.7(a).

(107) “Product Assets” shall mean any and all right, title and interest in and to the following Assets of (x) any member of the Product SpinCo Group at the applicable Relevant Time, and (y) any member of the IP RemainCo Group at the Relevant Time (provided, however, that Product Assets shall not include Tax Assets (as defined in the Tax Matters Agreement), which shall be governed by the Tax Matters Agreement, or Assets allocated pursuant to the Employee Matters Agreement, which shall be governed thereby):

 

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(i) (A) all interests in the capital stock of, or any other equity interests in the members of the Product SpinCo Group (other than Product SpinCo) and any and all rights related thereto;

(ii) the Assets set forth on Schedule 1.1(107)(ii);

(iii) any and all rights and interests of the Product SpinCo Group under this Agreement;

(iv) (A) all rights, title and interest in and to the owned real property set forth on Schedule 1.1(107)(iv)(A), including, in each case, all land and land improvements, structures, buildings and building improvements, tidelands or other marine leases, other improvements, fixtures, rights of ingress and egress, rights under any covenants, conditions and/or restrictions, all contract rights, if any, relating to the operation of the land or any improvements thereon, all riparian rights, surface and underground water rights, and any and all other water rights pertaining to the land, and any and all licenses, permits, registrations, approvals and authorizations which have been issued by any Governmental Entity related to the land and all easements and rights of way pertaining thereto or accruing to the benefit thereof and appurtenances located thereon or associated therewith (except to the extent otherwise set forth on Schedule 1.1(107)(iv)(A) under the heading “Other Party in Possession”) (the “Product Specified Owned Real Property”) and (B) all rights, title and interest in, and to and under the leases or subleases of the real property set forth on Schedule 1.1(107)(iv)(B), including, in each case, to the extent provided for in such leases, any land and land improvements, structures, buildings and building improvements, tidelands or other marine leases, other improvements, fixtures, rights of ingress and egress, rights under any covenants, conditions and/or restrictions, all contract rights, if any, relating to the operation of the land or any improvements thereon, all riparian rights, surface and underground water rights, and any and all other water rights pertaining to the land, and any and all licenses, permits, registrations, approvals and authorizations which have been issued by any Governmental Entity related to the land and all easements and rights of way pertaining thereto or accruing to the benefit thereof and appurtenances (except to the extent otherwise set forth on Schedule 1.1(107)(iv)(B) under the heading “Other Party in Possession”) (the “Product Specified Leased Real Property”);

(v) any and all Product Shared Contracts; provided; however, that any such Product Shared Contracts shall be subject to Section 2.2(d);

(vi) (A) the Patents and Patent applications and registrations set forth on Schedule 1.1(107)(vi)(A), (B)(I) the Xperi and TiVo names and any and all Xperi and TiVo brands, related Trademarks and related Trademark applications and registrations, and any and all derivations, abbreviations, translations, localizations and other variations of any of the foregoing and any confusingly similar Trademark and Trademark application and registration and (II) the Trademarks and Trademark applications and registrations set forth on Schedule 1.1(107)(vi)(B)(II), (C) the Copyrights and Copyright applications and registrations set forth on Schedule 1.1(107)(vi)(C) and (D) the Know-How set forth on Schedule 1.1(107)(vi)(D);

 

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(vii) any and all Assets in respect of accruals, counterclaims, insurance claims, rights to coverage under applicable insurance policies, warranties, contractual indemnities, control rights and other rights similar to the foregoing, in each case, to the extent related to any Product Liability;

(viii) the IT Assets set forth on Schedule 1.1(107)(viii);

(ix) all Product Contracts;

(x) other than Intellectual Property and IT Assets, any and all (a) Information to the extent related to any Product Asset or Product Liability and (b) corporate or similar legal entity books and records of any Person described in clause (i) of this definition of Product Assets;

(xi) the Applicable Product Percentage of any Specified Shared Asset (clauses (i)–(xi), the “Specified Product Assets”);

(xii) unless constituting a Specified IP Asset under clauses (i)–(xi) of the definitions thereof:

(a) any and all rights, title and interest in, and to, any Asset (excluding IT Assets and excluding Intellectual Property) of Historical Xperi that is not related to any Business (other than in a de minimis respect) (e.g. corporate or enterprise-wide Assets) owned by a member of the Product SpinCo Group;

(b) all Intellectual Property owned by Historical Xperi that is not related to any Business (other than in a de minimis respect);

(c) (I) all Cash and Cash Equivalents, notes, interest receivables and other financial assets owned by any member of the Product SpinCo Group (other than any such Cash and Cash Equivalents, notes, interest receivables and other financial assets constituting IP Factoring Proceeds) and (II) all derivative instruments of Historical Xperi owned by any member of the Product SpinCo Group;

(d) all credits, prepaid expenses, rebates, deferred charges, advance payments, security deposits and prepaid items, in each case to the extent they are used or held for use in, or arise out of, the operation or conduct of (I) the Product Business (including, for the avoidance of doubt, such portion of any credits, prepaid expenses, rebates, deferred charges, advance payments, security deposits and prepaid items of the Product SpinCo Group to the extent they are used or held for use in, or arise out of, the operation or conduct of the Product Business) and (II) Historical Xperi to the extent such credits, prepaid expenses, rebates, deferred charges, advance payments, security deposits and prepaid items are owned by a member of the Product SpinCo Group, and are not related to any Business (other than in a de minimis respect);

 

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(e) except for furniture, all tangible personal property and interests therein (including machinery, tools, equipment and vehicles), in each case, that is not related to any Business (other than in a de minimis respect) for which the relevant historical use of such Asset was at any Product Specified Owned Real Property or Product Specified Leased Real Property, other than at any portion leased or subleased by any member of the IP RemainCo Group pursuant to an intergroup lease;

(f) all furniture that is not related to any Business (other than in a de minimis respect) to the extent that the relevant historical use of such furniture was at (I) any Product Specified Owned Real Property, Product Specified Leased Real Property (except as provided pursuant to the terms of an intergroup lease or lease with any Person other than the Parties and their respective Group members and Affiliates);

(g) any and all Information of Historical Xperi (other than (x) Intellectual Property, (y) Information described in clause (xii) of the definition of “IP Assets” and (z) IT Assets) that is not related to any Business (other than in a de minimis respect) (I) owned by a member of the Product SpinCo Group; and

(h) all rights, claims, causes of action and credits to the extent relating to any Product Asset that do not relate to any Business (other than in a de minimis respect) and do not relate to any IP Liability (other than in a de minimis respect), including those arising under any guaranty, warranty, indemnity, right of recovery, right of set-off or similar right,; and

(xiii) any and all Assets Related to the Product Business, including in the following categories, but, in each case, excluding IT Assets, the Specified IP Assets and the Assets described in clause (xii) of each of the definitions of Product Assets and IP Assets:

(a) (1) all rights, title and interest in and to the owned real property Related to the Product Business, including, in each case, all land and land improvements, structures, buildings and building improvements, tidelands or other marine leases, other improvements, fixtures, rights of ingress and egress, rights under any covenants, conditions and/or restrictions, all contract rights, if any, relating to the operation of the land or any improvements thereon, all riparian rights, surface and underground water rights, and any and all other water rights pertaining to the land, and any and all licenses, permits, registrations, approvals and authorizations which have been issued by any Governmental Entity related to the land and all easements and rights of way pertaining thereto or accruing to the benefit thereof and appurtenances located thereon or associated therewith and (2) all rights, title and interest in, and to and under the leases or subleases of the real property Related to the Product Business, including, in each case, to the extent provided for in such leases, any land and land improvements, structures, buildings and building improvements, tidelands or other marine leases, other improvements, fixtures, rights of ingress and egress, rights under any covenants, conditions

 

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and/or restrictions, all contract rights, if any, relating to the operation of the land or any improvements thereon, all riparian rights, surface and underground water rights, and any and all other water rights pertaining to the land, and any and all licenses, permits, registrations, approvals and authorizations which have been issued by any Governmental Entity related to the land and all easements and rights of way pertaining thereto or accruing to the benefit thereof and appurtenances (the “Product Real Property”);

(b) except for IT Assets and Product SpinCo Inventory, any and all tangible personal property and interests therein, including machinery, furniture, tools, equipment, vehicles, in each case that are Related to the Product Business;

(c) any and all raw materials, works-in-process, supplies, ingredients, inputs, parts, packaging, finished goods and products and other inventories, (I) related to, or held for the benefit of, the Product Business and not related (other than in a de minimis respect) to any other Business, (II) Related to the Product Business (other than in a de minimis respect) and held at any Product Specified Owned Real Property, Product Specified Leased Real Property or Product Real Property (unless at a portion of such site leased to a different Group pursuant to an intergroup lease), (III) Related to the Product Business, held at any IP Specified Owned Real Property, IP Specified Leased Real Property or IP Real Property, other than any portion thereof leased by the Product SpinCo Group pursuant to an intergroup lease (other than those subject to any manufacturing product agreement), and not related (other than in a de minimis respect) to the Business of the Group to which such real property was allocated, and (IV) Related to the Product Business and not held at a real property constituting Product Specified Owned Real Property, Product Specified Leased Real Property, Product Real Property, IP Specified Owned Real Property, IP Specified Leased Real Property or IP Real Property (the “Product SpinCo Inventory”) (it being understood and agreed that any and all raw materials, works-in-process, supplies, ingredients, inputs, parts, packaging and finished goods referred to under clause (III) shall constitute an Asset Related to the Product Business);

(d) all Intellectual Property Related to the Product Business;

(e) any and all Consents, registrations and Regulatory Data, in each case, that is Related to the Product Business;

(f) any and all Information (other than Intellectual Property and IT Assets) that is Related to the Product Business; and

(g) any and all interests in the capital stock of, or other equity interests in, any Person that is not a member of the IP RemainCo Group or Product SpinCo Group that is Related to the Product Business.

 

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(108) “Product Business” shall mean (i) the product business of Historical Xperi (except for those described in clauses (i), (ii) or (iii) of the definition of “IP Business”), (iii) any other business conducted primarily through the use of the Product Assets prior to the Relevant Time (other than that described in clause (i) of the definition of “IP Business”) and (iv) the businesses and operations of Business Entities acquired or established by or for Product SpinCo or any of its Subsidiaries in connection with the operation of the product business after the date of this Agreement (other than that described in clause (i) of the definition of “IP Business”)..

(109) “Product Contracts” shall mean Contracts to which IP RemainCo or any of its Subsidiaries is a party or by which it or any of its Subsidiaries or any of their respective Assets is bound, whether or not in writing, which fall within the following categories:

(i) any and all contracts that relate exclusively to the Product Business, the Product Assets and/or the Product Liabilities and are not related (other than in a de minimis respect) to the IP Business, any IP Asset, or any IP Liability; and

(ii) any and all Contracts to which IP RemainCo was a party as of the Relevant Time (and any amendments, extensions or replacements thereof) that are not related in any respect to any Business (other than in a de minimis respect).

(110) “Product Form 10” shall mean the registration statement on Form 10 filed by Product SpinCo with the Commission in connection with the Distribution.

(111) “Product Liabilities” shall mean any and all Liabilities of (x) any member of the Product SpinCo Group at the Relevant Time and/or (y) any member of the IP RemainCo Group at the applicable Relevant Time, in the following categories, in each case, regardless of (i) when or where such Liabilities arose or arise, (ii) where or against whom such Liabilities are asserted or determined, (iii) regardless of whether arising from or alleged to arise from negligence, gross negligence, recklessness, violation of Law, fraud or misrepresentation by any member of the Product SpinCo Group or IP RemainCo Group, as the case may be, or any of their past or present respective directors, officers, employees, agents, Subsidiaries or Affiliates and (iv) which entity is named in any Action associated with any Liability (except for Liabilities related to Taxes which are governed exclusively by the Tax Matters Agreement, and Liabilities allocated pursuant to the Employee Matters Agreement, which are governed exclusively thereby):

(i) any and all Liabilities that are expressly assumed by or allocated to the Product SpinCo Group pursuant to this Agreement, including any obligations and Liabilities of any member of the Product SpinCo Group under this Agreement, including those pursuant to Section 11.5 hereof;

(ii) any and all Liabilities (including under applicable federal and state securities Laws) relating to, arising out of or resulting from the Distribution Disclosure Documents, including the Product Form 10, in each case relating to, arising out of or resulting from occurrences prior to, the Distribution;

(iii) any and all Liabilities arising out of Inventor Remuneration to the extent related to (i) the Intellectual Property constituting a Product Asset (other than any discrete and reasonably identifiable part thereof solely attributable to the use or sublicense of such Intellectual Property by members of the IP RemainCo Group as Licensees (as such term is defined in the Cross Business License Agreement) under the

 

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Cross Business License Agreement), or (ii) the discrete and reasonably identifiable part thereof solely attributable to the use or sublicense of Intellectual Property constituting an IP Asset by a member of the Product SpinCo Group as Licensees (as such term is defined in the Cross Business License Agreement) under the Cross Business License Agreement;

(iv) the Applicable Product Percentage of any Specified Shared Liability;

(v) any of the Liabilities set forth on Schedule 1.1(111)(v);

(vi) any and all Liabilities for Indebtedness of the type described in clauses (i), (iv) and (vii) (but in case of clause (vii) solely with respect to clauses (i) and (iv)) of the definition of Indebtedness of Historical Xperi that was incurred by any member of the Product SpinCo Group (and any such Indebtedness guaranteed by any member of Historical Xperi that is a member of the Product SpinCo Group) (clauses (i)-(v) of this Section 1.1(111), the “Specified Product Liabilities”);

(vii) unless constituting a Specified IP Liability, (i) any and all checks issued but not drawn and accounts payable to the extent related (other than in de minimis respects) to the Product Business, and (ii) all accounts payable represented by an invoice to the extent related to the Product Business; and

(viii) any and all Liabilities Related to the Product Business, including in the following categories, but in each case, excluding the Specified IP Liabilities, the Liabilities described in clause (vii) of the definition of Product Liabilities and the Liabilities described in clause (vi) of the definition of IP Liabilities:

(a) any and all Liabilities arising out of or resulting from any Action Related to the Product Business; and

(b) any and all Liabilities arising under any of the Product Contracts.

(112) “Product Shared Contracts” shall mean any and all Shared Contracts that are primarily related to the Product Business including those set forth on Schedule 2.2(d).

(113) “Product SpinCo” shall have the meaning set forth in the preamble.

(114) “Product SpinCo Common Stock” shall have the meaning set forth in the recitals hereto.

(115) “Product SpinCo CSIs” shall have the meaning set forth in Section 2.3(b)(iv).

(116) “Product SpinCo Group” shall mean Product SpinCo and each Person (other than any member of the IP RemainCo Group) that is a direct or indirect Subsidiary of Product SpinCo immediately after the Business Realignment Time, and each Person that becomes a Subsidiary of Product SpinCo after the Business Realignment Time.

(117) “Product SpinCo Indemnitees” shall mean each member of the Product SpinCo Group and each of their Affiliates from and after the Effective Time and each member of the Product SpinCo Group’s and their respective current, former and future Affiliates’ respective directors, officers, employees and agents and each of the heirs, executors, successors and assigns of any of the foregoing.

 

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(118) “Product SpinCo Information Statement” shall mean the information statement attached as an exhibit to the Product Form 10 sent to the holders of shares of IP RemainCo Common Stock in connection with the Distribution, including any amendment or supplement thereto.

(119) “Product SpinCo Liability Policies” shall have the meaning set forth in Section 10.2.

(120) “Product SpinCo Licensed Trademarks” shall mean those trademarks set forth on Schedule 5.6.

(121) “Public Reports” shall have the meaning set forth in Section 5.2(c).

(122) “Records” shall mean any Contracts, documents, books, records or files.

(123) “Regulatory Data” shall mean any and all regulatory data (including studies, data, raw data, efficacy data, reports, physical samples, reviews (including business risk reviews), opinions, information or other compliance requirements, including safety, risk and exposure assessments) in written, electronic, computerized, digital, or other tangible or intangible media, actually submitted to, or maintained to support a submission to (whether submitted or not), a Governmental Entity or a third party to seek, obtain or maintain a Consent from a Governmental Entity or demonstrate regulatory compliance.

(124) “Related”, with respect to any Business, shall mean primarily related to, primarily used in or primarily held for use in the conduct of such Business.

(125) “Relevant Time” shall mean, as between any member of the IP RemainCo Group and any member of the Product SpinCo Group, the time of the Distribution.

(126) “Rules” shall have the meaning set forth in Section 9.1(c).

(127) “Section 7.10(a) Basket” shall have the meaning set forth in Section 7.10(a).

(128) “Section 8.8 Matters” shall have the meaning set forth in Section 8.8(a).

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

(130) “Separation Expenses” shall have the meaning set forth in Section 11.5.

 

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(131) “Shared Contract” shall mean, any Contract, other than a Product Contract or a IP Contract, of (1) a member of the IP RemainCo Group that inures in part to the benefit or burden of any member of the Product SpinCo Group, as of the Distribution Date or (2) a member of the Product SpinCo Group that inures in part to the benefit or burden of any member of the IP RemainCo Group, as of the Distribution Date, including the Specified Licensing Shared Contracts.

(132) “Shared Policies” shall mean all Policies, current or past, which are owned or maintained by or on behalf of IP RemainCo or any of its Subsidiaries which relate to one or more of the Product Business or the IP Business.

(133) “Specified Licensing Shared Contracts” shall mean the Shared Contracts set forth in Schedule 2.2(d).

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

(135) “Sole Benefit Services” shall have the meaning set forth in Section 8.7(a).

(136) “Specified Shared Asset” shall mean the Assets set forth on Schedule 1.1(136).

(137) “Specified Shared Liabilities” shall mean:

(i) any and all Liabilities set forth on Schedule 1.1(137)(i);

(ii) any and all Liabilities of IP RemainCo or Product SpinCo to the extent relating to, arising out of or resulting from a general corporate matter of IP RemainCo related to occurrences on or prior to the Distribution Date, including any such Liabilities (including under applicable federal and state securities Laws) to the extent relating to, arising out of or resulting from:

(a) claims made by or on behalf of holders of any of IP RemainCo’s securities, in their capacities as such;

(b) any (x) form, report, statement, certifications or other document (including all exhibits, amendments and supplements thereto) (other than a Distribution Disclosure Document) filed by IP RemainCo with the Commission on or prior to the Distribution Date, including the financial statements included therein (other than for Liabilities related to any such forms, reports, statements, certifications or other documents, in each case filed in connection with the Internal Reorganization and the Business Realignment, specifically relating to the Product Business or the IP Business, as the case may be) or (y) Financing Disclosure Documents in respect of occurrences prior to the Distribution Date; and

 

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(c) (x) indemnification obligations to any current or former director or officer of IP RemainCo in their capacity as such in respect of occurrences prior to the Distribution Date or (y) any claims for breach of fiduciary duties brought against any current or former directors or officers of IP RemainCo, in their capacities as such in respect of occurrences prior to the Distribution Date, in each case, relating to any acts, omissions or events on or prior to the Distribution Date; and

(iii) any Separation Expenses not allocated to a Party in Section 11.5.

In the case of any Liability a portion of which relates to occurrences on or prior to the Distribution Date and a portion of which relates to occurrences after the Distribution Date, only that portion that relates to occurrences on or prior to the Distribution Date shall be considered a Specified Shared Liability; and with respect to the portion of such Liability that relates to occurrences after the Distribution Date, such Liability shall be allocated in accordance with the definitions of Product Liability or IP Liability, as the case may be. For purposes of clarification of the foregoing, the Parties agree that no Liability relating to, arising out of or resulting from any obligation of any Person to perform the executory portion of any Contract existing as of the Distribution Date shall be deemed to be a Specified Shared Liability.

Notwithstanding anything to the contrary herein, Specified Shared Liabilities shall not include any Liabilities that are related or attributable to or arising in connection with Taxes or Tax Returns.

(138) “Steps Plan” shall mean the steps plan set forth on Exhibit A hereto.

(139) “Subsidiary” shall mean with respect to any Person (i) a corporation, fifty percent (50%) or more of the voting or capital stock of which is, as of the time in question, directly or indirectly owned by such Person and (ii) any other partnership, joint venture, association, joint stock company, trust, unincorporated organization or other entity in which such Person, directly or indirectly, owns fifty percent (50%) or more of the equity or economic interest thereof or has the power to elect or direct the election of fifty percent (50%) or more of the members of the governing body of such entity or otherwise has control over such entity (e.g., as the managing partner of a partnership).

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

(141) “Tax Contest” shall have the meaning set forth in the Tax Matters Agreement.

(142) “Tax Matters Agreement” shall mean the Tax Matters Agreement effective as of October 1, 2022, by and among IP RemainCo and Product SpinCo.

(143) “Tax Return” shall have the meaning set forth in the Tax Matters Agreement.

(144) “Taxing Authority” shall have the meaning set forth in the Tax Matters Agreement.

(145) “Third Party Claim” shall have the meaning set forth in Section 7.4(a).

 

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(146) “Third Party Proceeds” shall have the meaning set forth in Section 7.8(a).

(147) “Trademarks” shall have the meaning set forth in the definition of “Intellectual Property.”

(148) “Transaction Expenses” shall have the meaning set forth in Section 11.5.

(149) “Transfer” shall have the meaning set forth in Section 2.2(b)(i) and the term “Transferred” shall have its correlative meaning.

(150) “Transition Services Agreement” shall mean the Transition Services Agreement effective as of the date of the Distribution, by and between a member of the Product SpinCo Group and a member of the IP RemainCo Group.

Section 1.2 References; Interpretation. For the purposes of this Agreement, (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 to 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) the Parties have each participated in the negotiation and drafting of this Agreement, except as otherwise stated herein, 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; (i) a reference to any Person includes such Person’s successors and permitted assigns; (j) any reference to “days” means calendar days unless Business Days are expressly specified; (k) when calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded and if the last day of such period is not a Business Day, the period shall end on the next succeeding Business Day; (l) any statute defined or referred to herein means such statute as from time to time amended, modified or supplemented, unless otherwise specifically indicated; (m) the use of the phrases “the date of this Agreement”, “the date hereof”, “of even date herewith” and terms of similar import shall be deemed to refer to the date set forth in the preamble to this Agreement; (n) the phrase “ordinary course of business” shall be deemed to be followed by the words “consistent with past practice” whether or not such words actually follow such phrase; (o) where a word or phrase is defined herein, each of its other grammatical forms shall have a corresponding meaning; and (p) any consent given by either party hereto pursuant to this Agreement shall be valid only if contained in a written instrument signed by such Party. Unless the context requires otherwise, references in this Agreement to “Product SpinCo” shall also be deemed to refer to the applicable member of the Product SpinCo Group, references to “IP RemainCo” shall also be deemed to refer to the applicable member of the IP RemainCo Group and, in connection therewith, any references to actions or omissions to be taken, or refrained from being taken, as the case may be, by Product SpinCo or IP RemainCo shall be deemed to require Product SpinCo, or IP RemainCo, as the case may be, to cause the applicable members of the Product SpinCo Group or the IP RemainCo Group, respectively, to take, or refrain from taking, any such action.

 

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Section 1.3 Effective Time; Suspension.

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

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

ARTICLE II

THE SEPARATION

Section 2.1 General. Subject to the terms and conditions of this Agreement, each Party shall use, and shall cause the other members of its Group and its respective then-Affiliates to use, their respective reasonable best efforts to consummate the transactions contemplated hereby (including the Internal Reorganization and the Business Realignment), a portion of which have already been implemented prior to the date hereof.

Section 2.2 Transfer of Assets and Liabilities.

(a) Acknowledgment of Pre-Effective Time Transfers. Prior to the Effective Time, the Parties shall and shall cause the other members of its Group and its respective then-Affiliates to complete the Internal Reorganization and the Business Realignment (other than as set forth on Schedule 2.2(d)).

(b) Transfer of Assets. Prior to the Relevant Time and, in each case, in accordance with the Steps Plan and pursuant to the Conveyancing and Assumption Instruments and, in connection with the Internal Reorganization and the Business Realignment:

(i) Subject to Section 2.5 (Transfers Not Effected On or Prior to the Effective Time; Transfers Deemed Effective as of the Effective Time) and Section 2.2(d) (Treatment of Shared Contracts), IP RemainCo shall, and shall cause the other members of its Group to, as applicable, transfer, contribute, assign and/or convey or cause to be transferred, contributed, assigned and/or conveyed (“Transfer”) to Product SpinCo or another member of the Product SpinCo Group all of its and the other members of its Group’s right, title and interest in and to the Product Assets and the applicable member(s) of the Product SpinCo Group shall accept from IP RemainCo and the applicable members of the IP RemainCo Group, all of IP RemainCo’s and the other members of the IP RemainCo Group’s respective direct or indirect rights, title and interest in and to the Product Assets; and

 

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(ii) Subject to Section 2.5 (Transfers Not Effected On or Prior to the Effective Time; Transfers Deemed Effective as of the Effective Time) and Section 2.2(d) (Treatment of Shared Contracts), Product SpinCo shall, and shall cause the other members of its Group to, as applicable, Transfer to IP RemainCo or another member of the IP RemainCo Group all of its and the other members of its Group’s right, title and interest in and to the IP Assets and the applicable member(s) of the IP RemainCo Group shall accept from Product SpinCo and the applicable members of the Product SpinCo Group, all of Product SpinCo’s and the other members of the Product SpinCo Group’s respective direct or indirect rights, title and interest in and to the IP Assets, respectively.

(c) Assignment and Assumption of Liabilities.

(i) Subject to Section 2.5 (Transfers Not Effected On or Prior to the Effective Time; Transfers Deemed Effective as of the Effective Time) and Section 2.2(d) (Treatment of Shared Contracts), (a) IP RemainCo shall, or shall cause a member of the IP RemainCo Group to, accept, assume (or, as applicable, retain) and perform, discharge and fulfill, in accordance with their respective terms (“Assume”), all of the IP Liabilities and (b) Product SpinCo shall, or shall cause a member of the Product SpinCo Group to, Assume all of the Product Liabilities.

(ii) Each Party, at the request of the other Party (such other Party, the “Other Party”), shall use commercially reasonable efforts to obtain, or to cause to be obtained, any Consent, release, substitution or amendment required to novate or assign to the fullest extent permitted by Law all obligations under Contracts (other than Shared Contracts, which shall be governed by Section 2.2(d)), and other obligations or Liabilities (other than with regard to guarantees or Credit Support Instruments, which shall be governed by Section 2.3(b) for which a member of such Party’s Group and a member of the Other Party’s Group are jointly or severally liable and that do not constitute Liabilities of such Other Party as provided in this Agreement, or to obtain in writing the unconditional release of the Other Party to such arrangements (other than any member of the Group who Assumed or retained such Liability as set forth in this Agreement), so that, in any such case, the members of the applicable Group will be solely responsible for such Liabilities; provided, however, that no Party shall be obligated to pay any consideration therefor to any third party from whom any such Consent, substitution or amendment is requested (unless such Party is fully reimbursed by the requesting Party). For the purposes of complying with the terms set forth in this Section 2.2(c)(ii), not more than thirty (30) Business Days after the end of each of the first six (6) fiscal quarters after the applicable Relevant Time, each of Product SpinCo and IP RemainCo shall deliver to the other Party a list of the Consents, releases, substitutions or amendments required to novate or assign to the fullest extent permitted by Law all obligations under Contracts (other than Shared Contracts, which shall be governed by Section 2.2(d), and other obligations or Liabilities (other than with regard to guarantees or Credit Support Instruments, which shall be governed by Section 2.3(b) for which a member of such Party’s Group and a member of the Other Party’s Group are jointly or severally liable and that do not constitute Liabilities of such Other Party as provided in this Agreement, along with the status and anticipated timing for obtaining such Consents, releases, substitutions or amendments required.

 

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(iii) If the Parties are unable to obtain, or to cause to be obtained, any such required Consent, release, substitution or amendment, the Other Party or a member of such Other Party’s Group shall continue to be bound by such Contract or other obligation that does not constitute a Liability of such Other Party and, unless not permitted by Law or the terms thereof, as agent or subcontractor for such Party, the Party or member of such Party’s Group who Assumed or retained such Liability as set forth in this Agreement (the “Liable Party”) shall, or shall cause a member of its Group to, directly pay, perform and discharge fully all the obligations or other Liabilities of such Other Party or member of such Other Party’s Group thereunder from and after the Effective Time. The Other Party shall, without further consideration, promptly pay and remit, or cause to be promptly paid or remitted, to the Liable Party or to another member of the Liable Party’s Group, all money, rights and other consideration received by it or any member of its Group in respect of such performance by the Liable Party (unless any such consideration is an Asset of such Other Party pursuant to this Agreement). If and when any such Consent, release, substitution or amendment shall be obtained or such agreement, lease or other rights or obligations shall otherwise become assignable or able to be novated, the Other Party shall promptly Transfer all rights, obligations and other Liabilities thereunder of any member of such Other Party’s Group to the Liable Party or to another member of the Liable Party’s Group without payment of any further consideration and the Liable Party, or another member of such Liable Party’s Group, without the payment of any further consideration, shall Assume such rights and Liabilities. Each of the applicable Parties shall, and shall cause their respective Subsidiaries to, take all actions and do all things reasonably necessary on its part, or such Subsidiaries’ part, under applicable Law or contractual obligations to consummate and make effective the transactions contemplated by this Section 2.2(c)(iii).

(d) Treatment of Shared Contracts. Without limiting the generality of the obligations set forth in Sections 2.2(b) and (c):

(i) Unless the benefits of a Shared Contract are conveyed to the applicable Party (or member of its Group) pursuant to an Ancillary Agreement, (A) any Contract that is a Shared Contract, shall be assigned in part to the applicable member(s) of the applicable Group, if so assignable, or appropriately amended, bifurcated, replicated or otherwise modified prior to, on or after the Effective Time, so that each Party or the members of their respective Groups shall be entitled to the rights and benefits, and shall Assume the related portion of any Liabilities, inuring to their respective Businesses (each, a “Partial Assignment”); provided, however, that (x) in no event shall any member of any Group be required to assign (or amend) any Shared Contract in its entirety or to assign a portion of any Shared Contract (including any Policy) which is a Specified Licensing Shared Contract or not assignable (or cannot be amended or otherwise modified) by its terms (including any terms imposing Consents or conditions on an assignment where such Consents or conditions have not been obtained or fulfilled) or under applicable Law and (y) if any Shared Contract cannot be so partially assigned by its terms or otherwise, cannot be amended or otherwise modified or if such assignment or amendment or modification would impair the benefit the parties thereto derive from such Shared Contract or if such Shared Contract is a Specified Licensing Shared Contract, (A) the Parties shall, and shall cause each of their respective

 

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Subsidiaries to, take such other reasonable and permissible actions (including providing Information in respect of such Shared Contracts) to cause a member of the IP RemainCo Group or the Product SpinCo Group as the case may be, to, in each case, (I) receive the benefit of that portion of each Shared Contract that relates to the Product Business, or the IP Business, as the case may be (in each case, to the extent so related) as if such Shared Contract had been assigned to (or amended or otherwise modified for the benefit of) a member of the applicable Group pursuant to this Section 2.2(d) (including, enforcing on the applicable Group’s behalf any and all of such Group’s rights against such third party under such Shared Contract solely to the extent related to the applicable Group’s respective Business (or applicable portion thereof) and entering into statements of work and, in accordance with Schedule 2.2(d), amendments, from time to time as reasonably requested by other Party in connection with such Shared Contract) and (II) bear the burden of the corresponding Liabilities (including any Liabilities that may arise by reason of such arrangement) as if such Liabilities had been Assumed by a member of the applicable Group pursuant to this Section 2.2(d), including expenses related to enforcing rights under such Shared Contract against the third party counterparty thereto solely to the extent related to the applicable Group’s respective Business (or applicable portion thereof); and (x) indemnifying the contracting Party (or its Group) against all Indemnifiable Losses to the extent arising out of (i) any actions (or omissions to act) taken by the contracting Party or its Group with respect to such Shared Contract at the direction of such other Party or its Group (except to the extent arising out of or related to gross negligence, fraud or willful misconduct by the contracting Party or its Group) or (ii) any actions (or omissions to act) taken by the non-contracting Party or its Group with respect to such Shared Contract, including the non-contracting Party’s or its Group’s failure to perform under such Shared Contract, that triggers a breach of the Shared Contract by the contracting Party or its Group and (y) indemnifying the non-contracting Party (or its Group) against all Indemnifiable Losses to the extent arising out of (i) failure by the contracting Party (or its Group) to act (or omit to act) at the direction of the non-contracting Party (or Group) in accordance with the terms of the applicable Shared Contract (except to the extent arising out of or related to gross negligence, fraud or willful misconduct by the non-contracting Party or its Group) or (ii) the contracting Party’s breach of the Shared Contract (other than a breach triggered by any actions (or omissions to act) taken by the non-contracting Party or its Group with respect to such Shared Contract, including the non-contracting Party’s or its Group’s failure to perform under such Shared Contract), in each case, as further set forth on Schedule 2.2(d) (for the avoidance of doubt, in the event that any rights in connection with a Force Majeure Event or similar event are exercised under a Shared Contract, the benefits and burdens with respect to such Shared Contract (as modified by such Force Majeure Event or similar event) shall, if reasonably practicable, be shared proportionally or, if not reasonably practicable, in such other manner as would be most equitable, among the Groups related to such Contract (or in any other manner as may be agreed in good faith by the relevant Parties whose Group is related to such contract), in each case, to the extent so related to the Product Business or the IP Business) and (B) to the extent that the Parties cannot effect a Partial Assignment in accordance with this Section 2.2(d), or cannot implement the arrangements set forth in clause (A), within 180 days of the Distribution Date, the Parties shall use commercially reasonable efforts to, if requested by either Party, seek

 

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mutually acceptable alternative arrangements for the purpose of allocating rights and obligations to each Group under such Shared Contract reflecting the principles set forth in clause (A) of this provision (an “Acceptable Alternative Arrangement”) other than in respect of the Specified Licensing Shared Contracts, which shall remain with the contracting party until the expiration or earlier termination thereof. With respect to any Specified Licensing Shared Contract so remaining with IP RemainCo or any member of the IP RemainCo Group, to the extent that IP RemainCo or such member of the IP RemainCo Group is a licensor on behalf of Product SpinCo or a member of the Product SpinCo Group under such Specified Licensing Shared Contract with respect to any products of such Product SpinCo or such member of the Product SpinCo Group, Product SpinCo or such member hereby grants to the applicable IP RemainCo Group member an irrevocable, worldwide, non-exclusive, royalty-free, fully paid-up, non-transferable and non-sublicensable (except to customers under such and in accordance with such Specified Licensing Shared Contract) license to grant a sublicense with respect to such products according to the terms and conditions of such Specified Licensing Shared Contract for the term of such Specified Licensing Shared Contract.

(ii) Each Party shall, and shall cause the other members of its Group to, use its commercially reasonable efforts to obtain the required Consents to complete a Partial Assignment of any Shared Contract as contemplated by this Agreement. Notwithstanding anything herein to the contrary, no Partial Assignment of any Shared Contract or Acceptable Alternative Arrangement shall be completed if it would violate any applicable Law or the rights of any third party to such Shared Contract.

(iii) To the extent permitted by applicable Law, each of IP RemainCo and Product SpinCo shall, and shall cause the members of its respective Group to, (A) treat for all Tax purposes the portion of each Shared Contract inuring to its respective Businesses as Assets owned by, and/or Liabilities of, as applicable, such Party, or the member(s) of such Party’s respective Group, as applicable, not later than the Relevant Time and (B) neither report shall take any Tax position (on a Tax Return or otherwise) inconsistent with such treatment (unless required by a change in applicable Tax Law or good faith resolution of a Tax Contest relating to income Taxes).

(iv) With respect to Liabilities pursuant to, under or relating to a Shared Contract to the extent relating to occurrences from and after the Relevant Time, such Liabilities shall, unless otherwise allocated pursuant to this Agreement or any Ancillary Agreement, be allocated among IP RemainCo and Product SpinCo as follows:

(1) If such Liability is incurred (x) exclusively in respect of the Product Business, such Liability shall be allocated to Product SpinCo or its applicable Subsidiary, or (y) exclusively in respect of the IP Business, such Liability shall be allocated to IP RemainCo or the applicable member of its Group;

(2) If such Liability cannot be so allocated under clause (1) above, such Liability shall be allocated to IP RemainCo or Product SpinCo, as the case may be, based on the relative proportions of total benefit received (over the term of the Shared Contract remaining as of the date of the Distribution by the Product Business or the IP Business, respectively, under the relevant Shared Contract after the Relevant Time); and

 

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(3) Notwithstanding the foregoing in this clause (3), each of Product SpinCo or IP RemainCo shall be responsible for any and all such Liabilities to the extent arising from its (or its Subsidiary’s) breach after the Relevant Time of the relevant Shared Contract.

(v) None of IP RemainCo, Product SpinCo or any of the members of their respective Group or their Affiliates shall be required to commence any litigation or offer or pay any money or otherwise grant any accommodation (financial or otherwise) to any third party to (x) obtain any new Contract or Partial Assignment with respect to any Shared Contract, as the case may be or (y) obtain any Consent necessary to enter into an Acceptable Alternative Arrangement; provided, however, a Party to which the benefit of a new Contract, Partial Assignment or Acceptable Alternative Arrangement would inure pursuant to this Section 2.2(d) may request that the Party that is allocated such Shared Contract as a Product Asset or IP Asset commence litigation, which request shall be considered in good faith by such Party; provided, further, that such Party’s good faith determination not to commence litigation shall not in and of itself constitute a breach of this Section 2.2(d)(v), but the foregoing shall not preclude consideration of a Party’s good faith for purposes of determining compliance with Section 2.2(d)(v).

(vi) From and after the Relevant Time, the Party to whose Group a Shared Contract has been allocated shall not (and shall cause the other members of its Group not to), without the consent of the other applicable Party or Parties (such consent not to be unreasonably withheld, conditioned or delayed) (x) waive any rights under such Shared Contract to the extent related to the Business, Assets or Liabilities of such other Party, (y) terminate (or consent to be terminated by the counterparty) such Shared Contract except in connection with (1) the expiration of such Shared Contract in accordance with its terms (it being understood, for the avoidance of doubt, that sending a notice of non-renewal to the counterparty to such Shared Contract in accordance with the terms of such Shared Contract is expressly permitted) or (2) a partial termination of such Shared Contract that would not reasonably be expected to impact any rights under such Shared Contract related to the Business, Assets or Liabilities of such other Party or Parties or any of its or their respective Subsidiaries, or (z) amend, modify or supplement such Shared Contract in a manner that results in an extension of the expiration date of such Shared Contract or that is otherwise material (relative to the existing rights and obligations related to such other Party’s Business, Assets or Liabilities under such Shared Contract) and adverse to the Business, Assets or Liabilities of such other Party or Parties or any of its or their respective Subsidiaries; provided, however, if such Shared Contract contains an option for such Party not to renew upon expiration of the current term, such Party shall exercise (and to the extent applicable, shall cause its permitted assigns and successors under such Shared Contract to exercise) such non-renewal option, so that such Shared Contract would terminate upon expiration of the current term of the Shared Contract, or, if earlier, prior to the commencement of the subsequent renewal period. From and after the Distribution, if a member of a Group (the “Notice Recipient”) receives from a counterparty to a Shared Contract a formal notice of breach of such Shared Contract, the Notice Recipient shall provide written notice to the other Party as soon as

 

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reasonably practicable (and in no event later than five (5) Business Days following receipt of such notice) and the Parties shall consult with respect to the actions proposed to be taken regarding the alleged breach. If a Group (the “Notifying Party”) desires to send to a counterparty to a Shared Contract a formal notice of breach of such Shared Contract, the Notifying Party shall provide written notice to the other Party as soon as reasonably practicable (and in any event no less than five (5) Business Days prior to sending such notice of breach to the counterparty), and the Parties shall consult with each other regarding such alleged breach and, if the Parties are unable to agree on the Notifying Party’s request to send such notice, then, to the extent such notice of breach of such Shared Contract would not reasonably be expected to impact any rights under such Shared Contract related to the Business, Assets or Liabilities of such other Party or Parties or any of its or their respective Subsidiaries, the Notifying Party may send such notice. From and after the Distribution, no Party shall (and shall cause the other members of its Group not to) breach any Shared Contract to the extent such breach would reasonably be expected to result in a loss of rights, or acceleration of obligations, of any member of the other Party’s Group (or related to its Business, Assets or Liabilities under such Shared Contract) pursuant to (X) such Shared Contract, (Y) any Partial Assignment related to such Shared Contract or (Z) any other Contract with the counterparty to such Shared Contract (or any of its Affiliates) in existence at the time of the Distribution that contains cross-default or similar provisions related to such Shared Contract.

(e) Treatment of Non-Shared Contracts. If either Party believes in good faith that it (or a member of its Group) was intended to have access to all or certain rights or benefits under a Non-Shared Contract pursuant to the efforts by each Group prior to the Relevant Time to separate, replace, replicate, mirror and/or bifurcate Non-Shared Contracts but such Non-Shared Contract is deemed not to inure in part to the benefit or burden of that Party (or a member of its Group), then such Party may request that the Party whose Group is a party to such Non-Shared Contract enter into a Partial Assignment or Acceptable Alternative Arrangement in accordance with Section 2.2(d)(i) and such other Party shall consider such request in good faith.

(f) Consents. Each Party shall, and shall cause each member of its respective Group to, use its commercially reasonable efforts to obtain the required Consents for the Transfer of any Assets, Contracts, licenses, permits and authorizations issued by any Governmental Entity or parts thereof as contemplated by this Agreement. Notwithstanding anything herein to the contrary, no Contract or other Asset shall be transferred if it would violate applicable Law or, in the case of any Contract, the rights of any third party to such Contract; provided, that Sections 2.2(d) and 2.5, to the extent provided therein, shall apply thereto.

(g) Previous Transfers. Each party understands and agrees on behalf of itself and each member of its Group that certain of the Transfers referenced in Section 2.2(b) or Assumptions referenced in Section 2.2(c) have heretofore occurred and, as a result, no additional Transfers or Assumptions by any member of the IP RemainCo Group or Product SpinCo Group, as applicable, shall be deemed to occur upon the execution of this Agreement with respect thereto. To the extent that a member of the IP RemainCo Group or the Product SpinCo Group, as applicable, owns an IP Asset or Product Asset, respectively, as of the Effective Time, there shall be no need for such member to Transfer such Asset in connection with the

 

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operation of Section 2.2(b). Moreover, to the extent that a member of the IP RemainCo Group or the Product SpinCo Group, as applicable, is liable for any IP Liability or Product Liability, respectively, at the Effective Time, there shall be no need for such member to Assume such Liability in connection with the operation of Section 2.2(c).

Section 2.3 Intercompany Accounts; Guarantees.

(a) Intercompany Accounts. Except as set forth in Section 7.1(b), any and all intercompany receivables, payables, loans and balances (other than (x) as specifically provided for under this Agreement, under any Ancillary Agreement, under any Continuing Arrangements or (y) as otherwise set forth on Schedule 2.3(a) (the matters set forth on Schedule 2.3(a), the “Other Surviving Intergroup Accounts”)) between any member of the Product SpinCo Group that was a member of Historical Xperi, on the one hand, and any member of the IP RemainCo Group that was a member of Historical Xperi, on the other hand, as of immediately prior to the Distribution Date (collectively, the “Intergroup Accounts”) shall, prior to the Distribution Date, be caused by Historical Xperi to be settled immediately prior to the Business Realignment Time, by means of cash payments, a dividend, capital contribution, a combination of the foregoing or otherwise. For the avoidance of doubt, the Other Surviving Intergroup Accounts (i) shall be an obligation of the relevant Party (or the relevant member of such Party’s Group), each responsible for fulfilling its (or a member of such Party’s Group’s) obligations in accordance with the terms and conditions applicable to such obligation or thirty (30) days of a written request by the beneficiary of such obligation given to the corresponding obligor thereunder, and (ii) shall be for each relevant Party (or the relevant member of such Party’s Group) an obligation to a third party and shall no longer be an intercompany account.

(b) Guarantees.

(i) (1) IP RemainCo shall, and shall cause the other members of its Group to, (with the reasonable cooperation of the other Party) use commercially reasonable efforts to have all members of the Product SpinCo Group removed as guarantor of or obligor for any IP Liability to the fullest extent permitted by applicable Law, and (2) Product SpinCo shall, and shall cause the other members of its Group to, (with the reasonable cooperation of the applicable Party) use commercially reasonable efforts to have all members of the IP RemainCo Group removed as guarantor of or obligor for any Product Liability to the fullest extent permitted by applicable Law, in each case (clauses (1)-(2)), on or prior to the Relevant Time or as soon as reasonably practicably thereafter. Except as otherwise provided in Section 2.3(b)(ii) no member of the Product SpinCo Group or IP RemainCo Group or any of their respective Affiliates from time to time shall be required to commence any litigation or offer or pay any money or otherwise grant any accommodation (financial or otherwise) to any third party with respect to any such guarantees.

(ii) On or prior to the Relevant Time or as soon as reasonably practicable thereafter, to the extent required to obtain a release from a guaranty (a “Guaranty Release”) (i) of any member of the IP RemainCo Group, Product SpinCo shall, and shall cause the other members of its Group to, as applicable, execute a guaranty agreement in the form of the existing guaranty, except to the extent that such existing

 

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guaranty contains representations, covenants or other terms or provisions either (A) with which any member of the Product SpinCo Group, would be reasonably unable to comply or (B) which would be reasonably expected to be breached, and (ii) of any member of the Product SpinCo Group, IP RemainCo shall, and shall cause the other members of its Group to, as applicable, execute a guaranty agreement in the form of the existing guaranty, except to the extent that such existing guaranty contains representations, covenants or other terms or provisions either (A) with which IP RemainCo would be reasonably unable to comply or (B) which would be reasonably expected to be breached.

(iii) If any of IP RemainCo or Product SpinCo is unable to obtain, or to cause to be obtained, any such required removal as set forth in clauses (i) and (ii) of this Section 2.3(b) (i) the Party whose Group is relevant beneficiary shall indemnify and hold harmless the guarantor or obligor for any Indemnifiable Loss arising from or relating thereto (in accordance with the provisions of Article VII) and shall or shall cause one of the other members of its Group, as agent or subcontractor for such guarantor or obligor to pay, perform and discharge fully all the obligations or other Liabilities of such guarantor or obligor thereunder, (ii) each of IP RemainCo and Product SpinCo agrees not to renew or extend the term of, increase its obligations under, or Transfer to a third party, any guarantees or Credit Support Instruments, for which the other Party is or may be liable unless all obligations of such other Party and the other members of such Party’s Group with respect thereto are thereupon terminated by documentation reasonably satisfactory in form and substance to such Party; provided, however, with respect to guarantees included in leases for real property, in the event a Guaranty Release is not obtained and such Party wishes to extend the term of such guaranteed lease, then such Party shall have the option of extending the term until the fourth (4th) anniversary of the Relevant Time if it provides such security as is reasonably satisfactory to the guarantor under such guaranteed lease and (iii) the relevant beneficiary shall pay to the guarantor or obligor a fee payable at the end of each calendar quarter based on a rate of 0.65% per annum on the average outstanding amount of the obligation underlying such guarantee or obligation during such quarter.

(iv) Each Party shall, and shall cause the other members of their respective Groups to cooperate and (i) Product SpinCo shall, and shall cause the other members of its Group to, use reasonable best efforts to replace all Credit Support Instruments issued by IP RemainCo or other members of the IP RemainCo Group on behalf of or in favor of any member of the Product SpinCo Group or the Product Business (the “Product SpinCo CSIs”) as promptly as practicable with Credit Support Instruments from Product SpinCo or a member of the Product SpinCo Group as of the Effective Time and (ii) IP RemainCo shall, and shall cause the other members of its Group to, use reasonable best efforts to replace all Credit Support Instruments issued by Product SpinCo or other members of the Product SpinCo Group on behalf of or in favor of any member of the IP RemainCo Group or the IP Business (the “IP RemainCo CSIs”) as promptly as practicable with Credit Support Instruments from IP RemainCo or a member of the IP RemainCo Group as of the Effective Time:

 

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(A) With respect to any Product SpinCo CSIs that remain outstanding after the Effective Time (x) Product SpinCo shall, and shall cause the members of the Product SpinCo Group to, jointly and severally indemnify and hold harmless the IP RemainCo Indemnitees for any Liabilities arising from or relating to the such Product SpinCo CSIs, including any fees in connection with the issuance and maintenance thereof and any funds drawn by (or for the benefit of), or disbursements made to, the beneficiaries of such Product SpinCo CSIs in accordance with the terms thereof, (y) Product SpinCo shall pay to IP RemainCo a fee payable at the end of each calendar quarter based on a rate of 0.65% per annum on the average outstanding balance during such quarter of any outstanding Product SpinCo CSIs issued by IP RemainCo or any member of the IP RemainCo Group, respectively, and (z) without the prior written consent of IP RemainCo, Product SpinCo shall not, and shall not permit any member of the Product SpinCo Group to, enter into, renew or extend the term of, increase its obligations under, or transfer to a third party, any loan, lease, Contract or other obligation in connection with which IP RemainCo or any member of the IP RemainCo Group, respectively, has issued any Credit Support Instruments which remain outstanding. None of IP RemainCo and the members of the IP RemainCo Group will have any obligation to renew any Credit Support Instruments issued on behalf of or in favor of any member of the Product SpinCo Group or the Product Business after the expiration of such Product SpinCo CSI.

(B) With respect to any IP RemainCo CSIs that remain outstanding after the Effective Time (x) IP RemainCo shall, and shall cause the members of the IP RemainCo Group to, jointly and severally indemnify and hold harmless the Product SpinCo Indemnitees for any Liabilities arising from or relating to the such IP RemainCo CSIs, including any fees in connection with the issuance and maintenance thereof and any funds drawn by (or for the benefit of), or disbursements made to, the beneficiaries of such IP RemainCo CSIs in accordance with the terms thereof, (y) IP RemainCo shall pay to Product SpinCo, a fee payable at the end of each calendar quarter based on a rate of 0.65% per annum on the average outstanding balance during such quarter of any outstanding IP RemainCo CSIs issued by Product SpinCo or any member of the Product SpinCo Group, respectively, and (z) without the prior written consent of Product SpinCo, IP RemainCo shall not, and shall not permit any member of the IP RemainCo Group to, enter into, renew or extend the term of, increase its obligations under, or transfer to a third party, any loan, lease, Contract or other obligation in connection with which Product SpinCo or any member of the Product SpinCo Group, has issued any Credit Support Instruments which remain outstanding. None of Product SpinCo and the members of the Product SpinCo Group will have any obligation to renew any Credit Support Instruments issued on behalf of or in favor of any member of the IP RemainCo Group or the IP Business after the expiration of such IP RemainCo CSI.

Section 2.4 Limitation of Intercompany Liabilities; Intergroup Contracts.

(a) No Party shall have any Liability to the other Party in the event that any information exchanged or provided pursuant to this Agreement (but excluding any such information included in a Distribution Disclosure Document or Financing Disclosure Document) which is an estimate or forecast, or which is based on an estimate or forecast, is found to be inaccurate.

 

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(b) Except as set forth in Section 2.4(c), no Party or any other member of its Group shall be liable to the other Party or any other member of such other Party’s Group based upon, arising out of or resulting from any Contract, arrangement, course of dealing or understanding existing on or prior to the Relevant Time (other than this Agreement, the Ancillary Agreements, the Continuing Arrangements, the Other Surviving Intergroup Accounts, and the Other Surviving Selected Intercompany Accounts) and each Party (on behalf of itself and each other member of its Group) hereby terminates any and all Contracts, arrangements, course of dealings or understandings between or among it or any of its other Group members, on the one hand, and the other Party or any of its respective Group members, on the other hand, effective as of the Relevant Time (other than this Agreement, the Ancillary Agreements, the Continuing Arrangements, the Other Surviving Intergroup Accounts, and the Other Surviving Selected Intercompany Accounts and the Conveyancing and Assumption Instruments). No such terminated Contract, arrangement, course of dealing or understanding (including any provision thereof which purports to survive termination) shall be of any further force or effect after the applicable Relevant Time. The Parties shall, and shall cause the other members of their respective Groups to, execute and deliver such agreements, instruments and other papers as may be required to terminate any such Contract, arrangement, course of dealing or understanding pursuant to this Section 2.4(b) if so requested by a Party. Notwithstanding the foregoing, the provisions of this Section 2.4(b) shall not apply to any agreements, arrangements, commitments or understandings to which any Person other than the Parties and their respective Affiliates is a Party (it being understood that (x) to the extent that the rights and obligations of the Parties and the members of their respective Groups under any such Contracts constitute Product Assets or Product Liabilities, or IP Assets or IP Liabilities, such Contracts shall be assigned or retained pursuant to Article II and (y) the obligations of any member of a Group to any other Group shall be deemed terminated as of the Relevant Time with no further liability to any Group as a result thereof).

(c) If any Contract, arrangement, course of dealing or understanding is terminated pursuant to Section 2.4(b), and, but for the mistake or oversight of either Party, would have been listed as continuing and is reasonably necessary for such affected Party to be able to continue to operate its Businesses in substantially the same manner in which such Businesses were operated prior to the applicable Relevant Time, then, at the request of such affected Party made within fifteen (15) months following the applicable Relevant Time, the Parties shall negotiate in good faith to determine whether and to what extent (including the terms and conditions relating thereto), if any, notwithstanding such termination, such Contract, arrangement, course of dealing or understanding should continue, or as appropriate, be re-instated, following the applicable Relevant Time; provided, however, that either Party may determine, in its sole discretion, not to re-instate or otherwise continue any such Contract, arrangement, course of dealing or understanding.

Section 2.5 Transfers Not Effected On or Prior to the Effective Time; Transfers Deemed Effective as of the Effective Time.

(a) To the extent that any Transfers or Assumptions contemplated by this Article II shall not have been consummated at or prior to the Effective Time, the Parties shall use commercially reasonable efforts to effect such Transfers or Assumptions as promptly following the Effective Time as practicable. Nothing herein shall be deemed to require or constitute the Transfer of any Assets or the Assumption of any Liabilities which by their terms or operation of Law cannot be Transferred; provided, however, that the Parties and their respective Subsidiaries shall cooperate and use commercially reasonable efforts to seek to obtain, in

 

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accordance with applicable Law, any necessary Consents for the Transfer of all Assets and Assumption of all Liabilities contemplated to be Transferred and Assumed pursuant to this Article II to the fullest extent permitted by applicable Law. In the event that any such Transfer of Assets or Assumption of Liabilities has not been consummated, from and after the Effective Time (i) the Party (or relevant member in its Group) retaining such Asset shall thereafter hold (or shall cause such member in its Group to hold) such Asset in trust for the use and benefit of the Party entitled thereto (at the expense of the Party entitled thereto) and (ii) the Party intended to Assume such Liability shall, or shall cause the applicable member of its Group to, pay or reimburse the Party retaining such Liability for all amounts paid or incurred in connection with the retention of such Liability. To the extent the foregoing applies to any Contracts (other than Shared Contracts, which shall be governed solely by Section 2.2(d)) to be assigned for which any necessary Consents are not received prior to the Effective Time, the treatment of such Contracts shall, for the avoidance of doubt, also be subject to Section 2.2(c)(iii) and Section 2.3(b), to the extent applicable; provided, that, prior to the date of the Transfer or Assumption of any such Contracts that are listed on Schedule 2.2(d), the Parties shall treat such Contract as a “Specified Licensing Shared Contract” for the purposes of any cooperation covenants applicable to Shared Contracts set forth herein; provided, further that in the event of any conflicts between this Section 2.5 and any other provision of this Agreement, this Section 2.5 shall govern. In addition, the Party retaining such Asset or Liability (or relevant member of its Group) shall (or shall cause such member in its Group to) treat, insofar as reasonably possible and to the extent permitted by applicable Law, such Asset or Liability in the ordinary course of business and take such other actions as may be reasonably requested by the Party to which such Asset is to be Transferred or by the Party responsible for Assuming such Liability in order to place such Party, insofar as reasonably possible and to the extent permitted by applicable Law, in the same position as if such Asset or Liability had been Transferred or Assumed as contemplated hereby and so that all the benefits and burdens relating to such Asset or Liability, including possession, use, risk of loss, potential for income and gain, and dominion, control and command over such Asset or Liability, are to inure from and after the Effective Time to the relevant member or members of the IP RemainCo Group or Product SpinCo Group entitled to the receipt of such Asset or required to Assume such Liability. In furtherance of the foregoing, each Party agrees (on behalf of itself and each other member of its Group) that, as of the Effective Time, subject to Section 2.2(c), each Party and/or each member of its Group shall (i) be deemed to have acquired complete and sole beneficial ownership over all of the Assets, together with all rights, powers and privileges incident thereto, and shall be deemed to have Assumed in accordance with the terms of this Agreement all of the Liabilities, and all duties, obligations and responsibilities incident thereto, which such Party is entitled to acquire or required to Assume pursuant to the terms of this Agreement and (ii) (A) enforce at the other Party’s (or relevant member of its Group’s) request, or allow the other Party’s Group to enforce in a commercially reasonable manner, any rights of the Party or its Group under such Assets and Liabilities against any other Persons, (B) not waive any rights related to such Assets or Liabilities to the extent related to the Business, Assets or Liabilities of the other Party’s Group (C) not terminate (or consent to be terminated by the counterparty) any Contract that constitutes such Asset except in connection with the expiration of such Contract in accordance with its terms, (D) not amend, modify or supplement any Contract that constitutes such Asset and (E) provide written notice to the other Party as soon as reasonably practicable (and in no event later than five (5) Business Days following receipt) after receipt of any formal notice of breach received from a counterparty to any Contract that constitutes such Asset; provided, that the costs and expenses incurred by the responding Party or its Group in respect of any request by the other Party in respect of such Assets or Liabilities shall be borne solely by the requesting Party or its Group plus ten per cent (10%).

 

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(b) If and when the Consents and/or conditions, the absence or non-satisfaction of which caused the deferral of Transfer of any Asset or deferral of the Assumption of any Liability pursuant to Section 2.5(a), are obtained or satisfied, the Transfer, assignment, Assumption or novation of the applicable Asset or Liability shall be effected without further consideration in accordance with and subject to the terms of this Agreement (including Sections 2.2 and 2.5) and/or the applicable Ancillary Agreement, and shall, to the extent possible without the imposition of any undue cost on either Party, be deemed to have become effective as of the Effective Time.

(c) The Party (or relevant member of its Group) retaining any Asset or Liability due to the deferral of the Transfer of such Asset or the deferral of the Assumption of such Liability pursuant to Section 2.5(a) or otherwise shall (i) not be obligated, in connection with the foregoing, to expend any money unless the necessary funds are advanced, assumed, or agreed in advance to be reimbursed by the Party (or relevant member of its Group) entitled to such Asset or the Person intended to be subject to such Liability, other than reasonable attorneys’ fees and recording or similar or other incidental fees, all of which shall be promptly reimbursed by the Party (or relevant member of its Group) entitled to such Asset or the Person intended to be subject to such Liability and (ii) be indemnified for all Indemnifiable Losses or other Liabilities arising out of any actions (or omissions to act) of such retaining Party taken at the direction of the other Party (or relevant member of its Group) in connection with and relating to such retained Asset or Liability, as the case may be. Except as otherwise expressly provided herein, none of IP RemainCo or Product SpinCo or any of their respective Affiliates shall be required to commence any litigation or offer or pay any money or otherwise grant any accommodation (financial or otherwise) to any third party with respect to any Assets or Liabilities not Transferred as of the Effective Time; provided, however, that a Party to which such Asset or Liability has not been Transferred or Assumed, respectively, due to the deferral of the Transfer of such Asset or the deferral of the Assumption of such Liability may request that the Party retaining such Asset or Liability commence litigation, which request shall be considered in good faith by the Party retaining such Asset or Liability; provided, further, that a Party’s good faith determination not to commence litigation shall not in and of itself constitute a breach of this Section 2.5(c), but the foregoing shall not preclude consideration of a Party’s good faith for purposes of determining compliance with this Section 2.5(c).

(d) Notwithstanding anything else set forth in this Section 2.5 to the contrary, (A) neither IP RemainCo nor any of its Subsidiaries shall be required by this Section 2.5 to take any action that may, in the good faith judgment of IP RemainCo, (x) result in a violation of any obligation which IP RemainCo or any such Subsidiary has to any third party or (y) violate applicable Law, and (B) neither Product SpinCo nor any of its Subsidiaries shall be required by this Section 2.5 to take any action that may, in the good faith judgment of Product SpinCo, (x) result in a violation of any obligation which Product SpinCo or any such Subsidiary has to any third party or (y) violate applicable Law.

 

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(e) The failure to obtain a Consent shall not in and of itself constitute a breach of this Agreement; provided, that the foregoing shall not preclude consideration of a Party’s efforts in pursuing such Consent for purposes of determining compliance with this Section 2.5.

(f) To the extent permitted by applicable Law, with respect to Assets and Liabilities described in Section 2.5(a), each of IP RemainCo and Product SpinCo shall, and shall cause the members of its respective Group to, (i) treat for all Tax purposes (A) the deferred Assets as assets having been Transferred to and owned by the Person entitled to such Assets not later than the Relevant Time and (B) the deferred Liabilities as liabilities having been Assumed and owned by the Person intended to be subject to such Liabilities not later than the Relevant Time and (ii) neither report shall take any Tax position (on a Tax Return or otherwise) inconsistent with such treatment (unless required by a change in applicable Tax Law or good faith resolution of a Tax Contest).

Section 2.6 Wrong Pockets; Mail & Other Communications; Payments.

(a) Subject to Section 2.5 (Transfers Not Effected On or Prior to the Effective Time; Transfers Deemed Effective as of the Effective Time) and Section 2.2(d) (Treatment of Shared Contracts), (i) if at any time within twenty-four (24) months after the Relevant Time either Party discovers that any Product Asset is held by any member of the IP RemainCo Group or any of their respective then-Affiliates, IP RemainCo shall, and shall cause the other members of the IP RemainCo Group and its and their respective then-Affiliates to, use their respective reasonable best efforts to promptly procure the transfer of the relevant Product Asset to Product SpinCo or an Affiliate of Product SpinCo designated by Product SpinCo for no additional consideration; or (ii) if at any time within twenty-four (24) months after the applicable Relevant Time, either Party discovers that any IP Asset is held by any member of the Product SpinCo Group or any of their respective then-Affiliates, Product SpinCo shall, and shall cause the other members of the Product SpinCo Group and its and their respective then-Affiliates to use their respective reasonable best efforts to promptly procure the transfer of the relevant IP Asset to IP RemainCo or an Affiliate of IP RemainCo designated by IP RemainCo for no additional consideration; provided that in the case of clause (i), neither IP RemainCo nor any of its Affiliates, in the case of clause (ii), Product SpinCo nor any of its Affiliates, shall be required to commence any litigation or offer or pay any money or otherwise grant any accommodation (financial or otherwise) to any third party. If reasonably practicable and permitted under applicable Law, such Transfer may be effected by rescission of the applicable portion of a Conveyancing and Assumption Instrument as may be agreed by the relevant Parties.

(b) On and prior to the twenty-four (24) month anniversary following the applicable Relevant Time, if either Party or any member of its Group or (or any of its or their respective then-Affiliates) owns any Asset, that, although not Transferred pursuant to this Agreement, is agreed by such Party and the other applicable Party in their good faith judgment to be an Asset that more properly belongs to such other Party or a member of its Group, or is an Asset that such other Party or a member of its Group was intended to have the right to continue to use (other than (for the avoidance of doubt), as between any two Parties, or any Asset acquired from an unaffiliated third party by a Party or member of such Party’s Group following the applicable Relevant Time), then the Party or a member of its Group (or applicable then-Affiliate)

 

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owning such Asset shall, as applicable (i) Transfer any such Asset to the Party or a member of its Group identified as the appropriate transferee and following such Transfer, such Asset shall be a Product Asset, or IP Asset, as the case may be, or (ii) grant such mutually agreeable rights with respect to such Asset to permit such continued use, subject to, and consistent with this Agreement, including with respect to Assumption of associated Liabilities. If reasonably practicable and permitted under applicable law, such Transfer may be effected by rescission of the applicable portion of a Conveyancing and Assumption Instrument as may be agreed by the relevant Parties.

(c) After the Effective Time, each Party (or any member of its Group and any of its or their respective then-Affiliates) may receive mail, packages and other communications properly belonging to the other Party (or any member of its Group). Accordingly, at all times after the Effective Time, each Party (or any member of its Group and any of its or their respective then-Affiliates) is hereby authorized to receive and, to the extent reasonably necessary to identify the proper recipient in accordance with this Section 2.6(c), open all mail, packages and other communications received by such Party (or member of its Group or its or their then-Affiliate) that belongs to such other Party (or member of such other Party’s Group), and to the extent that they do not relate to the business of the receiving Party, the receiving Party shall as promptly as reasonably practicable deliver or cause to be delivered such mail, packages or other communications (or, in case the same also relates to the business of the receiving Party or the other Party, copies thereof) to such other Party as provided for in Section 11.6; provided that, if a Party (or any member of its Group and any of its or their respective then-Affiliates) receives any claim or demand against the other Party (or any member of such other Party’s Group), or any notice or other communication regarding any Action involving the other Party (or any member of such other Party’s Group), such Party shall and shall cause the other members of its Group to, as promptly as practicable (and, in any event, use commercially reasonable efforts to do so within fifteen (15) days after receipt thereof) notify such other Party (including such other Party’s legal department) of the receipt of such claim, demand, notice or other communication, and shall promptly deliver such claim, demand, notice or other communication (or, in case the same also relates to the business of the receiving Party or the other Party, copies thereof) to such other Party provided, however, that the failure to provide such notice shall not constitute a breach of this Section 2.6(c) except to the extent that any such Party shall have been actually prejudiced as a result of such failure. The provisions of this Section 2.6(c) are not intended to, and shall not, be deemed to constitute an authorization by either Party or any other member of either Group (or any of their Affiliates from time to time) to permit the other to accept service of process on its behalf and no Party is or shall be deemed to be the agent of the other Party or any other member of any Group or any of their respective then-Affiliates for service of process purposes.

(d) After the Distribution, IP RemainCo shall, or shall cause the other members of its Group and its and any of its respective then-Affiliates to, promptly pay or deliver to Product SpinCo (or its designee) any monies or checks that have been received by IP RemainCo (or another member of its Group or its or its respective then-Affiliates) after the Distribution to the extent they are (or represent the proceeds of) a Product Asset (it being understood and agreed that any such amounts shall be paid and delivered on a monthly basis, in each case to the applicable members of the Product SpinCo Group; provided, that if the aggregate amount not yet paid or delivered exceeds $100,000 before such monthly payment and delivery, such amount shall be paid and delivered to the applicable members of the Product SpinCo Group within seven (7) days).

 

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(e) After the Distribution, Product SpinCo shall, or shall cause the other members of its Group and its and any of its respective then-Affiliates to, promptly pay or deliver to IP RemainCo (or its designee) any monies or checks that have been received by Product SpinCo (or another member of its Group or its or its respective then-Affiliates) after the Distribution to the extent they are (or represent the proceeds of) an IP Asset (it being understood and agreed that any such amounts shall be paid and delivered on a monthly basis, in each case to the applicable members of the IP RemainCo Group; provided, that if the aggregate amount not yet paid or delivered exceeds $100,000 before such monthly payment and delivery, such amount shall be paid and delivered to the applicable members of the IP RemainCo Group within seven (7) days).

Section 2.7 Conveyancing and Assumption Instruments. In connection with, and in furtherance of, the Transfers of Assets and the acceptance and Assumptions of Liabilities contemplated by this Agreement, the Parties shall execute or cause to be executed, on or prior to the Relevant Time, by the appropriate entities, the Conveyancing and Assumption Instruments necessary to evidence the valid and effective Assumption by the applicable Party of its Assumed Liabilities and the valid Transfer to the applicable Party or member of such Party’s Group of all right, title and interest in and to its accepted Assets, in substantially the form contemplated hereby for Transfers and Assumptions to be effected pursuant to Delaware Law or the Laws of one of the other states of the United States or, if not appropriate for a given Transfer or Assumption, and for Transfers and Assumptions to be effected pursuant to non-U.S. Laws, in such other form as the Parties shall reasonably agree; provided that Section 7.4(f) shall apply to each Transfer and Assumption contemplated by this Agreement.

Section 2.8 Further Assurances.

(a) In addition to and without limiting the actions specifically provided for elsewhere in this Agreement and subject to the limitations expressly set forth in this Agreement, including Section 2.5, each of the Parties shall, and shall cause the other members of its Group to, cooperate with each other and use commercially reasonable efforts, on and after the Effective Time, to take, or to cause to be taken, all actions, and to do, or to cause to be done, all things reasonably necessary on its part under applicable Law or contractual obligations to consummate and make effective the transactions contemplated by this Agreement.

(b) Without limiting the foregoing, on and after the Effective Time, each Party shall, and shall cause the other members of its Group to, cooperate with the other Party (or the relevant member of its Group), and without any further consideration, but at the expense (unless allocated to the Group of the requested Party pursuant to the other terms of this Agreement) of the requesting Party (or the relevant member of its Group) (except as provided in Sections 2.2(d)(v) and 2.5(c)) from and after the Effective Time, to execute and deliver, or use commercially reasonable efforts to cause to be executed and delivered, all instruments, including instruments of Transfer, and to make all filings with, and to obtain all Consents, any permit, license, Contract, indenture or other instrument (including any Consents), and to take all such other actions as such Party (or the relevant member of its Group) may reasonably be requested to

 

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take by the other Party (or the relevant member of its Group) from time to time, consistent with the terms of this Agreement, in order to effectuate the provisions and purposes of this Agreement and the Transfers of the applicable Assets and the assignment and Assumption of the applicable Liabilities and the other transactions contemplated hereby. Without limiting the foregoing, each Party shall, and shall cause the other members of its Group to, at the reasonable request, cost and expense (unless allocated to the Group of the requested Party (or other member of its Group) pursuant to the other terms of this Agreement) of the other Party, take such other actions as may be reasonably necessary to vest in such other Party (or other member of its Group) such title and such rights as possessed by the transferring Party (or its Group) to the Assets allocated to such Party (or member of its Group) under this Agreement, free and clear of any Security Interest.

Section 2.9 Disclaimer of Representations and Warranties. EACH OF IP REMAINCO (ON BEHALF OF ITSELF AND EACH MEMBER OF THE IP REMAINCO GROUP) AND PRODUCT SPINCO (ON BEHALF OF ITSELF AND EACH MEMBER OF THE PRODUCT SPINCO GROUP) UNDERSTANDS AND AGREES THAT, EXCEPT AS EXPRESSLY SET FORTH HEREIN OR IN ANY ANCILLARY AGREEMENT, NO PARTY TO THIS AGREEMENT, ANY ANCILLARY AGREEMENT OR ANY OTHER AGREEMENT OR DOCUMENT CONTEMPLATED BY THIS AGREEMENT, ANY ANCILLARY AGREEMENTS OR OTHERWISE, IS REPRESENTING OR WARRANTING IN ANY WAY AS TO THE ASSETS, BUSINESSES, INFORMATION OR LIABILITIES CONTRIBUTED, TRANSFERRED OR ASSUMED AS CONTEMPLATED HEREBY OR THEREBY, AS TO ANY CONSENTS REQUIRED IN CONNECTION HEREWITH OR THEREWITH, AS TO THE VALUE OR FREEDOM FROM ANY SECURITY INTERESTS OF, AS TO NONINFRINGEMENT, VALIDITY OR ENFORCEABILITY OR ANY OTHER MATTER CONCERNING, ANY ASSETS OF SUCH PARTY, OR AS TO THE ABSENCE OF ANY DEFENSES OR RIGHT OF SETOFF OR FREEDOM FROM COUNTERCLAIM WITH RESPECT TO ANY ACTION OR OTHER ASSET, INCLUDING ACCOUNTS RECEIVABLE, OF EITHER PARTY, OR AS TO THE LEGAL SUFFICIENCY OF ANY CONTRIBUTION, ASSIGNMENT, DOCUMENT, CERTIFICATE OR INSTRUMENT DELIVERED HEREUNDER TO CONVEY TITLE TO ANY ASSET OR THING OF VALUE UPON THE EXECUTION, DELIVERY AND FILING HEREOF OR THEREOF. EXCEPT AS MAY EXPRESSLY BE SET FORTH HEREIN OR THEREIN, ALL SUCH ASSETS ARE BEING TRANSFERRED ON AN “AS IS,” “WHERE IS,” AND “WITH ALL FAULTS” BASIS (AND, IN THE CASE OF ANY REAL PROPERTY, WITHOUT LIABILITIES OR WARRANTIES EXCEPT AS OTHERWISE SET FORTH IN THIS AGREEMENT) AND THE RESPECTIVE TRANSFEREES SHALL BEAR THE ECONOMIC AND LEGAL RISKS THAT (I) ANY CONVEYANCE SHALL PROVE TO BE INSUFFICIENT TO VEST IN THE TRANSFEREE GOOD TITLE, FREE AND CLEAR OF ANY SECURITY INTEREST OR OTHER MATTER WHETHER OR NOT OF RECORD AND (II) ANY NECESSARY CONSENTS ARE NOT OBTAINED OR THAT ANY REQUIREMENTS OF LAWS OR JUDGMENTS ARE NOT COMPLIED WITH.

 

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ARTICLE III

CERTAIN ACTIONS AT OR PRIOR TO THE DISTRIBUTION

Section 3.1 Certificate of Incorporation; Bylaws. At or prior to the Distribution, all necessary actions shall be taken by Product SpinCo to adopt the form of Amended and Restated Certificate of Incorporation and Bylaws filed by Product SpinCo with the Commission as exhibits to the Product Form 10.

Section 3.2 Directors. At or prior to the Distribution, IP RemainCo shall take all necessary action to cause the Board of Directors of Product SpinCo to consist of the individuals identified in the Product SpinCo Information Statement as directors of Product SpinCo.

Section 3.3 Officers. At or prior to the Distribution, IP RemainCo shall take all necessary action to cause the individuals identified as such in the Product SpinCo Information Statement to be officers of Product SpinCo as of the Distribution Date.

Section 3.4 Resignations.

(a) Subject to Section 3.4(b), at or prior to the Distribution, (i) IP RemainCo shall cause all its employees and all employees of its respective Subsidiaries (excluding any employees of any member of the Product SpinCo Group) to resign, effective as of the Distribution, from all positions as officers or directors of any member of the Product SpinCo Group (and any other Person where such position is as a designee or representative of the Product SpinCo Group) in which they serve, and (ii) Product SpinCo shall cause all its employees and all employees of its Subsidiaries to resign, effective as of the Distribution, from all positions as officers or directors of any members of the IP RemainCo Group (and any other Person where such position is as a designee or representative of the IP RemainCo Group) in which they serve.

(b) No Person shall be required by either Party to resign from any position or office with the other Party if such Person is disclosed in the Product SpinCo Information Statement as the Person who is to hold such position or office following the applicable Distribution.

Section 3.5 Wire Transfers. On or about October 3, 2022, IP RemainCo or Product SpinCo (as applicable) shall, and shall cause the other members of their respective Groups to, have a Product SpinCo Employee and IP RemainCo Employee jointly issue instructions to the relevant banks to make the wire payments necessary to effectuate the Internal Reorganization and Business Realignment pursuant to Section 4.4(f) in the applicable local currency, which, for purposes of calculating the impact of any such wire in other provisions of this Agreement, shall be converted into U.S. dollars by using the Bloomberg fixing rate at 5:00 p.m. New York City Time on the Business Day prior to such wire; provided that in no event shall the amount of any such payment exceed the amount of Cash and Cash Equivalents reflected as available (which, for the avoidance of doubt, excludes cash in transit) on the bank account statement for the applicable bank account measured as of 11:59 p.m. (using the local time zone for the jurisdiction of such bank account) on September 30, 2022.

Section 3.6 Ancillary Agreements. On or prior to the Effective Time, each of IP RemainCo and Product SpinCo shall enter into, and/or (where applicable) shall cause a member or members of their respective Group to enter into, the Ancillary Agreements and any other Contracts in respect of the Distribution reasonably necessary or appropriate in connection with the transactions contemplated hereby and thereby.

 

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ARTICLE IV

THE DISTRIBUTION

Section 4.1 Stock Dividends to IP RemainCo. In connection with the Distribution, (i) on or prior to the Distribution Date, Product SpinCo shall issue to IP RemainCo, as a stock dividend, such number of shares of Product SpinCo Common Stock (or IP RemainCo and Product SpinCo shall take or cause to be taken such other appropriate actions to ensure that IP RemainCo has the requisite number of shares of Product SpinCo Common Stock) as will be required so that the total number of shares of Product SpinCo Common Stock held by IP RemainCo immediately prior to the Distribution is equal to the total number of shares of Product SpinCo Common Stock distributable in the Distribution and (ii) on the Distribution Date, subject to the conditions and other terms set forth in this Article IV, IP RemainCo shall cause the Agent to distribute all of the then issued and outstanding shares of Product SpinCo Common Stock to holders of IP RemainCo Common Stock on the Distribution Record Date, and to credit the appropriate class and number of such shares of Product SpinCo Common Stock to book entry accounts for each such holder or designated transferee or transferees of such holder of Product SpinCo Common Stock. For stockholders of IP RemainCo who own IP RemainCo Common Stock through a broker or other nominee, their shares of Product SpinCo Common Stock will be credited to their respective accounts by such broker or nominee. Each holder of IP RemainCo Common Stock on the Distribution Record Date (or such holder’s designated transferee or transferees) will be entitled to receive in the Distribution a number of shares of Product SpinCo Common Stock (to be determined by the board of directors of IP RemainCo prior to the Distribution) for every one (1) share of IP RemainCo Common Stock held by such stockholder. No action by any such stockholder (or such stockholder’s designated transferee or transferees) shall be necessary for such stockholder (or such stockholder’s designated transferee or transferees) to receive the applicable number of shares of (and, if applicable, cash in lieu of any fractional shares) Product SpinCo Common Stock such stockholder is entitled to in the Distribution.

Section 4.2 Fractional Shares. IP RemainCo stockholders holding a number of shares of IP RemainCo Common Stock on the Distribution Record Date which would entitle such stockholders to receive less than one whole share of Product SpinCo Common Stock in the Distribution will receive cash in lieu of fractional shares. Fractional shares of Product SpinCo Common Stock will not be distributed in the Distribution nor credited to book-entry accounts. The applicable Agent shall, as soon as practicable after the Distribution Date (a) determine the number of whole shares and fractional shares of Product SpinCo Common Stock allocable to each holder of record or beneficial owner of IP RemainCo Common Stock as of close of business on the Distribution Record Date, (b) aggregate all such fractional shares into whole shares and sell the whole shares obtained thereby in open market transactions, in each case, at then prevailing trading prices on behalf of holders who would otherwise be entitled to fractional share interests, and (c) distribute to each such holder, or for the benefit of each such beneficial owner, such holder or owner’s ratable share of the net proceeds of such sale, based upon the average

 

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gross selling price per share of Product SpinCo Common Stock, after making appropriate deductions for any amount required to be withheld for U.S. federal income tax purposes, for applicable transfer Taxes and for the costs and expenses of such sale and distribution, including brokers fees and commissions. None of IP RemainCo, Product SpinCo or the applicable Agent will guarantee any minimum sale price for the fractional shares of Product SpinCo Common Stock. Neither IP RemainCo nor Product SpinCo will pay any interest on the proceeds from the sale of fractional shares. The Agent acting on behalf of the applicable Party will have the sole discretion to select the broker-dealers through which to sell the aggregated fractional shares and to determine when, how and at what price to sell such shares. Neither the Agent nor the broker-dealers through which the aggregated fractional shares are sold shall be Affiliates of IP RemainCo or Product SpinCo.

Section 4.3 Sole Discretion of IP RemainCo. IP RemainCo shall, in its sole and absolute discretion, determine the Distribution Date and all other terms of the Distribution, including the form, structure and terms of any transactions and/or offerings to effect the Distribution and the timing of and conditions to the consummation thereof. In addition, IP RemainCo may at any time and from time to time until the completion of the Distribution decide to abandon any or all of the Distribution or modify or change the terms of the Distribution, including by accelerating or delaying the timing of the consummation of all or part of the Distribution. Without limiting the foregoing and notwithstanding anything to the contrary in this Agreement, IP RemainCo shall have the right not to complete the Distribution if, at any time prior to the applicable Relevant Time, the Board shall have determined, in its sole discretion, that the Distribution is not in the best interests of IP RemainCo or its stockholders, that a sale or other alternative is in the best interests of IP RemainCo or its stockholders or that it is not advisable at that time for the Product Business to separate from IP RemainCo.

Section 4.4 Conditions to Distribution. Subject to Section 4.3, the obligation of IP RemainCo to consummate the Distribution is subject to the prior or simultaneous satisfaction, or, to the extent permitted by applicable Law, waiver by IP RemainCo, in its sole and absolute discretion, of the following conditions. None of Product SpinCo or any other member of the Product SpinCo Group with respect to the Distribution or any third party shall have any right or claim to require the consummation of the Distribution, which shall be effected at the sole discretion of the Board. Any determination made by IP RemainCo prior to the Distribution concerning the satisfaction or waiver of any or all of the conditions set forth in this Section 4.4 shall be conclusive and binding on the Parties. The conditions are for the sole benefit of IP RemainCo and shall not give rise to or create any duty on the part of IP RemainCo or the Board to waive or not waive any such condition. Each Party will use its commercially reasonable efforts to keep the other Party apprised of its efforts with respect to, and the status of, each of the following conditions:

(a) the Commission shall have declared effective the Product Form 10, of which the Product SpinCo Information Statement forms a part, and no stop order relating to the registration statement will be in effect, no proceedings seeking such stop order shall be pending before or threatened by the Commission, and the Product SpinCo Information Statement (or the Notice of Internet Availability of the Product SpinCo Information Statement) shall have been distributed to holders of IP RemainCo Common Stock;

 

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(b) the Product SpinCo Common Stock to be delivered in the Distribution shall have been approved for listing on NYSE, subject to official notice of distribution;

(c) IP RemainCo shall have received an opinion from Skadden, Arps, Slate, Meagher & Flom LLP, in form and substance satisfactory to IP RemainCo (in its sole discretion), substantially to the effect that, among other things, the Distribution, together with the Contribution, will qualify as a tax-free transaction under Section 355 and Section 368(a)(1)(D) of the Code;

(d) IP RemainCo shall have received an opinion from the independent appraisal firm set forth on Schedule 4.4(d) or another independent appraisal firm as determined by the Board, in form and substance satisfactory to IP RemainCo confirming that (i) following the Distribution, IP RemainCo, on the one hand, and Product SpinCo, on the other hand, will be solvent and adequately capitalized and (ii) IP RemainCo has adequate surplus under Delaware Law to declare the Distribution;

(e) no order, injunction, or decree issued by any Governmental Entity of competent jurisdiction, or other legal restraint or prohibition preventing the consummation of all or any portion of the Distribution or any of the related transactions shall be pending, threatened, issued or in effect, and no other event outside the control of IP RemainCo shall have occurred or failed to occur that prevents the consummation of all or any portion of the Distribution;

(f) the Internal Reorganization and Business Realignment shall have been effectuated prior to the Distribution, except for such steps (if any) as IP RemainCo in its sole discretion shall have determined need not be completed or may be completed after the Effective Time;

(g) the Board shall have declared the Distribution and approved all related transactions, which approval may be given or withheld at its absolute and sole discretion (and such declaration or approval shall not have been withdrawn);

(h) IP RemainCo shall have elected the board of directors of Product SpinCo, as described in the Product Form 10, immediately prior to the Distribution;

(i) the directors of IP RemainCo set forth on Schedule 4.4(i) shall have resigned from the Board effective upon the Distribution;

(j) (x) Product SpinCo shall have, and shall have caused its applicable Subsidiaries to have, entered into all Ancillary Agreements to which it and/or such Subsidiary is contemplated to be a party and (y) IP RemainCo shall have, and shall have caused its applicable Subsidiaries to have, entered into all Ancillary Agreements to which it and/or such Subsidiary is contemplated to be a party; and

(k) no events or developments shall have occurred or shall exist that, in the sole and absolute judgment of the Board, make it inadvisable to effect the Distribution or would result in the Distribution and related transactions not being in the best interest of IP RemainCo or its stockholders.

 

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Section 4.5 Effectiveness of Distribution. Unless otherwise determined by IP RemainCo prior to the Distribution, the Distribution shall be deemed to occur at 12:01 a.m. on the Distribution Date.

ARTICLE V

CERTAIN COVENANTS

Section 5.1 Covenants. From the Relevant Time until October 1, 2027, and subject to the terms and limitations contained in this Agreement and the Ancillary Agreements, each Party shall, and shall cause the other members of its Group, their respective then-Affiliates, each of its and their respective Affiliates and its and their employees to (a) provide reasonable cooperation and assistance to the other Party (and any member of such Party’s Group) in connection with the completion of the Internal Reorganization, the Business Realignment and the transactions contemplated herein and in each Ancillary Agreement (including assisting in the preparation of the Distribution), (b) provide knowledge transfer in reasonable detail at the request of the other Party regarding the Business, Assets or Liabilities of such other Party (for the avoidance of doubt, knowledge transfer is not required pursuant to this Section 5.1 with respect to Intellectual Property or Information constituting an Asset of the requested Party’s Group (unless a license or access thereto has been granted to a member of the requesting Party’s Group pursuant to an Ancillary Agreement (but in such case, Information shall be delivered only to the extent of such license (or to the extent reasonably necessary to exercise such license) or access and otherwise subject to the terms of the applicable Ancillary Agreement))), (c) reasonably assist each Party (or member of its respective Group) in the orderly and efficient transition in becoming an independent company, (d) reasonably assist the other Party (or member of its respective Group) to the extent such Party (or member of such Party’s Group) is providing or has provided services, as applicable, pursuant to the Transition Services Agreement, in connection with requests for Information from, audits or other examinations of, such other Party (or member of such Party’s Group) by a Governmental Entity, (e) provide reasonable cooperation and assistance to the other Party (and any member of its respective Group) in (x) seeking and obtaining all Consents of Governmental Entities under applicable Law with respect to the transactions contemplated by this Agreement, and (y) gathering, preparing and submitting any information or documentary material that may be requested by any Governmental Entity in connection with obtaining such Consents, and (f) reasonably assist the other Party (or member of its respective Group) to the extent such Party (or member of such Party’s Group) is party to a Specified Licensing Shared Contract, in connection with enforcement of rights, collecting payments on receivables, administering payoffs, prepayments, defaults and delinquencies, requests for Information, audits or other examinations in accordance with the provisions of such Specified Licensing Shared Contract, in each case (clauses (a)-(f)), at no additional cost to the Party (or member of such Party’s Group) requesting such assistance other than for the actual out-of-pocket costs (which shall not include the costs of salaries and benefits of employees of such Party (or its Group) or any pro rata portion of overhead or other costs of employing such employees which would have been incurred by such employees’ employer regardless of the employees’ service with respect to the foregoing) incurred by any such Party

 

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(or its Group), if applicable. The cooperation and assistance provided for in this Section 5.1 shall not be required to the extent such cooperation and assistance would result in an undue burden on either Party (or any member of its Group) or would unreasonably interfere with any of its employees’ normal functions and duties. In furtherance of, and without limiting, the foregoing, each Party shall, and shall cause the other members of its Group (or their then-current Affiliates) to, make reasonably available those employees with particular knowledge of any function or service of which the other Party was not allocated the employees involved in such function or service in connection with the Internal Reorganization and/or the Business Realignment (including employee benefits functions, risk management, etc.).

Section 5.2 Financial Statements.

(a) Reasonable Assistance. Each Party agrees (on behalf of itself and each other member of its Group) that, following the Relevant Time until the completion of each Party’s audit for the fiscal year ending December 31, 2022 and in any event solely with respect to any audit with respect to any fiscal year ending prior to the Relevant Time or for any portion of a fiscal year prior to the Relevant Time, in each case, in respect of which the Party requesting such reasonable assistance was an Affiliate (or relevant member of its Group) of the other Party’s Group, such Party will provide, and will instruct its Affiliates and advisors and representatives to provide, reasonable assistance for purposes of the preparation and audit of each of the Party’s financial statements for the year ended December 31, 2022 or amendments thereto (or the printing, filing and public dissemination thereof) and (z) the audit of each Party’s internal control over financial reporting and management’s assessment thereof and management’s assessment of each Party’s disclosure controls and procedures in respect of the year ended December 31, 2022; provided, that in the event that either Party changes its auditors within one (1) year of the completion of each Party’s audit for the fiscal year ending December 31, 2022, then such Party may request reasonable access on the terms set forth in this Section 5.1 for a period of up to one hundred and eighty (180) days from such change; provided, further, that, notwithstanding the foregoing, access of the type described in this Section 5.1 shall be afforded by and to each of the Parties (from time to time following the applicable Relevant Time), as applicable, to the extent reasonably necessary to respond (and for the limited purpose of responding) to any written request or official comment from a Governmental Entity, such as in connection with responding to a comment letter from the Commission, or as reasonably necessary to meet a filing, reporting or similar obligation required under applicable Law (including under Public Reports):

(i) Annual Financial Statements. (i) each Party shall provide or provide access to each other Party on a timely basis all Information reasonably required to meet such other Party’s schedule for the preparation, printing, filing, and public dissemination of such other Party’s annual financial statements for the fiscal year ending December 31, 2022 and for management’s assessment of the effectiveness of such Party’s disclosure controls and procedures and its internal control over financial reporting in accordance with Items 307 and 308, respectively, of Regulation S-K and, to the extent applicable to such Party, its auditor’s audit of its internal control over financial reporting and management’s assessment thereof in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 and the Commission’s and Public Company Accounting Oversight Board’s rules and auditing standards thereunder, if required (such assessments and audit

 

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being referred to as the “2021/2022 Internal Control Audit and Management Assessments”) for the fiscal year ending December 31, 2022 and (ii) without limiting the generality of the foregoing clause (i), each Party shall provide all required financial and other Information with respect to itself and its Subsidiaries to its auditors in a sufficient and reasonable time and in sufficient detail to permit its auditors to take all steps and perform all reviews necessary to provide sufficient assistance to each other Party’s auditors (each such other Party’s auditors, collectively, the “Other Party’s Auditor”) with respect to Information to be included or contained in such other Party’s annual financial statements for the fiscal year ending December 31, 2022 and to permit the Other Party’s Auditor and management to complete the 2021/2022 Internal Control Audit and Management Assessments, if required; and

(ii) Date of Auditors’ Opinion. (i) Product SpinCo shall use commercially reasonable efforts to enable its auditor to complete its audit for the fiscal year ending December 31, 2022 such that it shall date its opinion on the audited annual financial statements on the same date that IP RemainCo’s auditor dates its opinion on IP RemainCo’s audited annual financial statements, and to enable IP RemainCo to meet its timetable for the printing, filing and public dissemination of IP RemainCo’s annual financial statements for the fiscal year ending December 31, 2022 and (ii) IP RemainCo shall use commercially reasonable efforts to enable its auditor to complete its audit for the fiscal year ending December 31, 2022 such that it shall date its opinion on the audited annual financial statements on the same date that Product SpinCo’s auditors date its opinion on Product SpinCo’s audited annual financial statements, and to enable Product SpinCo to meet its timetable for the printing, filing and public dissemination of Product SpinCo’s annual financial statements for the fiscal year ending December 31, 2022; and

(b) Access to Personnel and Records. Subject to the confidentiality provisions of this Agreement, (i) each Party shall authorize and request its auditor to make reasonably available to the Other Party’s Auditor both the personnel who performed or are performing the annual audits of such audited Party (each such Party with respect to its own audit, the “Audited Party”) and work papers related to the annual audits of such Audited Party, in all cases within a reasonable time prior to such Audited Party’s auditors’ opinion date, so that the Other Party’s Auditor is able to perform the procedures it reasonably considers necessary to take responsibility for the work of the Audited Party’s auditor as it relates to its auditors’ opinion on such other Party’s financial statements, all within sufficient time to enable such other Party to meet its timetable for the printing, filing and public dissemination of its annual financial statements with the Commission for the fiscal year ending December 31, 2022, and (ii) each Party shall use commercially reasonable efforts to make reasonably available to the Other Party’s Auditor and management its personnel and Records in a reasonable time prior to the Other Party’s Auditor’s opinion date and other Party’s management’s assessment date so that the Other Party’s Auditor and other Party’s management are able to perform the procedures they reasonably consider necessary to conduct the 2021/2022 Internal Control Audit and Management Assessments; and

 

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(c) Current, Quarterly and Annual Reports. (i) at least three (3) Business Days prior to the earlier of public dissemination or filing with the Commission, each Party shall deliver to the other Party a reasonably complete draft of any earnings news release or any filing with the Commission containing financial statements for the years 2021 and 2022, including current reports on Form 8-K, quarterly reports on 10-Q and annual reports on Form 10-K or any other annual report purporting to fulfill the requirements of 17 CFR 240-14c-3 (such reports, collectively, the “Public Reports”); provided, however, that each of IP RemainCo and Product SpinCo may continue to revise its respective Public Report prior to the filing thereof, which changes will be delivered to the other Party as soon as reasonably practicable; provided, further, that each Party’s personnel will actively consult with the other Party’s personnel regarding any changes which it may consider making to its Public Reports and related disclosures prior to the anticipated filing with the Commission, with particular focus on any changes which would reasonably be expected to have an effect upon the other Party’s financial statements or related disclosures, (ii) each Party shall notify the other Party, as soon as reasonably practicable after becoming aware thereof, of any material accounting differences between the financial statements to be included in such Party’s annual report on Form 10-K and the pro forma financial statements included, as applicable, in the Product Form 10 or the Form 8-K to be filed by IP RemainCo with the Commission on or about the time of each Distribution and (iii) if any such differences are identified, the Parties shall confer and/or meet as soon as reasonably practicable thereafter, and in any event prior to the filing of any Public Report, to consult with each other in respect of such differences and the effects thereof on the Parties’ applicable Public Reports.

Section 5.3 Separation of Information.

(a) Except as set forth on Schedule 5.3(a), Product SpinCo shall, and shall cause the other members of the Product SpinCo Group to, use commercially reasonable efforts to deliver to IP RemainCo (or its designee) by January 2, 2024 all Information that constitutes an IP Asset but is commingled in any member of the Product SpinCo Group’s current records or archives (whether stored with a third party or directly by any member of the Product SpinCo Group) (for the avoidance of doubt, Product SpinCo may redact Information that is a Product Asset to which a member of the IP RemainCo Group does not have a license pursuant to an Ancillary Agreement (to the extent such Information is not reasonably necessary to exercise a license pursuant to any Ancillary Agreement)); provided, that with respect to any Information to which a member of the IP RemainCo Group has a license pursuant to any Ancillary Agreement (or such Information is reasonably necessary to exercise such license), such Information shall be delivered only to the extent of such license (or such reasonable need for related Information) or access and otherwise subject to the terms of the applicable Ancillary Agreement.

(b) If IP RemainCo identifies in writing particular Information (whether in written, electronic documentary or other archival documentary form) that IP RemainCo reasonably believes constitutes an IP Asset (or to which a member of its Group has a license pursuant to an Ancillary Agreement (or such Information is reasonably necessary to exercise such license)), but is held by or on behalf of any member of the Product SpinCo Group (or any transferee thereof), Product SpinCo shall, and shall cause any other applicable member of the Product SpinCo Group to, request that the archive holder deliver such item to Product SpinCo for review as soon as reasonably practicable, and Product SpinCo shall review such request and deliver the requested material to IP RemainCo, as promptly as reasonably practicable; provided, that with respect to any Information to which a member of the IP RemainCo Group has a license pursuant to any Ancillary Agreement (or such Information is reasonably necessary to exercise such license), such Information shall be delivered only to the extent of such license (or such reasonable need for related Information) or access and otherwise subject to the terms of the applicable Ancillary Agreement.

 

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(c) Except as set forth on Schedule 5.3(c), IP RemainCo shall, and shall cause the other members of the IP RemainCo Group to, use commercially reasonable efforts to deliver to Product SpinCo (or its designee) by January 2, 2024 all Information that constitutes a Product Asset but is commingled in any member of the IP RemainCo Group’s current records or archives (whether stored with a third party or directly by any member of the IP RemainCo Group) (for the avoidance of doubt, IP RemainCo may redact Information that is an IP Asset to which a member of the Product SpinCo Group does not have a license pursuant to an Ancillary Agreement (to the extent such Information is not reasonably necessary to exercise a license pursuant to any Ancillary Agreement)); provided, that with respect to any Information to which a member of the Product SpinCo Group has a license pursuant to any Ancillary Agreement (or such Information is reasonably necessary to exercise such license), such Information shall be delivered only to the extent of such license (or such reasonable need for related Information) or access and otherwise subject to the terms of the applicable Ancillary Agreement.

(d) If Product SpinCo identifies in writing particular Information (whether in written, electronic documentary or other archival documentary form) that Product SpinCo reasonably believes constitutes a Product Asset (or to which a member of its Group has a license pursuant to an Ancillary Agreement (or such Information is reasonably necessary to exercise such license)), but is held by or on behalf of any member of the IP RemainCo Group (or any transferee thereof), IP RemainCo shall, and shall cause any other applicable member of the IP RemainCo Group to, request that the archive holder deliver such item to IP RemainCo for review as soon as reasonably practicable, and IP RemainCo shall review such request and deliver the requested material to Product SpinCo as promptly as reasonably practicable; provided, that with respect to any Information to which a member of the Product SpinCo Group has a license pursuant to any Ancillary Agreement (or such Information is reasonably necessary to exercise such license), such Information shall be delivered only to the extent of such license (or such reasonable need for related Information) or access and otherwise subject to the terms of the applicable Ancillary Agreement.

Section 5.4 Nonpublic Information. Each Party acknowledges on behalf of itself and the other members of its Group that Information provided under Section 5.1 may constitute material, nonpublic information, and trading in the securities of a member of any Group (or the securities of such Person’s Affiliates, or partners) while in possession of such material, nonpublic information may constitute a violation of the U.S. federal securities Laws.

Section 5.5 Inventor Remuneration. Each Party shall, and shall cause the members of its respective Group to, reasonably cooperate with each other and shall use commercially reasonable efforts, on and after the Effective Time, to take, or cause to be taken, and without any further consideration, from and after the Effective Time to provide assistance and deliver, and cause to be delivered, all information, Contracts, reports, records and other materials reasonably necessary to determine and pay Inventor Remuneration, including (i) the Inventor Remuneration due to each such inventor, (ii) the calculations of such Inventor

 

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Remuneration, (iii) the last available contact information of each such inventor, (iv) when such Inventor Remuneration is or was due to be paid, (v) the milestones at which each such inventor was or is owed such Inventor Remuneration and the payments due at such milestones, and (vi) any pending or threatened Action arising out of such Inventor Remuneration. At the request of a Party, the other Party shall, and shall cause the other members of their respective Groups to, reasonably cooperate to maintain such information as confidential, including by permitting such information to be provided directly to the inventor and permitting a Party or a member of its Group to directly compensate such inventor, and permitting such inventor to be subject to reasonable confidentiality arrangements.

Section 5.6 License to Use Certain Trademark Names.

(a) Effective as of the Distribution Date, Product SpinCo hereby grants to IP RemainCo and its Affiliates a perpetual, worldwide, non-exclusive, non-transferable, non-sublicensable, fully paid-up, royalty-free license to use the Product SpinCo Licensed Trademarks solely for the purpose of referring to IP RemainCo’s owned Patents (or Patent portfolio) in existence on the Effective Date.

(b) Effective as of the Distribution Date, Product SpinCo hereby grants to IP RemainCo and its Affiliates a worldwide, non-exclusive, non-transferable, non-sublicensable, fully paid-up, royalty-free license to use the Product SpinCo Licensed Trademarks for a period of two (2) years solely in connection with the IP Business in the manner in which it has been conducted during the twelve (12)-month period prior to the Effective Time; provided that, except as expressly permitted pursuant to Section 5.7, IP RemainCo and its Affiliates shall not use any Product SpinCo Licensed Trademarks on any publicly facing branding, press materials, marketing collateral or the like.

(c) As between the Parties, subject to the limited licenses granted in Section 5.6(a) and Section 5.6(b), IP RemainCo acknowledges the sole ownership by Product SpinCo of all right, title and interest in and to the Product SpinCo Licensed Trademarks and all related goodwill and that all goodwill accruing from IP RemainCo’s and its Affiliates’ use of the Product SpinCo Licensed Trademarks will inure solely to the benefit of Product SpinCo. IP RemainCo covenants that it will not do or cause to be done any act to impair the Product SpinCo Licensed Trademarks or the right, title or interest of Product SpinCo in the Product SpinCo Licensed Trademarks. In connection with the use of the Product SpinCo Licensed Trademarks, IP RemainCo shall not in any manner represent that it has any ownership interest in the Product SpinCo Licensed Trademarks.

(d) IP RemainCo shall, in its use of the Product SpinCo Licensed Trademarks, adhere to a general level of quality that is consistent with or better than that used with respect to the Product SpinCo Licensed Trademarks in the twelve (12) months prior to the Effective Time.

(e) IP RemainCo shall comply with all applicable Laws in connection with use of the Product SpinCo Licensed Trademarks, including using all Product SpinCo Licensed Trademark legends, notices, and markings as required by applicable Law.

 

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Section 5.7 Publicity. Subject to Section 5.6, members of the IP RemainCo Group may at any time list members of the Product SpinCo Group (and their respective logos) as authorized licensees or reference members of the Product SpinCo Group (and their respective logos) as customers in websites, earnings releases and other investor communications, marketing materials, presentations or customer lists, which may be shared with third parties. Members of the Product SpinCo Group may at any time list members of the IP RemainCo Group (and their respective logos) as authorized licensors of members of the Product SpinCo Group in websites, earnings releases and other investor communications, marketing materials, presentations or licensor lists, which may be shared with third parties.

ARTICLE VI

SPECIFIED SHARED ASSETS AND SPECIFIED SHARED LIABILITIES

Section 6.1 Specified Shared Assets and Specified Shared Liabilities.

(a) Specified Shared Assets. To the extent that a Party or any member of its Group (or any of its or their respective then-Affiliates) receives from a third party any proceeds of any kind arising out of a Specified Shared Asset, to the extent necessary, such Party shall, or shall cause the applicable member of its Group (or any of its or their respective then-Affiliates) to, promptly (but in no event later than thirty (30) days following receipt thereof), unless there is a good faith open question as to whether such proceeds are in fact Specified Shared Assets and the matter has been submitted for resolution pursuant to the terms of this Agreement, in which case, promptly following the final determination thereof, transfer such amounts to the applicable Party or Parties, pursuant to and in accordance with their respective Applicable Percentage; provided, further, that so long as Product SpinCo is still an Affiliate of IP RemainCo, Product SpinCo shall be entitled to all of IP RemainCo’s Applicable Percentage of the proceeds realized from a Specified Shared Asset. In furtherance of the foregoing, the applicable Managing Party (and the Party or Parties providing assistance to the applicable Managing Party shall be entitled to such reimbursement of any out-of-pocket costs and expenses (which shall not include the costs of salaries and benefits of employees who are managing such Specified Shared Asset or any pro rata portion of overhead or other costs of employing such employees which would have been incurred by such employees’ employer regardless of the employees’ service as managing the Specified Shared Asset) related to or arising out of prosecuting or managing any such Specified Shared Asset from the other Party from time to time when invoiced, in advance of a final determination or resolution with respect to such Specified Shared Asset (and each such Party shall be liable for its Applicable Percentage of such costs and expenses). Without limiting any other provision of this Agreement, the Parties shall, and shall cause each other member of its Group to, use commercially reasonable efforts to cause any Specified Shared Asset to be assigned to each Party in accordance with such Parties’ Applicable Percentage. In the event that any Specified Shared Asset is not assignable in accordance with its terms and cannot otherwise be assigned to the Groups to whom ownership of such assets has otherwise been conveyed pursuant to this Agreement, then the Party (or member of its Group) who owns such Specified Shared Asset shall cause such Specified Shared Assets to be held in trust on behalf of the applicable Parties. To the extent that any such Specified Shared Assets are held in trust by the applicable Party or any other member of its Group (or any of its or their respective then-Affiliates) (as described in the foregoing sentences), then to the extent that any

 

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cash proceeds are actually received in connection with such Specified Shared Assets, such Party shall, or shall cause the applicable member of its Group (or its or their respective then-Affiliates) to, transfer or contribute such proceeds to the other applicable Parties in accordance with such Parties’ Applicable Percentage.

(b) Specified Shared Liabilities. Except as otherwise expressly set forth in this Article VI and without limiting the indemnification provisions of Article VII, each of the Parties shall be responsible for its respective Applicable Percentage of any costs and expenses (in addition to, without duplication, each such Party’s share of any Indemnifiable Losses in respect of any such Specified Shared Liabilities pursuant to and in accordance with the relevant provisions of Article VII) related to or arising out of any Specified Shared Liability; provided, that so long as Product SpinCo is still an Affiliate of IP RemainCo, IP RemainCo shall be responsible for Product SpinCo’s Applicable Percentage of any such Specified Shared Liability. Any amounts owed in respect of any Specified Shared Liabilities (including reimbursement for the out-of-pocket costs and expenses of defending, managing or providing assistance to the Managing Party with respect to any Third Party Claim that is a Specified Shared Liability, which shall include any amounts with respect to a bond, prepayment or similar security or obligation required (or determined to be advisable by the Managing Party) to be posted by the Managing Party in respect of any claim) shall be remitted promptly after the Party entitled to such amount provides an invoice (including reasonable supporting information with respect thereto) to the Party or Parties owing such amount and such costs and expenses shall be included in the calculation of the amount of the applicable Specified Shared Liability in determining the reimbursement obligations of the other Party with respect thereto. In furtherance of the foregoing, the Managing Party (and the Party providing assistance to the Managing Party) shall be entitled to reimbursement by the other Party (in an amount equal to its Applicable Percentage) of any out-of-pocket costs and expenses (which shall not include the costs of salaries and benefits of employees who are managing such Specified Shared Liability or any pro rata portion of overhead or other costs of employing such employees which would have been incurred by such employees’ employer regardless of the employees’ service as managing the Specified Shared Liability) related to or arising out of defending or managing any such Specified Shared Liability from the applicable Parties, from time to time when invoiced, in advance of a final determination or resolution of any Action related to a Specified Shared Liability. It shall not be a defense to any obligation by either Party to pay any amounts, whether pursuant to this Article VI or in respect of Indemnifiable Losses pursuant to Article VII, in respect of any Specified Shared Liability that (i) such Party was not consulted in the defense or management thereof, (ii) that such Party’s views or opinions as to the conduct of such defense were not accepted or adopted, (iii) that such Party does not approve of the quality or manner of the defense thereof or (iv) that such Specified Shared Liability was incurred by reason of a settlement rather than by a judgment or other determination of Liability (even if, subject in each case to Section 7.4(e), such settlement was effected without the consent or over the objection of such Party); it being understood that if such obligations arose in connection with any settlement of a Specified Shared Liability, and such settlement is of a type that required requisite approval of the Contingent Claim Committee and such requisite approval has not been obtained, then (to the extent such right exists) a Party may assert as a defense that the provisions of this Article VI have not been complied with.

 

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Section 6.2 Management of Specified Shared Assets and Specified Shared Liabilities.

(a) For purposes of this Article VI, “Managing Party” shall mean with respect to the Specified Shared Assets and Specified Shared Liabilities known by the Parties as of the date hereof, (i) IP RemainCo with respect to the matters designated as such on Schedule 6.2(a)(i), and (ii) Product SpinCo with respect to the matters designated as such on Schedule 6.2(a)(ii); provided, however, that the Managing Party with respect to any particular Specified Shared Asset and/or Specified Shared Liability not set forth in any of Schedules 6.2(a)(i), 6.2(a)(ii) or 6.2(a)(iii) shall be Product SpinCo (unless otherwise agreed by the Parties).

Section 6.3 Cooperation with Governmental Entity. If, in connection with any Specified Shared Asset or Specified Shared Liability, a Party (or any member of its Group or its or their respective then-Affiliates) is required by Law to respond to and/or cooperate with a Governmental Entity, such Party (and/or any applicable member of its Group and any of its or their respective and applicable then-Affiliates) shall be entitled to cooperate and respond to such Governmental Entity after, to the extent practicable under the specific circumstances, consultation with the other Party.

ARTICLE VII

INDEMNIFICATION

Section 7.1 Release of Pre-Distribution Claims.

(a) Except (i) as provided in Section 7.1(b), (ii) as may be otherwise expressly provided in this Agreement and (iii) for any matter for which any Indemnitee is entitled to indemnification pursuant to this Article VII, each Party, on behalf of itself and each member of its Group, and, to the extent permitted by Law, all Persons who at any time prior to the Relevant Time were directors, officers, agents or employees of any member of its respective Group (in their respective capacities as such), in each case, together with their respective heirs, executors, administrators, successors and assigns, do hereby remise, release and forever discharge the other Party and the other members of such other Party’s Group and their respective successors and all Persons who at any time prior to the Relevant Time were shareholders, directors, officers or employees of any member of such other Party’s Group (in their capacity as such), in each case, together with their respective heirs, executors, administrators, successors and assigns from any and all Liabilities whatsoever, whether at Law or in equity, whether arising under any Contract, by operation of Law or otherwise, in each case, existing or arising from any acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur or any conditions existing or alleged to have existed on or before the Relevant Time, including in connection with the Internal Reorganization, Business Realignment and Distribution and any of the other transactions contemplated hereunder and under the Ancillary Agreements; provided, however, that no employee shall be remised, released and discharged to the extent that such Liability relates to, arises out of or results from intentional misconduct by such employee.

 

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(b) Nothing contained in this Agreement, including Section 7.1(a), shall impair or otherwise affect any right of either Party, any member of either Group, or either Party’s or any member of a Group’s respective heirs, executors, administrators, successors and assigns to enforce this Agreement, any Ancillary Agreement, any Continuing Arrangements or any agreements, arrangements, commitments or understandings that continue in effect after the Relevant Time pursuant to the terms of this Agreement or any Ancillary Agreement. In addition, nothing contained in Section 7.1(a) shall release any Person from:

(i) any Liability Assumed, Transferred or allocated to a Party or a member of such Party’s Group pursuant to or as contemplated by, or any other Liability of any member of such Group under, this Agreement or any Ancillary Agreement including (A) with respect to Product SpinCo, any Product Liability and (B) with respect to IP RemainCo, any IP Liability;

(ii) any Specified Shared Liability;

(iii) any Liability under any Continuing Arrangements, any Other Surviving Intergroup Account, and Other Surviving Selected Intercompany Accounts;

(iv) any Liability that the Parties may have with respect to indemnification pursuant to this Agreement or any Ancillary Agreement or otherwise for claims or Actions brought against any Indemnitee by third Persons, which Liability shall be governed by the provisions of this Agreement and, in particular, this Article VII or, in the case of any Liability arising out of an Ancillary Agreement, the applicable provisions of the Ancillary Agreement; or

(v) any Liability the release of which would result in a release of any Person other than the Persons released in Section 7.1(a); provided that the Parties agree not to bring any Action or permit any other member of their respective Group to bring any Action against a Person released in Section 7.1(a) with respect to such Liability.

In addition, nothing contained in Section 7.1(a) shall release (x) IP RemainCo from indemnifying any director, officer or employee of Product SpinCo who was a director, officer or employee of IP RemainCo or any of its Subsidiaries on or prior to the Distribution to the extent such director, officer or employee is or becomes a named defendant in any Action with respect to which he or she was entitled to such indemnification pursuant to then-existing obligations; it being understood that if the underlying obligation giving rise to such Action is a Product Liability, Product SpinCo shall indemnify IP RemainCo for such Liability (including IP RemainCo’s costs to indemnify the director, officer or employee) in accordance with the provisions set forth in this Article VII, and (y) Product SpinCo from indemnifying any director, officer or employee of IP RemainCo who was a director, officer or employee of Product SpinCo or any of its Subsidiaries on or prior to the Distribution to the extent such director, officer or employee is or becomes a named defendant in any Action with respect to which he or she was entitled to such indemnification pursuant to then-existing obligations; it being understood that if the underlying obligation giving rise to such Action is an IP Liability, IP RemainCo shall indemnify Product SpinCo for such Liability (including Product SpinCo’s costs to indemnify the director, officer or employee) in accordance with the provisions set forth in this Article VII.

 

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

(d) It is the intent of each Party, by virtue of the provisions of this Section 7.1, to provide for a full and complete release and discharge of all Liabilities existing or arising from all acts and events occurring or failing to occur or alleged to have occurred or to have failed to occur and all conditions existing or alleged to have existed on or before the Relevant Time, whether known or unknown, between or among a Party (and/or a member of such Party’s Group), on the one hand, and the other Party (and/or a member of such Party’s Group), on the other hand (including any contractual agreements or arrangements existing or alleged to exist between or among any such members on or before the Relevant Time), except as specifically set forth in Sections 7.1(a) and 7.1(b). At any time, at the reasonable request of the other Party, each Party shall cause each member of its respective Group and, to the extent practicable, each other Person on whose behalf it released Liabilities pursuant to this Section 7.1 to execute and deliver releases reflecting the provisions hereof.

(e) Each of Product SpinCo and IP RemainCo hereby waives any claims, rights of termination and any other rights under any Continuing Arrangement related to or arising out of the Internal Reorganization, the Business Realignment and the Distribution (including with respect to any “change of control” or similar provision) and agrees that any change in rights or obligations that would automatically be effective as a result thereof be deemed amended to no longer apply (and that Section 2.8 shall apply in respect of such amendments).

Section 7.2 Indemnification by IP RemainCo. In addition to any other provisions of this Agreement requiring indemnification and except as otherwise specifically set forth in any provision of this Agreement, following the Distribution Date (with respect to the Product SpinCo Indemnitees), IP RemainCo shall and shall cause the other members of the IP RemainCo Group to indemnify, defend and hold harmless the Product SpinCo Indemnitees from and against any and all Indemnifiable Losses of the Product SpinCo Indemnitees to the extent relating to, arising out of or resulting from (i) the IP Liabilities or any Third Party Claim that would, if resolved in favor of the claimant, constitute an IP Liability or (ii) any breach by IP RemainCo of any provision of this Agreement.

Section 7.3 Indemnification by Product SpinCo. In addition to any other provisions of this Agreement requiring indemnification and except as otherwise specifically set forth in any provision of this Agreement, Product SpinCo shall and shall cause the other members of the Product SpinCo Group to indemnify, defend and hold harmless the IP RemainCo Indemnitees from and against any and all Indemnifiable Losses of the IP RemainCo Indemnitees to the extent relating to, arising out of or resulting from (i) the Product Liabilities or any Third Party Claim that would, if resolved in favor of the claimant, constitute a Product Liability or (ii) any breach by Product SpinCo of any provision of this Agreement.

 

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Section 7.4 Procedures for Third Party Claims.

(a) If a claim or demand is made against an IP RemainCo Indemnitee or a Product SpinCo Indemnitee (each, an “Indemnitee”) by any Person who is not a member of the Product SpinCo Group or IP RemainCo Group (a “Third Party Claim”) as to which such Indemnitee is or may be entitled to indemnification pursuant to this Agreement, such Indemnitee shall notify the Party (and, if applicable, the Contingent Claim Committee) which is or may be required pursuant to this Article VII to make such indemnification (the “Indemnifying Party”) in writing, and in reasonable detail, of the Third Party Claim as promptly as practicable (and in any event within fifteen (15) days) after receipt by such Indemnitee of written notice of the Third Party Claim. If either Party shall receive notice or otherwise learn of the assertion of a Third Party Claim which may reasonably be determined to be a Specified Shared Liability, such Party, as appropriate, shall give the Contingent Claim Committee (as determined pursuant to Article VI) written notice thereof within fifteen (15) days after such Person becomes aware of such Third Party Claim; provided, however, that the failure to provide notice of any such Third Party Claim pursuant to this or the preceding sentence shall not release the Indemnifying Party from any of its obligations under this Article VII except and solely to the extent the Indemnifying Party shall have been actually materially prejudiced as a result of such failure. Thereafter, the Indemnitee shall deliver to the Indemnifying Party (and, as applicable, to the Managing Party and the Contingent Claim Committee), as promptly as practicable (and in any event within five (5) Business Days) after the Indemnitee’s receipt thereof, copies of all notices and documents (including court papers) received by the Indemnitee relating to the Third Party Claim.

(b) Other than in the case of (i) Taxes addressed in the Tax Matters Agreement, which shall be addressed as set forth therein, (ii) indemnification by a beneficiary Party of a guarantor Party pursuant to Section 2.3(b)(iii) (the defense of which shall be controlled by the beneficiary Party), or (iii) a Specified Shared Liability (the defense of which shall be controlled by the Managing Party as provided for in Article VI), an Indemnifying Party shall be entitled (but shall not be required) (A) to assume and control the defense of any Third Party Claim, and (B) if it does not assume the defense of such Third Party Claim, to participate in the defense of such Third Party Claim, in each case, at such Indemnifying Party’s own cost and expense and by such Indemnifying Party’s own counsel that is reasonably acceptable to the applicable Indemnitees (after consultation in good faith with the applicable Indemnitees), if it gives notice of its intention to do so to the applicable Indemnitees within thirty (30) days of the receipt of such notice from such Indemnitees; provided, however, that the Indemnifying Party shall not be entitled to assume the defense of any Third Party Claim to the extent such Third Party Claim (x) is an allegation of a criminal violation, (y) seeks injunctive, equitable or other relief other than monetary damages against the Indemnitee (provided that such Indemnitee shall reasonably cooperate with the Indemnifying Party, at the request of the Indemnifying Party, in seeking to separate any such claims from any related claim for monetary damages if this clause (y) is the sole reason that such Third Party Claim is a Non-Assumable Third Party Claim) or (z) is made by a Governmental Entity (clauses (x), (y) and (z), the “Non-Assumable Third Party Claims”). After notice from an Indemnifying Party to an Indemnitee of the Indemnifying Party’s election to assume the defense of a Third Party Claim, such Indemnitee shall have the right to employ separate counsel and to participate in (but not control) the defense, compromise, or settlement thereof, at its own expense and, in any event, shall cooperate with the Indemnifying Party in such defense and make available to the Indemnifying Party, at the Indemnifying Party’s expense, all witnesses, pertinent Information, materials and other information in such Indemnitee’s possession or under such Indemnitee’s control relating thereto as are reasonably

 

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required by the Indemnifying Party; provided, however, that in the event a conflict of interest exists, or is reasonably likely to exist, that would make it inappropriate in the reasonable judgment of the applicable Indemnitee(s) for the same counsel to represent both the Indemnifying Party and the applicable Indemnitee(s), such Indemnitee(s) shall be entitled to retain, at the Indemnifying Party’s expense, separate counsel as required by the applicable rules of professional conduct with respect to such matter. In the event that the Indemnifying Party exercises the right to assume and control the defense of a Third Party Claim as provided above, (1) the Indemnifying Party shall keep the Indemnitee(s) apprised of all material developments in such defense, (2) the Indemnifying Party shall not withdraw from the defense of such Third Party Claim without providing advance notice to the Indemnitee(s) reasonably sufficient to allow the Indemnitee(s) to prepare to assume the defense of such Third Party Claim, and (3) the Indemnifying Party shall conduct the defense of the Third Party Claim actively and diligently, including the posting of bonds or other security required in connection with the defense of such Third Party Claim.

(c)    Other than in the case of a Specified Shared Liability or a Non-Assumable Third Party Claim, if an Indemnifying Party elects not to assume responsibility for defending a Third Party Claim or fails to notify an Indemnitee of its election as provided in Section 7.4(b), or if the Indemnifying Party fails to actively and diligently defend the Third Party Claim (including by withdrawing or threatening to withdraw from the defense thereof), the applicable Indemnitee(s) may defend such Third Party Claim at the cost and expense of the Indemnifying Party. If the Indemnitee is conducting the defense of any Third Party Claim, the Indemnifying Party shall cooperate with the Indemnitee in such defense and make available to the Indemnitee, at the Indemnifying Party’s expense, all witnesses, pertinent Information, material and other information in such Indemnifying Party’s possession or under such Indemnifying Party’s control relating thereto as are reasonably required by the Indemnitee.

(d)    Other than any Third Party Claim that is in respect of a Specified Shared Liability, which shall be governed by Article VI, no Indemnitee may admit any liability with respect to, consent to entry of any judgment of, or settle, compromise or discharge any Third Party Claim without the prior written consent of the Indemnifying Party, which consent shall not be unreasonably withheld, conditioned or delayed.

(e)    In the case of a Third Party Claim (except for any Third Party Claim that is in respect of a Specified Shared Liability which, with respect to the subject matter of this Section 7.4(e), shall be governed by Article VI), the Indemnifying Party shall not admit any liability with respect to, consent to entry of any judgment of, or settle, compromise or discharge the Third Party Claim without the prior written consent of the Indemnitee (which consent shall not be unreasonably withheld, conditioned or delayed) unless such settlement or judgment (A) completely and unconditionally releases the Indemnitee in connection with such matter, (B) provides relief consisting solely of money damages borne by the Indemnifying Party and (C) does not involve any admission by the Indemnitee of any wrongdoing or violation of Law.

 

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(f)    Notwithstanding anything herein or in any Ancillary Agreement or any Conveyancing and Assumption Instrument to the contrary, other than as provided in Section 11.18 with respect to this Agreement, (i) the indemnification provisions of this Article VII shall be the sole and exclusive remedy of the Parties, the parties to the Conveyancing and Assumption Instruments and any Indemnitee for any breach of this Agreement or any Conveyancing and Assumption Instrument and for any failure to perform and comply with any covenant or agreement in this Agreement or in any Conveyancing and Assumption Instrument; (ii) each party hereto and each Indemnitee expressly waives and relinquishes any and all rights, claims or remedies it may have with respect to the foregoing other than under this Article VII against any Indemnifying Party; (iii) neither Party, the members of their respective Groups or any other Person may bring a claim under any Conveyancing and Assumption Instrument; (iv) any and all claims arising out of, resulting from, or in connection with the Internal Reorganization, the Business Realignment or the other transactions contemplated in this Agreement must be brought under and in accordance with the terms of this Agreement; and (v) no breach of this Agreement or any Conveyancing and Assumption Instrument shall give rise to any right on the part of either party hereto or thereto, after the consummation of the Distribution, to rescind this Agreement, any Conveyancing and Assumption Instrument or any of the transactions contemplated hereby or thereby, except as expressly provided in Section 2.6(a) and Section 2.6(b); provided, however, that with respect to the transactions contemplated by this Agreement (including the Internal Reorganization, the Business Realignment and the Distribution), the Parties may also bring claims arising under the Tax Matters Agreement under and in accordance with the Tax Matters Agreement and claims arising under the Employee Matters Agreement under and in accordance with the Employee Matters Agreement. Each Party shall cause the members of its Group to comply with this Section 7.4(f).

(g)    The provisions of this Article VII shall apply to Third Party Claims that are already pending or asserted as well as Third Party Claims brought or asserted after the date of this Agreement. There shall be no requirement under this Section 7.4 to give a notice with respect to any Third Party Claim that exists as of the Effective Time. Each Party on behalf of itself and each other member of its Group acknowledges that Liabilities for Actions (regardless of the parties to the Actions) may be partly IP Liabilities and partly Product Liabilities. If the Parties cannot agree on the allocation of any such Liabilities for Actions, they shall resolve the matter pursuant to the procedures set forth in Article IX. Neither Party shall, nor shall either Party permit the other members of its Group (or their respective then-Affiliates) to, file Third Party Claims or cross-claims against the other Party or any members of another Group in an Action in which a Third Party Claim is being resolved.

Section 7.5    Procedures for Direct Claims. An Indemnitee shall give the Indemnifying Party written notice of any matter that an Indemnitee has determined has given or would reasonably be expected to give rise to a right of indemnification under this Agreement (other than a Third Party Claim, which shall be governed by Section 7.4(a)), within thirty (30) days of such determination, stating the amount of the Indemnifiable Loss claimed, if known, and method of computation thereof, and containing a reference to the provisions of this Agreement in respect of which such right of indemnification is claimed by such Indemnitee or arises; provided, however, that the failure to provide such written notice shall not release the Indemnifying Party from any of its obligations except and solely to the extent the Indemnifying Party shall have been actually materially prejudiced as a result of such failure.

 

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Section 7.6    Cooperation in Defense and Settlement.

(a)    With respect to any Third Party Claim (other than in respect of a Specified Shared Liability) that implicates both Parties in a material respect, including due to the allocation of Liabilities, the reasonably foreseeable impact on the Businesses of the relief sought or the responsibilities for management of defense and related indemnities pursuant to this Agreement, the Parties agree to use reasonable best efforts to cooperate fully and maintain a joint defense (in a manner that will preserve for all Parties any Privilege). The Party that is not responsible for managing the defense of any such Third Party Claim shall be consulted with respect to significant matters relating thereto and may, if necessary or helpful, retain counsel to assist in the defense of such claims. Notwithstanding the foregoing, nothing in this Section 7.6 shall derogate from either Party’s rights to control the defense of any Action in accordance with Section 7.4.

(b)    (i) Notwithstanding anything to the contrary in this Agreement, with respect to any Third Party Claim where the resolution of such Third Party Claim by order, judgment, settlement or otherwise, would reasonably be expected to include any condition, limitation or other stipulation that would, in the reasonable judgment of IP RemainCo, significantly and adversely impact the conduct of the IP Business or result in a significant adverse change to any member of the IP RemainCo Group at shared locations where any member of the Product SpinCo Group and any member of the IP RemainCo Group have operating agreements, governmental permits or joint obligations to a Governmental Entity with interdependencies, IP RemainCo shall have, at IP RemainCo’s expense, the reasonable opportunity to consult, advise and comment on all preparation, planning and strategy regarding any such Third Party Claim, including with regard to any drafts of notices and other conferences and communications to be provided or submitted by any member of the Product SpinCo Group to any third party involved in such Third Party Claim (including any Governmental Entity), to the extent that IP RemainCo’s participation does not affect any Privilege in a material and adverse manner; provided that, to the extent that any such Third Party Claim requires the submission by any member of the Product SpinCo Group of any Information relating to any current or former officer or director of any member of the IP RemainCo Group, such Information will only be submitted in a form approved by IP RemainCo in its reasonable discretion, and (ii) notwithstanding anything to the contrary in this Agreement, with respect to any Third Party Claim where the resolution of such Third Party Claim by order, judgment, settlement or otherwise, would reasonably be expected to include any condition, limitation or other stipulation that would, in the reasonable judgment of Product SpinCo, significantly and adversely impact the conduct of the Product Business or result in a significant adverse change to any member of the Product SpinCo Group at shared locations where any member of the Product SpinCo Group and any member of the IP RemainCo Group have operating agreements, governmental permits or joint obligations to a Governmental Entity with interdependencies, Product SpinCo shall have, at Product SpinCo’s expense, the reasonable opportunity to consult, advise and comment on all preparation, planning and strategy regarding any such Third Party Claim, including with regard to any drafts of notices and other conferences and communications to be provided or submitted by any member of the IP RemainCo Group to any third party involved in such Third Party Claim (including any Governmental Entity), to the extent that Product SpinCo’s participation does not affect any Privilege in a material and adverse manner; provided that, to the extent that any such Third Party Claim requires the submission by any member of the IP RemainCo Group of any Information relating to any current or former officer or director of any member of the Product SpinCo Group, such Information will only be submitted in a form approved by Product SpinCo

 

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in its reasonable discretion. (I) With regard to the matters specified in the preceding clause (i), IP RemainCo shall have a right to consent to any compromise or settlement related thereto by any member of the Product SpinCo Group to the extent that the effect on any member of the IP RemainCo Group would reasonably be expected to result in a significant adverse effect on the financial condition or results of operations of IP RemainCo and its Subsidiaries at such time or the IP Business conducted thereby at such time, taken as a whole, and such significant adverse effect would reasonably be expected to be greater with respect to the IP RemainCo Group, taken as a whole, than the effect on the Product SpinCo Group, taken as a whole, and (II) with regard to the matters specified in the preceding clause (ii), Product SpinCo shall have a right to consent to any compromise or settlement related thereto by any member of the IP RemainCo Group to the extent that the effect on any member of the Product SpinCo Group would reasonably be expected to result in a significant adverse effect on the financial condition or results of operations of Product SpinCo and its Subsidiaries at such time or the Product Business conducted thereby at such time, taken as a whole, and such significant adverse effect would reasonably be expected to be greater with respect to the Product SpinCo Group, taken as a whole, than the effect on the IP RemainCo Group, taken as a whole.

(c)    Each of IP RemainCo and Product SpinCo agrees on behalf of itself and the other members of its Group that at all times from and after the Effective Time, if an Action is commenced by a third party naming both Parties (or any member of such Parties’ respective Groups or their respective then-Affiliates) as defendants and with respect to which one or more named Parties (or any member of such Party’s respective Group or their respective then-Affiliates) is a nominal defendant and/or such Action is otherwise not a Liability allocated to such named Party under this Agreement, then the other Party shall use, and shall cause the other members of its respective Group to use, commercially reasonable efforts to cause such nominal defendant to be removed from such Action, as soon as reasonably practicable (including using commercially reasonable efforts to petition the applicable court to remove such Party (or member of its Group or their respective then-Affiliates) as a defendant to the extent such Action relates solely to Assets or Liabilities that the other Party (or Group) has been allocated pursuant to this Agreement). In the event of an Action in which the Indemnifying Party is not a named defendant, if either the Indemnitee or Indemnifying Party shall so request, each Party shall, and shall cause the other members of its Group to, endeavor to substitute the Indemnifying Party for the named defendant, if at all practicable and advisable under the circumstances. If such substitution or addition cannot be achieved for any reason or is not requested, management of the Action shall be determined as set forth in this Article VII.

Section 7.7    Indemnification Payments. Indemnification required by this Article VII shall be made by periodic payments of the amount of Indemnifiable Loss in a timely fashion during the course of the investigation or defense, as and when bills are received or an Indemnifiable Loss or Liability is incurred. The applicable Indemnitee shall deliver to the Indemnifying Party, upon request, reasonably satisfactory documentation setting forth the basis for the amount of such payments, including documentation with respect to calculations made and consideration of any Insurance Proceeds or Third Party Proceeds that actually reduce the amount of such Indemnifiable Losses; provided, that the delivery of such documentation shall not be a condition to the payments described in the first sentence of this Section 7.7, but the failure to deliver such documentation may be the basis for the Indemnifying Party to contest whether the applicable Indemnifiable Loss or Liability was incurred by the applicable Indemnitee.

 

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Section 7.8    Indemnification Obligations Net of Insurance Proceeds and Other Amounts.

(a)    Any Indemnifiable Loss subject to indemnification pursuant to this Article VII including, for the avoidance of doubt, in respect of any Specified Shared Liability, shall be calculated (i) net of Insurance Proceeds that actually reduce the amount of the Indemnifiable Loss and (ii) net of any proceeds received by the Indemnitee from any third party for such Liability that actually reduce the amount of the Indemnifiable Loss (“Third Party Proceeds”). Accordingly, the amount which any Indemnifying Party is required to pay to any Indemnitee pursuant to this Article VII shall be reduced by any Insurance Proceeds or Third Party Proceeds theretofore actually recovered by or on behalf of the Indemnitee in respect of the related Indemnifiable Loss. If an Indemnitee receives a payment required by this Agreement from an Indemnifying Party in respect of any Indemnifiable Loss (an “Indemnity Payment”) and subsequently receives Insurance Proceeds or Third Party Proceeds, then the Indemnitee shall pay to the Indemnifying Party an amount equal to the excess of the Indemnity Payment received over the amount of the Indemnity Payment that would have been due if the Insurance Proceeds or Third Party Proceeds had been received, realized or recovered before the Indemnity Payment was made.

(b)    The Parties hereby agree that an insurer who would otherwise be obligated to pay any claim shall not be relieved of the responsibility with respect thereto and, solely by virtue of the indemnification provisions hereof, shall not have any subrogation rights with respect thereto, and that no insurer or any other third party shall be entitled to a “windfall” (e.g., a benefit it would not otherwise be entitled to receive, or the reduction or elimination of an insurance coverage obligation that it would otherwise have, in the absence of the indemnification or release provisions) by virtue of any provision contained in this Agreement. The Indemnitee shall use commercially reasonable efforts to seek to collect or recover any Insurance Proceeds and any Third Party Proceeds to which the Indemnitee is entitled in connection with any Indemnifiable Loss for which the Indemnitee seeks indemnification pursuant to this Article VII; provided, that the Indemnitee’s inability, following such efforts, to collect or recover any such Insurance Proceeds or Third Party Proceeds shall not limit the Indemnifying Party’s obligations hereunder.

(c)    No Indemnitee shall be entitled to any payment or indemnification more than once with respect to the same Indemnifiable Loss.

(d)    In addition to the provisions of Section 7.8(a), any Indemnifiable Loss subject to indemnification pursuant to this Article VII (including, for the avoidance of doubt, in respect of any Specified Shared Liability) shall (i) be reduced by any Tax Benefit (as defined in the Tax Matters Agreement) actually realized by the Indemnitee as a result of the event giving rise to the payment, and (ii) be increased if and to the extent necessary to ensure that, after all required Taxes on the payment are paid (including Taxes attributable to any increases in the payment under this Section 7.8(d)), the Indemnitee receives the amount it would have received if the payment was not taxable or did not result in an increase in Taxes; provided, that the Party entitled to any such indemnity payment shall take all reasonable efforts to avoid or reduce any Taxes on such payment.

 

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Section 7.9 Additional Matters; Survival of Indemnities.

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

(b) The rights and obligations of any member of the IP RemainCo Group or any member of the Product SpinCo Group, in each case, under this Article VII shall survive the sale or other Transfer by either Party or its respective Subsidiaries of any Assets or businesses or the assignment by it of any Liabilities, with respect to any Indemnifiable Loss of any Indemnitee related to such Assets, businesses or Liabilities.

Section 7.10 Certain Other Limits on Indemnification.

(a) De Minimis Amount.

(i) IP RemainCo shall not be required to indemnify, defend and hold harmless the Product SpinCo Indemnitees from and against any Indemnifiable Losses pursuant to Section 7.2 unless the aggregate amount of all such Indemnifiable Losses arising from a single claim or a series of related claims arising out of substantially similar facts, circumstances or occurrences exceeds $25,000 (the “De Minimis Amount”); provided, that in the event that the aggregate amount of Indemnifiable Losses which were not in excess of the De Minimis Amount exceeds $10,000,000 (the “Section 7.10(a) Basket”), the De Minimis Amount shall no longer apply, after which IP RemainCo shall be obligated for all Indemnifiable Losses under Section 7.2 from the first dollar regardless of the Section 7.10(a) Basket.

(ii) Product SpinCo shall not be required to indemnify, defend and hold harmless the IP RemainCo Indemnitees from and against any Indemnifiable Losses pursuant to Section 7.3 unless the aggregate amount of all such Indemnifiable Losses arising from a single claim or a series of related claims arising out of substantially similar facts, circumstances or occurrences exceeds the De Minimis Amount; provided, that in the event that the aggregate amount of Indemnifiable Losses which were not in excess of the De Minimis Amount exceeds the Section 7.10(a) Basket, the De Minimis Amount shall no longer apply, after which Product SpinCo shall be obligated for all Indemnifiable Losses under Section 7.3 from the first dollar regardless of the Section 7.10(a) Basket.

 

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ARTICLE VIII

CONFIDENTIALITY; ACCESS TO INFORMATION

Section 8.1 Preservation of Corporate Records. Except to the extent otherwise contemplated by any Ancillary Agreement, a Party providing (or causing to be provided) Records or access to Information to the other Party under this Article VIII shall be entitled to receive from the recipient, upon the presentation of invoices therefor, payments for such amounts, relating to supplies, disbursements and other out-of-pocket expenses (which shall not include the costs of salaries and benefits of employees of such Party (or its Group or any of its or their respective then-Affiliates) or any pro rata portion of overhead or other costs of employing such employees which would have been incurred by such employees’ employer regardless of the employees’ service with respect to the foregoing), as are reasonably incurred in providing such Records or access to Information.

Section 8.2 Provision of Corporate Records. Other than in circumstances in which indemnification is sought pursuant to Article VII (in which event the provisions of such Article VII will govern) or for matters related to the provision of Tax Records (in which event the Tax Matters Agreement will govern) or for matters related to the provision of Records in relation to employees (in which event the Employee Matters Agreement will govern) or for matters related to the separation of Information (which shall be governed by Section 5.3) and without limiting the applicable provisions of Article VI, and subject to appropriate restrictions for Privileged Information (as defined below) or Confidential Information:

(a) After the Relevant Time and until the date on which IP RemainCo was required to retain, or cause to be retained, the Information requested pursuant to this Section 8.2(a) in accordance with IP RemainCo’s obligations under the Ancillary Agreements, and subject to compliance with the terms of the Ancillary Agreements, upon the prior written reasonable request by, and at the expense of, Product SpinCo for specific and identified Information (i) which (x) constitutes an Asset of the Product SpinCo Group and the Transfer of such Asset has not been consummated as of the applicable Relevant Time, or (y) relates to the Product SpinCo Group or the conduct of the Product Business up to the Distribution Date, solely to the extent reasonably necessary for the Parties to complete the separation of Assets (including Records) as contemplated hereby (or for such other reasonable purposes as may be agreed by the Parties), IP RemainCo shall, and shall cause the other members of the IP RemainCo Group (and each of its and their respective then-Affiliates) to, provide, as soon as reasonably practicable following the receipt of such request, Product SpinCo and its designated representatives reasonable access during normal business hours to the written or electronic documentary Information or appropriate copies of such Information (or the originals thereof if the Party making the request has a reasonable need for such originals) in the possession or control of any member of the IP RemainCo Group, but only to the extent such items (or copies thereof) so relate and are not already in the possession or control of the requesting Party (or any member of its Group); provided that, except in the case of clause (x) of this Section 8.2(a)(i), to the extent any originals are delivered to Product SpinCo pursuant to this Agreement or the Ancillary Agreements, Product SpinCo shall, and shall cause the other members of its Group (and each of its and their respective then-Affiliates) to, at its own expense, return them to IP RemainCo within a reasonable time after the need to retain such originals has ceased; provided, further, that, in the event that IP RemainCo, in its sole discretion, determines that any such access or the provision of any such Information would reasonably be expected to be significantly commercially detrimental to IP RemainCo or any member of the IP RemainCo Group or would violate any Law or Contract with a third party or would reasonably result in the waiver of any Privilege (unless the Privilege with respect to any such Privileged Information is solely related (other than in any de minimis respect) to Sole Benefit Services of the requesting Party), IP RemainCo shall not be obligated to, and shall not be obligated to cause the other members of the IP RemainCo Group

 

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(and each of its and their respective then-Affiliates) to, provide such Information requested by Product SpinCo; provided, however, in the event access or the provision of any such Information would reasonably be expected to be significantly commercially detrimental or violate a Contract with a third party, IP RemainCo shall, and shall cause the other members of the IP RemainCo Group (and any of its or their then-Affiliates) to, use commercially reasonable efforts to seek to mitigate any such harm or consequence of, or to obtain the Consent of such third party to, the disclosure of such Information or (ii) that (x) is required by any member of the Product SpinCo Group with regard to reasonable compliance with reporting, disclosure, filing or other requirements imposed on such Person (including under applicable securities Laws) by a Governmental Entity having jurisdiction over such Person, or (y) is for use in any other judicial, regulatory, administrative or other proceeding or in order to satisfy audit, accounting, claims, regulatory, litigation, Action or other similar requirements, as applicable, IP RemainCo shall, and shall cause the other members of the IP RemainCo Group (and each of its and their respective then-Affiliates) to, provide, as soon as reasonably practicable following the receipt of such request, Product SpinCo and its designated representatives reasonable access during normal business hours to the Information or appropriate copies of such written or electronic documentary Information (or the originals thereof if the applicable member of the Product SpinCo Group has a reasonable need for such originals) in the possession or control of IP RemainCo or any other member of the IP RemainCo Group (or any of its or their respective then-Affiliates), but only to the extent such items so relate and are not already in the possession or control of Product SpinCo (or another member of its Group, or any of its then-Affiliates); provided that, to the extent any originals are delivered to Product SpinCo pursuant to this Agreement or the Ancillary Agreements, Product SpinCo shall, at its own expense, return them to IP RemainCo within a reasonable time after the need to retain such originals has ceased; provided, further, that, in the event that IP RemainCo, in its sole discretion, determines that any such access or the provision of any such Information (including Information requested under Section 5.1) would violate any Law or Contract with a third party or would reasonably be expected to result in the waiver of any attorney-client privilege, the work product doctrine or other applicable Privilege (unless the application of such privilege, doctrine or Privilege with respect to such matter is solely related (other than in any de minimis respect) to the Assets, Business and/or Liabilities of the requesting Party), IP RemainCo shall not be obligated to provide such Information requested by Product SpinCo; provided, further, that in the event access or the provision of any such Information would violate a Contract with a third party, IP RemainCo shall, and shall cause the other members of the IP RemainCo Group (and any of its or their respective then-Affiliates) to, use commercially reasonable efforts to seek to obtain the Consent of such third party to the disclosure of such Information.

(b)    After the Distribution Date and until the date on which Product SpinCo was required to retain, or cause to be retained, the Information requested pursuant to this Section 8.2(b) in accordance with Product SpinCo’s obligations under the Ancillary Agreements, and subject to compliance with the terms of the Ancillary Agreements, upon the prior written reasonable request by, and at the expense of, IP RemainCo for specific and identified Information (i) which (x) constitutes an Asset of the IP RemainCo Group and the Transfer of such Asset has not been consummated as of the Relevant Time or (y) relates to the IP RemainCo Group or the conduct of the IP Business up to the Distribution Date solely to the extent reasonably necessary for the Parties to complete the separation of Assets (including Records) as contemplated hereby (or for such other reasonable purposes as may be agreed by the Parties),

 

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Product SpinCo shall, and shall cause the other members of the Product SpinCo Group (and each of its and their respective then-Affiliates) to, provide, as soon as reasonably practicable following the receipt of such request, IP RemainCo and its designated representatives reasonable access during normal business hours to the written or electronic documentary Information or appropriate copies of such Information (or the originals thereof if the Party making the request has a reasonable need for such originals) in the possession or control of any member of the Product SpinCo Group, but only to the extent such items (or copies thereof) so relate and are not already in the possession or control of the requesting Party (or any member of its Group); provided that, except in the case of clause (x) of this Section 8.2(b)(i), to the extent any originals are delivered to IP RemainCo pursuant to this Agreement or the Ancillary Agreements, IP RemainCo shall, and shall cause the other members of its Group (and each of its and their respective then-Affiliates) to, at its own expense, return them to Product SpinCo within a reasonable time after the need to retain such originals has ceased; provided, further, that, in the event that Product SpinCo, in its sole discretion, determines that any such access or the provision of any such Information would reasonably be expected to be significantly commercially detrimental to Product SpinCo or any member of the Product SpinCo Group or would violate any Law or Contract with a third party or would reasonably result in the waiver of any Privilege (unless the Privilege with respect to any such Privileged Information is solely related (other than in any de minimis respect) to Sole Benefit Services of the requesting Party), Product SpinCo shall not be obligated to, and shall not be obligated to cause the other members of the Product SpinCo Group (and each of its and their respective then-Affiliates) to, provide such Information requested by IP RemainCo; provided, however, in the event access or the provision of any such Information would reasonably be expected to be significantly commercially detrimental or violate a Contract with a third party, Product SpinCo shall, and shall cause the other members of the Product SpinCo Group (and any of its or their then-Affiliates) to, use commercially reasonable efforts to seek to mitigate any such harm or consequence of, or to obtain the Consent of such third party to, the disclosure of such Information or (ii) that (x) is required by any member of the IP RemainCo Group with regard to reasonable compliance with reporting, disclosure, filing or other requirements imposed on such Person (including under applicable securities Laws) by a Governmental Entity having jurisdiction over such Person, or (y) is for use in any other judicial, regulatory, administrative or other proceeding or in order to satisfy audit, accounting, claims, regulatory, litigation, Action or other similar requirements, as applicable, Product SpinCo shall, and shall cause the other members of the Product SpinCo Group (and each of its and their respective then-Affiliates) to, provide, as soon as reasonably practicable following the receipt of such request, IP RemainCo and its designated representatives reasonable access during normal business hours to the Information or appropriate copies of such written or electronic documentary Information (or the originals thereof if the applicable member of the IP RemainCo Group has a reasonable need for such originals) in the possession or control of Product SpinCo or any other member of the Product SpinCo Group (or any of its or their respective then-Affiliates), but only to the extent such items so relate and are not already in the possession or control of IP RemainCo (or another member of its Group, or any of their respective then-Affiliates); provided that, to the extent any originals are delivered to IP RemainCo pursuant to this Agreement or the Ancillary Agreements, IP RemainCo shall, at its own expense, return them to Product SpinCo within a reasonable time after the need to retain such originals has ceased; provided, further, that, in the event that Product SpinCo, in its sole discretion, determines that any such access or the provision of any such Information (including Information requested

 

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under Section 5.1) would violate any Law or Contract with a third party or would reasonably be expected to result in the waiver of any attorney-client privilege, the work product doctrine or other applicable Privilege (unless the application of such privilege, doctrine or Privilege with respect to such matter is solely related (other than in any de minimis respect) to the Assets, Business and/or Liabilities of the requesting Party), Product SpinCo shall not be obligated to provide such Information requested by IP RemainCo; provided, further, that in the event access or the provision of any such Information would violate a Contract with a third party, Product SpinCo shall, and shall cause the other members of the Product SpinCo Group (and any of its or their respective then-Affiliates) to, use commercially reasonable efforts to seek to obtain the Consent of such third party to the disclosure of such Information.

(c)    Any Information provided by or on behalf of or made available by or on behalf of either Party (or any other member of any Group) pursuant to this Article VIII shall be on an “as is,” “where is” basis and no Party (or any member of any Group) is making any representation or warranty with respect to such Information or the completeness thereof.

(d)    Each of IP RemainCo and Product SpinCo shall, and shall cause each other member of its Group to, inform its and their respective officers, employees, agents, consultants, advisors, authorized accountants, counsel and other designated representatives who have or have access to the Confidential Information or other Information of any member of any other Group provided pursuant to Section 5.1 or this Article VIII of their obligation to hold such Information confidential in accordance with the provisions of this Agreement.

Section 8.3    Disposition of Information.

(a)    Each Party, on behalf of itself and each other member of its Group, acknowledges that Information in its or in a member of its Group’s possession, custody or control as of the Relevant Time may include Information owned by the other Party or a member of the other Party’s Group and not related to (i) it or its Business or (ii) any Ancillary Agreement to which it or any member of its Group is a Party.

(b)    Notwithstanding such possession, custody or control, such Information shall remain the property of such other Party or member of such other Party’s Group. Each Party agrees, on behalf of itself and each other member of its Group, subject to legal holds and other legal requirements and obligations, (i) that any such Information is to be treated as Confidential Information of the Party or Parties to which it relates and (ii) subject to Section 8.1, to use commercially reasonable efforts to within a reasonable time (1) purge such Information from its databases, files and other systems and not retain any copy of such Information (including, if applicable, by transferring such Information to the Party to which such Information belongs) or (2) if such purging is not practicable, to encrypt or otherwise make unreadable or inaccessible such Information; provided, that each Party shall, and shall cause each other member of its Group to, provide reasonable advance notice to each other Party prior to taking any action described in this Section 8.3(b) with respect to any Information related to the matters set forth on Schedule 8.3.

 

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Section 8.4    Witness Services. At all times from and after the Relevant Time, each of IP RemainCo and Product SpinCo shall use its commercially reasonable efforts to make available to the other, upon reasonable written request, its and any member of its Group’s officers, directors, employees and agents (taking into account the business demands of such individuals) as witnesses (in the presence of counsel for such officer, director, employee or agent, if any, and, if requested by the providing Group, counsel or other representatives designated by the providing Group) to the extent that (i) such Persons may reasonably be required to testify, or the testimony of such Persons would reasonably be expected to be beneficial to the requesting Party (or any member of its Group), in connection with the prosecution or defense of any Action in which the requesting Party may from time to time be involved and (ii) there is no conflict in the Action between the requesting Party (or any member of its Group) and the requested Party (or any member of its Group). A Party providing, or causing to be provided, a witness to the other Party (or member of such other Party’s Group) under this Section 8.4 shall be entitled to receive from the recipient of such services, upon the presentation of invoices therefor, payments for all reasonable out-of-pocket costs and expenses incurred by such Party or a member of its Group in connection therewith (which shall not include the costs of salaries and benefits of employees who are witnesses or any pro rata portion of overhead or other costs of employing such employees which would have been incurred by such employees’ employer regardless of the employees’ service as witnesses), as may be properly paid under applicable Law.

Section 8.5    Reimbursement; Other Matters. Except to the extent otherwise contemplated by this Agreement or any Ancillary Agreement, a Party providing, or causing to be provided, Information or access to Information to the other Party (or a member of such Party’s Group) under this Article VIII shall be entitled to receive from the recipient, upon the presentation of invoices therefor, payments for such amounts, relating to supplies, disbursements and other out-of-pocket expenses (which shall not include the costs of salaries and benefits of employees of such Party or any other member of its Group or any pro rata portion of overhead or other costs of employing such employees which would have been incurred by such employees’ employer regardless of the employees’ service with respect to the foregoing), as may be reasonably incurred in providing such Information or access to such Information.

Section 8.6    Confidentiality; Non-Use.

(a)    Notwithstanding any termination of this Agreement, each Party shall, and shall cause each of the other members of its Group to, hold, and cause each of their respective officers, employees, agents, consultants and advisors to hold, in strict confidence, and not to disclose or release, or except as otherwise permitted by this Agreement, use, including for any ongoing or future commercial purpose, without the prior written consent of each Party to whom (or to whose Group) the Confidential Information relates (which may be withheld in each such Party’s sole and absolute discretion), any and all Confidential Information concerning or belonging to the other Party or any member of its Group; provided, that each Party may disclose, or may permit disclosure of, Confidential Information (i) to its (or any member of its Group’s) respective auditors, attorneys and other appropriate consultants and advisors who have a need to know such Confidential Information for auditing and other non-commercial purposes and are informed of the confidentiality and non-use obligations to the same extent as is applicable to the Parties and in respect of whose failure to comply with such obligations the applicable Party will be responsible, (ii) if a Party or any member of its Group is required or compelled to disclose any such Confidential Information by judicial or administrative process or by other requirements of

 

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Law or stock exchange rule, (iii) to the extent required in connection with any Action by a Party (or a member of its Group) against the other Party (or member of such other Party’s Group) or in respect of claims by a Party (or member of its Group) against the other Party (or member of such other Party’s Group) brought in an Action, (iv) to the extent necessary in order to permit a Party (or member of its Group) to prepare and disclose its financial statements in connection with any regulatory filings or Tax Returns, (v) to Governmental Entities in accordance with applicable procurement regulations and contract requirements or (vi) to other Persons in connection with their evaluation of, and negotiating and consummating, a potential strategic transaction, to the extent reasonably necessary in connection therewith, provided an appropriate and customary confidentiality agreement has been entered into with the Person receiving such Confidential Information. Notwithstanding the foregoing, in the event that any demand or request for disclosure of Confidential Information is made by a third party that relates to clause (ii), (iii), or (v) above, each Party, as applicable, shall promptly notify (to the extent permissible by Law) the Party to whom (or to whose Group) the Confidential Information relates of the existence of such request, demand or disclosure requirement and shall provide such Party (and/or any applicable member of its Group) a reasonable opportunity to seek an appropriate protective order or other remedy, which such Parties shall, and shall cause the other members of their respective Group to, cooperate in obtaining to the extent reasonably practicable. In the event that such appropriate protective order or other remedy is not obtained, the Party who is (or whose Group’s member is) required to make such disclosure shall or shall cause the applicable member of its Group to furnish (at the expense of the Party seeking to limit such request, demand or disclosure requirement), or cause to be furnished, only that portion of the Confidential Information that is legally required to be disclosed and shall take commercially reasonable steps to ensure that confidential treatment is accorded to such Confidential Information (at the expense of the Party seeking (or whose Group’s member is seeking) to limit such request, demand or disclosure requirement).

(b)    Notwithstanding anything to the contrary set forth herein, (i) a Party shall be deemed to have satisfied its obligations hereunder with respect to Confidential Information if it exercises, and causes the other members of its Group to exercise, at least the same degree of care (but no less than a commercially reasonable degree of care) as such Party takes to preserve confidentiality for its own similar Information and (ii) confidentiality obligations provided for in any agreement between each Party or another member of its Group and its or their respective past and/or present employees as of the Relevant Time shall remain in full force and effect. Notwithstanding anything to the contrary set forth herein, Confidential Information (other than Intellectual Property) of either Party (or another member of its Group) rightfully in the possession of and used by the other Party (or another member of its Group) in the operation of its Business as of the Relevant Time may continue to be used by such Party (and/or the applicable members of its Group) in possession of such Confidential Information in and only in the operation of the Product Business or the IP Business, as the case may be; provided, that, such Confidential Information may only be used by such Party and/or the applicable members of its Group and its and their respective officers, employees, agents, consultants and advisors in the specific manner and for the specific purposes for which it is used as of the date of this Agreement and may only be shared with additional officers, employees, agents, consultants and advisors of such Party (or Group member) on a need-to-know basis exclusively with regard to such specified use; provided, further, that such use is not competitive in nature, and such Confidential Information may be used only so long as the Confidential

 

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Information is maintained in confidence and not disclosed in violation of Section 8.6(a), except that such Confidential Information may be disclosed to third parties other than those listed in Section 8.6(a); provided that such disclosure to such other third parties and any associated use of such Information must be pursuant to a written agreement containing confidentiality obligations at least as protective of the Parties’ rights to such Confidential Information as those contained in this Agreement. Such continued right to use may not be transferred (directly or indirectly) to any third party without the prior written consent (not to be unreasonably withheld, conditioned or delayed) of the applicable Party, except pursuant to Section 11.9.

(c)    Each of IP RemainCo and Product SpinCo acknowledges, on behalf of itself and each other member of its Group, that it and the other members of its Group may have in their possession confidential or proprietary Information of third parties that was received under confidentiality or non-disclosure agreements with such third party while such Party and/or members of its Group were Subsidiaries of IP RemainCo. Each of IP RemainCo and Product SpinCo shall, and shall cause the other members of its Group to, hold and cause its and their respective representatives, officers, employees, agents, consultants and advisors (or potential buyers) to hold in strict confidence the confidential and proprietary Information of third parties to which they or any other member of their respective Groups has access, in accordance with the terms of any agreements entered into prior to the Distribution between one or more members of the IP RemainCo Group and/or Product SpinCo Group (whether acting through, on behalf of, or in connection with, the separated Businesses) and such third parties.

(d)    For the avoidance of doubt and notwithstanding any other provision of this Section 8.6, the disclosure and sharing of Privileged Information shall be governed solely by Section 8.7.

Section 8.7    Privileged Matters.

(a)    Pre-Separation Services. The Parties recognize that legal and other professional services that have been and will be provided prior to the Relevant Time have been and will be rendered either for (i) the collective benefit of each of the members of the IP RemainCo Group and the Product SpinCo Group (“Collective Benefit Services”), or (ii) the sole benefit of (x) IP RemainCo (or a member of IP RemainCo’s Group) in the case of legal and other professional services provided solely in respect of an IP Asset, an IP Liability or the IP Business, or (y) Product SpinCo (or a member of Product SpinCo’s Group) in the case of legal and other professional services provided solely in respect of a Product Asset or a Product Liability (“Sole Benefit Services”). For the purposes of asserting all privileges, immunities or other protections from disclosure which may be asserted under applicable Law, including attorney-client privilege, business strategy privilege, joint defense privilege, common interest privilege, and protection under the work-product doctrine (“Privilege”), (x) each of the members of the IP RemainCo Group and the Product SpinCo Group shall be deemed to be the client with respect to Collective Benefit Services and (y) IP RemainCo or Product SpinCo (or the applicable member of such Party’s Group), as the case may be, shall be deemed to be the client with respect to Sole Benefit Services. With respect to all Information subject to Privilege (“Privileged Information”), (A) the Parties shall have a shared Privilege for Privileged Information to the extent relating to Collective Benefit Services and (B) IP RemainCo or Product SpinCo (or the applicable member of such Party’s Group), as the case may be, shall have Privilege for Privileged Information to the extent relating to Sole Benefit Services and shall control the assertion or waiver of such Privilege. For the avoidance of doubt, Privileged Information includes, but is not limited to, services rendered by legal counsel retained or employed by either Party (or any member of such Party’s respective Group), including outside counsel and in-house counsel.

 

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(b) Post-Separation Services. Each Party, on behalf of itself and each other member of its Group, acknowledges that legal and other professional services will be provided following the Relevant Time which will be rendered solely for the benefit of IP RemainCo (or a member of its Group) or Product SpinCo (or a member of its Group), as the case may be, while other such post-separation services following the Relevant Time may be rendered with respect to claims, proceedings, litigation, disputes, or other matters which involve members of both Groups. With respect to such post-separation services and related Privileged Information, each of the Parties, on behalf of itself and each other member of its Group, agrees as follows:

(i) IP RemainCo shall be entitled, in perpetuity, to control the assertion or waiver of all Privileges in connection with Privileged Information which relates solely to the IP Business, whether or not the Privileged Information is in the possession of or under the control of any member of the IP RemainCo Group or Product SpinCo Group. IP RemainCo shall also be entitled, in perpetuity, to control the assertion or waiver of all Privileges in connection with Privileged Information that relates solely to the subject matter of any claims constituting IP Liabilities, now pending or which may be asserted in the future, in any lawsuits or other proceedings initiated against or by any member of the IP RemainCo Group, whether or not the Privileged Information is in the possession of or under the control of any member of the IP RemainCo Group or Product SpinCo Group; and

(ii) Product SpinCo shall be entitled, in perpetuity, to control the assertion or waiver of all Privileges in connection with Privileged Information which relates solely to the Product Business, whether or not the Privileged Information is in the possession of or under the control of any member of the IP RemainCo Group or Product SpinCo Group. Product SpinCo shall also be entitled, in perpetuity, to control the assertion or waiver of all Privileges in connection with Privileged Information that relates solely to the subject matter of any claims constituting Product Liabilities, now pending or which may be asserted in the future, in any lawsuits or other proceedings initiated against or by any member of the Product SpinCo Group, whether or not the Privileged Information is in the possession of or under the control of any member of the IP RemainCo Group or Product SpinCo Group.

(c) Each Party, on behalf of itself and each other member of its Group, agrees as follows in this Section 8.7(c) regarding all Privileges not allocated pursuant to the terms of Section 8.7(b) with respect to which the Parties shall have a shared Privilege. All Privileges relating to any claims, proceedings, litigation, disputes, or other matters which involve a member of both Groups in respect of which members of both Groups retain any responsibility or Liability under this Agreement shall be subject to a shared Privilege among them.

 

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(i) Subject to Sections 8.7(c)(ii) and 8.7(c)(iv), neither Party (or any member of its Group) may waive, nor allege or purport to waive, any Privilege which could be asserted under any applicable Law, and in which the other Party (or a member of its Group) has a shared Privilege, without the consent of such other Party, which shall not be unreasonably withheld, conditioned or delayed. Consent shall be in writing, or shall be deemed to be granted unless written objection (the “Privilege Waiver Objection Notice”) is made within twenty (20) days after written notice upon the other Party requesting such consent.

(ii) In the event of any Action or Dispute solely between or among either of the Parties, or any members of their respective Groups, either such Party may waive a Privilege in which the other Party or member of such Party’s Group has a shared Privilege, without obtaining the consent of such other Party (or Parties), as applicable; provided, that such waiver of a shared Privilege shall be effective only as to the use of Information with respect to the Action or Dispute between or among the relevant Parties and/or the applicable members of their respective Groups, and shall not operate as a waiver of the shared Privilege with respect to third parties.

(iii) In the event of any Action or Dispute involving a third party, if a Dispute arises between or among the Parties (or members of their respective Groups) regarding whether a Privilege should be waived to protect or advance the interest of either Party or its Group, each Party agrees that it shall, and shall cause each other member of its Group to, negotiate in good faith, endeavor to minimize any prejudice to the rights of the other Party (or members of its Group), and shall not, and shall cause each other member of its Group not to, unreasonably withhold consent to any request for waiver by the other Party. Each Party specifically agrees that it shall not, and shall cause each other member of its Group to not, withhold consent to waiver for any purpose except to protect its (or its Group’s) own legitimate interests.

(iv) If, within fifteen (15) days of receipt by the requesting Party of a written objection pursuant to Section 8.7(c)(i) (the “Privilege Waiver Negotiation Period”), the Parties have not succeeded in negotiating a resolution to any Dispute regarding whether a Privilege should be waived, and the requesting Party determines that a Privilege should nonetheless be waived to protect or advance its interest, the requesting Party shall provide the objecting Party fifteen (15) days’ written notice prior to effecting such waiver. Each Party specifically agrees that failure within fifteen (15) days of receipt of such notice to commence proceedings in accordance with Section 9.1(c) to enjoin such disclosure under applicable Law shall be deemed full and effective consent to such disclosure, and each Party agrees that any such Privilege shall not be waived by such Party (or any member of its Group) until the final determination of such Dispute in accordance with Section 9.1(c).

(v) Upon receipt by either Party or any other member of its Group of any subpoena, discovery or other request which, upon a good faith reading, would reasonably be construed as calling for the production or disclosure of Information subject to a shared Privilege or as to which the other Party has the sole right hereunder to assert a Privilege, or if a Party (or other member of its Group) obtains knowledge that any of its or member of its Group’s current or former directors, officers, agents or employees have received any subpoena, discovery or other requests which arguably, upon a good

 

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faith reading, would reasonably be construed as calling for the production or disclosure of such Privileged Information, such Party shall promptly notify the other Party of the existence of the request and shall provide the other Party (and the relevant members of its Group) a reasonable opportunity to review the Information and to assert any rights it may have under this Section 8.7 or otherwise to prevent, restrict or otherwise limit the production or disclosure of such Privileged Information.

(d) The transfer of all Information pursuant to this Agreement is made in reliance on the agreement of IP RemainCo and Product SpinCo, as set forth in Sections 8.6 and 8.7, to maintain and cause to be maintained the confidentiality of Privileged Information and to assert and maintain, and cause to be asserted and maintained, all applicable Privileges, including, but not limited to, attorney-client or attorney work product privileges. The access to Information being granted pursuant to Sections 5.1, , 7.4 and 8.2 hereof, the agreement to provide witnesses and individuals pursuant to Sections 5.1, , 7.4 and 8.4 hereof, the furnishing of notices and documents and other cooperative efforts contemplated by Sections 5.1, and 7.4 hereof, and the transfer of Privileged Information between and among the Parties and the members of their respective Groups pursuant to this Agreement shall not be deemed a waiver of any Privilege that has been or may be asserted under this Agreement or otherwise.

Section 8.8 Conflicts Waiver.

(a) Each of the Parties acknowledges, on behalf of itself and each other member of its Group, that IP RemainCo and Historical Xperi have retained the counsel set forth on Schedule 8.8(a) (“Historical Xperi Counsel”) to act as their counsel in connection with this Agreement, the Ancillary Agreements and the transactions contemplated hereby and thereby (the “Section 8.8 Matters”) and that Historical Xperi Counsel has not acted as counsel for any other Person in connection with the Section 8.8 Matters and that no other party or Person has the status of a client of Historical Xperi Counsel for conflict of interest or any other purposes as a result thereof. Each of Product SpinCo and IP RemainCo, on behalf of itself and each other member of its Group, agrees to take, and to cause their respective then-Affiliates to take, all steps necessary to implement the intent of this Section 8.8(a). Each of Product SpinCo and IP RemainCo, on behalf of itself and each other member of its Group, further agrees that Historical Xperi Counsel and their respective partners and employees are third party beneficiaries of this Section 8.8(a).

Section 8.9 Ownership of Information. Any Information owned by one Party or any member of its Group that is provided to a requesting Party pursuant to this Article VIII shall be deemed to remain the property of the providing Party (or member of its Group). Unless expressly and specifically set forth herein, nothing contained in this Agreement shall be construed as granting or conferring rights to either Party (or member of its Group) of license or otherwise in any such Information, whether by implication, estoppel or otherwise.

Section 8.10 Prior Contracts. Each Party, on behalf of itself and each member of its Group and their respective successors and assigns, acknowledges and agrees that, notwithstanding any Contract governing the use of Intellectual Property or Confidential Information entered into by an employee or contractor of such Party or its Group prior to the Effective Time, to the extent such employee or contractor is working for or on behalf of the other

 

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Party or a member of its Group after the Effective Time, such employee or contractor shall not be deemed in breach of such Contract due to such employee or contractor using such Intellectual Property or Confidential Information in his or her capacity as an employee or contractor of such other Party (or member of such other Party’s Group), or disclosing such Intellectual Property or Confidential Information to the other Party (or member of such Party’s Group) to the extent that this Agreement or an Ancillary Agreement grants a license to, or otherwise permits such other Party (or member of such Party’s Group) to use or have disclosed to it, such Intellectual Property or Confidential Information (and, in the case of use by such employee or contractor, solely to the extent such use is permitted by such Party or member of such Party’s Group pursuant to the terms of this Agreement or such Ancillary Agreement).

ARTICLE IX

DISPUTE RESOLUTION

Section 9.1 Negotiation and Arbitration.

(a) In the event of a controversy, dispute or Action between the Parties arising out of, in connection with, or in relation to this Agreement or any of the transactions contemplated hereby, including with respect to the interpretation, performance, nonperformance, validity or breach thereof, and including any Action based on contract, tort, statute or constitution, including but not limited to, the arbitrability of such controversy, dispute or Action and any controversy, dispute or Action related to Section 8.7 concerning privilege issues (a “Dispute”), the following provisions shall apply, unless expressly specified herein.

(b) Negotiation. The following procedures shall apply with respect to Disputes:

(i) Except in cases of Disputes regarding privilege issues (in which case the procedure in Section 8.7(c) shall apply), (a) either Party may deliver written notice of a Dispute (a “General Dispute Notice”) and (b) the general counsels of the relevant Parties and/or such other executive officer designated by the relevant Party in writing shall thereupon negotiate for a reasonable period of time to settle such Dispute; provided, however, that such reasonable period shall not, unless otherwise agreed by each relevant Party in writing, exceed ninety (90) days from the date of receipt by the relevant Party of the General Dispute Notice (the “General Negotiation Period”).

(ii) With respect to the subject Dispute, no Party shall be entitled to rely upon the expiry of any limitations period or contractual deadline during the period between the date of receipt of the relevant Dispute Notice and the earlier to occur of (A) the date of any arbitration being commenced under this Section 9.1 with respect to the Dispute and (B) the later to occur of (x) one hundred and eighty (180) days after the date of receipt of the relevant Dispute Notice and (y) the expiration of the applicable Negotiation Period.

 

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(iii) All offers, promises, conduct and statements, whether oral or written, made in the course of the discussions and negotiations related to the relevant Negotiation Period by any of the Parties (or the other members of their respective Group), their agents, employees, experts and attorneys are confidential, privileged and inadmissible for any purpose, including impeachment, in any arbitration or other proceeding involving the Parties (or any other member of a Group) and, in any Action, shall be governed by Rule 408 of the Federal Rules of Evidence and any applicable similar state or foreign rule and evidence of such discussions shall not be admissible in any future Action between the Parties, any member of their respective Groups and/or any Indemnitee; provided that evidence that is otherwise admissible or discoverable shall not be rendered inadmissible or non-discoverable as a result of its use in the negotiation or discussion.

(c) Arbitration. If the Dispute has not been resolved for any reason as of the expiration of the applicable Negotiation Period, such Dispute shall be submitted to final and binding arbitration administered in accordance with the International Arbitration Rules of the American Arbitration Association (“AAA”) then in effect (the “Rules”), except as modified herein.

(i) The arbitration shall be conducted by a three (3) member arbitral tribunal (the “Arbitral Tribunal”). The claimant shall appoint one arbitrator in its notice of arbitration and the respondent shall appoint one arbitrator within fourteen (14) days after the appointment of the first arbitrator. The third arbitrator, who shall serve as chair of the Arbitral Tribunal, shall be jointly appointed by the two party-nominated arbitrators within twenty-one (21) days of the appointment of the second arbitrator. If there are more than two Parties to the arbitration (with any Parties that are Affiliates of each other being deemed for this purpose only to be a single Party), such Parties shall have twenty (20) days to agree on a panel of three arbitrators. Any arbitrator not timely appointed by the Parties shall be appointed by the AAA according to its Rules.

(ii) In resolving any Dispute to the extent it involves contractual issues under this Agreement, the arbitrators shall apply the governing law specified herein.

(iii) Arbitration under this Section 9.1 shall be the sole and exclusive remedy for any Dispute, and any award rendered by the arbitrators shall be final and binding on the Parties and judgment thereupon may be entered in any court of competent jurisdiction having jurisdiction thereof, including any court having jurisdiction over the relevant Party or its Assets.

(iv) The Arbitral Tribunal shall be entitled, if appropriate, to award any remedy, including monetary damages, specific performance and all other forms of legal and equitable relief that is in accordance with the terms of this Agreement; provided, however, that the Arbitral Tribunal shall have no authority or power to (A) limit, expand, alter, modify, revoke or suspend any condition or provision of this Agreement, nor any right or power to award punitive, exemplary, treble or similar damages, or (B) review, resolve or adjudicate, or render any award or grant any relief in respect of, any issue, matter, claim or Dispute other than the specific Dispute or Disputes submitted by the Parties to such Arbitral Tribunal for final and binding arbitration, including any Disputes consolidated therewith in accordance with Section 9.1(c)(vii).

 

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(v) Each Party shall bear its own costs and attorneys’ fees in any arbitration conducted under this Article IX, and each party to such arbitration shall bear an equal portion of the fees and expenses of the arbitration including the Arbitral Tribunal’s fees and the fees and expenses of the AAA; provided, however, that the Arbitral Tribunal may award the prevailing party the recovery of its costs and attorneys’ fees and other reasonable and documented out-of-pocket expenses (including the fees and expenses of the arbitration, the Arbitral Tribunal’s fees and the fees and expenses of the AAA) if the Arbitral Tribunal finds that any of the claims or defenses of the non-prevailing party were frivolous or made in bad faith; provided, further, that if any parties to the arbitration are Affiliates of each other, they shall be counted as a single party to the arbitration for purposes of apportioning such fees and expenses.

(vi) The arbitration shall be held, and the award shall be rendered, in New York County, New York, in the English language.

(vii) The Arbitral Tribunal may, if requested by a Party, consolidate an arbitration with respect to a Dispute (including a Dispute with respect to this Agreement) with any other arbitration with respect to any other Dispute with respect to this Agreement or any dispute with regards to any Ancillary Agreement, if the subject matter thereof is substantially similar or otherwise arises out of or relates essentially to the same or substantially similar facts and, with the prior written consent of the Parties engaged in the applicable disputes, any other disputes between such Parties. Such consolidated arbitration shall be determined by the Arbitral Tribunal appointed for the arbitration proceeding that was commenced first in time, unless otherwise agreed in writing by the applicable Parties to the Dispute.

(viii) The Arbitral Tribunal (and, if applicable, Emergency Arbitrator) shall have the full authority to grant any pre-arbitral injunction, pre-arbitral attachment, interim or conservatory measure or other order in aid of arbitration proceedings (“Interim Relief”). The Parties shall exclusively submit any application for Interim Relief to only: (A) the Arbitral Tribunal; or (B) prior to the constitution of the Arbitral Tribunal, an Emergency Arbitrator appointed in the manner provided for in the Rules. Any Interim Relief so issued shall, to the extent permitted by applicable Law, be deemed a final arbitration award for purposes of enforceability, and, moreover, shall also be deemed a term and condition of this Agreement subject to specific performance in Section 11.18. The foregoing procedures shall constitute the exclusive means of seeking Interim Relief; provided, however, that (x) the Arbitral Tribunal shall have the power to continue, review, vacate or modify any Interim Relief granted by an Emergency Arbitrator, and the Arbitral Tribunal shall apply a de novo standard of review to the factual and legal findings of the Emergency Arbitrator and conduct any such proceeding with respect to the actions of the Emergency Arbitrator on an expedited basis; and (y) in the event an Emergency Arbitrator or the Arbitral Tribunal issues an order granting, denying or otherwise addressing Interim Relief (a “Decision on Interim Relief”), either Party may apply to enforce or require specific performance of such Decision on Interim Relief in any court of competent jurisdiction.

 

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(ix) In the event any proceeding is brought in any court of competent jurisdiction to enforce the dispute resolution provisions in this Section 9.1, to obtain relief as described in this Section 9.1, or to enforce any award, relief or decision issued by an Arbitral Tribunal, each Party irrevocably consents to the service of process in any action by the mailing of copies of the process to the Parties as provided in Section 11.6. Service effected as provided in this manner will become effective five (5) days after the mailing of the process.

(x) EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY AND (IV) EACH SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.1.

(d) Confidentiality. Without limiting the provisions of the Rules, unless otherwise agreed in writing by or among the relevant Parties or permitted by this Agreement, the relevant Parties shall keep, and shall cause the members of their applicable Group to keep, confidential all matters relating to the arbitration (including the existence of the proceeding and all of its elements and including any pleadings, briefs or other documents submitted or exchanged and any testimony or other oral submissions) or the award, and any negotiations, conferences and discussions pursuant to this Article IX shall be treated as compromise and settlement negotiations; provided, that such matters may be disclosed (i) to the extent reasonably necessary in any proceeding brought to enforce this Article IX or the award or for entry of a judgment upon the award and (ii) to the extent otherwise required by Law. Nothing said or disclosed, nor any document produced, in the course of any negotiations, conferences and discussions that is not otherwise independently discoverable shall be offered or received as evidence or used for impeachment or for any other purpose in any current or future arbitration. In the event either Party makes application to any court in connection with this Section 9.1(d) (including any proceedings to enforce a final award or any Interim Relief), that party shall take all steps reasonably within its power to cause such application, and any exhibits (including copies of any award or decisions of the Arbitral Tribunal or Emergency Arbitrator) to be filed under seal, shall oppose any challenge by any third party to such sealing, and shall give the other Party immediate notice of such challenge.

Section 9.2 Continuity of Service and Performance. Unless otherwise agreed in writing, the Parties will continue to provide service and honor all other commitments under this Agreement and each Ancillary Agreement during the course of dispute resolution pursuant to the provisions of this Article IX with respect to all matters not subject to such dispute resolution.

 

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ARTICLE X

INSURANCE

Section 10.1 Insurance Matters.

(a) With respect to Liabilities of Historical Xperi that (x) constitute Product Liabilities (other than those incurred by a member of the IP RemainCo Group) or (y) are otherwise incurred by a member of the Product SpinCo Group, in each case to the extent related to or arising from occurrences prior to the date of the Distribution, any rights to insurance coverage applicable to those Liabilities under Commercial Insurance Policies issued to any members of the IP RemainCo Group that were members of Historical Xperi are hereby assigned by IP RemainCo (on behalf of itself and the applicable members of its Group) to the applicable members of the Product SpinCo Group on that same date. IP RemainCo shall (or shall cause the applicable member of its Group to) provide the applicable member of the Product SpinCo Group with, from the date of the Distribution, access to, and the right to make claims under, the applicable Commercial Insurance Policy; provided, that such access to, and the right to make claims under, such Commercial Insurance Policy shall be subject to the terms, conditions and exclusions of such policy, including any limits on coverage or scope, and any deductibles, self-insured retentions, retrospective premiums, and other chargeback amounts, fees, costs and expenses, and shall be subject to the following:

(i) If permitted under such Commercial Insurance Policy, the applicable members of the Product SpinCo Group shall be responsible for the submission, administration and management of any claims under such Commercial Insurance Policy; provided, that Product SpinCo shall provide reasonable notice to IP RemainCo, or the relevant member of its Group, as applicable, prior to submitting any such claim;

(ii) If such Commercial Insurance Policy does not permit the applicable members of the Product SpinCo Group to directly submit claims under such Commercial Insurance Policy, Product SpinCo shall, or shall cause the applicable member of the Product SpinCo Group to, report any potential claims under such Commercial Insurance Policy as soon as practicable to IP RemainCo, and IP RemainCo shall, or shall cause the relevant member of its Group to, submit such claims directly to the applicable insurer; provided, that with respect to any such claims, Product SpinCo (or the applicable member of the Product SpinCo Group) shall (x) be responsible for (A) the preparation of any documents or forms that are required for the submission of such claims and (B) the administration and management of such claims after submission, and (y) provide IP RemainCo, or the relevant member of its Group, with such documents, forms or other information necessary for the submission of such claims by IP RemainCo, or the relevant member of its Group, on behalf of Product SpinCo (or the applicable member of the Product SpinCo Group);

 

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(iii) Product SpinCo (or the applicable members of the Product SpinCo Group) shall be responsible for any payments to the applicable Commercial Insurer under such Commercial Insurance Policy relating to its claims submissions, and shall indemnify, hold harmless and reimburse IP RemainCo (and the relevant members of the IP RemainCo Group) for any deductibles, self-insured retentions, retrospective premiums and other chargeback amounts, fees, costs and expenses incurred by IP RemainCo (or any members of the IP RemainCo Group), to the extent resulting from any access to, or any claims made by Product SpinCo (or any members of the Product SpinCo Group) under, any such Commercial Insurance Policy provided pursuant to this Section 10.1(a) (with respect to Product Liabilities), including any indemnity payments, settlements, judgments, legal fees and allocated claims expenses and claim handling fees, whether such claims are submitted directly or indirectly by Product SpinCo, a member of the Product SpinCo Group, its or their employees or third parties;

(iv) Product SpinCo (or the applicable members of the Product SpinCo Group) shall bear (and none of IP RemainCo or the members of its Group shall have any obligation to repay or reimburse any members of the Product SpinCo Group for) and shall be liable for all excluded, uninsured, uncovered, unavailable or uncollectible amounts of all such claims made by Product SpinCo or any members of the Product SpinCo Group under such Commercial Insurance Policy (unless otherwise constituting an IP Liability); and

(v) No member of the Product SpinCo Group, in connection with making a claim under any such Commercial Insurance Policy pursuant to this Section 10.1(a), shall take any action that would be reasonably likely to (w) have an adverse impact on the then-current relationship between any member of the IP RemainCo Group, on the one hand, and the applicable insurer, on the other hand; (x) result in the applicable insurer terminating or reducing coverage to, or increasing the amount of any premium owed by, any member of the IP RemainCo Group under such policy; (y) otherwise compromise, jeopardize or interfere with the rights of any member of the IP RemainCo Group under such policy; or (z) otherwise compromise or impair the ability of IP RemainCo to enforce its rights with respect to any indemnification under or arising out of this Agreement, and IP RemainCo shall have the right to cause Product SpinCo to desist, or cause any other member of the Product SpinCo Group to desist, from any action that it reasonably determines would compromise or impair its rights in accordance with this clause (z); provided, that this Section 10.1(a)(v) shall not preclude or otherwise restrict any member of the Product SpinCo Group from reporting claims to insurers in the ordinary course of business.

(b) With respect to any Commercial Insurance Policies the rights of which are shared between and/or among IP RemainCo and Product SpinCo (or any member of their respective Group), respectively, claims shall be paid, any self-insurance pertaining thereto shall be applied, and the applicable limits under such Commercial Insurance Policies shall be reduced, in each case, in accordance with the terms of such Commercial Insurance Policies and without any priority or preference shown or given to any of IP RemainCo or Product SpinCo (or any member of their respective Group), absent any written agreement otherwise; provided, however, none of IP RemainCo or Product SpinCo (or any member of their respective Group) shall accelerate or delay either the notification and submission of claims, on the one hand, or the demand for coverage for and receipt of insurance payments, on the other hand, in a manner that would differ from that which each would follow in the ordinary course when acting without regard to sufficiency of limits or the terms of self-insurance.

 

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Section 10.2 Liability Policies.

(a) After the Distribution, the members of the IP RemainCo Group shall not, without the Consent of any affected Person within the Product SpinCo Group (or the Consent of Product SpinCo on behalf of such Person), take any action or omit to take any action that would be reasonably likely to eliminate or substantially reduce the coverage of that Person who is or was covered under the directors and officers liability insurance policies, fiduciary liability insurance policies, primary and excess general liability policies, products liability, pollution liability, workers compensation, auto liability and cyber data breach or any other liability policy, as maintained by the members of the IP RemainCo Group prior to the Distribution (collectively, “IP RemainCo Liability Policies”) in respect of occurrences or alleged injury or damage taking place prior to the Distribution (for the avoidance of doubt, (i) the expiration of any IP RemainCo Liability Policies in accordance with their respective terms (including sending a notice of non-renewal) is expressly permitted; and (ii) the submission of a claim by any member of the IP RemainCo Group shall not constitute an action that is reasonably likely to eliminate or substantially reduce the coverage of any Person within the Product SpinCo Group who is or was covered under the IP RemainCo Liability Policies). Subject to Section 10.1(a), the members of the IP RemainCo Group shall reasonably cooperate with any Person who is or was covered by any IP RemainCo Liability Policy at or prior to the Distribution in such Person’s pursuit of any coverage claims under such IP RemainCo Liability Policies that would inure to the benefit of such Person. The members of the IP RemainCo Group shall allow the members of the Product SpinCo Group, and their respective agents and representatives, upon reasonable prior notice and during regular business hours, to examine and make copies of the relevant IP RemainCo Liability Policies and shall provide such cooperation as is reasonably requested by the members of the Product SpinCo Group, including their respective directors and their respective officers.

(b) After the Distribution, the members of the Product SpinCo Group shall not, without the consent of any affected Person within the IP RemainCo Group (or the Consent of IP RemainCo on behalf of such Person), take any action or omit to take any action that would be reasonably likely to eliminate or substantially reduce the coverage of that Person who is or was covered under the directors and officers liability insurance policies, fiduciary liability insurance policies, primary and excess general liability policies, products liability, pollution liability, workers compensation, auto liability policies and cyber data breach or any other liability policy, as maintained by the members of the Product SpinCo Group prior to the Distribution (collectively, “Product SpinCo Liability Policies”) in respect of occurrences or alleged injury or damage taking place prior to the Distribution (for the avoidance of doubt, (i) the expiration of any Product SpinCo Liability Policies in accordance with their respective terms (including sending a notice of non-renewal) is expressly permitted; and (ii) the submission of a claim by any member of the Product SpinCo Group shall not constitute an action that is reasonably likely to eliminate or substantially reduce the coverage of any Person within the IP RemainCo Group who is or was covered under the Product SpinCo Liability Policies). Subject to

 

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Section 10.1(a), the members of the Product SpinCo Group shall reasonably cooperate with any Person who is or was covered by any Product SpinCo Liability Policy at or prior to the Distribution, in their pursuit of any coverage claims under such Product SpinCo Liability Policies that would inure to the benefit of such Person. The members of the Product SpinCo Group shall allow the members of the IP RemainCo Group, and their respective agents and representatives, upon reasonable prior notice and during regular business hours, to examine and make copies of the relevant Product SpinCo Liability Policies and shall provide such cooperation as is reasonably requested by the members of the IP RemainCo Group, including their respective directors and their respective officers.

Section 10.3 Cooperation.

(a) With respect to the IP RemainCo Liability Policies, for claims (i) arising from wrongful acts or occurrences prior to the applicable Relevant Time, and (ii) for which IP RemainCo, in accordance with Section 10.1(a), is providing to Product SpinCo (or any member of the Product SpinCo Group) access to, and the right to make claims under, the applicable IP RemainCo Liability Policy, IP RemainCo shall, and shall cause the other members of its Group to, subject to the terms of Section 10.1(a), reasonably cooperate with Product SpinCo with respect to the submission of such claims by Product SpinCo (or the applicable member of the Product SpinCo Group) to insurers issuing such policies.

(b) With respect to the Product SpinCo Liability Policies, for claims (i) arising from wrongful acts or occurrences prior to the applicable Relevant Time, and (ii) for which Product SpinCo, in accordance with Section 10.1(a), is providing to IP RemainCo (or any member of the IP RemainCo Group) access to, and the right to make claims under, the applicable Product SpinCo Liability Policy, Product SpinCo shall, and shall cause the other members of its Group to, subject to the terms of Section 10.1(a) as applicable, reasonably cooperate with IP RemainCo with respect to the submission of such claims by IP RemainCo (or the applicable member of the IP RemainCo Group) to insurers issuing such policies.

(c) The Parties agree to use their commercially reasonable efforts to cooperate with respect to the various insurance matters contemplated by this Agreement. If any Liabilities involve claims against two (2) or more parties accruing both before and after the respective Distribution Dates, those Parties may jointly make claims for coverage under applicable Shared Policies, and said Parties will cooperate with each other in pursuit of such coverage, with the Insurance Proceeds relating thereto first used to reimburse the Parties for their respective costs, legal and consulting fees, and other out-of-pocket expenses incurred in pursuing such insurance recovery, and the remaining amounts to be allocated among the Parties in an equitable manner.

(d) With respect to the Specified Licensing Shared Contracts, the Parties agree to use their commercially reasonable efforts to exchange such Information as necessary and cooperate with each other to review and accurately determine (i) the Liabilities incurred under invoices received from; or (ii) Assets accrued under invoices issued to (or to be issued to) the other contracting party under such Specified Licensing Shared Contracts.

 

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Section 10.4 No Assignment of Entire Insurance Policies. This Agreement shall not be considered as an attempted assignment of any policy of insurance in its entirety (as opposed to an assignment of rights under a policy), nor is it considered to be itself a contract of insurance, and further this Agreement shall not be construed to waive any right or remedy of either Party under or with respect to any Shared Policy and related programs, or any other contract or policy of insurance, and the Parties reserve all their rights thereunder.

Section 10.5 Agreement for Waiver of Conflict and Shared Defense. In the event of any action by members of two (2) or more Groups to recover or obtain Insurance Proceeds under a Shared Policy, or to defend any action by an insurer attempting to restrict or deny any coverage benefits under a Shared Policy, the Parties (or the applicable member of such Party’s Group) may join in any such Action and be represented by joint counsel and each Party shall, and shall cause the other members of its Group to, waive any conflict of interest to the extent necessary to conduct any such action.

Section 10.6 Certain Matters Relating to Organizational Documents. (a) For a period of six (6) years from the Distribution Date, the Amended and Restated Certificate of Incorporation and Second Amended and Restated Bylaws of IP RemainCo, in each case, as amended and restated or otherwise modified from time to time, shall contain provisions no less favorable with respect to indemnification than are set forth in the Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws of IP RemainCo immediately before the Effective Time, which provisions shall not be amended, repealed or otherwise modified for a period of six (6) years from the Distribution Date in any manner that would affect adversely the rights thereunder of individuals who, at or prior to the Relevant Time, were indemnified under such Amended and Restated Certificate of Incorporation and Second Amended and Restated Bylaws, unless such amendment, repeal, or modification shall be required by Law and then only to the minimum extent required by Law or approved by IP RemainCo’s stockholders and (b) for a period of six (6) years from the Distribution Date, the Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws of Product SpinCo, in each case, as amended and restated or otherwise modified from time to time, shall contain provisions no less favorable with respect to indemnification than are set forth in the Certificate of Incorporation and Bylaws of Product SpinCo immediately before the Effective Time, which provisions shall not be amended, repealed or otherwise modified for a period of six (6) years from the Distribution Date in any manner that would affect adversely the rights thereunder of individuals who, at or prior to the Distribution Date, were indemnified under such Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws, unless such amendment, repeal, or modification shall be required by Law and then only to the minimum extent required by Law or approved by Product SpinCo’s stockholders.

Section 10.7 Directors and Officers Liability Insurance.

(a) Effective on the Distribution Date, Product SpinCo shall purchase and obtain, in such amounts and on such terms as it deems appropriate, directors and officers liability insurance policies to cover the Product SpinCo Group and the insured persons thereof, for claims first made after the Distribution Date, which claims are based on wrongful acts committed or allegedly committed after the Distribution Date. Such insurance policies, and the limits thereof, shall be separate from (i) IP RemainCo’s directors and officers liability insurance policies in force, and the limits thereof, as of the Distribution Date, as well as (ii) directors and officers liability insurance policies purchased by IP RemainCo as further described in Section 10.7(b), and the limits thereof.

 

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(b) Effective on the Distribution Date, IP RemainCo shall purchase and obtain, in such amounts and on such terms as it deems appropriate, directors and officers liability insurance policies to cover the IP RemainCo Group and the insured persons thereof, for claims first made after the Distribution Date, which claims are based on wrongful acts committed or allegedly committed after the Distribution Date. Such insurance policies, and the limits thereof, shall be separate from (i) IP RemainCo’s directors and officers liability insurance policies, and the limits thereof, in force as of the Distribution Date as well as (ii) directors and officers liability insurance policies purchased by Product SpinCo as further described in Section 10.7(a), and the limits thereof.

(c) Effective on the Distribution Date, each of IP RemainCo’s directors and officers liability insurance policies then in force shall become run-off policies with a six (6) year tail and shall cease providing coverage for claims made to the extent based on wrongful acts committed or allegedly committed after the Distribution Date, except as provided below in Section 10.7(d).

(d) Effective on the Distribution Date, IP RemainCo shall purchase and obtain, with respect to each of IP RemainCo’s directors and officers liability insurance policies then in force, a six (6) year tail extending coverage provided by such policies and the limits thereof in favor of the Product SpinCo Group, the IP RemainCo Group and the insured persons thereof as follows; provided, that the financial responsibility for the purchase of this six (6) year tail-extending coverage shall be borne 50% by the Product SpinCo Group and 50% by the IP RemainCo Group.

(i) With respect to the Product SpinCo Group and IP RemainCo Group and the insured persons thereof, the six (6) year tail coverage afforded by such policies shall apply to claims that are both (x) first made on or after the Distribution Date to a date six (6) years thereafter; and are (y) based either (A) on wrongful acts committed or allegedly committed on or before the Distribution Date, or (B) on related wrongful acts, of which one or more of such related wrongful acts was committed or allegedly committed, on or before the Distribution Date, including such claims based on the separation transactions provided for in this Agreement; and

(ii) Such IP RemainCo directors and officers liability insurance policies, including the six (6) year tail, and the limits thereof, shall be separate from the directors and officers liability insurance policies purchased by Product SpinCo and IP RemainCo, as further described in Sections 10.7(a) and 10.7(b), and the limits thereof. Such IP RemainCo directors and officers liability insurance policies, including the six (6) year tail, and the limits thereof, shall apply to the interests of each of Product SpinCo and IP RemainCo, and their respective insured persons in accordance with the terms and conditions of such policies, and nothing in this Section shall be deemed to prioritize the interests of one insured over another insured under such policies.

 

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ARTICLE XI

MISCELLANEOUS

Section 11.1 Complete Agreement; Construction. This Agreement, including the Exhibits and Schedules, the Ancillary Agreements and, solely to the extent and for the limited purpose of effecting the Internal Reorganization, the Conveyancing and Assumption Instruments shall constitute the entire agreement between the Parties with respect to the subject matter hereof and shall supersede all previous negotiations, commitments, course of dealings and writings with respect to such subject matter. In the event of any inconsistency between this Agreement and any Exhibit or Schedule hereto, the Exhibit or Schedule shall prevail. In the event and to the extent that there shall be a conflict between the provisions of (a) this Agreement and the provisions of any Ancillary Agreement or Continuing Arrangement, such Ancillary Agreement or Continuing Arrangement shall control (except with respect to any provisions relating to the Transfer of Assets to, or the Assumption of Liabilities by, a Party or a member of its Group, the Internal Reorganization, the Distribution, the covenants and obligations set forth in Article V, Article VI, Article VII, Article VIII, Article IX and Article X or the application of Article XI to the terms of this Agreement (or, in each case, any indemnification rights pursuant to this Agreement in respect thereof and/or any other remedies pursuant to this Agreement in respect of any breach of any covenant or obligation under this Agreement), in which case this Agreement shall control), (b) this Agreement and any Conveyancing and Assumption Instrument, this Agreement shall control and (c) this Agreement and any agreement which is not an Ancillary Agreement (other than a Conveyancing and Assumption Instrument), this Agreement shall control unless it is specifically stated in such agreement that such agreement controls. Except as expressly set forth in this Agreement or any Ancillary Agreement, (i) all matters relating to Taxes and Tax Returns of the Parties and their respective Subsidiaries shall be governed exclusively by the Tax Matters Agreement and (ii) for the avoidance of doubt, in the event of any conflict between this Agreement or any Ancillary Agreement, on the one hand, and the Tax Matters Agreement, on the other hand, with respect to such matters, the terms and conditions of the Tax Matters Agreement shall govern.

Section 11.2 Ancillary Agreements. Except as expressly set forth herein, this Agreement is not intended to address, and should not be interpreted to address, the matters specifically and expressly covered by the Ancillary Agreements.

Section 11.3 Counterparts. This Agreement may be executed and delivered (including by facsimile or other means of electronic transmission, such as by electronic mail in “pdf” form) in more than one counterpart, all of which shall be considered one and the same agreement, each of which when executed shall be deemed to be an original, and shall become effective when one or more such counterparts have been signed by each of the Parties and delivered to each of the Parties.

Section 11.4 Survival of Agreements. Except as otherwise contemplated by this Agreement or any Ancillary Agreement, all covenants and agreements of the Parties contained in this Agreement and each Ancillary Agreement shall survive the Effective Time and remain in full force and effect in accordance with their applicable terms.

 

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Section 11.5 Expenses. Except as otherwise provided (i) in this Agreement or (ii) in any Ancillary Agreement, the Parties agree that IP RemainCo shall be responsible for all out-of-pocket fees and expenses incurred (collectively “Transaction Expenses”), or to be incurred by IP RemainCo and directly related to the consummation of the financing transactions contemplated hereby (including third party professional fees (e.g., outside legal, banking and accounting fees)) and fees and expenses incurred in connection with the preparation, execution, delivery and implementation of the Financing Disclosure Documents. Except as otherwise provided (i) in this Agreement or (ii) in any Ancillary Agreement, (x) Product SpinCo shall be liable for costs and expenses incurred, or to be incurred by members of the Product SpinCo Group which were a part of Historical Xperi and directly related to the consummation of the transactions contemplated hereby, including Transaction Expenses and (y) IP RemainCo shall be liable for costs and expenses incurred, or to be incurred by members of the IP RemainCo Group which were a part of Historical Xperi and directly related to the consummation of the transactions contemplated hereby, including Transaction Expenses (collectively, “Separation Expenses”); provided; however, in the event of any inconsistency between clauses (x) and (y) of this Section 11.5, on one hand, and clauses (iv) and (xiv)(b) of the definition of Product Liabilities and clauses (iv) and (xiii)(b) of the definition of IP Liabilities, on the other hand, clauses (iv) and (xiv)(b) of the definition of Product Liabilities and clauses (iv) and (xiii)(b) of the definition of IP Liabilities shall control.

Section 11.6 Notices. All notices and other communications to be given to either Party under this Agreement shall be sufficiently given for all purposes hereunder if in writing and delivered by hand, courier or overnight delivery service, or five (5) days after being mailed by certified or registered mail, return receipt requested, with appropriate postage prepaid, or electronically mailed (with a response confirming receipt), and shall be directed to the address set forth below (or at such other address for a Party as shall be specified in a notice given in accordance with this Section 11.6):

To IP RemainCo:

Adeia Inc.

3025 Orchard Parkway

San Jose, California 95134

Attention:                       [•]

Email:                             [•]

with a copy (which shall not constitute notice) to:

Skadden, Arps, Slate, Meagher & Flom LLP

525 University Avenue

Palo Alto, CA 94301

Attention:                   Mike Ringler

Email:                         mike.ringler@skadden.com

 

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To Product SpinCo:

Xperi Inc.

2190 Gold Street

San Jose, CA 95002

Attention:                       [•]

Email:                             [•]

with a copy (which shall not constitute notice) to:

Skadden, Arps, Slate, Meagher & Flom LLP

525 University Avenue

Palo Alto, CA 94301

Attention:                     Mike Ringler

Email:                           mike.ringler@skadden.com

Section 11.7 Waivers. Any provision of this Agreement may be waived if and only if, such waiver is in writing and signed by the Party against whom the waiver is to be effective. Notwithstanding the foregoing, no failure to exercise and no delay in exercising, on the part of either Party, any right, remedy, power or privilege hereunder shall operate as a waiver hereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. Any consent required or permitted to be given by either Party to the other Party under this Agreement shall be in writing and signed by the Party giving such consent and shall be effective only against such Party (and the members of its Group).

Section 11.8 Amendments. This Agreement may not be modified or amended except by an agreement in writing signed by each of the Parties.

Section 11.9 Assignment. Except as otherwise provided for in this Agreement, neither this Agreement nor any right, interest or obligation shall be assignable, in whole or in part, directly or indirectly, by either Party without the prior written consent of the other Party (not to be unreasonably withheld, conditioned or delayed), and any attempt to assign any rights, interests or obligations arising under this Agreement without such consent shall be void; except, that a Party may assign this Agreement or any or all of the rights, interests and obligations hereunder in connection with a merger, reorganization or consolidation transaction in which such Party is a constituent party but not the surviving entity or the sale by such Party of all or substantially all of its Assets; provided, that the surviving entity of such merger, reorganization or consolidation transaction or the transferee of such Assets shall assume all the obligations of the relevant Party by operation of law or pursuant to an agreement in writing, reasonably satisfactory to the other Party, to be bound by the terms of this Agreement as if named as a “Party” hereto; provided, however, that in the case of each of the preceding clauses, no assignment permitted by this Section 11.9 shall release the assigning Party from Liability for the full performance of its obligations under this Agreement, unless agreed to in writing by the non-assigning Parties.

Section 11.10 Successors and Assigns. The provisions of this Agreement and the obligations and rights hereunder shall be binding upon, inure to the benefit of and be enforceable by (and against) the Parties and their respective successors and permitted transferees and assigns.

 

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Section 11.11 Payment Terms.

(a) Except as set forth in Article VII or as otherwise expressly provided to the contrary in this Agreement, any amount to be paid or reimbursed by a Party (and/or a member of such Party’s Group), on the one hand, to the other Party (and/or a member of such Party’s respective Group), on the other hand, under this Agreement shall be paid or reimbursed hereunder within thirty (30) days after presentation of an invoice or a written demand therefor and setting forth, or accompanied by, reasonable documentation or other reasonable explanation supporting such amount.

(b) Except as set forth in Article VII or as expressly provided to the contrary in this Agreement, any amount not paid when due pursuant to this Agreement (and any amount billed or otherwise invoiced or demanded and properly payable that is not paid within thirty (30) days of such bill, invoice or other demand) shall bear interest at a rate per annum equal to LIBOR (in effect on the date on which such payment was due) plus 3% calculated for the actual number of days elapsed, accrued from the date on which such payment was due up to the date of the actual receipt of payment; provided, however, in the event that LIBOR is no longer commonly accepted by market participants, then an alternative floating rate index that is commonly accepted by market participants, which Product SpinCo and IP RemainCo shall be jointly determined, each acting in good faith.

(c) In the event of a dispute or disagreement with respect to all or a portion of any amounts requested by either Party (and/or a member of such Party’s Group) as being payable, the payor Party shall in no event be entitled to withhold payments for any such amounts (and any such disputed amounts shall be paid in accordance with Section 11.11(a), subject to the right of the payor Party to dispute such amount following such payment); provided, that in the event that following the resolution of such dispute it is determined that the payee Party (and/or a member of the payee Party’s Group) was not entitled to all or a portion of the payment made by the payor Party, the payee Party shall repay (or cause to be repaid) such amounts to which it was not entitled, including interest, to the payor Party (or its designee), which amounts shall bear interest at a rate per annum equal to LIBOR plus 3%, calculated for the actual number of days elapsed, accrued from the date on which such payment was made by the payor Party to the payee Party.

(d) Without the Consent of the Party receiving any payment under this Agreement specifying otherwise, all payments to be made by IP RemainCo or Product SpinCo under this Agreement shall be made in U.S. dollars. Except as expressly provided herein, any amount which is not expressed in U.S. dollars shall be converted into U.S. dollars by using the Bloomberg fixing rate at 5:00 p.m. New York City Time on the day before the date the payment is required to be made or, as applicable, on which an invoice is submitted (provided, however, that with regard to any payments in respect of Indemnifiable Losses for payments made to third parties, the date shall be the day before the relevant payment was made to the third party) or in the Wall Street Journal on such date if not so published on Bloomberg. Except as expressly provided herein, in the event that any indemnification payment required to be made hereunder may be denominated in a currency other than U.S. dollars, the amount of such payment shall be converted into U.S. dollars on the date on which notice of the claim is given to the Indemnifying Party.

 

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Section 11.12 No Circumvention. The Parties agree not to directly or indirectly take any actions, act in concert with any Person who takes an action, or cause or allow any member of any such Party’s Group to take any actions (including the failure to take a reasonable action) such that the resulting effect is to materially undermine the effectiveness of any of the provisions of this Agreement (including adversely affecting the rights or ability of either Party to successfully pursue indemnification or payment pursuant to Articles VI and VII).

Section 11.13 Subsidiaries. Each of the Parties shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth herein to be performed by any Subsidiary of such Party or by any entity that becomes a Subsidiary of such Party on and after the Distribution Date.

Section 11.14 Third Party Beneficiaries. Except (i) as provided in Article VII relating to Indemnitees and for the release under Section 7.1 of any Person provided therein, (ii) as provided in Section 10.2 relating to insured persons and Section 10.6 relating to the directors, officers, employees, fiduciaries or agents provided therein, (iii) as provided in Section 8.8 relating to Historical Xperi Counsel and (iv) as specifically provided in any Ancillary Agreement, this Agreement is solely for the benefit of, and is only enforceable by, the Parties and their permitted successors and assigns and should not be deemed to confer upon third parties any remedy, benefit, claim, liability, reimbursement, cause of Action or other right of any nature whatsoever, including any rights of employment for any specified period, in excess of those existing without reference to this Agreement.

Section 11.15 Title and Headings. Titles and headings to sections herein are inserted for the convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement.

Section 11.16 Exhibits and Schedules. The Exhibits and Schedules shall be construed with and as an integral part of this Agreement to the same extent as if the same had been set forth verbatim herein. Nothing in the Exhibits or Schedules constitutes an admission of any Liability or obligation of any member of the IP RemainCo Group or the Product SpinCo Group or any of their respective Affiliates to any third party, nor, with respect to any third party, an admission against the interests of any member of the IP RemainCo Group or the Product SpinCo Group or any of their respective Affiliates. The inclusion of any item or Liability or category of item or Liability on any Exhibit or Schedule is made solely for purposes of allocating potential Liabilities among the Parties and shall not be deemed as or construed to be an admission that any such Liability exists.

Section 11.17 Governing Law. This Agreement and any dispute arising out of, in connection with or relating to this Agreement shall be governed by and construed in accordance with the Laws of the State of Delaware, without giving effect to the conflicts of laws principles thereof.

Section 11.18 Specific Performance. The Parties acknowledge and agree that irreparable harm would occur in the event that the Parties do not perform any provision of this Agreement in accordance with its specific terms or otherwise breach this Agreement and the remedies at law for any breach or threatened breach of this Agreement, including monetary

 

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damages, are inadequate compensation for any Indemnifiable Loss. Accordingly, from and after the Effective Time, in the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement, the Parties agree that the Party or Parties to this Agreement who are or are to be thereby aggrieved shall, subject and pursuant to the terms of this Article XI (including, for the avoidance of doubt, after compliance with all notice and negotiation provisions herein), have the right to specific performance and injunctive or other equitable relief under this Agreement, in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative. The Parties agree that any defense in any action for specific performance that a remedy at law would be adequate is hereby waived, and that any requirements for the securing or posting of any bond with such remedy are hereby waived.

Section 11.19 Severability. In the event any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby. The Parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid, legal and enforceable provisions, the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

Section 11.20 No Duplication; No Double Recovery. Nothing in this Agreement is intended to confer to or impose upon either Party a duplicative right, entitlement, obligation or recovery with respect to any matter arising out of the same facts and circumstances (including with respect to the rights, entitlements, obligations and recoveries that may arise out of one or more of the following Section 7.2; Section 7.3 and Section 7.4).

Section 11.21 Public Announcements. From and after the Effective Time, IP RemainCo and Product SpinCo hereby agree (a) to coordinate with the other Party on the Parties’ respective initial press releases with respect to the transactions contemplated herein and (b) that no press release or similar public announcement or external communication shall, if prior to, or after, the Effective Time, be made or be caused to be made (including by such Party’s Affiliates) concerning the execution or performance of this Agreement until such Party has consulted with the other Party, and provided meaningful opportunity for review and given due consideration to reasonable comment by the other Party, except (x) as may be required by applicable Law, court process or by obligations pursuant to any listing agreement with any national securities exchange or national securities quotation system; (y) for disclosures made that are substantially consistent with disclosures contained in any Distribution Disclosure Document or (z) as may pertain to disputes between one Party or any member of its Group, on the one hand, and the other Party or any member of its Group, on the other hand; provided, that in the case of clause (z), a Party that intends to issue a press release or similar public announcement or external communication regarding such dispute shall provide reasonable advance written notice to the other Party in accordance with Section 11.6, which notice shall include a copy of the press release or similar public announcement or external communication, or where no such copy is available, a description of the press release or similar public announcement or external communication.

 

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Section 11.22 Tax Treatment of Payments. To the extent permitted by applicable Law, unless otherwise required by a Final Determination or the Tax Matters Agreement or as otherwise agreed to among the Parties (including as may be agreed in any Continuing Arrangements among Affiliates of the Parties), for U.S. federal Tax purposes, any payment made pursuant to this Agreement shall be treated as follows:

(a) to the extent the member or assets of the payor Group and the member or assets of the payee Group to which the liability for payment relates were separated in a tax-free distribution for U.S. federal Tax purposes, such payment shall be treated as a tax-free contribution or tax-free distribution, as applicable, with respect to the stock of the applicable member of the payee Group or payor Group, occurring immediately prior to the relevant transaction in the Internal Reorganization or the Contribution, as applicable; and

(b) to the extent the member or assets of the payor Group and the member or assets of the payee Group to which the liability for payment relates were separated in a taxable transaction for U.S. federal Tax purposes, such payment shall be treated as an adjustment to the price or amount, as applicable, of the relevant transaction in the Internal Reorganization or the Contribution, as applicable.

Payments of interest shall be treated as deductible by the Indemnifying Party or its relevant Subsidiary and as income to the Indemnitee or its relevant Subsidiary, as permitted and applicable. In the case of each of the foregoing, no Party shall take any position inconsistent with such treatment. In the event that a Taxing Authority asserts that a Party’s treatment of a payment pursuant to this Agreement should be other than as set forth in this Section 11.22, such Party shall use its commercially reasonable efforts to contest such challenge.

* * * * *

[End of page left intentionally blank]

 

93


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

 

 

ADEIA INC.
By  

/s/ Keith Jones

 

Name:  KeithJones

 

Title:  ChiefFinancial Officer

 

XPERI INC.
By  

/s/ Robert Andersen

  Name: Robert Andersen
  Title: Chief Financial Officer

[Signature Page to the Separation and Distribution Agreement]


EXHIBIT A

Internal Reorganization and Business Realignment Steps Plan

See attached.

 

Exh. A-1

EX-3.1

Exhibit 3.1

CERTIFICATE OF AMENDMENT

TO THE

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

OF

XPERI HOLDING CORPORATION

Pursuant to Section 242 of the General

Corporation Law of the State of Delaware

 

 

Xperi Holding Corporation, a Delaware corporation (hereinafter called the “Corporation”), does hereby certify as follows:

 

  1.

Article I of the Corporation’s Amended and Restated Certificate of Incorporation is hereby amended to read in its entirety as set forth below:

 

  I.

The name of the corporation is Adeia Inc. (hereinafter the “Corporation”).

 

  2.

The foregoing amendment was duly adopted in accordance with Section 242 of the General Corporation Law of the State of Delaware.

 

  3.

This Certificate of Amendment shall become effective at 12:01 a.m. Eastern Time on October 1, 2022.

[Signature Page Follows]


IN WITNESS WHEREOF, the Corporation has caused this Certificate to be duly executed in its corporate name this 30th day of September, 2022.

 

XPERI HOLDING CORPORATION
By:  

/s/ Paul Davis

Name:   Paul Davis
Title:   Authorized Officer

[Signature Page to Certificate of Amendment Changing Name (Xperi Holding Corporation)]

EX-3.2

Exhibit 3.2

AMENDED AND RESTATED

BYLAWS

OF

ADEIA INC.

(as amended and restated on October 1, 2022)


TABLE OF CONTENTS

 

ARTICLE I

 

CORPORATE OFFICES

 

1.1

  REGISTERED OFFICE      1  

1.2

  OTHER OFFICES      1  
ARTICLE II

 

MEETINGS OF STOCKHOLDERS

 

2.1

  PLACE OF MEETINGS      1  

2.2

  ANNUAL MEETING      1  

2.3

  SPECIAL MEETING      1  

2.4

  NOTICE OF STOCKHOLDERS’ MEETINGS      2  

2.5

  ADVANCE NOTICE OF STOCKHOLDER NOMINEES      2  

2.6

  ADVANCE NOTICE OF STOCKHOLDER BUSINESS      6  

2.7

  MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE      8  

2.8

  QUORUM      8  

2.9

  ADJOURNED MEETING; NOTICE      8  

2.10

  CONDUCT OF BUSINESS      9  

2.11

  VOTING      9  

2.12

  WAIVER OF NOTICE      9  

2.13

  NO STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING      9  

2.14

  RECORD DATE FOR STOCKHOLDER NOTICE; VOTING      9  

2.15

  PROXIES      10  
ARTICLE III

 

DIRECTORS

 

3.1

  POWERS      10  

3.2

  NUMBER OF DIRECTORS      11  

3.3

  ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS      11  

3.4

  PLACE OF MEETINGS; MEETINGS BY TELEPHONE      12  

3.5

  REGULAR MEETINGS      12  

3.6

  SPECIAL MEETINGS; NOTICE      12  

3.7

  QUORUM      12  

3.8

  WAIVER OF NOTICE      13  

3.9

  ORGANIZATION      13  

3.10

  BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING      13  

3.11

  FEES AND COMPENSATION OF DIRECTORS      13  

 

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3.12

  REMOVAL AND RESIGNATION OF DIRECTORS      14  

3.13

  APPROVAL OF LOANS TO OFFICERS      14  
ARTICLE IV

 

COMMITTEES

 

4.1

  COMMITTEES OF DIRECTORS      14  

4.2

  COMMITTEE MINUTES      15  

4.3

  MEETINGS AND ACTION OF COMMITTEES      15  

4.4

  NOMINATING AND CORPORATE GOVERNANCE COMMITTEE      15  
ARTICLE V

 

OFFICERS

 

5.1

  OFFICERS      16  

5.2

  APPOINTMENT OF OFFICERS      16  

5.3

  SUBORDINATE OFFICERS      16  

5.4

  REMOVAL AND RESIGNATION OF OFFICERS      16  

5.5

  VACANCIES IN OFFICES      16  

5.6

  CHAIR OF THE BOARD      17  

5.7

  CHIEF EXECUTIVE OFFICER      17  

5.8

  PRESIDENT      17  

5.9

  VICE PRESIDENTS      17  

5.10

  SECRETARY      17  

5.11

  CHIEF FINANCIAL OFFICER      18  

5.12

  TREASURER      18  

5.13

  AUTHORITY AND DUTIES OF OFFICERS      18  
ARTICLE VI

 

INDEMNITY

 

6.1

  INDEMNIFICATION OF DIRECTORS AND OFFICERS      18  

6.2

  INDEMNIFICATION OF OTHERS      19  

6.3

  PAYMENT OF EXPENSES IN ADVANCE      19  

6.4

  INDEMNITY NOT EXCLUSIVE      19  

6.5

  INSURANCE      19  

6.6

  CONFLICTS      20  
ARTICLE VII

 

RECORDS AND REPORTS

 

7.1

  MAINTENANCE AND INSPECTION OF RECORDS      20  

7.2

  INSPECTION BY DIRECTORS      21  

7.3

  ANNUAL STATEMENT TO STOCKHOLDERS      21  

7.4

  REPRESENTATION OF SHARES OF OTHER CORPORATIONS      21  

 

ii


ARTICLE VIII

 

GENERAL MATTERS

 

8.1

  CHECKS      21  

8.2

  EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS      21  

8.3

  STOCK CERTIFICATES      22  

8.4

  SPECIAL DESIGNATION ON CERTIFICATES      22  

8.5

  LOST CERTIFICATES      22  

8.6

  CONSTRUCTION; DEFINITIONS      22  

8.7

  DIVIDENDS      23  

8.8

  FISCAL YEAR      23  

8.9

  SEAL      23  

8.10

  TRANSFER OF STOCK      23  

8.11

  STOCK TRANSFER AGREEMENTS      23  

8.12

  REGISTERED STOCKHOLDERS      23  
ARTICLE IX

 

AMENDMENTS

 

9.1

  AMENDMENTS      24  

 

iii


ARTICLE I

CORPORATE OFFICES

1.1 REGISTERED OFFICE

The registered office of Adeia Inc. (the “corporation”) shall be in the City of Wilmington, County of New Castle, State of Delaware. The name of the registered agent of the corporation at such location is The Corporation Trust Company.

1.2 OTHER OFFICES

The board of directors of the corporation (the “board of directors”) may at any time establish other offices at any place or places where the corporation is qualified to do business.

ARTICLE II

MEETINGS OF STOCKHOLDERS

2.1 PLACE OF MEETINGS

Meetings of stockholders shall be held at any place, within or outside the State of Delaware, or by means of remote communication, as designated by the board of directors. In the absence of any such designation, stockholders’ meetings shall be held at the registered office of the corporation.

2.2 ANNUAL MEETING

The annual meeting of stockholders shall be held each year on a date and at a time designated by the board of directors. Any previously scheduled annual meeting of the stockholders may be postponed by resolution of the board of directors upon public notice given prior to the date previously scheduled for such annual meeting of the stockholders. At the meeting, directors shall be elected and any other proper business may be transacted.

2.3 SPECIAL MEETING

A special meeting of the stockholders may be called at any time by the board of directors, or by a majority of the members of the board of directors, or by a committee of the board of directors which has been duly designated by the board of directors and whose powers and authority, as provided in a resolution of the board of directors or in these bylaws, include the power to call such meetings, but such special meetings may not be called by any other person or persons. Any previously scheduled special meeting of the stockholders may be postponed by resolution of the board of directors upon public notice given prior to the date previously scheduled for such special meeting of the stockholders. Business transacted at special meetings shall be confined to the purpose or purposes stated in the notice of the meeting.

 

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2.4 NOTICE OF STOCKHOLDERS MEETINGS

All notices of meetings with stockholders shall be sent or otherwise given in accordance with Section 2.5 of these bylaws not less than ten (10) nor more than sixty (60) days before the date of the meeting (unless a different time is specified by law) to each stockholder entitled to vote at such meeting. The notice shall specify the place, date, and hour of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called.

Notices of meetings to stockholders may be given by mailing the same, addressed to the stockholder entitled thereto, at such stockholder’s mailing address as it appears on the records of the corporation and such notice shall be deemed to be given when deposited in the U.S. mail, postage prepaid. Without limiting the manner by which notices of meetings otherwise may be given effectively to stockholders, any such notice may be given by electronic transmission in the manner provided in Section 232 of the General Corporation Law of the State of Delaware.

2.5 ADVANCE NOTICE OF STOCKHOLDER NOMINEES

(a) Proper Nominations; Who May Make Nominations. Only persons who are nominated in accordance with the procedures set forth in this Section 2.5 shall be eligible for election as directors. Nominations of persons for election to the board of directors of the corporation may be made at an annual meeting of stockholders or at a special meeting (but only if the election of directors is a matter specified in the notice of meeting given by or at the direction of the board of directors or other person calling such special meeting in accordance with Section 2.3 hereof) (i) by or at the direction of the board of directors, including by any committee or persons appointed by the board of directors, or (ii) by any stockholder of the corporation who (A) was a stockholder of record (and, with respect to any beneficial owner, if different, on whose behalf such nomination is proposed to be made, only if such beneficial owner was the beneficial owner of shares of the corporation) both at the time of giving the notice provided for in this Section 2.5 and at the time of the meeting, (B) is entitled to vote at the meeting and (C) has complied with this Section 2.5 as to such nomination. The foregoing clause (ii) shall be the exclusive means for a stockholder to make any nomination of a person or persons for election to the board of directors at an annual meeting or a special meeting.

(b) Requirement of Timely Notice of Nominations. Such nominations, other than those made by or at the direction of the board of directors, shall be made pursuant to timely notice in writing and in proper form to the secretary of the corporation.

(i) Timely Notice of Nominations for Annual Meeting. To be timely, a stockholder’s notice of nominations to be made at an annual meeting must be delivered to, or mailed and received at, the principal executive offices of the corporation not less than ninety (90) days nor more than one hundred twenty (120) days prior to the one-year anniversary of the preceding year’s annual meeting; provided, however, that if the date of the annual meeting is more than thirty (30) days before or more than sixty (60) days after such anniversary date, notice by the stockholder to be timely must be so delivered, or mailed and received, not later than the 90th day prior to such annual meeting or, if later, the tenth day following the day on which public disclosure of the date of

 

2


such annual meeting was first made. Any such notice that is delivered to, or mailed and received at, the principal executive offices of the corporation within any of the time periods set forth in the immediately preceding sentence shall be deemed an “Annual Meeting Timely Notice.” In no event shall any adjournment of an annual meeting or the announcement thereof commence a new time period for the giving of Annual Meeting Timely Notice as described above.

(ii) Timely Notice of Nominations for Special Meeting. To be timely, a stockholder’s notice of nominations to be made at a special meeting at which the election of directors is a matter specified in the notice of meeting must be delivered to, or mailed and received at, the principal executive offices of the corporation not earlier than the 120th day prior to such special meeting and not later than the 90th day prior to such special meeting or, if later, the 10th day following the day on which public disclosure (as defined in this Section 2.5) of the date of such special meeting was first made (such notice within such time periods, “Special Meeting Timely Notice”). In no event shall any adjournment of a special meeting or the announcement thereof commence a new time period for the giving of Special Meeting Timely Notice as described above.

(c) Definition of Public Disclosure. For purposes of these bylaws, “public disclosure” shall mean disclosure in a press release reported by a national news service or in a document publicly filed by the corporation with the Securities and Exchange Commission pursuant to Sections 13, 14 or 15(d) of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder (as so amended and inclusive of such rules and regulations, the “Exchange Act”).

(d) Requirements for Proper Form of Stockholder Notice of Nominations. To be in proper form for purposes of this Section 2.5, a stockholder’s notice to the secretary shall set forth:

(i) Stockholder Information. As to each Nominating Person (as defined below), (A) the name and address of such Nominating Person (including, if applicable, the name and address that appear on the corporation’s books and records); and (B) the class or series and number of shares of the corporation that are, directly or indirectly, owned of record or beneficially owned (within the meaning of Rule 13d-3 under the Exchange Act) by each Nominating Person as of the date of the stockholder’s notice, except that a Nominating Person shall in all events be deemed to beneficially own any shares of any class or series of the corporation as to which such Nominating Person has a right to acquire beneficial ownership at any time in the future (the disclosures to be made pursuant to the foregoing clauses (A) and (B) are referred to as “Stockholder Information”);

 

3


(ii) Information About Disclosable Interests. As to each Nominating Person, (A) any derivative, swap or other transaction or series of transactions engaged in, directly or indirectly, by such Nominating Person, the purpose or effect of which is to give such Nominating Person economic risk similar to ownership of shares of any class or series of the corporation, including due to the fact that the value of such derivative, swap or other transactions are determined by reference to the price, value or volatility of any shares of any class or series of the corporation, or which derivative, swap or other transactions provide, directly or indirectly, the opportunity to profit from any increase in the price or value of shares of any class or series of the corporation (“Synthetic Equity Interests”), which Synthetic Equity Interests shall be disclosed without regard to whether (x) the derivative, swap or other transactions convey any voting rights in such shares to such Nominating Person, (y) the derivative, swap or other transactions are required to be, or are capable of being, settled through delivery of such shares or (z) such Nominating Person may have entered into other transactions that hedge or mitigate the economic effect of such derivative, swap or other transactions, (B) any proxy (other than a revocable proxy or consent given in response to a solicitation made pursuant to, and in accordance with, Section 14(a) of the Exchange Act by way of a solicitation statement filed on Schedule 14A), agreement, arrangement, understanding or relationship pursuant to which such Nominating Person has or shares a right to vote any shares of any class or series of the corporation, (C) any agreement, arrangement, understanding or relationship, including any repurchase or similar so-calledstock borrowing” agreement or arrangement, engaged in, directly or indirectly, by such Nominating Person, the purpose or effect of which is to mitigate loss to, reduce the economic risk (of ownership or otherwise) of shares of any class or series of the corporation by, manage the risk of share price changes for, or increase or decrease the voting power of, such Nominating Person with respect to the shares of any class or series of the corporation, or which provides, directly or indirectly, the opportunity to profit from any decrease in the price or value of the shares of any class or series of the corporation (“Short Interests”), (D) any rights to dividends on the shares of any class or series of the corporation owned beneficially by such Nominating Person that are separated or separable from the underlying shares of the corporation, (E) any performance related fees (other than an asset based fee) that such Nominating Person is entitled to based on any increase or decrease in the price or value of shares of any class or series of the corporation, or any Synthetic Equity Interests or Short Interests, if any, and (F) any other information relating to such Nominating Person that would be required to be disclosed in a proxy statement or other filing required to be made in connection with solicitations of proxies or consents by such Nominating Person in support of the election of directors at the meeting pursuant to Section 14(a) of the Exchange Act (the disclosures to be made pursuant to the foregoing clauses (A) through (F) are referred to as “Disclosable Interests”); provided, however, that Disclosable Interests shall not include any such disclosures with respect to the ordinary course business activities of any broker, dealer, commercial bank, trust company or other nominee who is a Nominating Person solely as a result of being the stockholder directed to prepare and submit the notice required by these bylaws on behalf of a beneficial owner;

 

4


(iii) Information About Nominees. As to each person whom a Nominating Person proposes to nominate for election as a director, (A) all information with respect to such proposed nominee that would be required to be set forth in a stockholder’s notice pursuant to this Section 2.5(d) if such proposed nominee were a Nominating Person, (B) all information relating to such proposed nominee that is required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors in a contested election pursuant to Section 14(a) under the Exchange Act (including such proposed nominee’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected), (C) a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three years, and any other material relationships, between or among any Nominating Person, on the one hand, and each proposed nominee and his or her respective affiliates and associates, on the other hand, including, without limitation, all information that would be required to be disclosed pursuant to Item 404 under Regulation S-K if such Nominating Person were the “registrant” for purposes of such rule and the proposed nominee were a director or executive officer of such registrant (the disclosures to be made pursuant to the foregoing clauses (A) through (C) are referred to as “Nominee Information”); and

(iv) Intention on Proxy Delivery. A representation whether the Nominating Person intends to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the corporation’s outstanding capital stock required to approve the nomination and/or otherwise to solicit proxies from stockholders in support of the nomination.

(e) Definition of Nominating Person. For purposes of this Section 2.5, the term “Nominating Person” shall mean (i) the stockholder providing the notice of the nomination proposed to be made at the meeting, (ii) the beneficial owner or beneficial owners, if different, on whose behalf the notice of the nomination proposed to be made at the meeting is made and (iii) any affiliate or associate (each within the meaning of Rule 12b-2 under the Exchange Act for purposes of these bylaws) of such stockholder or beneficial owner.

(f) Other Information to be Furnished by Proposed Nominees. The corporation may require any proposed nominee to furnish such other information (A) as may reasonably be required by the corporation to determine the eligibility of such proposed nominee to serve as an independent director of the corporation in accordance with the corporation’s Corporate Governance Guidelines or (B) that could be material to a reasonable stockholder’s understanding of the independence or lack of independence of such proposed nominee.

(g) Updates and Supplements. A stockholder providing notice of any nomination proposed to be made at a meeting shall further update and supplement such notice, if necessary, so that the information provided or required to be provided in such notice pursuant to this Section 2.5 shall be true and correct as of the record date for the meeting and as of the date that is ten (10) business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to or mailed and received by the secretary at the principal executive offices of the corporation not later than five (5) business days after the record date for the meeting (in the case of the update and supplement required to be made as of the record date), and not later than eight (8) business days prior to the date for the meeting or (if practicable or, if not practicable, on the first practicable date prior to) any adjournment or postponement thereof (in the case of the update and supplement required to be made as of ten business days prior to the meeting or any adjournment or postponement thereof).

 

5


(h) Defective Nominations. No person shall be eligible for election as a director of the corporation at an annual meeting or a special meeting unless nominated in accordance with this Section 2.5. The chair of the meeting shall, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the procedures prescribed by the bylaws, and if he or she should so determine, he or she shall so declare to the meeting and the defective nomination shall be disregarded.

(i) Compliance with Exchange Act. In addition to the requirements of this Section 2.5 with respect to any nomination proposed to be made at a meeting, each Nominating Person shall comply with all applicable requirements of the Exchange Act with respect to any such nominations.

2.6 ADVANCE NOTICE OF STOCKHOLDER BUSINESS

(a) Business Properly Brought Before a Meeting. At the annual meeting of stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be: (i) as specified in the notice of meeting (or any supplement thereto) given by or at the direction of the board of directors, (ii) otherwise properly brought before the meeting by or at the direction of the board of directors, or (iii) otherwise properly brought before the meeting by a stockholder who (A) was a stockholder of record (and, with respect to any beneficial owner, if different, on whose behalf such business is proposed, only if such beneficial owner was the beneficial owner of shares of the corporation) both at the time of giving the notice provided for in this Section 2.6 and at the time of the meeting, (B) is entitled to vote at the meeting, and (C) has complied with this Section 2.6 as to such business. Except for proposals properly made in accordance with Rule 14a-8 under the Exchange Act and included in the notice of meeting given by or at the direction of the board of directors, the foregoing clause (iii) shall be the exclusive means for a stockholder to propose business to be brought before an annual meeting of the stockholders. Stockholders seeking to nominate persons for election to the board of directors at an annual meeting or a special meeting must comply with Section 2.5, and this Section 2.6 shall not be applicable to nominations.

(b) Requirement of Timely Notice of Stockholder Business. Without qualification, for business to be properly brought before an annual meeting by a stockholder, the stockholder must (i) provide Annual Meeting Timely Notice (as defined in Section 2.5 above) thereof in writing and in proper form to the secretary of the corporation. In no event shall any adjournment of an annual meeting or the announcement thereof commence a new time period for the giving of Annual Meeting Timely Notice.

(c) Requirements for Proper Form of Stockholder Notice of Proposed Business. To be in proper form for purposes of this Section 2.6, a stockholder’s notice to the secretary shall set forth:

 

6


(i) Stockholder Information. As to each Proposing Person (as defined below), the Stockholder Information (as defined in Section 2.5(d)(i), except that for the purposes of this Section 2.6 the term “Proposing Person” shall be substituted for the term “Nominating Person” in all places it appears in Section 2.5(d)(i));

(ii) Information About Disclosable Interests. As to each Proposing Person, any Disclosable Interests (as defined in Section 2.5(d)(ii), except that for purposes of this Section 2.6 the term “Proposing Person” shall be substituted for the term “Nominating Person” in all places as it appears in Section 2.5(d)(ii) and the disclosures shall be made with respect to the proposal of business to be brought before the meeting rather than to the nomination of directors to be elected at the meeting); and

(iii) Description of Proposed Business. As to each item of business that the stockholder proposes to bring before the annual meeting, (A) a reasonably brief description of the business desired to be brought before the annual meeting, the reasons for conducting such business at the annual meeting and any material interest in such business of each Proposing Person, (B) the text of the proposal or business (including the text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend these bylaws, the language of the proposed amendment), and (C) a reasonably detailed description of all agreements, arrangements and understandings (x) between or among any of the Proposing Persons or (y) between or among any Proposing Person and any other record or beneficial holder of the shares of any class or series of the corporation (including their names) in connection with the proposal of such business by such stockholder, including any anticipated benefit therefrom to such Proposing Person or their affiliates or associates.

(d) Definition of Proposing Person. For purposes of this Section 2.6, the term “Proposing Person” shall mean (i) the stockholder providing the notice of business proposed to be brought before an annual meeting, (ii) the beneficial owner or beneficial owners, if different, on whose behalf the notice of the business proposed to be brought before the annual meeting is made and (iii) any affiliate or associate of such stockholder or beneficial owner.

(e) Updates and Supplements. A stockholder providing notice of business proposed to be brought before an annual meeting shall further update and supplement such notice, if necessary, so that the information provided or required to be provided in such notice pursuant to this Section 2.6 shall be true and correct as of the record date for the meeting and as of the date that is ten (10) business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to, or mailed and received by, the secretary at the principal executive offices of the corporation not later than five (5) business days after the record date for the meeting (in the case of the update and supplement required to be made as of the record date), and not later than eight (8) business days prior to the date for the meeting or (if practicable or, if not practicable, on the first practicable date prior to) any adjournment or postponement thereof (in the case of the update and supplement required to be made as of ten (10) business days prior to the meeting or any adjournment or postponement thereof).

 

7


(f) Business Not Properly Brought Before a Meeting. Notwithstanding anything in these bylaws to the contrary, no business shall be conducted at any annual meeting except in accordance with this Section 2.6. The chair of the annual meeting shall, if the facts warrant, determine and declare at the meeting that business was not properly brought before the meeting and in accordance with the provisions of this Section 2.6, and if he or she should so determine, he or she so shall so declare at the meeting that any business not properly brought before the meeting shall not be transacted.

(g) Rule 14a-8; Exchange Act Compliance. This Section 2.6 is expressly intended to apply to any business proposed to be brought before an annual meeting of stockholders other than any proposal made pursuant to Rule 14a-8 under the Exchange Act. In addition to the requirements of this Section 2.6 with respect to any business proposed to be brought before an annual meeting, each Proposing Person shall comply with all applicable requirements of the Exchange Act with respect to any such business. Nothing in this Section 2.6 shall be deemed to affect the rights of stockholders to request inclusion of proposals in the corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act.

2.7 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE

Written notice of any meeting of stockholders, if mailed, is given when deposited in the United States mail, postage prepaid, directed to the stockholder at his address as it appears on the records of the corporation. An affidavit of the secretary or an assistant secretary or of the transfer agent of the corporation that the notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. Without limiting the manner by which notices of meetings otherwise may be given effectively to stockholders, any such notice may be given by electronic transmission in the manner provided in Section 232 of the General Corporation Law of the State of Delaware.

2.8 QUORUM

The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum is not present or represented at any meeting of the stockholders, then the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present or represented. At such adjourned meeting at which a quorum is present or represented, any business may be transacted that might have been transacted at the meeting as originally noticed.

2.9 ADJOURNED MEETING; NOTICE

When a meeting is adjourned to another time or place, unless these bylaws otherwise require, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting the corporation may transact any business that might have been transacted at the original meeting. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.

 

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2.10 CONDUCT OF BUSINESS

The chair of any meeting of stockholders shall determine the order of business and the procedure at the meeting, including such regulation of the manner of voting and the conduct of business.

2.11 VOTING

The stockholders entitled to vote at any meeting of stockholders shall be determined in accordance with the provisions of Section 2.14 of these bylaws, subject to the provisions of Sections 217 and 218 of the General Corporation Law of the State of Delaware (relating to voting rights of fiduciaries, pledgers and joint owners of stock and to voting trusts and other voting agreements).

Unless otherwise required by law or provided in the certificate of incorporation, each stockholder shall be entitled to one vote, in person or by proxy, for each share of capital stock held by such stockholder.

2.12 WAIVER OF NOTICE

Notice of any meeting need not be given to any stockholder who shall, either before or after the meeting, submit a waiver of notice or who shall attend such meeting, except when the stockholder attends for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Any stockholder waiving notice of a meeting shall be bound by the proceedings of the meeting in all respects as if due notice thereof had been given.

2.13 NO STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING

Any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action that may be taken at any annual or special meeting of such stockholders, must be taken at an annual or special meeting of stockholders of the corporation, with prior notice and with a vote, and may not be taken by a consent in writing.

2.14 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING

In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting, nor more than sixty (60) days prior to any other action.

 

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If the board of directors does not so fix a record date:

(i) The record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held.

(ii) The record date for determining stockholders for any other purpose shall be at the close of business on the day on which the board of directors adopts the resolution relating thereto.

A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the board of directors may fix a new record date for the adjourned meeting.

2.15 PROXIES

Each stockholder entitled to vote at a meeting of stockholders may authorize another person or persons to act for him by (i) a written proxy, signed by the stockholder and filed with the secretary of the corporation, or (ii) to the extent permitted by law, a stockholder may authorize another person or persons to act for him or her as proxy by transmitting or authorizing the transmission of an electronic transmission to the person who will be the holder of the proxy or to a proxy solicitation firm, proxy support service organization, or like agent duly authorized by the person who will be the holder of the proxy to receive such transmission, provided that the electronic transmission either sets forth or is submitted with information from which it can be determined that the electronic transmission was authorized by the stockholder, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. A copy, facsimile transmission, or other reliable reproduction of the proxy authorized by this Section 2.15 may be substituted for or used in lieu of the original writing or electronic transmission for any and all purposes for which the original writing or electronic transmission could be used, provided that such copy, facsimile transmission, or other reproduction shall be a complete reproduction of the entire original writing or electronic transmission. A proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power.

ARTICLE III

DIRECTORS

3.1 POWERS

Subject to the provisions of the General Corporation Law of the State of Delaware and any limitations in the certificate of incorporation or these bylaws relating to action required to be approved by the stockholders or by the outstanding shares, the business and affairs of the corporation shall be managed and all corporate powers shall be exercised by or under the direction of the board of directors.

 

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3.2 NUMBER OF DIRECTORS

The board of directors shall consist of not less than six (6) and not more than nine (9) directors as fixed from time to time by resolution of a majority of the total number of directors that the corporation would have if there were no vacancies. Each director shall hold office until a successor is duly elected and qualified or until the director’s earlier death, resignation, disqualification, or removal.

No reduction of the authorized number of directors shall have the effect of removing any director before that director’s term of office expires.

3.3 ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS

Directors shall be elected at each annual meeting of the stockholders or special meeting in lieu thereof, and shall serve until their successors are duly elected and qualified. Directors need not be stockholders unless so required by the certificate of incorporation or these bylaws, wherein other qualifications for directors may be prescribed.

Each director to be elected by the stockholders shall be elected by the affirmative vote of a majority of the votes cast with respect to such director by the shares represented and entitled to vote therefor at a meeting of the stockholders for the election of directors at which a quorum is present (an “Election Meeting”); provided, however, that if the board of directors determines that the number of nominees exceeds the number of directors to be elected at such meeting (a “Contested Election”), whether or not the election becomes an uncontested election after such determination, each of the directors to be elected at the Election Meeting shall be elected by the affirmative vote of a plurality of the votes cast by the shares represented and entitled to vote at such meeting with respect to the election of such director.

For purposes of this Section 3.3, a “majority of the votes cast” means that the number of votes cast “for” a candidate for director exceeds the number of votes cast “against” that director (with “abstentions” and “broker non-votes” not counted as votes cast as either “for” or “against” such director’s election). In an election other than a Contested Election, stockholders will be given the choice to cast votes “for” or “against” the election of directors or to “abstain” from such vote and shall not have the ability to cast any other vote with respect to such election of directors. In a Contested Election, stockholders will be given the choice to cast “for” or “withhold” votes for the election of directors and shall not have the ability to cast any other vote with respect to such election of directors. In the event an Election Meeting involves the election of directors by separate votes by class or classes or series, the determination as to whether an election constitutes a Contested Election shall be made on a class by class or series by series basis, as applicable. The board of directors has established procedures under which any director who is not elected shall offer to tender his or her resignation to the board of directors.

Newly created directorships resulting from any increase in the authorized number of directors or any vacancies in the board of directors resulting from death, resignation, retirement, disqualification, removal from office or other cause may be filled only by a majority vote of the directors then in office even though less than a quorum, or by a sole remaining director, and not by the stockholders. In the event of a vacancy in the board of directors, the remaining directors, except as otherwise provided by law, may exercise the powers of the full board of directors until the vacancy is filled. Notwithstanding the foregoing, each director shall serve until his or her successor is duly elected and qualified or until his or her death, resignation or removal.

 

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Elections of directors need not be by written ballot. There shall be no right with respect to shares of stock of the corporation to cumulate votes in the election of directors.

3.4 PLACE OF MEETINGS; MEETINGS BY TELEPHONE

The board of directors of the corporation may hold meetings, both regular and special, either within or outside the State of Delaware.

Unless otherwise restricted by the certificate of incorporation or these bylaws, members of the board of directors, or any committee designated by the board of directors, may participate in a meeting of the board of directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting.

3.5 REGULAR MEETINGS

Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board.

3.6 SPECIAL MEETINGS; NOTICE

Special meetings of the board for any purpose or purposes may be called at any time by the chair of the board, the president, the secretary or any two directors.

Notice of the time and place of special meetings shall be given in person or by telephone, mail addressed to such director at such director’s address as it appears on the records of the corporation, facsimile, email, or by other means of electronic transmission. Notice is to be provided at least twenty-four (24) hours before the time of the holding of the meeting, unless the notice is mailed. If the notice is mailed, it shall be deposited in the United States mail at least four (4) days before the time of the holding of the meeting. Any oral notice given personally or by telephone may be communicated either to the director or to a person at the office of the director who the person giving the notice has reason to believe will promptly communicate it to the director. The notice need not specify the purpose or the place of the meeting, if the meeting is to be held at the principal executive office of the corporation.

3.7 QUORUM

At all meetings of the board of directors, a majority of the authorized number of directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation. If a quorum is not present at any meeting of the board of directors, then the directors present

 

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thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present. At least twenty-four (24) hours’ notice of any adjourned meeting of the board of directors shall be given to each director whether or not present at the time of the adjournment, unless the notice is mailed, in which case it shall be deposited in the United States mail at least four days before the time of the holding of the meeting.

A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, if any action taken is approved by at least a majority of the required quorum for that meeting.

3.8 WAIVER OF NOTICE

Whenever notice is required to be given under any provision of the General Corporation Law of the State of Delaware or of the certificate of incorporation or these bylaws, a waiver thereof, in writing signed by, or by electronic transmission by, the person entitled to notice, whether before or after such notice is required, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the directors, or members of a committee of directors, need be specified in any waiver of notice unless so required by the certificate of incorporation or these bylaws.

3.9 ORGANIZATION

At each regular or special meeting of the board of directors, the chair of the board or, in his or her absence, the lead independent director or, in his or her absence, another director or officer selected by the board of directors shall preside. The secretary shall act as secretary at each meeting of the board of directors. If the secretary is absent from any meeting of the board of directors, an assistant secretary of the corporation shall perform the duties of secretary at such meeting; and in the absence from any such meeting of the secretary and all assistant secretaries of the corporation, the person presiding at the meeting may appoint any person to act as secretary of the meeting.

3.10 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING

Unless otherwise restricted by the certificate of incorporation or these bylaws, any action required or permitted to be taken at any meeting of the board of directors, or of any committee thereof, may be taken without a meeting if all members of the board or committee, as the case may be, consent thereto in writing or by electronic transmission.

3.11 FEES AND COMPENSATION OF DIRECTORS

Unless otherwise restricted by the certificate of incorporation or these bylaws, the board of directors shall have the authority to fix the compensation of directors. No such compensation shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor.

 

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3.12 REMOVAL AND RESIGNATION OF DIRECTORS

No reduction of the authorized number of directors shall have the effect of removing any director prior to the expiration of such director’s term of office.

Any director may resign at any time by notice given in writing or by electronic transmission to the corporation. Any resignation shall take effect on the date of the receipt of that notice or at any later time specified in that notice; and, unless otherwise specified in that notice, the acceptance of the resignation shall not be necessary to make it effective.

3.13 APPROVAL OF LOANS TO OFFICERS

The corporation may lend money to, or guarantee any obligation of, or otherwise assist any officer or other employee of the corporation or any subsidiary, whenever, in the judgment of the directors, such loan, guaranty or assistance may reasonably be expected to benefit the corporation. The loan, guaranty or other assistance may be with or without interest and may be unsecured, or secured in such manner as the board of directors shall approve, including, without limitation, a pledge of shares of stock of the corporation. Subject to the next sentence, nothing in this Section 3.13 shall be deemed to deny, limit or restrict the powers of guaranty or warranty of the corporation at common law or under any statute. Notwithstanding anything in this Section 3.13 to the contrary, the corporation shall not, directly or indirectly, including through any subsidiary, extend or maintain credit, arrange for the extension of credit, or renew an extension of credit, in the form of a personal loan to or for any director or executive officer in violation of Section 402 of the Sarbanes-Oxley Act of 2002

ARTICLE IV

COMMITTEES

4.1 COMMITTEES OF DIRECTORS

The board of directors may, by resolution passed by a majority of the whole board or as specified in these bylaws, designate one or more committees, with each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. If a member of a committee shall be absent from any meeting, or disqualified from voting thereat, the remaining member or members present at the meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors or in these bylaws, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers that may require it; but no such committee shall have the power or authority to (i) amend the certificate of incorporation (except that a committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the board of directors as provided in Section 151(a) of the General Corporation Law of the State of Delaware, fix any of

 

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the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the corporation), (ii) adopt an agreement of merger or consolidation under Sections 251 or 252 of the General Corporation Law of the State of Delaware, (iii) recommend to the stockholders the sale, lease or exchange of all or substantially all of the corporation’s property and assets, (iv) recommend to the stockholders a dissolution of the corporation or a revocation of a dissolution, or (v) amend these bylaws; and, unless the board resolution establishing the committee, these bylaws or the certificate of incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend, to authorize the issuance of stock or to adopt a certificate of ownership and merger pursuant to Section 253 of the General Corporation Law of the State of Delaware.

4.2 COMMITTEE MINUTES

Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required.

4.3 MEETINGS AND ACTION OF COMMITTEES

Meetings and actions of committees shall be governed by, and held and taken in accordance with, the provisions of Article III of these bylaws, Section 3.4 (Place of Meetings; Meetings by Telephone), Section 3.5 (Regular Meetings), Section 3.6 (Special Meetings; Notice), Section 3.7 (Quorum), Section 3.8 (Waiver of Notice) and Section 3.10 (Board Action by Written Consent Without a Meeting), with such changes in the context of those bylaws as are necessary to substitute the committee and its members for the board of directors and its members; provided, however, that the time of regular meetings of committees may also be called by resolution of the board of directors and that notice of special meetings of committees shall also be given to all alternate members, who shall have the right to attend all meetings of the committee. The board of directors may make, alter and repeal rules and procedures for the conduct of the business of any committee not inconsistent with the provisions of these bylaws.

4.4 NOMINATING AND CORPORATE GOVERNANCE COMMITTEE

Subject to this Article IV, the board of directors shall establish a nominating and corporate governance committee (the “Nominating and Corporate Governance Committee”) whose principal duties will be to assist the board of directors by identifying individuals qualified to become members of the board of directors consistent with criteria approved by the board of directors, to recommend to the board of directors for its approval the slate of nominees to be proposed by the board of directors to the stockholders for election to the board of directors, to develop and recommend to the board of directors the governance principles applicable to the corporation, as well as such other duties and responsibilities delegated to it by the board of directors and specified for it under applicable law and the rules and requirements of the Nasdaq Stock Market, LLC (the “Nasdaq”).

 

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ARTICLE V

OFFICERS

5.1 OFFICERS

The officers of the corporation shall be a chief executive officer, a president, one or more vice presidents, a secretary and a chief financial officer. The corporation may also have, at the discretion of the board of directors, a chair of the board, a treasurer, one or more assistant vice presidents, assistant secretaries and any such other officers as may be appointed in accordance with the provisions of Section 5.3 of these bylaws. Any number of offices may be held by the same person.

5.2 APPOINTMENT OF OFFICERS

The officers of the corporation, except such officers as may be appointed in accordance with the provisions of Sections 5.3 or 5.5 of these bylaws, shall be chosen by the board of directors, subject to the rights, if any, of an officer under any contract of employment.

5.3 SUBORDINATE OFFICERS

The board of directors may appoint, or empower the president to appoint, such other officers and agents as the business of the corporation may require, each of whom shall hold office for such period, have such authority, and perform such duties as are provided in these bylaws or as the board of directors may from time to time determine.

5.4 REMOVAL AND RESIGNATION OF OFFICERS

Subject to the rights, if any, of an officer under any contract of employment, any officer may be removed, either with or without cause, by an affirmative vote of the majority of the board of directors at any regular or special meeting of the board or, except in the case of an officer chosen by the board of directors, by any officer upon whom such power of removal may be conferred by the board of directors.

Any officer may resign at any time by giving written notice to the corporation. Any resignation shall take effect on the date of the receipt of that notice or at any later time specified in that notice; and, unless otherwise specified in that notice, the acceptance of the resignation shall not be necessary to make it effective. Any resignation is without prejudice to the rights, if any, of the corporation under any contract to which the officer is a party.

5.5 VACANCIES IN OFFICES

Any vacancy occurring in any office of the corporation shall be filled by the board of directors.

 

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5.6 CHAIR OF THE BOARD

The chair of the board, if such an officer be elected, shall, if present, preside at meetings of the board of directors and exercise and perform such other powers and duties as may from time to time be assigned to him by the board of directors or as may be prescribed by these bylaws. The chair of the board shall be determined by the vote of a majority of the directors who qualify as “independent directors” under the listing standards of the Nasdaq and the applicable rules of the Securities and Exchange Commission.

5.7 CHIEF EXECUTIVE OFFICER

The chief executive officer shall, subject to the provisions of these bylaws and the control of the board of directors, have general supervision, direction, and control over the business of the corporation and over its officers. The chief executive officer shall perform all duties incident to the office of the chief executive officer, and any other duties as may be from time to time assigned to the chief executive officer by the board of directors, in each case subject to the control of the board of directors.

5.8 PRESIDENT

The president shall report and be responsible to the chief executive officer. The president shall have such powers and perform such duties as from time to time may be assigned or delegated to the president by the board of directors or the chief executive officer or that are incident to the office of president.

5.9 VICE PRESIDENTS

Each vice president of the corporation shall have such powers and perform such duties as may be assigned to him or her from time to time by the board of directors, the chief executive officer, or the president, or that are incident to the office of vice president.

5.10 SECRETARY

The secretary shall keep or cause to be kept, at the principal executive office of the corporation or such other place as the board of directors may direct, a book of minutes of all meetings and actions of directors, committees of directors and stockholders. The minutes shall show the time and place of each meeting, whether regular or special (and, if special, how authorized and the notice given), the names of those present at directors’ meetings or committee meetings, the number of shares present or represented at stockholders’ meetings, and the proceedings thereof.

The secretary shall keep, or cause to be kept, at the principal executive office of the corporation or at the office of the corporation’s transfer agent or registrar, as determined by resolution of the board of directors, a share register, or a duplicate share register, showing the names of all stockholders and their addresses, the number and classes of shares held by each, the number and date of certificates evidencing such shares, and the number and date of cancellation of every certificate surrendered for cancellation.

 

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The secretary shall give, or cause to be given, notice of all meetings of the stockholders and of the board of directors required to be given by law or by these bylaws. He or she shall keep the seal of the corporation, if one be adopted, in safe custody and shall have such other powers and perform such other duties as may be prescribed by the board of directors or by these bylaws.

5.11 CHIEF FINANCIAL OFFICER

The chief financial officer shall be the principal financial officer of the corporation and shall have such powers and perform such duties as may be assigned by the board of directors, the chair of the board, or the chief executive officer.

5.12 TREASURER

The treasurer of the corporation shall have the custody of the corporation’s funds and securities, except as otherwise provided by the board of directors, and shall keep full and accurate accounts of receipts and disbursements in records belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors. The treasurer shall disburse the funds of the corporation as may be ordered by the board of directors, taking proper vouchers for such disbursements, and shall render to the chief executive officer and the president and the directors, at the regular meetings of the board of directors, or whenever they may require it, an account of all his or her transactions as treasurer and of the financial condition of the corporation.

5.13 AUTHORITY AND DUTIES OF OFFICERS

In addition to the foregoing authority and duties, all officers of the corporation shall respectively have such authority and perform such duties in the management of the business of the corporation as may be designated from time to time by the board of directors or the stockholders.

ARTICLE VI

INDEMNITY

6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS

The corporation shall, to the maximum extent and in the manner permitted by the General Corporation Law of the State of Delaware, indemnify and hold harmless each of its directors and officers against expenses (including attorneys’ fees), judgments, fines, settlements, and other amounts actually and reasonably incurred in connection with any proceeding, whether civil, criminal, administrative, or investigative, arising by reason of the fact that such person is or was an agent of the corporation. For purposes of this Section 6.1, a “director” or “officer” of the corporation includes any person (i) who is or was a director or officer of the corporation, (ii) who is or was serving at the request of the corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise or (iii) who was a director or officer of a corporation which was a predecessor corporation of the corporation or of another enterprise at the request of such predecessor corporation. Notwithstanding this Section 6.1, the corporation shall be required to indemnify a director or officer in connection with a proceeding (or part thereof) commenced by such person only if the commencement of such proceeding (or part thereof) by the person was authorized in the specific case by the board of directors.

 

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6.2 INDEMNIFICATION OF OTHERS

The corporation shall have the power, to the extent and in the manner permitted by the General Corporation Law of the State of Delaware, to indemnify and hold harmless each of its employees and agents (other than directors and officers) against expenses (including attorneys’ fees), judgments, fines, settlements and other amounts actually and reasonably incurred in connection with any proceeding, arising by reason of the fact that such person is or was an agent of the corporation. For purposes of this Section 6.2, an “employee” or “agent” of the corporation (other than a director or officer) includes any person (i) who is or was an employee or agent of the corporation, (ii) who is or was serving at the request of the corporation as an employee or agent of another corporation, partnership, joint venture, trust or other enterprise or (iii) who was an employee or agent of a corporation which was a predecessor corporation of the corporation or of another enterprise at the request of such predecessor corporation.

6.3 PAYMENT OF EXPENSES IN ADVANCE

Expenses incurred in defending any action or proceeding for which indemnification is required pursuant to Section 6.1 or for which indemnification is permitted pursuant to Section 6.2 following authorization thereof by the board of directors shall be paid by the corporation in advance of the final disposition of such action or proceeding upon receipt of an undertaking by or on behalf of the indemnified party to repay such amount if it shall ultimately be determined that the indemnified party is not entitled to be indemnified as authorized in this Article VI.

6.4 INDEMNITY NOT EXCLUSIVE

The indemnification provided by this Article VI shall not be deemed exclusive of any other rights which those seeking indemnification may be entitled under any bylaw, agreement, vote of shareholders or disinterested directors or otherwise, both as to action in an official capacity and as to action in another capacity while holding such office, to the extent that additional rights to indemnification are authorized in the certificate of incorporation. The corporation is specifically authorized to enter into individual contracts with any or all of its directors, officers, employees, or agents respecting indemnification and advances, to the fullest extent not prohibited by the General Corporation Law of the State of Delaware.

6.5 INSURANCE

The corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him or her and incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the corporation would have the power to indemnify him or her against such liability under the provisions of the General Corporation Law of the State of Delaware.

 

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6.6 CONFLICTS

No indemnification or advance shall be made under this Article VI, except where such indemnification or advance is mandated by law or the order, judgment or decree of any court of competent jurisdiction, in any circumstance where it appears:

(i) that it would be inconsistent with a provision of the certificate of incorporation, these bylaws, a resolution of the stockholders or an agreement in effect at the time of the accrual of the alleged cause of the action asserted in the proceeding in which the expenses were incurred or other amounts were paid, which prohibits or otherwise limits indemnification; or

(ii) that it would be inconsistent with any condition expressly imposed by a court in approving a settlement.

ARTICLE VII

RECORDS AND REPORTS

7.1 MAINTENANCE AND INSPECTION OF RECORDS

Any records administered by or on behalf of the Corporation in the regular course of its business, including its stock ledger, books of account, and minute books, may be maintained on any information storage device, method, or one or more electronic networks or databases (including one or more distributed electronic networks or databases); provided that the records so kept can be converted into clearly legible paper form within a reasonable time, and, with respect to the stock ledger, the records so kept comply with Section 224 of the General Corporation Law of the State of Delaware. The Corporation shall so convert any records so kept upon the request of any person entitled to inspect such records pursuant to applicable law.

The officer who has charge of the stock ledger of a corporation shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting: (a) on a reasonably accessible electronic network; provided that the information required to gain access to such list was provided with the notice of the meeting; or (b) during ordinary business hours, at the principal place of business of the corporation. If the meeting is to be held at a place, the list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. If the meeting is held solely by means of remote communication, the list shall also be open for inspection by any stockholder during the whole time of the meeting as provided by applicable law. Except as provided by applicable law, the stock ledger of the corporation shall be the only evidence as to who are the stockholders entitled to examine the stock ledger and the list of stockholders or to vote in person or by proxy at any meeting of stockholders.

 

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7.2 INSPECTION BY DIRECTORS

Any director shall have the right to examine the corporation’s stock ledger, a list of its stockholders and its other books and records for a purpose reasonably related to his position as a director. The Court of Chancery is hereby vested with the exclusive jurisdiction to determine whether a director is entitled to the inspection sought. The Court may summarily order the corporation to permit the director to inspect any and all books and records, the stock ledger and the stock list and to make copies or extracts therefrom. The Court may, in its discretion, prescribe any limitations or conditions with reference to the inspection, or award such other and

7.3 ANNUAL STATEMENT TO STOCKHOLDERS

The board of directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the corporation.

7.4 REPRESENTATION OF SHARES OF OTHER CORPORATIONS

The chair of the board, the president, any vice president, the secretary or assistant secretary of this corporation, or any other person authorized by the board of directors or the president or a vice president, is authorized to vote, represent and exercise on behalf of this corporation all rights incident to any and all shares of any other corporation or corporations standing in the name of this corporation. The authority granted herein may be exercised either by such person directly or by any other person authorized to do so by proxy or power of attorney duly executed by such person having the authority.

ARTICLE VIII

GENERAL MATTERS

8.1 CHECKS

From time to time, the board of directors shall determine by resolution which person or persons may sign or endorse all checks, drafts, other orders for payment of money, notes or other evidences of indebtedness that are issued in the name of or payable to the corporation, and only the persons so authorized shall sign or endorse those instruments.

8.2 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS

The board of directors, except as otherwise provided in these bylaws, may authorize any officer or officers, or agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the corporation; such authority may be general or confined to specific instances. Unless so authorized or ratified by the board of directors or within the agency power of an officer, no officer, agent or employee shall have any power or authority to bind the corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or for any amount.

 

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8.3 STOCK CERTIFICATES

The shares of a corporation shall be represented by certificates; provided that the board of directors of the corporation may provide by resolution or resolutions that some or all of any or all classes or series of its stock shall be uncertificated shares that may be evidenced by a book-entry system maintained by the registrar of such stock. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the corporation. Every holder of stock represented by certificates shall be entitled to have a certificate signed by, or in the name of the corporation by the chair or vice chair of the board of directors, or the president or vice president, and by the secretary or an assistant secretary, or the treasurer, if there be one, of such corporation representing the number of shares registered in certificate form. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue.

8.4 SPECIAL DESIGNATION ON CERTIFICATES

If the corporation is authorized to issue more than one class of stock or more than one series of any class, then the powers, the designations, the preferences and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate that the corporation shall issue to represent such class or series of stock; provided, however, that, except as otherwise provided in Section 202 of the General Corporation Law of the State of Delaware, in lieu of the foregoing requirements there may be set forth on the face or back of the certificate that the corporation shall issue to represent such class or series of stock a statement that the corporation will furnish without charge to each stockholder who so requests the powers, the designations, the preferences and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.

8.5 LOST CERTIFICATES

Except as provided in this Section 8.5, no new certificates for shares shall be issued to replace a previously issued certificate unless the latter is surrendered to the corporation and canceled at the same time. The corporation may issue a new certificate of stock or uncertificated shares in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the corporation may require the owner of the lost, stolen or destroyed certificate, or his legal representative, to give the corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate or uncertificated shares.

8.6 CONSTRUCTION; DEFINITIONS

Unless the context requires otherwise, the general provisions, rules of construction, and definitions in the General Corporation Law of the State of Delaware shall govern the construction of these bylaws. Without limiting the generality of this provision, the singular number includes the plural, the plural number includes the singular, and the term “person” includes both a corporation and a natural person.

 

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8.7 DIVIDENDS

The directors of the corporation, subject to any restrictions contained in the certificate of incorporation, may declare and pay dividends upon the shares of its capital stock pursuant to the General Corporation Law of the State of Delaware. Dividends may be paid in cash, in property or in shares of the corporation’s capital stock.

The directors of the corporation may set apart out of any of the funds of the corporation available for dividends a reserve or reserves for any proper purpose and may abolish any such reserve. Such purposes shall include but not be limited to equalizing dividends, repairing or maintaining any property of the corporation, and meeting contingencies.

8.8 FISCAL YEAR

The fiscal year of the corporation shall be fixed by resolution of the board of directors and may be changed by the board of directors.

8.9 SEAL

The seal of the corporation, if any, shall be such as from time to time may be approved by the board of directors. The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise, as may be prescribed by law or custom or by the board of directors.

8.10 TRANSFER OF STOCK

Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate, and record the transaction in its books.

8.11 STOCK TRANSFER AGREEMENTS

The corporation shall have power to enter into and perform any agreement with any number of stockholders of any one or more classes of stock of the corporation to restrict the transfer of shares of stock of the corporation of any one or more classes owned by such stockholders in any manner not prohibited by the General Corporation Law of the State of Delaware.

8.12 REGISTERED STOCKHOLDERS

The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends and to vote as such owner, shall be entitled to hold liable for calls and assessments the person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of another person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the State of Delaware.

 

23


ARTICLE IX

AMENDMENTS

9.1 AMENDMENTS

The original or other bylaws of the corporation may be adopted, amended or repealed by the holders of not less than 66-2/3% of the shares then entitled to vote at an election of directors; provided, however, that the corporation may, in its certificate of incorporation, confer the power to adopt, amend or repeal bylaws upon the directors; and provided further, that any proposal by a stockholder to amend these bylaws will be subject to the provisions of ARTICLE II of these bylaws except as otherwise required by law. The fact that such power has been so conferred upon the directors shall not divest the stockholders of the power, nor limit their power, to adopt, amend or repeal bylaws.

* * *

 

24

EX-10.1

Exhibit 10.1

TAX MATTERS AGREEMENT

by and between

ADEIA INC.

and

XPERI INC.

Dated as of October 1, 2022


TABLE OF CONTENTS

 

         Page  
Section 1.  

Definition of Terms

     2  
Section 2.  

Allocation of Tax Liabilities

     9  

Section 2.01

 

General Rule

     9  

Section 2.02

 

Tax Year Ends

     9  
Section 3.  

Preparation and Filing of Tax Returns

     10  

Section 3.01

 

General

     10  

Section 3.02

 

Responsibility for Preparation and Filing

     10  

Section 3.03

 

Tax Reporting Practices

     10  

Section 3.04

 

Consolidated or Combined Tax Returns

     10  

Section 3.05

 

Right to Review Tax Returns

     11  

Section 3.06

 

Refunds, Carrybacks, and Amended Tax Returns

     11  

Section 3.07

 

Apportionment of Tax Attributes

     12  
Section 4.  

Indemnification Payments

     13  

Section 4.01

 

Indemnification Payments

     13  
Section 5.  

Tax Benefits.

     14  

Section 5.01

 

Realized Tax Benefits.

     14  

Section 5.02

 

Tax Benefit Payments

     14  
Section 6.  

Employment Tax Matters

     14  
Section 7.  

Tax-Free Status

     14  

Section 7.01

 

Restrictions on Product SpinCo

     14  

Section 7.02

 

Restrictions on IP RemainCo

     16  

Section 7.03

 

Procedures Regarding Opinions and Rulings

     16  

Section 7.04

 

Liability for Distribution Tax-Related Losses

     17  
Section 8.  

Assistance and Cooperation

     18  

Section 8.01

 

Assistance and Cooperation

     18  

Section 8.02

 

Income Tax Return Information

     19  

Section 8.03

 

Reliance by IP RemainCo

     19  

Section 8.04

 

Reliance by Product SpinCo

     19  

Section 8.05

 

Non-Performance

     20  
Section 9.  

Tax Records

     20  

Section 9.01

 

Retention of Tax Records

     20  

Section 9.02

 

Access to Tax Records

     20  

Section 9.03

 

Preservation of Privilege

     21  
Section 10.  

Tax Contests

     21  

Section 10.01

 

Notice

     21  

Section 10.02

 

Control of Tax Contests

     21  
Section 11.  

Effective Date

     23  
Section 12.  

Survival of Obligations

     23  

 

i


Section 13.  

Treatment of Payments

     23  

Section 13.01

 

Treatment of Tax Indemnity and Tax Benefit Payments

     23  

Section 13.02

 

Tax Gross Up

     24  
Section 14.  

Disagreements

     24  

Section 14.01

 

Discussion

     24  

Section 14.02

 

Escalation

     24  

Section 14.03

 

Referral to Tax Advisor

     24  

Section 14.04

 

Injunctive Relief

     25  
Section 15.  

Expenses.

     25  
Section 16.  

General Provisions

     25  

Section 16.01

 

Complete Agreement; Construction

     25  

Section 16.02

 

Other Agreements

     25  

Section 16.03

 

Counterparts

     25  

Section 16.04

 

Survival or Agreement

     25  

Section 16.05

 

Notices

     26  

Section 16.06

 

Waivers

     27  

Section 16.07

 

Amendments

     27  

Section 16.08

 

Assignment

     27  

Section 16.09

 

Successors and Assigns

     27  

Section 16.10

 

Payment Terms

     27  

Section 16.11

 

No Circumvention

     28  

Section 16.12

 

Subsidiaries

     28  

Section 16.13

 

Third Party Beneficiaries

     29  

Section 16.14

 

Title and Headings

     29  

Section 16.15

 

Governing Law

     29  

Section 16.16

 

Specific Performance

     29  

Section 16.17

 

Severability

     29  

Section 16.18

 

No Duplication; No Double Recovery

     29  

Section 16.19

 

Further Action

     30  

 

ii


TAX MATTERS AGREEMENT

This TAX MATTERS AGREEMENT (this “Agreement”) is dated as of October 1, 2022, by and between Adeia Inc. (f/k/a Xperi Holding Corporation), a Delaware corporation (“IP RemainCo”), and Xperi Inc. (f/k/a TiVo Product HoldCo Corporation), a Delaware corporation (“Product SpinCo”). Each of IP RemainCo and Product SpinCo is sometimes referred to herein as a “Party” and collectively, as the “Parties.”

RECITALS

WHEREAS, IP RemainCo, acting through its direct and indirect Subsidiaries, currently conducts (a) the Product Business, and (b) the IP Business;

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

WHEREAS, in order to effect such separation, the Board has determined that it is appropriate, desirable, and in the best interests of IP RemainCo and its stockholders (a) to enter into a series of transactions whereby (i) IP RemainCo and/or one or more members of the IP RemainCo Group will, collectively, own all of the IP Assets, assume (or retain) all of the IP Liabilities, and, except as provided in any Ancillary Agreement, operate the IP Business, and (ii) Product SpinCo and/or one or more members of the Product SpinCo Group will, collectively, own all of the Product Assets, assume (or retain) all of the Product Liabilities and, except as provided in any Ancillary Agreement, operate the Product Business, and (b) for IP RemainCo to distribute to the holders of IP RemainCo Common Stock by way of a pro rata dividend (in each case without consideration being paid by such stockholders) all of the then issued and outstanding shares of Product SpinCo Common Stock (the “Distribution”), in each case upon the terms and subject to the conditions set forth in the Separation and Distribution Agreement by and between IP RemainCo and Product SpinCo, dated as of the date hereof (the “Separation Agreement”);

WHEREAS, in order to effect such separation, the Board has determined that it is appropriate, desirable, and in the best interests of IP RemainCo and its stockholders for IP RemainCo to undertake the Internal Reorganization and Business Realignment;

WHEREAS, as of the date hereof, IP RemainCo is the common parent of an affiliated group of corporations (including Product SpinCo) which has elected to file consolidated U.S. federal income tax returns;

WHEREAS, it is the intention of the Parties that the Contribution and the Distribution, taken together, will qualify as a transaction that is tax-free for U.S. federal income tax purposes under Section 355 and Section 368(a)(1)(D) of the Code;


WHEREAS, the Parties desire to provide for and agree upon the allocation between the Parties and their respective Groups of liabilities, and entitlements to refunds thereof, for certain Taxes arising prior to, at the time of, and subsequent to the Distribution, and to provide for and agree upon other matters relating to Taxes and to set forth certain covenants and indemnities relating to the preservation of the intended tax treatment of the Contribution and the Distribution and certain transactions effected pursuant to the Internal Reorganization and Business Realignment;

NOW THEREFORE, in consideration of the mutual agreements contained herein, the parties hereby agree as follows:

Section 1.    Definition of Terms. For purposes of this Agreement (including the recitals hereof), the following terms have the following meanings, and capitalized terms used but not otherwise defined herein shall have the meaning ascribed to them in the Separation Agreement:

Active Trade or Business” means, (a) with respect to Product SpinCo, the active conduct (as defined in Section 355(b)(2) of the Code and the Treasury Regulations thereunder) of the TiVo Product Business (as defined in the IRS Ruling Request) as conducted immediately prior to the Distribution, or, with respect to another Tax-Free Separation Transaction intended to qualify as tax-free pursuant to Section 355 of the Code or analogous provisions of state or local law, the active conduct (as defined in Section 355(b)(2) of the Code and the Treasury Regulations thereunder) by the relevant member of the Product SpinCo Group immediately prior to such Tax-Free Separation Transaction of the business on which such entity relied for purposes of satisfying the requirements of Section 355(b) of the Code, and (b) with respect to IP RemainCo, the active conduct (as defined in Section 355(b)(2) of the Code and the Treasury Regulations thereunder) of the Rovi Guides IP Business (as defined in the IRS Ruling Request) as conducted immediately prior to the Distribution, or, with respect to another Tax-Free Separation Transaction intended to qualify as tax-free pursuant to Section 355 of the Code or analogous provisions of state or local law, the active conduct (as defined in Section 355(b)(2) of the Code and the Treasury Regulations thereunder) by the relevant member of the IP RemainCo Group immediately prior to such Tax-Free Separation Transaction of the business on which such member relied for purposes of satisfying the requirements of Section 355(b) of the Code.

Affiliate” has the meaning set forth in the Separation Agreement.

Agreement” means this Tax Matters Agreement.

Board” has the meaning set forth in the Separation Agreement.

Business Day” has the meaning set forth in the Separation Agreement.

Capital Stock” means all classes or series of capital stock of a Party or a member of a Party’s Group, including (a) common stock, (b) all options, warrants and other rights to acquire such capital stock, and (c) all instruments properly treated as stock in for U.S. federal income tax purposes.

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

 

2


Consolidated Return” means an IP RemainCo Consolidated Return or a Product SpinCo Consolidated Return, as the case may be.

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

Controlling Party” has the meaning set forth in Section 10.02(a) of this Agreement.

DGCL” means the Delaware General Corporation Law.

Dispute” has the meaning set forth in Section 14.01 of this Agreement.

Distribution” has the meaning set forth in the recitals hereto.

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

Distribution Taxes” means any and all Taxes (a) required to be paid by or imposed on a Party or any of its Affiliates resulting from, or directly arising in connection with, the failure of the Contribution and the Distribution, taken together, to qualify as a reorganization described in Sections 355(a) and 368(a)(1)(D) of the Code, (b) required to be paid by or imposed on a Party or any of its Affiliates resulting from, or directly arising in connection with, the failure of the stock distributed in the Distribution 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 Party or any of its Affiliates resulting from the failure of any Tax-Free Separation Transaction to qualify for its intended tax treatment as described in the IRS Ruling.

Distribution Tax-Related Losses” means (a) all Distribution Taxes imposed pursuant to any Final Determination, and (b) all reasonable out-of-pocket accounting, legal, and other professional fees and court costs incurred in connection with such Distribution Taxes.

Employee Matters Agreement” has the meaning set forth in the Separation Agreement.

Employment Tax” means any Tax the liability or responsibility for which is allocated pursuant to the Employee Matters Agreement.

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” shall have the meaning given to the term “determination” by Section 1313 of the Code with respect to U.S. federal Tax matters and with respect to non-U.S., state, and local Tax matters Final Determination shall mean any final settlement with a relevant Taxing Authority that does not provide a right to appeal or any final decision by a court with respect to which no timely appeal is pending and as to which the time for filing such appeal has expired.

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

 

3


Internal Reorganization and Business Realignment” has the meaning set forth in the Separation Agreement.

IP Assets” has the meaning set forth in the Separation Agreement.

IP Business” has the meaning set forth in the Separation Agreement.

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

IP RemainCo” has the meaning provided in the first sentence of this Agreement.

IP RemainCo Common Stock” has the meaning set forth in the Separation Agreement.

IP RemainCo Consolidated Return” means any U.S. federal consolidated income Tax Return required to be filed by IP RemainCo 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 IP RemainCo or a member of the IP RemainCo Group as common parent (or analogous concept) under a similar or analogous provision of state, local, or non-U.S. Tax Law.

IP RemainCo Group” has the meaning set forth in the Separation Agreement.

IP RemainCo Tainting Act” means (a) any action (or the failure to take any action) within the control of IP RemainCo or any member of the IP RemainCo 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 IP RemainCo or another member of the IP RemainCo Group that, or (c) any breach by IP RemainCo or any member of the IP RemainCo Group of any representation, warranty, or covenant made by them in this Agreement, the Separation Agreement, any Ancillary Agreement, or any Representation Letter that, in each case, would affect the Tax-Free Status or otherwise cause a Tax-Free Separation Transaction to fail to qualify for its intended tax treatment as described in the IRS Ruling.

IP RemainCo Taxes” means, without duplication, (a) any Taxes required to be paid by IP RemainCo or a member of the IP RemainCo Group on or after the Distribution Date (including any Taxes imposed due to an adjustment of Taxes due and payable prior to the Distribution Date), (b) any Taxes required to be paid with respect to a Consolidated Return for any Pre-Distribution Period, and (c) any Taxes attributable to an IP RemainCo Tainting Act, in the case of each of clauses (a), (b) and (c), other than Taxes that would not have been incurred but for a Product SpinCo Tainting Act.

IRS” means the Internal Revenue Service.

IRS Ruling” means the private letter ruling, dated April 8, 2021, issued by the IRS to IP RemainCo in connection with the Contribution, Distribution, and certain Separation Transactions, and any amendment or supplement to such ruling.

 

4


IRS Ruling Request” means the letter filed by IP RemainCo with the IRS on October 12, 2020, as supplemented through the Distribution Date, requesting a ruling (which was ultimately issued as the IRS Ruling) regarding certain tax consequences of the Contribution, Distribution, and Separation Transactions (including all attachments, exhibits, and other materials submitted with such ruling request letter) and any amendment or supplement to such ruling request letter.

Merger” means the combination of TiVo and Xperi under IP RemainCo on June 1, 2020.

Mid-Term Applicable Federal Rate” means the applicable federal rate as set forth in Section 1274(d) of the Code for obligations with maturities of more than three (3) years but not more than nine (9) years, as published from time to time.

Non-Controlling Party” has the meaning set forth in Section 10.02(b) of this Agreement.

Payor” has the meaning set forth in Section 4.01(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 Tax Period beginning on the day after the Distribution Date.

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” has the meaning set forth in Section 14.03 of this Agreement.

Privilege” means any privilege that may be asserted under applicable law, including any privilege arising under or relating to the attorney-client relationship (including the attorney-client and work product privileges), the accountant-client privilege, and any privilege relating to internal evaluation processes.

Product Assets” has the meaning set forth in the Separation Agreement.

Product Business” has the meaning set forth in the Separation Agreement.

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

Product SpinCo” has the meaning provided in the first sentence of this Agreement.

Product SpinCo Common Stock” has the meaning set forth in the Separation Agreement.

Product SpinCo Consolidated Return” means any consolidated, combined, unitary, or similar income Tax Return required to be filed by Product SpinCo or a member of the Product SpinCo Group as common parent (or analogous concept) under a similar or analogous provision of state, local, or non-U.S. Law.

 

5


Product SpinCo Group” has the meaning set forth in the Separation Agreement.

Product SpinCo Tainting Act” means (a) any action (or the failure to take any action) within its control by Product SpinCo or any member of the Product SpinCo 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 Product SpinCo or another member of the Product SpinCo Group that, or (c) any breach by Product SpinCo or any member of the Product SpinCo Group of any representation, warranty, or covenant made by them in this Agreement, the Separation Agreement, any Ancillary Agreement, or any Representation Letter that, in each case, would affect the Tax-Free Status or otherwise cause a Tax-Free Separation Transaction to fail to qualify for its intended tax treatment as described in the IRS Ruling.

Product SpinCo Taxes” means, without duplication, (a) any Taxes required to be paid by Product SpinCo or a member of the Product SpinCo Group on or after the Distribution Date (including any Taxes imposed due to an adjustment of Taxes due and payable prior to the Distribution Date), and (b) any Taxes attributable to a Product SpinCo Tainting Act, in the case of each of clauses (a) and (b), other than Taxes that would not have been incurred but for an IP RemainCo Tainting Act.

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 regulations promulgated thereunder, to enter into a transaction or series of transactions), whether such transaction is supported by Product SpinCo management or shareholders, is a hostile acquisition, or otherwise, as a result of which Product SpinCo would merge or consolidate with any other Person or as a result of which any Person or any group of related Persons would (directly or indirectly) acquire, or have the right to acquire, from Product SpinCo and/or one or more holders of outstanding shares of Capital Stock of Product SpinCo, a number of shares of Capital Stock of Product SpinCo that, when combined with any other changes in ownership of Capital Stock of (a) Product SpinCo, (b) TiVo (prior to the Distribution, including in connection with the Merger), (c) IP RemainCo (prior to the Distribution, including in connection with the Merger), or (d) Xperi (prior to the Distribution, including in connection with the Merger), could reasonably be expected to cause the Distribution to be a taxable event to IP RemainCo as a result of the application of Section 355(e) of the Code, in each case taking into account the relevant rulings in the IRS Ruling. Notwithstanding the foregoing, a Proposed Acquisition Transaction shall not include (i) the adoption by Product SpinCo of a shareholder rights plan or (ii) issuances by Product SpinCo that satisfy Safe Harbor VIII (relating to acquisitions in connection with a person’s performance of services) or Safe Harbor IX (relating to acquisitions by a retirement plan of an employer) of Treasury 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 is intended to monitor compliance with Section 355(e) of the Code and shall be interpreted accordingly. Any clarification of, or change

 

6


in, the statute or regulations promulgated under Section 355(e) of the Code shall be incorporated in this definition and its interpretation. For purposes of this Agreement, this definition shall apply to any relevant member of the Product SpinCo Group other than Product SpinCo mutatis mutandis.

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 by any Taxing Authority on the receipt of the refund.

Representation Letters” means the statements of facts and representations, officer’s certificates, representation letters, and any other materials (including, without limitation, the IRS Ruling Request and any related supplemental submissions to the IRS or other Taxing Authority) delivered or deliverable by IP RemainCo, its Affiliates, or representatives thereof in connection with the rendering by Tax Advisors, and/or the issuance by the IRS or other Taxing Authority, of the Tax Opinions/Rulings.

Required Party” has the meaning set forth in Section 4.01(a) of this Agreement.

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

Retention Date” has the meaning set forth in Section 9.01 of this Agreement.

Ruling” means a ruling from the IRS substantially to the effect that, in respect of any action described in Section 7.01(c), such action will not affect (a) the Tax-Free Status, and/or (b) the intended Tax treatment of any applicable Tax-Free Separation Transaction.

Separation Agreement” has the meaning set forth in the recitals hereto.

Separation Transactions” means those transactions undertaken by the Parties and their Affiliates pursuant to the Internal Reorganization and Business Realignment.

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

Subsidiary” has the meaning set forth in the Separation Agreement.

Tax” or “Taxes” means any income, gross income, gross receipts, profits, capital stock, franchise, withholding, payroll, social security, workers compensation, unemployment, disability, property, ad valorem, value added, stamp, excise, severance, occupation, service, sales, use, license, lease, transfer, import, export, escheat, 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, penalty, additions to tax, or additional amounts in respect of the foregoing.

 

7


Tax Advisor” means a tax counsel or accountant, in each case of recognized national standing.

Tax Attribute” means a net operating loss, net capital loss, unused investment credit, unused foreign tax credit, excess charitable contribution, general business credit, research and development credit, or any other Tax Item that could reduce a Tax or create a Tax Benefit.

Tax Benefit” means any refund, credit, or other reduction in otherwise required liability for Taxes.

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 Separation Transactions” means those Separation Transactions that are described in the IRS Ruling as qualifying partially or wholly as tax-free for U.S. federal income tax purposes.

Tax-Free Status” means the qualification of the Contribution and the Distribution, taken together, (a) as a reorganization described in Sections 355(a) and 368(a)(1)(D) of the Code, (b) as a transaction in which the stock distributed thereby is “qualified property” for purposes of Sections 355(d), 355(e), and 361(c) of the Code, and (c) as a transaction in which IP RemainCo, Product SpinCo, and the shareholders of IP RemainCo recognize no income or gain for U.S. federal income tax purposes pursuant to Sections 355, 361, and 1032 of the Code, other than, in the case of IP RemainCo and Product SpinCo, intercompany items or excess loss accounts taken into account pursuant to the Treasury Regulations promulgated pursuant to Section 1502 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 the formal written opinions of Tax Advisors and/or the rulings by the IRS or other Taxing Authorities deliverable to IP RemainCo in connection with the Contribution and the Distribution or otherwise with respect to the Separation Transactions, including, for the avoidance of doubt, the IRS Ruling.

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 (a) Tax Returns, (b) Tax Return workpapers, (c) documentation relating to any Tax Contests, and (d) 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 Taxing Authority, in each case filed with respect to or otherwise relating to Taxes.

 

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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 with respect to Taxes, including any attachments, exhibits, or other materials submitted with any of the foregoing, and including any amendments or supplements to any of the foregoing.

Taxing 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.

TiVo” means TiVo Corporation, a Delaware corporation, and any successor entity thereto (including, for the avoidance of doubt, TiVo LLC, a Delaware limited liability company).

Transfer Pricing Adjustment” means any proposed or actual allocation by a Taxing Authority of any Tax Item between or among any member of the IP RemainCo Group and any member of the Product SpinCo Group with respect to any Tax Period ending prior to or including the Distribution Date.

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 Parties may rely substantially to the effect that a transaction will not (a) affect the Tax-Free Status, and/or (b) cause any Tax-Free Separation Transaction to fail to qualify for the intended tax treatment as described in the IRS Ruling. Any such opinion must assume that the Contribution and the Distribution, taken together, would have qualified for the Tax-Free Status and that other Tax-Free Separation Transactions would have qualified for the intended tax treatment as described in the IRS Ruling.

Xperi” means Xperi Corporation, a Delaware corporation, and any successor entity thereto.

Section 2.    Allocation of Tax Liabilities.

Section 2.01    General Rule.

(a)    IP RemainCo Liability. IP RemainCo shall be liable for, and shall indemnify and hold harmless the Product SpinCo Group from and against (i) any liability for IP RemainCo Taxes, and (ii) any Distribution Tax-Related Losses for which IP RemainCo is responsible pursuant to Section 7.04.

(b)    Product SpinCo Liability. Product SpinCo shall be liable for, and shall indemnify and hold harmless the IP RemainCo Group from and against (i) any liability for Product SpinCo Taxes, and (ii) any Distribution Tax-Related Losses for which Product SpinCo is responsible pursuant to Section 7.04.

Section 2.02    Tax Year Ends. IP RemainCo and Product SpinCo shall take all actions necessary or appropriate to close the taxable year of Product SpinCo and each member of the Product SpinGo Group for all Tax purposes as of the close of the Distribution Date to the extent permissible or required under applicable Tax Law.

 

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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 Parties 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. IP RemainCo shall prepare and timely file, or cause to be prepared and timely filed, taking into account applicable extensions, all Consolidated Returns required to be filed with respect to or including a Pre-Distribution Period, and shall pay, or cause to be paid, all Taxes shown as due and payable on such Consolidated Returns. Except as set forth in the prior sentence, each Party shall prepare and timely file, or cause to be prepared and timely filed, taking into account applicable extensions, all Tax Returns required to be filed by such Party or any member of such Party’s Group under applicable Tax Law, and shall pay, or cause to be paid, all Taxes shown as due and payable on such Tax Returns.

Section 3.03    Tax Reporting Practices.

(a)    General Rule. With respect to any Tax Return that either Party has the obligation and right to prepare and file, or cause to be prepared and filed, under Section 3.02, such Tax Return shall, to the extent consistent with applicable Tax Law, be prepared in accordance with past practices, accounting methods, elections, or conventions, to the extent such Tax Return may reasonably be expected to affect the Tax liability of the other Party or any member of the other Party’s Group.

(b)    Reporting of Contribution, Distribution, and Tax-Free Separation Transactions. The Tax treatment reported on any Tax Return of (i) the Contribution and Distribution, taken together, and (ii) each Tax-Free Separation Transaction, shall be consistent with the treatment of such transaction as described in the IRS Ruling.

Section 3.04    Consolidated or Combined Tax Returns.

(a)    Product SpinCo will elect and join, and will cause its applicable Affiliates to elect and join, in filing any consolidated, combined, or unitary Tax Returns that IP RemainCo determines in good faith are required to be filed by IP RemainCo under Section 3.02 with Product SpinCo and/or Affiliates of Product SpinCo. With respect to all Product SpinCo Consolidated Returns for the taxable year which includes the Distribution Date, Product SpinCo shall use (or cause to be used) the closing of the books method under Treasury Regulations Section 1.1502-76 (or analogous method under applicable state, local, or non-U.S. Tax Law).

(b)    IP RemainCo will elect and join, and will cause its applicable Affiliates to elect and join, in filing any consolidated, combined, or unitary Tax Returns that Product SpinCo determines in good faith are required to be filed by Product SpinCo under Section 3.02 with IP RemainCo and/or Affiliates of IP RemainCo. With respect to all IP RemainCo Consolidated

 

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Returns for the taxable year which includes the Distribution Date, IP RemainCo shall use (or cause to be used) the closing of the books method under Treasury Regulations Section 1.1502-76 (or analogous method under applicable state, local, or non-U.S. Tax Law).

Section 3.05    Right to Review Tax Returns.

(a)    General. The Responsible Party with respect to any material Tax Return shall make the portion of such Tax Return and related workpapers which are relevant to the determination of the other Party’s rights or obligations under this Agreement available for review by the other Party, if requested, to the extent (i) such Tax Return relates to Taxes for which the requesting Party would reasonably be expected to be liable, (ii) the requesting Party would reasonably be expected to be liable in whole or in part for any additional Taxes owing as a result of adjustments to the amount of Taxes reported on such Tax Return, (iii) such Tax Return relates to Taxes for which the requesting Party would reasonably be expected to have a claim for Tax Benefits under this Agreement, or (iv) the requesting Party reasonably determines that it must inspect such Tax Return to confirm compliance with the terms of this Agreement. The Responsible Party shall use reasonable best efforts to (A) make such portion of such Tax Return available for review as required under this paragraph sufficiently in advance of the due date for filing of such Tax Return to provide the requesting Party with a meaningful opportunity to analyze and comment on such Tax Return, and (B) have such Tax Return modified before filing to address reasonable comments made by the requesting Party, taking into account the Party responsible for payment of the Tax (if any) reported on such Tax Return and whether the amount of Tax liability allocable to the requesting Party with respect to such Tax Return is material. The Parties shall use good faith efforts to resolve any issues arising out of the review of any Tax Returns.

(b)    Material Tax Returns. For purposes of Section 3.05(a), a Tax Return is “material” if it could reasonably be expected to reflect (i) Tax liability equal to or in excess of $150,000 (ii) a credit or credits equal to or in excess of $150,000, or (iii) a loss or losses equal to or in excess of $600,000, in each case with respect to the requesting party.

Section 3.06    Refunds, Carrybacks, and Amended Tax Returns.

(a)    Refunds. IP RemainCo shall be entitled to any Refund of Taxes for which IP RemainCo is liable hereunder, Product SpinCo shall be entitled to any Refund of Taxes for which Product SpinCo is liable hereunder, and a Party receiving a Refund to which the other Party is entitled hereunder shall pay over such Refund (net of any reasonable expenses incurred by the receiving Party in connection with the receipt of such Refund) to such other Party within twenty (20) Business Days after such refund is received. Each Party shall cooperate in good faith with any reasonable request to pursue any Refund to which either Party may be entitled under this Section 3.06(a).

(b)    Carrybacks.

(i)    Each Party 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 to a Pre-Distribution Period only if such carryback cannot reasonably

 

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result in the other Party (or its Affiliates) being liable for additional Taxes. If a carryback could reasonably result in the other Party (or its Affiliates) being liable for additional Taxes, such carryback shall be permitted only if such other Party consents in writing to such carryback.

(ii)    Notwithstanding anything to the contrary in this Agreement, (A) any Party 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 that become due and payable as a result of the subsequent adjustment, if any, to the carryback claim, and (B) no Party shall be required to file, or cause to be filed, any Tax Return, including an amended Tax Return, affecting the carry back of a Tax Attribute realized in a Post-Distribution Period to a Pre-Distribution Period.

(iii)    A Party 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 Party pursuant to the provisions set forth in this Section 3.06(b).

(c)    Amended Tax Returns.

(i)    Product SpinCo shall not file (or permit to be filed) any amended Tax Return for a member of the Product SpinCo Group that relates to a Pre-Distribution Period or any Tax Return that IP RemainCo has reviewed in connection with its rights under Section 3.05 without the prior written consent (not to be unreasonably withheld, conditioned, or delayed) of IP RemainCo.

(ii)    IP RemainCo shall not file (or permit to be filed) any amended Tax Return that Product SpinCo has reviewed in connection with its rights under Section 3.05 without the prior written consent (not to be unreasonably withheld, conditioned, or delayed) of Product SpinCo.

Section 3.07    Apportionment of Tax Attributes.

(a)    IP RemainCo shall use its best efforts, within ninety (90) Business Days following the close of the year of the Distribution, to advise Product SpinCo in writing of the proposed amount, if any, of any Tax Attributes that IP RemainCo reasonably determines shall be allocated or apportioned to the Product SpinCo Group under applicable Tax Law. Product SpinCo shall have sixty (60) Business Days to review and provide to IP RemainCo written comments on such allocation and apportionment after receipt thereof from IP RemainCo. The Tax departments of IP RemainCo and Product SpinCo shall negotiate in good faith to resolve any disagreements in respect of the allocation and apportionment within thirty (30) Business Days after IP RemainCo’s receipt of any such written comments from Product SpinCo. If any such disagreements cannot be resolved within such thirty (30) Business Day period, then such disagreements shall be resolved in accordance with the provisions of Section 14. If Product SpinCo does not submit written comments to IP RemainCo within Product SpinCo’s sixty (60) Business Day review and comment period described above, the allocation and apportionment of Tax Attributes as determined by IP RemainCo and delivered to Product SpinCo pursuant to the

 

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first sentence of this Section 3.07 shall be deemed final, and Product SpinCo agrees that it shall not dispute such allocation and apportionment. Notwithstanding anything to the contrary contained herein, IP RemainCo shall bear no liability to Product SpinCo for determinations made by IP RemainCo pursuant to this Section 3.07(a) if any such determination shall be found or asserted to be inaccurate.

(b)    In the event there is an adjustment to any Tax Attributes reflected on a Tax Return relating to a Pre-Distribution Period that affects the apportionment or allocation of Tax Attributes as finally determined under Section 3.07(a), the Party whose Group made such adjustment (or is party to a Tax Contest resulting in such adjustment) shall promptly notify the other Party of such adjustment, and the allocation and apportionment of Tax Attributes as finally determined under Section 3.07(a) shall be updated to take into account such adjustment.

(c)    IP RemainCo shall, and shall cause all members of the IP RemainCo Group to, and Product SpinCo shall, and shall cause all members of the Product SpinCo Group to, prepare and file all Tax Returns in accordance with the allocation and apportionment of Tax Attributes as finally determined under Section 3.07(a), and adjusted (if applicable) under Section 3.07(b), unless otherwise required pursuant to a Final Determination.

Section 4.    Indemnification Payments.

Section 4.01    Indemnification Payments.

(a)    If any Party (the “Payor”) or any Affiliate of the Payor is required under applicable Tax Law to pay to a Taxing Authority a Tax that the other Party (the “Required Party”) is liable for under this Agreement, the Payor shall provide notice to the Required Party 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 Party shall have a period of thirty (30) days after the receipt of notice to respond thereto. Unless the Required Party disputes the amount it is liable for under this Agreement within the thirty (30) day period described in the preceding sentence, the Required Party shall reimburse the Payor within sixty (60) Business Days of delivery by the Payor of the notice described above. To the extent the Required Party does not agree with the amount the Payor claims the Required Party is liable for under this Agreement, the dispute shall be resolved in accordance with Section 14.

(b)    Any Tax indemnity payment required to be made by the Required Party pursuant to this Agreement shall be reduced by any corresponding Tax Benefit payment required to be made to the Required Party by the other Party pursuant to Section 5. For the avoidance of doubt, a Tax Benefit realized is treated as corresponding to a Tax indemnity payment to the extent the Tax Benefit realized is 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 IP RemainCo directly to Product SpinCo and by Product SpinCo directly to IP RemainCo; provided, however, that if the Parties mutually agree with respect to any such indemnification payment, any member of the IP RemainCo Group, on the one hand, may make such indemnification payment to any member of the Product SpinCo Group, on the other hand, and vice versa. Notwithstanding the prior sentence, all indemnification payments shall be treated in the manner described in Section 13.

 

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Section 5.    Tax Benefits.

Section 5.01    Realized Tax Benefits. If a member of the Product SpinCo Group realizes any Tax Benefit as a result of an adjustment pursuant to a Final Determination to any Taxes for which a member of the IP RemainCo Group is liable hereunder or under the Employee Matters Agreement, or if a member of the IP RemainCo Group realizes any Tax Benefit as a result of an adjustment pursuant to a Final Determination to any Taxes for which a member of the Product SpinCo Group is liable hereunder or under the Employee Matters Agreement, Product SpinCo or IP RemainCo, as the case may be, shall make a payment to the other Party within one hundred twenty (120) Business Days following such realization of the Tax Benefit, in an amount equal to such Tax Benefit. For the avoidance of doubt, if such Tax Benefit results in the reduction of an indemnity payment pursuant to Section 4.01(b), no payment shall be required under this Section 5 to the extent the Required Party reduced its Tax indemnity payment under Section 4.01(b).

Section 5.02    Tax Benefit Payments. No later than ninety (90) Business Days after a Tax Benefit described in Section 5.01 is realized by a member of the IP RemainCo Group or a member of the Product SpinCo Group, IP RemainCo (if a member of the IP RemainCo Group realizes such Tax Benefit) or Product SpinCo (if a member of the Product SpinCo Group realizes such Tax Benefit) shall provide the other Party with notice of the amount payable to such other Party by IP RemainCo or Product SpinCo pursuant to this Section 5, together with a written calculation supporting such amount. In the event that IP RemainCo or Product SpinCo disagrees with any such calculation described in this Section 5.02, IP RemainCo or Product SpinCo shall so notify the other Party in writing within thirty (30) Business Days of receiving such written calculation. IP RemainCo and Product SpinCo shall endeavor in good faith to resolve such disagreement and the amount payable under this Section 5 shall be determined in accordance with the disagreement resolution provisions of Section 14 as promptly as practicable.

Section 6.    Employment Tax Matters. Notwithstanding anything contained herein to the contrary, the Employee Matters Agreement shall govern with respect to the allocation of (a) liability for Employment Taxes and related Tax reporting and withholding obligations, and (b) Tax Items allocated pursuant to the Employee Matters Agreement.

Section 7.    Tax-Free Status.

Section 7.01    Restrictions on Product SpinCo.

(a)    Product SpinCo agrees that it will not take or fail to take, or permit any Affiliate to take or fail to take, any action where such action or failure to act would be inconsistent with or cause to be untrue any statement, information, covenant, or representation in any Representation Letter or Tax Opinion/Ruling. Product SpinCo agrees that it will not take or fail to take, or permit any Affiliate to take or fail to take, any action which could reasonably be expected to adversely affect (i) the Tax-Free Status, or (ii) the intended Tax treatment of any Tax-Free Separation Transaction.

 

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(b)    Product SpinCo agrees that, from the date hereof until the first Business Day after the two-year anniversary of the Distribution Date, it will (i) maintain its status as a company engaged in the Active Trade or Business for purposes of Section 355(b)(2) of the Code, (ii) not engage in any transaction that would result in it ceasing to be a company engaged in the Active Trade or Business for purposes of Section 355(b)(2) of the Code, (iii) cause each Affiliate whose Active Trade or Business is relied upon in the Tax Opinions/Rulings for purposes of qualifying a Tax-Free Separation Transaction as tax-free pursuant to Section 355 of the Code or other Tax Law to maintain its status as a company engaged in such Active Trade or Business for purposes of Section 355(b)(2) of the Code and any such other applicable Tax Law, (iv) not engage in any transaction or permit any Affiliate to engage in any transaction that would result in an Affiliate described in clause (iii) hereof ceasing to be a company engaged in the relevant Active Trade or Business for purposes of Section 355(b)(2) or such other applicable Tax Law, taking into account Section 355(b)(3) of the Code for purposes of clauses (i) through (iv) hereof, and (v) not dispose of or permit an Affiliate to dispose of, directly or indirectly, any interest in an Affiliate described in clause (iii) hereof or permit any such Affiliate to make or revoke any election under Treasury Regulations Section 301.7701-3.

(c)    Product SpinCo agrees that, from the date hereof until the first Business Day after the two-year anniversary of the Distribution Date, it will not and will not permit any Affiliate described in clause (iii) of Section 7.01(b), to (i) enter into any Proposed Acquisition Transaction or, to the extent Product SpinCo has the right to prohibit any Proposed Acquisition Transaction, permit any Proposed Acquisition Transaction to occur (whether by (A) redeeming rights under a shareholder rights plan, (B) finding a tender offer to be a “permitted offer” under any such plan or otherwise causing any such plan to be inapplicable or neutralized with respect to any Proposed Acquisition Transaction, (C) approving any Proposed Acquisition Transaction, whether for purposes of Section 203 of the DGCL or any similar corporate statute, any “fair price” or other provision of its charter or bylaws, (D) amending its certificate of incorporation to declassify its Board of Directors or approving any such amendment, or (E) otherwise), (ii) merge or consolidate with any other Person or liquidate or partially liquidate, (iii) in a single transaction or series of transactions sell or transfer (other than sales or transfers of inventory in the ordinary course of business) all or substantially all of the assets that were transferred (or deemed to be transferred for U.S. federal income tax purposes) to Product SpinCo pursuant to the Contribution or sell or transfer 25% or more of the gross assets of any Active Trade or Business or 25% or more of the consolidated gross assets of Product SpinCo and its Affiliates (such percentages to be measured based on fair market value as of the initial Distribution Date), (iv) redeem or otherwise repurchase (directly or through an Affiliate) any of its stock, or rights to acquire stock, except to the extent such repurchases satisfy Section 4.05(1)(b) of Revenue Procedure 96-30 (as in effect prior to the amendment of such Revenue Procedure by Revenue Procedure 2003-48), (v) amend its certificate of incorporation (or other organizational documents), or take any other action, whether through a stockholder vote or otherwise, affecting the voting rights of its Capital Stock (including, without limitation, through the conversion of one class of its Capital Stock into another class of its Capital Stock), or (vi) take any other action or actions (including any action or transaction that would be reasonably likely to be inconsistent with any representation made in the Representation Letters or the Tax Opinions/Rulings) which in the aggregate (and taking into account (x) any other transactions described in this Section 7.01(c), and (y) the Merger) would be reasonably likely to have the effect of causing or permitting one or more persons (whether or not acting in concert) to acquire directly or indirectly stock representing a Fifty-Percent or

 

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Greater Interest in Product SpinCo or otherwise jeopardize the Tax-Free Status, unless prior to taking any such action set forth in the foregoing clauses (i) through (vi), (A) Product SpinCo shall have (I) requested and obtained from IP RemainCo consent to obtain a Ruling in accordance with Section 7.03, and (II) received such Ruling in form and substance reasonably satisfactory to IP RemainCo, (B) Product SpinCo shall have provided to IP RemainCo an Unqualified Tax Opinion in form and substance reasonably satisfactory to IP RemainCo, or (C) IP RemainCo shall have waived the requirement to obtain such Ruling or Unqualified Tax Opinion. In determining whether a Ruling or Unqualified Tax Opinion is satisfactory, IP RemainCo may consider, among other factors, the appropriateness of any underlying assumptions, representations, or covenants used as a basis for the Ruling or Unqualified Tax Opinion and the views on the substantive merit. Product SpinCo shall bear all costs and expenses of securing any such Ruling or Unqualified Tax Opinion and shall reimburse IP RemainCo for all reasonable out-of-pocket costs and expenses that IP RemainCo may incur in seeking to obtain or evaluate any such Ruling or Unqualified Tax Opinion. For the avoidance of doubt, the presence of such a Ruling or Unqualified Tax Opinion, or the waiver by IP RemainCo of the requirement to obtain a Ruling or Unqualified Tax Opinion, shall not relieve Product SpinCo from any indemnification obligations otherwise present under this Agreement.

Section 7.02    Restrictions on IP RemainCo. IP RemainCo agrees that it will not take or fail to take, or permit any Affiliate to take or fail to take, any action (a) where such action or failure to act would be inconsistent with or cause to be untrue any statement, information, covenant or representation in any Representation Letter or Tax Opinion/Ruling, or (b) which adversely affects or could reasonably be expected to adversely affect (i) the Tax-Free Status, or (ii) the intended Tax treatment of any Tax-Free Separation Transaction; provided, however, that this Section 7.02 shall not be construed as obligating IP RemainCo to consummate the Distribution nor shall it be construed as preventing IP RemainCo from terminating the Separation Agreement pursuant to the terms thereof.

Section 7.03    Procedures Regarding Opinions and Rulings. If Product SpinCo notifies IP RemainCo that it desires to take one of the actions described in clauses (i) through (vi) of Section 7.01(c), IP RemainCo and Product SpinCo shall reasonably cooperate to attempt to obtain the Ruling or Unqualified Tax Opinion referred to in Section 7.01(c), unless IP RemainCo shall have waived the requirement to obtain such Ruling or Unqualified Tax Opinion. If such a Ruling is to be sought, Product SpinCo shall apply for such Ruling and IP RemainCo shall jointly control the process of obtaining such Ruling. IP RemainCo shall take any and all actions reasonably requested by Product SpinCo in connection with obtaining such Ruling or Unqualified Tax Opinion (including by making any representation or reasonable covenant or providing any materials requested by the IRS in connection with such Ruling or the Tax Advisor issuing such Unqualified Tax Opinion); provided, that IP RemainCo shall not be required to make (or cause any of its Affiliates to make) any representation or covenant that is untrue or inconsistent with historical facts, or as to future matters or events over which it has no control (in each case, as determined by IP RemainCo in its reasonable discretion). In no event shall Product SpinCo be permitted to file any request for a Ruling under this Section 7.03 unless IP RemainCo has approved such request (such approval not to be unreasonably withheld, conditioned, or delayed). Product SpinCo shall reimburse IP RemainCo for all reasonable costs and expenses incurred by IP RemainCo and its Affiliates in obtaining or seeking to obtain a Ruling or Unqualified Tax Opinion requested by Product SpinCo within forty-five (45) days after receiving an invoice from IP RemainCo therefor.

 

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Section 7.04    Liability for Distribution Tax-Related Losses.

(a)    In the event that Distribution Taxes become due and payable to a Taxing Authority pursuant to a Final Determination, then, notwithstanding anything to the contrary in this Agreement:

(i)    if such Distribution Taxes are attributable to an IP RemainCo Tainting Act, then IP RemainCo shall be responsible for any Distribution Tax-Related Losses arising out of such Distribution Taxes;

(ii)    if such Distribution Taxes are attributable to a Product SpinCo Tainting Act, then Product SpinCo shall be responsible for any Distribution Tax-Related Losses arising out of such Distribution Taxes;

(iii)    if such Distribution Taxes are attributable to both an IP RemainCo Tainting Act and a Product SpinCo Tainting Act, responsibility for any Distribution Tax-Related Losses arising out of such Distribution Taxes shall be allocated between IP RemainCo and Product SpinCo according to relative fault; provided, however, that if such Distribution Taxes result from the application of Section 355(e) of the Code to the Distribution or any Tax-Free Separation Transaction intended to be tax-free under Section 355 of the Code, (A) IP RemainCo shall be 100% responsible for any Distribution Tax-Related Losses if an IP RemainCo Tainting Act causes such application of Section 355(e) of the Code and a Product SpinCo Tainting Act does not cause such application of Section 355(e) of the Code, and (B) Product SpinCo shall be 100% responsible for any Distribution Tax-Related Losses if a Product SpinCo Tainting Act causes such application of Section 355(e) of the Code and an IP RemainCo Tainting Act does not cause such application of Section 355(e) of the Code; and

(iv)    if such Distribution Taxes are not attributable to an IP RemainCo Tainting Act or a Product SpinCo Tainting Act, then responsibility for any Distribution Tax-Related Losses arising out of such Distribution Taxes shall be shared by IP RemainCo and Product SpinCo in accordance with IP RemainCo’s and Product SpinCo’s relative market capitalizations as of the Distribution Date (determined based on the average trading prices of IP RemainCo and Product SpinCo during the ten trading days beginning on the Distribution Date).

(b)    For purposes of calculating the amount and timing of any Distribution Tax-Related Loss for which a Party is responsible under Section 7.04(b), Distribution Tax-Related Losses shall be calculated by assuming that the Party incurring such Losses, such Party’s affiliated group (within the meaning of Section 1504 of the Code), and each member of such Party’s Group (i) pay Tax at the highest marginal corporate Tax rates in effect in each relevant taxable year, and (ii) have no Tax Attributes in any relevant year.

 

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Section 8.    Assistance and Cooperation.

Section 8.01    Assistance and Cooperation.

(a)    The Parties 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 Parties 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, (iii) examinations of Tax Returns, (iv) any administrative or judicial proceeding in respect of Taxes assessed or proposed to be assessed, and (v) preparation of the provision for Taxes to be reported in IP RemainCo’s year-end financial statements for the year of the Distribution. Such cooperation shall include making all information and documents in their possession relating to the other Party and its Affiliates available to such other Party as provided in Section 9. Each of the Parties shall also make available to the other, as reasonably requested and available, personnel (including officers, directors, employees, and agents of the Parties 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 IP RemainCo Group, on the one hand, or a member of the Product SpinCo Group, on the other hand, suffers a Tax detriment as a result of a Transfer Pricing Adjustment, the Parties shall cooperate pursuant to this Section 8 to seek any competent authority relief that may be available with respect to such Transfer Pricing Adjustment. Product SpinCo shall cooperate with IP RemainCo and take any and all actions reasonably requested by IP RemainCo in connection with obtaining and maintaining the effectiveness of the Tax Opinions/Rulings (including, without limitation, by making any new representation or covenant, confirming any previously made representation or covenant, or providing any materials or information requested by any Tax Advisor or Taxing Authority); provided, that, Product SpinCo shall not be required to make or confirm any representation or covenant that is inconsistent with historical facts or as to future matters or events over which it has no control. The requesting Party shall reimburse the other Party for all third-party and reasonable costs and expenses, including $200 per hour for expenses relating to the utilization of the other Group’s personnel, incurred by the cooperating Group in complying with this Section 8.01(a); provided, that, neither Party shall be required to reimburse the other for such personnel expenses except to the extent that the aggregate amount of such cooperating Group personnel expenses exceeds $10,000 or the aggregate time spent by the cooperating Group personnel in connection with such cooperation exceeds 50 hours (it being expressly understood and acknowledged that all cooperation requested by a Party pursuant to this Section 8.01(a) shall count against such $10,000 and 50 hour thresholds, and such thresholds shall not apply on a per-month or per-invoice basis). A Party entitled to reimbursement pursuant to the preceding sentence (x) may issue an invoice for reimbursement in the month following the month in which the applicable cooperation was provided, but (y) shall, in any event, issue an invoice for such reimbursement no later than thirty (30) days after the end of the fiscal quarter in which the applicable cooperation was provided, and each invoice shall set forth a description of the cooperation provided. Each invoice shall be payable within forty-five (45) days after the requesting Party’s receipt of the invoice. The Transition Services Agreement, dated as of October 1, 2022, by and between IP RemainCo and Product SpinCo, and the schedules thereto, shall govern the payment for inter-Group support and services in respect of Tax items expressly provided for therein, and the preceding three sentences shall not apply with respect to such Tax items.

 

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(b)    Any information or documents provided under this Section 8 shall be kept confidential by the Party 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 IP RemainCo nor any Affiliate of IP RemainCo shall be required to provide Product SpinCo or any Affiliate of Product SpinCo or any other Person access to or copies of any information, documents, or procedures (including the proceedings of any Tax Contest) other than information, documents or procedures that relate to Product SpinCo, the business or assets of Product SpinCo, or any Affiliate of Product SpinCo, and (ii) in no event shall IP RemainCo or any Affiliate of IP RemainCo be required to provide Product SpinCo, any Affiliate of Product SpinCo, or any other Person access to or copies of any information or documents if such action could reasonably be expected to result in the waiver of any Privilege. In addition, in the event that either Party determines that the provision of any information or documents to the other Party or any Affiliate thereof could be commercially detrimental, violate any law or agreement, or waive any Privilege, the Parties 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. IP RemainCo and Product SpinCo acknowledge that time is of the essence in relation to any request for information, assistance, or cooperation made by IP RemainCo or Product SpinCo pursuant to Section 8.01 or this Section 8.02. IP RemainCo and Product SpinCo acknowledge that failure to conform to the reasonable deadlines set by IP RemainCo or Product SpinCo could cause irreparable harm. Each Party shall provide to the other Party information and documents relating to its Group required by the other Party to prepare Tax Returns, including, but not limited to, any pro forma returns required by the Responsible Party for purposes of preparing such Tax Returns. Any information or documents the Responsible Party requires to prepare such Tax Returns shall be provided in such form as the Responsible Party reasonably requests and at or prior to the time reasonably specified by the Responsible Party so as to enable the Responsible Party to file such Tax Returns on a timely basis.

Section 8.03    Reliance by IP RemainCo. If any member of the Product SpinCo Group supplies information to a member of the IP RemainCo Group in connection with a Tax liability and an officer of a member of the IP RemainCo Group signs a statement or other document under penalties of perjury in reliance upon the accuracy of such information, then upon the written request of such member of the IP RemainCo Group identifying the information being so relied upon, the chief financial officer of Product SpinCo (or any officer of Product SpinCo as designated by the chief financial officer of Product SpinCo) shall certify in writing that to his or her knowledge (based upon consultation with appropriate employees) the information so supplied is accurate and complete.

Section 8.04    Reliance by Product SpinCo. If any member of the IP RemainCo Group supplies information to a member of the Product SpinCo Group in connection with a Tax liability and an officer of a member of the Product SpinCo Group signs a statement or other document under penalties of perjury in reliance upon the accuracy of such information, then upon the written request of such member of the Product SpinCo Group identifying the information being so relied upon, the chief financial officer of IP RemainCo (or any officer of IP

 

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RemainCo as designated by the chief financial officer of IP RemainCo) shall certify in writing that to his or her knowledge (based upon consultation with appropriate employees) the information so supplied is accurate and complete.

Section 8.05    Non-Performance. If a Party (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 Party (or any of its Affiliates) and such failure results in the imposition of additional Taxes, the non-performing Party shall be liable in full for such additional Taxes.

Section 9.    Tax Records.

Section 9.01    Retention of Tax Records. Each Party shall preserve and keep all Tax Records exclusively relating to the assets and activities of its Group for Pre-Distribution Periods, and IP RemainCo shall preserve and keep all other Tax Records relating to Taxes of the Groups for Pre-Distribution Tax 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 (a) the expiration of any applicable statutes of limitations, or (b) seven years after the Distribution Date (such later date, the “Retention Date”). After the Retention Date, each Party may dispose of such Tax Records upon sixty (60) Business Days’ prior written notice to the other Party. If, prior to the Retention Date, a Party 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 Party agrees, then such first Party may dispose of such Tax Records upon sixty (60) Business Days’ prior notice to the other Party. 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 Party shall have the opportunity, at its cost and expense, to copy or remove, within such sixty (60) Business Day period, all or any part of such Tax Records. If, at any time prior to the Retention Date, a Party determines to decommission or otherwise discontinue any computer program or information technology system used to access or store any Tax Records, then such Party may decommission or discontinue such program or system upon ninety (90) Business Days’ prior notice to the other Party and the other Party shall have the opportunity, at its cost and expense, to copy, within such ninety (90) Business 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 Parties 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 Party and its Affiliates, authorized agents and representatives and any representative of a Taxing Authority or other Tax auditor direct access, at the cost and expense of such other Party, 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 Party in connection with the preparation of Tax Returns or financial accounting statements, audits, litigation, or the resolution of items under this Agreement.

 

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Section 9.03    Preservation of Privilege. Neither Party shall (or permit any Affiliate to) provide access to, copies of, or otherwise disclose to any Person any documentation relating to Taxes existing prior to the Distribution Date to which Privilege may reasonably be asserted without the prior written consent of the other Party, such consent not to be unreasonably withheld.

Section 10.    Tax Contests.

Section 10.01    Notice. Each of the Parties shall provide prompt notice to the other Party of any written communication from a Taxing Authority regarding any pending Tax audit, assessment or proceeding or other Tax Contest of which it becomes aware related to Taxes for Tax Periods for which it is indemnified by the other Party hereunder or for which it may be required to indemnify the other Party hereunder. Such notice shall attach copies of the pertinent portion of any written communication from a Taxing 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 Taxing Authority in respect of any such matters. If a Party has knowledge of an asserted Tax liability with respect to a matter for which it is to be indemnified hereunder and such Party fails to give the indemnifying Party prompt notice of such asserted Tax liability and the indemnifying Party is entitled under this Agreement to contest the asserted Tax liability, then (a) if the indemnifying Party is precluded from contesting the asserted Tax liability in any forum as a result of the failure to give prompt notice, the indemnifying Party shall have no obligation to indemnify the indemnified Party for any Taxes arising out of such asserted Tax liability, and (b) if the indemnifying Party 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 Party, then any amount which the indemnifying Party is otherwise required to pay the indemnified Party pursuant to this Agreement shall be reduced by the amount of such detriment.

Section 10.02    Control of Tax Contests.

(a)    Controlling Party. In the case of any Tax Contest with respect to any Tax Return, the Party that would be primarily liable under this Agreement to pay the applicable Taxing Authority the Taxes resulting from such Tax Contest shall administer and control such Tax Contest (the “Controlling Party”). Notwithstanding the previous sentence, in the case of any Tax Contest with respect to the Tax-Free Status or the tax treatment of any Tax-Free Separation Transaction, IP RemainCo shall be the Controlling Party; provided, however, that if Product SpinCo may reasonably be expected to become liable to make any indemnification payment under this Agreement in connection with the resolution of such Tax Contest, Product SpinCo shall have the right to jointly control the Tax Contest to the extent relating to Taxes for which Product SpinCo may reasonably be expected to indemnify under this Agreement, and IP RemainCo shall not settle any such Tax Contest without the prior written consent of Product SpinCo (not to be unreasonably withheld, conditioned, or delayed) to the extent such settlement relates to Taxes for which Product SpinCo may reasonably be expected to indemnify under this Agreement.

(b)    Information Rights. Unless waived by the Parties in writing, in connection with any potential adjustment in a Tax Contest as a result of which adjustment the other non-controlling

 

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Party (the “Non-Controlling Party”) may reasonably be expected to become liable to make any indemnification payment (or any payment under Section 5) to the Controlling Party under this Agreement: (i) the Controlling Party shall keep the Non-Controlling Party informed in a timely manner of all actions taken or proposed to be taken by the Controlling Party with respect to such potential adjustment in such Tax Contest; (ii) the Controlling Party shall provide the Non-Controlling Party copies of any written materials relating to such potential adjustment in such Tax Contest received from any Taxing Authority; (iii) the Controlling Party shall timely provide the Non-Controlling Party with copies of any correspondence or filings submitted to any Taxing Authority or judicial authority in connection with such potential adjustment in such Tax Contest; (iv) the Controlling Party shall consult with the Non-Controlling Party (including, without limitation, regarding the use of outside advisors to assist with the Tax Contest) and offer the Non-Controlling Party 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 Party shall defend such Tax Contest diligently and in good faith.

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

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

(e)    Costs. All external out-of-pocket costs and expenses that are incurred by the Controlling Party with respect to a Tax Contest related to an adjustment which the Non-Controlling Party may reasonably be expected to become liable to make any indemnification payment under this Agreement shall be shared by the Parties according to each Party’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 Party shall not be liable for fees payable to outside advisors to the extent that the Controlling Party failed to consult with the Non-Controlling Party to the extent required by Section 10.02(b). It the Controlling Party incurs out-of-pocket

 

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costs and expenses to be shared under this Section 10.02(e) during a fiscal quarter, such Controlling Party shall provide notice to the Non-Controlling Party within thirty (30) days after the end of such fiscal quarter for the amount due from such Non-Controlling Party pursuant to this Section 10.02(e), describing in reasonable detail the particulars relating thereto. Such Non-Controlling Party shall have a period of thirty (30) days after the receipt of notice to respond thereto. Unless the Non-Controlling Party disputes the amount it is liable for under this Section 10.02(e), the Non-Controlling Party shall reimburse the Controlling Party within forty-five (45) Business Days of delivery by the Controlling Party of the notice described above. To the extent the Non-Controlling Party does not agree with the amount the Controlling Party claims the Non-Controlling Party is liable for under this Section 10.02(e), the dispute shall be resolved in accordance with Section 14. 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 Party will provide the Non-Controlling Party with a good faith estimate of such costs.

Section 11.    Effective Date. This Agreement shall be effective as of the date hereof.

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. To the extent permitted by applicable Tax Law, unless otherwise required by a Final Determination or this Agreement or otherwise agreed among the Parties, for U.S. federal Tax purposes, any Tax indemnity payment or Tax Benefit payment made pursuant to this Agreement shall be treated as follows:

(a)    to the extent the member or assets of the payor Group and the member or assets of the payee Group to which the liability for payment relates were separated in a tax-free distribution for U.S. federal Tax purposes, such payment shall be treated as a tax-free contribution or tax-free distribution, as applicable, with respect to the stock of the applicable member of the payee Group or payor Group, as applicable, occurring immediately prior to the relevant Separation Transaction or the Contribution, as applicable; and

(b)    to the extent the member or assets of the payor Group and the member or assets of the payee Group to which the liability for payment relates were separated in a taxable transaction for U.S. federal Tax purposes, such payment shall be treated as an adjustment to the price or amount, as applicable, of the relevant Separation Transaction or the Contribution, as applicable.

Payments of interest shall be treated as deductible by the payor Party or its relevant Subsidiary and as income to the payee Party or its relevant Subsidiary, as permitted and applicable. In the case of each of the foregoing, no Party shall take any position inconsistent with such treatment. In the event that a Taxing Authority asserts that a Party’s treatment of a payment pursuant to this Agreement should be other than as set forth in this Section 13.01, such Party shall use its commercially reasonable efforts to contest such challenge.

 

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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 Party or another member of its Group as a result of the receipt of a payment pursuant to this Agreement, 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 Party entitled to such payment would otherwise be entitled to receive pursuant to this Agreement. The Party entitled to a payment under this Agreement shall take all reasonable efforts to avoid or reduce any income Taxes on such receipt.

Section 14.    Disagreements.

Section 14.01    Discussion. The Parties 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 between any member of the IP RemainCo Group and any member of the Product SpinCo Group as to the interpretation of any provision of this Agreement or the performance of obligations hereunder (a “Dispute”), the Tax departments of the Parties 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 Party, will be referred for resolution pursuant to the procedures set forth in Section 9.1(b) of the Separation Agreement. Except as expressly provided herein, Disputes hereunder shall not be subject to the dispute resolution procedures set forth in the Separation Agreement.

Section 14.03    Referral to Tax Advisor. If the Parties are not able to resolve the Dispute through the escalation process referred to above, then the matter will be referred to a Tax Advisor acceptable to each of the Parties to act as an arbitrator in order to resolve the Dispute. In the event that the Parties are unable to agree upon a Tax Advisor within fifteen (15) Business Days following the completion of the escalation process, the Parties 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 Parties 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 Parties 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 Parties. Following receipt of the Tax Advisor’s written notice to the Parties of its resolution of the Dispute, the Parties shall each take or cause to be taken any action necessary to implement such resolution of the Tax Advisor. Each Party 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 Parties.

 

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Section 14.04    Injunctive Relief. Nothing in this Section 14 will prevent either Party 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 Party. Notwithstanding anything to the contrary in this Agreement, IP RemainCo and Product SpinCo are the only members of their respective Group entitled to commence a dispute resolution procedure under this Agreement, and each of IP RemainCo and Product SpinCo will cause its respective Group members not to commence any dispute resolution procedure other than through such Party as provided in this Section 14.

Section 15.    Expenses. Except as otherwise provided in this Agreement, each Party 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    Complete Agreement; Construction. Except as otherwise expressly noted herein with respect to the Employee Matters Agreement and the Separation Agreement, this Agreement shall constitute the entire agreement among the Parties with respect to Taxes and Tax Returns of the Parties and their respective Subsidiaries and shall supersede all previous negotiations, commitments, course of dealings, and writings with respect to such subject matter. In the event and to the extent of any conflict between this Agreement, on the one hand, and the Separation Agreement or any Ancillary Agreements relating to the transactions contemplated by the Separation Agreement, on the other hand, with respect to Taxes and Tax Returns of the Parties and their respective Subsidiaries, the terms and conditions of this Agreement shall govern.

Section 16.02    Other Agreements. Except as expressly set forth herein (including, for the avoidance of doubt, as provided in Section 16.01), this Agreement is not intended to address, and should not be interpreted to address, the matters specifically and expressly covered by the Separation Agreement and the other Ancillary Agreements.

Section 16.03    Counterparts. This Agreement may be executed and delivered (including by facsimile or other means of electronic transmission, such as by electronic mail in “pdf” form) in more than one counterpart, all of which shall be considered one and the same agreement, each of which when executed shall be deemed to be an original, and shall become effective when one or more such counterparts have been signed by each of the Parties and delivered to each of the Parties.

Section 16.04    Survival of Agreement. Except as otherwise contemplated by this Agreement, all covenants and agreements of the Parties contained in this Agreement shall survive the Effective Time and remain in full force and effect in accordance with their applicable terms.

 

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Section 16.05    Notices. All notices and other communications to be given to either Party under this Agreement shall be sufficiently given for all purposes hereunder if in writing and delivered by hand, courier or overnight delivery service, or five (5) days after being mailed by certified or registered mail, return receipt requested, with appropriate postage prepaid, or electronically mailed (with a response confirming receipt), and shall be directed to the address set forth below (or at such other address for a Party as shall be specified in a notice given in accordance with this Section 16.05):

 

To IP RemainCo:   

Adeia Inc. 3025 Orchard Parkway

  

San Jose, California 95134

  

Attention:   [•]

Email:    [•]

with a copy (which shall not constitute notice) to:   

Skadden, Arps, Slate, Meagher & Flom LLP

  

525 University Avenue

  

Palo Alto, California 94301

  

Attention:   Mike Ringler

Email:    Mike.Ringler@skadden.com

Skadden, Arps, Slate, Meagher & Flom LLP

  

525 University Avenue

  

Palo Alto, California 94301

  

Attention:   Nathan Giesselman

Email:    Nathan.Giesselman@skadden.com

To Product SpinCo:   

Xperi Inc.

2190 Gold Street

  

San Jose, California 95002

  

Attention:   [•]

Email:    [•]

with a copy (which shall not constitute notice) to:   

Skadden, Arps, Slate, Meagher & Flom LLP

  

525 University Avenue

  

Palo Alto, California 94301

  

Attention:   Mike Ringler

Email:    Mike.Ringler@skadden.com

Skadden, Arps, Slate, Meagher & Flom LLP

  

525 University Avenue

  

Palo Alto, California 94301

  

Attention:   Nathan Giesselman

Email:    Nathan.Giesselman@skadden.com

 

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Section 16.06    Waivers. Any provision of this Agreement may be waived if and only if such waiver is in writing and signed by the Party against whom the waiver is to be effective. Notwithstanding the foregoing, no failure to exercise and no delay in exercising, on the part of either Party, any right, remedy, power or privilege hereunder shall operate as a waiver hereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder or preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. Any consent required or permitted to be given by either Party to the other Party under this Agreement shall be in writing and signed by the Party giving such consent and shall be effective only against such Party (and the members of its Group).

Section 16.07    Amendments. This Agreement may not be modified or amended except by an agreement in writing signed by each of the Parties.

Section 16.08    Assignment. Except as otherwise provided for in this Agreement, neither this Agreement nor any right, interest, or obligation shall be assignable, in whole or in part, directly or indirectly, by either Party without the prior written consent of the other Party (not to be unreasonably withheld, conditioned, or delayed), and any attempt to assign any rights, interests, or obligations arising under this Agreement without such consent shall be void; except, that a Party may assign this Agreement or any or all of the rights, interests, and obligations hereunder in connection with a merger, reorganization, or consolidation transaction in which such Party is a constituent party but not the surviving entity or the sale by such Party of all or substantially all of its Assets; provided, that the surviving entity of such merger, reorganization, or consolidation transaction or the transferee of such Assets shall assume all the obligations of the relevant Party by operation of law or pursuant to an agreement in writing, reasonably satisfactory to the other Party, to be bound by the terms of this Agreement as if named as a “Party” hereto; provided, however, that in the case of each of the preceding clauses, no assignment permitted by this Section 16.08 shall release the assigning Party from Liability for the full performance of its obligations under this Agreement, unless agreed to in writing by the non-assigning Parties.

Section 16.09    Successors and Assigns. The provisions of this Agreement and the obligations and rights hereunder shall be binding upon, inure to the benefit of, and be enforceable by (and against) the Parties and their respective successors and permitted transferees and assigns.

Section 16.10    Payment Terms.

(a)    Except as set forth in Section 4 or as otherwise expressly provided to the contrary in this Agreement, any amount to be paid or reimbursed by a Party (and/or a member of such Party’s Group), on the one hand, to the other Party (and/or a member of such Party’s respective Group), on the other hand, under this Agreement shall be paid or reimbursed hereunder within forty-five (45) days after presentation of an invoice or a written demand therefor and setting forth, or accompanied by, reasonable documentation or other reasonable explanation supporting such amount.

 

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(b)    Except as set forth in Section 4 or as otherwise expressly provided to the contrary in this Agreement, any amount not paid when due pursuant to this Agreement (and any amount billed or otherwise invoiced or demanded and properly payable that is not paid within forty-five (45) days of such bill, invoice or other demand) shall bear interest at a rate per annum equal to the Mid-Term Applicable Federal Rate (in effect on the date on which such payment was due) plus 1.5% calculated for the actual number of days elapsed, accrued from the date on which such payment was due up to the date of the actual receipt of payment.

(c)    In the event of a dispute or disagreement with respect to all or a portion of any amounts requested by either Party (and/or a member of such Party’s Group) as being payable, the payor Party shall in no event be entitled to withhold payments for any such amounts (and any such disputed amounts shall be paid in accordance with Section 16.10(a), subject to the right of the payor Party to dispute such amount following such payment); provided, that in the event that following the resolution of such dispute it is determined that the payee Party (and/or a member of the payee Party’s Group) was not entitled to all or a portion of the payment made by the payor Party, the payee Party shall repay (or cause to be repaid) such amounts to which it was not entitled, including interest, to the payor Party (or its designee), which amounts shall bear interest at a rate per annum equal to the Mid-Term Applicable Federal Rate (in effect on the date on which such payment was due) plus 1.5%, calculated for the actual number of days elapsed, accrued from the date on which such payment was made by the payor Party to the payee Party.

(d)    Without the consent of the Party receiving any payment under this Agreement specifying otherwise, all payments to be made by IP RemainCo or Product SpinCo under this Agreement shall be made in U.S. dollars. Except as expressly provided herein, any amount which is not expressed in U.S. dollars shall be converted into U.S. dollars by using the Bloomberg fixing rate at 5:00 p.m. New York City Time on the day before the date the payment is required to be made or, as applicable, on which an invoice is submitted (provided, however, that with regard to any payment hereunder made by a Party to indemnify the other Party for a payment or payments made by such other Party to third parties, the date shall be the day before the relevant payment was made to the third party) or in the Wall Street Journal on such date if not so published on Bloomberg. Except as expressly provided herein, in the event that any indemnification payment required to be made hereunder may be denominated in a currency other than U.S. dollars, the amount of such payment shall be converted into U.S. dollars on the date on which notice of the claim is given to the Party obligated to make such payment.

Section 16.11    No Circumvention. The Parties agree not to directly or indirectly take any actions, act in concert with any Person who takes an action, or cause or allow any member of any such Party’s Group to take any actions (including the failure to take a reasonable action) such that the resulting effect is to materially undermine the effectiveness of any of the provisions of this Agreement (including adversely affecting the rights or ability of either Party to successfully pursue indemnification or payment pursuant to Section 4).

Section 16.12    Subsidiaries. Each of the Parties shall cause to be performed, and hereby guarantees the performance of, all actions, agreements, and obligations set forth herein to be performed by any Subsidiary of such Party or by any entity that becomes a Subsidiary of such Party on and after the Distribution Date.

 

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Section 16.13    Third Party Beneficiaries. Except as specifically provided in the Separation Agreement or any Ancillary Agreement, this Agreement is solely for the benefit of, and is only enforceable by, the Parties and their permitted successors and assigns and should not be deemed to confer upon third parties any remedy, benefit, claim, liability, reimbursement, claim of action, or other right of any nature whatsoever, including any rights of employment for any specified period, in excess of those existing without reference to this Agreement.

Section 16.14    Title and Headings. Titles and headings to sections herein are inserted for the convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement.

Section 16.15    Governing Law. This Agreement and any dispute arising out of, in connection with or relating to this Agreement shall be governed by and construed in accordance with the Laws of the State of Delaware, without giving effect to the conflicts of laws principles thereof.

Section 16.16    Specific Performance. The Parties acknowledge and agree that irreparable harm would occur in the event that the Parties do not perform any provision of this Agreement in accordance with its specific terms or otherwise breach this Agreement and the remedies at law for any breach or threatened breach of this Agreement, including monetary damages, are inadequate compensation for any indemnifiable loss. Accordingly, from and after the Effective Time, in the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement, the Parties agree that the Party or Parties to this Agreement who are or are to be thereby aggrieved shall, subject and pursuant to the terms of this Section 16 (including for the avoidance of doubt, after compliance with all notice and negotiation provisions herein), have the right to specific performance and injunctive or other equitable relief of its or their rights under this Agreement, in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative. The Parties agree that any defense in any action for specific performance that a remedy at law would be adequate is hereby waived, and that any requirements for the securing or posting of any bond with such remedy are hereby waived.

Section 16.17    Severability. In the event any one or more of the provisions contained in this Agreement should be held invalid, illegal, or unenforceable in any respect, the validity, legality, and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby. The Parties shall endeavor in good-faith negotiations to replace the invalid, illegal, or unenforceable provisions with valid, legal, and enforceable provisions, the economic effect of which comes as close as possible to that of the invalid, illegal, or unenforceable provisions.

Section 16.18    No Duplication; No Double Recovery. Nothing in this Agreement is intended to confer to or impose upon either Party a duplicative right, entitlement, obligation, or recovery with respect to any matter arising out of the same facts and circumstances (including with respect to the rights, entitlements, obligations, and recoveries that may arise out of Section 4).

 

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Section 16.19    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.

[Signature page follows]

 

30


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

 

ADEIA INC.
By  

/s/ Keith Jones

  Name: Keith Jones
  Title: Chief Financial Officer
XPERI INC.
By  

/s/ Robert Andersen

  Name: Robert Andersen
  Title: Chief Financial Officer

[Signature Page to the Tax Matters Agreement]

EX-10.2

Exhibit 10.2

EMPLOYEE MATTERS AGREEMENT

by and among

ADEIA INC.

and

XPERI INC.

dated as of

October 1, 2022


TABLE OF CONTENTS

 

       Page  
ARTICLE I

 

DEFINITIONS AND INTERPRETATION

 

Section 1.1

  General      1  

Section 1.2

  References; Interpretation      7  
ARTICLE II

 

GENERAL PRINCIPLES

 

Section 2.1

  Nature of Liabilities      7  

Section 2.2

  Transfers of Employees Generally      7  

Section 2.3

  Assumption and Retention of Liabilities Generally      8  

Section 2.4

  Service Recognition      8  

Section 2.5

  Information and Consultation      9  

Section 2.6

  WARN      9  
ARTICLE III

 

CERTAIN BENEFIT PLAN PROVISIONS

 

Section 3.1

  Benefits Generally      10  

Section 3.2

  Health and Welfare Benefit Plans      10  

Section 3.3

  Savings Plans      10  

Section 3.4

  Flexible Spending Account Plan      10  
ARTICLE IV

 

EQUITY INCENTIVE AWARDS

 

Section 4.1

  Treatment of Options      11  

Section 4.2

  Treatment of Restricted Stock Units      12  

Section 4.3

  Treatment of Performance Stock Unit Awards      12  

Section 4.4

  Treatment of Key RSU Awards      14  

Section 4.5

  SpinCo Stock Plan      14  

Section 4.6

  General Terms      14  

Section 4.7

  Employee Stock Purchase Plan      16  

 

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ARTICLE V

 

ADDITIONAL MATTERS

 

Section 5.1

  Intellectual Property Incentive Plan      16  

Section 5.2

  Annual Bonus Programs      17  

Section 5.3

  Time-Off Benefits      17  

Section 5.4

  COBRA Compliance      17  

Section 5.5

  Code Section 409A      18  

Section 5.6

  Payroll Taxes and Reporting      18  

Section 5.7

  Regulatory Filings      18  

Section 5.8

  Disability      18  
ARTICLE VI s

 

GENERAL AND ADMINISTRATIVE

 

Section 6.1

  Employer Rights      19  

Section 6.2

  Effect on Employment      19  

Section 6.3

  Consent of Third Parties      19  

Section 6.4

  Access to Employees      19  

Section 6.5

  Employee Data Protection and the Data Sharing Agreement      19  

Section 6.6

  Beneficiary Designation/Release of Information/Right to Reimbursement      19  

Section 6.7

  No Third-Party Beneficiaries      20  

Section 6.8

  No Acceleration of Benefits      20  

Section 6.9

  Employee Benefits Administration      20  
ARTICLE VII

 

MISCELLANEOUS

 

Section 7.1

  Amendments and Waivers      20  

Section 7.2

  Entire Agreement      21  

Section 7.3

  Survival of Agreements      21  

Section 7.4

  Third-Party Beneficiaries      21  

Section 7.5

  Notices      21  

Section 7.6

  Counterparts; Electronic Delivery      21  

Section 7.7

  Severability      22  

Section 7.8

  Assignability; Binding Effect      22  

Section 7.9

  Termination; Effect of Termination      22  

Section 7.10

  Governing Law      22  

Section 7.11

  Construction      22  

Section 7.12

  Performance      23  

Section 7.13

  Title and Headings      23  

Section 7.14

  Schedules      23  

 

ii


EMPLOYEE MATTERS AGREEMENT

This EMPLOYEE MATTERS AGREEMENT (this “Agreement”), is entered into as of October 1, 2022, by and among Adeia Inc., a Delaware corporation (“RemainCo”) and Xperi Inc., a Delaware corporation and a subsidiary of RemainCo (“SpinCo”). RemainCo and SpinCo are sometimes referred to herein individually as a “Party,” and collectively as the “Parties”. Capitalized terms used in this Agreement, but not otherwise defined in this Agreement, shall have the meaning given to such terms in the Separation and Distribution Agreement by and between the Parties, dated as of October 1, 2022 (the “Separation Agreement”).

W I T N E S E T H:

WHEREAS, the RemainCo Board has determined that it is advisable and in the best interests of RemainCo and its stockholders to restructure the Assets and Liabilities of RemainCo into two companies: (i) RemainCo, which, following consummation of the transactions contemplated under the Separation Agreement, will own and conduct the RemainCo Business; and (ii) SpinCo, which, following consummation of the transactions contemplated under the Separation Agreement, will own and conduct the SpinCo Business, in the manner contemplated by the Separation Agreement;

WHEREAS, the Separation Agreement sets forth the terms and conditions applicable to the Distribution; and

WHEREAS, pursuant to the Separation Agreement, RemainCo and SpinCo have agreed to enter into this Agreement for the purpose of allocating Assets, Liabilities and responsibilities with respect to certain employee matters and employee compensation and benefit plans and programs between them and to address certain other employment-related matters.

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

ARTICLE I

DEFINITIONS AND INTERPRETATION

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

Adjusted SpinCo Stock Value” shall mean the product obtained by multiplying (a) the SpinCo Stock Value by (b) the Distribution Ratio.

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

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


Applicable Exchange” shall mean the securities exchange as may at the applicable time be the principal market for shares of RemainCo Common Stock or shares of SpinCo Common Stock, as applicable.

Benefit Arrangement” shall mean, with respect to an entity, each compensation or employee benefit plan, program, policy, agreement or other arrangement, whether or not “employee benefit plans” (within the meaning of Section 3(3) of ERISA, whether or not subject to ERISA), including any benefit plan, program, policy, agreement or arrangement providing cash- or equity-based compensation or incentives, health, medical, dental, vision, disability, accident or life insurance benefits or vacation, paid or unpaid leave, severance, retention, change in control, termination, deferred compensation, individual employment, retirement, pension or savings benefits, supplemental income, retiree benefit or other fringe benefit (whether or not taxable), or employee loans, that are sponsored or maintained by such entity (or to which such entity contributes or is required to contribute or in which it participates), and excluding workers’ compensation plans, policies, programs and arrangements.

Code” means the Internal Revenue Code of 1986, as amended from time to time, or any successor federal income tax law, and the regulations promulgated thereunder.

Data Sharing Agreement” shall mean the Data Sharing Agreement by and between Adeia Inc. and Xperi Inc., dated October 1, 2022.

Distribution Ratio” shall mean the number of shares of Product SpinCo Common Stock (as defined in the Separation Agreement) received by each holder of IP RemainCo Common Stock (as defined in the Separation Agreement) on the Distribution Record Date pursuant to Section 4.1 the Separation Agreement with respect to each share of IP RemainCo Common Stock.

Employee” shall mean any RemainCo Employee or SpinCo Employee.

ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

IPIP” shall mean the Xperi Holding Corporation Intellectual Property Incentive Plan.

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

Person” means an individual, a partnership, a corporation, an association, a joint stock company, a trust, a joint venture, a limited liability company, a union, an unincorporated organization or other legal entity, including a governmental entity or any department, agency or political subdivision thereof.

Plan Transition Date” shall mean the date that is (i) the Distribution Date or (ii) such earlier date as agreed between the Parties.

Post-Separation RemainCo Awards” shall mean Post-Separation RemainCo Options, Post-Separation RemainCo Restricted Stock Unit Awards, Post-Separation RemainCo Performance Stock Unit Awards (2020), Post-Separation RemainCo Performance Stock Unit Awards (2021), Post-Separation RemainCo Performance Stock Unit Awards (2022) and Post-Separation RemainCo Key RSU Awards, collectively.

 

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Post-Separation RemainCo Key RSU Award” shall mean a RemainCo Key RSU Award adjusted as of the Effective Time in accordance with Section 4.4.

Post-Separation RemainCo Option” shall mean a RemainCo Option adjusted as of the Effective Time in accordance with Section 4.1.

Post-Separation RemainCo Performance Stock Unit Award (2020)” shall mean a RemainCo Performance Restricted Stock Unit Award (2020) adjusted as of the Effective Time in accordance with Section 4.3(a).

Post-Separation RemainCo Performance Stock Unit Award (2021)” shall mean a RemainCo Performance Restricted Stock Unit Award (2021) adjusted as of the Effective Time in accordance with Section 4.3(b).

Post-Separation RemainCo Performance Stock Unit Award (2022)” shall mean a RemainCo Performance Restricted Stock Unit Award (2022) adjusted as of the Effective Time in accordance with Section 4.3(c).

Post-Separation RemainCo Restricted Stock Unit Award” shall mean a RemainCo Restricted Stock Unit Award adjusted as of the Effective Time in accordance with Section 4.2.

Post-Separation RemainCo Stock Value” shall mean the simple average of the volume-weighted average per-share price of RemainCo Common Stock (i) trading “ex distribution” on the Applicable Exchange during each of the last five (5) full Trading Sessions immediately prior to the Effective Time (or such shorter number of Trading Sessions that the RemainCo Common Stock is trading “ex distribution,” immediately prior to the Effective Time), excluding the date upon which the Effective Time occurs and (ii) trading on the Applicable Exchange during each of the first five (5) full Trading Sessions immediately after the Effective Time, including the date upon which the Effective Time occurs.

Pre-Separation RemainCo Stock Value” shall mean the simple average of the volume-weighted average per-share price of RemainCo Common Stock trading “regular way with due bills” on the Applicable Exchange during each of the last ten (10) full Trading Sessions, or such shorter number of Trading Sessions that the RemainCo Common Stock is trading “regular way with due bills,” immediately prior to the Effective Time.

RemainCo” shall have the meaning set forth in the Preamble.

RemainCo 401(k) Plan” means a tax-qualified 401(k) defined contribution savings plan to be established by RemainCo or a member of the RemainCo Group.

RemainCo Benefit Arrangement” shall mean any Benefit Arrangement sponsored, maintained or contributed to by any member of the IP RemainCo Group as of immediately following the Effective Time.

RemainCo Change in Control” shall have the meaning set forth in Section 4.6(b).

 

3


RemainCo Common Stock” shall mean the common stock of RemainCo, par value $0.001 per share.

RemainCo Director” shall mean any individual who is a non-employee member of the board of directors of RemainCo as of the Effective Time.

RemainCo Employee” shall mean each individual identified on Schedule 1.1 hereto.

RemainCo ESPP” shall mean the Xperi Holding Corporation 2020 Employee Stock Purchase Plan.

RemainCo Key RSU Award” shall mean an award of Restricted Stock Units granted in 2022 by RemainCo pursuant to the Xperi Holding Corporation 2020 Equity Incentive Plan that is subject to solely time-based vesting and that is identified on Schedule 4.4 and held by such individual set forth on Schedule 4.4.

RemainCo Option” shall mean an option to purchase shares of RemainCo Common Stock granted pursuant to a RemainCo Stock Plan.

RemainCo Performance Stock Unit Award (2020)” shall mean an award of Restricted Stock Units granted in 2020 by RemainCo pursuant to the RemainCo Stock Plans that is subject to performance-based vesting.

RemainCo Performance Stock Unit Award (2021)” shall mean an award of Restricted Stock Units granted in 2021 by RemainCo pursuant to the RemainCo Stock Plans that is subject to performance-based vesting.

RemainCo Performance Stock Unit Award (2022)” shall mean an award of Restricted Stock Units granted in 2022 by RemainCo pursuant to the RemainCo Stock Plans that is subject to performance-based vesting.

RemainCo Ratio” shall mean the quotient obtained by dividing (a) the Pre-Separation RemainCo Stock Value by (b) the Post-Separation RemainCo Stock Value.

RemainCo Restricted Stock Unit Award” shall mean an award of Restricted Stock Units granted by RemainCo pursuant to the RemainCo Stock Plans that is subject to solely time-based vesting, other than a RemainCo Key RSU Award.

RemainCo Stock Plans” shall mean the (i) Xperi Holding Corporation 2020 Equity Incentive Plan; (ii) TiVo Corporation 2008 Equity Incentive Plan (f/k/a the Rovi Corporation 2008 Equity Incentive Plan); (iii) TiVo Inc. Amended and Restated 2008 Equity Incentive Award Plan (now named the TiVo Corporation Titan Equity Incentive Award Plan); (iv) Xperi Corporation Seventh Amended and Restated 2003 Equity Incentive Plan and Amendment No. 1; (v) DTS, Inc. 2014 New Employee Incentive Plan, including Amendment No. 1 and Amendment No. 2 thereto; (v) DTS, Inc. 2012 Equity Incentive Plan, including Amendment No. 1 thereto; (vi) SRS Labs, Inc. 2006 Stock Incentive Plan, as amended and restated on August 9, 2012; (vii) DTS, Inc. 2003 Equity Incentive Plan, as amended on May 9, 2005, May 15, 2008, February 19, 2009, February 15, 2010, June 3, 2010 and October 8, 2010.

 

4


RemainCo Value Factor” shall mean the quotient obtained by dividing (a) the Pre-Separation RemainCo Stock Value by (b) the sum of (i) the Adjusted SpinCo Stock Value and (ii) the Post-Separation RemainCo Stock Value.

RemainCo Welfare Plans” shall mean any Welfare Plan maintained by RemainCo or any member of the IP RemainCo Group.

Restricted Stock Unit” shall have the meaning set forth under the RemainCo Stock Plans.

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

SpinCo” shall have the meaning set forth in the Preamble.

SpinCo Awards” shall mean SpinCo Options, SpinCo Restricted Stock Unit Awards, SpinCo Performance Stock Unit Awards (2020), SpinCo Performance Stock Unit Awards (2021), and SpinCo Performance Stock Unit Awards (2022) and SpinCo Key RSU Awards, collectively.

SpinCo Benefit Arrangement” shall mean any Benefit Arrangement sponsored, maintained or contributed to exclusively by any member of the Product SpinCo Group other than a SpinCo Transferred Benefit Arrangement.

SpinCo Change in Control” shall have the meaning set forth in Section 4.6(b).

SpinCo Common Stock” shall mean the common stock of SpinCo, par value $0.001 per share.

SpinCo Director” shall mean any individual who is a non-employee member of the board of directors of SpinCo as of the Effective Time.

SpinCo Employee” shall mean each individual who is an employee of RemainCo or any of its Subsidiaries or Affiliates immediately prior to the Effective Time and who is not identified on Schedule 1.1 as a RemainCo Employee.

SpinCo Key RSU Award” shall mean a RemainCo Key RSU Award assumed by SpinCo in accordance with Section 4.4.

SpinCo Option” shall mean an award of options to purchase shares of SpinCo Common Stock assumed by SpinCo in accordance with Section 4.1.

SpinCo Performance Stock Unit Award (2020)” shall mean a RemainCo Performance Stock Unit Award assumed by SpinCo in accordance with Section 4.3(a).

SpinCo Performance Stock Unit Award (2021)” shall mean a RemainCo Performance Stock Unit Award assumed by SpinCo in accordance with Section 4.3(b).

SpinCo Performance Stock Unit Award (2022)” shall mean a RemainCo Performance Stock Unit Award assumed by SpinCo in accordance with Section 4.3(c).

 

5


SpinCo Ratio” shall mean the quotient obtained by dividing (a) the Pre-Separation RemainCo Stock Value by (b) the SpinCo Stock Value.

SpinCo Restricted Stock Unit Award” shall mean a RemainCo Restricted Stock Unit Award assumed by SpinCo in accordance with Section 4.2.

SpinCo Stock Plans” shall have the meaning set forth in Section 4.5.

SpinCo Stock Value” shall mean the simple average of the volume-weighted average per-share price of SpinCo Common Stock (i) trading “as when issued” on the Applicable Exchange during each of the last five (5) full Trading Sessions immediately prior to the Effective Time (or such shorter number of Trading Sessions that the SpinCo Common Stock is trading “as when issued” immediately prior to the Effective Time), excluding the date upon which the Effective Time occurs and (ii) trading on the Applicable Exchange during each of the first five (5) full Trading Sessions immediately after the Effective Time, including the date upon which the Effective Time occurs.

SpinCo Transferred Benefit Arrangement” shall have the meaning set forth in Section 3.1.

SpinCo Value Factor” shall mean the quotient obtained by dividing (a) the Pre-Separation RemainCo Stock Value by (b) the sum of (i) the SpinCo Stock Value and (ii) the quotient obtained by dividing the Post-Separation RemainCo Stock Value by the Distribution Ratio.

SpinCo Welfare Plans” shall mean any Welfare Plan maintained by SpinCo or any member of the SpinCo Group.

Trading Session” shall mean the period of time during any given calendar day, commencing with the determination of the opening price on the Applicable Exchange and ending with the determination of the closing price on the Applicable Exchange, in which trading in shares of RemainCo Common Stock or shares of SpinCo Common Stock (as applicable) is permitted on the Applicable Exchange.

Welfare Plan” shall mean, where applicable, a “welfare plan” (as defined in Section 3(1) of ERISA and in 29 C.F.R. §2510.3-1) or a “cafeteria plan” under Section 125 of the Code, and any benefits offered thereunder, and any other plan offering health benefits (including medical, prescription drug, dental, vision and mental health and substance use disorder), disability benefits, or life, accidental death and disability, pre-tax premium conversion benefits, dependent care assistance programs, employee assistance programs, contribution funding toward a health savings account, flexible spending accounts, tuition reimbursement or adoption assistance programs or cashable credits.

Xperi 401(k) Plan” shall mean the Xperi 401(k) Retirement Plan.

Xperi Benefit Arrangement” shall mean any Benefit Arrangement sponsored, maintained or contributed to by RemainCo prior to the Effective Time.

Xperi Director” shall mean any individual who is a non-employee member of the board of directors of RemainCo immediately prior to the Effective Time.