8-K

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): July 2, 2023

BORGWARNER INC.

(Exact name of registrant as specified in its charter)

Delaware	1-12162	13-3404508
(State or other jurisdiction of	(Commission File No.)	(I.R.S. Employer
incorporation or organization)		Identification No.)

3850 Hamlin Road,	Auburn Hills,	Michigan	48326
(Address of principal executive offices)			(Zip Code)

Registrant’s telephone number, including area code: (248) 754-9200

(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 $0.01 per share	BWA	New York Stock Exchange
1.00% Senior Notes due 2031	BWA31	New York Stock Exchange

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

On July 3, 2023 (the “Distribution Date”), at 5:00 p.m. Eastern Daylight time, BorgWarner Inc. (the “Company”, “we,” “us,” or “our”) completed the previously announced separation of our Fuel Systems and Aftermarket businesses by way of a distribution of 100% of the outstanding shares of common stock of PHINIA Inc. (“PHINIA”) to holders of record of common stock of the Company on a pro rata basis (the “Spin-Off”). Each holder of record of common stock of the Company received one share of PHINIA common stock for every five shares of common stock of the Company held on June 23, 2023, the record date for the distribution. In lieu of fractional shares of PHINIA, shareholders of the Company will receive cash.

In connection with the Spin-Off, the Company entered into several agreements with PHINIA on or prior to the Distribution Date that, among other things, provide a framework for the Company’s relationship with PHINIA after the Spin-Off, including the following agreements:

• a Separation and Distribution Agreement;

• a Transition Services Agreement;

• a Tax Matters Agreement;

• an Employee Matters Agreement; and

• an Intellectual Property Cross-License Agreement.

The descriptions included below of the Separation and Distribution Agreement, Transition Services Agreement, Tax Matters Agreement, Employee Matters Agreement and Intellectual Property Cross-License Agreement do not purport to be complete and are qualified in their entirety by reference to the full text of such agreements, which are filed as Exhibits 2.1,10.1, 10.2, 10.3 and 10.4, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.

Separation and Distribution Agreement

We entered into a Separation and Distribution Agreement with PHINIA on July 2, 2023, before the distribution. The Separation and Distribution Agreement sets forth our agreements with PHINIA regarding the principal actions taken in connection with the Spin-Off. It also sets forth other agreements that govern aspects of our relationship with PHINIA following the Spin-Off.

Transfer of Assets and Assumption of Liabilities

The Separation and Distribution Agreement identifies certain transfers of assets and assumptions of liabilities that were necessary in advance of PHINIA’s separation from us so that we and PHINIA retain the assets of, and the liabilities associated with, our respective businesses. The Separation and Distribution Agreement generally provides that the assets that PHINIA received in the Spin-Off consist of those exclusively related to its current business and operations or otherwise allocated to its business through a process of dividing shared assets. The liabilities assumed by PHINIA in connection with the Spin-Off generally consist of those related to the assets comprising its business or to the past and future operations of its business, including locations used in its current operations. The Separation and Distribution Agreement also provides for the settlement or extinguishment of certain liabilities and other obligations between us and PHINIA.

Cash Adjustment

PHINIA’s cash balance at the time of the Spin-Off was targeted to be approximately $300 million, subject to a cash adjustment. The Separation and Distribution Agreement provides for a post-distribution cash adjustment payment by us or PHINIA to the other to be calculated by us based primarily on the differences between the estimated and actual amounts of (1) PHINIA’s businesses’ capital expenditures during 2023 prior to the Distribution Date relative to budgeted amounts and (2) PHINIA’s working capital levels.

Internal Restructuring

The Separation and Distribution Agreement describes certain actions related to PHINIA’s separation from us that occurred prior to the Spin-Off, including the contribution by us to PHINIA of the assets and liabilities that comprise PHINIA’s business.

Intercompany Arrangements

All agreements, arrangements, commitments and understandings between us and our subsidiaries, on the one hand, and PHINIA and its subsidiaries, on the other hand, terminated and/or were repaid effective as of the Distribution Date, except specified agreements and arrangements that are intended to survive the Spin-Off and most intercompany accounts payable or accounts receivable, which will be paid and settled by the parties and their respective subsidiaries on the earlier of the date that they are otherwise due in accordance with their terms or August 31, 2023. The parent entity (PHINIA or us) of the consolidated group of companies that has net positive receipts in that post-Spin-Off settlement process will then reimburse the other parent entity that net receipts amount so that the combined settlement and reimbursement process will have no net financial impact on us and our post-Spin-Off subsidiaries as a consolidated group.

Credit Support

In accordance with the Separation and Distribution Agreement, PHINIA arranged, prior to the Spin-Off, for the termination or replacement of all guarantees, bank provided guarantees, covenants, indemnities, surety bonds, letters of credit or similar assurances of credit support that were provided by or through us or any of our subsidiaries for the benefit of PHINIA or any of its subsidiaries.

Representations and Warranties

In general, neither we nor PHINIA made any representations or warranties regarding any assets or liabilities transferred or assumed (including with respect to the sufficiency of assets for the conduct of PHINIA’s business), any notices, consents or governmental approvals that may be required in connection with these transfers or assumptions, the value or freedom from any lien or other security interest of any assets or liabilities transferred, the absence of any defenses relating to any claim of either party or the legal sufficiency of any conveyance documents. Except as expressly set forth in the Separation and Distribution Agreement or any ancillary agreement, all assets have been, or will be, transferred on an “as is,” “where is” basis.

Further Assurances

The parties agreed to use commercially reasonable efforts to effect any transfers contemplated by the Separation and Distribution Agreement that have not been consummated prior to the Spin-Off. In addition, the parties will use commercially reasonable efforts to effect any transfer or re-transfer of any asset or liability that was improperly transferred or retained.

The Spin-Off

The Separation and Distribution Agreement governs PHINIA’s and our respective rights and obligations regarding the Spin-Off. On or prior to the Distribution Date, we delivered 100% of the issued and outstanding shares of PHINIA’ s common stock to a distribution agent. The distribution agent will be responsible for the distribution of PHINIA’s common stock pursuant to a separate distribution agent agreement between us and the distribution agent. On or as soon as practicable following the Distribution Date, the distribution agent electronically delivered or will electronically deliver the shares of PHINIA’s common stock to our stockholders based on the distribution ratio. Our board of directors (the “Board”) determined the Record Date and the Distribution Date. In addition, we, at any time until the distribution, had the ability to decide to abandon the Spin-Off or modify or change the terms of the Spin-Off.

Conditions

The Separation and Distribution Agreement also provides that several conditions must have been satisfied or, to the extent permitted by law, waived by us, in our sole and absolute discretion, before the distribution could occur. All conditions to the Separation and Distribution Agreement were satisfied at or prior to the distribution.

Exchange of Information

We and PHINIA each agreed to provide each other with information reasonably needed to comply with reporting, disclosure, filing or other requirements of any national securities exchange or governmental authority and requested by the other party for use in judicial, regulatory, administrative and other proceedings or to satisfy audit, accounting, litigation and other similar requirements. We and PHINIA also each agreed to use commercially reasonable efforts to retain such information in accordance with specified record retention policies. Each party also agreed to use its commercially reasonable efforts to assist the other with its financial reporting and audit obligations.

Termination

The Board, in its sole and absolute discretion, had the ability to terminate the Separation and Distribution Agreement at any time prior to the distribution.

Release of Claims

We and PHINIA each agreed to release the other and its affiliates, successors and assigns, and all persons that prior to the Spin-Off have been the other’s stockholders, fiduciaries, directors, trustees, counsel, officers, members, managers, employees, agents, and certain other parties, and their respective heirs, executors, administrators, successors, and assigns, from any and all liabilities, whether at law or in equity (including any right of contribution), whether arising under any contract, by operation of law or otherwise, existing or arising from any acts or events occurring, or failing to occur, or alleged to have occurred, or to have failed to occur, or any conditions existing or alleged to have existed on or before completion of the Spin-Off, including in connection with the Spin-Off and all other activities to implement the Spin-Off. The releases do not extend to obligations or liabilities under the Separation and Distribution Agreement or any of the other agreements between us and PHINIA entered into in connection with the Spin-Off, to any other agreements between us and PHINIA that remain in effect following the separation pursuant to the Separation and Distribution Agreement or any ancillary agreement or to certain other obligations or liabilities specified in the Separation and Distribution Agreement.

Indemnification

We and PHINIA each agreed to indemnify the other and each of the other’s current and former directors, officers and employees, and each of the heirs, executors, administrators, successors and assigns of any of them, against certain liabilities incurred in connection with the Spin-Off and our and PHINIA’s respective businesses. The amount of either PHINIA’s or our indemnification obligations will be reduced by any net insurance proceeds the party being indemnified receives. The Separation and Distribution Agreement also specifies procedures regarding claims subject to indemnification.

Transition Services Agreement

We entered into a Transition Services Agreement pursuant to which we will provide PHINIA, and PHINIA will provide us, with certain specified services for a limited time with the objective of ensuring an orderly transition following the Spin-Off. The services we will provide consist of digital technology, human resources, supply chain, finance and real estate services, among others. The services that PHINIA will provide will consist of engineering and human resources services, among others. The services are generally intended to be provided for a period no longer than 12 months following the Spin-Off. The Transition Services Agreement provides for customary termination provisions, including if the other party fails to cure a material breach of its obligations within an agreed period of time. The parties may otherwise negotiate mutually agreed reductions in the scope or early terminations of services received. The Transition Services Agreement provides for customary indemnification and limits on liability. Given the short-term nature of the Transition Services Agreement, PHINIA is in the process of increasing its internal capabilities to eliminate reliance on us for the transition services we will provide PHINIA as quickly as possible following the Spin-Off.

Tax Matters Agreement

We entered into a Tax Matters Agreement with PHINIA that governs the respective rights, responsibilities and obligations of PHINIA and us after the Spin-Off with respect to all tax matters (including tax liabilities, tax attributes, tax returns and tax contests).

The Tax Matters Agreement generally provides that we will be responsible and will indemnify PHINIA for taxes imposed on a joint-return basis or separate-return basis relating to the Fuel Systems and Aftermarket businesses for periods preceding completion of the Spin-Off, subject to certain exceptions. PHINIA will be responsible and will indemnify us for certain taxes imposed on a joint-return basis relating to the Fuel Systems and Aftermarket businesses for periods preceding completion of the Spin-Off, all taxes imposed on a separate-return basis on PHINIA or its subsidiaries (after giving effect to the Spin-Off) for periods following the Spin-Off and all other taxes relating to the Fuel Systems and Aftermarket businesses for all periods following the Spin-Off.

In addition, the Tax Matters Agreement addresses the allocation of liability for taxes that are incurred as a result of restructuring activities undertaken to effectuate the Spin-Off. The Tax Matters Agreement also provides that PHINIA will be required to indemnify us for any taxes (and reasonable expenses) resulting from the failure of the contribution by BorgWarner Inc. to PHINIA Inc. of the assets and liabilities that comprise our business, the distribution and related internal restructuring transactions to qualify for their respective tax treatments the Tax Matters Agreement contemplates under U.S. federal, state and local income tax law as well as foreign tax law, where such taxes result from (1) breaches of representations and covenants PHINIA makes and agrees to in connection with the Spin-Off, (2) the application of certain provisions of U.S. federal income tax law to these transactions, or (3) any other action or omission (other than actions expressly required or permitted by the Separation and Distribution Agreement, the Tax Matters Agreement or other ancillary agreements) PHINIA takes or fails to take after the Spin-Off that gives rise to these taxes. We have the exclusive right to control the conduct of any audit or contest relating to these taxes, but PHINIA has notification and information rights regarding our conduct of any such audit or contest to the extent that PHINIA could be liable for taxes under the Tax Matters Agreement as a result of such audit or contest.

The Tax Matters Agreement imposes certain restrictions on PHINIA and its subsidiaries (including restrictions on share issuances, redemptions or repurchases, mergers or other business combinations, sales of assets and similar transactions) that are intended to preserve the tax-free nature of the Spin-Off and certain related transactions. Under the Tax Matters Agreement, these restrictions apply for two years following the Spin-Off, unless we obtain a private letter ruling from the IRS or an opinion of counsel, in each case acceptable to us in our discretion, that the restricted action would not impact the tax-free treatment of the Spin-Off or other transaction, or unless we otherwise give our consent for PHINIA to take a restricted action in its discretion. Even if such a private letter ruling or opinion is obtained, or we otherwise consent to PHINIA taking an otherwise restricted action, PHINIA will remain liable to indemnify us in the event such restricted action gives rise to an otherwise indemnifiable liability.

Employee Matters Agreement

We entered into an Employee Matters Agreement with PHINIA that provides certain protections for PHINIA’s employees and former employees, sets forth the timing and general responsibilities related to the split of assets and liabilities of certain of our employee benefit and compensation plans and provides for mutual two-year non-solicitation obligations with respect to employees, with customary exceptions.

For example, for at least 12 months after the Spin-Off for U.S. PHINIA employees (and for longer periods as may be required by law), PHINIA will continue to provide its employees with at least the same salary/wages and cash incentive compensation opportunities in effect immediately prior to completion of the Spin-Off. During that period, PHINIA will also continue to offer employee benefits that are substantially similar, in the aggregate, to those in effect immediately prior to completion of the Spin-Off and recognize prior service credit for all employees employed by PHINIA on the Distribution Date.

Except as specifically provided in the Employee Matters Agreement, PHINIA will generally be responsible for all employment, employee compensation and employee benefits-related liabilities relating to employees, former employees and other individuals allocated to PHINIA. For these individuals, PHINIA will assume certain assets and liabilities with respect to our U.S. and non-U.S. benefit plans, including a majority of the assets and liabilities of our non-U.S. pension plans.

The Employee Matters Agreement incorporates the indemnification provisions contained in the Separation and Distribution Agreement and provides that PHINIA will indemnify us for certain liabilities associated with the failure to comply with PHINIA’s obligations under the Employee Matters Agreement, for any employment liabilities related to employees, former employees and other individuals allocated to PHINIA that cannot be assumed, retained, transferred or assigned as a matter of law, and for claims related to PHINIA’s adoption or assumption of certain employee benefit and compensation plans and any future actions that PHINIA take with respect to those plans.

The Employee Matters Agreement also reflects the adjustment of outstanding equity-based awards granted by us prior to completion of the Spin-Off.

Intellectual Property Cross-License Agreements

We entered into intellectual property agreements with PHINIA pursuant to which we granted to PHINIA, and PHINIA granted us, licenses under certain patents and other intellectual property rights that are used by the Fuel Systems and Aftermarket businesses but that are owned or being retained by us or that are currently being used in our retained businesses that were assigned to or owned by PHINIA.

We granted to PHINIA perpetual, non-exclusive, royalty-free licenses to use and exploit certain intellectual property rights (excluding trademarks and domain names), the ownership of which is being retained by us, that are currently being used by PHINIA’s business. Additionally, PHINIA granted to us perpetual, non-exclusive, royalty-free licenses to use and exploit certain intellectual property rights (excluding trademarks and domain names) that are owned by or assigned to PHINIA that are currently being used in our retained businesses.

The field of use for the foregoing intellectual property rights licensed by us to PHINIA will generally be for the Fuel Systems and the Aftermarket businesses. The field of use for the foregoing intellectual property rights licensed by PHINIA to us will be primarily for our retained starters and alternators business. The licenses granted to us and PHINIA are generally transferable with any sale or transfer of an entity or line of business that utilizes the relevant intellectual property, and the transferred license will be limited to the business, products and services as conducted by the transferred entity or line of business as of the date of the transfer.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits. The following exhibits are being filed as part of this Report.

Exhibit Number	Description
2.1	Separation and Distribution Agreement, dated July 2, 2023, by and between the Company and PHINIA.
10.1	Transition Services Agreement, dated July 2, 2023, by and between the Company. and PHINIA.
10.2	Tax Matters Agreement, dated July 2, 2023, by and between the Company and PHINIA.
10.3	Employee Matters Agreement, dated July 2, 2023, by and between the Company and PHINIA.
10.4	Intellectual Property Cross-License Agreement, dated July 2, 2023, by and between the Company, Delphi Technologies IP Limited, PHINIA Technologies, Inc. and BorgWarner Luxembourg Operations S.A.R.L.
104	The cover page from this Current Report on Form 8-K, formatted as Inline XBRL

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.

	BorgWarner Inc.
Date: July 7, 2023	By:	/s/ Tonit M. Calaway
		Name: Tonit M. Calaway
		Title: Executive Vice President and Secretary

EX-2.1

 

Exhibit 2.1

 

SEPARATION AND DISTRIBUTION AGREEMENT

 

by and between

 

BORGWARNER INC.

 

and

 

PHINIA INC.

 

Dated as of July 2, 2023

 

 

 

 

Table of contents

 

Article I DEFINITIONS			2
	Section 1.01	Definitions	2
Article II THE SEPARATION			17
	Section 2.01	Transfer of Assets and Assumption of Liabilities	17
	Section 2.02	Certain Matters Governed Exclusively by Ancillary Agreements	22
	Section 2.03	Termination of Agreements	22
	Section 2.04	Shared Contracts	24
	Section 2.05	Disclaimer of Representations and Warranties	25
	Section 2.06	Waiver of Bulk-Sale and Bulk-Transfer Laws	26
	Section 2.07	Wrong Pockets	26
	Section 2.08	Adjustment Payment	26
Article III CREDIT SUPPORT			27
	Section 3.01	Replacement of Parent Credit Support	27
	Section 3.02	Replacement of SpinCo Credit Support	28
Article IV ACTIONS PENDING THE DISTRIBUTION			30
	Section 4.01	Actions Prior to the Distribution	30
	Section 4.02	Conditions Precedent to Consummation of the Distribution	31
Article V THE DISTRIBUTION			32
	Section 5.01	The Distribution	32
	Section 5.02	Fractional Shares	32
	Section 5.03	Sole Discretion of Parent	33
Article VI MUTUAL RELEASES; INDEMNIFICATION			33
	Section 6.01	Release of Pre-Distribution Claims	33
	Section 6.02	Indemnification by SpinCo	36
	Section 6.03	Indemnification by Parent	36
	Section 6.04	Indemnification Obligations Net of Insurance Proceeds and Third-Party Proceeds	36
	Section 6.05	Procedures for Indemnification of Third-Party Claims	37
	Section 6.06	Additional Matters	39
	Section 6.07	Remedies Cumulative	40
	Section 6.08	Covenant Not to Sue	40
	Section 6.09	Survival of Indemnities	40
	Section 6.10	Indemnified Damages	41
	Section 6.11	Management of Certain Actions and Internal Investigations	41

 

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Article VII ACCESS TO INFORMATION; PRIVILEGE; CONFIDENTIALITY			44
	Section 7.01	Agreement for Exchange of Information; Archives	44
	Section 7.02	Ownership of Information	45
	Section 7.03	Compensation for Providing Information	45
	Section 7.04	Record Retention	45
	Section 7.05	Accounting Information	45
	Section 7.06	No Implied Warranties	47
	Section 7.07	Production of Witnesses; Records; Cooperation	47
	Section 7.08	Privileged Matters	48
	Section 7.09	Confidential Information	50
	Section 7.10	Conflicts Waiver	52
Article VIII INSURANCE			53
	Section 8.01	Maintenance of Insurance and Termination of Coverage	53
	Section 8.02	Claims under Parent Insurance Policies	53
	Section 8.03	Claims under SpinCo Insurance Policies	54
	Section 8.04	Policy Limits	55
	Section 8.05	Insurance Proceeds	55
	Section 8.06	Claims Not Reimbursed	55
	Section 8.07	D&O Policies	55
Article IX FURTHER ASSURANCES AND ADDITIONAL COVENANTS			56
	Section 9.01	Further Assurances	56
Article X TERMINATION			57
	Section 10.01	Termination	57
	Section 10.02	Effect of Termination	57
Article XI MISCELLANEOUS			57
	Section 11.01	Counterparts; Entire Agreement; Corporate Power	57
	Section 11.02	Jurisdiction	58
	Section 11.03	WAIVER OF JURY TRIAL	58
	Section 11.04	Specific Performance	58
	Section 11.05	No Set-Off	58
	Section 11.06	Continuity of Service and Performance	59
	Section 11.07	Governing Law	59
	Section 11.08	Assignability	59
	Section 11.09	Third-Party Beneficiaries	59
	Section 11.10	Notices	60
	Section 11.11	Severability	60
	Section 11.12	Publicity	61
	Section 11.13	Expenses	61
	Section 11.14	Headings	61
	Section 11.15	Survival of Covenants	61
	Section 11.16	Waivers of Default	61
	Section 11.17	Amendments	61
	Section 11.18	Interpretation	62

 

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Schedule 1.01(a)	Exclusions from Definition of Ancillary Agreements
Schedule 1.01(b)	Former SpinCo Businesses
Schedule 1.01(c)	Real Estate Separation Documents
Schedule 1.01(d)	Local Transfer Agreements
Schedule 1.01(e)	Parent Available Insurance Policies
Schedule 1.01(f)	Parent Retained Assets
Schedule 1.01(g)	Specified Parent Retained Liabilities
Schedule 1.01(h)	Shared Contracts
Schedule 1.01(i)	SpinCo Equity Interests
Schedule 1.01(j)	SpinCo Assets
Schedule 1.01(k)	Specified SpinCo Assumed Liabilities
Schedule 1.01(l)	SpinCo Available Insurance Policies
Schedule 1.01(m)	SpinCo Real Property
Schedule 2.03(b)	Surviving Intercompany Agreements and Intercompany Accounts
Schedule 2.08	Adjustment Payment
Schedule 3.01(d)	Parent Credit Support Instruments
Schedule 3.02(d)	SpinCo Credit Support Instruments
Schedule 6.03(d)	Reimbursement Matters
Schedule 6.11(a)	SpinCo Directed Actions
Schedule 6.11(b)	Parent Directed Actions
Schedule 6.11(c)	Joint Actions
Schedule 7.04	Litigation Holds
Schedule 7.10	Conflict Waivers

 

iii 

 

 

SEPARATION AND DISTRIBUTION AGREEMENT, dated as of July 2, 2023, by and between BorgWarner Inc., a Delaware corporation (“Parent”), and PHINIA Inc., a Delaware corporation (“SpinCo”). Capitalized terms used and not otherwise defined herein shall have the respective meanings assigned to them in Article I.

 

R E C I T A L S

 

WHEREAS, the board of directors of Parent has determined that it is in the best interests of Parent and its stockholders to create a new publicly traded company that will operate the SpinCo Business;

 

WHEREAS, in furtherance of the foregoing, the board of directors of Parent has determined that it is appropriate and desirable to effect the Separation Transactions;

 

WHEREAS, (i) Parent (A) has effected or will effect certain restructuring transactions for purposes of aggregating the SpinCo Business in the Parent Group (the “Restructuring”) prior to the Distribution and in connection therewith (B) has contributed, conveyed, sold or otherwise transferred or will contribute, convey, sell or otherwise transfer (or has caused or will cause its Subsidiaries to contribute, convey, sell or otherwise transfer) the SpinCo Assets to SpinCo and the other members of the SpinCo Group in exchange for (1) the assumption by one or more members of the SpinCo Group of the SpinCo Liabilities, and (2) the actual or deemed issuance by SpinCo to Parent of SpinCo Common Stock (clause (B), collectively, the “Contribution”) and (ii) Parent will make the Distribution;

 

WHEREAS, SpinCo has been incorporated solely for these purposes and has not engaged in activities except in preparation for the Spin-Off;

 

WHEREAS, Parent and SpinCo have prepared, and SpinCo has filed with the Commission, the Form 10, which includes the Information Statement and sets forth certain disclosures concerning SpinCo and the Distribution;

 

WHEREAS, Parent and SpinCo intend that the External Contribution, together with the Distribution, qualifies as a transaction that is tax-free for U.S. federal income tax purposes under Sections 368(a)(1)(D), 361 and 355 of the Code and this Agreement, together with the other documents effecting the External Contribution and the Distribution is intended to constitute a plan of reorganization within the meaning of Treasury Regulation Section 1.368-2(g); and

 

WHEREAS, it is appropriate and desirable to set forth the principal transactions required to effect the Spin-Off and provide for certain other agreements that will govern certain matters relating to the Spin-Off and the relationship of Parent, SpinCo and their respective Subsidiaries following the Distribution.

 

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

 

1 

 

 

Article I 

 

DEFINITIONS

 

Section 1.01           Definitions.

 

For the purposes of this Agreement, the following terms shall have the following meanings:

 

“Action” means any claim, complaint, petition, hearing, charge, demand, action, suit, countersuit, arbitration, inquiry, audit, assessment, proceeding or investigation by or before any Governmental Authority, including any Government Investigation.

 

“Adversarial Action” means (i) an Action by one or more members of the Parent Group, on the one hand, against one or more members of the SpinCo Group, on the other hand, or (ii) an Action by one or more members of the SpinCo Group, on the one hand, against one or more members of the Parent Group, on the other hand.

 

“Affiliate” of any Person means a Person that controls, is controlled by or is under common control with such Person. As used herein, “control” of any entity means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such entity, whether through ownership of voting securities or other interests, by Contract or otherwise; provided, however, that, from and after the Distribution Date, (i) SpinCo and the other members of the SpinCo Group shall not be considered Affiliates of Parent or any of the other members of the Parent Group and (ii) Parent and the other members of the Parent Group shall not be considered Affiliates of SpinCo or any of the other members of the SpinCo Group.

 

“Agent” means the distribution agent appointed by Parent to distribute to the Record Holders, pursuant to the Distribution, the shares of SpinCo Common Stock held by Parent.

 

“Agreement” means this Separation and Distribution Agreement, including the Schedules hereto.

 

“Ancillary Agreements” means the Master Ancillary Agreements and any other instruments, assignments, documents and agreements executed or to be executed between one or more members of the Parent Group, on the one hand, and one or more members of the SpinCo Group, on the other hand, in each case in connection with the Restructuring and the implementation of the transactions contemplated by this Agreement (including any Real Estate Separation Document, any Local Transfer Agreement and any other agreement or instrument executed by one or more members of the Parent Group and one or more members of the SpinCo Group for the purpose of transferring or conveying Assets or Liabilities to effect the transactions contemplated hereby, but excluding any agreement entered into between one or more members of the Parent Group, on the one hand, and one or more members of the SpinCo Group, on the other, governing commercial relationships between the two Groups following the Distribution, including those listed on Schedule 1.01(a)).

 

“Asset Transfer Limitation” has the meaning set forth in the definition of “Consent Delayed Asset.”

 

2 

 

 

“Assets” means all assets, Contracts, properties and rights of every kind and nature (including goodwill), wherever located (including in the possession of vendors or other third parties or elsewhere), whether real, personal or mixed, tangible or intangible, or accrued or contingent, 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.

 

“Cash Adjustments” has the meaning set forth in Section 2.08.

 

“Cash Management Arrangements” means all cash management arrangements pursuant to which Parent or any of its Subsidiaries automatically or manually sweep cash from, or automatically or manually transfer cash to, accounts of SpinCo or any member of the SpinCo Group.

 

“Commission” means the U.S. Securities and Exchange Commission.

 

“Consent Delayed Asset” means an Asset, other than a Shared Contract, for which (a) Consent has not been obtained on or prior to the Distribution without which the sale, assignment, conveyance, transfer or delivery of the Asset as contemplated hereunder would be null and void or otherwise constitute a breach or other contravention (or for which the failure to obtain such consent in connection with a sale, assignment, conveyance, transfer or delivery of the Asset as contemplated hereunder would result in the loss of any claim, right or benefit arising out of or resulting from the Asset); (b) the sale, assignment, conveyance, transfer or delivery of the Asset as contemplated hereunder would be a violation of applicable Law; (c) an operational prerequisite to the receipt by the SpinCo Group or Parent Group of the Asset as contemplated hereunder has not been satisfied prior to the Distribution; or (d) the Asset cannot otherwise be sold, assigned, conveyed, transferred or delivered as contemplated hereby prior to the Distribution (each, such limitation on transferability described in clause (a), (b), (c) or (d) is referred to as a “Asset Transfer Limitation”).

 

“Consent Delayed Liability” means an Liability, other than a Shared Contract, (a) for which a Consent has not been obtained on or prior to the Distribution without which the assumption of a Liability contemplated hereunder would constitute a violation of Law or would render such assumption null and void or otherwise constitute a breach or other contravention, or (b) that relates to a Delayed Asset (each, such limitation on transferability described in clauses (a) or (b) is referred to as a “Liability Transfer Limitation”).

 

“Consents” means any consents, waivers, authorizations, ratifications, permissions, exemptions or approvals from or to any Person.

 

“Contract” means any oral or written contract, agreement or other legally binding instrument, including any note, bond, mortgage, deed, indenture, commitment, lease, sublease, license, sublicense or joint venture agreement.

 

“Contribution” has the meaning set forth in the Recitals hereof.

 

“Credit Support Instruments” has the meaning set forth in Section 3.01(a).

 

“Cross License Agreement” means the Intellectual Property Cross License Agreement to be entered into by and between Parent and members of the SpinCo Group prior to the Distribution Date in connection with the Separation Transactions.

 

3 

 

 

“Customary Offering Actions” means all actions by SpinCo that are requested by Parent to assist with respect to the consummation of the Distribution and any transactions in connection therewith, including: (i) participating in meetings, presentations and due diligence sessions, (ii) assisting with the preparation of materials for presentations, memoranda and similar documents required in connection with any such transactions, (iii) providing any financial information and other information about SpinCo and its Subsidiaries reasonably requested by Parent and (iv) authorizing and directing SpinCo’s auditors to provide customary cooperation, including comfort letters and authorization letters, in connection with any such transactions.

 

“D&O Policies” has the meaning set forth in Section 8.07.

 

“Delayed Asset” means each Consent Delayed Asset or U.S. Plan Delayed Asset.

 

“Delayed Liability” means each Consent Delayed Liability or U.S. Plan Delayed Liability.

 

“Distribution” means the distribution by Parent to the Record Holders, on a pro rata basis, of 100% of the outstanding shares of SpinCo Common Stock held by Parent.

 

“Distribution Date” means the date, determined by Parent in accordance with Section 5.03, on which the Distribution occurs.

 

“EHS Law” means any Law or Governmental Approvals relating to (i) pollution, or protection of the environment, natural resources or human health and safety, (ii) the transportation, treatment, storage or Release of, or exposure to, Hazardous Materials or (iii) the registration, manufacturing, sale, labeling, distribution, recycling or take back of Hazardous Materials or products containing any such materials, including the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA).

 

“EHS Liabilities” means all Liabilities relating to, arising out of or resulting from any applicable EHS Law or Governmental Approvals required or issued thereunder, including any Liabilities (including Remedial Actions, Third-Party Claims and contractual obligations) relating to, arising out of or resulting from any (i) compliance, or any actual or alleged non-compliance, with any EHS Law, (ii) any actual or alleged presence or Release of, or exposure to, Hazardous Materials in the environment, (iii) any actual or alleged personal injuries, property or natural resource damages, financial assurance obligations, or contractual obligations relating to any of the foregoing clauses (i) and (ii); and (iv) any Remedial Action or similar activities related to any of the foregoing clauses (i), (ii) and (iii).

 

“EMA” means the Employee Matters Agreement to be entered into by and between Parent and SpinCo prior to the Distribution Date in connection with the Separation Transactions.

 

“Exchange” means the New York Stock Exchange.

 

“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, together with the rules and regulations promulgated thereunder.

 

“Excluded Intercompany Accounts” has the meaning set forth in Section 2.03(b).

 

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“External Contribution” has the meaning set forth in the TMA.

 

“Final Determination” has the meaning set forth in the TMA.

 

“First Post-Distribution Report” has the meaning set forth in Section 11.12.

 

“Form 10” means the registration statement on Form 10 filed by SpinCo with the Commission to effect the registration of SpinCo Common Stock pursuant to the Exchange Act in connection with the Distribution, as such registration statement may be amended or supplemented from time to time.

 

“Former Business” means any corporation, partnership, entity, product line, division, business unit or business, including any business within the meaning of Rule 11-01(d) of Regulation S-X (in each case, including any assets and liabilities comprising the same), that has been sold, conveyed, assigned, transferred or otherwise disposed of or divested (in whole or in part) by a Person to a Person other than Parent or its Subsidiaries or the operations, activities or production of which has been discontinued, abandoned, completed or otherwise terminated (in whole or in part), in each case, prior to the Distribution Date.

 

“Former SpinCo Business” means the operations set forth on Schedule 1.01(b) and any Former Business that at the time of sale, conveyance, assignment, transfer, or other disposition or divestiture (in whole or in part) or discontinuation, abandonment, completion or termination (in whole or in part) of the operations, activities or production thereof was, as between the Parent Business and the SpinCo Business, primarily associated with the SpinCo Business or any portion thereof as then conducted.

 

“Government Investigation” means any inquiry, investigation, probe, audit or inspection conducted by a Governmental Authority.

 

“Governmental Approvals” means any notices, reports or other filings given to or made with, or any Consents, registrations or permits obtained from, any Governmental Authority.

 

“Governmental Authority” means any federal, state, local, foreign, international or multinational government, political subdivision, governmental, quasi-governmental authority of any nature (including any department, commission, board, bureau, agency, court or tribunal) or other body exercising legislative, judicial, regulatory, administrative or taxing authority, arbitral body or official of any of the foregoing.

 

“Group” means either the Parent Group or the SpinCo Group, or both, as the context requires.

 

“Hazardous Materials” means (i) any natural or artificial substance (whether solid, liquid, gas or other form of matter, whether alone or in combination) that could cause harm to human health or the environment and (ii) any other chemical, material, substance or waste that could result in Liability under, or that is prohibited, limited or regulated by or pursuant to, any EHS Law.

 

“Indemnifying Party” has the meaning set forth in Section 6.04(a).

 

“Indemnitee” has the meaning set forth in Section 6.04(a).

 

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“Indemnity Payment” has the meaning set forth in Section 6.04(a).

 

“Information” means information, whether or not patentable, copyrightable or protectable as a trade secret, in written, oral, electronic or other tangible or intangible forms, stored in any medium now known or yet to be created, including studies, reports, records, books, Contracts, instruments, surveys, analyses, discoveries, ideas, concepts, know-how, techniques, designs, specifications, drawings, blueprints, diagrams, models, prototypes, samples, flow charts, data, computer data, disks, diskettes, tapes, computer programs or other software, marketing or business plans, customer names or information, communications (including emails, text messages, IMs, and chats, including those by or to attorneys (whether or not subject to the attorney-client privilege)), memos and other materials (including those prepared by attorneys or under their direction (whether or not constituting attorney work product)) and other technical, financial, employee or business information or data, documents, correspondence, materials and files, in each case excluding any Intellectual Property rights therein.

 

“Information Statement” means the Information Statement sent by or on behalf of Parent to the holders of Parent Common Stock in connection with the Distribution, as such Information Statement may be amended from time to time.

 

“Insurance Proceeds” means those monies:

 

(a) received by an insured (or its successor-in-interest) from an insurance carrier;

 

(b) paid by an insurance carrier on behalf of the insured (or its successor-in-interest); or

 

(c) received (including by way of set-off) from any third party in the nature of insurance in respect of any Liability;

 

in any such case net of (i) any applicable premium adjustments (including reserves and retrospectively rated premium adjustments), (ii) any costs or expenses incurred in the collection thereof, (iii) any reimbursement obligations under “fronted” or similar insurance policies and (iv) any Taxes resulting from the receipt thereof.

 

“Intellectual Property” means, collectively, (i) patents, utility models and all applications, issuances, divisions, continuations, continuations-in-part, reissues, extensions, reexaminations, and renewals thereof; (ii) all marks, names, trade dress, whether registered or unregistered, and all applications, issuances, extensions, and renewals thereof, together with the goodwill of the business connected with the use of, and symbolized by the foregoing; (iii) copyright registrations and applications for registration, and all applications, issuances, extensions, and renewals thereof, including any unregistered copyrights in and to all works based upon, derived from, or incorporating such copyrights; (iv) trade secrets and proprietary confidential information; (v) domain names; and (vi) any and all claims and causes of action with respect to any of the foregoing, whether accruing before, on, or after the date hereof, including all rights to and claims for damages, restitution, and injunctive and other legal and equitable relief for past, present, and future infringement, dilution, misappropriation, violation, misuse, breach, or default, with the right but no obligation to sue for such legal and equitable relief and to collect, or otherwise recover, any such damages.

 

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“Intellectual Property Assignment Agreements” means the Intellectual Property Assignment Agreements, to be entered into by and between certain members of the Parent Group and certain members of the SpinCo Group prior to the Distribution Date in connection with the Separation Transactions.

 

“Intended Tax Treatment” has the meaning set forth in the TMA.

 

“Intercompany Accounts” has the meaning set forth in Section 2.03(a).

 

“Intercompany Agreements” has the meaning set forth in Section 2.03(a).

 

“Intercompany Deeds” means the deeds (or similar instruments) conveying a fee simple interest (or local equivalent) in real property, together with any applicable transfer Tax forms and other documents required under applicable Law, (i) delivered by a member of the Parent Group, as grantor, to a member of the SpinCo Group, as grantee, or (ii) delivered by a member of the SpinCo Group, as grantor, to a member of the Parent Group, as grantee, in each case of clauses (i) and (ii), in connection with the Separation Transactions or set forth on Schedule 1.01(c) under the caption “Intercompany Deeds.”

 

“Intercompany Leases” means the real property leases by and between (i) a member of the Parent Group, as lessor, and a member of the SpinCo Group, as lessee, or (ii) a member of the SpinCo Group, as lessor, and a member of the Parent Group, as lessee, in each case of clauses (i) and (ii), entered into in accordance with the Separation Transactions or set forth on Schedule 1.01(c) under the caption “Intercompany Leases.”

 

“Intercompany Subleases” means the real property subleases by and between (i) a member of the Parent Group, as sublessor, and a member of the SpinCo Group, as sublessee, and (ii) a member of the SpinCo Group, as sublessor, and a member of the Parent Group, as sublessee (if any), in each case of clauses (i) and (ii), entered into in accordance with the Separation Transactions or set forth on Schedule 1.01(c) under the caption “Intercompany Subleases.”

 

“Internal Investigation” means any inquiry, investigation, probe, audit or inspection conducted by a member of the Parent Group or the SpinCo Group.

 

“Joint Actions” has the meaning set forth in Section 6.11(c).

 

“Known Counsel” has the meaning set forth in Section 7.10.

 

“Law” means any statute, law, regulation, ordinance, rule, judgment, rule of common law, order, decree, Governmental Approval, concession, grant, franchise, license, directive, guideline, policy, requirement or other governmental restriction or any similar form of decision of, or determination by, or any interpretation or administration of any of the foregoing by, any Governmental Authority, whether now or hereinafter in effect.

 

“Lease Assignments” means the assignments of real property leases and subleases by and between (i) a member of the Parent Group, as assignor, and a member of the SpinCo Group, as assignee, or (ii) a member of the SpinCo Group, as assignor, and a member of the Parent Group, as assignee, in each case of clauses (i) and (ii) as set forth on Schedule 1.01(c) under the caption “Lease Assignments.”

 

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“Liabilities” means any and all claims, debts, demands, causes of action, suits, damages, fines, penalties, obligations, prohibitions, accruals, accounts payable, bonds, indemnities and similar obligations, agreements, promises, guarantees, make-whole agreements and similar obligations, and other liabilities, obligations or requirements of any kind or nature, in each case owed to or at the behest of a third party, including all contractual obligations, whether absolute or contingent, matured or unmatured, liquidated or unliquidated, accrued or unaccrued, known or unknown, whenever arising, and including those arising under any Law, Action, threatened or contemplated Action or any award of any arbitrator or mediator, and those arising under any Contract, including those arising under this Agreement or any Ancillary Agreement, 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 the applicable Person.

 

“Liability Transfer Limitation” has the meaning set forth in the definition of “Consent Delayed Liability.”

 

“Local I/C Settlement Period” has the meaning set forth in Section 2.03(c).

 

“Local Transfer Agreement” means any agreement entered into for the purpose of effecting the Separation Transactions in accordance with the Laws or customs of an applicable jurisdiction, including the Real Estate Separation Documents and those agreements set forth on Schedule 1.01(d), other than any Master Ancillary Agreement.

 

“Managing Party” has the meaning set forth in Section 6.11(c).

 

“Master Ancillary Agreements” means the TMA, the EMA, the Cross License Agreement, the Intellectual Property Assignment Agreement, the Trademark License Agreement and the TSA.

 

“Mixed Action” means any Action in respect of which an Indemnifying Party may be obligated to provide indemnification pursuant to this Agreement that involves both Parent Assets or Parent Liabilities, on the one hand, and SpinCo Assets or SpinCo Liabilities, on the other hand.

 

“Non-Managing Party” has the meaning set forth in Section 6.11(c).

 

“Parent” has the meaning set forth in the Preamble hereof.

 

“Parent Account” means any bank, brokerage or similar account owned by Parent or any other member of the Parent Group.

 

“Parent Assets” means (a) all Assets of the Parent Group or the SpinCo Group as of immediately prior to the Distribution other than the SpinCo Assets, (b) the Parent Retained Assets, (c) all interests in the capital stock of, or other equity interests in, the members of the Parent Group (other than Parent), (d) all rights related to the Parent Portion of any Shared Contract and (e) all Parent IP Assets.

 

“Parent Available Insurance Policies” means the insurance policies listed on Schedule 1.01(e).

 

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“Parent Business” means the businesses and operations as conducted immediately prior to the Distribution or as formerly conducted by Parent and its Subsidiaries other than the SpinCo Business, including any Former Business other than any Former SpinCo Business.

 

“Parent Common Stock” means the common stock, par value $0.01 per share, of Parent.

 

“Parent Credit Support Instruments” has the meaning set forth in Section 3.01(a).

 

“Parent Directed Actions” has the meaning set forth in Section 6.11(b)(i).

 

“Parent Disclosure Sections” means all information contained in or incorporated by reference into the Form 10 or Information Statement, or used in documents for an offering of securities in connection with the Spin-Off or for an offering of securities as contemplated by this Agreement, including an offering of SpinCo debt securities, to the extent relating to (a) the Parent Group, (b) the Parent Liabilities, (c) the Parent Assets or (d) the substantive disclosure set forth in such documents relating to Parent’s board of directors’ consideration of the Spin-Off, including the section of the Form 10 entitled “Reasons for the Spin-Off.”

 

“Parent EHS Liabilities” means any EHS Liability, whether occurring or arising prior to, on or after the Distribution Date, to the extent (a) relating to, arising out of or resulting from (i) any compliance or non-compliance with any EHS Law in connection with the operation of the Parent Business or any Parent Asset, (ii) any Release of any Hazardous Material at, on, under, from or to any real property constituting a Parent Asset, (iii) any Release, transportation, storage, disposal, treatment or recycling (or arrangement for such activities) of any Hazardous Material in connection with the operation of the Parent Business or (iv) any exposure to Hazardous Materials (including those contained in any products currently or formerly manufactured, sold, distributed or marketed) in connection with clauses (i) through (iii) or otherwise in connection with the operation of the Parent Business or any Parent Asset, (b) otherwise relating to, arising out of or resulting from the Parent Business or any Parent Asset or (c) otherwise listed or described on Schedule 1.01(g) under the caption “EHS Liabilities.”

 

“Parent Group” means Parent and each Subsidiary of Parent that is or was a Subsidiary of Parent at the time in respect of which the relevant determination is being made, but excluding any member of the SpinCo Group.

 

“Parent Indemnitees” has the meaning set forth in Section 6.02.

 

“Parent IP Assets” means any Intellectual Property owned by a member of the Parent Group after the completion of the assignments provided for in the Intellectual Property Assignment Agreements.

 

“Parent Liabilities” means, without duplication, the following Liabilities:

 

(a) all Liabilities of the Parent Group or the SpinCo Group to the extent relating to, arising out of or resulting from:

 

(i) the operation or conduct of the Parent Business as conducted at any time prior to the Distribution (including any such Liability to the extent relating to, arising out of or resulting from any act or failure to act by any director, officer, employee, agent or representative (whether or not such act or failure to act is or was within such Person’s authority), which act or failure to act relates to the Parent Business);

 

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

 

(iii) the Parent Assets;

 

(b) all Liabilities of the Parent Group, and all Liabilities of the SpinCo Group as of immediately prior to the Distribution, in each case for accounts payable (other than intercompany accounts payable between members of the Parent Group or any other Affiliate of Parent, including any member of the SpinCo Group, which are addressed in Section 2.03) to the extent relating to, arising out of or resulting from the Parent Business, and in each case other than any item otherwise covered by clause (c) of the definition of “SpinCo Liabilities”;

 

(c) all Parent Retained Liabilities;

 

(d) all Parent EHS Liabilities;

 

(e) any obligations to the extent relating to, arising out of or resulting from the Parent Portion of any Shared Contract; and

 

(f) all Liabilities to the extent relating to, arising out of or resulting from any untrue statement or alleged untrue statement of a material fact or omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading with respect to the Parent Disclosure Sections.

 

Notwithstanding the foregoing, the Parent Liabilities shall not include any SpinCo Liabilities.

 

“Parent Policy Pre-Separation Insurance Matters” means any (a) circumstance known by the SpinCo Group or the Parent Group or claim made against the SpinCo Group or the Parent Group and, in either case, reported to the applicable insurer(s) prior to the Distribution Date in respect of an act, omission or Liability occurring prior to the Distribution Date that results in a Liability under a “claims-made-based” or an “occurrence-reported-based” insurance policy of the Parent Group in effect prior to the Distribution Date or any extended reporting period thereof, (b) Action (whether made prior to, on or following the Distribution Date) in respect of any incident occurring prior to the Distribution Date under the Parent Available Insurance Policies in effect prior to the Distribution Date or (c) if and solely to the extent Parent so elects by written notice to SpinCo, claims made against the SpinCo Group after the Distribution Date in respect of an act, omission or Liability occurring prior to the Distribution Date that results in a Liability under the “claims-made-based” insurance policies of the Parent Group so elected by Parent, other than Parent Available Insurance Policies.

 

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“Parent Portion” has the meaning set forth in Section 2.04(a).

 

“Parent Retained Assets” means the Assets to be retained by the Parent Group as set forth on Schedule 1.01(f).

 

“Parent Retained Liabilities” means the Liabilities to be retained by the Parent Group as set forth on Schedule 1.01(g).

 

“Party” means either party hereto, and “Parties” means both parties hereto.

 

“Person” means an individual, a general or limited partnership, a corporation, an association, a trust, a joint venture, an unincorporated organization, a limited liability company, any other entity or any Governmental Authority.

 

“Post Spin Cash Adjustment Payment” has the meaning set forth in Section 2.08.

 

“Pre-Spin Cash Adjustment Payment” has the meaning set forth in Section 2.08.

 

“Real Estate Separation Documents” means the Intercompany Deeds, the Intercompany Leases, the Intercompany Subleases and the Lease Assignments.

 

“Real Property” means real property and real property interests and any fixtures or appurtenances associated therewith.

 

“Receiving Party” has the meaning set forth in Section 2.01(f)(i).

 

“Record Date” means the close of business on the date determined by Parent’s board of directors as the record date for determining the shares of Parent Common Stock in respect of which shares of SpinCo Common Stock will be distributed pursuant to the Distribution.

 

“Record Holders” has the meaning set forth in Section 5.01(b).

 

“Release” means any actual or threatened release, spill, emission, discharge, flow, leaking, pumping, pouring, dumping, injection, deposit, disposal, dispersal, leaching or migration into or through the indoor or outdoor environment.

 

“Remedial Action” means those corrective actions, removal, remediation or cleanup activities, investigation, monitoring or sampling measures, including institutional controls and environmental covenants, and operations, maintenance and monitoring actions, in each case, undertaken to investigate, inspect, monitor, remove, remedy, abate, contain, control, treat or ameliorate the presence of Hazardous Materials in the environment.

 

“Representation Letters” has the meaning set forth in the TMA.

 

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“Representative” has the meaning set forth in Section 7.09(a).

 

“Responsible Party” has the meaning set forth in Section 2.03(d)(iii).

 

“Restructuring” has the meaning set forth in the Recitals hereof.

 

“Security Interest” means any mortgage, security interest, pledge, lien, charge, claim, option, right to acquire, voting or other restriction, right-of-way, covenant, condition, easement, encroachment, restriction on transfer or other encumbrance of any nature whatsoever.

 

“Separation Transactions” means the Restructuring, the Contribution, the Distribution and the other transactions contemplated by this Agreement.

 

“Shared Contract” means any Contract of any member of either Group with a third party that relates in any material respect to both the SpinCo Business and the Parent Business, in each case that is set forth on Schedule 1.01(h).

 

“SpinCo” has the meaning set forth in the Preamble hereof.

 

“SpinCo Account” means any bank, brokerage or similar account owned by SpinCo or any other member of the SpinCo Group.

 

“SpinCo Assets” means, without duplication, the following Assets of the Parent Group or the SpinCo Group:

 

(a) all Assets that are provided by this Agreement or any Ancillary Agreement as Assets to be assigned to or retained by, or allocated to, any member of the SpinCo Group;

 

(b) all interests in the capital stock of, or other equity interests in, the members of the SpinCo Group (other than SpinCo) and all other equity, partnership, membership, joint venture and similar interests held by any member of the SpinCo Group or set forth on Schedule 1.01(i) under the captions “SpinCo Joint Venture Interests and Other Equity Interests,” or “Subsidiaries,” as applicable;

 

(c) all SpinCo Contracts;

 

(d) all rights related to the SpinCo Portion of any Shared Contract;

 

(e) all SpinCo Real Property;

 

(f) all SpinCo IP Assets;

 

(g) all inventory and accounts receivable (other than intercompany accounts receivable between members of the Parent Group or any other Affiliate of Parent, including any member of the SpinCo Group, which are addressed in Section 2.03) that relate exclusively to the SpinCo Business;

 

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(h) all Assets of Parent and its Subsidiaries that relate exclusively to the SpinCo Business, other than Real Property, Intellectual Property, Contracts, inventory and accounts receivable, joint venture interests or other equity interests (each of which is addressed above);

 

(i) all Assets of any member of the SpinCo Group formed in connection with the transactions contemplated by this Agreement and the Ancillary Agreements;

 

(j) all Assets listed or described on Schedule 1.01(j); and

 

(k) all claims or rights against any Person, all Actions, judgments or similar rights, all rights under express or implied warranties, all rights of recovery and all rights of set-off of any kind and demands of any nature, in each case whether accrued or contingent, whether in tort, contract or otherwise and whether arising by way of counterclaim or otherwise, in each case exclusively arising from the ownership of any SpinCo Asset.

 

Notwithstanding the foregoing, the SpinCo Assets shall not include: (i) any Parent Assets or (ii) any Intellectual Property other than SpinCo IP Assets.

 

“SpinCo Available Insurance Policies” means the insurance policies listed on Schedule 1.01(l).

 

“SpinCo Business” means the Fuel Systems and Aftermarket businesses and operations of Parent and its Subsidiaries, as such businesses and operations were conducted as of immediately prior to the Distribution or as formerly conducted by Parent and its Subsidiaries, including as described in the Information Statement, together with any Former SpinCo Businesses.

 

“SpinCo Common Stock” means the common stock, $0.01 par value per share, of SpinCo.

 

“SpinCo Contracts” means the following Contracts to which Parent or any of its Subsidiaries is a party or by which Parent or any of its Subsidiaries or any of their respective Assets is bound, whether or not in writing, in each case, immediately prior to the Distribution, except for any such Contract or part thereof that is expressly contemplated to be assigned to or retained by, or allocated to, any member of the Parent Group pursuant to any provision of this Agreement or any other Ancillary Agreement:

 

(a) any Contract that relates exclusively to the SpinCo Business, other than any joint venture agreement, Shared Contract or other Contract that constitutes a Parent Retained Asset;

 

(b) the SpinCo Joint Venture Agreements;

 

(c) any Contract listed or described on Schedule 1.01(j) under the caption “Contracts”; and

 

(d) any Contract or part thereof that is otherwise contemplated pursuant to this Agreement or any of the other Ancillary Agreements to be assigned to or retained by, or allocated to, any member of the SpinCo Group.

 

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“SpinCo Credit Support Instruments” has the meaning set forth in Section 3.02(a).

 

“SpinCo Directed Actions” has the meaning set forth in Section 6.11(a)(i).

 

“SpinCo EHS Liabilities” means any EHS Liability, whether occurring or arising prior to, on or after the Distribution Date, to the extent (a) relating to, arising out of or resulting from (i) any compliance or non-compliance with any EHS Law in connection with the operation of the SpinCo Business or any SpinCo Assets, (ii) any Release of any Hazardous Material at, on, under, from or to any SpinCo Real Properties, (iii) any Release, transportation, storage, disposal, treatment or recycling (or arrangement for such activities) of any Hazardous Material in connection with the operation of the SpinCo Business or (iv) any exposure to Hazardous Materials (including those contained in any products currently or formerly manufactured, sold, distributed or marketed) in connection with clauses (i) through (iii) or otherwise in connection with the operation of the SpinCo Business or any SpinCo Asset, (b) otherwise relating to, arising out of or resulting from the SpinCo Business or any SpinCo Asset or (c) otherwise listed or described on Schedule 1.01(k) under the caption “EHS Liabilities.” Notwithstanding the foregoing, any EHS Liability to the extent relating to, arising out of or resulting from any SpinCo Real Property (and that is not a Parent Retained Liability referenced on Schedule 1.01(g)) shall be a SpinCo EHS Liability and shall not be treated as a Parent EHS Liability.

 

“SpinCo Group” means (a) SpinCo and each Subsidiary of SpinCo that is or was a Subsidiary of SpinCo at the time in respect of which the relevant determination is being made and (b) each entity set forth on Schedule 1.01(i) under the caption “Subsidiaries,” each of which is contemplated to become a Subsidiary in connection with the Restructuring.

 

“SpinCo Indemnitees” has the meaning set forth in Section 6.03.

 

“SpinCo IP Assets” means any Intellectual Property owned by a member of the SpinCo Group after the completion of the assignments provided for in the Intellectual Property Assignment Agreements.

 

“SpinCo Joint Venture Agreements” means those Contracts governing the rights and obligations associated with the ownership of the SpinCo Joint Venture Interests.

 

“SpinCo Joint Venture Interests” means the joint venture interests and equity interests identified as SpinCo Joint Venture Interests on Schedule 1.01(i).

 

“SpinCo Liabilities” means, without duplication, the following Liabilities:

 

(a) all Liabilities that are provided by this Agreement or any Ancillary Agreement as Liabilities to be assumed or retained by, or allocated to, any member of the SpinCo Group;

 

(b) all Liabilities to the extent relating to, arising out of or resulting from:

 

(i) the operation or conduct of the SpinCo Business as conducted at any time prior to the Distribution (including any such Liability to the extent relating to, arising out of or resulting from any act or failure to act by any director, officer, employee, agent or representative (whether or not such act or failure to act is or was within such Person’s authority), which act or failure to act relates to the SpinCo Business);

 

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

 

(iii) the SpinCo Assets;

 

(c) all Liabilities of the Parent Group and all Liabilities of the SpinCo Group, in each case for accounts payable (other than intercompany accounts payable between members of the Parent Group or any other Affiliate of Parent, including any member of the SpinCo Group, which are addressed in Section 2.03) to the extent relating to, arising out of or resulting from the SpinCo Business;

 

(d) all SpinCo EHS Liabilities;

 

(e) any obligations to the extent arising from the SpinCo Portion of any Shared Contract;

 

(f) all Liabilities of any member of the SpinCo Group that is formed in connection with the transactions contemplated by this Agreement and the Ancillary Agreements;

 

(g) all Liabilities listed or described on Schedule 1.01(k); and

 

(h) all Liabilities to the extent relating to, arising out of or resulting from any untrue statement or alleged untrue statement of a material fact or omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, with respect to all information contained in or incorporated by reference into the Form 10 or the Information Statement and any other documents filed with the Commission or used in documents for an offering of securities in connection with the Spin-Off or an offering of securities as otherwise contemplated by this Agreement, including an offering of SpinCo debt securities, other than with respect to the Parent Disclosure Sections.

 

Notwithstanding the foregoing, the SpinCo Liabilities shall not include any Parent Retained Liabilities.

 

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“SpinCo Policy Pre-Separation Insurance Matters” means any (a) circumstance known by the SpinCo Group or the Parent Group or claim made against the SpinCo Group or the Parent Group and reported to the applicable insurer(s) prior to the Distribution Date in respect of an act, omission or Liability occurring prior to the Distribution Date that results in a Liability under a “claims-made-based” or an “occurrence-reported-based” insurance policy of the SpinCo Group in effect prior to the Distribution Date or any extended reporting period thereof or (b) Action (whether made prior to, on or following the Distribution Date) in respect of facts, circumstances, events or matters occurring prior to the Distribution Date under the SpinCo Available Insurance Policies in effect prior to the Distribution Date.

 

“SpinCo Portion” has the meaning set forth in Section 2.04(a).

 

“SpinCo Real Property” means the Real Property identified on Schedule 1.01(m).

 

“Spin-Off” means the Contribution and the Distribution, taken together.

 

“Stub Period Intercompany Accounts” means intercompany accounts payable or accounts receivable that (i) would meet the definition of “Intercompany Accounts” but for the fact that they were paid and received on July 1, July 2 or July 3, 2023 and (ii) if they would meet the definition of “Intercompany Accounts,” would not meet the criteria for an Excluded Intercompany Account in Section 2.03(b).

 

“Subsidiary” of any Person means any corporation or other organization, whether incorporated or unincorporated, of which at least a majority of the securities or interests having by the terms thereof ordinary voting power to elect at least a majority of the board of directors or others performing similar functions with respect to such corporation or other organization, is directly or indirectly owned or controlled by such Person or by any one or more of its Subsidiaries.

 

“Tax” or “Taxes” has the meaning set forth in the TMA.

 

“Tax Return” has the meaning set forth in the TMA.

 

“Third-Party Claim” means any written assertion or other commencement by a Person (including any Governmental Authority) who is not a member of the Parent Group or the SpinCo Group of any claim, demand, inquiry or investigation, or the commencement by any such Person of any Action, against any member of the Parent Group or the SpinCo Group.

 

“Third-Party Proceeds” has the meaning set forth in Section 6.04(a).

 

“TMA” means the Tax Matters Agreement to be entered into by and between Parent and SpinCo prior to the Distribution Date in connection with the Separation Transactions.

 

“Trade Secrets” means know-how, trade secrets, inventions, designs, manufacturing schematics, improvements, ideas, and other confidential or proprietary information, including inventions and invention disclosures (whether or not patentable), source code, algorithms, methods, processes, specifications, technical data, research and development information, business plans, product plans, product roadmaps, prototypes and customer, distributor, reseller and vendor lists, and any information that derives economic value from not being generally known, and any other information that would constitute a trade secret as defined in the Uniform Trade Secrets Act and under corresponding foreign statutory Law and common law.

 

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“Trademark License Agreement” means the Transitional Trademark Cross License Agreement to be entered into by and between Parent and a member of the SpinCo Group prior to the Distribution Date in connection with the Separation Transactions.

 

“Transfer Limitation” means an Asset Transfer Limitation or a Liability Transfer Limitation.

 

“Transferring Party” has the meaning set forth in Section 2.01(f).

 

“TSA” means the Transition Services Agreement to be entered into by and between Parent and SpinCo prior to the Distribution Date in connection with the Separation Transactions.

 

“U.S. Plan Delayed Assets” means the Assets related to U.S. non-qualified defined contribution benefit plans of Parent to be transferred to SpinCo’s Mirror Deferred Compensation Plans on January 1, 2024 pursuant to Section 5(b) of the EMA.

 

“U.S. Plan Delayed Liabilities” means the Liabilities related to U.S. non-qualified defined contribution benefit plans of Parent to be transferred to SpinCo’s Mirror Deferred Compensation Plans on January 1, 2024 pursuant to Section 5(b) of the EMA.

 

Article II

 

THE SEPARATION

 

Section 2.01           Transfer of Assets and Assumption of Liabilities.

 

(a)            Prior to the Distribution, to the extent not already completed, the Parties shall, and shall cause their respective Group members to, execute such instruments of assignment, transfer or conveyance and take such other corporate actions as are necessary to:

 

(i)            transfer and convey to one or more members of the SpinCo Group all of the right, title and interest of the Parent Group in, to and under all SpinCo Assets not already owned by the SpinCo Group;

 

(ii)           transfer and convey to one or more members of the Parent Group all of the right, title and interest of the SpinCo Group in, to and under all Parent Assets not already owned by the Parent Group;

 

(iii)          cause one or more members of the SpinCo Group to assume all of the SpinCo Liabilities to the extent such Liabilities would otherwise remain Liabilities of any member of the Parent Group; and

 

(iv)          cause one or more members of the Parent Group to assume all of the Parent Liabilities to the extent such Liabilities would otherwise remain Liabilities of any member of the SpinCo Group.

 

Notwithstanding anything to the contrary herein, neither Party shall be required to transfer any Information, except as required by Article VII or by any Ancillary Agreement, or any insurance policies (which are the subject of Article VIII).

 

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(b)           In the event that it is discovered after the Distribution that there was an omission of (i) the transfer or conveyance by SpinCo (or a member of the SpinCo Group) to, or the acceptance or assumption by, Parent (or a member of the Parent Group) of any Parent Asset or Parent Liability, as the case may be, or (ii) the transfer or conveyance by Parent (or a member of the Parent Group) to, or the acceptance or assumption by, SpinCo (or a member of the SpinCo Group) of any SpinCo Asset or SpinCo Liability, as the case may be, the Parties shall use commercially reasonable efforts to promptly effect such transfer, conveyance, acceptance or assumption of such Asset or Liability, as the case may be, for no consideration and subject to Section 2.05. Any transfer, conveyance, acceptance or assumption made pursuant to this Section 2.01(b) shall be treated by the Parties for all purposes as if it had occurred immediately prior to the Distribution, except as otherwise required by applicable Law or a Final Determination.

 

(c)            In the event that it is discovered after the Distribution that there was a transfer or conveyance (i) by SpinCo (or a member of the SpinCo Group) to, or the acceptance or assumption by, Parent (or a member of the Parent Group) of any SpinCo Asset or SpinCo Liability, as the case may be, or (ii) by Parent (or a member of the Parent Group) to, or the acceptance or assumption by, SpinCo (or a member of the SpinCo Group) of any Parent Asset or Parent Liability, as the case may be, the Parties shall use commercially reasonable efforts to promptly transfer or convey such Asset or Liability back to the transferring or conveying Party or to rescind any acceptance or assumption of such Asset or Liability, as the case may be, for no additional consideration and subject to Section 2.05. Any transfer or conveyance made or acceptance or assumption rescinded pursuant to this Section 2.01(c) shall be treated by the Parties for all purposes as if such Asset or Liability had never been originally transferred, conveyed, accepted or assumed, as the case may be, except as otherwise required by applicable Law or a Final Determination.

 

(d)           With respect to each Delayed Asset, the Parties agree, on behalf of themselves and the members of their respective Groups, that:

 

(i)            this Agreement shall not constitute an assignment, an attempted assignment or an agreement to sell, convey, assign, transfer or deliver such Delayed Asset at or prior to the Distribution;

 

(ii)           each member of the Parent Group and member of the SpinCo Group shall use commercially reasonable efforts to satisfy the applicable Asset Transfer Limitation, if any, to permit the sale, assignment, conveyance, transfer or delivery of such Delayed Asset as contemplated hereby;

 

(iii)          the Parent Group member or SpinCo Group member, as applicable, holding a Delayed Asset shall hold (and retain legal title to or, in the case of a Delayed Asset that is a Contract, continue to be party to) such Delayed Asset on behalf, or for the account, of the Party (or the member of such Party’s Group) entitled to receive such Delayed Asset hereunder and such Party shall have the economic benefits (including fees, proceeds and any claims and rights) associated with such Delayed Asset; and

 

(iv)          except as expressly provided in this Section 2.01(d), each Delayed Asset shall be treated as a SpinCo Asset or a Parent Asset, as applicable, for all purposes of this Agreement, including for purposes of the definitions of SpinCo Liabilities or Parent Liabilities, as applicable.

 

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(e)           With respect to each Delayed Liability, the Parties agree, on behalf of themselves and the members of their respective Groups, that:

 

(i)            this Agreement shall not constitute an assumption or an agreement to assume such Delayed Liability at or prior to the Distribution;

 

(ii)           each Parent Group member and SpinCo Group member shall use commercially reasonable efforts to satisfy the applicable Liability Transfer Limitation, if any, to permit the assumption of such Delayed Liability as contemplated hereby;

 

(iii)          the Party (or member of such Party’s Group) that is required to assume such Delayed Liability hereunder shall bear the economic burdens (including the obligation to perform and pay taxes on income) of such Delayed Liability and shall indemnify and hold harmless the other Party (and members of its Group) from and against any and all Liabilities to the extent relating to, arising out of or resulting from such Delayed Liability; and

 

(iv)          except as expressly provided in this Section 2.01(e), each Delayed Liability shall be treated as a SpinCo Liability or a Parent Liability, as applicable, for all purposes of this Agreement.

 

(f)            In furtherance of the foregoing, each Party (or the member of such Party’s Group) that holds or is subject to a Delayed Asset or Delayed Liability (in each case, the “Transferring Party”) shall following the Distribution (for so long as the applicable Asset or Liability remains a Delayed Asset or a Delayed Liability):

 

(i)            hold such Delayed Asset for the use and benefit of the Party (or member of such Party’s Group) otherwise entitled to receive such Delayed Asset (at the expense of such other Party or the applicable member of such other Party’s Group) or retain such Delayed Liability for the account of the Party (or the member of such Party’s Group) required to assume such Delayed Liability (at the expense of such Party) (the Party, or the member of such Party’s Group, entitled to receive such Asset or required to assume such Delayed Liability, the “Receiving Party”), and take such other actions (including enforcing rights in respect of such Delayed Asset against any third party (including any Governmental Authority) as requested by, and for the benefit and at the expense of, the Receiving Party) as may be reasonably requested by the Receiving Party, to place the Receiving Party, insofar as reasonably possible, in the same position as would have existed had such Delayed Asset or Delayed Liability been transferred, conveyed, accepted or assumed (as applicable) as and when contemplated by this Agreement, including in respect of possession, use, risk of loss, potential for gain and control over such Delayed Asset or Delayed Liability, as the case may be;

 

(ii)           not take any action with respect to the Delayed Assets or Delayed Liabilities, other than at the written direction or with the written consent of the Receiving Party or any of its Representatives acting on the Receiving Party’s behalf, including disposing of any or all of the Delayed Assets, exercising rights (including voting rights) with respect to the Delayed Assets or defending against claims in respect of or settling Delayed Liabilities, in each case, against which action or operation the Receiving Party shall fully indemnify and hold harmless the Transferring Party; provided, however, that the Receiving Party’s consent to any such action shall be deemed given if a request for consent is made in writing to the Receiving Party and no objection to such action in writing is received by the Transferring Party within 15 days after the request;

 

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(iii)          use its commercially reasonable efforts to provide the Receiving Party with such information and assistance as the Receiving Party may reasonably request to exercise its rights or perform its obligations with respect to the Delayed Assets and Delayed Liabilities; and

 

(iv)          not renew or extend the term of, increase any of its obligations under or transfer to a third Person (other than as contemplated hereby or in any Ancillary Agreement) or otherwise amend, modify or waive any rights under, any Contract constituting a Delayed Asset or any Liabilities hereunder that constitute Delayed Liabilities, other than at the written direction or with the prior written consent of the Receiving Party.

 

(g)           To the extent monies are received or paid by the Transferring Party with respect to any of the Delayed Assets or Delayed Liabilities, the Transferring Party shall (i) receive or pay such monies for the sole benefit of the Receiving Party, (ii) transmit to the Receiving Party all such monies received by it as promptly as practicable following receipt thereof and (iii) be compensated by the Receiving Party for all such monies paid by it, in each case of (i) and (ii), net of the Transferring Party’s expenses incurred in connection with the foregoing; provided that Parent may elect to have the obligations under this Section 2.01(g) satisfied through aggregated settlement or set-off payments between Parent and SpinCo or the members of their respective Groups.

 

(h)           Notwithstanding anything herein to the contrary, with respect to a Consent Delayed Asset, unless otherwise agreed to by the Transferring Party and the Receiving Party, upon written notice by the Receiving Party to the Transferring Party that any applicable Asset Transfer Limitations have been satisfied, such Consent Delayed Asset shall automatically be deemed sold, assigned, conveyed, transferred and delivered by the Transferring Party to the Receiving Party without further consideration as of the Distribution Date or such earlier date on which the benefits of such Consent Delayed Asset were intended to be transferred. On January 1, 2024, each U.S. Plan Delayed Asset shall automatically be deemed sold, assigned, conveyed, transferred and delivered by the Transferring Party to the Receiving Party without further consideration as of the Distribution Date. If an automatic sale, assignment, conveyance, transfer or delivery may not be effected under applicable Law, each of the Transferring Party and Receiving Party shall immediately take all such actions as are required to effect such assignment, conveyance, transfer or delivery of such Delayed Asset to the Receiving Party.

 

(i)             Notwithstanding anything herein to the contrary, with respect to a Consent Delayed Liability, unless otherwise agreed to by the Transferring Party and the Receiving Party, upon written notice by the Receiving Party to the Transferring Party that the applicable Liability Transfer Limitations have been satisfied, such Consent Delayed Liability shall automatically be deemed assumed by the Receiving Party as of the Distribution Date or such earlier date on which the burdens of such Consent Delayed Liability were intended to be assumed by the Receiving Party, and the Receiving Party shall automatically assume, undertake and agree to pay, satisfy, perform and discharge such Consent Delayed Liability without further consideration. On January 1, 2024, each U.S. Plan Delayed Liability shall automatically be deemed assumed by the Receiving Party as of the Distribution Date, and the Receiving Party shall automatically assume, undertake and agree to pay, satisfy, perform and discharge such U.S. Plan Delayed Liability without further consideration. If the automatic assumption of the Delayed Liability may not be effected under applicable Law, each of the Transferring Party and Receiving Party shall immediately take all such actions as are required to effect such assumption of such Delayed Liability by the Receiving Party.

 

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(j)             Notwithstanding anything herein to the contrary, neither Party nor their respective Groups shall be required to contribute capital, pay or grant any consideration or concession in any form (including providing any letter of credit, guaranty or other financial accommodation) to any Person to cause any Transfer Limitation to be satisfied (other than reasonable out-of-pocket expenses, attorneys’ fees and expenses and recording or similar fees of a third-party counterparty that are incurred in connection with satisfying the applicable Transfer Limitation, if any, in each case, if requested by such counterparty); provided, that each Party shall be responsible for its own reasonable out-of-pocket expenses and attorneys’ fees and expenses, and the Receiving Party entitled to such Asset or required to assume such Liability, as applicable, shall be responsible for recording or similar fees.

 

(k)            Any transfer, conveyance, acceptance or assumption made pursuant to Section 2.01(h) or Section 2.01(i) shall be treated by the Parties for all purposes of this Agreement as if it had occurred as of the Distribution or such earlier effective date as provided in an applicable Local Transfer Agreement, except as otherwise required by applicable Law.

 

(l)            Without limiting any other provision hereof, each of Parent and SpinCo will take, and will cause each member of its Group to take, such actions as are reasonably necessary to consummate the Restructuring (whether prior to, at or after the Distribution, as applicable). The manner in which the Restructuring will be implemented is solely at the discretion of Parent.

 

(m)           In the event that Parent determines to seek a novation or assignment and release with respect to any SpinCo Liability, SpinCo shall cooperate with, and shall cause the members of the SpinCo Group to cooperate with, Parent and the members of the Parent Group (including, where necessary, entering into appropriate instruments of assumption subject to Section 2.05 and, where necessary, SpinCo providing parent guarantees in support of the obligations of other members of the SpinCo Group) to cause such novation or assignment and release to be obtained, on terms reasonably acceptable to SpinCo, and to have Parent and the members of the Parent Group released from all liability to third parties, and in the event SpinCo determines to seek a novation or assignment and release with respect to any Parent Liability, Parent shall cooperate with, and shall cause the members of the Parent Group to cooperate with, SpinCo and the members of the SpinCo Group (including, where necessary, entering into appropriate instruments of assumption and, where necessary, Parent providing parent guarantees in support of the obligations of other members of the Parent Group) to cause such novation or assignment and release to be obtained, on terms reasonably acceptable to Parent, and to have SpinCo and the members of the SpinCo Group released from all liability to third parties; provided, that neither Party nor any member of its Group shall be required to contribute capital or pay or grant any consideration or concession in any form (including providing any letter of credit, guaranty or other financial accommodation, except as provided in this Section 2.01(m)) to any Person to cause such novation or assignment and release to be obtained (other than reasonable out-of-pocket expenses, attorneys’ fees and expenses and recording or similar fees of a third-party counterparty that are incurred in connection with the applicable novation or assignment and release, in each case, if requested by such counterparty); provided that each Party shall be responsible for its own reasonable out-of-pocket expenses and attorneys’ fees and expenses and the member of the Party’s Group entitled to such Asset or intended to assume such Liability shall be responsible for recording or similar fees.

 

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Section 2.02           Certain Matters Governed Exclusively by Ancillary Agreements. Each of Parent and SpinCo agrees on behalf of itself and the members of its Group that, except as explicitly provided in this Agreement or any Ancillary Agreement (including clause (a) of the definition of SpinCo Assets and clause (a) of the definition of SpinCo Liabilities), (a) the TMA shall exclusively govern all matters relating to Taxes between such parties (except to the extent that tax matters relating to employees and employee benefits-related matters are addressed in the EMA), (b) the EMA shall exclusively govern the allocation of employees and of Assets and Liabilities related to employee and employee compensation and benefits-related matters, including the outstanding awards (equity- and cash-based) under existing equity plans with respect to employees and former employees of members of both the Parent Group and the SpinCo Group (except to the extent that employee compensation and benefits-related reimbursements are addressed in the TSA), (c) the Intellectual Property Assignment Agreements shall exclusively govern the recordation of the transfers of any registrations or applications of Parent IP Assets and SpinCo IP Assets that is allocated hereunder, as applicable, (d) the Cross License Agreement and any other Ancillary Agreements containing provisions addressing the use or licensing of Intellectual Property shall exclusively govern the use and licensing of certain Intellectual Property identified therein between members of the Parent Group and members of the SpinCo Group, (e) the Trademark License Agreement shall exclusively govern all matters relating to the use and licensing of certain trademarks identified therein between members of the Parent Group and the SpinCo Group and (f) the TSA shall exclusively govern all matters relating to the provision of certain services identified therein to be provided by each Party to the other on a transitional basis following the Distribution. Except as set forth in the immediately preceding sentence in respect of matters governed exclusively by the Ancillary Agreements, in the event and to the extent that there shall be a conflict between the provisions of this Agreement and the provisions of any Ancillary Agreement, the provisions of this Agreement shall control (unless this Agreement or the Ancillary Agreement explicitly provides otherwise in respect of such conflict).

 

Section 2.03           Termination of Agreements.

 

(a)            Except as set forth in Section 2.03(b) or Section 2.03(c), in furtherance of the releases and other provisions of Section 6.01, effective as of the Distribution, any and all Contracts, arrangements, commitments and understandings, oral or written, between a member of the Parent Group, on the one hand, and a member of the SpinCo Group, on the other hand, that is in existence as of the Distribution Date (“Intercompany Agreements”), excluding all intercompany accounts payable or accounts receivable in effect or accrued thereunder as of the Distribution Date (“Intercompany Accounts”), shall be deemed terminated; provided, however, that if more than one member of any Party’s Group is party to an Intercompany Agreement, such Intercompany Agreement shall continue in full force and effect as between the members of such Group and shall be terminated only as between such Group members that are party thereto, on the one hand, and the members of the other Party’s Group that are party thereto, on the other hand. No such terminated Intercompany Agreement (including any provision thereof that purports to survive termination) shall be of any further force or effect after the Distribution Date. Each Party shall, at the reasonable request of the other Party, take, or cause to be taken, such other actions as may be necessary to effect the foregoing. The Parties, on behalf of the members of their respective Groups, hereby waive any advance notice provision or other termination requirements or conditions with respect to any Intercompany Agreement.

 

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(b)           The provisions of Section 2.03(a) shall not apply to any of the following Intercompany Agreements (or to any of the provisions thereof) and the provisions of Section 2.03(c) shall not apply to any of the following Intercompany Agreements or Intercompany Accounts (“Excluded Intercompany Accounts”) (or to any of the provisions thereof): (i) this Agreement and the Ancillary Agreements (and each other Intercompany Agreement or Intercompany Account contemplated by this Agreement or any Ancillary Agreement to be entered into by either Party or any other member of its Group, including any Real Estate Separation Document and any Local Transfer Agreement, or created by any Ancillary Agreement); (ii) any Intercompany Agreements to which any third party is a party, including any Shared Contracts; (iii) any other Intercompany Agreements or Intercompany Accounts created by any Ancillary Agreement or that this Agreement, any Ancillary Agreement or such Intercompany Agreement expressly contemplates will survive the Distribution Date; (iv) any Intercompany Agreement entered into in connection with the transactions contemplated hereby for the purpose of surviving the Distribution and governing commercial matters between Parent Group and the SpinCo Group following the Distribution; and (v) those Intercompany Agreements and Intercompany Accounts set forth on Schedule 2.03(b).

 

(c)            Any Intercompany Accounts shall be settled as they become due in accordance with their terms in effect prior to the Distribution Date; provided that any Intercompany Accounts that are not settled before August 31, 2023 shall become due and be settled on August 31, 2023. On September 15, 2023, (i) to the extent that, during the period from July 1 to August 31, 2023 (the “Local I/C Settlement Period”), the aggregate amount received by members of the Parent Group with respect to Intercompany Accounts and Stub Period Intercompany Accounts exceeds the aggregate amount paid by the Parent Group with respect to Intercompany Accounts and Stub Period Intercompany Accounts, Parent shall pay SpinCo the amount of such excess, and (ii) to the extent that, during the Local I/C Settlement Period, the aggregate amount received by members of the SpinCo Group with respect to Intercompany Accounts and Stub Period Intercompany Accounts exceeds the aggregate amount paid by the SpinCo Group with respect to Intercompany Accounts and Stub Period Intercompany Accounts, SpinCo shall pay Parent the amount of such excess.

 

(d)           With regard to cash accounts, checks and receipts:

 

(i)            Parent and SpinCo shall take, or cause the respective members of their respective Groups to take, prior to the Distribution (or as promptly as reasonably practicable thereafter), all actions necessary to amend all contracts or agreements governing (x) the Parent Accounts so that such Parent Accounts, if linked (whether by automatic withdrawal, automatic deposit or any other authorization to transfer funds from or to, hereinafter “linked”) to any SpinCo Account, are de-linked from such SpinCo Accounts and (y) the SpinCo Accounts so that such SpinCo Accounts, if linked to any Parent Account, are de-linked from such Parent Accounts.

 

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(ii)           With respect to any outstanding checks issued by, or payments made by, Parent, SpinCo or any of their respective Subsidiaries prior to the Distribution, such outstanding checks shall be honored from and after the Distribution by the Person or Group owning the account on which the check is drawn, without limiting the ultimate allocation of Liability for such amounts under this Agreement or any Ancillary Agreement.

 

(iii)          Except to the extent prohibited by applicable Law or a Final Determination and except as set forth in Section 2.01, the Parties contemplate that, from time to time after the date hereof, a member of the Parent Group or of the SpinCo Group, as applicable, as a convenience to a member of the SpinCo Group or of the Parent Group, as applicable (the “Responsible Party”), may make certain payments that are properly the responsibility of the Responsible Party (whether pursuant to this Agreement or otherwise). Similarly, from time to time after the date hereof, a member of the Parent Group or the SpinCo Group, as applicable, may receive from third parties certain payments to which a member of the SpinCo Group or of the Parent Group, as applicable, is.

 

(iv)          Each of Parent and SpinCo shall, and shall cause each of its Subsidiaries to, take all necessary actions to remove each of SpinCo and SpinCo’s Subsidiaries from all Cash Management Arrangements to which it is a party, in each case prior to the close of business on the business day immediately prior to the Distribution Date.

 

Section 2.04           Shared Contracts.

 

(a)            The Parties shall, and shall cause the members of their respective Groups to, use their respective commercially reasonable efforts to work together in an effort to divide, partially assign, modify or replicate (in whole or in part) the respective rights and obligations under and in respect of any Shared Contract such that (i) a member of the SpinCo Group is the beneficiary of the rights and is responsible for the obligations related to that portion of such Shared Contract relating to the SpinCo Business (the “SpinCo Portion”), which rights shall be a SpinCo Asset and which obligations shall be a SpinCo Liability, and (ii) a member of the Parent Group is the beneficiary of the rights and is responsible for the obligations related to such Shared Contract not relating to the SpinCo Business (the “Parent Portion”), which rights shall be a Parent Asset and which obligations shall be a Parent Liability. Nothing in this Agreement shall require the division, partial assignment, modification or replication of a Shared Contract unless and until any necessary Consents are obtained or made, as applicable. If the Parties, or their respective Group members, as applicable, are not able to enter into an arrangement to formally divide, partially assign, modify or replicate such Shared Contract prior to the Distribution as contemplated by the immediately preceding sentence, and subject to the other provisions of this Section 2.04, then the Parties shall, and shall cause their respective Group members to, cooperate in any reasonable and permissible arrangement as determined by Parent to provide that, following the Distribution, a member of the SpinCo Group shall receive the interest in the benefits and obligations of the SpinCo Portion under such Shared Contract and a member of the Parent Group shall receive the interest in the benefits and obligations of the Parent Portion under such Shared Contract, it being understood that no Party shall have Liability to the other Party for the failure of any third party to perform its obligations under any such Shared Contract.

 

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(b)           Nothing in this Section 2.04 shall require either Party or any member of its Group to contribute capital or pay or grant any consideration or concession in any form (including providing any letter of credit, guaranty or other financial accommodation) to any Person (other than reasonable out-of-pocket expenses, attorneys’ fees and expenses and recording or similar fees of a third-party counterparty to a Shared Contract that are incurred in connection with the applicable division, partial assignment, modification or replication of such Shared Contract, in each case, if requested by such counterparty); provided that each Party shall be responsible for its own reasonable out-of-pocket expenses and attorneys’ fees and expenses and the member of the Party’s Group entitled to such Asset or intended to assume such Liability shall be responsible for recording or similar fees. For the avoidance of doubt, reasonable out-of-pocket expenses and recording or similar fees shall not include any purchase price, license fee, or other payment or compensation for the procurement of any asset secured to replace an Asset in the course of a Party’s obligation under Section 2.04(a).

 

Section 2.05           Disclaimer of Representations and Warranties. Each of Parent (on behalf of itself and each other member of the Parent Group) and SpinCo (on behalf of itself and each other member of the SpinCo Group) understands and agrees that, except as expressly set forth in this Agreement, any Ancillary Agreement or the Representation Letters, no party to this Agreement, any Ancillary Agreement or any other agreement or document contemplated by this Agreement or any Ancillary Agreement is representing or warranting in any way as to any Assets or Liabilities transferred or assumed as contemplated hereby or thereby, as to the sufficiency of the Assets or Liabilities transferred, conveyed, accepted or assumed hereby or thereby for the conduct and operations of the SpinCo Business or the Parent Business, as applicable, as to any notices, Governmental Approvals or other Consents required in connection therewith or in connection with any past transfers of the Assets or assumptions of the Liabilities, as to the value or freedom from any Security Interests of, or any other matter concerning, any Assets or Liabilities of such party, or as to the absence of any defenses or rights of set-off or freedom from counterclaim with respect to any claim or other Asset, including any accounts receivable, of any such party, or as to the legal sufficiency of any assignment, document or instrument delivered hereunder to convey title to any Asset or thing of value upon the execution, delivery and filing hereof or thereof, and each of Parent (on behalf of itself and each other member of the Parent Group) and SpinCo (on behalf of itself and each other member of the SpinCo Group) has relied only on the representations and warranties expressly contained in Section 11.01(c), in any Ancillary Agreement or the Representation Letters. Except as may expressly be set forth herein or in any Ancillary Agreement, any such Assets are being transferred on an “as is,” “where is,” “with all faults” basis, and the respective transferees shall bear the economic and legal risks that (a) any conveyance shall prove to be insufficient to vest in the transferee good and marketable title, free and clear of any Security Interest and (b) any necessary notices, Governmental Approvals or other Consents are not delivered or obtained, as applicable, or that any requirements of Laws or judgments are not complied with. To the extent any Local Transfer Agreement or any instrument, assignment, document or agreement described in Section 2.01 includes representations, warranties, covenants, indemnities or other provisions inconsistent with the purpose of this Section 2.05, each of SpinCo, on behalf of itself and the SpinCo Group, and Parent, on behalf of itself and the Parent Group, hereby waives and agrees not to enforce such provisions.

 

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Section 2.06           Waiver of Bulk-Sale and Bulk-Transfer Laws. SpinCo hereby waives compliance by each and every member of the Parent Group with the requirements and provisions of any “bulk-sale” or “bulk-transfer” Laws of any jurisdiction that may otherwise be applicable with respect to the transfer or sale of any or all of the SpinCo Assets to any member of the SpinCo Group. Parent hereby waives compliance by each and every member of the SpinCo Group with the requirements and provisions of any “bulk-sale” or “bulk-transfer” Laws of any jurisdiction that may otherwise be applicable with respect to the transfer or sale of any or all of the Parent Assets to any member of the Parent Group.

 

Section 2.07           Wrong Pockets. (a) To the extent monies are received by a member of the Parent Group following the Distribution that are due to a member of the SpinCo Group, Parent shall transmit, or cause the applicable member of the Parent Group to transmit, to the appropriate member of the SpinCo Group all such monies received by it as promptly as practicable following receipt thereof, and (b) to the extent monies are received by a member of the SpinCo Group following the Distribution that are due to a member of the Parent Group, SpinCo shall transmit, or cause the applicable member of the SpinCo Group to transmit, to the appropriate member of the Parent Group all such monies received by it as promptly as practicable following receipt thereof; provided that Parent may elect to have the obligations under this Section 2.07 satisfied through aggregated settlement or set-off payments between Parent and SpinCo or the members of their respective Groups.

 

Section 2.08           Adjustment Payment. Parent has delivered, or shall deliver prior to the Distribution, to SpinCo a calculation of the amount of a cash adjustment payment to be paid by Parent to SpinCo or by SpinCo to Parent (the “Pre-Spin Cash Adjustment Payment”) prior to the Distribution based on estimated amounts of the following adjustments (such adjustments, collectively, the “Cash Adjustments”): (a) the SpinCo Businesses’ capital expenditures during 2023 prior to the Distribution Date compared to budgeted amounts of such capital expenditures, (b) certain changes in working capital of SpinCo, (c) financing fees, discounts, ratings agency fees and other debt issuance costs in respect of any indebtedness incurred by SpinCo but paid by Parent in connection with the Spin-Off and (d) the remaining face amount as of the Distribution Date of Delphi Technologies 5.000% Senior Notes due 2025 that will be payable by a member of the SpinCo Group, in each case calculated as set forth in Schedule 2.08. No later than 40 days following the Distribution Date, Parent shall deliver to SpinCo a calculation of the amount of a cash adjustment payment to be paid by Parent to SpinCo or by SpinCo to Parent (the “Post-Spin Cash Adjustment Payment”) based on Parent’s calculation of the differences between the estimated and actual amounts of the Cash Adjustments, in each case calculated as set forth in Schedule 2.08. Within five business days of the Parent’s delivery of its calculation of the Adjustment Payment, SpinCo or Parent, as applicable, shall transmit to the other party the Adjustment Payment, provided that Parent may elect by written notice to SpinCo to have the payment obligation under this Section 2.08 satisfied through set-off against amounts otherwise payable pursuant to this Agreement or the Ancillary Agreements. During the 40 days following the Distribution Date, SpinCo shall provide Parent access to SpinCo’s accounting records and systems to the extent reasonably necessary for Parent’s calculation of the Adjustment Payment. Parent’s determination of the Adjustment Payment shall be made by Parent in its sole and absolute discretion; provided that, for the avoidance of doubt, this sentence shall not amend the express terms of any other sentence of this Section 2.08.

 

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Article III

CREDIT SUPPORT

Section 3.01           Replacement of Parent Credit Support.

(a)           SpinCo shall use commercially reasonable efforts to arrange, at its sole cost and expense and effective as soon as reasonably practicable after the date hereof and in any event within 90 days after the Distribution Date, the termination or replacement of all guarantees, bank provided guarantees, covenants, indemnities, surety bonds, letters of credit or similar assurances of credit support (“Credit Support Instruments”) provided by, through or on behalf of any member of the Parent Group for the benefit of any member of the SpinCo Group or providing credit support for a SpinCo Contract (“Parent Credit Support Instruments”), with alternate arrangements that do not require any Credit Support Instruments or other credit support from any member of the Parent Group. SpinCo shall use commercially reasonable efforts to obtain from the beneficiaries of such Credit Support Instruments full written releases providing that such member of the Parent Group, as well as all related members of the Parent Group liable, directly or indirectly, for obligations to a counterparty in connection with such Credit Support Instruments, will have no liability with respect to such Parent Credit Support Instruments. Such alternative arrangements and releases shall, in each case, be in form and substance reasonably satisfactory to Parent. Notwithstanding the foregoing, if any Parent Credit Support Instrument has not been terminated or replaced, or for which release from such Parent Credit Support Instrument pursuant to this Section 3.01(a) has not been obtained within 90 days after the Distribution Date, SpinCo shall continue to use commercially reasonable efforts to arrange, at its sole cost and expense and effective as soon as practicable thereafter, the termination, replacement or assumption (with full release) of such Parent Credit Support Instruments.

(b)           In furtherance of Section 3.01(a), to the extent required to obtain the termination or replacement of a removal or release from a Parent Credit Support Instrument, SpinCo or an appropriate member of the SpinCo Group shall execute an agreement substantially in the form of such existing Parent Credit Support Instrument or such other form as is agreed to by the relevant parties to such agreement, except to the extent that such existing Parent Credit Support Instrument contains representations, covenants or other terms or provisions (i) with which SpinCo or the appropriate member of the SpinCo Group would be reasonably unable to comply or (ii) which would be reasonably expected to be breached by SpinCo or the appropriate member of the SpinCo Group.

(c)           For any Parent Credit Support Instrument that has not been terminated or replaced, or for which releases from such Parent Credit Support Instrument pursuant to Section 3.01(a) and Section 3.01(b) have not been obtained, (i) without limiting SpinCo’s obligations under Article VI, SpinCo shall, from and after the Distribution, (x) pay directly to the guarantor, obligor or surety issuing such Parent Credit Support Instrument any and all losses incurred in connection with such Parent Credit Support Instrument promptly following receipt by a member of the Parent Group of a written demand in respect of such Parent Credit Support Instrument, (y) where a member of the Parent Group is required to pay such losses directly to the counterparty, advance such loss amounts to Parent (or, at Parent’s election, another member of the Parent Group) prior to such member of the Parent Group’s requirement to pay and (z) indemnify, defend and hold harmless each member of the Parent Group against, and reimburse such member of the Parent Group for, all Liabilities, fees, costs and any other amounts paid by such member of the Parent Group in connection with such Parent Credit Support Instrument, including any premiums due under such Parent Credit Support Instrument and any amounts such member of the Parent Group is obligated to pay the guarantor, obligor, surety issuing such Parent Credit Support Instrument whether or not such Parent Credit Support Instrument is drawn upon or required to be performed, (ii) with respect to any such Parent Credit Support Instrument that is in the form of a letter of credit, surety bond or bank guarantee, SpinCo shall provide the applicable member(s) of the Parent Group with letters of credit or guarantees, in each case issued by a bank reasonably acceptable to Parent, against losses arising from such Parent Credit Support Instrument or, if Parent agrees in writing, cash collateralize the full amount of such Parent Credit Support Instrument with respect to which such release has not been obtained and (iii) except as set forth on Schedule 3.01(d), with respect to such Parent Credit Support Instrument, each of Parent and SpinCo, on behalf of themselves and the members of each of their respective Groups, agrees, except as otherwise expressly required by the terms of a Contract with a third party in effect as of the Distribution, not to renew or extend the term of (or, in the case of instruments subject to automatic renewal, fail to take such actions as are authorized under such instrument to prevent such automatic renewal), increase any of its obligations under or directly or indirectly transfer (in whole or in part) to a third Person, any loan, guarantee, lease, sublease, license, Contract or other obligation for which the other Party or any member of the other Party’s Group is or may be liable under such Parent Credit Support Instrument unless all obligations of the other Party and the other members of the other Party’s Group with respect thereto are thereupon terminated with a full release by documentation reasonably satisfactory in form and substance to the other Party.

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(d)           Notwithstanding anything to the contrary in this Section 3.01, the Parent Credit Support Instruments listed on Schedule 3.01(d) shall be addressed in the manner provided on such Schedule 3.01(d).

Section 3.02           Replacement of SpinCo Credit Support.

(a)           Parent shall use commercially reasonable efforts to arrange, at its sole cost and expense and effective prior to the Distribution Date, the termination or replacement of all Credit Support Instruments provided by, through or on behalf of any member of the SpinCo Group for the benefit of any member of the Parent Group or providing credit support for a Contract of Parent or its Subsidiary other than a SpinCo Contract (“SpinCo Credit Support Instruments”), with alternate arrangements that do not require any Credit Support Instruments or other credit support from any member of the SpinCo Group. Parent shall use commercially reasonable efforts to obtain from the beneficiaries of such Credit Support Instruments full written releases providing that such member of the SpinCo Group, as well as all related members of the SpinCo Group liable, directly or indirectly, for obligations to a counterparty in connection with such Credit Support Instruments will have no liability with respect to such SpinCo Credit Support Instruments. Such alternative arrangements and releases shall, in each case, be in form and substance reasonably satisfactory to SpinCo. Notwithstanding the foregoing, if any SpinCo Credit Support Instrument has not been terminated or replaced, or for which release from such SpinCo Credit Support Instrument pursuant to this Section 3.02(a) has not been obtained prior to the Distribution Date, Parent shall continue to use commercially reasonable efforts to arrange, at its sole cost and expense and effective as soon as practicable thereafter, the termination, replacement or assumption (with full release) of such SpinCo Credit Support Instruments.

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(b)           In furtherance of Section 3.02(a), to the extent required to obtain the termination or replacement of a removal or release from a SpinCo Credit Support Instrument, Parent or an appropriate member of the Parent Group shall execute an agreement substantially in the form of such existing SpinCo Credit Support Instrument or such other form as is agreed to by the relevant parties to such agreement, except to the extent that such existing SpinCo Credit Support Instrument contains representations, covenants or other terms or provisions (i) with which Parent or the appropriate member of the Parent Group would be reasonably unable to comply or (ii) which would be reasonably expected to be breached by Parent or the appropriate member of the Parent Group.

(c)           For any SpinCo Credit Support Instrument that has not been terminated or replaced, or for which releases from such SpinCo Credit Support Instrument pursuant to Section 3.02(a) and Section 3.02(b) have not been obtained, (i) without limiting Parent’s obligations under Article VI, Parent shall, from and after the Distribution, (x) pay directly to the guarantor, obligor or surety issuing such SpinCo Credit Support Instrument any and all losses incurred in connection with such SpinCo Credit Support Instrument promptly following receipt by a member of the SpinCo Group of a written demand in respect of such SpinCo Credit Support Instrument, (y) where a member of the SpinCo Group is required to pay such losses directly to the counterparty, advance such loss amounts to SpinCo (or, at SpinCo’s election, another member of the SpinCo Group) prior to such member of the SpinCo Group’s requirement to pay and (z) indemnify, defend and hold harmless each member of the SpinCo Group against, and reimburse such member of the SpinCo Group for, all Liabilities, fees, costs and any other amounts paid by such member of the SpinCo Group in connection with such SpinCo Credit Support Instrument, including any premiums due under such SpinCo Credit Support Instrument and any amounts such member of the SpinCo Group is obligated to pay the guarantor, obligor, surety issuing such SpinCo Credit Support Instrument whether or not such SpinCo Credit Support Instrument is drawn upon or required to be performed, (ii) with respect to any such SpinCo Credit Support Instrument that is in the form of a letter of credit, surety bond or bank guarantee, Parent shall provide the applicable member(s) of the SpinCo Group with letters of credit or guarantees, in each case issued by a bank reasonably acceptable to SpinCo, against losses arising from such SpinCo Credit Support Instrument or, if SpinCo agrees in writing, cash collateralize the full amount of such SpinCo Credit Support Instrument with respect to which such release has not been obtained and (iii) except as set forth on Schedule 3.02(d), with respect to such SpinCo Credit Support Instrument, each of Parent and SpinCo, on behalf of themselves and the members of each of their respective Groups, agrees, except as otherwise expressly required by the terms of a Contract with a third party in effect as of the Distribution, not to renew or extend the term of (or, in the case of instruments subject to automatic renewal, fail to take such actions as are authorized under such instrument to prevent such automatic renewal), increase any of its obligations under or directly or indirectly transfer (in whole or in part) to a third Person, any loan, guarantee, lease, sublease, license, Contract or other obligation for which the other Party or any member of the other Party’s Group is or may be liable under such SpinCo Credit Support Instrument unless all obligations of the other Party and the other members of the other Party’s Group with respect thereto are thereupon terminated with a full release by documentation reasonably satisfactory in form and substance to the other Party.

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(d)           Notwithstanding anything to the contrary in this Section 3.02, the SpinCo Credit Support Instruments listed on Schedule 3.02(d) shall be addressed in the manner provided on such Schedule 3.02(d).

Article IV

ACTIONS PENDING THE DISTRIBUTION

Section 4.01           Actions Prior to the Distribution.

(a)           Subject to the conditions specified in Section 4.02 and subject to Section 5.03, Parent and SpinCo shall use reasonable best efforts to consummate the Distribution. Such efforts shall include taking the actions specified in this Section 4.01.

(b)           Prior to the Distribution, Parent shall mail the Notice of Internet Availability of the Information Statement or the Information Statement to the Record Holders.

(c)           SpinCo shall prepare, file with the Commission and use its reasonable best efforts to cause to become effective any registration statements or amendments thereto required to effect the establishment of, or amendments to, any employee benefit and other plans necessary or appropriate in connection with the transactions contemplated by this Agreement or any of the Ancillary Agreements.

(d)           Parent and SpinCo shall take all such action as may be necessary or appropriate under the securities or blue sky laws of the states or other political subdivisions of the United States or of other foreign jurisdictions in connection with the Distribution.

(e)           SpinCo shall prepare and file, and shall use reasonable best efforts to have approved prior to the Distribution, an application for the listing of the SpinCo Common Stock to be distributed in the Distribution on the Exchange, subject to official notice of distribution.

(f)            Prior to the Distribution, Parent, in its capacity as sole stockholder of SpinCo, shall have duly elected to the SpinCo board of directors the individuals listed as members of the SpinCo board of directors in the Information Statement, and such individuals shall be the members of the SpinCo board of directors effective as of immediately after the Distribution; provided, however, that, to the extent required by any Law or requirement of the Exchange or any other national securities exchange, as applicable, one independent director shall be appointed by the existing board of directors of SpinCo prior to the date on which “when-issued” trading of the SpinCo Common Stock begins on the Exchange and begin his or her term prior to the Distribution and shall serve on SpinCo’s Audit Committee, Compensation Committee and Corporate Governance Committee.

(g)           Prior to the Distribution, Parent shall deliver or cause to be delivered to SpinCo resignations, effective as of immediately prior to the Distribution, of each individual who will be an employee of any member of the Parent Group after the Distribution and who is an officer or director of any member of the SpinCo Group immediately prior to the Distribution (or shall otherwise cause such individuals to be removed as officers or directors, as applicable, of such SpinCo Group members).

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(h)           Immediately prior to the Distribution, the Amended and Restated Certificate of Incorporation and the Amended and Restated By-laws of SpinCo, each in substantially the form filed as an exhibit to the Form 10, shall be in effect.

(i)            Parent and SpinCo shall, subject to Section 5.03, take all reasonable steps necessary and appropriate to cause the conditions set forth in Section 4.02 to be satisfied and to effect the Distribution on the Distribution Date.

Section 4.02           Conditions Precedent to Consummation of the Distribution. Subject to Section 5.03, as soon as practicable after the date of this Agreement, the Parties shall use reasonable best efforts to satisfy the following conditions prior to the consummation of the Distribution. The obligations of the Parties to consummate the Distribution shall be conditioned on the satisfaction, or waiver by Parent, of the following conditions:

(a)           The board of directors of Parent shall have ratified, authorized and approved the Contribution and Distribution and not withdrawn such authorization and approval and shall have declared the dividend of SpinCo Common Stock to Parent stockholders.

(b)           Each Master Ancillary Agreement shall have been executed by each party to such agreement.

(c)           The SpinCo Common Stock shall have been accepted for listing on the Exchange or another national securities exchange approved by Parent, subject to official notice of issuance.

(d)           The Commission shall have declared effective the Form 10, no stop order suspending the effectiveness of the Form 10 shall be in effect and no proceedings for that purpose shall be pending before or threatened by the Commission.

(e)           Parent shall have received the written opinion of Ernst & Young LLP, which shall remain in full force and effect that, subject to the accuracy of and compliance with the relevant Representation Letters, the External Contribution, together with the Distribution will qualify for its Intended Tax Treatment.

(f)            The Separation Transactions shall have been completed to the satisfaction of Parent (other than those steps that are expressly contemplated to occur at or after the Distribution).

(g)           No order, injunction or decree issued by any Governmental Authority of competent jurisdiction or other applicable legal restraint or prohibition preventing the consummation of the Distribution shall be in effect, and no other event outside the control of Parent shall have occurred, or failed to occur, that prevents the consummation of the Distribution.

(h)           No other events or developments shall have occurred prior to the Distribution that, in the judgment of the board of directors of Parent, in its sole and absolute discretion, makes it inadvisable to effect the Distribution or any other Separation Transaction.

(i)            Each Party shall have completed all information and consultations processes with works councils and other employee representative bodies required in connection with the Separation Transactions under applicable Law or Contract.

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(j)            The actions set forth in Section 4.01(b), (f), (g) and (h) shall have been completed.

The foregoing conditions are for the sole benefit of Parent and shall not give rise to or create any duty on the part of Parent or the Parent board of directors to waive, or not waive, such conditions or in any way limit the right of Parent to terminate this Agreement as set forth in Article X or alter the consequences of any such termination from those specified in such Article. Any determination made by the Parent board of directors prior to the Distribution concerning the satisfaction or waiver of any or all of the conditions set forth in this Section 4.02 shall be conclusive.

Article V

THE DISTRIBUTION

Section 5.01           The Distribution.

(a)           SpinCo shall cooperate with Parent to accomplish the Distribution and shall, at the direction of Parent, use its reasonable best efforts to promptly take any and all actions reasonably necessary, customary or advisable to effect the Distribution, including any Customary Offering Actions. Parent shall select any investment bank or manager in connection with the Distribution, as well as any financial printer, solicitation, exchange or distribution agent and financial, legal, accounting, tax and other advisors for Parent in connection with the Distribution. Parent or SpinCo, as the case may be, will provide, or cause the applicable member of its Group to provide, to the Agent all share certificates and any information required to complete the Distribution (provided that any information required to be provided under this Section 5.01(a) shall be subject to Section 7.09).

(b)           Subject to the terms and conditions set forth in this Agreement, (i) after completion of the Separation Transactions (other than those steps that are expressly contemplated to occur at or after the Distribution) and on or prior to the Distribution Date, for the benefit of and distribution to the holders of Parent Common Stock as of the Record Date (“Record Holders”), Parent will deliver to the Agent 100% of the issued and outstanding shares of SpinCo Common Stock held by Parent and book-entry authorizations for such shares and (ii) on the Distribution Date, Parent shall instruct the Agent to distribute, by means of a pro rata dividend based on the aggregate number of shares of Parent Common Stock held by each applicable Record Holder, to each Record Holder (or such Record Holder’s bank or brokerage firm on such Record Holder’s behalf) electronically, by direct registration in book-entry form, the number of shares of SpinCo Common Stock to which such Record Holder is entitled based on a distribution ratio determined by Parent in its sole discretion. The Distribution shall be effective at 5:00 p.m.  New York City time on the Distribution Date. Parent shall, on or as soon as practicable after the Distribution Date, instruct the Agent to mail to each Record Holder (or otherwise transmit in accordance with the Agent’s regular practices) an account statement indicating the number of shares of SpinCo Common Stock that have been registered in book-entry form in the name of such Record Holder.

Section 5.02           Fractional Shares. Record Holders holding a number of shares of Parent Common Stock on the Record Date that would entitle such holders to receive less than one whole share of SpinCo Common Stock in the Distribution will receive cash in lieu of such fractional share. Fractional shares of SpinCo Common Stock will not be distributed in the Distribution nor credited to book-entry accounts. Parent shall cause the Agent to, as soon as practicable after the Distribution Date, (a) determine the number of whole shares and fractional shares of SpinCo Common Stock allocable to each Record Holder and (b) aggregate all fractional shares into whole shares and sell the whole shares obtained thereby in open market transactions at then prevailing trading prices on behalf of holders who would otherwise be entitled to fractional share interests. Parent shall cause the Agent to, as soon as practicable after the Distribution Date, distribute to each such holder, or for the benefit of each beneficial owner, such holder’s or owner’s ratable share of the net proceeds of such sale, based upon the average gross selling price per share of SpinCo Common Stock after making appropriate deductions for any amount required to be withheld under applicable Tax Law and less any brokers’ charges, commissions or transfer Taxes. The Agent, in its sole discretion, will determine the timing and method of selling such fractional shares, the selling price of such fractional shares and the broker-dealer through which such fractional shares will be sold; provided, however, that the designated broker-dealer shall not be an Affiliate of Parent or SpinCo. Neither Parent nor SpinCo will pay any interest on the proceeds from the sale of fractional shares.

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Section 5.03           Sole Discretion of Parent. Parent shall, in its sole and absolute discretion, determine the Record Date, the Distribution Date and all terms of the Distribution, including the form, structure and terms of any transactions to effect the Distribution and the timing of and conditions to the consummation thereof. In addition, and notwithstanding anything to the contrary set forth below, Parent may at any time and from time to time until the consummation of all or part of the Distribution decide to abandon the Distribution or modify or change the form, structure or terms of any transactions to effect the Distribution, including by accelerating or delaying the timing of the consummation of all or part of the Distribution. Any determinations regarding the allocation of Assets or Liabilities under this Agreement or under any Ancillary Agreement, including the identification of Assets or Liabilities for allocation hereunder or thereunder, shall be made by Parent in its sole and absolute discretion; provided that, for the avoidance of doubt, this sentence shall not amend the express terms of the Agreement or any Ancillary Agreement after the Distribution Date.

Article VI

MUTUAL RELEASES; INDEMNIFICATION

Section 6.01           Release of Pre-Distribution Claims.

(a)           Except as provided in Section 6.01(c) or elsewhere in this Agreement or the Ancillary Agreements, effective as of the Distribution, SpinCo does hereby, for itself and each other member of the SpinCo Group as of the Distribution (including, for the avoidance of doubt, any member of the SpinCo Group the equity interests of which constitute Consent Delayed Assets), their respective Affiliates as of the Distribution, and to the extent it may legally do so, its and their successors and assigns, and all Persons who at any time on or prior to the Distribution have been stockholders, fiduciaries, directors, trustees, counsel, officers, members, managers, employees, agents, insurers, re-insurers, administrators, representatives, including legal representatives, or employee retirement or benefit plans (and the trustees, administrators, fiduciaries, agents, representatives, insurers and re-insurers of such plans) of any member of the SpinCo Group (in each case, in their respective capacities as such), remise, release and forever discharge Parent and the other members of the Parent Group, their respective Affiliates, successors and assigns, and all Persons who at any time on or prior to the Distribution have been stockholders, fiduciaries, directors, trustees, counsel, officers, members, managers, employees, agents, insurers, re-insurers, administrators, representatives, including legal representatives, or employee retirement or benefit plans (and the trustees, administrators, fiduciaries, agents, representatives, insurers and re-insurers of such plans) of any member of the Parent Group (in each case, in their respective capacities as such), and their respective heirs, executors, administrators, successors and assigns, from any and all Liabilities whatsoever, whether at Law or in equity (including any right of contribution), whether arising under any Contract, by operation of Law or otherwise, existing or arising from any acts or events occurring, or failing to occur, or alleged to have occurred, or to have failed to occur, or any conditions existing or alleged to have existed on or before the Distribution, including in connection with the Spin-Off and all other activities to implement the Spin-Off.

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(b)           Except as provided in Section 6.01(c) or elsewhere in this Agreement or the Ancillary Agreements, effective as of the Distribution, Parent does hereby, for itself and each other member of the Parent Group as of the Distribution, their respective Affiliates as of the Distribution, and to the extent it may legally do so, its and their successors and assigns, and all Persons who at any time on or prior to the Distribution have been stockholders, fiduciaries, directors, trustees, counsel, officers, employees, agents, insurers, re-insurers, administrators, representatives, including legal representatives, or employee retirement or benefit plans (and the trustees, administrators, fiduciaries, agents, representatives, insurers and re-insurers of such plans) of any member of the Parent Group (in each case, in their respective capacities as such), remise, release and forever discharge SpinCo, the other members of the SpinCo Group, their respective Affiliates, successors and assigns, and all Persons who at any time on or prior to the Distribution have been stockholders, fiduciaries, directors, trustees, counsel, officers, employees, agents, insurers, re-insurers, administrators, representatives, including legal representatives, or employee retirement or benefit plans (and the trustees, administrators, fiduciaries, agents, representatives, insurers and re-insurers of such plans) of any member of the SpinCo Group (in each case, in their respective capacities as such), and their respective heirs, executors, administrators, successors and assigns, from any and all Liabilities whatsoever, whether at Law or in equity (including any right of contribution), whether arising under any Contract, by operation of Law or otherwise, existing or arising from any acts or events occurring, or failing to occur, or alleged to have occurred, or to have failed to occur, or any conditions existing, or alleged to have existed, on or before the Distribution, including in connection with the Spin-Off and all other activities to implement the Spin-Off.

(c)           Nothing contained in Section 6.01(a) or (b) shall impair any right of any Person to enforce this Agreement, any Ancillary Agreement, any Intercompany Account or any Intercompany Agreement that is specified in Section 2.03(b) not to terminate as of the Distribution, in each case in accordance with its terms. Nothing contained in Section 6.01(a) or (b) shall release:

(i)            any Person from any Liability provided in or resulting from any Contract among any members of the Parent Group or the SpinCo Group that is specified in Section 2.03(b) as not to terminate as of the Distribution, or any other Liability specified in such Section 2.03(b) as not to terminate as of the Distribution;

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(ii)           any Person from any Liability, contingent or otherwise, assumed, transferred, assigned or allocated to the Group of which such Person is a member in accordance with, or any other Liability of any member of any Group under, this Agreement or any Ancillary Agreement;

(iii)          any Person from any Liability provided in or resulting from any other Contract that is entered into after the Distribution between one Party (or a member of such Party’s Group), on the one hand, and the other Party (or a member of such Party’s Group), on the other hand;

(iv)         any Person from any Liability that the Parties may have with respect to indemnification or contribution pursuant to this Agreement or any Ancillary Agreement for claims brought against the Parties, the members of their respective Groups or any of their respective directors, officers, employees, agents or representatives, by third Persons, which Liability shall be governed by Section 6.02, Section 6.03 and the other applicable provisions of this Article VI or, if applicable, the appropriate provisions of the relevant Ancillary Agreement;

(v)          any Party (or any member of its Group) from any Liability that such Party (or any member of its Group) may have to directors, officers, agents or employees under indemnification or similar agreements or arrangements, including under such Party’s by-laws; it being understood that, if the underlying obligation giving rise to such Liability is a SpinCo Liability, then SpinCo shall indemnify Parent for such Liability (including Parent’s costs to indemnify any such director, officer, agent or employee) in accordance with the provisions set forth in this Article VI; or

(vi)         any employee from any Liability relating to, arising out of or resulting from such Person’s fraud, embezzlement or misappropriation of Intellectual Property.

(d)           SpinCo shall not make, and shall cause each other member of the SpinCo Group not to make, any claim or demand, or commence any Action asserting any claim or demand, including any claim of contribution or any indemnification, against Parent or any other member of the Parent Group, or any other Person released pursuant to Section 6.01(a), with respect to any Liabilities released pursuant to Section 6.01(a). Parent shall not make, and shall cause each other member of the Parent Group not to make, any claim or demand, or commence any Action asserting any claim or demand, including any claim of contribution or any indemnification against SpinCo or any other member of the SpinCo Group, or any other Person released pursuant to Section 6.01(b), with respect to any Liabilities released pursuant to Section 6.01(b).

(e)           It is the intent of each of Parent and SpinCo, by virtue of the provisions of this Section 6.01, 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 Distribution Date, between or among SpinCo or any other member of the SpinCo Group, on the one hand, and Parent or any other member of the Parent 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 Distribution Date), except as expressly set forth in Section 6.01, Section 6.02, Section 6.03 or elsewhere in this Agreement or in any Ancillary Agreement. At any time, at the request of the other Party, each Party shall cause each member of its respective Group to execute and deliver releases reflecting the provisions hereof.

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Section 6.02           Indemnification by SpinCo. Subject to Section 6.04, SpinCo shall indemnify, defend and hold harmless Parent, each other member of the Parent Group and each of their respective former and then-current directors, officers and employees, and each of the heirs, executors, administrators, successors and assigns of any of the foregoing (collectively, the “Parent Indemnitees”), from and against any and all Liabilities of the Parent Indemnitees to the extent relating to, arising out of or resulting from any of the following items (without duplication):

(a)           the SpinCo Liabilities, including the failure of SpinCo or any other member of the SpinCo Group or any other Person to pay, perform or otherwise promptly discharge any SpinCo Liability in accordance with its terms;

(b)           any breach by SpinCo or any other member of the SpinCo Group of this Agreement, or any Ancillary Agreement, unless such Ancillary Agreement expressly provides for separate indemnification therein (which shall be controlling); and

(c)           any breach by SpinCo of any of the representations and warranties made by SpinCo on behalf of itself and the members of the SpinCo Group in Section 11.01(c) or in the Representation Letters.

Section 6.03           Indemnification by Parent. Subject to Section 6.04, Parent shall indemnify, defend and hold harmless SpinCo, each other member of the SpinCo Group and each of their respective former and then-current directors, officers and employees, and each of the heirs, executors, administrators, successors and assigns of any of the foregoing (collectively, the “SpinCo Indemnitees”), from and against any and all Liabilities of the SpinCo Indemnitees to the extent relating to, arising out of or resulting from any of the following items (without duplication):

(a)           the Parent Liabilities, including the failure of Parent or any other member of the Parent Group, or any other Person, to pay, perform or otherwise promptly discharge any Parent Liability in accordance with its terms;

(b)           any breach by Parent or any other member of the Parent Group of this Agreement or any Ancillary Agreement unless such Ancillary Agreement expressly provides for separate indemnification therein (which shall be controlling);

(c)           any breach by Parent of any of the representations and warranties made by Parent on behalf of itself and the members of the Parent Group in Section 11.01(c); and

(d)           any matters set forth on Schedule 6.03(d), as and to the extent set forth therein.

Section 6.04           Indemnification Obligations Net of Insurance Proceeds and Third-Party Proceeds.

(a)           The Parties intend that any Liability subject to indemnification or reimbursement pursuant to this Agreement will be net of (i) Insurance Proceeds that actually reduce the amount of, or are paid to the applicable Indemnitee in respect of, such Liability and (ii) other amounts recovered from any third party (net of any out-of-pocket costs or expenses incurred in, or Taxes imposed with respect to, the collection thereof) that actually reduce the amount of, or are paid to the applicable Indemnitee in respect of, such Liability (“Third-Party Proceeds”). Accordingly, the amount that either Party (an “Indemnifying Party”) is required to pay to any Person entitled to indemnification or reimbursement pursuant to this Agreement (an “Indemnitee”) will be reduced by any Insurance Proceeds or Third-Party Proceeds theretofore actually recovered by or on behalf of the Indemnitee from a third party in respect of the related Liability. If an Indemnitee receives a payment required by this Agreement from an Indemnifying Party in respect of any Liability (an “Indemnity Payment”) and subsequently receives Insurance Proceeds or Third-Party Proceeds in respect of such Liability, then the Indemnitee will pay to the Indemnifying Party an amount equal to the excess of the Indemnity Payment received over the amount of the Indemnity Payment that would have been due if such Insurance Proceeds or Third-Party Proceeds had been received, realized or recovered before the Indemnity Payment was made; provided, that for the avoidance of doubt, such amount shall not exceed the amount of the Indemnity Payment.

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(b)           An insurer that would otherwise be obligated to pay any claim shall not be relieved of the responsibility with respect thereto or have any subrogation rights with respect thereto by virtue of the indemnification provisions hereof, it being expressly understood and agreed that no insurer or any other third party shall be entitled to a “windfall” (i.e., a benefit it would not be entitled to receive in the absence of the indemnification provisions) by virtue of the indemnification provisions hereof. Subject to Section 6.10, each member of the Parent Group and SpinCo Group shall use commercially reasonable efforts to collect or recover any Insurance Proceeds and any Third-Party Proceeds to which such Person is entitled in connection with any Liability for which such Person seeks indemnification pursuant to this Article VI; provided, however, that such Person’s inability to collect or recover any such Insurance Proceeds or Third-Party Proceeds shall not limit the Indemnifying Party’s obligations hereunder.

(c)           The calculation of any Indemnity Payments required by this Agreement shall be subject to Section 5.2(c) of the TMA.

Section 6.05           Procedures for Indemnification of Third-Party Claims.

(a)           If an Indemnitee shall receive notice or otherwise learn of a Third-Party Claim with respect to which an Indemnifying Party may be obligated to provide indemnification to such Indemnitee pursuant to this Agreement (including Article III), such Indemnitee shall give such Indemnifying Party written notice thereof as soon as reasonably practicable. Any such notice shall describe the Third-Party Claim in reasonable detail and shall include: (i) the basis for, and nature of, such Third-Party Claim, including the facts constituting the basis for such Third-Party Claim; (ii) the estimated amount of losses (to the extent so estimable) that have been or may be sustained by the Indemnitee in connection with such Third-Party Claim; and (iii) copies of all notices and documents (including court papers) received by the Indemnitee relating to the Third-Party Claim; provided, however, that any such notice need only specify such information reasonably known to the Indemnitee as of the date of such notice and shall not limit or prejudice any of the rights or remedies of any Indemnitee on the basis of any limitations on the information included in such notice, including any such limitations made in good faith to preserve the attorney-client privilege, work product doctrine or any other similar privilege or doctrine. Notwithstanding the foregoing, the failure of any Indemnitee or other Person to give notice as provided in this Section 6.05(a) shall not relieve the related Indemnifying Party of its obligations under this Article VI, except to the extent that such Indemnifying Party is actually prejudiced by such failure to give notice in accordance with this Section 6.05(a).

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(b)           The Indemnifying Party shall have the right, exercisable by written notice to the Indemnitee within 30 days after receipt of notice from an Indemnitee in accordance with Section 6.05(a), to assume and conduct the defense of such Third-Party Claim in accordance with the limits set forth in this Agreement with counsel selected by the Indemnifying Party and reasonably acceptable to the Indemnitee; provided, however, that (x) SpinCo shall not be entitled to control the defense of any Third-Party Claim in respect of a Mixed Action (and, for the avoidance of doubt, Parent shall control any such defense), (y) the Indemnifying Party shall not have the right to control the defense of any Third-Party Claim (i) to the extent such Third-Party Claim seeks criminal penalties or injunctive or other equitable relief or (ii) if the Party to this Agreement which is part of such Indemnitee’s Group has determined in good faith that the Indemnifying Party controlling such defense would reasonably be expected to have a material adverse impact on the reputation or the business relations of the Indemnitee or its Group, and (z) if the Party to this Agreement which is part of such Indemnitee’s Group determines in good faith that the proper defense of the Third-Party Claim requires that the election to assume the defense of such claim be made in fewer than 30 days, the Indemnitee may request that such election be made in such shorter period as the Indemnitee may reasonably determine; provided that such shorter period may not be shorter than 10 days. The Indemnifying Party shall notify the Indemnitee in writing within the time period described in the immediately preceding sentence as to whether or not it will assume the defense of the applicable Third-Party Claim. During such notice period, and prior to an election by the Indemnifying Party to control the defense of the applicable Third-Party Claim, the Indemnitee shall be permitted to take such actions in respect of such Third-Party Claim as the Indemnitee determines in good faith are necessary or appropriate to avoid prejudice to the Indemnitee’s interests in respect of such Third-Party Claim during such notice period, provided that the Indemnitee will consult reasonably and in good faith with the Indemnifying Party in respect of such actions in advance of taking such actions to the extent possible.

(c)           If the Indemnifying Party elects not to assume the defense of a Third-Party Claim (or is not permitted to assume the defense of such Third-Party Claim) in accordance with this Agreement, or fails to notify an Indemnitee of its election as provided in Section 6.05(b), such Indemnitee may defend such Third-Party Claim with counsel selected by the Indemnitee and reasonably acceptable to the Indemnifying Party. If the Indemnifying Party elects (and is permitted) to assume the defense of a Third-Party Claim in accordance with the terms of this Agreement, the Indemnitee shall, subject to the terms of this Agreement, reasonably cooperate with the Indemnifying Party with respect to the defense of such Third-Party Claim.

(d)           If the Indemnifying Party elects (and is permitted) to assume the defense of a Third-Party Claim in accordance with the terms of this Agreement, the Indemnifying Party will not be liable for any additional legal expenses subsequently incurred by the Indemnitee in connection with the defense of the Third-Party Claim; provided, however, that if the Indemnifying Party fails to take reasonable steps necessary to defend diligently such Third-Party Claim, or the nature of such Third-Party Claim changes such that the Indemnifying Party would no longer be entitled to assume the defense of such Third-Party Claim pursuant to Section 6.05(b), the Indemnitee may assume its own defense, and the Indemnifying Party will be liable for all reasonable and documented costs or expenses paid or incurred in connection with such defense. The Indemnifying Party or the Indemnitee, as the case may be, shall have the right to participate in (but, subject to the immediately preceding sentence, not control), at its own expense, the defense of any Third-Party Claim that the other is defending as provided in this Agreement. In the event, however, that such Indemnitee reasonably determines that representation by counsel to the Indemnifying Party of both such Indemnifying Party and the Indemnitee could reasonably be expected to present such counsel with a conflict of interest, then the Indemnitee may employ separate counsel to represent or defend it in any such Action and the Indemnifying Party will pay the reasonable and documented fees and expenses of such counsel.

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(e)           No Indemnifying Party shall consent to entry of any judgment or enter into any settlement of any Third-Party Claim with respect to which an Indemnifying Party is obligated to provide indemnification to an Indemnitee pursuant to this Agreement (including Article III) without the prior written consent of the applicable Indemnitee or Indemnitees (not to be unreasonably withheld, conditioned or delayed); provided, however, that such consent shall not be required if the judgment or settlement: (i) contains no finding or admission of liability with respect to any such Indemnitee or Indemnitees; (ii) involves only monetary relief which the Indemnifying Party has agreed to pay; and (iii) includes a full and unconditional release of the Indemnitee or Indemnitees. Notwithstanding the foregoing, the consent of an Indemnitee shall be required for any entry of judgment or settlement if the effect thereof is to permit any injunction, declaratory judgment, other order or other non-monetary relief to be entered, directly or indirectly, against such Indemnitee (such consent not to be unreasonably withheld, conditioned or delayed).

(f)            Whether or not the Indemnifying Party assumes the defense of a Third-Party Claim, no Indemnitee shall admit any liability with respect to, or settle, compromise, resolve or discharge, such Third-Party Claim without the Indemnifying Party’s prior written consent (such consent not to be unreasonably withheld, conditioned or delayed).

Section 6.06           Additional Matters.

(a)           Any claim on account of a Liability that does not result from a Third-Party Claim shall be asserted by prompt written notice given by the Indemnitee to the applicable Indemnifying Party. Any failure by an Indemnitee to give notice shall not relieve the Indemnifying Party’s indemnification obligations under this Agreement, except to the extent that the Indemnifying Party shall have been actually prejudiced by such failure.

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

(c)           For the avoidance of doubt, Liabilities incurred by an Indemnitee pursuant to a contractual indemnification or similar obligation granted to a third party in respect of Liabilities otherwise indemnifiable under Section 6.02 or Section 6.03 shall be indemnifiable thereunder to the same extent that the underlying Liabilities would have been indemnifiable under Section 6.02 or Section 6.03.

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(d)           To the maximum extent permitted by applicable Law, the rights to recovery of each Party’s Subsidiaries in respect of any past, present or future Action are hereby delegated to such Party. It is the intent of the Parties that the foregoing delegation shall satisfy any Law requiring such delegation to be effected pursuant to a power of attorney or similar instrument. The Parties and their respective Subsidiaries shall execute such further instruments or documents as may be necessary to effect such delegation.

(e)           With respect to any Third-Party Claim or Action pending as of the Distribution Date or commenced following the Distribution Date, in each case that (x) has named as a defendant one or more members of the SpinCo Group but otherwise relates only to the Parent Business or (y) has named as a defendant one or more members of the Parent Group but otherwise relates only to the SpinCo Business, the Parties shall use commercially reasonable efforts, each at its own expense, to cause each such nominal defendant to be removed as a defendant from such Third-Party Claim or Action, as soon as reasonably practicable (including using commercially reasonable efforts to petition the applicable court or counterparty to remove each such nominal defendant).

Section 6.07           Remedies Cumulative. The remedies provided in this Article VI shall be cumulative and, subject to the provisions of Section 6.01, Section 6.10 and Article XI, shall not preclude assertion by any Indemnitee of any other rights or the seeking of any and all other remedies against any Indemnifying Party.

Section 6.08           Covenant Not to Sue. Each Party hereby covenants and agrees that none of it, the members of such Party’s Group or any Person claiming through it shall bring an Action or otherwise assert any claim or defense against any Person, including before any court, arbitrator, mediator or administrative agency anywhere in the world, and further (on behalf of itself, the members of such Party’s Group, and any other Person claiming through it) waives and releases any claim or defense against any Person, alleging that: (a) the assumption or retention of any SpinCo Liabilities by SpinCo or a member of the SpinCo Group on the terms and conditions set forth in this Agreement or the Ancillary Agreements is unlawful, a breach of a fiduciary or other duty, void, unenforceable, unconscionable, inequitable, or otherwise improper for any reason; (b) the assumption or retention of any Parent Liabilities by Parent or a member of the Parent Group on the terms and conditions set forth in this Agreement or the Ancillary Agreements is unlawful, a breach of a fiduciary or other duty, void, unenforceable, unconscionable, inequitable, or otherwise improper for any reason; (c) the provisions of this Agreement (including this Article VI) or any Ancillary Agreement are unlawful, a breach of a fiduciary or other duty, void, unenforceable, unconscionable, inequitable, or otherwise improper for any reason; or (d) any member of the Parent Group owes fiduciary duties to any member of the SpinCo Group or any equity holder of such member in his, her or its capacity as such with respect to this Agreement, any Ancillary Agreement, any transaction contemplated hereby or thereby or any agreement entered into in connection herewith or therewith.

Section 6.09           Survival of Indemnities. The rights and obligations of each of Parent and SpinCo and their respective Indemnitees under this Article VI shall survive the sale or other transfer by any Party or its Affiliates of any Assets or businesses or the assignment by it of any Liabilities.

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Section 6.10           Indemnified Damages. Except as may expressly be set forth in this Agreement or any Ancillary Agreement, none of Parent, SpinCo or any other member of either Group shall in any event have any Liability to the other or to any other member of the other’s Group, or to any other Parent Indemnitee or SpinCo Indemnitee, as applicable, under this Agreement for any indirect, special, punitive, consequential, exemplary, enhanced or treble damages, whether or not caused by or resulting from negligence or breach of obligations hereunder and whether or not informed of the possibility of the existence of such damages; provided, however, that the provisions of this Section 6.10 shall not limit an Indemnifying Party’s indemnification obligations hereunder with respect to any Liability any Indemnitee may have to any third party not affiliated with any member of the Parent Group or the SpinCo Group for any indirect, special, punitive, consequential, exemplary, enhanced or treble damages.

Section 6.11          Management of Certain Actions and Internal Investigations. Notwithstanding the procedures set forth in Section 6.05, this Section 6.11 shall govern the management and direction of certain pending (or, as applicable in the case of Section 6.11(e), future) Actions and Internal Investigations involving one or more members of both the Parent Group and the SpinCo Group (including as a result of the allocation of Liabilities set forth in Article II), but shall not alter the allocation of Liabilities set forth in Article II or rights to indemnification pursuant to Section 6.02 or Section 6.03. In the event of any conflict between the provisions of this Section 6.11 and Section 6.05 in respect of a SpinCo Directed Action, Parent Directed Action or Joint Action, the provisions of this Section 6.11 shall govern.

(a)           From and after the Distribution, except as otherwise provided in Schedule 6.11(a) and subject to Section 7.08:

(i)            the SpinCo Group shall direct the defense, prosecution or conduct (as applicable) of any Actions and Internal Investigations described on Schedule 6.11(a) (the “SpinCo Directed Actions”), including the development and implementation of the legal strategy for each SpinCo Directed Action, the filing of any motions, pleadings or briefs, the conduct of discovery and related fact finding, the conduct of any trial, any presentations to regulators or enforcement officials, any responses to subpoenas, requests or demands for information, any decision to appeal or not to appeal any decisions, judgment or order, and, subject to Section 6.11(d), any decision or consent to a settlement, compromise, resolution or discharge of any SpinCo Directed Action or any aspect thereof;

(ii)           SpinCo (or the applicable member of the SpinCo Group) shall be responsible for selecting counsel in connection with the conduct and control of each SpinCo Directed Action;

(iii)          Parent (or the applicable member of the Parent Group) shall be entitled to participate in (but not control) the defense, prosecution or conduct (as applicable) of each SpinCo Directed Action, and SpinCo shall provide Parent with the reasonable opportunity to consult, advise and comment with respect to all preparation, planning and strategy regarding any such SpinCo Directed Action, to the extent that Parent’s participation does not waive or jeopardize any attorney-client privilege, attorney work product protection or other similar privilege or doctrine. The Parties and the applicable members of their respective Groups shall cooperate reasonably to preserve any attorney-client privilege, work product protection, joint defense, common interest or other privilege as to third parties as may be available in connection with each Group’s participation in a SpinCo Directed Action, including by negotiating and executing joint defense and/or common interest agreements to implement and/or supersede the provisions of this Section 6.11 or Section 7.01 where necessary or useful for this purpose; and

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(iv)         the costs and expenses incurred by the SpinCo Group and the Parent Group in connection with the conduct of any SpinCo Directed Action shall be advanced, paid and reimbursed in accordance with Schedule 6.11(a).

(b)           From and after the Distribution, except as otherwise provided in Schedule 6.11(b) and subject to Section 7.08:

(i)            the Parent Group shall direct the defense, prosecution or conduct (as applicable) of any Actions and Internal Investigations described on Schedule 6.11(b) (the “Parent Directed Actions”), including the development and implementation of the legal strategy for each Parent Directed Action, the filing of any motions, pleadings or briefs, the conduct of discovery and related fact finding, the conduct of any trial, any presentations to regulators or enforcement officials, any responses to subpoenas, requests or demands for information, any decision to appeal or not to appeal any decisions, judgment or order, and, subject to Section 6.11(d), any decision or consent to a settlement, compromise, resolution or discharge of any Parent Directed Action or any aspect thereof;

(ii)           Parent (or the applicable member of the Parent Group) shall be responsible for selecting counsel in connection with the conduct and control of each Parent Directed Action;

(iii)          SpinCo (or the applicable member of the SpinCo Group) shall be entitled to participate in (but not control) the defense, prosecution or conduct (as applicable) of each Parent Directed Action, and Parent shall provide SpinCo with the reasonable opportunity to consult, advise and comment with respect to all preparation, planning and strategy regarding any such Parent Directed Action, to the extent that SpinCo’s participation does not waive or jeopardize any attorney-client privilege, attorney work product protection or other similar privilege or doctrine. The Parties and the applicable members of their respective Groups shall cooperate reasonably to preserve any attorney-client privilege, work product protection, joint defense, common interest or other privilege as to third parties as may be available in connection with each Group’s participation in a Parent Directed Action, including by negotiating and executing joint defense and/or common interest agreements to implement and/or supersede the provisions of this Section 6.11 or Section 7.01 where necessary or useful for this purpose; and

(iv)         the costs and expenses incurred by the SpinCo Group and the Parent Group in connection with the conduct of any Parent Directed Action shall be advanced, paid and reimbursed in accordance with Schedule 6.11(b).

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(c)           From and after the Distribution, except as otherwise provided in Schedule 6.11(c) and subject to Section 7.08, the Parties shall separately but cooperatively manage and direct the defense, prosecution or conduct (as applicable) of any Actions and Internal Investigations described on Schedule 6.11(c) (“Joint Actions”), including the development and implementation of the legal strategy for each Joint Action, the filing of any motions, pleadings or briefs, the conduct of discovery and related fact finding, the conduct of any trial, any presentations to regulators or enforcement officials, any responses to subpoenas, requests or demands for information, any decision to appeal or not to appeal any decisions, judgment or order, and, subject to Section 6.11(d), any decision or consent to a settlement, compromise, resolution or discharge of any Joint Action or any aspect thereof. The Parties shall cooperate in good faith and take all reasonable actions to provide for any appropriate joinder or change in named parties to such Joint Actions such that the appropriate Party or member of each Party’s Group is party thereto. The Parties shall reasonably cooperate and consult with each other and, to the extent feasible, maintain a joint defense in a manner that would preserve for both Parties and their respective Affiliates any attorney-client privilege, work product protection, joint defense, common interest or other privilege with respect to any Joint Action, including by negotiating and executing joint defense and/or common interest agreements to implement and/or supersede the provisions of this Section 6.11 or Section 7.01 where necessary or useful for this purpose. Notwithstanding anything to the contrary herein, the costs and expenses of counsel for each Joint Action shall be paid for by the Party indicated with respect to such Joint Action on Schedule 6.11(c); provided, that in the event that either Party determines to retain new separate counsel with respect to any Joint Action, such Party shall bear the costs and expenses of its separate counsel. The costs and expenses incurred by SpinCo or Parent in connection with the conduct of any Joint Action shall be advanced, paid and reimbursed in accordance with Schedule 6.11(c), in each case to the extent specified therein. In any Joint Action, each of Parent and SpinCo may pursue separate defenses, claims, counterclaims or settlements to those claims relating solely to the Parent Business or the SpinCo Business, respectively; provided that each Party shall in good faith make commercially reasonable efforts to avoid adverse effects on the other Party.

(d)           No Party managing an Action (the “Managing Party”) pursuant to this Section 6.11 shall consent to entry of any judgment or enter into any settlement of any such Action without the prior written consent of the other Party (the “Non-Managing Party”) (not to be unreasonably withheld, conditioned or delayed); provided, however, that such Non-Managing Party, including, in the case of a Joint Action, any co-defendant, shall be required to consent to such entry of judgment or to such settlement that the Managing Party or other co-defendant may recommend with respect to any claim for which such Non-Managing Party (or co-defendant) is the defendant if the judgment or settlement: (i) contains no finding or admission of liability with respect to such Non-Managing Party’s (or co-defendant’s) Group or its applicable related Persons; (ii) involves only monetary relief which the Managing Party or proposing co-defendant has agreed to pay, and for which the Non-Managing Partner (or co-defendant) is not obligated to indemnify the Managing Party, either directly or indirectly through the application against a quantitative indemnification threshold; and (iii) includes a full and unconditional release of the Non-Managing Party’s (or co-defendant’s) Group and its applicable related Persons. Notwithstanding the foregoing, the consent of the Non-Managing Party or co-defendant shall be required for any entry of judgment or settlement if the effect thereof is to permit any injunction, declaratory judgment, other order or other non-monetary relief to be entered, directly or indirectly, against the Non-Managing Party’s Group or its applicable related Persons (such consent not to be unreasonably withheld, conditioned or delayed).

(e)           Any Action or Government Investigation that (i) is not set forth on Schedule 6.11(a) or Schedule 6.11(b), (ii) Parent determines in good faith involves one or more members of both the Parent Group and the SpinCo Group (including as a result of the allocation of Liabilities set forth in Article II), (iii) relates to conduct that occurred prior to the Distribution Date and (iv) Parent determines in good faith involves, or would reasonably be expected to involve, non-monetary relief sought by a Governmental Authority with respect to a member of the Parent Group, shall be separately but cooperatively managed and directed by the Parties as if it were a Joint Action in accordance with the terms of Section 6.11(c) (subject, for the avoidance of doubt, to Schedule 6.11(c) and Section 6.11(d). If either Party shall receive notice or otherwise learn of an Action or Government Investigation that would reasonably be expected to satisfy the criteria in clauses (i)-(iv) of the first sentence of this Section 6.11(e), then such Party shall give the other Party written notice thereof as soon as reasonably practicable.

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Article VII

ACCESS TO INFORMATION; PRIVILEGE; CONFIDENTIALITY

Section 7.01          Agreement for Exchange of Information; Archives.

(a)           Except in the case of an Adversarial Action or threatened Adversarial Action, and subject to Section 7.01(b), each of Parent and SpinCo, on behalf of its Group, shall provide, or cause to be provided, to the other Party, at any time after the Distribution, as soon as reasonably practicable after written request therefor, any Information relating to time periods on or prior to the Distribution Date in the possession or under the control of such respective Group, which Parent or SpinCo, or any member of its respective Group, as applicable: (i) reasonably needs to comply with reporting, disclosure, filing or other requirements imposed on Parent or SpinCo, or any member of its respective Group, as applicable (including under applicable securities Laws), by any national securities exchange or any Governmental Authority having jurisdiction over Parent or SpinCo, or any member of its respective Group, as applicable; (ii) requests for use in any other judicial, regulatory, administrative or other Action or Internal Investigation, including possible Actions or Internal Investigations anticipated in good faith, or to satisfy audit, accounting, regulatory, litigation or other similar requirements; or (iii) reasonably needs to comply with its obligations under this Agreement or any Ancillary Agreement; provided that any request for information pursuant to this Section 7.01 shall be used only for the purposes described in this paragraph.

(b)           In the event that either Parent or SpinCo determines in good faith that the disclosure of any Information pursuant to Section 7.01(a) could be commercially detrimental, violate any Law or Contract or waive or jeopardize any attorney-client privilege, attorney work product protection or other similar privilege or doctrine, such Party may restrict such information to viewing by the other Party’s attorneys’ and experts’ eyes only before providing access to or furnishing such Information to the other Party; provided, however, that both Parent and SpinCo shall take all commercially reasonable measures to permit compliance with Section 7.01(a) in a manner that avoids any such harm or consequence. The Parties and the applicable members of their respective Groups shall cooperate reasonably to preserve any attorney-client privilege, work product protection, joint defense, common interest or other privilege as to third parties as may be available in connection with each Group’s participation in an Action, including by negotiating and executing joint defense and/or common interest agreements to implement and/or supersede the provisions of Section 6.11 or this Section 7.01 where necessary or useful for this purpose.

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Section 7.02           Ownership of Information. Any Information owned by one Group that is provided to the requesting Party hereunder shall be deemed to remain the property of the providing Party. Except as specifically set forth herein or in any Ancillary Agreement, nothing herein shall be construed as granting or conferring rights of license or otherwise in any such Information.

Section 7.03           Compensation for Providing Information. Parent and SpinCo shall reimburse each other for the reasonable costs, if any, in complying with a request for Information pursuant to this Article VII (whether or not such Information was a SpinCo Asset or a Parent Asset). Except as may be otherwise specifically provided elsewhere in this Agreement, such costs shall be calculated in accordance with calculation of costs in the service sheets attached to the TSA.

Section 7.04           Record Retention. To facilitate the possible exchange of Information pursuant to this Article VII and other provisions of this Agreement, each Party shall use its commercially reasonable efforts, which shall be no less rigorous than those used for retention of such Party’s own information, to retain all Information in such Party’s possession relating to the other Party or its businesses, Assets or Liabilities, this Agreement or the Ancillary Agreements, in accordance with the policies of Parent as in effect at the Effective Time or such other policies as may be adopted by Parent after the Effective Time (provided that Parent notifies SpinCo in writing of any such policies); provided, however, that in the case of any information relating to Taxes, employee benefits or EHS Liabilities, such retention period shall be extended to the expiration of the applicable statute of limitations (giving effect to any extensions thereof). Notwithstanding the foregoing, Section 8.1 of the Tax Matters Agreement shall govern the retention of Tax Records (as defined in the Tax Matters Agreement). Each of Parent and SpinCo shall use their commercially reasonable efforts to maintain and continue their respective Group’s compliance with all “litigation holds” listed on Schedule 7.04 in accordance with the provisions set forth on Schedule 7.04 with respect to such listed litigation hold.

Section 7.05           Accounting Information. Without limiting the generality of Section 7.01 but subject to Section 7.01(b):

(a)           Until the end of the first full fiscal year occurring after the Distribution Date (and for a reasonable period of time afterwards, as determined in good faith by Parent, or as required by Law for Parent to prepare consolidated financial statements or complete a financial statement audit for any period during which the financial results of the SpinCo Group were consolidated with those of Parent), SpinCo shall use its commercially reasonable efforts to enable Parent to meet its timetable for dissemination of its financial statements and to enable Parent’s auditors to timely complete their annual audit and quarterly reviews of financial statements. As part of such efforts and during such period as specified in the immediately preceding sentence, to the extent reasonably necessary for the preparation of financial statements or completing an audit or review of financial statements or an audit of internal control over financial reporting, (i) SpinCo shall authorize and direct its auditors to make available to Parent’s auditors, within a reasonable time prior to the date of Parent’s auditors’ opinion or review report, both (x) the personnel who performed or will perform the annual audits and quarterly reviews of SpinCo and (y) work papers to the extent related to such annual audits and quarterly reviews, to enable Parent’s auditors to perform any procedures they consider reasonably necessary to take responsibility for the work of SpinCo’s auditors as it relates to Parent’s auditors’ opinion or report and (ii) SpinCo shall provide reasonable access during normal business hours for Parent’s internal auditors, counsel and other designated representatives to (x) the premises of SpinCo and its Subsidiaries and all Information (and duplicating rights) within the knowledge, possession or control of SpinCo and its Subsidiaries and (y) the officers and employees of SpinCo and its Subsidiaries, so that Parent may conduct reasonable audits relating to the financial statements provided by SpinCo and its Subsidiaries; provided, however, that such access shall not be unreasonably disruptive to the business and affairs of the SpinCo Group; provided, further, that, any request for access pursuant to this Section 7.05(a) shall be made in good faith and limited to the extent reasonable to satisfy the good faith basis for such request.

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(b)           Until the end of the first full fiscal year occurring after the Distribution Date (and for a reasonable period of time afterwards, as determined in good faith by Parent, or as required by Law), Parent shall use its commercially reasonable efforts to enable SpinCo to meet its timetable for dissemination of its financial statements and to enable SpinCo’s auditors to timely complete their annual audit and quarterly reviews of financial statements. As part of such efforts, and during such period as specified in the immediately preceding sentence, to the extent reasonably necessary for the preparation of financial statements or completing an audit or review of financial statements or an audit of internal control over financial reporting, (i) Parent shall authorize and direct its auditors to make available to SpinCo’s auditors, within a reasonable time prior to the date of SpinCo’s auditors’ opinion or review report, both (x) the personnel who performed or will perform the annual audits and quarterly reviews of Parent and (y) work papers to the extent related to such annual audits and quarterly reviews, to enable SpinCo’s auditors to perform any procedures they consider reasonably necessary to take responsibility for the work of Parent’s auditors as it relates to SpinCo’s auditors’ opinion or report and (ii) until all governmental audits of those financial statements of SpinCo specified in the immediately preceding sentence are complete, Parent shall provide reasonable access during normal business hours for SpinCo’s internal auditors, counsel and other designated representatives to (x) the premises of Parent and its Subsidiaries and all Information (and duplicating rights) within the knowledge, possession or control of Parent and its Subsidiaries and (y) the officers and employees of Parent and its Subsidiaries, so that SpinCo may conduct reasonable audits relating to the financial statements provided by Parent and its Subsidiaries; provided, however, that such access shall not be unreasonably disruptive to the business and affairs of the Parent Group; provided, further, that, any request for access pursuant to this Section 7.05(b) shall be made in good faith and limited to the extent reasonable to satisfy the good faith basis for such request.

(c)           To enable the principal executive officer(s) and principal financial officer(s) (as such terms are defined in the rules and regulations of the Commission) of Parent to make any certifications required of them under Section 302 or 906 of the Sarbanes-Oxley Act of 2002, SpinCo shall, within a reasonable period of time following a request from Parent in anticipation of filing such reports, cause its principal executive officer(s) and principal financial officer(s) to provide Parent with certifications of such officers in support of the certifications of Parent’s principal executive officer(s) and principal financial officer(s) required under Section 302 or 906 of the Sarbanes-Oxley Act of 2002 with respect to (i) Parent’s Quarterly Report on Form 10-Q filed with respect to the fiscal quarter during which the Distribution Date occurs (unless such quarter is Parent’s fourth fiscal quarter), (ii) to the extent applicable, each subsequent fiscal quarter through the third fiscal quarter of the year in which the Distribution Date occurs and (iii) Parent’s Annual Report on Form 10-K filed with respect to the fiscal year during which the Distribution Date occurs. Such certifications shall be provided in substantially the same form and manner as such SpinCo officers provided prior to the Distribution (reflecting any changes in certifications necessitated by the Spin-Off or any other transactions related thereto) or as otherwise agreed upon between Parent and SpinCo.

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Section 7.06           No Implied Warranties. Each of Parent (on behalf of itself and each other member of the Parent Group) and SpinCo (on behalf of itself and each other member of the SpinCo Group) understands and agrees that neither Party is representing or warranting in any way as to the accuracy or sufficiency of any Information exchanged or disclosed under this Agreement, including any Information that constitutes an estimate or forecast or is based upon an estimate or forecast.

Section 7.07           Production of Witnesses; Records; Cooperation.

(a)           Without limiting any of the rights or obligations of the Parties pursuant to Section 7.01 or Section 7.04, after the Distribution Date, except in the case of an Adversarial Action or threatened or contemplated Adversarial Action, and subject to Section 7.01(b), each of Parent and SpinCo shall use their commercially reasonable efforts to make reasonably available, upon written request: (i) the former, current and future directors, officers, employees, other personnel and agents of the Persons in its respective Group (whether as witnesses or otherwise); and (ii) subject to Section 7.01(b), Information contemplated by Section 7.01(a), in each case of clauses (i) and (ii), to the extent that such Person (giving consideration to business demands of such directors, officers, employees, other personnel and agents) or books, records or other documents may reasonably be required in connection with any Action, Internal Investigation, Commission comment or review or threatened or contemplated Action, Internal Investigation, Commission comment or review (including preparation for any such Action, Internal Investigation, Commission comment or review) in which either Parent or SpinCo or any Person or Persons in its Group, as applicable, may from time to time be involved, regardless of whether such Action, Internal Investigation, Commission comment or review or threatened or contemplated Action, Internal Investigation, Commission comment or review is a matter with respect to which indemnification may be sought hereunder. The requesting Party shall bear all reasonable out-of-pocket costs and expenses in connection therewith.

(b)           Without limiting the foregoing, Parent and SpinCo shall use their commercially reasonable efforts to cooperate and consult with each other to the extent reasonably necessary with respect to any Actions, Internal Investigations or threatened or contemplated Actions or Internal Investigations (including in connection with preparation for any such Action or Internal Investigation), other than an Adversarial Action or threatened or contemplated Adversarial Action.

(c)           The obligation of Parent and SpinCo, pursuant to this Section 7.07, to use their commercially reasonable efforts to make available former, current and future directors, officers, employees and other personnel and agents or provide witnesses and experts, except in the case of an Adversarial Action or threatened or contemplated Adversarial Action, is intended to be interpreted in a manner so as to facilitate cooperation and shall include the obligation to make available employees and other officers without regard to whether such individual or the employer of such individual could assert a possible business conflict. Without limiting the foregoing, each of Parent and SpinCo agrees that neither it nor any Person or Persons in its respective Group will take any adverse action against any employee of its Group based on such employee’s provision of assistance or information to each other pursuant to this Section 7.07.

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Section 7.08           Privileged Matters.

(a)           Solely for purposes of asserting privileges which may be asserted under applicable Law, and without limiting the provisions of Section 7.10: (x) the Parties recognize that legal and other professional services that have been and will be provided prior to the Distribution (whether by outside counsel, in-house counsel, other legal professionals, or other professionals acting at the direction of counsel) have been and will be rendered for the collective benefit of Parent and its Subsidiaries (in such capacity) and (y) each of the members of the Parent Group and the SpinCo Group shall be deemed to have been the client in connection with such services with respect to periods prior to the Distribution. The Parties recognize that legal and other professional services will be provided following the Distribution, which services will be rendered solely for the benefit of the Parent Group or the SpinCo Group, as the case may be.

(b)           Parent shall be entitled, in perpetuity, to control the assertion or waiver of all privileges and immunities in connection with any privileged Information that relates solely to the Parent Business or the Distribution and not to the SpinCo Business, whether or not the privileged Information is in the possession or under the control of any member of the Parent Group or any member of the SpinCo Group. Parent shall also be entitled, in perpetuity, to control the assertion or waiver of all privileges and immunities in connection with any privileged Information that relates solely to any Parent Assets or Parent Liabilities, and not any SpinCo Assets or SpinCo Liabilities, in connection with any Actions or Internal Investigations that are now pending or may be asserted in the future, whether or not the privileged Information is in the possession or under the control of any member of the Parent Group or any member of the SpinCo Group. For the avoidance of doubt, Information shall not be deemed to relate to the Parent Business solely by virtue of the fact that personnel associated with the corporate function of Parent were involved in the production or evaluation of such Information or otherwise involved in the Actions or Internal Investigations relating to such Information.

(c)           SpinCo shall be entitled, in perpetuity, to control the assertion or waiver of all privileges and immunities in connection with any privileged Information that relates solely to the SpinCo Business and not to the Parent Business or the Distribution, whether or not the privileged Information is in the possession or under the control of any member of the SpinCo Group or any member of the Parent Group. SpinCo shall also be entitled, in perpetuity, to control the assertion or waiver of all privileges and immunities in connection with any privileged Information that relates solely to any SpinCo Assets or SpinCo Liabilities and not any Parent Assets or Parent Liabilities in connection with any Actions or Internal Investigations that are now pending or may be asserted in the future, whether or not the privileged Information is in the possession or under the control of any member of the SpinCo Group or any member of the Parent Group. For the avoidance of doubt, Information shall not be deemed to relate to the SpinCo Business solely by virtue of the fact that SpinCo personnel were involved in the production or evaluation of such Information or otherwise involved in the Actions or Internal Investigations relating to such Information.

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(d)           Subject to the remaining provisions of this Section 7.08, Parent shall be entitled, in perpetuity, to control the assertion or waiver of all privileges and immunities in connection with privileged Information not otherwise allocated pursuant to this Section 7.08 in connection with any Actions or Internal Investigations, or threatened or contemplated Actions or Internal Investigations, or other matters that involve both Parties (or one or more members of their respective Groups), whether or not such privileged Information is in the possession or under the control of a member of the SpinCo Group or a member of the Parent Group.

(e)           To the extent that an issue regarding a privilege controlled by one Party under this Section 7.08 arises in connection with an Action or Internal Investigation the defense, prosecution or conduct (as applicable) of which the other Party is entitled to direct pursuant to Section 6.11, the Party entitled to control such privilege shall cooperate in good faith with the Party directing such Action or Internal Investigation to facilitate the efficient administration of such Action or Internal Investigation. If any dispute arises between the Parties or any members of their respective Group regarding whether a privilege or immunity should be waived to protect or advance the interests of either Party or any member of their respective Groups, each Party agrees that it shall: (i) negotiate with the other Party in good faith and (ii) endeavor to minimize any prejudice to the rights of the other Party and the members of its Group.

(f)            Upon receipt by either Party, or by any member of its respective Group, of any subpoena, discovery or other request (or of written notice that it will receive or has received such subpoena, discovery or other request) that may reasonably be expected to result in the production or disclosure of privileged Information subject to a shared privilege or immunity or as to which the other Party has the sole right hereunder to assert a privilege or immunity, or if either Party obtains knowledge or becomes aware that any of its, or any member of its respective Group’s, current or former directors, officers, agents or employees have received any subpoena, discovery or other requests (or have received written notice that they will receive or have received such subpoena, discovery or other requests) that may reasonably be expected to result in the production or disclosure of such privileged Information, such Party shall promptly notify the other Party of the existence of any such subpoena, discovery or other request and shall provide the other Party a reasonable opportunity to review the privileged Information and to assert any rights it or they may have, under this Section 7.08 or otherwise, to prevent the production or disclosure of such privileged Information; provided that if such Party is prohibited by applicable Law from disclosing the existence of such subpoena, discovery or other request, such Party shall provide written notice of such related information for which disclosure is not prohibited by applicable Law and use commercially reasonable efforts to inform the other Party of any related information such Party reasonably determines is necessary or appropriate for the other Party to be informed of to enable the other Party to review the privileged Information and to assert its rights, under this Section 7.08 or otherwise, to prevent the production or disclosure of such privileged Information.

(g)           Their respective rights to any access to Information, witnesses and other Persons, the furnishing of notices and documents and other cooperative efforts between the Parties contemplated by this Agreement, and the transfer of privileged Information between the Parties and 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. Further: (i) the exchange by one Party to the other Party of any Information that should not have been exchanged pursuant to the terms of Section 7.09 shall not be deemed to constitute a waiver of any privilege or immunity that has been or may be asserted under this Agreement or otherwise with respect to such privileged Information; and (ii) the Party receiving such privileged Information shall promptly return such privileged Information to the Party who has the right to assert the privilege or immunity.

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Section 7.09           Confidential Information.

(a)           During the Restricted Period, each of Parent and SpinCo, on behalf of itself and each Person in its respective Group, shall hold, and cause its respective directors, officers, employees, agents, accountants, subcontractors, counsel and other advisors and representatives (each, a “Representative”) to hold, in strict confidence, not release or disclose and protect with at least the same degree of care, but no less than a reasonable degree of care, that it applies to its own confidential and proprietary information pursuant to policies in effect as of the Distribution Date, all confidential or proprietary Information concerning the Parent Business or the Parent Group (in the case of SpinCo or a member of its Group) or the SpinCo Business or the SpinCo Group (in the case of Parent or a member of its Group) (such Group’s “Specified Confidential Information”) that is either in its possession (including such Specified Confidential Information in its possession prior to the Distribution) or furnished by the other Group or its respective Representatives at any time pursuant to this Agreement or any Ancillary Agreement, and shall not use any such Specified Confidential Information other than for such purposes as shall be expressly permitted hereunder or thereunder, except, in each case, to the extent that such Specified Confidential Information is: (x) in the public domain through no fault of any member of the Parent Group or the SpinCo Group, as applicable, or any of its respective Representatives; (y) later lawfully acquired from other sources by any of Parent, SpinCo or its respective Group or Representatives, as applicable, which sources are not themselves bound by a confidentiality obligation to the knowledge of any of Parent, SpinCo or Persons in its respective Group, as applicable; or (z) independently generated after the date hereof without reference to any Specified Confidential Information of the Parent Group or the SpinCo Group, as applicable. Notwithstanding the foregoing, each of Parent and SpinCo may release or disclose, or permit to be released or disclosed, any such Specified Confidential Information of the other Group (i) to their respective Representatives who need to know such Specified Confidential Information (who shall be advised of the obligations hereunder with respect to such Specified Confidential Information), (ii) to any nationally recognized statistical rating organization as it reasonably deems necessary, solely for the purpose of obtaining a rating of securities or other debt instruments upon normal terms and conditions, (iii) if such Party or its respective Group is required or compelled to disclose any such Specified Confidential Information by judicial or administrative process (including any proceeding brought by a Governmental Authority) or by other requirements of Law or stock exchange rule, in each case, to the extent such Party is advised by counsel that it is advisable to do so, (iv) as required in connection with any legal or other proceeding by one Party against the other Party or in respect of claims by one Party against the other Party brought in a proceeding, (v) as necessary to permit a Party to prepare and disclose its financial statements or other required disclosures under applicable Law or in connection with the Distribution, other than required for Tax Returns, which requirements will be governed by the TMA, (vi) as necessary for a Party to enforce its rights or perform its obligations under this Agreement or any Ancillary Agreement and (vii) to Governmental Authorities in accordance with applicable procurement regulations and contract requirements; provided, however, that, with respect to clause (i): (A) such Representatives shall keep such Specified Confidential Information confidential and will not disclose such Specified Confidential Information to any other Person and (B) each Party agrees that it is responsible to the other Party for any action or failure to act that would constitute a breach or violation of this Section 7.09(a) by any such Representative; with respect to clause (ii), the Party whose Specified Confidential Information is being disclosed or released to such rating organization is promptly notified thereof in writing in advance of such disclosure or release; with respect to public disclosures pursuant to clause (iii), that the Party required to disclose such Specified Confidential Information gives the other Party a reasonable opportunity to review and comment on the portion of such disclosure containing or reflecting Specified Confidential Information prior to the disclosure thereof; and, in the case of disclosure required by judicial or administrative process pursuant to clause (iii) or disclosure pursuant to clause (iv), that the Party required to disclose such Specified Confidential Information gives the other Party prompt and, to the extent reasonably practicable and legally permissible, prior notice of such disclosure and an opportunity to contest such disclosure and shall use commercially reasonable efforts to cooperate, at the expense of the requesting Party, in seeking any reasonable protective arrangements requested by such Party. In the event that such appropriate protective order or other remedy is not obtained, the Party that is required to disclose such Specified Confidential Information of the other Group shall furnish, or cause to be furnished, only that portion of such Specified Confidential Information that is legally required to be disclosed and shall use commercially reasonable efforts to ensure that confidential treatment is accorded such Specified Confidential Information. “Restricted Period” shall mean the five-year period beginning at the Effective Time, except with respect to Specified Confidential Information constituting Trade Secrets under the laws of any jurisdiction, for which the “Restricted Period” shall mean the period beginning at the Effective Time and continuing until such time, if ever, that such Specified Confidential Information loses its trade secret protection other than due to an act or omission of the Party receiving such Specified Confidential Information or its Representatives.

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(b)           Each Party acknowledges that it or members of its Group may currently have and, after the Distribution, may gain access to or possession of confidential or proprietary Information of, or legally protected personal Information relating to, third parties: (i) that was received under confidentiality or non-disclosure agreements entered into between such third parties, on the one hand, and the other Party or members of such other Party’s Group, on the other hand, prior to the Distribution or (ii) that, as between the two Parties, was originally collected by the other Party or such other Party’s Group and that may be subject to and protected by privacy, data protection or other applicable Laws. Each Party agrees that it shall hold, protect and use, and shall cause the members of its Group and its and their respective Representatives to hold, protect and use, in strict confidence the confidential and proprietary Information of, or legally protected personal Information relating to, third parties in accordance with privacy, data protection or other applicable Laws and the terms of any Contracts that were entered into before the Distribution or affirmative commitments or representations that were made before the Distribution by, between or among the other Party or members of the other Party’s Group, on the one hand, and such third parties, on the other hand.

(c)           Notwithstanding anything in this Agreement to the contrary, the receiving Party may disclose, disseminate, or use the ideas, concepts, know-how and techniques, in each case that are related to the receiving Party’s business activities and that are contained in the disclosing Party’s Specified Confidential Information and retained in the unaided memories of the receiving Party’s employees who have had access to the disclosing Party’s Specified Confidential Information, who have not intentionally memorized such Specified Confidential Information, and in each case without the specific intent to use or disclose such Specified Confidential Information. For the avoidance of doubt, nothing in this Section 7.09(c) grants either Party any right or license in or to any Patents or Copyrights (as each such term is defined in the Intellectual Property Assignment Agreements, without regard to whether such intellectual property is listed in Schedules 1 or 3 under such agreements).

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Section 7.10           Conflicts Waiver. Each of the Parties acknowledges, on behalf of itself and each other member of its Group, notwithstanding anything to the contrary contained herein or imposed by operation of law, that Parent has retained Foley & Lardner LLP, Freshfields Bruckhaus Deringer LLP, Simpson Thacher & Bartlett LLP and the legal counsel set forth on Schedule 7.10 (collectively, the “Known Counsel”) to act as its counsel in connection with this Agreement, the Ancillary Agreements and the transactions contemplated hereby and thereby. SpinCo hereby agrees on behalf of itself and each member of its Group that, notwithstanding anything to the contrary contained herein or imposed by operation of law, in the event that a dispute (whether or not related to this Agreement, the Ancillary Agreements, or the transactions contemplated hereby and thereby) arises between or among (x) any member of the SpinCo Group, any SpinCo Indemnitee or any of their respective Affiliates, on the one hand, and (y) any member of the Parent Group, any Parent Indemnitee or any of their respective Affiliates, on the other hand: (a) any Known Counsel may represent any member of the Parent Group, any Parent Indemnitee or any of their respective Affiliates in such dispute even though the interests of such Person may be directly adverse to, or conflict with the legal or economic interests of, any Person described in clause (x), and even though such Known Counsel may have represented or provided advice to a Person described in clause (x) in a matter substantially related to such dispute at or prior to the Distribution, or may be handling ongoing matters for a Person described in clause (x) as of the Distribution Date that continue following the Distribution, and even though such Known Counsel may have or previously have had confidential or privileged information of a Person described in clause (x) that may be related to such dispute, (b) SpinCo hereby waives, on behalf of itself and each other Person described in clause (x), as applicable, any conflict of interest or claim to confidentiality in connection with such representation by such Known Counsel, and (c) SpinCo hereby agrees, on behalf of itself and each other Person described in clause (x), as applicable, not to seek to disqualify such Known Counsel in connection with such representation. SpinCo, on behalf of itself and each other member of its Group, irrevocably authorizes any Known Counsel to disclose or provide any of its confidential or privileged information existing as of the date hereof to Parent or any other member of Parent’s Group and to otherwise use or disclose that information in accordance with Parent’s direction. Each of SpinCo and Parent, 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 7.10. Each of SpinCo and Parent, on behalf of itself and each other member of its Group, further agrees that each Known Counsel and its respective partners and employees are third-party beneficiaries of this Section 7.10 and may seek to enforce, without limitation, this Section 7.10.

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Article VIII

INSURANCE

Section 8.01           Maintenance of Insurance and Termination of Coverage.

(a)           Until the Distribution, Parent shall (i) cause the members of the SpinCo Group and their respective employees, officers and directors to continue to be covered as insured parties under Parent’s policies of insurance in a manner which is no less favorable than the coverage provided for the Parent Group and (ii) permit the members of the SpinCo Group and their respective employees, officers and directors to submit claims, whether made before or after the Distribution, relating to, arising out of or resulting from facts, circumstances, events or matters that occurred prior to the Distribution to the extent permitted under such policies.

(b)           Except as otherwise expressly permitted in this Article VIII, Parent and SpinCo acknowledge that, as of immediately prior to the Distribution, Parent intends to take such action as it may deem necessary or desirable to remove the members of the SpinCo Group and their respective employees, officers and directors as insured parties under any policy of insurance issued to any member of the Parent Group by any insurance carrier effective immediately prior to the Distribution, and on or following the Distribution, the SpinCo Group shall cease to be in any manner insured by, entitled to any benefits or coverage under, or entitled to seek benefits or coverage from or under any Parent insurance policies other than any insurance policy issued exclusively in the name and for the benefit of any member of the SpinCo Group. SpinCo Group will not be entitled at or following the Distribution to make any claims for insurance thereunder to the extent such claims are based upon facts, circumstances, events, matters or claims occurring or made at or after the Distribution. No member of the Parent Group shall be deemed to have made any representation or warranty as to the availability of any coverage, insurability, or satisfaction of any terms and conditions under any such insurance policy. At and after the Distribution, the SpinCo Group shall procure all contractual and statutorily obligated insurance related to the operation of the SpinCo Business.

Section 8.02           Claims under Parent Insurance Policies.

(a)           At and after the Distribution, the members of each of the Parent Group and the SpinCo Group shall, subject to the terms of this Section 8.02, have the right to assert Parent Policy Pre-Separation Insurance Matters under the applicable Parent insurance policies up to the full extent of the applicable and available limits of liability of such policy subject to the terms and conditions of such policies. No other claims shall be permitted under Parent’s insurance policies.

(i)            Members of the SpinCo Group shall be solely responsible for notifications, and updates to the applicable insurance companies, compliance with all policy terms and conditions, and for the handling, pursuit and collection of such claims.

(ii)           Members of the SpinCo Group shall not, without the written consent of Parent, amend, modify, waive or release any rights of Parent under any such insurance policies and programs. Parent shall have primary control over any joint Parent Policy Pre-Separation Insurance Matters, subject to the terms and conditions of the relevant policy of insurance governing such control.

(b)           Each of Parent and SpinCo shall, and shall cause each member of the Parent Group and SpinCo Group, respectively, to, reasonably cooperate with and assist the applicable member of the SpinCo Group and the Parent Group, as applicable, with respect to claims reported to insurance companies pursuant to Section 8.02(a). With respect to coverage claims or requests for benefits asserted by members of the SpinCo Group under the insurance policies of the Parent Group, Parent shall have the right but not the duty to monitor or associate with such claims.

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(c)           Notwithstanding anything contained herein, except as provided in Section 8.07, (i) nothing in this Agreement shall limit, waive or abrogate in any manner any rights of any member of the Parent Group to insurance coverage for any matter, whether relating to the rights of the SpinCo Group or otherwise, and (ii) Parent shall retain the exclusive right to control the insurance policies of the Parent Group, and the benefits and amounts payable thereunder, including the right to settle, release, commute, buy-back or otherwise resolve disputes with respect to any of such insurance policies and to amend, modify or waive any rights under any such insurance policies, notwithstanding whether any such insurance policies apply to any past, present or future Liabilities of or claims by any member of the SpinCo Group, including coverage claims with respect to any claim, act, omission, event, circumstance, occurrence or loss for which the SpinCo Group may make a claim under an insurance policy pursuant to this Section 8.02. SpinCo, on behalf of itself and each member of the SpinCo Group, hereby gives consent for Parent to inform any affected insurer of this Agreement and to provide such insurer, as reasonably necessary, with all or any portion of a copy hereof.

Section 8.03           Claims under SpinCo Insurance Policies.

(a)           At and after the Distribution, the members of each of the Parent Group and the SpinCo Group shall, subject to the terms of this Section 8.03, have the right to assert SpinCo Policy Pre-Separation Insurance Matters under the applicable SpinCo insurance policies up to the full extent of the applicable and available limits of liability of such policy subject to the terms and conditions of such policies.

(i)            Members of the Parent Group shall be solely responsible for notifications, and updates to the applicable insurance companies, compliance with all policy terms and conditions, and for the handling, pursuit and collection of such claims.

(ii)           Members of the Parent Group shall not, without the written consent of SpinCo, amend, modify, waive or release any rights of SpinCo under any such insurance policies and programs. SpinCo shall have primary control over any joint SpinCo Policy Pre-Separation Insurance Matters, subject to the terms and conditions of the relevant policy of insurance governing such control.

(b)           Each of Parent and SpinCo shall, and shall cause each member of the Parent Group and SpinCo Group, respectively, to, reasonably cooperate with and assist the applicable member of the SpinCo Group and the Parent Group, as applicable, with respect to claims reported to insurance companies pursuant to Section 8.03(a). With respect to coverage claims or requests for benefits asserted by members of the Parent Group under the insurance policies of the SpinCo Group, SpinCo shall have the right but not the duty to monitor or associate with such claims.

(c)           Notwithstanding anything contained herein, except as provided in this Article VIII, (i) nothing in this Agreement shall limit, waive or abrogate in any manner any rights of any member of the SpinCo Group to insurance coverage for any matter, whether relating to the rights of the Parent Group or otherwise and (ii) SpinCo shall retain the exclusive right to control the insurance policies of the SpinCo Group, and the benefits and amounts payable thereunder, including the right to exhaust, settle, release, commute, buy-back or otherwise resolve disputes with respect to any of such insurance policies and to amend, modify or waive any rights under any such insurance policies, notwithstanding whether any such insurance policies apply to any past, present or future Liabilities of or claims by any member of the Parent Group, including coverage claims with respect to any claim, act, omission, event, circumstance, occurrence or loss for which the Parent Group may make a claim under an insurance policy pursuant to this Section 8.03. Parent, on behalf of itself and each member of the Parent Group, hereby gives consent for SpinCo to inform any affected insurer of this Agreement and to provide such insurer, as reasonably necessary, with all or any portion of a copy hereof.

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Section 8.04           Policy Limits. Claims under the Parent insurance policies and the SpinCo insurance policies shall be paid and payable on a first-come first-served basis, absent any agreement between Parent and SpinCo to modify this first come-first served method of payment; provided, however, no member of the SpinCo Group or the Parent Group shall, or shall seek to, 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. Further, in the event that either SpinCo or Parent becomes aware of information that would lead it reasonably to expect that the policy limits of a Parent insurance policy or a SpinCo insurance policy (in either case, under which members of the Parent Group and the SpinCo Group are both insured) are likely to be exhausted based on existing insurance claims, it shall promptly notify the other in writing of that expectation and the basis therefor, and the Parties shall cooperate to ensure that the purposes and intent of the first sentence of this Section 8.04 are properly effectuated.

Section 8.05           Insurance Proceeds. Any Insurance Proceeds received by the Parent Group for the benefit of members of the SpinCo Group or by the SpinCo Group for the benefit of members of the Parent Group shall be transferred, respectively, to the SpinCo Group (in the former case) or the Parent Group (in the latter case). Any Insurance Proceeds received for the benefit of both the Parent Group and the SpinCo Group shall be distributed pro rata based on the respective share of the underlying loss.

Section 8.06           Claims Not Reimbursed. Neither Party shall be liable to the other Party for claims, or portions of claims, not reimbursed by insurers under any policy for any reason, including coinsurance provisions, deductibles, quota share deductibles, self-insured retentions, reimbursement obligations, bankruptcy or insolvency of any insurance carrier(s), policy limitations or restrictions (including exhaustion of limits), any coverage disputes, any failure to timely file a claim by any member of the Parent Group or any member of the SpinCo Group or any defect in such claim or its processing. Nothing in this Section 8.06 shall be construed to limit or otherwise alter in any way the obligations of the Parties, including those created by this Agreement, by operation of Law or otherwise.

Section 8.07           D&O Policies. At and after the Distribution, Parent shall not, and shall cause the members of the Parent Group not to, take any action that would limit the coverage of the individuals who acted as directors or officers of SpinCo (or members of the SpinCo Group) prior to the Distribution under any directors and officers liability insurance policies or fiduciary liability insurance policies (collectively, “D&O Policies”) maintained by the members of the Parent Group in respect of claims made against and known by Parent prior to the Distribution. Parent shall, and shall cause the members of the Parent Group to, reasonably cooperate with the individuals who acted as directors or officers of SpinCo (or members of the SpinCo Group) prior to the Distribution in their pursuit of any such coverage claims under such D&O Policies which could inure to the benefit of such individuals. Parent shall allow SpinCo and its agents and representatives, upon reasonable prior notice and during regular business hours, to examine the relevant D&O Policies maintained by Parent and members of the Parent Group. Parent shall provide, and shall cause other members of the Parent Group to provide, such cooperation as is reasonably requested by SpinCo for SpinCo to have in effect at and after the Distribution new D&O Policies with respect to claims reported at or after the Distribution including for claims relating to acts or omissions prior to the Distribution. Each of SpinCo and Parent shall, and shall cause each member of the SpinCo Group and the Parent Group, respectively, to have in effect at and after the Distribution such D&O Policies as are appropriate in their respective judgments to cover any claims reported at or after the Distribution for which they respectively have written indemnity obligations to directors, officers and employees, including for claims relating to acts or omissions prior to the Distribution.

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Article IX

FURTHER ASSURANCES AND ADDITIONAL COVENANTS

Section 9.01           Further Assurances.

(a)           In addition to the actions specifically provided for elsewhere in this Agreement, but subject to the express limitations of this Agreement and of the Ancillary Agreements, each of the Parties shall, subject to Section 5.03, use commercially reasonable efforts, prior to, on and after the Distribution Date, to take, or cause to be taken, all actions, and to do, or cause to be done, all things, reasonably necessary, proper or advisable under applicable Laws and agreements to consummate, and make effective, the transactions contemplated by this Agreement.

(b)           Without limiting the foregoing, but subject to the express limitations and other provisions of this Agreement and of the Ancillary Agreements, prior to, on and after the Distribution Date, each Party shall cooperate with the other Party, without any further consideration, but at the expense of the requesting Party: (i) to execute and deliver, or use commercially reasonable efforts to execute and deliver, or cause to be executed and delivered, all instruments, including any instruments of conveyance, assignment and transfer as such Party may reasonably be requested to execute and deliver by the other Party; (ii) to deliver all required notices and make, or cause to be made, all filings with, and to obtain, or cause to be obtained, all Consents of any Governmental Authority or any other Person under any permit, license, Contract or other instrument; (iii) to obtain, or cause to be obtained, any Governmental Approvals or other Consents required to effect the Spin-Off; and (iv) to take, or cause to be taken, all such other actions as such Party may reasonably be requested to take by the other Party from time to time, consistent with the terms of this Agreement and the Ancillary Agreements, to effectuate the provisions and purposes of this Agreement, the Ancillary Agreements and any transfers of Assets or assignments and assumptions of Liabilities hereunder and the other transactions contemplated hereby.

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Article X

TERMINATION

Section 10.01         Termination. This Agreement may be terminated by Parent at any time, in its sole discretion, prior to the Distribution.

Section 10.02         Effect of Termination. In the event of any termination of this Agreement prior to the Distribution, neither Party (nor any member of their Group or any of their respective directors or officers) shall have any Liability or further obligation to the other Party or any member of its Group under this Agreement or the Ancillary Agreements.

Article XI

MISCELLANEOUS

Section 11.01         Counterparts; Entire Agreement; Corporate Power.

(a)           This Agreement may be executed in one or more counterparts, all of which counterparts shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each Party and delivered to the other Party. This Agreement may be executed by facsimile or PDF signature and scanned and exchanged by electronic mail, and such facsimile or PDF signature or scanned and exchanged copies shall constitute an original for all purposes.

(b)           This Agreement, the Ancillary Agreements and the Appendices, Exhibits and Schedules hereto and thereto contain the entire agreement between the Parties with respect to the subject matter hereof and supersede all previous agreements, negotiations, discussions, writings, understandings, commitments and conversations with respect to such subject matter, and there are no agreements or understandings between the Parties with respect to the subject matter hereof other than those set forth or referred to herein or therein. In the event of conflict or inconsistency between the provisions of this Agreement or any Master Ancillary Agreement, on the one hand, and the provisions of any Local Transfer Agreement (including any provision of a Local Transfer Agreement providing for dispute resolution mechanisms inconsistent with those provided herein), on the other hand, the provisions of this Agreement and any such Master Ancillary Agreement shall prevail and remain in full force and effect, unless otherwise stated in such Master Ancillary Agreement or required by non-waivable local Law. Each Party hereto shall, and shall cause each of its Subsidiaries to, implement the provisions of and the transactions contemplated by the Local Transfer Agreement in accordance with the immediately preceding sentence.

(c)           Parent represents on behalf of itself and each other member of the Parent Group, and SpinCo represents on behalf of itself and each other member of the SpinCo Group, as follows:

(i)            each such Person has the requisite corporate or other power and authority and has taken all corporate or other action necessary to execute, deliver and perform each of this Agreement and each Ancillary Agreement to which it is a party and to consummate the transactions contemplated hereby and thereby; and

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(ii)           this Agreement and each Ancillary Agreement to which it is a party has been (or, in the case of any Ancillary Agreement, will be on or prior to the Distribution Date) duly executed and delivered by it and constitutes, or will constitute, a valid and binding agreement of it enforceable in accordance with the terms hereof or thereof.

Section 11.02         Jurisdiction. The Parties agree that any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby shall be brought in the Chancery Court of the State of Delaware and any state appellate court therefrom within the State of Delaware (or if the Chancery Court of the State of Delaware declines to accept jurisdiction over a particular matter, any federal or state court sitting in the State of Delaware and any federal or state appellate court therefrom), and each of the Parties hereto hereby irrevocably consents to the exclusive jurisdiction of such courts in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. Process in any such suit, action or proceeding may be served on any Party anywhere in the world, whether within or without the jurisdiction of any such court. Without limiting the foregoing, each Party agrees that service of process on such Party as provided in Section 6.01 shall be deemed effective service of process on such Party.

Section 11.03         WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

Section 11.04         Specific Performance. Subject to Section 11.02 and Section 11.03, except as provided below, in the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement or any applicable Ancillary Agreement, the affected Party shall have the right to specific performance, declaratory relief and injunctive or other equitable relief (on a permanent, emergency, temporary, preliminary or interim basis) of its rights under this Agreement or any applicable Ancillary 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 other Party shall not oppose the granting of such relief on the basis that money damages are an adequate remedy. The Parties agree that the remedies at Law for any breach or threatened breach hereof, including monetary damages, are inadequate compensation for any loss and that any defense in any action for specific performance that a remedy at Law would be adequate is hereby waived. Any requirements for the securing or posting of any bond or similar security with such remedy are hereby waived.

Section 11.05         No Set-Off. Except as expressly provided to the contrary in this Agreement or in any Ancillary Agreement or as otherwise mutually agreed to in writing by the Parties, neither Party nor any member of such Party’s Group shall have any right of set-off or other similar rights with respect to (a) amounts payable pursuant to this Agreement or any Ancillary Agreement or (b) any other amounts claimed to be owed to the other Party or any member of its Group arising out of this Agreement or any Ancillary Agreement.

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Section 11.06         Continuity of Service and Performance. Unless otherwise agreed in writing, the Parties shall continue to provide services and honor all other commitments under this Agreement and each Ancillary Agreement during the course of dispute resolution pursuant to the provisions of Section 11.02, Section 11.03, or Section 11.04 with respect to all matters not subject to such dispute resolution.

Section 11.07         Governing Law. This Agreement and any disputes relating to, arising out of or resulting from this Agreement, including to its execution, performance, or enforcement, shall be governed by, and construed and enforced in accordance with, the Laws of the State of Delaware, regardless of the Laws that might otherwise govern under applicable principles of conflicts of Laws thereof or of any other jurisdiction.

Section 11.08         Assignability. Except as otherwise provided for in this Agreement, neither this Agreement nor any right, interest or obligation arising under this Agreement shall be assignable (including by means of a divisional or divisive merger or similar transaction), in whole or in part, directly or indirectly, by either Party without the prior written consent of the other Party, and any attempt to assign any rights, interests or obligations arising under this Agreement without such consent shall be void; provided, that (i) a Party may assign any or all of its rights, interests and obligations hereunder to a member of such Party’s Group, so long as such assignee agrees pursuant to an agreement in writing reasonably satisfactory to the other Party to be bound by the terms of this Agreement as if named a “Party” hereto and (ii) a Party may assign this Agreement or any or all of the rights, interests and obligations hereunder in connection with a merger, divisive 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, so long as 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, further, that no assignment permitted by clauses (i) or (ii) of this Section 11.08 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 Party. In the case of any assignment permitted by this Section 11.08, the assigning Party shall provide prompt written notice of such assignment to the non-assigning Party.

Section 11.09         Third-Party Beneficiaries. Except as expressly set forth in Section 7.10, the rights of the members of each Party’s Group as set forth herein, and for the indemnification rights under this Agreement of any Parent Indemnitee or SpinCo Indemnitee in his, her or its capacity as such, (a) the provisions of this Agreement are solely for the benefit of the Parties hereto and are not intended to confer upon any Person except the Parties hereto any rights or remedies hereunder and (b) there are no third-party beneficiaries of this Agreement and this Agreement shall not provide any third person with any remedy, claim, liability, reimbursement, cause of action or other right in excess of those existing without reference to this Agreement.

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Section 11.10         Notices. All notices or other communications under this Agreement shall be in writing and shall be deemed to be duly given (a) when delivered in person, (b) on the date received, if sent by a nationally recognized delivery or courier service, (c) upon written confirmation of receipt after transmittal by electronic mail or (d) upon the earlier of confirmed receipt or the fifth business day following the date of mailing if sent by registered or certified mail, return receipt requested, postage prepaid and addressed as follows:

If to Parent, to:

BorgWarner Inc.

3850 Hamlin Road
Auburn Hills, MI 48326

Attn:       Tonit M. Calaway

Email: [***]

with a copy to:

Foley & Lardner LLP
777 East Wisconsin Avenue
Milwaukee, WI 53202

Attn: Patrick G. Quick
Mark T. Plichta

Email:      [***]

[***]

If to SpinCo, to:

PHINIA Inc.

3000 University Drive

Auburn Hills, MI 48326

Attn:      Robert Boyle

Email:      [***]

Either Party may, by notice to the other Party, change the address and identity of the Person to which such notices and copies of such notices are to be given. Each Party agrees that nothing in this Agreement shall affect the other Party’s right to serve process in any other manner permitted by Law (including pursuant to the rules for foreign service of process authorized by the Hague Convention).

Section 11.11         Severability. If any provision of this Agreement or the application thereof to any Person or circumstance is determined by an arbitrator or court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof, or the application of such provision to Persons or circumstances, or in jurisdictions other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby, so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to either Party. Upon any such determination, any such provision, to the extent determined to be invalid, void or unenforceable, shall be deemed replaced by a provision that such arbitrator or court determines is valid and enforceable and that comes closest to expressing the intention of the invalid, void or unenforceable provision.

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Section 11.12         Publicity. From and after the Distribution, each of Parent and SpinCo shall consult with the other and shall, subject to the requirements of Section 7.09, provide the other Party the opportunity to review and comment upon any press releases or other public statements in connection with the Spin-Off or any of the other transactions contemplated hereby and any filings with any Governmental Authority or national securities exchange with respect thereto, in each case prior to the issuance or filing thereof, as applicable (including the Information Statement, the Parties’ respective Current Reports on Form 8-K to be filed on the Distribution Date, the Parties’ respective Quarterly Reports on Form 10-Q filed with respect to the fiscal quarter during which the Distribution Date occurs, or if such quarter is the fourth fiscal quarter, the Parties’ respective Annual Reports on Form 10-K filed with respect to the fiscal year during which the Distribution Date occurs (each such Quarterly Report on Form 10-Q or Annual Report on Form 10-K, a “First Post-Distribution Report”)). Each Party’s obligations pursuant to this Section 11.12 shall terminate on the date on which such Party’s First Post-Distribution Report is filed with the Commission.

Section 11.13         Expenses. Except as expressly provided in this Agreement or in any Ancillary Agreement, (i) all third-party fees, costs and expenses incurred by either the Parent Group or the SpinCo Group in connection with effecting the Spin-Off prior to or on the Distribution Date (but excluding, for the avoidance of doubt, any financing fees, discounts, ratings agency fees, other debt issuance costs or interest payable in respect of any indebtedness incurred by SpinCo in connection with the Spin-Off), will be borne and paid by Parent and (ii) all third-party fees, costs and expenses incurred by either the Parent Group or the SpinCo Group in connection with effecting the Spin-Off following the Distribution Date, will be borne and paid by the Party incurring such fee, cost or expense. For the avoidance of doubt, this Section 11.13 shall not affect each Party’s responsibility to indemnify Parent Liabilities or SpinCo Liabilities, as applicable, arising from the transactions contemplated by the Distribution.

Section 11.14         Headings. The article, section and paragraph headings contained in this Agreement, including in the table of contents of this Agreement, are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

Section 11.15         Survival of Covenants. Except as expressly set forth in this Agreement, the covenants in this Agreement and the Liabilities for the breach of any obligations in this Agreement shall survive the Spin-Off and shall remain in full force and effect.

Section 11.16         Waivers of Default. No failure or delay of any Party (or the applicable member of its Group) in exercising any right or remedy under this Agreement or any Ancillary Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such right or power, or any course of conduct, preclude any other or further exercise thereof or the exercise of any other right or power. Waiver by any Party of any default by the other Party of any provision of this Agreement shall not be deemed a waiver by the waiving Party of any subsequent or other default.

Section 11.17         Amendments. No provisions of this Agreement shall be deemed waived, amended, supplemented or modified by any Party, unless such waiver, amendment, supplement or modification is in writing and signed by the authorized representative of each Party.

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Section 11.18         Interpretation. 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. The terms “hereof,” “herein,” “herewith” and words of similar import, unless otherwise stated, shall be construed to refer to this Agreement as a whole (including all of the Schedules hereto) and not to any particular provision of this Agreement. Article, Section or Schedule references are to the Articles, Sections and Schedules of or to this Agreement unless otherwise specified. Any capitalized terms used in any Schedule to this Agreement or to any Ancillary Agreement but not otherwise defined therein shall have the meaning as defined in this Agreement or the Ancillary Agreement to which such Schedule is attached, as applicable. Any definition of or reference to any agreement, instrument or other document herein (including any reference herein to this Agreement) shall, unless otherwise stated, be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth therein, including in Section 11.18). The word “including” and words of similar import when used in this Agreement shall mean “including, without limitation,” unless the context otherwise requires or unless otherwise specified. The word “or” shall not be exclusive. The word “extent” in the phrase “to the extent” shall mean the degree to which a subject or other thing extends, and such phrase shall not mean simply “if.” All references to “$” or dollar amounts are to the lawful currency of the United States of America. References herein to any Law shall be deemed to refer to such law as amended, reenacted, supplemented or superseded in whole or in part and in effect from time to time and also to all rules and regulations promulgated thereunder. Except as expressly set forth in this Agreement, the Parties (or their respective Group members) shall make, or cause to be made, any payment that is required to be made pursuant to this Agreement as promptly as practicable and without regard to any local currency constraints or similar restrictions. In the event that an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties, and no presumption or burden of proof shall arise favoring or disfavoring either Party by virtue of the authorship of any provisions hereof.

[Remainder of page left intentionally blank; signature pages follow.]

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IN WITNESS WHEREOF, the Parties have caused this Separation and Distribution Agreement to be executed as of the date first noted above by their duly authorized representatives.

BORGWARNER INC.
By:	/s/Tonit M. Calaway
Name:	Tonit M. Calaway
Title:	Executive Vice President and Secretary
PHINIA INC.
By:	/s/Brady D. Ericson
Name:	Brady D. Ericson
Title:	President and Chief Executive Officer

EX-10.1

Exhibit 10.1

TRANSITION SERVICES AGREEMENT

dated as of July 2, 2023

by and

between

BorgWarner Inc.

and

PHINIA Inc.

TRANSITION SERVICES AGREEMENT

This Transition Services Agreement (the “Agreement”) is made as of July 2, 2023 (the “Effective Date”) by and between BorgWarner Inc., a Delaware corporation (“Parent”), and PHINIA Inc., a Delaware corporation (“SpinCo”) (each a “Party” to this Agreement, and together the “Parties”).

WHEREAS, Parent and SpinCo have entered into a Separation and Distribution Agreement, dated July 2, 2023 (the “Separation Agreement”), which governs the principal transactions required to effect the spin-off of the SpinCo Business (as defined in the Separation and Distribution Agreement) into PHINIA Inc., and provides for certain other agreements that will govern certain matters relating to such spin-off and the relationship of BorgWarner Inc., PHINIA Inc. and their respective subsidiaries following such spin-off.

WHEREAS, in connection with the transaction contemplated by the Separation Agreement, each Party desires that the other Party provide or cause certain of its Affiliates to provide, it and its Affiliates with certain transition services on the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the premises and the representations, warranties, covenants and agreements herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the Parties hereby agree as follows:

Article I
Definitions

Section 1.01      For the purpose of this Agreement, the terms listed in this Article I, when used in their capitalized form in this Agreement, shall have the meaning set forth below. Unless expressly provided otherwise herein, all capitalized terms not specifically defined in this Agreement have the meaning ascribed to them in the Separation Agreement.

Section 1.02      In this Agreement:

“Confidential Information” means all information of a confidential nature disclosed (by whatever means, directly or indirectly) by, or on behalf of, either Party to the other Party, whether before, on or after the Effective Date, including the terms of this Agreement, any information relating to Intellectual Property rights, products, software, operations, processes, technical methods, plans, documentation, market opportunities or business affairs (including all information of a financial nature) of the Disclosing Party, as well as any information relating to the Services, the Service Provider Materials and the Service Recipient Materials;

“Control” means, with respect to any entity, the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such entity, whether through ownership of voting securities or other interests, by Contract or otherwise; provided, however, that, from and after the Distribution Date, (i) SpinCo and the other members of the SpinCo Group shall not be considered Affiliates of Parent or any of the other members of the Parent Group and (ii) Parent and the other members of the Parent Group shall not be considered Affiliates of SpinCo or any of the other members of the SpinCo Group;

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“Dependencies” has the meaning specified in Section 4.02;

“Disclosing Party” has the meaning specified in Section 10.01;

“Dispute” has the meaning specified in Section 11.09(b);

“Dispute Notice” has the meaning specified in Section 11.09(b);

“Due Date” has the meaning specified in Section 3.06;

“Effective Date” has the meaning specified in Section 8.01;

“Excluded Services” has the meaning specified in Section 2.03;

“Extended Service Term” has the meaning specified in Section 8.03;

“Force Majeure Event” means the occurrence of an event or circumstance beyond the reasonable control of a Party; provided that (i) the non-performing Party is without fault in causing or failing to prevent such occurrence; and (ii) such event may not be avoided by the use of reasonable precautions, it being specified that the Force Majeure Events shall also comprise labor strikes of any nature and pandemic and epidemic diseases as well as any internet suspension, revolutions, riots and curfews;

“Forward Services” means the services to be provided by Parent and its Affiliates to SpinCo and its Affiliates;

“Indemnified Person” has the meaning specified in Section 7.03;

“Indemnifying Person” has the meaning specified in Section 7.03;

“Intellectual Property” means, collectively, (i) patents, patent applications and all issuances, divisions, continuations, continuations-in-part, reissues, extensions, reexaminations, and renewals thereof; (ii) all marks, names, trade dress, whether registered or unregistered, and all issuances, extensions, and renewals thereof, together with the goodwill of the business connected with the use of, and symbolized by the foregoing; (iii) copyright registrations and applications for registration, and all issuances, extensions, and renewals thereof, including any unregistered copyrights in and to all works based upon, derived from, or incorporating such copyrights; (iv) trade secrets and proprietary confidential information; (v) domain names; and (vi) any and all claims and causes of action with respect to any of the foregoing, whether accruing before, on, or after the date hereof, including all rights to and claims for damages, restitution, and injunctive and other legal and equitable relief for past, present, and future infringement, dilution, misappropriation, violation, misuse, breach, or default, with the right but no obligation to sue for such legal and equitable relief and to collect, or otherwise recover, any such damages;

“IT Separation Costs” has the meaning specified in Section 3.05;

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“Law” means any law, ordinance, regulation, statute, code or other rule enacted or promulgated by any governmental authority, including any governmental order;

“Negotiation Period” has the meaning specified in Section 11.09(b);

“Non-Compliance” has the meaning specified in Section 7.04;

“Operational Change” has the meaning specified in Section 2.04;

“Party” and “Parties” has the meaning specified in the recitals;

“Permitted User” has the meaning specified in Section 10.02;

“Receiving Party” has the meaning specified in Section 10.01;

“Reverse Services” means the services to be provided by SpinCo and its Affiliates to Parent and its Affiliates;

“Sales Tax” has the meaning specified in Section 3.08;

“Security Policy” has the meaning specified in Section 9.01;

“Separation Agreement” has the meaning specified in the recitals;

“Services” means the Forward Services and the Reverse Services to be performed under this Agreement, as applicable, as set out in the Service Sheets in Appendix 1 and Appendix 2;

“Service Charges” means the cost for the Services as detailed in the Service Sheets plus five percent (5%) of such detailed cost;

“Service Level” has the meaning specified in Section 2.06;

“Service Provider” means (i) Parent, including its Affiliates, with respect to the Forward Services and (ii) SpinCo, including its Affiliates, with respect to the Reverse Services;

“Service Provider Materials” means all materials that are owned or licensable by the Service Provider and provided in connection with the provision of Services;

“Service Recipient” means (i) Parent, including its Affiliates, with respect to the Reverse Services and (ii) SpinCo, including its Affiliates, with respect to the Forward Services;

“Service Recipient Materials” means materials owned or licensable by the Service Recipient and provided in connection with the receipt of Services;

“Services Representative” has the meaning specified in Section 6.01;

“Service Sheets” has the meaning specified in Section 2.01;

“Service Term” has the meaning specified in Section 8.02;

“SpinCo” has the meaning specified in the recitals;

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“Systems” means information technology or communications systems, including networks and interfaces;

“Term” has the meaning specified in Section 8.01;

“Third Party” means, in respect of a Party, any other entitiy who is not an Affiliate of that Party;

“Third Party Consents” has the meaning specified in Section 2.05;

“Third Party Supplier” has the meaning specified in Section 2.05; and

“Transaction” has the meaning specified in the recitals.

Section 1.03      In this Agreement:

(a)      (i) “include”, “includes” or “including” shall be deemed to be followed by “without limitation”; (ii) “hereof”, “herein”, “hereby”, “hereto” and “hereunder” shall refer to this Agreement as a whole and not to any particular provision of this Agreement; (iii) “extent” in the phrase “to the extent” shall mean the degree to which a subject or other item extends and shall not simply mean “if”; (iv) “USD” shall mean United States Dollars; (v) the singular includes the plural and vice versa; (vi) reference to a gender includes the other gender; (vii) “any” shall mean “any and all”; (viii) “or” is used in the inclusive sense of “and/or”; (ix) reference to any agreement, document or instrument means such agreement, document or instrument as amended, supplemented, modified and in effect from time to time in accordance with its terms; and (x) reference to any Law means such Law as amended from time to time and includes any successor legislation thereto and any regulations promulgated thereunder;

(b)      the table of contents, articles, titles and headings to Sections herein are inserted for convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement. Except as otherwise indicated, all references in this Agreement to “Articles”, “Sections”, “Annexes” and “Appendices” are intended to refer to Articles and Sections of this Agreement and Appendixes and Appendices to this Agreement. Appendices and Annexes shall form part of this Agreement and any reference to this Agreement shall include the Appendices and Annexes, unless reference is specifically made to an Appendix or Annex or the front-end of this Agreement, respectively; and

(c)      in case of conflicts, the front-end of this Agreement shall prevail over its Appendices and Annexes, unless otherwise stipulated in the front-end of this Agreement.

Article II
Provision of Services

Section 2.01      On the terms and subject to the conditions herein, (a) Parent agrees to provide, or to cause one or more of its Affiliates to provide, to SpinCo (or its Affiliates) the Forward Services specified in Appendix 1 and (b) SpinCo agrees to provide, or to cause one or more of its Affiliates to provide, to Parent (or to its Affiliates) the Reverse Services specified in Appendix 2 (Appendix 1 and Appendix 2, collectively, the “Service Sheets”). Each Party, as Service Recipient, shall use the Services received by it solely in connection with the operation and conduct of the Parent Business or the SpinCo Business (as applicable) and shall ensure that the Services are not otherwise made available to any Third Party (except where the Service provided constitutes Third Party interaction), or used for any other purpose unless mutually agreed upon by the Parties in writing.

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Section 2.02      During the period commencing on the Effective Date and ending three (3) months after the Effective Date, the Service Recipient may identify and request the Service Provider to provide additional transitional services, which are not set out in the Service Sheets, that: (a) were used and are reasonably necessary for the operation of the Parent Business or the SpinCo Business, as applicable; (b) were provided to or by (as applicable) Parent or its Affiliates before the Effective Date; and (c) are not Excluded Services (clauses (a) through (c) together, the “Omitted Services”). If the Service Provider is reasonably capable of providing any such Omitted Services requested by the Service Recipient, the Service Provider shall consider in good faith such request and the provision of such Omitted Services. The Service Provider shall have sole discretion in considering such request and if the Service Provider agrees to provide any such Omitted Services requested by the Service Recipient, each of the Parties shall use its commercially reasonable efforts to negotiate in good faith and execute, as appropriate, a new Service Sheet or an amendment to an existing Service Sheet, in either case with respect to such Omitted Services and addressing, among other things, the scope, start date, duration, and charges in respect thereof. Upon execution of such new or amended Service Sheet, the Service Provider shall provide the agreed-upon Omitted Services described in such new or amended Service Sheet, and such Omitted Services shall become a Service under this Agreement.

Section 2.03      Notwithstanding anything in this Agreement to the contrary, the Service Provider shall not be obligated to provide any services that are not contemplated in the Service Sheets (subject to Section 2.02), including the services listed in Appendix 3 (the “Excluded Services”) or any Service if the provision of such Service would, in its sole reasonable discretion: (a) violate, breach or otherwise result in a non-compliance with any applicable Law or with any of the Service Provider’s internal policy requirements which are established generally by the Service Provider; (b) require a third party consent that has not been obtained; or (c) violate, conflict with, result in the loss of any benefit under or increase the costs under any existing contract or agreement with a third party.

Section 2.04      The Service Provider may from time to time unilaterally and subject to the Service Level: (a) change operational aspects of the Services or the way in which they are provided, or substitute such Services with equivalent services; or (b) substitute, change, update or enhance the Systems or materials used to provide the Services, (in each case under (a) and (b), an “Operational Change”); provided that, prior to making any Operational Change, the Service Provider shall: (x) ensure that the Service Recipient is given reasonable advance notice of the planned Operational Change, except in case of an emergency or where the Service Recipient will not be materially affected by the Operational Change; (y) ensure that the Service Recipient’s business is not disrupted to a material extent as a result of the Operational Change; and (z) using commercially reasonable efforts, ensure that the Operational Change will not result in a substantial increase to the Service Charges, unless the Operational Change is made pursuant to a change request as mutually agreed upon between the Parties.

Section 2.05      The Service Provider may, directly or through one or more Affiliates, unilaterally decide to involve or replace Affiliates or Third Parties as sub-contractors or otherwise as suppliers of goods, licenses or services for the provision of all or any part of the Services hereunder (such Third Party, each a “Third Party Supplier”). The Service Recipient shall at all times comply with all obligations, including use restrictions and non-disclosure provisions, in any agreements between the Service Provider and a Third Party Supplier. The Parties acknowledge that the Service Provider may require the consent of a Third Party Supplier to be able to provide certain Services to the Service Recipient and the Service Recipient may require such consent of the Third Party Supplier to receive certain Services (“Third Party Consents”). To the extent not yet obtained at the Effective Date, the Service Provider shall endeavor to obtain such Third Party Consents and shall not be obliged to provide the relevant Services as long as any Third Party Consent for such Service has not been granted. To the extent that Third Party Consents are refused, only granted subject to conditions (including the condition of additional payments), revoked, terminated or expires during a relevant Service Term, the Parties shall use their best efforts to identify, agree and implement the commercially most favorable solution (in the aggregate) by which provision of the Services can be enabled, either by fulfilling the relevant condition or by implementing a work-around at the Service Recipient’s sole expense.

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Section 2.06      Subject to Section 2.04, Section 2.05, Section 7.05 and Section 7.06, the Service Provider shall perform the Services in the scope and volumes, in the way and manner and with the quality and performance levels similar to the respective Services were provided by the Service Provider to the Service Recipient immediately prior to the Distribution Date, unless otherwise specified in the Service Sheet with respect to such Service (the “Service Level” for such Service).

Section 2.07      The Parties acknowledge that neither Party is a professional services provider with regard to the Services contemplated under this Agreement, and therefore should not expect the other Party to perform its obligations hereunder in the same manner and pursuant to the same standards as those applicable in the relevant industries practices.

Article III

SERVICE CHARGES

Section 3.01      In consideration of the Services provided by the Service Provider to the Service Recipient, the Service Recipient shall pay to the Service Provider the Service Charges set forth on the Service Sheets.

Section 3.02      Service Charges are subject to increase to account for increases in labor and other costs, with thirty (30) calendar days’ notice to the Service Recipient.

Section 3.03      Service Recipient shall bear any and all costs, expenses and other fees (excluding recoverable Sales Tax) that are invoiced to the Service Provider by any Third Party Supplier, to the extent such costs, expenses and other fees relate to Services provided by the Service Provider hereunder (the “Third Party Supplier Pass Through Costs”). If any Third Party Supplier Pass Through Costs increase or decrease at any time during the Term, the Service Provider shall, by written notice to the Service Recipient, increase or decrease (as applicable) the Service Charges to appropriately reflect such increase or decrease.

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Section 3.04      At the end of each calendar month, the Service Provider shall invoice the (a) Service Charges, (b) Third Party Supplier Pass Through Costs, (c) any reasonable expenses related to travel (including long-distance and local transportation, accommodation and meal expenses and other incidental expenses) by Service Provider’s or its Affiliates’ personnel in connection with performing the Services and any reasonable other out-of-pocket, third party costs for assets or services procured to provide the Services to be made by the Service Recipient under this Agreement in USD to the Service Recipient for that month (provided that any such travel and out-of-pocket costs described in this Section 3.04(c) exceeding $20,000 in the aggregate in any one-month period shall be subject to the Service Recipient’s prior approval), and (d) applicable Sales Taxes (if any).

Section 3.05      Responsibility for the IT-related deliverables and corresponding specific, one-time costs in conjunction with the separation of SpinCo operations and the Parties’ exit from the Services (the “IT Separation Costs”) shall be set forth on Appendix 4. The Service Charges do not reflect the IT Separation Costs or any other one-time expenses or other payments (including contract or license transfer fees and termination fees) that will incur as a result of the exit of any Services by the Service Recipient. For such one-time expenses and other payments, including any IT Separation Costs borne by Service Provider but for which Service Recipient shall be responsible as set forth on Appendix 4, the Service Provider shall invoice the Service Recipient at the time of occurrence. Notwithstanding the foregoing, the Service Recipient shall not be responsible for any employee termination or severance costs that will incur as a result of the exit of any Services.

Section 3.06      The Service Recipient shall pay the Service Charges invoiced by the Service Provider in USD within thirty (30) calendar days after the date of the invoice (the “Due Date”) to the Service Provider’s bank account as notified to the Service Recipient from time to time. Any payment under this Section 3.06 shall be made in immediately available funds by electronic transfer on or prior to the Due Date.

Section 3.07      If the Service Recipient fails to pay all or part of any invoice on or before the Due Date, then without prejudice to its other rights and remedies, among which is the right to suspend in whole or in part the Services, the Service Provider may charge interest on such unpaid amount at a rate of the lesser of ten percent (10%) per annum or the maximum rate allowed by applicable Law.

Section 3.08      All amounts payable under this Agreement by the Service Recipient shall be exclusive of any sales, use, value added or other similar tax (“Sales Tax”) (if any) which shall be paid by the Service Recipient at the rate and in the manner prescribed by the applicable Sales Tax laws in addition to and on the conditions of the relevant Service Charge. The Service Provider shall provide the Service Recipient with an invoice in accordance with applicable Sales Tax law; Section 3.11 shall remain unaffected. The Parties shall cooperate with each other in good faith in order to enable each Party to comply with the formal requirements imposed on such Party under applicable Sales Tax laws. Such cooperation includes, without limitation, that the Parties provide each other with all available information that is reasonably required for the other Party to comply with any reporting obligations under applicable Sales Tax laws (for example, the filing of Sales Tax declarations and the request of Sales Tax refunds).

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Section 3.09      All payments of Service Charges shall be made free and clear of any deduction or withholding of any kind (including taxes) other than any deduction or withholding required by applicable Laws. In case a payment of Service Charges under this Agreement is subject to any withholding or deduction prescribed by applicable Laws, then such amounts shall be borne by the Service Recipient, and any payment by the Service Recipient shall be grossed-up to ensure that the Service Provider receives the full Service Charge as specified in the Service Sheets without any deduction and withholding. Where a relief, waiver or reduction of the withholding tax is possible in accordance with Law, the Service Provider and the Service Recipient shall cooperate as far as reasonably practicable to achieve such tax exemption from the competent tax authorities. The Service Recipient shall provide the Service Provider with sufficient proof of the deduction or withholding made, in particular provide certificates or other documents in a manner as prescribed by Law. Section 3.11 shall remain unaffected by the provision of this Section 3.09.

Section 3.10      Any claims pursuant to Section 3.08 and Section 3.09 shall be time-barred upon expiration of a period of six (6) months after the respective assessment of the tax has become un-appealable and final or – if there has been no tax assessment insofar – the tax has been paid, but if and to the extent an assessment against the other Party is concerned, only at the earliest six (6) months after the former Party has notified the other Party in reasonable details about the existence of such claim.

Section 3.11      Invoices shall be sent, and payments shall be made, between the Parties, unless otherwise agreed in writing by the Parties.

Article IV
Obligations of the Service Recipient

Section 4.01      The Service Recipient shall, at its own expense, actively cooperate with and support the Service Provider to facilitate the provision of the Services and the implementation of any Operational Changes.

Section 4.02      Without limiting any other obligations of Service Recipient set forth in this Agreement, the Service Recipient undertakes, and shall cause its Affiliates, to:

(a)      provide the Service Provider with any resources (in particular, materials and premises), personnel, information and data that the Service Provider reasonably deems necessary to allow it to perform the Services and all the tasks and responsibilities set out in the Agreement and the Appendices;

(b)      provide the Service Provider with access to its personnel, premises, materials and Systems to the extent required for the provision of Services;

(c)      make decisions as to matters, as reasonably requested by the Service Provider, in good time;

(d)      upgrade, enhance or otherwise modify any computer hardware, software or network environment used in connection with any Services provided by the Service Provider, at the Service Recipient’s expense, such that the computer hardware, software or network environment are reasonably necessary to allow Service Provider to provide the Services;

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(e)      at its own expense, actively cooperate with and support the Service Provider to facilitate the provision of the Services and the implementation of any Operational Changes; and

(f)       comply with the Service Provider’s internal policy requirements which are established generally by the Service Provider (rather than directed towards the arrangements contemplated by this Agreement) as communicated to the Service Recipient from time to time (sections (a) through (f) together, the “Dependencies”).

Article V
Intellectual Property Rights

Section 5.01      All Intellectual Property rights belonging to a Party on or prior to the Effective Date (whether developed by that Party or acquired by it from a third party) or developed or acquired by it independently from the performance of its obligations under this Agreement after the Effective Date shall remain vested in that Party. Any and all Intellectual Property rights developed in the course of the provision of the Services shall be solely owned by the Service Provider; provided that Intellectual Property rights resulting from a development that has been specifically commissioned and identified in writing and paid for by the Service Recipient shall be owned by the Service Recipient. Each Party grants to the other Party a non-exclusive, non-assignable, worldwide, royalty-free, non-transferable, and non-sublicensable (except to the Third Party Suppliers of the other Party acting as a Service Provider) license for the Term to use such Party’s Service Provider Materials and Service Recipient Materials (as applicable) solely as necessary for the other Party to use or provide the Services, as applicable, and to otherwise perform its obligations hereunder.

Article VI
Governance

Section 6.01      During the Term, the Parties shall each appoint an individual (the “Services Representative”) who shall: (1) have the overall responsibility for managing and coordinating the provision and receipt of the Services; (2) be the primary contact for the other Party under this Agreement; (3) meet regularly with the other Party’s Services Representative; and (4) have the authority to make decisions with respect to actions to be taken with regard to the Services in the ordinary course of day-to-day management of this Agreement, it being understood that the exercise of contractual rights and the assumption of contractual obligations shall be reserved to duly authorized representative(s) of the respective Party and no act or omission by the Services Representative shall be deemed as exercise of rights or assumption of obligations.

Section 6.02      The Parties’ Services Representatives shall meet on a monthly basis, to generally review and discuss: (a) the provision of Services, including any anticipated Operational Changes and maintenance schedules; (b) performance objectives for applicable Services; (3) and Services Charges, expenses and payments under Section 3.05 and other payments that shall be due from the prior calendar month. If the Parties mutually agree, the Parties may offset the Service Charges and other payments due to the other, as specified in Section 3.04.

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Article VII
NO Warranties; LIMITATION OF Liability

Section 7.01      No warranties. The Service Provider does not provide any guarantee or warranty, express or implied, with respect to the Services, including, without limitation, a warranty for merchantability and fitness for a particular purpose or for compliance of the Services with regulatory requirements.

Section 7.02      LIMITATION OF LIABILITY. NO PARTY SHALL BE LIABLE TO OR OTHERWISE RESPONSIBLE TO ANY OTHER PARTY HERETO OR ANY AFFILIATE OF ANY OTHER PARTY HERETO FOR ANY INCIDENTAL, SPECIAL, CONSEQUENTIAL, INDIRECT, EXEMPLARY OR PUNITIVE DAMAGES THAT ARISE OUT OF OR RELATE TO THIS AGREEMENT OR THE PERFORMANCE OR BREACH HEREOF, WHETHER SUCH DAMAGES OR OTHER RELIEF ARE SOUGHT BASED ON BREACH OF CONTRACT, NEGLIGENCE, STRICT LIABILITY OR ANY OTHER LEGAL OR EQUITABLE THEORY AND WHETHER OR NOT THE PARTY WAS AWARE OR ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. THE SERVICE PROVIDER SHALL NOT BE RESPONSIBLE FOR ANY FAILURE OF ANY THIRD PARTY SUPPLIER TO MEET ITS OBLIGATIONS.

SUBJECT TO APPLICABLE LAW AND ANY RIGHTS AND REMEDIES PROVIDED UNDER THE SEPARATION AGREEMENT OR ANY OTHER ANCILLARY AGREEMENT AND WITHOUT LIMITING THE FOREGOING, SERVICE PROVIDER’S SOLE LIABILITY, AND SERVICE RECIPIENT’S SOLE AND EXCLUSIVE REMEDY, IN CONNECTION WITH ANY CLAIM UNDER THIS AGREEMENT SHALL BE RECOVERY OF ANY FEES PAID BY SERVICE RECIPIENT FOR THE SERVICES PROVIDED HEREUNDER, SUBJECT TO THE CAP STATED BELOW. WITHOUT LIMITING THE FOREGOING, IN NO CIRCUMSTANCES WILL SERVICE RECIPIENT BE ENTITLED TO SPECIFIC PERFORMANCE OR OTHER EQUITABLE RELIEF IN CONNECTION WITH ANY BREACH OR ALLEGED BREACH HEREUNDER OR OTHER CLAIM ARISING HEREUNDER. EXCEPT TO THE EXTENT LIABILITY RESULTS FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SERVICE PROVIDER OR ITS WILLFUL AND INTENTIONAL REFUSAL OR FAILURE TO PROVIDE THE SERVICES (EXCEPT WHERE SUCH WILLFUL AND INTENTIONAL FAILURE OR REFUSAL TO PROVIDE THE SERVICES IS OTHERWISE EXCUSED UNDER THIS AGREEMENT), IN NO EVENT WILL THE TOTAL, CUMULATIVE, AGGREGATE LIABILITY OF SERVICE PROVIDER, WHETHER BASED UPON AN ACTION OR CLAIM IN CONTRACT, TORT (INCLUDING NEGLIGENCE), WARRANTY, MISREPRESENTATION, EQUITY OR OTHERWISE, EXCEED FIFTY PERCENT (50%) OF THE AMOUNTS PAID BY SERVICE RECIPIENT TO SERVICE PROVIDER FOR THE SERVICES PROVIDED THAT ARE THE SUBJECT OF SUCH CLAIM DURING THE TWELVE (12) MONTHS PRECEDING THE DATE THAT SUCH CLAIM FIRST AROSE.

Section 7.03      Indemnification. Each Party (the “Indemnifying Person”) shall defend, indemnify and hold harmless the other Party and its Affiliates (the “Indemnified Persons”), against any and all losses owing to third parties with respect to third-party claims arising from or relating to (a) in the case of Service Provider as Indemnifying Person, any willful and intentional refusal or failure to provide the Services (except to the extent such refusal or failure to provide the Services is otherwise excused under this Agreement), or (b) the Indemnifying Person’s or its Affiliate’s willful misconduct, gross negligence or fraud. If the Indemnified Persons receives notice or knowledge of a claim as described in this Section 7.03, it shall promptly notify the Indemnifying Person in writing and give the Indemnifying Person all necessary information and assistance, and the exclusive authority to evaluate and settle such claim; provided, however, the Indemnifying Person may not settle such claim in a manner that would have a material adverse impact on the business of the Indemnified Persons without receiving the Indemnified Persons’ prior written consent.

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Section 7.04      Non-Compliance. In the event that the Service Provider fails to perform any of its obligations under this Agreement (“Non-Compliance”), the Service Provider shall, without undue delay after receipt of a notice from the Service Recipient, use commercially reasonable efforts to discontinue the Non-Compliance or to remedy the Non-Compliance; provided that the Service Provider has not been excused pursuant to Section 7.05. The remedies provided in relation to Non-Compliance shall be exclusive and the Service Recipient shall not be entitled to claim for any further remedies relating to any Non-Compliance. Any claims for failure or delay by the Service Provider under or in connection with this Agreement, irrespective of which nature, amount or legal basis, are hereby expressly waived and excluded, in particular, without limitation, post-performance or claims for reimbursement of expenses incurred as a result of a substitute performance, claims due to a disruption of the contractual basis, claims under pre-contractual fault, and/or the right to reduce the Services Fees or to terminate or rescind this Agreement. The right to terminate pursuant to Article VIII and/or to claim, subject to Article VII, damages for breach of contract shall, remain unaffected.

Section 7.05      Excused Obligations.

(a)      Any failure or delay by the Service Provider to perform an obligation under this Agreement as a consequence of the following shall release the Service Provider from the affected obligation and the Service Provider shall have no liability whatsoever for the failure or delay by the Service Provider to perform such obligation: (i) any failure of the Service Recipient to satisfy a Dependency or to perform any other obligation under this Agreement; (ii) the Service Recipient or a Third Party Supplier of the Service Provider having obstructed, hampered, impeded or otherwise adversely affected (whether by act or omission) the performance of the Services; or (iii) any matter constituting a Force Majeure Event.

(b)      If performance is excused under Section 7.05(a), then the Service Provider shall: (i) notify the Service Recipient of its failure to satisfy the Dependency, or other act or omission, and all events or circumstances causing or contributing to the failure or mal-performance, as soon as and to the extent reasonably practicable after it becomes aware of them; (ii) continue to perform those of its obligations under this Agreement which are unaffected by such events; and (iii) use reasonable efforts (it being understood that the Service Provider shall not be obliged to incur additional cost, unless the Service Recipient has agreed to indemnify the Service Provider for such cost before incurred) to minimize and mitigate the likely impact of the failure or mal-performance on the Service Recipient.

Section 7.06      Maintenance Shutdown. The Service Provider shall have the right to shut down temporarily for maintenance or similar purposes the operation of any facilities, equipment or systems used for providing any Service whenever, in the Service Provider’s reasonable judgment, such action is necessary or advisable for general maintenance or emergency purposes; provided that the Service Provider will use its commercially reasonable efforts to schedule non-emergency maintenance impacting the Services so as not to materially disrupt the operation of the Service Recipient’s business and the Service Provider will use commercially reasonable efforts to give the Service Recipient advance notice of any planned shutdown. With respect to the Services dependent on the operation of such facilities, equipment or systems, the Service Provider shall be released from its obligations hereunder to provide such Services during the period that such facilities, equipment or systems are shut down. The Service Recipient acknowledges that certain Services may be subject to network, supply, transportation logistics or other delays outside of the Service Provider’s direct control and that the Services may be affected by such network, supply, transportation logistics or other delays in the same manner.

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Article VIII
Term AND TERMINATION

Section 8.01      Term of Agreement. This Agreement shall be conditional on the Distribution and enter into force on the Distribution Date (the “Effective Date”). This Agreement shall commence on the Effective Date and expire when the last Service Term or Extended Service Term has ended (the “Term”), unless terminated earlier or extended by mutual agreement between the Parties.

Section 8.02      Service Term. Each Service shall commence on the Effective Date (unless a later date is specified in the Service Sheet) and have the duration as specified in the relevant Service Sheet, unless terminated earlier, but shall not exceed twelve (12) months following the Effective Date (the “Service Term”) unless extended pursuant to Section 8.03.

Section 8.03      Service Term Extensions. Service Recipient or Service Provider may request upon at least forty-five (45) calendar days’ prior written notice (in advance of the expiration of the then-current term of a Service) to extend the term of any Service Term on a Service-by-Service basis. Upon such request, the Parties shall negotiate in good faith on an extension of the Service Term for individual Services, subject to (a) the requesting Party solely bearing the cost of any Third Party Consents required to extend such Service and, (b) unless otherwise specified on the Service Sheet for such Service, an increase in Service Charges and Third Party Supplier Pass Through Costs of twenty-five percent (25%) for each month such Service is extended beyond the initial Service Term (an “Extended Service Term”) and shall amend the Service Term in the respective Service Sheet if and once they have reached mutual consent on such extension; provided that such Extended Service Term shall not exceed the shorter of (x) six (6) months and (y) half the length of the original Service Term. If the Service Recipient desires to extend the provision of Services beyond the Extended Service Term, the Parties may negotiate in good faith on such extensions, but the Service Provider shall not be obligated to grant such extensions.

Section 8.04      Termination of Individual Services by Service Recipient for Convenience. Service Recipient may, at any time after the Effective Date, terminate any individual Service provided under this Agreement on a Service-by-Service basis upon sixty (60) days’ prior notice (unless a longer notice period is specified for the applicable Service category in the Services Sheets) to Service Provider identifying the particular Service to be terminated and the effective date of termination, which date shall not be later than the end of the applicable Service Term or earlier than sixty (60) days after Service Provider’s receipt of such notice of termination (or such longer notice period as set forth in the Service Sheets), unless Service Provider otherwise agrees in writing. Notwithstanding the foregoing, Service Recipient shall not be able to terminate any individual Service if any non-terminated Services are dependent upon the provision of the Services that Service Recipient is seeking to terminate, unless all such interdependent Services are simultaneously terminated. Service Recipient shall be responsible for all wind-down costs (excluding any employee termination and severance costs of affected personnel), and third-party breakage or termination fees as a result of its early termination of a Service or this Agreement; provided, that, Service Provider shall provide notice of any such costs within fifteen (15) days or receipt of notice of early termination and Service Recipient has not withdrawn its termination notice within five (5) days of receipt of such notice from Service Provider.

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Section 8.05      Termination for Cause.

(a)      If either Party materially breaches any of its obligations under this Agreement and such Party does not cure such breach within thirty (30) days after receiving notice thereof from the non-breaching Party, the non-breaching Party may terminate this Agreement, in whole or in part (with respect to the Services to which the breach relates), immediately by providing notice of termination to the Party in breach. Notwithstanding the foregoing, if Service Recipient fails to pay any undisputed amounts for Services provided hereunder when due, and Service Recipient fails to cure its failure to pay such undisputed amounts within fifteen (15) days of receipt of notice thereof from Service Provider, Service Provider may terminate this Agreement, in whole, including the provision of Services pursuant hereto, immediately by providing notice of termination to Service Recipient; provided that Service Provider may not terminate this Agreement or the provision of any Services pursuant hereto for Service Recipient’s failure to pay any amount that is disputed by Service Recipient in good faith. Further, this Agreement may be terminated, effective immediately upon notice, by Service Provider, on the one hand, or by Service Recipient, on the other hand, if the other Party files, or has filed against it, a petition for voluntary or involuntary bankruptcy or pursuant to any other insolvency law or makes or seeks to make a general assignment for the benefit of its creditors or applies for or consents to the appointment of a trustee, receiver or custodian for it or a substantial part of its property.

(b)      Parent may terminate this Agreement in whole by delivering written notice thereof to SpinCo not less than one (1) calendar month prior to the proposed effective date of such termination, such proposed effective date of termination always to be the end of a calendar month, if SpinCo undergoes a change of control, meaning that a Third Party acquires Control over SpinCo or SpinCo has transferred or assigned this Agreement or any rights or obligations thereunder other than in accordance with Section 11.02.

(c)      Where any Force Majeure Event subsists for sixty (60) or more consecutive calendar days, each Party shall be entitled to forthwith terminate the Service Sheet impacted by the Force Majeure Event by giving written notice to the other Party.

Section 8.06      The rights to terminate this Agreement set forth in this Article VIII shall not prejudice any other right or remedy of either Party (including statutory rights) in respect of the breach concerned (if any) or any other breach, to the extent not excluded under other terms of this Agreement.

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Section 8.07      Consequences of Termination.

(a)      Upon expiry or termination of this Agreement in whole or in part (with respect to any terminated Services), (i) the Service Recipient shall immediately cease to use the Services affected by such termination or expiry and, (ii) except to the extent required for the performance of its remaining obligations under this Agreement, the Service Provider and the Service Recipient shall at the Service Recipient’s costs: return or deliver to the Service Provider or the Service Recipient, as applicable, all records and documents, including any Service Provider Materials or Service Recipient Materials, as applicable; and expunge all data from any Systems in its possession or control or that of any of its Affiliates containing Confidential Information of the Service Provider or the Service Recipient, as applicable, or, at the Service Provider’s or the Service Recipient’s direction, shall destroy it, and certify that the destruction has taken place. The Service Provider or the Service Recipient returning, expunging or destroying the Confidential Information may retain (A) a copy of the Confidential Information for the purposes of fulfilling, and so long as required by, retention obligations as imposed by any Law or its internal compliance procedures, and (B) copies of any computer records and files containing any Confidential Information that have been created pursuant to automatic archiving and back-up procedures.

(b)      Upon termination or expiry of the Agreement, the Service Recipient shall pay to the Service Provider all the amounts remaining due (and in case of partial termination the amounts remaining due with respect to the Services terminated), whether invoiced or not. Termination of this Agreement shall not release either Party from any other liability which at the time of termination has already accrued to the other Party, nor affect in any way the survival of any other right, duty or obligation of the Parties which is expressly stated elsewhere in this Agreement to survive termination.

Article IX
Data

Section 9.01      If the Service Recipient is given access to any of the Service Provider’s Systems or physical facilities in connection with the receipt of the Services, the Service Recipient shall cause the compliance with all of the Service Provider’s Systems security policies, procedures, technical standards and requirements (“Security Policy”). The Service Recipient will use commercially reasonable efforts to ensure that no security or audit measures employed by the Service Provider will be tampered with, compromised or circumvented, it being understood and agreed that if despite use of such commercially reasonable efforts the Service Recipient fails to comply with the Security Policy, then the Service Provider may suspend the Service Recipient’s access to the affected Systems to the extent necessary to preserve the security of the Systems until such time as such non-compliance is cured. The Service Recipient shall ensure that only those Systems of the Service Provider are accessed and used for which the right to access and use has been granted, and that such Systems are only accessed and used to the extent reasonably necessary in connection with the receipt of the Services. The Service Recipient shall ensure that only such personnel that is specifically authorized to have access to the Systems or physical facilities of the Service Provider gain such access, and to prevent unauthorized access, use, destruction, alteration or loss of information or other property contained therein, including notifying its personnel of the restrictions set forth in this Agreement. The Service Recipient shall promptly notify the Service Provider under the circumstances, but in no event later than the earlier of: (a) when required by Law; or (b) two (2) business days after discovering any unauthorized access or acquisition or suspected unauthorized acquisition of the Service Provider non-public information, or security incident which could result in the misuse or reasonable belief of misuse of identification numbers and passwords by a Service Recipient accessing the Service Provider’s computer systems.

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Section 9.02      The Data Protection Agreement in Section 9.02 shall govern processing of personal data under the Agreement and made a part of this Agreement for all purposes as if fully set forth herein.

Section 9.03      The Service Provider shall have no obligation to check, modify or correct the data processed through materials and it shall be the sole responsibility of the Service Recipient to ensure that data as well as the results of the processing carried out through the materials are accurate.

Article X
Confidentiality

Section 10.01    Each Party (“Receiving Party”) undertakes to the other Party (“Disclosing Party”) to treat as confidential all Confidential Information received under or in connection with this Agreement, which the Receiving Party receives, from or through the Disclosing Party either directly or from any other Person which concerns the business, operations, customers or users of the Disclosing Party.

Section 10.02    The Receiving Party may only use the Confidential Information for the purposes of, and in accordance with, the Agreement. The Receiving Party may only provide its employees, directors, subcontractors, professional advisers and Affiliates (“Permitted Users”) with access to the Confidential Information on a strict “need-to-know” basis. The Receiving Party shall ensure that each of its Permitted Users is bound to hold all Confidential Information in confidence to the standard required under the Agreement. Where a Permitted User is not an employee or director of the Receiving Party (and is not under a professional duty to protect confidentiality) the Receiving Party shall ensure that the Permitted User shall, prior receiving the Confidential Information, enter into a written confidentiality undertaking with the Receiving Party on substantially equivalent terms to the Agreement, copy of which shall be provided to the Disclosing Party upon request.

Section 10.03    This Section shall not apply to any information which: (a) is already known to the Receiving Party at the time of disclosure and is not subject to a confidentiality obligation (other than any information that is transferred to Service Recipient as a transferred asset under the Separation Agreement) or thereafter is independently developed by the Receiving Party without breach of this Agreement; (b) is already in the public domain at the time of disclosure, or thereafter becomes publicly known other than as the result of a breach by the Receiving Party of its obligations under this Agreement; or (c) is received from a third party without breach of this Agreement or a confidentiality obligation to the Disclosing Party known to the Receiving Party.

Section 10.04    Each Permitted User may disclose Confidential Information where that Permitted User (or, where the Permitted User is an individual, his or her employer) is required to do so by Law or by any competent court or by any competent regulatory authority. In these circumstances the Recipient shall to the extent permitted by law give the Disclosing Party prompt advance written notice of the disclosure (where lawful and practical to do so) so that the Disclosing Party has sufficient opportunity (where possible) to prevent or control the manner of disclosure by appropriate legal means.

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Section 10.05    On termination or expiry of the Agreement, this Article shall remain in full force and effect for three (3) years as from the expiry or the termination of the Agreement and, unless otherwise stated in the Agreement, each Party agrees that it must continue to keep the other Party’s Confidential Information confidential in accordance with this Article X.

Article XI
General

Section 11.01    Relationship of the Parties. Nothing contained in this Agreement shall be construed as creating a partnership, joint venture, agency, trust or other association of any kind among or between the Parties, each Party being individually responsible only for its obligations as set forth in this Agreement. Service Provider and its Affiliates shall provide the Services hereunder in the capacity of an independent contractor and not as an employee, agent or joint venture counterparty of Service Recipient. Without limiting the foregoing, Service Recipient shall not have any power or authority to bind Service Provider to any contract, undertaking or other engagement with any third party.

Section 11.02    Assignment. Neither Party may assign, delegate or otherwise transfer, in whole or in part, directly or indirectly, by operation of law or otherwise (including by merger, contribution, spin-off or otherwise) any of its rights, interests or obligations hereunder, without the prior written consent of the other Party; provided, that Parent may, without the prior written consent of SpinCo, assign its rights under this Agreement, in whole or in part, to one or more of its Affiliates or to any acquiror or successor to any business or assets used in the provision of the Services; provided, further, that no such assignment shall relieve Parent of its obligations hereunder. Any purported assignment, delegation or transfer in violation of this Section 11.02 shall be null and void.

Section 11.03    Expenses.

(a)       Except as otherwise provided in this Agreement or the Ancillary Agreements, the Parties shall bear their respective direct and indirect costs and expenses incurred in connection with the negotiation, preparation, execution and performance of this Agreement and the transactions contemplated hereby.

(b)      Unless otherwise indicated, all dollar amounts stated in this Agreement are stated in U.S. currency, and all payments required under this Agreement shall be paid in U.S. currency by wire transfer of immediately available funds.

Section 11.04    Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by overnight courier service, by email transmission (so long as confirmation of transmission is electronically or mechanically generated), or by registered or certified mail (postage prepaid, return receipt requested) to the respective Persons at the following addresses (or at such other address for a Party as shall be specified in a notice given in accordance with this Section 11.04):

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(a) if to Parent:

BorgWarner Inc.
3850 Hamlin Road
Auburn Hills, MI 48326
Attention:	Legal
Email:	[***]

with a copy, which shall not constitute notice, to:

Freshfields Bruckhaus Deringer US LLP
601 Lexington Avenue, 31st Floor
New York, NY 10022
Attention:	Menachem Kaplan
Email:	[***]

(b) if to SpinCo:

PHINIA Inc.
3000 University Drive
Auburn Hills, MI 48326
Attention:	General Counsel
Email:	[***]

Section 11.05    Amendment; Waiver. No provisions of this Agreement shall be deemed waived, amended, supplemented or modified by any Party, unless such waiver, amendment, supplement or modification is in writing and signed by the authorized representative of each Party. No failure or delay of any Party (or the applicable member of its Group) in exercising any right or remedy under this Agreement or any Ancillary Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such right or power, or any course of conduct, preclude any other or further exercise thereof or the exercise of any other right or power. Waiver by any Party of any default by the other Party of any provision of this Agreement shall not be deemed a waiver by the waiving Party of any subsequent or other default.

Section 11.06    Severability. If any provision of this Agreement or the application thereof to any Person or circumstance is determined by an arbitrator or court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof, or the application of such provision to Persons or circumstances, or in jurisdictions other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby, so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to either Party. Upon any such determination, any such provision, to the extent determined to be invalid, void or unenforceable, shall be deemed replaced by a provision that such arbitrator or court determines is valid and enforceable and that comes closest to expressing the intention of the invalid, void or unenforceable provision.

Section 11.07    Separation Agreement. Neither the making nor the acceptance of this Agreement shall enlarge, restrict or otherwise modify the terms of the Separation Agreement or constitute a waiver or release by Parent or SpinCo of any liabilities, obligations or commitments imposed upon them by the terms of the Separation Agreement, including the representations, warranties, covenants, agreements and other provisions of the Separation Agreement. In the event of any conflict between the provisions of this Agreement, on the one hand, and the provisions of the Separation Agreement, on the other hand, the Separation Agreement shall control.

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Section 11.08    Entire Agreement. This Agreement, together with the Ancillary Agreements, constitutes the entire agreement of the Parties with respect to the subject matter hereof and supersedes all prior agreements and undertakings, both written and oral, between the Parent and SpinCo with respect to the subject matter hereof.

Section 11.09    Governing Law; Dispute Resolution; Jurisdiction.

(a)      This Agreement and all matters, claims, controversies, disputes, suits, Actions or proceedings arising out of or relating to this Agreement and the negotiation, execution or performance of this Agreement or any of the transactions contemplated hereby, including all rights of the Parties (whether in contract, tort, common or statutory law, equity or otherwise) in connection therewith, shall be interpreted, construed and governed by and in accordance with the Laws of of the State of Delaware without giving effect to any choice or conflict of law provision or rule that would cause the application of the Law of any jurisdiction other than those of Delaware.

(b)      In the event of any claim, controversy, demand or request for relief of any kind arising out of, in connection with, or in relation to the interpretation, performance, nonperformance, validity or breach of this Agreement or otherwise arising out of or related to this Agreement or the transactions contemplated hereby or thereby, including any Action based on contract, tort, equity, statute, regulation or constitution (a “Dispute”), the Party raising the Dispute shall give written notice (which shall include a detailed description) of the Dispute (the “Dispute Notice”). Following the service of such Dispute Notice, the Parties’ Services Representatives shall attempt to resolve the dispute in good faith within thirty (30) Business Days from and including the date of receipt of the Dispute Notice. If the dispute cannot be resolved by the Parties’ Services Representatives within such thirty (30) Business Day period, the dispute shall be escalated to the executive officers designated by the Parties, who shall then attempt to resolve the dispute in good faith within further twenty (20) Business Days from the escalation (the period commencing from receipt of the Dispute Notice until the expiration of such escalation, the “Negotiation Period”). Neither Party shall commence any Action in accordance with Section 11.09(c) until after having attempted to resolve the Dispute pursuant to this Section 11.09(b). However, in the event of any Action in accordance with Section 11.09(c), (i) the Parties shall not assert the defenses of statute of limitations, laches or any other defense, in each such case based on the passage of time during the Negotiation Period, and (ii) any contractual time period or deadline under this Agreement relating to such Dispute occurring after the Dispute Notice is received shall not be deemed to have passed until such proceeding has been resolved.

(c)      Subject to Section 11.09(b), any Action by a Party seeking any relief whatsoever arising out of, relating to or in connection with, this Agreement shall be brought only in the federal and state courts in the State of Delaware, and such Party (i) agrees to submit to the exclusive jurisdiction of such courts for purposes of all legal proceedings arising out of, or in connection with, this Agreement, (ii) waives and agrees not to assert any objection that it may now or hereafter have to the laying of the venue of any such Action brought in such a court or any claim that any such Action brought in such a court has been brought in an inconvenient forum, (iii) agrees that mailing of process or other papers in connection with any such Action in the manner provided in Section 11.04 or any other manner as may be permitted by Law shall be valid and sufficient service thereof, and (iv) agrees that a final judgment in any such Action shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable Law.

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Section 11.10    Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

Section 11.11    Specific Performance. Subject to Section 11.09 and Section 11.10, in the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement, the affected Party shall have the right to specific performance, declaratory relief and injunctive or other equitable relief (on a permanent, emergency, temporary, preliminary or interim basis) of its 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 other Party shall not oppose the granting of such relief on the basis that money damages are an adequate remedy. The Parties agree that the remedies at Law for any breach or threatened breach hereof, including monetary damages, are inadequate compensation for any loss and that any defense in any action for specific performance that a remedy at Law would be adequate is hereby waived. Any requirements for the securing or posting of any bond or similar security with such remedy are hereby waived.

Section 11.12    Headings. The article, section and paragraph headings contained in this Agreement, including in the table of contents of this Agreement, are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

Section 11.13    No Third-Party Beneficiaries. The provisions of this Agreement are solely for the benefit of the Parties hereto and are not intended to confer upon any Person except the Parties hereto any rights or remedies hereunder and there are no third-party beneficiaries of this Agreement and this Agreement shall not provide any third person with any remedy, claim, liability, reimbursement, cause of action or other right in excess of those existing without reference to this Agreement.

Section 11.14    Counterparts. This Agreement may be executed in one or more counterparts, all of which counterparts shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each Party and delivered to the other Party. This Agreement may be executed by facsimile or PDF signature and scanned and exchanged by electronic mail, and such facsimile or PDF signature or scanned and exchanged copies shall constitute an original for all purposes.

- Signature Page follows -

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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed as of the date first written above.

.

BorgWarner Inc.
By:	/s/ Tonit Calaway
Name:	Tonit Calaway
Title:	Executive Vice President and Chief Administrative Officer
PHINIA Inc.
By:	/s/ Robert Boyle
Name:	Robert Boyle
Title:	General Counsel

EX-10.2

Exhibit 10.2

TAX MATTERS AGREEMENT

by and between

BORGWARNER INC.

and

PHINIA INC.

Dated as of July 2, 2023

TABLE OF CONTENTS

Page

Article I – DEFINITIONS			1
	1.1	General	1
Article II – PAYMENTS AND TAX REFUNDS			10
	2.1	Responsibility for SpinCo Group Taxes and Certain Parent Group Taxes	10
	2.2	Transaction Taxes	11
	2.3	Allocation of Taxes	11
	2.4	Allocation of Employment Taxes	12
	2.5	Tax Benefits	12
	2.6	The Determination of Taxes and Tax Benefits	13
	2.7	Prior Agreements	13
Article III – PREPARATION AND FILING OF TAX RETURNS			13
	3.1	Joint Returns	13
	3.2	SpinCo Separate Returns	13
	3.3	Right to Review Tax Returns	13
	3.4	Special Rules Relating to the Preparation of Tax Returns	14
	3.5	Reporting of Separation	14
	3.6	Transfer Pricing and Similar Reports	14
	3.7	Payment of Taxes	15
	3.8	Amended Returns and Carrybacks	16
	3.9	Apportionment of Earnings & Profits and Tax Attributes	16
	3.10	Deductions and Reporting for Certain Awards	16
Article IV – INTENDED TAX TREATMENT OF THE DISTRIBUTION			17
	4.1	Representations and Warranties	17
	4.2	Restrictions Relating to the Distribution	17
	4.3	Additional Procedures Regarding Post-Distribution Rulings and Unqualified Tax Opinions	19
Article V – INDEMNITY OBLIGATIONS			21
	5.1	Indemnity Obligations	21
	5.2	Indemnification Payments	21
	5.3	Payment Mechanics	22
	5.4	Treatment of Payments	22
Article VI – TAX CONTESTS			23
	6.1	Notice	23
	6.2	Separate Returns	23
	6.3	Joint Return	23
	6.4	Transaction Related Tax Contests	24
	6.5	Tax Contest Rights	24
	6.6	Costs and Expenses	25

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Article VII – COOPERATION			25
	7.1	General	25
	7.2	Return Information	26
Article VIII – RETENTION OF RECORDS; ACCESS			26
	8.1	Retention of Records	26
	8.2	Access to Tax Records	26
Article IX – DISPUTE RESOLUTION			26
	9.1	Tax Disputes	26
	9.2	Legal Disputes	27
	9.3	Injunctive Relief	27
	9.4	Specific Performance	28
	9.5	Venue for Injunctive Relief and Specific Performance Claims by Parent	28
Article X – MISCELLANEOUS PROVISIONS			28
	10.1	Conflicting Agreements	28
	10.2	Specified Matters	28
	10.3	Interest on Late Payments	28
	10.4	Counterparts	29
	10.5	Successors	29
	10.6	Third Party Beneficiaries	29
	10.7	Governing Law	29
	10.8	Assignability	29
	10.9	Further Assurances	30
	10.10	Survival	30
	10.11	Severability	30
	10.12	Amendments	30
	10.13	Headings	30
	10.14	Waivers of Default	30
	10.15	Continuity of Service and Performance	30
	10.16	Notices	31
	10.17	Interpretation	32
	10.18	Effectiveness	32

ii

Schedules

Schedule A -      Specified Matters

Schedule B -      Intended Tax Treatment

Schedule C -      Identified Transactions

Schedule D -      Gain Recognition Agreements

Schedule E -      Active Business

iii

TAX MATTERS AGREEMENT

This TAX MATTERS AGREEMENT (including the schedules hereto, this “Agreement”), is entered into as of July 2, 2023 between BorgWarner Inc., a Delaware corporation (“Parent”), and PHINIA Inc., a Delaware corporation (“SpinCo” and, together with Parent, the “Parties”).

RECITALS

WHEREAS, the board of directors of Parent has determined that it is appropriate, desirable and in the best interests of Parent and its stockholders to separate the Parent Business from the SpinCo Business in the manner described in the Separation and Distribution Agreement, dated as of July 2, 2023, between the Parties (such agreement, the “Separation Agreement” and such separation the “Separation”) and, following the Separation, to undertake the Distribution;

WHEREAS, SpinCo has been incorporated for these purposes and has not engaged in activities except those incidental to its formation and in preparation for the Distribution;

WHEREAS, Parent has effected or will effect certain restructuring transactions for purposes of aggregating the SpinCo Business in the Parent Group prior to the Distribution (collectively, the “Restructuring”);

WHEREAS, Parent will contribute SpinCo Assets to SpinCo in exchange for SpinCo Common Stock and the assumption of SpinCo Liabilities (the “External Contribution”);

WHEREAS, Parent intends to effect the Spin-Off Transaction in a transaction that qualifies as tax-free for U.S. federal income tax purposes under Sections 368(a)(1)(D), 355 and 361 of the Code;

WHEREAS, certain members of the Parent Group, on the one hand, and certain members of the SpinCo Group, on the other hand, file certain Tax Returns on a consolidated, combined or unitary basis for certain federal, state, local and Non-U.S. Tax purposes; and

WHEREAS, the Parties desire to (a) provide for the payment of Tax Liabilities and entitlement to refunds thereof, allocate responsibility for, and cooperation in, the filing of Tax Returns, and provide for certain other matters relating to Taxes and (b) set forth certain covenants and indemnities relating to the preservation of the Intended Tax Treatment of the Transactions.

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

Article I – DEFINITIONS

1.1           General. For the purposes of this Agreement, the following terms shall have the following meanings:

“Accounting Firm” shall have the meaning set forth in Section 9.1.

“Active Business” shall mean, as shown on Schedule E, the active conduct (as defined in Section 355(b)(2) of the Code and the Treasury Regulations thereunder) by SpinCo and its “separate affiliated group” (as defined in Section 355(b)(3)(B) of the Code) and any SpinCo Group member that is a party to a transaction intended to qualify under Section 355 of the Code and such Affiliate’s “separate affiliated group” of the SpinCo Business, in each case, as conducted immediately prior to the Distribution or any other relevant distribution.

“Adjustment” shall mean an adjustment of any item of income, gain, loss, deduction, credit or any other item affecting Taxes of a taxpayer.

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

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

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

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

“Chosen Court Claim” shall have the meaning set forth in Section 9.5.

“Chosen Courts” shall have the meaning set forth in Section 9.5.

“Code” shall mean the U.S. Internal Revenue Code of 1986 (as amended).

“Controlling Party” shall mean, with respect to a Tax Contest, the Party entitled to control such Tax Contest pursuant to Section 6.2, Section 6.3 or Section 6.4.

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

“Dispute” shall have the meaning set forth in Section 9.2.

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

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

“Distribution Taxes” shall mean any Taxes incurred solely as a result of the failure of any of the Transactions to qualify for the Intended Tax Treatment of such Transaction.

“Due Date” shall mean (a) with respect to a Tax Return, the date (taking into account all valid extensions) on which such Tax Return is required to be filed under applicable Tax Law or, in the case of a Joint Return for a U.S. jurisdiction filed by Parent pursuant to Section 2.1(a), such earlier date on which such Tax Return is filed as determined by Parent and (b) with respect to a payment of Taxes, the date on which such payment is required to be made, which shall in any case be no later than the payment date required to avoid the incurrence of interest, penalties and additions to Tax.

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

“External Contribution” shall have the meaning set forth in the recitals hereto

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

“Gain Recognition Agreement” shall mean any agreement to recognize gain that is described in Treasury Regulations Section 1.367(a)-8(i) which is entered into in connection with the Transactions and (ii) to which any member of the Parent Group or the SpinCo Group is a party.

“Group” shall mean either the Parent Group or the SpinCo Group, as the context requires.

“Indemnifying Party” shall have the meaning set forth in Section 5.2.

“Indemnitee” shall have the meaning set forth in Section 5.2.

“Informational Tax Returns” shall have the meaning set forth in Section 3.6.

“Intended Tax Treatment” shall mean (x) the qualification of (i) the External Contribution (and Parent’s receipt or deemed receipt of the SpinCo Common Stock in connection therewith) and the Distribution, taken together, as a reorganization described in Sections 368(a)(1)(D) and 355(a) of the Code, with each of Parent and SpinCo being a party to the reorganization, in which no income or gain is recognized by Parent, SpinCo, the Parent Group, the SpinCo Group or the holders of Parent Common Stock pursuant to Sections 355, 357, 361 and 1032 of the Code, other than in respect of intercompany items or excess loss accounts taken into account pursuant to the Treasury Regulations promulgated pursuant to Section 1502 of the Code, and (ii) the Distribution as a transaction in which the stock distributed thereby is “qualified property” for purposes of Section 361(c) of the Code (and neither Section 355(d) nor Section 355(e) of the Code causes such stock to be treated as other than “qualified property” for such purposes), and (y) the qualification of each of the transactions undertaken pursuant to the Restructuring identified on Schedule B for the tax treatment specified for such transaction therein under applicable Tax Law. The term “Intended Tax Treatment” will, as applicable, also include the qualification of each transaction described in clauses (x) and (y) under comparable provisions of state or local Tax Law, or, in the case of clause (y), Non-U.S. Tax Law.

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“IRS” shall mean the United States Internal Revenue Service or any successor thereto, including its agents, representatives, and attorneys.

“Joint Return” shall mean any Tax Return that includes, by election or otherwise, one or more members of the Parent Group together with one or members of the SpinCo Group (including, for the avoidance of doubt, the following Tax Returns (and any related claims or elections) for UK Tax purposes: a joint amended return pursuant to the Corporation Tax (Simplified Arrangements for Group Relief) Regulations 1999, an interest restriction return for the purposes of the corporate interest restriction in Part 10 and Schedule 7A to the Taxation (International and Other Provisions) Act 2010, and a group allowance allocation statement for the purposes of the loss restriction in Part 7ZA of the Corporation Tax Act 2010, in each case to the extent that the return or statement covers one or more members of the Parent Group together with one or members of the SpinCo Group).

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

“Negotiation Period” shall have the meaning set forth in Section 9.1.

“Non-Controlling Party” shall mean, with respect to a Tax Contest, the Party that is not entitled to (or elects not to) control such Tax Contest pursuant to Section 6.2, Section 6.3 or Section 6.4.

“Non-U.S. Tax” shall mean any Tax imposed by any non-U.S. country or any possession of the United States, or by any political subdivision of any non-U.S. country or possession of the United States.

“Notified Action” shall have the meaning set forth in Section 4.3(a).

“Parent” shall have the meaning set forth in the preamble hereto.

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

“Parent Common Stock” shall have the meaning set forth in the Separation Agreement.

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

“Parent Separate Return” shall mean any Tax Return of or including any member of the Parent Group (including any consolidated, combined, or unitary return) that does not include any member of the SpinCo Group.

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

“Past Practices” shall have the meaning set forth in Section 3.4.

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

“Post-Distribution Period” shall mean any Tax Period (or portion thereof) beginning after the Distribution Date, including, for the avoidance of doubt, the portion of any Straddle Period with respect to the Distribution Date beginning after the Distribution Date.

“Post-Distribution Ruling” shall have the meaning set forth in Section 4.2(c).

“Pre-Distribution Period” shall mean any Tax Period (or portion thereof) ending on or before the Distribution Date, including, for the avoidance of doubt, the portion of any Straddle Period with respect to the Distribution Date ending at the end of the day on the Distribution Date.

“Preparing Party” shall have the meaning set forth in Section 3.3.

“Privilege” shall mean 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.

“Prohibited Acts” shall mean any act or failure to act by SpinCo described in Section 4.2(a) or Section 4.2(b) (regardless of whether the conditions set forth in Section 4.2(c) are satisfied).

“Proposed Acquisition Transaction” shall mean 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 SpinCo management or stockholders, is a hostile acquisition, or otherwise, as a result of which SpinCo (or any successor thereto) would merge or consolidate with any other Person or as a result of which one or more Persons would (directly or indirectly) acquire, or have the right to acquire, from SpinCo (or any successor thereto) and/or one or more holders of SpinCo Capital Stock, respectively, any amount of stock of SpinCo, that would, when combined with any other direct or indirect changes in ownership of the stock of SpinCo pertinent for purposes of Section 355(e) of the Code and the Treasury Regulations promulgated thereunder, comprise 40% or more of (i) the value of all outstanding shares of SpinCo as of the date of such transaction, or in the case of a series of transactions, the date of the last transaction of such series, or (ii) the total combined voting power of all outstanding shares of voting stock of SpinCo as of the date of such transaction, or in the case of a series of transactions, the date of the last transaction of such series. Notwithstanding the foregoing, a Proposed Acquisition Transaction shall not include (i) the adoption by SpinCo of a customary stockholder rights plan or (ii) issuances by 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 stockholders. This definition and the application thereof are intended to monitor compliance with Section 355(e) of the Code and the Treasury Regulations promulgated thereunder and shall be interpreted and applied accordingly. Any clarification of, or change in, the statute or regulations promulgated under Section 355(e) of the Code shall be incorporated in this definition and its interpretation.

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“Refund” shall mean any refund, reimbursement, offset, credit or other similar benefit in respect of Taxes (including any overpayment of Taxes that can be refunded or, alternatively, applied against other Taxes payable), including any interest paid on or with respect to such refund of Taxes; provided, however, that the amount of any refund of Taxes shall be net of any costs and expenses (including Taxes imposed by any Taxing Authority) related to, or attributable to, the receipt of or accrual of such refund (including any Taxes imposed by way of withholding or offset).

“Relevant Items” shall have the meaning set forth in Section 2.6.

“Representation Letters” shall mean the representation letters of officers of Parent and/or SpinCo provided to Ernst & Young LLP in connection with any Tax Opinion issued in connection with the Transactions.

“Responsible Party” shall mean, with respect to any Tax Return, the Party having responsibility for preparing and filing such Tax Return pursuant to this Agreement.

“Restricted Period” shall mean the period beginning on the Distribution Date and ending on the two (2)-year anniversary of the day after the Distribution Date.

“Restructuring” shall have the meaning set forth in the recitals hereto.

“Reviewing Party” shall have the meaning set forth in Section 3.3.

“Section 4.2(b)(v) Acquisition Transaction” shall have the meaning set forth in Section 4.2(b)(v).

“Separate Return” shall mean a Parent Separate Return or a SpinCo Separate Return, as the case may be.

“Separation” shall have the meaning set forth in the recitals hereto.

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

“Spin-Off Transaction” shall mean the External Contribution and the Distribution, , taken together.

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

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

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

“SpinCo Capital Stock” means the Capital Stock of SpinCo, including the SpinCo Common Stock.

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“SpinCo Common Stock” shall have the meaning set forth in the Separation Agreement.

“SpinCo Disqualifying Action” shall mean (a) any action (or the failure to take any action) by any member of the SpinCo Group after the Distribution (including entering into any agreement, understanding or arrangement or any negotiations with respect to any transaction or series of transactions), (b) any event (or series of events) after the Distribution involving the SpinCo Capital Stock or any stock or assets of any member of the SpinCo Group or (c) any breach by any member of the SpinCo Group after the Distribution of any representation, warranty or covenant made by them in this Agreement, that, in each case, would adversely affect, jeopardize or prevent the Intended Tax Treatment; provided, however, that the term “SpinCo Disqualifying Action” shall not include any action required by the Separation Agreement or any Ancillary Agreement (other than this Agreement) or that is undertaken pursuant to the Separation or the Distribution.

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

“SpinCo Separate Return” shall mean any Tax Return of or including any member of the SpinCo Group (including any consolidated, combined, or unitary return) that does not include any member of the Parent Group.

“State Tax” shall mean any Tax imposed by any State of the United States or by any political subdivision of any such State.

“Straddle Period” shall mean any Tax Period beginning on or before the Distribution Date and ending after the Distribution Date.

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

“Tax” or “Taxes” shall mean (i) all taxes, charges, fees, duties, levies, imposts, rates or other assessments or charges of any kind imposed by any Taxing Authority, including income, gross income, gross receipts, profits, employment, estimated, excise, severance, stamp, occupation, premium, windfall profits, environmental, custom duties, property, sales, use, license, lease, capital stock, transfer, import, export, franchise, registration, payroll, withholding, social security, workers’ compensation, unemployment, disability, ad valorem, service, value-added, alternative or add-on minimum, estimated, unclaimed property or escheat, or other taxes, whether disputed or not, and including any fee, assessment, duty, or other charge in the nature of or in lieu of any tax, and including any interest, penalties, charges or additions to tax or additional amounts in respect of the foregoing, (ii) liability for the payment of any amount of the type described in clause (i) arising as a result of being (or having been) a member of any consolidated, combined, unitary or similar group or being (or having been) included or required to be included in any Tax Return related thereto and (iii) liability for the payment of any amount of the type described in clause (i) or (ii) as a result of any express or implied obligation to indemnify or otherwise assume or succeed to the liability of any other Person. For the avoidance of doubt, Tax includes any increase in Tax as a result of a Final Determination.

“Tax Advisor” shall mean a U.S. Tax counsel or other Tax advisor of recognized national standing acceptable to Parent, in its sole and absolute discretion.

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“Tax Advisor Dispute” shall have the meaning set forth in Section 9.1.

“Tax Advisor Dispute Notice” shall have the meaning set forth in Section 9.1.

“Tax Attribute” shall mean net operating losses, capital losses, research and experimentation credit carryovers, investment tax credit carryovers, earnings and profits, foreign tax credit carryovers, overall foreign losses, overall domestic losses, previously taxed earnings and profits, separate limitation losses and any other losses, deductions, credits or other comparable items that could affect a Tax Liability for a past, current or future Tax Period, other than the basis or adjusted basis of any property or any depreciation, amortization or other deductions or offsets attributable thereto.

“Tax Benefit” shall mean any reduction in Taxes paid or payable actually realized by a Person as a result of any loss, deduction, Refund, credit, offset or other Tax Item.

“Tax Contest” shall have the meaning set forth in Section 6.1.

“Tax Item” shall mean any item of income, gain, loss, deduction, or credit.

“Tax Law” shall mean the law of any Taxing Authority or political subdivision thereof relating to any Tax.

“Tax Liability” shall mean any liability or obligation for Taxes.

“Tax Materials” shall have the meaning set forth in Section 4.1(a).

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

“Tax Opinion” shall mean any written opinion or memorandum of any law or accounting firm, regarding certain tax consequences of certain transactions executed as part of the Transactions.

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

“Tax Records” shall have the meaning set forth in Section 8.1.

“Tax Related Costs and Expenses” shall mean, with respect to Taxes, all out-of-pocket accounting, legal and other professional fees, and court costs incurred in connection with such Taxes, as well as any other out-of-pocket costs incurred in connection with such Taxes.

“Tax Related Losses” shall mean (i) Tax Related Costs and Expenses and (ii) with respect to Taxes, all costs, expenses and damages associated with stockholder litigation or controversies and any amount paid by Parent (or any of its Affiliates) or SpinCo (or any of its Affiliates) in respect of the liability of stockholders, whether paid to stockholders or to the IRS or any other Taxing Authority, in each case, resulting from the failure of any of the Transactions to qualify for the Intended Tax Treatment or the defense against any challenge by the IRS or any other Taxing Authority to the Intended Tax Treatment of any Transaction, even if such Transaction ultimately is determined to so qualify.

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“Tax Return” shall mean any return, report, certificate, form or similar statement or document (including any related supporting information or schedule attached thereto and any information return, amended tax return, claim for refund or other adjustment or declaration of estimated tax) supplied to or filed with, or required to be supplied to or filed with, a Taxing Authority, or any bill for or notice related to ad valorem or other similar Taxes received from a Taxing Authority, in each case, in connection with the determination, assessment or collection of any Tax or the administration of any laws, regulations or administrative requirements relating to any Tax.

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

“Transaction Related Tax Contest” shall mean any Tax Contest in which the IRS, another Taxing Authority or any other party asserts a position that could reasonably be expected to (a) adversely affect, jeopardize or prevent (i) the Intended Tax Treatment of the Spin-Off Transaction or (ii) the Intended Tax Treatment of any other Transaction as set forth in a Tax Opinion (or, if not set forth in a Tax Opinion, as set forth in Schedule B) or (b) otherwise affect the amount of Taxes imposed with respect to any of the Transactions, as determined in each case by Parent.

“Transaction Taxes” shall mean all Taxes (including Taxes imposed on any member of the Parent Group under Sections 951 or 951A of the Code) imposed on or with respect to the Transactions other than any Taxes resulting from the failure of any of the Transactions to qualify for the Intended Tax Treatment, as determined by Parent.

“Transactions” shall mean the Separation (including the Restructuring and the External Contribution), the Distribution and any related transactions.

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

“Unqualified Tax Opinion” shall mean an unqualified “will” opinion of a Tax Advisor, and on which Parent may rely, to the effect that a transaction will not affect the Intended Tax Treatment or otherwise cause any Transaction to fail to qualify for the Intended Tax Treatment; provided that any tax opinion obtained in connection with a proposed acquisition of SpinCo Capital Stock entered into during the Restricted Period shall not qualify as an Unqualified Tax Opinion unless such tax opinion concludes that such proposed acquisition will not be treated as “part of a plan (or series of related transactions),” within the meaning of Section 355(e) of the Code and the Treasury Regulations promulgated thereunder, that includes the Distribution; provided, further, that any such opinion must assume that the External Contribution and the Distribution, taken together, would have qualified for the Intended Tax Treatment if the transaction in question did not occur.

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Article II – PAYMENTS AND TAX REFUNDS

2.1           Responsibility for SpinCo Group Taxes and Certain Parent Group Taxes. Except as otherwise expressly provided in this Agreement (including Schedule A):

(a)           Parent shall be responsible for all Taxes reported, or required to be reported, on any Joint Return; provided, however, that to the extent any such Joint Return includes any Tax Item attributable to any member of the SpinCo Group or the SpinCo Business in respect of any Post-Distribution Period, SpinCo Group shall be allocated all Taxes attributable to such Tax Items in accordance with Section 2.3.

(b)           Responsibility for Taxes related to Separate Returns.

(i)           Parent shall be responsible for all Taxes reported, or required to be reported, on (x) a Parent Separate Return and (y) a SpinCo Separate Return with respect to a Pre-Distribution Period.

(ii)          SpinCo shall be responsible for all Taxes reported, or required to be reported, on a SpinCo Separate Return with respect to a Post-Distribution Period.

(iii)         Where a SpinCo Separate Return relates to a Straddle Period, the responsibility for Taxes between Parent and SpinCo will be determined in accordance with Section 2.3.

(c)           Taxes Not Reported on Tax Returns.

(i)           Parent shall be responsible for any Tax attributable to any member of the Parent Group that is not required to be reported on a Tax Return, as determined by Parent in its sole and absolute discretion.

(ii)          Any Tax attributable to any member of the SpinCo Group that is not required to be reported on a Tax Return shall be, as determined by Parent in its sole and absolute discretion in accordance with Section 2.3, the responsibility of, (x) if with respect to a Pre-Distribution Period, Parent and, (y) if with respect to a Post-Distribution Period, SpinCo.

(d)           Parent shall be responsible for all Taxes (i) imposed under Treasury Regulations Section 1.1502-6 or under any comparable or similar provision of state, local or non-U.S. Law on any member of the SpinCo Group solely as a result of such company being a member of a consolidated, combined, affiliated or unitary group with, or as a successor to, any member of the Parent Group during any Tax Period; and (ii) imposed on any member of the SpinCo Group for any Pre-Distribution Period as a result of any express or implied obligation to indemnify any other Person, or any successor or transferee liability, except to the extent such Taxes are otherwise not the responsibility of Parent pursuant to clauses (a) through (c) of this Section 2.1, as determined by Parent in its sole and absolute discretion.

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2.2           Transaction Taxes and Distribution Taxes. Notwithstanding anything to the contrary in Section 2.1, and except as otherwise provided herein (including Schedule A):

(a)           Parent shall be responsible for any Transaction Taxes; and

(b)           SpinCo shall be responsible for any Distribution Taxes and Tax Related Losses for which SpinCo has an indemnification obligation pursuant to Section 5.1(b)(v).

2.3           Allocation of Taxes.

(a)           If any member of the SpinCo Group is permitted but not required under applicable U.S. federal, state, local or Non-U.S. Tax Law to treat the Distribution Date as the last day of a Tax Period with respect to any member of the SpinCo Group, then the Parties and their Affiliates shall treat such day as the last day of the applicable Tax Period under such applicable Law, and shall file any elections necessary or appropriate for such treatment; provided that, for the avoidance of doubt, this Section 2.3 shall not be construed to require Parent to change its taxable year or treat the Distribution Date as the last day of a Tax Period of any member of the Parent Group.

(b)           Any Tax Item arising from transactions occurring, or actions taken, on the Distribution Date but after the Distribution outside the ordinary course of business by, or with respect to, any member of the SpinCo Group shall be deemed subject to the “next day rule” of Treasury Regulations Section 1.1502-76(b)(1)(ii)(B) and under any comparable or similar provision under state, local or non-U.S. Laws or regulations; provided that, if there is no comparable or similar provision under state, local or non-U.S. Laws or regulations or such treatment is not permitted by any comparable or similar provision under state, local or non-U.S. Laws or regulations, then the transaction or action will be deemed subject to the “next day rule” of Treasury Regulations Section 1.1502-76(b)(1)(ii)(B)) for the purposes of this Agreement and as such shall for purposes of this Agreement be treated (and consistently reported by the Parties and their Affiliates) as occurring in a Post-Distribution Period of the SpinCo Group and the responsibility of SpinCo (or a member of the SpinCo Group), as appropriate.

(c)           Any Taxes for a Straddle Period with respect to the SpinCo Group (or entities in which any member of the SpinCo Group has an ownership interest) shall, for purposes of this Agreement, be allocated between the portion of the period ending on and including the Distribution Date and the portion of the period beginning after the Distribution Date by means of a closing of the books and records of the SpinCo Group as of the close of business on the Distribution Date; provided that (i) Parent may elect to allocate Tax Items (other than any extraordinary Tax Items) ratably in the month in which the Distribution occurs (and if Parent so elects, SpinCo shall so elect) as described in Treasury Regulations Section 1.1502-76(b)(2)(iii) and corresponding provisions of state, local, and non-U.S. Law; (ii) whenever it is necessary to determine the liability for Taxes of a United States shareholder (within the meaning of Section 951(b) of the Code) of a controlled foreign corporation (within the meaning of Section 957 of the Code) attributable to amounts included in the income of such United States shareholder under Sections 951 or 951A of the Code for the taxable year or period of such controlled foreign corporation that begins on or before and ends after the Distribution Date, the determination of liability for any such Taxes shall be made by assuming that the taxable year or period of the controlled foreign corporation consisted of two (2) taxable years or periods, one which ended at the close of the Distribution Date and the other of which began at the beginning of the day following the Distribution Date and relevant items of income, gain, deduction, loss or credit of the controlled foreign corporation shall be allocated between such two (2) taxable years or periods on a closing of the books basis by assuming that the books of the controlled foreign corporation were closed at the close of the Distribution Date; provided, however, that Subpart F income (within the meaning of Section 952 of the Code) of the controlled foreign corporation shall be determined without regard to Section 952(c) of the Code; and (iii) subject to clauses (i) and (ii), exemptions, allowances or deductions that are calculated on an annual basis, and not on a closing of the books method (including depreciation and amortization deductions) and, at Parent’s election, Taxes that are imposed on a periodic basis or otherwise measured by the level of any item, shall be allocated between the period ending on and including the Distribution Date and the period beginning after the Distribution Date based on the number of days for the portion of the Straddle Period ending on and including the Distribution Date, on the one hand, and the number of days for the portion of the Straddle Period beginning after the Distribution Date, on the other hand. The foregoing provisions in this Section 2.3(c) shall be applied as determined by Parent.

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2.4           Allocation of Employment Taxes. Liability for Taxes and any related Tax Benefits related to any equity compensation awards shall be determined pursuant to the EMA.

2.5           Tax Benefits.

(a)           Parent shall be entitled to all Tax Benefits (including, in the case of any refund received, any interest thereon actually received) attributable to Taxes the liability for which is allocated to Parent pursuant to this Agreement. SpinCo shall be entitled to all Tax Benefits (including, in the case of any refund received, any interest thereon actually received) attributable to Taxes the liability for which is allocated to SpinCo pursuant to this Agreement. For purposes of the foregoing, a Tax Benefit relating to a correlative adjustment as a result of a competent authority proceeding shall be deemed to be attributable to the liability for Taxes that gave rise to the correlative adjustment.

(b)           A Party receiving (or realizing) a Tax Benefit to which another Party is entitled hereunder (a “Tax Benefit Recipient”) shall pay over the amount of such Tax Benefit (including interest received from the relevant Taxing Authority, but net of any Taxes imposed with respect to such Tax Benefit and any other reasonable costs associated therewith) within thirty (30) days of receipt thereof (or from the due date for payment of any Tax reduced thereby); provided, however, that the other Party, upon the request of such Tax Benefit Recipient, shall repay the amount paid to the other Party (plus any penalties, interest or other charges imposed by the relevant Taxing Authority) in the event that, as a result of a subsequent Final Determination, a Tax Benefit that gave rise to such payment is subsequently disallowed. Notwithstanding anything in Section 2.5(b) to the contrary, any Tax Benefit of less than $100,000 treated as received pursuant to this Section 2.5(b) by any member of the Parent Group, on the one hand, or SpinCo or any member of the SpinCo Group, on the other hand, and that is allocable to the other Party pursuant to this Section 2.5, may be aggregated with other Tax Benefit received in the same calendar quarter and paid over to the other Party within 30 days after the end of such calendar quarter.

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2.6           The Determination of Taxes and Tax Benefits. The amount of any Taxes and any Tax Benefits (including any Refunds attributable to Taxes) for which Parent or SpinCo, respectively, is responsible pursuant to this Agreement, or the amount of any Tax Benefit, in each case, attributable to one or more items of income, gain, loss, deduction or credit (or equivalent items in the case of non-income Taxes) (the “Relevant Items”) shall be based on the increase or decrease in the amount of cash Taxes for which such Party is liable when measured by including such Relevant Items in a computation of Tax compared to excluding such Relevant Items from the computation of Tax, in each case as determined by Parent, which may include making simplifying assumptions concerning the computation of Tax, including that the relevant Party be deemed to recognize all other items of income, gain, loss, deduction or credit (or equivalent items) before recognizing such Relevant Items; provided that, if there is no increase or decrease in the amount of cash Taxes for which a Party is liable in the taxable period when first measured, the Parties shall thereafter remeasure the amount of payment obligations to one another at the end of each subsequent taxable period to reflect any increase or decrease in the amount of cash Taxes recognized in such subsequent taxable period; provided, further, that notwithstanding anything in this Section 2.6 to the contrary, Parent shall not be responsible for any non-U.S. Taxes of the SpinCo Group to the extent SpinCo has Tax Attributes attributable to the Parent Business that are available to offset such Tax, as determined by Parent.

2.7           Prior Agreements. Except as set forth in this Agreement and in consideration of the mutual indemnities and other obligations of this Agreement, any and all prior Tax sharing or allocation agreements or practices between any member of the Parent Group and any member of the SpinCo Group shall be terminated with respect to the SpinCo Group and the Parent Group as of the Distribution Date and no member of either the SpinCo Group or the Parent Group shall have any continuing rights or obligations under any such agreement. This Agreement shall be the sole Tax sharing agreement between the members of the SpinCo Group on the one hand, and the members of the Parent Group, on the other hand

Article III – PREPARATION AND FILING OF TAX RETURNS

3.1           Joint Returns. Parent shall prepare and file when due (taking into account any applicable extensions), or shall cause to be prepared and filed, all such Joint Returns, including any amendments to such Joint Returns.

3.2           SpinCo Separate Returns. SpinCo shall prepare and file when due (taking into account any applicable extensions), or shall cause to be prepared and filed, all SpinCo Separate Returns, including any amendments to such SpinCo Separate Returns.

3.3           Right to Review Tax Returns. To the extent that the positions taken on any Tax Return would reasonably be expected to materially adversely affect the Tax position of the Party other than the Party that is required to prepare and file any such Tax Return pursuant to Section 3.1 or Section 3.2 (the “Reviewing Party”), or, in the case of Tax Returns related to Pre-Distribution Periods required to be prepared and filed by SpinCo, the Party required to prepare and file such Tax Return (the “Preparing Party”) shall prepare the portions of such Tax Return that relates to the business of the Reviewing Party (the Parent Business or the SpinCo Business, as the case may be) and shall provide a draft of such portion of such Tax Return to the Reviewing Party for its review and comment at least 30 days prior to the Due Date for such Tax Return (taking into account any applicable extensions). The Preparing Party shall consider in good faith any comments received at least 14 days prior to the Due Date for such Tax Return (taking into account any applicable extensions) to the extent that the relate to items that would reasonably be expected to materially adversely affect the Tax position of the Reviewing Party, as determined by Parent.

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3.4           Special Rules Relating to the Preparation of Tax Returns.

(a)           General Rule. SpinCo shall prepare, or cause to be prepared, any Tax Return for which it is responsible under this Section 3 in accordance with past practices, accounting methods, elections or conventions (“Past Practices”) used by the members of the Parent Group prior to the Distribution Date with respect to such Tax Return, and to the extent any items, methods or positions are not covered by Past Practices, as directed by Parent.

(b)           SpinCo Separate Returns. With respect to any SpinCo Separate Return for which SpinCo is responsible pursuant to this Agreement, SpinCo and the other members of the SpinCo Group shall include such Tax Items in such SpinCo Separate Return in a manner that is consistent with the inclusion of such Tax Items in any related Tax Return for which Parent is responsible to the extent such Tax Items are allocated in accordance with this Agreement.

(c)           Election to File Combined Tax Returns. Parent shall have the sole discretion to file any Combined Tax Return if the filing of such Tax Return is elective under Applicable Tax Law.

(d)           Preparation of Transfer Tax Returns. The company required under Applicable Tax Law to file any Tax Returns in respect of Transfer Taxes shall prepare and file (or cause to be prepared and filed) such Tax Returns. If required by Applicable Tax Law, Parent and SpinCo shall, and shall cause their respective Affiliates to, cooperate in preparing and filing, and join the execution of, any such Tax Returns.

3.5           Reporting of Separation.

(a)           The Tax treatment of any step in or portion of the Transactions shall be reported on each applicable Tax Return consistently with the Intended Tax Treatment, taking into account the jurisdiction in which such Tax Returns are filed.

(b)           If Parent determines that a protective election under Section 336(e) of the Code shall be made with respect to the Distribution, then SpinCo shall take any such action that is necessary to effect such election, including any corresponding election with respect to any of its Subsidiaries, as determined by Parent. If such a protective election is made, this Agreement shall be amended in such a manner as is determined by Parent to compensate Parent for any Tax Benefits realized by SpinCo as a result of such election.

3.6           Transfer Pricing and Similar Reports. SpinCo shall prepare and file when due (taking into account any applicable extensions), or shall cause to be prepared and filed, all country-by-country notifications and reports and all transfer pricing documentation (including master file and local files) and other similar Tax documentation required to be filed (“Informational Tax Returns”) with respect to the SpinCo Group following the Distribution Date. SpinCo shall prepare, or cause to be prepared, any Informational Tax Return for which it is responsible under this Section 3.6 in accordance with Past Practices used by the members of the Parent Group prior to the Distribution Date with respect to such Informational Tax Return, and to the extent any items, methods or positions are not covered by Past Practices, as directed by Parent.

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3.7           Payment of Taxes.

(a)           With respect to any Tax Return required to be filed pursuant to this Agreement, the Responsible Party shall remit or cause to be remitted to the applicable Taxing Authority in a timely manner any Taxes due in respect of any such Tax Return.

(b)           In the case of any Tax Return for which the Party that is not the Responsible Party is obligated pursuant to this Agreement to pay all or a portion of the Taxes reported as due on such Tax Return, the Responsible Party shall notify the other Party, in writing, of its obligation to pay such Taxes and, in reasonably sufficient detail, its calculation of the amount due by such other Party and the Party receiving such notice shall pay such amount to the Responsible Party upon the later of 30 business days prior to the Due Date for such payment and 30 business days after the receipt of such notice; provided that, if any amount due to the Responsible Party cannot be calculated with accuracy prior to the applicable Due Date, the Responsible Party’s notice shall set forth, and the Party that is not the Responsible Party shall pay, a reasonable estimate of such amount to the Responsible Party at such time. If the amount determined to be the amount due exceeds the estimated amount, then the Party that is not the Responsible Party shall pay the Responsible Party such excess within 30 business days of receipt of written notice from the Responsible Party setting forth in reasonably sufficient detail the calculation of such final determination. If the estimated amount exceeds the amount determined to be the amount due, then the Responsible Party shall provide the Party that is not the Responsible Party (i) written notice setting forth in reasonably sufficient detail the calculation of such final determination and (ii) payment of such excess amount, in each case within 15 business days of its prompt final determination.

(c)           With respect to any estimated Taxes, the Party that is or will be the Responsible Party with respect to any Tax Return that will reflect (or otherwise give credit for) such estimated Taxes shall remit or cause to be remitted to the applicable Taxing Authority in a timely manner any estimated Taxes due. In the case of any estimated Taxes for which the Party that is not the Responsible Party is obligated pursuant to this Agreement to pay all or a portion of the Taxes that will be reported as due on any Tax Return that will reflect (or otherwise give credit for) such estimated Taxes, the Responsible Party shall notify the other Party, in writing, of its obligation to pay such estimated Taxes and, in reasonably sufficient detail, its calculation of the amount due by such other Party and the Party receiving such notice shall pay such amount to the Responsible Party upon the later of 30 business days prior to the Due Date for such payment and 30 business days after the receipt of such notice.

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3.8           Amended Returns and Carrybacks.

(a)           SpinCo shall not, and shall not permit any member of the SpinCo Group to, file or allow to be filed any request for an Adjustment or any amended Tax Return for any Pre-Distribution Period without the prior written consent of Parent, such consent to be exercised in Parent’s sole and absolute discretion; provided that, if requested by Parent in its sole and absolute discretion, SpinCo shall file, or cause to be filed, a request for an Adjustment or an amended Tax Return, and shall, to the extent permitted by applicable Law, amend any financial account or statement to the extent necessary to effectuate such Adjustment or amended Tax Return, to claim a Refund to which Parent is entitled pursuant to this Agreement. Parent shall be entitled to determine whether to file or allow to be filed any request for an Adjustment or any amended Joint Return.

(b)           SpinCo shall not, and shall cause each member of the SpinCo Group not to, without the prior written consent of Parent, make any affirmative election to carry back any Tax Attribute from a Post-Distribution Period to a Pre-Distribution Period, including by filing a claim for a refund or making any other filing with any Taxing Authority with respect to such carryback, such consent to be exercised in Parent’s sole and absolute discretion. To the extent requested in writing by Parent, in Parent’s sole and absolute discretion, SpinCo shall, and shall cause each member of the SpinCo Group to, make any available requested elections to waive the right to carry back any Tax Attribute from a Post-Distribution Period to a Pre-Distribution Period.

(c)           Receipt of consent by SpinCo or a member of the SpinCo Group from Parent pursuant to the provisions of this Section 3.8 shall not limit or modify SpinCo’s continuing indemnification obligation pursuant to Article V.

3.9           Apportionment of Earnings & Profits and Tax Attributes. Parent shall advise SpinCo in writing of the amount (if any) of any Tax Attributes which Parent determines shall be allocated or apportioned to the SpinCo Group under applicable Law. SpinCo and all members of the SpinCo Group shall prepare all Tax Returns in accordance with such written notice. SpinCo shall not dispute Parent’s determination of Tax Attributes. Parent shall provide (or otherwise make available) to SpinCo documentation maintained or prepared by Parent to support such Tax Attributes, provided that, for the avoidance of doubt, Parent shall not be required, to comply with this Section 3.9, to create or cause to be created any books and records or reports or other documents based thereon (including “earnings & profits studies,” “basis studies” or similar determinations) that it does not maintain or prepare in the ordinary course of business.

3.10         Gain Recognition Agreements. SpinCo will not take any action (including the sale or disposition of any stock, securities, or other assets), or permit its Affiliates to take any such action, and SpinCo will not fail to take any action, or permit its Affiliates to fail to take any action, that would cause Parent or any of its Affiliates or SpinCo or any of its Affiliates to recognize gain under any Gain Recognition Agreement, including those listed on Schedule D.

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Article IV – INTENDED TAX TREATMENT OF THE DISTRIBUTION

4.1           Representations and Warranties.

(a)           SpinCo hereby represents and warrants that (i) it has examined the Tax Opinion, the Representation Letters and any other materials delivered or deliverable in connection with the issuance of the rendering of the Tax Opinion, in each case, as they exist as of the date hereof (collectively, the “Tax Materials”) and (ii) the facts presented and representations made therein, to the extent descriptive of or otherwise relating to SpinCo or any member of the SpinCo Group or the SpinCo Business, were or will be, at the time presented or represented and from such time until and including the Distribution Date, true, correct and complete in all material respects. SpinCo hereby confirms and agrees to comply, and to cause the other members of the SpinCo Group to comply, with any and all covenants and agreements in the Tax Materials applicable to SpinCo or any member of the SpinCo Group or the SpinCo Business.

(b)           SpinCo represents and warrants that it knows of no fact (after due inquiry) that may cause the Tax treatment of any of the Transactions to be other than the Intended Tax Treatment.

(c)           SpinCo represents and warrants that it has no plan or intent to take any action that is inconsistent with any statements or representations made in the Tax Materials.

4.2           Restrictions Relating to the Distribution.

(a)           SpinCo shall not, and shall not permit any member of the SpinCo Group to, take or fail to take: (i) 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 the Tax Materials or (ii) any action that constitutes a SpinCo Disqualifying Action.

(b)           During the Restricted Period, SpinCo:

(i)           shall (and shall cause each SpinCo Group member whose Active Business is identified on Schedule E to) continue and cause to be continued and not approve or allow, or enter into any agreement, understanding or arrangement with respect to, the discontinuance, cessation, or sale or other transfer (to an Affiliate or otherwise) of, or a material change in or sale of the material assets of, any Active Business, other than sales in the ordinary course of business;

(ii)          shall not voluntarily dissolve or liquidate or partially liquidate itself, approve or allow any liquidation, or partial liquidation of any of its Affiliates (including any action that is a liquidation for U.S. federal income tax purposes), or enter into any agreement, understanding or arrangement with respect to the foregoing, other than, in the case of any of its Affiliates, into any other Affiliate that is a member of the SpinCo “separate affiliated group” as defined in Section 355(b)(3)(B) of the Code;

(iii)         shall not (1) enter into any Proposed Acquisition Transaction or, to the extent SpinCo has the right or ability to prevent or prohibit any Proposed Acquisition Transaction, permit any Proposed Acquisition Transaction to occur, (2) redeem or otherwise repurchase (directly or through an Affiliate) any 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), (3) amend its certificate of incorporation (or other organizational documents), issue a new class of non-voting stock, or take any other action, whether through a stockholder vote or otherwise, affecting the relative voting rights of its Capital Stock (including through the conversion of any Capital Stock into another class of Capital Stock), (4) (A) merge or consolidate with any other Person or (B) allow any of its Affiliates to merge or consolidate with any other Person other than any other Affiliate that is a member of the SpinCo “separate affiliated group” as defined in Section 355(b)(3)(B) of the Code or (5) 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 Tax Materials) that in the aggregate would, when combined with any other direct or indirect changes in ownership of SpinCo Capital Stock pertinent for purposes of Section 355(e) of the Code, 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 40% or greater interest in SpinCo or would reasonably be expected to result in a failure to preserve, achieve or maintain the Intended Tax Treatment, or enter into any agreement, understanding or arrangement with respect to any of the foregoing;

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(iv)         shall not and shall not permit any member of the SpinCo Group, to sell, transfer or otherwise dispose of (including in any transaction treated for U.S. federal income tax purposes as a sale, transfer or disposition) assets (including any shares of Capital Stock of a Subsidiary) that, in the aggregate, constitute more than 20% of the consolidated gross assets of SpinCo or the SpinCo Group, or enter into (or permit any member of the SpinCo Group to enter into) any agreement, understanding or arrangement with respect to the foregoing. The foregoing sentence shall not apply to (1) sales, transfers or dispositions of assets in the ordinary course of business or to members of the SpinCo “separate affiliated group” as defined in Section 355(b)(3)(B) of the Code, (2) any cash paid to acquire assets from an unrelated Person in an arm’s-length transaction, (3) any assets transferred to a Person that is disregarded as an entity separate from the transferor for U.S. federal income tax purposes or (4) any mandatory or optional repayment (or pre-payment) of any indebtedness of SpinCo or any member of the SpinCo Group. The percentages of gross assets or consolidated gross assets of SpinCo or the SpinCo Group, as the case may be, sold, transferred or otherwise disposed of, shall be based on the fair market value of the gross assets of SpinCo and the members of the SpinCo Group as of the Distribution Date. For purposes of this Section 4.2(b)(iv) a merger of SpinCo or one of its Subsidiaries with and into any Person that is not a wholly owned Subsidiary of SpinCo shall constitute a disposition of all of the assets of SpinCo or such Subsidiary;

(v)          shall, if any member of the SpinCo Group proposes to enter into any transaction or series of transactions that is not a Proposed Acquisition Transaction but would be a Proposed Acquisition Transaction if the percentage reflected in the definition of Proposed Acquisition Transaction were 30% instead of 40% (a “Section 4.2(b)(v) Acquisition Transaction”) or, to the extent SpinCo has the right or ability to prevent or prohibit any Section 4.2(b)(v) Acquisition Transaction, proposes to permit any Section 4.2(b)(v) Acquisition Transaction to occur, in each case, provide Parent, no later than 10 business days following the signing of any written agreement with respect to the Section 4.2(b)(v) Acquisition Transaction, a written description of such transaction (including the type and amount of stock of SpinCo to be issued in such transaction) and a certificate of the board of directors of SpinCo to the effect that the Section 4.2(b)(v) Acquisition Transaction is not a Proposed Acquisition Transaction;

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(vi)         shall not cause or permit (A) any member of the SpinCo Group identified on Schedule C as either a “distributing corporation” or a “controlled corporation” (within the meaning of Section 355(b) of the Code) in any Transaction other than the Distribution to take any action or enter into any transaction described in Section 4.2(b)(ii), in clauses (2), (3), (4) or (5) of Section 4.2(b)(iii) or in Section 4.2(b)(iv) (in each case, substituting references therein to “SpinCo”, the “SpinCo Group” and “SpinCo Capital Stock” with references to the relevant corporation, the relevant corporation and its Subsidiaries and the Capital Stock of such corporation, respectively) or (B) any member of the SpinCo Group otherwise identified on Schedule C to entering into a transaction or take an action identified on Schedule C; and

(vii)        shall not take (or fail to take), or permit any other member of the SpinCo Group to take (or fail to take), any action, the commission (or omission) of which could reasonably be expected to result in a Tax treatment inconsistent with the Intended Tax Treatment.

(c)           Notwithstanding the restrictions imposed by Section 4.2(b), SpinCo or a member of the SpinCo Group may take any of the actions or transactions described therein if (i) SpinCo shall have requested that Parent obtain a private letter ruling (including a supplemental ruling, if applicable) from the IRS (a “Post-Distribution Ruling”) in accordance with Section 4.3(b) to the effect that such transaction will not affect the Intended Tax Treatment, and Parent shall have received such a Post-Distribution Ruling and shall have notified SpinCo in writing that Parent has determined that such Post-Distribution Ruling is in form and substance satisfactory to Parent in its sole and absolute discretion or (ii) both (A) SpinCo obtains an Unqualified Tax Opinion with respect thereto and (B) Parent notifies SpinCo in writing that Parent has determined that such Unqualified Tax Opinion is in form and substance satisfactory to Parent. Parent’s evaluation of a Post-Distribution Ruling or an Unqualified Tax Opinion may consider, among other factors, the appropriateness of any underlying assumptions, representations and covenants made in connection with such ruling or opinion as well as any other factors, circumstances, considerations or concerns that Parent determines are relevant. SpinCo shall bear all costs and expenses of securing any such Post-Distribution Ruling or Unqualified Tax Opinion and shall, as set forth in Section 4.3(b), reimburse Parent for all reasonable out-of-pocket expenses that Parent or any of its Affiliates may incur in good faith in seeking to obtain or evaluate any such Post-Distribution Ruling or Unqualified Tax Opinion. None of the obtaining of a Post-Distribution Ruling, the delivery of an Unqualified Tax Opinion or Parent’s waiver of SpinCo’s obligation to deliver a Post-Distribution Ruling or an Unqualified Tax Opinion shall limit or modify SpinCo’s continuing indemnification obligation pursuant to Article V.

4.3           Additional Procedures Regarding Post-Distribution Rulings and Unqualified Tax Opinions.

(a)           If SpinCo determines that it desires to take one of the actions described in Section 4.2(b) (a “Notified Action”), then SpinCo shall notify Parent of this fact in writing.

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(b)           Post-Distribution Rulings or Unqualified Tax Opinions at SpinCo’s Request. Unless Parent shall have waived the requirement to obtain such Post-Distribution Ruling or Unqualified Tax Opinion, upon the reasonable request of SpinCo pursuant to Section 4.2(c)(i), Parent shall use commercially reasonable efforts in cooperating with SpinCo and in seeking to obtain, as expeditiously as possible, at Parent’s election at its sole discretion either a Post-Distribution Ruling from the IRS (and/or any other applicable Taxing Authority) or an Unqualified Tax Opinion for the purpose of permitting SpinCo to take the Notified Action, subject in all respects to the provisions of Section 4.2. Notwithstanding the foregoing, Parent shall not be required to file or cooperate in the filing of any request for a Post-Distribution Ruling under this Section 4.3(b) unless (i) Parent elects to seek to obtain a Post-Distribution Ruling (and not an Unqualified Tax Opinion) pursuant to the first sentence of this Section 4.3(b) and (ii) SpinCo represents that (A) it has reviewed such request for a Post-Distribution Ruling, and (B) all statements, information and representations relating to any member of the SpinCo Group contained in such request for a Post-Distribution Ruling are (subject to any qualifications therein) true, correct and complete. SpinCo shall reimburse Parent for all reasonable costs and expenses, including out-of-pocket expenses and expenses relating to the utilization of Parent personnel, incurred by the Parent Group in obtaining a Post-Distribution Ruling or Unqualified Tax Opinion requested by SpinCo within 30 business days after receiving an invoice from Parent therefor.

(c)           Post-Distribution Rulings or Unqualified Tax Opinions at Parent’s Request. Parent shall have the right to obtain a Post-Distribution Ruling or an Unqualified Tax Opinion at any time in its sole and absolute discretion. If Parent determines to obtain a Post-Distribution Ruling or an Unqualified Tax Opinion, SpinCo shall (and shall cause each Affiliate of SpinCo to) cooperate with Parent and take any and all actions reasonably requested by Parent in connection with obtaining the Post-Distribution Ruling or Unqualified Tax Opinion (including by making any representation or covenant or providing any materials or information requested by the IRS, any other applicable Taxing Authority or a Tax Advisor. Parent shall reimburse SpinCo for all reasonable costs and expenses, including out-of-pocket expenses and expenses relating to the utilization of SpinCo personnel, incurred by the Parent Group in connection with such cooperation within 30 business days after receiving an invoice from SpinCo therefor.

(d)           Parent shall have sole and exclusive control over the process of obtaining any Post-Distribution Ruling, and only Parent shall be permitted to apply for a Post-Distribution Ruling. In connection with obtaining a Post-Distribution Ruling, Parent shall (A) keep SpinCo informed in a timely manner of all material actions taken or proposed to be taken by Parent in connection therewith; (B) (1) reasonably in advance of the submission of any request for any Post-Distribution Ruling provide SpinCo with a draft copy thereof, (2) reasonably consider SpinCo comments on such draft copy, and (3) provide SpinCo with a final copy of such Post-Distribution Ruling; and (C) provide SpinCo with notice reasonably in advance of, and SpinCo shall have the right to attend, any formally scheduled meetings with the IRS or other applicable Taxing Authority (subject to the approval of the IRS or such Taxing Authority) that relate to such Post-Distribution Ruling. Neither SpinCo nor any Affiliate of SpinCo directly or indirectly controlled by SpinCo shall seek any guidance from the IRS or any other Taxing Authority (whether written, oral or otherwise) at any time concerning the Transactions (including the impact of any transaction on the Transactions).

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(e)           Any Post-Distribution Ruling or Unqualified Tax Opinion obtained in accordance with Section 4.2(c) and Section 4.3 shall be deemed included in the definition of Tax Materials from and after the obtaining thereof for all purposes of this Agreement.

Article V – INDEMNITY OBLIGATIONS

5.1           Indemnity Obligations.

(a)           Parent shall indemnify and hold harmless SpinCo from and against, and will reimburse SpinCo for, (i) all liability for Taxes allocated to Parent pursuant to Article II, (ii) all Tax Related Costs and Expenses allocated to Parent pursuant to Section 6.6, (iii) all Taxes, Tax Related Costs and Expenses and Tax Related Losses (without duplication) to the extent arising out of, based upon, or relating or attributable to any breach of or inaccuracy in, or failure to perform, as applicable, any representation, covenant or obligation of any member of the Parent Group pursuant to this Agreement and (iv) the amount of any Tax Benefit received by any member of the Parent Group that is allocated to SpinCo pursuant to Section 2.5(a).

(b)           Without regard to whether a Post-Distribution Ruling or an Unqualified Tax Opinion may have been provided or whether any action is permitted or consented to hereunder and notwithstanding anything to the contrary in this Agreement, SpinCo shall indemnify and hold harmless Parent from and against, and will reimburse Parent for, (i) all liability for Taxes allocated to SpinCo pursuant to Article II, (ii) all Tax Related Costs and Expenses allocated to SpinCo pursuant to Section 6.6, (iii) all liability for Taxes, Tax Related Costs and Expenses and Tax Related Losses (without duplication) arising out of, based upon, or relating or attributable to any breach of or inaccuracy in, or failure to perform, as applicable, any representation, covenant or obligation of any member of the SpinCo Group pursuant to this Agreement, (iv) the amount of any Tax Refund received by any member of the SpinCo Group that is allocated to Parent pursuant to Section 2.5(a) and (v) any Distribution Taxes and Tax Related Losses attributable to a Prohibited Act, or otherwise attributable to a SpinCo Disqualifying Action (regardless of whether the conditions set forth in Section 4.2(c) are satisfied). To the extent that any Tax, Tax Related Costs and Expenses or Tax Related Loss is subject to indemnity pursuant to both Section 5.1(a) and Section 5.1(b), responsibility for such Tax, Tax Related Costs and Expenses or Tax Related Loss shall be shared by Parent and SpinCo according to relative fault as determined by Parent. The amount of any liability for Taxes that are indemnifiable pursuant to this Section 5.1(b)(iii) and (v) shall be determined by Parent without regard to any Tax Attributes of the Parent Group or the Parent Business.

5.2           Indemnification Payments.

(a)           Except as otherwise provided in this Agreement, if either Party (the “Indemnitee”) is required to pay to a Taxing Authority a Tax or to another Person a payment in respect of a Tax, Tax Related Costs and Expenses or Tax Related Loss that the other Party (the “Indemnifying Party”) is liable for under this Agreement, including as the result of a Final Determination, the Indemnitee shall notify the Indemnifying Party, in writing, of its obligation to pay such Tax, Tax Related Costs and Expenses or Tax Related Loss and, in reasonably sufficient detail, its calculation of the amount due by such Indemnifying Party to the Indemnitee. The Indemnifying Party shall pay such amount, including any Tax Related Costs and Expenses or Tax Related Losses, to the Indemnitee no later than the later of (i) 30 business days prior to the Due Date for such payment to the applicable Taxing Authority or (ii) 30 business days after the receipt of notice from the other Party.

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(b)           If, as a result of any change or redetermination, any amount previously allocated to and borne by one Party pursuant to the provisions of Article II is thereafter allocated to the other Party, then no later than 30 business days after such change or redetermination, such other Party shall pay to such Party the amount previously borne by such Party which is allocated to such other Party as a result of such change or redetermination.

(c)           If a Party incurs a Tax Liability as a result of its receipt of a payment pursuant to this Agreement or the Separation Agreement, such payment shall be appropriately adjusted so that the amount of such payment, reduced by the amount of all Taxes payable with respect to the receipt thereof (but taking into account all correlative Tax Benefits resulting from the payment of such Taxes), shall equal the amount of the payment which the Party receiving such payment would otherwise be entitled to receive.

5.3           Payment Mechanics.

(a)           All payments under this Agreement shall be made by Parent directly to SpinCo and by SpinCo directly to Parent; provided, however, that if the Parties mutually agree with respect to any such indemnification payment, any member of the Parent Group, on the one hand, may make such indemnification payment to any member of the SpinCo Group, on the other hand, and vice versa. All indemnification payments shall be treated in the manner described in Section 5.4.

(b)           In the case of any payment of Taxes made by a Responsible Party or Indemnitee pursuant to this Agreement for which such Responsible Party or Indemnitee, as the case may be, has received a payment from the other Party, such Responsible Party or Indemnitee shall provide to the other Party a copy of any official government receipt received with respect to the payment of such Taxes to the applicable Taxing Authority (or, if no such official governmental receipts are available, executed bank payment forms or other reasonable evidence of payment).

(c)           It is intended that the provisions of this Agreement shall not result in a duplicative payment of any amount required to be paid under the Separation Agreement or any other Ancillary Agreement, and this Agreement shall be construed accordingly.

5.4           Treatment of Payments. The Parties agree that any payment made among the Parties pursuant to this Agreement, pursuant to Article VI of the Separation Agreement or pursuant to indemnification obligations under Section 2 or Section 5 of the EMA shall be treated, to the extent permitted by Law, for all U.S. income tax purposes as either (a) a non-taxable contribution by Parent to SpinCo or (b) a distribution by SpinCo to Parent, and with respect to any payment made among the Parties pursuant to this Agreement after the Distribution, such payment shall be treated as having been made immediately prior to the Distribution.

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Article VI – TAX CONTESTS

6.1           Notice. Each Party shall notify the other Party in writing (a) within 30 days after receipt by such Party or any member of its Group of a written communication from any Taxing Authority with respect to any pending or threatened audit, claim, dispute, suit, action, proposed assessment or other proceeding (a “Tax Contest”) concerning any Taxes for which the other Party may be liable pursuant to this Agreement, or (ii) at least 10 days prior to any deadline to respond to any such communication from any Taxing Authority with respect to such a Tax Contest, whichever is earlier, and thereafter shall promptly forward or make available to such Party copies of notices and communications relating to such Tax Contest.

6.2           Separate Returns.

(a)           In the case of any Tax Contest with respect to any Separate Return other than a Separate Return in respect of a Straddle Period, the Party having the liability for the Tax pursuant to Article II shall have the sole responsibility and right to control the prosecution of such Tax Contest, including the exclusive right to communicate with agents of the applicable Taxing Authority and to control, resolve, settle or agree to any deficiency, claim or adjustment proposed, asserted or assessed in connection with or as a result of such Tax Contest.

(b)           In the case of any Tax Contest with respect to any Separate Return in respect of a Straddle Period, Parent shall have the responsibility and right to control the prosecution of such Tax Contest; provided that, Parent may elect that SpinCo be responsible for the conduct of such Tax Contest (or portion thereof), but, in such case, SpinCo may not take any position in such Tax Contest inconsistent with any position taken by Parent on a relevant U.S. federal Tax Return or Joint Return unless and until there has been a Final Determination that such latter position is not correct; provided, further, the other Party shall have the right to participate, at its own expense, and the controlling Party shall not have the right to resolve, settle or agree to any deficiency, claim or adjustment proposed, asserted or assessed in connection with or as a result of such Tax Contest without the consent of the other Party, not to be unreasonably withheld, delayed or conditioned.

6.3           Joint Return. In the case of any Tax Contest with respect to any Joint Return, Parent shall have the responsibility and right to control the prosecution of such Tax Contest, including the exclusive right to communicate with agents of the applicable Taxing Authority and to control, resolve, settle or agree to any deficiency, claim or adjustment proposed, asserted, or assessed in connection with or as a result of such Tax Contest. Notwithstanding the foregoing, (a) to the extent a portion of any such Tax Contest controlled by Parent relates to a Tax liability allocated to SpinCo pursuant to Schedule A, SpinCo shall have the right to be notified of any material written communication asserting a Tax liability for which the SpinCo Group could reasonably be expected to be liable hereunder, as determined by Parent, provided that Parent shall have the right to resolve, settle or agree to any deficiency, claim or adjustment proposed, asserted or assessed in connection with or as a result of such portion of the Tax Contest in its sole and absolute discretion, (b) to the extent a portion of any such Tax Contest controlled by SpinCo relates to a Tax liability allocated to Parent, Parent shall have the right to be notified of any material written communication asserting a Tax liability for which the Parent Group could reasonably be expected to be liable hereunder, as determined by Parent, Parent shall have the right to participate in such portion of such Tax Contest, and SpinCo shall not resolve, settle or agree to any deficiency, claim or adjustment proposed, asserted or assessed in connection with or as a result of such portion of the Tax Contest without the prior written consent of Parent, such consent to be exercised in Parent’s sole and absolute discretion and (c) to the extent a portion of any such Tax Contest controlled by Parent with respect to a Joint Return with respect to Non-U.S. Taxes relates to a matter which was customarily controlled by a member of the SpinCo Group, as determined by Parent, then Parent may elect that SpinCo shall be responsible for conduct of such portion of such Tax Contest and, notwithstanding anything to the contrary in Section 6.6, any expenses related thereto, including expenses relating to supporting transfer pricing analysis.

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6.4           Transaction Related Tax Contests. Notwithstanding anything to the contrary in Section 6.2 or Section 6.3, in the case of any Transaction Related Tax Contest, Parent shall have the sole and absolute responsibility and right to control the prosecution of such Tax Contest, including the exclusive right to communicate with agents of the applicable Taxing Authority and to control, resolve, settle or agree to any deficiency, claim or adjustment proposed, asserted, or assessed in connection with or as a result of such Tax Contest. Notwithstanding anything to the contrary in Section 6.5, the final determination of the positions taken, including with respect to settlement or other disposition, in any Transaction Related Tax Contest (taking into account the proviso to the first sentence of this Section 6.4) shall be made by Parent and shall be final and not subject to the dispute resolution provisions of Section 9.1 or Section 9.2 of this Agreement or Section 11.02, Section 11.03 or Section 11.05 of the Separation Agreement.

6.5           Tax Contest Rights.

(a)           Unless waived by the Parties in writing, in connection with any potential adjustment in a Tax Contest as a result of which adjustment the Non-Controlling Party may reasonably be expected to become liable to make any indemnification payment to the Controlling Party under this Agreement: (i) the Controlling Party shall keep the Non-Controlling Party informed in a timely manner of all material 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 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; and (iii) the Controlling Party shall defend such Tax Contest diligently and in good faith. The failure of the Controlling Party to take any action specified in the preceding sentence with respect 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, 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.

(b)           Consistent Treatment. Unless and until there has been a Final Determination to the contrary, each Party agrees not to take any position on any Tax Return, in connection with any Tax Contest or otherwise that is inconsistent with (i) the treatment of payments between the Parent Group and the SpinCo Group as set forth in Section 5.4, (ii) the Tax Materials or (iii) the Intended Tax Treatment.

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6.6           Costs and Expenses. Except to the extent provided otherwise in this Agreement, the Party to which the Tax liability related to a Tax Contest is (or would be) allocated, as determined by Parent, shall be responsible for all Tax Related Costs and Expenses incurred in connection with such Tax Contest, regardless of which Party is responsible for the conduct of such Tax Contest; provided that in the event such Tax liability is allocated to both Parties, such Tax Related Costs and Expenses shall be allocated to the Parties in such manner as the Parent determines.

Article VII – COOPERATION

7.1           General.

(a)           Each Party shall fully cooperate, and shall cause all members of such Party’s Group to fully cooperate, with all reasonable requests in writing from the other Party, or from an agent, representative or advisor to such Party, in connection with the preparation and filing of any Tax Return, claims for Refunds, the conduct of any Tax Contest (including, for the avoidance of doubt, providing assistance to respond to information requests from any Taxing Authority), and calculations of amounts required to be paid pursuant to this Agreement, in each case, related or attributable to or arising in connection with Taxes of either Party or any member of either Party’s Group covered by this Agreement or otherwise relating to the SpinCo Business for any Pre-Distribution Period and the establishment of any reserve required in connection with any financial reporting (a “Tax Matter”). Such cooperation shall include making available, upon reasonable notice, all information and documents in their possession relating to the other Party and its respective Affiliates as provided in this Article VII and Article VIII. Each Party shall make its employees, advisors and facilities available, subject to Section 6.7 without charge, on a reasonable and mutually convenient basis in connection with the foregoing matters in a manner that does not interfere with the ordinary business operations of such Party. The Parties shall use commercially reasonable efforts to provide any information or documentation requested by the other Party in a manner that permits the other Party (or its Affiliates) to comply with Tax Return filing deadlines or other applicable timing requirements.

(b)           Any information or documents provided under this Section 7.1 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 Tax Contest. Notwithstanding any other provision of this Agreement or any other agreement, (i) no Party or any of its Affiliates shall be required to provide another Party or any Affiliate thereof or any other Person access to or copies of any information or procedures (including the proceedings of any Tax Contest) other than information or procedures that reasonably relate to the Taxes (including any Taxes for which the first Party is liable under this Agreement), business or assets of the first Party or any of its Affiliates or are necessary to prepare Tax Returns for which the first Party is responsible for preparing the applicable Tax Return in accordance with the terms of this Agreement, (ii) in no event shall any Party or its Affiliates be required to provide another Party, any of its Affiliates or any other Person access to or copies of any information if such action could reasonably be expected to result in the waiver of any Privilege, and (iii) for the avoidance of doubt, Section 7.08 of the Separation Agreement shall apply with respect to matters of Privilege. In addition, in the event that a Party determines that the provision of any information to another Party or any of its Affiliates could be commercially detrimental, violate any Law or agreement or waive any Privilege, the first Party shall use reasonable best efforts to permit compliance with its obligations under this Section 7.1 in a manner that avoids any such harm or consequence.

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7.2           Return Information. SpinCo and Parent acknowledge that time is of the essence in relation to any request for information, assistance or cooperation made by Parent or SpinCo pursuant to Section 7.1 or this Section 7.2. Each Party shall provide to the other Parties information and documents relating to its Group reasonably required by the other Parties to prepare Tax Returns. Any information or documents a Party responsible for preparing a Tax Return in accordance with the terms of this Agreement requires to prepare such Tax Returns shall be provided in such form as such Party reasonably requests and in sufficient time for such Party to prepare such Tax Returns on a timely basis.

Article VIII – RETENTION OF RECORDS; ACCESS

8.1           Retention of Records. Until the later of (i) 60 days after the expiration of any applicable statutes of limitation (including any waivers or extensions thereof) and (ii) seven (7) years after the Distribution Date, the Parties shall retain records, documents, accounting data and other information (including computer data) necessary for the preparation and filing of all Tax Returns (collectively, “Tax Records”) in respect of Taxes of any member of either the Parent Group or the SpinCo Group for any Pre-Distribution Period or Post-Distribution Period or for any Tax Contests relating to such Tax Returns. Each Party will notify the other in writing of any waivers or extensions of the applicable statute of limitations that may affect the period for which the Tax Records must be retained.

8.2           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 (including, 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, 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 pursuant to this Agreement. The Party seeking access to the records of the other Party shall bear all costs and expenses associated with such access, including any professional fees.

Article IX – DISPUTE RESOLUTION

9.1           Tax Disputes. Subject to Section 9.3, Section 9.4 and Section 9.5, this Section 9.1 shall govern the resolution of any dispute between the Parties as to any matter covered by this Agreement that primarily relates to the interpretation of Tax Law, as determined by Parent (a “Tax Advisor Dispute”). The Party raising the Tax Advisor Dispute shall give written notice of the Tax Advisor Dispute (a “Tax Advisor Dispute Notice”), and the tax directors of the Parties (or such other individuals designated by the respective general counsels) and/or the executive officers designated by the Parties shall negotiate for a reasonable period of time to settle such Tax Advisor Dispute; provided that, such reasonable period shall not, unless otherwise agreed by the Parties in writing, exceed 30 days (the “Negotiation Period”) from the time of receipt of the Tax Advisor Dispute Notice; provided, further, that (x) the Parties shall not assert the defenses of statute of limitations, laches or any other defense, in each such case based on the passage of time during the Negotiation Period, and (y) any contractual time period or deadline under this Agreement relating to such Tax Advisor Dispute occurring after the Tax Advisor Dispute Notice is received shall not be deemed to have passed until the procedures described in this Section 9.1 have been resolved. If the Tax Advisor Dispute has not been resolved for any reason after the Negotiation Period, Parent shall, in its sole and absolute discretion, appoint a nationally recognized independent public accounting firm (the “Accounting Firm”) to resolve such dispute. In this regard, the Accounting Firm shall make determinations with respect to the Tax Advisor Dispute based solely on representations made by Parent, SpinCo and their respective representatives, and not by independent review, and shall function only as an expert and not as an arbitrator and shall be required to make a determination in favor of one Party only. The Parties shall require the Accounting Firm to resolve all Tax Advisor Disputes no later than 30 days after the submission of such Tax Advisor Dispute to the Accounting Firm, but in no event later than the Due Date of Taxes or the filing of the applicable Tax Return, if applicable, and agree that all decisions by the Accounting Firm with respect thereto shall be final and conclusive and binding on the Parties. The Accounting Firm shall resolve all Tax Advisor Dispute in a manner consistent with this Agreement and, to the extent not inconsistent with this Agreement, in a manner consistent with the Past Practices of Parent and its Subsidiaries, except as otherwise required by applicable Law. The Parties shall require the Accounting Firm to render all determinations in writing and to set forth, in reasonable detail, the basis for such determination. The fees and expenses of the Accounting Firm shall be borne equally by the Parties, and the parties agree to waive any objection to the naming of the Accounting Firm or the determination of the Accounting Firm based on actual or alleged conflicts of interest.

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9.2           Legal Disputes. Subject to Section 9.1, Section 9.3, Section 9.4 and Section 9.5, in the event of any claim, controversy, demand or request for relief of any kind arising out of, in connection with, or in relation to the interpretation, performance, nonperformance, validity or breach of this Agreement or otherwise arising out of or related to this Agreement (a “Dispute”), then the Party raising the Dispute shall give written notice of the Dispute, and the Parties shall work together in good faith to resolve any such Dispute within 30 days of such notice. If any Dispute is not so resolved, then a senior executive of each Party shall, in good faith, attempt to resolve any such Dispute within the following 30 days of the referral of the matter to the senior executives. If no resolution is reached with respect to any such Dispute, the Dispute shall be resolved in accordance with the procedures contained in Section 11.03, Section 11.04 and Section 11.05 of the Separation Agreement.

9.3           Injunctive Relief. Nothing in this Article IX shall prevent Parent from seeking injunctive relief to enforce the procedures provided for in Section 9.1 if any delay resulting from the efforts to resolve the Tax Advisor Dispute through the Accounting Firm could result in serious and irreparable injury to Parent. Notwithstanding anything to the contrary in this Agreement or the Separation Agreement (or any Ancillary Agreement), Parent and SpinCo are the only members of their respective Groups entitled to commence a dispute resolution procedure under this Agreement, and each of Parent and SpinCo will cause its respective Group members not to commence any dispute resolution procedure other than through Parent or SpinCo, as applicable, as provided in this Article IX.

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9.4           Specific Performance. Notwithstanding anything to the contrary in this Agreement or the Separation Agreement (or any Ancillary Agreement), in the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of Section 4.1(a), Section 4.2(a) or Section 4.2(b) by SpinCo, Parent shall have the right, without first pursuing the procedures provided for in Section 9.1 and Section 9.2, to specific performance, declaratory relief and injunctive or other equitable relief (on a permanent, emergency, temporary, preliminary or interim basis) of its 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. SpinCo shall not oppose the granting of such relief on the basis that money damages are an adequate remedy. SpinCo agrees that the remedies at Law for any breach or threatened breach hereof, including monetary damages, are inadequate compensation for any loss, and waives any defense in any action by Parent for specific performance that a remedy at Law would be adequate. SpinCo also waives any requirements that Parent secure or post any bond or similar security with respect to such remedy.

9.5           Venue for Injunctive Relief and Specific Performance Claims by Parent. Notwithstanding anything to the contrary in this Agreement or the Separation Agreement (or any Ancillary Agreement), Parent may bring any claim for specific performance, declaratory relief and injunctive or other equitable relief (on a permanent, emergency, temporary, preliminary or interim basis) under Section 9.3 or Section 9.4 of this Agreement (a “Chosen Court Claim”) either (a) pursuant to the procedures contained in Section 11.03, Section 11.04 and Section 11.05 of the Separation Agreement or (b) at Parent’s sole and absolute discretion, in the Delaware Court of Chancery (or, if the Delaware Court of Chancery shall be unavailable, any Delaware State court or the federal court sitting in the State of Delaware) (the “Chosen Courts”). SpinCo irrevocably consents and agrees to the jurisdiction, forum and venue of the Chosen Courts for a Chosen Court Claim, and agrees that it shall not assert, and shall hereby waive, any claim or right or defense that it is not subject to the jurisdiction of the Chosen Courts, that the venue is improper, that the forum is inconvenient, that the Chosen Court Claim should instead be arbitrated by agreement of Parent or operation of law, or any similar objection, claim or argument.

Article X – MISCELLANEOUS PROVISIONS

10.1         Conflicting Agreements. In the event and to the extent that there shall be a conflict between the provisions of this Agreement and the provisions of the Separation Agreement, this Agreement shall control with respect to the subject matter hereof.

10.2         Specified Matters. Notwithstanding anything to the contrary in this Agreement, the matters specified in Schedule A shall in addition be subject to the provisions of Schedule A, which shall govern in the event of any conflict between the provisions of Schedule A and any provision in this Agreement.

10.3         Interest on Late Payments. With respect to any payment between the Parties pursuant to this Agreement not made by the due date set forth in this Agreement for such payment, the outstanding amount will accrue interest at a rate per annum equal to the rate in effect for underpayments under Section 6621 of the Code from such due date to and including the payment date.

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10.4         Counterparts. This Agreement may be executed in one or more counterparts, all of which counterparts shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each Party and delivered to the other Party. This Agreement may be executed by facsimile or PDF signature and scanned and exchanged by electronic mail, and such facsimile or PDF signature or scanned and exchanged copies shall constitute an original for all purposes.

10.5         Successors. This Agreement shall be binding on and inure to the benefit of any successor by merger, acquisition of assets or otherwise, to any of the parties hereto, to the same extent as if such successor had been an original party to this Agreement.

10.6         Third Party Beneficiaries. The provisions of this Agreement are solely for the benefit of the Parties hereto and are not intended to confer upon any Person except the Parties hereto any rights or remedies hereunder. There are no third-party beneficiaries of this Agreement, and this Agreement shall not provide any third person with any remedy, claim, liability, reimbursement, cause of action or other right in excess of those existing without reference to this Agreement.

10.7         Governing Law. This Agreement and any disputes relating to, arising out of or resulting from this Agreement, including to its execution, performance, or enforcement, shall be governed by, and construed and enforced in accordance with, the Laws of the State of Delaware, regardless of the Laws that might otherwise govern under applicable principles of conflicts of Laws thereof or of any jurisdiction.

10.8         Assignability. Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned, in whole or in part, by operation of Law or otherwise by either Party without the prior written consent of the other Party. Any purported assignment without such consent shall be void. Subject to the preceding sentences, this Agreement will be binding upon, inure to the benefit of, and be enforceable by, the Parties and their respective successors and assigns. Notwithstanding the foregoing, if any Party to this Agreement (or any of its successors or permitted assigns) (a) shall enter into a consolidation or merger transaction in which such Party is not the surviving entity and the surviving entity acquires or assumes all or substantially all of such Party’s assets or (b) shall transfer all or substantially all of such Party’s assets to any Person, then, in each such case, the assigning Party (or its successors or permitted assigns, as applicable) shall ensure that the assignee or successor-in-interest expressly assumes in writing all of the obligations of the assigning Party under this Agreement, and the assigning Party shall not be required to seek consent, but shall provide written notice and evidence of such assignment, assumption or succession to the non-assigning Party. No assignment permitted by this Section 10.8 shall release the assigning Party from liability for the full performance of its obligations under this Agreement.

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10.9         Further Assurances. Subject to the provisions hereof, the Parties hereto shall make, execute, acknowledge and deliver, or cause to be made, executed, acknowledged and delivered, such other instruments and documents, and take or do, or cause to be taken or done, all such other actions and all things reasonably necessary, proper or advisable under applicable Laws and agreements to effectuate the provisions and purposes of this Agreement and to consummate and make effective the transactions contemplated hereby.

10.10       Survival. Notwithstanding anything to the contrary in this Agreement, all representations, covenants and obligations contained in this Agreement shall survive until the expiration of the applicable statute of limitations with respect to any such matter (including extensions thereof).

10.11       Severability. If any provision of this Agreement or the application thereof to any Person or circumstance is determined by an arbitrator or court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof, or the application of such provision to Persons or circumstances, or in jurisdictions other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby, so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to either Party. Upon any such determination, any such provision, to the extent determined to be invalid, void or unenforceable, shall be deemed replaced by a provision that such arbitrator or court determines is valid and enforceable and that comes closest to expressing the intention of the invalid, void or unenforceable provision.

10.12       Amendments. No provisions of this Agreement shall be deemed waived, amended, supplemented or modified by any Party, unless such waiver, amendment, supplement or modification is in writing and signed by the authorized representative of each Party. Any decision by any Party to waive or to not waive any provision of this Agreement is in such Party’s sole and absolute discretion.

10.13       Headings. The article, section and paragraph headings contained in this Agreement, including in the table of contents of this Agreement, are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

10.14       Waivers of Default. No failure or delay of any Party (or the applicable member of its Group) in exercising any right or remedy under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such right or power, or any course of conduct, preclude any other or further exercise thereof or the exercise of any other right or power. Waiver by any Party of any default by the other Party of any provision of this Agreement shall not be deemed a waiver by the waiving Party of any subsequent or other default.

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

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10.16       Notices. All notices or other communications under this Agreement shall be in writing and shall be deemed to be duly given (a) when delivered in person, (b) on the date received, if sent by a nationally recognized delivery or courier service, (c) upon written confirmation of receipt after transmittal by electronic mail or (d) upon the earlier of confirmed receipt or the fifth business day following the date of mailing if sent by registered or certified mail, return receipt requested, postage prepaid and addressed as follows:

If to Parent, to:

BorgWarner Inc.

3850 Hamlin Road

Auburn Hills, MI 48326

Attn: Tonit M. Calaway

Email: [***]

and with a copy to:

Foley & Lardner LLP

777 East Wisconsin Avenue

Milwaukee, WI 53202

Attn: Patrick G. Quick

Mark T. Plichta

Email: [***]

[***]

If to SpinCo, to:

PHINIA Inc.

3000 University Drive

Auburn Hills, MI 48326

Attn: Robert Boyle

Email: [***]

Either Party may, by notice to the other Party, change the address and identity of the Person to which such notices and copies of such notices are to be given. Each Party agrees that nothing in this Agreement shall affect any other Party’s right to serve process in any other manner permitted by Law (including pursuant to the rules for foreign service of process authorized by the Hague Convention).

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10.17       Interpretation. 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. The terms “hereof,” “herein,” “herewith” and words of similar import, unless otherwise stated, shall be construed to refer to this Agreement as a whole (including all of the schedules hereto) and not to any particular provision of this Agreement. Article, Section or schedule references are to the articles, sections and schedules of or to this Agreement unless otherwise specified. Any capitalized terms used in this Agreement but not otherwise defined therein shall have the meaning as defined in the Separation Agreement. Any definition of or reference to any agreement, instrument or other document herein (including any reference herein to this Agreement) shall, unless otherwise stated, be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth therein, including in Section 10.12). The word “including” and words of similar import when used in this Agreement shall mean “including, without limitation,” unless the context otherwise requires or unless otherwise specified. The word “or” shall not be exclusive. The word “extent” in the phrase “to the extent” shall mean the degree to which a subject or other thing extends, and such phrase shall not mean simply “if.” All references to “$” or dollar amounts are to the lawful currency of the United States of America. References herein to any Law shall be deemed to refer to such law as amended, reenacted, supplemented or superseded in whole or in part and in effect from time to time and also to all rules and regulations promulgated thereunder. Any determination contemplated by this Agreement to be made by Parent shall be made by Parent in its sole and absolute discretion. Except as expressly set forth in this Agreement, the Parties (or their respective Group members) shall make, or cause to be made, any payment that is required to be made pursuant to this Agreement as promptly as practicable and without regard to any local currency constraints or similar restrictions. In the event that an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties, and no presumption or burden of proof shall arise favoring or disfavoring either Party by virtue of the authorship of any provisions hereof.

10.18       Effectiveness. This Agreement shall become effective only upon the Distribution Date.

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed on the date first written above by their respective duly authorized officers.

BORGWARNER INC.
By:	/s/Tonit M. Calaway
Name: Tonit M. Calaway
Title: Executive Vice President and Secretary
PHINIA INC.
By:	/s/Brady D. Ericson
Name: Brady D. Ericson
Title: President and Chief Executive Officer

EX-10.3

Exhibit 10.3

EMPLOYEE MATTERS AGREEMENT

THIS EMPLOYEE MATTERS AGREEMENT (“Employee Matters Agreement”) is executed effective as of July 2, 2023, by and between BorgWarner Inc., a Delaware corporation (“Parent”), and PHINIA Inc., a Delaware corporation (“SpinCo”) (collectively, the “Parties”).

WHEREAS, the Parties have entered into a Separation and Distribution Agreement dated July 2, 2023 (the “Separation Agreement”); and

WHEREAS, the Parties desire to set forth in writing the terms and conditions governing employee matters related to the Separation Transactions as set forth in this Employee Matters Agreement, which shall supplement the provisions of the Separation Agreement.

NOW, THEREFORE, in consideration of the promises and mutual covenants set forth in the Separation Agreement and herein, and other good and valuable consideration, and contingent upon the Distribution, the Parties hereby agree as follows:

Section 1.           Definitions

For purposes of this Employee Matters Agreement, the following terms shall have the following meanings. All capitalized terms used but not defined herein shall have the meanings assigned to them in the Separation Agreement unless otherwise indicated.

“Allocated Plan” means each Parent Plan identified in Appendix A for which sponsorship is transferred to a member of the SpinCo Group in accordance with the terms of this Employee Matters Agreement.

“Assets” for purposes of this Employee Matters Agreement has the meaning assigned to it in the Separation Agreement, except that such meaning is applicable only with respect to those Parent Plans or Business Plans that are funded by a trust that is exempt from tax under Section 501(a) of the U.S. Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”).

“Automatic Transfer Regulations” as defined in Section 3(b)(i).

“Business Plan” means each (i) “employee benefit plan,” as defined in Section 3(3) of ERISA (whether or not subject to ERISA), (ii) other plan, program, fund, scheme or agreement, whether written or unwritten, providing for compensation, bonuses, profit-sharing, equity compensation or other forms of incentive or deferred compensation, insurance (including self-insured arrangements), health, medical or other welfare benefits, or post-employment or retirement benefits (including severance or other compensation, pension, health, medical, life insurance or other welfare benefits), and (iii) Employee Agreement, in each case that is sponsored, maintained, or administered or contributed to by one or more members of the SpinCo Group or with respect to which a SpinCo Group member has any Liability. Effective upon the applicable Split Date, the Business Plans shall include the Allocated Plans and the Mirror Plans for which Liabilities (and Assets, where applicable) are transferred or allocated to the SpinCo Group and shall exclude the Business Plans listed in Appendix B for which sponsorship is transferred to a member of the Parent Group (the “Retained Plans”) and the Parent Plans retained by Parent Group, each in accordance with the terms of this Employee Matters Agreement.

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“COBRA” means the continuation coverage requirements under Section 4980B of the Internal Revenue Code and Part 6 of Subtitle B of Title I of ERISA.

“Continuation Period” means the period from the Distribution Date through the later of (i) any continuation period required by applicable Law and (ii) a period of 12 months following the Distribution Date.

“Deferred Plans” means the BorgWarner Inc. Retirement Savings Excess Benefit Plan and the BorgWarner Inc. 2004 Deferred Compensation Plan.

“Defined Contribution Arrangement” means, in respect of the Employees, any defined contribution schemes as defined in IAS 19.

“Defined Contribution Assets” means any assets relating to Defined Contribution Arrangements.

“Employee” means each employee of (i) a SpinCo Group member as of the Distribution Date, (ii) a Parent Group member that (x) is providing services primarily for the benefit of the SpinCo Business on the Distribution Date or (y) has been providing services primarily for the benefit of the SpinCo Business prior to entering into pre-retirement but continues to be in an employment relationship as of the Distribution Date, (x) and (y) as determined by Parent, including with regard to (i) and (ii) any employee who is on a leave of absence (including due to short-term or long-term disability) (and their Plan Payees, as applicable), or (iii) another Parent Group member as of the Distribution Date who is employed outside of the United States and would have become a SpinCo employee on the Distribution Date, as determined by Parent, but for a delay in transferring the employee from the employee’s employing entity. For purposes of Section 5(c), Section 5(d), Section 5(f), and Section 12(d), “Employee” also includes any employee hired by a SpinCo Group member after the Distribution Date.

“Employee Agreement” means each (i) employment, retention, termination, severance, change in control, and other similar agreement between an Employee and a member of either the Parent Group or the SpinCo Group, and (ii) separation or other individual agreement between a Former Employee or a Legacy Former Employee and a member of either the Parent Group or the SpinCo Group that provides for post-separation benefits or compensation. For purposes of this definition, the term “SpinCo Group” shall have the meaning assigned to it in the Separation Agreement and shall also include any Former SpinCo Business.

“Employment Liabilities” means any and all Liabilities (contingent, known or unknown, asserted, unasserted, or otherwise) relating to, arising out of, or resulting from: (i) the employment of, or services provided by, an Employee, Former Employee, or Legacy Former Employee, including termination of employment, or termination of services provided by, an Employee, Former Employee, Legacy Former Employee (ii) any Business Plan (including any Mirror Plan or Allocated Plan), and/or (iii) Health and Other Welfare Liabilities described in Section 5(c), in each case whether arising before, on, or after the applicable Split Date, and including any claims for benefits, fiduciary breach, or any type of equitable or non-monetary remedies, and obligations for related taxes and penalties. Such Liabilities are Employment Liabilities regardless of when such Liabilities, or any actual or alleged act, error, or omission giving rise to Liabilities, arose or accrued, including before, on, or after the applicable Split Date, with respect to each participant in such Business Plan. Notwithstanding the foregoing, employment tax Liabilities with respect to Legacy Former Employees for periods prior to the applicable Split Date shall remain the obligation of Parent.

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“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations issued thereunder.

“Former Employee” means each former employee (and their Plan Payees, as applicable) of Parent or any of its current or former Affiliates (including current or former members of the SpinCo Group) who when last employed by Parent or a current or former Parent Affiliate, was providing services primarily for the benefit of the SpinCo Business or Former SpinCo Business as determined by Parent. For purposes of Section 5(c), Section 5(d), Section 5(f), and Section 12(d), “Former Employee” also includes any employee hired by a SpinCo Group member after the Distribution Date who becomes a former employee of a SpinCo Group member after the Distribution Date.

“Former Non-U.S. Employees” means all Former Employees who are not Former U.S. Employees.

“Former U.S. Employees” means all Former Employees who, when last employed by Parent or a current or former Parent Affiliate, were employed in the United States.

“Legacy Former Employee” means each former employee (and their Plan Payees, as applicable) of Parent or any of its current or former Affiliates who is not a Former Employee (as determined by Parent) with respect to whom Liabilities are being transferred to a member of the SpinCo Group. As soon as practicable following the Distribution, Parent will determine all Legacy Former Employees as of the Distribution Date and provide SpinCo with a list of the relevant Legacy Former Employees.

“Legacy Former Non-U.S. Employees” means all Legacy Former Employees who are not Legacy Former U.S. Employees.

“Legacy Former U.S. Employees” means all Legacy Former Employees who, when last employed by Parent or a current or former Parent Affiliate, were employed in the United States.

“Liability Split Date” means the applicable date set forth in Appendix D or Appendix E for assumption of Health and Other Welfare Liabilities by SpinCo.

“Local Transfer Agreement” means any agreement entered into for the purpose of effecting the Separation Transactions in accordance with the Laws or customs of an applicable jurisdiction, other than Separation Agreement or any Master Ancillary Agreement.

“Maintained Health and Welfare Plans,” means the Parent Plans identified on Appendix D.

“Master Ancillary Agreements” means the TMA, the Cross License Agreement, the Intellectual Property Assignment Agreements, the Trademark License Agreement and the TSA.

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“Mirror Plan” means each Business Plan sponsored by a member of the SpinCo Group to which Liabilities (and Assets, where applicable) are transferred from a Parent Plan on the Split Date.

“Non-Transferred Employees” has the meaning given in Section 3(a). Non-Transferred Employees shall not be considered Employees unless provided otherwise in this Agreement.

“Non-U.S. Employees” means all Employees who are not U.S. Employees.

“Non-U.S. Retirement Benefit Arrangement” means, in respect of the Non-U.S. Employees, all plans, schemes, arrangements or individual commitments (whether externally funded or unfunded and whether or not such plans, schemes, arrangements or commitments are tax-qualified under applicable law) for the provision of or contribution towards Retirement Benefits.

“Non-U.S. Retirement Benefits Funding Assets” has the meaning given in Section 5(e)(iv) of this Agreement.

“Non-U.S. Retirement Benefit Liabilities” means any and all liabilities and obligations, as at the Distribution Date, to and in respect of the Non-U.S. Employees under any Non-U.S. Retirement Benefit Arrangement that are classified as a defined benefit plan under US-GAAP.

“Objecting Employee” has the meaning given in Section 3(b)(iii). Objecting Employees shall not be considered Employees unless provided otherwise in this Agreement.

“Other Long-Term Employee Benefits” means (i) any termination benefits and (ii) any other long-term employee benefits such as, e.g., jubilee, old-age part time benefits or other long-service benefits.

“Parent Health and Welfare Plans” means the Parent Plans identified in Appendix E.

“Parent Post-Distribution Stock Price” means the per share price of the Parent’s common stock immediately after the Distribution, which shall be equal to the volume weighted average price of the Parent’s common stock over the ten (10) trading days immediately following the Distribution Date.

“Parent Plan” means each (i) “employee benefit plan,” as defined in Section 3(3) of ERISA (whether or not subject to ERISA), (ii) other plan, program, fund, scheme or agreement, whether written or unwritten, providing for compensation, bonuses, profit-sharing, equity compensation or other forms of incentive or deferred compensation, insurance (including self-insured arrangements), health, medical or other welfare benefits, or post-employment or retirement insurance or other welfare benefits), and (iii) Employee Agreement, in each case that is sponsored, maintained, administered or contributed to by Parent or any Affiliate (other than a member of the SpinCo Group) or with respect to which Parent or any Affiliate (other than a member of the SpinCo Group) has any Liability. Effective upon the applicable Split Date, Parent Plans shall include the Retained Plans and shall exclude the Allocated Plans and Mirror Plans for which Liabilities (and Assets, where applicable) are transferred to the SpinCo Group, each in accordance with the terms of this Employee Matters Agreement.

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“Plan Payee” means, as to each individual who participates in a Business Plan or a Parent Plan, such individual’s dependents, beneficiaries, alternate payees, and alternative recipients, as applicable, under each such Business Plan or Parent Plan. For the avoidance of doubt, to the extent an individual is both a Plan Payee and a current or former employee of Parent or any of its Affiliates, references to “Plan Payee” shall be deemed to refer to such individual only in his or her capacity as such a dependent, beneficiary, alternate payee, or alternative recipient, as applicable.

“Retained Employees” has the meaning given in Section 3(a). Retained Employees shall not be considered Employees unless provided otherwise in this Agreement.

“Service Provider” has the meaning given in Section 8(a)(i).

“SpinCo Post-Distribution Stock Price” means the per share price of SpinCo’s common stock immediately after the Distribution, which shall be equal to the volume weighted average price of SpinCo’s common stock over the ten (10) trading days immediately following the Distribution Date.

“Split Date” means with respect to each Split Plan, Allocated Plan and Retained Plan: (i) the date upon which certain Parent Plan Liabilities (and Assets, where applicable) that are attributable to Employees, Former Employees and Legacy Former Employees will be allocated and transferred, as described herein, to a Mirror Plan or member of the SpinCo Group, (ii) the date upon which the sponsorship of (and responsibility for) the Allocated Plan will be transferred to a member of the SpinCo Group, or (iii) the date upon which sponsorship of (and responsibility for) the Retained Plan will be transferred to a member of the Parent Group. The Split Date for the Parent Plans listed in Appendix C, the Retained Plans listed in Appendix B, and the Allocated Plans listed in Appendix A shall be the applicable date listed in the relevant Appendix.

“Split Plans” means those Parent Plans for which Liabilities (and Assets, where applicable) will be allocated between Parent and SpinCo in accordance with this Agreement. The Split Plans are the plans identified in Appendix C and the Maintained Health and Welfare Plans.

“Successor Retirement Benefit Arrangement” has the meaning given in Section 5(e)(ii).

“Transition Services Period” means the period following the Distribution Date as provided in the Transition Services Agreement, or such other period mutually agreed upon by the Parties with respect to a specific administrative service.

“U.S. Employees” means all Employees employed in the United States.

Section 2.           Assumption of Certain Obligations and Liabilities.

(a)           Ancillary Agreements: In the event of conflict or inconsistency between the provisions of this Agreement and any Local Transfer Agreement (including any provision of a Local Transfer Agreement providing for dispute resolution mechanism inconsistent with those provided herein), on the other hand, the provisions of this Agreement shall prevail and remain in full force and effect, unless otherwise provided in Appendix 2a or required by non-waivable applicable Law. Each Party hereto shall, and shall cause each of its members to, implement the provisions of and the transactions contemplated by each Local Transfer Agreement in accordance with the preceding sentence.

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(b)           General Liability Allocation. Except as otherwise expressly set forth in this Agreement, including without limitation in Section 5(e)(i), to the fullest extent permitted by applicable Law, SpinCo shall, or shall cause one or more of the SpinCo Group members to, assume or retain, as the case may be, any and all Employment Liabilities, and Parent shall, and shall cause each other member of the Parent Group to, transfer, assign, and convey, each effective as of the following dates: (i) in the case of Employment Liabilities other than those related to the Mirror Plans or Allocated Plans, the Distribution Date, and (ii) in the case of Employment Liabilities related to the Mirror Plans and the Allocated Plans, the applicable Split Date.

If applicable Law does not permit the assumption or retention, or the transfer, assignment, or conveyance, of a certain Employment Liability or as provided in Appendix 2b, then solely with respect to that Employment Liability, then SpinCo shall indemnify, defend and hold harmless the Parent Indemnitees against any and all losses related to such Employment Liability.

(c)           Bonuses. With respect to the fiscal year in which the Distribution Date occurs and each fiscal year thereafter, SpinCo shall be solely responsible for paying (or causing to be paid) annual cash incentive bonuses for the full fiscal year to all Employees (and, if applicable, Former Employees) unless otherwise provided in Appendix 2c. For the fiscal year in which the Distribution Date occurs, (i) SpinCo shall maintain a bonus plan for the benefit of Employees (and, if applicable, Former Employees) with substantially the same terms and conditions as the annual bonus plan applicable to such Employees (and, if applicable, Former Employees) immediately prior to the Distribution Date, except that SpinCo may adjust the performance goals to the extent necessary or appropriate to maintain the intended incentive opportunity, and (ii) SpinCo shall pay (or cause to be paid) the bonuses due to each Employee (and, if applicable, each Former Employee) under such bonus plan (taking into account any adjustments made pursuant to clause (i)) during the next following fiscal year consistent with past practice under the comparable Parent Plan.

(d)           Individual Employee Agreements. SpinCo, to the extent permitted by applicable Law and consistent with the principles set out in Section 2(b), shall, or shall cause another member of the SpinCo Group to, assume or retain exclusive responsibility for all Employee Agreements with Employees, Former Employees and Legacy Former Employees, which are or shall become Business Plans on and after the Split Date.

(e)           Vacation and Paid Time-Off. Effective as of the Distribution Date, SpinCo, to the extent permitted by law and consistent with the principles set out in Section 2(b), shall, or shall cause another member of the SpinCo Group to, assume or retain all obligations of the Parent Group members for the accrued, unused vacation and other paid time off or leave benefits for Employees, Former Employees and Legacy Former Employees unless otherwise provided in Appendix 2e.

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(f)            Litigation. If a member of the Parent Group is a party to an Action brought by or on behalf of an Employee, Non-Transferred Employee, Former Employee or Legacy Former Employee (including a class thereof), or related to a Business Plan (including an Allocated Plan or Mirror Plan), then SpinCo shall indemnify, defend and hold harmless the Parent Indemnitees from and against any and all Liabilities of the Parent Indemnitees to the extent relating to, arising out of or resulting from such Action and manage any such Action (including without limitation any SpinCo Directed Actions) pursuant to the terms of the Separation Agreement; provided, however that SpinCo shall not have any indemnification obligations with respect to any Parent Retained Liabilities. If SpinCo or another member of the SpinCo Group is a party to an Action brought by an employee who is not an Employee, Former Employee, or Legacy Former Employee, and such Action relates to a Parent Plan, then Parent shall indemnify, defend and hold harmless the SpinCo Indemnitees from and against any and all Liabilities of the SpinCo Indemnitees to the extent relating to, arising out of or resulting from such Action and manage any such Action (including without limitation any Parent Directed Actions) pursuant to the terms of the Separation Agreement; provided, however that Parent shall not have any indemnification obligations with respect to any SpinCo Liabilities.

(g)           Workers’ Compensation. For the avoidance of doubt, SpinCo shall, or shall cause another member of the SpinCo Group to, establish a workers’ compensation program covering all members of SpinCo Group, effective as of the Distribution Date, and shall cease to have access to any Parent Group workers’ compensation programs for any injuries from and after the Distribution Date. Parent Group workers’ compensation programs shall cover any injuries occurring before the Distribution Date for Employees, Former Employees and Legacy Former Employees, provided that such Employees, Former Employees and Legacy Former Employees, and such injuries, are otherwise eligible for coverage under the Parent Group’s workers’ compensation programs.

Section 3.           Employment.

(a)           Continuation of Employment. Except for the Employees retained by Parent set out in Appendix 3a (the “Retained Employees”, and together with the Objecting Employees, the “Non-Transferred Employees”), SpinCo shall, or shall cause another member of the SpinCo Group to, employ each Employee employed immediately prior to the Distribution Date; provided that, notwithstanding anything to the contrary in this Agreement, the transfer to SpinCo or another member of the SpinCo Group of the employment of Employees who are on short-term disability leave with Parent or any Parent affiliate as of the Distribution Date (the “Delayed Transfer Employees”) shall be delayed until the end of such leave, at which point such Delayed Transfer Employees will be transferred to SpinCo or another member of the SpinCo Group. Notwithstanding such delayed transfer, SpinCo shall be responsible for Liabilities associated with such Delayed Transfer Employees from the Distribution Date to the extent otherwise provided in this Agreement.

(b)           Transfer of Employment.

(i)            Automatic Transfer of Employment: In those jurisdictions where the transfers of employment relationships of Employees to SpinCo or to another member of the SpinCo Group constitute transfers of an undertaking pursuant to the applicable local automatic transfer regulations (“Automatic Transfer Regulations”), Parent and SpinCo agree that they will comply with the requirements of the Automatic Transfer Regulations affecting the automatic transfer of employees on the sale, transfer or continuation of a business and/or the provision of services and that they will work to provide an orderly transition for those employees who will automatically transfer pursuant to Automatic Transfer Regulations.

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(ii)           Offer and Acceptance Employee Transfers: For those jurisdictions, where Employees will be transferred to SpinCo or to another member of the SpinCo Group via an offer and acceptance prior to the Distribution Date, SpinCo is obliged to make, or shall cause another member of the SpinCo to make, subject to the applicable Law, an employment offer to the Employees as soon as reasonably practicable, effective no later than the Distribution Date and consistent with the employment terms following the Distribution Date and the terms of this Agreement.

(iii)          Refusal or Objection of Transfer to SpinCo: If the Employee does not accept the offer of SpinCo or any other member of SpinCo Group to transfer their employment relationship or objects to the transfer of their employment relationship to SpinCo or another member of the SpinCo group (the “Objecting Employees”), SpinCo undertakes to inform Parent without undue delay of any receipts of refusals or objections of the Objecting Employees to the transfer of their respective employment relationship to SpinCo or any member of the SpinCo group.

(c)           No Guarantee of Employment. Notwithstanding any other provision of this Employee Matters Agreement or the Separation Agreement, and subject to applicable Law, no SpinCo Group member shall be obligated to continue to employ any Employee for any specific period of time.

(d)           Employee Representative Agreements. Effective as of the Distribution Date, SpinCo shall, or shall cause another SpinCo Group member to, assume or remain a party to all collective bargaining, works council or other similar employee representative agreements (the employee representative party to such agreements, collectively, “Appropriate Representatives”), or honor the obligations thereunder, that apply to any Employees and either (i) require assumption by Law, or (ii) state that such agreement or obligation applies to successors (collectively, “Employee Representative Agreements”). If there are Employee Representative Agreements that continue to cover employees of the SpinCo Group and employees of the Parent Group, the Parties will work together in good faith and in accordance with applicable Law to open and manage negotiations with the applicable Appropriate Representative with a goal of establishing separate agreements to be in place by the Distribution Date, where possible on reasonable terms that are acceptable to both SpinCo and Parent.

Section 4.           Employment Terms Following the Distribution Date.

(a)           Terms and Conditions of Employment. Consistent with applicable Law and this Agreement, during the applicable Continuation Period, SpinCo shall, or shall cause another SpinCo Group member to, provide each Employee employed immediately prior to the Distribution Date with the following:

(i)            salary or wages, cash incentive compensation opportunities, cash bonus opportunities (excluding any transaction-related, retention or similar opportunities) and welfare and retirement benefits that are at least substantially similar, in the aggregate, to those provided to such Employee immediately prior to Distribution Date; and

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(ii)           to the extent required by applicable Law, a Parent Plan or a Business Plan, other material terms and conditions of employment as were provided to such Employee immediately prior to the Distribution Date.

(b)           Vacation and Paid Time Off. SpinCo shall, or shall cause another member of the SpinCo Group to, provide vacation, paid time off, and leave benefits to Employees during the Continuation Period (or such longer period required by applicable Law) that are at least as favorable (and take into account the same service) as those provided to Employees under the applicable vacation, paid time off, or leave program immediately prior to the Distribution Date.

(c)           Severance Benefits. SpinCo shall, or shall cause another member of the SpinCo Group to, provide severance benefits to any Employee who was employed immediately prior to the Distribution Date, but who is laid off or terminated by a SpinCo Group member during the 12-month period immediately following the Distribution Date in an amount that is equal to the greater of (i) the severance benefits, if any, to which the Employee would have been entitled under the circumstances pursuant to the terms of any Parent Plan or Business Plan that is a severance or layoff plan as would have applied to such Employee if such termination occurred immediately prior to the Distribution Date, or (ii) the severance benefits, if any, provided under the severance arrangements of a SpinCo Group member applicable to similarly-situated employees and in connection with comparable terminations of employment, in each case to be calculated on the basis of the Employee’s compensation and service at the time of the layoff or other termination. In addition, SpinCo shall consider such eligible laid off or terminated Employee for a pro rata bonus under the terms of any bonus plan of the applicable SpinCo Group member in which the employee participates to the extent such Employee would have been eligible for a pro rata bonus under similar circumstances pursuant to the terms of any Parent Plan or Business Plan.

(d)           Credit for Service. SpinCo shall, and shall cause the other SpinCo Group members to, credit Employees for all service earned on and prior to the Distribution Date with the Parent Group and the SpinCo Group, in addition to service earned with the SpinCo Group on and after the Distribution Date for all purposes, including under the Business Plans (including the Mirror Plans and Allocated Plans) and other similar plans and programs sponsored by a SpinCo Group member; provided, however, that in no event shall SpinCo be required to credit service for Employees in a manner that results in a duplication of service under a plan with respect to a period, thus leading to a duplication of benefits. The SpinCo Group shall not amend any provision of a Business Plan (including a Mirror Plan or an Allocated Plan) as to any participant as of the applicable Split Date in any manner that would reduce the credit for service for such individual that is provided under this Section 4(d), to the extent this leads to a reduction of benefits, or if more generous, under the applicable plan or applicable Law.

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Section 5.           Parent Plans.

(a)           U.S. Defined Benefit Pension Plans. As of the Distribution Date, the Parent Group shall retain (or assume to the extent necessary) sponsorship of each Parent Plan that is a tax-qualified defined benefit pension plan (a “Parent Pension Plan”), and, from and after the Distribution Date, all Assets and Liabilities thereunder shall be Assets and Liabilities of the Parent Group. No member of SpinCo Group shall assume any Assets or Liabilities relating to the Parent Pension Plans or, notwithstanding anything to the contrary in this Agreement, shall have any obligation to establish a tax-qualified defined benefit plan in the United States.

(b)           U.S. Defined Contribution Plans. Effective as of January 1, 2024, (i) (A) Parent shall transfer from the BorgWarner Inc. Retirement Savings Plan (the “BW RSP”) to a tax-qualified defined contribution plan sponsored by SpinCo or another member of the SpinCo Group (the “RSP Mirror Plan”) all Assets and Liabilities under the BW RSP with respect to Employees, Former Employees and Legacy Former Employees and (B) the RSP Mirror Plan shall assume all such Assets and Liabilities from the BW RSP, (ii) (A) Parent shall transfer from the Deferred Plans to comparable plans sponsored by SpinCo or another member of the SpinCo Group (the “Mirror Deferred Compensation Plans”) all Liabilities under the Deferred Plans with respect to Employees and Former Employees and (B) the Mirror Deferred Compensation Plans shall assume all such Liabilities from the Deferred Compensation Plans, and (iii) SpinCo shall assume, and shall cause any other SpinCo Group member that sponsors the RSP Mirror Plan or a Mirror Deferred Compensation Plan to assume, all responsibility for funding and paying (or causing to be paid) the transferred Liabilities described in this Section 5(b) for any such plan that SpinCo or such other member sponsors. For the avoidance of doubt, the Assets and Liabilities to be transferred with respect to the BW RSP shall include the allocable portion (in proportion to the aggregate account balances transferred to the RSP Mirror Plan) of the forfeiture account and revenue account accumulation held in the BW RSP as of January 1, 2024 (net of any applicable estimated unpaid plan expenses for the most recently completed plan year), and promissory notes evidencing plan loans, and neither the transfers described in this Section 5(b), nor the Distribution Date, shall be treated as a “separation from service” as defined under Treasury Regulation s. 1.409A-1(h) for purposes of the Deferred Plans and the Mirror Deferred Compensation Plans or as a “severance from employment” within the meaning of Treasury Regulation s. 1.401(k)-1(d)(2) for purposes of the RSP. After the transfer of Assets and Liabilities has occurred with respect to the BW RSP and the RSP Mirror Plan as contemplated by this paragraph, if on further review it is determined and agreed upon by the Parties that an incorrect amount of assets was transferred, there shall be a corresponding adjustment to correct any such mistake.

The Liabilities transferred in accordance with this Section 5(b) shall cease to be Liabilities of the BW RSP (and the BW RSP Assets transferred in accordance with this Section 5(b), if any, shall cease to be Assets of the BW RSP), the Deferred Plans and the Parent Group (excluding the SpinCo Group) as of January 1, 2024. From and after January 1, 2024, the RSP Mirror Plan, the Mirror Deferred Compensation Plans and the members of the SpinCo Group that sponsor such plans, as applicable, shall be responsible for all obligations and Liabilities (including, for the avoidance of doubt, the obligation to defend claims related to benefits and/or benefits eligibility) with respect to, or in any way related to, the Liabilities transferred under this Section 5(b), whether accrued before, on or after January 1, 2024.

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The plan documents for the RSP Mirror Plan and the Mirror Deferred Compensation Plans adopted on January 1, 2024 shall reflect the service crediting requirements described in Section 4(d).

SpinCo and the other members of the SpinCo Group that sponsor such plans shall be solely and exclusively responsible for, and SpinCo shall indemnify and defend the Parent Group against, any and all claims related to (x) the establishment of, or transfer of Liabilities (and Assets, where applicable) to, the RSP Mirror Plan or the Mirror Deferred Compensation Plans, and/or the members of the SpinCo Group, and/or (y) any amendments to, or termination of, the RSP Mirror Plan or the Mirror Deferred Compensation Plans. For the avoidance of doubt, SpinCo and the other members of the SpinCo Group that sponsor such plans shall be solely and exclusively responsible for all Liabilities arising from clause (x) or (y).

Employees, Former Employees, and Legacy Former Employees who otherwise meet the eligibility requirements of the BW RSP and the Deferred Plans shall be eligible to participate in the BW RSP and the Deferred Plans through December 31, 2023, unless otherwise mutually agreed by the Parties or as otherwise required by applicable Law; provided that SpinCo shall continue to reimburse Parent promptly for the full cost of any benefits provided under such BW RSP and the Deferred Plans (including expenses) and pay Parent for all administrative and other expenses associated with such continued participation in the BW RSP and the Deferred Plans.

(c)           U.S. Health and Other Welfare Benefits.

(i)            Continued Participation in Parent Health and Welfare Plans. Employees who otherwise meet the eligibility requirements of the Parent Health and Welfare Plans shall be eligible to participate in the Parent Health and Welfare Plans for active employees through December 31, 2023, unless otherwise mutually agreed by the Parties or as otherwise required by applicable Law; provided that SpinCo shall continue to reimburse Parent promptly for the full cost of such benefits (including expenses), as described in this Section 5(c) and Section 12(d) and pay Parent for all administrative and other expenses associated with such continued participation in the Parent Health and Welfare Plans as provided in the TSA.

(ii)           SpinCo Group U.S. Health and Welfare Plans. By January 1, 2024, SpinCo shall, or shall cause the applicable member of the SpinCo Group to, establish SpinCo Group U.S. health and welfare plans (the “SpinCo Group U.S. Health and Welfare Plans”). Except as specifically provided herein, it is anticipated that U.S. Employees shall cease active participation in the Parent Health and Welfare Plans as of January 1, 2024 (the “Plan Transition Date”) and commence such participation in the SpinCo Group U.S. Health and Welfare Plans on the Plan Transition Date. SpinCo shall use commercially reasonable efforts to cause the SpinCo Group U.S. Health and Welfare Plans, as applicable, to: (a) with respect to initial enrollment as of the Plan Transition Date, waive (1) all limitations as to preexisting conditions, exclusions, and service conditions with respect to participation and coverage requirements applicable to any U.S. Employee, or any covered dependents thereof, other than limitations that were in effect with respect to such U.S. Employee, or covered dependent under the applicable Parent Health and Welfare Plan as of immediately prior to the Plan Transition Date, and (2) any waiting period limitation or evidence of insurability requirement applicable to such U.S. Employee, or any covered dependents thereof, other than limitations or requirements that were in effect with respect to such U.S. Employee, or covered dependent under the applicable Parent Health and Welfare Plan as of immediately prior to the Plan Transition Date; and (b) take into account (x) with respect to aggregate annual, lifetime, or similar maximum benefits available under the SpinCo Group U.S. Health and Welfare Plans, such U.S. Employee’s, or any covered dependents’ prior claim experience under the Parent Health and Welfare Plan; and (y) any eligible expenses incurred by such U.S. Employee and his or her covered dependents during the portion of the plan year of the applicable Parent Health and Welfare Plan ending as of the Plan Transition Date to be taken into account under such SpinCo Group U.S. Health and Welfare Plan for purposes of satisfying all deductible, coinsurance, and maximum out-of-pocket requirements applicable to such U.S. Employee and his or her covered dependents for the applicable plan year to the same extent as such expenses were taken into account by Parent for similar purposes prior to the Plan Transition Date as if such amounts had been paid in accordance with such SpinCo Group U.S. Health and Welfare Plan.

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(iii)          Allocation of Health and Welfare Assets and Liabilities. Effective as of the Distribution Date, except as otherwise specifically provided herein, Parent Group shall retain all Liabilities relating to Incurred Claims (as defined below) under the Parent Health and Welfare Plans, and shall also retain Assets (including, without limitation, Medicare reimbursements, pharmaceutical rebates, and similar items) associated with such Incurred Claims. The SpinCo Group shall be responsible for all Liabilities relating to Incurred Claims under any SpinCo Group U.S. Health and Welfare Plan and shall also retain Assets (including, without limitation, Medicare reimbursements, pharmaceutical rebates, and similar items) associated with such Incurred Claims. “Incurred Claims” shall mean a Liability related to services or benefits provided under a health and welfare benefit plan, and shall be deemed to be incurred: (a) with respect to medical, dental, vision, and prescription drug benefits, upon the rendering of services giving rise to such Liability; (b) with respect to death benefits, life insurance, accidental death and dismemberment insurance, and business travel accident insurance, upon the occurrence of the event giving rise to such Liability; (c) with respect to disability benefits, upon the date of disability, as determined by the disability benefit insurance carrier or claim administrator, giving rise to such Liability; (d) with respect to a period of continuous hospitalization, upon the date of admission to the hospital; and (e) with respect to tuition reimbursement or adoption assistance, upon completion of the requirements for such reimbursement or assistance, whichever is applicable.

Notwithstanding anything to the contrary in the preceding paragraphs, except to the extent otherwise required by law or agreed by the Parties, any Employee, Former Employee or Legacy Former Employee (or their respective covered dependents) who incurs a qualifying event under COBRA, or is receiving long-term disability benefits as a result of an Incurred Claim occurring, on or after the Distribution Date and before January 1, 2024 shall continue to participate in and receive benefits under (to the extent otherwise eligible for continued participation and benefits under) any applicable Parent Health and Welfare Plans; provided that SpinCo or a member of SpinCo Group shall reimburse Parent promptly an amount equal to the premiums, as determined by Parent, with respect to such continued participation between the Distribution Date and January 1, 2024 and pay Parent for all administrative and other expenses associated with such continued participation.

(d)           Parent FSA Plans. U.S. Employees shall remain eligible to participate in health care and dependent care flexible spending account arrangements under the Parent Health and Welfare Plans (collectively, the “Parent FSA Plans”) through December 31, 2023 (and thereafter for any amounts rolled over in accordance with the terms of the Parent FSA Plans or to the extent of any grace period or claims run-out period). SpinCo shall, or shall cause another member of the SpinCo Group to, establish a cafeteria plan (within the meaning of Section 125 of the Internal Revenue Code) with health care and dependent care flexible spending account arrangements (the “SpinCo Cafeteria Plan”) effective January 1, 2024.

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(e)           Non-U.S. Retirement Benefits and Other Long-Term Employee Benefits of Non-U.S. Employees.

(i)            Transfer of Non-U.S. Retirement Benefit Liabilities: As an exception to Section 2(b), the Retirement Benefit Liabilities pertaining to the Non-U.S. Employees and Legacy Former Non-U.S. Employees shall be transferred to SpinCo or other members of the SpinCo Group to the extent such transfer is required by applicable Law or set out in Appendix 5 (e) (i) (“Transferring Non-U.S. Retirement Benefit Liabilities”).

(ii)           Successor Non-U.S. Retirement Benefit Arrangements: In respect to the Non-U.S. Retirement Benefit Arrangements, SpinCo shall be obliged to establish a successor plan for the benefit of the Non-U.S. Employees to the extent required by applicable Law or set out in Appendix 5 (e) (ii) (“Successor Retirement Benefit Arrangement”) and shall be required to maintain this Successor Retirement Benefit Arrangement during the Continuation Period.

(iii)          Non-U.S. Defined Contribution Arrangements: With regard to any Non-U.S. Defined Contribution Arrangement, such Successor Retirement Benefit Arrangement shall also include the possibility to transfer all assets corresponding to Non-U.S. Defined Contribution Arrangements to the Successor Retirement Benefit Arrangement with discharging effect for the Non-US Defined Contribution Arrangement of Parent or the members of the Parent Group to the extent required by applicable Law or as provided in Appendix 5 (e) (ii).

(iv)          Non-U.S. Retirement Benefit Funding Assets: To the extent that there are assets to fund the Transferring Non-U.S. Retirement Benefit Liabilities (“Non-U.S. Retirement Benefits Funding Assets”), Parent and SpinCo shall make the declarations required for the transfer and undertake reasonable efforts to achieve a transfer of such Non-U.S. Retirement Benefits Funding Assets.

(v)           Transfer of Other Long-Term Employee Benefits of Non-U.S. Employees: If and to the extent applicable, the foregoing provisions of this Section 5(e) shall apply mutatis mutandis to Other Long-Term Employee Benefits of Non-U.S. Employees unless provided otherwise in this Agreement.

(f)            Participation in Parent Plans. Effective as of the applicable Split Date, all Employees, Former Employees, and Legacy Former Employees will cease participation in and benefit accrual under the Parent Plan from which Liabilities (and Assets, where applicable) are transferred to the SpinCo Group as of such Split Date, except to the extent (if at all) as required by applicable Law or as otherwise explicitly set forth in this Section 5 or Appendix 5f. To the extent that any Employees, Former Employees and Legacy Former Employees continue to participate in a Parent Plan in accordance with this Agreement, SpinCo shall, or shall cause another member of the SpinCo Group to, reimburse Parent promptly as described in Section 12 (d). Parent shall, and shall cause the other members of the Parent Group to, take all necessary actions to effect such cessation of participation by Employees, Former Employees, and Legacy Former Employees under the Parent Plans, and SpinCo shall promptly reimburse Parent for costs as described in Section 12(d).

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(g)           Follow-on Transfers. With respect to the Parent Plans that are Split Plans identified in Appendix C as being subject to this Section 5(g), if a participant in any such plan subsequently transfers between the Parent Group and the SpinCo Group before the Distribution Date, then the Liabilities (and, if applicable, Assets) for such participant’s benefits under such plans shall be transferred to and from each Parent Plan as needed to ensure that each such participant’s benefit is allocated to the individual’s employer or most recent former employer (in each case, or an Affiliate thereof). Effective upon the reallocation of the Liabilities (and Assets, where applicable) for such benefits pursuant to this Section 5(g), the legal entity to whom such benefits are transferred shall assume all responsibility for funding and paying (or causing to be paid) the transferred Liabilities described in this Section 5(g). For the avoidance of doubt, with respect to the Parent Plans that are Split Plans identified in Appendix C as being subject to this Section 5(g), if a participant in any such plan subsequently transfers between the Parent Group and the SpinCo Group after the Distribution Date, then the Liabilities (and, if applicable, Assets) for the participant’s benefits shall not transfer as described in this Section 5(g).

Section 6.           Business Plans. The members of the SpinCo Group shall retain all Liabilities (and Assets, where applicable) with respect to the Business Plans (and no member of the Parent Group that is not in the SpinCo Group shall have any obligations with respect thereto). Without limiting the generality of the foregoing, a SpinCo Group member shall be designated by SpinCo as plan sponsor of each Business Plan from and after the Split Date.

Section 7.           Non-U.S. Employees.

(a)           Terms and Conditions of Employment. In the case of the Non-U.S. Employees employed by a member of the SpinCo Group immediately prior to the Distribution Date, SpinCo shall, and shall cause the other members of the SpinCo Group to, in addition to meeting the requirements specified in Section 4 through Section 6, comply with any additional obligations arising under applicable Laws governing the terms and conditions of their employment or severance of employment in connection with the transfer of the SpinCo Business or otherwise.

(b)           Severance Indemnity. In the event (i) the members of the SpinCo Group do not provide Non-U.S. Employees employed by a SpinCo Group member immediately prior to the Distribution Date with (A) similar in-kind benefits to those provided immediately prior to the Distribution Date, or (B) a benefit plan consistent with applicable Law or the SpinCo Group’s obligations in this Employee Matters Agreement, or (ii) any member of the SpinCo Group amends or otherwise modifies on or after the Distribution Date any such benefit plan, any Non-U.S. Business Plan in which any Non-U.S. Employee was covered or eligible for coverage immediately prior to the Distribution Date, or any other term or condition of employment applicable to Non-U.S. Employees immediately prior to the Distribution Date, in each case in a manner that results in any obligation, contingent or otherwise, of any Parent Group member to pay any severance, termination indemnity, or other similar benefit (including such benefits required under applicable Law) to such person, SpinCo shall, or shall cause another member of the SpinCo Group to, reimburse and otherwise hold harmless the Parent Group for all such severance, termination indemnity and other similar benefits and any additional Liability incurred by the Parent Group in connection therewith.

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Section 8.           Equity Compensation Awards

(a)           Restricted Stock and Restricted Stock Units.

(i)            Restricted Stock and Restricted Stock Units Held by SpinCo Group Employees and Service Providers. Parent and SpinCo shall take or cause to be taken any and all action as shall be necessary or appropriate, including approval of the provisions of this Section 8(a)(i) by SpinCo’s Board of Directors and Parent’s Board of Directors or Compensation Committee pursuant to the terms of Parent’s 2018 Stock Incentive Plan or successor equity plan (the “Parent Equity Plan”), the SpinCo 2023 Stock Incentive Plan (the “SpinCo Equity Plan”) and this Employee Matters Agreement, so that each restricted stock award and restricted stock unit award (including, for the avoidance of doubt, any restricted stock and restricted stock units attributable to the reinvestment or deemed reinvestment of associated dividends or dividend equivalents (“Related Dividend Equivalents”)) relating to Parent’s common stock granted under the Parent Equity Plan (each, a “Parent RSU Award”) held at the close of business on the Distribution Date by any Employee or any current individual independent contractor, consultant or other individual service provider who is or was providing services primarily for the benefit of the SpinCo Business as determined by Parent (collectively, “Service Providers”) shall be replaced with a substitute restricted stock or restricted stock unit (including, for the avoidance of doubt, any Related Dividend Equivalents) award relating to SpinCo’s common stock that is granted under the SpinCo Equity Plan (“Substitute SpinCo RSU Award”). The number of SpinCo shares of restricted stock or restricted stock units subject to the Substitute SpinCo RSU Award will be equal to the number of shares of Parent restricted stock or Parent restricted stock units subject to the Parent RSU Award (including, for the avoidance of doubt, any Related Dividend Equivalents) held by the participant at the close of business on the Distribution Date multiplied by a fraction, (i) the numerator of which is equal to the sum of (x) the Parent Post-Distribution Stock Price plus (y) the quotient of the SpinCo Post-Distribution Stock Price divided by the number of shares of Parent’s common stock a holder of Parent’s common stock must hold to receive one share of SpinCo common stock in the Distribution, and (ii) the denominator of which is the SpinCo Post-Distribution Stock Price (the “SpinCo Conversion Ratio”). Each Substitute SpinCo RSU Award shall vest and be payable based on the holder’s service with the SpinCo Group. Each Substitute SpinCo RSU Award shall have the same terms and conditions as the corresponding Parent RSU Award, except as provided herein.

(ii)           Restricted Stock and Restricted Stock Units Held by Persons Other Than SpinCo Group Employees or Service Providers. Parent shall take or cause to be taken any and all action as shall be necessary or appropriate, including approval of the provisions of this Section 8(a)(ii)) by Parent’s Board of Directors or Compensation Committee pursuant to the terms of the Parent Equity Plan and this Employee Matters Agreement, so that each Parent RSU Award held at the close of business on the Distribution Date by any person who is not an Employee or a Service Provider, including any restricted stock units, shall be adjusted (“Adjusted Parent RSU Award”). The number of Parent shares of restricted stock or restricted stock units subject to the Adjusted Parent RSU Award will be equal to the number of Parent shares of restricted stock or restricted stock units subject to the Parent RSU Award (including, for the avoidance of doubt, any Related Dividend Equivalents) held by the holder at the close of business on the Distribution Date multiplied by a fraction, (i) the numerator of which is equal to the sum of (x) the Parent Post-Distribution Stock Price plus (y) the quotient of the SpinCo Post-Distribution Stock Price divided by the number of shares of Parent’s common stock a holder of Parent’s common stock must hold to receive one share of SpinCo common stock in the Distribution, and (ii) the denominator of which is the Parent Post-Distribution Stock Price (the “Parent Conversion Ratio”). Each Adjusted Parent RSU Award shall have the same terms and conditions as the corresponding Parent RSU Award, except as provided herein.

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(b)           Performance Share Awards.

(i)            Performance Share Awards Held by SpinCo Group Employees or Service Providers. Parent and SpinCo shall take or cause to be taken any and all action as shall be necessary or appropriate, including approval of the provisions of this Section 8(b)(i) by SpinCo’s Board of Directors and Parent’s Board of Directors or Compensation Committee pursuant to the terms of the Parent Equity Plan, the SpinCo Plan and this Employee Matters Agreement, so that each Parent performance share award held at the close of business on the Distribution Date by any Employee or Service Provider will be replaced with a Substitute SpinCo RSU Award granted under the SpinCo Plan. For purposes of determining the number of SpinCo restricted stock units subject to the Substitute SpinCo RSU Award, the SpinCo Conversion Ratio shall be applied to the number of Parent performance shares considered earned with respect to such Parent performance share award (including, for the avoidance of doubt, any Related Dividend Equivalents), and the number of such Parent performance shares that are considered earned with respect to such performance share award shall be determined by Parent’s Board of Directors or Compensation Committee based upon projected performance results through the end of the applicable performance period, calculated based on actual performance from the beginning of the applicable performance period through the end of the fiscal quarter immediately preceding the Distribution Date and expected performance, as determined by Parent’s Board of Directors or Compensation Committee, through the remainder of the applicable performance period had the Distribution not occurred; provided that, for any Parent performance share awards for which less than one year of the performance period has elapsed, the target number of Parent performance shares shall be considered earned. Each Substitute SpinCo RSU Award shall have a vesting period ending on the last day of the performance period applicable to the corresponding Parent performance share award to which it relates based on the holder’s service with the SpinCo Group, and shall have the same terms and conditions as the corresponding Parent performance share award, except as provided herein.

(ii)           Performance Share Awards Held by Persons Other Than SpinCo Group Employees or Service Providers. Parent shall take or cause to be taken any and all action as shall be necessary or appropriate, including approval of the provisions of this Section 8(b)(ii) by Parent’s Board of Directors or Compensation Committee pursuant to the terms of the Parent Equity Plan and this Employee Matters Agreement, so that each Parent performance share award held at the close of business on the Distribution Date by any person who is not an Employee or a Service Provider will be replaced with, or modified to constitute, an adjusted Parent performance share award (an “Adjusted Parent Performance Share Award”) granted under or subject to the Parent Equity Plan. The number of Parent performance shares subject to the Adjusted Parent Performance Share Award will be equal to the number of Parent performance shares subject to the Parent Performance Award held by the holder at the close of business on the Distribution Date (including, for the avoidance of doubt, any Related Dividend Equivalents) multiplied by the Parent Conversion Ratio. Parent’s Board of Directors or Compensation Committee shall adjust any performance goals applicable to the Adjusted Parent Performance Share Awards in any manner it deems in its discretion to be appropriate to take into account the Separation and related effects, and the Adjusted Parent Performance Share Awards shall otherwise have the same terms and conditions as the corresponding Parent Group performance share award, except as provided herein.

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(c)           Approval and Terms of Equity Awards. By approval of SpinCo’s Board of Directors and Parent’s Board of Directors or Compensation Committee pursuant to Section 8(a), (b) and (c), SpinCo, as issuer of substitute and replacement awards provided hereunder, and Parent as sole shareholder of SpinCo, shall adopt and approve, respectively, the issuance of the substitute or replacement awards, or modifications to awards, provided for herein. Except as set forth above or otherwise determined by Parent’s Board of Directors or Compensation Committee or SpinCo’s Board of Directors, the terms of the Parent Equity Plan and of the outstanding equity compensation awards held by participants under the Parent Equity Plan and the substitute or replacement SpinCo equity awards shall be subject to the terms of such plans and applicable award agreements, except that references in such outstanding substitute and replacement SpinCo awards to “Board” and “Committee” shall mean the Board, Compensation Committee or any other designated committee of SpinCo (as applicable) and references to the “Company” shall mean SpinCo. Notwithstanding the foregoing, substitute or replacement awards made under the SpinCo Plan pursuant to SpinCo’s obligations under this Employee Matters Agreement shall take into account all employment and service with both Parent Group and SpinCo Group, and their respective subsidiaries and affiliates, for purposes of determining when such awards vest and terminate.

(d)           No Change in Control or Separation from Service. The Distribution and any related transfers of employment between Parent Group and SpinCo Group entities will not constitute a “Change in Control” or a termination or separation of employment or service that would result in accelerated vesting for purposes of Parent equity awards that are outstanding as of the Distribution Date or for purposes of other compensation arrangements maintained by Parent.

(e)           Through the Distribution Date. From the date of this Employee Matters Agreement through the Distribution Date, the Parties shall comply with Parent’s established policies and practices with respect to the solicitation and hiring of any individual employed by the Parent Group or the SpinCo Group, as applicable.

Section 9.           Transition Services Agreement

Nothing in the TSA is intended, or shall be construed, to conflict with this Employee Matters Agreement. In the event of any such conflict, the terms of this Employee Matters Agreement shall prevail.

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The members of the SpinCo Group remain responsible for Employment Liabilities regardless of whether the Parent Group provides services (or makes discretionary decisions in providing services) to the SpinCo Group pursuant to the TSA in relation to the Employment Liabilities.

Section 10.         Impermissibility; Good Faith.

In the event that any provision of this Employee Matters Agreement is not permissible under any Law or practice, the Parties agree that they shall proceed in good faith under such Law or practice to carry out to the fullest extent possible the purposes of such provision.

Section 11.         Restrictive Covenants Relating to Employees.

(a)           Non-Solicitation by Parent. During the twenty-four (24) month period following the Distribution Date, Parent shall not, and shall cause the other Parent Group members not to, directly or indirectly, solicit or induce or attempt to solicit or induce any Employee to leave employment with any SpinCo Group member; provided, however, that SpinCo shall notify Parent in writing of any alleged breach of this obligation and Parent shall have ten (10) calendar days following receipt of such notice to effect a cure.

(b)           Non-Solicitation by SpinCo. During the twenty-four (24) month period following the Distribution Date, SpinCo shall not, and shall cause the other SpinCo Group members not to, directly or indirectly, solicit or induce or attempt to solicit or induce any employee of the Parent Group to leave the employment with any Parent Group member; provided, however, that Parent shall notify SpinCo in writing of any alleged breach of this obligation and SpinCo shall have ten (10) calendar days following receipt of such notice to effect a cure.

(c)           Exceptions. The limitations set forth in Sections 11(a) and 11(b) shall not prohibit members of the SpinCo Group or the Parent Group from: (i) soliciting any individual whose employment has been terminated, or who has been provided with formal notice of layoff, by a member of the SpinCo Group or the Parent Group, as the case may be, (ii) placing public advertisements or conducting any other form of general solicitation that is not specifically targeted towards the applicable employees, or (iii) soliciting specifically identified employees with the prior written agreement of the other Party.

Section 12.         Cooperation and Assistance.

(a)           Mutual Cooperation. From and after the date of this Employee Matters Agreement, Parent and SpinCo shall, and each shall cause their respective Parent Group and SpinCo Group members to, cooperate with each other to facilitate the obligations assumed by the SpinCo Group under this Employee Matters Agreement including (i) using commercially reasonable effort to enter into any necessary agreements to accomplish the assumptions and transfers of assets and liabilities contemplated by this Agreement, (ii) undertaking reasonable effort to obtain employee consent as required; provided that, if such consent cannot be obtained, SpinCo shall treat Parent economically as if such consent has been granted unless agreed otherwise in this Agreement, (iii) providing (to the extent permitted by Law) such current information regarding the Employees, Former Employees, and/or Legacy Former Employees as may be necessary to facilitate determinations of eligibility for, and crediting of service, and payments of benefits to, such current and former employees under the Parent Plans and Business Plans (including Mirror Plans and Allocated Plans), as applicable, (iv) ensuring consistent administration of Split Plans and Mirror Plans to the extent consistent administration is necessary or appropriate, and (v) executing documents for the Mirror Plans and as required to complete the transactions contemplated by this Employee Matters Agreement.

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Without limiting the generality of the foregoing, Parent and SpinCo each recognize that transfers of Liabilities and assets will require an initial transfer based on data available several months before the transfer, followed by one or more “true-up” adjustments to reflect changes between the time of the initial calculation and the effective date of the applicable transfer. Parent and SpinCo shall cooperate to determine and effectuate the “true-up” adjustments, with such adjustments for each plan to be completed in accordance with an agreed schedule that is acceptable to the plans’ actuaries and other service providers.

(b)           Claims Assistance. From and after the date of this Employee Matters Agreement:

(i)            If a threat, demand, lawsuit, or claim involving an Employee, Former Employee or Legacy Former Employee (a “Claim”) is made against either Party, or members of the respective SpinCo Group or Parent Group (as the case requires), then the other Party shall, and shall cause members of the respective SpinCo Group and Parent Group (as the case requires) to, provide reasonable assistance to the Party and members of the respective SpinCo Group and Parent Group (as the case requires) in the investigation of and defense against the Claim. Such reasonable assistance shall include providing reasonable access to employees as well as documents, data, other information in the possession of such employees (to the extent permitted by applicable Law) who reasonably likely may have relevant information or whose assistance is reasonably necessary to investigating and defending against such Claim.

(ii)           In the event a Claim is made against either Party, or any other member of the respective SpinCo Group or Parent Group (as the case requires), and to the knowledge of the other Party such Claim involves materially similar factual or legal issues to a Claim that was made against the other Party, or any member of the respective SpinCo Group or Parent Group (as the case requires), then the Parties shall, to the extent both Parties agree it is reasonable and appropriate under the circumstances, consult with each other to address whether the Parties are taking, or might take, positions that are inconsistent or would materially harm the other Party. The Parties are not, however, required to waive any applicable privileges or protections, or assert, or refrain from asserting, any arguments, rights, claims, or defenses.

(iii)          To the fullest extent permitted by applicable Law, neither Party shall provide assistance or support, of any type, to any person or entity that is, or may be, asserting, investigating, or considering a Claim against the other Party with respect to the subject matter of such Claim or potential Claim.

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(c)           Consultation with Employee Representative Bodies. The Parties shall, and shall cause their respective Group members to, mutually cooperate in undertaking all reasonably necessary or legally required provision of information to, or consultations, discussions or negotiations with, employee representative bodies (including any unions or works councils) that represent employees affected by the transactions contemplated by this Employee Matters Agreement. Where any steps or arrangements contemplated by this Employee Matters Agreement or the Separation Agreement are subject to information and/or consultation with employees and/or their representatives in accordance with local Law, such steps shall be subject to the completion of any such information and/or consultation process.

(d)           Cost-Sharing. Notwithstanding anything to the contrary in the Separation Agreement, SpinCo shall, or shall cause other members of the SpinCo Group to, reimburse Parent promptly (upon receipt of periodic billing where applicable) as follows:

(i)            For health benefits for U.S. Employees, and for COBRA benefits with respect to Former U.S. Employees and U.S. Employees, for the full cost of all benefits paid for claims incurred, and all administrative and other expenses incurred under the Parent Plans and Parent Health and Welfare plans without regard to when claims are incurred.

(ii)           For health benefits for applicable U.S. Former Employees and Legacy U.S. Former Employees (excluding COBRA under Parent Health and Welfare Plans for active U.S. Employees), including pre-Medicare and post-Medicare, all benefits and administrative expenses paid under the Parent Plans or Parent Health and Welfare Plan, and all other Liabilities assigned to the members of the SpinCo Group on or after the Split Date or Liability Split Date. SpinCo shall, or shall cause other members of the SpinCo Group to, pay service costs through the Transition Services Period. For the avoidance of doubt, Liabilities assigned to the members of the SpinCo Group include claims incurred (whether known or unknown) but not paid prior to the Split Date for U.S. Former Employees and Legacy Former Employees.

(iii)          For life insurance benefits for U.S. Employees, U.S. Former Employees, and Legacy Former Employees, all claims and administrative and other expenses paid under the Parent Health and Welfare Plans, SpinCo shall, or shall cause other members of the SpinCo Group to, pay service costs for life insurance premiums for U.S. Former Employees and Legacy Former Employees under Parent Plans through the Transition Services Period.

(iv)          For all benefits provided through Parent Plans or Parent Health and Welfare Plans and for any and all costs (whether incurred internally (e.g., expenses associated with Parent Group employees performing services relating to the Parent Plans or Parent Health and Welfare Plans) or externally (e.g., through a consulting firm) by Parent Group) associated with the provision of such benefits or services related thereto (collectively, the “Costs”), SpinCo shall, or shall cause other members of the SpinCo Group to, continue to pay Costs and other allocations in the ordinary course for benefit expenses in each case upon the receipt of periodic billings for such amounts. Certain of the amounts paid by members of the SpinCo Group to members of the Parent Group may be held in trust, as determined by Parent. For purposes of this Employee Matters Agreement, (A) benefit claims shall be deemed incurred on the date of the service giving rise to the claim (e.g., the date the Employee goes to the doctor and not, for example, the invoice date), (B) expenses for administrative and other services shall be deemed incurred on the date the services giving rise to the expense are performed (and not, for example, on the invoice date), and (C) claims and expenses paid on or after any date shall not include any claims and expenses for which Parent’s payment procedures required payment before such date.

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Additionally, during the Transition Services Period: (i) Parent shall, or shall cause other members of the Parent Group to, continue to collect contributions and premiums due and owing from SpinCo Group’s Employees, Former Employees, and Legacy Former Employees for any voluntary Parent Health and Welfare Plans, will hold contributions and premiums collected in trust to the extent required by applicable Law, and will pay those contributions and premiums to the insurer of the applicable voluntary Parent Health and Welfare Plan; and (ii) SpinCo Group’s obligations to the Parent Group with respect to Parent Health and Welfare Plans shall be determined by Parent using the accrual methodology that is in effect immediately prior to the Distribution Date.

(v)           For any costs relating to the continued participation in Parent Plans of Employees set out in Appendix 5f, SpinCo shall, or shall cause another member of the SpinCo group to, provide a one-off payment equaling the sum of the costs of any unfunded pension benefit obligation relating to such Employees’ continued participation in the Parent Plans, calculated on a plan by plan basis by Parent in accordance with Parent`s regular accounting assumptions and methods for the respective plans, using census data of such Employees as of the Distribution Date.

(vi)          SpinCo shall, or shall cause another member of the SpinCo group to, indemnify or reimburse Parent for any liabilities (contingent, known or unknown, asserted, unasserted, or otherwise) and costs relating to Non-Transferred Employees, including, without limitation, those arising out of, or resulting from the retention or non-transfer of the employment relationship or the termination of employment of such Non-Transferred Employees, unless agreed otherwise among the Parties.

Section 13.         U.S. Payroll and Related Taxes.

Except as otherwise agreed by the Parties or set forth in this Agreement, with respect to any U.S. Employee or Former U.S. Employee, the Parties shall, or shall cause their respective Subsidiaries to:

(a)           treat SpinCo (or the applicable member of the SpinCo Group) as a “successor employer” and Parent (or the applicable member of the Parent Group) as a “predecessor,” within the meaning of Sections 3121(a)(1) and 3306(b)(1) of the Internal Revenue Code, for purposes of taxes imposed under the United States Federal Insurance Contributions Act, as amended (“FICA”), or the United States Federal Unemployment Tax Act, as amended (“FUTA”);

(b)           cooperate with each other to avoid, to the extent possible, the restart of FICA and FUTA upon or following the Distribution Date with respect to each such U.S. Employee or Former U.S. Employee for the tax year during which the Distribution Date occurs; and

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(c)           use commercially reasonable efforts to implement the alternate procedure described in Section 5 of Revenue Procedure 2004-53; provided, however, that, to the extent that SpinCo (or the applicable member of the SpinCo Group) cannot be treated as a “successor employer” to Parent (or the applicable member of the Parent Group) within the meaning of Sections 3121(a)(1) and 3306(b)(1) of the Internal Revenue Code with respect to any U.S. Employee or Former U.S. Employee, then (A) with respect to the portion of the tax year commencing on the first day of the year in which the Distribution Date occurs and ending on the Distribution Date, Parent shall (x) be responsible for all payroll obligations, tax withholding, and reporting obligations for such U.S. Employees or Former U.S. Employees, and (y) furnish a Form W-2 or similar earnings statement to all such U.S. Employees or Former U.S. Employees for such period, and (B) with respect to the remaining portion of such tax year, SpinCo shall (x) be responsible for all payroll obligations, tax withholding, and reporting obligations regarding such U.S. Employees or Former U.S. Employees and (y) furnish a Form W-2 or similar earnings statement to all such U.S. Employees or Former U.S. Employees, subject to the provisions of the TSA.

Section 14.         No Third-Party Beneficiaries.

Notwithstanding the provisions of this Employee Matters Agreement or any provision of the Separation Agreement, nothing in this Employee Matters Agreement is intended to and shall not (a) create any third-party rights, except with respect to the respective rights of the Parent Indemnitees or the SpinCo Indemnitees expressly referred to in this Employee Matters Agreement, (b) amend any employee benefit plan, program, policy or arrangement, or (c) provide any Employee, Former Employee, or Legacy Former Employee with any rights to continued employment or any level of benefits or compensation whether during employment or thereafter.

Section 15.         Other Separation Agreement Provisions.

Article IX of the Separation Agreement is hereby incorporated into this Employee Matters Agreement mutatis mutandis; provided that, in the event of any conflict between the provisions of Article IX of the Separation Agreement and this Employee Matters Agreement, the provisions of this Employee Matters Agreement shall control.

This Employee Matters Agreement, including the provisions herein expressly providing for indemnification, shall be subject to the indemnification provisions of Article VI of the Separation Agreement; provided that, in the event of any conflict between such indemnification provisions, the indemnification provisions in this Employee Matters Agreement shall control.

Article XI of the Separation Agreement is hereby incorporated into this Employee Matters Agreement mutatis mutandis.

Section 16.         Interpretation.

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. The terms “hereof,” “herein,” “herewith” and words of similar import, unless otherwise stated, shall be construed to refer to this Employee Matters Agreement as a whole (including all of the schedules hereto) and not to any particular provision of this Employee Matters Agreement. Article, Section or schedule references are to the articles, sections and schedules of or to this Employee Matters Agreement unless otherwise specified. Any definition of or reference to any agreement, instrument or other document herein (including any reference herein to this Employee Matters Agreement) shall, unless otherwise stated, be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth therein). The word “including” and words of similar import when used in this Employee Matters Agreement shall mean “including, without limitation,” unless the context otherwise requires or unless otherwise specified. The word “or” shall not be exclusive. The word “extent” in the phrase “to the extent” shall mean the degree to which a subject or other thing extends, and such phrase shall not mean simply “if”. References herein to any Law shall be deemed to refer to such law as amended, reenacted, supplemented or superseded in whole or in part and in effect from time to time and also to all rules and regulations promulgated thereunder. Any determination contemplated by this Employee Matters Agreement to be made by Parent or its Board of Directors or Compensation Committee shall be made by Parent or such body, as applicable, in its sole and absolute discretion. Except as expressly set forth in this Employee Matters Agreement, the Parties (or their respective Group members) shall make, or cause to be made, any payment that is required to be made pursuant to this Employee Matters Agreement as promptly as practicable and without regard to any local currency constraints or similar restrictions. In the event that an ambiguity or question of intent or interpretation arises, this Employee Matters Agreement shall be construed as if drafted jointly by the Parties, and no presumption or burden of proof shall arise favoring or disfavoring either Party by virtue of the authorship of any provisions hereof.

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Section 17.         Entire Agreement.

(a)           Except as otherwise expressly provided in this Employee Matters Agreement, this Employee Matters Agreement, together with the Separation Agreement and the other Ancillary Agreements, constitutes the entire agreement of the parties hereto with respect to the subject matter of this Employee Matters Agreement and supersedes all prior agreements and undertakings, both written and oral, between or on behalf of the Parties with respect to the subject matters addressed herein.

(b)           In addition to the responsibilities and obligations set forth herein, the Parties shall have certain other responsibilities and obligations as set forth in the TSA.

[Remainder of page left intentionally blank; signature pages follow.]

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IN WITNESS WHEREOF, the Parties have caused this Employee Matters Agreement to be executed on the date first written above by their respective duly authorized officers.

BORGWARNER INC.
By:	/s/Tonit M. Calaway
Name:	Tonit M. Calaway
Title:	Executive Vice President and Secretary
PHINIA INC.
By:	/s/Brady D. Ericson
Name:	Brady D. Ericson
Title:	President and Chief Executive Officer

EX-10.4

Exhibit 10.4

INTELLECTUAL PROPERTY

CROSS-LICENSE AGREEMENT

by and among

BORGWARNER INC.

and

DELPHI TECHNOLOGIES IP LIMITED

and

PHINIA TECHNOLOGIES, INC.

and

BORGWARNER LUXEMBOURG OPERATIONS S.A.R.L.

Dated as of June 30, 2023

Table of contents

Article I		1
Section 1.01	Certain Definitions	1
Article II License Grants		5
Section 2.01	License to SpinCo Licensee	5
Section 2.02	License to Parent Licensee	5
Section 2.03	Sublicensing	5
Section 2.04	Reservation of Rights	6
Section 2.05	Inadvertently Omitted Patents, Copyrights, and Trade Secrets	6
Section 2.06	Intellectual Property Rights under Bankruptcy Code	7
Section 2.07	Assignment of Licensed IP	7
Section 2.08	Provision of Information	7
Section 2.09	Third Party Rights	8
Section 2.10	No Other Rights or Obligations	8
Article III Intellectual Property Ownership; No Challenge		8
Section 3.01	Ownership of Licensed IP	8
Section 3.02	Improvements	8
Section 3.03	No Challenge	9
Article IV Prosecution, Maintenance, and Enforcement		9
Section 4.01	Prosecution and Maintenance	9
Section 4.02	Enforcement	9
Section 4.03	Cooperation	9
Section 4.04	No Obligation	10
Article V CONFIDENTIALITY		10
Section 5.01	Confidentiality	10
Article VI Disclaimer of Warranties; Limitation of Liability		10
Section 6.01	Disclaimer of Warranties	10
Section 6.02	Limitation of Liability	10
Section 6.03	Acknowledgment	11
Article VII Term and Termination		11
Section 7.01	Term	11
Section 7.02	Termination	11
Section 7.03	Survival	11

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Article VIII Indemnification		12
Section 8.01	Indemnification	12
Section 8.02	Indemnification Procedures	12
Section 8.03	Tax Treatment	12
Article IX Other Separation Agreement Provisions		12
Section 9.01	Other Separation Agreement Provisions	12
Article X Miscellaneous		12
Section 10.01	Entire Agreement	13
Section 10.02	Third-Party Beneficiaries	13
Section 10.03	Notices	13
Section 10.04	Interpretation	14
Section 10.05	Relationship of the Parties	14

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This INTELLECTUAL PROPERTY CROSS-LICENSE AGREEMENT (this “IP License Agreement”) dated as of June 30, 2023 (“Effective Date”), is by and among BORGWARNER INC., a Delaware corporation (“Parent”), and DELPHI TECHNOLOGIES IP LIMITED, a Barbados limited company, on the one hand, and PHINIA TECHNOLOGIES, INC., a Delaware corporation, and BORGWARNER LUXEMBOURG OPERATIONS S.À.R.L., a Luxembourg société à responsabilité limitée, on the other hand (collectively, the “Parties,” or each, individually, a “Party”).

RECITALS

WHEREAS, Parent and PHINIA Inc. (“SpinCo”) have entered into that certain Separation and Distribution Agreement (the “Separation Agreement”);

WHEREAS, pursuant to the Separation Agreement, Parent and SpinCo have agreed to deliver, or cause to be delivered, executed copies of this IP License Agreement on or prior to the Distribution Date (as defined in the Separation Agreement);

WHEREAS, the Parent Licensors (as defined below) wish to grant to the SpinCo Licensee (as defined below), and the SpinCo Licensee wishes to be granted, certain licenses under the Parent Licensed IP (as defined below) in accordance with and subject to the terms and conditions of this IP License Agreement; and

WHEREAS, the SpinCo Licensors (as defined below) wish to grant to the Parent Licensee (as defined below), and the Parent Licensee wishes to be granted, certain licenses under the SpinCo Licensed IP (as defined below) in accordance with and subject to the terms and conditions of this IP License Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and terms and conditions set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

Article I

Section 1.01           Certain Definitions. Capitalized terms used but not otherwise defined in this IP License Agreement have the meanings set forth in the Separation Agreement. As used in this IP License Agreement, the following terms have the meanings set forth below.

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

“Confidential Information” means all information relating generally or specifically to a Party’s business that is supplied to or obtained by the other Party pursuant to or as a result of this Agreement and that is not generally known in the trade or industry and includes: (i) information, knowledge, trade secrets disclosed by a Party or an Affiliate, including drawings, software, samples, pictures, models, recordings or other tangible or intangible forms, techniques, methods, development specifications, programming instructions and code and proprietary manufacturing processes; (ii) non-published patent applications of Licensor; (iii) business, legal, marketing or sales data or information of Licensor; (iv) information provided by either Party that is marked “confidential”, “proprietary” or with a similar designation; and (v) any other non-public information or data related to the design, development, manufacturing, assembling, operation, distribution or use of the licensed products, Licensed IP or Improvements, in each case, whether disclosed in writing, orally or visually.

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

“Electronics Collaboration Agreement” means a certain “Electronics Collaboration Agreement” entered into between BorgWarner PDS (USA) Inc. and PHINIA Technologies Inc. on or around the date of this Agreement under which the respective parties grant each other licenses under their respective Intellectual Property.

“Holding Party” has the meaning set forth in Section 2.08(a).

“Improvement” means, with respect to any Intellectual Property, any improvement, enhancement, derivative work, modification, adaptation, or new application of such Intellectual Property.

“Intellectual Property” means any and all of the following arising under the Laws of any jurisdiction throughout the world: (a) patents and patent applications (whether provisional or non-provisional), including divisionals, continuations, continuations-in-part, substitutions, reissues, reexaminations, extensions, or restorations of any of the foregoing, and other Governmental Authority-issued indicia of invention ownership (including certificates of invention, petty patents, and utility models) (“Patents”); (b) copyrights and works of authorship (whether or not copyrightable), and all registrations, applications for registration, and renewals of any of the foregoing (“Copyrights”); (c) trade secrets, Know-How, inventions (whether or not patentable), technology, and other confidential and proprietary information (“Trade Secrets”); and (d) other intellectual property and related proprietary rights. For the purposes of this IP License Agreement, Intellectual Property does not include trademarks, service marks, trade dress, trade names, domain names, social media accounts or usernames, or other indicia of source or origin (“Marks”).

“IP License Agreement” has the meaning set forth in the preamble.

“Know-How” means trade secrets and rights in other technical 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, 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.

“Know-How Materials” means those written, electronic, computerized, digital or other similar tangible or intangible media to the extent containing or embodying any Know-How licensed under this IP License Agreement.

“Licensed IP” means the Parent Licensed IP or SpinCo Licensed IP, as applicable.

“Licensee” means (a) the relevant SpinCo Licensee with respect to the license rights granted pursuant to Section 2.01, and (b) the relevant Parent Licensee with respect to the license rights granted pursuant to Section 2.02.

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“Licensor” means (a) the relevant SpinCo Licensor with respect to the license rights granted pursuant to Section 2.02, and (b) the relevant Parent Licensor with respect to the license rights granted pursuant to Section 2.01.

“Losses” means any loss, liability, damage, cost or expense, including legal fees and expenses, fines, penalties, and interest expenses.

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

“Parent Field” means the following products and services:

(1) Fuel delivery modules manufactured in Beijing by the Beijing Joint Venture as of or immediately prior to the Distribution Date;

(2) Dynamic sensors (including digital cam sensors; crank sensors; knock sensors; enhanced canister purge (ECP) valves; high flow ECP valves; and BDS crank sensors) manufactured in Beijing by the Beijing Joint Venture as of or immediately prior to the Distribution Date;

(3) Port Fuel Injection (PFI) fuel rail assemblies manufactured in Beijing by the Beijing Joint Venture as of or immediately prior to the Distribution Date;

(4) Starters and alternators manufactured in Korea and China as of or immediately prior to the Distribution Date; and

(5) Any and all Product/Production Updates to (1) through (4).

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

“Parent Licensed IP” means the Parent Licensed Patents and Parent Licensed Other IP.

“Parent Licensed Other IP” means all Intellectual Property, other than Patents, owned or controlled by any member of the Parent Group as of immediately after the Distribution Date and used or held for use in the SpinCo Business as of or prior to the Distribution Date, including the Copyrights and any Trade Secrets associated with Parent Licensed Patents, including those Copyrights and Trade Secrets set forth on Schedule 4.

“Parent Licensed Patents” means all of the following that are owned or controlled by any member of the Parent Group: (a) the patents and patent applications listed on Schedule 1 (“Scheduled Parent Licensed Patents”); (b) any Patent issuing after the Effective Date that claims priority to any Scheduled Parent Licensed Patent, excluding those claims in any continuation-in-part patent application that are not supported by the disclosure in any Scheduled Parent Licensed Patent; and (c) all foreign equivalents of any of the foregoing.

“Parent Licensee” means BorgWarner Inc.

“Parent Licensors” means BorgWarner Inc. and Delphi Technologies IP Limited.

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

“PDS License Agreement” means a certain “Intellectual Property License Agreement” entered into on or prior to the Distribution under which BorgWarner PDS (Anderson) L.L.C. grants BorgWarner PDS Technologies, L.L.C. (f/k/a Remy Technologies, L.L.C.) a license to certain of its Intellectual Property.

3

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

“Product/Production Updates” means product improvements, production improvement, quality improvement, and changes due to customer request (including design changes), cost savings, value analysis/value engineering (VA/VE), and resourcing for supplier changes.

“Requesting Party” has the meaning set forth in Section 2.08(a).

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

“SpinCo” has the meaning set forth in the recitals.

“SpinCo Field” means the following products and services:

(1) oxygen sensors manufactured at the Piracicaba site as of or immediately prior to the Distribution Date,

(2) smart remote actuators remanufactured in North America,

(3) cam phasers manufactured at the Gillingham site as of or immediately prior to the Distribution Date,

(4) starters and alternators, and

(5) any and all Product/Production Updates to (1) through (4);

provided, that in all cases the SpinCo Field excludes power electronics applications for any electrified stationary applications or electrified mobility applications, including any hybrid vehicles, electric vehicles or other applications exceeding 400 volts.

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

“SpinCo Licensed IP” means the SpinCo Licensed Patents and SpinCo Licensed Other IP.

“SpinCo Licensed Other IP” means all Intellectual Property (other than Patents) owned or controlled by any member of the SpinCo Group as of immediately after the Distribution Date and used or held for use in the Parent Business as of or prior to the Distribution Date, including the Copyrights and any Trade Secrets associated with the SpinCo Licensed Patents, including those Copyrights and Trade Secrets set forth on Schedule 3.

“SpinCo Licensed Patents” means all of the following that are owned or controlled by any member of the SpinCo Group: (a) the patents and patent applications listed on Schedule 1 (“Scheduled SpinCo Licensed Patents”); (b) any Patent issuing after the Effective Date that claims priority to any Scheduled SpinCo Licensed Patent, excluding those claims in any continuation-in-part patent application that are not supported by the disclosure in any Scheduled SpinCo Licensed Patent; and (c) all foreign equivalents of any of the foregoing.

“SpinCo Licensee” means PHINIA Technologies, Inc.

“SpinCo Licensors” means PHINIA Technologies, Inc. and BorgWarner Luxembourg Operations S.à.r.l.

4

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

“Third Party” means any Person who is not a member of the Parent Group or the SpinCo Group.

Article II

License Grants

Section 2.01           License to SpinCo Licensee. Subject to the terms and conditions of this IP License Agreement, Parent Licensors hereby grant, or shall cause one or more of the other Parent Group members to grant, to the SpinCo Licensee a nonexclusive, perpetual, nontransferable (except in accordance with Section 9.01(a)), sublicensable (to the extent permitted in Section 2.03), worldwide, royalty-free, fully paid up license under Parent Licensed IP to make, have made, import, use, offer to sell, sell, and otherwise commercialize products and services solely in the SpinCo Field. Subject to the terms and conditions of this IP License Agreement, the license in, to and under the applicable Parent Licensed IP shall include the right to practice the same to make, have made, import, use, offer to sell, sell, and otherwise commercialize products and services solely in the SpinCo Field. SpinCo Licensee shall not, and shall ensure that all SpinCo sublicensees do not, directly or indirectly, use, practice, or otherwise exploit any Parent Licensed IP outside of the SpinCo Field.

Section 2.02           License to Parent Licensee. Subject to the terms and conditions of this IP License Agreement, SpinCo Licensors hereby grant, or shall cause one or more of the other SpinCo Group members to grant, to the Parent Licensee a nonexclusive, perpetual, nontransferable (except in accordance with Section 9.01(a)), sublicensable (to the extent permitted in Section 2.03), worldwide, royalty-free, fully paid up license under the SpinCo Licensed IP to make, have made, import, use, offer to sell, sell, and otherwise commercialize products and services solely in the Parent Field. Subject to the terms and conditions of this IP License Agreement, the license in, to and under the applicable SpinCo Licensed IP shall include the right to practice the same to make, have made, import, use, offer to sell, sell, and otherwise commercialize products and services solely in the Parent Field. Parent Licensee shall not, and shall ensure that all Parent sublicensees do not, directly or indirectly, use, practice, or otherwise exploit any SpinCo Licensed IP outside of the Parent Field.

Section 2.03           Sublicensing.

(a)            Each Licensee may grant sublicenses under the rights and licenses granted to it under Section 2.01 or Section 2.02, as applicable, to:

(i)            any of its Subsidiaries and Affiliates, through multiple tiers; and

(ii)           any Third Parties in connection with the operation of such Licensee’s business (but not for independent use by any such Third Party) in substantially the same manner that any such licenses were granted by the Licensor to such Licensee, including to customers or end-users in connection with products or services provided by such Licensee, and to manufacturers, suppliers, distributors, contractors, and consultants as necessary or useful to exercise the rights and licenses granted to such Licensee hereunder.

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(b)            All sublicenses granted under Section 2.03(a) must be consistent with the applicable terms and conditions of this IP License Agreement and, if granted to a Third Party, in writing. Without limiting the foregoing, all sublicenses must include provisions for protection of Confidential Information at least as stringent as those set forth in Section 5.01. Any sublicense granted to a Third Party under this Section 2.03 must prohibit such Third Party sublicensee from further sublicensing without the prior written consent of Licensor. Licensee is responsible for the compliance of its sublicensees with the terms and conditions of this IP License Agreement, and any act or omission of a sublicensee that would be a material breach of this IP License Agreement if performed by Licensee will be deemed to be a material breach by Licensee.

(c)            All licenses or sublicenses granted to any Person that is a Subsidiary of SpinCo or Parent or an Affiliate of SpinCo Licensee or Parent Licensee will continue only for so long as such Person is a Subsidiary of SpinCo or Parent or an Affiliate of SpinCo Licensee or Parent Licensee, and will automatically and immediately terminate with respect to such Person as of the date it ceases to be a Subsidiary of SpinCo or Parent or an Affiliate of SpinCo Licensee or Parent Licensee.

Section 2.04           Reservation of Rights. All rights not expressly granted by a Party hereunder are reserved by such Party. The rights and licenses granted in Section 2.01 and Section 2.02 are subject to, and limited by, any and all licenses, rights, limitations, and restrictions with respect to Intellectual Property previously granted to or otherwise obtained by any Third Party that are in effect as of the Effective Date.

Section 2.05           Inadvertently Omitted Patents, Copyrights, and Trade Secrets.

(a)            If following the Effective Date, Parent determines that a Patent, Copyright, or Trade Secret owned or controlled by SpinCo or any member of the SpinCo Group immediately following the Effective Date was practiced by Parent or any of its Subsidiaries as of the Effective Date, and such Patent is not listed in Schedule 1 and such Copyright or Trade Secret was not listed in Schedule 3, then on written request from Parent, such Patent, Copyright, or Trade Secret will be deemed for all purposes hereunder to be a SpinCo Licensed IP as of the Effective Date, and Schedule 1 or Schedule 3 (as the case may be) will be amended to include such Patent, Copyright, or Trade Secret.

(b)            If following the Effective Date, a SpinCo Licensee determines that a Patent, Copyright, or Trade Secret owned or controlled by Parent or any member of the Parent Group immediately following the Effective Date was practiced by SpinCo Subsidiaries as of the Effective Date, and such Patent is not listed in Schedule 2 and such Copyright or Trade Secret was not listed in Schedule 4, then on written request from such SpinCo Licensee, such Patent, Copyright, or Trade Secret will be deemed for all purposes hereunder to be a Parent Licensed IP as of the Effective Date, and Schedule 2 or Schedule 4 (as the case may be) will be amended to include such Patent, Copyright, or Trade Secret.

6

Section 2.06           Intellectual Property Rights under Bankruptcy Code. All rights and licenses granted by any Licensor under this IP License Agreement are and will be deemed to be rights and licenses to “intellectual property” as such term is used in, and interpreted under, Section 365(n) of the United States Bankruptcy Code (the “Bankruptcy Code”) (11 U.S.C. § 365(n)). Each Licensor acknowledges that each applicable Licensee has all rights, elections, and protections under the Bankruptcy Code and all other bankruptcy, insolvency, and similar Laws with respect to this IP License Agreement, and the subject matter hereof. Without limiting the generality of the foregoing, each Licensor acknowledges and agrees that, if such Licensor or its estate shall become subject to any bankruptcy or similar proceeding, subject to each applicable Licensee’s rights of election under Section 365(n), all rights, licenses, and privileges granted to such Licensee under this IP License Agreement will continue subject to the respective terms and conditions hereof, and will not be affected, even by such Licensor’s rejection of this IP License Agreement.

Section 2.07           Assignment of Licensed IP. Each Licensor acknowledges, agrees, and covenants that any assignment of any Licensed IP will include a transfer of any applicable license and similar contractual rights or permissions granted to the applicable Licensee in this IP License Agreement.

Section 2.08           Provision of Information.

(a)            If any Party (the “Requesting Party”) reasonably believes that any Know-How Materials are in possession or control of the other Party (such Party, the “Holding Party”) or any of its Affiliates and such Know-How Materials are not in the possession or control of the Requesting Party or any of its Affiliates, and the Requesting Party makes a request in writing during the two (2) year period following the Effective Date that the Holding Party deliver the Know-How Materials to the Requesting Party, the Holding Party shall review such request and, to the extent in the possession or control of the Holding Party or any of its Affiliates, deliver the Know-How Materials to the Requesting Party as promptly as reasonably practicable and in any event within thirty (30) business days of receiving such request from the Requesting Party; provided that, the Holding Party shall notify the Requesting Party within such thirty (30) business day period if it reasonably believes that such request requires a longer period of review to determine if the request concerns licensed Know-How or to locate the applicable Know-How Materials; provided, further, to the extent the request does not constitute licensed Know-How, the Holding Party shall not be required to deliver such Know-How Materials to the Requesting Party, but shall provide the Requesting Party with an explanation in reasonable detail of the basis of such determination and shall make itself and its relevant Affiliates available to discuss in good faith with the Requesting Party.

(b)            For clarity, and notwithstanding anything to the contrary, in no event shall any Licensor or its Affiliates be required hereunder to provide any written, electronic, computerized, digital or other tangible or intangible media to the extent comprising, containing, reflecting or embodying any licensed Know-How that has already been provided to, or is in the possession of, Licensee or its Affiliates.

7

Section 2.09           Third Party Rights. Notwithstanding anything to the contrary herein, the terms and conditions of this IP License Agreement (including the licenses granted under Sections 2.01 through 2.02 and sublicense rights under Section 2.03) are subject to any and all rights of and obligations owed to any Third Parties with respect to the Licensed IP under any contracts existing as of the Effective Date to which either Licensor or any of its Affiliates or Licensee or any of its Affiliates is a party or is otherwise bound, and to the extent that, as a result of such rights or obligations, any license or other rights granted hereunder: (i) may not be granted without the consent of or payment of a fee or other consideration; or (ii) will cause Licensor or any of its Affiliates or Licensee or any of its Affiliates to be in breach of any of its or their obligations to any Third Party, the applicable licenses and other rights granted hereunder shall only be granted to the extent such consent has been obtained or such fee or other consideration has been paid. The Parties shall use commercially reasonable efforts to obtain any such consents to the extent required to grant Licensee the rights granted hereunder; provided that, (x) the foregoing shall not require the Parties to duplicate any obligations undertaken under the Separation Agreement and (y) notwithstanding anything herein to the contrary, Licensor shall have no obligation to agree to or make any payments or other concessions, except as mutually agreed in writing between the Parties, or participate in any act or omission that will cause Licensor to be in breach of its or their obligations to any Third Party. Notwithstanding the foregoing, Licensee shall not be deemed in breach of this Section 2.09 only if, and for such time, Licensee is not aware of such rights of or obligations owed to such Third Party.

Section 2.10           No Other Rights or Obligations. Except as expressly set forth in this Article II of this IP License Agreement, in the PDS License Agreement, or in the Electronics Collaboration Agreement, this IP License Agreement grants no right or license, whether by implication, estoppel or otherwise, under any intellectual property rights that any Party or any of their Affiliates may own or control now or in the future. Except as expressly set forth in this Article II, nothing contained herein will be construed as an obligation to disclose or deliver any technical information or embodiment of any Licensed IP or to provide any technical assistance or other services or deliverables to any other Party or the members of its Group.

Article III

Intellectual Property Ownership; No Challenge

Section 3.01           Ownership of Licensed IP. As between the Parties, (a) SpinCo Licensee acknowledges and agrees that Parent or a member of the Parent Group owns or controls the Parent Licensed IP; (b) Parent Licensee acknowledges and agrees that SpinCo or a member of the SpinCo Group owns or controls the SpinCo Licensed IP; and (c) each Party acknowledges and agrees that neither such Party nor any of its Subsidiaries, Affiliates, or sublicensees will acquire any ownership rights in the Licensed IP licensed to such Party hereunder.

Section 3.02           Improvements. The ownership of any Improvements to the Licensed Parent IP or the Licensed SpinCo IP, or the subject matter described or claimed therein, that are invented, created, conceived, developed, or otherwise made by or on behalf of any Party or any of its Affiliates after the Effective Date will be determined in accordance with United States patent, copyright, or other applicable intellectual property law. Each Party expressly acknowledges and agrees that no right or license, express or implied, is granted hereunder in or to any Improvements by any Party as the Licensor to any other Party as the Licensee.

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Section 3.03           No Challenge.

(a)            Each Parent Licensee shall not do anything inconsistent with any SpinCo Licensor’s ownership of the SpinCo Licensed IP and shall not claim adversely to any SpinCo Licensor, or assist any Third Party in attempting to claim adversely to any SpinCo Licensor, with regards to such ownership. No Parent Licensee shall challenge, in any country or jurisdiction, any SpinCo Licensor’s title to or ownership of the SpinCo Licensed IP or any rights therein, challenge any issuances or application of any Licensed Intellectual Property or challenge the validity of the SpinCo Licensed IP, this IP License Agreement or the license granted herein. However, notwithstanding the above, each Parent Licensee shall be free to challenge any SpinCo Licensor’s title to or ownership of the SpinCo Licensed IP or in any rights therein in the event of any infringement dispute or contractual dispute, in each case, regarding the scope of such Parent Licensee’s rights as between such SpinCo Licensor and such Parent Licensee.

(b)            Each SpinCo Licensee shall not do anything inconsistent with any Parent Licensor’s ownership of the Parent Licensed IP and shall not claim adversely to any Parent Licensor, or assist any Third Party in attempting to claim adversely to any Parent Licensor, with regards to such ownership. No SpinCo Licensee shall challenge, in any country or jurisdiction, any Parent Licensor’s title to or ownership of the Parent Licensed IP or any rights therein, challenge any issuances or application of any Parent Licensed IP or challenge the validity of the Parent Licensed IP, this IP License Agreement or the license granted herein. However, notwithstanding the above, SpinCo Licensee shall be free to challenge any Parent Licensor’s title to or ownership of the Parent Licensed IP or in any rights therein in the event of any infringement dispute or contractual dispute, in each case, regarding the scope of SpinCo Licensee’s rights as between such Parent Licensor and SpinCo Licensee.

Article IV

Prosecution, Maintenance, and Enforcement

Section 4.01           Prosecution and Maintenance. As between the Parties, each Licensor will have the sole and exclusive right, but no obligation, at its own cost and expense, to file, prosecute, and maintain all Patents within the Licensed IP under which such Licensor grants a license to a Licensee hereunder.

Section 4.02           Enforcement. As between the Parties, each Licensor will have the sole and exclusive right, but no obligation, at its own cost and expense, to initiate and control any legal proceeding or take other appropriate action against any infringement or misappropriation of, or to defend against any challenge to, the Licensed IP under which such Licensor grants a license to a Licensee hereunder. Each Licensor may retain all amounts recovered by such Licensor in any such action (including by settlement or other disposition), unless otherwise agreed in writing by the Parties.

Section 4.03           Cooperation. Upon a Licensor’s request, an applicable Licensee shall provide reasonable assistance and cooperation in connection with any activities undertaken by such Licensor pursuant to Section 4.01 or 4.02. Such Licensor shall keep such Licensee reasonably informed of the status of any such activities and shall reimburse such Licensee for its reasonable out-of-pocket costs and expenses incurred in connection therewith.

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Section 4.04           No Obligation. Nothing in this IP License Agreement will obligate any Party to file, prosecute, maintain, register, or bring any action or other proceeding against any Third Party for infringement or misappropriation of, or to defend against any challenge to, any Licensed IP, or take any other step to protect any Intellectual Property, except as expressly provided in Section 4.03.

Article V

CONFIDENTIALITY

Section 5.01           Confidentiality. The Parties acknowledge and agree that the confidentiality obligations set forth in the Separation Agreement apply to a Party’s Confidential Information hereunder, mutatis mutandis. Without limiting the foregoing, each Licensee shall, and shall ensure that its Affiliates: (i) use at least the same standard of care to protect and safeguard the confidentiality of all Trade Secrets of a Licensor or its Affiliates included in the Licensed IP received by such Licensee or its Affiliates as they use to protect their own Trade Secrets (but no less than reasonable care); and (ii) not use or disclose, or permit to be used or accessed, such licensed Trade Secrets except in accordance with the license granted in Section 2.01 or Section 2.02, as applicable. Each Party shall promptly provide written notice to the other Party of any suspected or actual breach of its confidentiality obligations in this Section 5.01.

Article VI

Disclaimer of Warranties; Limitation of Liability

Section 6.01           Disclaimer of Warranties. EACH OF SPINCO LICENSEE (ON BEHALF OF ITSELF AND EACH MEMBER OF THE SPINCO GROUP) AND PARENT (ON BEHALF OF ITSELF AND EACH MEMBER OF THE PARENT GROUP) UNDERSTANDS AND AGREES THAT ALL LICENSED IP IS BEING LICENSED ON AN “AS IS” BASIS. NO PARTY IS MAKING ANY REPRESENTATION OR WARRANTY OF ANY KIND UNDER THIS IP LICENSE AGREEMENT (INCLUDING WITH RESPECT TO MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT, VALIDITY, ENFORCEABILITY, OR SCOPE OF THE LICENSED IP), AND EACH PARTY HEREBY EXPRESSLY DISCLAIMS ALL SUCH REPRESENTATIONS AND WARRANTIES.

Section 6.02           Limitation of Liability. NO PARTY NOR ANY OF ITS AFFILIATES WILL BE LIABLE TO ANY OTHER PARTY OR ITS AFFILIATES FOR ANY CONSEQUENTIAL, INCIDENTAL, INDIRECT, EXEMPLARY, SPECIAL, PUNITIVE, OR ENHANCED DAMAGES, OR FOR ANY LOSS OF ACTUAL OR ANTICIPATED PROFITS, ARISING IN ANY WAY OUT OF THIS IP LICENSE AGREEMENT OR THE USE OF THE LICENSED IP, WHETHER ARISING OUT OF BREACH OF CONTRACT, TORT (INCLUDING NEGLIGENCE OR STRICT LIABILITY), STATUTE, OR OTHERWISE, REGARDLESS OF WHETHER SUCH DAMAGES WERE FORESEEABLE AND WHETHER ANY PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. THE FOREGOING LIMITATIONS DO NOT APPLY TO (A) THIRD-PARTY CLAIMS THAT ARE SUBJECT TO INDEMNIFICATION UNDER Article VIII; OR (B) LOSSES ARISING OUT OF OR RELATING TO A PARTY’S BREACH OF ITS CONFIDENTIALITY OBLIGATIONS UNDER Section 5.01.

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Section 6.03           Acknowledgment. For the avoidance of doubt, notwithstanding anything in this IP License Agreement to the contrary, the Parties acknowledge and agree that nothing in this IP License Agreement is intended to limit or restrict any of the representations, warranties, or remedies available to the Parties or their Affiliates under the Separation Agreement or any of the other Transaction Documents.

Article VII

Term and Termination

Section 7.01           Term. This IP License Agreement is effective as of the Effective Date and will continue in effect, on a Licensed IP-by-Licensed IP basis, until the expiration, invalidation, or other loss of protection under applicable Law of such Licensed IP, unless earlier terminated in accordance with Section 7.02 (the “Term”).

Section 7.02           Termination.

(a)            Either Parent Licensors or Parent Licensee may terminate this IP License Agreement on written notice to SpinCo Licensors or SpinCo Licensee if SpinCo Licensors or SpinCo Licensee materially breaches this IP License Agreement and fails to cure such breach within ninety (90) days after receiving written notice thereof. Either SpinCo Licensors or SpinCo Licensee may terminate this IP License Agreement on written notice to Parent Licensors or Parent Licensee if Parent Licensors or Parent Licensee materially breaches this IP License Agreement and fails to cure such breach within ninety (90) days after receiving written notice thereof.

(b)            In the event of termination of this IP License Agreement under Section 7.02(a): (i) the breaching Party shall, and shall cause its Subsidiaries, Affiliates, and sublicensees, promptly cease all use of the Licensed IP; (ii) all rights and licenses granted to such breaching Party and its Subsidiaries, Affiliates, and sublicensees under this IP License Agreement will immediately revert to the non-breaching Party; and (iii) the rights and licenses granted by the breaching Party to the non-breaching Party and its Subsidiaries and Affiliates will survive such termination but remain subject to the terms and conditions of this IP License Agreement.

Section 7.03           Survival. The rights and obligations of the Parties set forth in Section 3.01 (Ownership of Licensed IP), Section 3.02 (Improvements), Section 5.01 (Confidentiality), Article VI (Disclaimer of Warranties; Limitation of Liability), Article VIII (Indemnification), Article IX (Other Separation Agreement Provisions), and Article X (Miscellaneous) will survive any expiration or termination of this IP License Agreement.

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Article VIII

Indemnification

Section 8.01           Indemnification.

(a)            Parent (the “Indemnifying Parent Party”) shall indemnify, defend, and hold harmless SpinCo Licensee and its Affiliates and its and their officers, directors, employees, agents, successors, and assigns (collectively, “Indemnified SpinCo Parties”) from and against any and all Losses arising out of, relating to, or resulting from (a) breach of this IP License Agreement by Parent or its Affiliates; or (b) use of the Licensed IP by or on behalf of the Indemnifying Parent Party or its Affiliates or sublicensees after the Effective Date.

(b)            SpinCo Licensors and SpinCo Licensee (the “Indemnifying SpinCo Party”) shall indemnify, defend, and hold harmless Parent and its Affiliates and its and their officers, directors, employees, agents, successors, and assigns (collectively, “Indemnified Parent Parties”) from and against any and all Losses arising out of, relating to, or resulting from (a) breach of this IP License Agreement by SpinCo or its Affiliates; or (b) use of the Licensed IP by or on behalf of the Indemnifying SpinCo Party or its Affiliates or sublicensees after the Effective Date.

Section 8.02           Indemnification Procedures. The indemnification procedures set forth in Section 6 of the Separation Agreement are hereby incorporated into this IP License Agreement mutatis mutandis.

Section 8.03           Tax Treatment. Any indemnity payments made between Parent and SpinCo Licensee under this Agreement shall be reported for US federal income tax purposes by the payor and the recipient as distributions or capital contributions, as appropriate, immediately before the Effective Date or as payments of an assumed or retained liability.

Article IX

Other Separation Agreement Provisions

Section 9.01           Other Separation Agreement Provisions.

(a)            Article IX of the Separation Agreement is hereby incorporated into this IP License Agreement mutatis mutandis; provided that, in the event of any conflict between the provisions of Article IX of the Separation Agreement and this IP License Agreement, the provisions of this IP License Agreement shall control.

(b)            This IP License Agreement, including the provisions herein expressly providing for indemnification, shall be subject to the indemnification provisions of Article VI of the Separation Agreement; provided that, in the event of any conflict between such indemnification provisions, the indemnification provisions in this IP License Agreement shall control.

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(c)            Article XI of the Separation Agreement is hereby incorporated into this IP License Agreement mutatis mutandis. In the case of any permitted assignment of this Agreement, all rights and obligations herein are binding upon and inures to the benefit of the Parties hereto and their respective permitted successors and assigns.

Article X

Miscellaneous.

Section 10.01         Entire Agreement. Except as otherwise expressly provided in this IP License Agreement, this IP License Agreement, together with the Separation Agreement and the other Ancillary Agreements, constitutes the entire agreement of the parties hereto with respect to the subject matter of this IP License Agreement and supersedes all prior agreements and undertakings, both written and oral, between or on behalf of the Parties with respect to the subject matters addressed herein. In the event of any conflict between the provisions of this IP License Agreement and the provisions of the Separation Agreement or any other Ancillary Agreements, the terms and conditions of this IP License Agreement will control.

Section 10.02         Third-Party Beneficiaries. Except for the rights of the members of each Party’s Group as set forth herein, and for the indemnification rights under this IP License Agreement of any Indemnified Party, (a) the provisions of this IP License Agreement are solely for the benefit of the Parties hereto and are not intended to confer upon any Person except the Parties hereto any rights or remedies hereunder and (b) there are no third-party beneficiaries of this IP License Agreement and this IP License Agreement shall not provide any Third Party with any remedy, claim, liability, reimbursement, cause of action or other right in excess of those existing without reference to this IP License Agreement.

Section 10.03         Notices. All notices or other communications under this IP License Agreement shall be in writing and shall be deemed to be duly given (a) when delivered in person, (b) on the date received, if sent by a nationally recognized delivery or courier service, (c) upon written confirmation of receipt after transmittal by electronic mail or (d) upon the earlier of confirmed receipt or the fifth business day following the date of mailing if sent by registered or certified mail, return receipt requested, postage prepaid and addressed as follows:

If to Parent or any Parent Licensor, to:

BorgWarner Inc.

3850 Hamlin Road

Auburn Hills, MI 48326

Attention: General Counsel

with a copy, which shall not constitute notice, to:

BorgWarner Inc.

3850 Hamlin Road

Auburn Hills, MI 48326

Attention: Chief IP Counsel

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If to SpinCo Licensee or any SpinCo Licensee, to:

PHINIA Inc.

3000 University Drive

Auburn Hills, MI 48326

Attention: General Counsel

Section 10.04         Interpretation. 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. The terms “hereof,” “herein,” “herewith” and words of similar import, unless otherwise stated, shall be construed to refer to this IP License Agreement as a whole (including all of the schedules hereto) and not to any particular provision of this IP License Agreement. Section or schedule references are to the articles, sections and schedules of or to this IP License Agreement unless otherwise specified. Any definition of or reference to any agreement, instrument or other document herein (including any reference herein to this IP License Agreement) shall, unless otherwise stated, be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth therein). The word “including” and words of similar import when used in this IP License Agreement shall mean “including, without limitation,” unless the context otherwise requires or unless otherwise specified. The word “or” shall not be exclusive. The word “extent” in the phrase “to the extent” shall mean the degree to which a subject or other thing extends, and such phrase shall not mean simply “if.” References herein to any Law shall be deemed to refer to such law as amended, reenacted, supplemented or superseded in whole or in part and in effect from time to time and also to all rules and regulations promulgated thereunder. Except as expressly set forth in this IP License Agreement, Parent and SpinCo Licensee (or their respective Parent or SpinCo Group members) shall make, or cause to be made, any payment that is required to be made pursuant to this IP License Agreement as promptly as practicable and without regard to any local currency constraints or similar restrictions. In the event that an ambiguity or question of intent or interpretation arises, this IP License Agreement shall be construed as if drafted jointly by the Parties, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provisions hereof.

Section 10.05         Relationship of the Parties. Nothing contained in this IP License Agreement creates any agency, partnership, joint venture, or other form of joint enterprise, employment, or fiduciary relationship between the Parties, and none of Parent Licensors and Parent Licensee, on the one hand, or SpinCo Licensors and SpinCo Licensee, on the other hand, has authority to contract for or bind the other in any manner whatsoever.

[signature page follows]

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IN WITNESS WHEREOF, the Parties have caused this IP License Agreement to be executed by their duly authorized representatives as of the Effective Date.

BorgWarner Inc.
Name	Tonit M. Calaway
Position	Authorized Signor
Date	June 30, 2023
Signature	/s/ Tonit M. Calaway

Delphi Technologies IP Limited
Name	John M. Howard
Position	Director
Date	June 30, 2023
Signature	/s/ John M. Howard

PHINIA Technologies, Inc.
Name	Fara Karam
Position	Assistant Secretary
Date	June 30, 2023
Signature	/s /Fara Karam

BorgWarner Luxembourg Operations S.à.r.l.
Name	Markus Edwin Turke
Position	Manager
Date	June 30, 2023
Signature	/s/ Markus Edwin Turke

XML

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Document Information [Line Items]
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Amendment Flag	false
Document Period End Date	Jul. 02, 2023
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Entity Registrant Name	BORGWARNER INC.
Entity Central Index Key	0000908255
Entity Tax Identification Number	13-3404508
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	3850 Hamlin Road
Entity Address, City or Town	Auburn Hills
Entity Address, State or Province	MI
Entity Address, Postal Zip Code	48326
City Area Code	248
Local Phone Number	754-9200
Written Communications	false
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Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
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Document Information [Line Items]
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Trading Symbol	BWA
Security Exchange Name	NYSE
Senior Notes Due 2031 [Member]
Document Information [Line Items]
Title of 12(b) Security	1.00% Senior Notes due 2031
Trading Symbol	BWA31
Security Exchange Name	NYSE