Spin Off Agreement

In addition, there is no “honeymoon period” for SpinCos with activists and acquirers – a point illustrated by the unsolicited offer for Baxalta days after his rotation of Baxter and Starboard Value`s intense activism on Cars.com in the months following the end of his separation from Tegna. As a result, the provision of procedural and structural protection for SpinCo, both procedurally and structurally, against unsolicited offers and activism during this vulnerable post-spin window, will protect and increase the value of SpinCo shareholders and will not reduce it. Implementing many of the necessary safeguards in a separation is particularly simple – including a classified board of directors, prohibitions on convening meetings or actions by shareholders by written agreement and the majority of majority decisions, proxy access and other similar “shareholder-friendly” mechanisms – since these protection mechanisms will not have a particularly negative impact on shareholder approval or investors` “purchase decisions” in the spin-off distribution paradigm. Similarly, market-protected employment contracts for executives and severance programs often provide other important employees with the comfort they need to focus on the long-term value added of shareholders. Unlike IPOs, the advantage of a spin-off transaction is that ParentCo does not need time for “market windows,” since a split is a share distribution as opposed to a capital increase. As a result, ParentCo is able to dictate timing and have greater execution security. The Personnel Affairs Agreement regulates ParentCo and SpinCo`s compensation and performance obligations for current and former employees of each company and generally assigns commitments and responsibilities related to employee compensation and performance plans and performance agreements. This agreement defines how current ParentCo equity compensation is handled as part of the separation. For example, ParentCo premiums can “follow” the employee, With SpinCo employees` ParentCo premiums converted into SpinCo bonuses, and ParentCo premiums held by employees who continue to represent parentCo premiums.

In addition, all workers may be treated in the same way, regardless of which company will be the owner`s employer after separation, i.e., all distinctions can be divided into two distinctions, one representing a distinction in ParentCo and another in SpinCo, or (ii) all distinctions may continue to represent a ParentCo premium.