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As filed with the Securities and Exchange Commission on April 4, 2014
Registration No. 333- 193950

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Amendment No. 1
to
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

xpedx Holding Company
(Exact Name of Registrant as Specified in its Charter)

 
					
Delaware	 	5110	 	46-3234977	
(State or other jurisdiction of
incorporation)	 	(Primary Standard Industrial
Classification Code Number)	 	(I.R.S. Employer
Identification No.)	

6400 Poplar Ave.
Memphis, TN 38197
Tel: (901) 419-9000
(Address, including Zip Code, and Telephone Number, including Area Code, of Registrant’s Principal Executive Offices)

Mark W. Hianik, Esq.
Senior Vice President, General Counsel and Corporate Secretary
xpedx Holding Company
6400 Poplar Ave.
Memphis, TN 38197
Tel: (901) 419-9000
(Name, Address, including Zip Code, and Telephone Number, including Area Code, of Agent for Service)

With a copy to:

Peter J. Loughran, Esq.
Debevoise & Plimpton LLP
919 Third Avenue
New York, NY 10022
(212) 909-6000	 	Dennis M. Myers, P.C.
Kirkland & Ellis LLP
300 North LaSalle
Chicago, IL 60654
(312) 862-2000	

Approximate date of commencement of proposed sale of the securities to the public:
As soon as practicable following the effective date of this registration statement and the date on which all other conditions to the merger of UWW Holdings, Inc. with and into xpedx Holding Company (“SpinCo” or the “registrant”) pursuant to the merger agreement described herein have been satisfied or waived.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.   ¨
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   ¨
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   ¨
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	 	¨	  	Accelerated filer	 	¨	
				
Non-accelerated filer	 	x   (Do not check if a smaller reporting company)	  	Smaller reporting company	 	¨	

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until this registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

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The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state or jurisdiction where the offer or sale is not permitted.
 
SUBJECT TO COMPLETION, DATED April 4, 2014
PRELIMINARY PROSPECTUS
xpedx Holding Company
Common Stock

This prospectus is being furnished in connection with the planned distribution by International Paper Company (“International Paper”) on a pro rata basis to its shareholders of all the shares of common stock of its wholly-owned subsidiary xpedx Holding Company (“SpinCo”) outstanding prior to the Merger described below. SpinCo will own and operate xpedx, the business-to-business distribution business of International Paper (“xpedx”). We refer to such planned distribution as the “Distribution” or “spin-off.” Immediately following the Distribution, UWW Holdings, Inc. (“UWWH”) will merge with SpinCo, with SpinCo continuing as the surviving corporation (the “Merger”).
Each share of International Paper common stock outstanding as of 5:00 p.m. New York City time on                      , 2014, the record date for the Distribution (the “record date”), will entitle its holder to receive a number of SpinCo shares of common stock determined by a formula as described in this prospectus. We expect the distribution ratio to be approximately                      SpinCo shares of common stock for each share of International Paper common stock. The distribution of SpinCo common stock will be made in book-entry form. As a result of the Merger, the sole shareholder of UWWH will receive a number of shares of SpinCo common stock for each share of UWWH common stock that it holds at the time of the Merger in a private placement transaction that will result in International Paper’s shareholders owning approximately 51%, and the sole shareholder of UWWH owning approximately 49%, of the shares of SpinCo common stock on a fully-diluted basis immediately following the Merger. Assuming a record date of                     , 2014 and approximately                      shares of International Paper common stock outstanding as of such date, and applying the assumed distribution ratio of                      SpinCo shares for every International Paper share of common stock, approximately                      shares of our common stock would be distributed to International Paper shareholders. We expect that the Distribution and the Merger will be tax-free to International Paper’s shareholders for U.S. federal income tax purposes, except for gain or loss attributable to cash received in lieu of fractional shares in the Distribution. Immediately after the Transactions (as defined below), SpinCo will be an independent, publicly-traded company that will own and operate the combined businesses of xpedx and Unisource Worldwide, Inc. (“UWW”).
SpinCo intends to apply to list its common stock on the New York Stock Exchange (the “NYSE”) under the symbol “         ”.
No action will be required of you to receive common stock of SpinCo, which means that:
 
 	•	 	you will not be required to pay for our common stock that you receive in the Distribution;	
 
 	•	 	you do not need to surrender or exchange any of your International Paper common stock in order to receive SpinCo common stock, or take any other action in connection with the spin-off.	
There is currently no trading market for our common stock. However, we expect that a limited market, commonly known as a “when-issued” trading market, for our common stock will develop on or shortly before the record date for the Distribution, and we expect “regular way” trading of our common stock will begin the first trading day after the completion of the Distribution.

You should carefully consider the matters described under “ Risk Factors ” beginning on page 36 of this prospectus for a discussion of factors that should be considered by recipients of our common stock.
Neither the Securities and Exchange Commission (“SEC”) nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
This prospectus does not constitute an offer to sell or the solicitation of an offer to buy any securities.
The date of this prospectus is                     , 2014.

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 TABLE OF CONTENTS

 	  	Page	 	
Supplemental Information	  	 	3	  	
Introduction	  	 	6	  	
Questions and Answers about the Transactions	  	 	8	  	
Prospectus Summary	  	 	16	  	
Summary Historical Combined Financial Data of xpedx	  	 	30	  	
Summary Historical Consolidated Financial Data of Unisource	  	 	32	  	
Summary Unaudited Pro Forma Condensed Combined Financial Data	  	 	34	  	
Risk Factors	  	 	36	  	
Note Regarding Forward-Looking Statements and Information	  	 	56	  	
The Transactions	  	 	58	  	
The Merger Agreement	  	 	68	  	
The Contribution and Distribution Agreement and the Ancillary Agreements	  	 	82	  	
Dividend Policy	  	 	94	  	
Capitalization	  	 	95	  	
Selected Historical Combined Financial Data for xpedx	  	 	96	  	
Selected Historical Consolidated Financial Data for Unisource	  	 	97	  	
Unaudited Pro Forma Condensed Combined Financial Information of Combined Company and Related Notes	  	 	98	  	
Management’s Discussion and Analysis of Financial Condition and Results of Operations of xpedx	  	 	110	  	
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Unisource	  	 	127	  	
Business of xpedx	  	 	153	  	
Business of Unisource	  	 	161	  	
Management of SpinCo Following the Transactions	  	 	170	  	
Compensation of Directors	  	 	177	  	
Executive Compensation	  	 	177	  	
Security Ownership of Certain Beneficial Owners and Management	  	 	180	  	
Certain Relationships and Related Party Transactions	  	 	182	  	
Description of Capital Stock	  	 	184	  	
Description of Material Indebtedness	  	 	190	  	
Legal Matters	  	 	193	  	
Experts	  	 	193	  	
Where You Can Find More Information	  	 	194	  	
Index to Financial Statements	  	 	F-1	  	
You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it.
This prospectus is being furnished solely to provide information to International Paper shareholders who will receive shares of SpinCo common stock in the Distribution. It is not to be construed as an inducement or encouragement to buy or sell any of our securities or any securities of International Paper. This prospectus describes our business, our relationship with International Paper, Unisource’s business, and the Distribution and the Mergers, and provides other information to assist you in evaluating the benefits and risks of holding or disposing of our common stock that you will receive in the Distribution. You should be aware of certain risks relating to the spin-off, our business, Unisource’s business and ownership of our common stock, which are described under the heading “Risk Factors.”
You should not assume that the information contained in this prospectus is accurate as of any date other than the date set forth on the cover. Changes to the information contained in this prospectus may occur after that date, and we undertake no obligation to update the information, except in the normal course of our public disclosure obligations.
 
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 SUPPLEMENTAL INFORMATION
In this prospectus:
“ABL Facility” has the meaning specified in “Description of Material Indebtedness.”
“Bain Capital” means Bain Capital Partners, LLC and investment funds advised or managed by it.
“Closing Date” means the date on which the Merger occurs pursuant to the Merger Agreement.
“Code” means the U.S. Internal Revenue Code of 1986, as amended.
“combined company” means SpinCo and its subsidiaries following and giving effect to the completion of the Transactions.
“Contribution” means the contribution by International Paper of xpedx to SpinCo pursuant to the terms of the Contribution and Distribution Agreement.
“Contribution and Distribution Agreement” means the Contribution and Distribution Agreement, dated January 28, 2014, among International Paper, SpinCo, UWWH and the UWWH Stockholder.
“Consulting and Non-Competition Agreement” means the Consulting and Non-Competition Agreement, dated as of January 28, 2014, between UWWH and Allan R. Dragone.
“Debevoise” means Debevoise & Plimpton LLP.
“DGCL” means the General Corporation Law of the State of Delaware.
“Distribution” means the pro rata distribution immediately prior to the consummation of the Merger of all the then outstanding shares of SpinCo to the shareholders of International Paper.
“distribution agent” means Computershare Inc., a Delaware corporation and its fully owned subsidiary, Computershare Trust Company, N.A., a national banking association, the distribution agent in connection with the Distribution.
“distribution date” means                     , 2014, the expected date of the Distribution.
“Employee Matters Agreement” means the Employee Matters Agreement, dated as of January 28, 2014, among International Paper, SpinCo and UWWH.
“Employment Agreement” means the Employment Agreement, dated as of January 28, 2014, between xpedx Holding Company and Mary A. Laschinger.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Georgia-Pacific” means Georgia-Pacific LLC or its predecessor, Georgia-Pacific Corporation.
“Kirkland” means Kirkland & Ellis LLP.
“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1977.
“International Paper” means International Paper Company, a New York corporation.
 
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“IRS” means the U.S. Internal Revenue Service.
“IRS ruling” means the private letter ruling from the IRS to the effect that the spin-off and certain related transactions will qualify as tax-free to SpinCo, International Paper and International Paper’s shareholders for U.S. federal income tax purposes.
“Merger” means the merger of UWWH with and into SpinCo, with SpinCo continuing as the surviving company.
“Mergers” means the Merger and the Subsidiary Merger.
“Merger Agreement” means the Merger Agreement, dated January 28, 2014, among International Paper, SpinCo, xpedx Intermediate, xpedx LLC, the UWWH Stockholder, UWWH and UWW.
“NYSE” means the New York Stock Exchange.
“record date” means 5:00 p.m., New York City time on                      , 2014, the record date for the Distribution.
“Sarbanes Oxley Act” means the Sarbanes-Oxley Act of 2002.
“SEC” means the U.S. Securities and Exchange Commission.
“SpinCo” means xpedx Holding Company, a Delaware corporation.
“Subsidiary Merger” means the merger of xpedx Intermediate with and into UWW, with UWW continuing as the surviving company.
“Tax Receivable Agreement” means the Tax Receivable Agreement, to be dated as of the Closing Date, between SpinCo and the UWWH Stockholder.
“Tax Matters Agreement” means the Tax Matters Agreement, dated as of January 28, 2014, among International Paper, SpinCo and UWWH.
“Transaction Agreements” means the Contribution and Distribution Agreement, the Merger Agreement, the Tax Receivable Agreement, the Tax Matters Agreement, the Employee Matters Agreement, the Transition Services Agreement and the other agreements entered into by International Paper, UWWH and their respective affiliates in connection with the Transactions.
“Transactions” means the transactions contemplated by the Merger Agreement and the Contribution and Distribution Agreement which provide, among other things, for the Distribution and the Mergers, as described under the section “The Transactions.”
“Transition Services Agreement” means the Transition Services Agreement, to be dated as of the Closing Date, between International Paper and SpinCo.
“Unisource” means UWWH and its subsidiaries.
“UWW” means Unisource Worldwide, Inc., a Delaware corporation and a wholly-owned subsidiary of UWWH.
“UWWH” means UWW Holdings, Inc., a Delaware corporation and a wholly-owned subsidiary of the UWWH Stockholder.
 
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“UWWH Stockholder” means UWW Holdings, LLC, a Delaware limited liability company, the sole shareholder of UWW Holdings, Inc.
“we,” “us” and “our” refers to SpinCo and its subsidiaries and the xpedx business that will be contributed thereto for periods prior to the completion of the Transactions, and to SpinCo and its subsidiaries, including the combined businesses of xpedx and Unisource, after giving effect to the Transactions, unless the context otherwise requires or indicates.
“xpedx” or the “xpedx business” means the business-to-business printing, packaging and facility supplies and equipment distribution business of International Paper, as described in International Paper’s public filings as its distribution segment.
“xpedx Intermediate” means xpedx Intermediate, LLC, a Delaware limited liability company and a wholly-owned subsidiary of International Paper (that will be a wholly-owned subsidiary of SpinCo at the time of the Distribution).
“xpedx LLC” means xpedx, LLC, a New York limited liability company and a wholly-owned subsidiary of International Paper (that will be a wholly-owned, indirect subsidiary of SpinCo at the time of the Distribution).
Throughout this prospectus, with respect to Unisource, references to “December 31, 2013” or “fiscal 2013” refers to the year ended December 31, 2013, references to “December 31, 2012” or “fiscal 2012” refers to the 52 weeks ended December 29, 2012, references to “fiscal 2011” refers to the 52 weeks ended December 31, 2011, references to “December 31, 2010” or “fiscal 2010” refers to the 52 weeks ended January 1, 2011, references to “December 31, 2009” or “fiscal 2009” refers to the 52 weeks ended January 2, 2010 and references to “December 31, 2008” or “fiscal 2008” refers to the 52 weeks ended January 3, 2009.
 
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 INTRODUCTION
On April 22, 2013, International Paper announced that it had entered into a letter of intent with UWWH regarding a proposed business combination of xpedx, its business-to-business printing, packaging and facility supplies and equipment distribution business, and Unisource in a transaction structured as a “Reverse Morris Trust,” in which a newly-formed entity holding the xpedx business would be spun off and merged with UWWH, creating an independent, publicly-traded company. A “Reverse Morris Trust,” or “RMT,” transaction is a spin-off structure in which, as part of a plan, a merger partner, here UWWH, merges with the spun-off subsidiary, here SpinCo, in a transaction intended to be tax-free to the distributing parent and the distributing parent’s shareholders. See “The Transactions—Background of the Distribution and the Merger.” International Paper will effect the spin-off through a pro rata distribution to International Paper shareholders of all of the shares of common stock of SpinCo outstanding prior to the Merger. SpinCo will hold, through its subsidiaries, all of the assets and liabilities of xpedx. The Distribution will occur pursuant to a Contribution and Distribution Agreement, which International Paper, SpinCo, UWWH and the UWWH Stockholder entered into on January 28, 2014.
On January 28, 2014, International Paper announced that it, SpinCo, xpedx Intermediate and xpedx LLC had entered into an Agreement and Plan of Merger with UWWH, the UWWH Stockholder and UWW (the “Merger Agreement”), providing that sequentially and immediately following the Distribution and on the terms and subject to the other conditions of the Merger Agreement, UWWH will merge with and into SpinCo, with SpinCo continuing as the surviving corporation. Immediately thereafter, a wholly-owned subsidiary of SpinCo (“xpedx Intermediate”) will merge with and into UWW, a wholly-owned subsidiary of UWWH, with UWW surviving such merger as a wholly-owned subsidiary of SpinCo (the “Subsidiary Merger”). The Merger and the Subsidiary Merger are collectively referred to as the “Mergers.”
On                     , 2014, the expected date of the Distribution (the “distribution date”), each holder of International Paper common stock as of the record date will receive a number of shares of SpinCo common stock determined by a formula based on the number of International Paper shares of common stock outstanding at 5:00 p.m. New York City time on the distribution date. Each such holder will receive a number of SpinCo shares of common stock equal to the percentage of the total number of SpinCo shares of common stock outstanding as of the time of the Distribution as is equal to a fraction, (a) the numerator of which is the total number of issued and outstanding International Paper shares of common stock held by such holder as of the record date and (b) the denominator of which is the total number of International Paper shares of common stock issued and outstanding (excluding treasury shares held by International Paper and any other International Paper shares otherwise held by International Paper or one of its subsidiaries). Based on the number of International Paper shares of common stock outstanding as of                     , 2014, we expect the distribution ratio to be approximately              SpinCo shares of common stock for each International Paper share of common stock. As a result of the Merger, the UWWH Stockholder will receive a number of newly issued shares of SpinCo common stock for each share of UWWH common stock that it holds at the time of the Merger, in a private placement transaction, equal to (i) the aggregate number of SpinCo shares issued and outstanding after the Distribution, but prior to the Merger, divided by (ii) 0.51, multiplied by (iii) 0.49. Although the number of International Paper shares of common stock outstanding may increase or decrease prior to the distribution date and as a result the distribution ratio may change, it will nonetheless result in International Paper shareholders owning approximately 51%, and the UWWH Stockholder owning approximately 49%, of the shares of SpinCo common stock on a fully-diluted basis immediately following the Merger. Immediately following the Distribution, but prior to the Merger, International Paper’s shareholders will own all of the shares of common stock of SpinCo outstanding. You will not be required to make any payment, surrender or exchange your International Paper common stock or take any other action to receive your shares of SpinCo common stock. In lieu of fractional shares of SpinCo, shareholders will receive a cash payment. To that end, the distribution agent will sell whole shares that otherwise would have been distributed as fractional shares of SpinCo in the open market at prevailing market prices and distribute the aggregate cash proceeds of the sales, net of brokerage fees and similar costs, pro rata to each International Paper shareholder who would otherwise have been entitled to receive a fractional share of SpinCo, as applicable, in the Distribution.
 
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We expect that the Distribution and the Merger will be tax-free to International Paper’s shareholders for U.S. federal income tax purposes, except for any gain or loss attributable to cash received in lieu of a fractional share in the Distribution. Immediately after the Transactions, we will be an independent, publicly-traded company that will own and operate the combined businesses of xpedx and Unisource.
You may contact International Paper with any questions. International Paper’s contact information is:
International Paper Company
Attn: Investor Relations
6400 Poplar Ave.
Memphis, TN 38197
Tel: (901) 419-4352
 
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 QUESTIONS AND ANSWERS ABOUT THE TRANSACTIONS
Set forth below are commonly asked questions and answers about the Distribution, the Merger and the transactions contemplated thereby. You should read the sections entitled “The Transactions,” “The Merger Agreement” and “The Contribution and Distribution Agreement and the Ancillary Agreements” of this prospectus for a more detailed description of the matters described below.
Q: What are the Transactions?
A: The Distribution is the final step in the separation of the xpedx business from International Paper, which will be accomplished through a series of transactions that will result in International Paper’s shareholders owning approximately 51% of the shares of common stock of SpinCo, with SpinCo in turn holding the xpedx business, which is currently operated by International Paper. The Distribution will be a pro rata distribution immediately prior to the consummation of the Merger of all the then outstanding shares of common stock of SpinCo by International Paper to holders of International Paper common stock. Under the terms of the Merger Agreement, immediately following the Distribution, UWWH will merge with and into SpinCo, with SpinCo continuing as the surviving corporation, and xpedx Intermediate will merge with and into UWW, with UWW surviving the merger as a wholly-owned subsidiary of SpinCo. As a result of the Merger, the UWWH Stockholder will receive a number of shares of SpinCo common stock for each share of UWWH common stock that it holds at the time of the Merger in a private placement transaction. This will result in International Paper’s shareholders owning approximately 51%, and the UWWH Stockholder owning approximately 49%, of the common stock of SpinCo on a fully-diluted basis immediately following the Merger.
Q: What is SpinCo?
A: SpinCo is a wholly-owned subsidiary of International Paper incorporated under the laws of Delaware. Following the Transactions, SpinCo will be an independent, publicly-traded company operating through its subsidiaries what was formerly International Paper’s xpedx business and Unisource’s business.
Q: What is the reason for the Transactions?
A: International Paper determined that the Transactions would be in the best interests of International Paper and its shareholders because the Transactions would provide a number of key benefits, including primarily: (i) greater strategic focus of resources and management’s efforts for each of International Paper and for the combined company, (ii) the special payment, (iii) direct and differentiated access by each of International Paper and the combined company to capital resources and (iv) increased value to International Paper’s shareholders, in particular the combined company’s anticipated value on a stand-alone basis. In assessing and approving the Transactions, International Paper considered the unavailability of alternative transactions that would produce similar or better results for International Paper and its shareholders, and the spinoff’s facilitating the strategic combination of the xpedx and Unisource businesses. See “The Transactions—International Paper’s Reasons for the Transactions.”
Q: Why did International Paper decide not to separate SpinCo into a stand-alone public company and instead engage in the Transactions with Unisource?
A: International Paper decided to pursue the Transactions with Unisource rather than a stand-alone spin-off or split-off transaction involving the xpedx business because it determined that the expected value to International Paper and its shareholders from pursuing the Transactions was greater than the value to International Paper and its shareholders of a stand-alone spin-off or split-off of the xpedx business. The principal factor considered by International Paper in reaching this decision, in addition to the factors noted above, was Unisource’s business and prospects, after giving effect to the proposed acquisition by SpinCo, including expected synergies to be realized as a result of a combination of xpedx and Unisource.
 
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The principal countervailing factors considered by International Paper in its deliberations concerning the Transactions were:
 
 	•	 	the fact that the Unisource transaction necessarily involved another party and therefore presented execution risks that would not be present in a single party transaction like a spin-off or split-off;	
 
 	•	 	the possibility that the Unisource business will not perform in the anticipated manner; and	
 
 	•	 	risks relating to integrating the xpedx business with Unisource’s current operations and the potential effects on the value of SpinCo common stock to be received in the Transactions.	
After consideration of the above factors and based on information furnished by Unisource to International Paper, particularly in respect of synergies SpinCo expected to realize in the Transactions, and the terms of the Transaction Agreements as finally negotiated by International Paper, International Paper concluded that the expected value to International Paper and its shareholders from pursuing the Transactions was greater than the value to International Paper and its shareholders of a stand-alone spin-off or split-off of the xpedx business. See “The Transactions.”
Q: What will I receive in the Transactions?
A: Each share of International Paper common stock outstanding as of the record date will entitle its holder to receive a number of shares of SpinCo common stock, as determined by a formula based on the number of International Paper shares of common stock outstanding at 5:00 p.m. New York City time on the distribution date. Each such holder will receive a number of SpinCo shares of common stock equal to the percentage of the total number of SpinCo shares of common stock outstanding as of the time of the Distribution as is equal to a fraction, (a) the numerator of which is the total number of issued and outstanding International Paper shares of common stock held by such holder as of the record date and (b) the denominator of which is the total number of International Paper shares of common stock issued and outstanding (excluding treasury shares held by International Paper and any other International Paper shares otherwise held by International Paper or one of its subsidiaries). Based on the number of International Paper shares of common stock outstanding as of                     , 2014, we expect the distribution ratio to be approximately              SpinCo shares for each International Paper share of common stock. Although the number of International Paper shares of common stock outstanding may increase or decrease prior to the distribution date and as a result this distribution ratio may change, it will nonetheless result in International Paper shareholders owning approximately 51%, and the UWWH Stockholder owning approximately 49%, of the common stock of SpinCo on a fully-diluted basis immediately following the Merger. International Paper shareholders will not receive any new shares of common stock of SpinCo in the Merger and will continue to hold the SpinCo shares they received in the Distribution.
Q: What International Paper shareholder approvals are required?
A: None. No International Paper shareholder approvals are required for the Transactions. International Paper, as the sole shareholder of SpinCo and the sole member of xpedx Intermediate, must approve the Merger and the Subsidiary Merger, the UWWH Stockholder must approve the Merger and UWW’s sole shareholder must approve the Subsidiary Merger, which each of them did promptly after the Merger Agreement was signed. International Paper shareholders are not required to take any action to approve the Distribution or the Merger. After the Merger, SpinCo will mail to the holders of International Paper common stock who are entitled to receive shares of SpinCo common stock book-entry statements evidencing their ownership of SpinCo common stock, cash payments in lieu of fractional shares (if any) and related tax information, and other information regarding their receipt of SpinCo common stock.
No International Paper shareholder will be required to pay any cash or other consideration for shares of SpinCo common stock received in the Distribution, or to surrender or exchange International Paper shares in order to receive shares of SpinCo common stock and they should not return their International Paper stock certificates. The Transactions will not result in any changes in International Paper shareholders’ ownership of
 
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International Paper common stock. No vote of International Paper shareholders is required or sought in connection with the Distribution or Merger, and International Paper shareholders will have no appraisal rights in connection with the Transactions.
Q: How will International Paper distribute SpinCo shares of common stock?
A: Holders of International Paper common stock as of the record date will receive shares of SpinCo common stock in book-entry form. See “The Transactions.”
Q: What is the record date for the Distribution?
A: Record ownership will be determined as of 5:00 p.m., New York City time, on                      , 2014, which we refer to as the record date.
Q: When will the Transactions occur?
A: The date of the Distribution is expected to be on or about                      , 2014, which we refer to as the distribution date. The Merger will occur immediately thereafter, and the Subsidiary Merger will occur immediately after the Merger. We expect that it will take the distribution agent, acting on behalf of International Paper, up to three business days after the distribution date to fully distribute our common stock to International Paper shareholders.
Q: Are there any conditions to the consummation of the Transactions?
A: Yes, the consummation of the Transactions is subject to the satisfaction or waiver (to the extent permitted by applicable law) of a number of conditions, including (i) SpinCo’s receipt of the proceeds from the special payment financing in an amount sufficient to pay the special payment, and International Paper’s receipt of the special payment from SpinCo, (ii) receipt of the IRS ruling by International Paper, (iii) the International Paper board of directors’ receipt of a solvency opinion with respect to International Paper and SpinCo, (iv) this registration statement having been declared effective and the approval for listing on the New York Stock Exchange of SpinCo common stock to be issued in the Merger, (v) subject to certain exceptions, the accuracy of representations and warranties in the Merger Agreement, (vi) receipt of customary tax opinions and (vii) the absence of a material adverse effect on xpedx and Unisource since June 30, 2013. In addition, the consummation of the Merger is subject to the Contribution and Distribution having occurred pursuant to the terms of the Contribution and Distribution Agreement. This prospectus describes these conditions in more detail in “The Merger Agreement—Conditions to Consummation of the Merger” and “The Contribution and Distribution Agreement and the Ancillary Agreements—Contribution and Distribution Agreement—Conditions to the Completion of the Spin-off” and “—Termination.”
Q: What will happen to the listing of my International Paper common stock?
A: Nothing. International Paper common stock will continue to be traded on the NYSE under the symbol “IP”.
Q: Will the spin-off affect the trading of my International Paper common stock?
A: Until the market has fully analyzed the value of International Paper without the xpedx business, the price of International Paper common stock may fluctuate. In addition, it is anticipated that shortly before the record date and through the distribution date, there will be two markets in International Paper common stock: a “regular way” market and an “ex-distribution” market. International Paper common stock that will trade on the regular way market will trade with an entitlement to SpinCo common stock distributed pursuant to the Distribution. Stock that trades on the ex-distribution market will trade without an entitlement to SpinCo common stock distributed pursuant to the Distribution. See “The Transactions—Listing and Trading of Our Common Stock.”
 
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Q: What if I want to sell my International Paper common stock or my SpinCo common stock?
A: You should consult with your financial advisors, such as your stockbroker, bank or tax advisor. Neither International Paper nor SpinCo makes any recommendations on the purchase, retention or sale of International Paper common stock or the SpinCo common stock to be distributed in the Distribution.
If you decide to sell any stock before the Distribution, you should make sure your stockbroker, bank or other nominee understands whether you want to sell your International Paper common stock or the SpinCo common stock you will receive in the Distribution or both. If you sell your International Paper common stock in the “regular way” market up to and including the distribution date, you will be selling your right to receive SpinCo common stock in the Distribution. However, if you own International Paper common stock as of 5:00 p.m., New York City time, on the record date and sell those shares in the “ex-distribution” market up to and including the distribution date, you will still receive the SpinCo common stock that you would be entitled to receive in respect of the International Paper common stock you owned as of 5:00 p.m., New York City time on the record date. See “The Transactions—Listing and Trading of our Common Stock.”
Q: How will fractional shares be treated in the spin-off?
A: Holders of International Paper common stock will not receive fractional shares in connection with the spin-off. Instead, the distribution agent will sell whole shares that otherwise would have been distributed as fractional shares of SpinCo in the open market at prevailing market prices and distribute the aggregate cash proceeds of the sales, net of brokerage fees and similar costs, pro rata to each International Paper shareholder who would otherwise have been entitled to receive a fractional share in the Distribution. The receipt of cash in lieu of fractional shares will generally be taxable to the recipient shareholder. See “The Transactions—Manner of Effecting the Distribution.”
Q: Who will serve on the board of directors of the combined company?
A: Pursuant to the terms of the Contribution and Distribution Agreement, immediately prior to the distribution date, International Paper will cause to be elected the following individuals who have been agreed upon by International Paper and the UWWH Stockholder as the initial members of SpinCo’s board of directors: Allan R. Dragone, Jr., Daniel T. Henry, Mary A. Laschinger, Tracy A. Leinbach, Seth A. Meisel, William E. Mitchell, Michael P. Muldowney, Charles G. Ward, III and John J. Zillmer. Pursuant to the terms of the Merger Agreement, these individuals will constitute the board of directors of SpinCo following the Merger, and the majority of SpinCo’s directors will be independent, as determined in accordance with the criteria for independence required by the NYSE. See “Management of SpinCo Following the Transactions—Directors.”
Q: Who will manage the business of the combined company following the Merger?
A: Following the Merger, the business of the combined company will be managed by Mary A. Laschinger, a current Senior Vice President of International Paper and President of xpedx who will be Chief Executive Officer and Chairman of the combined company. The senior management of the combined company will also include Stephen J. Smith, Senior Vice President and Chief Financial Officer; Charles B. Henry, Senior Vice President Integration and Change Management; Mark W. Hianik, Senior Vice President, General Counsel and Corporate Secretary; Timothy D. Kutz, Senior Vice President Supply Chain; Thomas S. Lazzaro, Senior Vice President Field Sales and Operations; Joseph B. Myers, Senior Vice President Facility Solutions, Strategy and Commercial Excellence; Barry R. Nelson, Senior Vice President Publishing and Print Management; Elizabeth Patrick, Senior Vice President and Chief Human Resources Officer; Neil Russell, Senior Vice President Corporate Affairs; Darin W. Tang, Senior Vice President Packaging; and Daniel J. Watkoske, Senior Vice President Print. See “Management of SpinCo Following the Transactions—Executive Officers.”
 
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Q: What will be the indebtedness of the combined company following completion of the Transactions?
A: In connection with the Transactions, assuming the closing of the Transactions as of December 31, 2013, subsidiaries of SpinCo will incur an amount of indebtedness equal to approximately $725.2 million. This indebtedness will consist of borrowings under the ABL Facility, which will be used to fund the special payment to International Paper, described below, to repay certain outstanding indebtedness of Unisource and to pay related fees and expenses. Based upon Unisource’s outstanding indebtedness as of December 31, 2013, assuming the closing of the Transactions as of December 31, 2013, we expect that, immediately following the Merger, the combined company will have approximately $827.0 million in total indebtedness, including the new borrowings of $725.2 million under the ABL Facility, $73.7 million of capital lease obligations (exclusive of the non-monetary portion) and $28.1 million of Unisource Canadian bank overdrafts. See “Capitalization.”
Q: What is the current relationship between SpinCo and both International Paper and Unisource?
A: SpinCo is currently a wholly-owned subsidiary of International Paper and was incorporated as a Delaware corporation in order to effect the separation of the xpedx business from International Paper. Other than in connection with the Transactions, there is currently no relationship between SpinCo and Unisource. After the Transactions, SpinCo or its subsidiaries will be a party to certain commercial agreements with International Paper and Georgia-Pacific. See “The Contribution and Distribution Agreement and the Ancillary Agreements.”
Q: How will the rights of shareholders of SpinCo and International Paper change after the Merger?
A: The rights of shareholders of SpinCo will not change as a result of the Merger. The rights of shareholders of International Paper will also remain the same as prior to the Merger, except that shareholders of International Paper will also receive shares of SpinCo common stock and cash paid in lieu of fractional shares in the Transactions.
Following the Transactions, International Paper shareholders will continue to own all of their shares of International Paper common stock. Their rights as International Paper shareholders will not change, except that their shares of International Paper common stock will represent an interest in International Paper that no longer includes the ownership and operation of the xpedx business (but will include receipt by International Paper of the special payment). International Paper shareholders will also separately own stock of the combined company, which will include the combined business operations of Unisource and xpedx.
Q: Will the Transactions affect employees and former employees of International Paper who hold International Paper stock options and other stock-based awards?
A: International Paper granted stock options in 2004, which have expiration dates of May 10, 2014 and October 11, 2014. These options are currently fully vested. Employees of International Paper who hold International Paper options will retain the options and will not be granted SpinCo options (as replacement for such International Paper options) in connection with the Transactions. No adjustment to International Paper options or exercise prices will be made by reason of the Transactions. Any outstanding options held by employees of International Paper who will be employed by SpinCo following the closing of the Transactions will be treated by International Paper in accordance with the terms of the relevant International Paper equity incentive plan as though each employee incurred a termination of employment without cause from International Paper as of the closing of the Transactions.
Certain International Paper employees hold International Paper Performance Share Plan (“PSP”) awards pursuant to which an employee has been granted units that are paid in International Paper common stock at the end of a three-year period. The amounts earned under the PSP fluctuate based on the performance of International Paper, measured at the end of each year in the three-year period. No adjustment to the performance metrics of the PSP awards by reason of the Transactions is currently contemplated. If an employee received a PSP grant in 2011 and continues to be employed by International Paper through February 2014, that employee
 
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were paid under the PSP in February 2014, regardless of when the Transactions close, because the performance period ended December 31, 2013. International Paper employees who will be employed by SpinCo following the Transactions will continue to hold the 2012, 2013, and 2014 grants through the remainder of the performance period. The amounts to which these individuals will be entitled will be based on International Paper’s actual performance during the performance period but will be prorated based on the period of time from the grant date through the occurrence of the Transactions. Payments in respect of these awards will be paid in February of the year following the end of the relevant three-year period (e.g., the employee’s pro rata portion of the 2012 grant will be paid in February 2015).
Certain employees of International Paper also hold restricted shares of International Paper common stock. No SpinCo shares will be received by holders of restricted shares, nor will there be any adjustment to International Paper restricted stock made for the value of SpinCo. Other than Mary A. Laschinger, Chief Executive Officer of SpinCo, no employee of the xpedx business currently holds International Paper restricted stock awards. The awards of restricted stock currently held by Ms. Laschinger will vest by reason of the Transactions.
Q: Will there be any payments by SpinCo to International Paper in connection with the Distribution?
A: Yes, pursuant to the Contribution and Distribution Agreement, SpinCo is required to make a special payment to International Paper of $400 million, subject to adjustment based on estimates of changes in the net working capital and net indebtedness of the xpedx business and Unisource, and the transaction expenses of Unisource. If the sum of the changes in net working capital and net indebtedness of the xpedx business represents a positive change in the value of the xpedx business, the special payment to International Paper will be increased by such amount. If that amount represents a negative change in the value of the xpedx business, the special payment to International Paper will be reduced by such amount. Pursuant to the Contribution and Distribution Agreement and the Merger Agreement, if the sum of the Unisource transaction expenses in excess of $15 million and changes in the net working capital and net indebtedness of Unisource represents a positive change in the value of Unisource, SpinCo will pay such amount to the UWWH Stockholder. If that amount represents a negative change in the value of Unisource, the special payment to International Paper will be increased by a corresponding amount. See “The Contribution and Distribution Agreement and the Ancillary Agreements—Contribution and Distribution Agreement—Working Capital and Net Indebtedness Adjustments.”
Q: Will there be post-closing adjustments in connection with the Distribution?
A: Yes, pursuant to the Contribution and Distribution Agreement and the Merger Agreement, after the Merger, the parties will determine the actual amount of Unisource transaction expenses, net working capital and net indebtedness and, if such actual amounts differ from the estimated amounts, a corresponding payment will be made to the applicable party. See “The Contribution and Distribution Agreement and the Ancillary Agreements—Contribution and Distribution Agreement—Working Capital and Net Indebtedness Adjustments.”
Q: What are the U.S. federal income tax consequences to me of the Distribution?
A: International Paper expects to receive the IRS ruling to the effect that the Distribution will qualify as tax-free under Sections 355 and 361 of the Code. The IRS ruling is also expected to provide that the Merger, the Subsidiary Merger and certain internal transactions undertaken in anticipation of the Distribution will qualify for tax-free treatment under the Code. In addition to obtaining the IRS ruling, International Paper expects to receive an opinion from Debevoise confirming the tax-free status of the Distribution for U.S. federal income tax purposes, which opinion will rely on the IRS ruling as to matters covered by the IRS ruling. The IRS ruling and such opinion will rely on certain facts and assumptions, and certain representations and undertakings, provided by us, International Paper and Unisource regarding the past and future conduct of our business and other matters.
Assuming that the Distribution qualifies as tax-free under Section 355 of the Code, for U.S. federal income tax purposes no gain or loss will be recognized by an International Paper shareholder upon the receipt of our
 
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common stock pursuant to the Distribution, except for any gain or loss attributable to cash received in lieu of a fractional share. International Paper shareholders will not recognize any gain or loss for U.S. federal income tax purposes as a result of the Merger.
See “The Transactions—Material U.S. Federal Income Tax Consequences of the Transactions” and “Risk Factors—Risks Relating to the Transactions—If the spin-off does not qualify as a tax-free spin-off under Section 355 of the Code, including as a result of subsequent acquisitions of stock of International Paper or SpinCo, then International Paper and/or the International Paper shareholders may be required to pay substantial U.S. federal income taxes.”
Each International Paper shareholder is urged to consult his, her or its tax advisor as to the specific tax consequences of the Distribution or the Merger to that shareholder, including the effect of any state, local or non-U.S. tax laws and of changes in applicable tax laws.
Q: How will I determine the tax basis I will have in the SpinCo shares of common stock I receive in this distribution?
A: Generally, for U.S. federal income tax purposes, your aggregate basis in the shares of common stock you hold in International Paper and the new shares of SpinCo common stock received in the Distribution (including any fractional shares in SpinCo for which cash is received) will equal the aggregate basis of International Paper common stock held by you immediately before the Distribution. This aggregate basis will be allocated among your International Paper common stock and the SpinCo common stock you receive in the Distribution (including any fractional shares in SpinCo for which cash is received), in proportion to the relative fair market value of each immediately following the Distribution. See “The Transactions—Material U.S. Federal Income Tax Consequences of the Transactions” for more information.
Q: Does SpinCo intend to pay cash dividends?
A: No, we do not currently expect to declare or pay dividends on our common stock for the foreseeable future. See “Dividend Policy.” Furthermore, we are restricted under the Contribution and Distribution Agreement from declaring or paying special dividends through the second anniversary of the Closing Date (or, in certain circumstances, January 1, 2016). See “The Contribution and Distribution Agreement and The Ancillary Agreements—Contribution and Distribution Agreement—Additional Post-Closing Covenants.”
Q: How will SpinCo shares trade?
A: Currently, there is no public market for our common stock. We intend to apply to list our common stock on the NYSE under the symbol “      ”.
We anticipate that trading will commence on a “when-issued” basis on or shortly prior to the record date and before the distribution date. When-issued trading in the context of a spin-off refers to a sale or purchase of securities effected on or before the distribution date and made conditionally because the securities of the spun-off entity have not yet been distributed. When-issued trades generally settle within four trading days of the distribution date. On the first trading day following the distribution date, any when-issued trading in respect of SpinCo common stock will end and “regular-way” trading will begin. Regular-way trading refers to trading after the security has been distributed and typically involves a trade that settles on the third full trading day following the date of the sale transactions. See “The Transactions—Listing and Trading of Our Common Stock.”
Q: Do I have appraisal rights?
A: No. Holders of International Paper common stock are not entitled to appraisal rights in connection with the Transactions.
 
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Q: Who will be the transfer agent for SpinCo shares?
A: Computershare Inc. will be the transfer agent for SpinCo shares.
Q: Are there risks associated with owning SpinCo common stock upon consummation of the Transactions?
A: Our business is subject to both general and specific risks and uncertainties relating to the xpedx business and Unisource’s business. Our business is also subject to risks relating to the Transactions. Accordingly, you should read carefully the information set forth in the section entitled “Risk Factors.”
Q: Where can I get more information?
A: If you have any questions relating to the mechanics of the Distribution, you should contact the distribution agent at:
Computershare Inc.
250 Royall Street
Canton, MA 02021
Tel: (800) 522-6645
Before the Distribution and the Merger, if you have any questions relating to the Distribution or the Merger, you should contact International Paper at:
International Paper Company
Attn: Investor Relations
6400 Poplar Ave.
Memphis, TN 38197
Tel: (901) 419-4352
www.internationalpaper.com
 
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 PROSPECTUS SUMMARY
The following summary highlights information contained elsewhere in this prospectus relating to the Transactions. You should read this entire prospectus including the risk factors, our and Unisource’s management’s discussion and analysis of financial condition and results of operations, our and Unisource’s historical financial statements, and our unaudited pro forma condensed combined financial statements and the respective notes to those historical and pro forma financial statements.
Our historical combined financial data have been prepared on a “carve-out” basis to reflect the operations, financial condition and cash flows specifically allocable to the xpedx business of International Paper during all periods shown. Our pro forma combined financial data adjust our historical combined financial data to give effect to the Transactions and our anticipated post-Transactions capital structure.
Except as otherwise indicated or the context otherwise requires, the information included in this prospectus assumes the completion of the Transactions.
The Companies
xpedx
xpedx is a leading business-to-business printing, packaging and facility supplies and equipment distribution business. Through its three operating segments, Print, Packaging and Facility Solutions, xpedx offers an extensive portfolio of nationally recognized, high quality public and private brands of paper, graphics, packaging and facility supplies primarily in the United States and Mexico.
The Print segment includes the sale and distribution of printing and communication papers, publishing papers, digital papers, specialty papers, graphics consumables, wide format papers and substrates, graphics equipment and related equipment installation and service. The Packaging segment includes the design, sourcing, sale and distribution of customized packaging and packing equipment and the sale and distribution of custom and standard corrugated boxes, shrink and stretch films, tape, strapping, cushioning, labels, bags, mailers, molded fiber, bio-polymer and plastics and packaging equipment and related equipment installation and service. The packaging segment also includes fulfillment and contract packaging services. The Facility Solutions segment markets and sells products necessary to maintain large public facilities, including hand towel and bathroom tissue, cleaning chemicals, disinfectants, skin care products, safety and hazard products, trash bags and receptacles, sanitary maintenance supplies, facilities maintenance equipment and related equipment installation and service.
Products and equipment are sourced from approximately 6,000 vendors in the United States and approximately 600 vendors in Mexico as of December 31, 2013, with xpedx serving as an important distribution channel for these vendors. As of December 31, 2013, the xpedx network consists of 86 strategically located distribution centers in 39 states and Mexico and a fleet of approximately 1,500 trucks and trailers travelling approximately 32 million miles annually in the United States. xpedx markets and distributed these supplies, products and services to more than 58,000 customer locations as of December 31, 2013, including printers, publishers, data centers, manufacturers, higher education institutions, contract packaging/fulfillment providers, healthcare facilities, print design agencies, sporting and performance arenas, retail stores, government agencies, property managers and building service contractors, through more than 1,150 sales professionals, equipment representatives and service technicians.
Unisource
Unisource is a leading distributor of printing and business paper products, packaging supplies and equipment, and facility supplies and equipment, primarily in the United States and Canada, with additional

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international operations in Europe, Asia and Latin America. Through its six business units, U.S. Distribution, Canada Distribution, Graphic Communications, Rollsource, PaperPlus and Unisource Global Solutions, Unisource operates in four primary product categories: Print, Packaging, Facility Supplies and Other.
The Print product category includes the sale and distribution of high-quality commercial printing, writing, copying and digital printing paper to commercial printers, retailers, publishers, business form manufacturers, direct mail firms and the digital printing industry, as well as corporate and retail copy centers, in-plant print facilities, government institutions and other paper-intensive businesses. The Packaging product category includes the sale and distribution of consumer goods packaging, packaging for industrial or manufacturing components and point-of-sale displays, as well as the sale and distribution of single function or fully automated packaging machines. The Facility Supplies product category includes the sale and distribution of products such as towels, tissues, wipers and dispensers, can liners, commercial cleaning chemicals, soaps and sanitizers, sanitary maintenance supplies and equipment, safety and hazard supplies, and shampoos and amenities from leading manufacturers. In the Other category, Unisource provides third-party logistics services, which includes freight brokerage, material handling, warehousing and kitting.
Products and equipment are sourced in North America, Europe and Asia from approximately 2,800 vendors in the United States, approximately 600 vendors in Canada and approximately 100 vendors in Europe and Asia, with Unisource serving as an important North American distribution channel for many of these vendors. Unisource sells its products to a diverse customer base of approximately 48,000 customers, based on customer bill-to locations, including building service contractors, catalog and direct mail providers, commercial printers, consumer goods providers, cruise lines, food processors, healthcare providers, higher education institutions, government agencies, fulfillment, hotels and resorts, manufacturers and property managers, through approximately 760 sales representatives. Unisource provides supply chain management through its 93 distribution centers, providing next-day services to most major metropolitan areas in the United States and Canada.
Transaction Rationale
Size and Scale
By combining two well-established businesses, we anticipate that the Transactions will create a North American business-to-business distribution company with a broad geographic reach, extensive product offerings and a differentiated and leading service platform. We expect the Transactions to strengthen the combined company’s relationships with suppliers and customers by:
 
 	•	 	expanding our reach to multi-location customers that value a broader, national footprint;	
 
 	•	 	enhancing our supply chain capabilities with greater scale; and	
 
 	•	 	providing greater sourcing strategies.	
Expertise
We anticipate that the combined company will be able to deliver a greater breadth of expertise in the following:
 
 	•	 	Packaging —a full service platform for designing, sourcing and delivering commodity and specialty packaging, which we believe will enable the combined company to provide solutions to customers at every point in the packaging process, including design, engineering, materials, equipment, workflow and logistics;	

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 	•	 	Print —a fully integrated national distributor with expertise in paper, graphics, equipment and print management;	
 
 	•	 	Facility Solutions —a comprehensive facility solution to help customers maintain a safe, clean, healthy and productive environment; and	
 
 	•	 	Other —a third-party logistics service, including supply chain solutions, freight brokerage, warehousing and kitting.	
Synergies
We expect that the Merger will provide significant opportunities for the combined company to capture cost savings and other synergies. We are targeting annual cost savings and other synergies in the range of approximately $150 million to $225 million, which we anticipate will be fully realized by the end of 2018. We anticipate cost savings and other synergies in the following areas: overhead, strategic sourcing, supply chain efficiencies, optimizing the ability to service customers and reduction of fixed costs. We currently expect the one-time costs associated with achieving these cost savings and other synergies to be approximately $225 million over a five-year period.
Stable Platform with Improved Strategic Prospects
We expect that the combination of xpedx and Unisource will strengthen the combined company’s overall business platform and provide improved opportunities for strategic options as a combined enterprise. Additional advantages to the combination include:
 
 	•	 	xpedx’s and Unisource’s complementary businesses;	
 
 	•	 	minimal customer overlap between the businesses;	
 
 	•	 	strong relationships with each company’s customers and suppliers;	
 
 	•	 	better positioning the combined company to manage through the secular decline in the print segment; and	
 
 	•	 	an enterprise better able to take advantage of strategic opportunities, including acquisitions.	
Risk Factors
We face numerous risks related to, among other things, our business operations, our strategies, general economic conditions, competitive dynamics of the industry, our level of indebtedness, the legal and regulatory environment in which we operate, and our status as an independent public company following the Transactions. These risks are set forth in detail under the heading “Risk Factors.” If any of these risks should materialize, they could have a material adverse effect on our business, financial condition, results of operations or cash flows. We encourage you to review these risk factors carefully. Furthermore, this prospectus contains forward-looking statements that involve risks, uncertainties and assumptions. Actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including but not limited to those under the headings “Risk Factors” and “Note Regarding Forward-Looking Statements and Information.”

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Summary of the Transactions
We provide below a summary of the Transactions. See “The Transactions” for a more detailed description.
The following chart illustrates our organizational structure following the Transactions.

 
 
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The Distribution
 
Distributing company	International Paper Company. After the Distribution, International Paper will not own any shares of SpinCo.	
 
Distributed company	xpedx Holding Company, referred to herein as “SpinCo.”	
 
Record date	Record ownership will be determined as of 5:00 p.m., New York City time, on                     , 2014.	
 
Distribution date	The distribution date is expected to be on or about                     , 2014.	
 
Distribution ratio	Each share of International Paper common stock outstanding as of the record date will entitle its holder to receive a number of shares of SpinCo common stock determined by a formula based on the number of International Paper shares of common stock outstanding at 5:00 p.m. New York City time on the distribution date. Each such holder will receive a number of SpinCo shares of common stock equal to the percentage of the total number of SpinCo shares of common stock outstanding as of the time of the Distribution as is equal to a fraction, (a) the numerator of which is the total number of issued and outstanding International Paper shares of common stock held by such holder as of the record date and (b) the denominator of which is the total number of International Paper shares of common stock issued and outstanding (excluding treasury shares held by International Paper and any other International Paper shares otherwise held by International Paper or one of its subsidiaries). Based on the number of fully diluted International Paper shares of common stock outstanding as of                     , 2014, we expect the distribution ratio to be approximately              shares of SpinCo common stock for each share of International Paper common stock. Although the number of International Paper shares of common stock outstanding may increase or decrease prior to the distribution date and as a result the distribution ratio may change, it will nonetheless result in International Paper shareholders as of the record date and their transferees owning approximately 51%, and the UWWH Stockholder owning approximately 49%, of the shares of SpinCo common stock on a fully diluted basis immediately following the Merger.	
 
Securities to be distributed	All of the shares of common stock of SpinCo outstanding immediately prior to the Merger will be distributed pro rata to International Paper shareholders who hold International Paper common stock as of the record date. Assuming a record date of                     , 2014 and approximately              shares of International Paper common stock outstanding as of such date, and applying the assumed distribution ratio of              SpinCo shares for every International Paper share of common stock, approximately              shares of our common stock would be distributed to International Paper shareholders. The number of SpinCo shares that International Paper will ultimately distribute to its shareholders will (i) fluctuate depending on the number of International Paper shares of common	

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 	stock actually outstanding as of the record date and (ii) be reduced to the extent that cash payments are to be made in lieu of fractional shares, as described below.	
 
The Distribution	On the distribution date, International Paper will cause the distribution agent to distribute the shares of SpinCo common stock to the International Paper shareholders as of the record date. The distribution of shares of SpinCo common stock will be made in book-entry form. It is expected that it will take the distribution agent up to three business days to electronically issue SpinCo shares to you or your bank or brokerage firm on your behalf by way of direct registration in book-entry form. You will not be required to make any payment, surrender or exchange your International Paper common stock or take any other action to receive your SpinCo common stock.	
 
No fractional shares	Holders of International Paper common stock will not receive any fractional shares of SpinCo common stock. In lieu of fractional shares of SpinCo, International Paper shareholders will receive a cash payment. To that end, the distribution agent will aggregate and sell whole shares that otherwise would have been distributed as fractional shares of SpinCo in the open market at prevailing market prices and distribute the aggregate cash proceeds of the sales, net of brokerage fees and similar costs, pro rata to each International Paper shareholder who would otherwise have been entitled to receive a fractional share of SpinCo, as applicable, in the Distribution. Recipients of cash in lieu of fractional shares will not be entitled to any interest on payments made in lieu of fractional shares. See “The Transactions—Manner of Effecting the Distribution.” The receipt of cash in lieu of fractional shares generally will be taxable to the recipient shareholders that are subject to U.S. federal income tax as described in “The Transactions—Material U.S. Federal Income Tax Consequences of the Transactions.”	
 
Conditions to the Distribution	The Distribution is subject to a number of important conditions. Under the terms of the Contribution and Distribution Agreement, the consummation of the Distribution is conditioned upon (i) SpinCo’s receipt of the proceeds from the completion of the special payment financing in an amount sufficient to pay the special payment, and International Paper’s receipt of the special payment from SpinCo, (ii) the satisfaction (or waiver by International Paper) of each of the conditions to International Paper’s obligation to effect the closing of the transactions contemplated by the Merger Agreement (other than the consummation of the Distribution) and (iii) each of International Paper, SpinCo and Unisource having irrevocably confirmed to the other that each of the conditions to its obligations to effect the closing of the Merger has been satisfied or waived and that it is prepared to proceed with the Merger. For a more detailed description of the Merger conditions see “The Merger Agreement—Conditions to Consummation of the Merger.”	
 
Special payment adjustment	Pursuant to the Contribution and Distribution Agreement, SpinCo is required to make a special payment to International Paper of	

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 	$400 million, subject to adjustment based on estimates of changes in the net working capital and net indebtedness of the xpedx business and Unisource, and the transaction expenses of Unisource. If the sum of the changes in the net working capital and net indebtedness of the xpedx business represents a positive change in the value of the xpedx business, the special payment to International Paper will be increased by such amount. If that amount represents a negative change in the value of the xpedx business, the special payment to International Paper will be reduced by such amount. Pursuant to the Contribution and Distribution Agreement and the Merger Agreement, if the sum of the Unisource transaction expenses in excess of $15 million and changes in the net working capital and net indebtedness of Unisource represents a positive change in the value of Unisource, SpinCo shall pay such amount to the UWWH Stockholder. If that amount represents a negative change in the value of Unisource, the special payment to International Paper will be increased by a corresponding amount. See “The Contribution and Distribution Agreement and the Ancillary Agreements—Contribution and Distribution Agreement—Working Capital and Net Indebtedness Adjustments.”	
 
Earnout Payment	The Contribution and Distribution Agreement provides that in 2020 the combined company may be required to pay to International Paper an earnout payment of up to $100 million if the combined company’s aggregate EBITDA for its 2017, 2018 and 2019 fiscal years exceeds an agreed-upon target, subject to certain adjustments. The amount of the earnout payment, if owed by the combined company, will be an amount equal to (i) the excess of the combined company’s aggregate EBITDA for its 2017, 2018 and 2019 fiscal years over the agreed-upon target, (ii) multiplied by four divided by three, capped at $100 million in the aggregate. The earnout payment may also be due in certain other circumstances. See “The Contribution and Distribution Agreement and the Ancillary Agreements—Contribution and Distribution Agreement—Earnout Payment.”	
 
Trading market and symbol	We intend to apply to list our common stock on the NYSE under the ticker symbol “        ”. We anticipate that, on or shortly before the record date for the Distribution, trading of SpinCo common stock will begin on a “when-issued” basis and will continue up to and including the distribution date. See “The Transactions—Listing and Trading of Our Common Stock.”	
 
Dividend policy	We do not currently expect to declare or pay dividends on our common stock for the foreseeable future. See “Dividend Policy.”	
 
Tax consequences of the Distribution to International Paper shareholders	International Paper expects to receive a private letter ruling from the IRS to the effect that the Distribution will qualify as tax-free under Sections 355 and 361 of the Code. The IRS ruling is also expected to provide that the Merger, the Subsidiary Merger and certain internal transactions undertaken in anticipation of the Distribution will qualify	

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 	for tax-free treatment under the Code. In addition to obtaining the IRS ruling, International Paper expects to receive an opinion from Debevoise confirming the tax-free status of the Distribution for U.S. federal income tax purposes, which opinion will rely on the IRS ruling as to matters covered by the IRS ruling. The IRS ruling and such opinion will rely on certain facts and assumptions, and certain representations and undertakings, provided by us, International Paper and Unisource regarding the past and future conduct of our respective business and other matters.	
 
 	Assuming that the Distribution qualifies as tax-free under Section 355 of the Code, for U.S. federal income tax purposes no gain or loss will be recognized by an International Paper shareholder upon the receipt of our common stock pursuant to the Distribution, except for any gain or loss attributable to cash received in lieu of a fractional share.	
 
 	See “The Transactions—Material U.S. Federal Income Tax Consequences of the Transactions” and “Risk Factors—Risks Relating to the Transactions—If the spin-off does not qualify as a tax-free spin-off under Section 355 of the Code, including as a result of subsequent acquisitions of stock of International Paper or SpinCo, then International Paper and/or the International Paper shareholders may be required to pay substantial U.S. federal income taxes.”	
 
 	Each International Paper shareholder is urged to consult his, her or its tax advisor as to the specific tax consequences of the Distribution to that shareholder, including the effect of any state, local or non-U.S. tax laws and of changes in applicable tax laws.	
 
Relationship with International Paper after the spin-off	We have entered into the Contribution and Distribution Agreement and shortly before the Distribution, we expect to enter into other agreements with International Paper related to the Transactions. These agreements will govern the relationship between SpinCo and International Paper subsequent to the completion of the Distribution and provide for the allocation between SpinCo and International Paper of various assets, liabilities and obligations (including employee benefits and tax-related assets and liabilities). The Contribution and Distribution Agreement, in particular, provides for the settlement or extinguishment of certain obligations between SpinCo and International Paper. We will enter into a Transition Services Agreement pursuant to which International Paper will provide certain services to SpinCo, and SpinCo will provide certain services to International Paper, on a transitional basis. Further, we have entered into the Tax Matters Agreement with International Paper which governs the rights and obligations of International Paper and SpinCo for certain tax liabilities with respect to periods or portions thereof ending on or before the date of the Distribution. The Tax Matters Agreement also contains certain restrictions with respect to the intended tax-free status of the Transactions and indemnification	

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 	obligations on the part of SpinCo if the Transactions are not tax-free. We will enter into a supply agreement with International Paper pursuant to which International Paper will supply xpedx LLC with certain printing and communications papers and coated paperboard and xpedx LLC will supply International Paper with certain products, in each case, for a period of 18 months. We describe these and related arrangements in greater detail under “The Contribution and Distribution Agreement and the Ancillary Agreements” and describe some of the risks of these arrangements under “Risk Factors—Risks Relating to the Transactions.”	
 
Distribution Agent	Computershare Inc., a Delaware corporation and its fully owned subsidiary, Computershare Trust Company, N.A., a national banking association.	
The Merger
 
Structure of the Merger	UWWH will merge with and into SpinCo, with SpinCo continuing as the surviving corporation, and xpedx Intermediate, which will be SpinCo’s direct, wholly-owned subsidiary, will merge with and into UWW, with UWW surviving the Subsidiary Merger as SpinCo’s direct, wholly-owned subsidiary. We expect the Mergers to be consummated sequentially and immediately following the Distribution and on the terms and subject to the other conditions of the Merger Agreement. The Merger Agreement provides that the Mergers will take place on the date of the Distribution (such date, the “Closing Date”).	
 
Primary purposes of the Transactions	International Paper determined that the Transactions would be in the best interests of International Paper and its shareholders because the Transactions would provide a number of key benefits, including primarily: (i) greater strategic focus of resources and management’s efforts for each of International Paper and for the combined company, (ii) the special payment, (iii) direct and differentiated access by each of International Paper and the combined company to capital resources and (iv) increased value to International Paper’s shareholders, in particular the combined company’s anticipated value on a stand-alone basis. In assessing and approving the Transactions, International Paper considered the unavailability of alternative transactions that would produce similar or better results for International Paper and its shareholders, and the spinoff’s facilitating the strategic combination of the xpedx and Unisource businesses. See “The Transactions—International Paper’s Reasons for the Transactions.”	
 
Consideration for the Merger	SpinCo shareholders will not receive any consideration in the Merger, and SpinCo will remain the parent company for the combined company. Each UWWH share of common stock outstanding as of                     , 2014 will be converted into the right to receive a number of shares of SpinCo common stock in a private placement transaction, that will result	

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 	in International Paper’s shareholders as of the record date and their transferees owning approximately 51% of the common stock of SpinCo, and the UWWH Stockholder owning approximately 49%, on a fully-diluted basis immediately following the Merger.	
 
Approval of the Merger	No vote by International Paper shareholders is required or is being sought in connection with the Transactions. International Paper, as the sole shareholder of SpinCo, has already approved the Merger.	
 
Conditions to the Merger	The obligations of each party to consummate the Merger are subject to the satisfaction or waiver (to the extent permitted by applicable law) of certain conditions, including:	
 
 	•	 	the Contribution and Distribution having occurred pursuant to the terms of the Contribution and Distribution Agreement;	
 
 	•	 	SpinCo’s receipt of the proceeds from the special financing in an amount sufficient to pay the special payment, and International Paper’s receipt of the special payment from SpinCo;	
 
 	•	 	International Paper’s receipt of one or more private letter rulings from the IRS, which rulings shall be in full force and effect on the Closing Date, to the effect that (i) the transactions that comprise the Distribution will qualify as a “reorganization” within the meaning of Section 368(a)(1)(D) of the Code, (ii) International Paper will recognize no gain or loss under Section 361(c) of the Code upon the Distribution and (iii) International Paper’s shareholders will recognize no gain or loss under Section 355(a) of the Code upon the receipt of SpinCo shares in the Distribution;	
 
 	•	 	the receipt by International Paper’s board of directors of customary solvency and surplus opinions of a nationally recognized investment banking or appraisal firm;	
 
 	•	 	the effectiveness of the registration statement on Form S-1, of which this prospectus forms a part, and the approval of the listing of SpinCo common stock on the NYSE, subject to official notice of the issuance; and	
 
 	•	 	the absence of any order issued by any governmental authority of competent jurisdiction or other legal impediment preventing or making illegal the consummation of the Transactions.	
 
 	In addition, International Paper, SpinCo, xpedx Intermediate and xpedx LLC’s obligations to consummate the Merger are subject to the satisfaction or waiver (to the extent permitted by applicable law) of the following additional conditions, among others:	
 
 	•	 	the representations and warranties of the UWWH Stockholder, UWWH and UWW, disregarding all materiality or material adverse effect qualifications, being true and correct in all respects as of the effective time of the Merger as if made as of the effective time of the Merger (except to the extent such representations and	

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 	warranties address matters as of a particular date, in which case as of such date), except where the failure to be true and correct has not had or would not, individually or in the aggregate, reasonably be expected to have, a material adverse effect on UWWH, its subsidiaries or the financial condition or results of operations of UWWH, taken as a whole, subject to certain exceptions, or the ability of UWWH to consummate the Transactions and to perform its obligations under the Merger Agreement and the Transaction Agreements (a “UWWH MAE”) (other than certain representations and warranties which must be true and correct in all respects);	
 
 	•	 	the covenants and agreements being performed by the UWWH Stockholder, UWWH and UWW in all material respects at or prior to the effective time of the Merger (other than certain covenants and agreements which must be performed in all respects);	
 
 	•	 	the delivery by UWWH of an officer’s certificate certifying the satisfaction of the above conditions;	
 
 	•	 	the absence of a UWWH MAE since June 30, 2013;	
 
 	•	 	the receipt of a spin-off tax opinion by International Paper and SpinCo from legal counsel;	
 
 	•	 	the receipt of a tax opinion by International Paper and SpinCo from legal counsel to the effect that the Merger will constitute a “reorganization” for federal income tax purposes within the meaning of Section 368(a) of the Code;	
 
 	•	 	the entrance into and delivery of the applicable Transaction Agreements by the UWWH Stockholder and UWWH, which are in full force and effect;	
 
 	•	 	the delivery by the UWWH Stockholder of a certification that it is not a foreign person; and	
 
 	•	 	the termination of the advisory agreement among UWWH, UWW and Bain Capital, without liability to SpinCo or its subsidiaries.	
 
 	Furthermore, UWWH and UWW’s obligations to consummate the Merger are subject to the satisfaction or waiver (to the extent permitted by applicable law) of the following additional conditions, among others:	
 
 	•	 	the representations and warranties of International Paper, SpinCo, xpedx Intermediate and xpedx LLC, disregarding all materiality or material adverse effect qualifiers, being true and correct in all respects as of the effective time of the Merger as if made as of the effective time of the Merger (except to the extent such representations and warranties address matters as of a particular date, in which case as of such date), except where their failure to be true and correct has not had or would not, individually or in the aggregate, reasonably be expected to have, a material adverse effect on the xpedx business, SpinCo and its subsidiaries,	

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 	International Paper or any of International Paper’s subsidiaries with respect to the xpedx business or the financial condition or results of operations of the xpedx business, taken as a whole, subject to certain exceptions, or the ability of International Paper or SpinCo and its subsidiaries to consummate the Transactions and to perform its obligations under the Merger Agreement and the Transaction Agreements (a “SpinCo MAE”) (other than certain representations and warranties which must be true and correct in all respects);	
 
 	•	 	the covenants and agreements being performed by International Paper, SpinCo, xpedx Intermediate and xpedx LLC in all material respects at or prior to the effective time of the Merger (other than certain covenants and agreements, which must be performed in all respects);	
 
 	•	 	the delivery by each of International Paper and SpinCo of an officer’s certificate certifying the satisfaction of the above conditions;	
 
 	•	 	the absence of any SpinCo MAE since June 30, 2013;	
 
 	•	 	the receipt of a tax opinion by UWWH’s legal counsel, to the effect that (i) the Merger will constitute a “reorganization” for federal income tax purposes within the meaning of Section 368(a) of the Code and (ii) the Subsidiary Merger will qualify as a capital contribution within the meaning of Section 351(a) of the Code;	
 
 	•	 	the entrance into and delivery of the applicable Transaction Agreements by International Paper, SpinCo, xpedx Intermediate and xpedx LLC, which are in full force and effect.	
 
 	Furthermore, the effective date of the registration statement of which this prospectus forms a part will be no earlier than the date on which SpinCo, as the surviving corporation, would be reasonably able to meet its obligations and requirements as a public company with securities listed on the NYSE and is otherwise reasonably prepared to operate as a standalone entity taking into account all resources available to it under the Transaction Agreements and on commercially reasonable terms from third parties.	
 
Termination of the Merger Agreement	The Merger Agreement may be terminated by:	
 
 	•	 	the mutual written consent of International Paper and UWWH;	
 
 	•	 	either of International Paper or UWWH if the effective time of the Merger has not occurred on or before January 5, 2015, unless the failure to effect the Merger by that date is due to the failure of the party seeking to terminate the Merger Agreement to perform its obligations set forth in the Merger Agreement;	
 
 	•	 	UWWH, if there has been a material breach by International Paper or SpinCo of any of its representations, warranties, covenants or agreements contained in the Merger Agreement, or any such	

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 	representation and warranty has become untrue in any material respect, and such breach or inaccuracy has not been cured within 30 business days following notice of such breach (so long as UWWH is not then in material breach of any covenant, representation or warranty or other agreement contained in the Merger Agreement which breach would cause the closing conditions of International Paper or SpinCo not to be satisfied if the closing were to occur at the time of termination);	
 
 	•	 	International Paper, if there has been a material breach by UWWH of any of its representations, warranties, covenants or agreements contained in the Merger Agreement, or any such representation and warranty has become untrue in any material respect, and such breach or inaccuracy has not been cured within 30 business days following notice of such breach (so long as International Paper is not then in material breach of any covenant, representation or warranty or other agreement contained in the Merger Agreement which breach would cause the closing conditions of UWWH or the UWWH Stockholder not to be satisfied if the closing were to occur at the time of termination); and	
 
 	•	 	any of the parties if any law or order of any governmental authority preventing or prohibiting the completion of the Transactions has become final and nonappealable.	
 
Termination fees and expenses	The Merger Agreement provides that, upon termination of the Merger Agreement under specified circumstances, certain termination fees may be payable:	
 
 	•	 	If International Paper terminates the Merger Agreement as described in the fourth bullet of the preceding section and an acquisition proposal for UWWH has commenced or is publicly disclosed, proposed or announced or otherwise communicated to UWWH or the UWWH Stockholder prior to such termination and within 15 months following such termination, UWWH or any of its subsidiaries enters into a definitive agreement with respect to such proposal, then UWWH must pay International Paper a $6 million termination fee.	
 
 	•	 	If UWWH terminates the Merger Agreement as described in the third bullet of the preceding section and an acquisition proposal for xpedx has commenced or is publicly disclosed, proposed or announced or otherwise communicated to International Paper or the International Paper shareholders prior to such termination and within 15 months following such termination, International Paper or SpinCo enters into a definitive agreement with respect to such proposal, then International Paper must pay UWWH a $6 million termination fee.	
 
Tax consequences to International Paper shareholders	International Paper shareholders are not expected to recognize any gain or loss for U.S. federal income tax purposes as a result of the Merger.	

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 	Each International Paper shareholder is urged to consult his, her or its tax advisor as to the specific tax consequences of the Merger to that shareholder, including the effect of any state, local or non-U.S. tax laws and of changes in applicable tax laws.	
 
Accounting Treatment of the Transactions	SpinCo will be the accounting acquiror in the Merger. Accordingly, SpinCo will apply acquisition accounting to the assets acquired and liabilities assumed of Unisource upon consummation of the Merger. See “The Transactions—Accounting Treatment and Considerations.”	
Financing
 
The ABL Facility	In connection with the Transactions, we will enter into an asset-based revolving facility that will provide for revolving loans in an aggregate principal amount of up to $1,400.0 million (subject to availability under a borrowing base). In connection with the Transactions, subsidiaries of SpinCo will borrow approximately $725.2 million under the ABL Facility, assuming the closing of the Transactions as of December 31, 2013. The proceeds of the initial borrowings under the ABL Facility will be used to make the special payment to International Paper, to refinance certain existing indebtedness of Unisource and to pay related fees and expenses. See “Description of Material Indebtedness.”	
 Market and Industry Data
 
This prospectus includes estimates regarding market and industry data and forecasts, which are based on publicly available information, industry publications and surveys, reports from government agencies, reports by market research firms and our own estimates based on our management’s knowledge of and experience in the market sectors in which we compete. We have not independently verified market and industry data from third party sources.		
 Trademarks
We use various trademarks, service marks and brand names that we deem particularly important to the advertising activities and operation of our various lines of business and some of these marks are registered in the United States and, in some cases, other jurisdictions. This prospectus also refers to the brand names, trademarks or service marks of other companies. All brand names and other trademarks or service marks cited in this prospectus are the property of their respective holders.
*  *  *  *  *
xpedx Holding Company is a Delaware corporation. Prior to the Transactions, our principal executive offices are located at 6400 Poplar Avenue, Memphis, Tennessee 38197, and our telephone number at that address is (901) 419-9000. We expect to change our name in connection with the Transactions. Following the Transactions, our principal executive offices will be located in the greater Atlanta, Georgia area, and we expect to maintain a significant presence at Unisource’s and xpedx’s current operational headquarters in Norcross, Georgia and Loveland, Ohio, respectively. Our website is www.                    .com. Information on, and which can be accessed through, our website is not incorporated in this prospectus.

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 SUMMARY HISTORICAL COMBINED FINANCIAL DATA OF XPEDX
The following summary historical condensed combined financial data of xpedx for the years ended December 31, 2013, December 31, 2012 and December 31, 2011, and as of December 31, 2013 and December 31, 2012, have been derived from the audited combined financial statements of xpedx included elsewhere in this prospectus. The following summary historical condensed combined financial data of xpedx as of December 31, 2011 have been derived from the audited combined financial statements of xpedx not included in this prospectus. This information is only a summary and should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations of xpedx” and the financial statements of xpedx and the notes thereto included elsewhere in this prospectus.

 	  	Year Ended December 31,	 	
 	  	2013	 	 	2012	 	 	2011	 	
 	  	(Dollars in millions)	 	
Statement of Operations Data:	  				 				
Net sales	  	$	 5,652.4	  	 	$	6,012.0	  	 	$	6,509.2	  	
Cost of products sold	  	 	4,736.8	  	 	 	5,036.7	  	 	 	5,475.3	  	
Distribution expenses	  	 	314.2	  	 	 	324.0	  	 	 	324.5	  	
Selling and administrative expenses	  	 	548.2	  	 	 	580.6	  	 	 	598.7	  	
Depreciation and amortization	  	 	17.1	  	 	 	14.0	  	 	 	15.6	  	
Restructuring charges	  	 	37.9	  	 	 	35.1	  	 	 	43.6	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Operating (loss) income	  	 	(1.8	) 	 	 	21.6	  	 	 	51.5	  	
Other income, net	  	 	(2.2	) 	 	 	(1.9	) 	 	 	(5.2	) 	
Income tax provision	  	 	0.4	  	 	 	9.1	  	 	 	21.2	  	
Income (loss) from discontinued operations, net of income taxes	  	 	0.2	  	 	 	(10.0	) 	 	 	(13.6	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net income	  	$	0.2	  	 	$	4.4	  	 	$	21.9	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Balance Sheet Data (at period end):	  				 				
Accounts receivable, net	  	$	669.7	  	 	$	680.6	  	 	$	731.7	  	
Inventories, net	  	 	360.9	  	 	 	373.4	  	 	 	387.2	  	
Total assets	  	 	1,312.2	  	 	 	1,367.9	  	 	 	1,442.9	  	
Non-current liabilities	  	 	12.5	  	 	 	16.9	  	 	 	16.4	  	
			
Cash Flow Provided by (Used for) Continuing Operations:	  				 				
Operating activities	  	$	54.9	  	 	$	61.7	  	 	$	96.5	  	
Investing activities	  	 	13.2	  	 	 	(7.7	) 	 	 	(16.9	) 	
Financing activities	  	 	(78.5	) 	 	 	(50.3	) 	 	 	(86.2	) 	
			
Other Selected Data:	  				 				
Adjusted EBITDA (1)	  	$	55.4	  	 	$	74.8	  	 	$	115.9	  	

(1)	xpedx supplements its financial information prepared in accordance with GAAP with Adjusted EBITDA (earnings before interest, income taxes, depreciation and amortization, cash and non-cash restructuring and certain other unusual costs, if any) because xpedx believes investors commonly use Adjusted EBITDA as a main component of valuing companies such as xpedx. Adjusted EBITDA is not a measurement of financial performance under GAAP. Non-GAAP measures do not have definitions under GAAP and may be defined differently by and not be comparable to, similarly titled measures used by other companies. As a result, management of xpedx considers and evaluates non-GAAP measures in connection with a review of the most directly comparable measure calculated in accordance with GAAP. Management of xpedx cautions investors not to place undue reliance on such non-GAAP measures, but also to consider them with the most directly comparable GAAP measure. Adjusted EBITDA has limitations as an analytical tool and should not be considered in isolation or as a substitute for analyzing xpedx’s results as reported under GAAP.	

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A reconciliation of Adjusted EBITDA to net income determined in accordance with GAAP is provided below:

 	  	Year Ended December 31,	 	
 	  	2013	 	  	2012	 	 	2011	 	
 	  	(Dollars in millions)	 	
Net income	  	$	0.2	  	  	$	4.4	  	 	$	21.9	  	
Interest expense, net	  	 	—  	  	  	 	—  	  	 	 	—  	  	
Income tax provision	  	 	0.4	  	  	 	9.1	  	 	 	21.2	  	
Depreciation and amortization	  	 	17.1	  	  	 	14.0	  	 	 	15.6	  	
	  	 	 	 	  	 	 	 	 	 	 	 	
EBITDA	  	 	17.7	  	  	 	27.5	  	 	 	58.7	  	
Restructuring charges	  	 	37.9	  	  	 	35.1	  	 	 	43.6	  	
Income (loss) from discontinued operations, net of income taxes	  	 	0.2	  	  	 	(10.0	) 	 	 	(13.6	) 	
Other (a)	  	 	—  	  	  	 	2.2	  	 	 	—  	  	
	  	 	 	 	  	 	 	 	 	 	 	 	
Adjusted EBITDA	  	$	55.4	  	  	$	74.8	  	 	$	115.9	  	

 	(a)	“Other” for the year ended December 31, 2012 is comprised of $2.2 million of temporary labor costs incurred due to a labor strike.	

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 SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA OF UNISOURCE
The following summary of historical consolidated financial data of Unisource for the fiscal years ended December 31, 2013, December 29, 2012 and December 31, 2011, and as of December 31, 2013 and December 29, 2012, have been derived from the audited consolidated financial statements of Unisource included elsewhere in this prospectus. The historical consolidated financial data of Unisource as of December 31, 2011 have been derived from the audited consolidated financial statements of Unisource not included in this prospectus. This information is only a summary and should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Unisource” and the financial statements of Unisource and the notes thereto included elsewhere in this prospectus.

 	  	Fiscal Year Ended	 	
 	  	December 31,
2013	 	 	December 29,
2012	 	 	December 31,
2011	 	
 	  	(Dollars in millions)	 	
Statement of Operations Data:	  				 				 				
Net sales	  	$	4,089.1	  	 	$	4,123.3	  	 	$	4,327.8	  	
Cost of products sold, excluding depreciation and amortization	  	 	3,370.4	  	 	 	3,405.6	  	 	 	3,591.9	  	
Distribution expenses	  	 	250.3	  	 	 	240.0	  	 	 	252.4	  	
Selling and administrative expenses	  	 	391.3	  	 	 	392.9	  	 	 	409.0	  	
Depreciation and amortization	  	 	25.1	  	 	 	25.4	  	 	 	24.5	  	
Restructuring (gains) expenses	  	 	(3.4	) 	 	 	6.6	  	 	 	14.6	  	
Merger expenses	  	 	14.3	  	 	 	—  	  	 	 	—  	  	
Asset impairments	  	 	0.4	  	 	 	4.9	  	 	 	1.0	  	
Other expense, net	  	 	0.5	  	 	 	0.4	  	 	 	1.5	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Operating income	  	 	40.2	  	 	 	47.5	  	 	 	32.9	  	
Interest expense, net	  	 	27.4	  	 	 	28.3	  	 	 	66.7	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Income (loss) before income taxes	  	 	12.8	  	 	 	19.2	  	 	 	(33.8	) 	
Income tax expense (benefit)	  	 	(228.5	) 	 	 	15.2	  	 	 	(5.5	) 	
Equity earnings of affiliates, net of taxes	  	 	(1.1	) 	 	 	(1.1	) 	 	 	(1.2	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net income (loss)	  	 	242.4	  	 	 	5.1	  	 	 	(27.1	) 	
Redeemable preferred stock dividends	  	 	(19.4	) 	 	 	(17.2	) 	 	 	(1.3	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net income (loss) attributable to common shareholders	  	$	223.0	  	 	$	(12.1	) 	 	$	(28.4	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Balance Sheet Data (at period end):	  				 				 				
Accounts receivable, net	  	$	467.8	  	 	$	471.9	  	 	$	461.7	  	
Inventories	  	 	314.7	  	 	 	315.2	  	 	 	316.7	  	
Total assets	  	 	1,215.2	  	 	 	1,039.2	  	 	 	1,067.5	  	
Long-term debt (including current maturities)	  	 	383.4	  	 	 	382.8	  	 	 	385.6	  	
Other noncurrent liabilities	  	 	100.0	  	 	 	110.2	  	 	 	96.1	  	
				
Cash Flow Provided by (used in):	  				 				 				
Operating activities	  	$	(1.5	) 	 	$	18.1	  	 	$	40.9	  	
Investing activities	  	 	(10.3	) 	 	 	(26.9	) 	 	 	(22.3	) 	
Financing activities	  	 	3.6	  	 	 	(4.7	) 	 	 	(13.3	) 	
				
Other Selected Data :	  				 				 				
Adjusted EBITDA (1)	  	$	82.1	  	 	$	89.9	  	 	$	78.6	  	

(1)	Unisource supplements its financial information prepared in accordance with GAAP with Adjusted EBITDA (earnings before interest, income taxes, depreciation and amortization, restructuring (gains) expenses, merger expenses, asset impairments, and certain other costs, if any) because similar information has historically been required by its lenders pursuant to its senior credit facility. Further, Unisource believes Adjusted EBITDA gives investors meaningful information to help them understand Unisource’s operating results and to analyze Unisource’s financial and business trends on a period-to-period basis and is commonly used as a component when valuing companies such as Unisource. Adjusted EBITDA is not a measurement of financial performance under GAAP. Non-GAAP measures do not have definitions under GAAP and may be defined differently by and not be comparable to similarly titled measures used by other	

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 	companies. As result, management of Unisource considers and evaluates non-GAAP measures in connection with a review of the most directly comparable measure calculated in accordance with GAAP. Management of Unisource cautions investors not to place undue reliance on such non-GAAP measures, but also to consider them with the most directly comparable GAAP measure. Adjusted EBITDA has limitations as an analytical tool and should not be considered in isolation or as substitutes for analysis of Unisource’s results as reported under GAAP.	
A reconciliation of Adjusted EBITDA to net income (loss) determined in accordance with GAAP is provided below:

 	  	Fiscal years ended	 	
 	  	December 31,
2013	 	 	December 29,
2012	 	  	December 31,
2011	 	
 	  	(Dollars in millions)	 	
Net income (loss)	  	$	242.4	  	 	$	5.1	  	  	$	(27.1	) 	
Interest expense, net	  	 	27.4	  	 	 	28.3	  	  	 	66.7	  	
Income tax expense (benefit)	  	 	(228.5	) 	 	 	15.2	  	  	 	(5.5	) 	
Depreciation and amortization	  	 	25.1	  	 	 	25.4	  	  	 	24.5	  	
	  	 	 	 	 	 	 	 	  	 	 	 	
EBITDA	  	 	66.4	  	 	 	74.0	  	  	 	58.6	  	
Restructuring (gains) expenses	  	 	(3.4	) 	 	 	6.6	  	  	 	14.6	  	
Merger expenses	  	 	14.3	  	 	 	—  	  	  	 	—  	  	
Asset impairments	  	 	0.4	  	 	 	4.9	  	  	 	1.0	  	
Other (a)	  	 	4.4	  	 	 	4.4	  	  	 	4.4	  	
	  	 	 	 	 	 	 	 	  	 	 	 	
Adjusted EBITDA	  	$	82.1	  	 	$	89.9	  	  	$	78.6	  	

 	(a)	“Other” consists of fees paid to Bain Capital pursuant to the advisory agreement.	

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 SUMMARY UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA
The following sets forth summary unaudited pro forma condensed combined financial data which combines the combined financial information of xpedx and consolidated financial information of Unisource as of and for the year ended December 31, 2013 after giving effect to the Transactions. The summary unaudited pro forma condensed combined financial data are derived from the unaudited pro forma condensed combined financial statements that are included elsewhere in this prospectus. The summary unaudited pro forma condensed combined financial data are provided for illustrative purposes only and do not purport to represent what the actual consolidated results of operations or the consolidated financial position of the combined company would have been had the Transactions occurred on the dates assumed, nor are they necessarily indicative of future consolidated results of operations or consolidated financial position.
This information is only a summary and should be read in conjunction with “Selected Historical Combined Financial Data for xpedx,” “Selected Historical Consolidated Financial Data for Unisource,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations of xpedx” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Unisource” which are included elsewhere in this prospectus.

 	  	Year Ended
December 31, 2013	 	
	  	(Dollars in millions)	 	
Statement of Operations Data:	  				
Net sales	  	$	9,741.5	  	
Cost of products sold	  	 	8,108.8	  	
Distribution expense	  	 	564.5	  	
Selling and administrative expense	  	 	934.8	  	
Depreciation and amortization	  	 	54.3	  	
Restructuring charges	  	 	34.5	  	
Asset impairment	  	 	0.4	  	
	  	 	 	 	
Operating income	  	 	44.2	  	
	  	 	 	 	
Other income, net	  	 	(1.7	) 	
Interest expense, net	  	 	28.0	  	
Income tax (benefit) provision	  	 	(220.7	) 	
Equity earnings of affiliates, net of taxes	  	 	(1.1	) 	
	  	 	 	 	
Income from continuing operations	  	$	239.7	  	
	  	 	 	 	
Balance Sheet Data (at period end):	  				
Accounts receivable, net	  	 	1,144.4	  	
Inventories, net	  	 	717.7	  	
Total assets	  	 	2,766.1	  	
Long-term debt	  	 	761.4	  	
Total other non-current liabilities	  	 	368.5	  	
		
Other Selected Data:	  				
Pro Forma Adjusted EBITDA (1)	  	$	136.2	  	

(1)	In addition to evaluating the financial condition and results of operations in accordance with GAAP, management of xpedx and Unisource also review and evaluate certain alternative financial measures not prepared in accordance with GAAP. Non-GAAP measures do not have definitions under GAAP and may be defined differently by and not be comparable to, similarly titled measures used by other companies. As a result, management of xpedx and Unisource consider and evaluate non-GAAP measures in connection with a review of the most directly comparable measure calculated in accordance with GAAP. Management of	

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 	xpedx and Unisource caution investors not to place undue reliance on such non-GAAP measures, but also to consider them with the most directly comparable GAAP measure. Pro Forma Adjusted EBITDA has limitations as an analytical tool and should not be considered in isolation or as a substitute for analyzing our results as reported under GAAP.	
In this prospectus, xpedx and Unisource supplement their financial information prepared in accordance with GAAP with Pro Forma Adjusted EBITDA because xpedx and Unisource believe investors commonly use Pro Forma Adjusted EBITDA as a main component of valuing companies such as xpedx and Unisource. Pro Forma Adjusted EBITDA is not a measurement of financial performance under GAAP. Pro Forma Adjusted EBITDA is defined as net income, plus (i) loss from discontinued operations, (ii) interest expense, net, (iii) income tax provision (benefit), (iv) depreciation and amortization expense, (v) restructuring charges, (vi) merger expenses, (vii) asset impairment and (viii) other adjustments, pro forma for the Transactions.
A reconciliation of Pro Forma Adjusted EBITDA to net income determined in accordance with GAAP is provided below:

 	  	Year Ended December 31, 2013	 	
 	  	Historical	 	 	 	 	 	 	 	
 	  	xpedx	 	 	Unisource	 	 	Pro Forma
Adjustments	 	 	Pro Forma
Condensed
Combined	 	
 	  	(Dollars in millions)	 	
Net income	  	$	0.2	  	 	$	242.4	  	 	$	(2.7	) 	 	$	239.9	  	
Income from discontinued operations, net of income taxes	  	 	(0.2	) 	 	 	—  	  	 	 	—  	  	 	 	(0.2	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income from continuing operations	  	 	—  	  	 	 	242.4	  	 	 	(2.7	) 	 	 	239.7	  	
Interest expense, net	  	 	—  	  	 	 	27.4	  	 	 	0.6	  	 	 	28.0	  	
Income tax provision (benefit)	  	 	0.4	  	 	 	(228.5	) 	 	 	7.4	  	 	 	(220.7	) 	
Depreciation and amortization	  	 	17.1	  	 	 	25.1	  	 	 	12.1	  	 	 	54.3	  	
Restructuring charges	  	 	37.9	  	 	 	(3.4	) 	 	 	—  	  	 	 	34.5	  	
Merger expenses	  	 	—  	  	 	 	14.3	  	 	 	(14.3	) 	 	 	—  	  	
Asset impairment	  	 	—  	  	 	 	0.4	  	 	 	—  	  	 	 	0.4	  	
Other (a)(b)	  	 	—  	  	 	 	4.4	  	 	 	(4.4	) 	 	 	—  	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Pro Forma Adjusted EBITDA	  	$	55.4	  	 	$	82.1	  	 	$	(1.3	) 	 	$	136.2	  	

 	(a)	In connection with the Transactions, the combined company will enter into a new five-year asset-based revolving credit facility that provides for borrowings of up to $1,400.0 million. The agreements governing the combined company’s ABL Facility are expected to contain financial ratio covenants based on Consolidated EBITDA as defined within those agreements. Accordingly, additional items may be included in the Pro Forma Adjusted EBITDA calculation presented above to ensure consistency with Consolidated EBITDA as calculated under the ABL Facility.	
 	(b)	“Other” for Unisource for the year ended December 31, 2013 consists of advisory fees paid to Bain Capital pursuant to the advisory agreement of $4.4 million.	

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 RISK FACTORS
You should carefully consider the following risk factors, together with information contained or incorporated by reference in this prospectus in evaluating us and our common stock. The risks described below are the material risks, although not the only risks relating to the Transactions. If any of the following risks and uncertainties develop into actual events, these events could have a material adverse effect on SpinCo’s business, financial condition, results of operations or cash flows after the Transactions. In addition, past financial performance may not be a reliable indicator of future performance and historical trends should not be used to anticipate results or trends in future periods.
Risks Relating to the Transactions
We may not realize the anticipated synergies, cost savings and growth opportunities from the Merger.
The benefits that we expect to achieve as a result of the Merger will depend, in part, on the ability of the combined company to realize anticipated growth opportunities, cost savings and other synergies. Our success in realizing these growth opportunities, cost savings and synergies, and the timing of this realization, depends on the successful integration of the xpedx and Unisource businesses. Even if the combined company is able to integrate the xpedx and Unisource businesses successfully, this integration may not result in the realization of the full benefits of the growth opportunities and cost savings and other synergies that we currently expect from this integration within the anticipated time frame or at all. For example, the combined company may be unable to eliminate duplicative costs. Moreover, we may incur substantial expenses in connection with the integration of xpedx’s and Unisource’s businesses. While we anticipate that certain expenses will be incurred, such expenses are difficult to estimate accurately, and may exceed current estimates. Accordingly, the benefits from the Merger may be offset by costs or delays incurred in integrating the businesses.
The integration of the xpedx business with the Unisource business following the Transactions may present significant challenges.
There is a significant degree of difficulty and management distraction inherent in the process of integrating the xpedx and Unisource businesses. These difficulties include:
 
 	•	 	the challenge of integrating the xpedx and Unisource businesses and carrying on the ongoing operations of each business;	
 
 	•	 	the challenge of integrating the business cultures of each company;	
 
 	•	 	the challenge and cost of integrating the information technology (“IT”) systems of each company; and	
 
 	•	 	the potential difficulty in retaining key employees and sales personnel of xpedx and Unisource.	
The process of integrating operations could cause an interruption of, or loss of momentum in, the activities of one or more of xpedx’s or Unisource’s businesses and may require the combined company to incur substantial out-of-pocket costs. Members of our senior management may be required to devote considerable amounts of time and attention to this integration process, which will decrease the time they will have to manage the combined company, service existing customers, attract new customers and develop new services or strategies. If senior management is not able to effectively manage the integration process, or if any significant business activities are interrupted as a result of the integration process, the combined company could suffer.
We cannot assure you that the combined company will successfully or cost-effectively integrate the Unisource and xpedx businesses. The failure to do so could have a material adverse effect on the combined company’s financial condition and results of operations.
 
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The combined company may be unable to provide benefits and services or access to equivalent financial strength and resources to the xpedx business that historically have been provided by International Paper.
The xpedx business has been able to receive benefits and services from International Paper and has been able to benefit from International Paper’s financial strength and extensive business relationships. After the Transactions, the combined company will no longer benefit from International Paper’s resources, other than pursuant to the Transition Services Agreement. While International Paper will provide certain transition services for SpinCo following the Transactions under the Transition Services Agreement, it cannot be assured that we will be able to adequately replace all of the resources provided by International Paper or replace them at the same cost. If we are not able to replace the resources provided by International Paper, are unable to replace them at the same cost or are delayed in replacing the resources provided by International Paper, our business, financial condition and results of operations may be negatively impacted.
Our and Unisource’s historical and pro forma combined financial data are not necessarily representative of the results the combined company would have achieved and may not be a reliable indicator of the combined company’s future results.
Our and Unisource’s historical and pro forma financial data included in this prospectus may not reflect what xpedx’s or Unisource’s results of operations, financial condition and cash flows would have been had we been a combined company during the periods presented, or what the combined company’s results of operations, financial condition and cash flows will be in the future. Among other factors, this is because:
 
 	•	 	Prior to the Transactions, International Paper operated the xpedx business as part of its broader corporate organization and International Paper, or one of its affiliates, performed certain corporate functions for the xpedx business, including tax and treasury administration and certain governance functions, including internal audit and external reporting. Our historical and pro forma financial statements reflect allocations of corporate expenses from International Paper for these and similar functions and may not reflect the costs that the combined company will incur for similar services in the future.	
 
 	•	 	The xpedx business and the Unisource business have and the combined company will rely heavily on the sale of paper and related products. There has been an industry-wide decrease in demand for paper and related products in key markets the combined company will serve, primarily because of the use of email, increased and permanent product substitution, including less print advertising, more electronic billing, more e-commerce, fewer catalogs and a reduced volume of mail.	
 
 	•	 	The working capital and other capital required for the general corporate purposes of the xpedx business, including acquisitions and capital expenditures, historically have been satisfied as part of the company-wide cash management practices of International Paper. Following the completion of the Transactions, the combined company will need to generate its own funds to finance working capital or other cash requirements and may need to obtain additional financing from banks, through public offerings or private placements of debt or equity securities or other arrangements.	
 
 	•	 	Other significant changes may occur in our cost structure, management, financing and business operations as a result of operating as a combined company.	
In addition, the pro forma financial data we have included in this prospectus are based in part upon a number of estimates and assumptions. These estimates and assumptions may prove not to be accurate, and accordingly, our pro forma financial data should not be assumed to be indicative of what our financial condition or results of operations actually would have been as a combined company and may not be a reliable indicator of what our financial condition or results of operations actually may be in the future.
Our accounting, management and financial reporting systems may not be adequately prepared to comply with public company reporting, disclosure controls and internal control over financial reporting requirements.
The financial results of the xpedx business previously were included within the consolidated results of International Paper, and neither SpinCo nor Unisource were subject to the reporting and other requirements of the
 
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Securities Exchange Act of 1934, as amended (the “Exchange Act”). As a result of the Transactions, we will be directly subject to reporting and other obligations under the Exchange Act. The Exchange Act requires that we file annual, quarterly and current reports with respect to the combined company’s business and financial condition. Following the Merger, we will be responsible for ensuring that all aspects of the combined company’s business comply with Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes Oxley Act”). Under the Sarbanes-Oxley Act, we will be required to maintain effective disclosure controls and procedures and internal control over financial reporting. In addition, our management will be required to assess the effectiveness of our internal control over financial reporting and obtain a report by an independent registered public accounting firm addressing such assessments on an annual basis, subject to applicable phase-in periods.
To comply with these requirements, the combined company may need to upgrade its systems, implement additional financial and management controls, reporting systems and procedures, and hire additional accounting, legal and finance staff. The combined company expects to incur additional annual expenses for the purpose of addressing these requirements, and those expenses may be significant. If the combined company is unable to upgrade its financial and management controls, reporting systems, IT systems and procedures in a timely and effective fashion, our ability to comply with our financial reporting requirements and other rules that apply to reporting companies under the Exchange Act and the Sarbanes-Oxley Act could be impaired. Any failure to achieve and maintain effective internal controls could have a material adverse effect on the combined company’s business, financial condition and results of operations.
We expect that the combined company will incur significant one-time costs associated with the Transactions that could affect the period-to-period operating results of the combined company following the completion of the Transactions.
We anticipate that the combined company will incur one-time costs of approximately $225 million over the next five years as a result of costs associated with the Transactions. We will not be able to quantify the exact amount of these charges or the period in which they will be incurred until after the Transactions are completed. Some of the factors affecting the costs associated with the Transactions include the timing of the completion of the Transactions, the resources required in integrating the Unisource business and the xpedx business and the length of time during which transition services are provided to SpinCo by International Paper. The amount and timing of these charges could adversely affect the period-to-period operating results of SpinCo, which could result in a reduction in the market price of shares of SpinCo common stock. Moreover, delays in completing the integration may reduce or delay the synergies and other benefits expected from the Transactions and such reduction may be material.
If costs to integrate our information technology infrastructure and network systems are more than amounts that have been budgeted, our business, financial condition and results of operations could be adversely affected.
We expect to spend approximately $70 million of the anticipated $225 million one-time costs (described above) on information technology infrastructure and systems integration and planning in connection with the Merger. The primary areas of spending will be integrating our financial, operational and human resources systems. We expect that a portion of these expenditures will be capitalized. Expenditures in excess of the budgeted amounts on transition and other costs could adversely affect our business, financial condition and results of operations.
Our business, financial condition and results of operations may be adversely affected following the Merger if we, International Paper and Unisource are unable to obtain required third-party consents for certain contracts.
Certain contracts, including customer contracts, which are required by the Contribution and Distribution Agreement to be transferred or assigned to SpinCo by International Paper and its subsidiaries, contain provisions
 
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which require the consent of a third party to the transactions to affect such transfer or assignment. Similarly, certain of Unisource’s existing contracts contain provisions which require the consent of a third party to the Merger. If we, International Paper and Unisource are unable to obtain these consents on commercially reasonable and satisfactory terms or at all, our ability to obtain the benefit of such contracts in the future may be impaired. For example, the failure to obtain the consent of our or Unisource’s customers could result in lost sales and have an adverse effect on our results of operation, cash flows and financial condition.
The combined company’s substantial indebtedness, which would have been approximately $827.0 million on a pro forma basis as of December 31, 2013, could adversely affect our financial condition and impair our ability to operate our business.
In connection with the Transactions, we will enter into a $1.4 billion asset-based revolving credit facility, which will be used to fund the special payment to International Paper, to repay certain outstanding indebtedness of subsidiaries of UWWH and pay related fees and expenses. Based upon Unisource’s outstanding indebtedness as of December 31, 2013, assuming the closing of the Transactions occurred as of December 31, 2013, we expect that the combined company will have approximately $827.0 million in total indebtedness, including the new borrowings of $725.2 million under the ABL Facility, $73.7 million of capital lease obligations (exclusive of the non-monetary portion) and $28.1 million of Unisource Canadian bank overdrafts. See “Capitalization.” This level of indebtedness could have important consequences to the combined company’s financial condition, operating results and business, including the following:
 
 	•	 	limiting our ability to obtain additional debt or equity financing for working capital, capital expenditures, debt service requirements, acquisitions and general corporate or other purposes;	
 
 	•	 	increasing our cost of borrowing;	
 
 	•	 	requiring that a substantial portion of our cash flows from operations be dedicated to payments on our indebtedness instead of other purposes, including operations, capital expenditures and future business opportunities;	
 
 	•	 	making it more difficult for us to make payments on our indebtedness or satisfy other obligations;	
 
 	•	 	exposing us to risk of increased interest rates because our borrowings under the ABL Facility are at variable rates of interest;	
 
 	•	 	limiting our ability to make the expenditures necessary to complete the integration of xpedx’s business with Unisource’s business;	
 
 	•	 	limiting our ability to adjust to changing market conditions and placing us at a competitive disadvantage compared to our competitors that have less debt; and	
 
 	•	 	increasing our vulnerability to a downturn in general economic conditions or in our business, and making us unable to carry out capital spending that is important to our growth.	
Despite our substantial indebtedness following the consummation of the Transactions, we may still be able to incur substantially more indebtedness in the future. This could further exacerbate the risks to our financial condition described above.
We may be able to incur significant additional indebtedness in the future, including secured indebtedness. Although the agreements governing the ABL Facility will contain restrictions on the incurrence of additional indebtedness, these restrictions will be subject to a number of qualifications and exceptions, and the additional indebtedness incurred in compliance with these restrictions could be substantial. If new indebtedness is added to our current indebtedness levels, the related risks we will face could intensify.
 
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The agreements governing our indebtedness will contain restrictive covenants, which will restrict our operational flexibility.
The agreements governing the combined company’s ABL Facility will contain restrictions and limitations on its ability to engage in activities that may be in the combined company’s long-term best interests, including financial and other restrictive covenants that will limit its ability to:
 
 	•	 	incur additional indebtedness or guaranties, or issue certain preferred shares;	
 
 	•	 	pay dividends, redeem stock or make other distributions;	
 
 	•	 	repurchase, prepay or redeem subordinated indebtedness;	
 
 	•	 	make investments or acquisitions;	
 
 	•	 	create liens;	
 
 	•	 	make negative pledges;	
 
 	•	 	consolidate or merge with another company;	
 
 	•	 	sell or otherwise dispose of all or substantially all of our assets;	
 
 	•	 	enter into certain transactions with affiliates; and	
 
 	•	 	change the nature of our business.	
The agreements governing the ABL Facility will also contain other restrictions customary for asset-based facilities of this nature.
Our ability to borrow additional amounts under the ABL Facility will depend upon satisfaction of these covenants. Events beyond our control could affect our ability to meet these covenants. Our failure to comply with obligations under the agreements governing the ABL Facility may result in an event of default under those agreements. A default, if not cured or waived, may permit acceleration of our indebtedness. If our indebtedness is accelerated, we cannot be certain that we will have sufficient funds available to pay the accelerated indebtedness or that we will have the ability to refinance the accelerated indebtedness on terms favorable to us or at all. This could have serious consequences to our financial condition, operating results and business and could cause us to become bankrupt or insolvent.
The Transactions are subject to certain conditions, and therefore the Transactions may not be consummated on the terms or timeline currently contemplated.
The consummation of the Transactions remain subject to the satisfaction or waiver (to the extent permitted by applicable law) of certain conditions, including (i) SpinCo’s receipt of the proceeds of the special payment financing in an amount sufficient to pay the special payment, and International Paper’s receipt of the special payment from SpinCo, (ii) receipt of the IRS ruling to International Paper, (iii) the International Paper board of directors’ receipt of a solvency opinion with respect to International Paper and SpinCo, (iv) this registration statement having been declared effective and the approval for listing on the New York Stock Exchange of SpinCo common stock to be issued in the Merger, (v) subject to certain exceptions, the accuracy of representations and warranties in the Merger Agreement, (vi) receipt of customary tax opinions and (vii) the absence of a material adverse effect on xpedx and Unisource since June 30, 2013. In addition, the consummation of the Merger is subject to the Contribution and Distribution having occurred pursuant to the terms of the Contribution and Distribution Agreement.
In addition, the parties to the Merger Agreement have the right to terminate the Merger Agreement under certain circumstances. See “The Merger Agreement—Termination of the Merger; Termination Fees.” Neither we nor UWWH can assure you that the Transactions will be consummated on the terms or timeline currently contemplated.
 
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We have and will continue to expend a significant amount of capital and management’s time and resources on the Transactions, and a failure to consummate the Transactions as currently contemplated could have a material adverse effect on our business and results of operations.
The pendency of the Merger could potentially adversely affect the business and operations of xpedx and Unisource.
In connection with the pending Merger, some customers of each of xpedx and Unisource may delay or defer decisions, may end their relationships with the relevant company or may reduce the amount of products purchased, which could negatively affect the revenues, earnings and cash flows of the xpedx business and the Unisource business, regardless of whether the Merger is completed. Similarly, it is possible that our and Unisource’s current and prospective employees could experience uncertainty about their future roles with the combined company following the Merger, which could materially adversely affect our ability and that of Unisource to attract and retain key personnel during the pendency and upon consummation of the Merger.
If the spin-off does not qualify as a tax-free spin-off under Section 355 of the Code, including as a result of subsequent acquisitions of stock of International Paper or SpinCo, then International Paper and/or the International Paper shareholders may be required to pay substantial U.S. federal income taxes.
The spin-off and the Merger are conditioned upon International Paper’s receipt of a private letter ruling from the IRS to the effect that the spin-off and certain related transactions will qualify as tax-free to International Paper and the International Paper shareholders for U.S. federal income tax purposes. Although a private letter ruling from the IRS generally is binding on the IRS, the IRS ruling does not rule that the spin-off satisfies every requirement for a tax-free spin-off under Section 355 of the Code, and the parties will rely solely on the opinion of counsel for comfort that such additional requirements are satisfied.
Our and International Paper’s obligations to complete the spin-off and the Merger are also conditioned upon International Paper’s and SpinCo’s receipt of an opinion of Debevoise to the effect that the spin-off will qualify as tax-free to International Paper and the International Paper shareholders, though we expect that the condition that SpinCo receive such opinion will be waived. This opinion will rely on the IRS ruling as to matters covered by the IRS ruling.
The IRS ruling and such opinion will be based on, among other things, certain representations and assumptions as to factual matters made by us, International Paper and UWWH, including assumptions concerning Section 355(e) of the Code as discussed below. The failure of any factual representation or assumption to be true, correct and complete in all material respects could adversely affect the validity of the IRS ruling or such opinion. An opinion of counsel represents counsel’s best legal judgment, is not binding on the IRS or the courts, and the IRS or the courts may not agree with the opinion. In addition, the IRS ruling and such opinion will be based on current law, and cannot be relied upon if current law changes with retroactive effect.
If the spin-off does not qualify as a tax-free spin-off under Section 355 of the Code, then the receipt of our common stock would be taxable to the International Paper shareholders, International Paper might recognize a substantial gain on the spin-off, and we may be required to indemnify International Paper for the tax on such gain pursuant to the Tax Matters Agreement.
In addition, the spin-off will be taxable to International Paper pursuant to Section 355(e) of the Code if there is a 50% or more change in ownership of either International Paper or SpinCo, directly or indirectly, as part of a plan or series of related transactions that include the spin-off. Because the International Paper shareholders will collectively own more than 50% of our common stock following the Merger, the Merger alone will not cause the spin-off to be taxable to International Paper under Section 355(e) of the Code. However, Section 355(e) of the Code might apply if other acquisitions of stock of International Paper before or after the Merger, or of SpinCo after the Merger, are considered to be part of a plan or series of related transactions that include the spin-off. If Section 355(e) of the Code applied, then International Paper might recognize a substantial amount of taxable gain, and we may be required to indemnify International Paper for the tax on such gain pursuant to the Tax Matters Agreement.
 
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If the Merger does not qualify as a tax-free reorganization under Section 368(a) of the Code, then we may be required to pay substantial U.S. federal income taxes.
Our and International Paper’s obligations to complete the Merger are conditioned upon International Paper’s and SpinCo’s receipt of an opinion of Debevoise to the effect that the Merger will qualify as a tax-free reorganization under Section 368(a) of the Code, though we expect to receive the private letter ruling described below and therefore expect that such condition will be waived. UWWH’s obligation to complete the Merger is conditioned on receipt of a similar opinion from UWWH’s counsel, Kirkland.
In addition, we expect that International Paper will receive a private letter ruling from the IRS to the effect that the Merger will qualify as a tax-free reorganization under Section 368(a) of the Code. Although a private letter ruling from the IRS generally is binding on the IRS, the IRS ruling does not rule that the Merger satisfies every requirement for a tax-free reorganization under Section 368(a) of the Code, and the parties will rely solely on the opinion of counsel, to the extent provided, for comfort that such additional requirements are satisfied.
The IRS ruling and such opinions, to the extent provided, will be based on, among other things, certain representations and assumptions as to factual matters made by us, International Paper and UWWH. The failure of any factual representation or assumption to be true, correct and complete in all material respects could adversely affect the validity of the IRS ruling and such opinions. An opinion of counsel represents counsel’s best legal judgment, is not binding on the IRS or the courts, and the IRS or the courts may not agree with the opinion. In addition, the IRS ruling and such opinions, to the extent provided, will be based on current law, and cannot be relied upon if current law changes with retroactive effect.
If the Merger does not qualify as a tax-free reorganization under Section 368(a) of the Code, then UWWH would be considered to have made a taxable sale of its assets to us and we would be required to pay the U.S. federal income tax on the gain, if any, arising from such taxable sale as a result of being the surviving corporation in the Merger.
If the Subsidiary Merger does not qualify as a capital contribution under Section 351(a) of the Code, then we may be required to pay substantial U.S. federal income taxes.
UWWH’s obligation to complete the Merger is conditioned on receipt of an opinion from Kirkland to the effect that the Subsidiary Merger will qualify as a capital contribution under Section 351(a) of the Code. In addition, we expect that International Paper will receive a private letter ruling from the IRS to the effect that the Subsidiary Merger will qualify as a capital contribution under Section 351(a) of the Code. Although a private letter ruling from the IRS generally is binding on the IRS, the IRS ruling does not rule that the Subsidiary Merger satisfies every requirement for a capital contribution under Section 351(a) of the Code, and the parties will rely solely on the opinion of counsel for comfort that such additional requirements are satisfied.
The IRS ruling and such opinion will be based on, among other things, certain representations and assumptions as to factual matters made by us, International Paper and UWWH. The failure of any factual representation or assumption to be true, correct and complete in all material respects could adversely affect the validity of the IRS ruling or such opinion. An opinion of counsel represents counsel’s best legal judgment, is not binding on the IRS or the courts, and the IRS or the courts may not agree with the opinion. In addition, the IRS ruling and such opinion will be based on current law, and cannot be relied upon if current law changes with retroactive effect.
If the Subsidiary Merger does not qualify as a capital contribution under Section 351(a) of the Code, then we would be considered to have made a taxable sale of the assets of xpedx Intermediate to UWW, and we may either be required to pay the U.S. federal income tax on such sale or to indemnify International Paper for the U.S. federal income tax on such sale pursuant to the Tax Matters Agreement.
 
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SpinCo will generally be obligated to pay the UWWH Stockholder an amount equal to 85% of the tax savings arising from pre-merger net operating loss (“NOL”) carryforwards, and our ability to use such NOL carryforwards to offset future taxable income may be subject to limitations, including as a result of an ownership change for Unisource in connection with the Merger under Section 382 of the Code.
Unisource has substantial NOLs for U.S. federal, state and Canadian income tax purposes. Pursuant to the Tax Receivable Agreement, SpinCo generally will be obligated to pay the UWWH Stockholder an amount equal to 85% of the U.S. federal, state and Canadian income tax savings, if any, that SpinCo actually realizes with respect to taxable periods (or portions thereof) beginning after the date of the Merger as a result of the utilization of Unisource’s net operating losses attributable to taxable periods prior to the date of the Merger. The utilization of Unisource’s NOLs, tax credits and other tax attributes following the Merger depends on the timing and amount of taxable income earned by the combined company in the future, which neither Unisource nor xpedx are able to predict, and a lack of future taxable income would adversely affect our ability to utilize these tax attributes. Tax attributes are generally subject to expiration at various times in the future to the extent that they have not previously been applied to offset the taxable income of the combined company, and there is a risk that our existing NOL carryforwards could expire unused and be unavailable to offset future income tax liabilities. Moreover, the Merger will likely result in an ownership change for Unisource under Section 382 of the Code, potentially limiting the use of Unisource’s NOLs to offset future taxable income for both U.S. federal and state income tax purposes. These limitations may affect the timing of when these NOLs may be used which, in turn, may impact the timing and amount of cash taxes payable by the combined company.
Significant judgment is required in evaluating the need for and magnitude of appropriate valuation allowances against deferred tax assets. The realization of these assets is dependent on generating future taxable income, as well as successful implementation of various tax planning strategies. While we believe that the judgments and estimates of Unisource with respect to the valuation allowances included in this prospectus are appropriate and reasonable under the circumstances on a standalone basis, actual results could differ from projected results, which could give rise to additions to valuation allowances or reductions in valuation allowances. It is possible that such changes could have a material effect on the amount of income tax expense (benefit) recorded in our consolidated statement of operations.
We are required to abide by potentially significant restrictions that could limit our ability to undertake certain corporate actions (such as the issuance of common stock or the undertaking of a merger or consolidation) that otherwise could be advantageous.
The Tax Matters Agreement prohibits us from taking actions that could reasonably be expected to cause the Transactions to be taxable. In particular, for two years after the spin-off we may not:
 
 	•	 	cease, or permit certain of our wholly-owned subsidiaries to cease, the active conduct of a business that was conducted immediately prior to the spin-off or from holding certain assets held at the time of the spin-off;	
 
 	•	 	dissolve, liquidate, take any action that is a liquidation for U.S. federal income tax purposes, merge or consolidate with any other person (other than pursuant to the Mergers), or permit certain of our wholly-owned subsidiaries from doing any of the foregoing; or	
 
 	•	 	approve or allow an extraordinary contribution to us by our shareholders in exchange for stock, redeem or otherwise repurchase (directly or indirectly) any of our stock, or amend our certificate of incorporation or other organizational documents, or take any other action, if such amendment or other action would affect the relative voting rights of our capital stock.	
Nevertheless, we are permitted to take any of the actions described above if International Paper obtains a supplemental IRS private letter ruling (or, in certain circumstances, an opinion of counsel that is reasonably acceptable to International Paper) to the effect that such action will not affect the tax-free status of the Transactions. Because of these restrictions, for two years after the spin-off, we may be limited in the amount of capital stock that we can issue to make acquisitions or to raise additional capital.
 
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The number of shares of our common stock that International Paper shareholders will receive in the Distribution is not subject to adjustment based on our performance or that of Unisource. Accordingly, because this performance may fluctuate, the relative market values of our common stock that International Paper shareholders receive in the Distribution may not reflect the performance of the individual companies at the time of the Merger.
In connection with the Transactions, International Paper shareholders or their transferees as of the record date will own approximately 51% of the common stock of the combined company on a fully-diluted basis after giving effect to the Merger. International Paper shareholders who receive our shares in the Distribution will not receive any new shares in the Merger and will continue to hold the existing shares of International Paper and SpinCo. In connection with the Distribution, SpinCo is required to make a special payment to International Paper of $400 million, subject to adjustment based on estimates of changes in the net working capital and net indebtedness of the xpedx business and Unisource, and the transaction expenses of Unisource. If the sum of the changes in the net working capital and net indebtedness of the xpedx business represents a positive change in the value of the xpedx business, the special payment to International Paper will be increased by such amount. If that amount represents a negative change in the value of the xpedx business, the special payment to International Paper will be reduced by such amount. If the sum of the Unisource transaction expenses in excess of $15 million and changes in the net working capital and net indebtedness of Unisource represents a positive change in the value of Unisource, SpinCo shall pay such amount to the UWWH Stockholder. If that amount represents a negative change in the value of Unisource, the special payment to International Paper will be increased by a corresponding amount.
Risks Relating to the Combined Company’s Business
The industry-wide decline in demand for paper and related products could have an adverse effect on the combined company’s financial condition and results of operations.
The xpedx business and the Unisource business have relied, and the combined company will rely, heavily on the sale of paper and related products. The industry-wide decrease in demand for paper and related products in key markets the combined company serves will place continued pressure on the combined company’s revenues and profit margins and make it more difficult to maintain or grow Adjusted EBITDA. This trend is expected to continue. The failure to effectively differentiate the combined company from its competitors and the failure to grow the Packaging and Facility Solutions businesses in the face of increased use of email, increased and permanent product substitution, including less print advertising, more electronic billing, more e-commerce, fewer catalogs and a reduced volume of mail, could have an adverse impact on market share, sales and profitability through increased expenditures or decreased prices.
The combined company may not realize anticipated benefits from cost reduction efforts.
We expect to implement a number of cost reduction initiatives that we believe are necessary to position the combined company’s business for future success and growth. Future success and earnings growth depend upon our ability to achieve a lower cost structure and operate efficiently in the highly competitive business-to-business distribution industry, particularly in an environment of increased competitive activity and reduced profitability. If we are unable to realize the anticipated benefits from cost cutting efforts, the combined company could have a cost disadvantage in the marketplace, and our competitiveness and profitability could decrease.
Competition in our industry may adversely impact the combined company’s margins and our ability to retain customers and make it difficult to maintain its market share and profitability.
The business-to-business distribution industry is highly competitive, with numerous regional and local competitors, and is a mature industry characterized by slowing revenue growth. The combined company’s principal competitors include regional and local distributors in the Print segment; national distributors, national and regional manufacturers and independent brokers in the Packaging segment; and national, regional and local distributors in
 
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the Facility Solutions segment. Most of these competitors generally offer a wide range of products at prices comparable to those the combined company offers. Additionally, new competition could arise from non-traditional sources, group purchasing organizations, e-commerce, discount wholesalers such as Costco or Sam’s Club or consolidation among competitors. New competitive sources may result in increased focus on pricing and on limiting price increases, or may require increased discounting. Such competition may result in margin erosion or make it difficult to attract and retain customers.
Increased competition within the industry, reduced demand for paper, increased and permanent product substitution through less print advertising, more electronic billing, more e-commerce, fewer catalogs, a reduced volume of mail and general economic conditions have served to further increase pressure on the industry’s profit margins, and continued margin pressure within the industry may have a material adverse impact on our operating results and profitability.
Adverse developments in general business and economic conditions as well as conditions in the global capital and credit markets could have an adverse effect on the demand for the combined company’s products and the combined company’s financial condition and results of operations.
The persistent slow growth in gross domestic product (“GDP”) in recent years has adversely affected the results of operations of both xpedx and Unisource. If GDP continues to grow at a slow rate, demand for the products the combined company sells will be adversely affected. In addition, volatility in the capital and credit markets, which impacts interest rates, currency exchange rates and the availability of credit, could have a material adverse effect on the business, financial condition and results of operations of the combined company and its customers. The combined company has exposure to counterparties with which it routinely executes transactions. Such counterparties include customers and financial institutions. A bankruptcy or illiquidity event by one or more of its counterparties could have a material adverse effect on the business, financial condition and results of operations of the combined company.
In order to compete, the combined company must attract, train and retain highly qualified employees, and the failure to do so could have an adverse effect on results of operations.
To successfully compete, the combined company must attract, train and retain a large number of highly qualified employees while controlling related labor costs. Specifically, the combined company must recruit and retain qualified sales professionals. As a result of the Transactions, sales professionals may choose to leave the combined company. If the combined company were to lose a significant amount of its sales professionals, we could lose a material amount of sales, which would have a material adverse effect on our financial condition and results of operations. Many sales professionals are subject to confidentiality and non-competition agreements. If sales professionals were to violate these agreements, the combined company could seek to legally enforce these agreements and may incur substantial costs in connection with such enforcement. The combined company competes with other businesses for employees and invests significant resources in training and motivating them. There is no assurance that the combined company will be able to attract or retain highly qualified employees. The inability to retain or hire qualified personnel at economically reasonable compensation levels would restrict our ability to grow the combined company’s business and result in lower operating results and profitability.
The combined company’s business may be adversely affected by work stoppages, union negotiations and labor disputes.
Approximately 10% of the combined company’s employees are currently covered by collective bargaining or other similar labor agreements. Historically, the effects of collective bargaining and other similar labor agreements on xpedx and Unisource have not been significant. However, if a larger number of the combined company’s employees were to unionize, including in the wake of any future legislation or administrative regulation that makes it easier for employees to unionize, the effect may be negative. Any inability to negotiate acceptable new contracts under these collective bargaining arrangements could cause strikes or other work
 
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stoppages, and new contracts could result in increased operating costs. If any such strikes or other work stoppages occur, or if additional employees become represented by a union, a disruption of our operations and higher labor costs could result. Labor relations matters affecting the combined company’s suppliers of products and services could also adversely affect our business from time to time.
The loss of any of xpedx’s or Unisource’s significant customers could adversely affect the combined company’s financial condition.
xpedx’s ten largest customers generated approximately 16% of its sales in fiscal 2013, and xpedx’s largest customer accounted for approximately 4.3% of its sales in that same period. Unisource’s ten largest customers generated approximately 11.8% of its net sales in fiscal 2013, and Unisource’s largest customer comprised approximately 2.4% of its net sales in fiscal 2013. We cannot guarantee that the combined company will maintain or improve our relationships with these customers or that the combined company will continue to supply these customers at historical levels.
Generally, neither xpedx’s nor Unisource’s customers are contractually required to purchase any minimum amount of products. Should such customers purchase products sold by the combined company in significantly lower quantities than they have in the past, such decreased purchases could have a material adverse effect on the combined company’s financial condition, operating results and cash flows.
In addition, consolidation among customers could also result in changes to the purchasing habits and volumes among some of xpedx’s and Unisource’s present customers. The loss of one or more of these significant customers, a significant customer’s decision to purchase xpedx’s or Unisource’s products in significantly lower quantities than they have in the past, or deterioration in the relationship with any of them could significantly affect the combined company’s financial condition, operating results and cash flows.
Some of the products that the combined company will sell are produced by other businesses of International Paper and Georgia-Pacific and other businesses of International Paper and Georgia-Pacific purchase some of the products the combined company will distribute. There is no guarantee that such arrangements will continue on the same terms on which they currently exist or at all.
The xpedx business receives a significant portion of the products it sells from other businesses of International Paper and supplies many other businesses of International Paper with the products that it distributes. Purchases by xpedx from other businesses of International Paper represented approximately 13% of xpedx’s cost of products sold in fiscal 2013. Unisource purchases certain products from Georgia-Pacific and sells certain products to Georgia-Pacific. Purchases by Unisource from Georgia-Pacific, net of applicable discounts, represented approximately 6.1% of Unisource’s cost of products sold in fiscal 2013. The combined company intends to enter into supply agreements and other commercial arrangements with International Paper in connection with the Transactions. The terms of these agreements and other arrangements will be materially consistent with current terms; however, there is no assurance that the supply agreement or other arrangements will not be terminated or allowed to lapse.
Changes in business conditions in the combined company’s international operations could adversely affect its business and results of operations.
The combined company’s operating results and business prospects could be substantially affected by risks related to Mexico, Canada and other countries where we sell and distribute our products. Some of our operations are in or near locations that have suffered from political, social, and economic issues; civil unrest; and a high level of criminal activity. In those locations where we have employees or operations, we may incur substantial costs to maintain the safety of our personnel and the security of our operations. Downturns in economic activity, adverse tax consequences or any change in social, political or labor conditions in any of the countries in which we operate could negatively affect the combined company’s financial results. In addition, our international operations are subject to regulation under U.S. law and other laws related to operations in foreign jurisdictions.
 
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For example, the Foreign Corrupt Practices Act of 1977 (the “FCPA”) prohibits U.S. companies and their representatives from offering, promising, authorizing or making payments to foreign officials for the purpose of obtaining or retaining business abroad. Failure to comply with domestic or foreign laws could result in various adverse consequences, including the imposition of civil or criminal sanctions and the prosecution of executives overseeing the combined company’s international operations.
The combined company will purchase all of the products we sell to our customers from other parties and conditions beyond our control can interrupt our supplies and increase our product costs.
As a distributor, the combined company will obtain all of its packaging, paper and facility products from third-party suppliers. The combined company’s business and financial results will be dependent on our ability to purchase products from suppliers not controlled by the combined company that we, in turn, sell to our customers. The combined company may not be able to obtain the products it needs on open credit, with market or other favorable terms, or at all. Based on historical data as of December 31, 2013, we estimate that approximately 35% of the combined company’s purchases will be made from only ten suppliers. A sustained disruption in the combined company’s ability to source product from one or more of the largest of these vendors might have a material impact on our ability to fulfill customer orders resulting in lost sales and, in rare cases, damages for late or non-delivery.
For the most part, we do not expect that the combined company will have a significant number of long-term contracts with its suppliers committing them to provide products to us. Although our purchasing volume can provide benefits when dealing with suppliers, suppliers may not provide the products and supplies needed in the quantities and at the prices requested. The combined company will also be subject to delays caused by interruption in production and increases in product costs based on conditions outside of its control. These conditions include raw material shortages, environmental restrictions on operations, work slowdowns, work interruptions, strikes or other job actions by employees of suppliers, product recalls, transportation interruptions, unavailability of fuel or increases in fuel costs, competitive demands and natural disasters or other catastrophic events. The combined company’s inability to obtain adequate supplies of paper, packaging and facility supply products as a result of any of the foregoing factors or otherwise could mean that we could not fulfill our obligations to customers, and customers may turn to other distributors.
In addition, increases in product costs may reduce our margins if we are unable to pass all or a portion of these costs along to our customers, which xpedx and Unisource have historically had difficulty doing. Any such inability may have a negative impact on our business and our profitability.
Changes in prices for raw materials, including pulp, paper and resin, could negatively impact the combined company’s results of operations and cash flows.
Changes in prices for raw materials, such as pulp, paper and resin, could significantly impact the combined company’s results of operations in the print market. Although the combined company does not produce paper products and is not directly exposed to production of raw materials risk associated with production, declines in pulp and paper prices, driven by falling secular demand, periods of industry overcapacity and overproduction by paper suppliers, may adversely affect the combined company’s revenues and net income to the extent such factors produce lower paper prices. Declining pulp and paper prices generally produce lower revenues and gross profits, even when volume and trading margin percentages remain constant. During periods of declining pulp and paper prices, customers may alter purchasing patterns and defer paper purchases or deplete inventory levels until long-term price stability occurs. Alternatively, if prices for raw materials rise and we are unable to pass these increases on to our customers, our results of operations and gross profits may also be negatively impacted.
The combined company may not be able to fully compensate for increases in fuel costs.
Volatile fuel prices have a direct impact on our industry. The cost of fuel affects the price paid by the combined company for products as well as the costs incurred to deliver products to its customers. Although we
 
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have been able to pass along a portion of increased fuel costs to our customers in the past, there is no guarantee that the combined company can continue to do so. We currently pass on some of our fuel costs through a fuel surcharge on orders, but the combined company may experience difficulties in passing all or a portion of these costs along to our customers, which may have a negative impact on our business and our profitability.
Inclement weather, anti-terrorism measures and other disruptions to the transportation network could impact the combined company’s distribution system and operations.
The combined company’s ability to provide efficient distribution of products to our customers is an integral component of our overall business strategy. Disruptions at distribution centers or shipping ports or the closure of roads or imposition of other driving bans due to events such as the flooding from Superstorm Sandy, Hurricane Irene and the outbreaks of tornadoes in 2011 and blizzards in 2010 may affect our ability to both maintain key products in inventory and deliver products to our customers on a timely basis, which may in turn adversely affect our results of operations.
Furthermore, in the aftermath of terrorist attacks in the United States, federal, state and local authorities have implemented and continue to implement various security measures that affect many parts of the transportation network in the United States and abroad. Our customers typically need quick delivery and will rely on the combined company’s on-time delivery capabilities. If security measures disrupt or impede the timing of our deliveries, we may fail to meet the needs of the combined company’s customers, or may incur increased expenses to do so. Any of these disruptions to the combined company’s operations may reduce our sales and have an adverse effect on our business, financial condition and results of operation.
The combined company will be dependent on a variety of IT and telecommunications systems and the Internet, and any failure of these systems could adversely impact our business and operating results.
The combined company will depend on IT and telecommunications systems and the Internet for our operations. These systems support a variety of functions including inventory management, order placement and processing with vendors and from customers, shipping, shipment tracking and billing. The combined company will maintain redundant information systems as part of our disaster recovery program and, if necessary, are able to operate in many respects using a paper-based system to help mitigate a complete interruption in our information processing capabilities. Nonetheless, the combined company’s information systems remain vulnerable to natural disasters, wide-area telecommunications or power utility outages, terrorist or cyber-attack and other major disruptions.
Failures or significant downtime of the combined company’s IT or telecommunications systems for any reason, including as a result of disruptions from integrating the xpedx and Unisource businesses, prevent us from taking customer orders, printing product pick-lists, shipping products, billing customers and handling call volume. Sales also may be affected if our reseller and retail customers are unable to access pricing and product availability information. We will also rely on the Internet, and in particular electronic data interchange, for a large portion of our orders and information exchanges with our suppliers and customers. The Internet and individual websites have experienced a number of disruptions and slowdowns, some of which were caused by organized attacks. In addition, some websites have experienced security breakdowns. If the combined company were to experience a security breakdown, disruption or breach that compromised sensitive information, it could harm our relationships with our suppliers and customers. Disruption of the combined company’s website or the Internet in general could impair our order processing or more generally prevent our suppliers and resellers from accessing information. Failures of our systems could also lead to delivery delays and may expose us to litigation and penalties under some of our contracts. Any significant increase in the combined company’s IT and telecommunications costs or temporary or permanent loss of our IT or telecommunications systems, including as a result of disruptions from integrating the xpedx and Unisource businesses, could harm our relationships with our customers and suppliers and result in lost sales, business delays and bad publicity. The occurrence of any of these events could have an adverse effect on the combined company’s business, financial condition and results of operations.
 
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The combined company will be subject to cyber-security risks related to breaches of security pertaining to sensitive company, customer, employee and vendor information as well as breaches in the technology that manages operations and other business processes.
The combined company’s business operations will rely upon secure IT systems for data capture, processing, storage and reporting. Our IT systems, and those of our third party providers, could become subject to cyber-attacks. Network, system, application and data breaches could result in operational disruptions or information misappropriation including, but not limited to, interruption of systems availability, denial of access to and misuse of applications required by our customers to conduct business with the combined company. Access to internal applications required to plan our operations, source materials, assemble and ship finished goods and account for orders could be denied or misused. Theft of intellectual property or trade secrets, and inappropriate disclosure of confidential information, could stem from such incidents. Any of these operational disruptions or misappropriation of information could harm the combined company’s relationship with our customers and suppliers, result in lost sales, business delays and negative publicity and could have a material effect on our business, financial condition and results of operation.
Costs to comply with environmental, health and safety laws, and to satisfy any liability or obligation imposed under such laws, could impact the combined company’s business and results of operations.
The combined company’s operations will be subject to U.S. and international environmental, health and safety laws, including laws regulating the emission or discharge of materials into the environment, the use, storage, treatment, disposal and management of hazardous substances and waste, the investigation and remediation of contamination and the health and safety of our employees and the public. The combined company could incur substantial fines or sanctions, enforcement actions (including orders limiting our operations or requiring corrective measures), investigation, remediation and closure costs and third-party claims for property damage and personal injury as a result of violations of, or liabilities or obligations under, environmental, health and safety laws. The combined company could be held liable for the costs to address contamination at any real property we have ever owned, operated or used as a disposal site.
In addition, changes in, or new interpretations of, existing laws, the discovery of previously unknown contamination, or the imposition of other environmental liabilities or obligations in the future, may lead to additional compliance or other costs that could impact the combined company’s business and results of operations. Moreover, as environmental issues, such as climate change, have become more prevalent, U.S. and foreign governments, have responded and are expected to continue to respond, with increased legislation and regulation, which could negatively affect us.
Expenditures related to the cost of compliance with laws, rules and regulations could impact the combined company’s business and results of operations.
The combined company’s operations will be subject to U.S. and international laws and regulations, including regulations of the U.S. Department of Transportation Federal Motor Carrier Safety Administration, the import and export of goods, customs regulations, Office of Foreign Asset Control and the FCPA. The combined company could incur substantial fines or sanctions, enforcement actions (including orders limiting our operations or requiring corrective measures), and third-party claims for property damage and personal injury as a result of violations of, or liabilities under, laws, regulations, codes and common law.
Tax assessments and unclaimed property audits by governmental authorities could adversely impact our operating results.
We remit a variety of taxes and fees to various governmental authorities, including federal and state income taxes, excise taxes, property taxes, sales and use taxes, and payroll taxes. The taxes and fees remitted by us are subject to review and audit by the applicable governmental authorities which could result in liability for additional assessments. In addition, we are subject to unclaimed property (escheat) laws which require us to turn
 
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over to certain government authorities the property of others held by us that has been unclaimed for a specified period of time. We are subject to audit by individual U.S. states with regard to our escheatment practices. The legislation and regulations related to tax and unclaimed property matters tend to be complex and subject to varying interpretations by both government authorities and taxpayers. Although management believes that the positions are reasonable, various taxing authorities may challenge certain of the positions we have taken, which may also potentially result in additional liabilities for taxes, unclaimed property and interest in excess of accrued liabilities. Our positions are reviewed as events occur such as the availability of new information, the lapsing of applicable statutes of limitations, the conclusion of tax audits, the measurement of additional estimated liability based on current calculations, the identification of new tax contingencies, or the rendering of relevant court decisions. An unfavorable resolution of assessments by a governmental authority could negatively impact our results of operations and cash flows in future periods.
Our inability to renew existing leases on acceptable terms, negotiate rent decreases or concessions and identify affordable real estate could affect our operating results.
We may be unable to successfully negotiate or renew existing leases at attractive rents, negotiate rent decreases or concessions or identify affordable real estate. A key factor in our operating performance is the location and associated real estate costs of our distribution centers. In particular, approximately 40 of Unisource’s lease and sublease agreements expire in June 2018. Our inability to negotiate or renew these or any other leases on favorable terms, or at all, could have a material adverse effect on our business and results of operations due to, among other things, any resultant increased lease payments.
Results of legal proceedings could have a material effect on our consolidated financial statements.
The combined company will rely on manufacturers and other suppliers to provide us with the products and equipment we sell, distribute and service. As we will not have direct control over the quality of the products manufactured or supplied by such third-party suppliers, we will be exposed to risks relating to the quality of the products and equipment we sell, distribute and service. It is possible that inventory from a manufacturer or supplier could be sold to our customers and later be alleged to have quality problems or to have caused personal injury, subjecting the combined company to potential claims from customers or third parties. Our ability to hold such manufacturer or supplier liable will depend on a variety of factors, including its financial viability. Moreover, as the combined company increases the number of private label products we distribute, our exposure to potential liability for product liability claims may increase. Finally, even if the combined company is successful in defending any claim relating to the products or equipment we distribute, claims of this nature could negatively impact our reputation and customer confidence in our products, equipment and company. xpedx and Unisource have been subject to such claims in the past, which have been resolved without material financial impact. The combined company also operates a significant number of facilities and a large fleet of trucks and other vehicles and therefore faces the risk of premises-related liabilities and vehicle-related liabilities including traffic accidents.
From time to time, we may also be involved in government inquiries and investigations, as well as class action, employment and other litigation. We cannot predict with certainty the outcomes of these legal proceedings and other contingencies, including environmental remediation and other proceedings commenced by government authorities. The costs and other effects of pending litigation against us cannot be determined with certainty. Although we believe that the outcome of any pending or future lawsuits or claims will not have a material adverse effect on the combined company’s business or consolidated financial statements, there can be no assurance that the outcome of any lawsuit or claim will be as expected. The defense of these lawsuits may divert our management’s attention, and significant expenses may be incurred in defending these lawsuits. In addition, we may be required to pay damage awards or settlements, or become subject to injunctions or other equitable remedies, that could have a material adverse effect on the combined company’s business, financial condition, results of operations and cash flows.
While we currently maintain insurance coverage to address a portion of these types of liabilities, we cannot make assurances that we will be able to obtain such insurance on acceptable terms in the future, if at all, or that
 
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any such insurance will provide adequate coverage against potential claims. In addition, the combined company may choose not to seek to obtain such insurance in the future. Moreover, indemnification rights that we have may be insufficient or unavailable to protect us against potential loss exposures.
The combined company may not be able to adequately protect its intellectual property and other proprietary rights that are material to the combined company, or to defend successfully against intellectual property infringement claims by third parties.
The combined company’s ability to compete effectively depends in part upon its intellectual property rights, including but not limited to trademarks, copyrights and proprietary technology. The use of contractual provisions, confidentiality procedures and agreements, and trademark, copyright, unfair competition, trade secret and other laws to protect intellectual property rights and proprietary technology may not be adequate. Litigation may be necessary to enforce the combined company’s intellectual property rights and protect proprietary technology, or to defend against claims by third parties that the conduct of the combined company or its use of intellectual property infringes upon such third party’s intellectual property rights. Any intellectual property litigation or claims brought against the combined company, whether or not meritorious, could result in substantial costs and diversion of its resources, and there can be no assurances that favorable final outcomes will be obtained in all cases. The terms of any settlement or judgment may require the combined company to pay substantial amounts to the other party or cease exercising its rights in such intellectual property, including ceasing the use of certain trademarks used by us to distinguish our services from those of others or ceasing the exercise of our rights in copyrightable works. In addition, the combined company may have to seek a license to continue practices found to be in violation of a third party’s rights, which may not be available on reasonable terms, or at all. The combined company’s business, financial condition or results of operations could be adversely affected as a result.
The combined company’s pension and health care costs are subject to numerous factors which could cause these costs to change.
The combined company’s pension costs are dependent upon numerous factors resulting from actual plan experience and assumptions of future experience, including actuarial assumptions regarding life expectancies. Pension plan assets are primarily made up of equity and fixed income investments. Fluctuations in actual equity market returns, changes in general interest rates and changes in the number of retirees may result in increased pension costs in future periods. Significant changes in any of these factors may adversely impact the combined company’s cash flows, financial condition and results of operations.
As a division of International Paper employing less than 8% of International Paper’s total U.S. employee population, our experience rating and resulting health care costs and rates were blended with International Paper and the rest of its employee population. Once separated from International Paper our health care costs and rates will be more reflective of the experiences of our employees, rather than those of International Paper. As a result, our health care costs may be greater than our historical financial statements reflect.
The combined company will participate in multiemployer pension plans and multiemployer health and welfare plans, which could create additional obligations and payment liabilities.
The combined company will contribute to multiemployer defined contribution pension as well as multiemployer health and welfare plans under the terms of collective-bargaining agreements that cover certain unionized employee groups in the United States. The risks of participating in multiemployer pension plans differ from single employer-sponsored plans and such plans are subject to regulation under the Pension Protection Act (PPA). Multiemployer pension plans are cost-sharing plans subject to collective-bargaining agreements. Contributions to a multiemployer plan by one employer are not specifically earmarked for its employees and may be used to provide benefits to employees of other participating employers. If a participating employer stops contributing to the plan, the unfunded obligations of the plan are borne by the remaining participating employers. In addition, if a multiemployer plan is determined to be underfunded based on the criteria established by the
 
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PPA, the plan may be required to implement a financial improvement plan or rehabilitation plan that may require additional contributions or surcharges by participating employers.
In addition to the contributions discussed above, the combined company could be obligated to pay additional amounts, known as withdrawal liability, if the combined company decreases or ceases participation in a multiemployer pension plan. While an employer may obtain an estimate of such liability, the final calculation of withdrawal liability may not be determined for an extended period. The cash obligation of such withdrawal liability is payable over a 20 year period.
Risks Relating to SpinCo’s Common Stock
We are a holding company with no operations of our own, and we depend on our subsidiaries for cash to fund all of our operations and expenses, including making future dividend payments, if any.
Our operations, including the Unisource business, will be conducted almost entirely through our subsidiaries and our ability to generate cash to meet our debt service obligations or to pay dividends is highly dependent on the earnings and the receipt of funds from our subsidiaries via dividends or intercompany loans. We do not currently expect to declare or pay dividends on our common stock for the foreseeable future. Furthermore, we are restricted under the Contribution and Distribution Agreement from declaring or paying special dividends through the second anniversary of the Closing Date (or, in certain circumstances, January 1, 2016). To the extent that we determine in the future to pay dividends on our common stock, existing indebtedness, including our ABL Facility, and debt incurred by our subsidiaries, may significantly restrict the ability of our subsidiaries to pay dividends or otherwise transfer assets to us, which will negatively impact our ability to pay dividends to our shareholders. In addition, Delaware law may impose requirements that may restrict our ability to pay dividends to holders of our common stock. There can be no assurance that we will pay a dividend or continue to pay any dividend if we do commence the payment of dividends.
There is currently no public market for our common stock and we cannot be certain that an active trading market will develop or be sustained after the Transactions, and following the Transactions our stock price may fluctuate significantly.
There is currently no public market for our common stock. It is anticipated that on or shortly before the record date for the Distribution, trading of our common stock will begin on a “when-issued” basis and such trading will continue through the distribution date. However, there can be no assurance that an active trading market for our common stock will develop as a result of the Transactions or be sustained in the future. The lack of an active market may make it more difficult for you to sell our common stock and could lead to the price of our common stock being depressed or more volatile. We cannot predict the prices at which our common stock may trade after the Transactions. The market price of our common stock may fluctuate widely, depending on many factors, some of which may be beyond our control, including:
 
 	•	 	the combined company’s business profile and market capitalization may not fit the investment objectives of some International Paper shareholders and, as a result, these shareholders may sell our shares after the Transactions are completed;	
 
 	•	 	actual or anticipated fluctuations in the operating results of the combined company due to factors related to our business;	
 
 	•	 	success or failure of the strategy of our combined company;	
 
 	•	 	the quarterly or annual earnings of the combined company, or those of other companies in our industry;	
 
 	•	 	continued industry-wide decrease in demand for paper and related products;	
 
 	•	 	our ability to obtain third-party financing as needed;	
 
 	•	 	announcements by us or our competitors of significant acquisitions or dispositions;	
 
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 	•	 	the inability to issue equity securities or convertible debt securities during the two year period following the date of the Distribution without jeopardizing the intended tax consequences of the Transactions;	
 
 	•	 	restrictions on our ability to pay dividends under our ABL Facility;	
 
 	•	 	changes in accounting standards, policies, guidance, interpretations or principles;	
 
 	•	 	the failure of securities analysts to cover our common stock after the Transactions;	
 
 	•	 	changes in earnings estimates by securities analysts or the combined company’s ability to meet those estimates;	
 
 	•	 	the operating and stock price performance of other comparable companies;	
 
 	•	 	investor perception of the combined company;	
 
 	•	 	natural or environmental disasters that investors believe may affect the combined company;	
 
 	•	 	overall market fluctuations;	
 
 	•	 	results from any material litigation or government investigation;	
 
 	•	 	changes in laws and regulations affecting the combined company or any of the principal products sold by the combined company; and	
 
 	•	 	general economic conditions and other external factors.	
Stock markets in general have experienced volatility that has often been unrelated to the operating performance of a particular company. These broad market fluctuations could adversely affect the trading price of our common stock. Until an orderly market develops, the trading prices for our common stock may fluctuate significantly.
After the completion of the Merger, sales of our common stock may negatively affect its market price.
The SpinCo common stock that International Paper distributes to its shareholders in the Distribution may be sold immediately in the public market. It is likely that some International Paper shareholders, including some large shareholders, may sell our common stock received in the Transactions for various reasons such as if our business profile or market capitalization as a combined company following the Transactions does not fit their investment objectives. In particular, International Paper is a member of the S&P 500 Index, while the combined company will not initially be and may not be in the future. Accordingly, certain International Paper shareholders may elect or be required to sell our shares following the Transactions due to investment guidelines or other reasons. The sales of significant amounts of our common stock or the perception in the market that this will occur may result in the lowering of the market price of our common stock. A fund associated with International Paper’s 401(k) plans will receive shares of SpinCo common stock in the Distribution as a result of its ownership of International Paper common stock, representing approximately     % of SpinCo’s common stock as of the distribution date. We anticipate that the 401(k) plans will sell all of these shares. Following the Transactions, approximately 49% of our outstanding shares of common stock will be owned by the UWWH Stockholder. Pursuant to the Registration Rights Agreement, all of these shares will be eligible to be registered, subject to certain limitations, following the expiration of a 180-day lock-up period. These shares will be restricted securities within the meaning of Rule 144 under the Securities Act and will also be eligible for resale in the public market without registration subject to volume, manner of sale and holding period limitations under Rule 144 under the Securities Act. If some or all of these shares are sold, or if it is perceived that they will be sold, in the public market, the price of our common stock could decline substantially.
If securities or industry analysts do not publish research or publish unfavorable research about the combined company, our stock price and trading volume could decline.
The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about the combined company and our business. We do not currently have and may
 
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never obtain research coverage by securities and industry analysts. If there is no coverage of the combined company by securities or industry analysts, the trading price for our stock would be negatively impacted. In the event we obtain securities or industry analyst coverage, if one or more of these analysts downgrades our stock or publishes misleading or unfavorable research about our business, our stock price would likely decline. If one or more of these analysts ceases coverage of our company or fails to publish reports on us regularly, demand for our stock could decrease, which could cause our stock price or trading volume to decline.
A few shareholders may exert significant control over the direction of the combined company. Ownership of our common stock will be highly concentrated after the Transactions and could prevent you and other shareholders from influencing significant corporate decisions.
Following the completion of the Transactions, the UWWH Stockholder, controlled by Bain Capital, will beneficially own approximately 49% of the outstanding shares of our common stock. As a result, the UWWH Stockholder will exercise significant influence over all matters requiring shareholder approval for the foreseeable future, including approval of significant corporate transactions, which may reduce the market price of our common stock. The interests of the UWWH Stockholder may conflict with the interests of our other shareholders. Our board of directors intends to adopt corporate governance guidelines that will, among other things, address potential conflicts between a director’s interests and our interests. In addition, we intend to adopt a code of business conduct that, among other things, requires our employees to avoid actions or relationships that might conflict or appear to conflict with their job responsibilities or our interests and to disclose their outside activities, financial interests or relationships that may present a possible conflict of interest or the appearance of a conflict to management or corporate counsel. These corporate governance guidelines and code of business ethics will not, by themselves, prohibit transactions with our principal shareholders.
Under our amended and restated certificate of incorporation, the UWWH Stockholder, Bain Capital Fund VII, L.P. and their respective affiliates and, in some circumstances, any of our directors and officers who is also a director, officer, employee, member or partner of the UWWH Stockholder, Bain Capital Fund VII, L.P. and their respective affiliates, have no obligation to offer us corporate opportunities.
The policies relating to corporate opportunities and transactions with the UWWH Stockholder, Bain Capital Fund VII, LP and their respective affiliates to be set forth in our amended and restated certificate of incorporation address potential conflicts of interest between SpinCo, on the one hand, and the UWWH Stockholder, Bain Capital Fund VII, L.P., their respective affiliates and their respective officers and directors who are directors or officers of our company, on the other hand. By becoming a shareholder in SpinCo, you will be deemed to have notice of and have consented to these provisions of our amended and restated certificate of incorporation. Although these provisions are designed to resolve conflicts between us and the UWWH Stockholder, Bain Capital Fund VII, L.P. and their respective affiliates fairly, conflicts may not be so resolved.
Anti-takeover provisions in our amended and restated certificate of incorporation and amended and restated by-laws could discourage, delay or prevent a change of control of our company and may affect the trading price of our common stock.
Our amended and restated certificate of incorporation and amended and restated by-laws include a number of provisions that may discourage, delay or prevent a change in our management or control over us that shareholders may consider favorable. For example, our amended and restated certificate of incorporation and amended and restated by-laws will collectively:
 
 	•	 	authorize the issuance of “blank check” preferred stock that could be issued by our board of directors to thwart a takeover attempt;	
 
 	•	 	limit the ability of shareholders to remove directors;	
 
 	•	 	provide that vacancies on our board of directors, including vacancies resulting from an enlargement of our board of directors, may be filled only by a majority vote of directors then in office;	
 
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 	•	 	prohibit shareholders from calling special meetings of shareholders unless called by the holders of not less than 20% of our outstanding shares of common stock;	
 
 	•	 	prohibit shareholder action by written consent, unless initiated by the holders of not less than 20% of the outstanding shares of common stock;	
 
 	•	 	establish advance notice requirements for nominations of candidates for election as directors or to bring other business before an annual meeting of our shareholders; and	
 
 	•	 	require the approval of holders of at least a majority of the outstanding shares of our common stock to amend our amended and restated by-laws and certain provisions of our amended and restated certificate of incorporation.	
These provisions may prevent our shareholders from receiving the benefit from any premium to the market price of our common stock offered by a bidder in a takeover context. Even in the absence of a takeover attempt, the existence of these provisions may adversely affect the prevailing market price of our common stock if the provisions are viewed as discouraging takeover attempts in the future.
Our amended and restated certificate of incorporation and amended and restated by-laws may also make it difficult for shareholders to replace or remove our management. These provisions may facilitate management entrenchment that may delay, deter, render more difficult or prevent a change in our control, which may not be in the best interests of our shareholders.
We do not intend to pay dividends on our common stock and, consequently, your ability to achieve a return on your investment will depend on appreciation in the price of our common stock.
We do not intend to declare and pay dividends on our common stock for the foreseeable future. We currently intend to invest our future earnings, if any, to fund our growth, to develop our business, for working capital needs and for general corporate purposes. Therefore, you are not likely to receive any dividends on your common stock for the foreseeable future and the success of an investment in shares of our common stock will depend upon any future appreciation in their value. There is no guarantee that shares of our common stock will appreciate in value or even maintain the price at which our shareholders have received their shares in the Distribution. In addition, our operations are conducted almost entirely through our subsidiaries. As such, to the extent that we determine in the future to pay dividends on our common stock, none of our subsidiaries will be obligated to make funds available to us for the payment of dividends. Further, agreements governing the ABL Facility will restrict the ability of our subsidiaries to pay dividends or otherwise transfer assets to us. We are also restricted under the Contribution and Distribution Agreement from declaring or paying special dividends through the second anniversary of the Closing Date (or, in certain circumstances, January 1, 2016). In addition, Delaware law may impose requirements that may restrict our ability to pay dividends to holders of our common stock.
Our amended and restated certificate of incorporation will designate the Court of Chancery of the State of Delaware as the exclusive forum for certain litigation that may be initiated by our shareholders, which could limit our shareholders’ ability to obtain a favorable judicial forum for disputes with us.
Our amended and restated certificate of incorporation will provide that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed to us or our shareholders by any of our directors, officers, employees or agents, (iii) any action asserting a claim against us arising under the DGCL or (iv) any action asserting a claim against us that is governed by the internal affairs doctrine. By becoming a shareholder in our company, you will be deemed to have notice of and have consented to the provisions of our amended and restated certificate of incorporation related to choice of forum. The choice of forum provision in our amended and restated certificate of incorporation may limit our shareholders’ ability to obtain a favorable judicial forum for disputes with us.
 
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 NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INFORMATION
This prospectus includes forward-looking statements, including in the sections entitled “Prospectus Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations of xpedx,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Unisource,” “Business of xpedx” and “Business of Unisource.” These forward-looking statements include, without limitation, statements regarding our industry, business strategy, plans, goals and expectations concerning our market position, anticipated synergies from the Merger, future operations, margins, profitability, future efficiencies, capital expenditures, liquidity and capital resources and other financial and operating information. When used in this discussion, the words “anticipate,” “assume,” “believe,” “budget,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “future” and the negative of these or similar terms and phrases are intended to identify forward-looking statements in this prospectus.
Forward-looking statements reflect our current expectations regarding future events, results or outcomes. These expectations may or may not be realized. Although we believe the expectations reflected in the forward-looking statements are reasonable, we can give you no assurance these expectations will prove to have been correct. Some of these expectations may be based upon assumptions, data or judgments that prove to be incorrect. Actual events, results and outcomes may differ materially from our expectations due to a variety of known and unknown risks, uncertainties and other factors. Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include those set forth under “Risk Factors,” as well as, among others, risks and uncertainties relating to:
 
 	•	 	our ability to realize the anticipated synergies, cost savings and growth opportunities from the Merger;	
 
 	•	 	our ability to successfully integrate the xpedx business with the Unisource business following the Transactions;	
 
 	•	 	our ability to comply with public company reporting, disclosure controls and internal control over financial reporting requirements;	
 
 	•	 	continued industry-wide decrease in demand for paper and related products;	
 
 	•	 	unanticipated costs associated with infrastructure and network systems integration and planning following the Merger;	
 
 	•	 	the combined company’s substantial indebtedness;	
 
 	•	 	restrictive covenants in our financing agreements;	
 
 	•	 	our ability to provide or replace benefits and services that historically have been provided by International Paper;	
 
 	•	 	the pendency of the Merger adversely affecting the business and operations of xpedx and Unisource;	
 
 	•	 	incurrence of significant one-time costs;	
 
 	•	 	unfavorable economic conditions in our industry and the economy as a whole;	
 
 	•	 	our ability to realize anticipated benefits from cost reduction efforts;	
 
 	•	 	our ability to compete effectively;	
 
 	•	 	expiration or termination of our supplier and sales relationships with businesses of International Paper and Georgia-Pacific;	
 
 	•	 	our ability to attract and retain qualified employees and key personnel;	
 
 	•	 	work stoppages, union negotiations and labor disputes;	
 
 	•	 	loss of significant customers;	
 
 	•	 	changes in business conditions in our international operations;	
 
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 	•	 	our reliance on our suppliers;	
 
 	•	 	fuel cost increases;	
 
 	•	 	inclement weather, anti-terrorism measures and other disruptions to the transportation network;	
 
 	•	 	reliability of the combined company’s IT and telecommunications systems and the Internet;	
 
 	•	 	cyber-security risks relating to breaches of security pertaining to sensitive information;	
 
 	•	 	unanticipated costs to comply with environmental, health and safety laws and other laws, rules and regulation;	
 
 	•	 	our ability to renew existing leases on acceptable terms;	
 
 	•	 	adverse results in legal proceedings; and	
 
 	•	 	unanticipated pension and health care costs.	
Any of the foregoing events, or other events, could cause financial information to vary materially from the forward-looking statements included in this prospectus. You should consider these important factors, as well as the risk factors set forth in this prospectus, in evaluating any statement made in this prospectus. See “Risk Factors.” For the foregoing reasons, you are cautioned against relying on any forward-looking statements. SpinCo does not undertake any obligation to update or revise these forward-looking statements, except as required by law.
 
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 THE TRANSACTIONS
Background of the Distribution and the Merger
International Paper, SpinCo, UWWH and UWW have agreed pursuant to the Merger Agreement to merge UWWH with and into SpinCo, with SpinCo as the surviving corporation. Prior to consummating the Merger and pursuant to the Contribution and Distribution Agreement, International Paper will transfer the xpedx business to a subsidiary of SpinCo and subsequently distribute all of the shares of SpinCo common stock outstanding prior to the Merger to holders of International Paper common stock on a pro rata basis in connection with the Distribution. Immediately following the Distribution, UWWH and SpinCo will consummate the Merger upon the terms and subject to the conditions of the Merger Agreement, with SpinCo as the surviving corporation. xpedx Intermediate, which will be a wholly-owned, direct subsidiary of SpinCo will then merge with and into UWW, and UWW will survive the Subsidiary Merger as a wholly-owned, direct subsidiary of SpinCo. Immediately after consummation of the Merger, on a fully-diluted basis, approximately 51% of SpinCo common stock will be held by International Paper shareholders and approximately 49% of SpinCo common stock will be held by the UWWH Stockholder. After the Transactions, SpinCo will be an independent, publicly-traded company that operates the Unisource and the xpedx businesses.
A RMT transaction is a spin-off structure in which, as part of a plan, a merger partner, here UWWH, merges with the spun-off subsidiary, here SpinCo, in a tax-free transaction. To ensure that a RMT transaction remains tax free to the distributing parent and the distributing parent’s shareholders the transaction must meet several criteria, including that immediately following the transaction, historic shareholders of the distributing parent must own more than 50% of the stock by vote and value of the combined company. The Transactions were structured as a RMT transaction to provide a tax-free transaction for International Paper and its shareholders.
The discussions with respect to the Transactions were initiated when Unisource approached International Paper about a possible transaction involving xpedx, and on April 22, 2013, International Paper announced that it had entered into a letter of intent with UWWH regarding a proposed business combination of xpedx and Unisource. The parties negotiated the transaction after entering into the non-binding letter of intent and entered into definitive agreements with respect to the Transactions on January 28, 2014.
The UWWH board of directors (i) has approved and declared advisable, and in the best interests of UWWH and the UWWH Stockholder, the Merger Agreement and the Transactions, including the Merger, and (ii) has recommended the adoption by the UWWH Stockholder of the Merger Agreement and its approval of the Transactions. The UWW board of directors (i) has approved and declared advisable, and in the best interests of UWW and its sole shareholder, UWWH, the Merger Agreement and the Transactions, including the Subsidiary Merger, and (ii) has recommended the adoption by UWWH, as the sole shareholder of UWW, of the Merger Agreement and its approval of the Transactions.
International Paper’s Reasons for the Transactions
International Paper determined that the Transactions would be in the best interests of International Paper and its shareholders because the Transactions would provide a number of key benefits, including primarily: (i) greater strategic focus of resources and management’s efforts for each of International Paper and for the combined company, (ii) the special payment, (iii) direct and differentiated access by each of International Paper and the combined company to capital resources and (iv) increased value to International Paper’s shareholders, in particular the combined company’s anticipated value on a stand-alone basis. In assessing and approving the Transactions, International Paper considered the unavailability of alternative transactions that would produce similar or better results for International Paper and its shareholders, and the spinoff’s facilitating the strategic combination of the xpedx and Unisource businesses.
To ensure tax-free treatment of the Transactions, a RMT transaction requires, among other things, that the distributing parent’s stockholders receive more than 50% of the stock by vote and value of the combined
 
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company. The approximate 51% ownership of the International Paper shareholders following the Merger was determined, in part, based on the tax requirements applicable to the RMT transaction structure. Additionally, the approximate 51% ownership of the International Paper shareholders, when coupled with the special payment to International Paper and the potential earnout payment, reflects the relative valuation of each company to the Merger as determined by the parties during extensive negotiations. The $400 million special payment, subject to certain adjustments, to International Paper and the potential $100 million earnout payment were the product of extensive negotiation between the parties and reflect the relative contribution of each of xpedx and Unisource to the combined company.
The International Paper board of directors has approved and declared advisable, and in the best interests of the International Paper shareholders, the Merger Agreement and the Contribution and Distribution Agreement and the Transactions, including the Distribution and the Merger. Finally, the SpinCo board of directors (i) has approved and declared advisable, and in the best interests of SpinCo and its sole shareholder, International Paper, the Merger Agreement and the Contribution and Distribution Agreement and the Transactions, including the Contribution and the Merger, and (ii) has recommended the adoption by International Paper, as the sole shareholder of SpinCo, of the Merger Agreement and its approval of the Transactions. International Paper, as the sole shareholder of SpinCo, has approved and adopted the Merger Agreement. International Paper, as the sole member and managing member of xpedx Intermediate and xpedx LLC, has approved and adopted the Merger Agreement and the Transactions, including the Subsidiary Merger.
You are encouraged to read carefully the sections titled “The Merger Agreement” and “The Contribution and Distribution Agreement and the Ancillary Agreements,” because they set forth the terms of the Merger and the Distribution, respectively.
Structure of the Spin-Off and Merger
Below is a step-by-step list describing the sequence of material events relating to the Distribution and the Merger. Each of these events is discussed in more detail elsewhere in this prospectus. We anticipate that the steps will occur in the following order:
Step 1—International Paper will cause all non-U.S. xpedx assets, liabilities and entities (other than those owned or owed directly or indirectly by xpedx International, Inc., which is a U.S. subsidiary of International Paper) to be directly or indirectly transferred, assigned, delivered and conveyed to or assumed by a Luxembourg entity to be formed as an indirect, wholly-owned subsidiary of International Paper.
Step 2—International Paper will contribute 100% of the equity interests of the Luxembourg entity and xpedx International, Inc., and any xpedx assets not held by the Luxembourg entity or xpedx International, Inc., to xpedx LLC or a subsidiary of xpedx LLC and will cause xpedx LLC or its subsidiaries to assume any xpedx liabilities not assumed by the Luxembourg entity or otherwise held by xpedx International, Inc.
Step 3—International Paper will contribute all of the membership interest in xpedx LLC to xpedx Intermediate and then contribute all of the membership interest in xpedx Intermediate to SpinCo.
Step 4—xpedx LLC will incur indebtedness under the ABL Facility and will distribute all or a portion of the proceeds to xpedx Intermediate, which in turn will distribute such proceeds to SpinCo to fund the special payment to International Paper.
Step 5—In exchange for the Contribution, SpinCo will issue shares of SpinCo common stock to International Paper and make a special payment to International Paper of $400 million, subject to certain adjustments.
Step 6—International Paper will effect the Distribution by distributing all of the shares of SpinCo common stock it holds to International Paper shareholders as of the record date of the Distribution on a pro rata basis. Shareholders otherwise entitled to receive fractional shares will receive cash in lieu thereof.
 
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Step 7—UWWH will merge with and into SpinCo with SpinCo being the surviving corporation of the Merger. As a result of the Merger, in exchange for its shares, the UWWH Stockholder will receive a number of shares of SpinCo common stock for each share of UWWH common stock that it held at the time of the Merger that will result in International Paper’s shareholders owning approximately 51%, and the UWWH Stockholder owning approximately 49%, of the common stock of SpinCo on a fully-diluted basis immediately following the Merger.
Step 8—Immediately following completion of the Merger, xpedx Intermediate will merge with and into UWW, with UWW surviving the Subsidiary Merger as a wholly-owned subsidiary of SpinCo. Following completion of the Subsidiary Merger, Unisource will accede to incur indebtedness under the ABL Facility, the proceeds of which will be used to repay all third-party indebtedness for borrowed money of Unisource and its subsidiaries outstanding on the Closing Date (except for capitalized lease obligations).
As of the date of this prospectus, the board of directors of International Paper has not set a record date for the Distribution. International Paper will publicly announce the record date for the Distribution when the record date has been determined. This announcement will be made prior to the completion of the Distribution and the Merger.
After the Distribution, International Paper will not own any shares of SpinCo common stock.
Manner of Effecting the Distribution
Before we can complete the Merger, we must consummate the Distribution. The Distribution will be a pro rata distribution of shares of SpinCo common stock to holders of International Paper common stock. Each share of International Paper common stock outstanding as of the record date will entitle its holder to receive a number of shares of SpinCo common stock, as determined by a formula based on the number of shares of International Paper common stock outstanding at 5:00 p.m. New York City time on the distribution date. Each such holder will receive a number of shares of SpinCo common stock equal to the percentage of the total number of SpinCo shares of common stock outstanding as of the time of the Distribution as is equal to a fraction, (a) the numerator of which is the total number of issued and outstanding International Paper shares of common stock held by such holder as of the record date and (b) the denominator of which is the total number of International Paper shares of common stock issued and outstanding (excluding treasury shares held by International Paper and any other International Paper shares otherwise held by International Paper or one of its subsidiaries). Based on the number of International Paper shares of common stock outstanding as of                     , 2014, we expect the distribution ratio to be approximately              SpinCo shares for each share of International Paper common stock. Although the number of International Paper shares of common stock outstanding may increase or decrease prior to the distribution date and as a result this distribution ratio may change, it will nonetheless result in International Paper shareholders owning approximately 51%, and the UWWH Stockholder owning approximately 49%, of the common stock of SpinCo on a fully-diluted basis immediately following the Merger.
How You Will Receive SpinCo Common Stock
Upon the Distribution, the shares of SpinCo common stock distributed to each record holder of International Paper common stock on the record date will be registered in such record holder’s name on the share registry books of SpinCo, and such International Paper record holder will become the record holder of that number of shares of SpinCo common stock.
SpinCo common stock will be issued as uncertificated shares. This means that we will not issue physical stock certificates. SpinCo common stock will be issued electronically, as of the distribution date, to you or to your bank or brokerage firm on your behalf by way of direct registration in book-entry form. Registration in book-entry form refers to a method of recording stock ownership when no physical stock certificates are issued to shareholders.
 
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Commencing on or shortly after the distribution date, if you hold physical stock certificates that represent your shares of International Paper common stock and you are the registered holder of the shares of International Paper common stock represented by those certificates, the distribution agent will mail to you an account statement that indicates the number of our shares of common stock that have been registered in book-entry form in your name.
Many of International Paper’s shareholders hold their International Paper common stock through a bank or brokerage firm. In such cases, the bank or brokerage firm would be said to hold the share of common stock in “street name” and ownership would be recorded on the bank or brokerage firm’s books. If you hold your International Paper common stock through a bank or brokerage firm, your bank or brokerage firm will credit your account for the SpinCo common stock that you are entitled to receive in the Distribution. If you have any questions concerning the mechanics of having shares of common stock held in “street name,” we encourage you to contact your bank or brokerage firm.
No International Paper shareholder will be required to pay any cash or other consideration for shares of SpinCo common stock received in the distribution, or to surrender or exchange International Paper shares of common stock in order to receive shares of SpinCo common stock. No vote of International Paper shareholders is required or sought in connection with the Transactions, and International Paper shareholders will have no appraisal rights in connection with the Transactions.
Treatment of Fractional Shares
The distribution agent will not deliver any fractional shares of our common stock in connection with the Distribution. Instead, the distribution agent will aggregate all fractional shares of SpinCo common stock and sell them on behalf of those holders who otherwise would be entitled to receive a fractional share. We anticipate that these sales will occur as soon as practicable after the distribution date. Those holders will then receive a cash payment in the form of a check or wire transfer, as applicable, in an amount equal to their pro rata share of the total net proceeds of those sales. If you physically hold International Paper stock certificates or hold your stock in book-entry form, your check for any cash that you may be entitled to receive instead of fractional shares of our common stock will be mailed to you separately, or if applicable and practicable, a deposit will be made by wire transfer provided you are enrolled in direct deposit.
It is expected that all fractional shares held in street name will be aggregated and sold by brokers or other nominees according to their standard procedures and that brokers or other nominees may request the distribution agent to sell the fractional shares on their behalf. The distribution agent, in its sole discretion, without any influence from International Paper or SpinCo, will determine when, how, through which broker-dealer and at what price to sell the whole shares. Any broker-dealer used by the distribution agent will not be an affiliate of either International Paper or us. Any applicable expenses, including brokerage fees, will be paid by us. You should contact your broker or other nominee for additional details.
None of International Paper, SpinCo or the distribution agent will guarantee any minimum sale price for the fractional shares of our common stock. Neither we nor International Paper will pay any interest on the proceeds from the sale of fractional shares. The receipt of cash in lieu of fractional shares will generally be taxable to the recipient shareholders. See “—Material U.S. Federal Income Tax Consequences of the Transactions.”
Effects of the Distribution and Merger on International Paper Stock Options and Other International Paper Stock-Based Awards
International Paper granted stock options in 2004, which have expiration dates of May 10, 2014 and October 11, 2014. These options are currently fully vested. Employees of International Paper who hold International Paper options will retain the options and will not be granted SpinCo options (as replacement for such International Paper options) in connection with the Transactions. No adjustment to International Paper
 
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options or exercise prices will be made by reason of the Transactions. Any outstanding options held by employees of International Paper who will be employed by SpinCo following the closing of the Transactions will be treated by International Paper in accordance with the terms of the relevant International Paper equity incentive plan as though each employee incurred a termination of employment without cause from International Paper as of the closing of the Transactions.
Certain International Paper employees hold International Paper Performance Share Plan (“PSP”) awards pursuant to which an employee has been granted units that are paid in International Paper common stock at the end of a three-year period. The amounts earned under the PSP fluctuate based on the performance of International Paper, measured at the end of each year in the three-year period. No adjustment to the performance metrics of the PSP awards by reason of the Transactions is currently contemplated. Former International Paper employees who will be employed by SpinCo following the Transactions will continue to hold the 2012, 2013, and 2014 grants through the remainder of the performance period. The amounts to which these individuals will be entitled will be based on International Paper’s actual performance during the performance period but will be prorated based on the period of time from the grant date through the occurrence of the Transactions. Payments in respect of these awards will be paid in February of the year following the end of the relevant three-year period (e.g., the employee’s pro rata portion of the 2012 grant will be paid in February 2015).
Certain employees of International Paper also hold restricted shares of International Paper common stock. No adjustment to International Paper restricted stock will be made for the value of SpinCo. Other than Mary A. Laschinger, Chief Executive Officer of SpinCo, no employee of the xpedx business currently holds International Paper restricted stock awards. The awards of restricted stock currently held by Ms. Laschinger will vest by reason of the Transactions.
Material U.S. Federal Income Tax Consequences of the Transactions
The following is a summary of the material U.S. federal income tax consequences of the Transactions to SpinCo, International Paper and the International Paper shareholders. This discussion is based on the U.S. Internal Revenue Code of 1986, as amended (the “Code”), U.S. Treasury regulations promulgated or proposed thereunder and administrative and judicial interpretations thereof, all as in effect on the date hereof, and all of which are subject to change, possibly with retroactive effect, or to different interpretation. This summary does not address all of the U.S. federal income tax consequences of the Transactions. In particular, it may not address U.S. federal income tax considerations applicable to the International Paper shareholders subject to special treatment under U.S. federal income tax law, such as financial institutions, dealers in securities, traders in securities who elect to apply a mark-to-market method of accounting, insurance companies, tax-exempt entities, partnerships and other pass-through entities, shareholders who hold their shares as part of a “hedge,” “straddle,” “conversion” or “constructive sale” transaction, shareholders who are subject to the alternative minimum tax and shareholders who acquired their shares upon the exercise of employee stock options or otherwise as compensation. In addition, this summary is limited to shareholders that hold their International Paper and SpinCo common stock as a capital asset. This summary does not address the U.S. federal income tax considerations applicable to the UWWH Stockholder or any of its direct or indirect owners. Finally, this discussion does not address any U.S. state or local or non-U.S. tax considerations or any U.S. federal estate, gift or alternative minimum tax considerations.
This summary is limited to the International Paper shareholders that are United States holders. A United States holder is a beneficial owner of International Paper stock that, for U.S. federal income tax purposes, is (i) an individual who is a citizen or resident of the United States, (ii) a corporation created or organized in or under the laws of the United States, any state thereof or the District of Columbia, (iii) an estate the income of which is subject to U.S. federal income tax regardless of its source or (iv) a trust (x) with respect to which a court within the United States is able to exercise primary supervision over its administration and one or more U.S. persons have the authority to control all of its substantial decisions or (y) that has in effect a valid election under applicable U.S. Treasury regulations to be treated as a U.S. person.
 
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If an entity treated as a partnership for U.S. federal income tax purposes holds stock of International Paper or SpinCo, the U.S. federal income tax considerations relating to such investment will depend in part upon the status and activities of such entity and the particular partner. Any such entity should consult its own tax advisor regarding the U.S. federal income tax considerations applicable to it and its partners of the Transactions.
INTERNATIONAL PAPER’S SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS REGARDING THE TAX CONSEQUENCES OF THE TRANSACTIONS TO THEM, INCLUDING THE EFFECTS OF UNITED STATES FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX LAWS.
The Spin-Off
The Transactions are conditioned upon International Paper’s receipt of a private letter ruling from the IRS to the effect that the spin-off and certain related transactions will qualify as tax-free to International Paper and the International Paper shareholders for U.S. federal income tax purposes. Although a private letter ruling from the IRS generally is binding on the IRS, the IRS ruling does not rule that the spin-off satisfies every requirement for a tax-free spin-off under Section 355 of the Code, and the parties will rely solely on the opinion of counsel for comfort that such additional requirements are satisfied.
Our and International Paper’s obligations to complete the Transactions are also conditioned upon International Paper’s and SpinCo’s receipt of an opinion of Debevoise, to the effect that the spin-off will qualify as tax-free to International Paper and the International Paper shareholders (the “Spin Opinion of Counsel”), though we expect that the condition that SpinCo receive the Spin Opinion of Counsel will be waived. The Spin Opinion of Counsel will rely on the IRS ruling as to matters covered by the IRS ruling.
The IRS ruling and the Spin Opinion of Counsel will be based on, among other things, certain representations and assumptions as to factual matters made by us, International Paper and UWWH, including assumptions concerning Section 355(e) of the Code as discussed below. The failure of any factual representation or assumption to be true, correct and complete in all material respects could adversely affect the validity of the IRS ruling or the Spin Opinion of Counsel. An opinion of counsel represents counsel’s best legal judgment, is not binding on the IRS or the courts, and the IRS or the courts may not agree with the opinion. In addition, the IRS ruling and the Spin Opinion of Counsel will be based on current law, and cannot be relied upon if current law changes with retroactive effect.
The IRS ruling is expected to conclude that:
 
 	(1)	the contribution by International Paper to SpinCo of 100% of the membership interests in xpedx Intermediate in exchange for additional shares of our common stock and receipt by International Paper of the special cash payment, followed by the distribution of our common stock in the spin-off, will qualify as a reorganization within the meaning of Section 368(a)(1)(D) of the Code, and International Paper and SpinCo will each be a party to a reorganization within the meaning of Section 368(b) of the Code;	
 
 	(2)	no gain or loss will be recognized by International Paper on the contribution to SpinCo of 100% of the membership interests in xpedx Intermediate, receipt of the special payment or distribution of our common stock in the spin-off under Section 361 of the Code;	
 
 	(3)	no gain or loss will be recognized by the International Paper shareholders on the receipt of our common stock in the spin-off under Section 355(a)(1) of the Code;	
 
 	(4)	each International Paper shareholder’s holding period in our common stock received in the spin-off will include the holding period of the International Paper common stock held by such shareholder; and	
 
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 	(5)	each International Paper shareholder’s aggregate basis in its shares of International Paper common stock and our common stock (including fractional shares) immediately after the spin-off will equal the aggregate basis of the International Paper common stock held by such shareholder immediately before the spin-off, with such basis allocated between the International Paper common stock and our common stock held by such shareholder in proportion to their respective fair market values.	
The IRS ruling is also expected to conclude that certain internal contributions and distributions in connection with the spin-off will be tax-free to International Paper and to us.
If the spin-off does not qualify as a tax-free spin-off under Section 355 of the Code, then each International Paper shareholder who receives our common stock would be treated as receiving a taxable dividend in an amount equal to the fair market value of our stock received, to the extent of such shareholder’s ratable share of International Paper’s earnings and profits.
In addition, if the spin-off does not qualify as a tax-free spin-off under Section 355 of the Code, International Paper would have taxable gain equal to the excess of the value of the assets transferred to SpinCo plus the value of the liabilities assumed by SpinCo over International Paper’s tax basis for those assets. Even if the spin-off otherwise qualifies as a tax-free spin-off under Section 355 of the Code, the spin-off will be taxable to International Paper pursuant to Section 355(e) of the Code if there is a 50% or more change in ownership of either International Paper or SpinCo, directly or indirectly, as part of a plan or series of related transactions that include the spin-off. Because the International Paper shareholders will collectively own more than 50% of our common stock following the Merger, the Merger alone will not cause the spin-off to be taxable to International Paper under Section 355(e) of the Code. However, Section 355(e) of the Code might apply if other acquisitions of stock of International Paper before or after the Merger, or of SpinCo after the Merger, are considered to be part of a plan or series of related transactions that include the spin-off. In connection with the request for the IRS ruling, International Paper has represented, and in connection with the Spin Opinion of Counsel, International Paper, SpinCo and UWWH will represent, that the spin-off is not part of any such plan or series of related transactions. If Section 355(e) of the Code applied, then International Paper might recognize a substantial amount of taxable gain. Even if Section 355(e) of the Code causes the spin-off to be taxable to International Paper, the spin-off will nevertheless remain tax-free to the International Paper shareholders.
Under the Tax Matters Agreement, in certain circumstances and subject to certain limitations, we are required to indemnify International Paper for taxes on the spin-off, including taxes that arise as a result of actions or failures to act by SpinCo or its subsidiaries, as a result of changes in ownership of the stock of SpinCo after the Merger or as a result of acquisition of International Paper’s common stock by the UWWH Stockholder or certain related persons prior to the spin-off. See “The Contribution and Distribution Agreement and the Ancillary Agreements—Tax Matters Agreement.” In some cases however, International Paper might recognize gain on the spin-off without being entitled to an indemnification payment under the Tax Matters Agreement.
U.S. Treasury regulations require each International Paper shareholder that owns at least 5% of the total outstanding stock of International Paper and receives stock in the spin-off to attach to its U.S. federal income tax return for the year in which the spin-off occurs a statement containing certain information relating to the tax-free nature of the spin-off.
The Merger
Our and International Paper’s obligation to complete the Merger are conditioned on receipt by International Paper and SpinCo of an opinion of Debevoise to the effect that the Merger will qualify as a tax-free reorganization under Section 368(a) of the Code (the “Debevoise Merger Opinion”), though we expect to receive the private letter ruling described below and therefore expect that such condition will be waived. UWWH’s obligation to complete the Merger is conditioned on receipt of a similar opinion (the “Kirkland Merger Opinion”) from UWWH’s counsel, Kirkland.
 
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In addition, we expect that International Paper will receive a private letter ruling from the IRS to the effect that the Merger will qualify as a tax-free reorganization under Section 368(a) of the Code. Although a private letter ruling from the IRS generally is binding on the IRS, the IRS ruling does not rule that the Merger satisfies every requirement for a tax-free reorganization under Section 368(a) of the Code, and the parties will rely solely on the opinion of counsel, to the extent provided, for comfort that such additional requirements are satisfied.
The IRS ruling, the Debevoise Merger Opinion, to the extent provided, and the Kirkland Merger Opinion will be based on, among other things, certain representations and assumptions as to factual matters made by us, International Paper and UWWH. The failure of any factual representation or assumption to be true, correct and complete in all material respects could adversely affect the validity of the IRS ruling, the Debevoise Merger Opinion, to the extent provided, and the Kirkland Merger Opinion. An opinion of counsel represents counsel’s best legal judgment, is not binding on the IRS or the courts, and the IRS or the courts may not agree with the opinion. In addition, the IRS ruling, the Debevoise Merger Opinion, to the extent provided, and the Kirkland Merger Opinion will be based on current law, and cannot be relied upon if current law changes with retroactive effect.
The IRS ruling, the Debevoise Merger Opinion, to the extent provided, and the Kirkland Merger Opinion are expected to conclude that:
 
 	•	 	the Merger will qualify as a reorganization under Section 368(a)(1)(A) of the Code and SpinCo and UWWH will each be a party to a reorganization within the meaning of Section 368(b) of the Code; and	
 
 	•	 	no gain or loss will be recognized by UWWH on the transfer of its assets to SpinCo and SpinCo’s assumption of UWWH’s liabilities.	
If the Merger does not qualify as a tax-free reorganization under Section 368(a) of the Code, then UWWH would be considered to have made a taxable sale of its assets to us and we would be required to pay the U.S. federal income tax on the gain, if any, arising from such taxable sale as a result of being the surviving corporation in the Merger.
The Subsidiary Merger
UWWH’s obligation to complete the Merger is conditioned on receipt of an opinion from Kirkland to the effect that the Subsidiary Merger will qualify as a capital contribution under Section 351(a) of the Code (the “Subsidiary Merger Opinion of Counsel”).
In addition, we expect that International Paper will receive a private letter ruling from the IRS to the effect that the Subsidiary Merger will qualify as a capital contribution under Section 351(a) of the Code. Although a private letter ruling from the IRS generally is binding on the IRS, the IRS ruling does not rule that the Subsidiary Merger satisfies every requirement for a capital contribution under Section 351(a) of the Code, and the parties will rely solely on the opinion of counsel for comfort that such additional requirements are satisfied.
The IRS ruling and the Subsidiary Merger Opinion of Counsel will be based on, among other things, certain representations and assumptions as to factual matters made by us, International Paper and UWWH. The failure of any factual representation or assumption to be true, correct and complete in all material respects could adversely affect the validity of the IRS ruling or the Subsidiary Merger Opinion of Counsel. An opinion of counsel represents counsel’s best legal judgment, is not binding on the IRS or the courts, and the IRS or the courts may not agree with the opinion. In addition, the IRS ruling and the Subsidiary Merger Opinion of Counsel will be based on current law, and cannot be relied upon if current law changes with retroactive effect.
The IRS ruling and the Subsidiary Merger Opinion of Counsel are expected to conclude that:
 
 	•	 	the Subsidiary Merger will qualify as a capital contribution under Section 351(a) of the Code; and	
 
 	•	 	no gain or loss will be recognized by SpinCo on the transfer of xpedx Intermediate’s assets to Unisource and Unisource’s assumption of xpedx Intermediate’s liabilities.	
 
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If the Subsidiary Merger does not qualify as a capital contribution under Section 351(a) of the Code, then we will be considered to have made a taxable sale of the assets of xpedx Intermediate to Unisource, and we may either be required to pay the U.S. federal income tax on such sale or to indemnify International Paper for the U.S. federal income tax on such sale pursuant to the Tax Matters Agreement.
Regulatory Approvals
The Merger Agreement provides that each of the parties to the Merger Agreement will use reasonable best efforts to obtain all necessary actions, waivers, consents and approvals from any governmental authority, and to take all steps as may be necessary to obtain an approval or waiver from, or to avoid an action by, any governmental authority. This includes making all necessary filings and defending or contesting all actions or proceedings (subject to certain limitations). As of the date hereof, all material regulatory approvals expected by the parties to be required in connection with the Transactions have been obtained.
Accounting Treatment and Considerations
ASC 805, Business Combinations, requires the use of the acquisition method of accounting for business combinations. In applying the acquisition method, it is necessary to identify both the accounting acquiree and the accounting acquiror. In a business combination effected through an exchange of equity interests, such as the Merger, the entity that issues the interests (SpinCo in this case) is generally the acquiring entity. In identifying the acquiring entity in a combination effected through an exchange of equity interests, however, all pertinent facts and circumstances must be considered, including the following:
 
 	•	 	The relative voting interests of SpinCo after the Transactions . In this case, shareholders of International Paper, the sole shareholder of SpinCo, will receive at least 51% of the equity ownership and associated voting rights in SpinCo after the Transactions.	
 
 	•	 	The composition of the governing body of SpinCo after the Transactions . In this case, the board of directors of SpinCo immediately following the Merger will consist of the members of the board of directors of SpinCo immediately prior to the consummation of the Merger. The Chairman of the board of directors will be Mary A. Laschinger, who currently serves as a Senior Vice President of International Paper and President of xpedx and will be the Chief Executive Officer of SpinCo.	
 
 	•	 	The composition of the senior management of SpinCo after the Transactions . The Chief Executive Officer, the General Counsel and the Chief Human Resources Officer are existing members of SpinCo management. The remaining executive officers including the Chief Financial Officer and Senior Vice President Corporate Affairs have been hired from outside the combined company with the direct input of the Chief Executive Officer. In addition it is expected that there will be approximately four to six operational leaders as well as functional leaders which would also report to the Chief Executive Officer.	
SpinCo’s management has determined that SpinCo will be the accounting acquiror in the Merger based on the facts and circumstances outlined above and the detailed analysis of the relevant GAAP guidance. Consequently, SpinCo will apply acquisition accounting to the assets acquired and liabilities assumed of Unisource upon consummation of the Merger.
Listing and Trading of Our Common Stock
There is currently no market for our common stock. However, a “when-issued” market in our common stock may develop prior to the Distribution. See “—Trading Prior to the Distribution Date” below for an explanation of a “when-issued” market. We intend to apply to list our common stock on the NYSE under the symbol “        ”. We will announce our when-issued trading symbol when and if it becomes available. Following the Transactions, International Paper’s common stock will continue to trade on the NYSE under the symbol “IP”.
 
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Neither we nor International Paper can assure you as to the trading price of International Paper common stock or SpinCo common stock after the Transactions, or as to whether the combined trading prices of SpinCo’s common stock and International Paper common stock after the Transactions will be less than, equal to or greater than the trading prices of International Paper common stock prior to the Transactions. The trading price of SpinCo’s common stock may fluctuate significantly following the Transactions. See “Risk Factors—Risks Related to SpinCo’s Common Stock— There is currently no public market for our common stock and we cannot be certain that an active trading market will develop or be sustained after the Transactions, and following the Transactions our stock price may fluctuate significantly.”
Trading Prior to the Distribution Date
It is anticipated that shortly before the record date and through the distribution date, there will be a “when-issued” market in our common stock. When-issued trading refers to a sale or purchase of securities made conditionally because the security has been authorized but not yet issued. The when-issued trading market will be a market for SpinCo common stock that will be distributed to holders of International Paper common stock on the distribution date. If you own shares of International Paper common stock as of 5:00 p.m., New York City time on the record date, you will be entitled to SpinCo common stock distributed pursuant to the spin-off. You may trade this entitlement to SpinCo common stock, without the shares of International Paper common stock you own, on the when-issued market. On the first trading day following the distribution date, we expect when-issued trading with respect to SpinCo common stock will end and regular-way trading will begin. When-issued trading is expected to begin two days before the record date and when-issued trades are expected to settle within four days of the distribution date.
It is also anticipated that shortly before the record date and through the distribution date, there will be two markets in International Paper common stock: a “regular-way” market and an “ex-distribution” market. International Paper common stock that trades on the regular way market will trade with an entitlement to SpinCo common stock distributed pursuant to the Distribution. Shares that trade on the ex-distribution market will trade without an entitlement to SpinCo common stock distributed pursuant to the Distribution. Therefore, if you sell shares of International Paper common stock in the regular-way market up to and including the distribution date, you will be selling your right to receive SpinCo common stock in the Distribution. However, if you own shares of International Paper common stock as of 5:00 p.m., New York City time on the record date and sell those shares on the ex-distribution market up to and including the distribution date, you will still receive the SpinCo common stock that you would otherwise be entitled to receive pursuant to your ownership of shares of International Paper common stock because you owned these shares of common stock as of 5:00 p.m., New York City time on the record date.
 
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 THE MERGER AGREEMENT
The following is a summary of material provisions of the Merger Agreement, which we entered into on January 28, 2014. This summary is qualified in its entirety by reference to the full text of the Merger Agreement which is filed as an exhibit to the registration statement of which this prospectus forms a part.
The Merger
Under the Merger Agreement and in accordance with the DGCL, at the effective time of the Merger, UWWH will merge with and into SpinCo. As a result of the Merger, the separate corporate existence of UWWH will cease and SpinCo will continue as the surviving corporation and will succeed to and assume all the rights, powers and privileges and franchises, and be subject to all of the obligations of UWWH in accordance with the DGCL and upon the terms set forth in the Merger Agreement. The certificate of incorporation and bylaws of SpinCo, as in effect immediately prior to the effective time of the Merger, will be the certificate of incorporation and bylaws of the combined company from and after the effective time of the Merger until amended in accordance with applicable law and such certificate of incorporation.
Under the terms of the Merger Agreement, the board of directors of SpinCo immediately prior to the effective time of the Merger will be, from and after the effective time of the Merger, the initial members of the board of directors of the combined company and will serve until their successors have been duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the combined company’s certificate of incorporation and bylaws.
The Subsidiary Merger
Under the Merger Agreement and in accordance with the DGCL, immediately following the effective time of the Merger, xpedx Intermediate will be merged with and into UWW. Following the Subsidiary Merger, the separate corporate existence of xpedx Intermediate will cease, and UWW will continue as the surviving corporation and will succeed to and assume all the rights, powers, privileges and franchises, and be subject to all of the obligations of xpedx Intermediate in accordance with the DGCL and upon the terms set forth in the Merger Agreement. The certificate of incorporation and bylaws of Unisource as in effect immediately prior to the consummation of the Subsidiary Merger will be the certificate of incorporation and bylaws of Unisource following the Subsidiary Merger until amended in accordance with the terms thereof and applicable law.
All membership interests in xpedx Intermediate outstanding immediately prior to the consummation of the Subsidiary Merger will be automatically converted into the right to receive one fully paid and non-assessable share of UWW common stock.
Closing and Effective Time
Under the terms of the Merger Agreement, the closing of the Merger will take place at 10:00 a.m., New York time, on a date to be specified by the parties to the Merger Agreement, which will be no later than the eighth business day after the satisfaction or, to the extent permitted by applicable law, waiver of the conditions precedent to the Merger, unless another date is agreed to in writing by such parties.
On the Closing Date, SpinCo and UWWH will execute and file with the office of the Secretary of State of the State of Delaware a certificate of merger executed in accordance with the DGCL. The Merger will become effective at the time of filing of the certificate of merger, or at such later time as is agreed upon by the parties and set forth in the certificate of merger. We cannot assure you on what date we will consummate the Merger.
Merger Consideration
The Merger Agreement provides that, as of the effective time of the Merger, and without any action on part of any holder of capital stock of International Paper, SpinCo or UWWH, each share of UWWH common stock
 
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issued and outstanding immediately prior to the effective time of the Merger will be converted into the right to receive a number of shares of SpinCo common stock issued and outstanding equal to (i) (a) the aggregate number of shares of SpinCo common stock issued and outstanding after the Distribution, but prior to the Merger, divided by (b) 0.51, multiplied by (c) 0.49, divided by (d) the aggregate number of shares of UWWH common stock issued and outstanding on a fully diluted basis as of immediately prior to the effective time of the Merger, (ii) any rights provided to UWWH or the UWWH Stockholder under the Tax Receivable Agreement and (iii) the right to receive any amounts payable pursuant to certain adjustments described below.
No fractional shares of SpinCo common stock will be issued to the UWWH Stockholder in the Merger. Following the effective time of the Merger, all shares of UWWH common stock will be automatically cancelled and cease to exist.
Working Capital, Net Indebtedness and Transaction Expenses Adjustments
The Merger Agreement provides that not less than three (but not more than five) business days prior to the anticipated date of the Distribution, UWWH will deliver to International Paper and SpinCo an unaudited balance sheet of UWWH and its subsidiaries and a statement setting forth its good faith estimate of Unisource’s transaction expenses, working capital and net indebtedness (as defined in the Merger Agreement as the “UWWH Estimated Transaction Expenses Amount,” “UWWH Estimated Working Capital Adjustment” and “UWWH Estimated Net Debt Adjustment,” respectively) as of the closing date. If the transaction expenses of Unisource exceed $15 million, the special payment to International Paper pursuant to the Contribution and Distribution Agreement will be increased by a corresponding amount. If the estimated working capital of Unisource as of the date of the Distribution exceeds $499.1 million, SpinCo will make a payment to the UWWH Stockholder in an amount equal to the excess. If the estimated net indebtedness of Unisource as of the date of the Distribution is less than $318.2 million, SpinCo will make a payment to the UWWH Stockholder in an amount equal to the absolute value of the deficit. If the estimated working capital of Unisource as of the date of the Distribution is less than $499.1 million, the special payment to International Paper will be increased by an amount equal to the absolute value of the difference. If the estimated net indebtedness of Unisource as of the date of the Distribution is more than $318.2 million, the special payment to International Paper will be increased by an amount equal to the excess.
The Merger Agreement provides that within 90 days after the Distribution, the combined company will cause to be prepared and delivered to International Paper and the UWWH Stockholder an unaudited balance sheet of Unisource and a calculation of the amounts referred to above. The parties will resolve any disputes they may have over the statement and agree upon a final, conclusive calculation of such amounts, and if they are unable to resolve such disputes, they will retain an accounting firm to make a final determination of the amounts. After the amounts are finally determined, an appropriate payment will be made to account for any difference between the finally determined amounts and the estimated amounts used at closing.
Conditions to Consummation of the Merger
The obligations of each party to consummate the Merger are subject to the satisfaction or waiver (to the extent permitted by applicable law) of closing conditions that are contained in the Merger Agreement, including:
 
 	•	 	the Contribution and Distribution having occurred pursuant to the terms of the Contribution and Distribution Agreement;	
 
 	•	 	SpinCo’s receipt of the proceeds from the special payment financing in an amount sufficient to pay the special payment, and International Paper’s receipt of the special payment from SpinCo;	
 
 	•	 	International Paper’s receipt of one or more private letter rulings from the IRS, which rulings shall be in full force and effect on the Closing Date, to the effect that (i) the transactions that comprise the Distribution will qualify as a “reorganization” within the meaning of Section 368(a)(1)(D) of the Code,	
 
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 	(ii) International Paper will recognize no gain or loss under Section 361(c) of the Code upon the Distribution and (iii) International Paper’s shareholders will recognize no gain or loss under Section 355(a) of the Code upon the receipt of SpinCo shares in the Distribution;	
 
 	•	 	the receipt of the approval of shareholders of UWWH, UWW and SpinCo and the approval of the sole member of xpedx Intermediate;	
 
 	•	 	the receipt of all consents, approvals and authorizations by governmental authorities;	
 
 	•	 	the receipt by International Paper’s board of directors of a customary solvency and surplus opinion of a nationally recognized investment banking or appraisal firm;	
 
 	•	 	the expiration or termination of any required waiting period, or the non-issuance of a stop order, as applicable, under the HSR Act, Competition Act (Canada), Federal Law on Economic Competition of Mexico and Austrian Cartel Act of 2005;	
 
 	•	 	the effectiveness of the registration statement on Form S-1, of which this prospectus forms a part, and the approval of the listing of the shares of SpinCo common stock on the NYSE, subject to official notice of the issuance; and	
 
 	•	 	the absence of any order issued by any governmental authority of competent jurisdiction or other legal impediment preventing or making illegal the consummation of the Transactions.	
In addition, International Paper, SpinCo, xpedx Intermediate and xpedx LLC’s obligations to consummate the Merger are subject to the satisfaction or waiver (to the extent permitted by applicable law) of the following conditions:
 
 	•	 	the representations and warranties of the UWWH Stockholder, UWWH and UWW, disregarding all materiality or material adverse effect qualifications, being true and correct in all respects in each case as of the effective time of the Merger as if made as of the effective time of the Merger (except to the extent such representations and warranties address matters as of a particular date, in which case as of such date), except where the failure to be true and correct has not had or would not, individually or in the aggregate, reasonably be expected to have a UWWH MAE (other than certain representations and warranties which must be true and correct in all respects);	
 
 	•	 	the covenants and agreements being performed by the UWWH Stockholder, UWWH and UWW in all material respects at or prior to the effective time of the Merger (other than certain covenants and agreements which must be performed in all respects);	
 
 	•	 	the delivery by UWWH of an officer’s certificate certifying the satisfaction of the above conditions;	
 
 	•	 	the absence of a UWWH MAE since June 30, 2013;	
 
 	•	 	the receipt by International Paper and SpinCo of a tax opinion regarding the tax-free treatment of the spin-off;	
 
 	•	 	the receipt of the Debevoise Merger Opinion;	
 
 	•	 	the entrance into and delivery of the applicable Transaction Agreements by the UWWH Stockholder and UWWH, which are in full force and effect;	
 
 	•	 	the delivery by the UWWH Stockholder to SpinCo of a certification that it is not a foreign person; and	
 
 	•	 	the termination of the advisory agreement among UWWH, UWW and Bain Capital, without liability to SpinCo or its subsidiaries.	
Furthermore, UWWH and UWW’s obligations to consummate the Merger are subject to the satisfaction or waiver (to the extent permitted by applicable law) of the following conditions:
 
 	•	 	the representations and warranties of International Paper, SpinCo, xpedx Intermediate and xpedx LLC, disregarding all materiality or material adverse effect qualifications, being true and correct in all respects in each case as of the effective time of the Merger as if made as of the effective time (except to	
 
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 	the extent such representations and warranties address matters as of a particular date, in which case as of such date), except where the failure to be true and correct has not had or would not, individually or in the aggregate, reasonably be expected to have a SpinCo MAE (other than certain representations and warranties which must be true and correct in all respects);	
 
 	•	 	the covenants and agreements being performed by International Paper, SpinCo, xpedx Intermediate and xpedx LLC in all material respects at or prior to the effective time of the Merger (other than certain covenants and agreements which must be performed in all respects);	
 
 	•	 	the delivery by each of International Paper and SpinCo of an officer’s certificate certifying the satisfaction of the above conditions;	
 
 	•	 	the absence of any SpinCo MAE since June 30, 2013;	
 
 	•	 	the receipt of the Kirkland Merger Opinion and the Subsidiary Merger Opinion; and	
 
 	•	 	the entrance into and delivery of the applicable Transaction Agreements by International Paper, SpinCo, xpedx Intermediate and xpedx LLC, which are in full force and effect.	
Furthermore, the effective date of the registration statement of which this prospectus forms a part will be no earlier than the date on which SpinCo as the surviving corporation would be reasonably able to meet its obligations and requirements as a public company with securities listed on the NYSE and is otherwise reasonably prepared to operate as a standalone entity taking into account all resources available to it under the Transaction Agreements and on commercially reasonable terms from third parties.
To the extent permitted by applicable law, each party to the Merger Agreement may waive, at its sole discretion, any of the conditions to its respective obligations to complete the Merger.
Regulatory Approvals
Under the HSR Act, and the rules promulgated under the HSR Act by the U.S. Federal Trade Commission (the “FTC”), the parties must file notification and report forms with the FTC and the Antitrust Division of the Department of Justice (the “Antitrust Division”) and observe specified waiting period requirements before consummating the Merger. Bain Capital Fund VII, L.P. and SpinCo each filed the requisite notification and report forms with the FTC and the Antitrust Division on May 31, 2013. The FTC granted early termination of the waiting period under the HSR Act on June 14, 2013. Because such termination of the waiting period under this notification remains effective for 12 months, and the possibility that the Closing Date could occur after June 14, 2014, Bain Capital Fund VII, L.P. and SpinCo each filed a second notification and report forms with the FTC and the Antitrust Division on December 23, 2013. The FTC granted early termination of the second waiting period under the HSR Act on January 7, 2014.
Under the Competition Act in Canada, the parties must file a pre-merger notification and observe the specified waiting period requirements before consummating the Merger, unless the parties are exempted from such requirements through the issuance of an Advance Ruling Certificate, or a “no-action” letter together with a waiver of the notification and waiting period requirements. UWWH and International Paper filed the requisite notification and report forms with the Competition Bureau of Canada on June 17, 2013. On June 27, 2013, the Competition Bureau of Canada issued a “no-action” letter together with a waiver of the notification and waiting period requirements in Canada in respect of the Merger.
Under the Austrian Cartel Act 2005, Bain Capital Investors, LLC must file a pre-merger notification and observe the specified waiting period requirements before consummating the Merger, unless the Federal Competition Authority and the Federal Cartel Attorney of Austria (together the “Official Parties”) inform the parties in writing that neither of the Official Parties has requested an in-depth investigation before the Cartel Court of Austria (Phase II) prior to the expiry of the waiting period requirements or the Official Parties waive,
 
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upon the request of the parties, the specified waiting period requirements. Bain Capital Investors LLC filed the requisite notification and report forms with the Federal Competition Authority on August 23, 2013. On September 23, 2013, the Federal Competition Authority issued a letter confirming that neither of the Official Parties had requested an in-depth investigation before the Cartel Court of Austria in respect of the Merger and that the prohibition to implement the Merger ended on September 21, 2013.
Under the Federal Economic Competition Law of Mexico, the parties are required to file a concentration notice requesting the authorization of the transaction from the regulator, the Federal Economic Competition Commission (“FECC”). SpinCo and UWWH filed the concentration notice with the FECC on September 4, 2013. On September 9, 2013, the FECC issued a “stop order,” which provided that the Transactions could not close until final approval by the FECC was issued. We received the FECC approval on January 31, 2014.
Representations and Warranties
The Merger Agreement contains substantially reciprocal customary representations and warranties that International Paper, SpinCo, xpedx Intermediate, xpedx LLC, UWWH and UWW made to each other as of specific dates. The UWWH Stockholder also made similar representations and warranties with respect to, among other things, its capital structure and status as an investor.
The representations and warranties by each of International Paper, SpinCo, xpedx Intermediate, xpedx LLC, UWWH and UWW in the Merger Agreement relate to, among other things:
 
 	•	 	due organization, good standing, corporate power and subsidiaries;	
 
 	•	 	authority to enter into the Merger Agreement (and other transaction-related agreements) and no conflicts with or violations of governance documents, other obligations or laws;	
 
 	•	 	capitalization;	
 
 	•	 	affiliate transactions;	
 
 	•	 	financial statements and absence of undisclosed liabilities;	
 
 	•	 	compliance with SEC requirements of the information supplied for this prospectus;	
 
 	•	 	ownership of assets;	
 
 	•	 	absence of certain changes or events;	
 
 	•	 	litigation and similar actions;	
 
 	•	 	compliance with applicable laws and ownership of certain licenses;	
 
 	•	 	environmental matters;	
 
 	•	 	tax matters;	
 
 	•	 	employee benefit matters;	
 
 	•	 	labor and employment matters;	
 
 	•	 	intellectual property matters;	
 
 	•	 	existence and enforceability of material contracts;	
 
 	•	 	approval by the board of directors and votes required;	
 
 	•	 	insurance;	
 
 	•	 	payment of fees to brokers or finders in connection with the Merger Agreement and other Transaction Agreements;	
 
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 	•	 	transaction bonuses; and	
 
 	•	 	true and complete disclosure of bank accounts.	
In addition, International Paper, SpinCo, xpedx Intermediate and xpedx LLC made representations and warranties that relate to:
 
 	•	 	the sufficiency of assets necessary to run the xpedx business;	
 
 	•	 	status of the new SpinCo common stock; and	
 
 	•	 	operations of SpinCo.	
Furthermore, UWWH and UWW made representations and warranties that relate to the absence of dividends since June 30, 2013.
In addition to making representations and warranties related to due organization, good standing, corporate power, authority to enter into the Merger Agreement (and additional agreements) and no conflicts with or violation of governance documents, and other obligations or laws, the UWWH Stockholder also made representations to International Paper and SpinCo relating to the prohibition of public sale or distribution of SpinCo common stock, its accredited investor status, its reliance on exemptions from the U.S. securities laws, the supply of requested information, the absence of a governmental review of the investment in and offering of SpinCo common stock and the transfer or resale of SpinCo common stock.
Many of the representations and warranties contained in the Merger Agreement are subject to a “material adverse effect” standard, and, except for the representations and warranties related to information supplied in this prospectus (which survive for two years after the effective time of the Merger), do not survive the closing.
Under the Merger Agreement, SpinCo MAE means any effect, change or circumstance, individually or in the aggregate, that is, or would reasonably be expected to be, materially adverse to (i) the xpedx business, SpinCo or any of its subsidiaries, International Paper or any of its subsidiaries with respect to the xpedx business, or the financial condition or results of operations of the xpedx business, taken as a whole, or (ii) the ability of International Paper, SpinCo or any of their respective subsidiaries to consummate the Merger and to perform their obligations under the Merger Agreement and the Transaction Agreements. However, any adverse effect, change or circumstance, individually or in the aggregate, arising from or relating to the following will not be deemed either to constitute, or be taken into account in determining whether there has occurred a SpinCo MAE (but only if the xpedx business, SpinCo or its subsidiaries or International Paper or its subsidiaries with respect to the xpedx business are not disproportionately affected thereby compared to other operators of xpedx’s business):
 
 	•	 	general business or economic conditions, including any such conditions as they relate to the xpedx business and matters generally affecting the industries in which the xpedx business operates;	
 
 	•	 	national or international political or social conditions, including the engagement by the United States in hostilities, whether or not pursuant to the declaration of a national emergency or war, or the occurrence of any military or terrorist attack upon the United States, or any of its territories, possessions or diplomatic or consular offices or upon any military installation, equipment or personnel of the United States	
 
 	•	 	financial, banking or securities markets;	
 
 	•	 	changes in GAAP;	
 
 	•	 	changes in any laws; and	
 
 	•	 	except for the purposes of clause (ii) above, the negotiation or execution of the Merger Agreement or any Transaction Agreement, any actions that are required to be taken by the Merger Agreement or the Transaction Agreements or the pendency or announcement of the Transactions.	
In addition, the term UWWH MAE, means any effect, change or circumstance, individually or in the aggregate, that is, or would reasonably be expected to be, materially adverse to (i) UWWH, its subsidiaries or the
 
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financial condition or results of operations of Unisource, taken as a whole, or (ii) the ability of UWWH to consummate the Merger and to perform its obligations under the Merger Agreement and the Transaction Agreements. However, any adverse effect, change or circumstance, individually or in the aggregate, arising from or relating to the following will not be deemed either to constitute, or be taken into account in determining whether there has occurred a UWWH MAE (but only if UWWH and its subsidiaries are not disproportionately affected thereby compared to other operators of Unisource’s business):
 
 	•	 	general business or economic conditions, including any such conditions as they relate to Unisource, and matters generally affecting the industries in which Unisource operates;	
 
 	•	 	national or international political or social conditions, including the engagement by the United States in hostilities, whether or not pursuant to the declaration of a national emergency or war, or the occurrence of any military or terrorist attack upon the United States, or any of its territories, possessions or diplomatic or consular offices or upon any military installation, equipment or personnel of the United States;	
 
 	•	 	financial, banking or securities markets;	
 
 	•	 	changes in GAAP;	
 
 	•	 	changes in any laws; and	
 
 	•	 	except for the purposes of clause (ii) above, the negotiation or execution of the Merger Agreement or any Transaction Agreement, any actions that are required to be taken by the Merger Agreement or the Transaction Agreements or the pendency or announcement of the Transactions.	
Covenants
In the Merger Agreement, each of International Paper and SpinCo and each of their respective subsidiaries have made certain covenants relating to its conduct in respect of the SpinCo business, and UWWH and its subsidiaries has made certain covenants relating to its conduct of its business, with certain exceptions specified in the Merger Agreement. Some of these covenants are not easily summarized. You are urged to read carefully the sections of the Merger Agreement entitled “Conduct of the Business Pending the Merger.” The following summarizes the more significant of these covenants:
Conduct of Business
Each of International Paper and SpinCo, with respect to the xpedx business, and UWWH are required to carry on its respective business in the ordinary course consistent with past practice and to use reasonable best efforts to preserve intact its respective current business organization, maintain material rights and licenses, keep available the services of current officers and key employees and preserve relationships with customers, suppliers and others having business dealings with it in such a manner that its goodwill and ongoing businesses are not impaired in any material respect as of the effective time of the Merger.
Required Consent
Without the prior written consent of the other parties to the Merger Agreement, subject to certain exceptions and items disclosed in the schedules to the Merger Agreement, none of International Paper (with respect to the xpedx business only), SpinCo, UWWH or any of their respective subsidiaries may take any or all of the following actions or authorize, commit or agree to take any of the following actions:
 
 	•	 	split, combine or reclassify any of its capital stock or issue or propose to issue any other securities;	
 
 	•	 	amend the terms or change the period of exercisability of, purchase, repurchase, redeem or otherwise acquire any securities of any of their respective subsidiaries or propose to do any of the foregoing;	
 
 	•	 	issue, sell, pledge, dispose of or encumber any shares of capital stock of any class or any options, warrants, convertible securities or other rights of any kind to acquire any shares of capital stock, or any	
 
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 	other ownership interest; or accelerate the timing of payments or vesting under, or otherwise materially amend or supplement, any existing benefit, stock option compensation plan or arrangement, except as otherwise provided for in the Merger Agreement;	
 
 	•	 	amend or propose to amend or otherwise change the certificate of incorporation or bylaws or similar governance documents;	
 
 	•	 	enter into a transaction, acquire by merging or consolidating with, or by purchasing any equity interest in or the assets of, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof;	
 
 	•	 	enter into a transaction, sell, lease, pledge, encumber, transfer, license or otherwise dispose of any of its assets, excluding the disposition for fair market value in the ordinary course of business of assets having a fair market value not exceeding $500,000 in the aggregate;	
 
 	•	 	obligate the combined company or its subsidiaries to pay any amounts or assume any obligations at or after the effective time of the Merger;	
 
 	•	 	incur any indebtedness for borrowed money or guarantee or otherwise become contingently liable for any such indebtedness or issue or sell any debt securities or warrants or rights to acquire any of its debt securities or guarantee any debt securities of others or enter into any material lease other than in connection with operating leases in the ordinary course of business;	
 
 	•	 	issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for, the obligations of any person for borrowed money or otherwise;	
 
 	•	 	make any loans, advances, capital contributions to or investments in any other person other than as specified in the Merger Agreement;	
 
 	•	 	authorize material capital expenditures or purchases of fixed assets other than from third parties in the ordinary course of business;	
 
 	•	 	incur liabilities secured by an encumbrance on its assets other than in the ordinary course of business;	
 
 	•	 	adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other material reorganization or any other transaction that would preclude or be inconsistent in any material respect with, or hinder or delay in any material respect, the transactions contemplated by the Merger Agreement or the Transaction Agreements;	
 
 	•	 	make any material change in the methods of accounting or procedures in effect as of January 1, 2013 (except as required by changes in GAAP or in response to SEC guidance or as may be required in connection with the Merger);	
 
 	•	 	make, change or rescind any material tax election, settle, compromise or abandon any material action or controversy relating to taxes, amend any material returns, adopt or change any material method of tax accounting or change any annual tax accounting period or consent to any extension or waiver of the limitation period applicable to any material tax claim or assessment, in filing returns;	
 
 	•	 	enter into or amend any contract or arrangement with affiliates, except in connection with the Merger or for arm’s length commercial arrangements entered into in the ordinary course of business with certain limitations;	
 
 	•	 	modify, amend, terminate or enter into any material contracts with a third party, or waive, realize or assign any material rights or claims, except in the ordinary course of business and, in the case of SpinCo, except in connection with an approved offer of employment to certain senior employees of SpinCo;	
 
 	•	 	pay discharge, satisfy or settle any action, other than any action in respect of taxes, if such payment would (i) require any material payment prior to the effective time of the Merger or (ii) restrict operations in any material respect or require the taking of action that would, or would reasonably be expected to, materially and adversely, affect the operation of business;	
 
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 	•	 	enter into any contract or arrangement that limits or restricts the entity from engaging in its business;	
 
 	•	 	sell, transfer, license, abandon, let lapse, encumber or otherwise dispose of any intellectual property that is necessary to carry on the business substantially as currently conducted; or	
 
 	•	 	agree or commit to do any of the actions inconsistent with the foregoing restrictions and limitations.	
In addition, without the prior written consent of the other parties to the Merger Agreement, and with certain exceptions described in or contemplated by the Merger Agreement (which exceptions apply to certain but not all of the following items), neither UWWH nor any of its subsidiaries may declare, set aside or pay dividends on or make other distributions in respect of any shares of the capital stock or partnership or equity interests of itself or any of its subsidiaries, or authorize, commit or agree to take the foregoing actions.
Competition Approvals; IRS Rulings
Each party to the Merger Agreement agreed to use its reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary under applicable laws and regulations to consummate and make effective the Transactions and the Transaction Agreements, including providing information and using their reasonable best efforts to obtain all necessary exemptions, rulings, consents, authorizations, approvals and waivers to effect all necessary registrations and filings and to lift any injunction or other legal bar to the Transactions, as promptly as practicable, and to take all other actions necessary to consummate the Transactions in a manner consistent with applicable law. Any filing fees required to be paid by the parties under any filing with any governmental authority will be borne one-half by International Paper and one-half by UWWH.
International Paper and SpinCo also agreed to use their reasonable best efforts to seek, as promptly as practicable, one or more private letter rulings from the IRS, in form and substance reasonably satisfactory to International Paper, and an opinion of their tax counsel regarding certain United States federal income tax matters relating to the Transactions. UWWH and the UWWH Stockholder each agreed to cooperate and use reasonable best efforts to assist in obtaining such rulings and opinion. In addition, International Paper agreed to obtain an opinion of its tax counsel regarding certain United States federal income tax matters related to the Merger and UWWH agreed to obtain opinions of its tax counsel regarding certain United States federal income tax matters related to the Merger and the Subsidiary Merger, unless, in each case, such party waives such requirement to obtain the opinion.
Employee Matters
Subject to certain exceptions and other than as required by law or certain collective bargaining agreements, none of International Paper (with respect to the xpedx business), SpinCo, UWWH or their respective subsidiaries will:
 
 	•	 	grant any material increase in compensation or fringe benefits to its employees;	
 
 	•	 	pay or agree to pay any pension, retirement allowance, severance benefit or other material employee benefit not required by any of the existing benefit plans as in effect on the date the Merger Agreement was signed or in connection with an approved offer of employment to certain senior employees of SpinCo;	
 
 	•	 	except in the ordinary course of business or with respect to an approved offer of employment to certain senior employees of SpinCo, enter into any new, or materially terminate or amend any existing collective bargaining agreement or relationship, employment, severance or termination contract or other arrangement with any employee; provided, that any such new or material amendment to a collective bargaining agreement will be subject to review by xpedx management and UWWH and subject to approval by xpedx management;	
 
 	•	 	become obligated under any new, or amend any existing, pension plan, welfare plan, employee benefit plan, severance plan, benefit arrangement or similar plan or arrangement, except as would not result in a material increase in the annual aggregate cost of maintaining such plan;	
 
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 	•	 	except to the extent that it has obtained written consent from the other parties to the Merger Agreement, grant any equity-based compensation to any employee or director or independent contractor in respect of its stock;	
 
 	•	 	make any offer for the employment or engagement of any employee providing for annual compensation in excess of $250,000, other than an approved offer of employment to certain senior employees of SpinCo;	
 
 	•	 	implement any distribution center, facility, warehouse or business unit closing or mass layoff that could implicate the Worker Adjustment and Retraining Notification Act of 1988; or	
 
 	•	 	make any loan to any director, officer or member of senior management, or except in the ordinary course of business and in compliance with applicable law, to any other employee.	
Directors of SpinCo
The board of directors of SpinCo immediately prior to the effective time of the Merger will be the initial members of the board of directors of the combined company at and immediately following the effective time of the Merger.
Directors and Officers Indemnification; Insurance
The Merger Agreement provides that for a period of at least six years after the effective time of the Merger, the combined company will indemnify and hold harmless, and provide advancement of expenses, subject to certain conditions, to all past and present directors or officers of International Paper, SpinCo, UWWH and their respective subsidiaries and each individual who prior to the effective time of the Merger becomes a director or officer of International Paper, SpinCo or UWWH or their respective subsidiaries, to the maximum extent allowed under applicable law in respect of acts or omissions occurring at or prior to the effective time of the Merger Agreement or other Transaction Agreements. The Merger Agreement also provides that the combined company will maintain in effect for the benefit of such individuals directors’ and officers’ liability and fiduciary liability insurance for a period of at least six years following the Merger.
No Solicitation of Acquisition Proposals
Each of UWWH, International Paper and SpinCo agreed that, except in certain circumstances, it and its subsidiaries will not authorize or permit any of the following actions:
 
 	•	 	directly or indirectly, solicit, initiate or encourage any inquiry or proposal that constitutes or could reasonably be expected to lead to an acquisition proposal;	
 
 	•	 	provide any non-public information or data to any person relating to or in connection with an acquisition proposal;	
 
 	•	 	waive, amend or modify any standstill or confidentiality agreement to which it or any of its subsidiaries is a party in connection with an acquisition proposal;	
 
 	•	 	enter into, maintain or continue any discussions or negotiations concerning an acquisition proposal; or	
 
 	•	 	otherwise cooperate with, participate in or facilitate any effort to attempt to make or implement, or approve, agree to, recommend or accept, or execute or enter into, any letter of intent, agreement in principle, merger agreement, acquisition agreement, option agreement or other similar agreement related to any acquisition proposal.	
Other than in connection with the Merger or as specifically contemplated in the Merger Agreement or the Transaction Agreements, an “acquisition proposal” includes, with respect to SpinCo, any proposal relating to:
 
 	•	 	any merger, consolidation, share exchange, business combination, recapitalization or other similar transaction or series of related transactions with respect to the xpedx business;	
 
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 	•	 	any sale, lease, exchange transfer or other disposition in a single transaction or a series of related transactions, of the assets of the xpedx business or SpinCo entities constituting 15% or more of the consolidated assets of the xpedx business or accounting for 15% or more of the consolidated revenues of the xpedx business; or	
 
 	•	 	any other similar transaction that would reasonably be expected to prevent or materially impair or delay the consummation of the Transactions or the Transaction Agreements.	
Other than in connection with the Merger or as specifically contemplated in the Merger Agreement or the Transaction Agreements, an “acquisition proposal” includes, with respect to UWWH, any proposal relating to:
 
 	•	 	any merger, consolidation, share exchange, business combination, recapitalization or other similar transaction or series of related transactions with respect to UWWH or its subsidiaries representing a material portion of UWWH’s business;	
 
 	•	 	any sale, lease, exchange, transfer or other disposition, in a single transaction or a series of related transactions, of the assets of UWWH or any of its subsidiaries constituting 15% or more of the consolidated assets of UWWH or accounting for 15% or more of the consolidated revenues of UWWH; or	
 
 	•	 	any other similar transaction that would reasonably be expected to prevent or materially impair or delay the consummation of the Transactions or the Transaction Agreements.	
Tax Matters
Each party to the Merger Agreement has agreed that it will not take any action, or refrain from taking any action, which (i) is inconsistent with the facts presented and the representations made in the IRS submissions with respect to such party or its affiliates or (ii) could reasonably be expected to cause any tax-free transaction failure (as described in the Tax Matters Agreement). See “The Contribution and Distribution Agreement and Ancillary Agreements—Tax Matters Agreement.”
Financing
International Paper, SpinCo and UWWH agreed to use their reasonable best efforts to consummate the debt financing to be incurred by xpedx LLC or its subsidiaries to fund the special payment to International Paper and the refinancing of the Unisource credit facility on terms and conditions no less favorable in the aggregate than the terms set forth in the debt commitment letter, dated as of January 28, 2014, among SpinCo, Bank of America, N.A., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Wells Fargo Bank, N.A., SunTrust Bank and SunTrust Robinson Humphrey, Inc. If such financing becomes unavailable on such terms and conditions, International Paper, SpinCo and UWWH will use their reasonable best efforts to promptly obtain alternative financing from the same or alternative sources in an amount sufficient to consummate the transactions contemplated by the Merger Agreement and the other Transaction Agreements. Without the prior written consent of International Paper and UWWH, SpinCo cannot, among other things, (x) terminate the debt commitment letter, (y) consent to any amendment or modification that would add or change the conditions precedent, delay or prevent the funding under the debt financing, be more restrictive with respect to payments under the Tax Receivable Agreement, adversely affect in any material respect those terms set forth in the debt commitment letter or result in terms less favorable in the aggregate to International Paper, SpinCo or UWWH or (z) enter into any definitive documentation with terms inconsistent with the debt commitment letter. Each of International Paper, SpinCo and UWWH will use their reasonable best efforts to cooperate with each other and to assist in marketing the surviving corporation and the common stock of SpinCo.
Non-Solicitation of Employees and Customers
Subject to certain exceptions set forth in the Merger Agreement, International Paper agreed that for a period of 18 months from and after the effective time of the Merger, it and its subsidiaries would not, without the prior
 
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written consent of the combined company, approach, solicit, induce or attempt to induce certain restricted employees from leaving the employ of the combined company or hire, employ or enter into a consulting agreement with certain restricted employees unless such employee ceased to be an employee or was terminated six months prior to his or her employment.
Subject to certain exceptions set forth in the Merger Agreement, International Paper also agreed that for a period of two years from and after the effective time of the Merger it and its subsidiaries would not, without the prior written consent of the combined company, solicit certain restricted customers of the combined company with respect to offset paper products, cut-size paper products, forms and converting paper products or coated paperboard products that are manufactured by International Paper or any of its subsidiaries and sold by the xpedx business to such restricted customers as of the date of the Merger Agreement. Nothing in the Merger Agreement, however, prevents International Paper or its subsidiaries from responding to unsolicited requests initiated by restricted customers for such covered products or from selling the category of covered product that International Paper or its subsidiaries (other than the xpedx business) sold to such restricted customer as of the date of the Merger Agreement. If a restricted customer makes an unsolicited request of International Paper or its subsidiaries and such request is in connection with such restricted customer seeking multiple supplier bids, International Paper will inform the combined company of such unsolicited request and its or its subsidiary’s intention to respond to such unsolicited request. The non-solicit of a restricted customer with respect to a covered product falls away in the event that (i) the combined company has not during the immediately preceding 30 days (or more) sold such category of covered product to such restricted customer and International Paper and the combined company reasonably agree that such failure to sell is due to specified reasons set forth in the Merger Agreement or (ii) the combined company transfers the supply of covered product of a restricted customer away from International Paper and its subsidiaries to another supplier, unless the combined company provides notice of the terms such other supplier is willing to offer and International Paper is unwilling to supply such covered product on terms not less favorable than those offered by such other supplier.
In the event that a division producing covered products is sold or transferred by International Paper, the non-solicit obligations shall continue to be binding upon such division after such sale or transfer until the end of the two-year period.
Non-Competition
For a period of four years from and following the effective time of the Merger, International Paper agreed that it and its subsidiaries would not, without the prior written consent of the combined company, acquire any interest in, operate, manage, control, or engage in certain restricted businesses specified in the Merger Agreement; provided, however, that nothing in the Merger Agreement prohibits (i) International Paper or its subsidiaries from selling or distributing products manufactured by third parties that are ancillary to and sold in connection with sales of products manufactured by International Paper or its affiliates so long as all such products in the aggregate (other than certain specified products) are of a de minimis value in relation to all International Paper manufactured covered products in the aggregate, (ii) selling any products to or performing any services for the combined company or (iii) acquiring the assets or capital stock or other equity interests of any other entity engaged in certain restricted businesses (provided that International Paper divests or terminates such restricted business within 12 months of its acquisition). The protocol for divesting such acquired restricted business is set forth in the Merger Agreement. The restricted business does not include (i) the sale by International Paper or any of its subsidiaries of products manufactured by International Paper or any of its subsidiaries, or (ii) any other activities conducted by International Paper or any of its subsidiaries as of the date of the Merger Agreement (so long as there is no material expansion thereof after the date of the Merger Agreement), other than the xpedx business.
 
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Other Covenants and Agreements
The Merger Agreement contains certain other covenants and agreements, including covenants (with certain exceptions specified in the Merger Agreement) relating to:
 
 	•	 	cooperation among the parties relating to the prompt preparation and filing of the registration statement of which this prospectus forms a part;	
 
 	•	 	prior to the effective time of the Merger, the approval of the listing on the NYSE of the SpinCo common stock issued pursuant to the Distribution and the Merger;	
 
 	•	 	SpinCo’s actions as may be required under state securities or blue sky laws in connection with the issuance of shares of SpinCo common stock pursuant to the Distribution and the Merger;	
 
 	•	 	assistance as any party may reasonably request and as may be reasonably necessary or appropriate in effectuating the provisions of the Merger Agreement;	
 
 	•	 	cooperation of any third parties necessary for each party to fulfill its obligations under the Merger Agreement;	
 
 	•	 	confidentiality, reasonable access with respect to certain information relating to the parties and the preservation of records following the effective time of the Merger;	
 
 	•	 	International Paper’s obligation to use its reasonable best efforts to list all license agreements or contracts that are material to the xpedx business, subject to certain exceptions;	
 
 	•	 	the making of public announcements or press releases with respect to the Merger or the Transactions;	
 
 	•	 	defense of litigation and other actions attempting to challenge, enjoin, restrain or prohibit the consummation of the Transactions;	
 
 	•	 	the notification of events, the occurrence or nonoccurrence of which could result in a closing condition to the Merger Agreement being incapable of being fulfilled;	
 
 	•	 	the delivery of payoff letters with respect to certain indebtedness and the delivery of invoices with respect to those expenses that the parties to the Merger Agreement have agreed to share;	
 
 	•	 	termination of the advisory agreement among UWWH, Unisource and Bain Capital;	
 
 	•	 	the delivery of audited and unaudited financial statements between the signing of the Merger Agreement and the effective date of the Merger;	
 
 	•	 	the development of a system of internal controls over financial reporting and integration of the financial reporting systems of SpinCo and UWWH; and	
 
 	•	 	the amount allocated to International Paper with respect to the restructuring of the xpedx business.	
Amendment; Extension; Waiver
The Merger Agreement may be amended by the parties at any time, provided that any amendment that by law requires the further approval of the shareholders of SpinCo, UWWH or UWW and the member approval of xpedx Intermediate will not be made without such approvals. Prior to the effective time of the Merger, the parties may extend the time for the performance of any of the obligations or other acts of the parties or waive any inaccuracies in the representations and warranties or compliance with any of the agreements or conditions contained in the Merger Agreement.
 
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Termination of the Merger; Termination Fees
The Merger Agreement may be terminated at any time before the effective time of the Merger by the mutual written consent of International Paper and UWWH. It may also be terminated by either International Paper or UWWH if:
 
 	•	 	the effective time of the Merger has not occurred on or before January 5, 2015 unless the failure to effect the Merger by that date is due to the failure of the party seeking to terminate the Merger Agreement to perform its obligations set forth in the Merger Agreement; or	
 
 	•	 	if any law or order of any governmental authority preventing or prohibiting the completion of the Transactions has become final and nonappealable.	
The Merger Agreement may also be terminated by:
 
 	•	 	UWWH at any time before the effective time if there has been a material breach by International Paper or SpinCo of any of its representations, warranties or covenants or agreements contained in the Merger Agreement, or any such representation and warranty has become untrue in any material respect, and such breach or inaccuracy has not been cured within 30 business days following notice of such breach (so long as UWWH is not then in material breach of any covenant, representation or warranty or other agreement contained in the Merger Agreement which breach would cause the closing conditions of International Paper or SpinCo not to be satisfied if the closing were to occur at the time of termination); or	
 
 	•	 	International Paper at any time before the effective time if there has been a material breach by UWWH of any of its representations, warranties or covenants or agreements contained in the Merger Agreement, or any such representation and warranty has become untrue in any material respect, and such breach or inaccuracy has not been cured within 30 business days following notice of such breach (so long as International Paper is not then in material breach of any covenant, representation or warranty or other agreement contained in the Merger Agreement which breach would cause the closing conditions of UWWH or the UWWH Stockholder not to be satisfied if the closing were to occur at the time of termination).	
In the event the Merger Agreement is terminated, UWWH and International Paper, as applicable, may be obligated to pay a termination fee to the other party as follows:
 
 	•	 	If the Merger Agreement is terminated as described in the second bullet of the preceding paragraph and (i) an acquisition proposal for UWWH has commenced or is publicly disclosed, proposed or announced or otherwise communicated to UWWH or the UWWH Stockholder prior to such termination and (ii) within 15 months following such termination, UWWH or any of its subsidiaries enters into a definitive agreement with respect to such acquisition proposal, UWWH will pay to International Paper a termination fee equal to $6 million; and	
 
 	•	 	If the Merger Agreement is terminated as described in the first bullet of the preceding paragraph and (i) an acquisition proposal for the xpedx business has commenced or is publicly disclosed, proposed or announced or otherwise communicated to International Paper or the International Paper shareholders prior to such termination and (ii) within 15 months following such termination, International Paper or SpinCo enters into a definitive agreement with respect to such acquisition proposal, International Paper will pay to UWWH a termination fee equal to $6 million.	
Fees and Expenses
Generally, all fees and expenses incurred in connection with the Transactions are to be paid by the party incurring such fees or expenses. Expenses incurred in connection with the SpinCo debt financing or by certain consultants or for certain other products or services for the benefit of the combined company are to be paid (i) by the combined company if the Merger is consummated or (ii) one-half by International Paper and one-half by UWWH if the Merger is not consummated. Subject to certain exceptions, the combined company will bear certain scheduled severance obligations, transaction bonus obligations and retention bonus obligations of UWWH and the xpedx business.
 
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 THE CONTRIBUTION AND DISTRIBUTION AGREEMENT AND THE ANCILLARY AGREEMENTS
Contribution and Distribution Agreement
The following is a summary of material provisions of the Contribution and Distribution Agreement, which we entered into on January 28, 2014. This summary is qualified in its entirety by reference to the full text of the Contribution and Distribution Agreement which is filed as an exhibit to the registration statement of which this prospectus forms a part.
General
The Contribution and Distribution Agreement among International Paper, SpinCo, UWWH and the UWWH Stockholder provides for, among other matters, the principal corporate transactions required to effect the proposed contribution of the xpedx business to SpinCo and distribution of SpinCo common stock to International Paper shareholders and certain other terms governing the relationship between International Paper and SpinCo with respect to or as a result of the Contribution and the Distribution.
Preliminary Transactions
Transfer of Assets . Pursuant to the Contribution and Distribution Agreement, and subject to certain exceptions, International Paper will transfer or cause to be transferred to xpedx LLC all of the right, title and interest of International Paper and its affiliates in the assets that are primarily used or held for use in, or that primarily arise from, the operation or conduct of the xpedx business or that are produced by the xpedx business for use in or sale by the xpedx business, including certain subsidiaries of International Paper through which the xpedx business is conducted internationally, after which all of the membership interests in xpedx LLC will be transferred to xpedx Intermediate and, in turn, all of the membership interests in xpedx Intermediate will be transferred to SpinCo.
The xpedx business consists of the business segment of International Paper referred to in International Paper’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012 as “Distribution,” which includes the business of purchasing for resale, and reselling, or acting as a broker for the purchase or sale of, products manufactured by third parties, including (i) printing, reprographics and writing paper products, (ii) paperboard and other consumer packaging products, (iii) containerboard, linerboard, corrugated products and other industrial packaging products, (iv) tissue, toilet paper, paper towels, paper napkins, plates, utensils, cups, and food containers, (v) cleaning products, liners, sanitation products, and other facilities supplies, (vi) cushioning and void fill products, shrink film, stretch film, pallet covering materials, strapping, bags, tape or other packaging materials and (vii) warehouse supply products, in each case, in North America. For purposes of the Contribution and Distribution Agreement, the xpedx business does not include the International Paper Asia Distribution business, nor does it include certain international entities that no longer have any operations or material assets.
Transfer of Liabilities . The transfer of assets to SpinCo is made subject to the assumption by xpedx LLC of liabilities of International Paper or its subsidiaries to the extent relating to or arising from the xpedx business or the transferred assets, subject to certain exceptions.
Exceptions to Transfers . Transfers of assets and liabilities are subject to receipt of applicable consents, waivers and approvals. International Paper must use its reasonable best efforts to obtain such consents, waivers and approvals that are required in order to effect the transfers of assets and liabilities. If International Paper cannot do so prior to the Distribution, it must use its reasonable best efforts (and SpinCo must cooperate with International Paper) to establish arrangements under which the SpinCo Group will obtain the economic claims, rights and benefits and assume the economic burden with respect to such assets and liabilities as closely as possible with the use of reasonable best efforts to that which would be applicable if the consent had been obtained and the asset or liability transferred.
 
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Consideration . Following certain preliminary transfers of assets and liabilities, and prior to the Distribution and Merger, International Paper will contribute all of the membership interests in xpedx Intermediate to SpinCo in exchange for the issuance of SpinCo common stock to International Paper and a special payment to International Paper equal to an amount determined by International Paper, which shall not exceed $400 million, subject to the working capital and net indebtedness adjustments described below.
The financing associated with these transactions is described further in “The Merger Agreement—Covenants—Financing” and “Description of Material Indebtedness.”
Working Capital and Net Indebtedness Adjustments
The Contribution and Distribution Agreement provides that not less than three (but not more than five) business days prior to the anticipated date of the Distribution, International Paper will cause to be prepared and delivered to SpinCo and UWWH an unaudited balance sheet of the xpedx business and a statement setting forth its good faith estimate of working capital and net indebtedness (as defined in the Contribution and Distribution Agreement as “Spinco Closing Date Working Capital” and “Spinco Closing Date Net Debt,” respectively) of SpinCo and its subsidiaries as of the Closing Date. If the estimated working capital of SpinCo as of the date of the Distribution exceeds $661.3 million, the special payment to International Paper will be increased by an amount equal to the excess. If the estimated net indebtedness of SpinCo as of the date of the Distribution is less than $5.9 million, the special payment to International Paper will be increased by an amount equal to the absolute value of the difference. If the estimated working capital of SpinCo as of the date of the Distribution is less than $661.3 million, the special payment to International Paper will be reduced by an amount equal to the absolute value of the difference. If the estimated net indebtedness of SpinCo as of the date of the Distribution is more than $5.9 million, the special payment to International Paper will be decreased by an amount equal to the excess. The Contribution and Distribution Agreement also provides that the special payment may, in certain circumstances, be increased by the estimated working capital and net indebtedness adjustments of UWWH, as described further in “The Merger Agreement—Working Capital, Net Indebtedness Adjustments and Transaction Expenses Adjustments.”
The Contribution and Distribution Agreement provides that within 90 days after the Distribution, the combined company will cause to be prepared and delivered to International Paper an unaudited balance sheet of the xpedx business and a calculation of the amounts referred to above. The parties will resolve any disputes they may have over the statement and agree upon a final, conclusive calculation of such amounts, and if they are unable to resolve such disputes, they will retain an accounting firm to make a final determination of the amounts. After the amounts are finally determined, an appropriate payment will be made to account for any difference between the finally determined amounts and the estimated amounts used at closing.
Earnout Payment
The Contribution and Distribution Agreement provides that in 2020 the combined company may be required to pay to International Paper an earnout payment of up to $100 million if the combined company’s aggregate EBITDA for its 2017, 2018 and 2019 fiscal years exceeds an agreed-upon target, subject to certain adjustments. The amount of the earnout payment, if owed by the combined company, will be an amount equal to (i) the excess of the surviving corporation’s aggregate EBITDA for its 2017, 2018 and 2019 fiscal years over the agreed-upon target, multiplied by (ii) four divided by three, capped at $100 million in the aggregate.
If any person or group acquires a majority of the voting power of the combined company’s capital stock, or a majority of the assets of the combined company and its subsidiaries, such person or group must agree in writing to International Paper that (i) the collective business activities of the combined company will continue to be operated and accounted for separately from any other business activities and operations, (ii) complete and accurate books of account and records covering all transactions relating to the computation of the earnout payment will be maintained and (iii) the combined company will remain an SEC registrant or will provide International Paper with unaudited quarterly and audited annual financial statements and financial data of the
 
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type and on the timetable as if it were an SEC registrant. If the combined company and such acquiror do not provide International Paper with such written agreement prior to the closing of such acquisition, and such acquisition closes prior to the end of fiscal year 2019, the earnout payment will be deemed to be due and payable to International Paper in an amount equal to $100 million, subject to the right described in the following paragraph.
At any time prior to the date the earnout payment is to be paid, the combined company may elect to make a payment to International Paper in full satisfaction of its obligation to make the earnout payment by paying an amount equal to the present value of $100 million on the date of payment assuming a discount rate of 6%.
Covenants
Each of International Paper and SpinCo has agreed to take certain actions after the signing of the Contribution and Distribution Agreement. These actions include the following:
 
 	•	 	immediately prior to the Distribution, International Paper and SpinCo terminating any agreements entered into pursuant to any contract or other arrangement, formal or informal (including with respect to intercompany cash balances and accounts and notes payable), between International Paper and its subsidiaries (such subsidiaries determined assuming that the Distribution has occurred), collectively referred to as the International Paper Group, on the one hand, and SpinCo or any of its subsidiaries, collectively referred to as the SpinCo Group, on the other hand (except as contemplated by the other agreements executed in connection with the Transactions, outstanding payment obligations with respect to ordinary course commercial transactions and specific agreements intended to replace intercompany arrangements between the International Paper Group and the SpinCo Group);	
 
 	•	 	immediately prior to the Distribution, International Paper assigning to SpinCo or a member of the SpinCo Group designated by UWWH all of the agreements to which any employee of the SpinCo Group is a party that contain restrictive covenants related to confidentiality, ownership of intellectual property, non-competition or non-solicitation;	
 
 	•	 	immediately prior to the date of the Distribution, International Paper and SpinCo electing new directors of SpinCo;	
 
 	•	 	appointing Deloitte & Touche LLP as the auditors of SpinCo (and the surviving corporation after the Merger), subject to a contrary determination by the board of directors of SpinCo (or the surviving corporation after the Merger);	
 
 	•	 	cooperating in good faith to prepare and negotiate supply agreements for the provision by International Paper to SpinCo of coated paperboard and printing and communications papers and the provision by SpinCo to International Paper of certain paper and supply products in each case which will include terms set forth in the disclosure letter to the Contribution and Distribution Agreement; and	
 
 	•	 	cooperating in seeking to release the International Paper Group, on the one hand, and the SpinCo Group, on the other hand, from guarantee obligations that either group may have entered into with respect to the other’s business and providing indemnification with respect to any losses in connection with the guarantees.	
Conditions to the Completion of the Spin-Off
The Contribution and Distribution Agreement provides that the distribution of SpinCo common stock will occur only if the special payment to International Paper has been made and each condition to the obligations of International Paper and SpinCo to consummate the Merger shall have been fulfilled or waived by International Paper (except for the consummation of the contribution and the Distribution). See “The Merger Agreement—Conditions to Consummation of the Merger.”
 
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Subsequent Transfers
In the event that at any time during the two-year period following the Distribution International Paper becomes aware that it possesses any assets or liabilities that should have been transferred to the SpinCo Group as part of the Contribution, International Paper will hold those assets or liabilities in trust, pay over to SpinCo any benefits received by International Paper with respect to such assets and cause the prompt transfer of the assets or liabilities to SpinCo or a member of the SpinCo Group. In the event that at any time during the two-year period following the Distribution a member of the SpinCo Group becomes aware that it possesses any assets or liabilities that should not have been transferred to SpinCo, SpinCo will hold those assets or liabilities in trust, pay over to International Paper any benefits received by SpinCo with respect to such assets and cause the prompt transfer of the applicable assets or liabilities to International Paper.
Mutual Release and Indemnification
SpinCo and International Paper have each agreed to release the other party and the other party’s respective subsidiaries and representatives from any and all liabilities that it has or may have against the other party which exist or arise out of or relate to events, circumstances or actions taken by the other party occurring or failing to occur or any conditions existing at or prior to the time of the spin-off. The mutual release is subject to specified exceptions set forth in the Contribution and Distribution Agreement. The specified exceptions include:
 
 	•	 	any liability assumed, transferred, assigned or allocated to SpinCo or to International Paper in accordance with, or any liability or obligation of either of them arising under the Contribution and Distribution Agreement, any other transaction agreements or any of the contracts or affiliate arrangements contemplated thereby; and	
 
 	•	 	the ability of any person to enforce its rights under the Contribution and Distribution Agreement, any other Transaction Agreements or any of the contracts or affiliate arrangements contemplated thereby.	
SpinCo and UWWH have agreed to indemnify, defend and hold harmless the International Paper Group and certain other related parties from and against all indemnifiable losses relating to or arising from (a) the liabilities of the xpedx business assumed by SpinCo in accordance with the terms of the Contribution and Distribution Agreement; (b) any breach by UWWH or its subsidiaries of any obligation, covenant or agreement pursuant to the Transaction Agreements to be performed by them prior or subsequent to the Closing Date; (c) any breach by any member of the SpinCo Group of any obligation, covenant or agreement pursuant to the Transaction Agreements to be performed by them subsequent to the Closing Date (in the case of each of clauses (b) and (c), in accordance with the applicable survival period(s) set forth therein); and (d) any breach of the representation contained in the Merger Agreement that the information supplied by UWWH for inclusion in this prospectus does not contain an untrue statement of a material fact or omission of a material fact.
International Paper has agreed to indemnify, defend and hold harmless SpinCo and its subsidiaries and certain other related parties from and against all indemnifiable losses relating to or arising from (a) any liabilities not transferred to SpinCo in accordance with the terms of the Contribution and Distribution Agreement; (b) any breach by International Paper or its subsidiaries of any obligation, covenant or agreement pursuant to the Transaction Agreements to be performed by them prior or subsequent to the Closing Date; (c) any breach by any member of the SpinCo Group of any obligation, covenant or agreement pursuant to the Transaction Agreements to be performed by them prior to the Closing Date (in the case of each of clauses (b) and (c), in accordance with the applicable survival period(s) set forth therein); and (d) any breach of the representation contained in the Merger Agreement that the information supplied by International Paper or SpinCo for inclusion in this prospectus does not contain an untrue statement of a material fact or omission of a material fact.
The UWWH Stockholder has agreed to indemnify, defend and hold harmless SpinCo, its subsidiaries and certain other related parties from and against all indemnifiable losses relating to or arising from any breach of the covenants of UWWH in the Merger Agreement related to (a) any material increases in the compensation
 
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(including bonus and incentive compensation) or fringe benefits of any employee of UWWH or (b) any transaction or severance bonus obligations entered into by UWWH and not disclosed to International Paper prior to the date of the Merger Agreement.
Expenses
All fees and expenses incurred by the parties in connection with the transactions contemplated by the Contribution and Distribution Agreement and the other Transaction Agreements will be paid as provided for in the Merger Agreement, provided that SpinCo will reimburse International Paper for all financial printer costs in connection with the preparation of any information statement and Form 8-K in connection with the transactions contemplated by the Merger Agreement and Contribution and Distribution Agreement and all mailing costs associated with delivery to International Paper shareholders of such information statement. See “The Merger Agreement—Fees and Expenses.”
Additional Post-Closing Covenants
The Contribution and Distribution Agreement contains additional post-closing covenants of International Paper and SpinCo (as the combined company following the Merger), including:
 
 	•	 	restrictions on the SpinCo Group and the International Paper Group using any material showing any affiliation with the other group (and the International Paper name being removed from the corporate names of the SpinCo Group) other than as provided in the Transaction Agreements;	
 
 	•	 	restrictions on SpinCo from repurchasing or redeeming any of its capital stock prior to the second anniversary of the Closing Date;	
 
 	•	 	restrictions on SpinCo from declaring or paying any dividend on its capital stock (except for regular quarterly cash dividends) prior to the second anniversary of the Closing Date, unless the combined company makes a payment in full satisfaction of its obligation to make an earnout payment to International Paper, as described further in “—Earnout Payment,” in which case such restriction continues in full force and effect until January 1, 2016;	
 
 	•	 	International Paper’s agreement to use reasonable best efforts to assert claims under occurrence-based insurance policies with respect to incidents occurring prior to the Distribution (subject to cost reimbursement);	
 
 	•	 	providing certain access to books and records relating to the xpedx business following the Distribution; and	
 
 	•	 	International Paper’s agreement to transfer, provide access to or provide a replacement for certain assets necessary to operate the xpedx business that are not transferred to SpinCo pursuant to the terms of the Contribution and Distribution Agreement and not identified as such.	
Amendment; Waiver
The Contribution and Distribution Agreement may be amended only by a written instrument signed by each of the parties, and any right may be waived only in a written instrument signed by the party against whom the waiver is to be effective. No failure or delay by any party to the Contribution and Distribution Agreement to exercise a right operates as a waiver thereof.
Termination
Following termination of the Merger Agreement, the Contribution and Distribution Agreement may be terminated and the spin-off abandoned at any time prior to the Distribution by and in the sole discretion of International Paper.
 
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Tax Receivable Agreement
The following is a summary of material provisions of the Tax Receivable Agreement. This summary is qualified in its entirety by reference to the Tax Receivable Agreement, which is included as an exhibit to the registration statement of which this prospectus is a part.
The Tax Receivable Agreement sets forth the terms by which SpinCo generally will be obligated to pay UWWH Stockholder an amount equal to 85% of the U.S. federal, state and Canadian income tax savings, if any, that SpinCo actually realizes as a result of the utilization of Unisource’s net operating losses attributable to taxable periods prior to the date of the Merger.
For purposes of the Tax Receivable Agreement, SpinCo’s income tax savings will generally be computed by comparing SpinCo’s actual aggregate U.S. federal, state and Canadian income tax liability for taxable periods (or portions thereof) beginning after the date of the Merger to the amount of SpinCo’s aggregate U.S federal, state and Canadian income tax liability for taxable periods (or portions thereof) beginning after the date of the Merger had SpinCo not been able to utilize Unisource’s net operating losses attributable to taxable periods prior to the date of the Merger. SpinCo will pay to UWWH Stockholder an amount equal to 85% of such tax savings, plus interest at a rate of LIBOR plus 1.00%, computed from the earlier of the date that SpinCo filed its U.S. federal income tax return for the applicable taxable year and the date that such tax return was due (without extensions) until payments are made. Under the Tax Receivable Agreement, UWWH Stockholder will not be required to reimburse SpinCo for any payments previously made if such tax benefits are subsequently disallowed or adjusted (although future payments under the Tax Receivable Agreement would be adjusted to the extent possible to reflect the result of such disallowance or adjustment).
If Unisource ceases to be includable in SpinCo’s affiliated group of corporations for U.S. federal income tax purposes, SpinCo shall cause the parent of the affiliated group of corporations that includes Unisource to enter into an agreement with UWWH Stockholder that is substantially similar to the Tax Receivable Agreement. In addition, SpinCo shall cause any indirect successor (whether by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of SpinCo to assume and agree to perform the obligations under the Tax Receivable Agreement in the same manner that SpinCo would be required to perform had no succession occurred.
The Tax Receivable Agreement provides that in the event SpinCo breaches any of its material obligations by operation of law as a result of the rejection of it in a case commenced under the United States Bankruptcy Code, then all obligations under the Tax Receivable Agreement will be accelerated. If SpinCo does not timely make payments under the Tax Receivable Agreement for any reason, except as described below, such payments will accrue interest at a rate of LIBOR plus 5.00% per annum until paid. The Tax Receivable Agreement provides that SpinCo is permitted to defer payments under the Tax Receivable Agreement if such payments (or payments to SpinCo from its subsidiaries to allow SpinCo to make such payments) are not permitted pursuant to the terms of SpinCo’s or its direct or indirect subsidiary’s debt agreements. Any payment so deferred shall accrue interest at a rate of LIBOR plus 1.00% per annum until paid.
UWWH Stockholder and later beneficiaries of the Tax Receivable Agreement are permitted to assign or transfer their rights thereunder, provided that in certain circumstances the transferor must notify SpinCo of the proposed transfer, including its terms, and SpinCo will have a right to acquire the transferred interest on such terms.
The Tax Receivable Agreement will be binding on and inure to the benefit any permitted assignees of UWWH Stockholder and to any successors to any of the parties of the Tax Receivable Agreement to the same extent as if such permitted assignee or successor had been an original party to the Tax Receivable Agreement. The Tax Receivable Agreement may be amended only by a written instrument signed by each of the parties. Any provision of the Tax Receivable Agreement may be waived only if such waiver is in writing and signed by the party against whom the waiver is to be effective.
 
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Transition Services Agreement
The following is a summary of material provisions of the Transition Services Agreement. This summary is qualified in its entirety by reference to the Transition Services Agreement, which is included as an exhibit to the registration statement of which this prospectus is a part.
The Transition Services Agreement, to be dated as of the Closing Date, by and between International Paper and SpinCo, sets forth the terms and conditions for the provision by each of International Paper and SpinCo of services to the other, from and following the Closing Date. A party providing a service is referred to as the service provider and a party receiving a service is referred to as the service recipient.
The term of the Transition Services Agreement extends for a period of up to one year from the Closing Date, and, subject to certain fee increases and obtaining any necessary consents, can be extended for up to a total of two years from the Closing Date at the election of the service recipient. Individual services provided under the agreement may terminate earlier in accordance with the schedules to the Transition Services Agreement or, in most cases, at the option of the service recipient. The period during which services are provided is referred to as the transition period. The fees to be paid by SpinCo under the Transition Services Agreement for the one-year period from the Closing Date are estimated to be approximately $        .
The services expected to be performed by International Paper will relate generally to the following areas, among others:
 
 	•	 	Real estate services, including lease administration and transaction management;	
 
 	•	 	Finance and accounting services, including accounts receivable services;	
 
 	•	 	Network optimization services; and	
 
 	•	 	Information technology services, including data center, WAN, remote access, facility support, messaging, internet, document management, telecom, support and other services.	
In addition, each of SpinCo and International Paper is generally entitled to obtain additional services from the other if those services are needed by the service recipient and were provided to it by the service provider prior to the Closing (or, in the case of services to be received by SpinCo, are services it cannot obtain on commercially reasonable terms from third parties and that are provided by International Paper to its other businesses).
However, the parties have agreed that International Paper will not be required to provide certain services related to information technology, finance, accounting, sourcing and procurement, tax, legal and compliance, government relations, investor relations, risk management, human resource and treasury functions. Within 90 days after the Closing Date, the parties will consult regarding the terms of and a plan for the service migration.
The Transition Services Agreement may be amended only by a written instrument signed by each of the parties, and any right may be waived only in a written instrument signed by the party against whom the waiver is to be effective. No failure or delay by any party to the Transition Services Agreement to exercise a right operates as a waiver thereof.
Supply Agreements
Prior to the Closing Date, UWWH, SpinCo and International Paper will cooperate in good faith to prepare and negotiate supply agreements pursuant to which International Paper will supply xpedx LLC with certain printing and communications papers and coated paperboard and xpedx LLC will supply International Paper with certain products, in each case, for a period of 18 months.
Employee Matters Agreement
In connection with the Transactions, International Paper, SpinCo and UWWH entered into an Employee Matters Agreement with respect to the transfer of employees engaged in the xpedx business and matters related
 
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to the terms of employment, health and welfare benefits, fringe benefits, retirement plans, and collective bargaining agreements. The following is a summary of material provisions of the Employee Matters Agreement. This summary is qualified in its entirety by reference to the Employee Matters Agreement, dated as of January 28, 2014, which is filed as an exhibit to the registration statement of which this prospectus forms a part.
Transfer of Employment and General Allocation of Employee Liabilities
Prior to the Distribution, International Paper will take all actions necessary to ensure that each employee working in the xpedx business, except those specifically designated to remain with International Paper, is employed by SpinCo or its Affiliates. In general, SpinCo will assume all employment-related liabilities related to such transferred xpedx business employees, and International Paper will assume or retain all employment-related liabilities related to its retained employees. From January 28, 2014 until the Effective Time, International Paper has agreed not to solicit or otherwise transfer any xpedx business employee to another International Paper business without prior written consent of UWWH, and UWWH has agreed not to solicit any xpedx business employee (other than on behalf of SpinCo) or any other employee to be retained by International Paper without prior written consent of International Paper.
Collective Bargaining Agreements
As of the Distribution, SpinCo will assume existing collective bargaining agreements covering employees of the xpedx business and, in accordance with applicable law, be bound by the terms of any expired collective bargaining agreements covering employees of the xpedx business. With limited exceptions, SpinCo will assume all liabilities related to such collective bargaining agreements, regardless of whether the liabilities arise from or relate to events occurring prior to, on or after the Distribution. International Paper will retain any liabilities related to any alleged failure to satisfy any “decision” or “effects” bargaining obligations pursuant to the collective bargaining agreements arising from the transactions contemplated by the Transaction Agreements.
Benefit Plans and Arrangements
Effective as of the Distribution, employees working in the xpedx business will generally cease active participation in International Paper’s employee benefit plans, and International Paper will retain all liabilities related to employee benefit plans sponsored or maintained by International Paper, including on behalf of xpedx business employees. Following the Distribution, SpinCo will be required to notify International Paper promptly of any termination of employment of certain employees who are identified by International Paper; this information will be relevant for a determination by International Paper of benefits to which such employee may be entitled under the International Paper employee benefit plans.
Following the Distribution, SpinCo will recognize xpedx business employees’ accrued and unused paid time off and allow employees to use such time after the Distribution in accordance with SpinCo policies.
Prior to the Distribution, SpinCo will, in consultation with UWWH, establish new employee benefit plans in which eligible xpedx business employees will participate no later than the Distribution. The new employee benefit plans for the benefit of xpedx business employees will be no more favorable than the analogous International Paper benefit plans that previously covered such employees and will not, unless required by a collective bargaining agreement, include any defined benefit pension plan, non-qualified retirement plan or non-qualified deferred compensation plan, or retiree medical program. Subject to the following paragraph, the UWWH-sponsored employee benefit plans will remain in effect and continue to cover eligible UWWH employees.
After the effective time of the Merger, the board of directors of SpinCo will have full discretion to determine the scope, terms and conditions of the employee benefit plans covering the xpedx business employees and UWWH employees, subject to applicable law and the terms of any applicable collective bargaining
 
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agreement. For any new plans established for either xpedx business employees or UWWH employees after the effective time of the Merger, SpinCo will use its reasonable best efforts to prevent interruption of coverage and to credit service of such employee under all SpinCo benefit plans for purposes of eligibility and vesting, and, for any vacation, paid time off plan or severance plan, for determination of level of benefits. SpinCo is not required to establish any retiree or post-termination medical, life or other benefit plan, but must establish tax-qualified health care and dependent care flexible spending account plans.
Cash and Equity Incentive Compensation Plans
Effective on or as soon as practicable following the Distribution, the board of directors of SpinCo or its designee will establish incentive plans for management incentive, commissions or goal sharing awards for xpedx business employees who will cease to participate in such plans maintained by International Paper by reason of the Transactions. SpinCo has the sole obligation to fund and pay such cash incentives for xpedx business employees. International Paper is solely responsible for all liabilities under any of its plans that provide for equity incentive awards in respect of International Paper common stock. Any outstanding International Paper equity incentive awards held by xpedx business employees will be treated by International Paper in accordance with the terms of the applicable International Paper plan as though each xpedx business employee incurred a termination without cause from International Paper as of the Distribution.
Retirement Plans
International Paper will fully vest each xpedx business employee who is a participant in any International Paper defined benefit pension plan as of the Distribution, and each such employee will be eligible to receive pension benefits in accordance with the terms of the applicable International Paper plan. No transfers of assets or liabilities from an International Paper defined benefit pension plan will occur as a result of the Transactions. SpinCo will not establish a defined benefit pension plan for xpedx business employees unless otherwise required by an assumed collective bargaining agreement. If such a pension plan is established by SpinCo, it will provide the pension benefit required by the collective bargaining agreement, offset by the pension benefit provided to such employee by the International Paper pension plan based on service prior to the Distribution.
SpinCo will continue its participation in multiemployer pension and multiemployer health and welfare plans on behalf of covered union employees of the xpedx business to the extent required by an assumed collective bargaining agreement. SpinCo will assume all liabilities related to such multiemployer plans to the extent related to the xpedx business, whether arising from or relating to events occurring prior to, on or after the Distribution, and International Paper will assume or retain any liabilities related to such multiemployer plans to the extent related to International Paper’s unrelated businesses whether arising from or relating to events occurring prior to, on or after the Distribution.
International Paper will fully vest all xpedx business employees in their accounts under the International Paper 401(k) plan as of the Distribution. SpinCo will establish a 401(k) plan and trust, in consultation with UWWH, to cover xpedx business employees effective as of the Distribution, and as soon as practicable after the Distribution this SpinCo 401(k) plan will accept a transfer of accounts of xpedx business employees from the International Paper 401(k) plan. Any account that is invested in International Paper common stock will be converted to cash prior to such transfer, such that the SpinCo 401(k) plan will not hold any investments in International Paper common stock. SpinCo will not have any liability with respect to the investment of xpedx business employees’ 401(k) plan accounts in International Paper common stock prior to the transfer or any failure by International Paper or any fiduciary, agent, administrator or recordkeeper to comply with applicable law or contract governing the International Paper 401(k) plan.
Health and Welfare Claims
The applicable International Paper-sponsored health or welfare plans will retain the obligation to pay any claims incurred by xpedx business employees prior to the Distribution, and SpinCo’s new health and welfare plans will have the obligation to pay any claims incurred by xpedx business employees after the Distribution.
 
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Amendment; Waiver
The Employee Matters Agreement may be amended only by a written instrument signed by each of the parties, and any right may be waived only in a written instrument signed by the party against whom the waiver is to be effective. No failure or delay by any party to the Employee Matters Agreement to exercise a right operates as a waiver thereof.
Tax Matters Agreement
The following is a summary of material provisions of the Tax Matters Agreement. This summary is qualified in its entirety by reference to the Tax Matters Agreement, dated as of January 28, 2014, which is included as an exhibit to the registration statement of which this prospectus is a part.
The Tax Matters Agreement addresses federal, state, local and non-U.S. tax matters related to the Distribution, Merger, Subsidiary Merger and other Transactions. In particular, the Tax Matters Agreement addresses the filing of tax returns by SpinCo and International Paper, tax indemnification obligations of International Paper and SpinCo, the conduct of tax proceedings by International Paper and SpinCo and representations, warranties and covenants with respect to the intended tax-free treatment of the Transactions.
Pursuant to the Tax Matters Agreement, SpinCo shall indemnify International Paper for a variety of taxes, including (i) certain pre-Merger non-income taxes and non-U.S. income taxes attributable to the xpedx business and (ii) income taxes imposed on International Paper, SpinCo or UWWH attributable to a failure of the Transactions to qualify as tax-free as a result of, among other items, a breach of representations by UWWH or its shareholders, a breach of covenants (following the Distribution) by SpinCo, acquisitions of SpinCo stock after the Distribution, acquisitions of International Paper stock by UWWH and certain persons related thereto prior to the Distribution, the failure of the Merger to qualify as a reorganization under Section 368 of the Code or the failure of the Subsidiary Merger to qualify as a tax-free capital contribution under Section 351(a) of the Code. Pursuant to the Tax Matters Agreement, International Paper shall indemnify SpinCo for a variety of taxes not specifically indemnified by SpinCo, including (i) taxes attributable to any business retained by International Paper, (ii) International Paper’s consolidated U.S. federal income taxes, (iii) certain pre-Distribution income taxes of SpinCo and its subsidiaries to the extent not specifically apportioned to SpinCo pursuant to the Tax Matters Agreement, and (iv) income taxes attributable to a failure of the Transactions to qualify as tax-free to the extent not specifically apportioned to SpinCo pursuant to the Tax Matters Agreement.
The Tax Matters Agreement prohibits SpinCo and International Paper from taking actions (or refraining from taking actions) that could reasonably be expected to cause the Transactions to be taxable or to jeopardize the conclusions of the IRS ruling or opinions of counsel received by SpinCo or International Paper. In particular, for two years after the Distribution, SpinCo may not:
 
 	•	 	cease, or permit certain of its wholly-owned subsidiaries to cease, the active conduct of a business that was conducted immediately prior to the Distribution or from holding certain assets held at the time of the Distribution;	
 
 	•	 	dissolve, liquidate, take any action that is a liquidation for federal income tax purposes, merge or consolidate with any other person (other than pursuant to the Mergers), or permit certain of its wholly-owned subsidiaries from doing any of the foregoing; or	
 
 	•	 	approve or allow an extraordinary contribution to SpinCo by its shareholders in exchange for stock, redeem or otherwise repurchase (directly or indirectly) any of SpinCo’s stock, or amend its certificate of incorporation or other organizational documents, or take any other action, if such amendment or other action would affect the relative voting rights of its capital stock.	
Nevertheless, SpinCo is permitted to take any of the actions described above if International Paper obtains a supplemental IRS private letter ruling (or, in certain circumstances, an opinion of counsel that is reasonably acceptable to International Paper) to the effect that the action will not affect the tax-free status of the Distribution
 
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or the Merger. Notwithstanding the above, under the Tax Matters Agreement, SpinCo may make stock issuances that meet certain safe harbors provided in Section 1.355-7(d) of the Treasury Regulations and may redeem any such stock so long as such issuances or redemptions are not inconsistent with formal or informal written guidance provided by the IRS in connection with the IRS ruling.
The Tax Matters Agreement will be binding on and inure to the benefit of any permitted assignees and any successor to any of the parties of the Tax Matters Agreement. The Tax Matters Agreement may be amended only by a written instrument signed by each of the parties, and any right may be waived only in a written instrument signed by the party against whom the waiver is to be effective. No failure or delay by any party to the Tax Matters Agreement to exercise a right operates as a waiver thereof.
Registration Rights Agreement
In connection with the Transactions, we entered into a registration rights agreement, or the “Registration Rights Agreement,” with the UWWH Stockholder. The following is a summary of material provisions of the Registration Rights Agreement, which we entered into on January 28, 2014. This summary is qualified in its entirety by reference to the full text of the Registration Rights Agreement which is filed as an exhibit to the registration statement of which this prospectus forms a part. The registration of shares of our common stock pursuant to the exercise of registration rights described below would enable the holders to trade these shares, without restriction under the Securities Act when the applicable registration statement is deemed effective. We will pay the registration expenses, other than underwriting discounts and commissions, of the shares registered pursuant to the demand and piggyback registrations described below.
Pursuant to the terms of the Registration Rights Agreement, UWWH Stockholder may transfer our common stock to one or more of its affiliates or equityholders and may exercise registration rights on behalf of such transferees if such transferees become a party to the Registration Rights Agreement.
The demand rights described below will commence 180 days after the distribution date. We are not required to effect more than one demand registration in any 150-day period or more than two demand registrations in any 365-day period. If we believe that a registration or an offering would materially affect a significant transaction or would require us to disclose confidential information which we in good faith believe would be adverse to our interest, then we may delay a registration or filing for no more than 120 days in a 360-day period. Generally, in an underwritten offering, the managing underwriter, if any, has the right, subject to market conditions, to limit the number of shares such holders may include.
Demand Registration Rights. Under the terms of the Registration Rights Agreement, the UWWH Stockholder on behalf of the holders of shares of our common stock that are party to the Registration Rights Agreement, under certain circumstances and provided certain thresholds described in the Registration Rights Agreement are met may make a written request to us for the registration of the offer and sale of all or part of the shares subject to such registration rights, or Registrable Securities, provided that the Registrable Securities to be registered under a “long-form” registration on Form S-1 have an aggregate market value, based upon the offering price to the public, equal to at least $40 million. We may be required to make up to three long-form registrations, which may also include shelf registrations. If we are eligible to file a registration statement on Form S-3 or any successor form with similar “short-form” disclosure requirements, UWWH Stockholder on behalf of holders of Registrable Securities may make a written request to us for the registration of the offer and sale of all or part of the Registrable Securities provided that the Registrable Securities to be registered under such short-form registration have an aggregate market value, based upon the offering price to the public, equal to at least $15 million. The Registration Rights Agreement also provides for “take down” offerings, provided that the Registrable Securities proposed to be offered have an aggregate market value, based on the offering price to the public, equal to at least $15 million.
Piggyback Registration Rights . If we register the offer and sale of our common stock (other than pursuant to a demand registration or in connection with registration on Form S-4 and Form S-8 or any successor or similar
 
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forms, or relating solely to the sale of debt or convertible debt instruments) either on our behalf or on the behalf of other security holders, the holders of the Registrable Securities under the Registration Rights Agreement are entitled to include their Registrable Securities in the registration. The managing underwriters of any underwritten offering may limit the number of Registrable Securities included in the underwritten offering if the underwriters believe that including these shares would have a materially adverse effect on the offering. If the number of Registrable Securities is limited by the managing underwriter, the securities to be included first in the registration will depend on whether we or certain holders of our securities initiate the Piggyback registration. If we initiate the Piggyback registration, we are required to include in the offering (i) first, the securities we propose to sell, (ii) second, the Registrable Securities requested to be included in such registration, pro rata among holders of such Registrable Securities on the basis of the number of Registrable Securities owned by each such holder and (iii) third, any other shares of common stock requested to be included. If holders of common stock other than the Registrable Securities initiated the Piggyback registration, it is required to include in the offering (i) first, the shares of common stock other than the Registrable Securities and the Registrable Securities requested to be included in such registration, pro rata among holders of such shares of common stock and the Registrable Securities on the basis of the number of Registrable Securities owned by each such holder and (ii) second, any other shares of common stock requested to be included.
Amendment and Waiver . The Registration Rights Agreement may be amended, extended, terminated or waived only by an agreement in writing signed by each of the parties. Any party to the Registration Rights Agreement may waive any right thereunder, as to itself, by an instrument in writing signed by such party. The failure of any party to the Registration Rights Agreement to enforce any provision does not operate as a waiver thereof.
Board of Directors Matters . Upon the UWWH Stockholder and its affiliates in the aggregate ceasing to hold at least 3% of the outstanding shares of SpinCo common stock and equity securities issued in respect of such SpinCo common stock, any individual nominated by the UWWH Stockholder to the SpinCo board of directors is required to promptly tender his or her resignation to the SpinCo board of directors and will not remain a director of SpinCo, unless a majority of the SpinCo board of directors affirmatively votes not to accept such director’s resignation.
Restrictions on Acquisitions of Common Stock by the UWWH Stockholder . Commencing on the Closing Date and ending on the second anniversary of the Closing Date, the UWWH Stockholder is not permitted to acquire any shares of SpinCo common stock other than shares of SpinCo common stock issued in respect to outstanding shares of SpinCo common stock by way of stock dividend or stock split or in connection with a combination or exchange of shares, recapitalization, merger, consolidation or other reorganization. If, prior to the second anniversary of the Closing Date, the UWWH Stockholder desires to transfer shares of SpinCo common stock to a permitted transferee, as a condition to the transfer, the transferee must enter into an agreement with SpinCo to be bound by the restriction on acquiring any shares of SpinCo common stock, as described above.
 
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 DIVIDEND POLICY
We do not currently expect to declare or pay dividends on our common stock for the foreseeable future. Instead, we intend to retain earnings to finance the growth and development of our business and for working capital and general corporate purposes. Our ability to pay dividends to holders of our common stock is limited by our ability to obtain cash or other assets from our subsidiaries. Further, the agreements governing our ABL Facility, will restrict the ability of our subsidiaries to pay dividends or otherwise transfer assets to us. Any payment of dividends will be at the discretion of our board of directors and will depend upon various factors then existing, including earnings, financial condition, results of operations, capital requirements, level of indebtedness, contractual restrictions with respect to payment of dividends, restrictions imposed by applicable law, general business conditions and other factors that our board of directors may deem relevant.
Furthermore, we are restricted under the Contribution and Distribution Agreement from declaring or paying special dividends through the second anniversary of the Closing Date (or, in certain circumstances, January 1, 2016). See “The Contribution And Distribution Agreement and The Ancillary Agreements—Contribution and Distribution Agreement—Additional Post-Closing Covenants.”
 
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 CAPITALIZATION
The following table sets forth our cash and cash equivalents and capitalization as of December 31, 2013 on a pro forma combined as adjusted basis giving effect to the Transactions, assuming they were consummated on December 31, 2013.
You should read this table in conjunction with the sections of this prospectus entitled “Selected Historical Combined Financial Data for xpedx,” “Selected Historical Consolidated Financial Data for Unisource,” “Management’s Discussion and Analysis of Financial Condition and Results of Operation of xpedx,” “Management’s Discussion and Analysis of Financial Condition and Results of Operation of Unisource,” “Description of Material Indebtedness” and our combined and Unisource’s consolidated financial statements and related notes included elsewhere in this prospectus.

 	  	Actual	 	  	 	 	 	 	 	
 	  	xpedx	 	  	Unisource	 	  	Pro Forma
Adjustments	 	 	Pro Forma
As adjusted	 	
 	  	December 31,
2013	 	  	December 31,
2013	 	  	December 31,
2013	 	 	December 31,
2013	 	
 	  	(Unaudited)	 	
 	  	(Dollars in millions)	 	
Cash and cash equivalents (a)	  	$	5.7	  	  	$	22.2	  	  	$	(1.6	) 	 	$	26.3	  	
	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Indebtedness:	  				  				  				 				
ABL Facility (b)	  	$	—  	  	  	$	289.2	  	  	$	436.0	  	 	$	725.2	  	
Other indebtedness (c)	  	 	—  	  	  	 	94.2	  	  	 	7.6	  	 	 	101.8	  	
	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Total indebtedness	  	 	—  	  	  	 	383.4	  	  	 	443.6	  	 	 	827.0	  	
Redeemable preferred stock	  	 	—  	  	  	 	147.7	  	  	 	(147.7	) 	 	 	—  	  	
Total equity	  	 	848.4	  	  	 	251.8	  	  	 	(289.1	) 	 	 	811.1	  	
	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Total capitalization	  	$	848.4	  	  	$	782.9	  	  	$	6.8	  	 	$	1,638.1	  	

(a)	Reflects pro forma amount of cash expected to remain on SpinCo’s balance sheet following the Transactions.	
(b)	After giving pro forma effect to the Transactions, we will have entered into the ABL Facility, which will provide for an asset-based revolving credit facility that will provide for revolving loans in an aggregate principal amount of up to $1,400.0 million (subject to availability under a borrowing base). In connection with the Transactions, subsidiaries of SpinCo will incur or assume an amount of indebtedness equal to approximately $725.2 million. This indebtedness will be used to fund (i) $400.0 million for the special payment to International Paper, subject to the working capital and indebtedness adjustments, (ii) $21.0 million in deferred financing costs, (iii) $15.0 million of Unisource transaction fees associated with the Transactions and (iv) repayment of the $289.2 million outstanding under Unisource’s senior credit facility as of December 31, 2013. Long term debt, net of current maturities, included in the unaudited pro forma condensed combined balance sheet, of $761.4 million also includes $8.1 million of non-current capital lease obligations and $28.1 million of Unisource Canadian bank overdrafts which are presented as other indebtedness as described in (c) below.	
(c)	Reflects certain other indebtedness of the combined company assumed to be outstanding upon consummation of the Transactions. The actual amount of such other indebtedness outstanding upon the closing of the Transactions may vary. Other indebtedness is expected to include (i) $73.7 million of current and non-current Unisource capital lease obligations, exclusive of the non-monetary capital lease obligation of $169.1 million and (ii) $28.1 million of Unisource Canadian bank overdrafts.	
 
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 SELECTED HISTORICAL COMBINED FINANCIAL DATA FOR XPEDX
The following selected historical condensed combined financial data of xpedx for the years ended December 31, 2013, December 31, 2012 and December 31, 2011, and as of December 31, 2013 and December 31, 2012, have been derived from xpedx’s audited combined financial statements included elsewhere in this prospectus. The selected historical condensed combined financial data of xpedx as of December 31, 2011 and for the year ended December 31, 2010 have been derived from xpedx’s audited combined financial statements not included in this prospectus. The selected historical condensed combined financial data of xpedx as of December 31, 2010 and as of and for the year ended December 31, 2009 have been derived from unaudited condensed combined financial information not included in this prospectus. The selected historical condensed combined financial data presented below are not necessarily indicative of the results or financial condition that may be expected for any future period or date. This information is only a summary and you should read the table below in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations of xpedx” and the financial statements of xpedx and the notes thereto included elsewhere in this prospectus.

 	 	As of and for the
Year Ended December 31,	 	
 	 	2013	 	 	2012	 	 	2011	 	 	2010	 	 	2009	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Statement of Operations Data	 				 				 				 				 				
Net sales	 	$	5,652.4	  	 	$	6,012.0	  	 	$	6,509.2	  	 	$	6,625.1	  	 	$	6,437.9	  	
Cost of products sold	 	 	4,736.8	  	 	 	5,036.7	  	 	 	5,475.3	  	 	 	5,585.9	  	 	 	5,446.6	  	
Distribution expenses	 	 	314.2	  	 	 	324.0	  	 	 	324.5	  	 	 	316.7	  	 	 	307.3	  	
Selling and administrative expenses	 	 	548.2	  	 	 	580.6	  	 	 	598.7	  	 	 	635.8	  	 	 	626.2	  	
Depreciation and amortization (1)	 	 	17.1	  	 	 	14.0	  	 	 	15.6	  	 	 	14.7	  	 	 	125.8	  	
Restructuring charges	 	 	37.9	  	 	 	35.1	  	 	 	43.6	  	 	 	—  	  	 	 	2.9	  	
Operating (loss) income	 	 	(1.8	) 	 	 	21.6	  	 	 	51.5	  	 	 	72.0	  	 	 	(70.9	) 	
Income tax provision	 	 	0.4	  	 	 	9.1	  	 	 	21.2	  	 	 	33.0	  	 	 	7.6	  	
Income (loss) from continuing operations	 	 	—  	  	 	 	14.4	  	 	 	35.5	  	 	 	47.7	  	 	 	(73.0	) 	
Income (loss) from discontinued operations, net of income taxes	 	 	0.2	  	 	 	(10.0	) 	 	 	(13.6	) 	 	 	(9.1	) 	 	 	(10.2	) 	
Net income (loss)	 	$	0.2	  	 	$	4.4	  	 	$	21.9	  	 	$	38.6	  	 	$	(83.2	) 	
						
Balance Sheet Data (at period end):	 				 				 				 				 				
Accounts receivable, net	 	$	669.7	  	 	$	680.6	  	 	$	731.7	  	 	$	796.8	  	 	$	766.8	  	
Inventories, net	 	 	360.9	  	 	 	373.4	  	 	 	387.2	  	 	 	447.5	  	 	 	413.6	  	
Total assets	 	 	1,312.2	  	 	 	1,367.9	  	 	 	1,442.9	  	 	 	1,584.8	  	 	 	1,511.3	  	
Non-current liabilities	 	 	12.5	  	 	 	16.9	  	 	 	16.4	  	 	 	14.1	  	 	 	15.4	  	

(1)	Depreciation and amortization for the year ended December 31, 2009 includes goodwill impairment charges of $110.4 million.	
 
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 SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA FOR UNISOURCE
The following selected historical consolidated financial data of Unisource for the fiscal years ended December 31, 2013, December 29, 2012 and December 31, 2011, and as of December 31, 2013 and December 29, 2012, have been derived from the audited consolidated financial statements of Unisource included elsewhere in this prospectus. The selected historical consolidated financial data of Unisource as of December 31, 2011 and for the fiscal year ended January 1, 2011 have been derived from Unisource’s audited consolidated financial statements not included in this prospectus. The selected historical consolidated financial data of Unisource as of January 1, 2011 and as of and for the fiscal year ended January 2, 2010 have been derived from unaudited consolidated financial information of Unisource not included in this prospectus. The management of Unisource believes that the unaudited consolidated financial statements reflect all normal and recurring adjustments necessary for a fair statement of the results as of and for the annual periods presented. The selected historical consolidated financial data presented below are not necessarily indicative of the results or financial condition that may be expected for any future period or date. This information is only a summary and should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Unisource” and the financial statements of Unisource and the notes thereto included elsewhere in this prospectus.

 	 	As of and for the Fiscal Year Ended	 	
 	 	December 31,
2013	 	 	December 29,
2012	 	 	December 31,
2011	 	 	January 1,
2011	 	 	January 2,
2010	 	
 	 	 	 	 	(Dollars in millions)	 	
Statement of Operations Data:	 				 				 				 				 				
Net sales	 	$	4,089.1	  	 	$	4,123.3	  	 	$	4,327.8	  	 	$	4,239.5	  	 	$	3,996.0	  	
Cost of products sold, excluding depreciation and amortization	 	 	3,370.4	  	 	 	3,405.6	  	 	 	3,591.9	  	 	 	3,494.4	  	 	 	3,272.5	  	
Distribution expenses	 	 	250.3	  	 	 	240.0	  	 	 	252.4	  	 	 	245.4	  	 	 	227.3	  	
Selling and administrative expenses	 	 	391.3	  	 	 	392.9	  	 	 	409.0	  	 	 	421.8	  	 	 	420.3	  	
Depreciation and amortization	 	 	25.1	  	 	 	25.4	  	 	 	24.5	  	 	 	19.9	  	 	 	16.4	  	
Restructuring (gains) expenses	 	 	(3.4	) 	 	 	6.6	  	 	 	14.6	  	 	 	10.4	  	 	 	7.4	  	
Merger expenses	 	 	14.3	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	
Asset impairments	 	 	0.4	  	 	 	4.9	  	 	 	1.0	  	 	 	—  	  	 	 	—  	  	
Other expense, net	 	 	0.5	  	 	 	0.4	  	 	 	1.5	  	 	 	0.5	  	 	 	0.2	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating income	 	 	40.2	  	 	 	47.5	  	 	 	32.9	  	 	 	47.1	  	 	 	51.9	  	
Interest expense, net	 	 	27.4	  	 	 	28.3	  	 	 	66.7	  	 	 	72.0	  	 	 	59.8	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income (loss) before income taxes	 	 	12.8	  	 	 	19.2	  	 	 	(33.8	) 	 	 	(24.9	) 	 	 	(7.9	) 	
Income tax expense (benefit)	 	 	(228.5	) 	 	 	15.2	  	 	 	(5.5	) 	 	 	2.3	  	 	 	6.5	  	
Equity earnings of affiliates, net of taxes	 	 	(1.1	) 	 	 	(1.1	) 	 	 	(1.2	) 	 	 	(1.0	) 	 	 	(2.4	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income (loss)	 	 	242.4	  	 	 	5.1	  	 	 	(27.1	) 	 	 	(26.2	) 	 	 	(12.0	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Redeemable preferred stock dividends	 	 	(19.4	) 	 	 	(17.2	) 	 	 	(1.3	) 	 	 	—  	  	 	 	—  	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income (loss) attributable to common shareholders	 	$	223.0	  	 	$	(12.1	) 	 	$	(28.4	) 	 	$	(26.2	) 	 	$	(12.0	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance Sheet Data (at period end):	 				 				 				 				 				
Accounts receivable, net	 	$	467.8	  	 	$	471.9	  	 	$	461.7	  	 	$	462.9	  	 	$	452.6	  	
Inventories	 	 	314.7	  	 	 	315.2	  	 	 	316.7	  	 	 	328.9	  	 	 	283.0	  	
Total assets	 	 	1,215.2	  	 	 	1,039.2	  	 	 	1,067.5	  	 	 	1,040.9	  	 	 	979.6	  	
Long-term debt (including current maturities)	 	 	383.4	  	 	 	382.8	  	 	 	385.6	  	 	 	577.3	  	 	 	497.1	  	
Other noncurrent liabilities	 	 	100.0	  	 	 	110.2	  	 	 	96.1	  	 	 	90.1	  	 	 	75.7	  	
 
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 UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION OF COMBINED COMPANY AND RELATED NOTES
The following unaudited pro forma condensed combined balance sheet as of December 31, 2013 and the unaudited pro forma condensed combined statement of operations for the year ended December 31, 2013 are based on the historical financial statements of xpedx and Unisource after giving effect to the Transactions. The unaudited pro forma condensed combined statements are based on the assumptions, adjustments and eliminations described in the accompanying notes to the unaudited pro forma condensed combined financial statements.
The unaudited pro forma condensed combined statements of operations for the year ended December 31, 2013 combines the historical condensed combined statements of operations of xpedx and the historical consolidated statements of operations for Unisource, giving effect to the Transactions as if they had occurred at the beginning of fiscal 2013. The unaudited pro forma condensed combined balance sheet combines the historical condensed combined balance sheet of xpedx as of December 31, 2013 and the historical condensed consolidated balance sheet of Unisource as of December 31, 2013, giving effect to the Transactions as if they had occurred on December 31, 2013.
The unaudited pro forma condensed combined financial statements were prepared using the acquisition method of accounting, with SpinCo considered the accounting acquirer of Unisource. Under the acquisition method of accounting, the purchase price is allocated to the underlying tangible and intangible assets acquired and liabilities assumed based on their respective fair market values, with any excess purchase price allocated to goodwill. The pro forma purchase price allocation was based on an estimate of the fair market values of the tangible and intangible assets and liabilities related to Unisource. SpinCo has considered multiple factors in arriving at the estimated fair market values which were based on a preliminary and limited review of the assets and liabilities related to Unisource to be transferred. Following the effective date of the Transactions, SpinCo expects to complete the preliminary purchase price allocation after considering Unisource’s assets and liabilities at the level of detail necessary to finalize the required purchase price allocation. The final purchase price allocation may be different than that reflected in the pro forma purchase price allocation presented herein, and this difference may be material.
xpedx’s historical combined financial statements have been “carved-out” from International Paper’s consolidated financial statements and reflect assumptions and allocations made by International Paper. The xpedx historical combined financial statements include all revenues, costs, assets and liabilities that are directly attributable to xpedx. In addition, certain expenses reflected in xpedx’s combined financial statements are an allocation of corporate expenses from International Paper. Such expenses include, but are not limited to, centralized International Paper support functions including finance, legal, information technology, human resources, communications and insurance as well as stock-based compensation. These expenses have been allocated to xpedx on the basis of direct usage when identifiable, with the remainder principally allocated on the basis of percent of capital employed, headcount or other measures. The actual costs that may have been incurred if xpedx had been a stand-alone company would depend on a number of factors, including the chosen organizational structure and strategic decisions made as to information technology and infrastructure requirements. As such, xpedx’s combined financial statements do not necessarily reflect what xpedx’s financial condition and results of operations would have been had xpedx operated as a stand-alone company during the periods or at the date presented.
The unaudited pro forma condensed combined financial statements contain only adjustments that are factually supportable and directly attributable to the transaction and do not reflect the costs of any integration activities or benefits that may result from realization of future cost savings from operating efficiencies or revenue synergies expected to result from the Transactions.
 
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The unaudited pro forma condensed combined financial statements should be read in conjunction with:
 
 	•	 	the accompanying notes to the unaudited pro forma condensed combined financial statements;	
 
 	•	 	xpedx’s audited historical combined financial statements and related notes as of and for the year ended December 31, 2013 which are included elsewhere in this prospectus; and	
 
 	•	 	Unisource’s audited historical consolidated financial statements as of and for the year ended December 31, 2013 which are included elsewhere in this prospectus.	
The unaudited pro forma condensed combined financial statements are provided for illustrative purposes only and do not purport to represent what the actual consolidated results of operations or the consolidated financial position of the combined company would have been had the Transactions occurred on the dates assumed, nor are they necessarily indicative of future consolidated results of operations or consolidated financial position.
 
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UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
As of December 31, 2013

 	  	Historical	 	  	Pro Forma
Adjustments
(Note 2)	 	 	 	  	Pro Forma
Condensed
Combined	 	
 	  	xpedx	 	  	Unisource	 	  			 	 	  			
 	  	(Dollars in millions)	 	
Assets	  				
Current assets:	  				  				  				 		  				
Cash and cash equivalents	  	$	5.7	  	  	$	22.2	  	  	$	(1.6	) 	 	A	  	$	26.3	  	
Accounts receivable, net	  	 	669.7	  	  	 	467.8	  	  	 	6.9	  	 	B,C	  	 	1,144.4	  	
Related-party receivable	  	 	10.1	  	  	 	2.8	  	  	 	(10.1	) 	 	B	  	 	2.8	  	
Inventories, net	  	 	360.9	  	  	 	314.7	  	  	 	42.1	  	 	D	  	 	717.7	  	
Deferred income tax assets	  	 	55.3	  	  	 	10.2	  	  	 	(19.2	) 	 	E	  	 	46.3	  	
Other current assets	  	 	26.3	  	  	 	52.9	  	  	 	—  	  	 		  	 	79.2	  	
Assets held for sale	  	 	9.3	  	  	 	—  	  	  	 	(9.3	) 	 	A	  	 	—  	  	
	  	 	 	 	  	 	 	 	  	 	 	 	 		  	 	 	 	
Total current assets	  	 	1,137.3	  	  	 	870.6	  	  	 	8.8	  	 		  	 	2,016.7	  	
Property and equipment, net	  	 	107.1	  	  	 	76.3	  	  	 	239.0	  	 	A,F	  	 	422.4	  	
Other non-current assets	  	 	9.4	  	  	 	14.0	  	  	 	17.0	  	 	G,H	  	 	40.4	  	
Goodwill	  	 	26.4	  	  	 	23.4	  	  	 	61.9	  	 	I	  	 	111.7	  	
Other intangibles, net	  	 	9.3	  	  	 	20.9	  	  	 	26.3	  	 	J	  	 	56.5	  	
Deferred income tax assets	  	 	22.7	  	  	 	210.0	  	  	 	(114.3	) 	 	E	  	 	118.4	  	
	  	 	 	 	  	 	 	 	  	 	 	 	 		  	 	 	 	
Total assets	  	$	1,312.2	  	  	$	1,215.2	  	  	$	238.7	  	 		  	$	2,766.1	  	
	  	 	 	 	  	 	 	 	  	 	 	 	 		  	 	 	 	
Liabilities and Stockholders’ Equity	  				  				  				 		  				
Current liabilities:	  				  				  				 		  				
Accounts payable	  	 	357.3	  	  	 	227.1	  	  	 	34.8	  	 	B,K	  	 	619.2	  	
Related-party note payable	  	 	—  	  	  	 	—  	  	  	 	—  	  	 		  	 	—  	  	
Related-party payable	  	 	2.6	  	  	 	6.7	  	  	 	(2.6	) 	 	B	  	 	6.7	  	
Accrued payroll and benefits	  	 	54.9	  	  	 	33.0	  	  	 	(0.6	) 	 	L	  	 	87.3	  	
Other accrued liabilities	  	 	36.5	  	  	 	65.5	  	  	 	(6.8	) 	 	B,G,L,M	  	 	95.2	  	
Current maturities of long term debt	  	 	—  	  	  	 	2.7	  	  	 	—  	  	 		  	 	2.7	  	
Capital lease obligations to related party, current portion	  	 	—  	  	  	 	9.4	  	  	 	4.6	  	 	F	  	 	14.0	  	
	  	 	 	 	  	 	 	 	  	 	 	 	 		  	 	 	 	
Total current liabilities	  	 	451.3	  	  	 	344.4	  	  	 	29.4	  	 		  	 	825.1	  	
						
Long term debt, net of current maturities	  	 	—  	  	  	 	325.4	  	  	 	436.0	  	 	G	  	 	761.4	  	
Capital lease obligations to related party, less current portion	  	 	—  	  	  	 	45.9	  	  	 	172.1	  	 	F	  	 	218.0	  	
Defined benefit pension obligations, net	  	 	—  	  	  	 	26.6	  	  	 	—  	  	 		  	 	26.6	  	
Other non-current liabilities	  	 	12.5	  	  	 	73.4	  	  	 	38.0	  	 	B,M,N,O	  	 	123.9	  	
	  	 	 	 	  	 	 	 	  	 	 	 	 		  	 	 	 	
Total liabilities	  	 	463.8	  	  	 	815.7	  	  	 	675.5	  	 		  	 	1,955.0	  	
Redeemable preferred stock	  	 	—  	  	  	 	147.7	  	  	 	(147.7	) 	 	P	  	 	—  	  	
						
Stockholders’ equity	  	 	848.4	  	  	 	251.8	  	  	 	(289.1	) 	 	P	  	 	811.1	  	
	  	 	 	 	  	 	 	 	  	 	 	 	 		  	 	 	 	
Total liabilities, redeemable preferred stock and stockholders’ equity	  	$	1,312.2	  	  	$	1,215.2	  	  	$	238.7	  	 		  	$	2,766.1	  	
	  	 	 	 	  	 	 	 	  	 	 	 	 		  	 	 	 	
See accompanying notes to the unaudited pro forma condensed combined financial statements
 
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UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
Year ended December 31, 2013

 	  	Historical	 	 	Pro Forma
Adjustments
(Note 2)	 	 	 	  	Pro Forma
Condensed
Combined	 	
 	  	xpedx	 	 	Unisource	 	 			 		  			
 	  	(Dollars in millions)	 	
Net sales	  	$	5,652.4	  	 	$	4,089.1	  	 	$	—  	  	 		  	$	9,741.5	  	
Cost of products sold	  	 	4,736.8	  	 	 	3,370.4	  	 	 	1.6	  	 	Q	  	 	8,108.8	  	
Distribution expenses	  	 	314.2	  	 	 	250.3	  	 	 	—  	  	 		  	 	564.5	  	
Selling and administrative expenses	  	 	548.2	  	 	 	391.3	  	 	 	(4.7	) 	 	R,S	  	 	934.8	  	
Depreciation and amortization	  	 	17.1	  	 	 	25.1	  	 	 	12.1	  	 	S,T,U	  	 	54.3	  	
Restructuring charges	  	 	37.9	  	 	 	(3.4	) 	 	 	—  	  	 		  	 	34.5	  	
Merger expenses	  	 	—  	  	 	 	14.3	  	 	 	(14.3	) 	 	V	  	 	—  	  	
Asset impairment	  	 	—  	  	 	 	0.4	  	 	 	—  	  	 		  	 	0.4	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 		  	 	 	 	
Operating (loss) income	  	 	(1.8	) 	 	 	40.7	  	 	 	5.3	  	 		  	 	44.2	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 		  	 	 	 	
Other (income) expense, net	  	 	(2.2	) 	 	 	0.5	  	 	 	—  	  	 		  	 	(1.7	) 	
Interest expense, net	  	 	—  	  	 	 	27.4	  	 	 	0.6	  	 	T,W	  	 	28.0	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 		  	 	 	 	
Income from continuing operations before income taxes	  	 	0.4	  	 	 	12.8	  	 	 	4.7	  	 		  	 	17.9	  	
Income tax provision (benefit)	  	 	0.4	  	 	 	(228.5	) 	 	 	7.4	  	 	X	  	 	(220.7	) 	
Equity earnings of affiliates, net of taxes	  	 	—  	  	 	 	(1.1	) 	 	 	—  	  	 		  	 	(1.1	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 		  	 	 	 	
Income from continuing operations	  	$	(0.0	) 	 	$	242.4	  	 	$	(2.7	) 	 		  	$	239.7	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 		  	 	 	 	
Pro forma earnings per share from continuing operations:	  				 				 				 		  				
Basic	  				 				 				 		  	$	(a	)  	
Diluted	  				 				 				 		  	$	(b	)  	
						
Pro forma weighted-average shares outstanding:	  				 				 				 		  				
Basic	  				 				 				 		  	 	(a	)  	
Diluted	  				 				 				 		  	 	(b	)  	

(a)	Pro forma basic earnings per share and pro forma weighted-average basic shares outstanding for the year ended December 31, 2013 reflect the estimated number of shares of common stock we expect to have outstanding upon completion of the Transactions based on the number of International Paper shares of common stock outstanding as of December 31, 2013, adjusted for an assumed distribution ratio of              shares of SpinCo common stock for every share of International Paper common stock.	
(b)	Pro forma diluted earnings per share and pro forma weighted-average diluted shares outstanding reflect the estimated number of shares of common stock we expect to have outstanding upon completion of the Transactions and reflect the potential issuance of shares of common stock under SpinCo equity plans in which our employees will participate, based on the distribution ratio. While the actual dilutive impact in the future may differ from these estimates, we believe this estimate reflects a reasonable approximation of the dilutive impact of SpinCo equity plans.	
See accompanying notes to the unaudited pro forma condensed combined financial statements
 
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NOTES TO THE UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS
Note 1. Basis of Presentation
The accompanying unaudited pro forma condensed combined financial statements present the pro forma condensed combined financial position and results of operations of the combined company based upon the historical financial statements of each of xpedx and Unisource, after giving effect to the Transactions, including the pro forma adjustments described in these notes, and are intended to reflect the impact of the Transactions on xpedx’s combined financial statements. The accompanying unaudited pro forma condensed combined financial statements have been prepared using and should be read in conjunction with the respective audited combined or consolidated (as the case may be) financial statements of each of xpedx and Unisource as of and for the fiscal year ended December 31, 2013. The accompanying unaudited pro forma condensed combined financial statements are presented for illustrative purposes only and do not reflect the costs of any integration activities or benefits that may result from realization of future cost savings due to operating efficiencies or revenue synergies expected to result from the Transactions. In addition, throughout the periods presented in the unaudited pro forma condensed combined financial statements, the operations of xpedx were conducted and accounted for as part of International Paper. xpedx’s audited condensed combined financial statements have been derived from International Paper’s historical accounting records and reflect significant allocations of direct costs and expenses. All of the allocations and estimates in such financial statements are based on assumptions that the management of xpedx believes are reasonable. xpedx’s financial statements do not necessarily represent the financial position of xpedx had it been operated as a separate independent entity.
The unaudited pro forma condensed combined statement of operations combines the historical condensed combined statements of operations of xpedx and the historical consolidated statements of operations of Unisource for the year ended December 31, 2013, to reflect the Transactions as if they had occurred at the beginning of fiscal 2013. The unaudited pro forma condensed combined balance sheet combines the historical condensed combined balance sheet of xpedx and the historical condensed consolidated balance sheet of Unisource as of December 31, 2013, giving effect to the Transactions including the adjustments described in these notes, as if they had been consummated on December 31, 2013.
The unaudited pro forma condensed combined financial statements were prepared using the acquisition method of accounting with SpinCo considered the accounting acquirer of Unisource.
For purposes of the unaudited pro forma condensed combined financial statements, a global blended statutory tax rate of 39.0% has been used. This does not reflect the combined company’s expected effective tax rate, which will include other tax charges and benefits, and does not take into account any historical or possible future tax events that may impact the combined company.
Note 2. Pro Forma Adjustments
The unaudited pro forma condensed combined balance sheet has been adjusted to reflect the allocation of the preliminary estimated purchase price to identifiable assets to be acquired and liabilities to be assumed related to Unisource, with the excess recorded as goodwill. The preliminary purchase price allocation in these unaudited pro forma condensed combined financial statements is based upon an estimated purchase price of approximately $437.1 million. This amount was derived in accordance with the Merger Agreement, based on the business enterprise value of Unisource on December 31, 2013, less debt and debt-like items, as described further below and in Note 2 (P). The final purchase price will be based on the actual net tangible assets and intangible assets and liabilities that exist as of the date of completion of the Transactions. Accordingly, the pro forma purchase price adjustments are preliminary and are subject to further adjustments as additional information becomes available and as additional analyses are performed. Upon completion of the Transactions, final valuations will be performed. Increases or decreases in the fair value of relevant balance sheet amounts will result in adjustments to the combined balance sheet and/or statement of operations. This could result in an increase or decrease to goodwill and materially impact the unaudited pro forma condensed combined financial statements.
 
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NOTES TO THE UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS
 
The preliminary estimated purchase price is allocated as follows:

(Dollars in millions)	  	
Cash	  	$	 22.2	  	
Accounts receivable, net	  	 	467.8	  	
Related-party receivable	  	 	2.8	  	
Inventories	  	 	356.8	  	
Other current assets	  	 	52.9	  	
Property and equipment, net	  	 	330.7	  	
Goodwill	  	 	85.3	  	
Other intangibles	  	 	47.2	  	
Current and long term deferred income tax assets	  	 	94.6	  	
Other non-current assets	  	 	10.0	  	
Accounts payable	  	 	(227.1	) 	
Related party payable	  	 	(6.7	) 	
Accrued payroll and benefits	  	 	(33.0	) 	
Other accrued liabilities	  	 	(65.5	) 	
Current and long term equipment capital lease obligations	  	 	(10.8	) 	
Current and long term capital lease obligations to related party	  	 	(232.0	) 	
Canadian bank overdrafts	  	 	(28.1	) 	
Senior credit facility	  	 	(289.2	) 	
Defined benefit pension obligations	  	 	(26.6	) 	
Other non-current liabilities	  	 	(114.2	) 	
	  	 	 	 	
Total preliminary estimated purchase price allocation	  	$	437.1	  	
	  	 	 	 	
The unaudited pro forma condensed combined balance sheet reflects the following adjustments:
 
(A)	A decrease of $26.3 million to exclude xpedx cash and cash equivalents and the net book value of properties that will not transfer to the combined company. The adjustment impacted the following financial statement line items:	

(Dollars in millions)	  	
Cash and cash equivalents	  	$	(1.6	) 	
Assets held for sale	  	 	(9.3	) 	
Property and equipment, net	  	 	(15.4	) 	
	  	 	 	 	
Total	  	$	(26.3	) 	

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NOTES TO THE UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS
 
(B)	A $7.2 million and $1.9 million decrease in total assets and total liabilities, respectively, as a result of the reorganization of non-U.S. xpedx legal entities necessary to facilitate the Transactions. As a result of the reorganization, these net assets and liabilities will not transfer to the combined company. The following table presents the composition of the net reduction to total assets and total liabilities:	

 	  	Pro forma
Adjustment	 	
(Dollars in millions)	 	
Accounts receivable, net	  	$	2.9	  	
Related-party receivable	  	 	(10.1	) 	
	  	 	 	 	
Total assets	  	$	(7.2	) 	
	  	 	 	 	
Accounts payable	  	$	1.2	  	
Related party payable	  	 	(2.6	) 	
Other accrued liabilities	  	 	0.4	  	
	  	 	 	 	
Total current liabilities	  	 	(1.0	) 	
Other non-current liabilities	  	 	(0.9	) 	
	  	 	 	 	
Total liabilities	  	$	(1.9	) 	

(C)	A $4.0 million increase in accounts receivable related to sales from xpedx to other businesses of International Paper that will be transferred to the combined company. This balance was historically accounted for through parent company investment and not settled in cash, but will be settled in cash following the Transactions.	
 
(D)	A $42.1 million increase in inventory to reflect the estimated fair value of Unisource’s inventory. Of this amount, $1.6 million relates to inventory that is not recorded using the last-in, first-out basis and will be amortized over one average inventory turn (approximately two months).	
 
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NOTES TO THE UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS
 
(E)	Reflects a reduction to deferred income tax assets representing the net deferred income tax liability based on the global blended statutory tax rate of 39.0% multiplied by either (i) the fair value adjustments made to the assets to be acquired and liabilities to be assumed, excluding goodwill, or (ii) the applicable pro forma adjustments to related assets and liabilities that will not be assumed by the combined company included herein (Notes 2(L) and (M)). Additionally, the reduction to deferred income tax assets includes the portion of (i) Unisource pre-Transactions net operating losses that will expire unutilized as a result of certain anticipated limitations associated with a change in ownership and (ii) xpedx pre-Transactions net operating losses that are not expected to be utilized under the legal entity tax structure of the combined company. The adjustment was calculated as follows:	

 	  	 	 	
 	  	 	 	
(Dollars in millions)	 	
Current portion of deferred income tax assets:	  				
Inventory fair value adjustment	  	$	42.1	  	
Severance and accrued compensation liabilities that will not be assumed	  	 	4.0	  	
Restructuring liabilities that will not be assumed	  	 	3.2	  	
	  	 	 	 	
Total	  	 	49.3	  	
Statutory tax rate	  	 	39.0	% 	
	  	 	 	 	
Reduction to current deferred income tax asset	  	$	(19.2	) 	
	  	 	 	 	
Non-current portion of deferred income tax asset:	  				
Property and equipment fair value adjustment	  	$	254.4	  	
Capital lease obligations fair value adjustment	  	 	(176.7	) 	
Intangible assets fair value adjustment	  	 	26.3	  	
Investment in joint venture fair value adjustment	  	 	6.7	  	
Restructuring liabilities that will not be assumed	  	 	1.9	  	
	  	 	 	 	
Total	  	 	112.6	  	
Statutory tax rate	  	 	39.0	% 	
	  	 	 	 	
Reduction to non-current deferred income tax asset before tax attributes	  	 	(43.9	) 	
Unisource federal net operating losses expected to expire unutilized, net of tax	  	 	(66.0	) 	
xpedx federal net operating losses expected to expire unutilized, net of tax	  	 	(4.4	) 	
	  	 	 	 	
Reduction to non-current deferred income tax asset	  	$	(114.3	) 	

 
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NOTES TO THE UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS
 
(F)	A $254.4 million increase in property and equipment to reflect the estimated fair value of Unisource’s property and equipment. For purposes of determining the impact on the unaudited pro forma condensed combined statements of operations, the fair value of property and equipment is being depreciated over the estimated useful lives summarized in the table below:	

 	  	Estimated
Useful
Life (years)	 	
Building and site improvements	  	 	5 to 33	  	
Leasehold improvements	  	 	9	  	
Machinery and equipment	  	 	3 to 7	  	
Internal-use software	  	 	5	  	
The above increase in property and equipment includes an increase of $210.2 million associated with land and buildings that were sold and subsequently leased back by Unisource in 2002. These properties continue to be reported as part of Unisource’s property and equipment and have been adjusted to fair value in purchase accounting due to Unisource’s continued involvement with the properties.
There is a corresponding increase in capital lease obligations to related party of $176.7 million to reflect the estimated fair value of such obligations. Total current and long term capital lease obligations to related party of $232.0 million is comprised of the fair value of the remaining lease payments of $62.9 million and the fair value of a non-monetary obligation of $169.1 million due at the end of the lease term (June 2018). The following table summarizes the financial statement impact:

 	  	Reported	 	  	Pro forma
Adjustment	 	  	Pro Forma
Condensed
Combined	 	
 	  	(Dollars in millions)	 	
Capital lease obligations to related party, current portion	  	$	9.4	  	  	$	4.6	  	  	$	14.0	  	
Capital lease obligations to related party, less current portion	  	 	45.9	  	  	 	172.1	  	  	 	218.0	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total capital lease obligations to related party	  	$	55.3	  	  	$	176.7	  	  	$	232.0	  	

(G)	In connection with the Transactions, the combined company will enter into a new five year asset-based revolving credit facility that provides for borrowings of up to $1,400.0 million. Long-term debt under the new revolving credit facility is expected to approximate $725.2 million, which includes the refinancing of Unisource’s existing senior credit facility of $289.2 million. Pro forma adjustments related to the new revolving credit facility are comprised of the following:	
 
 	a.	A $436.0 million increase in long term debt for (i) $400.0 million special payment to International Paper, subject to the working capital and net indebtedness adjustments; (ii) $21.0 million in deferred financing costs and (ii) $15.0 million of Unisource transaction fees associated with the Transactions.	
 
 	b.	A $10.3 million increase in other non-current assets consisting of deferred financing costs of $21.0 million, partially offset by the removal of Unisource’s existing deferred financing costs of $10.7 million.	
 
 	c.	A $0.6 million decrease to other accrued liabilities for the removal of accrued interest relating to Unisource existing debt.	
 
(H)	A $6.7 million increase in other non-current assets to reflect the estimated fair value of Unisource’s investment in joint ventures acquired.	
 
(I)	A $61.9 million increase to goodwill consisting of the elimination of $23.4 million of existing Unisource goodwill and recording preliminary estimated goodwill of $85.3 million attributable to the Transactions. The goodwill resulting from the Transactions is not expected to be deductible for tax purposes.	
 
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NOTES TO THE UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS
 
(J)	A $26.3 million increase to other intangibles consisting of the elimination of $20.9 million of existing Unisource intangible assets and recording of $47.2 million for the estimated fair value of identifiable intangible assets attributable to the Transactions. The estimated other intangibles attributable to the Transactions are comprised of the following:	

 	  	Amount	 	 	Annual
Amortization
Expense	 	 	Quarterly
Amortization
Expense	 	 	Remaining Useful
Life (years)	
 	  	(Dollars in millions)	 	 	 	
Customer relationships	  	$	38.3	  	 	$	2.7	  	 	$	0.7	  	 	14	
Trademarks / trade names	  	 	9.0	  	 	 	4.5	  	 	 	1.1	  	 	2	
Non-competition agreements	  	 	3.1	  	 	 	3.1	  	 	 	0.8	  	 	1	
Above market leasehold interests	  	 	(3.2	) 	 	 	(0.3	) 	 	 	(0.1	) 	 	9	
	  	 	 	 	 	 	 	 	 	 	 	 	 		
	  	$	47.2	  	 	$	10.0	  	 	$	2.5	  	 		

(K)	A $33.6 million increase in accounts payable related to purchases by xpedx from other businesses of International Paper that will be assumed by the combined company. Historically, this balance was accounted for through parent company investment and not settled in cash, but will be settled in cash following the Transactions.	
 
(L)	A $3.4 million decrease in other accrued liabilities and a $0.6 million decrease in accrued payroll and benefits related to certain xpedx severance and accrued compensation liabilities that will not be assumed by the combined company.	
 
(M)	A $3.2 million decrease in other accrued liabilities and a $1.9 million decrease in other non-current liabilities to exclude certain xpedx restructuring liabilities that will not be assumed by the combined company.	
 
(N)	A $77.1 million increase in other non-current liabilities related to the estimated fair value of the obligation resulting from utilization of Unisource pre-Transactions net operating losses, as described in the Tax Receivable Agreement. The actual amount that the combined company may be obligated to pay under this arrangement could vary depending upon the utilization of Unisource’s pre-Transactions net operating losses, which may not be resolved for several years.	
 
(O)	A $36.3 million decrease in other non-current liabilities to exclude Unisource dividends payable to Georgia Pacific that will not be assumed by the combined company.	
 
(P)	Stockholders’ equity and Redeemable preferred stock have been adjusted for the following:	
 
 	a.	Elimination of Unisource’s Redeemable preferred stock of $147.7 million.	
 
 	b.	Adjustment to reflect Transactions consideration for Unisource, calculated as follows:	

(Dollars in millions)	  	
Business Enterprise Value (i)	  	$	752.9	  	
Less: Debt and debt-like items (ii)	  	 	(315.8	) 	
	  	 	 	 	
Preliminary purchase price	  	$	437.1	  	

 	i.	Business Enterprise Value was estimated as of December 31, 2013. This value is inclusive of Unisource cash of $22.2 million.	
 
 	ii.	Debt and debt-like items include long-term debt of $289.2 million, as described in Note 2(G), and defined benefit pension obligations of $26.6 million.	
 
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NOTES TO THE UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS
 
 	c.	Elimination of Unisource’s (i) common stock of $0.3 million and treasury stock of $(1.0) million, (ii) additional paid in capital of $311.2 million, (iii) accumulated deficit of $(63.4) million and (iv) accumulated other comprehensive loss, net of tax of $4.7 million.	
 
 	d.	A $414.4 million decrease to equity for debt related items described in Note 2(G) comprised of (i) a $400.0 million special payment to International Paper, subject to the working capital and net indebtedness adjustments and (ii) $15.0 million of Unisource transaction fees associated with the Transactions. These decreases to equity are partially offset by an increase of $0.6 million for the removal of accrued interest related to Unisource existing debt.	
 
 	e.	Removal of assets and liabilities described in Notes 2(A), (B), (L) and (M).	
 
 	f.	Assumption of assets and liabilities described in Notes 2(C) and (K).	
 
 	g.	Assumption of deferred tax liabilities unrelated to fair value adjustments described in Note 2(E).	
The unaudited pro forma condensed combined statements of operations reflect the following adjustments:
 
(Q)	A $1.6 million increase to cost of products sold for the year ended December 31, 2013 related to the step-up in fair value of UWWH’s inventory that is not recorded using the last-in, first-out basis and will be amortized over one average inventory turn (approximately two months).	
 
(R)	A $4.4 million decrease in selling and administrative expenses for the year ended December 31, 2013 to remove advisory fees paid to Bain Capital by UWWH in conjunction with the Transactions as these fees will be terminated.	
 
(S)	A $0.5 million decrease in costs for the year ended December 31, 2013 related to facilities historically shared by International Paper and xpedx, as lease agreements have been entered into between International Paper and the combined company for these shared properties in connection with the Transactions. The adjustment impacted the following financial statement line items:	

 	  	Year ended
December 31, 2013	 	
 	  	(Dollars in
millions)	 	
Selling and administrative expense	  	$	(0.3	) 	
Depreciation and amortization	  	 	(0.2	) 	
	  	 	 	 	
Total	  	$	(0.5	) 	

(T)	A $5.5 million increase in depreciation expense for the year ended December 31, 2013 as a result of the increase in the value of the Unisource property and equipment, as described in Note 2(F). In addition, interest expense reflects a decrease of $1.7 million for the year ended December 31, 2013. The decrease is attributable to accretion of the fair value step-up of Unisource capital lease obligations to related party, as described in Note 2(F).	
 
(U)	A $6.8 million increase in amortization expense for the year ended December 31, 2013 resulting from adjustments to Unisource intangible assets, as described in Note 2(J).	
 
(V)	A $14.3 million decrease in merger expenses for the year ended December 31, 2013 related to the removal of direct, incremental costs directly related to the Transactions reflected in the historical financial statements of Unisource as the combined company will not continue to incur this expense subsequent to the closing of the Transactions. These costs primarily consist of professional and legal fees and are not deductible for tax purposes.	
 
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NOTES TO THE UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS
 
(W)	A $2.3 million increase in interest expense for the year ended December 31, 2013 resulting from the terms of, and expected borrowings under, the new asset-based revolving credit facility, as described in Note 2(G). Under the terms of the debt commitment letter, interest expense will be either base rate plus up to 1.75% or LIBOR plus up to 2.75%, in each case, depending on the level of borrowings under the facility. Pro forma adjusted interest expense is calculated based on average one month LIBOR for the year ended December 31, 2013 of 0.19% plus an additional rate of 2.75% for the first $60 million of expected borrowings and 1.50% for the expected borrowings in excess of $60 million, consistent with the terms of the commitment letter. The applicable additional rate, under the terms of the debt commitment letter may vary depending on the level of borrowings under the facility. As of December 31, 2013 and after giving effect to the Transactions, assuming $725.2 million was drawn under the asset-based revolving credit facility, each 0.125 percentage point change in interest rates would result in approximately a $0.9 million change in our annual interest expense	
 
(X)	For purposes of these unaudited pro forma condensed combined financial statements, a global blended statutory tax rate of 39.0% has been used.	
Note 3. Items Not Included
The following expected material nonrecurring charges related to the Transactions and all related transactions are not included or provided for in the unaudited pro forma condensed combined statements of operations:
 
 	•	 	$15.0 million of Unisource transaction fees associated with the Transactions that are expected to be paid with debt proceeds subsequent to December 31, 2013.	
 
 	•	 	Certain costs associated with the Transition Services Agreement, intercompany arrangements and supply agreements pursuant to the Contribution and Distribution Agreement, and professional fees, consultants, information technology implementation, relocation and severance which may be incurred in connection with the integration of xpedx and Unisource. These items may have an impact on the statement of operations, but as they are currently being negotiated such amounts are not currently estimable or factually supportable.	
The unaudited pro forma condensed combined financial statements do not reflect the settlement of xpedx net working capital and net indebtedness adjustments, Unisource net working capital and net indebtedness adjustments, Unisource transaction fees associated with the Transactions in excess of $15.0 million and shared expenses associated with the Transactions as such costs are not currently estimable or factually supportable.
The unaudited pro forma condensed combined financial statements do not reflect certain obligations under employment, retention and other similar agreements of approximately $30 million that may be payable by SpinCo to certain Unisource employees as a result of the Transactions.
The unaudited pro forma condensed combined financial statements do not reflect the increased costs of being a separate public company.
The unaudited pro forma condensed combined financial statements also do not reflect benefits that may result from the realization of cost synergies expected to be realized as a result of the Transactions.
The unaudited pro forma condensed combined financial statements do not reflect the potential impact of post-Transactions compensation and benefit structure changes of the combined company as these costs have not yet been finalized.
 
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 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF XPEDX
You should read the following discussion of xpedx’s results of operations and financial condition together with xpedx’s selected historical combined financial data, audited historical combined financial statements and the notes thereto included in this prospectus as well as the discussion in the section of this prospectus entitled “Business of xpedx.” This discussion contains forward-looking statements that involve risks and uncertainties. The forward-looking statements are not historical facts, but rather are based on current expectations, estimates, assumptions and projections about our industry, business and future financial results. Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including those discussed in the sections of this prospectus entitled “Risk Factors” and “Note Regarding Forward-Looking Statements and Information.” The financial information discussed below and included in this prospectus may not necessarily reflect what our financial condition, results of operations or cash flow would have been had we been a stand-alone company during the periods presented or what our financial condition, results of operations and cash flows may be in the future. Except as otherwise indicated or unless the context otherwise requires, the information included in this discussion and analysis assumes the completion of the Transactions.
Overview
xpedx’s Business
xpedx is a business-to-business distributor of paper, packaging, and facility supplies products in North America operating 86 distribution centers in the U.S. and Mexico as of December 31, 2013. xpedx distributes products and services to a number of customer markets including printers, publishers, data centers, manufacturers, higher education institutions, healthcare facilities, sporting and performance arenas, retail, government agencies, property managers and building service contractors, with no single customer accounting for more than 5% of our net sales in 2013. For the year ended December 31, 2013, we had net sales of $5,652.4 million, 97.5% of which was derived from our U.S. customers.
The xpedx business is organized into three reportable business segments—Print, Packaging and Facility Solutions. The following summary describes the products and services offered in each of the segments:
 
 	•	 	Print: The Print segment includes the sale and distribution of printing and communication papers, publishing papers, digital papers, specialty papers, graphics consumables, wide format papers, graphics equipment and related equipment installation and service. Within this segment, xpedx also operates the Bulkley Dunton Publishing Group (“Bulkley Dunton”), which focuses on the sale of coated and uncoated commercial printing and specialty papers to printers, converters, publishers, retailers and specialty businesses for use in magazines, catalogs, books, directories, gaming, couponing and retail inserts and direct mail. Products sold by Bulkley Dunton are predominately shipped directly from the manufacturer to the customer.	
 
 	•	 	Packaging: The Packaging segment includes the design, sourcing, sale and distribution of customized packaging and packaging equipment and the sale and distribution of custom and standard corrugated boxes, shrink and stretch films, tape, strapping, cushioning, labels, bags, mailers, molded fiber, bio-polymer and plastics and packaging equipment and related equipment installation and service. This segment also includes fulfillment and contract packaging services.	
 
 	•	 	Facility Solutions: The Facility Solutions segment includes the sale and distribution of products necessary to maintain large public facilities, including hand towel and bathroom tissue, cleaning chemicals, disinfectants, skin care products, safety and hazard products, trash bags and receptacles, sanitary maintenance supplies, facilities maintenance equipment and related equipment installation and service. These products are sold to customers for use in their own facilities and for re-distribution.	
 
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Industry Considerations
The paper, packaging and facility supplies distribution industry is highly competitive, with numerous regional and local competitors, and is a mature industry characterized by slowing or, in the case of paper, declining net sales growth. xpedx’s principal competitors include regional, local and national distributors, national and regional manufacturers, independent brokers and both catalog based and online business-to-business suppliers. Most of these competitors generally offer a wide range of products at prices comparable to those xpedx offers, though at varying service levels. Additionally, new competition could arise from non-traditional sources, group purchasing organizations, e-commerce, discount wholesalers, or consolidation among competitors. xpedx believes it offers the full range of services required to effectively compete, but if new competitive sources appear it may result in margin erosion or make it more difficult to attract and retain customers.
The following summary briefly describes the key competitive landscape for each of our business segments:
 
 	•	 	Print:  Industry sources estimate that there are hundreds of regional and local companies engaged in the marketing and distribution of paper and graphics products. While we believe there are few national distributors of paper and graphics products similar to xpedx, several regional and local distributors have cooperated together to serve customers nationally. xpedx’s customers also have the opportunity to purchase product directly from paper and graphics manufacturers, including International Paper. In addition, competitors also include regional and local specialty distributors, office supply and big box stores, independent brokers and large commercial printers that broker the sale of paper in connection with the sale of their printing services.	
 
 	•	 	Packaging:  The packaging market is fragmented consisting of competition from national and regional packaging distributors, national and regional manufacturers of packaging materials, independent brokers, and both catalog based and online business-to-business suppliers. We believe there are few national packaging distributors with substrate neutral design capabilities similar to xpedx’s capability.	
 
 	•	 	Facility Solutions: There are few national but numerous regional and local distributors of facility supplies. Several groups of distributors have created strategic alliances among multiple distributors to provide broader geographic coverage for larger customers. Other key competitors include the business-to-business divisions of big box stores, purchasing group affiliates, and both catalog based and online business-to-business suppliers.	
Separation of xpedx from International Paper
We have entered into the Contribution and Distribution Agreement and several other agreements with International Paper related to the spin-off. These agreements will govern the relationship between us and International Paper after completion of the spin-off and provide for the allocation between us and International Paper of various assets, liabilities, rights and obligations (including employee benefits, insurance and tax-related assets and liabilities). These agreements will also include arrangements for transition services to be provided by International Paper to SpinCo and vice versa. See “The Contribution and Distribution Agreement and the Ancillary Agreements.” To complete the spin-off, International Paper will distribute to its shareholders all of the shares of SpinCo common stock outstanding immediately prior to the Merger.
Under the terms of the Merger Agreement, immediately following the Distribution, UWWH will merge with and into SpinCo, with SpinCo continuing as the surviving corporation, and xpedx Intermediate will merge with and into UWW, with UWW surviving the merger as a wholly-owned subsidiary of SpinCo. As a result of the Merger, the UWWH Stockholder will receive a number of shares of SpinCo common stock for each share of UWWH common stock that it holds at the time of the Merger in a private placement transaction, such that International Paper’s shareholders will hold approximately 51%, and the UWWH Stockholder will hold 49%, of the common stock of SpinCo on a fully-diluted basis immediately following the Merger.
SpinCo will be the accounting acquiror in the Merger. Accordingly, SpinCo will apply acquisition accounting to the assets acquired and liabilities assumed of Unisource upon consummation of the Merger. See “The Transactions—Accounting Treatment and Considerations.”

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Key Performance Measures
Operating income and free cash flow are the primary financial performance measures xpedx uses to manage its businesses and monitor results of operations. Operating income is used by xpedx to manage performance as it is a comprehensive measure reflecting both growth and efficiency. Free cash flow (cash provided by operations less cash invested in capital projects) is used by xpedx as it is a measure that reflects the effectiveness of managing working capital together with operating earnings and the business’ ability to fund capital requirements. xpedx supplements these primary financial performance measures with Adjusted EBITDA (earnings before interest, income taxes, depreciation and amortization, cash and non-cash restructuring and certain other unusual costs, if any) because xpedx believes investors commonly use Adjusted EBITDA as a key financial metric for valuing companies such as xpedx. Free cash flow and Adjusted EBITDA are considered by the Securities and Exchange Commission (“SEC”) as non-GAAP financial measures, and are not alternatives to net income, operating income or any other measure prescribed by U.S. generally accepted accounting principles (“GAAP”).
Net Sales Trends : During the last five years total net sales have declined $785.5 million, or 12.2%, from $6,437.9 during the year ended December 31, 2009 to $5,652.4 during the year ended December 31, 2013. This net sales decline was primarily due to weak economic conditions beginning in 2008 in conjunction with a slow overall economic recovery, sales losses associated with the restructuring of certain of our businesses and, to a lesser extent, the disruption caused by the organizational and other operational changes implemented beginning in 2011 to right-size our organization. Falling demand in the print market was also a cause of lower net sales to customers within the print market, which management defines as companies involved in printing, publishing, packaging with converted paper products and advertising agencies. Net sales to print segment customers were approximately 57.0% of our net sales in 2013.
Operating Income Trends : Total operating income for the year ended December 31, 2013 decreased by $23.4 million, or 108.3%, compared to the year ended December 31, 2012. Our total operating margin was 0.0% for the year ended December 31, 2013 and 0.4% for the year ended December 31, 2012. For the year ended December 31, 2012, our total operating income was $21.6 million, a decrease of 58.1% from $51.5 million for the year ended December 31, 2011. Our total operating margin was 0.4% for the year ended December 31, 2012 compared to 0.8% for the year ended December 31, 2011. The decrease in operating income throughout these periods was primarily due to a decline in revenue as a result of the deterioration of the print market, partially offset by reductions in selling and administrative expenses. xpedx measures the print market by using monthly flash reports provided by the Pulp and Paper Products Council that depict North American Printing and Writing Paper Statistics. Based on these reports, volume within the print market increased by 3.5% from 2009-2010, decreased by 5.5% from 2010-2011, decreased by 6.4% from 2011-2012 and decreased by 1.6% from 2012-2013.
Free Cash Flow Trends : xpedx generated free cash flow of approximately $44.3 million, $45.8 million and $85.3 million in 2013, 2012 and 2011, respectively. The decrease from 2012 to 2013 was primarily attributable to a $5.0 million decrease in cash provided by operations, partially offset by a decrease in cash invested in capital projects of $3.5 million. The decrease from 2011 to 2012 was primarily due to $43.6 million of less cash generated by operations, partially offset by a reduction in investments in capital projects of $4.1 million.
The following table presents a reconciliation of free cash flow from cash provided by operations determined in accordance with GAAP:

 	  	Year Ended December 31,	 	
 	  	2013	 	 	2012	 	 	2011	 	
 	  	(Dollars in millions)	 	
Cash provided by operations	  	$	54.1	  	 	$	59.1	  	 	$	102.7	  	
Less: Cash invested in capital projects	  	 	(9.8	) 	 	 	(13.3	) 	 	 	(17.4	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Free cash flow	  	$	44.3	  	 	$	45.8	  	 	$	85.3	  	

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Free cash flow has limitations as an analytical tool, and you should not consider it in isolation or as substitutes for analysis of our results as reported under GAAP. Other companies in xpedx’s industry may calculate free cash flow differently than xpedx does, limiting its usefulness as a comparative measure. Because of these limitations, free cash flow should not be considered as a measure of discretionary cash available to xpedx to invest in the growth of its business.
Adjusted EBITDA : During 2013, 2012 and 2011, Adjusted EBITDA margin was approximately 1.0%, 1.2% and 1.8%, respectively. The decrease from 2012 to 2013 was primarily attributable to an increase in distribution expense as a percentage of sales from 5.4% to 5.6%. The decrease in Adjusted EBITDA margin from 2011 to 2012 was primarily due to (i) an increase in selling and administrative expenses as a percentage of sales from 9.2% to 9.7% and (ii) an increase in distribution expense as a percentage of sales from 5.0% to 5.4%. See “Summary Historical Combined Financial Data of xpedx” for a reconciliation of Adjusted EBITDA from net income determined in accordance with GAAP.
Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as substitutes for analysis of xpedx’s results as reported under GAAP. For example, Adjusted EBITDA:
 
 	•	 	does not reflect xpedx’s income tax expenses or the cash requirements to pay its taxes; and	
 
 	•	 	although depreciation and amortization charges are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and the foregoing metrics do not reflect any cash requirements for such replacements.	
Other companies in xpedx’s industry may calculate Adjusted EBITDA differently than xpedx does, limiting its usefulness as a comparative measure. Because of these limitations, Adjusted EBITDA should not be considered as a measure of discretionary cash available to xpedx to invest in the growth of its business. xpedx compensates for these limitations by relying primarily on its GAAP results and using Adjusted EBITDA for supplemental purposes. Additionally, Adjusted EBITDA is not an alternative measure of financial performance under GAAP and therefore should be considered in conjunction with net income and other performance measures such as operating income or net cash provided by operating activities and not as an alternative to such GAAP measures.
Results of Operations, Including Business Segments
Overview
The combined financial statements of xpedx reflect the historical financial position, results of operations, changes in parent company equity and cash flows of xpedx for the periods presented, as xpedx was historically managed within International Paper. These statements have been prepared on a “carve-out” basis and are derived from the consolidated financial statements and accounting records of International Paper. xpedx’s combined financial statements may not be indicative of our future performance and do not necessarily reflect what the results of operations, financial position and cash flows would have been had it operated as an independent company during the periods presented.
The combined financial statements include expense allocations for certain functions provided by International Paper, including, but not limited to, general corporate expenses related to finance, legal, information technology, human resources, communications, insurance, and stock-based compensation. These expenses have been allocated to xpedx on the basis of direct usage when identifiable, with the remainder principally allocated on the basis of percent of capital employed, headcount or other measures. Management considers the basis on which the expenses have been allocated to reasonably reflect the utilization of services provided or the benefit received by xpedx during the periods presented. The allocations may not, however, reflect the expenses xpedx would have incurred as an independent company for the periods presented. Actual costs that may have been incurred if xpedx had been a stand-alone company would depend on a number of factors, including, the organizational structure, whether functions were outsourced or performed by employees, and strategic decisions made in areas such as information technology and infrastructure. We are unable to determine what such costs would have been had xpedx been independent.
 
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Comparison of Results of Operations for the Years Ended December 31, 2013 and 2012
The following discussion compares the combined operating results of xpedx for the years ended December 31, 2013 and 2012.

 	  	Year Ended December 31,	 	
 	  	2013	 	 	2012	 	 	Increase
(Decrease)	 	
 	  	(Dollars in millions)	 	 	$	 	 	%	 	
Net sales	  	$	5,652.4	  	 	$	6,012.0	  	 	 	(359.6	) 	 	 	(6.0	) 	
Cost of products sold (exclusive of depreciation and amortization shown separately below)	  	 	4,736.8	  	 	 	5,036.7	  	 	 	(299.9	) 	 	 	(6.0	) 	
Distribution expenses	  	 	314.2	  	 	 	324.0	  	 	 	(9.8	) 	 	 	(3.0	) 	
Selling and administrative expenses	  	 	548.2	  	 	 	580.6	  	 	 	(32.4	) 	 	 	(5.6	) 	
Depreciation and amortization	  	 	17.1	  	 	 	14.0	  	 	 	3.1	  	 	 	22.1	  	
Restructuring charges	  	 	37.9	  	 	 	35.1	  	 	 	2.8	  	 	 	8.0	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating (loss) income	  	 	(1.8	) 	 	 	21.6	  	 	 	(23.4	) 	 	 	(108.3	) 	
Other income, net	  	 	(2.2	) 	 	 	(1.9	) 	 	 	0.3	  	 	 	15.8	  	
Income tax provision	  	 	0.4	  	 	 	9.1	  	 	 	(8.7	) 	 	 	(95.6	) 	
Income (loss) from discontinued operations, net of income taxes	  	 	0.2	  	 	 	(10.0	) 	 	 	(10.2	) 	 	 	(102.0	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	  	$	0.2	  	 	$	4.4	  	 	 	(4.2	) 	 	 	(95.5	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net Sales : For the year ended December 31, 2013, net sales of $5,652.4 million decreased $359.6 million, or 6.0%, compared to the year ended December 31, 2012. Net sales declined primarily due to decreases of $266.8 million and $97.8 million in our Print and Facility Solutions segments, respectively, which are further discussed in the section “Industry Segment Results.”
Cost of Products Sold (Exclusive of Depreciation and Amortization) : For the year ended December 31, 2013, cost of products sold of $4,736.8 million decreased $299.9 million, or 6.0%, compared to the year ended December 31, 2012, which is consistent with the decline in net sales during this period. As a result, gross margin remained consistent and approximated 16.2% for the years ended December 31, 2013 and 2012. Gross margin is calculated based on net sales less cost of products sold (exclusive of depreciation and amortization), as a percentage of net sales.
Distribution Expenses : For the year ended December 31, 2013, total distribution expenses of $314.2 million decreased by $9.8 million, or 3.0%, compared to the year ended December 31, 2012, primarily due to (i) decreased salaries, wages and employee benefits of $4.1 million as a result of a management initiative to restructure the organization enabling the reduction in headcount, (ii) decreased temporary labor of $3.9 million attributable to the decrease in sales, (iii) decreased freight and fuel costs of $1.2 million primarily attributable to the decrease in sales and (iv) decreased repairs and maintenance costs of $0.6 million. As a percentage of net sales, distribution expense increased from 5.4% to 5.6% due to volume declining more rapidly than costs.
Selling and Administrative Expenses : For the year ended December 31, 2013, selling and administrative expenses of $548.2 million decreased by $32.4 million, or 5.6%, compared to the year ended December 31, 2012 primarily due to (i) a decrease in incentive compensation of $15.4 million attributable to the decrease in sales, (ii) a decrease in salaries, wages and benefits of $9.8 million as a result of a management initiative to restructure the organization enabling the reduction in headcount, (iii) lower commissions of $7.4 million associated with decreased volume, (iv) a decrease in travel and entertainment expenses of $2.8 million attributable to the decrease in sales and (v) a decrease in other administrative expenses of $5.5 million as a result of the decrease in sales. These decreases are partially offset by an $8.6 million increase related to the creation of centralized procurement and operations organizations. Selling and administrative expenses as a percentage of net sales remained consistent and approximated 9.7% for the years ended December 31, 2013 and 2012.
 
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Restructuring Charges : During 2010, xpedx completed a strategic assessment of its operating model, resulting in the decision to undertake a multi-year restructuring plan. The restructuring plan involved the establishment of a lower cost operating model in conjunction with the repositioning of the Print segment in consideration of changing market conditions. The restructuring plan included initiatives to (i) optimize the warehouse network, (ii) improve the efficiency of the sales team and (iii) reorganize the procurement function. Restructuring charges for the year ended December 31, 2013 are primarily comprised of severance of $16.9 million, closure costs to bring the facilities to saleable condition of $15.2 million, personnel costs of $10.9 million, professional services of $1.0 million, partially offset by a gain on sale of fixed assets of $6.4 million.
For the year ended December 31, 2013, restructuring charges of $37.9 million increased by $2.8 million, or 8.0%, compared to the year ended December 31, 2012 primarily due to increases in (i) severance costs of $5.0 million and (ii) facility closure costs of $2.2 million. These increases to restructuring charges are partially offset by an increase of $3.7 million from gains on the sale of fixed assets disposed as part of the restructuring activities and decreased accelerated amortization and depreciation of $0.9 million.
Income Taxes:  The effective tax rate for the year ended December 31, 2013 increased to 100.0% from 38.7% for the year ended December 31, 2012 primarily due to an increased meals and entertainment disallowance.
Discontinued Operations : During 2011, xpedx ceased both its Canadian operations, which provided distribution of printing supplies to Canadian based customers, and its printing press distribution business which operated in the U.S. For the year ended December 31, 2013, income from discontinued operations approximated $0.2 million.
Comparison of Results of Operations for the Years Ended December 31, 2012 and 2011
The following discussion compares the combined operating results of xpedx for the years ended December 31, 2012 and 2011.

 	  	Year Ended December 31,	 	
 	  	2012	 	 	2011	 	 	Increase (Decrease)	 	
 	  	(Dollars in millions)	 	 	$	 	 	%	 	
Net sales	  	$	6,012.0	  	 	$	6,509.2	  	 	$	(497.2	) 	 	 	(7.6	) 	
Cost of products sold (exclusive of depreciation and amortization shown separately below)	  	 	5,036.7	  	 	 	5,475.3	  	 	 	(438.6	) 	 	 	(8.0	) 	
Distribution expenses	  	 	324.0	  	 	 	324.5	  	 	 	(0.5	) 	 	 	(0.2	) 	
Selling and administrative expenses	  	 	580.6	  	 	 	598.7	  	 	 	(18.1	) 	 	 	(3.0	) 	
Depreciation and amortization	  	 	14.0	  	 	 	15.6	  	 	 	(1.6	) 	 	 	(10.3	) 	
Restructuring charges	  	 	35.1	  	 	 	43.6	  	 	 	(8.5	) 	 	 	(19.5	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating income	  	 	21.6	  	 	 	51.5	  	 	 	(29.9	) 	 	 	(58.1	) 	
Other income, net	  	 	(1.9	) 	 	 	(5.2	) 	 	 	(3.3	) 	 	 	(63.5	) 	
Income tax provision	  	 	9.1	  	 	 	21.2	  	 	 	(12.1	) 	 	 	(57.1	) 	
Loss from discontinued operations, net of income taxes	  	 	(10.0	) 	 	 	(13.6	) 	 	 	(3.6	) 	 	 	(26.5	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	  	$	4.4	  	 	$	21.9	  	 	$	(17.5	) 	 	 	(79.9	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net Sales : For the year ended December 31, 2012, net sales of $6,012.0 million decreased by $497.2 million, or 7.6%, compared to the year ended December 31, 2011 principally due to a $425.7 million decline in Print, which is further discussed in the section “Industry Segment Results.”
Cost of Products Sold (Exclusive of Depreciation and Amortization) : For the year ended December 31, 2012, cost of products sold of $5,036.7 million decreased by $438.6 million, or 8.0% compared to the year ended December 31, 2011 as a result of lower overall volume. The lower volume was the result of overall lower
 
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demand for print products. As the decline in cost of products sold was fairly consistent with the net sales decline, gross margin remained fairly consistent at 16.2% in 2012 compared to 15.9% in 2011. Gross margin is calculated based on net sales less cost of products sold (exclusive of depreciation and amortization), as a percentage of net sales.
Distribution Expenses : For the year ended December 31, 2012, total distribution expenses of $324.0 million decreased by $0.5 million, or 0.2%, compared to the year ended December 31, 2011 primarily due to (i) decreased facilities costs of $6.3 million attributable to the decrease in sales and (ii) decreased salaries and wages of $2.8 million primarily attributable to the decrease in sales. These decreases are partially offset by (i) increased freight and fuel costs of $6.3 million driven by an increase in miles driven as a result of the consolidation of our distribution network that occurred during 2011 and (ii) increased temporary labor of $2.4 million attributable to a labor strike. As a percentage of net sales, distribution expense increased from 5.0% to 5.4% primarily due to (i) increased freight and fuel costs of 0.2%, (ii) increased salaries and wages of 0.1% and (iii) increased temporary labor of 0.1%.
Selling and Administrative Expenses : For the year ended December 31, 2012, selling and administrative expense of $580.6 million decreased by $18.1 million, or 3.0%, compared to the year ended December 31, 2011 primarily due to (i) a decrease in salaries, wages and employee benefits of $33.4 million as a result of a management initiative to restructure the organization enabling the reduction in headcount, (ii) a decrease in commissions of $6.2 million associated with decreased sales and (iii) a decrease in travel and entertainment of $2.8 million attributable to the decrease in sales. These decreases are partially offset by (i) an increase of $16.9 million related to the creation of a centralized sales and procurement organization in 2012, (ii) additional costs expensed in 2012 for internally developed software of $5.2 million and (iii) increased incentive compensation of $2.3 million. As a percentage of net sales, selling and administrative expenses increased from 9.2% for 2011 to 9.7% for 2012 due to (i) an increase of 0.3% related to the creation of a centralized sales and procurement organization in 2012, (ii) additional costs expensed in 2012 for internally developed software of 0.1%, (iii) an increase in management incentives of 0.1% and (iv) fixed costs remaining consistent over the period. These increases were partially offset by a decrease in salary, wages and benefits of 0.3%.
Restructuring Charges : For the year ended December 31, 2012, restructuring charges of $35.1 million decreased by $8.5 million, or 19.5%, compared to the year ended December 31, 2011 primarily due to a $6.7 million intangible asset write down in 2011 that did not recur in 2012 and a $2.7 million gain on the sale of fixed assets in 2012 attributable to the restructuring activities. The impairment charge of $6.7 million recorded in 2011 related to the Central Lewmar trade name. Restructuring charges for the year ended December 31, 2012 are primarily comprised of closure costs to bring the facility to saleable condition of $13.0 million, severance of $11.9 million and personnel costs of $10.6 million.
Income Taxes: The effective tax rate remained fairly consistent year over year at 38.7% during the year ended December 31, 2012 as compared to 37.4% for the year ended December 31, 2011.
Discontinued Operations : During 2011, xpedx ceased both its Canadian operations, which provided distribution of printing supplies to Canadian based customers, and its printing press distribution business which operated in the U.S. For the year ended December 31, 2012, loss from discontinued operations of $10.0 million decreased by $3.6 million, or 26.5%, compared to the year ended December 31, 2011. The costs incurred in 2012 primarily relate to additional costs associated with fully exiting the businesses.
Industry Segment Results
Segment operating profits are used by xpedx’s management to measure the earnings performance of its segments. Management believes that this measure allows a better understanding of trends in costs, operating efficiencies, prices and volumes. Segment operating profits are defined as earnings from continuing operations before taxes and corporate items. Segment operating profits are considered by the SEC a non-GAAP financial measure, and are not GAAP alternatives to net income or any other operating measure prescribed by accounting principles generally accepted in the United States.
 
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The table below presents selected data by reportable segment reconciled to the combined totals.

 	  	Year Ended December 31,	 	
 	  	2013	 	 	2012	 	 	2011	 	
 	  	(Dollars in millions)	 	
Net sales:	  				 				 				
Print	  	$	3,219.4	  	 	$	3,486.2	  	 	$	3,911.9	  	
Packaging	  	 	1,587.2	  	 	 	1,582.1	  	 	 	1,617.0	  	
Facility Solutions	  	 	845.8	  	 	 	943.6	  	 	 	979.9	  	
Corporate and intersegment sales	  	 	—  	  	 	 	0.1	  	 	 	0.4	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total net sales	  	 	5,652.4	  	 	 	6,012.0	  	 	 	6,509.2	  	
				
Operating profit (loss):	  				 				 				
Print	  	 	27.4	  	 	 	32.3	  	 	 	54.5	  	
Packaging	  	 	43.1	  	 	 	51.0	  	 	 	61.5	  	
Facility Solutions	  	 	(24.1	) 	 	 	(35.5	) 	 	 	(18.3	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total segment operating profit	  	 	46.4	  	 	 	47.8	  	 	 	97.7	  	
Corporate items	  	 	(46.0	) 	 	 	(24.3	) 	 	 	(41.0	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total income from continuing operations before income taxes	  	$	0.4	  	 	$	23.5	  	 	$	56.7	  	

Operating margin:	  				 				 				
Print	  	 	0.9	% 	 	 	0.9	% 	 	 	1.4	% 	
Packaging	  	 	2.7	% 	 	 	3.2	% 	 	 	3.8	% 	
Facility Solutions	  	 	(2.8	%) 	 	 	(3.8	)% 	 	 	(1.9	)% 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total segment operating margin	  	 	0.8	% 	 	 	0.8	% 	 	 	1.5	% 	
				
Total operating margin	  	 	0.0	% 	 	 	0.4	% 	 	 	0.9	% 	
The following table presents a reconciliation of net income to total segment operating profit.

 	  	Year Ended December 31,	 	
 	  	2013	 	 	2012	 	 	2011	 	
 	  	(Dollars in millions)	 	
Net income	  	$	0.2	  	 	$	4.4	  	 	$	21.9	  	
Add back:	  				 				 				
Income (loss) from discontinued operations, net of income tax	  	 	0.2	  	 	 	(10.0	) 	 	 	(13.6	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Income from continuing operations	  	 	—  	  	 	 	14.4	  	 	 	35.5	  	
Add back:	  				 				 				
Income tax provision	  	 	0.4	  	 	 	9.1	  	 	 	21.2	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Income from continuing operations before income taxes	  	 	0.4	  	 	 	23.5	  	 	 	56.7	  	
Corporate items	  	 	46.0	  	 	 	24.3	  	 	 	41.0	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total segment operating profit	  	$	46.4	  	 	$	47.8	  	 	$	97.7	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Segment operating profit (loss)	  				 				 				
Print	  	$	27.4	  	 	$	32.3	  	 	$	54.5	  	
Packaging	  	 	43.1	  	 	 	51.0	  	 	 	61.5	  	
Facility Solutions	  	 	(24.1	) 	 	 	(35.5	) 	 	 	(18.3	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total segment operating profit	  	$	46.4	  	 	$	47.8	  	 	$	97.7	  	

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The principal changes in operating profit by segment were as follows:
 
 	•	 	The decline in Print operating profit from 2011 to 2013 was primarily a result of a decline in net sales of $425.7 million and $266.8 million from 2011 to 2012 and 2012 to 2013, respectively. The decline in net sales year over year was primarily a result of the overall print market decline (6.4% from 2011 to 2012 and 1.6% from 2012 to 2013) and the closure of certain retail locations during 2011, 2012 and 2013. The decline in Print operating profit from 2012 to 2013 was primarily the result of continued decline in print revenue partially offset by reductions in operating and restructuring expenses. Operating margin remained consistent and approximated 0.9% for both 2012 and 2013. The net sales decline from 2011 to 2012 impacting the 2012 operating profit was offset by $2.3 million less of bad debt expense and $4.7 million less of restructuring charges.	
 
 	•	 	The decrease in Packaging operating profit from 2012 to 2013 was primarily the result of an increase in operating expenses of $4.9 million and an increase in restructuring costs of $3.2 million. Packaging gross profit remained fairly consistent from 2012 to 2013. The operating profit decrease from 2011 to 2012 was primarily a result of net sales decline of approximately $34.9 million, in addition to an increase in corrugated costs that preceded an increase in selling prices, partially offset by a decrease in restructuring charges of $3.3 million.	
 
 	•	 	The decline in Facility Solutions operating profit from 2011 to 2013 was primarily the result of a decline in volume, leading to a net sales decline of $134.1 million. The decline in volume year over year was a result of increased competitive pressure. From 2011 to 2012, the decline in operating profit was also impacted by increased operating expenses of $7.3 million. Operating profit improved when comparing 2013 to 2012 as a result of $32.8 million of reduced operating expenses, partially offset by the overall decrease in volume.	
Print
The table below presents selected data with respect to the Print segment.

 	 	Year Ended
December 31,	 	 	 	 	 	Year Ended
December 31,	 	 	 	 	
 	 	2013	 	 	2012	 	 	Increase
(Decrease)	 	 	2012	 	 	2011	 	 	Increase
(Decrease)	 	
 	 	(Dollars in millions)	 	
Net sales	 	$	3,219.4	  	 	$	3,486.2	  	 	$	(266.8	) 	 	$	3,486.2	  	 	$	3,911.9	  	 	$	(425.7	) 	
Operating profit	 	 	27.4	  	 	 	32.3	  	 	 	(4.9	) 	 	 	32.3	  	 	 	54.5	  	 	 	(22.2	) 	
Operating margin	 	 	0.9	% 	 	 	0.9	% 	 	 	—  	% 	 	 	0.9	% 	 	 	1.4	% 	 	 	(0.5	)% 	
Comparison of the Years Ended December 31, 2013 and December 31, 2012
Print net sales for the year ended December 31, 2013 decreased by $266.8 million, or 7.7%, compared to the year ended December 31, 2012. The decrease in net sales was primarily due to (i) volume decline of $138.4 million, or 4.0%, driven by the overall print market decline of 1.6%, (ii) a decrease of $27.7 million, or 0.8%, as a result of xpedx altering its go-to-market approach for walk-in customers through the closing of certain retail stores and (iii) price erosion of $100.7 million, or 2.9%. Customer losses included within the above changes approximated $113.5 million for the year ended December 31, 2013.
Print operating profit for the year ended December 31, 2013 decreased by $4.9 million, or 15.2%, compared to the year ended December 31, 2012. The decrease in operating profit was primarily driven by an overall decrease in sales partially offset by a reduction in operating expenses of $24.8 million and a reduction in restructuring expenses of $7.5 million. Operating margin remained consistent from 2012 to 2013 and approximated 0.9% for both periods.
 
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Comparison of the Years Ended December 31, 2012 and December 31, 2011
Print net sales for the year ended December 31, 2012, decreased by $425.7 million, or 10.9%, compared to the year ended December 31, 2011. The decrease in Print net sales was primarily due to (i) volume decline of $264.7 million, or 6.8%, driven by the overall print market decline of 6.4%, (ii) a decline $113.8 million, or 2.9%, related to the closure of certain retail locations and (iii) price erosion of $47.2 million, or 1.2%.
Print operating profit for the year ended December 31, 2012 decreased by $22.2 million, or 40.7%, compared to the year ended December 31, 2011. The operating profit decrease was primarily a result of the decline in gross profit partially offset by (i) a $4.7 million decrease in restructuring charges and (ii) a $2.3 million decrease in bad debt expense.
Packaging
The table below presents selected data with respect to the Packaging segment.

 	 	Year Ended
December 31,	 	 	 	 	 	Year Ended
December 31,	 	 	 	 	
 	 	2013	 	 	2012	 	 	Increase
(Decrease)	 	 	2012	 	 	2011	 	 	Increase
(Decrease)	 	
 	 	(Dollars in millions)	 	
Net sales	 	$	1,587.2	  	 	$	1,582.1	  	 	$	5.1	  	 	$	1,582.1	  	 	$	1,617.0	  	 	$	(34.9	) 	
Operating profit	 	 	43.1	  	 	 	51.0	  	 	 	(7.9	) 	 	 	51.0	  	 	 	61.5	  	 	 	(10.5	) 	
Operating margin	 	 	2.7	% 	 	 	3.2	% 	 	 	(0.5	)% 	 	 	3.2	% 	 	 	3.8	% 	 	 	(0.6	)% 	
Comparison of the Years Ended December 31, 2013 and December 31, 2012
Packaging net sales for the year ended December 31, 2013 increased by $5.1 million, or 0.3%, compared to the year ended December 31, 2012. The increase in net sales was primarily due to increased volume of $4.6 million or 0.3%. This increase is primarily attributable to the realization of benefits from the multi-year restructuring plan which was implemented during 2011.
Packaging operating profit for the year ended December 31, 2013 decreased by $7.9 million, or 15.5%, compared to the year ended December 31, 2012. The decline in operating profit is primarily due to an increase in operating expenses of $4.9 million and an increase in restructuring costs of $3.2 million. Packaging gross profit remained fairly consistent from 2012 to 2013.
Comparison of the Years Ended December 31, 2012 and December 31, 2011
Packaging net sales for the year ended December 31, 2012 decreased by $34.9 million, or 2.2%, compared to the year ended December 31, 2011 due to a volume decline of $32.3 million, or 2.0%. The decrease was primarily the result of revenue decline of $39.4 million for an existing customer.
Packaging operating profit for the year ended December 31, 2012 decreased by $10.5 million, or 17.1%, compared to the year ended December 31, 2011. The operating profit decline was the result of an increase in corrugated and resin cost that were not fully passed on to customers, partially offset by a reduction in restructuring charges of $3.3 million.
 
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Facility Solutions
The table below presents selected data with respect to the Facility Solutions segment.

 	 	Year Ended
December 31,	 	 	 	 	 	Year Ended
December 31,	 	 	 	 	
 	 	2013	 	 	2012	 	 	Increase
(Decrease)	 	 	2012	 	 	2011	 	 	Increase
(Decrease)	 	
 	 	(Dollars in millions)	 	
Net sales	 	$	845.8	  	 	$	943.6	  	 	$	(97.8	) 	 	$	943.6	  	 	$	979.9	  	 	$	(36.3	) 	
Operating loss	 	 	(24.1	) 	 	 	(35.5	) 	 	 	11.4	  	 	 	(35.5	) 	 	 	(18.3	) 	 	 	(17.2	) 	
Operating margin	 	 	(2.8	)% 	 	 	(3.8	)% 	 	 	1.0	% 	 	 	(3.8	)% 	 	 	(1.9	)% 	 	 	(1.9	)% 	
Comparison of the Years Ended December 31, 2013 and December 31, 2012
Facility Solutions net sales for the year ended December 31, 2013 decreased by $97.8 million, or 10.4%, compared to the year ended December 31, 2012 primarily as a result of the decline in volume. The decrease was due to lost customers of $31.8 million, overall market decline and management’s decision to reposition its distribution network.
Facility Solutions operating profit for the year ended December 31, 2013 increased by $11.4 million, or 32.1%, compared to the year ended December 31, 2012 primarily due to a decrease in operating expenses of $32.8 million and a decrease in restructuring costs of $0.7 million. These increases to operating profit were partially offset by a decrease in gross profit of $21.9 million attributable to the overall decrease in sales.
Comparison of the Years Ended December 31, 2012 and December 31, 2011
Facility Solutions net sales for the year ended December 31, 2012 decreased by $36.3 million, or 3.7%, compared to the year ended December 31, 2011. The decrease in net sales was primarily a result of volume decline of $38.0 million related to specific customer losses, as well as an overall price decline of 0.5% or $5.0 million, partially offset by new customer activity of $8.0 million.
Facility Solutions operating profit for the year ended December 31, 2012 decreased by $17.2 million, or 94.0%, compared to the year ended December 31, 2011. The operating profit decrease was a result of the volume decline and customer loss discussed above along with an increase in operating expenses of $7.3. Higher operating expenses were primarily due to (i) an increase in delivery charges of $4.4 million as a result of higher fuel charges and (ii) an increase of $1.6 million related to handling expense.
Corporate Items
The principal changes in corporate items were as follows:
 
 	•	 	The increase in corporate items from 2012 to 2013 of $21.7 million was primarily a result of a $7.8 million increase in restructuring, a $4.3 million increase in operating expenses and $3.6 million of higher allocated expenses from International Paper. Consolidated restructuring increased as a result of increased restructuring related incentive compensation and severance. Corporate operating expenses increased primarily due to increased incentive compensation and severance not associated with restructuring.	
 
 	•	 	The decrease in corporate items from 2011 to 2012 of $16.7 million was primarily a result of $10.2 million of lower allocated expenses from International Paper. In addition, corporate items were impacted by lower deferred rebates of $0.9 million and a decrease in management incentives of $1.5 million as a result of xpedx not meeting annual performance targets.	
 
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Liquidity and Capital Resources
Historical
Under International Paper’s centralized cash management system, the cash requirements of xpedx were provided directly by International Paper and cash generated by xpedx was generally remitted directly to International Paper. During the three years ended December 31, 2013, 2012 and 2011, xpedx generated sufficient cash from operating activities to fund its capital spending.
The following table sets forth a summary of cash flows for the years ended December 31, 2013, 2012 and 2011.

 	  	Year Ended December 31,	 	
 	  	2013	 	 	2012	 	 	2011	 	
 	  	(Dollars in millions)	 	
Net cash from (used for):	  				 				 				
Operating activities	  	 	54.1	  	 	$	59.1	  	 	$	102.7	  	
Investing activities	  	 	13.2	  	 	 	(7.5	) 	 	 	(17.1	) 	
Financing activities	  	 	(78.5	) 	 	 	(49.4	) 	 	 	(86.5	) 	
Operating Activities
2013 Compared with 2012: We generated $54.1 million of cash from operating activities during the year ended December 31, 2013; a decrease of $5.0 million compared with the $59.1 million generated during the year ended December 31, 2012. This decrease was primarily due to $14.4 million of lower income from continuing operations, adjusted to exclude non-cash items and deferred income taxes, partially offset by (i) an increase in cash generated by working capital of $7.6 million and (ii) a decrease in cash used by discontinued operations for operating activities of $1.8 million.
2012 Compared with 2011: We generated $59.1 million of cash from operating activities during the year ended December 31, 2012; a decrease of $43.6 million compared with the $102.7 million generated during the year ended December 31, 2011. This decrease was primarily due to $29.3 million of lower income from continuing operations, adjusted to exclude non-cash impairment charges and deferred income taxes, as well as a decrease in cash generated by working capital components of $5.5 million. The decrease in cash generated by working capital components was primarily due to the changes in accounts receivable and accounts payable as a result of the overall decrease in sales and cost of sales.
Investing Activities
During 2013, cash used for capital expenditures was approximately $9.8 million. This was more than offset by proceeds from the sale of certain assets of $22.7 million.
During 2012, cash used for capital expenditures was approximately $13.3 million. This was partially offset by proceeds from sale of certain assets of $5.1 million.
During 2011, cash used for capital expenditures was approximately $17.4 million.
Financing Activities
Cash used in financing activities for the three years ended December 31, 2013 primarily represent transactions between us and International Paper. These transactions are considered to be effectively settled for cash at the time the transaction is recorded. The components of these transactions (or transfers) include (i) cash transfers from us to International Paper, (ii) cash transfers from International Paper to fund our requirements for working capital and other commitments and (iii) allocation of International Paper’s corporate expenses.
 
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Free Cash Flow
For a discussion of free cash flow, see “—Key Performance Measures—Free Cash Flow Trends.”
The Combined Company
Following the completion of the Transactions, the combined company’s capital structure and sources of liquidity will change significantly from our historical capital structure. We will no longer participate in cash management and funding arrangements with International Paper. Instead, our ability to fund the combined company’s cash needs will depend on SpinCo’s ongoing ability to generate cash from operations and borrow under the ABL Facility. If the combined company’s cash flows from operating activities are lower than we expect, we will need to borrow under the ABL Facility and may need to incur additional debt or issue additional equity. Although we believe that the arrangements in place at the time of the closing of the Transactions will permit the combined company to finance our operations on acceptable terms and conditions, our access to, and the availability of, financing on acceptable terms and conditions in the future will be impacted by many factors, including (i) the combined company’s credit ratings or absence of a credit rating, (ii) the liquidity of the overall capital markets and (iii) the current state of the economy.
We expect that the combined company’s primary future cash needs will be for working capital, capital expenditures, contractual commitments and strategic investments. On a pro forma as adjusted basis giving effect to the Transactions, the combined company would have had cash and cash equivalents of $26.3 million as of December 31, 2013. We expect that cash provided by operating activities and available capacity under the ABL Facility will provide sufficient funds to operate the combined company’s business and meet the combined company’s other liquidity needs for the twelve months following the closing of the Transactions. We expect the combined company to generate positive free cash flow before restructuring and integration expenses for the twelve months following the closing.
We currently expect the one-time costs associated with achieving anticipated cost savings and other synergies from the Merger to be approximately $225 million over a five-year period, including approximately $70 million for information technology infrastructure and systems integration and planning.
As a result of the Transactions, we may be obligated to pay bonus, severance, change-in-control and other employee payments of approximately $30 million to certain Unisource employees.
Capital spending for the combined company for the second half of 2014 is currently estimated to be $10 million, excluding one-time integration costs which may be capitalized.
In connection with the Transactions, we will enter into the ABL Facility, which we expect will provide for revolving loans in an aggregate principal amount of up to $1,400.0 million (subject to availability under a borrowing base). The ABL Facility will be available to finance the Transactions and to fund working capital and other general corporate purposes. The borrowing base availability under the ABL Facility is estimated to be approximately $             as of December 31, 2013. After giving effect to letters of credit expected to be issued under the ABL Facility and initial borrowings under the ABL Facility of approximately $725.2 million in connection with the Transactions, assuming the Transactions had closed as of December 31, 2013, we expect to have available borrowing capacity of approximately $             million under the ABL Facility as of the Closing Date. Our liquidity requirements will be significant, primarily due to the combined company’s debt service requirements. On a pro forma combined basis, after giving effect to the Transactions, assuming the Transactions had closed as of December 31, 2013, our interest expense for the year ended December 31, 2013 would have been $18.9 million for our ABL Facility. See “Description of Material Indebtedness.”
Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements as of December 31, 2013, other than the operating lease obligations listed in the table below. Immediately following the Transactions, we do not expect to not have
 
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any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, revenues, or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to investors.
Contractual Obligations
The table below presents our estimated total contractual obligations at December 31, 2013, including the amounts expected to be paid or settled for each of the periods indicated below.

 	  	Payments Due by Period	 	
 	  	Total	 	  	Less Than
1 Year	 	  	1–3
Years	 	  	3–5
Years	 	  	More Than
5 Years	 	
 	  	(Dollars in millions)	 	
Non-cancelable operating leases (1)	  	$	230.5	  	  	$	45.4	  	  	$	69.6	  	  	$	54.4	  	  	$	61.1	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total	  	$	230.5	  	  	$	45.4	  	  	$	69.6	  	  	$	54.4	  	  	$	61.1	  	

(1)	Non-cancelable operating leases are presented net of estimated sublease rental income.	
As of December 31, 2013, on a pro forma combined basis, we had contractual obligations and commitments consisting principally of non-cancelable operating leases and long-term debt, representing our expected borrowings under our ABL Facility and related projected interest obligations. Subsequent to December 31, 2013, other than as contemplated by the Transactions, there have been no material changes to our contractual obligations that are outside the normal course. For further discussion of the impact of the Transactions on the contractual obligations of the combined company, see “Unaudited Pro Forma Condensed Combined Financial Information of Combined Company and Related Notes” and “Management’s Discussion and Analysis of Financial Condition and Results of Operation for Unisource—Impacts of Merger.”
Quantitative and Qualitative Disclosures About Market Risk
xpedx has limited exposure to foreign currency exchange risk as the substantial majority of the business is conducted in U.S. dollars. In addition, 97.5% of our sales were in the U.S. for the year ended December 31, 2013. As a business within International Paper, xpedx has not directly experienced exposure to the impacts of certain market risks, including those related to equity price risk and interest rate risk.
We will be exposed to changes in interest rates following the Transactions. Our indebtedness under our new ABL Facility will bear interest at variable rates. As a result, increases in interest rates could increase the cost of servicing such debt and materially reduce our profitability and cash flows. See Note 2(W) to the unaudited pro forma condensed combined financial statements. We may manage our exposure to fluctuations in interest rates following the consummation of the Transactions with respect to our new ABL Facility by entering into certain market-based interest rate hedging instruments, such as swaps or caps.
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires xpedx to establish accounting policies and to make estimates that affect both the amounts and timing of the recording of assets, liabilities, net sales and expenses. Some of these estimates require judgment about matters that are inherently uncertain. Actual amounts will differ from these estimates and could differ materially.
Management of xpedx has evaluated the accounting policies used in the preparation of the financial statements and related notes presented elsewhere in this prospectus and believes those policies to be reasonable and appropriate. Management of xpedx believes that the most critical accounting policies whose application may have a significant effect on the reported results of operations and financial position of xpedx, and that can require
 
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judgments by Management that affect their application, include the accounting for (i) revenue (ii) contingencies, (iii) impairment or disposal of long-lived assets and goodwill, (iv) pensions and postretirement benefit obligations, (v) stock based compensation and (vi) income taxes.
Revenue Recognition
Revenue is recognized when persuasive evidence of an arrangement exists, the price is fixed or determinable, collectability is reasonably assured and delivery has occurred. Revenue is recognized when the customer takes title and assumes the risks and rewards of ownership. Revenue is recorded at the time of shipment for customer terms designated f.o.b. (free on board) shipping point. For sales transactions with customers designated f.o.b. destination, revenue is recorded when the product is delivered to the customer’s delivery site, when title and risk of loss are transferred. Shipping terms are determined on a customer by customer or order by order basis.
Certain revenues are derived from shipments arranged by xpedx made directly from a manufacturer to an xpedx customer. xpedx is considered to be a principal to these transactions because, among other factors, xpedx controls pricing to the customer and bears the credit risk of the customer defaulting on payment and is the primary obligor. Revenues from these sales are reported on a gross basis in the combined statements of operations and comprehensive income and amounted to $2.4 billion, $2.5 billion, and $2.8 billion for the years ended December 31, 2013, 2012 and 2011, respectively.
Taxes collected from customers relating to product sales and remitted to governmental authorities are accounted for on a net basis. Accordingly, such taxes are excluded from both net sales and expenses.
Contingent Liabilities
Accruals for contingent liabilities, including legal matters, are recorded when it is probable that a liability has been incurred or an asset impaired and the amount of the loss can be reasonably estimated. Liabilities accrued for legal matters require judgments regarding projected outcomes and range of loss based on historical experience and recommendations of legal counsel.
Impairment of Long-Lived Assets and Goodwill
An impairment of a long-lived asset exists when the asset’s carrying amount exceeds its expected future undiscounted cash flows, and is recorded at its estimated fair value. Goodwill impairment exists when the carrying amount of goodwill exceeds its fair value. Assessments of possible impairments of long-lived assets and goodwill are made when events or changes in circumstances indicate that the carrying value of the asset may not be recoverable through future operations. Additionally, testing for possible impairment of goodwill and intangible asset balances is required annually. The amount and timing of any impairment charges based on these assessments require the estimation of future cash flows and the fair market value of the related assets based on management’s best estimates of certain key factors. These key factors include, future selling prices and volumes, operating, raw material, energy and freight costs, and various other projected operating economic factors. As these key factors change in future periods, we will update our impairment analyses to reflect our latest estimates and projections.
Under the provisions of Accounting Standards Codification (ASC) 350, “Intangibles—Goodwill and Other,” the testing of goodwill for possible impairment is a two-step process. In the first step, the fair value of our reporting units is compared with their carrying value, including goodwill. If fair value exceeds the carrying value, goodwill is not considered to be impaired. If the fair value of a reporting unit is below the carrying value, then step two is performed to measure the amount of the goodwill impairment loss for the reporting unit. This analysis requires the determination of the fair value of all of the individual assets and liabilities of the reporting unit, including any currently unrecognized intangible assets, as if the reporting unit had been purchased on the analysis date. Once these fair values have been determined, the implied fair value of the unit’s goodwill is
 
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calculated as the excess, if any, of the fair value of the reporting unit determined in step one over the fair value of the net assets determined in step two. The carrying value of goodwill is then reduced to this implied value, or to zero if the fair value of the assets exceeds the fair value of the reporting unit, through a goodwill impairment charge.
The impairment analysis requires a number of judgments by management. In calculating the estimated fair value of its reporting units in step one, we use the projected future cash flows to be generated by each unit over the estimated remaining useful operating lives of the unit’s assets, discounted using the estimated cost-of-capital discount rate for each reporting unit. These calculations require many estimates, including discount rates, future growth rates, and cost and pricing trends for each reporting unit. Subsequent changes in economic and operating conditions can affect these assumptions and could result in additional interim testing and goodwill impairment charges in future periods. Upon completion, the resulting estimated fair values are then analyzed for reasonableness by comparing them to earnings multiples for historic industry business transactions and by comparing the sum of the reporting unit fair values and to the fair value of xpedx as a whole.
No goodwill or long-lived asset impairment charges were recorded during the years ended December 31, 2013 or 2012. An impairment charge of $6.7 million was recorded in the year ended December 31, 2011 related to the Central Lewmar trade name, which was included within restructuring charges in the combined statements of operations and comprehensive income. No goodwill impairment charges were recorded in 2011.
Retirement and Post Retirement Benefit Obligations
Certain of xpedx’s employees participate in defined benefit pension and other post-employment benefit plans (the “Plans”) sponsored by International Paper and accounted for by International Paper in accordance with accounting guidance for defined benefit pension and other post-employment benefit plans. The total cost of the Plans is determined by actuarial valuation and xpedx receives an allocation of the service cost of the Plans based upon a percent of salaries. The amount of net pension and other post-employment benefit expense attributable to xpedx related to these International Paper sponsored plans was $15.1 million, $12.7 million and $12.8 million for the years ended December 31, 2013, 2012 and 2011, respectively. xpedx also contributes to multiemployer pension plans for certain collective bargaining U.S. employees that are not sponsored by International Paper. xpedx made contributions to the bargaining unit supported multiemployer pension plans of $2.5 million, $2.6 million and $2.6 million for the years ended December 31, 2013, 2012 and 2011, respectively.
Accounting for Stock Based Compensation
As of December 31, 2013, all equity awards held by employees of xpedx were granted under International Paper’s 2009 Incentive Compensation Plan (“ICP”) or predecessor plans. The ICP authorizes grants of restricted stock, restricted or deferred stock units, performance awards payable in cash or stock upon the attainment of specified performance goals, dividend equivalents, stock options, stock appreciation rights, other stock-based awards, and cash-based awards at the discretion of the Management Development and Compensation Committee of the board of directors (the “Committee”) that administers the ICP. Restricted stock units were also awarded to certain non-U.S. employees.
Under the Performance Share Plan (“PSP”), contingent awards of International Paper common stock are granted by the Committee. The PSP awards are earned over a three-year period. For the 2011 grant, one-fourth of the award was earned during each of the three twelve-month periods, with the final one-fourth portion earned over the full three-year period. Beginning with the 2012 grant, the award was earned evenly over a thirty-six-month period. PSP awards are earned based on the achievement of defined performance rankings of return on investment (“ROI”) and total shareholder return (“TSR”) compared to ROI and TSR peer groups of companies. Awards are weighted 75% for ROI and 25% for TSR for all participants except for officers for whom the awards are weighted 50% for ROI and 50% for TSR. The ROI component of the PSP awards is valued at the closing stock price on the day prior to the grant date. As the ROI component contains a performance condition, compensation expense, net of estimated forfeitures, is recorded over the requisite service period based on the most probable number of awards expected to vest.
 
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The service-based Restricted Stock Award program (“RSA”), designed for recruitment, retention and special recognition purposes, also provides for awards of restricted stock to key employees. Of the outstanding awards at December 31, 2013, 25,000 shares are expected to vest in 2014.
Income Taxes
Following the Transactions, SpinCo will record its global tax provision based on the respective tax rules and regulations for the jurisdictions in which it operates. Where we believe that a tax position is supportable for income tax purposes, the item will be included in SpinCo’s income tax returns. Where treatment of a position is uncertain, liabilities will be recorded based upon our evaluation of the “more likely than not” outcome considering technical merits of the position based on specific tax regulations and facts of each matter. Changes to recorded liabilities will be only made when an identifiable event occurs that changes the likely outcome, such as settlement with the relevant tax authority, the expiration of statutes of limitation for the subject tax year, change in tax laws, or a recent court case that addresses the matter.
Valuation allowances will be recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. Significant judgment is required in evaluating the need for and magnitude of appropriate valuation allowances against deferred tax assets. The realization of these assets is dependent on generating future taxable income, as well as successful implementation of various tax planning strategies.
While xpedx believes that these judgments and estimates are appropriate and reasonable under the circumstances, actual resolution of these matters may differ from recorded estimated amounts.
xpedx’s effective income tax rates, before discontinued operations, were 100.0%, 38.7% and 37.4% for 2013, 2012 and 2011, respectively.
Recent Accounting Standards Implemented and Accounting Standards Issued and Not Yet Implemented
For a discussion of new accounting standards implemented, see Note 2, “Recent Accounting Developments,” of the audited combined financial statements of xpedx for the three years ended December 31, 2013 included elsewhere in this prospectus.
 
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 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF UNISOURCE
You should read the following discussion of Unisource’s results of operations and financial condition together with Unisource’s audited historical consolidated financial statements and notes thereto included in this prospectus as well as the discussion in the section of this prospectus entitled “Business of Unisource.” This discussion contains forward-looking statements that involve risks and uncertainties. The forward-looking statements are not historical facts, but rather are based on current expectations, estimates, assumptions and projections about our industry, business and future financial results. Unisource’s actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including those discussed in the sections of this prospectus entitled “Risk Factors” and “Note Regarding Forward-Looking Statements and Information.”
Overview
Merger with xpedx Intermediate
The Merger Agreement provides that sequentially and immediately following the Distribution and on the terms and subject to the other conditions of the Merger Agreement, UWWH will merge with and into SpinCo, with SpinCo continuing as the surviving corporation. Immediately thereafter, xpedx Intermediate, a wholly-owned subsidiary of SpinCo will merge with and into UWW, with UWW surviving such merger as a wholly-owned subsidiary of SpinCo.
Unisource Business
Unisource is a leading distributor of printing and business paper products, packaging supplies and equipment, and facility supplies and equipment, primarily in the United States and Canada. Additionally, Unisource has international operations in Europe, Asia and Latin America. Unisource is one of the largest independent print, packaging and facility supplies distributors in North America with approximately $4.1 billion in net sales in fiscal 2013. Unisource markets and distributes its products, supplies and services to approximately 48,000 customers, based on customer bill-to locations. Unisource is organized into six business units (U.S. Distribution, Canada Distribution, Graphic Communications (“Graphic”), Rollsource, PaperPlus and Unisource Global Solutions (“UGS”)) and sells four primary product categories (Print, Packaging, Facility Supplies and Other) as described below. Over the last several years, the print market has experienced a secular decline in North America as a result of increasing electronic distribution and communication and eCommerce. Unisource is addressing the declining print market by focusing on global corporate end-use customers who have a ready need for improved print consultative and management services and by investing in and focusing on its three other product categories.
Unisource stocks more than 80,000 different commercial paper, business paper, imaging supplies, packaging supplies and equipment products, and facility supplies and equipment products. Through an expansive supplier network, Unisource also has ready access to thousands of additional products to fulfill its customers’ specific requirements. Unisource sells its products to a diverse customer base that includes building service contractors, catalog and direct mail providers, commercial printers, consumer goods providers, cruise lines, food processors, healthcare providers, higher education institutions, government agencies, fulfillment industry, hotels and resorts, manufacturers and property managers. No single customer accounted for more than 5% of Unisource’s net sales for fiscal 2013.
The following summary describes the major product categories and services offered by Unisource:
 
 	•	 	Print: The Print product category encompasses the sale and distribution of high-quality commercial printing, writing, copying and digital printing paper.	
 
 	•	 	Packaging: The Packaging product category includes the sale and distribution of consumer goods packaging, packaging for industrial or manufacturing components and point-of-sale displays as well as	
 
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 	the sale and distribution of single function or fully automated packaging machines. This product category includes fulfillment and contract packaging services, packaging design, packaging equipment and related equipment installation and service.	
 
 	•	 	Facility Supplies: The Facility Supplies product category includes the sale and distribution of a broad range of maintenance supplies, equipment and service.	
 
 	•	 	Other : The Other product category includes primarily outsourced supply chain solutions, also known as third-party logistics services, which includes freight brokerage, material handling, warehousing and kitting.	
Unisource product categories are based primarily on product designations used by its U.S. Distribution and Canada Distribution businesses. Unisource’s Graphic, Rollsource and PaperPlus businesses sell primarily items in the Print product category and UGS sells products primarily in the Packaging product category. The Other product category is primarily offered by the U.S. Distribution business.
Industry Considerations
The markets for print, packaging and facility supplies products are highly competitive, with numerous regional and local competitors. One characteristic that all of Unisource’s markets share is strong price competition. The markets for each of Unisource’s major product categories are mature and characterized by slowing, or in the case of print, declining gross revenue. Unisource believes that the principal competitive factors in these markets include price, responsiveness to customer needs, quality of customer service and the range of products maintained in inventory for quick delivery.
Unisource’s Print product category competitors include numerous regional distributors and independent local distributors and very few distributors with a national presence. Several regional and local distributors have joined together to provide marketing and distribution capabilities across a broad geographic area for national customers.
The market for the Packaging product category is extremely fragmented, and Unisource’s packaging products face competition from national and regional packaging distributors, national and regional manufacturers of packaging materials, independent brokers and both catalog-based and online business-to-business suppliers.
In the fragmented Facility Supplies product category market, Unisource competes with a large number of local and regional distributors, as well as several national distributors. Large customers, including national accounts, often desire to do business with a network of independent regional distributors rather than depend on one company such as Unisource. Other key competitors include the business-to-business divisions of big box retailers, purchasing group affiliates and both catalog-based and online business-to-business suppliers.
Reorganization and Restructuring Activities
Over the past several years, Unisource developed and implemented a series of restructuring programs which were established primarily to lower the cost of its operating model and also to reposition Unisource’s sales model to respond to the continued secular decline in the print market. These restructuring initiatives have primarily included: (i) reorganization and restructuring of the sales teams, sales management and sales support functions, (ii) restructuring of unprofitable service offerings and locations, (iii) centralization of back-office functions and (iv) closures and consolidations of certain facilities. These programs included the North American shared service model, Sweden operation closure, U.S. sales reorganization, Canada sales reorganization and cold chain storage reorganization.
Unisource has been implementing a North American shared service model for the past several years. Restructuring efforts have included the reorganization and centralization of sales management, sales operations, supply chain operations, customer service and corporate support functions and the closure and consolidation of certain facilities. The purpose of this program is to improve profitability, create more efficient business processes and optimize Unisource’s ability to service large and geographically dispersed customers. This program is still ongoing.
 
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During 2013, Unisource closed its Sweden operations which had been planned for future packaging manufacturing, research and development. This program was completed in the third quarter of 2013.
Primarily in response to the secular decline in the print market, the U.S. sales reorganization focused on right-sizing the U.S. Distribution business’ sales organization and sales support functions. This program was finalized in the third quarter of 2011.
In May 2010, Unisource announced its plan to consolidate its Canadian selling and operating territories from four regions into three regions. The initiative included reorganization of the regional support functions and sales organization. This program was substantially completed in the fourth quarter of 2010.
In the second quarter of 2011, the Canada Distribution business concluded that the existing arrangement to provide procurement, cold storage and delivery services to an existing retail customer was not economically viable. Unisource and the customer mutually agreed to terminate and transition the arrangement. As a result, Unisource decided to exit the delivery part of the cold storage service offering. This program included the reorganization of certain support functions and the elimination of delivery and handling equipment. This program was completed in the fourth quarter of 2011.
Additionally, on December 5, 2011, Unisource issued redeemable preferred stock (the “Redeemable preferred stock”) to Georgia-Pacific as partial settlement for outstanding long-term debt obligations (“PIK notes”) that were originally issued in connection with the Bain Capital acquisition of Unisource (refer to Note 10 of Unisource’s consolidated financial statements for fiscal year ended December 31, 2013). This transaction also included a cash payment of $100.0 million from Unisource to Georgia-Pacific. On the date of issuance, the Redeemable preferred stock had a liquidation value of $228.5 million. Redeemable preferred stock dividends are accrued daily at an annual rate of 8.0% based on the liquidation value of the outstanding shares and if unpaid are added to the liquidation value of the Redeemable preferred shares on each anniversary date.
For each anniversary date that occurs before April 29, 2016, Unisource has the option to either pay the declared dividend amounts in cash or to elect to have the unpaid dividend amount added to the liquidation value of the Redeemable preferred stock. On April 29, 2016, Unisource is required to declare and pay in cash all dividends that are accrued and unpaid as of that date, including unpaid amounts which were previously added to the liquidation value. Since the issuance of the Redeemable preferred stock, Unisource has elected not to pay dividends in cash. At December 31, 2013, the liquidation value of the Redeemable preferred stock was $268.1 million.
Pursuant to an internal reorganization consummated on January 27, 2014 in preparation for the Merger, the Redeemable preferred stock, as well as all existing UWWH common stock and stock options, were cancelled and all obligations related to the accumulated dividends on such Redeemable preferred stock ownership were terminated. In connection with the internal reorganization, equity interests in UWWH Stockholder were issued to holders of cancelled equity interests on substantially the same economic terms as the cancelled equity interests, including the obligation to pay the accumulated preferred dividends when due. As of January 27, 2014, Unisource no longer has any obligation with respect to Redeemable preferred stock or the accumulated dividends thereon (refer to Note 10 and Note 11 of Unisource’s consolidated financial statements for the fiscal year ended December 31, 2013).
Key Performance Measures
Unisource supplements its financial information prepared in accordance with GAAP with Adjusted EBITDA (earnings before interest, income taxes, depreciation and amortization, restructuring (gains) expenses, merger expenses, asset impairments and certain other items, if any) because Unisource believes investors commonly use Adjusted EBITDA as a key financial metric for assessing the performance of Unisource and because similar information has historically been required by its lenders pursuant to its North American asset-based senior credit facility, dated March 15, 2011 (the “Senior Credit Facility”). Operating income and free cash flow are also important primary financial performance measures which are used by Unisource to manage its
 
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businesses and monitor results of its operations and cash flow performance. Operating income is used by Unisource to manage performance as it is a comprehensive measure reflecting both growth and efficiency. Free cash flow is used by Unisource as it is a measure that reflects the effectiveness of managing working capital together with operating earnings and the business’ ability to fund capital requirements. Adjusted EBITDA and free cash flow are considered by the SEC as non-GAAP financial measures and are not GAAP alternatives to net income or any other measure of operating performance, cash flows or liquidity prescribed by GAAP.
Net Sales Trends: During the last five years total net sales have increased $93.1 million, or 2.3%, from $3,996.0 million during fiscal 2009 to $4,089.1 million during fiscal 2013. During the period from fiscal 2009 to fiscal 2013, Unisource’s Print product category net sales declined by $193.5 million, or 8.0%, Packaging product category net sales increased by $263.8 million, or 30.2%, Facility Supplies product category net sales decreased by $40.8 million, or 5.8%, and Other product category net sales increased by $63.5 million from $1.0 million in 2009. This growth represents primarily third party logistics services which was a startup business in 2009 and grew to $62.0 million in net sales for fiscal 2013. The decline in Print product category net sales during the five year period is primarily attributable to the overall secular decline in the print market. One of the sources that Unisource uses to monitor the print market is information provided by the Pulp and Paper Products Council that depicts North American Printing and Writing Paper Statistics. Based on these reports, volume within the print market increased by 3.5% from 2009-2010, decreased by 5.5% from 2010-2011, decreased by 6.4% from 2011-2012 and decreased by 1.6% from 2012-2013. The growth in the Packaging product category net sales during the five year period is primarily attributable to organic growth at the U.S. Distribution and Canada Distribution businesses and growth at UGS. The decline in the Facility Supplies product category net sales during the five year period occurred at both the U.S. Distribution and Canada Distribution businesses and reflects primarily the effect of various restructuring initiatives in the facility supplies business and the focus on customer profitability.
Operating Income Trends: During the last five years operating income has decreased by $11.7 million, or 22.5%, from $51.9 million for fiscal 2009 to $40.2 million for fiscal 2013. The decrease in operating income is primarily a result of the following: (i) lower gross margin of $4.8 million, primarily resulting from a decline in gross margin percentage which decreased from 18.1% in fiscal 2009 to 17.6% in fiscal 2013, partially offset by an increase in net sales of $93.1 million, or 2.3%, during the period. Gross margin is a non-GAAP measure and calculated as net sales less cost of products sold (excluding depreciation and amortization) and gross margin percentage is calculated as gross margin divided by net sales. The decline in the gross margin percentage was primarily due to a decrease in Print product category gross margins attributable to competitive pricing pressure in the market offset in part by a sales mix change from the lower gross margin percentage Print product category to the higher gross margin percentage Packaging product category, (ii) higher distribution expenses of $23.0 million, or 10.1%, reflecting primarily the impact of inflation during the period on wages and benefits, transportation and facility related costs, offset in part by restructuring initiatives which were implemented to reduce the distribution cost structure, (iii) lower selling and administrative expenses of $29.0 million, or 6.9%, due primarily to lower sales commission costs of $16.9 million, lower bad debt expense of $14.3 million and the impact of restructuring programs which were established primarily to lower the cost of Unisource’s operating model to respond to the secular decline in the print market offset in part by the impact of inflation. The decrease in commission costs reflects primarily changes made to commission plans to respond to market changes and the decline in bad debt expense reflects primarily an improvement in the U.S. economy, (iv) lower restructuring (gains) expenses of $10.8 million, (v) an increase in depreciation and amortization expense of $8.7 million, resulting primarily from higher levels of investment in internal-use software and transportation equipment and (vi) an increase in merger expenses of $14.3 million, resulting from the Merger. During the period from January 3, 2009 to December 31, 2013, Unisource’s workforce decreased by 810 employees or 16.0%.
Adjusted EBITDA Trends: The decrease in Adjusted EBITDA of $7.8 million or 8.7% from fiscal 2012 to fiscal 2013 was primarily attributable to the following: (i) higher gross margin of $1.0 million, (ii) higher distribution expenses of $10.3 million or 4.3%, and (iii) lower selling and administrative expenses of $1.6 million or 0.4%. The increase in Adjusted EBITDA of $11.3 million or 14.4% from fiscal 2011 to fiscal 2012 was primarily attributable to the following: (i) lower gross margin of $18.2 million primarily driven by a 4.7%
 
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decline in net sales partially offset by an improvement in gross margin percentage, (ii) lower distribution expenses of $12.4 million or 4.9%, (iii) lower selling and administrative expenses of $16.1 million or 3.9%, (iv) lower other (income)/expense, net of $1.1 million. See “Summary Historical Consolidated Financial Data of Unisource” for a reconciliation of Adjusted EBITDA to net income (loss) determined in accordance with GAAP.
Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as substitutes for analysis of Unisource’s results as reported under GAAP. For example, Adjusted EBITDA:
 
 	•	 	does not reflect the significant interest expense or the cash requirements necessary to service interest or principal payments on Unisource’s debt;	
 
 	•	 	does not reflect Unisource’s income tax expenses or the cash requirements to pay its taxes;	
 
 	•	 	although depreciation and amortization charges are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and the foregoing metrics do not reflect any cash requirements for such replacements; and	
 
 	•	 	does not reflect costs associated with restructuring initiatives implemented over multiple fiscal periods. Further, Unisource could initiate similar restructuring initiatives in future periods.	
Other companies in Unisource’s industry may calculate Adjusted EBITDA differently than Unisource, limiting its usefulness as a comparative measure. Because of these limitations, Adjusted EBITDA should not be considered as a measure of discretionary cash available to Unisource to invest in the growth of its business. Unisource compensates for these limitations by relying primarily on its GAAP results and using Adjusted EBITDA for supplemental purposes. Additionally, Adjusted EBITDA is not an alternative measure of financial performance under GAAP and therefore should be considered in conjunction with net income (loss) and other performance measures such as operating income or net cash provided by operating activities and not as an alternative to such GAAP measures.
Free Cash Flow Trends: Unisource generated (used) free cash flow of approximately $(19.5) million, $(8.1) million and $18.6 million in fiscal 2013, 2012 and 2011, respectively. The decrease in free cash flow from fiscal 2012 to fiscal 2013 was primarily attributable to a $19.6 million decrease in cash provided by operations, and partially offset by a decrease in cash used in capital projects of $8.2 million. The decrease from fiscal 2011 to fiscal 2012 was primarily due to $22.8 million of less cash generated by operations and an increase in cash used in capital projects of $3.9 million.
The following table reconciles free cash flow to cash provided by (used in) operations.

 	  	Fiscal Years Ended	 	
 	  	December 31,
2013	 	 	December 29,
2012	 	 	December 31,
2011	 	
 	  	(Dollars in millions)	 	
Cash (used in) provided by operations	  	$	(1.5	) 	 	$	18.1	  	 	$	40.9	  	
Less: Cash used in capital projects	  	 	(18.0	) 	 	 	(26.2	) 	 	 	(22.3	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Free cash flow (used) generated	  	$	(19.5	) 	 	$	(8.1	) 	 	$	18.6	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Free cash flow has limitations as an analytical tool, and should not be considered in isolation or as a substitute for analysis of Unisource’s results as reported under GAAP. Other companies in Unisource’s industry may calculate free cash flow differently than Unisource, limiting its usefulness as a comparative measure. Because of these limitations, free cash flow should not be considered as a measure of discretionary cash available to Unisource to invest in the growth of its business.
 
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Results of Operations
Overview
The financial information and discussions concerning Unisource have been derived from Unisource’s consolidated financial statements as of December 31, 2013 and December 29, 2012 and for each of the fiscal years ended December 31, 2013, December 29, 2012 and December 31, 2011 found elsewhere in this prospectus and have been prepared on a historical basis, with Unisource operating as a stand-alone business.
With respect to the planned Merger, in accordance with the accounting rules and regulations set forth in ASC 805, “Business Combinations,” Unisource has been deemed the accounting acquiree. Unisource was determined to be the acquiree based primarily on the following: (i) relative voting interest of the new common shareholders on the effective date of the Merger, (ii) composition of the new board of directors and (iii) the composition of the new senior management team. As a result, Unisource’s assets and liabilities will be adjusted to fair value as of the Closing Date. As such, Unisource’s assets and liabilities will be revalued and such changes could be material. See “Summary Unaudited Pro Forma Condensed Combined Financial Data” included elsewhere in this prospectus. Additionally, changes in how Unisource is operated, as well as the accounting policies which are followed by SpinCo as the surviving corporation, could have had a material effect on Unisource’s results of operations and financial condition if they were in effect during the historical periods for which Unisource has provided financial information.
Comparison of Results of Operations for the Fiscal Years Ended December 31, 2013 and December 29, 2012
The following discussion compares the consolidated operating results of Unisource for the fiscal years ended December 31, 2013 and December 29, 2012.

 	  	Fiscal Years Ended	 	
 	  	December 31,
2013	 	 	December 29,
2012	 	 	Increase (decrease)	 	
 	  	(Dollars in millions)	 	 	 	 	
Net sales	  	$	4,089.1	  	 	$	4,123.3	  	 	$	(34.2	) 	 	 	(0.8	)% 	
Cost of products sold (excluding depreciation and amortization)	  	 	3,370.4	  	 	 	3,405.6	  	 	 	(35.2	) 	 	 	(1.0	) 	
Distribution expenses	  	 	250.3	  	 	 	240.0	  	 	 	10.3	  	 	 	4.3	  	
Selling and administrative expenses	  	 	391.3	  	 	 	392.9	  	 	 	(1.6	) 	 	 	(0.4	) 	
Depreciation and amortization	  	 	25.1	  	 	 	25.4	  	 	 	(0.3	) 	 	 	(1.2	) 	
Restructuring (gains) expenses	  	 	(3.4	) 	 	 	6.6	  	 	 	(10.0	) 	 	 	*	  	
Merger expenses	  	 	14.3	  	 	 	—  	  	 	 	14.3	  	 	 	*	  	
Asset impairments	  	 	0.4	  	 	 	4.9	  	 	 	(4.5	) 	 	 	(91.8	) 	
Other expense, net	  	 	0.5	  	 	 	0.4	  	 	 	0.1	  	 	 	25.0	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating income	  	 	40.2	  	 	 	47.5	  	 	 	(7.3	) 	 	 	(15.4	) 	
Interest expense, net	  	 	27.4	  	 	 	28.3	  	 	 	(0.9	) 	 	 	(3.2	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income (loss) before income taxes	  	 	12.8	  	 	 	19.2	  	 	 	(6.4	) 	 	 	(33.3	) 	
Income tax expense (benefit)	  	 	(228.5	) 	 	 	15.2	  	 	 	(243.7	) 	 	 	*	  	
Equity earnings of affiliates, net of taxes	  	 	(1.1	) 	 	 	(1.1	) 	 	 	—  	  	 	 	—  	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income (loss)	  	$	242.4	  	 	$	5.1	  	 	$	237.3	  	 	 	*	  	

*	not meaningful	
 
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Net sales: For fiscal 2013, net sales of $4,089.1 million decreased by $34.2 million, or 0.8%, compared to fiscal 2012. The decrease in net sales was primarily a result of a volume decrease of 1.0%, offset in part by a price improvement of 0.2%. The components of the change in net sales for fiscal 2013 compared to fiscal 2012 include a decrease in Print product category net sales of $122.6 million, or 5.2%, an increase in Packaging product category net sales of $63.6 million, or 5.9%, an increase in Facility Supplies product category net sales of $3.6 million, or 0.5 %, and an increase in Other product category net sales of $21.2 million, or 52.0%. Further details on the components of changes in net sales are discussed in the “—Supplementary Information on Product Category Results” below.
Cost of products sold (excluding depreciation and amortization): For fiscal 2013, cost of products sold (excluding depreciation and amortization) of $3,370.4 million decreased by $35.2 million, or 1.0%, compared with fiscal 2012, and compared with a decline in net sales of $34.2 million, or 0.8%, during the same period. As a result, gross margin increased by $1.0 million, or 0.1%. The slight improvement in gross margin reflects primarily a mix shift in net sales from the lower gross margin percentage Print product category to the higher gross margin percentage Packaging and Other product categories. The percentage of cost of products sold (excluding depreciation and amortization) to net sales for Unisource’s Packaging and Facility Supplies product categories rose slightly due to competitive pricing pressures and the similar percentage for the Print product category was consistent for fiscal 2013 compared to fiscal 2012.
Distribution expenses: For fiscal 2013, distribution expenses of $250.3 million increased by $10.3 million, or 4.3%, compared to fiscal 2012. The increase was primarily a result of increases in wages, benefits and temporary labor expenses of $4.2 million, an increase in warehouse rent and facility costs of $2.1 million and higher freight and delivery expense of $3.6 million. The increase in wages, benefits and temporary labor expenses reflects primarily the impact of Unisource’s annual compensation merit increase, which occurred primarily in January 2013. The increase in rent expense reflects primarily the impact of annual rent escalation clauses, the addition of a new warehouse distribution facility in Toronto, Ontario, Canada and a reduction in sublease rental income as a result of the termination of a sublease agreement, offset in part by a decrease in rent expense associated with surplus properties. The increase in facility costs primarily reflects higher property and utility costs.
Selling and administrative expenses: For fiscal 2013, selling and administrative expenses of $391.3 million decreased by $1.6 million, or 0.4%, compared to fiscal 2012. The decrease in selling and administrative expenses reflects primarily lower management and sales incentives of $3.5 million, lower travel and entertainment expenditures of $3.7 million and lower advertising and marketing expenses of $1.5 million, offset by higher bad debt expense of $6.2 million and higher commission expense of $1.3 million. The decrease in travel and entertainment was driven by management initiatives to reduce non-critical travel, entertainment and meeting expenses. Bad debt expense changed from a credit of $(2.6) million for fiscal 2012 to an expense of $3.6 million for fiscal 2013. The increase in bad debt expense reflects primarily the impact of the decrease in the allowance for doubtful accounts recorded in fiscal 2012. The fiscal 2012 reduction in the allowance for doubtful accounts resulted primarily from an improvement in the credit risk ratings of customer receivables and a reduction in the losses associated with those risk categories.
Restructuring (gains) expenses: The net restructuring gain of $3.4 million for fiscal 2013 related to two restructuring programs which included the North American shared service model and the closure of the Sweden operation. A net restructuring gain of $4.4 million was recorded in connection with the North American shared service model program and included gains related to the closure of four properties totaling $7.6 million. Charges included $1.6 million of severance and personnel costs relating to the elimination of 60 positions, $1.2 million of professional fees and other costs and $0.4 million relating to facility closure and consolidation costs. The actions taken with respect to this program included primarily restructuring activities involving sales management and support functions in both the U.S. Distribution and Canada Distribution businesses and in the supply chain functions in the Canada Distribution business. The second restructuring program for fiscal 2013 related to the closure of the Sweden operation. Unisource concluded that this operation, which had been acquired for future packaging manufacturing, research and development, was not economically viable. Restructuring charges of
 
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$1.0 million were recorded in connection with the closure of the Sweden operation, including $0.3 million of personnel costs relating to the elimination of 8 positions and $0.7 million relating primarily to the facility closure and consolidation costs.
The restructuring expense of $6.6 million for fiscal 2012 related to the North American shared service model program and included charges of $5.7 million for severance and personnel costs due to the elimination of 99 positions, charges of $0.8 million for professional fees and other costs and $0.1 million of facility closure and consolidation costs. The actions taken with respect to this program occurred at both the U.S. Distribution and Canada Distribution businesses and affected the sales and sales support, distribution and corporate back-office functions. The actions included the centralization of functions within the Canada Distribution business and the transfer of other functions such as credit, cash application, and certain information technology support functions to the U.S. Distribution business.
Merger expenses: For fiscal 2013, Unisource incurred merger expenses of $14.3 million relating to the pending Merger. These costs were primarily legal, accounting, tax, consulting and other professional services.
Interest expense: For fiscal 2013, interest expense of $27.4 million decreased by $0.9 million compared to fiscal 2012 primarily due to the reduction in the outstanding principal balances under real estate capital leases. Interest expense under the Senior Credit Facility was $10.8 million for fiscal 2013 versus $10.9 million in fiscal 2012.
Income taxes: For fiscal 2013, Unisource recognized an income tax benefit of $228.5 million compared to income tax expense of $15.2 million in fiscal 2012. The income tax benefit in fiscal 2013 primarily related to the release of substantially all of Unisource’s valuation allowance associated with its U.S. federal and state deferred tax assets. The provision for income tax expense for fiscal 2012 included approximately $16.7 million of income tax expense related to the establishment of a full valuation allowance against the net deferred tax assets in Canada.
Comparison of Results of Operations for the Fiscal Years Ended December 29, 2012 and December 31, 2011
The following discussion compares the consolidated operating results of Unisource for the fiscal years ended December 29, 2012 and December 31, 2011.

 	  	Fiscal Years Ended	 	
 	  	December 29,
2012	 	 	December 31,
2011	 	 	Increase (decrease)	 	
 	  	(Dollars in millions)	 	
Net sales	  	$	4,123.3	  	 	$	4,327.8	  	 	$	(204.5	) 	 	 	(4.7	)% 	
Cost of products sold, (excluding depreciation and amortization)	  	 	3,405.6	  	 	 	3,591.9	  	 	 	(186.3	) 	 	 	(5.2	) 	
Distribution expenses	  	 	240.0	  	 	 	252.4	  	 	 	(12.4	) 	 	 	(4.9	) 	
Selling and administrative expenses	  	 	392.9	  	 	 	409.0	  	 	 	(16.1	) 	 	 	(3.9	) 	
Depreciation and amortization	  	 	25.4	  	 	 	24.5	  	 	 	0.9	  	 	 	3.7	  	
Restructuring (gains) expenses	  	 	6.6	  	 	 	14.6	  	 	 	(8.0	) 	 	 	(54.8	) 	
Asset impairments	  	 	4.9	  	 	 	1.0	  	 	 	3.9	  	 	 	390.0	  	
Other expense, net	  	 	0.4	  	 	 	1.5	  	 	 	(1.1	) 	 	 	(73.3	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating income	  	 	47.5	  	 	 	32.9	  	 	 	14.6	  	 	 	44.4	  	
Interest expense, net	  	 	28.3	  	 	 	66.7	  	 	 	(38.4	) 	 	 	(57.6	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income (loss) before income taxes	  	 	19.2	  	 	 	(33.8	) 	 	 	53.0	  	 	 	*	  	
Income tax expense (benefit)	  	 	15.2	  	 	 	(5.5	) 	 	 	20.7	  	 	 	*	  	
Equity earnings of affiliates, net of taxes	  	 	(1.1	) 	 	 	(1.2	) 	 	 	0.1	  	 	 	(8.3	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income (loss)	  	$	5.1	  	 	$	(27.1	) 	 	$	32.2	  	 	 	*	  	

*	not meaningful	
 
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Net sales: For fiscal 2012, net sales of $4,123.3 million decreased by $204.5 million, or 4.7%, compared to fiscal 2011. The decrease in net sales was primarily a result of a volume decrease of 5.2% offset in part by price improvement of 0.5%. The components of the change in net sales for fiscal 2012 compared with fiscal 2011 include a decline in Print product category net sales of $159.6 million, or 6.4%, an increase in Packaging product category net sales of $52.9 million, or 5.2%, a decrease in Facility Supplies product category net sales of $120.9 million, or 15.4%, and an increase in Other product category net sales, reflecting primarily the third party logistics business of $23.1 million, or 130.5%. Approximately $105.4 million, or 51.5%, of the decline in net sales reflects the loss of a single customer (the “Cold Chain Customer”) for which Unisource was providing procurement, cold chain storage and delivery services to its retail locations throughout Canada. Further details on the components of changes in net sales are discussed in “—Supplementary Information on Product Category Results” below.
Cost of products sold (excluding depreciation and amortization): For fiscal 2012, cost of products sold (excluding depreciation and amortization) of $3,405.6 million decreased by $186.3 million, or 5.2%, compared with fiscal 2011, and compared to a $204.5 million, or 4.7%, decrease in net sales during the same period. Approximately $84.2 million, or 45.2%, of the decrease was attributable to the loss of the Cold Chain Customer. The gross margin decreased by $18.2 million, or 2.5%, for fiscal 2013 compared to fiscal 2012. The decrease in the gross margin reflects the decline in net sales, partially offset by a slight improvement in the gross margin percentage resulting from a mix shift in sales to the higher margin Packaging product category. The percentage of the cost of products sold (excluding depreciation and amortization) to net sales for Unisource’s Print, Packaging and Facility Supplies product categories were generally consistent for fiscal 2012 compared to fiscal 2011.
Distribution expenses: For fiscal 2012, distribution expenses of $240.0 million decreased by $12.4 million, or 4.9%, compared to fiscal 2011. The decrease in distribution expenses includes approximately $15.4 million associated with the loss of the Cold Chain Customer, which reduced delivery and warehouse costs at the Canada Distribution business. Partially offsetting the decrease of $15.4 million was an increase of $3.6 million in distribution expenses consisting of higher wages and benefit expenses of $3.1 million and an increase in warehouse rent of $1.5 million offset in part by a $1.0 million reduction in workers’ compensation charges.
Selling and administrative expenses: For fiscal 2012, selling and administrative expenses of $392.9 million decreased by $16.1 million, or 3.9%, compared to fiscal 2011. Approximately $1.2 million of the decrease in selling and administrative expenses was associated with the loss of the Cold Chain Customer. The remaining decrease in selling and administrative expenses reflects primarily the reduction in wages and salaries of $2.8 million associated with Unisource’s restructuring initiatives during 2012 and 2011, a decrease in professional fees of $2.4 million and a decrease in bad debt expense of $10.3 million. The year-over-year decrease in bad debt expense resulted primarily from an improvement in the credit risk ratings of customer receivables and a reduction in the losses associated with those risk categories. The above reductions were partially offset by an increase in management incentives of $1.5 million associated with the cost reduction initiatives.
Restructuring (gains) expenses: The restructuring expenses of $14.6 million for fiscal 2011 primarily related to three restructuring programs relating to the U.S. sales reorganization, the North American shared service model and the cold chain storage programs. The U.S. sales reorganization program included a restructuring charge of $0.9 million, which reflected severance and personnel costs relating to the elimination of 43 positions. The activities involved in this program were primarily related to the reorganization of the product and equipment specialist groups and certain sales management and sales support functions.
The North American shared service model program included a restructuring expense of $12.0 million for fiscal 2011, including $11.5 million of severance and personnel costs, relating to the elimination of 197 positions and $0.5 million of professional fees and other costs. The sales, sales support, distribution and back-office functions were realigned and consolidated at the U.S. Distribution and Canada Distribution businesses and facilities were closed and consolidated at the U.S. Distribution and Graphic businesses.
 
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In the third quarter of 2010, the Canada Distribution business entered into an arrangement with the Cold Chain Customer to provide its procurement, cold storage and delivery services to the customer’s retail stores located throughout Canada. In the second quarter of 2011, Unisource concluded that the existing arrangement was not economically viable, and Unisource and the customer mutually agreed to transition and terminate the arrangement. As a result, Unisource decided to exit the delivery part of the cold storage service offering. In connection with this program, Unisource recorded in fiscal 2011 a restructuring expense of $1.6 million including $0.9 million of severance and personnel costs relating to the elimination of 124 positions and $0.7 million relating to contract termination and other costs.
Asset impairments: For fiscal 2012 and 2011, Unisource recorded asset impairments of $4.9 million and $1.0 million, respectively. The fiscal 2012 charge was related to the write-down of the net book value associated with the cold storage assets located at three of the Canada Distribution business locations. In the prior year, Unisource decided to exit the service delivery aspect of the cold chain service offering and after reviewing alternative uses, Unisource decided not to pursue its initiative to provide a warehousing only third party cold storage service at the end of 2012. Also in 2012, Unisource impaired $1.0 million of packaging and related equipment for which it was determined would not be used in the future operations. During the fourth quarter of fiscal 2011, Unisource recorded impairment charges of $1.0 million related to the write-down of customer relationship and trade name intangibles associated with an acquisition by the Canada Distribution business, as a result of the decision to integrate the product lines and operations into its existing business and to exit the use of separate trade names and marketing collateral.
Interest expense: For fiscal 2012, interest expense of $28.3 million decreased by $38.4 million, or 57.6%, versus fiscal 2011. Approximately $36.4 million of the decrease is a result of the partial pay down of the PIK notes and the conversion of the remainder of the PIK notes to Redeemable preferred stock on December 5, 2011 (refer to Notes 7 and 10 to Unisource’s consolidated financial statements for the fiscal year ended December 31, 2013). Interest expense in fiscal 2011 includes a $0.9 million write-off of deferred financing cost associated with the refinancing of Unisource’s new Senior Credit Facility, which was executed on March 15, 2011.
Income taxes: For fiscal 2012, income tax expense was $15.2 million compared to an income tax benefit of $5.5 million in fiscal 2011. The provision for income tax expense for fiscal 2012 included approximately $16.7 million of income tax expense due to the establishment of a full valuation allowance against the net deferred tax assets in Canada. The income tax benefit in fiscal 2011 was primarily due to the loss before income taxes.
Supplementary Information on Product Category Results
The tables below disclose selected supplemental information by major product category in order to provide consistency with the information presented by SpinCo in “Management’s Discussion and Analysis of Financial Condition and Results of Operation of xpedx.” Such information has been reconciled to Unisource’s consolidated results. Management of SpinCo expects to report segments by major product category on a combined company basis after the closing of the Transactions, and thus expects, at a minimum, to report segments of Print, Packaging and Facility Solutions as a combined company.
Overview
Unisource product categories are based primarily on product designations by its U.S. Distribution and Canada Distribution businesses. Unisource’s Graphic, Rollsource and PaperPlus businesses sell primarily items in the Print product category and UGS sells products primarily in the Packaging product category. The Other product category is primarily offered by the U.S. Distribution business. Product category expenses are calculated based on specific identification of expenses when available. Expenses that are not able to be specifically identified were allocated based on what Unisource believes are reasonable drivers for such expenses. Variable warehouse expenses were allocated based on a combination of the number and complexity of the product lines ordered. Delivery expenses were allocated based on a combination of the number of pallets and distance from the distribution center and storage expenses were allocated based on the pallet positions and time the product
 
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occupied space in the warehouses. Selling expenses that were not specifically identifiable were allocated based on the sales support expenses that were specifically identifiable. Corporate expenses were allocated based on net sales except for certain portions of credit which were specifically identifiable to the product category they support. Gains related primarily to the sale of real estate and merger expenses were not allocated to individual product categories. Such information has been reconciled to Unisource’s consolidated results.
Net Sales
The table below presents net sales by product category reconciled to the consolidated totals.

 	 	 	 	 	Fiscal Years Ended	 	
 	 	December 31,
2013	 	 	December 29,
2012	 	 	Increase /
(Decrease)	 	 	Increase /
(Decrease)	 	 	December 31,
2011	 	 	Increase /
(Decrease)	 	 	Increase /
(Decrease)	 	
 	 	(Dollars in millions)	 	
Net sales	 				 				 				 				 				 				 				
Print	 	$	2,223.5	  	 	$	2,346.1	  	 	$	(122.6	) 	 	 	(5.2	)% 	 	$	2,505.7	  	 	$	(159.6	) 	 	 	(6.4	)% 	
Packaging	 	 	1,138.2	  	 	 	1,074.6	  	 	 	63.6	  	 	 	5.9	  	 	 	1,021.7	  	 	 	52.9	  	 	 	5.2	  	
Facility Supplies	 	 	665.4	  	 	 	661.8	  	 	 	3.6	  	 	 	0.5	  	 	 	782.7	  	 	 	(120.9	) 	 	 	(15.4	) 	
Other	 	 	62.0	  	 	 	40.8	  	 	 	21.2	  	 	 	52.0	  	 	 	17.7	  	 	 	23.1	  	 	 	130.5	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 				 	 	 	 	 	 	 	 	 				
Total net sales	 	$	4,089.1	  	 	$	4,123.3	  	 	$	(34.2	) 	 	 	(0.8	)% 	 	$	4,327.8	  	 	$	(204.5	) 	 	 	(4.7	)% 	
	 	 	 	 	 	 	 	 	 	 	 	 	 				 	 	 	 	 	 	 	 	 				
Comparison of the Fiscal Years Ended December 31, 2013 and December 29, 2012
Print product category net sales for fiscal 2013 decreased by $122.6 million, or 5.2%, compared to fiscal 2012. The decrease in net sales was primarily a result of a volume decrease of $121.5 million, or 5.2%, combined with a price decline of $1.1 million. Volume decreased $62.1 million, or 4.3%, in the U.S. Distribution and Canada Distribution businesses, primarily driven by decreased sales to existing customers in the product groupings of copy paper, coated paper and uncoated paper. Net sales at Graphic decreased $58.7 million, or 8.0%, compared to fiscal 2012 due in part to decreased net sales in Europe of $42.3 million due to customer losses. The Print product category volume decrease was also driven by the overall decline in the print market including decreasing demand for key print products offered by the U.S. Distribution and Canada Distribution businesses and Graphic.
Packaging product category net sales for fiscal 2013 increased by $63.6 million, or 5.9%, compared to fiscal 2012. The increase in net sales was primarily a result of volume increases of $69.1 million, or 6.4%, offset in part by a price decline of $5.5 million, or 0.5%. Volume increased $75.7 million in the U.S. Distribution and Canada Distribution businesses which was primarily driven by increased sales to both new and existing customers in the product groupings of corrugated and folding carton consumer goods packaging, packaging films and specialty packaging. Volume at UGS decreased $6.5 million, or 10.7%, compared to fiscal 2012 primarily driven by declining sales related to a single customer.
Facility Supplies product category net sales for fiscal 2013 increased by $3.6 million, or 0.5%, compared to fiscal 2012. The increase in net sales was primarily a result of volume increases of $9.6 million, or 1.4%, offset in part by a price decline of $6.0 million, or 0.9%. Volume increases in the U.S. Distribution and Canada Distribution businesses were primarily driven by increased sales in the product groupings of commercial cleaning chemicals and sanitary maintenance supplies partially offset by decreased sales in food service related products and towel and tissue product groupings. The price decline of 0.9% was primarily related to a shift from higher margin warehouse business to lower margin direct-to-customer business.
Other product category net sales for fiscal 2013 increased by $21.2 million, or 52.0%, compared to fiscal 2012. The increase in net sales was primarily driven by an increase of $14.3 million, or 67.5%, in the freight brokerage component of the third party logistics business. The growth in net sales reflects Unisource’s initiative to invest in and grow this product category as a complementary offering to its existing customer base as well as to potential new customers.
 
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Comparison of the Fiscal Years Ended December 29, 2012 and December 31, 2011
Print product category net sales for fiscal 2012 decreased by $159.6 million, or 6.4%, compared to fiscal 2011. The decrease in net sales was primarily a result of a volume decrease of $159.2 million, or 6.4%, combined with a price decline of $0.4 million. Volume decreases in the Print product category were impacted by the overall decline in the print market. Volume at Graphic decreased $91.8 million, or 11.2%, compared to fiscal 2011. The volume decline was due in part to decreased net sales in Europe of $85.8 million primarily due to customer losses and a weak European economy. Volume decreased $73.2 million, or 4.8%, in the U.S. Distribution and Canada Distribution businesses, primarily driven by decreased sales to existing customers in the product groupings of copy paper, uncoated paper and coated paper. Net sales at PaperPlus increased $5.6 million, or 11.4%, compared to fiscal 2011 primarily driven by a competitor closing retail locations located in several of PaperPlus’ market areas.
Packaging product category net sales for fiscal 2012 increased by $52.9 million, or 5.2%, compared to fiscal 2011. The increase in net sales was primarily a result of a volume increase of $48.1 million, or 4.7%, combined with a price improvement of $4.8 million, or 0.5%. Volume increased $54.5 million, or 5.7%, in the U.S. Distribution and Canada Distribution businesses, primarily driven by increased sales to existing customers in the product groupings of corrugated and folding carton consumer goods packaging, food packaging, packaging films and packaging tapes. Volume at UGS decreased $6.4 million, or 9.8%, compared to fiscal 2011 primarily driven by declining sales related to a single customer.
Facility Supplies product category net sales for fiscal 2012 decreased by $120.9 million, or 15.4%, compared to fiscal 2011. The decrease in net sales was primarily a result of a volume decrease of $121.5 million, or 15.5%, offset in part by a price improvement of $0.6 million, or 0.1%. The decrease in net sales was primarily a result of a volume decline of $87.0 million, or 72.0% of the decline in net sales, attributable to the loss of the Cold Chain Customer. Other volume decreases in the U.S. Distribution and Canada Distribution businesses were primarily driven by decreased sales in the product groupings of food service related products and towel and tissue.
Other product category net sales for fiscal 2012 increased by $23.1 million, or 130.5%, compared to fiscal 2011. The increase in net sales was primarily driven by an increase of approximately $18.1 million, or 78.4%, in the freight brokerage component of the third party logistics business.
Operating Income
The table below presents operating income by product category reconciled to the combined consolidated totals.

 	  	Fiscal Years Ended	 	
 	  	December 31,
2013	 	 	December 29,
2012	 	  	Increase /
(Decrease)	 	 	Increase /
(Decrease)	 	 	December 29,
2012	 	  	December 31,
2011	 	 	Increase /
(Decrease)	 	 	Increase /
(Decrease)	 	
 	  	(Dollars in millions)	 	
Operating income (loss)	  				 				  				  				 				
Print	  	$	6.5	  	 	$	19.5	  	  	$	(13.0	) 	 	 	(66.7	)% 	 	$	19.5	  	  	$	6.1	  	 	$	13.4	  	 	 	219.7	% 	
Packaging	  	 	30.6	  	 	 	20.7	  	  	 	9.9	  	 	 	47.8	  	 	 	20.7	  	  	 	17.1	  	 	 	3.6	  	 	 	21.1	  	
Facility Supplies	  	 	7.4	  	 	 	5.0	  	  	 	2.4	  	 	 	48.0	  	 	 	5.0	  	  	 	8.4	  	 	 	(3.4	) 	 	 	(40.5	) 	
Other	  	 	2.3	  	 	 	1.9	  	  	 	0.4	  	 	 	21.1	  	 	 	1.9	  	  	 	1.4	  	 	 	0.5	  	 	 	35.7	  	
	  	 	 	 	 	 	 	 	  	 	 	 	 				 	 	 	 	  	 	 	 	 	 	 	 	 				
Total product category operating income	  	 	46.8	  	 	 	47.1	  	  	 	(0.3	) 	 	 	(0.6	) 	 	 	47.1	  	  	 	33.0	  	 	 	14.1	  	 	 	42.7	  	
	  	 	 	 	 	 	 	 	  	 	 	 	 				 	 	 	 	  	 	 	 	 	 	 	 	 				
Other (costs) income	  	 	(6.6	) 	 	 	0.4	  	  	 	(7.0	) 	 	 	*	  	 	 	0.4	  	  	 	(0.1	) 	 	 	0.5	  	 	 	500.0	  	
	  	 	 	 	 	 	 	 	  	 	 	 	 				 	 	 	 	  	 	 	 	 	 	 	 	 				
Total operating income	  	$	40.2	  	 	$	47.5	  	  	$	(7.3	) 	 	 	(15.4	)% 	 	$	47.5	  	  	$	32.9	  	 	$	14.6	  	 	 	44.4	% 	

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Comparison of the Fiscal Years Ended December 31, 2013 and December 29, 2012
Print product category operating income for fiscal 2013 decreased by $13.0 million, or 66.7%, compared to fiscal 2012. The decrease was primarily driven by decreased gross margin of $14.0 million due to lower sales volumes and increased distribution expenses of $2.1 million offset by decreased restructuring expenses of $1.9 million, decreased asset impairments of $0.7 million and decreased depreciation and amortization expense of $0.6 million. The increase in distribution expenses primarily reflects higher delivery costs and the loss of sublease income at one of the facilities in the U.S. Distribution business. Selling and administrative expenses were unchanged year-over-year, as a result of higher bad debt expense of $5.3 million in fiscal 2013 which was offset by lower commission costs and reductions in sales overhead and corporate expenses primarily related to restructuring programs and other management initiatives.
Packaging product category operating income for fiscal 2013 increased by $9.9 million, or 47.8%, compared to fiscal 2012. The increase was primarily driven by higher gross margin of $10.0 million due to higher sales volumes, decreased selling and administrative expenses of $2.2 million, decreased asset impairments of $0.7 million offset by increased distribution expenses of $2.2 million. The decrease in selling and administrative expenses was primarily attributable to lower costs related to the restructuring initiatives around sales management and sales support. The increase in distribution expenses reflects primarily the higher sales volume in the Packaging product category.
Facility Supplies product category operating income for fiscal 2013 increased by $2.4 million, or 48.0%, compared to fiscal 2012. The increase was primarily driven by decreased selling and administrative expenses of $2.7 million, decreased asset impairments of $3.1 million and decreased restructuring expenses of $0.8 million offset by decreased gross margin of $3.0 million and increased distribution expenses of $1.7 million. The decrease in selling and administrative expenses was primarily attributable to lower costs related to the restructuring initiatives around sales management and sales support and decreased commissions related to the decline in gross margin. Distribution expenses increased at a slightly higher rate than sales volume due primarily to higher facility expense at the Canada Distribution business.
Other product category operating income for fiscal 2013 increased by $0.4 million, or 21.1%, compared to fiscal 2012. The increase was primarily driven by higher gross margin of $8.0 million offset by increased distribution expenses of $4.8 million and increased selling and administrative expenses of $2.5 million. The increase in distribution expenses is primarily related to higher volume in the Other product category. The increase in selling and administrative expenses was primarily attributable to investments in the sales force and other support functions for the business and increased bad debt expense.
Other (costs) income was $(6.6) million in fiscal 2013 and consisted primarily of gains recorded on the sales of real estate assets of $7.7 million and merger expenses of $14.3 million related to the Merger. Such (costs) income were not allocated to Unisource’s product categories because management does not believe that there is a correlation between the (costs) income and its product categories and allocation of these amounts is not useful to management in understanding the respective operating results. Other (costs) income was $0.4 million in fiscal 2012 and consisted primarily of the sale of certain assets and a gain recorded in connection with an early lease termination.
Comparison of the Fiscal Years Ended December 29, 2012 and December 31, 2011
Print product category operating income for fiscal 2012 increased by $13.4 million, or 219.7%, compared to fiscal 2011. The increase was primarily driven by decreased distribution expenses of $4.5 million, decreased selling and administrative expenses of $19.4 million, decreased restructuring expenses of $4.3 million and decreased depreciation and amortization expense of $0.7 million offset by a decline in gross margin of $16.1 million. The decline in distribution expenses reflects primarily the decline in volume and the effects of the restructuring initiatives. The decrease in selling and administrative expenses was primarily attributable to lower bad debt expenses, lower commissions related to the decrease in sales volume, and reductions in sales overhead and corporate expenses primarily related to the restructuring initiatives.
 
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Packaging product category operating income for fiscal 2012 increased by $3.6 million, or 21.1%, compared to fiscal year 2011. The increase was primarily driven by higher gross margin of $15.6 million and decreased restructuring expenses of $0.6 million offset by increased selling and administrative expenses of $8.7 million, increased distribution expenses of $2.1 million, increased depreciation and amortization expenses of $1.7 million, and increased asset impairments of $1.0 million. The increase in selling and administrative expenses was primarily attributable to higher commissions associated with sales volume increases, investments in corporate accounts and packaging specialists and an increase in corporate expenses. The increase in distribution expenses reflects primarily the higher sales volume in the Packaging product category.
Facility Supplies product category operating income for fiscal 2012 decreased by $3.4 million, or 40.5%, compared to fiscal 2011. The decrease was primarily driven by lower gross margin of $25.0 million and increased asset impairment expense of $3.1 million offset by decreased distribution expenses of $13.9 million, decreased selling and administrative expenses of $7.6 million, and decreased restructuring expenses of $2.8 million. The decrease in distribution expenses reflects lower volumes primarily related to the loss of the Cold Chain Customer. The decrease in selling and administrative expenses was primarily attributable to lower commissions related to the decrease in sales volume and reductions in sales overhead and corporate expenses primarily related to the restructuring initiatives.
Other product category operating income for fiscal 2012 increased by $0.5 million, or 35.7%, compared to fiscal 2011. Operating income increased at a slower rate than net sales as a result of investments in the sales force and other areas of the business.
Liquidity And Capital Resources
Overview
The cash and liquidity needs of Unisource are provided by operating profits and by the Senior Credit Facility. The Senior Credit Facility has a five-year term and matures on March 15, 2016. The Senior Credit Facility provides for borrowings of up to $613.5 million as follows:
 
 	•	 	Tranche A provides up to $450 million and $150 million of borrowings based upon eligible receivables and inventory in the U.S. and Canada, respectively. Unisource has the right to increase the Tranche A borrowings by up to $150 million (which may be allocated among the U.S. and Canadian sub-facilities as Unisource elects) so long as certain conditions are satisfied.	
 
 	•	 	Tranche A-1 provides additional borrowings of up to $10 million in the United States and $3.5 million in Canada, subject to eligibility requirements in the Senior Credit Facility. Advance rates on eligible collateral under Tranche A-1 are amortized on a straight-line basis over 18 months.	
Unisource has letters of credit availability of $100 million and $25 million in the United States and Canada, respectively.
The availability is determined based upon a monthly borrowing base calculation, which includes eligible customer receivables and inventory, less outstanding borrowings, letters of credit and certain designated reserves.
Individual borrowings under the Senior Credit Facility generally have terms of three months or less. At the election of Unisource, the Senior Credit Facility bears interest at the Bankers Acceptance (BA) Equivalent or LIBOR, plus an applicable margin, as defined in the Senior Credit Facility. The Senior Credit Facility also allows for borrowings referenced to the U.S. base rate or Canadian prime rate. At December 31, 2013 and December 29, 2012, the weighted average interest rate for these borrowings was 2.9% and 3.2%, respectively. In addition, the Senior Credit Facility has an unused line fee which ranges between 37.5 and 62.5 basis points.
 
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Borrowings under Unisource’s Senior Credit Facility can be used for general business purposes, including operating and capital expenditures, making acquisitions, paying dividends and funding investments, subject to certain requirements and restrictions. Substantially all of Unisource’s consolidated assets in which it holds an ownership interest are encumbered or have been pledged as collateral for the Senior Credit Facility. The Senior Credit Facility restricts the incurrence of additional indebtedness with respect to secured assets and includes other customary restrictions and provisions contained in an asset-based credit facility. Unisource was in compliance with all covenants and restrictions as of December 31, 2013. The Senior Credit Facility will be repaid with borrowings under the ABL Facility at the closing of the Transactions.
Each business day, cash collections received through a network of lock box accounts are transferred into master concentration accounts in the United States and Canada, in which available funds, at Unisource’s direction, are transferred to pay down its U.S. and Canadian loan accounts. Additionally, Unisource, at its direction, funds on a daily basis master disbursement accounts by transferring funds from its U.S. and Canadian loan accounts which exist under the Senior Credit Facility. The cash amounts of $22.2 million at December 31, 2013 and $30.6 million at December 29, 2012, reflect primarily balances in North American lock box and cash concentration accounts, which are pending transfer to pay down Senior Credit Facility borrowings. See “Description of Material Indebtedness” for a description of the terms of the new ABL Facility.
Unisource’s operations outside North America are funded through their individual operating results and by loans and advances which are made under the Senior Credit Facility. Unisource believes that the cash generated from operations plus the availability under the Senior Credit Facility will be adequate to meet anticipated requirements for operating and other expenditures for the foreseeable future.
The following table sets forth a summary of cash flows for the fiscal years ended December 31, 2013, December 29, 2012 and December 31, 2011:

 	  	Fiscal Years Ended	 	
 	  	December 31,
2013	 	 	December 29,
2012	 	 	December 31,
2011	 	
 	  	(Dollars in millions)	 	
Net cash from (used for):	  				 				 				
Operating activities	  	$	(1.5	) 	 	$	18.1	  	 	$	40.9	  	
Investing activities	  	 	(10.3	) 	 	 	(26.9	) 	 	 	(22.3	) 	
Financing activities	  	 	3.6	  	 	 	(4.7	) 	 	 	(13.3	) 	
Operating Activities
Overview
Cash flows from operating activities are primarily affected by the amount of net income (loss) generated by the business, changes in non-cash items and the effect of changes in working capital. At times when the business is growing, working capital will require additional funding. Conversely, if the business contracts, liquidations of working capital would be expected to occur, however, such funds generated may not be sufficient to offset declines in net income (loss), restructuring programs and other measures. Changes in customer accounts receivable aging, inventory levels and vendor payment terms could have a material impact on cash flows from operating activities.
During fiscal 2013 and fiscal 2012, Unisource has experienced pressure from its customers, particularly in the Print product category, for extended payment terms and has experienced delays in customer payments under existing invoice terms. The extended payment terms have not negatively impacted collectability, however even delays or extensions in customer terms of a few days can have a material impact on operating cash flow. Based on the net sales during fiscal 2013, one day of delay in average customer receipts, based on shipping days was
 
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estimated to have a negative effect of approximately $16.1 million on working capital. Additionally, during the above period, certain of Unisource’s vendors were offering discount terms or strictly enforcing the discount terms which were offered, to improve their cash flow. In cases where vendors offer payment discounts, it has been the policy of Unisource to take advantage of such discount terms since the economic benefit currently outweighs Unisource’s cost of funds.
Comparison of Fiscal Years Ended December 31, 2013 and December 29, 2012
Unisource used $1.5 million of cash in operating activities during fiscal 2013, a decrease of $19.6 million, compared with the $18.1 million generated during fiscal 2012. The components of the year-over-year decrease in cash provided by operating activities include an increase in net income (loss) of $237.3 million, a decrease in non-cash expenses of $(249.9) million, an increase in the amount of cash required to fund working capital needs of $13.5 million and a change in other long-term assets/liabilities, net of $6.5 million. The decrease in non-cash expenses is primarily attributable to the release of the U.S. deferred tax asset valuation allowance of $238.7 million in fiscal 2013, coupled with the recording of a deferred tax asset valuation allowance in the first quarter of 2012, relating to the operations in Canada. For fiscal 2013, Unisource used $44.9 million of cash to fund its working capital requirements. The primary driver of the usage was a decrease in the average number of days to pay vendors. For fiscal 2012, Unisource used $31.4 million to fund its working capital requirements. The primary drivers of the usage were an increase in the time it took customers to pay, offset by the decline in net sales and a decrease in the average number of days to pay vendors. Throughout fiscal 2013 and 2012, Unisource experienced both pressure from customers to extend terms and pressure from vendors to accelerate payment.
Comparison of Fiscal Years Ended December 29, 2012 and December 31, 2011
Unisource generated $18.1 million of cash from operating activities during fiscal 2012, a decrease of $22.8 million compared with the $40.9 million generated during fiscal 2011. The components of the year-over-year decrease in cash provided by operating activities include an increase in net income (loss) of $32.2 million, a decrease in non-cash expenses of $(30.5) million, an increase in the amount of cash required to fund working capital needs of $22.8 million and a change in other long-term assets/liabilities, net of $(1.7) million. The change in the non-cash expenses is primarily due to lower PIK interest resulting from the partial pay off and conversion of the PIK notes on December 5, 2011 and the pay off of the Graphic seller notes in September of 2011, and the non-cash charge recorded in the first quarter of 2012, relating to the Canada operation deferred tax assets valuation allowance.
For fiscal 2012, Unisource required $31.4 million of cash to fund its working capital requirements. The primary drivers of the change were due to an increase in the time it took customers to pay offset by the decline in net sales and a decrease in the average number of days to pay vendors. For the fiscal year 2011, Unisource required $8.6 million of cash to fund its working capital requirements. The increase in working capital during fiscal 2011 was primarily attributable to higher net sales levels.
Investing Activities
In recent years, Unisource’s capital investments have generally fallen into four primary categories: (1) investments in transportation and warehouse moving equipment, (2) investments in packaging design, testing and select packaging manufacturing equipment, (3) investments in internal-use software and (4) investments in leasehold improvements. Unisource’s policy with respect to buying versus leasing transportation and warehouse moving equipment is based upon a number of factors, including Unisource’s estimate of the economic life of the equipment, the current interest rate environment and estimates regarding the future liquidity needs of Unisource. Purchases of packaging design, testing and select packaging manufacturing equipment, internal-use software and leasehold improvements are generally paid through operating cash flows or through availability under its Senior Credit Facility.
 
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Comparison of Fiscal Years Ended December 31, 2013, December 29, 2012 and December 31, 2011
During fiscal 2013, 2012 and 2011, Unisource used $18.0 million, $26.2 million and $22.3 million, respectively to fund capital expenditures and leasehold improvements. Capital expenditures during fiscal 2013 were primarily made for internal-use software projects, including the software investments required in connection with the North American shared service model program, the upgrade of the Graphic business to a new enterprise platform, the implementation of a new financial consolidation system and purchases of transportation and warehouse moving equipment at the U.S. Distribution and Canada Distribution businesses. Capital expenditures during fiscal 2012 included investments made for select packaging manufacturing equipment in connection with Unisource’s strategy to provide limited manufacturing capabilities to support select customers, investments in internal-use software including the purchase of financial consolidation, general ledger, accounts receivable and account payable systems, internal-use software related to the implementation of a new enterprise system at the Graphic business, and purchases of transportation and material handling equipment at both the U.S. Distribution and Canada Distribution businesses and leasehold improvements. Capital expenditures during fiscal 2011 included primarily investments made for transportation and warehouse moving equipment, packaging design, testing and select packaging manufacturing equipment, investments in internal-use software and leasehold improvements.
In connection with the North American shared service model restructuring program, during the fourth quarter of fiscal 2013, Unisource sold its Richmond Hill, Ontario, Canada and Bangor, Maine warehouses and a cottage located in Montebello, Quebec, Canada. The aggregate proceeds from property and equipment sales totaled approximately $7.7 million.
Financing Activities
Comparison of Fiscal Years Ended December 31, 2013, December 29, 2012 and December 31, 2011
For fiscal 2013, net borrowings under the Senior Credit Facility decreased by $(1.4) million primarily due to the net deficit from operating and investing activities of $(11.8) million, the principal pay down of real estate and equipment leases of $(11.7) million, the increase in bank overdrafts of $16.7 million and a decrease in cash of $8.4 million. For fiscal 2012, net borrowings under the Senior Credit Facility increased by $28.6 million, primarily due to the net deficit between operating cash flow and investing activities of $(8.8) million, the principal pay down of real estate and equipment capital leases of $(10.1) million, the decrease in bank overdrafts of $(23.2) million and a reduction in cash of $13.3 million. For fiscal 2011, net borrowings under the Senior Credit Facility increased by $109.2 million primarily due to the net surplus between operating cash flows and investing activities of $18.6 million, the payment of $(6.8) million in fees related to the execution of the new Senior Credit Facility in March of 2011, the principal pay down of real estate and equipment capital leases of $(8.8) million, the partial pay down of $(100.0) million in connection with the PIK note conversion to Redeemable preferred stock in December of 2011, the payoff of $(10.0) million related to the maturity of the Graphic seller notes in September of 2011, an increase in bank overdrafts of $3.5 million and an increase of cash of $(5.0) million.
Free Cash Flow
For a discussion of free cash flow, see “—Key Performance Measures—Free Cash Flow Trends.”
 
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Senior Credit Facility Availability
The following table reconciles the available borrowing base to excess availability under Unisource’s Senior Credit Facility at the dates indicated.

 	  	December 31,
2013	 	  	December 29,
2012	 	  	December 31,
2011	 	
 	  	(Dollars in millions)	 	
Available borrowing base (1)(2)	  	$	503.2	  	  	$	526.9	  	  	$	514.6	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Borrowing under the Senior Credit Facility (3)	  	 	289.2	  	  	 	292.2	  	  	 	263.4	  	
Outstanding letters of credit	  	 	7.8	  	  	 	9.0	  	  	 	9.1	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total uses under the Senior Credit Facility	  	 	297.0	  	  	 	301.2	  	  	 	272.5	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Excess availability under Senior Credit Facility	  	$	206.2	  	  	$	225.7	  	  	$	242.1	  	

(1)	Available borrowing base amounts reflect the amounts derived for the monthly borrowing base certificates presented to Unisource’s agent bank which were as of the date closest to the fiscal year-end.	
(2)	Customer receivables and inventory located outside North America are generally not eligible for inclusion in the available borrowing base.	
(3)	Excludes Canadian bank overdrafts which do not reduce availability under the Senior Credit Facility. For financial statement reporting purposes, the Canadian bank overdrafts are included in the balance of outstanding borrowings under the Senior Credit Facility.	
As of December 31, 2013, December 29, 2012 and December 31, 2011, Unisource had unused availability under the Senior Credit Facility of $206.2 million, $225.7 million and $242.1 million, respectively.
Future Liquidity
Following the Merger, Unisource’s capital structure and sources of liquidity will change significantly from its historical capital structure. Unisource will no longer participate in its Senior Credit Facility which will be paid off and terminate as of the effective date of the Merger. The historical and future operating cash flow results of Unisource as a stand-alone company could be materially different than the results that may be achieved with the Merger. See “Description of Material Indebtedness” for a description of the ABL Facility.
 
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Off-Balance Sheet Arrangements
Unisource does not have any material off-balance sheet arrangements other than the contractual obligations that are listed below.
Contractual Obligations
The table below presents Unisource’s estimated total contractual obligations at December 31, 2013, including the amounts expected to be paid or settled for each of the periods indicated below.

 	  	Payments Due by Period	 	
 	  	Total	 	  	Less Than
1 Year	 	  	1–3
Years	 	  	3–5
Years	 	  	More Than
5 Years	 	
 	  	(Dollars in millions)	 	
Contractual obligations	  				  				  				  				  				
Senior Credit Facility (1)	  	$	317.3	  	  	$	—  	  	  	$	317.3	  	  	$	—  	  	  	$	—  	  	
Real estate capital leases (2)	  	 	72.7	  	  	 	15.9	  	  	 	32.2	  	  	 	24.6	  	  	 	—  	  	
Equipment capital leases (2)	  	 	13.1	  	  	 	3.6	  	  	 	6.1	  	  	 	3.1	  	  	 	0.3	  	
Non-cancelable operating leases (3)	  	 	163.3	  	  	 	39.5	  	  	 	56.1	  	  	 	37.4	  	  	 	30.3	  	
Deferred compensation obligations (4)	  	 	33.1	  	  	 	2.6	  	  	 	5.4	  	  	 	4.9	  	  	 	20.2	  	
Defined benefit pension plans (5)	  	 	8.2	  	  	 	8.2	  	  	 	—  	  	  	 	—  	  	  	 	—  	  	
Redeemable preferred stock dividends and principal (6)	  	 	369.8	  	  	 	—  	  	  	 	92.3	  	  	 	36.6	  	  	 	240.9	  	
Advisor fees (7)	  	 	26.4	  	  	 	4.4	  	  	 	8.8	  	  	 	8.8	  	  	 	4.4	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total	  	$	1,003.9	  	  	$	74.2	  	  	$	518.2	  	  	$	115.4	  	  	$	296.1	  	

(1)	The Senior Credit Facility matures on March 15, 2016. Interest payments are not included. (refer to Note 7 of Unisource’s consolidated financial statements for the fiscal year ended December 31, 2013).	
(2)	Capital lease obligation includes amounts classified as interest.	
(3)	Non-cancelable operating leases are presented net of contractual sublease rental income.	
(4)	Deferred compensation obligations reflect gross cash payment amounts due.	
(5)	The timing and amounts of contributions to the defined benefit pension plans vary as pension contributions depend on government-mandated minimum funding requirements. Unisource expects to contribute $8.2 million in 2014 to its U.S. and Canadian defined benefit pension plans. Due to the future impact of various market conditions, rates of return and changes in plan participants, Unisource cannot provide a meaningful estimate of its future contributions beyond 2014 (refer to Note 8 of Unisource’s consolidated financial statements for the fiscal year ended December 31, 2013).	
(6)	On December 5, 2011, Unisource issued Redeemable preferred stock to Georgia-Pacific as partial settlement for outstanding long-term debt obligations that were originally issued in connection with the Bain Capital acquisition of Unisource (refer to Note 10 of Unisource’s consolidated financial statements for the fiscal year ended December 31, 2013). At the date of issuance, the Redeemable preferred stock had a liquidation value of $228.5 million. Under the terms of the Redeemable preferred stock agreement, dividends are accrued daily at an annual rate of 8.0% based on the shares outstanding liquidation value.	
Unisource is required to declare a dividend on each share of Redeemable preferred stock in the amount accrued for the one year period ending at the anniversary date (December 5). Any dividends not paid in cash are added to the liquidation value of the Redeemable preferred stock shares.
For each anniversary date which occurs before April 29, 2016, Unisource has the option to either pay the declared dividend amounts in cash or to elect to have the unpaid dividend amount added to the liquidation value of the Redeemable preferred stock. On April 29, 2016, Unisource is required to declare and pay in cash all dividends that are accrued and unpaid as of that date, including unpaid amounts which were previously added to the liquidation value. Since the issuance of the Redeemable preferred stock, Unisource has elected not to pay dividends in cash. If Unisource continues to elect not to pay Redeemable preferred stock dividends in cash, the amount of the April 29, 2016 dividend cash payment will be $92.3 million and the liquidation value
 
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of the Redeemable preferred stock after the payment of cash dividend will be $228.5 million. Additionally, under the terms of the Redeemable preferred stock agreement for all periods after April 29, 2016, Unisource is required to declare and pay in cash annual dividends on each April 29 in the amount of $18.3 million. At December 31, 2013, the liquidation value of the Redeemable preferred stock was $268.1 million.
While the shares of Redeemable preferred stock remain outstanding, Unisource cannot, without the written consent of the holders of its Redeemable preferred stock, redeem, purchase or otherwise acquire any of its common stock (unless associated with an employee termination), nor pay or declare dividends or distributions with respect to its common stock. Additionally, without the written consent of the Redeemable preferred stock shareholders, Unisource cannot alter any of the rights and preferences of the Redeemable preferred stock, issue any new shares of Redeemable preferred stock, authorize or issue senior stock, or subdivide the outstanding shares of the Redeemable preferred stock. The holders of the Redeemable preferred stock have no voting rights.
The Redeemable preferred stock shares are contingently redeemable, with written notice from the holders, upon any event of default for a price per share equal to the shares’ liquidation value ($1,000 per share) plus any accrued but unpaid dividends. An event of default includes a change in control of Unisource, an insolvency event, or failure to declare and pay dividends when required. At any time Unisource, with written notice, has the right to redeem all or a portion of the Redeemable preferred stock for the amount up to the liquidation value plus any accrued but unpaid dividends. For purposes of the Contractual Obligations table above, the accrued amount of dividends of $92.3 million which are due on April 29, 2016 are assumed to be paid in cash, accrued dividends of $18.3 million which are due on April 29, 2017 and April 29, 2018 are assumed to be paid in cash and the Redeemable preferred stock liquidation value, plus accrued but unpaid dividends are assumed to be paid on January 1, 2019.
Pursuant to an internal reorganization consummated on January 27, 2014 in preparation for the Merger, the Redeemable preferred stock, as well as all existing UWWH common stock and stock options, were cancelled and all obligations related to the accumulated dividends on such Redeemable preferred stock ownership were terminated. In connection with the internal reorganization, equity interests in UWWH Stockholder were issued to holders of cancelled equity interests on substantially the same economic terms as the cancelled equity interests, including the obligation to pay the accumulated Redeemable preferred stock dividends when due. As of January 27, 2014, Unisource no longer has any obligation with respect to Redeemable preferred stock or the accumulated dividends thereon (refer to Note 10 and Note 11 of Unisource’s consolidated financial statements for the fiscal year ended December 31, 2013).
 
(7)	Only one year of advisor fees are shown for the period beyond five years as the advisory agreement has no explicit end date. Upon completion of the Mergers, the advisory agreement with Bain Capital will terminate.	
The table above excludes estimated funding for asset retirement obligations due to the uncertainty of the ultimate settlement of the obligation. Unisource’s asset retirement obligations are recognized at fair value in the period in which they are incurred and the carrying amount of the related long-lived asset is correspondingly increased. Over time, the liability is accreted to its future value and the corresponding asset cost is amortized over the useful life of the asset. At December 31, 2013, Unisource had recorded asset retirement obligations of $7.5 million, including amounts reported as current (refer to Note 9 of Unisource’s consolidated financial statements for the fiscal year ended December 31, 2013).
The timing of cash outflows related to liabilities for uncertain tax positions cannot be estimated and therefore have been excluded from the table. Unisource had liabilities of $1.9 million for uncertain tax positions at December 31, 2013. Related to these uncertain tax positions, Unisource has also recorded a liability for potential interest and penalties of $2.5 million at December 31, 2013 (refer to Note 6 of Unisource’s consolidated financial statements for the fiscal year ended December 31, 2013).
The table above does not reflect certain obligations under employment, retention and other similar agreements of approximately $30 million that may be payable by SpinCo to certain Unisource employees as a result of the Transactions.
 
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Impacts of Merger
Pursuant to an internal reorganization consummated on January 27, 2014 in preparation for the Merger, the Redeemable preferred stock, as well as all existing UWWH common stock and stock options, were cancelled and all obligations related to the accumulated dividends on such Redeemable preferred stock ownership were terminated. In connection with the internal reorganization, equity interests in UWWH Stockholder were issued to holders of cancelled equity interests on substantially the same economic terms as the cancelled equity interests, including the obligation to pay the accumulated Redeemable preferred stock dividends when due. As of January 27, 2014, Unisource no longer has any obligation with respect to Redeemable preferred stock or the accumulated dividends thereon (refer to Note 10 and Note 11 of Unisource’s consolidated financial statements for the fiscal year ended December 31, 2013). Also, at the Closing Date, the Bain Capital advisory agreement will terminate (refer to Note 13 of Unisource’s consolidated financial statements for the year ended December 31, 2013).
In connection with the Merger, UWWH, UWW, Bain Capital and Georgia-Pacific entered into a Consent and Waiver Agreement, whereby Unisource and each of the parties agreed: (i) Unisource would not have the ability to extend the term of the leases under its real estate capital leases and two other warehouse leases with Georgia-Pacific (refer to Note 7 of Unisource’s consolidated financial statements for the year ended December 31, 2013), (ii) Georgia-Pacific would no longer be required to reimburse Unisource for certain future deferred compensation obligations, which at December 31, 2013 had a discounted future obligation of approximately $1.9 million, and (iii) to settle a Canadian tax dispute concerning a tax benefit relating to the tax basis of goodwill at the time of the Bain Capital acquisition of Unisource. The settlement of the tax dispute requires a payment by Unisource which will be based upon the realization of the benefit, but shall not exceed $1.6 million. As of December 31, 2013, Unisource had realized $1.1 million of such benefit. The liability for the amount realized is included in other accrued liabilities in Unisource’s consolidated balance sheets at December 31, 2013 and December 29, 2012, which are included elsewhere in this prospectus.
Critical Accounting Policies And Estimates
The preparation of Unisource’s financial statements in accordance with GAAP requires Unisource to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements, the reported amounts of revenues and expenses during the reporting periods and the related disclosures in the consolidated financial statements and accompanying footnotes. Unisource believes that of its significant accounting policies, which are described in Note 1: “Summary of Significant Accounting Policies” in the audited consolidated financial statements included elsewhere in this prospectus, the following accounting policies are critical because they involve a higher degree of judgment, and the estimates required to be made were based on assumptions that are inherently uncertain. As a result, these accounting policies could materially affect the financial position, results of operations and related disclosures. On an ongoing basis, Unisource evaluates these estimates and judgments based on historical experiences and various other factors that are believed to reflect the current circumstances. While Unisource believes its estimates, assumptions and judgments are reasonable, they are based on information presently available. Actual results may differ significantly from these estimates due to changes in judgments, assumptions and conditions as a result of unforeseen events or otherwise, which could have a material impact on Unisource’s financial position and results of operations.
Revenue Recognition
For fiscal 2013, 2012 and 2011, approximately 98.3%, 98.9% and 99.5%, respectively of Unisource’s net sales were derived from the sale of paper, packaging and facility supply products which were manufactured by third parties, approximately 0.8%, 0.7% and 0.7%, respectively were derived from the sale of packaging and facility supplies equipment, and approximately 1.7%, 1.1% and 0.5%, were derived from services provided by or arranged by Unisource.
 
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Unisource recognizes revenue on the sale of products when persuasive evidence of an agreement exists, delivery has occurred, the price to the buyer is fixed or determinable and collectability is reasonably assured. Delivery is not considered to have occurred until the customer takes title and assumes the risks and rewards of ownership. Certain of the above product sales are derived from shipments arranged by Unisource made directly from the manufacturer to the customer. Unisource is considered to be a principal to these transactions since it, among other factors, controls pricing and terms with respect to the customer, bears the credit risk of the customer defaulting on payment and is the primary obligor to the manufacturer. In certain cases, Unisource is required to estimate whether delivery to the customer has occurred as of the end of the accounting period. Such estimates are based in part on historical delivery information which is calculated based on mode of delivery and updated throughout the year.
Unisource recognizes revenue on the sale of equipment upon delivery and acceptance by its customers. In instances where the equipment includes more than one component, revenue is recognized at the time that all components are installed and functioning. Revenue associated with services is recognized upon the completion of such services.
Taxes collected from customers which are remitted to governmental authorities are accounted for on a net basis. Accordingly, such taxes are excluded from both net sales and expenses.
Impairment of Long-Lived Assets and Goodwill
Long-Lived Assets
Unisource has recorded in its consolidated balance sheet property and equipment with a net book value of $76.3 million and $80.2 million at December 31, 2013 and December 29, 2012, respectively, and intangible assets with finite lives with a net book value of $20.9 million and $24.3 million at December 31, 2013 and December 29, 2012, respectively. Unisource also has intangible assets with indefinite lives related to the Graphic acquisition of $23.4 million at December 31, 2013 and December 29, 2012.
Long-lived assets, including property and equipment and intangible assets with finite useful lives, are reviewed for possible impairment whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. Unisource evaluates the carrying value of its long-lived assets by comparing the expected undiscounted future cash flows to the net book value of the assets when it is determined that there are indicators of potential impairment. If it is determined that the expected undiscounted future cash flows are less than the net book value of the assets, the excess of the net book value over the estimated fair value, calculated using discounted cash flows, is recorded in the consolidated statement of operations as asset impairments.
As part of the process described above, Unisource exercises judgment to:
 
 	•	 	Determine if there are indicators of impairment. Unisource assesses indicators of impairment that include the overall impact of trends in the industry and general economy, current period losses combined with a history of losses, management’s decision to exit a facility for strategic business reasons, and changes in other circumstances that indicate the carrying amount of an asset may not be recoverable;	
 
 	•	 	Determine the projected undiscounted future cash flows when indicators of impairment are present. Unisource develops projections of future revenues and expenses over the expected useful life of the asset group to estimate the undiscounted cash flows. The estimate is subject to assumptions related to future sales, margin growth rates, economic conditions, market competition and inflation; and	
 
 	•	 	Determine the asset fair value if it is determined that the asset may not be recoverable. In determining the fair value, Unisource often uses internally-developed discounted cash flow models. Assumptions used in the discounted cash flow models include estimating cash flows, which may require Unisource to adjust for specific market conditions, as well as capitalization rates, which are based on asset type, market-specific dynamics and overall economic performance. The discount rate takes into account Unisource’s weighted average cost of capital according to its capital structure and other market specific considerations.	
 
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Asset impairment charges of $0.4 million, $4.9 million and $1.0 million were recorded during fiscal 2013, fiscal 2012 and fiscal 2011, respectively. (See the notes to Unisource’s consolidated financial statements for a further discussion of the asset impairment analysis and resulting losses from those analyses).
Goodwill
The balance of goodwill on Unisource’s consolidated balance sheet relates solely to its acquisition of the Graphic business. Unisource performed an assessment in the fourth quarter of 2013 of the goodwill balance, at the reporting unit level, using the income approach. The income approach is a quantitative evaluation to determine the fair value of the reporting unit. Under the income approach, Unisource determined the fair value based on estimated future cash flows discounted by an estimated weighted-average cost of capital, which reflects the overall level of inherent risk of the reporting unit and the rate of return a market participant would expect to earn. The estimated future cash flows were based on forecasts of future operating results that were probability weighted based upon a discount factor of 25%, which was based on historical performance and expectations regarding the industry and business. These calculations require many estimates, including discount rates, future growth rates, and cost and pricing trends. As a result of the testing, Unisource concluded that the Graphic goodwill was not impaired. Subsequent changes in economic and operating conditions can affect these assumptions and could result in additional interim testing and goodwill impairment charges in future periods which could be material.
Allowance for Doubtful Accounts
The balance of the allowance for uncollectible accounts on Unisource’s consolidated balance sheet was $14.6 million and $19.6 million at December 31, 2013 and December 29, 2012, respectively.
Unisource sells its products to a diverse customer base that includes commercial printers, retail, hospitality, healthcare, governmental, distribution and manufacturing sectors. Credit is generally extended without requiring collateral based on an evaluation of the customer’s credit risk. Unisource relies on a variety of sources to establish its reserves for uncollectable accounts, including customer specific financial information, when available, information purchased from outside credit agencies, including credit agency risk code ratings, customer payment patterns, including past due balances, and specific management judgment. Additionally, for fiscal 2013, approximately 54.4% of Unisource’s sales were in the Print product category, which end users include commercial printers, advertising agencies and book publishers among others, which have experienced a secular decline, as many of their end user customers have migrated to electronic formats. These trends have resulted in consolidations and bankruptcies by companies which serve these markets. It is reasonably possible that future declines in the economy and print market could lead to additional consolidation and bankruptcies, and the resulting increased requirements for bad debt reserves could be material.
Asset Retirement Obligations
The balance of the asset retirement obligations on Unisource’s consolidated balance sheets was $7.5 million and $5.5 million at December 31, 2013 and December 29, 2012, respectively.
Unisource has contractual obligations associated with its warehouse and facility operating leases and its warehouse real estate capital leases which require Unisource to restore the facilities to their original condition less normal wear and tear upon exit of the facility. (Refer to Note 9 to Unisource’s consolidated financial statements for the fiscal year ended December 31, 2013.) The development of Unisource’s asset retirement obligation (“ARO”) is based upon estimates which include the current market restoration costs, the amount and extent of the repair which will be required at a facility, future inflation and discount rates and expected facility exit dates. Cost estimates in part are based on actual costs incurred associated with the exit of similar facilities, input from Unisource’s real estate group and, in certain instances, outside contractors. Assumptions used to estimate Unisource’s ARO liability are updated on an annual basis and when significant changes in facts and circumstances occur which would affect such estimates. Given that the estimates are based on facts and
 
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circumstances which will occur at future dates, it is reasonably possible that the actual costs incurred upon the exit of such facilities could result in changes in the ARO liabilities recorded in the consolidated financial statements which are material in nature.
Defined Benefit Pension Obligations
Unisource sponsors defined benefit pension plans both in the United States and in Canada. The determination of Unisource’s defined benefit pension expense in the consolidated statement of operations and the related projected benefit obligations is based on various actuarial assumptions and methodologies. The critical assumptions, which are based on future events include expected rates of return on investments, discount rates, inflation rates, employee retirement patterns and payment selections and mortality rates. These assumptions are reviewed with Unisource’s outside advisors at the end of each fiscal year and are updated as appropriate. Actual experience that differs from the assumptions could have a significant effect on Unisource’s consolidated results of operations, financial position or cash flows. (Refer to Note 8 to Unisource’s consolidated financial statements for the fiscal year ended December 31, 2013 for a further discussion of Unisource’s pension obligations.)
Income Taxes
Unisource records its global tax provision based on the respective tax rules and regulations for the jurisdictions in which it operates. Where Unisource believes that a tax position is supportable for income tax purposes, the item is included in its income tax returns. Where treatment of a position is uncertain, liabilities are recorded based upon Unisource’s evaluation of the “more likely than not” outcome considering technical merits of the position based on specific tax regulations and facts of each matter. Changes to recorded liabilities are made when an identifiable event occurs that changes the likely outcome, such as settlement with the relevant tax authority, the expiration of statutes of limitation for the subject tax year, changes in tax laws, or other relevant events.
A valuation allowance is required to be established or maintained, if based on the available evidence, it is more likely than not such assets will not be realized. In the assessment for a valuation allowance, Unisource gives appropriate consideration to positive and negative evidence related to the realization of the deferred tax assets. Prior to the third quarter of 2013, Unisource had recorded a full valuation allowance against its U.S. and state net deferred tax assets.
During fiscal 2013, Unisource concluded that it was more likely than not that the majority of the valuation allowance against its U.S. federal and a substantial portion of its state deferred tax assets would be utilized. This conclusion was based on a detailed evaluation of all relevant evidence, both positive and negative, including such factors as cumulative income for the last twelve quarters, a recent ability to sustain a level of profitability, and the expectation of continued earnings. Unisource has weighed these positive factors against the negative factors, including a prior history of losses and significant NOL carryforward, and determined that the positive evidence outweighs the negative evidence. Accordingly, Unisource reversed $238.7 million of its valuation allowance against its U.S. federal and a substantial portion of its state net deferred tax assets. A valuation allowance remains for some of Unisource’s state NOL carryforwards that it believes are not more likely than not to be utilized at this time due to the short carryforward periods that exist in certain states. In future periods, the remaining valuation allowance could be reduced if sufficient positive evidence is present indicating that it is more likely than not that a portion or all of Unisource’s remaining deferred tax assets will be realized. After the reversal, Unisource has a valuation allowance of $11.0 million against its state net deferred tax assets as of December 31, 2013.
 
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Prior to fiscal 2012, Unisource had not recorded a valuation allowance for its net deferred tax asset position at its Canadian operations based upon its historical taxable operating performance, the availability of tax loss carrybacks and its expectations regarding future taxable income. During fiscal 2012, Unisource concluded that a 100% valuation allowance was required against its Canadian net deferred tax assets, based on its more likely than not standard assessment, which considered such factors as cumulative loss for the last twelve quarters, recent taxable losses, the complete utilization of tax carryback opportunities in the prior year and expectations regarding future taxable income, including available tax planning strategies. Therefore, Unisource established a full valuation allowance against its net deferred tax assets in Canada of $16.7 million. In fiscal 2013, the Canada Distribution business has not shown sufficient positive evidence to justify releasing part or all of its valuation allowance. Unisource has a valuation allowance of $13.4 million against its Canadian net deferred tax assets as of December 31, 2013.
Significant judgment is required in evaluating the need for and magnitude of appropriate valuation allowances against deferred tax assets. The realization of these assets is dependent on generating future taxable income, as well as successful implementation of various tax planning strategies. While Unisource believes that these judgments and estimates are appropriate and reasonable under the circumstances, actual results could differ from estimated results, which could result in additions to valuation allowances or reductions in valuation allowances. It is reasonably possible that such changes could have a material effect on the amount of income tax expense (benefit) recorded in Unisource’s consolidated statement of operations.
On consummation of the pending merger with xpedx Intermediate, there will likely be a change in ownership of Unisource, as defined under Section 382 of the Internal Revenue Code. Under Section 382, if a corporation undergoes an “ownership change,” the corporation’s ability to use its pre-change NOL carryforwards to offset its post-change income may be limited. Similar rules may apply under state tax laws. Unisource may be limited in its ability to use its NOL carryforwards to reduce taxes owed on the net taxable income that it earns. Any such limitations on the ability to use its NOL carryforwards could adversely impact Unisource’s business, financial condition and operating results.
Contingent Liabilities
At any time, Unisource may be subject to investigations, legal proceedings, or claims related to the ongoing operation of its business, including claims both by and against Unisource. Unisource routinely assesses the likelihood of any adverse outcomes related to these matters, as well as the potential ranges of losses and fees. Unisource establishes accruals for its potential exposure, as appropriate, when losses become probable and reasonably estimable. Where Unisource is able to reasonably estimate a range of potential losses, the best estimate within the range is recorded. Liabilities accrued for legal matters require judgments regarding projected outcomes and range of loss based on historical experience and recommendations of legal counsel. Although the ultimate outcome of legal proceedings underway at any point in time is difficult to reasonably determine, Unisource believes adequate reserves have been established for probable losses and legal costs related thereto.
On February 14, 2013, Unisource was notified by the State of Delaware that they intended to examine the books and records of Unisource to determine compliance with Delaware escheat laws. Since that date, seven other states have joined with Delaware in the audit process which is conducted by an outside firm on behalf of the states and covers the period from 1981 to present. Unisource had been informed that similar audits have generally taken two to four years to complete. Due to the preliminary stages of such audits, Unisource determined that the ultimate outcome cannot be estimated at this time. Claims or liabilities could be asserted and such outcomes could have a material impact on Unisource’s financial position, results of operations and cash flows.
 
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New Accounting Standards Implemented and Accounting Standards Issued and Not Yet Implemented
For a discussion of new accounting standards implemented and accounting standards issued but not yet implemented, see Note 1 of Unisource’s consolidated financial statements for the year ended December 31, 2013 included elsewhere in this prospectus.
Quantitative And Qualitative Disclosures About Market Risk
Unisource is exposed to the impact of interest rate changes and foreign currency fluctuations primarily related to the Canadian dollar.
Interest Rate Risk
Unisource’s exposure to fluctuations in interest rates results primarily from its borrowings under the Senior Credit Facility. Under the terms of the Senior Credit Facility, interest rates are based upon LIBOR or the prime rate plus a margin rate, or in the case of Canada, a banker’s acceptance rate or base rate plus a margin rate. LIBOR based loans can be set for durations of one week, or for periods of one to nine months. The margin rate amount can be adjusted upward or downward based upon usage under the line in two increments of 25 basis points. Unisource’s interest rate exposure under the Senior Credit Facility results from changes in LIBOR, bankers’ acceptance rates, the prime/base interest rates and actual borrowings. The weighted average borrowing interest rate at December 31, 2013 was 2.9%. Based on the average borrowings under the Senior Credit Facility during fiscal 2013, the following table shows the sensitivity of interest rate increases on interest expense under the Senior Credit Facility.

Senior Credit Facility	
Change in Interest
Rate	  	Increase (Decrease)
in Annual Interest
Expense	
 	  	(Dollars in millions)	
(1.0%)	  	$(2.9)	
1.0%	  	2.9	
2.0%	  	5.9	
3.0%	  	8.8	
5.0%	  	14.6	
Historically, Unisource has not entered into interest rate hedges or futures agreements.
Foreign Currency Exchange Rate Risk
Unisource conducts business in various foreign currencies and is exposed to earnings and cash flow volatility associated with changes in foreign currency exchange rates. This exposure is primarily related to international assets and liabilities, whose value could change materially in reference to the U.S. dollar reporting currency. The most significant impact of changes to foreign currency values include certain intercompany loans and advances not deemed to be permanently invested and transactions denominated in currencies which differ from Unisource’s own currency.
Unisource’s significant foreign currency exposure relates to fluctuations in the foreign exchange rate between the U.S. dollar and the Canadian dollar. Net sales from Unisource’s Canadian operations for fiscal 2013 represented 21% of Unisource’s total net sales. Historically, Unisource has not used foreign exchange currency options or futures agreements to hedge its exposure to changes in foreign exchange rates.
 
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 BUSINESS OF XPEDX
xpedx is a leading business to business distributor of paper, graphics, packaging and facility supplies products and related equipment and services in the United States and Mexico, with approximately $5.7 billion in net sales in 2013. xpedx markets and distributes these supplies, products and services to more than 58,000 customer locations as of December 31, 2013, including printers, publishers, data centers, manufacturers, higher education institutions, contract packaging/fulfillment providers, healthcare facilities, print design agencies, sporting and performance arenas, retail stores, government agencies, property managers and building service contractors, through more than 1,150 sales professionals, equipment representatives and service technicians.
xpedx offers an extensive portfolio of nationally recognized, high quality public and private brands of paper, graphics, packaging and facility supplies. xpedx’s branded portfolio includes Sustainable Forestry Initiative (SFI) and Sustainable Forestry Stewardship Council (FSC) certified paper and packaging products and facility supplies for environmentally conscious customers sold by Leadership in Energy and Environmental Design (LEED) certified professionals. xpedx also provides a wide range of services, including graphics and structural packaging design services and equipment installation and repair services, which promote the efficient and cost effective operations for its customers. Products and equipment are sourced from approximately 6,000 vendors in the United States and approximately 600 vendors in Mexico as of December 31, 2013, with xpedx serving as an important distribution channel for these vendors. As of December 31, 2013, the xpedx network consisted of 86 strategically located distribution centers in 39 states and Mexico and a fleet of approximately 1,500 trucks and trailers travelling approximately 32 million miles annually in the United States.
International Paper entered the distribution business in 1986 with its acquisition of several distribution companies that were part of the Hammermill Paper Company. Since then, International Paper has grown its distribution business both organically and through the acquisition of over 30 distribution businesses located across the United States and Mexico. International Paper’s distribution business was consolidated into a division operating under the xpedx name in 1998 to serve these important markets.
xpedx Holding Company is currently a wholly-owned subsidiary of International Paper, incorporated for the purpose of receiving and assuming the assets and liabilities primarily associated with xpedx as described under the headings “The Transactions” and “The Contribution and Distribution Agreement and the Ancillary Agreements” in this prospectus.
Reportable Segments
The xpedx business is organized into three reportable business segments—Print, Packaging and Facility Solutions. The following summary describes the products and services offered in each of the segments:
 
 	•	 	Print: The Print segment includes the sale and distribution of printing and communication papers, publishing papers, digital papers, specialty papers, graphics consumables, wide format papers, graphics equipment and related equipment installation and service. Within this segment, xpedx also operates the Bulkley Dunton Publishing Group (“Bulkley Dunton”), which focuses on the sale of coated and uncoated commercial printing and specialty papers to printers, converters, publishers, retailers and specialty businesses for use in magazines, catalogs, books, directories, gaming, couponing and retail inserts and direct mail. Products sold by Bulkley Dunton are predominately shipped directly from the manufacturer to the customer.	
 
 	•	 	Packaging: The Packaging segment includes the design, sourcing, sale and distribution of customized packaging and packaging equipment and the sale and distribution of custom and standard corrugated boxes, shrink and stretch films, tape, strapping, cushioning, labels, bags, mailers, molded fiber, bio-polymer and plastics and packaging equipment and related equipment installation and service. This segment also includes fulfillment and contract packaging services.	
 
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 	•	 	Facility Solutions: The Facility Solutions segment includes the sale and distribution of products necessary to maintain large public facilities, including hand towel and bathroom tissue, cleaning chemicals, disinfectants, skin care products, safety and hazard products, trash bags and receptacles, sanitary maintenance supplies, facilities maintenance equipment and related equipment installation and service. These products are sold to customers for use in their own facilities and for re-distribution.	
In 2013, xpedx had net sales and income from continuing operations before income taxes of $5.6 billion and $0.4 million, respectively, of which approximately $3.2 billion, and $27.4 million were from the Print segment, $1.6 billion, and $43.1 million were from the Packaging segment and $0.8 billion, and $(24.1) million were from the Facility Solutions segment, and $0.0 billion and $(46.0) million were from Corporate. Selected financial data for each of xpedx’s reportable segments as well as financial information concerning geographic areas can be found in Note 11 “Financial Information by Reportable Segment and Geographic Area,” in the notes to xpedx’s consolidated financial statements included elsewhere in this prospectus.
In each business segment, xpedx serves a diverse group of customers, from those with single location operations to multinational corporations. In 2013, no single customer accounted for more than 5% of xpedx’s total net sales. Key customer categories for each segment include the following:
 
 	•	 	Print: Commercial printers (including digital wide format and packaging printers), publishers, in-plant print facilities, data centers, print design agencies and in certain limited cases, high volume purchasers of paper.	
 
 	•	 	Packaging: Manufacturers, contract packaging/fulfillment firms and transportation companies.	
 
 	•	 	Facility Solutions: Manufacturers, higher education institutions, healthcare facilities, sporting and entertainment facilities, retail, food service, government agencies, property managers and building service contractors. xpedx’s customers include foodservice, industrial supply, janitorial and sanitary maintenance and healthcare distributors.	
The table below summarizes the percentage of net sales that xpedx received from each of its business segments in the years indicated:

Percentage of Net Sales by Segment	 	
Product	  	2013	 	 	2012	 	 	2011	 	
Print	  	 	57	% 	 	 	58	% 	 	 	60	% 	
Packaging	  	 	28	% 	 	 	26	% 	 	 	25	% 	
Facility Solutions	  	 	15	% 	 	 	16	% 	 	 	15	% 	
xpedx distributes well-known national and regional brand products as well as products marketed under xpedx’s private label brands. xpedx’s portfolio of private label products includes coated cut size and folio papers under the Endurance ® brand; cleaning chemicals, skin care products and sanitary maintenance supplies under the Reliable ® and Spring Grove ® brands; and packaging tapes and films under the Tufflex ® brand. Products manufactured under xpedx’s private label brands are manufactured in accordance with specifications established by xpedx. We believe that substantially all of xpedx’s private label products are similar or better in quality, price and other key attributes as compared to the nationally branded product. xpedx’s marketing and procurement teams monitor product quality of xpedx’s private brands, including periodic review of manufacturing plants of suppliers. For the year ended December 31, 2013, private label sales in the Print, Packaging and Facility Solutions segments accounted for approximately 12%, 4% and 7%, respectively, of that segment’s total sales.
Sales and Marketing
xpedx utilizes a market-driven strategy to identify targeted customer categories and continuously focuses on the evolving product and service needs of its customers. xpedx’s e-commerce platform, xpedx.com, allows
 
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customers to place orders for products, inquire on a 24/7 basis regarding the availability of inventory, check the status of outstanding orders and pending shipments and obtain a wide range of product information. In 2013, xpedx.com received approximately 4.7 million orders for a total $1.4 billion of products. xpedx completed a major upgrade of the platform in 2012, including installation of state-of-the-art software, which provides enhanced functionality and visibility to a broader range of products, thereby increasing opportunities for additional sales. xpedx management believes that its e-commerce capabilities provide a competitive advantage, especially with regard to customer retention.
We believe that ease of ordering, product selection, competitive pricing, the timely and accurate delivery of orders to facilitate customers’ efficient operations and xpedx’s national distribution capabilities are the most important factors in the marketing and distribution of products and services to customers and for maintaining strong relationships with customers. xpedx’s marketing and sales philosophy is based on four key principles:
 
 	•	 	choose markets carefully and establish a leadership position in priority markets;	
 
 	•	 	become the “face to the customer”;	
 
 	•	 	tailor service propositions to those for which customers will pay; and	
 
 	•	 	simplify business systems to facilitate execution on operations and sales.	
As of December 31, 2013, xpedx employs more than 1,150 trained and experienced sales professionals, equipment representatives and service technicians and more than 590 customer service representatives, who play a key role in developing and maintaining xpedx’s customer relationships. This group strives to learn customer needs, inform customers of new products and services, assure customers’ continued satisfaction and obtain customer feedback regarding both products and related services. Approximately 58% of xpedx’s experienced sales representatives are compensated on a commission-only basis, but are also eligible to participate in xpedx’s employee benefits programs. xpedx has developed an extensive sales training program designed to recruit and develop the sales capabilities of individuals with two years or less prior sales experience. While sales trainees are participating in the program, they are compensated on a salary basis combined with a reduced commission and bonus opportunity and full employee benefits. In addition to those sales representatives who receive commission-only compensation, approximately 31% of xpedx’s sales representatives receive only a portion of their compensation on a variable or commission basis.
As part of its customer relationships, xpedx also provides ancillary services to customers, including product and equipment selection advice, product usage reports, product usage training, assistance with demand planning and inventory control, as well as access to third party services designed to add value to the customer’s business. Since 2010, xpedx has significantly expanded its packaging design capabilities, establishing five packaging design centers. The design centers provide value added ancillary services through the development of custom packaging prototypes, which are utilized by xpedx sales professionals to assist customers in visualizing and testing new or updated packaging concepts or options. In addition, xpedx provides equipment installation, training and repair services for packaging, facility supplies and graphics related equipment.
Customers
Sales are made through a variety of means ranging from multi-year supply contracts to transactional sales. Many of xpedx’s largest customers have entered into multi-year supply agreements that set forth the terms and conditions of sale, including product pricing and warranties. xpedx has valuable, long-term relationships with many of its customers. Generally, xpedx’s customers are not required to purchase any minimum amount of products from it and place orders on an individual purchase order basis. However, xpedx enters into negotiated supply agreements with a minority of its customers. In the Packaging and Facility Solutions segments, xpedx’s business is less transactional, allowing the company to maintain longer-term primary or secondary supplier-customer relationships. No single customer accounted for more than 5% of xpedx’s total net sales in 2013.
 
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Operations
As of December 31, 2013, xpedx had a network of 68 distribution centers and 13 “mini-distribution” centers across the United States, totaling approximately 8.5 million square feet of warehouse space. xpedx’s five distribution centers in Mexico total approximately 0.6 million square feet. These facilities are strategically located in order to efficiently serve xpedx’s customer base in the surrounding area while also facilitating expedited delivery services for special orders. As used in this prospectus, a DC or Distribution Center is a warehouse which is the primary facility in a specific geography, generally a metro area. An MDC or Mini Distribution Center is one of 13 specific smaller warehouses that serve primarily small order volumes. MDCs can be co-located in a geographic area with a larger full-size DC. We operate, but did not include in our counts here, smaller satellite locations or cross docks even if they hold inventory.
During the past three years, xpedx has worked to optimize its delivery system by consolidating inventory in fewer but larger centralized locations, utilizing hub and spoke networks and installing state-of-the-art warehouse management systems in many DCs, along with truck routing software in most of our locations. xpedx’s logistics professionals have leveraged their collective expertise and the company’s technology to minimize overall logistics costs, reduce future facility and delivery fleet expansion needs and assure accurate and timely delivery of every customer order.
The map below shows xpedx’s locations as of December 31, 2013.

Timely and accurate delivery of a customer’s order, on a consistent basis, is an important criteria in a customer’s decision to purchase products and services from xpedx. Delivery of products is provided through two primary channels, either from xpedx’s warehouses or directly from the manufacturer. Less than truckload quantities of a product from a single manufacturer most often originate from an xpedx warehouse, while full
 
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truckload quantities are typically shipped directly from the manufacturer to the customer or the customer’s designated destination. The profitability on sales from the warehouse floor compared to direct sales can vary significantly, and the warehouse / direct mix of product deliveries varies by business segment. xpedx’s distribution centers offer a range of delivery options, from daily to monthly, depending on the customer’s needs and preferences, and the strategic placement of the distribution centers also allows for delivery of special or “rush” orders to many customers.
Purchasing and Merchandising
xpedx purchases from thousands of suppliers, both domestic and international, across its business segments. Although varying by segment, xpedx’s suppliers consist generally of large corporations selling brand name and private label products, and to a more limited extent, independent regional and private label suppliers. Suppliers are selected based on customer demand for the product and a supplier’s total service, cost and product quality offering. Purchases by xpedx from other businesses of International Paper represented approximately 13% of xpedx’s cost of products sold in fiscal 2013. Upon consummation of the Transactions, the combined company plans to continue purchasing uncoated paper, paperboard and corrugated products from International Paper, and under the terms of the Supply Agreement described under the heading “The Contribution and Distribution Agreement and the Ancillary Agreements—Supply Agreements” in this prospectus will purchase uncoated paper and paperboard from International Paper.
xpedx’s centralized sourcing organization supports the warehouse and handles the purchasing of core public and private brands from key national suppliers in each segment. The Bulkley Dunton business operates as a direct ship brokerage business aligned with xpedx’s core supplier strategy. In addition, under the guidance and oversight of the centralized sourcing team, xpedx’s merchandising personnel located within individual distribution centers source custom products and products not available within xpedx’s core offering in order to meet specialized customer needs.
The product sourcing program is designed to ensure that xpedx is able to offer consistent product selections and market competitive pricing across the enterprise while maintaining the ability to serve localized market requirements. xpedx’s procurement program is also focused on replenishment which includes purchase order placement and managing the total cost of inventory by improving the number of days inventory is on hand, negotiating favorable payment terms and maintaining vendor-owned and vendor-managed programs. As one of the largest purchasers of paper, graphics, packaging and facility supplies, xpedx can qualify for volume allowances with some suppliers and can realize significant economies of scale. xpedx in turn enters into incentive agreements with certain of its largest customers, which are generally based on sales to these customers.
Working Capital
The combined company’s working capital needs generally reflect the need to carry significant amounts of inventory in our distribution centers to meet delivery requirements of our customers, as well as significant accounts receivable balances. As is typical in our industry, our customers often do not pay upon receipt, but are offered terms which are heavily dependent on the specific circumstances of the sale. It is expected that our accounts receivable balances will generally reflect average days that sales are outstanding of approximately 40-45 days after invoicing.
Corporate Headquarters and Shared Service Center
International Paper’s corporate staff currently provides a number of services to xpedx in the areas of accounting and finance, treasury, cash management, employee benefits, labor relations, real estate and construction, information technology and systems, corporate governance, investor relations, risk management and insurance, human resources, procurement, legal, business strategy, tax compliance and government relations.
 
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Upon consummation of the Merger Agreement, International Paper will continue to provide certain of these services for up to 24 months following the Distribution pursuant to the Transition Services Agreement, as further described under the heading “The Contribution and Distribution Agreement and the Ancillary Agreements—Transition Services Agreement” in this prospectus.
xpedx’s Shared Services, based in Loveland, Ohio, along with certain outsourced arrangements, performs centralized support services for employees, xpedx distribution centers, Bulkley Dunton and customers, including human resources, payroll administration, training and development, marketing, financial services such as vendor payments, credit, information technology, e-Commerce, certain accounting and logistics services, national account sales and administration, sales and use tax administration, procurement and sales support.
Warehouse Network Optimization and Capital Improvements
Since 2010, xpedx has focused on improving productivity and customer service by consolidating from 107 distribution centers and 122 retail outlets with 11.5 million square feet of storage space to our footprint of 73 distribution centers and 13 mini-distribution centers with approximately 9.1 million square feet of storage space as of December 31, 2013. As part of this transition, capital improvements for warehouse fixtures and equipment, along with state-of-the-art warehouse management systems in many locations, were added. These expenditures were approximately $9.8 million, $13.3 million and $17.4 million during 2013, 2012 and 2011, respectively. During the three years ended December 31, 2013, capital expenditures were financed primarily by internally generated funds.
Employees
As of March 31, 2014, xpedx had approximately 4,750 full time employees in the United States and approximately 420 in Mexico. In the United States approximately 10% of employees were represented by unions, primarily the International Brotherhood of Teamsters. Labor contract negotiations are handled on an individual basis by a team of International Paper and xpedx Human Resources and Legal personnel. Less than 5%, of xpedx’s unionized employees had collective bargaining agreements expire during fiscal 2013. We consider labor relations to be good.
Competition
While xpedx is one of the few distributors to have a national distribution network in each of its business segments, there is significant existing and emerging competition in each of the business segments in which xpedx distributes products and services. The types and levels of competition vary significantly by segment.
The following summary briefly describes the key competitive landscape in each of the business segments:
 
 	•	 	Print: There are hundreds of regional and local companies engaged in the marketing and distribution of paper and graphics products. While we believe there are few national distributors of paper and graphics products similar to xpedx, several regional and local distributors have cooperated together to serve customers nationally. xpedx’s customers also have the opportunity to purchase product directly from paper and graphics manufacturers, including International Paper. In addition, competitors also include regional and local specialty distributors, office supply and big box stores, independent brokers and large commercial printers that broker the sale of paper in connection with the sale of their printing services.	
 
 	•	 	Packaging: The packaging market is fragmented, consisting of competition from multiple regional packaging distributors, national and regional manufacturers of packaging materials, independent brokers, and both catalog based and online business-to-business suppliers. We believe there are few national packaging distributors with substrate neutral design capabilities similar to xpedx’s capability.	
 
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 	•	 	Facility Solutions: There are few national but numerous regional and local distributors of facility supplies. Several groups of distributors have created strategic alliances among multiple distributors to provide broader geographic coverage for larger customers. Other key competitors include the business-to-business divisions of big box stores, purchasing group affiliates, and both catalog based and online business-to-business suppliers.	
We believe that xpedx’s competitive advantages include its over 1,500 sales and marketing associates; the breadth of xpedx’s selection of quality products including its high quality private brands; xpedx’s e-commerce platform which provides customers with efficient product ordering, real time information on product availability, and individual order status. The breadth of products distributed and services offered, the diversity of the types of customer served, xpedx’s broad geographic footprint in the United States and Mexico buffers the impact of regional economic declines while also providing a network to readily serve xpedx’s national accounts.
Government Relations
As a distributor, xpedx’s transportation operations are subject to the U.S. Department of Transportation Federal Motor Carrier Safety Regulations.
The xpedx business is also subject to federal, state and local regulations regarding licensing and inspection of its facilities, including compliance with the U.S. Occupational Safety and Health Act. These regulations require xpedx to comply with health and safety standards to protect its employees from accidents and establish hazard communication programs to transmit information on the hazards of certain chemicals present in the Jan-San products xpedx distributes.
xpedx is also subject to regulation by numerous U.S. and Mexican federal, state and local regulatory agencies, including but not limited to, the U.S. Department of Labor which sets employment practice standards for workers. Although xpedx is subject to other U.S. and Mexican federal, state and local provisions relating to the protection of the environment and the discharge or destruction of materials, these provisions do not materially impact the use or operation of the company’s facilities. Compliance with these laws has not had, and is not anticipated to have, a material effect on xpedx’s capital expenditures, earnings or competitive position.
Intellectual Property
The xpedx business has numerous well recognized trademarks, including private brands, in each of the segments within which xpedx distributes its products. In 2013, sales of products sold under private brands accounted for approximately 9% of total sales. xpedx’s U.S. trademarks are effective for a 10-year period, and xpedx generally renews its trademarks before the expiration dates unless a particular trademark is no longer in use. xpedx does not have any material patents or licenses.
As a distributor of products and services, xpedx does not manufacture any products. During the last three years, xpedx has not had any research and development expenditures.
Litigation
xpedx is involved in legal proceedings arising in the ordinary course of business. xpedx is not involved in any legal proceedings that we believe will result, individually or in the aggregate, in a material adverse effect upon its financial condition or results of operations.
Properties
We consider xpedx’s properties to be suitable and adequate for their intended purposes. xpedx continually evaluates location, size and attributes to maximize efficiency, deliver top quality customer service, and achieve economies of scale.
 
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Executive Offices
The office space at xpedx’s current operational headquarters and Shared Services center in Loveland, Ohio area totals 163,000 square feet of space owned by International Paper. Following the Distribution, we will lease this space from International Paper. This lease is expected to be for two years. The xpedx business also leases approximately 13,000 square feet of office space in New York City which houses Bulkley Dunton’s primary sales and business offices. In addition, substantially all of xpedx’s distribution centers have a portion of the leased or owned space dedicated to office space for the support of that distribution center or a group of distribution centers’ sales and operations.
Distribution Centers
As of December 31, 2013, xpedx maintained a total of approximately 9.1 million square feet of warehouse space in 86 distribution centers, including 0.6 million square feet of warehouse space in distribution centers located in and serving customers in Mexico. Of the 9.1 million square feet of distribution space, 2.1 million square feet was owned and 7 million square feet was leased as of December 31, 2013. We believe that the distributions centers are adequately maintained and suitable for xpedx’s ongoing operations. We also consider each of the distribution centers important to maintaining xpedx’s network of operations and ability to serve customers.
 
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 BUSINESS OF UNISOURCE
Overview
Unisource is a leading distributor of printing and business paper products, packaging supplies and equipment, and facility supplies and equipment, primarily in the United States and Canada. Additionally, Unisource has international operations in Europe, Asia and Latin America. Unisource is one of the largest independent print, packaging and facility supplies distributors in North America with approximately $4.1 billion in net sales in fiscal 2013. Unisource markets and distributes its products, supplies and services to approximately 48,000 customers, based on customer bill-to locations. Unisource is organized into six business units (U.S. Distribution, Canada Distribution, Graphic, Rollsource, PaperPlus and UGS) and sells four primary product categories (Print, Packaging, Facility Supplies and Other) as described below. The print market has experienced a secular decline in North America for several years as a result of increasing electronic distribution and communication and eCommerce. Unisource is addressing the declining print market by focusing on global corporate end-use customers who have a ready need for improved paper and print consultative and management services and by investing in and focusing on its three other product categories.
Unisource stocks more than 80,000 different commercial paper, business paper, imaging supplies, packaging supplies and equipment products and facility supplies and equipment products. Through an expansive supplier network, Unisource also has ready access to thousands of additional products to fulfill its customers’ specific requirements. Unisource sells its products to a diverse customer base that includes building service contractors, catalog and direct mail providers, commercial printers, consumer goods providers, cruise lines, food processors, healthcare providers, higher education institutions, government agencies, fulfillment industry, hotels and resorts, manufacturers and property managers. No single customer accounted for more than 5% of Unisource’s net sales for fiscal 2013.
History
Unisource was incorporated in August 1975. Prior to December 31, 1996, Unisource was a wholly-owned subsidiary of Alco Standard Corporation (“Alco”). In December 1996, in connection with Alco’s spin-off of Unisource, Unisource became a separate public company. Unisource was acquired by Georgia-Pacific, now owned by Koch Industries, in July 1999. In November 2002, Bain Capital acquired approximately a 60 percent ownership interest in Unisource, while Georgia-Pacific retained approximately a 40 percent ownership interest.
Unisource Business Units
The following is a brief summary of Unisource’s business units.
U.S. Distribution
The U.S. Distribution business sells products manufactured by a wide variety of vendors, including those sold under its Unisource brands. The U.S. Distribution business unit generated approximately $2,333.7 million, or 57.0%, of Unisource’s net sales for fiscal 2013. The U.S. Distribution business unit provides services through a network of 75 distribution facilities in 40 states and a fleet of approximately 298 trucks to sell and supply its products in all 50 states in the United States. The U.S. Distribution business utilizes approximately 8.9 million square feet of warehouse space. The U.S. Distribution business sells products in each of Unisource’s primary product categories.
Print product category net sales were approximately $1,076.3 million, or 46.1%, of the U.S. Distribution business’ total net sales for fiscal 2013. Commercial printers, retailers, publishers, business form manufacturers, direct mail firms and the digital printing industry represent the key markets for the U.S. Distribution print products. The key print products included coated paper, uncoated paper and copy paper, which are most often used in catalogs, brochures, advertising supplements, annual reports, business forms, retail circulars, and other imaging and copy formats.
 
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Packaging product category net sales were approximately $861.0 million, or 36.9%, of the U.S. Distribution business’ total net sales for fiscal 2013. Manufacturing, fulfillment industry, food processors, commercial printers, retail and healthcare represent key markets for packaging products. Significant products within the Packaging product category include corrugated and folding carton consumer goods packaging, packaging films, protective packaging supplies and packaging tapes. The U.S. Distribution business provides two engineering solutions centers which design and test packaging solutions for Unisource’s customers.
Facility Supplies product category net sales were approximately $334.5 million, or 14.3%, of the U.S. Distribution business’ total net sales for fiscal 2013. Key markets for this product category include building service contractors, manufacturers, healthcare, governmental agencies, food processors, fulfillment industry and hospitality. Products sold in this product category include towels and tissues, commercial cleaning chemicals, trash can liners and sanitary maintenance supplies and equipment.
The Other product category within the U.S. Distribution business includes Unisource Logistics Solutions (“ULS”), which was started by the U.S. Distribution business in 2009 to optimize its supply chain capabilities and warehouse and transportation network. ULS provides customers with outsourced supply chain solutions, also known as third-party logistics services, which include freight brokerage, material handling, warehousing and kitting. Net sales for this product category represented approximately $61.9 million, or 2.7%, of the U.S. Distribution business’ net sales for fiscal 2013.
Canada Distribution
The Canada Distribution business sells products manufactured by a wide variety of vendors, including those products sold under its Unisource brands.
The Canada Distribution business represented approximately $846.5 million, or 20.7%, of Unisource’s net sales for fiscal 2013. The Canada Distribution business provides services through a network of 17 distribution facilities and a fleet of approximately 102 trucks, with warehouse locations in 9 provinces that sell products to all 13 provinces and territories. The Canada Distribution business utilizes approximately 1.8 million square feet of warehouse space and sells primarily products in the Print, Packaging and Facility Supplies product categories.
Print net sales were approximately $294.0 million, or 34.7%, of the Canada Distribution business total net sales for fiscal 2013. Key markets for print products include commercial printers, publishers, retailers, distributors, advertising and designers and digital printers. Significant products in this category include copy paper, coated paper and uncoated paper that are most often used in catalogs, brochures, advertising supplements, annual reports, business forms, retail circulars, and other imaging and copy formats.
Packaging net sales were approximately $221.4 million, or 26.2%, of the Canada Distribution business net sales for fiscal 2013. Grocery, food processors, distributors, manufacturers and retailers represented key markets for packaging products. Significant products in this category include food packaging, packaging supplies, flexible packaging films, and corrugated and folding carton consumer goods packaging.
Facility Supplies net sales were approximately $331.1 million, or 39.1%, of the Canada Distribution business net sales for fiscal 2013. Key markets for facility supplies include distributors, retailers, food service, hospitality, grocery, healthcare and property managers. The key products sold in this category include towels and tissues, food service related products, commercial cleaning chemicals and trash can liners.
Graphic
Graphic is Unisource’s paper and print brokerage business. Graphic sells paper products and print management services and also provides ecommerce procurement and supply chain management software that enables its customers to centralize and standardize their paper procurement processes. Graphic has operations in the United States, Mexico, the United Kingdom, Belgium and Brazil and represented approximately $671.6 million, or 16.4%, of Unisource’s net sales for fiscal 2013.
 
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Rollsource
Rollsource provides customized paper conversion services of commercial printing paper for distribution. Rollsource’s key markets are document centers and form printers. Rollsource represented approximately $125.4 million, or 3.1%, of Unisource’s net sales for fiscal 2013.
PaperPlus
PaperPlus primarily serves the small printer markets through its 39 retail locations throughout the United States. The products offered primarily include uncoated free sheet paper, copy paper and coated free sheet paper. PaperPlus represented approximately $56.2 million, or 1.4%, of Unisource’s net sales for fiscal 2013.
Unisource Global Solutions
UGS is Unisource’s packaging design and engineering business. UGS designs, develops, tests and sources packaging products for its customers. UGS operates in the United States, China, Malaysia, Taiwan, Singapore and Poland and represented approximately $55.7 million, or 1.4%, of Unisource’s net sales for fiscal 2013. UGS has its headquarters in Chandler, Arizona, which is also the location of its primary packaging design, engineering and testing facility. This facility has capabilities that allow UGS to design and test a wide variety of packaging materials. Recently, the UGS business has been investigating the possibility of engaging in limited packaging manufacturing. During the fiscal years 2011, 2012 and 2013, UGS invested an aggregate amount of $7.7 million related to packaging, design, testing and select packaging manufacturing equipment which is located at its Chandler, Arizona and Lodz, Poland facilities. During fiscal 2013, the Lodz, Poland facility generated $0.9 million of net sales related to its start-up manufacturing initiative.
Unisource Product Categories
Unisource product categories are based on product designations used by its U.S. Distribution and Canada Distribution businesses. Unisource’s Graphic, Rollsource and PaperPlus businesses sell primarily items in the Print product category and UGS sells products primarily in the Packaging product category. The Other product category is primarily offered by the U.S. Distribution business.
The U.S. Distribution business sells packaging and facilities supplies equipment, and the Canada Distribution business sells wide-format printing, packaging and facilities supplies equipment, each on a limited basis to compliment their product lines. The aggregate amount of equipment sales represented 0.8% of Unisource’s net sales for fiscal 2013. Additionally, the U.S. Distribution business, including the ULS division, the Canada Distribution business and UGS provide services for fees which include third party logistics services, equipment maintenance and repair services and packaging design services. The aggregate amount of revenue derived from such services was 1.7% of Unisource’s Net sales for 2013.
These product categories, as a percentage of consolidated net sales, were represented as follows:

 	  	Fiscal Year Ended	 	
 	  	December 31, 2013	 	 	December 29, 2012	 	 	December 31, 2011	 	
Print	  	 	54	% 	 	 	57	% 	 	 	58	% 	
Packaging	  	 	28	% 	 	 	26	% 	 	 	24	% 	
Facility Supplies	  	 	16	% 	 	 	16	% 	 	 	18	% 	
Other	  	 	2	% 	 	 	1	% 	 	 	0	% 	
 
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The following describes the major product lines and services and customers of each of Unisource’s Print, Packaging, Facility Supplies and Other product categories.
 
 	•	 	Print : Unisource’s Print product category represented approximately $2.2 billion in net sales for fiscal 2013. This product category encompasses the sale and distribution of high quality commercial printing, writing, copying and digital printing paper to commercial printers, retailers, publishers, business form manufacturers, direct mail firms and the digital printing industry, as well as corporate and retail copy centers, in-plant print facilities, government institutions and other paper-intensive businesses. These products are used in a variety of catalogs, brochures, advertising supplements, annual reports, business forms, retail circulars and other imaging or copying formats.	
Unisource also provides eCommerce procurement and supply chain management solutions to its printing customers through its uAdvantage integrated electronic paper management system, as well as customized paper conversion services through its Rollsource centers and retail products and services through its 39 PaperPlus locations throughout the United States. Graphic provides managed print and promotional procurement solutions to a variety of multi-national companies and commercial printers.
Unisource also provides a range of paper products under its own brands such as Nordic, Econosource, uBrand, Starbrite and Comet.
 
 	•	 	Packaging : Unisource’s Packaging product category represented approximately $1.1 billion in net sales for fiscal 2013. The Packaging product category encompasses the sale and distribution of consumer goods packaging, packaging for industrial or manufacturing components and point-of-sale displays, as well as the sale and distribution of single function or fully automated packaging machines. Products in this category include corrugated and folding carton consumer goods packaging, packaging films, protective packaging and packaging tapes. Unisource’s engineering solutions centers design and test packaging solutions. Unisource provides several packaging products and equipment under its Unisource brand, which include stretch film, carton sealing tape and stretch wrapping equipment.	
 
 	•	 	Facility Supplies : Unisource’s Facility Supplies product category represented approximately $0.7 billion in net sales for fiscal 2013. The Facility Supplies product category involves the sale and distribution of a broad range of supplies, equipment and service, principally to manufacturers, food processors, retail, health care providers, building service contractors and property managers, hospitality and lodging industry, higher education and government agencies. Products distributed include towels, tissues, wipes and dispensers, can liners, commercial cleaning chemicals, soaps and sanitizers, sanitary maintenance supplies and equipment, safety and hazard supplies, and shampoos and amenities from leading manufacturers. Unisource also provides a wide range of facility supplies products under its own brands such as uBrand, Respect PUR, Chemtrol and others.	
 
 	•	 	Other: Unisource’s Other product category represented approximately $0.1 billion in net sales for fiscal 2013. The Other product category includes outsourced supply chain solutions, also known as third-party logistics services, which includes freight brokerage, material handling, warehousing and kitting.	
For fiscal 2013, approximately 14% of Unisource’s net sales were made under its own private label brands.
Working Capital
Unisource’s working capital needs generally reflect the need to carry significant amounts of inventory in its distribution centers to meet delivery requirements of its customers, as well as significant accounts receivable balances. As is typical in the industry, customers often do not pay upon receipt, but are offered terms which are heavily dependent on the specific circumstances of the sale. It is expected that the accounts receivable balances will generally reflect average days that sales are outstanding of approximately 40-45 days after invoicing.
 
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Distribution and Logistics
Unisource provides supply chain management through its 92 North American distribution facilities, providing next-day services to most major metropolitan areas in the United States and Canada. Unisource offers variable access to approximately 10.7 million square feet of warehouse space spread among its North American distribution facilities. Unisource also offers delivery services on its private fleet of approximately 400 “Big Red” trucks, supplemented by its relationships with the nation’s top freight carriers. ULS provides supply chain analytics, e-fulfillment and inventory management solutions. Additionally, UGS operates an approximately 90,000 square foot distribution and packaging manufacturing facility in Lodz, Poland.
Unisource distributes products from its distribution facilities and through mill direct-to-customer deliveries. Approximately 51% and 71% of Unisource’s Print and Packaging product category net sales in fiscal 2013, respectively, were generated through its own distribution facilities, and approximately 49% and 29%, respectively, were generated through mill direct-to-customer deliveries. The quantity of the goods ordered and the delivery lead times are the primary factors involved in determining whether an order will be fulfilled from a Unisource distribution facility or direct-shipped to the customer from a mill or manufacturer. Facility supplies products are distributed primarily from Unisource’s distribution facilities.
Unisource maintains distribution facilities in 40 states in the United States, in 9 provinces in Canada and at one location in Poland.
Unisource operates through 93 distribution facilities, of which 89 are leased and 4 are owned. Unisource generally prefers to lease its warehouse locations, as it provides the flexibility to expand or relocate its facilities at the end of the lease terms to serve evolving markets and meet changes in business needs. Unisource’s leased distribution facilities comprise approximately 10.5 million square feet of warehouse space, while owned locations comprise approximately 0.3 million square feet of warehouse space. The following table summarizes Unisource’s distribution facilities by country, whether leased or owned and by respective square footage.

 	  	Number of Distribution Facilities	 	  	Approximate Warehouse Square Footage	 	
 	  	 	 	  	 	 	  	 	 	  	(in millions)	 	
Country	  	Leased	 	  	Owned	 	  	Total	 	  	Leased	 	  	Owned	 	  	Total	 	
U.S.	  	 	74	  	  	 	1	  	  	 	75	  	  	 	8.8	  	  	 	0.1	  	  	 	8.9	  	
Canada	  	 	14	  	  	 	3	  	  	 	17	  	  	 	1.6	  	  	 	0.2	  	  	 	1.8	  	
Poland	  	 	1	  	  	 	—	  	  	 	1	  	  	 	0.1	  	  	 	—	  	  	 	0.1	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total	  	 	89	  	  	 	4	  	  	 	93	  	  	 	10.5	  	  	 	0.3	  	  	 	10.8	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Unisource believes that its distribution facilities are adequately maintained and suitable for its ongoing operations. Unisource also considers its distribution facilities important to maintaining its network of operations and its ability to provide high quality services to its customers.
International Operations
Unisource has international operations in Canada, Latin America, Asia and Europe. During fiscal 2013, Unisource’s international net sales were approximately $896.0 million with approximately $846.5 million attributable to the Canada Distribution business and approximately $49.5 million attributable to other international operations. As of December 31, 2013, approximately 24% of Unisource’s net assets were attributable to foreign operations.
Canada and other international operations, as a percentage of consolidated net sales, were represented as follows:

 	  	Fiscal Year Ended	 	
(% of Net sales)	  	December 31, 2013	 	 	December 29, 2012	 	 	December 31, 2011	 	
Canada	  	 	21	% 	 	 	21	% 	 	 	23	% 	
Other international	  	 	1	% 	 	 	2	% 	 	 	4	% 	
 
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Net assets in Canada and other international countries were as follows:

 	  	Fiscal Year Ended	 	
 	  	December 31, 2013	 	  	December 29, 2012	 	
 	  	(Dollars in millions)	 	
Canada	  	$	90.5	  	  	$	84.9	  	
Other international	  	 	4.3	  	  	 	10.4	  	
There are certain risks attributable to foreign operations, including, but not limited to, currency fluctuations and the political environment.
Suppliers/Vendors
Products and equipment are sourced in North America, Europe and Asia from approximately 2,800 vendors in the United States, approximately 600 vendors in Canada and approximately 100 vendors in Europe and Asia, with Unisource serving as an important North American distribution channel for many of these vendors.
Unisource’s print suppliers include the major North American paper producers. Its ten largest suppliers accounted for approximately 60% of its paper and printing purchases in fiscal 2013. Unisource’s packaging suppliers include major North American packaging material manufacturers and suppliers. Its ten largest suppliers accounted for approximately 38% of its packaging purchases in fiscal 2013. Unisource has numerous facility supplies product vendors. Unisource’s ten largest suppliers in this category accounted for approximately 59% of facility supplies and equipment product purchases in fiscal 2013.
Unisource does not anticipate a supply interruption from any of its significant vendors of Print, Packaging or Facility Supplies product categories, however, if any such interruption were to occur, Unisource believes it would be able to arrange comparable alternative supply arrangements.
Fluctuations in Operating Results; Sensitivity to Pulp and Paper Prices
Unisource’s net sales and net income (loss) have fluctuated from quarter-to-quarter due to a combination of factors, including changes in pulp and paper prices. These price changes can significantly impact Unisource’s Print product category, which accounted for 54% of net sales in fiscal 2013. Prices rose steadily in 2010 following the economic downturn, but prices have generally trended lower over the course of the past several years, driven by over-capacity and falling secular demand.
Rising pulp prices can produce higher gross profits and often represent favorable market conditions for Unisource, especially when market conditions allow Unisource to quickly pass along increased product costs to customers and maintain gross margin percentages. Declining pulp and paper prices generally produce lower revenues and gross profits for Unisource even when volume and trading margin percentages remain constant. Declines in pulp and paper prices also may alter purchasing patterns and cause customers to defer paper purchases or deplete inventory levels until long-term price stability occurs. See “Risk Factors—Risk Related to the Combined Company’s Business—Changes in prices for raw materials, including pulp and paper, could negatively impact the combined company’s results of operations and cash flows.”
Sales and Marketing
Unisource has approximately 760 sales representatives who sell current and new product solutions to its customers. Unisource’s extensive distribution network and national presence enable it to service national account customers, and its large size gives it important economies of scale in product purchasing and supply chain management. In addition, Graphic provides managed print and promotional procurement solutions to a variety of multi-national companies and commercial printers.
 
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Unisource has developed and implemented a business and marketing strategy that focuses on delivering value-added services to its customers. Unisource’s core growth strategy is to help Fortune 1000 companies efficiently drive customer loyalty by providing complete, integrated consultative solutions. The following solutions comprise Unisource’s fundamental set of offerings:
 
 	•	 	innovative, custom packaging and integrated logistics solutions;	
 
 	•	 	full service print management solutions; and	
 
 	•	 	value-added facilities solutions and support services.	
Competition
Each of Unisource’s businesses operates within highly competitive markets. One characteristic that all of its target markets share is strong price competition. Unisource believes that the principal competitive factors in these markets include price, responsiveness to customer needs, quality of customer service and the range of products maintained in inventory for quick delivery.
Unisource’s Print product category’s competitors consist of numerous regional distributors and independent local distributors and very few distributors with a national presence. Several regional and local distributors have joined together to provide marketing and distribution capabilities across a broad geographic area for national customers.
The market for packaging products is extremely fragmented, and Unisource’s packaging products face competition from national and regional packaging distributors, national and regional manufacturers of packaging materials, independent brokers and both catalog-based and online business-to-business suppliers.
In the fragmented facility supplies market, Unisource competes with a large number of local and regional distributors, as well as several national distributors. Large customers, even national accounts, often desire to do business with a network of independent regional distributors rather than depend on one company such as Unisource. Other key competitors include the business-to-business divisions of big box retailers, purchasing group affiliates and both catalog-based and online business-to-business suppliers.
Information Technology Systems
Unisource has made significant investments in its enterprise-wide eBusiness Solutions platform. Its eBusiness Solutions platform provides real-time critical information, increases ordering efficiency, reduces costs and improves accuracy across its customers’ supply chain. eBusiness Solutions includes a user-friendly eCommerce platform for real-time visibility across all account activity, Electronic Data Interchange (“EDI”) capabilities, end-to-end enterprise integration, third-party partnerships, integrated paper and print management solutions via its uAdvantage solutions and technology for automatic replenishment and inventory management.
Unisource’s eCommerce site is used by most of its businesses with its facility supplies and packaging customers using it most frequently to place online orders. Advanced integration solutions, system-to-system integration and EDI are used most frequently by Unisource’s large national accounts.
Unisource utilizes a variety of sophisticated packaged and custom system solutions to support order-to-cash, procure-to-pay, general management and administration as well as reporting and analytics functions. More recent technology investments include customer relationship management, business intelligence, pricing optimization and administration, sales compensation management and financial planning and consolidation tools.
 
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Capital Improvements
Over the past three years through fiscal 2013, Unisource invested approximately $66.5 million primarily in information technology systems for internal-use, as described above, warehouse and other building improvements, transportation and warehouse moving equipment and equipment for packaging design, testing and select packaging manufacturing. Unisource believes that investments in these areas enable it to continually improve operational efficiency throughout the distribution process from sales order entry to material receipt and handling, through product delivery to the customer. Additionally, capital expenditures to implement or enhance its enterprise resource planning systems have enabled Unisource to more efficiently service customers who have a geographical presence throughout North America.
Employees
Unisource employs approximately 4,200 people, including sales, supply chain, and customer service personnel, on a worldwide basis, located primarily in North America. Approximately 73% of Unisource’s total workforce is employed in the United States, approximately 24% of its work force is employed in Canada and the remaining 3% is employed in Asia, Latin America and Europe. Approximately 11% of Unisource’s worldwide employees are represented by 26 collective bargaining agreements (“CBAs”). In the United States, approximately 11% of Unisource’s employees are represented by CBAs. There are 21 separate CBAs in the United States, with a total of 3 unions and approximately 88% of these unionized employees are covered under CBAs with the International Brotherhood of Teamsters. In Canada, approximately 11% of Unisource’s employees are unionized under 5 CBAs and approximately 81% of these unionized employees are covered under CBAs with Unifor.
There have been no strikes or work stoppages in the last 10 years. Unisource believes its relations with its employees and unions are good.
Properties
Unisource’s corporate offices are located in the Atlanta, Georgia metropolitan area located at 6600 Governors Lake Parkway, Norcross, GA 30071. This facility consists of approximately 47,000 square feet of office space.
Unisource considers its properties to be suitable and adequate for their intended purposes. See additional information regarding Unisource’s distribution facilities provided above in the section captioned “—Distribution and Logistics.”
Intellectual Property
Unisource uses a number of trademarks, service marks and trade names which are important to its business. The Unisource name and related logos are Unisource’s most important marks and are used throughout its business. The Unisource name and related logos are registered throughout North America and in other countries where relevant to Unisource’s business operations. Unisource’s rights in these marks may generally be renewed an unlimited number of times. Other trademarks, service marks and trade names which Unisource uses in its business are registered in the U.S. and Canada and certain of which are maintained in other countries.
In fiscal 2013, net sales of products sold under Unisource’s private brands accounted for approximately 14% of total net sales. Unisource does not have any material patents or licenses.
Regulation
As a distributor, Unisource’s transportation operations are subject to the U.S. Department of Transportation Federal Motor Carrier Safety Regulations. Unisource’s business is also subject to federal, state and local regulations regarding licensing and inspection of its facilities, including compliance with the U.S. Occupational
 
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Safety and Health Act. These regulations require Unisource to comply with health and safety standards to protect its employees from accidents and establish hazard communication programs to transmit information on the hazards of certain chemicals present in products distributed by Unisource. Unisource is also subject to federal, state and local regulations related to certain products it resells or warehouses. All private label products are manufactured by contract manufacturers. Federal, state and local provisions relating to the protection of the environment or the discharge of hazardous materials or relating to products have not had, and are not expected to have, a material effect on Unisource’s financial condition or competitive position.
Unisource is also subject to regulation by numerous U.S., Canadian and other federal, state and local regulatory agencies, including but not limited to, the U.S. Department of Labor which establishes employment practice standards for workers. Compliance with these laws has not had, and is not anticipated to have, a material effect on Unisource’s financial condition or competitive position.
Unisource is subject to unclaimed property (escheat) laws and regulations in the United States. On February 14, 2013, Unisource was notified by the State of Delaware that they intended to examine the books and records of Unisource to determine compliance with Delaware escheat laws. Since that date, seven other states have joined with Delaware in the audit process. Unisource has determined that the ultimate outcome cannot be estimated at this time. Claims or liabilities could be asserted and such outcomes could have a material impact on Unisource’s financial position, results of operations and cash flows.
Litigation
Unisource is involved in legal proceedings arising in the ordinary course of business. Unisource is not involved in any legal proceedings that it believes will result, individually or in the aggregate, in a material adverse effect upon Unisource’s financial condition, results of operations and cash flows.
 
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 MANAGEMENT OF SPINCO FOLLOWING THE TRANSACTIONS
The following table sets forth certain information, as of March 31, 2014, concerning our directors and our executive officers following the completion of the Transactions.

Name	  	Age	  	Position	
Mary A. Laschinger	  	54	  	Chief Executive Officer and Chairman	
Stephen J. Smith	  	50	  	Senior Vice President and Chief Financial Officer	
Charles B. Henry	  	49	  	Senior Vice President Integration and Change Management	
Mark W. Hianik	  	53	  	Senior Vice President, General Counsel and Corporate Secretary	
Timothy D. Kutz	  	50	  	Senior Vice President Supply Chain^	
Thomas S. Lazzaro	  	50	  	Senior Vice President Field Sales and Operations	
Joseph B. Myers	  	49	  	Senior Vice President Facility Solutions, Strategy and
Commercial Excellence^	
Barry R. Nelson	  	49	  	Senior Vice President Publishing and Print Management	
Elizabeth Patrick	  	46	  	Senior Vice President and Chief Human Resources Officer	
Neil Russell	  	42	  	Senior Vice President Corporate Affairs	
Darin W. Tang	  	48	  	Senior Vice President Packaging^	
Daniel J. Watkoske	  	45	  	Senior Vice President Print	
Allan R. Dragone, Jr.	  	58	  	Director*	
Daniel T. Henry	  	64	  	Director*	
Tracy A. Leinbach	  	54	  	Director*	
Seth A. Meisel	  	41	  	Director*	
William E. Mitchell	  	70	  	Director*	
Michael P. Muldowney	  	50	  	Director*	
Charles G. Ward, III	  	61	  	Director*	
John J. Zillmer	  	58	  	Director*	

*	Messrs. Dragone, Henry, Mitchell, Meisel, Muldowney, Ward and Zillmer and Ms. Leinbach will become directors upon consummation of the Transactions.	
^	Timothy D. Kutz will become Senior Vice President Supply Chain, Joseph B. Myers will become Senior Vice President Facility Solutions, Strategy and Commercial Excellence and Darin W. Tang will become Senior Vice President Packaging upon consummation of the Transactions.	
Executive Officers
The Merger Agreement provides that, as of the completion of the Transactions, the executive officers of SpinCo will consist of the following executives. All but one of these executives who will be our executive officers following the completion of the Transactions are currently employees of either International Paper or Unisource. Following the completion of the Transactions, none of our executive officers will be employees of International Paper.
Mary A. Laschinger , Chief Executive Officer and Chairman of the Board of Directors, has served as Senior Vice President of International Paper Company, a global packaging and paper manufacturing company, since 2007 and as President of its xpedx distribution business since January, 2010. She previously served as President of International Paper’s Europe, Middle East, Africa and Russia business, Vice President and General Manager of International Paper’s Wood Products and Pulp businesses and in other senior management roles at International Paper in sales, marketing, manufacturing and supply chain. Ms. Laschinger joined International Paper in 1992. Prior to joining International Paper, Ms. Laschinger held various positions in product management and distribution at James River Corporation and Kimberly-Clark Corporation. Ms. Laschinger has significant knowledge and executive management experience running domestic and international manufacturing and
 
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distribution businesses as well as a deep understanding of xpedx and the industry in which it operates. Ms. Laschinger also serves as a director of Kellogg Company.
Stephen J. Smith,  Senior Vice President and Chief Financial Officer,  was hired by International Paper in March 2014 to serve in this role. Previously, Mr. Smith served as Senior Vice President and Chief Financial Officer of American Greetings Corporation, a global greeting card company, from November 2006 to March 2014. Previously, Mr. Smith served as Vice President of Investor Relations and Treasurer of American Greetings from April 2003 to November 2006. Prior to American Greetings, Mr. Smith served as Vice President and Treasurer of General Cable Corporation, a global wire and cable manufacturer and distributer, and Vice President, Treasurer and Assistant Secretary of Insilco Holding Company, a telecommunications and electrical component products manufacturer. During Mr. Smith’s tenure as a public company chief financial officer, he helped lead several strategic acquisitions and was responsible for the design and execution of the capital structure for a recent management buyout.
Charles B. Henry , Senior Vice President Integration and Change Management , has served as Vice President, Strategy Management and Integration of xpedx since March 2013 and is currently a member of the xpedx Senior Lead Team. Prior to that, he served as Director of the xpedx Strategy Management Office from August 2010 to March 2013. Prior to that, he served as a Director in International Paper’s Supply Chain Project Management Office. Mr. Henry joined International Paper in 1986 and served in a variety of supply chain, sales and general management roles within International Paper’s Program Management Office, Printing and Communications Papers business and Global Supply Chain operations. Mr. Henry has significant strategy and project management experience in the manufacturing and distribution industries.
Mark W. Hianik, Senior Vice President, General Counsel and Corporate Secretary, was hired by International Paper in January, 2014 to serve in this role. Previously, Mr. Hianik served as Senior Vice President, General Counsel and Chief Administrative Officer for Dex One Corporation, an advertising and marketing services company, from March 2012 to May 2013. Prior to that Mr. Hianik served as Senior Vice President, General Counsel and Corporate Secretary for Dex One (and its predecessor, R.H. Donnelley Corporation) from April 2008 to March 2012. R.H. Donnelley Corporation filed for voluntary reorganization under Chapter 11 of the U.S. Bankruptcy Code in May 2009 emerging with a confirmed plan as Dex One in January 2010 and Dex One filed a pre-packaged bankruptcy petition under Chapter 11 in March 2013 to effect a merger consummated in April 2013. Mr. Hianik previously served as Vice President and Assistant General Counsel for Tribune Company, a diversified media company, and as a corporate and securities partner in private practice. Mr. Hianik has significant experience as a public company general counsel and leader of corporate administrative functions as well as significant mergers and acquisitions, securities, corporate finance and corporate governance experience.
Tim othy D. Kutz, Senior Vice President Supply Chain, has served as Executive Vice President, Global Strategy & Market Creation, for Unisource Worldwide, Inc. since November 2012. In this role, Mr. Kutz is responsible for Global Strategy, Information Technology, Marketing, Sustainability and Corporate Communications. Mr. Kutz joined Unisource in 2007 as Senior Vice President and Chief Information Officer. Prior to Unisource, Mr. Kutz was a partner for Accenture, a global management consulting, technology services and outsourcing company, and had worked in its Global Forest Products Practice since 1999. Previously, Mr. Kutz served as an IT director for Union Camp Corporation, a paper company acquired by International Paper. Mr. Kutz has significant information technology, supply chain, and strategy experience in the manufacturing, forest products and distribution industries.
T homas S. Lazzaro, Senior Vice President Field Sales and Operations, has served as Executive Vice President, Supply Chain of xpedx since March 2013 and is currently a member of the xpedx Senior Lead Team. In this position, Mr. Lazzaro leads the procurement, operations, inventory management, customer service, pricing and e-commerce functions for xpedx. Mr. Lazzaro joined xpedx in January 2011 as Executive Vice President and Chief Procurement Officer, responsible for all aspects of the purchasing organization. From October 2007 to May 2010, Mr. Lazzaro held several positions with HD Supply, a construction supply company, including President of
 
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White Cap Construction Supply and President of Creative Touch Interiors. Previously, Mr. Lazzaro was a senior executive with Home Depot and General Electric. Mr. Lazzaro has significant experience in general management, supply chain, operations and finance positions in the manufacturing and distribution industries.
Joseph B. Myers, Senior Vice Preside nt Facility Solutions, Strategy and Commercial Excellence, served as President of Oldcastle Building Solutions, a unit of Oldcastle Inc., one of the nation’s largest building products companies, from February 2012 to April 2014. From August 2000 to February 2012, Mr. Myers was a Partner at McKinsey & Company, where he was a designated expert in sales and market growth development and led client engagements across various industries, including distribution, paper, packaging and chemicals. Previously, Mr. Myers held positions in sales, marketing and general management with BP Amoco. Mr. Myers has significant experience in senior leadership, general management, consulting, strategy and business transformation positions.
Barry R. Nelson, Senior Vice President Publishing and Print Management, has served as Group Vice President, Sales-Publishing for xpedx since December 2012. In this role, Mr. Nelson oversees and directs sales and operations for xpedx’s publishing business, Bulkley Dunton. From August 2002 to December 2012, Mr. Nelson served as Senior Vice President of Sales and Marketing for NewPage Corporation, a paper manufacturing company. NewPage filed for voluntary reorganization under Chapter 11 of the U.S. Bankruptcy Code in September 2011 and emerged with a confirmed plan in December of 2012. Previously, Mr. Nelson served as Executive Vice President of Sales, Marketing and Client Delivery at ForestExpress, a technology joint venture of leading forest product companies. Mr. Nelson has significant sales and sales leadership experience in the paper manufacturing and distribution industries.
Elizabeth Patrick, Senior Vice President and Chief Human Resources Officer, has served as Vice President, Human Resources, of xpedx since March 2013 and is currently a member of International Paper Company’s Human Resources & Communications Lead Team and the xpedx Senior Lead Team. Prior to that, she served as Director, Human Resources-Field Operations of xpedx from October 2012 to March 2013. Prior to that, Ms. Patrick served as Vice President of Human Resources of TE Connectivity, a global electronics manufacturing and distribution company, from April 2008 to October 2012. Previously, Ms. Patrick served as Vice President Human Resources of Guilford Mills, Inc., an automotive and specialty markets fabrics manufacturer, and in a variety of roles of increased responsibility with General Motors Company and GM spin-off, Delphi Corporation, a global automotive parts manufacturer. Ms. Patrick has significant human resources and finance management and leadership experience.
Neil Russell, Senior Vice President Corporate Affairs, was hired by International Paper in February 2014 to serve in this role. Previously, Mr. Russell served as Vice President—Investor Relations of Sysco Corporation, a global business-to-business foodservice distributor, from August 2007 to February 2014. Previously, Mr. Russell served as Director of Investor Relations of Delta Air Lines. While at Delta, Mr. Russell also held positions of increasing responsibility including Director of Financial Analysis and worked in the areas of Strategic Planning and Network Analysis. Mr. Russell has significant experience as an investor relations officer for global public companies, as well as significant financial planning and public relations experience.
Darin W. Tang, Senior Vice President Packaging, has served as President of the Packaging Solutions Group for Unisource Worldwide, Inc. since January 2013. Since joining Unisource in 2004, Mr. Tang has held positions as Area Vice President of Packaging, Senior Vice President of Packaging, Senior Vice President for the East Region and National Packaging Director and President, Sales of the Industry Business Group. Prior to joining Unisource, Mr. Tang served as Director of Sales with Intertape Polymer Group, Inc., a specialty manufacturer of packaging products and systems, and in various roles in sales and training with Scott Paper Company/Kimberly Clark, a manufacturer of personal care products to the distribution and retail channels. Mr. Tang has significant sales and sales management experience in the paper and packaging manufacturing and distribution industries.
Dan iel J. Watkoske, Senior Vice President Print, has served as Executive Vice President Sales for xpedx since January 2011 and is currently a member of the xpedx Senior Lead Team. In this role, Mr. Watkoske is responsible for sales effectiveness and revenue growth for the Print, Packaging, and Facility Solutions segments.
 
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Mr. Watkoske’s additional sales channel responsibilities in his current role include xpedx’s publishing business, Bulkley Dunton, redistribution business, Saalfeld, international supply chain business, Global Solutions, and sales support businesses, which include packaging design centers, equipment sales and service. Prior to that, Mr. Watkoske served as Group Vice President for the xpedx Metro New York Group from January 2008 to January 2011. Previously, Mr. Watkoske served as Vice President National Accounts for xpedx. Mr. Watkoske joined International Paper in 1989 as a sales trainee for Nationwide Papers, which later became part of xpedx. Mr. Watkoske has significant sales, sales management and operations experience in the paper and packaging distribution industries.
Directors
The Contribution and Distribution Agreement and the Merger Agreement provide that, as of the completion of the Transactions, the board of directors of SpinCo will consist of the following directors, the majority of whom will not be employees of SpinCo or its affiliates and will satisfy the director independence requirements of the SEC and the NYSE. We have listed below biographical information for each person who is currently expected to be a member of the board of directors of SpinCo as of the completion of the Transactions in addition to Ms. Laschinger.
Allan R. Dragone, Jr. , has served as Chief Executive Officer of Unisource Worldwide Inc., a leading North American business-to-business print, packaging and facilities supply distribution company, since February 2004 after serving as President, Unisource Paper, since September 2003. Mr. Dragone started his business career with Champion International, a paper and wood products producer, in 1978 and served in various roles, including Vice President of Sales and Marketing for International and Newsprint. In 1998, Mr. Dragone left Champion to become the Chief Executive Officer of Graphic Communications, an independent paper procurement and print procurement company. Unisource later acquired Graphic in September 2003. Mr. Dragone brings to the board of directors his extensive print, packaging and facilities distribution experience and his experience running Unisource for the past 10 years.
Daniel T. Henry, served as the Chief Financial Officer of American Express Company, a global financial services company, from October 2007 until his retirement in August 2013 and as its Executive Vice President from February 25, 2007 until his August 2013 retirement. Mr. Henry served as Acting Chief Financial Officer of American Express Company from February 2007 until October 2007. While at American Express, Mr. Henry was responsible for leading the company’s finance organization and representing American Express to investors, lenders and rating agencies. Mr. Henry joined American Express in 1990 and served in a variety of senior finance roles including Comptroller. Prior to joining American Express, Mr. Henry was a Partner with Ernst & Young LLP. Mr. Henry brings to the board of directors substantial experience and expertise with respect to complex financial systems, public company financial management and reporting, and financial and strategic planning. Mr. Henry also serves as a director of Groupon, Inc.
Tracy A. Leinbach, served as Executive Vice President and Chief Financial Officer of Ryder System, Inc., a global leader in supply chain, warehousing and transportation management solutions, from March 2003 until her retirement in February 2006. Ms. Leinbach served as Executive Vice President of Ryder’s Fleet Management Solutions from March 2001 to March 2003, Senior Vice President, Sales and Marketing from September 2000 to March 2001, and she was Senior Vice President, Field Management from July 2000 to September 2000. Ms. Leinbach also served as Managing Director-Europe of Ryder Transportation Services from January 1999 to July 2000 and previously she had served Ryder Transportation Services as Senior Vice President and Chief Financial Officer from 1998 to January 1999, Senior Vice President, Business Services from 1997 to 1998, and Senior Vice President, Purchasing and Asset Management for six months during 1996. From 1985 to 1996, Ms. Leinbach held various financial positions in Ryder subsidiaries. Prior to her career with Ryder, Ms. Leinbach, a former licensed CPA, worked in public accounting for Price Waterhouse. Ms. Leinbach possesses particular knowledge, expertise and perspectives in corporate finance; operations, sales and logistics; and in strategic planning and risk management; expertise in issues regarding the management of a multinational corporation; and expertise regarding financial reporting and accounting issues for large public companies. Ms. Leinbach also serves as a director of Hasbro, Inc. and Forward Air Corporation.
 
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Seth A. Meisel , is a Managing Director of Bain Capital, LLC, a leading private alternative asset management and financial services company, where he has been employed since 1999. Prior to joining Bain Capital, from 1995-1999, Mr. Meisel was as consultant and manager at Mercer Management Consulting, a global consulting firm, in the industrial, financial services and retail industries. Mr. Meisel currently serves as a director of several Bain Capital portfolio companies and as a director of UWWH. Mr. Meisel formerly served as a director of Sensata Technologies. Mr. Meisel brings to the board of directors extensive corporate finance and investment experience as well as a significant understanding of Unisource’s business.
William E. Mitchell , is the managing partner of Sequel Capital Management, LLC, an investment management firm that he founded in 2010. Mr. Mitchell served as the chairman of the board of directors of Arrow Electronics, Inc. from May 2006 until December 2009, and also served as President and Chief Executive Officer of Arrow Electronics, Inc. from February 2003 to May 1, 2009. Prior to that, Mr. Mitchell was Executive Vice President of Solectron Global Services, Inc. from 1999 to 2003 and was Chairman, President and Chief Executive Officer of Sequel, Inc. from 1995 to 1999 until its acquisition by Solectron. Mr. Mitchell brings to the board of directors extensive experience as president and chief executive officer of a global distribution company, extensive knowledge of international business operations and significant experience in the governance of large publicly-traded corporations. Mr. Mitchell currently serves as a director of Humana, Inc., Rogers Corporation and Spansion, Inc. In addition to serving as chairman of Arrow Electronics, Inc., Mr. Mitchell previously served as a director of Brown-Forman Corporation and National Semiconductor Corporation.
Michael P. Muldowney, is the Founder and Chief Executive Officer of Foxford Capital, LLC, a strategic financial advisory and investment management firm, founded in 2012. From 2007 to 2011, Mr. Muldowney served as the Executive Vice President and Chief Financial Officer of Houghton Mifflin Harcourt Company, a global educational publishing company. From March 2011 through September 2011, Mr. Muldowney also served as Houghton Mifflin Harcourt Company’s Interim Chief Executive Officer. Houghton Mifflin Harcourt Company filed for voluntary reorganization under Chapter 11 of the U.S. Bankruptcy Code in May 2012 and emerged with a confirmed plan in June 2012. Previously, Mr. Muldowney served in various capacities, including as Chief Operating Officer, Chief Financial Officer, President and Director, at Nextera Enterprises, Inc., a consulting firm. Early in his career, Mr. Muldowney held various management positions with Marsh & McLennan Companies, including Corporate Controller and Principal of the Mercer Management Consulting subsidiary. Mr. Muldowney, a former licensed Certified Public Accountant, brings to the board of directors a broad-based business background, significant financial expertise and leadership skills and experience leading an initial public offering.
Charles G. Ward, III, has been a partner at Perella Weinberg Partners, a global, independent advisory and asset management firm, since March 2012. From October 2010 to December 2011, Mr. Ward served as Chief Investment Officer for Arcapita Inc., a private equity firm. Arcapita filed for voluntary reorganization under Chapter 11 of the U.S. Bankruptcy Code in March 2012 and emerged with a confirmed plan in September 2013. From 2002 to 2010 Mr. Ward was President of Lazard Ltd, a leading financial advisory and investment management firm. Prior to that, Mr. Ward served as Global Head of Investment Banking and Private Equity for Credit Suisse First Boston and as a Co-Founder and member of the board of directors of Wasserstein Perella Group, a U.S. investment bank. Mr. Ward brings to the board of directors extensive investment banking, capital markets and private equity experience.
John J. Zillmer , is the retired Executive Chairman of Univar Inc., a leading global distributor of industrial and specialty chemicals and related services, which position he held from May 2012 to December 2012. Mr. Zillmer served as President and Chief Executive Officer of Univar Inc. from October 2009 to May 2012. Prior to joining Univar Inc., Mr. Zillmer was Chairman and Chief Executive Officer of Allied Waste Industries, Inc., the nation’s second-largest waste management company, from May 2005 until December 2008, when Allied Waste Industries, Inc. merged with Republic Services, Inc. Previously, Mr. Zillmer spent 18 years at Aramark Corporation, a leading foodservice, facilities and uniforms provider, in roles of increasing responsibility, the last of which was President, Food and Support Services. Mr. Zillmer brings to the board of directors strong leadership skills, broad experience with public and private boards of directors, and extensive knowledge in the
 
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areas of strategy development and execution, operational efficiencies, management of global operations, capital investments and executive compensation. Mr. Zillmer also serves as a director of Ecolab Inc. and Reynolds American, Inc.
Board Composition and Director Independence
Effective upon completion of the Transactions, our business and affairs will be managed under the direction of our board of directors. We expect that we will have nine directors upon the completion of the Transactions. Our directors will hold office until their successors have been elected and qualified or until the earlier of their resignation or removal.
All of the directors of SpinCo, other than Mary A. Laschinger and Allan R. Dragone, Jr., are expected to be independent directors as determined in accordance with the criteria for independence required by the NYSE.
Under our amended and restated certificate of incorporation, our board of directors shall initially consist of nine directors and thereafter shall consist of such number of directors as may be determined from time to time by resolution of the board of directors. Any vacancies or newly created directorships may be filled only by the affirmative vote of a majority of our directors then in office, even if less than a quorum, or by a sole remaining director. Each director will hold office until his or her successor has been duly elected and qualified or until his or her earlier death, resignation or removal.
Upon the UWWH Stockholder and its affiliates in the aggregate ceasing to hold at least 3% of the outstanding shares of SpinCo common stock and equity securities issued in respect of such SpinCo common stock, any individual nominated by the UWWH Stockholder to the SpinCo board of directors is required to promptly tender his or her resignation to the SpinCo board of directors and will not remain a director of SpinCo, unless a majority of the SpinCo board of directors affirmatively votes not to accept such director’s resignation. Messrs. Dragone and Meisel are the UWWH Stockholder nominees to SpinCo’s board of directors.
Committees of the Board of Directors
Effective upon completion of the Transactions, our board of directors will have the following committees, each of which will operate under a written charter that will satisfy the applicable standards of the SEC and the NYSE and be posted to our website in connection with the Transactions.
Audit and Finance Committee
The Audit and Finance Committee, which we expect will consist of Messrs. Henry, Muldowney and Ward and Ms. Leinbach, will have the responsibility for, among other things, assisting the board of directors in reviewing: our financial reporting and other internal control processes; our financial statements; the independent auditors’ qualifications and independence; the performance of our internal audit function and independent auditors; our proposed and ongoing finance arrangements; and our compliance with legal and regulatory requirements and our code of business conduct and ethics.
We expect that the board of directors will determine that each of the members of the Audit and Finance Committee qualifies as an “audit committee financial expert” as that term is defined in the rules and regulations of the SEC and is “financially literate” under the NYSE rules. We expect that Mr. Henry will chair the Audit and Finance Committee.
Compensation and Leadership Development Committee
The Compensation and Leadership Development Committee, which we expect will consist of Messrs. Henry, Meisel, Muldowney and Zillmer, will have the responsibility for, among other things, reviewing and approving the compensation and benefits of our employees, directors and consultants, administering our
 
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employee benefits plans, authorizing and ratifying stock option grants and other incentive arrangements and authorizing employment and related agreements. We expect that Mr. Zillmer will chair the Compensation and Leadership Development Committee.
Nominating and Governance Committee
The Nominating and Governance Committee, which we expect will consist of Messrs. Meisel, Ward, Zillmer and Ms. Leinbach, will have the responsibility for, among other things, identifying and recommending candidates to the board of directors for election to our board of directors, reviewing the composition of the board of directors and its committees, developing and recommending to the board of directors corporate governance guidelines that are applicable to us and overseeing board of directors evaluations. We expect that Mr. Meisel will chair the Nominating and Governance Committee.
Code of Ethics for Senior Executives and Financial Officers and Code of Business Conduct and Ethics
Prior to the completion of the Transactions, our board of directors intends to adopt a Code of Ethics for Senior Executives and Financial Officers that applies to our senior executive and financial officers, including our principal executive officer, principal financial officer, principal accounting officer or persons performing similar functions. A copy of the Code of Ethics for Senior Executives and Financial Officers, which may be a stand-alone code or incorporated into the Code of Business Conduct and Ethics described below, will be made available on our website. We will also maintain a Code of Business Conduct and Ethics that governs all of our employees. We will promptly disclose any substantive changes in or waiver of, together with reasons for any waiver of, either of these codes granted to our executive officers, including our principal executive officer, principal financial officer, principal accounting officer, or persons performing similar functions, and our directors by posting such information on our website.
 
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 COMPENSATION OF DIRECTORS
We have not yet paid any compensation to the individuals who will become SpinCo’s directors. We intend to establish a director compensation policy prior to the consummation of the Transactions.
It is currently expected that the non-management directors of the board of directors of SpinCo will be paid annual directors’ fees in the amount of $210,000, consisting of $85,000 in cash and $125,000 in equity or other compensation of similar value. Additional annual cash stipends will be paid to each of the committee chairs and to the lead director. The stipend amounts and form of equity awards are subject to the determination of our board of directors in establishing and approving the final director compensation policy. Following the consummation of the Transactions, we also expect to pay to each non-management director of the board of directors of SpinCo (other than Messrs. Dragone and Meisel) a portion of their annual directors’ fees as compensation for their services to SpinCo for the period prior to the consummation of the Transactions.
 EXECUTIVE COMPENSATION
SpinCo has not yet paid any compensation to the individuals who will become its executive officers, and we have not yet made any determinations with respect to the compensation of the executive officers following the Transactions, other than as described below. Information as to the historical compensation by International Paper and Unisource of certain persons who will become executive officers of SpinCo upon the completion of the Transactions is not indicative of the compensation of those executives following the completion of the Transactions. Accordingly, SpinCo has not included information regarding compensation and other benefits paid to those executives by International Paper or Unisource, as the case may be, during 2013 or prior years.
Upon completion of the Transactions, our board of directors will have a Compensation and Leadership Development Committee. In connection with the completion of the Transactions, the Compensation and Leadership Development Committee will commence to oversee and determine the compensation of the Chief Executive Officer and other executive officers of SpinCo and evaluate and determine the appropriate executive compensation philosophy and objectives for SpinCo. The Compensation and Leadership Development Committee will evaluate and determine the appropriate design of SpinCo’s executive compensation program and appropriate process for establishing executive compensation. With respect to base salaries, annual incentive compensation and any long-term incentive awards, it is expected that the Compensation and Leadership Development Committee will develop programs reflecting appropriate measures, goals, targets and business objectives based on SpinCo’s competitive marketplace. The Compensation and Leadership Development Committee will determine the appropriate benefits, perquisites and severance arrangements, if any, that it will make available to executive officers. If determined to be necessary or appropriate by the Compensation and Leadership Development Committee, the Compensation and Leadership Development Committee will retain a compensation consultant to provide advice and support to the committee in the design and implementation of the executive compensation program for SpinCo.
Employment Agreement with Mary A. Laschinger
In connection with the signing of the Merger Agreement, SpinCo and Mary A. Laschinger entered into an Employment Agreement governing the terms and conditions of Ms. Laschinger’s anticipated employment as the Chief Executive Officer and Chairman of the combined company following the closing of the Merger. The Employment Agreement is not effective unless and until the closing of the transactions contemplated by the Merger Agreement occurs. This summary is qualified in its entirety by reference to the full text of the Employment Agreement which is filed as an exhibit to the registration statement of which this prospectus forms a part.
 
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Effective as of the Closing Date, Ms. Laschinger will become the Chief Executive Officer of SpinCo pursuant to the terms and conditions of the Employment Agreement. The initial term of the agreement is five years, which will be automatically extended for successive one-year periods following the end of the initial term. The term of the Employment Agreement, and Ms. Laschinger’s employment with SpinCo thereunder, may terminate earlier, subject to any applicable severance payments provided for in the agreement and described below. Within 30 days of the Closing Date, Ms. Laschinger will receive a $1.0 million signing bonus, which must be repaid by Ms. Laschinger in the event that she terminates her employment during the first year of the initial term for any reason other than for death, disability or for good reason (as such terms are defined in the Employment Agreement). During Ms. Laschinger’s employment, she will receive a base salary in the amount of $1.0 million per year, will qualify for an annual cash-based incentive bonus with a target based opportunity of $1.0 million a year payable upon the attainment of one or more pre-established performance metrics established by the board of directors of SpinCo or its Compensation and Leadership Development Committee and, during the initial term of the Employment Agreement, will receive equity grants under the long-term equity incentive program to be established by SpinCo having a target value of $3.5 million per year. An annual bonus of at least $1.0 million will be guaranteed for the calendar year of the Closing Date. SpinCo will also reimburse Ms. Laschinger for certain living allowances prior to her relocation to Atlanta (not to exceed $10,000 per month), certain moving expenses (not to exceed $100,000 in the aggregate), reasonable closing costs incurred in the sale of her home and certain losses incurred in the sale of her home (not to exceed $500,000, which amount will also be “grossed-up” for tax purposes). The Employment Agreement provides that SpinCo may be required to purchase her home if it does not sell within a designated 60-day period.
For each of calendar years 2014, 2015 and 2016, Ms. Laschinger will be entitled to two additional bonuses, the amount of which will vary depending upon the Closing Date. For calendar year 2014, the two bonuses are each based upon a target amount of $1.75 million but will be prorated for the portion of calendar year 2014 following the Closing Date. One of these bonuses will be payable in cash, contingent upon Ms. Laschinger’s continued employment with SpinCo through the end of the 2014, while the other bonus will be payable in cash or stock (as determined by the board of directors of SpinCo or its Compensation and Leadership Development Committee in consultation with Ms. Laschinger), contingent upon her continued employment with SpinCo through the end of 2014 and the satisfaction of certain performance conditions to be determined by the board of directors of SpinCo or its Compensation and Leadership Development Committee after consultation with Ms. Laschinger. For calendar year 2015, the two bonuses will each be based upon a target amount of $1.75 million, but reduced by an amount equal to half of the product of $1.75 million and a fraction, the numerator of which is the number of months between January 1, 2013 and the Closing Date and the denominator of which is 36. For example, if the Merger were to close exactly half-way through calendar year 2014, each of the 2015 bonuses would be reduced by one-half of the product of $1.75 million and the quotient of 18 and 36, yielding a total of $1,312,500 for each bonus after such reduction. One of these bonuses will be payable in cash, contingent upon Ms. Laschinger’s continued employment with SpinCo through the end of the 2015, while the other bonus will be payable in cash or stock (as determined by the board of directors of SpinCo or its Compensation and Leadership Development Committee in consultation with Ms. Laschinger), contingent upon her continued employment with SpinCo through the end of the 2015 and the satisfaction of certain performance conditions to be determined by the board of directors of SpinCo or its Compensation and Leadership Development Committee after consultation with Ms. Laschinger. For calendar year 2016, the two bonuses are each based upon a target amount of $1.75 million, but reduced by an amount equal to half of the product of $1.5 million and a fraction, the numerator of which is the number of months between January 1, 2014 and the Closing Date and the denominator of which is 36. For example, if the Merger were to close exactly half-way through calendar year 2014, each of the 2016 bonuses would be reduced by one-half of the product of $1.5 million and the quotient of six and 36, yielding a total of $1.625 million for each bonus after such reduction. One of these bonuses will be payable in cash, contingent upon Ms. Laschinger’s continued employment with SpinCo through the end of the 2016, while the other bonus will be payable in cash or stock (as determined by the board of directors of SpinCo or its Compensation and Leadership Development Committee in consultation with Ms. Laschinger), contingent upon her continued employment with SpinCo through the end of the 2016 and the satisfaction of certain performance conditions to be determined by the board of directors of SpinCo or its Compensation and Leadership Development Committee after consultation with Ms. Laschinger. In the event that
 
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Ms. Laschinger’s employment is terminated by SpinCo without cause or by her for good reason (as each such term is defined in the Employment Agreement), or due to her death or disability, in addition to the severance payments and benefits described below, she will be paid the applicable bonuses for the year of termination and, in the case of the performance based bonus, based upon the level at which the applicable performance goals are satisfied as of the end of the applicable performance period. Ms. Laschinger will not be entitled to be paid the additional bonus amounts for any subsequent year following the year of termination.
In the event that Ms. Laschinger’s employment is terminated by SpinCo other than for cause or she terminates her employment for good reason (as each such term is defined in the Employment Agreement) then, subject to Ms. Laschinger executing a general release of claims against SpinCo, Ms. Laschinger would be entitled to severance equal to (i) a pro-rated annual bonus for her year of termination, based upon the level at which the applicable performance goals are satisfied, (ii) an amount equal to two times the sum of her base salary and target bonus, paid over 24 months and (iii) the reimbursement of the portion of her monthly costs incurred under COBRA during the 18 month period following her termination at the same rate that SpinCo was subsidizing such healthcare costs immediately prior to termination.
Ms. Laschinger is also subject to restrictive covenants against competing with SpinCo, soliciting customers or employees of Spinco, interfering with SpinCo’s relationship with any vendors, joint venturers or licensors and disparaging SpinCo in each case for the two-year period following her termination of employment for any reason. Ms. Laschinger will also enter into agreements with respect to confidential information and the protection of intellectual property consistent with similar agreements required of other senior executives of SpinCo.
Consulting and Non-Competition Agreement with Allan R. Dragone, Jr.
In connection with the signing of the Merger Agreement, UWWH and Allan R. Dragone, Jr., the current Chief Executive Officer of UWWH, entered into a Consulting and Non-Competition Agreement governing the terms and conditions of Mr. Dragone’s anticipated role as a consultant with the combined company following the Closing Date. The Consulting and Non-Competition Agreement is not effective unless and until the closing of the Merger occurs. This summary is qualified in its entirety by reference to the Consulting and Non-Competition Agreement which is filed as an exhibit to the registration statement of which this prospectus forms a part.
Effective as of the Closing Date, Mr. Dragone will cease to be the Chief Executive Officer of UWWH and will receive any severance benefits and obligations to which he is entitled to under his existing employment agreement with UWWH, subject to his execution and non-revocation of a general release of claims against UWWH, SpinCo and International Paper. Following the Closing Date, Mr. Dragone will become a member of the board of directors of SpinCo and will also serve in a consulting role for SpinCo as an independent contractor for a period of two years from the Closing Date. Under the Consulting and Non-Competition Agreement, Mr. Dragone will be paid a consulting fee in the annual amount of $1.0 million and have the opportunity to earn an annual bonus with a target amount of $500,000 for each one year period following the Closing Date based upon the satisfaction of certain performance metrics established by the Compensation and Leadership Development Committee of the board of directors of SpinCo prior to each year of the consulting period. Mr. Dragone will also be entitled to receive the same compensation for his services as a member of the board of directors of SpinCo as that received by SpinCo’s independent directors, as determined in accordance with the criteria for independence determined by the NYSE. If the two-year consulting term is terminated earlier by SpinCo without cause or by Mr. Dragone for good reason (as each such term is defined in the Consulting and Non-Competition Agreement), then Mr. Dragone will be entitled to continue to receive his base consulting fee through the end of the original two-year term, and will receive an additional lump sum amount equal to $1.0 million reduced by any bonuses he had been paid prior to the termination of his consultancy, subject to Mr. Dragone’s execution and non-revocation of a general release of claims against SpinCo. Mr. Dragone will also be subject to restrictive covenants against competing with SpinCo, and against soliciting customers and employees of SpinCo, in each case for the two-year period following the termination of the consulting period for any reason. Mr. Dragone will also be subject to restrictive covenants with respect to confidential information and the protection of intellectual property.
 
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 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of the date of this prospectus, all of our outstanding common stock is beneficially owned by International Paper. After the spin-off, International Paper will not own any of our shares of common stock. The table below sets forth the expected beneficial ownership of SpinCo common stock immediately after the completion of the Distribution and the Merger and is derived from information relating to the beneficial ownership of International Paper common stock and UWWH common stock as of                     , 2014. The following table provides information with respect to the anticipated beneficial ownership of our common stock by the following:
 
 	•	 	each person known to beneficially own more than 5% of our common stock;	
 
 	•	 	each director;	
 
 	•	 	each of our named executive officers; and	
 
 	•	 	all directors and executive officers as a group.	
The amounts and percentages of shares beneficially owned are reported on the basis of SEC regulations governing the determination of beneficial ownership of securities. Under SEC rules, a person is deemed to be a “beneficial owner” of a security if that person has or shares voting power or investment power, which includes the power to dispose of or to direct the disposition of such security. A person is also deemed to be a beneficial owner of any securities of which that person has a right to acquire beneficial ownership within 60 days of the determination date, which in the case of the following table is                         , 2014. Securities that can be so acquired are deemed to be outstanding for purposes of computing such person’s ownership percentage, but not for purposes of computing any other person’s percentage. Under these rules, more than one person may be deemed to be a beneficial owner of the same securities and a person may be deemed to be a beneficial owner of securities as to which such person has no economic interest.
Immediately following the Transactions, we estimate that approximately              million shares of our common stock will be issued and outstanding. The actual number of our outstanding shares of common stock following the Transactions will be determined upon completion of the Merger. Unless otherwise indicated, the address for each individual listed below is c/o xpedx Holding Company, 6400 Poplar Avenue, Memphis, Tennessee 38197.

 	  	Shares Beneficially Owned After the Merger	
Name and address of beneficial owner	  	Number	  	Percentage	
UWW Holdings, LLC (1)	  		  		
Mary A. Laschinger (2)	  		  		
Stephen J. Smith	  		  		
Allan R. Dragone, Jr.	  		  		
Daniel T. Henry	  		  		
Tracy A. Leinbach	  		  		
Seth A. Meisel (3)	  		  		
William E. Mitchell	  		  		
Michael P. Muldowney	  		  		
Charles G. Ward, III	  		  		
John J. Zillmer	  		  		
All executive officers and directors as a group (20 persons)	  		  		

*	Less than 1%	
(1)	Voting and dispositive power with respect to the shares of common stock held by UWW Holdings, LLC is exercised through a three-member board of managers acting by majority vote. Bain Capital Fund VII, L.P. (“Fund VII”) and Bain Capital VII Coinvestment Fund, L.P. (“Coinvestment VII”) have the right to appoint two of the three members of the board of managers of UWW Holdings, LLC. Bain Capital Investors, LLC (“BCI”) is the general partner of Bain Capital Partners VII, L.P., which is the general partner of each of	
 
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 	Fund VII and Coinvestment VII. In addition, certain investments funds associated with Bain Capital collectively hold approximately 60% of the common equity interests of UWW Holdings, LLC (together with Fund VII and Coinvestment VII, the “Bain Capital Funds”). The governance, investment strategy and decision-making process with respect to investments held by investment funds associated with Bain Capital is directed by BCI’s Global Private Equity Board (“GPEB”), which is comprised of the following individuals: Steven Barnes, Joshua Bekenstein, John Connaughton, Paul Edgerley, Stephen Pagliuca, Michel Plantevin, Dwight Poler, Jonathan Zhu and Steven Zide. By virtue of the relationships described in this footnote, GPEB may be deemed to exercise voting and dispositive power with respect to the shares held by UWW Holdings, LLC. Each of the members of the GPEB disclaims beneficial ownership of such shares to the extent attributed to such member solely by virtue of serving on GPEB. Each of BCI, the Bain Capital Funds and UWW Holdings, LLC has a business address c/o Bain Capital Partners, LLC, John Hancock Tower, 200 Clarendon Street, Boston, Massachusetts 02116.	
(2)	Includes              shares of our common stock Ms. Laschinger will receive as a result of her ownership of              shares of International Paper common stock.	
(3)	Mr. Meisel will be a director of SpinCo and is a managing director of BCI. Mr. Meisel will also be a member of the board of managers of UWW Holdings, LLC. By virtue of the relationships described in this footnote and in footnote (1), Mr. Meisel may be deemed to share beneficial ownership of the shares held by UWW Holdings, LLC. Mr. Meisel’s business address is c/o Bain Capital Partners, LLC, John Hancock Tower, 200 Clarendon Street, Boston, Massachusetts 02116.	
 
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 CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Policies and Procedures for Related Person Transactions
In connection with the Transactions, we expect our board of directors will approve policies and procedures with respect to the review and approval of certain transactions between us and a “Related Person” (a “Related Person Transaction”), which we refer to as our “Related Person Transaction Policy.” Pursuant to the terms of the Related Person Transaction Policy we expect our board of directors to approve, any Related Person Transaction is required to be reported to the legal department, which will then determine whether it should be submitted to our audit committee for consideration. The audit committee must then review and decide whether to approve any Related Person Transaction.
For the purposes of the Related Person Transaction Policy, we expect our board of directors to approve, a “Related Person Transaction” is a transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) in which we (including any of our subsidiaries) were, are or will be a participant and the amount involved exceeds $120,000, and in which any Related Person had, has or will have a direct or indirect interest.
A “Related Person,” as defined in the Related Person Transaction Policy we expect our board of directors to approve, means any person who is, or at any time since the beginning of our last fiscal year was, a director or executive officer of SpinCo or a nominee to become a director of SpinCo; any person who is known to be the beneficial owner of more than five percent of our common stock; any immediate family member of any of the foregoing persons, including any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law of the director, executive officer, nominee or more than five percent beneficial owner, and any person (other than a tenant or employee) sharing the household of such director, executive officer, nominee or more than five percent beneficial owner; and any firm, corporation or other entity in which any of the foregoing persons is a general partner or, for other ownership interests, a limited partner or other owner in which such person has a beneficial ownership interest of ten percent or more.
Registration Rights
In connection with the Transactions, we will enter into the Registration Rights Agreement with the UWWH Stockholder. The registration of shares of our common stock pursuant to the exercise of registration rights would enable the UWWH Stockholder to trade these shares without restriction under the Securities Act when the applicable registration statement is deemed effective. See “The Contribution and Distribution Agreement and the Ancillary Agreements—Registration Rights Agreement.”
Indemnification Agreements
Pursuant to the terms of the Merger Agreement, we have agreed to indemnify (and maintain policies of directors’ and officers’ liability insurance for) certain parties to the Transactions, including all of our past and present directors or officers, for a period of at least six years following the closing of the Merger in respect of acts or omissions relating to the Transactions and occurring at or prior to the consummation of the Merger. In addition, in connection with the closing of the Merger, we will enter into separate indemnification agreements with each of our continuing directors. Under these indemnification agreements, we, subject to certain limitations, agreed to indemnify our directors against certain liabilities arising out of service as a director of SpinCo.
The Employment Agreement and the Consulting and Non-Competition Agreement include indemnification provisions. Under those agreements, we agree to indemnify each of these individuals against claims arising out of events or occurrences related to that individual’s service as our agent or the agent of any of our subsidiaries to the fullest extent legally permitted.
 
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Transactions with the UWWH Stockholder
For a discussion of the contracts that UWWH, the UWWH Stockholder, UWW and SpinCo have entered into or will enter into in connection with the Transactions, see “The Contribution and Distribution Agreement and the Ancillary Agreements.”
Transactions with International Paper
For a discussion of the contracts that International Paper and SpinCo have entered into or will enter into in connection with the Transactions, see “The Contribution and Distribution Agreement and the Ancillary Agreements.”
 
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 DESCRIPTION OF CAPITAL STOCK
General
Upon the completion of the Distribution, our authorized capital stock will consist of              shares of common stock, par value $0.01 per share, and              shares of undesignated preferred stock, par value $0.01 per share. Upon the completion of the Transactions, we expect that there will be approximately              shares of our common stock issued and outstanding, not including              shares of our common stock issuable upon exercise of outstanding stock options.
In connection with the Transactions, we will amend and restate our certificate of incorporation and bylaws. The following descriptions of our capital stock, amended and restated certificate of incorporation and amended and restated bylaws are intended as summaries only and are qualified in their entirety by reference to our amended and restated certificate of incorporation and amended and restated bylaws which are filed as exhibits to the registration statement, of which this prospectus forms a part, and to the applicable provisions of the DGCL.
Common Stock
Holders of common stock will be entitled:
 
 	•	 	to cast one vote for each share held of record on all matters submitted to a vote of the shareholders;	
 
 	•	 	to receive, on a pro rata basis, dividends and distributions, if any, that the board of directors may declare out of legally available funds, subject to preferences that may be applicable to preferred stock, if any, then outstanding; and	
 
 	•	 	upon our liquidation, dissolution or winding up, to share equally and ratably in any assets remaining after the payment of all debt and other liabilities, subject to the prior rights, if any, of holders of any outstanding shares of preferred stock.	
Any dividends declared on the common stock will not be cumulative. Our ability to pay dividends on our common stock is subject to our subsidiaries’ ability to pay dividends to us, which is in turn subject to the restrictions set forth in the ABL Facility and the Contribution and Distribution Agreement. See “Dividend Policy.”
The holders of our common stock will not have any preemptive, cumulative voting, subscription, conversion, redemption or sinking fund rights. The common stock will not be subject to future calls or assessments by us. The rights and privileges of holders of our common stock are subject to any series of preferred stock that we may issue in the future, as described below.
Before the date of this prospectus, there has been no public market for our common stock.
As of March 31, 2014, we had 100 shares of common stock outstanding and one holder of record of common stock.
Preferred Stock
Upon completion of the Transactions, under our amended and restated certificate of incorporation, our board of directors will have the authority, without further action by our shareholders, except as described below, to issue up to              shares of preferred stock in one or more series and to fix the voting powers, designations, preferences and the relative participating, optional or other special rights and qualifications, limitations and restrictions of each series, including dividend rights, conversion rights, voting rights, terms of redemption, liquidation preferences and the number of shares constituting any series. Upon completion of the Transactions,
 
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no shares of our authorized preferred stock will be outstanding. Because the board of directors will have the power to establish the preferences and rights of the shares of any additional series of preferred stock, it may afford holders of any preferred stock preferences, powers and rights, including voting and dividend rights, senior to the rights of holders of the common stock, which could adversely affect the holders of the common stock and could delay, discourage or prevent a takeover of us even if a change of control of our company would be beneficial to the interests of our shareholders.
Annual Shareholders Meeting
Our amended and restated by-laws will provide that annual shareholder meetings will be held at a date, time and place, if any, as exclusively selected by our board of directors. To the extent permitted under applicable law, we may conduct meetings by remote communications, including by webcast.
Voting
The affirmative vote of a majority of the shares of our common stock present, in person or by proxy, at the meeting and entitled to vote at any annual or special meeting of shareholders will decide all matters voted on by shareholders, unless the question is one upon which, by express provision of law, under our amended and restated certificate of incorporation, or under our amended and restated bylaws, a different vote is required, in which case such provision will control.
Anti-Takeover Effects of our Certificate of Incorporation and Bylaws
The provisions of our amended and restated certificate of incorporation and amended and restated bylaws and of the DGCL summarized below may have an anti-takeover effect and may delay, defer or prevent a tender offer or takeover attempt that you might consider in your best interest, including an attempt that might result in your receipt of a premium over the market price for your shares. These provisions are also designed, in part, to encourage persons seeking to acquire control of us to first negotiate with our board of directors, which could result in an improvement of their terms.
Special Meetings of Shareholders . Our amended and restated certificate of incorporation will provide that a special meeting of shareholders may be called only by the Chairman of our board of directors or by a resolution adopted by a majority of our board of directors. Special meetings may also be called by the holders of not less than 20% of the outstanding shares of our common stock entitled to vote generally in the election of directors.
Shareholder Action by Written Consent . Our amended and restated certificate of incorporation will provide that any action that may be taken at any meeting of shareholders may be taken by written consent of shareholders in lieu of a meeting if a consent in writing is (i) initiated by the holders of not less than 20% of the outstanding shares of our common stock entitled to vote generally in the election of directors, (ii) signed by the holders having not less than the minimum number of votes necessary to take such action at a meeting at which all shares of common stock entitled to vote were present and voted and (iii) delivered to us.
Removal of Directors. Our amended and restated certificate of incorporation and amended and restated bylaws will provide that directors may be removed with cause at any time upon the affirmative vote of holders of at least a majority of the votes to which all the shareholders would be entitled to cast and with or without cause at any special meeting of the shareholders called by the board of directors or by the Chairman of the board of directors for this purpose.
Shareholder Advance Notice Procedure . Our amended and restated by-laws will establish an advance notice procedure for shareholders to make nominations of candidates for election as directors or to bring other business before an annual meeting of our shareholders. The amended and restated by-laws will provide that any shareholders wishing to nominate persons for election as directors at, or bring other business before, an annual
 
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meeting must deliver to our secretary a written notice of the shareholder’s intention to do so. These provisions may have the effect of precluding the conduct of certain business at a meeting if the proper procedures are not followed. We expect that these provisions may also discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of our company. To be timely, the shareholder’s notice must be delivered to our corporate Secretary at our principal executive offices not less than 90 days nor more than 120 days before the first anniversary date of the annual meeting for the preceding year; provided, however, that in the event that the annual meeting is set for a date that is more than 30 days before or more than 70 days after the first anniversary date of the preceding year’s annual meeting, a shareholder’s notice must be delivered to our Secretary (x) not less than 90 days nor more than 120 days prior to the meeting or (y) no later than the close of business on the 10th day following the day on which a public announcement of the date of the such meeting is first made by us.
Amendment to Certificate of Incorporation and Bylaws . Our amended and restated certificate of incorporation will provide that our amended and restated certificate of incorporation may be amended by both the affirmative vote of a majority of our board of directors or the affirmative vote of the holders of a majority of the outstanding shares of our common stock then entitled to vote at any annual or special meeting of shareholders; provided that specified provisions of our amended and restated certificate of incorporation may not be amended, altered or repealed unless the amendment is approved by the affirmative vote of the holders of at least a majority of the outstanding shares of our common stock then entitled to vote at any annual or special meeting of shareholders, including the provisions governing:
 
 	•	 	the liability and indemnification of directors;	
 
 	•	 	corporate opportunities;	
 
 	•	 	shareholder action by written consent;	
 
 	•	 	the rights of shareholders to call a special meeting;	
 
 	•	 	our board of directors;	
 
 	•	 	required approval of the holders of at least a majority of the outstanding shares of our common stock to amend our amended and restated by-laws and certain provisions of our amended and restated certificate of incorporation, and;	
 
 	•	 	exclusive jurisdiction for certain actions.	
In addition, our amended and restated certificate of incorporation and amended and restated by-laws will provide that our amended and restated by-laws may be amended, altered or repealed, or new by-laws may be adopted, by the affirmative vote of a majority of the board of directors, or by the affirmative vote of the holders of at least a majority of the outstanding shares of our common stock then entitled to vote at any annual or special meeting of shareholders.
These provisions make it more difficult for any person to remove or amend any provisions in our amended and restated certificate of incorporation and amended and restated by-laws that may have an anti-takeover effect.
Section 203 of the DGCL . In our amended and restated certificate of incorporation, we will elect not to be governed by Section 203 of the DGCL, as permitted under and pursuant to subsection (b)(3) of Section 203. Section 203 prohibits a publicly held Delaware corporation from engaging in a business combination, such as a merger, with a person or group owning 15% or more of the corporation’s outstanding voting stock for a period of three years following the date the person became an interested shareholder, unless (with certain exceptions) the business combination or the transaction in which the person became an interested shareholder is approved in a prescribed manner. Accordingly, we will not be subject to any anti-takeover effects of Section 203.
 
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Interested Shareholder Transactions. In our amended and restated certificate of incorporation, we will provide that we will not engage in a business combination with any interested shareholder for a period of three years following the time that such shareholder became an interested shareholder unless:
 
 	•	 	prior to such time, the board of directors of SpinCo approved either the business combination or the transaction which resulted in the shareholder becoming an interested shareholder;	
 
 	•	 	upon consummation of the transaction which resulted in the shareholder becoming an interested shareholder, the interested shareholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the voting stock outstanding, but not the outstanding voting stock owned by the interested shareholder, those shares owned (i) by persons who are directors and also officers and (ii) employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or	
 
 	•	 	at or subsequent to such time, the business combination is approved by the board of directors and authorized at an annual or special meeting of shareholders, and not by written consent, by the affirmative vote of at least 66  2 ⁄ 3 % of the outstanding voting stock that is not owned by the interested shareholder.	
Our amended and restated certificate of incorporation defines “business combination” to include the following:
 
 	•	 	any merger or consolidation of the corporation or a majority-owned subsidiary with the interested shareholder;	
 
 	•	 	any sale, lease, exchange, mortgage, transfer, pledge or other disposition of 10% or more of the assets of the corporation involving the interested shareholder;	
 
 	•	 	subject to specified exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested shareholder;	
 
 	•	 	any transaction involving the corporation that has the effect of increasing the proportionate share of the stock of any class or series of the corporation beneficially owned by the interested shareholder; or	
 
 	•	 	any receipt by the interested shareholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation.	
Our amended and restated certificate of incorporation defines an “interested shareholder” as any entity or person who, together with affiliates and associates, owns, or within the previous three years owned, 15% or more of the outstanding voting stock of the corporation. Bain Capital Fund VII, L.P., Georgia-Pacific or any of their respective affiliates or associates, including any investment funds managed by the investment advisor to Bain Capital Fund VII, L.P., or any person whose ownership of shares in excess of the 15% limitation is the result of action taken solely by SpinCo is not considered an interested shareholder, unless such person acquires additional shares of voting stock.
Limitations on Liability and Indemnification
Our amended and restated certificate of incorporation will contain provisions permitted under DGCL relating to the liability of directors. These provisions will eliminate a director’s personal liability for monetary damages resulting from a breach of fiduciary duty, except in circumstances involving:
 
 	•	 	any breach of the director’s duty of loyalty;	
 
 	•	 	acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law;	
 
 	•	 	under Section 174 of the DGCL (unlawful dividends); or	
 
 	•	 	any transaction from which the director derives an improper personal benefit.	
 
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The principal effect of the limitation on liability provision is that a shareholder will be unable to prosecute an action for monetary damages against a director unless the shareholder can demonstrate a basis for liability for which indemnification is not available under the DGCL. These provisions, however, should not limit or eliminate our rights or any shareholder’s rights to seek non-monetary relief, such as an injunction or rescission, in the event of a breach of director’s fiduciary duty. These provisions will not alter a director’s liability under federal securities laws. The inclusion of this provision in our amended and restated certificate of incorporation may discourage or deter shareholders or management from bringing a lawsuit against directors for a breach of their fiduciary duties, even though such an action, if successful, might otherwise have benefited us and our shareholders.
Our amended and restated certificate of incorporation and amended and restated bylaws will require us to indemnify and advance expenses to our directors and officers to the fullest extent not prohibited by the DGCL and other applicable law, except in the case of a proceeding instituted by the director without the approval of our board of directors. Our amended and restated bylaws will provide that we are required to indemnify our directors and executive officers, to the fullest extent permitted by law, for all judgments, fines, settlements, legal fees and other expenses incurred in connection with pending or threatened legal proceedings because of the director’s or officer’s positions with us or another entity that the director or officer serves at our request, subject to various conditions, and to advance funds to our directors and officers to enable them to defend against such proceedings. To receive indemnification, the director or officer must have been successful in the legal proceeding or have acted in good faith and in what was reasonably believed to be a lawful manner in our best interest and, with respect to any criminal proceeding, had no reasonable cause to believe his or her conduct was unlawful.
Prior to the completion of the Transactions, we will enter into an indemnification agreement with each of our directors. The indemnification agreement will provide our directors with contractual rights to the indemnification and expense advancement rights provided under our amended and restated by-laws, as well as contractual rights to additional indemnification as provided in the indemnification agreement.
Corporate Opportunities
Our amended and restated certificate of incorporation will provide that we, on our behalf and on behalf of our subsidiaries, renounce any interest or expectancy in, or in being offered an opportunity to participate in, corporate opportunities, that are from time to time presented to the UWWH Stockholder or Bain Capital Fund VII, L.P. or any of their respective officers, directors, agents, shareholders, members, partners, affiliates or subsidiaries (other than us and our subsidiaries), even if the opportunity is one that we or our subsidiaries might reasonably be deemed to have pursued or had the ability or desire to pursue if granted the opportunity to do so. Neither the UWWH Stockholder, Bain Capital Fund VII, L.P. nor their respective agents, shareholders, members, partners, affiliates or subsidiaries will generally be liable to us or any of our subsidiaries for breach of any fiduciary or other duty, as a director or otherwise, by reason of the fact that such person pursues or acquires such corporate opportunity, directs such corporate opportunity to another person or fails to present such corporate opportunity, or information regarding such corporate opportunity, to us or our subsidiaries unless, in the case of any such person who is a director or officer of SpinCo, such corporate opportunity is expressly offered to such director or officer in writing solely in his or her capacity as a director or officer of SpinCo. Shareholders will be deemed to have notice of and consented to this provision of our amended and restated certificate of incorporation.
Choice of Forum
Our amended and restated certificate of incorporation will provide that the Court of Chancery of the State of Delaware will be the exclusive forum for (i) any derivative action or proceeding brought on behalf of SpinCo, (ii) any action asserting a claim of breach of a fiduciary duty owed to SpinCo or SpinCo’s shareholders by any of SpinCo’s directors, officers, employees or agents, (iii) any action asserting a claim against SpinCo arising under the DGCL or (iv) any action asserting a claim against SpinCo that is governed by the internal affairs doctrine. We may consent in writing to alternative forums. By becoming a shareholder in our company, you will be deemed to have notice of and have consented to the provisions of our amended and restated certificate of incorporation related to choice of forum.
 
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Market Listing
We intend to apply to list our common stock on the NYSE under the symbol “            .”
Transfer Agent and Registrar
Upon the completion of the Transactions, the transfer agent and registrar for our common stock will be Computershare Inc.
 
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 DESCRIPTION OF MATERIAL INDEBTEDNESS
ABL Credit Facility
On January 28, 2014, SpinCo entered into a commitment letter with Bank of America, N.A., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Wells Fargo Bank, N.A., SunTrust Bank and SunTrust Robinson Humphrey, Inc., under which the banks party thereto have committed, subject to the terms and conditions set forth therein, to provide xpedx LLC and, following the Subsidiary Merger, Unisource (the “Borrower” and, together with xpedx LLC, the “U.S. Borrowers”) and Unisource Canada Inc. (the “Canadian Borrower” and, together with the U.S. Borrowers, the “Borrower Entities”) with a committed ABL Revolving Facility (the “ABL Facility”). The ABL Facility will provide for revolving loans in an aggregate principal amount of up to $1,400.0 million (subject to availability under a borrowing base). The commitment to enter into the ABL Facility will expire on January 5, 2015.
The ABL Facility will comprise four subfacilities: (a) a $1,250.0 million (minus the amount set forth in clause (b)) revolving facility to be made available to the U.S. Borrowers; (b) a first-in, last-out facility to be made available to the U.S. Borrowers in an amount to be determined (such facility, along with the facility described in clause (a), the “U.S. Facilities”); (c) a $150.0 million (minus the amount set forth in clause (d)) revolving facility to be made available to the Canadian Borrower; and (d) a first-in, last-out facility made available to the Canadian Borrower in an amount to be determined (such facility, along with the facility described in clause (c), the “Canadian Facilities”). The ABL Facility will be available to be drawn in U.S. Dollars, in the case of the U.S. Facilities, and Canadian Dollars, in the case of the Canadian Facilities, or in other currencies to be agreed.
Extensions of credit under the ABL Facility will be limited by a borrowing base calculated periodically based on specified percentages of the value of eligible inventory and eligible accounts receivable, subject to certain reserves and other adjustments. A portion of the ABL Facility will be available for letters of credit and swingline loans. The ABL Facility will also permit the Borrower Entities to add one or more incremental term loan facilities to be included in the ABL Facility or one or more revolving credit facility commitments to be included in the ABL Facility. Any such additional incremental facilities or increased commitments shall not exceed $400.0 million in the aggregate.
The ABL Facility will be available to finance the Transactions and to fund working capital and other general corporate purposes. The borrowing base availability under the ABL Facility is estimated to be approximately $             as of December 31, 2013. After giving effect to letters of credit expected to be issued under the ABL Facility and initial borrowings under the ABL Facility of approximately $725.2 million in connection with the Transactions, assuming the Transactions had closed as of December 31, 2013, we expect to have available borrowing capacity of approximately $                 million under the ABL Facility as of the Closing Date.
Maturity; Prepayment
The ABL Facility will mature, and the commitments thereunder will terminate, five years after the effective date thereof. In addition, the ABL Facility will provide for the right of the individual lenders to extend the maturity date of their commitments and loans upon the request of the Borrower Entities and without the consent of any other lender.
The ABL Facility may be prepaid at the Borrower Entities’ option at any time without premium or penalty and will be subject to mandatory prepayment if the outstanding ABL Facility exceeds either the aggregate commitments with respect thereto or the current borrowing base, in an amount equal to such excess. Mandatory prepayments will not result in a permanent reduction of the lenders’ commitments under the ABL Facility.
 
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Guarantee; Security
Each of the Borrower Entities’ direct and indirect wholly-owned U.S. restricted subsidiaries, subject to certain exceptions (the “Subsidiary Guarantors”), and SpinCo (together with the Subsidiary Guarantors, the “U.S. Guarantors”) will guarantee the U.S. Borrowers’ obligations under the U.S. Facilities, and each of the Borrower Entities’ direct and indirect wholly-owned Canadian subsidiaries, subject to certain exceptions (the “Canadian Guarantors,” and together with the U.S. Guarantors, the “Guarantors”), and the U.S. Guarantors will guarantee the Canadian Borrower’s obligations under the Canadian Facilities.
The obligations under the ABL Facility and the guarantees thereof will be secured by the following:
 
 	•	 	a perfected first priority (subject to certain permitted liens) security interest in substantially all personal property of the Borrower Entities, Subsidiary Guarantors and the Canadian Guarantors consisting of accounts receivable, credit card receivables, other receivables, inventory, cash, deposit accounts, securities and commodity accounts, documents, supporting obligations, books and records related to the foregoing (but excluding, for the avoidance of doubt, intellectual property), general intangibles evidencing, governing, securing or otherwise relating to the foregoing, other property that is customarily treated as priority collateral for similar asset-based lending facilities, and proceeds (including insurance proceeds) of the foregoing, subject to certain exclusions (collectively, the “ABL Priority Collateral”) and	
 
 	•	 	a security interest in substantially all tangible and intangible assets of the Borrower Entities, Subsidiary Guarantors and the Canadian Guarantors other than ABL Priority Collateral, including pledges of the capital stock of the Borrower Entities, the Subsidiary Guarantors and the Canadian Guarantors and the capital stock of each direct, wholly-owned material restricted subsidiary owned by any of the foregoing (limited, in the case of non-U.S. and non-Canadian subsidiaries, to 65% of such capital stock), security interest in, and mortgages on equipment, general intangibles, investment property, intellectual property, material fee-owned real property, intercompany notes, and proceeds of the foregoing, subject to certain exclusions, which may be second in priority (subject to an intercreditor agreement) to the extent the Borrower Entities have incurred obligations secured by a first priority lien on such collateral.	
Interest; Fees
The interest rates applicable to the ABL Facility will be subject to a pricing grid based on average daily excess availability for the previous fiscal quarter. Customary fees will be payable in respect of the ABL Facility.
Covenants
The ABL Facility will contain negative covenants limited to the following: limitations on mergers, consolidations and sales of all or substantially all assets; limitations on dividends, prepayment of subordinated debt and other restricted payments; limitations of changes in the nature of business; limitations on the incurrence of debt and guarantees; limitations on liens; limitations on transactions with affiliates; limitations on investments and acquisitions; and limitations on negative pledge clauses. The negative covenants will be subject to customary exceptions and also will permit mergers, consolidations and sales of all or substantially all assets, dividends, prepayments of subordinated debt and other restricted payments, incurrence of unsecured indebtedness and investments and acquisitions upon satisfaction of a “payment condition.” The payment condition will be deemed satisfied upon specified availability exceeding agreed upon thresholds, the absence of specified events of default and (unless certain higher thresholds of specified availability are met) pro forma compliance with a fixed charge coverage ratio of 1.00 to 1.00 on a trailing four-quarter basis. The ABL Facility will also contain certain affirmative covenants, including financial and other reporting requirements.
The ABL Facility will not include any financial covenants, other than a springing minimum fixed charge coverage ratio of at least 1.00 to 1.00 on a trailing four-quarter basis, which will be tested only when specified availability is less than the greater of (A) $90 million and (B) 10.0% of the lesser of (x) the then applicable
 
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borrowing base and (y) the then total effective commitments under the ABL Facility, and continuing until such time as specified availability has been in excess of such threshold for a period of 20 consecutive calendar days.
Events of Default
The ABL Facility will provide for events of default limited to the following: non-payment of principal, interest or fees; violation of covenants; material inaccuracy of representations or warranties; cross default and cross acceleration to other material indebtedness; certain bankruptcy events; certain ERISA events and similar events under Canadian pension laws; material invalidity of guarantees or security interests; material judgments; and change of control.
Other Indebtedness
On a pro forma basis as of December 31, 2013, other indebtedness of the combined company of $101.8 million includes (i) $73.7 million of current and non-current Unisource capital lease obligations, exclusive of the non-monetary capital lease obligation of $169.1 million and (ii) $28.1 million of Unisource Canadian bank overdrafts. The actual amount of such indebtedness outstanding upon the closing of the Transactions may vary.
 
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 LEGAL MATTERS
The validity of the shares of SpinCo common stock to be distributed by International Paper to its shareholders in the Distribution will be passed upon for SpinCo by Debevoise & Plimpton LLP, New York, New York. Debevoise & Plimpton LLP will provide to International Paper legal opinions regarding certain U.S. federal income tax matters. Kirkland & Ellis LLP will provide to UWWH legal opinions regarding certain U.S. federal income tax matters.
 EXPERTS
The combined financial statements of the xpedx business of International Paper Company as of December 31, 2013 and December 31, 2012 and for each of the three years in the period ended December 31, 2013, included in this prospectus, have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report appearing herein (which report expresses an unqualified opinion and includes an explanatory paragraph referring to allocations of certain corporate costs from International Paper Company). Such combined financial statements have been so included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.
The consolidated financial statements of UWW Holdings, Inc. as of December 31, 2013 and December 29, 2012 and for each of the three years in the period ended December 31, 2013 included in this prospectus have been so included in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting.
 
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 WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to our common stock being distributed as contemplated hereby. This prospectus is part of, and does not contain all of the information set forth in, the registration statement and the exhibits thereto. Some items are omitted in accordance with the rules and regulations of the SEC. For further information with respect to us and our common stock, we refer you to the registration statement and the exhibits filed therewith. Statements contained in this prospectus as to the contents of any contract, agreement or any other document referred to are summaries of the material terms of the respective contract, agreement or other document. With respect to each of these contracts, agreements or other documents filed as an exhibit to the registration statement, reference is made to the exhibits for a more complete description of the matter involved.
A copy of the registration statement, and the exhibits thereto, may be inspected without charge at the public reference facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. Copies of these materials may be obtained by writing to the Public Reference Section of the SEC at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference facilities. The SEC maintains a website that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC. The address of the SEC’s website is http://www.sec.gov.
In connection with the spin-off, we will become subject to the information and periodic reporting requirements of the Exchange Act and, accordingly, will file annual reports containing financial statements audited by an independent public accounting company, quarterly reports containing unaudited financial statements, current reports, proxy statements and other information with the SEC. You will be able to inspect and copy these reports, proxy statements and other information at the public reference facilities maintained by the SEC at the address noted above. You will also be able to obtain copies of this material from the Public Reference Room of the SEC as described above, or inspect them without charge at the SEC’s website. Upon completion of the spin-off, you will also be able to access, free of charge, our reports filed with the SEC (for example, our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K and any amendments to those forms) through our website. Reports filed with or furnished to the SEC will be available as soon as reasonably practicable after they are filed with or furnished to the SEC. Our website is included in this prospectus as an inactive textual reference only. The information found on our website is not part of this prospectus or any report filed with or furnished to the SEC.
 
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 INDEX TO FINANCIAL STATEMENTS

 	  	Page	 	
Combined Financial Statements of xpedx	  				
Audited Combined Financial Statements:	  				
Report of Independent Registered Public Accounting Firm	  	 	F-2	  	
Combined Statements of Operations and Comprehensive Income for the years ended December  31, 2012, 2011 and 2010	  	 	F-3	  	
Combined Balance Sheets as of December 31, 2012 and 2011	  	 	F-4	  	
Combined Statements of Cash Flows for the years ended December 31, 2012, 2011 and 2010	  	 	F-5	  	
Combined Statements of Changes in Parent Company Equity for the years ended December 31, 2012,  2011 and 2010	  	 	F-6	  	
Notes to Combined Financial Statements	  	 	F-7	  	
		
Consolidated Financial Statements of Unisource	  				
Audited Consolidated Financial Statements:	  				
Report of Independent Auditors	  	 	F-34	  	
Consolidated Statements of Operations for the years ended December 29, 2012, December  31, 2011 and January 1, 2011	  	 	F-35	  	
Consolidated Statements of Comprehensive Income/(Loss) for the years ended December  29, 2012, December 31, 2011 and January 1, 2011	  	 	F-36	  	
Consolidated Balance Sheets as of December 29, 2012 and December 31, 2011	  	 	F-37	  	
Consolidated Statements of Changes in Redeemable Preferred Stock and Stockholder’s Equity (Deficit) for the years ended December 29, 2012, December 31, 2011 and January 1, 2011	  	 	F-38	  	
Consolidated Statements of Cash Flows for the years ended December 29, 2012, December  31, 2011 and January 1, 2011	  	 	F-39	  	
Notes to Consolidated Financial Statements	  	 	F-40	  	
 
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 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Shareholders
International Paper Company
We have audited the accompanying combined balance sheets of the xpedx business of International Paper Company (such business referred to as the Company) as of December 31, 2013 and 2012, and the related combined statements of operations and comprehensive income, changes in parent company equity, and cash flows for each of the three years in the period ended December 31, 2013. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such combined financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2013 and 2012, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2013, in conformity with accounting principles generally accepted in the United States of America.
As discussed in Note 1 to the combined financial statements, the Company is comprised of the assets and liabilities used in managing the xpedx business of International Paper Company. The combined financial statements include expense allocations for certain corporate functions historically provided by International Paper Company. These allocations may not be reflective of the actual expenses which would have been incurred had the Company operated as a separate entity apart from International Paper Company.
/s/ Deloitte & Touche LLP
Memphis, Tennessee
April 4, 2014
 
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 xpedx
(A Business of International Paper Company)
Combined Statements of Operations and Comprehensive Income

 	  	Year Ended December 31,	 	
 	  	2013	 	 	2012	 	 	2011	 	
 	  	(Dollars in millions)	 	
Net sales (including sales to a related party of $53.0, $65.1 and $60.0 for 2013, 2012 and 2011, respectively)	  	$	5,652.4	  	 	$	6,012.0	  	 	$	6,509.2	  	
Cost of products sold (including purchases from a related party of $604.4, $639.0 and $651.6 for 2013, 2012 and 2011, respectively) (exclusive of depreciation and amortization shown separately below)	  	 	4,736.8	  	 	 	5,036.7	  	 	 	5,475.3	  	
				
Distribution expenses	  	 	314.2	  	 	 	324.0	  	 	 	324.5	  	
Selling and administrative expenses	  	 	548.2	  	 	 	580.6	  	 	 	598.7	  	
Depreciation and amortization	  	 	17.1	  	 	 	14.0	  	 	 	15.6	  	
Restructuring charges	  	 	37.9	  	 	 	35.1	  	 	 	43.6	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Operating (loss) income	  	 	(1.8	) 	 	 	21.6	  	 	 	51.5	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Other income, net	  	 	(2.2	) 	 	 	(1.9	) 	 	 	(5.2	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Income from continuing operations before income taxes	  	 	0.4	  	 	 	23.5	  	 	 	56.7	  	
Income tax provision	  	 	0.4	  	 	 	9.1	  	 	 	21.2	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Income from continuing operations	  	 	0.0	  	 	 	14.4	  	 	 	35.5	  	
Income (loss) from discontinued operations, net of income taxes	  	 	0.2	  	 	 	(10.0	) 	 	 	(13.6	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net income	  	 	0.2	  	 	 	4.4	  	 	 	21.9	  	
				
Other comprehensive income, net of tax:	  				 				 				
Change in cumulative foreign currency translation adjustment	  	 	1.4	  	 	 	1.8	  	 	 	(4.2	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total comprehensive income, net of tax	  	$	1.6	  	 	$	6.2	  	 	$	17.7	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
The accompanying notes are an integral part of these combined financial statements.
 
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 xpedx
(A Business of International Paper Company)
Combined Balance Sheets

 	  	December 31,	 	
 	  	2013	 	 	2012	 	
 	  	(Dollars in millions)	 	
Assets	  				 				
Current assets:	  				 				
Cash and cash equivalents	  	$	5.7	  	 	$	15.4	  	
Accounts receivable, less allowances of $22.7 and $25.3 in 2013 and 2012, respectively	  	 	669.7	  	 	 	680.6	  	
Related-party receivable	  	 	10.1	  	 	 	6.6	  	
Inventories, net	  	 	360.9	  	 	 	373.4	  	
Deferred income tax assets	  	 	55.3	  	 	 	60.0	  	
Other current assets	  	 	26.3	  	 	 	29.5	  	
Assets held for sale	  	 	9.3	  	 	 	7.5	  	
	  	 	 	 	 	 	 	 	
Total current assets	  	 	1,137.3	  	 	 	1,173.0	  	
			
Property and equipment, net	  	 	107.1	  	 	 	132.0	  	
Other non-current assets	  	 	9.4	  	 	 	1.5	  	
Goodwill	  	 	26.4	  	 	 	26.4	  	
Other intangibles, net	  	 	9.3	  	 	 	10.8	  	
Deferred income tax assets	  	 	22.7	  	 	 	24.2	  	
	  	 	 	 	 	 	 	 	
Total assets	  	$	1,312.2	  	 	$	1,367.9	  	
	  	 	 	 	 	 	 	 	
Liabilities and parent company equity	  				 				
Current liabilities:	  				 				
Accounts payable	  	$	357.3	  	 	$	356.8	  	
Related-party note payable	  	 	—  	  	 	 	20.3	  	
Related-party payable	  	 	2.6	  	 	 	2.1	  	
Accrued payroll and benefits	  	 	54.9	  	 	 	55.4	  	
Other accrued liabilities	  	 	36.5	  	 	 	32.2	  	
	  	 	 	 	 	 	 	 	
Total current liabilities	  	 	451.3	  	 	 	466.8	  	
			
Non-current liabilities	  	 	12.5	  	 	 	16.9	  	
	  	 	 	 	 	 	 	 	
Total liabilities	  	 	463.8	  	 	 	483.7	  	
			
Commitments and contingent liabilities (Note 8)	  				 				
			
Parent company equity:	  				 				
Parent company investment	  	 	853.1	  	 	 	890.3	  	
Accumulated other comprehensive loss	  	 	(4.7	) 	 	 	(6.1	) 	
	  	 	 	 	 	 	 	 	
Total parent company equity	  	 	848.4	  	 	 	884.2	  	
	  	 	 	 	 	 	 	 	
Total liabilities and parent company equity	  	$	1,312.2	  	 	$	1,367.9	  	
	  	 	 	 	 	 	 	 	
The accompanying notes are an integral part of these combined financial statements.
 
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 xpedx
(A Business of International Paper Company)
Combined Statements of Cash Flows

 	  	Year Ended December 31,	 	
 	  	2013	 	 	2012	 	 	2011	 	
 	  	(Dollars in millions)	 	
Operating activities	  				 				
Net income	  	$	0.2	  	 	$	4.4	  	 	$	21.9	  	
Income (loss) from discontinued operations, net of income taxes	  	 	0.2	  	 	 	(10.0	) 	 	 	(13.6	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Income from continuing operations	  	 	—  	  	 	 	14.4	  	 	 	35.5	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Depreciation and amortization	  	 	17.4	  	 	 	15.2	  	 	 	16.1	  	
Net (gains) losses on sales of fixed assets	  	 	(6.4	) 	 	 	(2.3	) 	 	 	0.6	  	
Loss on impairment of trade name	  	 	—  	  	 	 	—  	  	 	 	6.7	  	
Adjustment to allowance for doubtful accounts	  	 	6.4	  	 	 	7.5	  	 	 	8.2	  	
Deferred income tax provision	  	 	5.2	  	 	 	4.5	  	 	 	4.5	  	
Stock-based compensation	  	 	15.4	  	 	 	13.1	  	 	 	10.1	  	
Changes in assets and liabilities:	  				 				
Accounts receivable	  	 	(1.3	) 	 	 	27.8	  	 	 	53.9	  	
Inventories, net	  	 	12.3	  	 	 	12.3	  	 	 	43.3	  	
Accounts payable and accrued liabilities	  	 	10.8	  	 	 	(38.0	) 	 	 	(87.8	) 	
Other	  	 	(4.9	) 	 	 	7.2	  	 	 	5.4	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Cash provided by operating activities – continuing operations	  	 	54.9	  	 	 	61.7	  	 	 	96.5	  	
Cash provided by (used for) provided by operating activities – discontinued operations	  	 	(0.8	) 	 	 	(2.6	) 	 	 	6.2	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Cash provided by operating activities	  	 	54.1	  	 	 	59.1	  	 	 	102.7	  	
			
Investing activities	  				 				
Invested in capital projects	  	 	(9.8	) 	 	 	(13.3	) 	 	 	(17.4	) 	
Proceeds from asset sales	  	 	22.7	  	 	 	5.1	  	 	 	0.1	  	
Other	  	 	0.3	  	 	 	0.5	  	 	 	0.4	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Cash provided by (used for) investing activities – continuing operations	  	 	13.2	  	 	 	(7.7	) 	 	 	(16.9	) 	
Cash provided by (used for) investing activities – discontinued operations	  	 	—  	  	 	 	0.2	  	 	 	(0.2	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Cash provided by (used for) investing activities	  	 	13.2	  	 	 	(7.5	) 	 	 	(17.1	) 	
			
Financing activities	  				 				
Net transfers to parent	  	 	(72.7	) 	 	 	(52.0	) 	 	 	(87.5	) 	
Change in book overdrafts	  	 	(5.8	) 	 	 	1.7	  	 	 	1.3	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Cash used for financing activities – continuing operations	  	 	78.5	  	 	 	(50.3	) 	 	 	(86.2	) 	
Cash (used for) provided by financing activities – discontinued operations	  	 	—  	  	 	 	0.9	  	 	 	(0.3	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Cash used for financing activities	  	 	(78.5	) 	 	 	(49.4	) 	 	 	(86.5	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Effect of exchange rate changes on cash	  	 	1.5	  	 	 	(1.5	) 	 	 	0.7	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Change in cash and cash equivalents	  	 	(9.7	) 	 	 	0.7	  	 	 	(0.2	) 	
Cash and cash equivalents at beginning of period	  	 	15.4	  	 	 	14.7	  	 	 	14.9	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Cash and cash equivalents at end of period	  	$	5.7	  	 	$	15.4	  	 	$	14.7	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Supplementary cash flow information	  				 				
Income taxes paid, net of refunds	  	$	0.7	  	 	$	1.1	  	 	$	0.9	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Non-Cash Transactions:	  				 				 				
Property additions included in accounts payable	  	$	0.7	  	 	$	1.2	  	 	$	0.1	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Conveyance of related-party note payable	  	$	20.3	  	 	 	—  	  	 	 	—  	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
The accompanying notes are an integral part of these combined financial statements.
 
F-5

Table of Contents
 xpedx
(A Business of International Paper Company)
Combined Statements of Changes in Parent Company Equity

 	  	Parent
Company
Investment	 	 	Accumulated
Other
Comprehensive
Income (Loss)	 	 	Total
Parent
Company
Equity	 	
 	  	(Dollars in millions)	 	
Balance, January 1, 2011	  	$	981.9	  	 	$	(3.7	) 	 	$	978.2	  	
Net income	  	 	21.9	  	 	 	—  	  	 	 	21.9	  	
Other comprehensive loss, net of tax	  	 	—  	  	 	 	(4.2	) 	 	 	(4.2	) 	
Net transfers to parent	  	 	(79.8	) 	 	 	—  	  	 	 	(79.8	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Balance, December 31, 2011	  	 	924.0	  	 	 	(7.9	) 	 	 	916.1	  	
Net income	  	 	4.4	  	 	 	—  	  	 	 	4.4	  	
Other comprehensive income, net of tax	  	 	—  	  	 	 	1.8	  	 	 	1.8	  	
Net transfers to parent	  	 	(38.1	) 	 	 	—  	  	 	 	(38.1	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Balance, December 31, 2012	  	 	890.3	  	 	 	(6.1	) 	 	 	884.2	  	
Net income	  	 	0.2	  	 	 	—  	  	 	 	0.2	  	
Other comprehensive income, net of tax	  	 	—  	  	 	 	1.4	  	 	 	1.4	  	
Net transfers to parent	  	 	(37.4	) 	 	 	—  	  	 	 	(37.4	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Balance, December 31, 2013	  	$	853.1	  	 	$	(4.7	) 	 	$	848.4	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
The accompanying notes are an integral part of these combined financial statements.
 
F-6

Table of Contents
xpedx
(A Business of International Paper Company)
 Notes to Combined Financial Statements
December 31, 2013
1. Summary of Business and Significant Accounting Policies
Nature of Operations
xpedx is a business-to-business distributor of paper, packaging and facility supplies products in North America operating 86 distribution centers in the U.S. and Mexico as of December 31, 2013. xpedx distributes products and services to a number of customer markets including: printers, publishers, data centers, manufacturers, higher education institutions, healthcare facilities, sporting and performance arenas, retail, government agencies, property managers and building service contractors.
Basis of Combination
These combined financial statements reflect the historical financial position, results of operations, changes in parent company equity and cash flows of the Company for the periods presented as the Company was historically managed within International Paper Company (International Paper or Parent). The combined financial statements have been prepared on a “carve-out” basis and are derived from the consolidated financial statements and accounting records of International Paper. The combined financial statements have been prepared in United States (U.S.) dollars and in accordance with generally accepted accounting principles in the U.S. (GAAP). The Company’s combined financial statements may not be indicative of the Company’s future performance and do not necessarily reflect what the results of operations, financial position and cash flows would have been had it operated as an independent company during the periods presented.
The combined financial statements include expense allocations for certain functions provided by International Paper, including, but not limited to, general corporate expenses related to finance, legal, information technology, human resources, communications, insurance and stock-based compensation. These expenses have been allocated to the Company on the basis of direct usage when identifiable, with the remainder principally allocated on the basis of percent of capital employed, headcount or other measures. During the years ended December 31, 2013, 2012 and 2011, the Company was allocated $84.0 million, $78.4 million and $84.8 million, respectively, of general corporate expenses incurred by International Paper which are included within selling and administrative expenses in the combined statements of operations and comprehensive income. Management considers the basis on which the expenses have been allocated to reasonably reflect the utilization of services provided to or the benefit received by the Company during the periods presented. The allocations may not, however, reflect the expenses the Company would have incurred as an independent company for the periods presented. Actual costs that may have been incurred if the Company had been a stand-alone company would depend on a number of factors, including the organizational structure, whether functions were outsourced or performed by employees and strategic decisions made in areas such as information technology and infrastructure. The Company is unable to determine what such costs would have been had the Company been independent. Following the separation, the Company will perform these functions using its own resources or purchased services. For an interim period, however, some of these functions will continue to be provided by International Paper under transition services agreements. In addition to the transition services agreements, we will enter into a number of commercial agreements with International Paper in connection with the separation.
Intercompany transactions between the Company and International Paper have been included in these combined financial statements and are primarily considered to be effectively settled for cash in the combined financial statements at the time the transaction is recorded. For those intercompany transactions historically settled in cash between the Company and International Paper, the Company has separately disclosed those balances in the balance sheet as of December 31, 2013 and 2012 as related party receivables and payables. The total net effect of
 
F-7

Table of Contents
xpedx
(A Business of International Paper Company)
Notes to Combined Financial Statements  (continued)
 
1. Summary of Business and Significant Accounting Policies  (continued)
 
the settlement of these intercompany transactions, exclusive of those historically settled in cash, is reflected in the combined statements of cash flows as a financing activity and in the combined balance sheets as parent company investment.
International Paper’s debt and the related interest expense have not been allocated to the Company for any of the periods presented because the Company is not the legal obligor of the debt and International Paper’s borrowings were not directly attributable to the Company’s business.
International Paper maintains self-insurance programs at the corporate level. The Company was allocated a portion of the expenses associated with these programs as part of the general corporate overhead expense allocation. No self-insurance reserves have been allocated to the Company as the self-insurance reserves represent obligations of International Paper, which are not transferrable.
International Paper uses a centralized approach to cash management and financing its operations. Transactions between International Paper and the Company are accounted for through parent company investment. Accordingly, none of the cash, cash equivalents, debt or related interest expense at the Parent level has been assigned to the Company in the combined financial statements. Cash and cash equivalents in the combined balance sheets represents cash and cash equivalents held locally by certain of the Company’s entities.
The Company ceased certain of its operations, and where appropriate, these operations have been reflected as discontinued operations in the combined financial statements. See Note 4 for further discussion.
The Company operates on a calendar year-end.
Subsequent to the issuance of the Company’s consolidated financial statements as of and for the year ended December 31, 2012, the Company’s management identified the following errors:
Company management determined that a last in, first out (LIFO) reserve relating to a prior business combination of IP was incorrectly allocated to xpedx. As a result, the xpedx LIFO reserve is overstated by approximately $27.5 million in the previously issued financial statements. The prior period financial information has been revised to reflect this adjustment. As of December 31, 2012, this correction resulted in an increase in inventory of $27.5 million, an increase to current deferred tax assets of $10.8 million, and an increase to parent company investment of $38.3 million. The correction had no impact on previously reported amounts of net income.
Assets with a net book value of approximately $17.3 million should have been recognized in the Company’s historical combined financial statements. The prior period financial information has been revised to include these assets in the Company’s property balances. As of December 31, 2012, this correction resulted in an increase to property of $17.3 million, a decrease to long term deferred tax assets of $6.9 million, and an increase to parent company investment of $10.4 million. The impact of this correction on net income was immaterial.
The cumulative effect on these adjustments on Parent Company Investment on January 1, 2011 was an increase of $48.7 million.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and
 
F-8

Table of Contents
xpedx
(A Business of International Paper Company)
Notes to Combined Financial Statements  (continued)
 
1. Summary of Business and Significant Accounting Policies  (continued)
 
liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Estimates are revised as additional information becomes available. Estimates and assumptions are used for, but not limited to income tax contingency accruals and valuation allowances, impairment of goodwill and other intangibles. Actual results could differ from these estimates.
Revenue Recognition
Revenue is recognized when persuasive evidence of an arrangement exists, the price is fixed or determinable, collectability is reasonably assured and delivery has occurred. Revenue is recognized when the customer takes title and assumes the risks and rewards of ownership. Revenue is recorded at the time of shipment for customer terms designated f.o.b. (free on board) shipping point. For sales transactions with customers designated f.o.b. destination, revenue is recorded when the product is delivered to the customer’s delivery site, when title and risk of loss are transferred. Shipping terms are determined on a customer by customer or order by order basis.
Certain revenues are derived from shipments arranged by xpedx made directly from a manufacturer to an xpedx customer. xpedx is considered to be a principal to these transactions because, among other factors, xpedx controls pricing to the customer and bears the credit risk of the customer defaulting on payment and is the primary obligor. Revenues from these sales are reported on a gross basis in the combined statements of operations and comprehensive income and amounted to $2.4 billion, $2.5 billion and $2.8 billion for the years ended December 31, 2013, 2012 and 2011, respectively.
Taxes collected from customers relating to product sales and remitted to governmental authorities are accounted for on a net basis. Accordingly, such taxes are excluded from both net sales and expenses.
Purchase Incentives and Customer Rebates
xpedx enters into agreements with suppliers that entitle xpedx to receive rebates, allowances and other discounts based on the attainment of specified purchasing levels or sales to certain customers. Other current assets in the combined balance sheets included $18.4 million and $22.3 million as of December 31, 2013 and 2012, respectively, of anticipated amounts not yet received. Purchase incentives are recorded as a reduction in inventory and recognized into cost of products sold as the product is sold.
xpedx enters into incentive agreements with its customers, which are generally based on sales to these customers. xpedx records its customers’ estimated attainment of discounts and rebates as a reduction of sales. Other accrued liabilities in the combined balance sheets included $12.8 million and $12.3 million as of December 31, 2013 and 2012, respectively, of anticipated amounts not yet paid.
Distribution Expense
Distribution expense consists of storage, handling and delivery costs including freight to our customers’ destination as shown in the combined statements of operations and comprehensive income. Handling and delivery costs in the combined statement of operations and comprehensive income amounted to $252.9 million, $259.7 million and $258.7 million for the years ended December 31, 2013, 2012 and 2011, respectively.
 
F-9

Table of Contents
xpedx
(A Business of International Paper Company)
Notes to Combined Financial Statements  (continued)
 
1. Summary of Business and Significant Accounting Policies  (continued)
 
Advertising Costs
Advertising costs are expensed as incurred and primarily represent purchases of advertising space within newspapers, trade publications and websites. Such costs were approximately $0.7 million, $0.6 million and $0.9 million for the years ended December 31, 2013, 2012 and 2011, respectively, and are recorded in selling and administrative expenses.
Annual Maintenance Costs
Costs for repair and maintenance activities are expensed in the month that the related activity is performed under the direct expense method of accounting.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, deposits on-demand and other highly liquid investments with maturities of three months or less. Cash balances may exceed government insured limits in certain jurisdictions.
Outstanding checks of $33.2 million and $39.1 million as of December 31, 2013 and 2012, respectively, represent checks issued that have not been presented for payment to the banks and are classified in accounts payable in the combined balance sheets.
Accounts Receivable and Allowance for Doubtful Accounts
Accounts receivables are recognized net of an allowance for doubtful accounts. The allowance for doubtful accounts reflects the best estimate of losses inherent in the Company’s accounts receivable portfolio determined on the basis of historical experience, specific allowances for known troubled accounts and other available evidence. The allowance is inclusive of credit risks, returns, discounts and any other items affecting the realization of these assets. Accounts receivable are written off when management determines they are uncollectible.

 	  	2013	 	 	2012	 	 	2011	 	
 	  	(Dollars in millions)	 	
Beginning balance	  	$	25.3	  	 	$	26.2	  	 	$	29.1	  	
Adjustment to reserve	  	 	6.4	  	 	 	8.7	  	 	 	8.6	  	
Write-offs	  	 	(9.0	) 	 	 	(9.6	) 	 	 	(11.5	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Ending balance	  	$	22.7	  	 	$	25.3	  	 	$	26.2	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Inventories, Net
Inventories are primarily valued at cost as determined by the LIFO method. Such valuations are not in excess of market. Elements of cost in inventories include the purchase price invoiced by a supplier, plus inbound freight and related costs and reduced by estimated volume-based discounts available from certain suppliers.
 
F-10

Table of Contents
xpedx
(A Business of International Paper Company)
Notes to Combined Financial Statements  (continued)
 
1. Summary of Business and Significant Accounting Policies  (continued)
 
Property and Equipment, Net
Property and equipment are stated at cost, less accumulated depreciation and consist principally of land, buildings, leasehold improvements, machinery, equipment and internal-use software. Expenditures for betterments are capitalized, whereas normal repairs and maintenance are expensed as incurred. Depreciation for property and equipment, other than land and construction in progress, is based upon the following estimated useful lives, using the straight-line method:

Buildings	  	 	40 years	  	
Leasehold improvements	  	 	1 to 10 years	  	
Machinery and equipment	  	 	3 to 10 years	  	
Internal-use software	  	 	1 to 5 years	  	
The Company capitalizes certain computer software and development costs incurred in connection with developing or obtaining software for internal use. Costs related to the development of internal-use software, other than those incurred during the application development stage, are expensed as incurred.
Upon retirement or other disposal of property and equipment, the cost and related amount of accumulated depreciation are eliminated from the asset and accumulated depreciation accounts, respectively. The difference, if any, between the net asset value and the proceeds is included in net income.
The Company assesses the recoverability of assets using undiscounted cash flows whenever events or circumstances indicate that the carrying value of an asset may not be recoverable. If an asset is found to be impaired, the amount recognized for impairment is equal to the difference between the carrying value of the asset and the present value of future cash flows or other reasonable estimate of fair value.
Depreciation includes amortization of leasehold improvements. The amortization of leasehold improvements is recorded over the shorter of the remaining lease term or the economic lives of the leased assets.
Goodwill and Other Intangibles, Net
Goodwill relating to a single business reporting unit is included as an asset of the applicable segment. Goodwill arising from major acquisitions that involve multiple reportable segments is allocated to the reporting units that are expected to benefit from the synergies of the business combinations generating the underlying goodwill.
During the quarter ended December 31, 2013, the Company voluntarily changed the date of its annual goodwill and indefinite-lived intangible asset impairment test from the last day of the fourth quarter (December 31) to the first day of the fourth quarter (October 1). This change is preferable under the circumstances as it (i) results in better alignment with the Company’s annual strategic planning and forecasting process and (ii) provides the Company with additional time in a given fiscal reporting period to accurately assess the recoverability of goodwill and indefinite-lived intangible assets and to measure any indicated impairment. The Company believes that the change in accounting principle related to the annual testing date will not delay, accelerate, or avoid an impairment charge. In accordance with Accounting Standards Codification (ASC) 350, Intangibles – Goodwill and other , if indicators of impairment are deemed to be present and management believes that it is more likely than not events or circumstances have occurred that would result in the impairment of a reporting unit’s goodwill, the Company would perform an interim impairment test and any resulting impairment loss would be
 
F-11

Table of Contents
xpedx
(A Business of International Paper Company)
Notes to Combined Financial Statements  (continued)
 
1. Summary of Business and Significant Accounting Policies  (continued)
 
charged to expense in the period identified. This change is not applied retrospectively as it is impracticable to do so because retrospective application would require the application of significant estimates and assumptions with the use of hindsight. Accordingly, the change will be applied prospectively.
In performing this impairment testing, the Company estimates the fair value of its reporting units using the projected future cash flows to be generated by each unit over the estimated remaining useful operating lives of the unit’s assets, discounted using the estimated cost of capital for each reporting unit. These estimated fair values are then analyzed for reasonableness by comparing them to historic market transactions for businesses in the industry. For reporting units whose recorded value of net assets plus goodwill is in excess of their estimated fair values, the fair values of the individual assets and liabilities of the respective reporting units are then determined to calculate the amount of any goodwill impairment charge required. See Note 6 for further discussion.
Intangible assets acquired in a business combination are recorded at fair value. Intangible assets with finite useful lives are subsequently amortized using the straight-line method over the following estimated useful lives of the assets:

Customer lists	  	 	13–24 years	  	
Trade names	  	 	15–17 years	  	
Non-compete covenants	  	 	5 years	  	
The Company assesses the remaining useful life and the recoverability of finite-lived intangible assets whenever events or circumstances indicate that the carrying value of an asset may not be recoverable. The Company reviews indefinite intangible assets for impairment by comparing the fair value of the assets, estimated using an income approach, with their carrying value. If the carrying value exceeds the fair value of the intangible asset, the amount recognized for impairment is equal to the difference between the carrying value of the asset and the present value of future cash flows.
Impairment of Long-Lived Assets
Long-lived assets, including other intangible assets with finite lives, are reviewed for impairment upon the occurrence of events or changes in circumstances that indicate that the carrying value of the assets may not be recoverable, measured by comparing their net book value to the undiscounted projected future cash flows generated by their use. Impaired assets are recorded at their estimated fair value. See Note 6 for further discussion.
Employee Benefits
Certain of the Company’s employees participate in defined benefit pension and other post-employment benefit plans (the Plans) sponsored by International Paper and accounted for by International Paper in accordance with accounting guidance for defined benefit pension and other post-employment benefit plans.
For the employees who participate in the Plans sponsored by International Paper, the Company recognizes a liability only for any required contributions to the Plans that are accrued and unpaid at the balance sheet date, in accordance with generally accepted accounting principles for multiemployer benefit plans. The Company does not record an asset or liability to recognize the funded status of the Plans. The Company also contributes to
 
F-12

Table of Contents
xpedx
(A Business of International Paper Company)
Notes to Combined Financial Statements  (continued)
 
1. Summary of Business and Significant Accounting Policies  (continued)
 
multiemployer pension plans for certain collective bargaining U.S. employees that are not sponsored by International Paper. All pension and other postretirement expenses related to xpedx employees are reported within both cost of products sold and selling and administrative expenses in the combined statements of operations and comprehensive income.
Stock-Based Compensation
Compensation costs resulting from all stock-based compensation transactions are measured and recorded in the combined financial statements based on the grant-date fair value of the equity instruments issued. Compensation cost is recognized over the period that an employee provides service in exchange for the award.
Income Taxes
Historically, the Company was included in the foreign and domestic tax filings with other International Paper entities. The income tax provisions in these financial statements have been prepared on a separate return basis as if the Company was a stand-alone entity. The results from being included in the combined tax returns are included in Parent company investment. International Paper’s global tax structure and model has been developed based on its entire portfolio of businesses. Accordingly, the Company’s tax results as presented may not be reflective of the results that the Company will generate in the future or would have generated on a stand-alone basis. Further, for jurisdictions where the Company filed returns as part of International Paper, the stand alone provision will present taxes payable as a component of equity since the Company will never actually be liable for the payable. The Company will record a payable balance, if necessary, for foreign jurisdictions where the Company has a legal obligation to file and pay income tax.
With the exception of certain non-U.S. entities, the Company does not maintain taxes payable to or from International Paper and the Company is deemed to settle the annual current tax balances immediately with the legal tax-paying entities in the respective jurisdictions. These settlements are reflected as changes in parent company investment.
xpedx uses the asset and liability method of accounting for income taxes whereby deferred income taxes are recorded for the future tax consequences attributable to differences between the financial statement and tax bases of assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Deferred tax assets and liabilities are remeasured to reflect new tax rates in the periods rate changes are enacted.
xpedx records its tax provision based on the respective tax rules and regulations for the jurisdictions in which it operates. Where the Company believes that a tax position is supportable for income tax purposes, the item is included in its income tax returns. Where treatment of a position is uncertain, liabilities are recorded based upon the Company’s evaluation of the “more likely than not” outcome considering the technical merits of the position based on specific tax regulations and the facts of each matter. Changes to recorded liabilities are made only when new information becomes available that changes the likely outcome, such as settlement with the relevant tax authority, the expiration of statutes of limitation for the subject tax year, a change in tax laws, or a recent court case that addresses the matter.
 
F-13

Table of Contents
xpedx
(A Business of International Paper Company)
Notes to Combined Financial Statements  (continued)
 
1. Summary of Business and Significant Accounting Policies  (continued)
 
Fair Value of Financial Instruments
The Company’s financial instruments consist primarily of cash, trade accounts receivable, accounts payable and other components of other current assets and other current liabilities, in which the carrying amount approximates fair value due to the short maturity of these items.
Intangible assets acquired in a business combination are recorded at fair value and the Company reviews indefinite intangible assets for impairment by comparing the fair value of the assets, estimated using an income approach, with their carrying value. Additionally when performing annual goodwill impairment testing, the Company estimates the fair value of its reporting units using the projected future cash flows to be generated by each unit over the estimated remaining useful operating lives of the unit’s assets, discounted using the estimated cost of capital for each reporting unit.
The guidance for fair value measurements and disclosures sets out a fair value hierarchy that groups fair value measurement inputs into the following three classifications:
Level 1: Quoted market prices in active markets for identical assets or liabilities.
Level 2: Observable market-based inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3: Unobservable inputs for the asset or liability reflecting the reporting entity’s own assumptions or external inputs from inactive markets.
In valuing intangible assets acquired in a business combination as well as in performing annual and interim, if applicable, intangible asset impairment testing the Company utilizes a combination of Level 1, 2 and 3 inputs.
Translation of Financial Statements
Balance sheets of international operations are translated into U.S. dollars at year-end exchange rates, while statements of operations are translated at average rates. Adjustments resulting from financial statement translations are included as cumulative translation adjustments in accumulated other comprehensive income.
Parent Company Investment
Parent company investment in the combined balance sheets represents International Paper’s historical investment in the Company, the Company’s accumulated net earnings after income taxes and the net effect of transactions with and allocations from International Paper.
2. Recent Accounting Developments
Income Taxes
In July 2013, the FASB issued ASU 2013-11, Income Taxes , which provides guidance on financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. This guidance should be applied to all unrealized tax benefits that exist as of the effective date which is fiscal years beginning after December 15, 2013 and interim periods within those years. The Company is currently evaluating the provisions of this guidance.
 
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Table of Contents
xpedx
(A Business of International Paper Company)
Notes to Combined Financial Statements  (continued)
2. Recent Accounting Developments  (continued)
 
Multiemployer Pension Plans
In September 2011, the FASB issued ASU 2011-09, Compensation – Retirement Benefits – Multiemployer Plans , related to the disclosure requirements for an employer’s participation in a multiemployer pension plan, resulting in more detailed disclosure information. The updated guidance is effective for fiscal years ending on or after December 15, 2012; however, early adoption is permitted for both public and nonpublic entities. The application of the requirements of this guidance did not have a material effect on the combined financial statements. See Note 9 for further discussion of the Company’s participation in multiemployer plans.
3. Restructuring Charges
During 2010, the Company completed a strategic assessment of its operating model, resulting in the decision to begin on a multi-year restructuring plan. The restructuring plan involved the establishment of a lower cost operating model in connection with the repositioning of the Print segment in consideration of changing market considerations. The restructuring plan included initiatives to: (i) optimize the warehouse network, (ii) improve the efficiency of the sales team and (iii) reorganize the procurement function. Management launched the plan in 2011.
The restructuring plan identified locations to be affected and a range of time for specific undertakings. A severance liability was established when positions to be eliminated were identified. Generally severance arrangements were based on years of employee service.
2013
During 2013, six retail and warehouse locations were closed as part of the identified restructuring plan. The closures occurred throughout 2013 with a majority of the activity in the first and second quarters. The Company recorded total restructuring charges of $37.9 million before taxes ($ 23.0 million after taxes). These charges included:

 	  	Before-Tax
Charges	 	 	After-Tax
Charges	 	
 	  	(Dollars in millions)	 	
Facility costs	  	$	15.2	  	 	$	9.3	  	
Severance	  	 	16.9	  	 	 	10.3	  	
Personnel costs	  	 	10.9	  	 	 	6.6	  	
Accelerated amortization and depreciation	  	 	0.3	  	 	 	0.1	  	
Professional services	  	 	1.0	  	 	 	0.6	  	
Gain on sale of fixed assets	  	 	(6.4	) 	 	 	(3.9	) 	
	  	 	 	 	 	 	 	 	
Total	  	$	37.9	  	 	$	23.0	  	

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Table of Contents
xpedx
(A Business of International Paper Company)
Notes to Combined Financial Statements  (continued)
3. Restructuring Charges  (continued)
 
2012
During 2012, 118 total retail and warehouse locations were closed as part of the identified restructuring plan. The closures occurred throughout 2012 with a majority of the activity in the first and second quarters. The Company recorded total restructuring charges of $35.1 million before taxes ($21.2 million after taxes). These charges included:

 	  	Before-Tax
Charges	 	 	After-Tax
Charges	 	
 	  	(Dollars in millions)	 	
Facility costs	  	$	13.0	  	 	$	7.9	  	
Severance	  	 	11.9	  	 	 	7.2	  	
Personnel costs	  	 	10.6	  	 	 	6.4	  	
Accelerated amortization and depreciation	  	 	1.2	  	 	 	0.7	  	
Professional services	  	 	1.1	  	 	 	0.6	  	
Gain on sale of fixed assets	  	 	(2.7	) 	 	 	(1.6	) 	
	  	 	 	 	 	 	 	 	
Total	  	$	35.1	  	 	$	21.2	  	
	  	 	 	 	 	 	 	 	
2011
During 2011, 61 total retail and warehouse locations were closed and an additional three warehouse locations were relocated to better serve the existing customer base. The closures and relocations occurred throughout 2011 with a majority of the activity in the third and fourth quarters. The Company recorded total restructuring charges of $43.6 million before taxes ($26.7 million after taxes) related to the overall restructuring plan. These charges included:

 	  	Before-Tax
Charges	 	  	After-Tax
Charges	 	
 	  	(Dollars in millions)	 	
Severance	  	$	12.2	  	  	$	7.6	  	
Professional services	  	 	9.9	  	  	 	6.0	  	
Facility costs	  	 	7.0	  	  	 	4.2	  	
Personnel costs	  	 	6.9	  	  	 	4.2	  	
Write-down of intangible asset	  	 	6.7	  	  	 	4.1	  	
Accelerated amortization and depreciation	  	 	0.5	  	  	 	0.3	  	
Loss on sale of fixed assets	  	 	0.4	  	  	 	0.3	  	
	  	 	 	 	  	 	 	 	
Total	  	$	43.6	  	  	$	26.7	  	

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Table of Contents
xpedx
(A Business of International Paper Company)
Notes to Combined Financial Statements  (continued)
3. Restructuring Charges  (continued)
 
The corresponding liability and activity during the periods presented are detailed in the table below. The restructuring liability is included within other non-current liabilities ($1.9 million and $2.3 million at December 31, 2013 and 2012, respectively) and other accrued liabilities ($5.8 million and $1.5 million for 2013 and 2012, respectively) in the combined balance sheets.

 	  	Total	 	
 	  	(Dollars in
millions)	 	
Liability at December 31, 2011	  	 	4.7	  	
Additional provision	  	 	36.6	  	
Payments	  	 	(37.0	) 	
Adjustment of prior year’s estimate	  	 	(0.5	) 	
	  	 	 	 	
Liability at December 31, 2012	  	$	3.8	  	
Additional provision	  	 	44.0	  	
Payments	  	 	(39.7	) 	
Adjustment of prior year’s estimate	  	 	(0.4	) 	
	  	 	 	 	
Liability at December 31, 2013	  	$	7.7	  	
	  	 	 	 	
4. Discontinued Operations
During 2011, the Company ceased its Canadian operations which provided distribution of printing supplies to Canadian based customers. Additionally, the Company ceased its printing press distribution business which was located in the U.S. Historically, both of these businesses had been included in the Company’s Print segment. As the operations and cash flows of these components have been eliminated from the ongoing operations of the Company and the Company will not have any significant continuing involvement in the operations of the components, these components are included in discontinued operations for all periods presented.
Net sales, income (loss) from operations and loss on disposition for discontinued operations are as follows:

 	  	2013	 	 	2012	 	 	2011	 	
 	  	(Dollars in millions)	 	
Net sales	  	$	—  	  	 	$	—  	  	 	$	82.1	  	
Loss from operations	  	 	(0.5	) 	 	 	(0.4	) 	 	 	(6.4	) 	
Restructuring and disposal gains (costs)	  	 	0.7	  	 	 	(10.1	) 	 	 	(8.6	) 	
Income (loss) from discontinued operations, net of income tax benefit of $0.0, $0.5 and $1.4, respectively	  	 	0.2	  	 	 	(10.0	) 	 	 	(13.6	) 	
5. Supplementary Financial Statement Information
Inventories, Net
The Company’s inventories are comprised of finished goods. The LIFO inventory method is used to value the Company’s inventories. Approximately 97% of inventories were valued using this method. If the first-in, first-out method had been used, it would have increased total inventory balances by approximately $76.6 million and $73.2 million at December 31, 2013 and 2012, respectively. During 2013, the Company incurred a LIFO decrement of $13.9 million. During 2013, 2012 and 2011, liquidation of LIFO layers generated (expense) / income of $(3.4), $(1.0) and $0.8, respectively.
 
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Table of Contents
xpedx
(A Business of International Paper Company)
Notes to Combined Financial Statements  (continued)
5. Supplementary Financial Statement Information  (continued)
 
Other Current Assets
The components of other current assets were as follows at December 31, 2013 and 2012:

 	  	December 31,	 	
 	  	2013	 	  	2012	 	
 	  	(Dollars in millions)	 	
Rebates receivable	  	$	18.4	  	  	$	 22.3	  	
Prepaid expenses	  	 	5.6	  	  	 	6.8	  	
Other	  	 	2.3	  	  	 	0.4	  	
	  	 	 	 	  	 	 	 	
Other current assets	  	$	 26.3	  	  	$	29.5	  	
	  	 	 	 	  	 	 	 	
Property and Equipment, Net
The components of property and equipment, net were as follows at December 31, 2013 and 2012:

 	  	December 31,	 	
 	  	2013	 	  	2012	 	
 	  	(Dollars in millions)	 	
Land, buildings and improvements	  	$	143.8	  	  	$	171.3	  	
Machinery and equipment	  	 	72.5	  	  	 	73.1	  	
Internal-use software	  	 	84.5	  	  	 	84.5	  	
Construction in process	  	 	4.9	  	  	 	5.8	  	
	  	 	 	 	  	 	 	 	
Gross cost	  	 	305.7	  	  	 	334.7	  	
Less accumulated depreciation and amortization	  	 	198.6	  	  	 	202.7	  	
	  	 	 	 	  	 	 	 	
Property and equipment, net	  	$	107.1	  	  	$	132.0	  	

													
 	  	2013	 	  	2012	 	  	2011	 	
 	  	(Dollars in millions)	 	
Depreciation and amortization expense, property and equipment	  	$	15.9	  	  	$	12.9	  	  	$	13.1	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Depreciation expense was $7.6 million, $9.9 million and $10.0 million for the years ended December 31, 2013, 2012 and 2011, respectively. Amortization of internal-use software costs was $8.3 million, $3.0 million and $3.1 million for the years ended December 31, 2013, 2012 and 2011, respectively. Unamortized internal-use software costs, including amounts recorded in construction in progress, were $17.1 million and $25.4 million at December 31, 2013 and 2012, respectively. During 2013, 2012, and 2011, $0.3 million, $1.2 million, and $0.5 million of depreciation is included in restructuring, respectively.
Assets Held for Sale
As part of the Company’s restructuring activities described in Note 3 certain land, buildings and improvements have been classified as held for sale within the combined balance sheet as of December 31, 2013 and 2012 as the Company has committed to a plan to sell the identified assets and the assets are available for immediate sale.
 
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Table of Contents
xpedx
(A Business of International Paper Company)
Notes to Combined Financial Statements  (continued)
5. Supplementary Financial Statement Information  (continued)
 
Accrued Payroll and Benefits
The components of accrued payroll and benefits were as follows at December 31, 2013 and 2012:

 	  	December 31,	 	
 	  	2013	 	  	2012	 	
 	  	(Dollars in millions)	 	
Employee payroll	  	$	43.8	  	  	$	31.2	  	
Employee bonuses	  	 	2.8	  	  	 	15.5	  	
Payroll tax	  	 	8.3	  	  	 	8.7	  	
	  	 	 	 	  	 	 	 	
Accrued payroll and benefits	  	$	54.9	  	  	$	55.4	  	
	  	 	 	 	  	 	 	 	
Other Accrued Liabilities
The components of other accrued liabilities were as follows at December 31, 2013 and 2012:

 	  	December 31,	 	
 	  	2013	 	  	2012	 	
 	  	(Dollars in millions)	 	
Customer incentive	  	$	12.8	  	  	$	12.3	  	
Other accrued expenses	  	 	11.5	  	  	 	7.7	  	
Sales tax	  	 	3.1	  	  	 	3.3	  	
Freight	  	 	2.4	  	  	 	2.8	  	
Deferred severance	  	 	3.4	  	  	 	2.3	  	
Real estate tax	  	 	2.0	  	  	 	2.0	  	
Accrued tax	  	 	1.3	  	  	 	1.8	  	
	  	 	 	 	  	 	 	 	
Other accrued liabilities	  	$	36.5	  	  	$	32.2	  	
	  	 	 	 	  	 	 	 	
6. Goodwill and Other Intangibles, Net
The net goodwill balance is specific to the Packaging reportable segment and approximated $26.4 million at December 31, 2013 and 2012. Since the adoption of ASC 350, Intangibles – Goodwill and Other , in 2002, the Company has recognized impairment charges of $373.0 million; there were no impairment charges related to goodwill for the years ended December 31, 2011, 2012 or 2013. The Company made no acquisitions during 2011, 2012 and 2013.
Identifiable intangible assets were comprised of the following at December 31, 2013 and 2012:

 	  	December 31,	 	  	 	 	
 	  	2013	 	  	2012	 	  	 	 	
 	  	Gross
Carrying
Amount	 	  	Accumulated
Amortization	 	  	Gross
Carrying
Amount	 	  	Accumulated
Amortization	 	  	Remaining
Life	 	
 	  	(Dollars in millions)	 	  	 	 	
Customer lists	  	$	30.7	  	  	$	21.5	  	  	$	30.7	  	  	$	20.1	  	  	 	1–7 years	  	
Trade names	  	 	0.2	  	  	 	0.1	  	  	 	0.2	  	  	 	—  	  	  	 	11 years	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  				
Total	  	$	30.9	  	  	$	21.6	  	  	$	30.9	  	  	$	20.1	  	  				

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Table of Contents
xpedx
(A Business of International Paper Company)
Notes to Combined Financial Statements  (continued)
6. Goodwill and Other Intangibles, Net  (continued)
 
The Company recognized the following amounts as amortization expense related to intangible assets for the years ended December 31, 2013, 2012 and 2011:

 	  	2013	 	  	2012	 	  	2011	 	
 	  	(Dollars in millions)	 	
Amortization expense related to intangible assets	  	$	1.5	  	  	$	2.3	  	  	$	9.7	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Included in the above amounts is an impairment charge of $6.7 million recorded in 2011 related to the Central Lewmar trade name, which is included within restructuring charges in the combined statements of operations and comprehensive income. The Central Lewmar trade name was deemed to have a fair value of $0 and is a classified as a Level 3 fair value measurement.
Based on current intangibles subject to amortization, estimated amortization expense for each of the succeeding years is as follows: 2014 – $1.4 million, 2015 – $1.4 million, 2016 – $1.4 million, 2017 – $1.4 million, 2018 – $1.4 million and cumulatively thereafter – $2.3 million.
7. Income Taxes
The components of the Company’s earnings from continuing operations before income taxes and equity earnings by taxing jurisdiction were as follows:

 	  	2013	 	 	2012	 	  	2011	 	
 	  	(Dollars in millions)	 	
(Loss) income:	  				 				  				
U.S.	  	$	(2.1	) 	 	$	15.8	  	  	$	45.0	  	
Non-U.S.	  	 	2.5	  	 	 	7.7	  	  	 	11.7	  	
	  	 	 	 	 	 	 	 	  	 	 	 	
Income from continuing operations before income taxes	  	$	0.4	  	 	$	23.5	  	  	$	56.7	  	
	  	 	 	 	 	 	 	 	  	 	 	 	
A summary of income tax (benefit) provision from continuing operations in the Combined Statement of Operations and comprehensive income is as follows:

 	  	2013	 	 	2012	 	  	2011	 	
 	  	(Dollars in millions)	 	
Current tax (benefit) provision:	  				 				  				
U.S. federal	  	$	(4.9	) 	 	$	2.1	  	  	$	11.2	  	
U.S. state and local	  	 	(0.4	) 	 	 	0.4	  	  	 	2.5	  	
Non-U.S.	  	 	0.5	  	 	 	2.1	  	  	 	3.0	  	
	  	 	 	 	 	 	 	 	  	 	 	 	
	  	 	(4.8	) 	 	 	4.6	  	  	 	16.7	  	
	  	 	 	 	 	 	 	 	  	 	 	 	
Deferred tax provision:	  				 				  				
U.S. federal	  	 	4.6	  	 	 	3.5	  	  	 	4.1	  	
U.S. state and local	  	 	0.5	  	 	 	0.9	  	  	 	0.4	  	
Non-U.S.	  	 	0.1	  	 	 	0.1	  	  	 	—  	  	
	  	 	 	 	 	 	 	 	  	 	 	 	
	  	 	5.2	  	 	 	4.5	  	  	 	4.5	  	
	  	 	 	 	 	 	 	 	  	 	 	 	
Income tax provision	  	$	0.4	  	 	$	9.1	  	  	$	21.2	  	
	  	 	 	 	 	 	 	 	  	 	 	 	
Income tax benefit separately allocated to discontinued operations was $0.0, $0.5 million and $1.4 million for the years ending December 31, 2013, 2012 and 2011, respectively.
 
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Table of Contents
xpedx
(A Business of International Paper Company)
Notes to Combined Financial Statements  (continued)
7. Income Taxes  (continued)
 
A reconciliation of income tax expense from continuing operations using the statutory U.S. income tax rate compared with the actual income tax provision follows:

 	  	2013	 	 	2012	 	 	2011	 	
 	  	(Dollars in millions)	 	
Income from continuing operations before income taxes	  	 	0.4	  	 	 	23.5	  	 	 	56.7	  	
Statutory U.S. income tax rate	  	 	35.0	% 	 	 	35.0	% 	 	 	35.0	% 	
Tax expense using statutory U.S. income tax rate	  	 	0.1	  	 	 	8.2	  	 	 	19.9	  	
State and local income taxes	  	 	—  	  	 	 	0.7	  	 	 	2.1	  	
Foreign rate differential	  	 	(0.1	) 	 	 	(0.6	) 	 	 	(1.1	) 	
Meals and entertainment	  	 	0.4	  	 	 	0.6	  	 	 	0.6	  	
Other	  	 	—  	  	 	 	0.2	  	 	 	(0.3	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Income tax provision	  	 	0.4	  	 	 	9.1	  	 	 	21.2	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Effective income tax rate	  	 	100.0	% 	 	 	38.7	% 	 	 	37.4	% 	
	  	 	 	 	 	 	 	 	 	 	 	 	
The tax effects of significant temporary differences, representing deferred income tax assets and liabilities as of December 31, 2013 and 2012, were as follows:

 	  	December 31,	 	
 	  	2013	 	  	2012	 	
 	  	Domestic	 	 	Non-US	 	  	Domestic	 	 	Non-US	 	
 	  	(Dollars in millions)	 	
Deferred income tax assets:	  				 				  				 				
Bad debt reserves	  	$	8.6	  	 	$	—  	  	  	$	9.3	  	 	$	—  	  	
Inventory	  	 	36.9	  	 	 	—  	  	  	 	39.5	  	 	 	—  	  	
Accrued compensation	  	 	7.1	  	 	 	—  	  	  	 	10.8	  	 	 	—  	  	
Other current	  	 	2.3	  	 	 	0.4	  	  	 	—  	  	 	 	0.7	  	
Goodwill and intangibles	  	 	18.2	  	 	 	—  	  	  	 	21.8	  	 	 	—  	  	
Long-term compensation	  	 	7.3	  	 	 	—  	  	  	 	8.1	  	 	 	—  	  	
Other non-current	  	 	1.4	  	 	 	0.1	  	  	 	1.1	  	 	 	—  	  	
Net operating losses and credit Carryforwards	  	 	4.4	  	 	 	—  	  	  	 	—  	  	 	 	—  	  	
	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Gross deferred income tax assets	  	 	86.2	  	 	 	0.5	  	  	 	90.6	  	 	 	0.7	  	
Less valuation allowance	  	 	—  	  	 	 	—  	  	  	 	—  	  	 	 	—  	  	
	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Deferred income tax asset	  	 	86.2	  	 	 	0.5	  	  	 	90.6	  	 	 	0.7	  	
	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Deferred income tax liabilities:	  				 				  				 				
Fixed assets	  	 	(8.7	) 	 	 	—  	  	  	 	(7.1	) 	 	 	—  	  	
	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Gross deferred income tax liabilities	  	 	(8.7	) 	 	 	—  	  	  	 	(7.1	) 	 	 	—  	  	
	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Net deferred income tax asset	  	$	77.5	  	 	$	0.5	  	  	$	83.5	  	 	$	0.7	  	
	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
The Company’s deferred balances include $4.0 million in federal and state net operating loss carryforwards that were generated in 2013. The federal net operating loss carryforward will expire in 2033 and the state net operating loss carryforward will expire in different years depending on the jurisdiction. In addition to the net
 
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Table of Contents
xpedx
(A Business of International Paper Company)
Notes to Combined Financial Statements  (continued)
7. Income Taxes  (continued)
 
operating loss carryforward, the Company maintains an Alternative Minimum Tax credit carryforward of $0.4 million which has an indefinite life.
The deferred income tax balances included in the combined balance sheets as of December 31, 2013 and 2012 were as follows:

 	  	2013	 	  	2012	 	
 	  	(Dollars in millions)	 	
Deferred income tax assets (current)	  	$	55.3	  	  	$	60.0	  	
Deferred income tax assets (non-current)	  	 	22.7	  	  	 	24.2	  	
	  	 	 	 	  	 	 	 	
Net deferred income tax asset	  	$	78.0	  	  	$	84.2	  	
	  	 	 	 	  	 	 	 	
A reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended December 31, 2013, 2012 and 2011 is as follows:

 	  	2013	 	 	2012	 	 	2011	 	
 	  	(Dollars in millions)	 	
Balance at January 1	  	$	(1.7	) 	 	$	(1.4	) 	 	$	(1.1	) 	
Additions based on tax positions related to current year	  	 	—  	  	 	 	(0.3	) 	 	 	(0.3	) 	
Expiration of statutes of limitation	  	 	1.1	  	 	 	—  	  	 	 	—  	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Balance at December 31	  	$	(0.6	) 	 	$	(1.7	) 	 	$	(1.4	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Included in the balance as of December 31, 2013, 2012 and 2011 are $0.6, $1.7 and $1.4, respectively, for tax positions for which the ultimate benefits are highly certain, but for which there is uncertainty about the timing of such benefits. However, except for the possible effect of any penalties, any disallowance that would change the timing of these benefits would not affect the annual effective tax rate, but would accelerate the payment of cash to the taxing authority to an earlier period.
The Company accrues interest on unrecognized tax benefits as a component of interest expense. Penalties, if incurred, are recognized as a component of income tax expense. The Company had less than $0.1 million in each year accrued for the payment of estimated interest associated with unrecognized tax benefits at December 31, 2013, 2012 and 2011, respectively.
In assessing the realizability of the deferred tax assets at December 31, 2013, 2012 and 2011, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The Company considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, the Company believes it is more likely than not that it will realize the benefits of these deductible differences.
The major jurisdictions where the Company files income tax returns, both separately and as a part of International Paper Company, are the United States, Canada, Mexico and the Netherlands. Generally, tax years
 
F-22

Table of Contents
xpedx
(A Business of International Paper Company)
Notes to Combined Financial Statements  (continued)
7. Income Taxes  (continued)
 
2002 through 2012 remain open and subject to examination by the relevant tax authorities. The Company is typically engaged in various tax examinations at any given time, both in the United States and overseas. In 2013, the Company concluded its examination with the U.S. Internal Revenue Service for the tax years 2006-2009. As a result of the completion of the examinations, the Company reduced its unrecognized tax benefits by approximately $1.1 million. Due to expiration of statutes of limitation, the Company currently estimates that the amount of unrecognized tax benefits could be reduced by up to $0.3 million during the next twelve months.
Deferred income taxes are not provided for temporary differences of approximately $37.7 million as of December 31, 2013, representing earnings non-U.S. subsidiaries intended to be permanently reinvested. Computation of the potential deferred tax liability associated with these undistributed earnings and other basis difference is not practicable.
8. Commitments and Contingent Liabilities
Certain property, machinery and equipment are leased under cancelable and noncancelable agreements.
At December 31, 2013, total future minimum commitments under existing noncancelable operating leases were as follows:

 	  	2014	 	  	2015	 	  	2016	 	  	2017	 	  	2018	 	  	Thereafter	 	
 	  	(Dollars in millions)	 	
Lease obligations	  	$	46.3	  	  	$	38.2	  	  	$	33.0	  	  	$	29.4	  	  	$	25.5	  	  	$	61.1	  	
Sublease income	  	 	0.9	  	  	 	0.8	  	  	 	0.8	  	  	 	0.5	  	  	 	—  	  	  	 	—  	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total	  	$	45.4	  	  	$	37.4	  	  	$	32.2	  	  	$	28.9	  	  	$	25.5	  	  	$	61.1	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Rent expense was $65.0 million, $64.4 million and $71.6 million for the years ended December 31, 2013, 2012 and 2011, respectively.
Operating Leases
xpedx leases certain of its distribution facilities, operating equipment and office equipment under noncancelable operating leases with terms greater than one year. Operating lease terms, including renewal options likely to be exercised, range from 3 months to 22 years and commitments range from $0.1 million to $15.3 million based on the type of equipment or size of the facility. Many of the leases include escalating rents for which the Company calculates annual straight-line expense and compares this to the actual lease expense by year in accordance with ASC 840, Leases . The Company records lease expense using the straight-line method. The difference between straight-line and actual lease payments is recorded on the combined balance sheet as a current or noncurrent liability based on the remaining lease term. Many leases include renewal options at predetermined rates or rates tied to a published index. All leasehold improvements are depreciated at the lesser of the asset life or the lease term and reflected in depreciation and amortization in the combined statements of operations and comprehensive income.
Guarantees
In connection with sales of property, equipment and other assets, xpedx commonly makes representations and warranties relating to such assets and may agree to indemnify buyers with respect to tax and environmental liabilities, breaches of representations and warranties, and other matters. Where liabilities for such matters are
 
F-23

Table of Contents
xpedx
(A Business of International Paper Company)
Notes to Combined Financial Statements  (continued)
8. Commitments and Contingent Liabilities  (continued)
 
determined to be probable and subject to reasonable estimation, accrued liabilities are recorded at the time of sale as a cost of the transaction. There were no such guarantees at December 31, 2013 and 2012.
Legal Proceedings
From time to time the Company is involved in legal proceedings that are incidental to the operation of our business. Some of these proceedings seek remedies relating to product liability, personal injury claims, employment and pension matters, and commercial or contractual disputes, sometimes related to acquisitions. We will continue to defend vigorously against all claims.
Although the ultimate outcome of any legal mater cannot be predicted with certainty, based on present information, including our assessment of the merits of the particular claim, we do not expect that any asserted or unasserted legal claims or proceedings, individually or in the aggregate, will have a material adverse effect on our cash flow, results of operations or financial condition.
Other
Approximately 10.0% of xpedx’s work force is represented under 23 collective bargaining agreements as of December 31, 2013. Six of these agreements expire during 2014.
9. Retirement and Post Retirement Benefit Plans
Certain of the Company’s employees participate in defined benefit pension and other post-employment benefit plans (the Plans) sponsored by International Paper and accounted for by International Paper in accordance with accounting guidance for defined benefit pension and other post-employment benefit plans. The total cost of the Plans is determined by actuarial valuation and the Company receives an allocation of the service cost of the Plans based upon a percent of salaries. The amount of net pension and other post-employment benefit expense attributable to the Company related to these International Paper sponsored plans was $15.1 million, $12.7 million and $12.8 million for the years ended December 31, 2013, 2012 and 2011, respectively, and is reflected within both cost of products sold and selling and administrative expenses in the combined statements of operations and comprehensive income.
The Company also contributes to multiemployer pension plans for certain collective bargaining U.S. employees that are not sponsored by International Paper. The risks of participating in these multiemployer pension plans are different from a single employer plan in the following aspects:
 
 	•	 	Assets contributed to the multiemployer plans by one employer may be used to provide benefits to employees of other participating employers.	
 
 	•	 	If a participating employer ceases contributing to the plan, the unfunded obligations of the plan may be inherited by the remaining participating employers.	
 
 	•	 	If the Company chooses to stop participating in the multiemployer plan, the Company may be required to pay those plans an amount based on the underfunded status of the plan, referred to as a withdrawal liability.	
The Company made contributions to the bargaining unit supported multiemployer pension plans of approximately $2.5 million, $2.6 million and $2.6 million for the years ended December 31, 2013, 2012 and
 
F-24

Table of Contents
xpedx
(A Business of International Paper Company)
Notes to Combined Financial Statements  (continued)
9. Retirement and Post Retirement Benefit Plans  (continued)
 
2011, respectively. xpedx’s participation in these plans for the annual period ended December 31, 2013 is outlined in the table below. The “EIN/Pension Plan Number” column provides the Employee Identification Number and the three-digit plan number, if applicable. Unless otherwise noted, the most recent Pension Protection Act zone status available in 2013 and 2012 is for the plan’s year-end at December 31, 2013 and December 31, 2012, respectively. The zone status is based on information that xpedx received from the plan and is certified by the plan’s actuary. Among other factors, plans in the red zone are generally less than 65 percent funded, plans in the yellow zone are less than 80 percent funded and plans in the green zone are at least 80 percent funded. The “FIP/RP Status Pending/Implemented” column indicates plans for which a Financial Improvement Plan or a Rehabilitation Plan is either pending or has been implemented. The last column lists the expiration date(s) of the collective bargaining agreement(s) to which the plans are subject.

 	 	EIN/Pension
Plan No.	 	Pension Protection
Act Zone Status	 	FIP/RP Status
Pending/
Implemented	 	xpedx
Contributions	 	Surcharge
Imposed	 	Expiration
Date of
Collective
Bargaining
Agreement	
Pension Fund	 		 	    2013    	 	    2012    	 		 	2013	 	2012	 	2011	 		 		
 	 	 	 	 	 	 	 	 	 	(Dollars in millions)	 	 	 	 	
Western Conference of Teamsters Pension Plan	 	916145047/001	 	Green	 	Green	 	No	 	$1.2	 	$1.3	 	$1.4	 	No	 	10/31/2015	
										
Central States Southeast Southwest Pension (IBT)	 	366044243/001	 	Red	 	Red	 	RP,
Implemented	 	0.2	 	0.2	 	0.2	 	Yes	 	2/28/2014	
										
Teamsters Pension Trust Fund of Philadelphia and Vicinity	 	231511735/001	 	Yellow	 	Yellow	 	FIP,
Implemented	 	0.3	 	0.3	 	0.3	 	No	 	7/31/2015	
										
Graphic Arts Industry Joint Pension Trust	 	521074215/001	 	Red	 	Red	 	RP,
Implemented	 	0.1	 	0.1	 	0.1	 	Yes	 	9/16/2016	
										
New England Teamsters & Trucking Industry Pension	 	046372430/001	 	Red	 	Red	 	RP,
Implemented	 	0.5	 	0.5	 	0.4	 	No	 	9/30/2017	
										
Western Pennsylvania Teamsters and Employers Pension Plan	 	256029946/001	 	Red	 	Red	 	RP,
Implemented	 	0.2	 	0.2	 	0.2	 	No	 	3/31/2017	
	 		 		 		 		 	 	 	 	 	 	 		 		
Total contributions	 		 		 		 		 	$2.5	 	$2.6	 	$2.6	 		 		
	 		 		 		 		 	 	 	 	 	 	 		 		
Certain employees also participate in defined contribution plans sponsored by International Paper including the International Paper Company Salaried Savings Plan, the International Paper Company Hourly Savings Plan and the Deferred Compensation Savings Plan. The defined contribution plans allow eligible employees to contribute a portion of their salary to the plans and International Paper makes matching contributions to participant accounts on a specified percentage of employee deferrals as determined by the provisions of each plan.
Both the International Paper Company Salaried Savings Plan and the International Paper Company Hourly Savings Plan are tax-qualified defined contribution 401(k) savings plans. The Deferred Compensation Savings Plan is an unfunded nonqualified defined contribution plan. This plan permits eligible employees to continue to make deferrals and receive company matching contributions when their contributions to the International Paper Salaried Savings Plan are stopped due to limitations under U.S. tax law. Participant deferrals and company matching contributions are not invested in a separate trust, but are paid directly from International Paper’s general assets at the time benefits become due and payable.
Company matching contributions to the plans totaled approximately $16.7 million, $17.3 million and $18.0 million for the years ended December 31, 2013, 2012 and 2011, respectively.
 
F-25

Table of Contents
xpedx
(A Business of International Paper Company)
Notes to Combined Financial Statements  (continued)
9. Retirement and Post Retirement Benefit Plans  (continued)
 
Company employees also participate in other post-retirement benefit plans such as health care and life insurance plans sponsored by International Paper. International Paper provides certain retiree health care and life insurance benefits covering certain U.S. salaried and hourly employees. International Paper does not fund these benefits prior to payment and has the right to modify or terminate certain of these plans in the future. The service cost related to xpedx employees covered by these plans totaled approximately $2.9 million , $3.0 million and $3.1 million for the years ended December 31, 2013, 2012 and 2011, respectively.
10. Incentive Plans
As of December 31, 2013, all equity awards held by employees of the Company were granted under International Paper’s 2009 Incentive Compensation Plan (ICP) or predecessor plans. The ICP authorizes grants of restricted stock, restricted or deferred stock units, performance awards payable in cash or stock upon the attainment of specified performance goals, dividend equivalents, stock options, stock appreciation rights, other stock-based awards and cash-based awards at the discretion of the Management Development and Compensation Committee of the Board of Directors (the Committee) that administers the ICP. Restricted stock units (RSU’s) were also awarded to certain non-U.S. employees. The following disclosures represent the Company’s portion of such plans.
Performance Share Plan
Under the Performance Share Plan (PSP), contingent awards of International Paper common stock are granted by the Committee. The PSP awards are earned over a three-year period. For the 2011 grant, one-fourth of the award is earned during each of the three twelve-month periods, with the final one-fourth portion earned over the full three-year period. The 2012 and 2013 grants are earned evenly over a thirty-six-month period. PSP awards are earned based on the achievement of defined performance rankings of return on investment (ROI) and total shareholder return (TSR) compared to ROI and TSR peer groups of companies. Awards are weighted 75% for ROI and 25% for TSR for all participants except for officers for whom the awards are weighted 50% for ROI and 50% for TSR. The ROI component of the PSP awards is valued at the closing stock price on the day prior to the grant date. As the ROI component contains a performance condition, compensation expense, net of estimated forfeitures, is recorded over the requisite service period based on the most probable number of awards expected to vest. The TSR component of the PSP awards is valued using a Monte Carlo simulation as the TSR component contains a market condition. The Monte Carlo simulation estimates the fair value of the TSR component based on the expected term of the award, a risk-free rate, expected dividends and the expected volatility for International Paper and its competitors. The expected term is estimated based on the vesting period of the awards, the risk-free rate is based on the yield on U.S. Treasury securities matching the vesting period and the volatility is based on the Company’s historical volatility over the expected term.
Beginning with the 2011 PSP, grants are made in performance-based restricted stock units (PSU’s). The PSP will continue to be paid in unrestricted shares of International Paper stock.
 
F-26

Table of Contents
xpedx
(A Business of International Paper Company)
Notes to Combined Financial Statements  (continued)
10. Incentive Plans  (continued)
 
The following table sets forth the assumptions used to determine compensation cost for the market condition component of the PSP plan:

 	  	Twelve Months
Ended
December 31,
2013	 	  	Twelve Months
Ended
December 31, 2012	 	
Expected volatility	  	 	36.02%	  	  	 	25.25% – 55.33%	  	
Risk-free interest rate	  	 	0.37%	  	  	 	0.12% – 0.42%	  	
The following summarizes PSP activity for the three years ended December 31, 2013:

 	  	Shares/
Units	 	 	Weighted
Average
Grant Date
Fair Value	 	
 	  	 	 	 	(Actual Dollar)	 	
Outstanding at December 31, 2010	  	 	804,579	  	 	 	26.56	  	
Granted	  	 	471,214	  	 	 	28.08	  	
Shares issued	  	 	(168,409	) 	 	 	36.26	  	
Forfeited	  	 	(23,561	) 	 	 	28.08	  	
	  	 	 	 	 	 	 	 	
Outstanding at December 31, 2011	  	 	1,083,823	  	 	 	25.68	  	
Granted	  	 	336,334	  	 	 	31.33	  	
Shares issued	  	 	(309,368	) 	 	 	19.10	  	
Forfeited	  	 	(16,817	) 	 	 	31.33	  	
	  	 	 	 	 	 	 	 	
Outstanding at December 31, 2012	  	 	1,093,972	  	 	$	29.28	  	
Granted	  	 	296,888	  	 	 	39.55	  	
Shares issued	  	 	(334,228	) 	 	 	28.93	  	
Forfeited	  	 	(14,844	) 	 	 	39.55	  	
	  	 	 	 	 	 	 	 	
Outstanding at December 31, 2013	  	 	1,041,788	  	 	$	32.21	  	
	  	 	 	 	 	 	 	 	
Executive Continuity and Restricted Stock Award Programs
The Executive Continuity Award program provides for the granting of tandem awards of restricted stock and/or nonqualified stock options to key executives. Grants are restricted and awards conditioned on attainment of a specified age. The awarding of a tandem stock option results in the cancellation of the related restricted shares.
The service-based Restricted Stock Award program (RSA), designed for recruitment, retention and special recognition purposes, also provides for awards of restricted stock to key employees. Of the outstanding awards at December 31, 2013, 25,000 shares are expected to vest in 2014.
 
F-27

Table of Contents
xpedx
(A Business of International Paper Company)
Notes to Combined Financial Statements  (continued)
10. Incentive Plans  (continued)
 
The following summarizes the activity of the Executive Continuity Award program and RSA program for the three years ended December 31, 2013:

 	  	Shares/
Units	 	 	Weighted
Average
Grant Date
Fair Value	 	
 	  	 	 	 	(Actual Dollar)	 	
Outstanding at December 31, 2010	  	 	—  	  	 	 	—  	  	
Granted	  	 	5,000	  	 	 	27.24	  	
	  	 	 	 	 	 	 	 	
Outstanding at December 31, 2011	  	 	5,000	  	 	 	27.24	  	
Granted	  	 	25,000	  	 	 	35.15	  	
Shares issued	  	 	(2,500	) 	 	 	27.24	  	
	  	 	 	 	 	 	 	 	
Outstanding at December 31, 2012	  	 	27,500	  	 	$	34.43	  	
Granted	  				 				
Shares issued	  	 	(2,500	) 	 	 	27.24	  	
	  	 	 	 	 	 	 	 	
Outstanding at December 31, 2013	  	 	25,000	  	 	$	35.15	  	
	  	 	 	 	 	 	 	 	
Stock-based compensation expense and related income tax benefits were as follows:

 	 	2013	 	 	2012	 	 	2011	 	
 	 	(Dollars in millions)	 	
Total stock-based compensation expense (included in selling and administrative expense)	 	$	15.4	  	 	$	13.1	  	 	$	10.1	  	
Income tax benefits related to stock-based compensation	 	 	8.5	  	 	 	6.2	  	 	 	4.4	  	
At December 31, 2013, $10.2 million of compensation cost, net of estimated forfeitures, related to unvested restricted performance shares, executive continuity awards and restricted stock attributable to future performance had not yet been recognized. This amount will be recognized in expense over a weighted-average period of 1.65 years.
11. Financial Information by Reportable Segment and Geographic Area
xpedx’s reportable segments, Print, Packaging and Facility Solutions, are consistent with the internal structure used to manage these businesses and the Company’s major product lines.
For management purposes, xpedx reports the operating performance of each segment based on operating profit. Intersegment sales and transfers are recorded at current market prices.
 
F-28

Table of Contents
xpedx
(A Business of International Paper Company)
Notes to Combined Financial Statements  (continued)
11. Financial Information by Reportable Segment and Geographic Area  (continued)
 
Information by Reportable Segment
Net Sales
The following table presents net sales by reportable segment for the years ended December 31, 2013, 2012 and 2011:

 	  	2013	 	  	2012	 	  	2011	 	
 	  	(Dollars in millions)	 	
Print	  	$	3,219.4	  	  	$	3,486.2	  	  	$	3,911.9	  	
Packaging	  	 	1,587.2	  	  	 	1,582.1	  	  	 	1,617.0	  	
Facility Solutions	  	 	845.8	  	  	 	943.6	  	  	 	979.9	  	
Corporate and intersegment sales	  	 	—  	  	  	 	0.1	  	  	 	0.4	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Net sales	  	$	5,652.4	  	  	$	6,012.0	  	  	$	6,509.2	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Operating Profit
The following table presents operating profit (loss) by reportable segment for the years ended December 31, 2013, 2012 and 2011:

 	  	2013	 	 	2012	 	 	2011	 	
 	  	(Dollars in millions)	 	
Print	  	$	27.4	  	 	$	32.3	  	 	$	54.5	  	
Packaging	  	 	43.1	  	 	 	51.0	  	 	 	61.5	  	
Facility Solutions	  	 	(24.1	) 	 	 	(35.5	) 	 	 	(18.3	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Operating profit	  	 	46.4	  	 	 	47.8	  	 	 	97.7	  	
Corporate items	  	 	(46.0	) 	 	 	(24.3	) 	 	 	(41.0	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Earnings from continuing operations before income taxe s	  	$	0.4	  	 	$	23.5	  	 	$	56.7	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Assets
The following table presents total assets by reportable segment as of December 31, 2013 and 2012:

 	  	2013	 	  	2012	 	
 	  	(Dollars in millions)	 	
Print	  	$	654.2	  	  	$	708.9	  	
Packaging	  	 	437.2	  	  	 	418.2	  	
Facility Solutions	  	 	220.2	  	  	 	238.0	  	
Corporate	  	 	0.6	  	  	 	2.8	  	
	  	 	 	 	  	 	 	 	
Total assets	  	$	1,312.2	  	  	$	1,367.9	  	

F-29

Table of Contents
xpedx
(A Business of International Paper Company)
Notes to Combined Financial Statements  (continued)
11. Financial Information by Reportable Segment and Geographic Area  (continued)
 
Restructuring Charges
The following table presents restructuring charges by reportable segment for the years ended December 31, 2013, 2012 and 2011:

 	  	2013	 	  	2012	 	  	2011	 	
 	  	(Dollars in millions)	 	
Print	  	$	13.0	  	  	$	20.5	  	  	$	25.2	  	
Packaging	  	 	8.9	  	  	 	5.7	  	  	 	9.0	  	
Facility Solutions	  	 	3.8	  	  	 	4.5	  	  	 	4.4	  	
Corporate	  	 	12.2	  	  	 	4.4	  	  	 	5.0	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Restructuring charges	  	$	37.9	  	  	$	35.1	  	  	$	43.6	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Capital Spending
The following table presents capital spending by reportable segment for the years ended December 31, 2013, 2012 and 2011:

 	  	2013	 	  	2012	 	  	2011	 	
 	  	(Dollars in millions)	 	
Print	  	$	3.5	  	  	$	7.9	  	  	$	9.5	  	
Packaging	  	 	4.2	  	  	 	4.6	  	  	 	5.7	  	
Facility Solutions	  	 	1.6	  	  	 	2.0	  	  	 	2.2	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total from continuing operations	  	$	9.3	  	  	$	14.5	  	  	$	17.4	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Depreciation and Amortization
The following table presents depreciation and amortization by reportable segment for the years ended December 31, 2013, 2012 and 2011:

 	  	2013	 	  	2012	 	  	2011	 	
 	  	(Dollars in millions)	 	
Print	  	$	10.5	  	  	$	7.6	  	  	$	9.7	  	
Packaging	  	 	3.7	  	  	 	3.6	  	  	 	3.4	  	
Facility Solutions	  	 	2.9	  	  	 	2.8	  	  	 	2.5	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Depreciation and amortization	  	$	17.1	  	  	$	14.0	  	  	$	15.6	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Information by Geographic Area
Substantially all of the Company’s operations and identifiable assets are located in the United States. The following tables present net sales and long-lived assets by geographic area.
 
F-30

Table of Contents
xpedx
(A Business of International Paper Company)
Notes to Combined Financial Statements  (continued)
11. Financial Information by Reportable Segment and Geographic Area  (continued)
 
Net Sales (a)
The following table presents net sales by geographic area for the years ended December 31, 2013, 2012 and 2011:

 	  	2013	 	  	2012	 	  	2011	 	
 	  	(Dollars in millions)	 	
United States	  	$	5,508.5	  	  	$	5,830.9	  	  	$	6,295.3	  	
Other countries	  	 	143.9	  	  	 	181.1	  	  	 	213.9	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Net sales	  	$	5,652.4	  	  	$	6,012.0	  	  	$	6,509.2	  	

(a)  	Net sales are attributed to countries based on the location of the purchaser/destination.	
Long-Lived Assets
The following table presents long-lived assets by geographic area as of December 31, 2013 and 2012:

 	  	December 31,	 	
 	  	2013	 	  	2012	 	
 	  	(Dollars in millions)	 	
United States	  	$	106.1	  	  	$	130.9	  	
Other countries	  	 	1.0	  	  	 	1.1	  	
	  	 	 	 	  	 	 	 	
Long-lived assets	  	$	107.1	  	  	$	132.0	  	
	  	 	 	 	  	 	 	 	
12. Concentrations of Credit Risk
Concentration of credit risk relates to trade receivables which arise in the normal course of business. The Company performs regular credit evaluations of its customers. Collateral is not always required and the majority of trade receivables are unsecured.
No one customer accounted for more than 5% of net sales or accounts receivable as of or for the years ended December 31, 2013, 2012 and 2011. The Company does not believe that there is any concentration of sales or accounts receivable that present a significant risk.
13. Related-Party Transactions and Parent Company Equity
Related-Party Sales and Purchases
For the years ended December 31, 2013, 2012 and 2011, the Company sold products to other International Paper businesses in the amount of $53.0 million, $65.1 million and $60.0 million, respectively, which is included in net sales in the combined statements of operations and comprehensive income. The Company also purchases inventories from other International Paper businesses. The Company purchased and recognized in cost of products sold inventory from International Paper of $604.4 million, $639.0 million and $651.6 million in the years ended December 31, 2013, 2012 and 2011, respectively. At December 31, 2013 and 2012, the aggregate amount of inventories purchased from other International Paper businesses that remained on the Company’s combined balance sheets was $48.5 million and $53.7 million, respectively.
 
F-31

Table of Contents
xpedx
(A Business of International Paper Company)
Notes to Combined Financial Statements  (continued)
13. Related-Party Transactions and Parent Company Equity  (continued)
 
Related-Party Receivables Securitization
International Paper’s contractually committed credit facilities include up to $1.0 billion of commercial paper-based financings based on eligible receivables balances ($958 million available as of December 31, 2013) under a receivables securitization program. The accounts receivable of xpedx are included in the eligible receivable balances under the securitization program. At December 31, 2013 and 2012 there were no borrowings under the receivables securitization program.
Parent Company Investment
Net transfers to parent are included within parent company equity on the combined statements of changes in parent company equity. All significant intercompany transactions between the Company and International Paper have been included in these combined financial statements and are considered to be effectively settled for cash in the combined financial statements at the time the transaction is recorded. The total net effect of the settlement of these intercompany transactions is reflected in the combined statements of cash flows as a financing activity and in the combined balance sheets as Parent company investment. The components of the net transfers to parent for the years ended December 31, 2013, 2012 and 2011 are as follows:

 	  	2013	 	 	2012	 	 	2011	 	
 	  	(Dollars in millions)	 	
Intercompany sales and purchases, net	  	$	556.6	  	 	$	575.2	  	 	$	590.3	  	
Cash pooling and general financing activities	  	 	(678.1	) 	 	 	(698.1	) 	 	 	(770.9	) 	
Corporate allocations including income taxes	  	 	84.1	  	 	 	84.8	  	 	 	100.8	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total net transfers to parent	  	$	(37.4	) 	 	$	(38.1	) 	 	$	(79.8	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
On June 27, 2011 the Company borrowed $15.1 million from the Parent bearing interest at 1.86%. Additionally, on August 31, 2011, the Company separately borrowed $5.1 million from the Parent bearing interest of
3.05%. There are no covenants with these Promissory Notes and interest is due to the Parent at the maturity date. On December 31, 2013, the Company entered into a General Conveyance Agreement with its Parent whereby the debt was assumed by the Parent effective immediately.
14. Subsequent Events
These combined financial statements reflect management’s evaluation of subsequent events through April 4, 2014, the date the Company’s financial statements were available to be issued.
On January 28, 2014, International Paper announced that the Company and Unisource Worldwide, Inc. (“Unisource”) will merge under the terms of a definitive agreement that will result in the creation of a new publicly traded company.
International Paper will indirectly contribute the assets of the Company to a newly formed wholly owned subsidiary, xpedx Holding Company, in exchange for the stock of the subsidiary, a cash payment of approximately $400 million expected to be financed with new debt in the new company’s capital structure, and the potential for an additional cash payment of up to $100 million pursuant to an “earn-out” provision. International Paper will distribute shares of the new company to International Paper shareholders on a pro rata basis in a manner intended to be tax-free to International Paper and its shareholders.
 
F-32

Table of Contents
xpedx
(A Business of International Paper Company)
Notes to Combined Financial Statements  (continued)
14. Subsequent Events  (continued)
 
Following the spinoff of the new company to International Paper shareholders, Unisource will immediately merge with and into the new company. In connection with the merger, the shares of Unisource will be converted into a number of shares of the new company such that, following the merger, approximately 51% of the shares of the new public company will be owned by International Paper shareholders, with the remaining approximately 49% of shares held by UWW Holdings LLC, the holding company that owns Unisource.
To finance the cash payment to International Paper and refinance existing debt of Unisource, the new company has entered into a commitment with three banks for $1.4 billion of asset-backed financing.
 
F-33

Table of Contents
 Independent Auditor’s Report
To the Board of Directors
UWW Holdings, Inc. and Subsidiaries:
We have audited the accompanying consolidated financial statements of UWW Holdings, Inc. and its subsidiaries, which comprise the consolidated balance sheets as of December 31, 2013 and December 29, 2012, and the related consolidated statements of operations, comprehensive income/(loss), changes in redeemable preferred stock and stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2013.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on the consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Company’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of UWW Holdings, Inc. and its subsidiaries at December 31, 2013 and December 29, 2012, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2013 in accordance with accounting principles generally accepted in the United States of America.
/s/ PricewaterhouseCoopers LLP
Atlanta, Georgia
March 28, 2014
 
F-34

Table of Contents
 UWW HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(Dollars in millions)

 	  	Fiscal years ended	 	
 	  	December 31,
2013	 	 	December 29,
2012	 	 	December 31,
2011	 	
Net sales (including sales to a related party of $31.0, $22.7, $17.0 for fiscal years 2013, 2012 and 2011, respectively)	  	$	4,089.1	  	 	$	4,123.3	  	 	$	4,327.8	  	
Cost of products sold (including purchases from a related party of $205.5, $208.9 and $209.9 for fiscal years 2013, 2012 and 2011, respectively) excluding depreciation and amortization	  	 	3,370.4	  	 	 	3,405.6	  	 	 	3,591.9	  	
Distribution expenses	  	 	250.3	  	 	 	240.0	  	 	 	252.4	  	
Selling and administrative expenses	  	 	391.3	  	 	 	392.9	  	 	 	409.0	  	
Depreciation and amortization	  	 	25.1	  	 	 	25.4	  	 	 	24.5	  	
Restructuring (gains) expenses	  	 	(3.4	) 	 	 	6.6	  	 	 	14.6	  	
Merger expenses	  	 	14.3	  	 	 	—  	  	 	 	—  	  	
Asset impairments	  	 	0.4	  	 	 	4.9	  	 	 	1.0	  	
Other expense, net	  	 	0.5	  	 	 	0.4	  	 	 	1.5	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Operating income	  	 	40.2	  	 	 	47.5	  	 	 	32.9	  	
Interest expense, net	  	 	27.4	  	 	 	28.3	  	 	 	66.7	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Income (loss) before income taxes	  	 	12.8	  	 	 	19.2	  	 	 	(33.8	) 	
Income tax expense (benefit)	  	 	(228.5	) 	 	 	15.2	  	 	 	(5.5	) 	
Equity earnings of affiliates, net of taxes	  	 	(1.1	) 	 	 	(1.1	) 	 	 	(1.2	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net income (loss)	  	 	242.4	  	 	 	5.1	  	 	 	(27.1	) 	
Redeemable preferred stock dividends	  	 	(19.4	) 	 	 	(17.2	) 	 	 	(1.3	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net income (loss) attributable to common shareholders	  	$	223.0	  	 	$	(12.1	) 	 	$	(28.4	) 	

 
The accompanying notes are an integral part of these consolidated financial statements.
 
F-35

Table of Contents
 UWW HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income/(Loss)
(Dollars in millions)

 	  	Fiscal years ended	 	
 	  	December 31,
2013	 	 	December 29,
2012	 	 	December 31,
2011	 	
Net income (loss)	  	$	242.4	  	 	$	5.1	  	 	$	(27.1	) 	
Other comprehensive income (loss), net of tax:	  				 				 				
Foreign currency translation adjustment	  	 	(5.4	) 	 	 	2.4	  	 	 	(2.2	) 	
Defined benefit pension plans, net of taxes:	  				 				 				
Net pension gain (loss)	  	 	20.1	  	 	 	(0.6	) 	 	 	(18.0	) 	
Prior service credit	  	 	—  	  	 	 	—  	  	 	 	3.2	  	
Amortization of prior service credit	  	 	(0.4	) 	 	 	(0.2	) 	 	 	—  	  	
Amortization of net loss	  	 	0.7	  	 	 	1.0	  	 	 	0.1	  	
Pension foreign currency translation adjustment	  	 	—  	  	 	 	—  	  	 	 	(0.2	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Defined benefit pension plans	  	 	20.4	  	 	 	0.2	  	 	 	(14.9	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Other comprehensive income (loss)	  	 	15.0	  	 	 	2.6	  	 	 	(17.1	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total comprehensive income (loss)	  	$	257.4	  	 	$	7.7	  	 	$	(44.2	) 	

 
The accompanying notes are an integral part of these consolidated financial statements.
 
F-36

Table of Contents
 UWW HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Dollars in millions, except share amounts)

 	  	December 31,

2013	 	 	December 29,
2012	 	
Assets	  				 				
Current assets:	  				 				
Cash	  	$	22.2	  	 	$	30.6	  	
Accounts receivable, less allowance of $14.6 and $19.6 at 2013 and 2012, respectively	  	 	467.8	  	 	 	471.9	  	
Related-party accounts receivable	  	 	2.8	  	 	 	2.8	  	
Inventories	  	 	314.7	  	 	 	315.2	  	
Deferred income tax assets	  	 	10.2	  	 	 	—  	  	
Other current assets	  	 	52.9	  	 	 	61.7	  	
	  	 	 	 	 	 	 	 	
Total current assets	  	 	870.6	  	 	 	882.2	  	
Property and equipment, net	  	 	76.3	  	 	 	80.2	  	
Goodwill	  	 	23.4	  	 	 	23.4	  	
Other intangibles, net	  	 	20.9	  	 	 	24.3	  	
Deferred income tax assets	  	 	210.0	  	 	 	8.8	  	
Other noncurrent assets	  	 	14.0	  	 	 	20.3	  	
	  	 	 	 	 	 	 	 	
Total assets	  	$	1,215.2	  	 	$	1,039.2	  	
	  	 	 	 	 	 	 	 	
Liabilities, Redeemable preferred stock and Stockholders’ equity	  				 				
Current liabilities:	  				 				
Accounts payable	  	$	227.1	  	 	$	275.0	  	
Related-party accounts payable	  	 	6.7	  	 	 	4.5	  	
Accrued payroll and benefits	  	 	33.0	  	 	 	25.5	  	
Other accrued liabilities	  	 	65.5	  	 	 	68.3	  	
Deferred income tax liabilities	  	 	—  	  	 	 	12.1	  	
Current maturities of long-term debt	  	 	2.7	  	 	 	3.0	  	
Capital lease obligations to related party, current portion	  	 	9.4	  	 	 	8.2	  	
	  	 	 	 	 	 	 	 	
Total current liabilities	  	 	344.4	  	 	 	396.6	  	
Long-term debt, net of current maturities	  	 	325.4	  	 	 	315.9	  	
Capital lease obligations to related party, less current portion	  	 	45.9	  	 	 	55.7	  	
Defined benefit pension obligations, net	  	 	26.6	  	 	 	57.0	  	
Other noncurrent liabilities	  	 	73.4	  	 	 	53.2	  	
	  	 	 	 	 	 	 	 	
Total liabilities	  	$	815.7	  	 	$	878.4	  	
	  	 	 	 	 	 	 	 	
Commitments and contingencies (Note 9)	  				 				
			
Redeemable preferred stock, $.01 par value per share; 228,465 shares authorized; 228,463 issued and outstanding	  	 	147.7	  	 	 	147.4	  	
			
Stockholders’ equity:	  				 				
Common stock, $.01 par value per share; 33.2 million shares authorized: and 25.8 million shares issued and outstanding	  	 	0.3	  	 	 	0.3	  	
Additional paid-in capital	  	 	311.2	  	 	 	330.2	  	
Accumulated deficit	  	 	(63.4	) 	 	 	(305.8	) 	
Accumulated other comprehensive loss	  	 	4.7	  	 	 	(10.3	) 	
Treasury stock at cost, 90,000 shares of Class B and 10,000 shares of Class M	  	 	(1.0	) 	 	 	(1.0	) 	
	  	 	 	 	 	 	 	 	
Total stockholders’ equity	  	 	251.8	  	 	 	13.4	  	
	  	 	 	 	 	 	 	 	
Total liabilities, redeemable preferred stock and stockholders’ equity	  	$	1,215.2	  	 	$	1,039.2	  	
	  	 	 	 	 	 	 	 	
The accompanying notes are an integral part of these consolidated financial statements.
 
F-37

Table of Contents
 UWW HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Statements of Changes in Redeemable Preferred Stock and Stockholders’ Equity
(Dollars in millions)

 	 	Redeemable
preferred
stock	 	 	Common stock	 	 	Additional
paid-in capital	 	 	Accumulated
deficit	 	 	Accumulated
other
comprehensive
income (loss)	 	 	Treasury
stock	 	 	Total
Stockholders’
equity	 	
Balance at January 1, 2011	 	$	—  	  	 	$	0.3	  	 	$	275.1	  	 	$	(283.8	) 	 	$	4.2	  	 	$	(1.0	) 	 	$	(5.2	) 	
Compensation from stock awards	 	 	—  	  	 	 	—  	  	 	 	1.3	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	1.3	  	
Noncash capital contributions	 	 	—  	  	 	 	—  	  	 	 	71.6	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	71.6	  	
Redeemable preferred stock issuance	 	 	146.1	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	
Redeemable preferred stock dividends accretion	 	 	1.3	  	 	 	—  	  	 	 	(1.3	) 	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(1.3	) 	
Net loss	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(27.1	) 	 	 	—  	  	 	 	—  	  	 	 	(27.1	) 	
Other comprehensive loss, net of tax	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(17.1	) 	 	 	—  	  	 	 	(17.1	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance at December 31, 2011	 	$	147.4	  	 	$	0.3	  	 	$	346.7	  	 	$	(310.9	) 	 	$	(12.9	) 	 	$	(1.0	) 	 	$	22.2	  	
Compensation from stock awards	 	 	—  	  	 	 	—  	  	 	 	0.7	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	0.7	  	
Redeemable preferred stock dividends accretion	 	 	17.2	  	 	 	—  	  	 	 	(17.2	) 	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(17.2	) 	
Redeemable preferred stock dividends declared	 	 	(17.2	) 	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	
Net income	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	5.1	  	 	 	—  	  	 	 	—  	  	 	 	5.1	  	
Other comprehensive income, net of tax	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	2.6	  	 	 	—  	  	 	 	2.6	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance at December 29, 2012	 	$	147.4	  	 	$	0.3	  	 	$	330.2	  	 	$	(305.8	) 	 	$	(10.3	) 	 	$	(1.0	) 	 	$	13.4	  	
Compensation from stock awards	 	 	—  	  	 	 	—  	  	 	 	0.4	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	0.4	  	
Redeemable preferred stock dividends accretion	 	 	19.4	  	 	 	—  	  	 	 	(19.4	) 	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(19.4	) 	
Redeemable preferred stock dividends declared	 	 	(19.1	) 	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	
Net income	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	242.4	  	 	 	—  	  	 	 	—  	  	 	 	242.4	  	
Other comprehensive income, net of tax	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	15.0	  	 	 	—  	  	 	 	15.0	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance at December 31, 2013	 	$	147.7	  	 	$	0.3	  	 	$	311.2	  	 	$	(63.4	) 	 	$	4.7	  	 	$	(1.0	) 	 	$	251.8	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
The accompanying notes are an integral part of these consolidated financial statements.
 
F-38

Table of Contents
 UWW HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Dollars in millions)

 	  	Fiscal years ended	 	
 	  	December 31,
2013	 	 	December 29,
2012	 	 	December 31,
2011	 	
Cash flows from operating activities:	  				 				 				
Net income (loss)	  	$	242.4	  	 	$	5.1	  	 	$	(27.1	) 	
Adjustments to reconcile net income/(loss) to cash provided by operating activities:	  				 				 				
Depreciation and amortization	  	 	25.1	  	 	 	25.4	  	 	 	24.5	  	
Amortization of deferred financing costs	  	 	5.6	  	 	 	5.2	  	 	 	6.9	  	
Interest on PIK notes and Graphic Seller notes	  	 	—  	  	 	 	—  	  	 	 	37.3	  	
Bad debt expense	  	 	3.6	  	 	 	(2.6	) 	 	 	7.7	  	
Deferred income taxes	  	 	(230.3	) 	 	 	16.7	  	 	 	(1.3	) 	
LIFO provision (benefit)	  	 	3.3	  	 	 	(0.4	) 	 	 	1.9	  	
(Gain) Loss on retirement of assets	  	 	(7.2	) 	 	 	(0.2	) 	 	 	—  	  	
Long-lived asset impairment charges	  	 	0.4	  	 	 	4.1	  	 	 	1.0	  	
Goodwill impairment charges	  	 	—  	  	 	 	0.8	  	 	 	—  	  	
Stock option compensation expense	  	 	0.4	  	 	 	0.7	  	 	 	1.3	  	
Undistributed earnings from affiliates	  	 	0.1	  	 	 	(0.1	) 	 	 	(0.3	) 	
Other noncash items, net	  	 	(0.6	) 	 	 	0.7	  	 	 	1.8	  	
Changes in assets and liabilities:	  				 				 				
Accounts receivable	  	 	(5.9	) 	 	 	(2.1	) 	 	 	(15.4	) 	
Related party accounts receivable	  	 	—  	  	 	 	(1.5	) 	 	 	2.9	  	
Inventories	  	 	(8.6	) 	 	 	4.5	  	 	 	8.0	  	
Other current assets	  	 	6.7	  	 	 	1.4	  	 	 	(9.4	) 	
Accounts payable	  	 	(58.4	) 	 	 	(21.6	) 	 	 	7.9	  	
Related party accounts payable	  	 	2.2	  	 	 	(3.9	) 	 	 	1.4	  	
Accrued payroll and benefits	  	 	7.7	  	 	 	(3.3	) 	 	 	(2.0	) 	
Other accrued liabilities	  	 	11.4	  	 	 	(4.9	) 	 	 	(2.0	) 	
Other	  	 	0.6	  	 	 	(5.9	) 	 	 	(4.2	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Cash (used in) provided by operating activities	  	 	(1.5	) 	 	 	18.1	  	 	 	40.9	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Cash flows from investing activities:	  				 				 				
Property and equipment additions	  	 	(15.1	) 	 	 	(24.1	) 	 	 	(15.7	) 	
Leasehold improvement additions	  	 	(2.9	) 	 	 	(2.1	) 	 	 	(6.6	) 	
Proceeds from sales of assets	  	 	7.7	  	 	 	0.3	  	 	 	—  	  	
Business acquisitions, net of cash acquired	  	 	—  	  	 	 	(1.0	) 	 	 	—  	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Cash used in investing activities	  	 	(10.3	) 	 	 	(26.9	) 	 	 	(22.3	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Cash flows from financing activities:	  				 				 				
Borrowings under Senior Credit Facility	  	 	3,751.5	  	 	 	3,767.1	  	 	 	4,013.0	  	
Payments under Senior Credit Facility	  	 	(3,752.9	) 	 	 	(3,738.5	) 	 	 	(3,903.8	) 	
Payments under Equipment Capital Lease obligations	  	 	(3.1	) 	 	 	(3.1	) 	 	 	(2.8	) 	
Payments under Real Estate Capital Lease obligations to related party	  	 	(8.6	) 	 	 	(7.0	) 	 	 	(6.0	) 	
Changes in bank overdrafts	  	 	16.7	  	 	 	(23.2	) 	 	 	3.5	  	
Borrowings under other borrowing agreements	  	 	—  	  	 	 	—  	  	 	 	0.5	  	
Payments under other borrowing agreements with a related party	  	 	—  	  	 	 	—  	  	 	 	(110.9	) 	
Deferred financing fees	  	 	—  	  	 	 	—  	  	 	 	(6.8	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Cash (used in) provided by financing activities	  	 	3.6	  	 	 	(4.7	) 	 	 	(13.3	) 	
Effect of exchange rate changes on cash	  	 	(0.2	) 	 	 	0.2	  	 	 	(0.3	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net change in cash	  	 	(8.4	) 	 	 	(13.3	) 	 	 	5.0	  	
Cash at beginning of year	  	 	30.6	  	 	 	43.9	  	 	 	38.9	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Cash at end of the year	  	$	22.2	  	 	$	30.6	  	 	$	43.9	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Supplemental cash flow disclosures:	  				 				 				
Cash paid for interest	  	$	20.1	  	 	$	21.3	  	 	$	20.1	  	
Cash (paid) received for income taxes net of refunds received	  	 	(1.7	) 	 	 	(5.1	) 	 	 	(2.3	) 	
Supplemental schedule of noncash investing and financing activities:	  				 				 				
Redeemable preferred stock dividends declared but not paid	  	 	19.1	  	 	 	17.2	  	 	 	—  	  	
Capital lease obligations	  	 	—  	  	 	 	0.9	  	 	 	13.1	  	
Senior Credit Facility transaction fee waiver by a related party	  	 	—  	  	 	 	—  	  	 	 	6.3	  	
Issuance of Redeemable preferred stock to related party	  	 	—  	  	 	 	—  	  	 	 	146.1	  	
Contribution of capital upon Redeemable preferred stock issuance with related party	  	 	—  	  	 	 	—  	  	 	 	65.3	  	
The accompanying notes are an integral part of these consolidated financial statements.
 
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 UWW HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2013 and December 29, 2012
(Dollars in millions, except share amounts in thousands)
 
(1)	Summary of Significant Accounting Policies	
 
 	(a)	Organization and Basis of Presentation	
UWW Holdings, Inc. (UWWH), a Delaware corporation, is owned approximately 60% by Bain Capital Fund VII, L.P. (Bain) and approximately 40% owned by Georgia-Pacific LLC (GP). Bain acquired (the Acquisition) its interest from GP on November 27, 2002 (the Acquisition Date), which effected a change in the control of UWWH. UWWH and its wholly owned subsidiaries are collectively referred to as “Unisource”.
The accompanying Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) and include the accounts of UWWH and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated from these Consolidated Financial Statements. Investments in entities in which Unisource can exercise significant influence, but does not own a majority equity interest or otherwise control, are accounted for using the equity method and are included in Other noncurrent assets in the Consolidated Balance Sheets.
Prior to fiscal 2013, Unisource’s fiscal year-end was based on the Saturday closest to December 31. On September 25, 2013, Unisource’s Board of Directors approved a change in Unisource’s fiscal year-end to a calendar year-end on a prospective basis beginning in 2013. Consequently, Unisource’s 2013 year-end was changed to December 31, 2013 versus January 4, 2014 under the previous policy. Also, beginning on January 1, 2014, future quarterly reporting periods will be based on calendar months. Throughout these Consolidated Financial Statements and footnotes, references to “fiscal 2013” relate to the 52 weeks ended December 31, 2013, references to “fiscal 2012” relate to the 52 weeks ended December 29, 2012 and references to “fiscal 2011” relate to the 52 weeks ended December 31, 2011.
During 2012, Unisource recorded adjustments to correct errors related to previous reporting periods. The adjustments related to refunds from insurance providers and workers’ compensation reserves. Unisource has recorded the cumulative effect of the adjustments within the Selling and administrative expenses in the December 29, 2012 Consolidated Statement of Operations which resulted in increases of $1.0 million in Pre-tax income and $1.0 million in Net income (loss). Unisource concluded that the impact of the corrections is not material to the Consolidated Financial Statements for the year ended December 29, 2012 nor are the errors material, individually, or in the aggregate, to previous reporting periods.
 
 	(b)	Nature of Operations	
Unisource is a leading distributor of printing and business paper, packaging supplies and equipment, and facility supplies and equipment primarily in the United States and Canada. Additionally, Unisource has international operations in Europe, Asia and Latin America. These product categories, as a percentage of consolidated Net sales, were as follows:

 	  	2013	 	 	2012	 	 	2011	 	
 	  	(% of net sales)	 	
Print	  	 	54	% 	 	 	57	% 	 	 	58	% 	
Packaging	  	 	28	% 	 	 	26	% 	 	 	24	% 	
Facility supplies	  	 	16	% 	 	 	16	% 	 	 	18	% 	
Other	  	 	2	% 	 	 	1	% 	 	 	—  	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total	  	 	100	% 	 	 	100	% 	 	 	100	% 	

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UWW HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2013 and December 29, 2012
(Dollars in millions, except share amounts in thousands)
 
Sales in the United States, Canada and other international operations, as a percentage of consolidated Net sales, were as follows:

 	  	2013	 	 	2012	 	 	2011	 	
 	  	(% of net sales)	 	
United States	  	 	78	% 	 	 	77	% 	 	 	73	% 	
Canada	  	 	21	% 	 	 	21	% 	 	 	23	% 	
Other international	  	 	1	% 	 	 	2	% 	 	 	4	% 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total	  	 	100	% 	 	 	100	% 	 	 	100	% 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net assets in the United States, Canada and other international countries were as follows:

 	  	2013	 	  	2012	 	
United States	  	$	304.7	  	  	$	65.5	  	
Canada	  	 	90.5	  	  	 	84.9	  	
Other international	  	 	4.3	  	  	 	10.4	  	
	  	 	 	 	  	 	 	 	
Total	  	$	399.5	  	  	$	160.8	  	
	  	 	 	 	  	 	 	 	
Unisource sells its products to a diverse customer base that includes commercial printing, retail, hospitality, healthcare, governmental, distribution and manufacturing sectors. Credit is generally extended without requiring collateral based on an evaluation of the customer’s credit risks.
Unisource’s suppliers are widely dispersed throughout North America, Asia and Europe.
 
 	(c)	Use of Estimates	
Management makes estimates and assumptions when preparing Consolidated Financial Statements under GAAP that affect Unisource’s reported amounts of assets and liabilities at the dates of the Consolidated Financial Statements, the disclosure of contingent assets and liabilities at the dates of the Consolidated Financial Statements and the reported amounts of revenue and expenses during the reporting periods. Significant items subject to such estimates and assumptions include revenue recognition, income taxes, allowance for doubtful accounts, inventory reserves, impairment of long-lived assets, impairment of goodwill, contingencies, asset retirement obligations, stock-based compensation, employee benefit plans, self-insurance reserves and the determination of the fair value of Redeemable preferred stock share issuances. These estimates involve judgments with respect to, among other things, future economic factors that are difficult to predict and are beyond management’s control. As a result, actual amounts could differ from these estimates.
 
 	(d)	Revenue Recognition	
Unisource recognizes revenue when persuasive evidence of an agreement exists, delivery has occurred, the price to the buyer is fixed or determinable and collectability is reasonably assured. Delivery is not considered to have occurred until the customer takes title and assumes the risks and rewards of ownership.
Certain revenues are derived from shipments arranged by Unisource made directly from a manufacturer to the customer. Unisource is considered to be a principal to these transactions since it, among other factors, controls pricing and terms with respect to the customer, bears the credit risk of the customer defaulting on payment and is the primary obligor to the manufacturer. Revenues from these sales are
 
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UWW HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2013 and December 29, 2012
(Dollars in millions, except share amounts in thousands)
 
reported on a gross basis in the Consolidated Statements of Operations and amounted to $1,471.8 million, $1,521.6 million and $1,618.7 million in fiscal 2013, 2012 and 2011, respectively.
Taxes collected from customers which are remitted to governmental authorities are accounted for on a net basis. Accordingly, such taxes are excluded from both net sales and expenses.
Unisource estimates anticipated sales returns by customers in the period in which the sale occurs. The estimated returns are recorded as a reduction of sales and cost of products sold based on historical return rates. The return rates are periodically analyzed and updated to reflect current trends. Any returned product is valued at the lower of cost or net realizable value.
Additionally, Unisource estimates anticipated cash discounts to be taken by customers in the period in which the sale occurs. The estimated discounts are reflected as a reduction of Net sales in the Consolidated Statements of Operations.
 
 	(e)	Purchase Incentives and Customer Rebates	
Unisource enters into agreements with suppliers that allow it to receive rebates, allowances and other discounts based on the attainment of specified purchasing levels or sales to certain customers. Other current assets in the Consolidated Balance Sheets included $35.9 million and $33.7 million at the end of fiscal 2013 and 2012, respectively, of anticipated incentive and rebate amounts not yet received. Purchase incentives are recorded as a reduction in inventory and recognized into cost of products sold as the product is sold.
Unisource enters into similar incentive agreements with its customers, which are generally based on sales to these customers. Unisource records its customers’ estimated attainment of discounts as a reduction of Net sales. Other accrued liabilities in the Consolidated Balance Sheets included $12.0 million and $12.4 million at the end of fiscal 2013 and 2012, respectively, of anticipated incentive and rebate amounts not yet paid. For some incentive agreements, Unisource prepays amounts before the customers earn the incentive. These prepaid incentives amounted to $0.2 million and zero at the end of fiscal 2013 and 2012, respectively, and are recorded in Other current assets in the Consolidated Balance Sheets.
 
 	(f)	Distribution Expense	
Distribution expense consists primarily of storage and related facility costs (excluding depreciation charges), shipping and handling, freight and supply chain management costs. Total shipping and handling expenses were $168.7 million, $160.5 million and $174.4 million in fiscal 2013, 2012 and 2011, respectively, and are included in Distribution expenses in the Consolidated Statements of Operations.
 
 	(g)	Merger Expenses	
Merger expenses consist primarily of third party professional service fees related to the proposed merger (the Merger) with xpedx, the business-to-business distribution business of International Paper.
 
 	(h)	Advertising	
Advertising costs are charged to expense as incurred and consist primarily of purchases of advertising, trade publications, sales collateral and website promotions. Such costs were approximately $2.1 million,
 
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UWW HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2013 and December 29, 2012
(Dollars in millions, except share amounts in thousands)
 
$3.3 million and $1.4 million in fiscal 2013, 2012 and 2011, respectively, and are recorded in Selling and administrative expenses in the Consolidated Statements of Operations.
 
 	(i)	Stock-Based Compensation	
Unisource records compensation expense related to stock options issued to employees. These options are measured and recorded in the Consolidated Financial Statements based on the grant date fair value of the instrument, which is determined using the Black-Scholes option-pricing model. Compensation expense is recognized over the period in which the employee provides service, which is typically the vesting period.
 
 	(j)	Income Taxes	
Unisource recognizes deferred income taxes based on the expected future tax consequences of differences in financial reporting and income tax reporting for operating results, assets and liabilities. Deferred income taxes are determined using enacted tax rates for the applicable future period.
Unisource regularly reviews its deferred tax assets for recoverability and establishes a valuation allowance if it is more likely than not that some portion or all of a deferred tax asset will not be realized. The determination as to whether a deferred tax asset will be realized is made on a jurisdictional basis and is based on the evaluation of positive and negative evidence. This evidence includes historical taxable income, projected future taxable income, the expected timing of the reversal of existing temporary differences and the implementation of tax planning strategies. Projected future taxable income is based on Unisource’s expected results and assumptions as to the jurisdiction in which the income will be earned. The expected timing of the reversals of existing temporary differences is based on current tax law and Unisource’s tax methods of accounting.
Unisource recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained upon examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the Consolidated Financial Statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon settlement. Interest and penalties related to uncertain tax positions are recognized as part of the provision for income taxes and are accrued beginning in the period that such interest and penalties would be applicable under relevant tax law until such time that the related tax benefits are recognized.
 
 	(k)	Cash	
Unisource maintains cash accounts at several banks. Accounts at each institution are insured according to Federal Deposit Insurance Corporation (FDIC) regulations; however, most of the cash balances were in excess of FDIC insured limits as of December 31, 2013 and December 29, 2012, respectively.
Book overdrafts of $34.6 million and $94.1 million as of December 31, 2013 and December 29, 2012, respectively, represent checks issued that have not been presented for payment to the banks and are classified as Accounts payable in the Consolidated Balance Sheets. Unisource funds daily outstanding checks, which are presented to its banks, through transfers made under its Senior Credit Facility. The funding of these overdrafts is at the direction of Unisource. Bank overdrafts in Canada represent legal draws on the Canadian portion of the Senior Credit Facility (Refer to Note 7, Long-term Debt), and are
 
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UWW HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2013 and December 29, 2012
(Dollars in millions, except share amounts in thousands)
 
therefore considered borrowings under the Senior Credit Facility, and are classified as financing activities in the Consolidated Statements of Cash Flows.
 
 	(l)	Accounts Receivable	
Accounts receivable are recognized as revenues are earned, recorded at the invoiced amount net of estimated discounts, and do not bear interest. Amounts due from customers are regularly reviewed, and an allowance for doubtful accounts is established for Unisource’s estimate of probable losses from existing customer balances. These estimates require consideration of historical loss experience, adjusted for current conditions, trends in customer payment frequency, third party and internal customer risk ratings and management judgments about the financial health of specific customers.
The allowance is inclusive of credit risks, returns, cash discounts and any other items affecting the realization of these assets. The allowance for doubtful accounts was $14.6 million and $19.6 million at the end of fiscal 2013 and 2012, respectively. Receivables are written off and deducted from the allowance account when the receivables are deemed uncollectible.
 
 	(m)	Inventories	
Inventory cost components include the purchase price invoiced by a supplier, plus inbound freight and related costs, and are reduced by estimated volume-based discounts available from certain suppliers. Inventories consist principally of goods purchased for resale (finished goods) and are valued at the lower of cost or market. Cost is determined using the last-in, first-out (LIFO) method for U.S. inventories, which represented 71% of total reported inventories at the end of fiscal 2013 and 69% at the end of fiscal 2012. Cost is determined using the weighted average method for non-U.S. inventories. If the average cost method (at lower of cost or market) had been used to value U.S. inventories, cost would have been $36.5 million and $33.2 million higher than the LIFO cost at the end of fiscal 2013 and 2012, respectively. Unisource’s base LIFO layer is from 2002.
 
 	(n)	Property and Equipment	
Property and equipment costs consist principally of land, buildings, leasehold improvements, machinery, equipment and internal-use software. Property and equipment includes certain assets accounted for as capital leases.
Additions to property and equipment are recorded at cost. When assets are disposed or retired, the remaining book value, minus any proceeds, is recognized as a gain or loss and included in Other expense, net in the Consolidated Statements of Operations, and the associated asset cost and accumulated depreciation are removed from the Consolidated Balance Sheets. Replacements of minor items along with maintenance and repair costs that do not extend the useful life of the asset are expensed as incurred and included in either Distribution expenses or Selling and administrative expenses, as applicable, in the Consolidated Statements of Operations.
Depreciation of property and equipment is provided using the straight-line method over the estimated useful lives of the related assets. Useful lives are typically up to 10 years for buildings and improvements and up to 15 years for machinery and equipment. Depreciation includes depreciation of capital-leased assets and amortization of leasehold improvements which is recorded over the shorter of the remaining lease term or the economic lives of the leased assets, using the straight-line method.
 
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UWW HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2013 and December 29, 2012
(Dollars in millions, except share amounts in thousands)
 
Depreciation of capital-leased assets is reflected in Depreciation and amortization in the Consolidated Statements of Operations.
 
 	(o)	Capitalized Interest	
Interest cost incurred during the period of time required to bring an asset to the condition and location necessary for its intended use is considered part of the historical cost of acquiring the asset. Accordingly, capitalized interest is treated as an addition to property and equipment and is depreciated over the life of the related asset.
 
 	(p)	Internal-Use Software	
Internal-use software costs incurred during the application development stage are capitalized as incurred. The application development stage does not begin until technological feasibility is established and all research and development activities for the other components of the product or process are completed. Costs related to the development of internal-use software, other than those incurred during the application development stage, are expensed as incurred. Capitalized internal-use software costs are amortized over 3 to 5 years using the straight-line method. Amortization of internal-use software is reflected in Depreciation and amortization in the Consolidated Statements of Operations.
 
 	(q)	Impairment of Long Lived Assets	
For purposes of testing impairment of long-lived assets such as property and equipment and customer lists, Unisource evaluates whether events or changes in circumstances indicate that the carrying amount may not be recoverable. Triggering events include a significant change in the extent or manner in which long-lived assets are being used or in their physical condition, legal factors, management decisions regarding the use of the asset, or changes in the business climate that could affect the value of the long-lived assets.
Upon the occurrence of a triggering event, the carrying amount of a long-lived asset is reviewed to assess whether the recoverable amount has declined below its carrying amount. The recoverable amount is based on the estimated net undiscounted future cash flows that Unisource expects to recover from the asset. In situations where the recoverable amount of the long-lived asset is less than the carrying value, an impairment loss is recognized to write down the asset to its fair value which is based on discounted estimated cash flows from the future use of the asset.
 
 	(r)	Goodwill and Indefinite-Lived Intangibles	
Unisource tests goodwill and indefinite-lived intangibles for impairment annually on the first business day of the fourth quarter.
For purposes of testing the impairment of indefinite-lived tradenames, Unisource calculates the fair value based on management assumptions, including an estimate of future cash flows (income approach) which are discounted based on the estimated market participant weighted average cost of capital. This approach was determined to be the most representative measure because Unisource does not have an active market for its equity or debt. An impairment loss is recognized to the extent the carrying amounts of indefinite-lived trade names exceed their fair values.
 
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UWW HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2013 and December 29, 2012
(Dollars in millions, except share amounts in thousands)
 
Unisource tests goodwill for impairment at the reporting unit level annually, or more frequently when events or changes in circumstances indicate that the fair value of a reporting unit has more likely than not declined below its carrying value. When testing goodwill for impairment, Unisource may first assess qualitative factors. The qualitative impairment test includes considering various factors including macroeconomic conditions, industry and market conditions, cost factors and any reporting unit specific events. If an initial qualitative assessment identifies that it is more likely than not that the carrying value of a reporting unit exceeds its estimated fair value, an additional two-step quantitative testing is performed. Unisource may also elect to proceed directly to the two-step impairment test without considering such qualitative factors. If the quantitative testing indicates that goodwill is impaired, the carrying value of goodwill is written down to fair value. Unisource primarily utilizes a discounted cash flow methodology to calculate the fair value of its reporting units based on forecasts of future operating results and cash flows. An impairment loss is recognized to the extent the carrying amount of a reporting unit’s goodwill exceeds its implied fair value.
 
 	(s)	Deferred Compensation	
Unisource maintains deferred compensation obligations for certain employees from its past acquisitions. Unisource has agreed to pay these employees deferred compensation in return for services rendered prior to their retirement. In general, the payout terms vary for each employee agreement and are paid in monthly or annual installments ranging from 5 years to 15 years from the date of eligibility. For one of the plans, Unisource is indemnified by GP for certain deferred compensation payments. Unisource estimated the present value of the deferred compensation payment obligations at the Acquisition Date by using market-based discount rates.
The deferred compensation liabilities at December 31, 2013 and December 29, 2012 were $20.5 million and $22.2 million, respectively. The current liability portion of the deferred compensation obligations was $2.6 million and $3.1 million at December 31, 2013 and December 29, 2012, respectively. The remaining portion of the obligations is recorded in Other noncurrent liabilities in the Consolidated Balance Sheets.
 
 	(t)	Self-Insurance	
Unisource is self-insured up to certain limits for workers’ compensation costs, automobile and general liability claims and employee medical benefits. Unisource has purchased stop-loss coverage to limit its exposure to significant individual workers’ compensation, automobile, general liability and employee medical claims. Self-insured losses are accrued for known and incurred but not reported claims based upon certain actuarial assumptions and historical claim payment patterns. The aggregate liabilities at December 31, 2013 and December 29, 2012 for self-insurance obligations were $7.6 million and $8.6 million, respectively, on an undiscounted basis. Of this amount, $2.3 million and $2.5 million were recorded in Other noncurrent liabilities, with the remainder recorded in Other accrued liabilities in the Consolidated Balance Sheets.
 
 	(u)	Foreign Currency	
Amounts for foreign subsidiaries and branches whose functional currency is other than the U.S. dollar are translated into U.S. dollars using exchange rates for balance sheet amounts as of the applicable balance sheet date and using average exchange rates during the applicable period for the results of
 
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UWW HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2013 and December 29, 2012
(Dollars in millions, except share amounts in thousands)
 
operations. Foreign currency gains and losses from the conversion of intercompany balances that are not considered to be permanent in nature are recorded in the Consolidated Statements of Operations. Other gains and losses arising from the translation of the Consolidated Financial Statements of foreign operations are deferred and recognized as a separate component of Stockholders’ equity. Deferred income taxes are not provided in currency translation adjustments as foreign earnings are considered to be permanently reinvested. Unisource did not repatriate any earnings related to the American Jobs Creation Act of 2004. Transactional currency gains or losses are recorded in the Consolidated Statements of Operations as gain or loss in foreign currency transactions within Cost of products sold or Other expense, net. Unisource recorded net foreign currency transactional (gains)/losses for fiscal 2013, 2012 and 2011 as shown below:

 	  	2013	 	  	2012	 	 	2011	 	
Cost of products sold	  	$	1.2	  	  	$	(0.7	) 	 	$	(0.5	) 	
Other expense, net	  	 	0.5	  	  	 	0.4	  	 	 	1.5	  	
	  	 	 	 	  	 	 	 	 	 	 	 	
Transactional (gain) loss	  	$	1.7	  	  	$	(0.3	) 	 	$	1.0	  	

 	(v)	Fair Value of Financial Instruments	
Unisource’s financial instruments consist primarily of cash, accounts receivable, accounts payable, borrowings under the Senior Credit Facility, capital lease obligations and other components of other current assets and other current liabilities, in which the carrying amount approximates its fair value due to the short maturity of these items.
 
 	(w)	Fair Value Measurements	
The various inputs used to measure assets and liabilities at fair value establish a hierarchy that distinguishes between assumptions based on market data (observable inputs) and Unisource’s assumptions (unobservable inputs). The hierarchy consists of three broad levels as follows:
Level 1 – Quoted market prices in active markets for identical assets or liabilities.
Level 2 – Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 – Unobservable inputs developed using Unisource’s estimates and assumptions, which reflect those that market participants would use.
Unisource’s assets and liabilities measured at fair value are classified in the fair value hierarchy, as described above, based on the inputs used for valuation.
Pension plan assets are primarily comprised of mutual funds and pooled funds. The underlying investments of these funds are valued using either quoted prices in active markets or valued as of the most recent trade date and are classified as Level 2. The carrying value of borrowings under the Senior Credit Facility approximates fair value since the underlying borrowings bear floating market interest rates and have original terms of no more than three months. The fair value of borrowings under the Senior Credit Facility is estimated using quoted market prices for similar instruments in active markets,
 
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UWW HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2013 and December 29, 2012
(Dollars in millions, except share amounts in thousands)
 
or on the current rates offered for debt of similar maturities, and are therefore classified as Level 2 of the hierarchy.
As described in Note 10, Redeemable Preferred Stock, Unisource issued long-term debt obligations (PIK notes) at the Acquisition Date to GP which were extinguished during fiscal year 2011 by a cash payment and the issuance of Redeemable preferred stock, which was recorded at fair value, Level 3, using a discounted cash flow approach.
 
 	(x)	New Accounting Pronouncements and Recently Adopted Accounting Standards	
In July 2012, the FASB issued ASU 2012-02, “ Testing Indefinite-Lived Intangible Assets for Impairment , ” which amends ASC 350, “ Intangibles—Goodwill and Other ” . This ASU gives an entity the option to first assess qualitative factors if it is more likely than not that the fair value of indefinite-lived intangible assets are less than their carrying amount. If that assessment indicates no impairment, the quantitative impairment test is not required. This amendment was effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. The application of the requirements of this guidance was adopted by Unisource as of December 29, 2012 and the adoption did not have an impact on the Consolidated Financial Statements.
In February 2013, the FASB issued ASU 2013-02, “ Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income, ” which adds new disclosure requirements for items reclassified out of Accumulated other comprehensive income (loss). This guidance was effective for fiscal years, and interim periods within those years, beginning after December 15, 2012. Unisource adopted ASU 2013-2 prospectively as of December 30, 2012 and the adoption did not have an impact on the Consolidated Financial Statements.
In July 2013, the FASB also issued ASU 2013-11, “Income Taxes,” which provides guidance on financial statement presentation of an unrecognized tax benefit when a net operating loss carry forward, a similar tax loss or a tax credit carry forward exists. This guidance is applied to all unrealized tax benefits that exist as of the effective date which is fiscal years beginning after December 15, 2013, and interim periods within those years. Unisource plans to adopt ASU 2013-11 prospectively as of January 1, 2014, and is currently evaluating the impact, if any, that this ASU will have on its Consolidated Financial Statements.
 
 	(y)	Accounting Standards Issued But Not Effective	
Other accounting pronouncements issued, but not effective until after December 31, 2013, are not expected to have a significant impact on Unisource’s Consolidated Financial Statements.
 
(2)	Restructuring (Gains) Expenses	
During fiscal 2013, 2012 and 2011, Unisource developed and implemented a series of restructuring programs which were established primarily to lower the cost of its operating model and to reposition Unisource’s sales model to respond to the continued secular decline in the paper market. These restructuring initiatives have primarily included: (i) reorganization and restructuring of the sales teams, sales management and sales support functions, (ii) restructuring of unprofitable service offerings and locations, (iii) centralization of back-office functions, and (iv) closures and consolidations of certain facilities.
 
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UWW HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2013 and December 29, 2012
(Dollars in millions, except share amounts in thousands)
 
The following table presents the components of Restructuring (gains) expenses in the Consolidated Statements of Operations:

 	  	2013	 	 	2012	 	  	2011	 	
Severance and personnel costs	  	$	1.9	  	 	$	5.7	  	  	$	13.4	  	
Professional fees and other costs	  	 	1.2	  	 	 	0.8	  	  	 	1.2	  	
Facility closure and consolidation costs	  	 	1.1	  	 	 	0.1	  	  	 	—  	  	
Gains on facility sales/lease termination	  	 	(7.6	) 	 	 	—  	  	  	 	—  	  	
	  	 	 	 	 	 	 	 	  	 	 	 	
Total Restructuring (gains) expenses	  	$	(3.4	) 	 	$	6.6	  	  	$	14.6	  	

 	(a)	North American Shared Service Model	
Over the past several years, Unisource has been working to implement a North American shared service model with the goal of improving profitability and streamlining processes. This initiative involves the consolidation and centralization of sales management, sales operations, supply chain operations, customer service and corporate support functions. Efforts to implement this initiative include restructuring of the workforce, information technology infrastructure and business processes and is currently ongoing.
The Restructuring (gains) expenses of $3.2 million, $6.6 million and $12.0 million in fiscal 2013, 2012 and 2011, respectively, include severance and other personnel costs of $1.6 million, $5.7 million and $11.5 million in fiscal 2013, 2012 and 2011, respectively. Positions totaling 60, 99 and 197 were eliminated in fiscal 2013, 2012 and 2011, respectively.
Additionally, Unisource recognized a $7.6 million gain related to the closure of 4 facilities in connection with the North American shared service model plan. During the first quarter of 2013, Unisource recognized a $0.2 million gain upon the execution of an early surrender agreement to terminate the lease for its Mobile, Alabama warehouse. During the fourth quarter of 2013, Unisource recognized a $6.5 million gain on the sale of its Richmond Hill, Ontario, Canada facility to consolidate its warehouses in the greater Toronto area. Also during the fourth quarter of 2013, Unisource completed the sale of its warehouse in Bangor, Maine and cottage in Montebello, Quebec, Canada and recorded gains of $0.6 million and $0.3 million, respectively.
 
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UWW HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2013 and December 29, 2012
(Dollars in millions, except share amounts in thousands)
 
The following table presents the restructuring accrual activity related to the North American shared service model:

 	  	Severance and
Personnel Costs	 	 	Professional
Fees and
Other Costs	 	 	Facility
Closure and
Consolidation
Costs	 	 	Total	 	
Balance as of January 1, 2011	  	$	2.7	  	 	$	—  	  	 	$	—  	  	 	$	2.7	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Restructuring charges	  	 	11.5	  	 	 	0.5	  	 	 	—  	  	 	 	12.0	  	
Cash payments	  	 	(6.9	) 	 	 	(0.5	) 	 	 	—  	  	 	 	(7.4	) 	
Foreign currency translation	  	 	(0.1	) 	 	 	—  	  	 	 	—  	  	 	 	(0.1	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance as of December 31, 2011	  	 	7.2	  	 	 	—  	  	 	 	—  	  	 	 	7.2	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Restructuring charges	  	 	5.7	  	 	 	0.8	  	 	 	0.1	  	 	 	6.6	  	
Cash payments	  	 	(8.4	) 	 	 	(0.7	) 	 	 	(0.1	) 	 	 	(9.2	) 	
Non cash reductions	  	 	(1.2	) 	 	 	—  	  	 	 	—  	  	 	 	(1.2	) 	
Foreign currency translation	  	 	0.1	  	 	 	—  	  	 	 	—  	  	 	 	0.1	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance as of December 29, 2012	  	 	3.4	  	 	 	0.1	  	 	 	—  	  	 	 	3.5	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Restructuring charges	  	 	1.6	  	 	 	1.2	  	 	 	0.4	  	 	 	3.2	  	
Cash payments	  	 	(4.0	) 	 	 	(1.3	) 	 	 	(0.4	) 	 	 	(5.7	) 	
Non cash (reductions)/additions	  	 	(0.4	) 	 	 	—  	  	 	 	—  	  	 	 	(0.4	) 	
Foreign currency translation	  	 	(0.1	) 	 	 	—  	  	 	 	—  	  	 	 	(0.1	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance as of December 31, 2013	  	$	0.5	  	 	$	—  	  	 	$	—  	  	 	$	0.5	  	

 	(b)	Sweden Operations Closure	
During 2013, Unisource closed its Sweden operations which had been planned for future packaging manufacturing and research and development. This initiative was substantially completed in the third quarter of 2013. The restructuring charge of $1.0 million in fiscal 2013 includes personnel costs of $0.3 million and the elimination of 8 positions.
The following table presents the restructuring accrual activity related to the Sweden operations restructuring:

 	  	Personnel Costs	 	 	Facility
Closure and
Consolidation
Costs	 	 	Total	 	
Balance at December 29, 2012	  	$	—  	  	 	$	—  	  	 	$	—  	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Restructuring Charges	  	 	0.3	  	 	 	0.7	  	 	 	1.0	  	
Cash Payments	  	 	(0.3	) 	 	 	(0.8	) 	 	 	(1.1	) 	
Non-cash adjustments	  	 	—  	  	 	 	0.1	  	 	 	0.1	  	
Foreign currency translation	  	 	—  	  	 	 	—  	  	 	 	—  	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Balance at December 31, 2013	  	$	—  	  	 	$	—  	  	 	$	—  	  	

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UWW HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2013 and December 29, 2012
(Dollars in millions, except share amounts in thousands)

 	(c)	U.S. Sales Reorganization	
Starting in the first quarter of 2010, Unisource initiated a restructuring and reorganizing of the U.S. sales organization in order to improve profitability. The initiative included reorganization of the sales teams, sales management and sales support functions. This program was finalized in the third quarter of 2011.
The restructuring charge of $0.9 million in 2011 was primarily severance and other personnel costs and included the elimination of 43 positions in 2011.
The following table presents the restructuring accrual activity related to the U.S. sales reorganization initiative:

 	  	Severance and
Personnel Costs	 	
Balance as of January 1, 2011	  	$	0.6	  	
	  	 	 	 	
Restructuring charges	  	 	0.9	  	
Cash payments	  	 	(1.4	) 	
Non cash reductions	  	 	—  	  	
Foreign currency translation	  	 	—  	  	
	  	 	 	 	
Balance as of December 31, 2011	  	 	0.1	  	
	  	 	 	 	
Restructuring charges	  	 	—  	  	
Cash payments	  	 	(0.1	) 	
Non cash reductions	  	 	—  	  	
Foreign currency translation	  	 	—  	  	
	  	 	 	 	
Balance as of December 29, 2012	  	$	—  	  	

 	(d)	Canada Sales Reorganization	
In May 2010, Unisource announced its plan to consolidate its Canadian selling and operating territories from four regions into three regions. The initiative included reorganization of the regional support functions and sales organization. This program was substantially completed in the fourth quarter of 2010.
 
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UWW HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2013 and December 29, 2012
(Dollars in millions, except share amounts in thousands)
 
The following table presents the restructuring accrual activity related to the Canada sales reorganization initiative:

 	  	Severance and
Personnel Costs	 	
Balance as of January 1, 2011	  	$	0.8	  	
	  	 	 	 	
Restructuring charges	  	 	0.1	  	
Cash payments	  	 	(0.7	) 	
Non cash reductions	  	 	—  	  	
Foreign currency translation	  	 	—  	  	
	  	 	 	 	
Balance as of December 31, 2011	  	 	0.2	  	
	  	 	 	 	
Restructuring charges	  	 	—  	  	
Cash payments	  	 	(0.2	) 	
Non cash reductions	  	 	—  	  	
Foreign currency translation	  	 	—  	  	
	  	 	 	 	
Balance as of December 29, 2012	  	$	—  	  	

 	(e)	Cold Chain Storage	
In the second quarter of 2011, Unisource decided to exit its Canadian cold chain service offering. This initiative included the reorganization of certain support functions and the elimination of cold chain delivery and handling equipment. This initiative was completed in the fourth quarter of 2011.
The restructuring charge of $1.6 million in 2011 includes severance and other personnel costs of $0.9 million related to the elimination of 124 positions.
The following table presents the restructuring accrual activity related to the cold chain initiative:

 	  	Severance and
Personnel Costs	 	 	Contract
Termination and
Other Costs	 	 	Total	 	
Balance as of January 1, 2011	  	$	—  	  	 	$	—  	  	 	$	—  	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Restructuring charges	  	 	0.9	  	 	 	0.7	  	 	 	1.6	  	
Cash payments	  	 	(0.9	) 	 	 	(0.4	) 	 	 	(1.3	) 	
Non cash reductions	  	 	—  	  	 	 	(0.3	) 	 	 	(0.3	) 	
Foreign currency translation	  	 	—  	  	 	 	—  	  	 	 	—  	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Balance as of December 31, 2011	  	$	—  	  	 	$	—  	  	 	$	—  	  	

 	(f)	Restructuring Obligation Summary	
The remaining restructuring obligations aggregate to $0.5 million at December 31, 2013, the majority of which is expected to be spent in cash within one year.
 
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UWW HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2013 and December 29, 2012
(Dollars in millions, except share amounts in thousands)

(3)	Property and Equipment	
Property and equipment at the end of fiscal 2013 and 2012 were as follows:

 	  	Range of life	  	2013	 	 	2012	 	
Machinery and equipment	  	4-15 Years	  	$	80.4	  	 	$	76.5	  	
Internal-use software	  	3-5 Years	  	 	49.5	  	 	 	44.3	  	
Land, buildings and improvements	  	8-10 Years	  	 	34.2	  	 	 	31.9	  	
Construction in progress	  	N/A	  	 	13.2	  	 	 	10.8	  	
	  		  	 	 	 	 	 	 	 	
	  		  	 	177.3	  	 	 	163.5	  	
				
Accumulated depreciation	  		  	 	(101.0	) 	 	 	(83.3	) 	
	  		  	 	 	 	 	 	 	 	
Property and equipment, net	  		  	$	76.3	  	 	$	80.2	  	
	  		  	 	 	 	 	 	 	 	
Depreciation expense for Property and equipment was $21.9 million, $22.2 million and $21.3 million for fiscal 2013, 2012 and 2011, respectively.
During the fourth quarter of fiscal 2013, Unisource sold its Richmond Hill, Ontario, Canada distribution facility, which at the time of the sale had a net carrying value of $0.1 million, and received net proceeds of $6.6 million. In connection with the real estate sale, Unisource recorded a gain on the sale of real estate of $6.5 million which was recorded in Restructuring (gains) expenses in the fiscal 2013 Consolidated Statements of Operations.
Additionally during the fourth quarter of 2013, Unisource completed the sale of its warehouse in Bangor, Maine and cottage in Montebello, Quebec, Canada. Net proceeds were $0.6 million and $0.3 million for the Bangor and Montebello properties, respectively. Unisource recorded gains on the sale of the Bangor and Montebello properties of $0.6 million and $0.3 million, respectively, in Restructuring (gains) expenses in the Consolidated Statements of Operations.
 
 	(a)	Internal-Use Software	
Amortization of internal-use software costs of $8.1 million, $10.4 million and $11.4 million for fiscal 2013, 2012 and 2011, respectively, has been included in Depreciation and amortization in the Consolidated Statements of Operations.
Unamortized internal-use software costs, including amounts recorded in construction in progress, were $16.1 million and $17.2 million and are included in Property and equipment, net in the Consolidated Balance Sheets as of December 31, 2013 and December 29, 2012, respectively.
 
 	(b)	Capital Leases	
Capital leases at the end of fiscal 2013 and 2012 were as follows:

 	  	2013	 	 	2012	 	
Gross amounts of assets recorded under capital leases	  	$	18.4	  	 	$	19.9	  	
Accumulated depreciation on capital lease assets	  	 	(8.9	) 	 	 	(7.7	) 	
	  	 	 	 	 	 	 	 	
Net book value of capital lease assets	  	$	9.5	  	 	$	12.2	  	

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UWW HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2013 and December 29, 2012
(Dollars in millions, except share amounts in thousands)
 
Depreciation of capital-leased assets of $3.1 million, $3.7 million and $3.4 million for fiscal 2013, 2012 and 2011, respectively, is included in Depreciation and amortization in the Consolidated Statements of Operations.
 
 	(c)	Impairment	
During fiscal 2013, Unisource recognized a $0.3 million impairment primarily related to the write-off of leasehold improvements upon the early termination of a lease and the discontinued use of capitalized software and equipment.
In 2012, Unisource impaired long-lived assets with net book value of $3.1 million for cold storage assets located at three of its Canadian facilities. The net book value of cold storage assets was written down to zero based on management’s decision not to pursue this line of business and the conclusion that such assets did not have an alternative use. The resulting impairment was included in Asset impairments in the Consolidated Statements of Operations.
Also in 2012, Unisource impaired $1.0 million of packaging manufacturing and related equipment, and this write down was included in Asset impairments in the Consolidated Statements of Operations.
There was no impairment of Property and equipment during fiscal 2011.
 
(4)	Intangible Assets	
 
 	(a)	Goodwill	
Goodwill reflects the excess of consideration paid over the estimated fair value of net identifiable assets acquired in a business combination.
During fiscal 2013, the result of the first step of the goodwill impairment analysis indicated that the fair value of the Graphic Communications (Graphic) reporting unit exceeded the carrying value and therefore, no impairment was necessary.
During fiscal 2012, Unisource performed the step-one analysis for the Unisource Canada goodwill and concluded that the reporting unit’s carrying value exceeded its fair value. Accordingly, Unisource performed the second step of the impairment test to determine the implied fair value of goodwill for the Unisource Canada reporting unit, which required an allocation of the fair value of the reporting unit determined in step-one to all of the assets and liabilities, including any unrecognized intangible assets. Step two of the goodwill impairment test utilized significant unobservable inputs that caused the determination of the implied fair value of goodwill to fall within level three of the GAAP fair value hierarchy. Due to deterioration in anticipated future cash flows for Unisource Canada, Unisource determined that the implied fair value of goodwill in this reporting unit was zero. As a result, in 2012 Unisource impaired all of the goodwill in the Unisource Canada reporting unit and recorded a $0.8 million impairment loss which is included in Asset impairments in the Consolidated Statements of Operations.
There were no goodwill impairment losses recorded for fiscal year 2011.
 
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UWW HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2013 and December 29, 2012
(Dollars in millions, except share amounts in thousands)
 
Goodwill at the end of fiscal 2013 and 2012 was as follows:

 	  	2013	 	
 	  	Gross
Carrying
Amount	 	  	Loss on
Impairments	 	 	Currency
Translation
Adjustment	 	  	Net	 	
Graphic	  	$	23.4	  	  	$	—  	  	 	$	—  	  	  	$	23.4	  	

 	  	2012	 	
 	  	Gross
Carrying
Amount	 	  	Loss on
Impairments	 	 	Currency
Translation
Adjustment	 	  	Net	 	
Graphic	  	$	23.4	  	  	$	—  	  	 	$	—  	  	  	$	23.4	  	
Unisource Canada	  	 	0.8	  	  	 	(0.8	) 	 	 	—  	  	  	 	—  	  	
	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	
Total	  	$	24.2	  	  	$	(0.8	) 	 	$	—  	  	  	$	23.4	  	

 	(b)	Customer Relationships and Trade Names	
Customer relationships (finite lived intangible) and trade names (indefinite lived intangibles) for Graphic arose during fiscal 2004 when adjustments were made to allocate to the Graphic customer relationships and trade names from the amount previously reported as goodwill at January 3, 2004. Customer relationships and trade names for Unisource Canada arose in 2009 when Unisource Canada purchased certain assets and liabilities of Mondrian Hall.
Customer relationships are amortized over a weighted average period of 14 years. Amortization of Graphic customer relationships will be approximately $3.2 million per year for fiscal years 2014 through 2018. In 2011, a loss on impairment of $0.4 million and $0.6 million related to customer relationships and trade names, respectively, was recorded when Unisource announced a plan to discontinue the Mondrian Hall trade name which triggered an impairment of the Mondrian Hall trade name and customer relationships. Those charges were included in Asset impairments in the Consolidated Statements of Operations for 2011 and resulted in these asset balances being written down to zero as of December 31, 2011.
Other intangible assets at the end of fiscal 2013 and 2012 were as follows:

 	  	2013	 	
 	  	Gross
carrying
amount	 	  	Accumulated
amortization	 	 	Cumulative
loss on
Impairments	 	 	Currency
translation
adjustment	 	 	Net	 	
Customer relationships	  	$	45.2	  	  	$	(31.9	) 	 	$	(0.4	) 	 	$	(0.2	) 	 	$	12.7	  	
Trade names	  	 	8.8	  	  	 	—  	  	 	 	(0.6	) 	 	 	—  	  	 	 	8.2	  	
Licensing agreement	  	 	0.2	  	  	 	(0.1	) 	 	 	(0.1	) 	 	 	—  	  	 	 	—  	  	
	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
	  	$	54.2	  	  	$	(32.0	) 	 	$	(1.1	) 	 	$	(0.2	) 	 	$	20.9	  	

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UWW HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2013 and December 29, 2012
(Dollars in millions, except share amounts in thousands)

																					
 	  	2012	 	
 	  	Gross
carrying
amount	 	  	Accumulated
amortization	 	 	Cumulative
loss on
Impairments	 	 	Currency
translation
adjustment	 	 	Net	 	
Customer relationships	  	$	45.2	  	  	$	(28.8	) 	 	$	(0.4	) 	 	$	(0.1	) 	 	$	15.9	  	
Trade names	  	 	8.8	  	  	 	—  	  	 	 	(0.6	) 	 	 	—  	  	 	 	8.2	  	
Licensing agreement	  	 	0.2	  	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	0.2	  	
	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
	  	$	54.2	  	  	$	(28.8	) 	 	$	(1.0	) 	 	$	(0.1	) 	 	$	24.3	  	
	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
During fiscal 2013, an Asset impairment charge of $0.1 million was recorded relating to the write-off of an exclusive marketing arrangement.
Amortization expense for fiscal 2013, 2012 and 2011 was $3.2 million, $3.2 million and $3.2 million, respectively.
 
(5)	Investments in Real Estate Joint Ventures	
Unisource Realty, Inc. and Alco Realty, Inc., wholly owned subsidiaries of Unisource, are partners in one and three real estate joint ventures (partnerships), respectively. In each of the joint ventures, Unisource serves as the limited partner, and each partner has a 50% ownership interest. The general partners of the joint ventures are all real estate investment firms. Unisource has determined that while these investments are Variable Interest Entities (VIE), Unisource is not the primary beneficiary since it has little to no power to direct the most significant operating activities of each of the VIE’s. Accordingly, the Consolidated Financial Statements of the real estate partnerships are accounted for using the equity method and are therefore not consolidated within the financial statements of Unisource.
Investments in these joint ventures at the end of fiscal 2013 and 2012 were as follows:

 	 	2013	 	 	2012	 	
 	 	Investment
carrying
amount	 	 	Proportionate
share of
equity in
net assets	 	 	Dividends
received	 	 	Investment
carrying
amount	 	 	Proportionate
share of
equity in net
assets	 	 	Dividends
received	 	
HP/ALCO, L.P.	 	$	0.3	  	 	 	0.7	  	 	 	(0.4	) 	 	$	0.4	  	 	$	0.9	  	 	$	(0.3	) 	
Valley Park Development I, L.P.	 	 	0.7	  	 	 	0.9	  	 	 	—  	  	 	 	0.6	  	 	 	0.8	  	 	 	—  	  	
Uniwest Atlanta I, L.P.	 	 	0.5	  	 	 	0.7	  	 	 	(0.6	) 	 	 	0.4	  	 	 	0.8	  	 	 	(0.5	) 	
Alco West Las Vegas I, L.P.	 	 	0.1	  	 	 	0.3	  	 	 	(0.2	) 	 	 	0.1	  	 	 	0.4	  	 	 	(0.2	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
	 	$	1.6	  	 	$	2.6	  	 	$	(1.2	) 	 	$	1.5	  	 	$	2.9	  	 	$	(1.0	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Differences between the carrying value of the investments and the underlying equity in net assets are the result of the carrying value of Noncurrent assets being written down to zero at the Acquisition Date.
Investment carrying values are included in Other noncurrent assets in the Consolidated Balance Sheets. Equity earnings in real estate joint ventures were $1.1 million, $1.1 million and $1.2 million in fiscal 2013, 2012 and 2011, respectively, and are included in Equity earnings of affiliates, net of taxes in the Consolidated Statements of Operations.
 
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UWW HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2013 and December 29, 2012
(Dollars in millions, except share amounts in thousands)

(6)	Income Taxes	
Unisource is subject to United States and Canadian federal, state and local income taxes as well as other foreign income taxes. The domestic (United States) and foreign components of Unisource’s Income (loss) before income taxes are as follows:

 	  	2013	 	 	2012	 	 	2011	 	
Domestic (United States)	  	$	15.0	  	 	$	35.3	  	 	$	(18.9	) 	
Foreign	  	 	(1.1	) 	 	 	(15.0	) 	 	 	(13.7	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Income (loss) before income taxes including equity earnings of affiliates	  	$	13.9	  	 	$	20.3	  	 	$	(32.6	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Income tax expense (benefit) in the Consolidated Statements of Operations consisted of the following:

 	  	2013	 	 	2012	 	 	2011	 	
Current provision:	  				 				 				
U.S.	  	$	—  	  	 	$	—  	  	 	$	—  	  	
State	  	 	1.0	  	 	 	1.0	  	 	 	0.4	  	
Foreign	  	 	0.8	  	 	 	(2.5	) 	 	 	(4.6	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total current income tax expense (benefit)	  	$	1.8	  	 	$	(1.5	) 	 	$	(4.2	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Deferred, net:	  				 				 				
U.S.	  	$	(222.1	) 	 	$	—  	  	 	$	—  	  	
State	  	 	(8.2	) 	 	 	—  	  	 	 	0.2	  	
Foreign	  	 	—  	  	 	 	16.7	  	 	 	(1.5	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total deferred, net	  	 	(230.3	) 	 	 	16.7	  	 	 	(1.3	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Provision for income tax expense (benefit)	  	$	(228.5	) 	 	$	15.2	  	 	$	(5.5	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Reconciliation between the federal statutory rate and the effective tax rate is as follows:

 	  	2013	 	 	2012	 	 	2011	 	
Statutory U.S. income tax rate	  	 	35.0	% 	 	 	35.0	% 	 	 	35.0	% 	
State tax (net of federal benefit)	  	 	2.4	  	 	 	11.8	  	 	 	(1.5	) 	
Foreign tax (net of federal benefit)	  	 	9.2	  	 	 	11.4	  	 	 	2.8	  	
Effect of tax reserve adjustments	  	 	—  	  	 	 	—  	  	 	 	(1.5	) 	
State net operating loss	  	 	—  	  	 	 	(6.5	) 	 	 	(14.5	) 	
Nondeductible items	  	 	26.5	  	 	 	10.5	  	 	 	(2.9	) 	
Valuation allowance	  	 	(1,716.1	) 	 	 	11.8	  	 	 	(18.7	) 	
Deferred tax – PIK notes	  	 	—  	  	 	 	—  	  	 	 	17.5	  	
Other	  	 	(0.9	) 	 	 	0.9	  	 	 	0.7	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Effective income tax rate	  	 	(1,643.9	)% 	 	 	74.9	% 	 	 	16.9	% 	

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UWW HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2013 and December 29, 2012
(Dollars in millions, except share amounts in thousands)
 
Deferred income tax assets and liabilities at the end of fiscal 2013 and 2012 were as follows:

 	  	2013	 	 	2012	 	
 	  	Domestic	 	 	Non-US	 	 	Domestic	 	 	Non-US	 	
Deferred income tax assets:	  				 				 				 				
Property and equipment, net	  	$	5.3	  	 	 	1.7	  	 	$	3.8	  	 	$	2.9	  	
Capital lease obligations to related party	  	 	21.7	  	 	 	—  	  	 	 	24.3	  	 	 	—  	  	
Other intangibles, net	  	 	—  	  	 	 	4.1	  	 	 	—  	  	 	 	4.7	  	
Deferred compensation, defined benefit plans and bonus	  	 	16.0	  	 	 	5.6	  	 	 	21.8	  	 	 	8.5	  	
Net operating loss carryforward	  	 	206.6	  	 	 	1.4	  	 	 	214.9	  	 	 	—  	  	
Allowance for doubtful accounts	  	 	4.3	  	 	 	—  	  	 	 	6.4	  	 	 	—  	  	
Other	  	 	10.2	  	 	 	0.9	  	 	 	11.2	  	 	 	1.2	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross deferred income tax assets	  	 	264.1	  	 	 	13.7	  	 	 	282.4	  	 	 	17.3	  	
Less valuation allowance	  	 	(11.0	) 	 	 	(13.4	) 	 	 	(251.4	) 	 	 	(17.1	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total deferred tax asset	  	$	253.1	  	 	$	0.3	  	 	$	31.0	  	 	$	0.2	  	
Deferred income tax liabilities:	  				 				 				 				
Inventory reserve	  	 	(12.6	) 	 	 	—  	  	 	 	(12.4	) 	 	 	—  	  	
Prepaid assets	  	 	(3.1	) 	 	 	—  	  	 	 	(3.5	) 	 	 	—  	  	
Defined benefit plans	  	 	(7.7	) 	 	 	—  	  	 	 	(7.2	) 	 	 	—  	  	
Other intangibles, net	  	 	(9.5	) 	 	 	—  	  	 	 	(11.2	) 	 	 	—  	  	
Other	  	 	—  	  	 	 	(0.3	) 	 	 	—  	  	 	 	(0.2	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total deferred tax liability	  	$	(32.9	) 	 	$	(0.3	) 	 	$	(34.3	) 	 	$	(0.2	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net deferred income tax asset (liability)	  	$	220.2	  	 	$	—  	  	 	$	(3.3	) 	 	$	—  	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Unisource has historically recorded a valuation allowance related to certain U.S. deferred tax assets due to the uncertainty of the ultimate realization of future benefits from these assets. Unisource records a valuation allowance when it is “more likely than not” that some portion or all of the deferred income tax assets will not be realized. In reaching this determination, Unisource considers both positive and negative evidence, including historical losses, the future reversal of temporary differences, future taxable income, exclusive of taxable temporary differences and carryforwards, taxable income in carryback years and tax planning strategies.
During 2013, Unisource concluded that it was more likely than not that the majority of the valuation allowance against its U.S. federal and a substantial portion of its state net deferred tax assets would be realized. This conclusion was based on a detailed evaluation of all relevant evidence in the third quarter, both positive and negative, including such factors as cumulative income for the last twelve quarters, Unisource’s recent ability to sustain a level of profitability and the expectation of continued earnings. Unisource has weighed these positive factors against negative factors, including a prior history of losses and significant net operating loss carryforward, and determined that the positive evidence outweighs the negative evidence. Accordingly, Unisource reversed $238.7 million of its valuation allowance against its U.S. federal and a substantial portion of its state net deferred tax assets. A valuation allowance remains for some of Unisource’s state net operating loss carryforwards that it believes are not more likely than not to be utilized due to the short carryforward periods that exist in certain states. In future periods, the remaining valuation allowance could be reduced if sufficient positive evidence is present indicating that it is more likely than not that a portion or all of Unisource’s remaining deferred tax assets will be realized.
 
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UWW HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2013 and December 29, 2012
(Dollars in millions, except share amounts in thousands)
 
In connection with the detailed analysis of deferred tax balances in 2013, Unisource identified certain amounts that required adjustments to the 2012 financial statement disclosure of income taxes to properly reflect the deferred tax assets and liabilities as of December 29, 2012. Accordingly, certain net deferred tax assets and liabilities in the 2012 column of the above table have been revised. The revisions increased total deferred tax assets by approximately $0.9 million and increased the corresponding valuation allowance by approximately $1.5 million and decreased total deferred tax liabilities by approximately $0.6 million. The revisions had no impact on the previously reported net deferred tax liabilities, income tax expense or Stockholders’ equity.
During 2012, Unisource concluded that it was more likely than not that the majority of its Canada net deferred tax assets would not be realized. This conclusion was based on a detailed evaluation of all relevant evidence, both positive and negative, including such factors as cumulative loss for the last twelve quarters and the expectation of continued losses in Canada. Therefore, Unisource established a full valuation allowance against its net deferred tax assets in Canada of $16.7 million. As of December 31, 2013, Canada has not shown sufficient positive evidence to justify releasing any of its related valuation allowance.
Unisource has a valuation allowance of $11.0 million against its U.S. state net deferred tax assets and $13.4 million against its Canadian net deferred tax assets as of December 31, 2013.
Deferred tax liabilities have not been recognized for federal tax purposes for the $30.9 million of undistributed earnings of Unisource Canada and Unisource’s other foreign subsidiaries as they are considered to be reinvested for an indefinite period of time. Based on negative cumulative earnings from foreign operations, no incremental tax costs would be expected to be incurred in the hypothetical instance of repatriation and thus no deferred asset or liability would be recorded in the Consolidated Financial Statements.
At December 31, 2013, Unisource had approximately $499.8 million of net operating loss carryforward available for U.S. federal income tax purposes that will expire between 2023 and 2031. Unisource has a state net operating loss benefit of approximately $673.7 million available for state income tax purposes that will expire between 2014 and 2031. As a result, the effective tax rate was different from the statutory tax rate.
Unisource applies a “more likely than not” threshold to the recognition and de-recognition of uncertain tax positions. A change in judgment related to prior years’ uncertain tax positions is recognized in the period of such change.
The following table presents the rollforward of activity for fiscal 2013, 2012 and 2011 for uncertain tax positions:

 	  	2013	 	  	2012	 	  	2011	 	
Beginning of the fiscal year	  	$	1.9	  	  	$	1.9	  	  	$	2.1	  	
Additions based on tax positions taken during the current period	  	 	—  	  	  	 	—  	  	  	 	—  	  	
Reductions based on tax positions taken during a prior period	  	 	—  	  	  	 	—  	  	  	 	—  	  	
Lapses of statutes of limitations	  	 	—  	  	  	 	—  	  	  	 	(0.2	) 	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total gross unrecognized tax benefit	  	$	1.9	  	  	$	1.9	  	  	$	1.9	  	

 
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UWW HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2013 and December 29, 2012
(Dollars in millions, except share amounts in thousands)
 
Unisource recognizes accrued interest and penalties related to uncertain tax positions as a component of Income tax expense (benefit). Unisource’s Consolidated Statements of Operations include $0.4 million, $0.3 million and $0.2 million in fiscal 2013, 2012 and 2011, respectively, in interest and penalties related to the liability for uncertain tax positions. Unisource recorded a liability for the fiscal years ended December 31, 2013 and December 29, 2012 of $2.5 million and $2.1 million, respectively, in interest and penalties related to the liability. Of the total amount of gross unrecognized tax benefits as of December 31, 2013, an amount up to $1.9 million would affect Unisource’s effective tax rate if realized.
During 2014, Unisource expects to resolve certain tax matters related to U.S. and foreign jurisdictions. As of December 31, 2013, Unisource estimates that it is reasonably possible that unrecognized tax benefits may decrease by $0.3 million in the next twelve months due to the resolution of these issues or due to a lapse in the statute of limitations. With the exception of these tax matters, Unisource does not expect any significant changes in unrecognized tax benefits in 2014.
In the U.S., Unisource remains subject to examination by the Internal Revenue Service (IRS) and certain states for fiscal years 2009 and later. There are certain states where Unisource remains subject to examination for fiscal years 2008 and later. Unisource Canada remains subject to examination by the Canadian Revenue Agency (CRA) and certain provinces for fiscal years 2009 and later.
 
(7)	Long-term Debt	
Long-term debt obligations at the end of fiscal 2013 and 2012 were as follows:

 	  	2013	 	 	2012	 	
Senior Credit Facility	  	$	 317.3	  	 	$	 305.0	  	
			
Real Estate Capital Lease obligations, with related party	  	 	55.3	  	 	 	63.9	  	
Equipment Capital Lease obligations	  	 	10.8	  	 	 	13.9	  	
	  	 	 	 	 	 	 	 	
	  	 	383.4	  	 	 	382.8	  	
Less: Current maturities	  	 	(12.1	) 	 	 	(11.2	) 	
	  	 	 	 	 	 	 	 	
Long term debt, net of current maturities	  	$	371.3	  	 	$	371.6	  	
	  	 	 	 	 	 	 	 	
Future payments related to Long-term debt obligations as of December 31, 2013, were as follows:

 	  	Senior Credit
Facility	 	  	Real Estate
Capital
Leases	 	 	Equipment
Capital
Leases	 	 	Total	 	
2014	  	$	—  	  	  	$	15.9	  	 	$	3.6	  	 	$	19.5	  	
2015	  	 	—  	  	  	 	16.0	  	 	 	3.2	  	 	 	19.2	  	
2016	  	 	317.3	  	  	 	16.2	  	 	 	2.9	  	 	 	336.4	  	
2017	  	 	—  	  	  	 	16.3	  	 	 	2.6	  	 	 	18.9	  	
2018	  	 	—  	  	  	 	8.3	  	 	 	0.5	  	 	 	8.8	  	
Thereafter	  	 	—  	  	  	 	—  	  	 	 	0.3	  	 	 	0.3	  	
	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	
	  	 	317.3	  	  	 	72.7	  	 	 	13.1	  	 	 	403.1	  	
Less: amounts representing interest	  	 	—  	  	  	 	(17.4	) 	 	 	(2.3	) 	 	 	(19.7	) 	
	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	
	  	$	317.3	  	  	$	55.3	  	 	$	10.8	  	 	$	383.4	  	

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UWW HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2013 and December 29, 2012
(Dollars in millions, except share amounts in thousands)
 
Senior Credit Facilities
On March 15, 2011, Unisource entered into an asset-based senior credit facility agreement (the Senior Credit Facility) which matures on March 15, 2016. The Senior Credit Facility provides for borrowings of up to $613.5 million and $640.0 million as of December 31, 2013 and December 29, 2012, respectively, as follows:
 
 	•	 	Tranche A provided up to $450 million and $150 million of borrowings as of December 31, 2013 and December 29, 2012 based upon eligible receivables and inventory in the U.S. and Canada, respectively. Unisource has the right to increase the Tranche A borrowings up to $150 million (which may be allocated among the U.S. and Canadian sub-facilities as Unisource elects) so long as certain conditions are satisfied.	
 
 	•	 	Tranche A-1 provides additional borrowings in the U.S. and Canada subject to eligibility requirements in the Senior Credit Facility. Effective October 1, 2013, Unisource elected to reduce the Tranche A-1 commitment to $10.0 million and $3.5 million for the U.S. and Canadian sub-facilities, respectively, to lower the fees charged on the unused commitment. Prior to this reduction, Tranche A-1 provided for additional borrowings of up to $30.0 million in the U.S. and $10.0 million in Canada. Advance rates on eligible collateral under Tranche A-1 were initially set to be amortized on a straight-line basis to zero over the first 3 years of the Senior Credit Facility. In connection with the pay down and conversion of the PIK notes, the Tranche A-1 layer was reset to $40 million on December 5, 2011 and the amortization resumed September 2012 on a straight-line basis over 18 months.	
Unisource has letter of credit availability of $100 million and $25 million in the United States and Canada, respectively.
Availability under the Senior Credit Facility is determined based upon a monthly borrowing base calculation which includes eligible customer receivables and inventory, less outstanding borrowing, letters of credit and certain designated reserves. At December 31, 2013 and December 29, 2012, Unisource had $7.8 million and $9.0 million, respectively, of letters of credit outstanding under the Senior Credit Facility. Unisource had $206.2 million and $225.7 million of unused available borrowing capacity at December 31, 2013 and December 29, 2012, respectively.
Individual borrowings under the Senior Credit Facility generally have terms of three months or less. Such arrangements do not preclude classification as a noncurrent liability. All borrowings under the Senior Credit Facility have been classified as Long-term debt based upon Unisource’s intent and ability to refinance these borrowings as they mature on a long-term basis. The Senior Credit Facility includes $28.1 million and $12.8 million of Canadian bank overdrafts at the end of fiscal 2013 and 2012, respectively.
At the election of Unisource, the Senior Credit Facility bears interest at the Bankers Acceptance (BA) Equivalent or LIBOR, plus an applicable margin, as defined in the Senior Credit Facility. The Senior Credit Facility also allows for borrowings referenced to the U.S. base rate or Canadian prime rate. At December 31, 2013 and December 29, 2012, the weighted average interest rate for these borrowings was 2.9% and 3.2%, respectively. In addition, the Senior Credit Facility has an unused line fee which ranges between 37.5 and 62.5 basis points based upon the usage of the line.
The Senior Credit Facility restricts the incurrence of additional indebtedness with respect to secured assets and includes other customary restrictions and provisions contained in an asset-based credit facility. Unisource was in compliance with all covenants and restrictions under the Senior Credit Facility as of December 31, 2013.
 
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UWW HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2013 and December 29, 2012
(Dollars in millions, except share amounts in thousands)
 
Deferred Financing Fees
In connection with Unisource’s Senior Credit Facility which was entered into in March of 2011, Unisource incurred $13.1 million in deferred financing costs of which $6.3 million was due to Bain Capital Partners, LLC (Bain Capital Partners) for services received. The $6.3 million of fees were waived by Bain Capital Partners in 2011 and recorded as a reduction of Other accrued liabilities and an increase to Additional paid-in capital in the Consolidated Balance Sheets. Unamortized deferred financing costs included in Other non-current assets were $10.7 million and $16.5 million, as of December 31, 2013 and December 29, 2012, respectively.
Deferred financing costs are amortized on a straight-line basis over the remaining term of the Senior Credit Facility through 2016 and are reflected as Interest expense in the Consolidated Statements of Operations. Amortization expense was $5.6 million, $5.2 million and $6.9 million for fiscal 2013, 2012 and 2011, respectively. Future amortization of deferred financing costs totals approximately $4.9 million per year for fiscal years 2014 through 2015 and $0.9 million for fiscal 2016.
In connection with the reduction of the Tranche A-1 commitment on October 1, 2013 of $20.0 million and $6.5 million in the U.S. and Canada, respectively, Unisource recorded a charge of $0.5 million in Interest expense in the Consolidated Statements of Operations to write-off the deferred financing costs associated with the reduction in the commitment amount.
Prior to the March 2011 refinancing, the asset-based senior credit facility (the Old Agreement) provided for total borrowings of up to $600 million of which up to $500 million could have been denominated in U.S. dollars and up to the equivalent of US$100 million could have been denominated in Canadian dollars. Borrowings bore interest at the BA Equivalent or LIBOR, plus an applicable margin, as defined in the Old Agreement. The Old Agreement also allowed for borrowings referenced to the U.S. base rate or Canadian prime rate. At January 1, 2011, the weighted average interest rate for these borrowings was 6.3%.
PIK notes
Unisource issued long-term debt obligations (PIK notes) payable to GP in connection with the Acquisition. The PIK notes consisted of two tranches as follows:
 
 	•	 	Tranche A had a face amount of $70 million with an original interest rate of 7%. The Tranche A agreement included a Leverage Ratio requirement such that if Unisource’s Leverage Ratio decreased below a defined threshold at the end of a calendar year, the interest rate in effect increased by 100 basis points. Unisource’s Leverage Ratio was below the threshold at January 1, 2011; therefore, the interest rate in effect for Tranche A increased to 8% retroactive to January 1, 2010.	
 
 	•	 	Tranche B had a face amount of $100 million and an interest rate of 8%. The Tranche B agreement contained no Leverage Ratio provisions or interest rate adjustments.	
Interest under the PIK notes compounded annually at each anniversary date (November 27), and Unisource had the option to pay the interest in cash or issue additional PIK notes equal to the amount of any unpaid interest. Unisource issued additional PIK notes for the settlement of interest amounts due at each payment date.
As described in Note 10, Redeemable Preferred Stock, Unisource completed a recapitalization with Bain and GP on December 5, 2011 to settle the PIK notes through a $100 million cash payment and conversion of the remaining balance into redeemable preferred stock.
 
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UWW HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2013 and December 29, 2012
(Dollars in millions, except share amounts in thousands)
 
Graphic Seller notes
In connection with the 2003 acquisition of Graphic, Unisource issued Graphic Seller notes to certain sellers who were also employees. These notes were non-interest bearing, had a face amount of $10.0 million, matured in September of 2011 and were paid-off at that time. The carrying amount of the Graphic Seller notes at maturity was discounted using a comparable industry borrowing rate of 15.5%.
Real Estate Capital Leases
In connection with the Acquisition, Unisource transferred 42 of its U.S. warehouse and distribution facilities (the Properties) to GP and GP sold 38 of such Properties to an unrelated third party (the Purchaser/Landlord). Contemporaneously with the above, GP entered into lease agreements (the Real Estate Capital Leases) with respect to the individual 38 Properties with the Purchaser/Landlord and Unisource entered into sublease agreements with respect to such Properties with GP. The initial term of the lease and sublease agreements was fifteen years and six months, and such lease and sublease agreements expire in June 2018. The lease and sublease agreements also provide for five consecutive options to renew any lease or sublease for a term of five years each. The lease and sublease agreements also include rent schedules and escalation clauses throughout the lease and sublease terms, including the option periods. Subject to certain conditions, Unisource has the right to sublease any of the Properties. Under the terms of the lease and sublease agreements, GP and Unisource are responsible for all costs and expenses associated with the Properties, including the operation, maintenance and repair, taxes and insurances. Of the four remaining Properties that are directly owned by GP, Unisource has retained lease agreements on two of those Properties which are part of the Real Estate Capital Lease amounts aforementioned.
Equipment Capital Leases
Capital lease obligations also consist of delivery equipment, material handling equipment, computer hardware and office equipment which are leased through third parties under non-cancelable leases with terms ranging from three to eight years. Many of the delivery equipment leases include annual rate increases based on the Consumer Price Index which are included in the calculation of the initial lease obligation. The carrying value of the related equipment associated with these capital leases is included within Property and equipment, net in the Consolidated Balance Sheets.
 
(8)	Employee Benefit Plans	
 
 	(a)	Defined Contribution Plans	
Unisource sponsors defined contribution retirement plans in the United States and Canada in which most of its employees are eligible to participate. In the U.S., Unisource maintains a defined contribution plan for full-time, non-union employees. Unisource’s contributions to these plans are generally a function of the employees’ contributions. Effective January 1, 2010, Unisource matches up to 3.0% of employee contributions.
Unisource also sponsors a defined contribution plan for its full-time, non-union employees in Canada. Unisource contributes 1% of eligible salaries for its full-time, non-union employees. In addition, there is a voluntary employee contribution rate between 0% – 7% (subject to legislative thresholds) and Unisource matches these employee contributions at the rate of 50%. The potential maximum employer contribution for the Canadian defined contribution plan is 4.5%. Furthermore, in Canada there is a
 
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UWW HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2013 and December 29, 2012
(Dollars in millions, except share amounts in thousands)
 
mandatory defined contribution plan for union employees. Employees who participate in this plan contribute 2.0%, with a Unisource match of 2.0%. Unisource’s total contributions to its defined contribution retirement plans were $6.9 million, $6.9 million and $8.5 million for fiscal 2013, 2012 and 2011, respectively.
 
 	(b)	U.S. Defined Benefit Plans	
In the U.S., the defined benefit pension plans consist of a non-union and union pension plan. The non-union pension plan was established in November 2002 and is sponsored by Unisource. When the plan was established, certain participants were previously enrolled in a similar plan sponsored by GP. The accumulated obligations of Unisource employees in the GP plan were retained by the GP plan. Effective February 15, 2008, Unisource elected to freeze its U.S. defined benefit pension plan for non-union employees. Under the terms of the freeze, participant benefits ceased accruing future pay credits effective February 15, 2008, however, participants continue to receive interest credits on account balances prior to the freeze date, and no employees became active participants after January 1, 2008.
The U.S. union defined benefit plan is also sponsored by Unisource. In general, employees of Unisource classified as hourly paid and covered by a collective bargaining agreement who are employed at designated locations are eligible to participate in the plan. Each location participating in the plan has certain benefits and other provisions specific to that location. Effective January 1, 2011, the salaried pension plan and the hourly pension plan were merged into one plan; however, the benefits, rights and features applicable to the individual plans remained the same.
Unisource also sponsored a non qualified Supplemental Executive Retirement Plan (SERP) for certain highly compensated employees in the U.S that provided benefits in excess of the qualified plans’ compensation limits. As of January 1, 2008, the plan was amended so that no future eligible employees could become a participant in the plan. Effective February 15, 2008, Unisource amended the plan so that no further pay credits will be made, however, the interest credits will continue after the amendment.
During the period from April 1, 2009 through September 28, 2013, the U.S. defined benefit plan was prevented from making lump sum distributions to its non-union participants, based on restrictions imposed by Internal Revenue Code Section 436, relating to the funding status of the plan. On September 29, 2013, the U.S. defined benefit plan received actuarial certification that the restrictions were lifted and eligible U.S. participants are now permitted to receive lump sum payments for their full cash balance accounts. Expected benefit payments in the U.S. plan for 2014 assume that 75% of vested terminated participants will take lump sum payments; however, the timing of when the actual account balances will be paid is dependent on when participants elect to receive payment of their accounts.
 
 	(c)	Canada Defined Benefit Plans	
In Canada, Unisource sponsors one non-union and two union defined benefit plans also known as Registered Pension Plans (RPP).
Effective December 31, 2009, the non-union defined benefit plan was frozen for service credit. However, the participants are still eligible for early retirement benefits, and final average earnings continue to be used for calculating the retirement benefits.
Effective 2010, the union defined benefit plan was frozen for new participants under the two Collective Bargaining Agreements (CBA). All employees hired after the ratification date of the Collective
 
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UWW HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2013 and December 29, 2012
(Dollars in millions, except share amounts in thousands)
 
Bargaining Agreements, which cover 2010 – 2015, are eligible to participate in the defined contribution plan described above which requires the employee to make mandatory contributions of 2.0%, with a Unisource match of 2.0%. All employees hired before the ratification date continue to accrue benefits.
Unisource also maintains a nonregistered SERP for certain highly compensated employees in Canada that provides pension benefits in excess of the registered plan compensation limits. Unisource elected to freeze accruing participant benefits and new participation effective December 31, 2009. However, Unisource continues to pay the accumulated benefits earned through December 31, 2009.
In 2011, Unisource implemented significant staff reductions. Some of the affected members received lump sum value settlements for their accrued benefits in 2011, and a significant number of the remaining affected members settled their benefits in 2012. GAAP requires settlement accounting to be adopted when the lump sum payments in the year exceed the sum of service cost and interest cost (the mandatory threshold) for the year. Since the lump sum payments in 2012 were higher than the mandatory threshold, Unisource was required to adopt settlement accounting for 2012. The effect of the settlement on net periodic cost in fiscal 2012 was determined based on an estimated re-measurement gain or loss for those members receiving lump sum payments in the year, plus a charge for a portion of the unrecognized net gains and losses based on estimated percentages of the projected benefit obligation (PBO) settled in the year which amounted to 7.8% for RPP and 11.8% for SERP.
In fiscal 2013, the lump sum payments were also higher than the mandatory threshold. The effect of the settlement on net periodic cost in fiscal 2013 was determined based on an estimated re-measurement gain or loss for those members receiving lump sum payments in the year, plus a charge for a portion of the unrecognized net gains and losses based on estimated percentages of the PBO settled in the year which amounted to 4.4% for RPP and 28.8% for SERP.
Settlement charges related to Canadian defined benefit and SERP plans was $1.2 million and $2.1 million, respectively, for fiscal 2013 and 2012. These settlement charges are reflected in the Consolidated Statements of Operations as follows:

 	  	2013	 	  	2012	 	
Distribution expenses	  	$	0.1	  	  	$	0.2	  	
Selling and administrative expenses	  	 	0.7	  	  	 	0.7	  	
Restructuring (gains) expenses	  	 	0.4	  	  	 	1.2	  	
	  	 	 	 	  	 	 	 	
	  	$	1.2	  	  	$	2.1	  	

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UWW HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2013 and December 29, 2012
(Dollars in millions, except share amounts in thousands)
 
The following table provides information about the U.S. and Canadian defined benefit pension plans:

 	  	2013	 	 	2012	 	
 	  	U.S.	 	 	Canada	 	 	U.S.	 	 	Canada	 	
Accumulated benefit obligation, end of the year	  	$	84.9	  	 	$	75.7	  	 	$	90.5	  	 	$	84.3	  	
					
Change in projected benefit obligation:	  				 				 				 				
Benefit obligation at the beginning of the year	  	$	90.5	  	 	$	99.3	  	 	$	84.2	  	 	$	99.0	  	
Service cost	  	 	0.6	  	 	 	0.3	  	 	 	0.5	  	 	 	0.2	  	
Interest cost	  	 	3.0	  	 	 	3.8	  	 	 	3.5	  	 	 	4.3	  	
Actuarial (gain) loss	  	 	(7.0	) 	 	 	(5.6	) 	 	 	4.3	  	 	 	3.4	  	
Benefits paid	  	 	(2.1	) 	 	 	(6.8	) 	 	 	(2.0	) 	 	 	(10.2	) 	
Settlements	  	 	(0.1	) 	 	 	—  	  	 	 	—  	  	 	 	—  	  	
Foreign exchange adjustments	  	 	—  	  	 	 	(6.5	) 	 	 	—  	  	 	 	2.6	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Projected benefit obligation at the end of the year	  	$	84.9	  	 	$	84.5	  	 	$	90.5	  	 	$	99.3	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Change in plan assets:	  				 				 				 				
Plan assets, beginning of year	  	$	64.9	  	 	$	67.2	  	 	$	56.5	  	 	$	66.8	  	
Employer contributions	  	 	3.5	  	 	 	1.7	  	 	 	3.9	  	 	 	4.1	  	
Investment returns	  	 	13.7	  	 	 	5.8	  	 	 	7.2	  	 	 	4.7	  	
Benefits paid	  	 	(2.1	) 	 	 	(6.8	) 	 	 	(2.0	) 	 	 	(10.2	) 	
Administrative expenses paid	  	 	(0.8	) 	 	 	—  	  	 	 	(0.7	) 	 	 	—  	  	
Settlements	  	 	(0.1	) 	 	 	—  	  	 	 	—  	  	 	 	—  	  	
Currency translation adjustments	  	 	—  	  	 	 	(4.4	) 	 	 	—  	  	 	 	1.8	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Plan assets, end of year	  	$	79.1	  	 	$	63.5	  	 	$	64.9	  	 	$	67.2	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Underfunded status at end of year	  	$	(5.8	) 	 	$	(21.0	) 	 	$	(25.6	) 	 	$	(32.1	) 	

																	
 	  	2013	 	 	2012	 	
 	  	U.S.	 	 	Canada	 	 	U.S.	 	 	Canada	 	
Amounts recognized in the	  				 				 				 				
Consolidated Balance Sheets consist of:	  				 				 				 				
Other current liabilities	  	$	(0.1	) 	 	$	(0.1	) 	 	$	(0.2	) 	 	$	(0.5	) 	
Defined benefit pension obligations	  	 	(5.7	) 	 	 	(20.9	) 	 	 	(25.4	) 	 	 	(31.6	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net liability recognized	  	$	(5.8	) 	 	$	(21.0	) 	 	$	(25.6	) 	 	$	(32.1	) 	

 	  	2013	 	 	2012	 	
 	  	U.S.	 	 	Canada	 	 	U.S.	 	 	Canada	 	
Amounts not yet reflected in net periodic benefit cost and included in Accumulated other comprehensive income (loss) consist of:	  				 				 				 				
Net loss (gain)	  	$	2.0	  	 	$	17.8	  	 	$	19.3	  	 	$	29.9	  	
Prior service cost (credit)	  	 	0.4	  	 	 	(3.1	) 	 	 	0.5	  	 	 	(3.7	) 	
Net transition obligation (asset)	  				 				 	 	—  	  	 	 	0.1	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net amount recognized	  	$	2.4	  	 	$	14.7	  	 	$	19.8	  	 	$	26.3	  	

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UWW HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2013 and December 29, 2012
(Dollars in millions, except share amounts in thousands)

																									
 	  	2013	 	 	2012	 	 	2011	 	
 	  	U.S.	 	 	Canada	 	 	U.S.	 	 	Canada	 	 	U.S.	 	 	Canada	 	
Components of net periodic benefit cost:	  				 				 				 				 				 				
Service cost	  	$	1.3	  	 	$	0.3	  	 	$	1.2	  	 	$	0.2	  	 	$	1.3	  	 	$	0.2	  	
Interest cost	  	 	3.0	  	 	 	3.8	  	 	 	3.6	  	 	 	4.3	  	 	 	3.5	  	 	 	5.3	  	
Expected return on plan assets	  	 	(4.6	) 	 	 	(3.8	) 	 	 	(4.6	) 	 	 	(4.1	) 	 	 	(3.7	) 	 	 	(4.7	) 	
Amortization of prior service cost	  	 	0.1	  	 	 	(0.4	) 	 	 	0.1	  	 	 	(0.4	) 	 	 	0.1	  	 	 	(0.1	) 	
Settlement (gain) loss	  	 	—  	  	 	 	1.2	  	 	 	—  	  	 	 	2.2	  	 	 	—  	  	 	 	—  	  	
Amortization of net (gain) loss	  	 	1.1	  	 	 	1.5	  	 	 	0.9	  	 	 	2.1	  	 	 	—  	  	 	 	0.9	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net periodic benefit cost	  	$	0.9	  	 	$	2.6	  	 	$	1.2	  	 	$	4.3	  	 	$	1.2	  	 	$	1.6	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Changes to funded status recognized in accumulated other comprehensive (income) loss:	  				 				 				 				 				 				
Net (gain) loss during year	  	$	(16.1	) 	 	$	(7.6	) 	 	$	1.7	  	 	$	2.7	  	 	$	11.1	  	 	$	10.3	  	
Recognized gain (loss)	  	 	(1.1	) 	 	 	(2.7	) 	 	 	(0.9	) 	 	 	(4.3	) 	 	 	—  	  	 	 	(0.9	) 	
Prior service (cost) credit during year	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(4.2	) 	
Recognized prior service (cost) credit	  	 	(0.1	) 	 	 	0.4	  	 	 	(0.1	) 	 	 	0.4	  	 	 	(0.1	) 	 	 	0.1	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net periodic benefit cost	  	$	(17.3	) 	 	$	(9.9	) 	 	$	0.7	  	 	$	(1.2	) 	 	$	11.0	  	 	$	5.3	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Amounts expected to be recognized as components of net periodic benefit cost in 2014 are as follows:

 	  	U.S.	 	  	Canada	 	
Amortization of net loss	  	$	—  	  	  	$	0.7	  	
Prior service cost	  	 	0.1	  	  	 	(0.4	) 	
	  	 	 	 	  	 	 	 	
Estimated net periodic cost	  	$	0.1	  	  	$	0.3	  	

																									
 	  	2013	 	 	2012	 	 	2011	 	
 	  	U.S.	 	 	Canada	 	 	U.S.	 	 	Canada	 	 	U.S.	 	 	Canada	 	
Weighted average actuarial assumptions:	  				 				 				 				 				 				
Benefit obligations:	  				 				 				 				 				 				
Discount rate	  	 	4.55	% 	 	 	4.90	% 	 	 	3.75	% 	 	 	4.25	% 	 	 	4.35	% 	 	 	4.50	% 	
Rate of compensation increases	  	 	—  	  	 	 	3.00	% 	 	 	—  	  	 	 	3.00	% 	 	 	—  	  	 	 	3.00	% 	
Net periodic pension costs:	  				 				 				 				 				 				
Discount rate	  	 	3.75	% 	 	 	4.25	% 	 	 	4.35	% 	 	 	4.50	% 	 	 	5.35	% 	 	 	5.40	% 	
Rate of compensation increases	  	 	—  	  	 	 	3.00	% 	 	 	—  	  	 	 	3.00	% 	 	 	—  	  	 	 	3.00	% 	
Expected long-term rate of return on assets	  	 	8.00	% 	 	 	6.25	% 	 	 	8.00	% 	 	 	6.25	% 	 	 	8.00	% 	 	 	6.75	% 	
Unisource recognized the funded status (i.e., the difference between the fair value of plan assets and the projected benefit obligations) of its defined benefit pension plans in the accompanying 2013 Consolidated Balance Sheets, with a corresponding adjustment to Accumulated other comprehensive loss, net of $6.8 million of tax.
 
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UWW HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2013 and December 29, 2012
(Dollars in millions, except share amounts in thousands)
 
Unisource’s weighted average expected rate of return on pension plan assets was developed with information provided by its third party professional asset managers and consultants and was based on historical rates of return, inflation expectations and the investment allocations of the pension plan assets.
The weighted average asset allocations of invested assets within Unisource’s defined benefit pension plans at the end of each fiscal year were as follows:

 	  	2013	 	 	2012	 	 	Asset allocation range	 	
 	  	U.S.	 	 	Canada	 	 	U.S.	 	 	Canada	 	 	U.S.	 	  	Canada	 	
Equity securities	  	 	69	% 	 	 	66	% 	 	 	66	% 	 	 	58	% 	 	 	50 – 70	% 	  	 	50 – 70	% 	
Fixed income securities	  	 	31	% 	 	 	33	% 	 	 	34	% 	 	 	40	% 	 	 	25 – 45	% 	  	 	30 – 50	% 	
Cash and cash equivalents	  	 	—  	  	 	 	1	% 	 	 	—  	  	 	 	2	% 	 	 	0 – 10	% 	  	 	0 – 5	% 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 				  				
Total	  	 	100	% 	 	 	100	% 	 	 	100	% 	 	 	100	% 	 				  				
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 				  				
Investment performance is evaluated at least quarterly. Total returns are compared to the weighted average return of a benchmark mix of investment vehicles. Individual fund investments are compared to historical 3, 5 and 10 year returns achieved by funds with similar investment objectives.
Plan assets are measured using the fair value hierarchy as described in Note 1, Fair Value Measurements. U.S. pension plan assets are invested in broad-based mutual funds. Unisource Canada pension assets are invested in pooled funds comprised of marketable securities that are traded on an active exchange.
The following table presents Unisource’s plan assets using the fair value hierarchy as of December 31, 2013.

 	  	Total	 	  	Level 1	 	  	Level 2	 	  	Level 3	 	
Investments – U.S.:	  				  				  				  				
Equity securities	  	$	54.2	  	  	$	—  	  	  	$	54.2	  	  	$	—  	  	
Fixed income securities	  	 	24.7	  	  	 	—  	  	  	 	24.7	  	  	 	—  	  	
Cash and cash equivalents	  	 	0.2	  	  	 	0.2	  	  	 	—  	  	  	 	—  	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
	  	$	79.1	  	  	$	0.2	  	  	$	78.9	  	  	$	—  	  	

																	
 	  	Total	 	  	Level 1	 	  	Level 2	 	  	Level 3	 	
Investments – Canada	  				  				  				  				
Equity securities	  	$	41.6	  	  	$	—  	  	  	$	41.6	  	  	$	—  	  	
Fixed income securities	  	 	21.1	  	  	 	—  	  	  	 	21.1	  	  	 	—  	  	
Cash and cash equivalents	  	 	0.8	  	  	 	0.8	  	  	 	—  	  	  	 	—  	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
	  	$	63.5	  	  	$	0.8	  	  	$	62.7	  	  	$	—  	  	

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UWW HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2013 and December 29, 2012
(Dollars in millions, except share amounts in thousands)
 
The following table presents Unisource’s plan assets using the fair value hierarchy as of December 29, 2012.

 	  	Total	 	  	Level 1	 	  	Level 2	 	  	Level 3	 	
Investments – U.S.:	  				  				  				  				
Equity securities	  	$	42.8	  	  	$	—  	  	  	$	42.8	  	  	$	—  	  	
Fixed income securities	  	 	22.0	  	  	 	—  	  	  	 	22.0	  	  	 	—  	  	
Cash and cash equivalents	  	 	0.1	  	  	 	0.1	  	  	 	—  	  	  	 	—  	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
	  	$	64.9	  	  	$	0.1	  	  	$	64.8	  	  	$	—  	  	

																	
 	  	Total	 	  	Level 1	 	  	Level 2	 	  	Level 3	 	
Investments – Canada	  				  				  				  				
Equity securities	  	$	39.2	  	  	$	—  	  	  	$	39.2	  	  	$	—  	  	
Fixed income securities	  	 	26.9	  	  	 	—  	  	  	 	26.9	  	  	 	—  	  	
Cash and cash equivalents	  	 	1.1	  	  	 	1.1	  	  	 	—  	  	  	 	—  	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
	  	$	67.2	  	  	$	1.1	  	  	$	66.1	  	  	$	—  	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Unisource expects to contribute $3.8 million and $4.4 million to its U.S. and Canadian defined benefit pension plans, respectively, during fiscal 2014. Future benefit payments under Unisource’s defined benefit pension plans are estimated as follows:

 	  	U.S.	 	  	Canada	 	
2014	  	$	17.7	  	  	$	2.6	  	
2015	  	 	4.2	  	  	 	2.8	  	
2016	  	 	4.3	  	  	 	2.9	  	
2017	  	 	4.3	  	  	 	3.1	  	
2018	  	 	4.4	  	  	 	3.2	  	
2019 – 2023	  	 	23.4	  	  	 	18.9	  	
 
 	(d)	Multiemployer Plans	
Unisource also makes contributions to multiemployer pension plans for its employees covered by such plans. These contributions were $1.5 million for fiscal year 2013, $1.5 million for fiscal year 2012 and $1.6 million for fiscal year 2011. It is reasonably possible that changes could occur affecting employees for which Unisource makes contributions to multiemployer employee benefit plans. Such changes might result in additional contribution obligations to these plans. Any such obligations would be governed by the specific agreement between Unisource and any such plan.
Unisource contributions did not represent more than 5% of total contributions to any multiemployer plans as indicated in the plans’ most recently available annual report and Form 5500. At the date these Consolidated Financial Statements were issued, Forms 5500 were not available for the plan years ending in 2013.
The risks of participating in these multiemployer plans are different from single-employer plans in the following aspects including:
 
 	a.	Assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers.	
 
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UWW HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2013 and December 29, 2012
(Dollars in millions, except share amounts in thousands)

 	b.	If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers.	
 
 	c.	If Unisource chooses to stop participating in some of its multiemployer plans, Unisource may be required to pay those plans an amount based on the underfunded status of the plan, referred to as a withdrawal liability.	
Unisource’s participation in the multiemployer plans for the annual period ended December 31, 2013 is outlined in the table below. The “EIN/Pension Plan Number” column provides the Employee Identification Number and the three-digit plan number, if applicable. Unless otherwise noted, the most recent Pension Protection Act zone status available in 2013 and 2012 is for the plan’s year end at December 31, 2013 and December 31, 2012, respectively. The zone status is based on information that Unisource received from the plan and is certified by the plan’s actuary. Among other factors, plans in the red zone are generally less than 65% funded, plans in the yellow zone are less than 80% funded and plans in the green zone are at least 80% funded. The “FIP/RP Status Pending/Implemented” column indicates plans for which a financial improvement plan or a rehabilitation plan is either pending or has been implemented. The last column lists the expiration date(s) of the collective-bargaining agreement.

 	 	EIN/Pension
Plan
No.	 	Pension
Protection
Act Zone Status	 	FIP/RP
status
Pending/
Implemented	 	Unisource
contributions	 	 	Surcharge
imposed	 	Expiration
date of
collective
bargaining
agreement	
Pension Fund	 		 	    2013    	 	    2012    	 		 	2013	 	 	2012	 	 	2011	 	 		 		
Central States, Southeast & Southwest Areas Pension Fund	 	36-6044243/001	 	Red	 	Red	 	Implemented	 	$	0.1	  	 	$	0.1	  	 	$	0.1	  	 	Yes	 	7/31/2015
11/30/2016	
										
Grocery/Storage Pension Plan 1	 	51-6110168/001	 	N/A	 	N/A	 	N/A	 	 	—  	  	 	 	—  	  	 	 	0.1	  	 	Yes	 	7/31/2015	
										
Minneapolis Food Industry Pension Plan	 	41-6047047/001	 	Yellow	 	Yellow	 	Implemented	 	 	0.2	  	 	 	0.2	  	 	 	—  	  	 	Yes	 	7/31/2015	
										
Teamsters Pension Plan of Philadelphia & Vicinity	 	23-1511735/001	 	Yellow	 	Yellow	 	Implemented	 	 	0.1	  	 	 	0.1	  	 	 	0.1	  	 	Yes	 	3/31/2015	
										
Warehouse Employees Union Local 169 and Employers Joint Pension Fund	 	23-6230368/001	 	Red	 	Red	 	Implemented	 	 	0.1	  	 	 	0.1	  	 	 	0.1	  	 	Yes	 	4/30/2016	
										
Western Conference of Teamsters Pension Trust Fund 2	 	91-6145047	 	Green	 	Green	 	N/A	 	 	0.7	  	 	 	0.7	  	 	 	0.7	  	 	No	 	9/30/2015; 12/31/2015
9/30/2015; 1/31/2017
10/31/2016
10/31/2016	
										
Distributors Association Warehousemen’s 3 Pension Trust Fund 4	 	94-0294755/002	 	Red	 	Red	 	Implemented	 	 	0.1	  	 	 	0.1	  	 	 	0.1	  	 	Yes	 	9/30/2013	
										
The Pulp and Paper Industry Pension Plan for the Pulp and Paper Division 5	 	394940	 	Green	 	Green	 	N/A	 	 	0.2	  	 	 	0.2	  	 	 	0.4	  	 	No	 	10/21/2015	
	 		 		 		 		 	 	 	 	 	 	 	 	 	 	 	 	 		 		
Total contributions	 		 		 		 		 	 	$1.5	  	 	$	1.5	  	 	$	1.6	  	 		 		

 	1  	The Grocery/Storage Pension Plan was in critical status for the plan year that began June 1, 2010. The Rehabilitation Plan included a merger of the Plan into the Minneapolis Food Distributing Industry Pension Plan effective June 1, 2011. These contributions were impacted due to the merger with the Grocery Storage Pension Fund.	

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UWW HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2013 and December 29, 2012
(Dollars in millions, except share amounts in thousands)
 
 	2  	Unisource has 7 CBAs which participate in the Western Conference of Teamsters Pension Trust. As of the end of the most recent plan year, the participating Unions including the number of employees participating in the pension plan are as follows: L0070 – IPT Pleasanton (Teamsters Local 70) – 16 Employees, L117 – Kent, WA (Teamsters Local Union No. 117) – 5 Employees, L162 – Portland, OR (General Teamsters Local Union No. 162) – 5 Employees, L0174 – IBT Seattle (General Teamsters Employees, L206 – Eugene, OR) – 6 Employees, L0986 – IBT – Commerce – 52 Employees, L0986 – IBT – La Palma – 44 Employees.	
 
 	3  	The CBA was under negotiation as of the end of fiscal 2013.	
 
 	4  	The Distributors Association Warehousemen’s Pension Trust Fund Plan Year ended May 31, 2013. However, the contributions shown are based on a full 12 month period.	
 
 	5  	The Pulp and Paper Industry Pension Plan for the Pulp and Paper Division is a Canadian plan.	
 
(9)	Commitments and Contingencies	
 
 	(a)	Operating Leases	
Unisource leases, with terms greater than one year, certain of its distribution facilities, operating equipment and office equipment under noncancelable operating leases. Operating lease terms, including renewal options that range from one to twenty years. Many of the leases include escalating rents for which Unisource calculates annual straight-line expense and compares the amount to the actual lease expense by year. Unisource records lease expense using the straight-line method. The difference between straight-line and actual lease payments is recorded in the Consolidated Balance Sheets as a current or noncurrent liability based on the remaining lease term. Many leases include renewal options at predetermined rates or rates tied to a published index. All leasehold improvements are depreciated at the lesser of the asset life or the lease term and the expense is reflected in Depreciation and amortization in the Consolidated Statements of Operations. Total rent expense included in operating expenses in the Consolidated Statements of Operations for fiscal 2013, 2012 and 2011 was as follows:

 	  	2013	 	  	2012	 	  	2011	 	
Distribution expenses	  	$	42.0	  	  	$	41.0	  	  	$	42.0	  	
Selling and administrative expenses	  	 	5.0	  	  	 	5.5	  	  	 	6.0	  	
Restructuring (gains) expenses	  	 	0.5	  	  	 	—  	  	  	 	—  	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
	  	$	47.5	  	  	$	46.5	  	  	$	48.0	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
At the end of fiscal 2013, future commitments under noncancelable leases with an original term of at least one year were as follows:

 	  	2014	 	 	2015	 	 	2016	 	 	2017	 	 	2018	 	 	Thereafter	 	
Operating lease obligations	  	$	39.7	  	 	$	30.5	  	 	$	25.8	  	 	$	20.9	  	 	$	16.7	  	 	$	30.3	  	
Sublease income	  	 	(0.2	) 	 	 	(0.1	) 	 	 	(0.1	) 	 	 	(0.1	) 	 	 	(0.1	) 	 	 	—  	  	
During fiscal 2013, Unisource subleased six facilities under operating leases. Sublease income was $0.6 million, $2.3 million and $2.6 million in fiscal year 2013, 2012 and 2011, respectively.
 
 	(b)	Asset Retirement Obligations	
Unisource has contractual obligations associated with warehouse leases which require the facility be returned to its original condition less normal wear and tear. Costs to restore the warehouse facilities to
 
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UWW HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2013 and December 29, 2012
(Dollars in millions, except share amounts in thousands)
 
their previous condition typically include signage removal and repairs to the warehouse floor, dock doors and drywall. In the case of the Real Estate Capital Leases (Note 7), Unisource is also responsible for the repair and/or replacement of warehouse roofs, parking lots and HVAC, in addition to other repairs which are required to return these warehouses to their original condition less normal wear and tear. In accordance with GAAP, accruals are made based on Unisource’s estimates of current market restoration costs, inflation rates and discount rates. At the inception of a lease, the present value of the expected cash payment is recognized as an asset retirement obligation with a corresponding amount recognized in Property and equipment, net in the Consolidated Balance Sheets. The property asset amount is depreciated, and the liability is accreted, over the period from lease inception to the time Unisource expects to vacate the premises resulting in both depreciation and interest accretion charges in the Consolidated Statements of Operations. Discount rates used are based on credit-adjusted risk-free interest rates. Credit-adjusted risk-free rates are estimated based on the average yield for noninvestment grade bonds for the year of the lease inception. Assumptions used to estimate Unisource’s asset retirement obligation (ARO) liability are updated on an annual basis and when significant changes in facts and circumstances occur which would require an adjustment to such estimates.
The following schedule is a reconciliation of the beginning and ending aggregate carrying amount of Unisource’s ARO liabilities, which is reflected primarily in Other noncurrent liabilities in the Consolidated Balance Sheets, for the years ended December 31, 2013 and December 29, 2012:

 	  	2013	 	 	2012	 	
Obligation, beginning of the period	  	$	5.5	  	 	$	4.9	  	
Accretion expense	  	 	0.5	  	 	 	0.5	  	
Additions	  	 	2.0	  	 	 	0.9	  	
Terminations	  	 	(0.4	) 	 	 	(0.8	) 	
Currency translations adjustments	  	 	(0.1	) 	 	 	—  	  	
	  	 	 	 	 	 	 	 	
Obligation, end of period	  	$	7.5	  	 	$	5.5	  	

 	(c)	Escheat Audit	
During 2013, Unisource was notified by the State of Delaware that they intended to examine the books and records of Unisource to determine compliance with Delaware escheat laws. Since that date, seven other states have joined with Delaware in the audit process which is conducted by an outside firm on behalf of the states and covers the period from 1981 to present. Unisource had been informed that similar audits have generally taken two to four years to complete. Due to the preliminary stages of such audits, Unisource determined that the ultimate outcome cannot be estimated at this time. Claims or liabilities could be asserted and such outcomes could have a material impact on Unisource’s financial position, results of operations and cash flows.
 
 	(d)	Legal Matters	
Unisource is subject to various legal proceedings and claims that arise in the ordinary course of business. Although the ultimate outcome of legal proceedings underway at any point in time is difficult to reasonably determine, Unisource believes adequate reserves have been established for probable losses and legal costs related thereto.
 
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UWW HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2013 and December 29, 2012
(Dollars in millions, except share amounts in thousands)
 
During fiscal 2005, Unisource Canada entered into a $10.7 million settlement agreement with the Canadian Competition Bureau that required Unisource Canada to make equal annual payments beginning in January 2007 through January 2012. The settlement was subject to an indemnification agreement with GP such that most of these costs were reimbursed by GP. The last remaining payment was made in 2012 to settle the obligation.
 
 	(e)	Other	
Approximately 11.0% of Unisource’s work force is represented under 26 collective bargaining agreements at December 31, 2013. During 2013, Unisource successfully negotiated and renewed three of the six collective bargaining agreements which expired during the year. These agreements were extended through 2016 under terms which approximate market rates. The remaining collective bargaining agreements are currently under negotiation and are expected to be renewed during 2014.
 
(10)	Redeemable Preferred Stock	
On December 5, 2011 (the Transaction Date), Unisource completed a recapitalization with Bain and GP to issue redeemable preferred stock as settlement for its outstanding PIK notes, that had been issued in connection with the Acquisition. As of the Transaction Date, the PIK notes had a net carrying value of $311.4 million. To settle this obligation, Unisource paid $100 million in cash and authorized 228,465 shares of Class A redeemable preferred stock (the Redeemable preferred stock), of which 228,463 were issued, with a par value of $0.01 per share. The initial fair and carrying value of the Redeemable preferred stock at the date of its issuance was $146.1 million, which was determined with the assistance of an independent third party valuation specialist, and was recorded net of stock issuance costs of $0.1 million and a $2.3 million advisory fee due to Bain Capital Partners.
The $65.3 million difference between the net carrying value of the PIK notes, less the cash payment to GP, and the fair value of the Redeemable preferred stock was recorded as Additional paid-in capital in the Consolidated Balance Sheets.
While these shares of Redeemable preferred stock remain outstanding, Unisource cannot, without the written consent of the holders of the Redeemable preferred stock, redeem, purchase or otherwise acquire any of the common stock (unless associated with an employee termination), nor pay or declare dividends or distributions with respect to the common stock. Additionally, without the written consent of the Redeemable preferred stock shareholders, Unisource cannot alter any of the rights and preferences of the Redeemable preferred stock, issue any new shares of Redeemable preferred stock, authorize or issue senior stock, or subdivide the outstanding shares of the Redeemable preferred stock. The holders of the Redeemable preferred stock have no voting rights. In the event of liquidation, dissolution or winding up of Unisource, Redeemable preferred stock holders are entitled to receive assets of Unisource prior to any other stockholders.
The Redeemable preferred stock shares are contingently redeemable, with written notice from the holders, upon any event of default for a price per share equal to the shares’ liquidation value ($1,000 per share) plus any accrued but unpaid dividends. An event of default includes a change in control of Unisource, an insolvency event or failure to declare and pay dividends when required. At any time Unisource, with written notice, has the right to redeem all or a portion of the Redeemable preferred stock for the amount up to the liquidation value plus any accrued but unpaid dividends.
 
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UWW HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2013 and December 29, 2012
(Dollars in millions, except share amounts in thousands)
 
Redeemable preferred stock dividends accrue on a daily basis at a legal rate of 8% per year of the shares’ liquidation value. These dividends must accrue whether or not there are profits, funds or surplus of Unisource available for payment, and Unisource is required to declare a dividend on each share of Redeemable preferred stock in the amount accrued for the one year period ending at the anniversary date of the initial issuance of Redeemable preferred stock. Any dividends not paid shall be accrued and added to the liquidation value of the Redeemable preferred stock shares. In April 2016, Unisource is required to declare and pay in cash all dividends that are accrued and unpaid as of that date.
As of December 5, 2013, Unisource declared a Redeemable preferred stock dividend of $86.40 per share, which aggregated to $19.7 million. For financial statement purposes, the December 5, 2013 dividend amount was recorded at $19.1 million, which reflected the aggregate dividend payment required to be made in April 2016 using a fair value discount rate of 12%, and was recorded as a reduction in Redeemable preferred stock and increase in Other noncurrent liabilities. The discount rate was based on the fair value rates established at the date of the PIK note exchange.
As of December 31, 2013, the cumulative preferred stock dividend payable recorded in Other noncurrent liabilities was $36.3 million.
As of December 31, 2013 and December 29, 2012, dividends, accreted at a fair value rate of 12%, totaled $37.9 million and $18.5 million, respectively, and were recorded as a reduction to Additional paid-in capital and an increase to Redeemable preferred stock in the Consolidated Balance Sheets. The aggregate liquidation preference of the Redeemable preferred stock at December 31, 2013 was $268.1 million.
 
(11)	Common Stock	
 
 	(a)	Common Stock	
Authorized UWWH common stock includes 30,000 shares of Class A, 90 shares of Class B, 3,125 shares of Class L and 10 shares of Class M. Class A and Class L shares are entitled to one vote per share. Class B and Class M shares have no voting rights.
Any distributions to holders of common stock are to be paid as follows: First, distributions are paid on Class L and Class M shares on a pro rata basis until such distributions constitute a 10% annual return on the original cost from the issuance date through the distribution date. Second, distributions are paid on Class L and Class M shares on a pro rata basis until such distributions constitute a return of the entire original cost of these shares. Last, distributions are paid on a pro rata basis to all classes of common stock.
 
 	(b)	Treasury Stock	
Unisource accounts for treasury stock under the cost method, which requires Unisource to record the value of the shares at the purchased amount. Treasury stock was acquired due to the resignation of a former officer of Unisource in 2009.
The number of authorized shares, outstanding shares, voting shares, treasury shares and the value of treasury stock, has not changed during the fiscal years 2013, 2012 and 2011. The treasury stock values
 
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UWW HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2013 and December 29, 2012
(Dollars in millions, except share amounts in thousands)
 
as of the end of fiscal 2013, 2012 and 2011 for Class B and Class M shares were $0.1 million and $0.9 million, respectively.

 	  	Authorized	 	  	Outstanding
at end
  of fiscal year  	 	  	Voting
shares	 	  	Treasury
stock
shares	 	
 	  	Number of shares outstanding (in thousands)	 	
Class A	  	 	30,000	  	  	 	23,104	  	  	 	23,104	  	  	 	—  	  	
Class B	  	 	90	  	  	 	90	  	  	 	—  	  	  	 	90	  	
Class L	  	 	3,125	  	  	 	2,547	  	  	 	2,547	  	  	 	—  	  	
Class M	  	 	10	  	  	 	10	  	  	 	—  	  	  	 	10	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total	  	 	33,225	  	  	 	25,751	  	  	 	25,651	  	  	 	100	  	

 	(c)	Stock Option Plan	
Unisource’s stock option plan provided for the granting of options to purchase up to 2,500,000 shares of Class A common stock and up to 277,778 shares of Class L common stock. Options could be granted to employees, consultants or advisors to Unisource, had an exercise price established by Unisource’s Board of Directors, generally vested over five years from the date granted and expired ten years after granted, whereby no new options are allowed to be issued under the plan, however, all options which were previously issued under the plan continued in place according to the original terms established at the date of the grant.
A summary of stock option plan activity was as follows:

 	  	Class A
shares	 	 	Weighted
average
exercise price	 	  	Class L
shares	 	 	Weighted
average
exercise price	 	
 	  	(Number of shares in thousands and value per share, as stated)	 	
Outstanding options:	  				 				  				 				
December 29, 2012	  	 	2,165	  	 	$	0.28	  	  	 	241	  	 	$	97.56	  	
Exercised	  	 	(7	) 	 	 	0.28	  	  	 	(1	) 	 	 	97.56	  	
Forfeited	  	 	(63	) 	 	 	0.28	  	  	 	(7	) 	 	 	97.56	  	
Expired	  	 	(570	) 	 	 	0.28	  	  	 	(63	) 	 	 	97.56	  	
	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
December 31, 2013	  	 	1,525	  	 	$	0.28	  	  	 	170	  	 	$	97.56	  	
	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Exercisable options:	  				 				  				 				
December 31, 2013	  	 	1,384	  	 	$	0.28	  	  	 	154	  	 	$	97.56	  	
	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
All outstanding options granted to purchase Class A and Class L common stock were granted to Unisource employees and have an exercise price of $0.28 and $97.56 per share, respectively. These exercise prices did not exceed the fair market values of the underlying shares of Class A and Class L common stock on the date of the grant. The exercise prices were determined by the Board of Directors by taking the actual prices paid for similar shares of common stock at the Acquisition Date as a reference.
 
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UWW HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2013 and December 29, 2012
(Dollars in millions, except share amounts in thousands)
 
For the fiscal year 2013, no options were granted and therefore no fair value was estimated. For the fiscal years 2012 and 2011, the fair value was estimated with the following assumptions:

 	  	March 15,
2012	 	 	June 16,
2011	 	 	August 18,
2011	 	
Risk-free interest rate (1)	  	 	2.29	% 	 	 	2.93	% 	 	 	2.08	% 	
Expected annual volatility (2)	  	 	38.55	% 	 	 	41.68	% 	 	 	41.92	% 	
Expected life (3)	  	 	10	  	 	 	10	  	 	 	10	  	
Dividends (4)	  	 	—  	  	 	 	—  	 	 	 	—  	  	
The inputs used at the grant dates above, were as follows:
 
 	1)	The risk-free interest rate is based on the rate for a U.S. Treasury zero-coupon issue with a term that approximates the expected life of the option grant at the date closest to the option grant date.	
 
 	2)	There is no active external or internal market for Class A and Class L common stock. Accordingly, the volatility used in the valuation model was calculated using averages of the annualized historical volatility for companies considered to be within Unisource’s peer group.	
 
 	3)	The expected life represents the period that Unisource’s stock-based awards are expected to be outstanding. The expected term assumptions were determined based on expected employee exercise behavior.	
 
 	4)	Unisource has not paid and does not expect to pay dividends on Class A and Class L common stock.	
Compensation expense is recognized on a straight-line basis over the entire vesting period of the options. The compensation expense which was recognized was $0.4 million, $0.7 million and $1.3 million in fiscal 2013, 2012 and 2011, respectively, and is included as a component of Selling and administrative expenses in the Consolidated Statements of Operations.
Historically, Unisource has not recognized any tax benefit associated with stock-based compensation in the Consolidated Statements of Operations due to tax net operating losses and full valuation allowances.
At the end of fiscal 2013, all outstanding options had a weighted average remaining life of 3.1 years and vested options had a weighted average remaining life of 2.2 years. Unisource had $0.5 million of unvested compensation expense related to options that is expected to be charged to expense over the weighted average future period of 1.0 years.
 
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UWW HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2013 and December 29, 2012
(Dollars in millions, except share amounts in thousands)
 
The following is a summary of the changes in nonvested options for fiscal 2011, 2012 and 2013:

 	  	Class A
shares	 	 	Weighted
Average
Grant date
fair value	 	  	Class L
Shares	 	 	Weighted
Average
Grant date
fair value	 	
 	  	(Number of shares in thousands and value per share,
as stated)	 	
Outstanding options:	  				 				  				 				
Nonvested shares at January 1, 2011	  	 	611	  	 	$	0.06	  	  	 	67	  	 	$	44.13	  	
					
Granted	  	 	100	  	 	 	—  	  	  	 	11	  	 	 	5.48	  	
Vested	  	 	(202	) 	 	 	0.09	  	  	 	(22	) 	 	 	45.11	  	
Forfeited	  	 	(58	) 	 	$	0.02	  	  	 	(6	) 	 	 	36.97	  	
	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Nonvested shares at December 31, 2011	  	 	451	  	 	 	0.06	  	  	 	50	  	 	$	44.13	  	

Granted	  	 	63	  	 	$	—  	  	  	 	7	  	 	$	—  	  	
Vested	  	 	(163	) 	 	 	0.08	  	  	 	(18	) 	 	 	40.73	  	
Forfeited	  	 	(40	) 	 	 	—  	  	  	 	(4	) 	 	 	35.50	  	
	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Nonvested shares at December 29, 2012	  	 	311	  	 	$	0.02	  	  	 	35	  	 	$	26.49	  	

Granted	  	 	—  	  	 	$	—  	  	  	 	—  	  	 	$	—  	  	
Vested	  	 	(107	) 	 	 	0.01	  	  	 	(12	) 	 	 	27.46	  	
Forfeited	  	 	(63	) 	 	 	—  	  	  	 	(7	) 	 	 	3.99	  	
	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Nonvested shares at December 31, 2013	  	 	141	  	 	$	—  	  	  	 	16	  	 	$	24.37	  	

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UWW HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2013 and December 29, 2012
(Dollars in millions, except share amounts in thousands)

(12)	Other Comprehensive Income	
A summary of the components of Other comprehensive income (loss) for the fiscal years ended December 31, 2013, December 29, 2012 and December 31, 2011 is as follows:

 	  	Pre-Tax
amount	 	 	Tax
(expense)/
benefit	 	 	Net of
tax
amount	 	
Fiscal year ended December 31, 2013:	  				 				 				
Foreign currency translation adjustment	  	$	(5.4	) 	 	$	—  	  	 	$	(5.4	) 	
Defined benefit pension plans:	  				 				 				
Net pension gain (loss)	  	 	23.7	  	 	 	(6.4	) 	 	 	17.3	  	
Amortization of prior service credit	  	 	(0.3	) 	 	 	—  	  	 	 	(0.3	) 	
Amortization of net loss	  	 	3.8	  	 	 	(0.4	) 	 	 	3.4	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Other comprehensive income (loss)	  	$	21.8	  	 	$	(6.8	) 	 	$	15.0	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Fiscal year ended December 29, 2012:	  				 				 				
Foreign currency translation adjustment	  	$	2.4	  	 	$	—  	  	 	$	2.4	  	
Defined benefit pension plans:	  				 				 				
Net pension gain (loss)	  	 	(4.4	) 	 	 	0.7	  	 	 	(3.7	) 	
Amortization of prior service credit	  	 	(0.3	) 	 	 	0.1	  	 	 	(0.2	) 	
Amortization of net loss	  	 	5.2	  	 	 	(1.1	) 	 	 	4.1	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Other comprehensive income (loss)	  	$	2.9	  	 	$	(0.3	) 	 	$	2.6	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Fiscal year ended December 31, 2011:	  				 				 				
Foreign currency translation adjustment	  	$	(2.2	) 	 	$	—  	  	 	$	(2.2	) 	
Defined benefit pension plans:	  				 				 				
Net pension gain (loss)	  	 	(21.4	) 	 	 	2.7	  	 	 	(18.7	) 	
Prior service credit	  	 	4.2	  	 	 	(1.1	) 	 	 	3.1	  	
Amortization of net loss	  	 	0.9	  	 	 	(0.2	) 	 	 	0.7	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Other comprehensive income (loss)	  	$	(18.5	) 	 	$	1.4	  	 	$	(17.1	) 	

(13)	Related Party Transactions	
 
 	(a)	Georgia-Pacific	
Unisource purchases certain inventory items from GP and sells certain inventory items to GP in the normal course of business. Purchases from GP, net of applicable discounts, were $205.5 million, $208.9 million and $209.9 million during fiscal 2013, 2012 and 2011, respectively, and were recorded in Cost of products sold in the Consolidated Statements of Operations. Sales to GP were $31.0 million, $22.7 million and $17.0 million during fiscal 2013, 2012 and 2011, respectively.
Related-party accounts receivable from GP were approximately $2.5 million and $2.5 million at the end of fiscal 2013 and 2012, respectively. Related-party accounts payable to GP at the end of fiscal 2013 and 2012 were $6.7 million and $4.5 million, respectively.
At the end of fiscal 2013 and 2012, Unisource had a Related-party accounts receivable from GP related to an indemnity agreement of $0.3 million and $0.3 million, respectively.
 
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UWW HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2013 and December 29, 2012
(Dollars in millions, except share amounts in thousands)
 
Total payments made with respect to the Properties discussed in Note 7, Long-term debt, were $15.7 million, $15.7 million and $15.5 million during fiscal 2013, 2012 and 2011, respectively. Amounts due and related to the Properties were $55.3 million and $63.9 million at the end of fiscal 2013 and 2012, respectively, and are included in Capital lease obligations to related party, current portion and Capital lease obligations to related party, less current portion in the Consolidated Balance Sheets. Certain assets and liabilities attributed to Unisource for periods prior to the Acquisition Date, related to pension liabilities, income and sales taxes, insurance, other employee benefits, environmental matters, litigation and others, were retained by GP for these prior periods. Unisource also has an agreement with GP whereby Unisource is indemnified by GP against certain claims related to periods prior to the Acquisition Date above certain thresholds.
 
 	(b)	Bain Capital Partners	
At the Acquisition Date, Unisource and Bain Capital Partners entered into an advisory services agreement that provides for consulting and other management services by Bain Capital Partners to Unisource. Under the terms of the advisory consulting agreement, Unisource pays Bain Capital Partners one million dollars a quarter, plus reimbursable expenses. The costs associated with this agreement were $4.4 million, $4.4 million and $4.4 million during fiscal 2013, 2012 and 2011, respectively, and such costs are included in Selling and administrative expenses in the Consolidated Statements of Operations. At the end of fiscal 2012, Other current assets included $1.0 million in advisory fees that related to the first quarter payment for the following year. No prepayment of advisory fees was made at the end of fiscal 2013 for the first quarter of 2014. The advisory services agreement also provides Bain Capital Partners with the right to receive a success fee for leading efforts related to acquisitions and refinancing activities. As discussed in Note 7, Long-term debt, Unisource refinanced the Senior Credit Facility in March 2011. Bain Capital Partners was entitled to receive a transaction fee of $6.3 million related to the refinancing, which Bain Capital Partners agreed to waive, effective December 5, 2011 as part of the PIK note and Redeemable preferred stock transaction (Note 10). The $6.3 million fee waiver is reflected as Additional paid-in capital in the December 31, 2011 Consolidated Balance Sheets. Also as part of the Redeemable preferred stock transaction, Bain Capital Partners was entitled to receive an additional $2.3 million advisory fee. This fee was waived and also recorded as Additional paid-in capital in the December 31, 2011 Consolidated Balance Sheet.
 
 	(c)	Other	
As discussed in Note 5, Investments in Real Estate Joint Ventures, Unisource has a 50.0% ownership interest in four real estate joint ventures. Unisource also leases warehouse and office space from the joint ventures. Rent expense paid to these related parties was approximately $4.3 million, $4.2 million and $4.2 million in fiscal 2013, 2012 and 2011, respectively, and is recorded in Distribution expenses and Selling and administrative expenses in the Consolidated Statements of Operations. Unisource also recorded Equity earnings of affiliates, net of taxes, related to these real estate joint ventures of $1.1 million, $1.1 million and $1.2 million, respectively, in fiscal 2013, 2012 and 2011. Amounts receivable from the joint ventures were $0.2 million and $0.4 million at the end of fiscal 2013 and fiscal 2012, respectively.
 
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UWW HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2013 and December 29, 2012
(Dollars in millions, except share amounts in thousands)

(14)	Subsequent Events	
Unisource evaluated all events or transactions that occurred after the balance sheet date of December 31, 2013 through March 28, 2014, the date of issuance for the Consolidated Financial Statements. Subsequent to the balance sheet date, no significant events or transactions were noted except as set forth below that impacted the Consolidated Financial Statements.
Unisource entered into an agreement to sell the underlying property held by its real estate joint venture Uniwest Atlanta I, L.P. and received net sale proceeds of $5.0 million in the first quarter of 2014.
Pursuant to an internal reorganization consummated on January 27, 2014 in preparation for the Merger, the Redeemable preferred stock, as well as all existing UWWH common stock and stock options, were cancelled and all obligations related to the accumulated dividends on such Redeemable preferred stock ownership were terminated. In connection with the internal reorganization, equity interests in UWW Holdings, LLC (UWWH Stockholder) were issued to holders of cancelled equity interests on substantially the same economic terms as the cancelled equity interests, including the obligation to pay the accumulated preferred dividends when due. As of January 27, 2014, any obligation with respect to Redeemable preferred stock or the accumulated dividends thereon was transferred from Unisource to UWWH Stockholder.
On January 28, 2014, Unisource and International Paper, Inc. (parent company of xpedx) entered into a definitive merger agreement whereby Unisource will merge with xpedx and form a newly registered publically traded company. The sale is subject to customary closing conditions, including regulatory approvals, and the registration of publically traded shares is subject to customary SEC regulatory approvals.
In connection with the Merger, UWWH, Unisource Worldwide, Inc., a wholly-owned subsidiary of UWWH, Bain Capital and Georgia-Pacific entered into a Consent and Waiver Agreement, whereby Unisource and each of the parties agreed: (i) Unisource would not have the ability to extend the term of the leases under its real estate capital leases and two other warehouse leases with Georgia-Pacific (Refer to Note 7, Long-term Debt), (ii) Georgia-Pacific would no longer be required to reimburse Unisource for certain future deferred compensation obligations, which at December 31, 2013 had a discounted future obligation of approximately $2.0 million and (iii) to settle a Canadian tax dispute concerning a tax benefit relating to the tax basis at the time of the Bain Capital acquisition of Unisource. The payment by Unisource will be based upon the realization of the benefit, but shall not exceed $1.6 million. As of December 31, 2013, Unisource had recognized $1.1 million of such benefit. The liability for the amount recognized was included in Other accrued liabilities in the Consolidated Financial Statements at December 31, 2013.
 
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PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated expenses payable by us in connection with the distribution of the securities registered hereby. All amounts are estimates except for the SEC registration fee.

SEC Registration Fee	  	$	 169,682	  	
Stock Exchange Listing Fee	  	$	*	  	
Printing Fees and Expenses	  	$	*	  	
Accounting Fees and Expenses	  	$	*	  	
Legal Fees and Expenses	  	$	*	  	
Blue Sky Fees and Expenses	  	$	*	  	
Transfer Agent Fees and Expenses	  	$	*	  	
Miscellaneous	  	$	*	  	
	  	 	 	 	
Total:	  	$	*	  	

*	To be filed by amendment.	
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Delaware General Corporation Law
xpedx Holding Company is incorporated under the laws of the state of Delaware.
Section 145(a) of the General Corporation Law of the State of Delaware, or the “DGCL,” provides that a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with such action, suit or proceeding if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the person’s conduct was unlawful.
Section 145(b) of the DGCL provides that a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees) actually and reasonably incurred by the person in connection with the defense or settlement of such action or suit if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Delaware Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all of the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Delaware Court of Chancery or such other court shall deem proper.
 
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Section 145(c) of the DGCL provides that to the extent that a present or former director or officer of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in subsections (a) and (b) of Section 145 of the DGCL, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection therewith.
Section 145(e) of the DGCL provides that expenses, including attorneys’ fees, incurred by an officer or director of the corporation in defending any civil, criminal, administrative or investigative action, suit or proceeding may be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the corporation as authorized in Section 145 of the DGCL. Such expenses, including attorneys’ fees, incurred by former directors and officers or other persons serving at the request of the corporation as directors, officers, employees or agents of another corporation, partnership, joint venture, trust or other enterprise may be so paid upon such terms and conditions, if any, as the corporation deems appropriate.
Section 145(g) of the DGCL specifically allows a Delaware corporation to purchase liability insurance on behalf of its directors and officers and to insure against potential liability of such directors and officers regardless of whether the corporation would have the power to indemnify such directors and officers under Section 145 of the DGCL.
Our Amended and Restated Certificate of Incorporation will contain provisions permitted under Delaware General Corporation Law relating to the liability of directors. These provisions will eliminate a director’s personal liability for monetary damages resulting from a breach of fiduciary duty, except in circumstances involving:
 
 	•	 	any breach of the director’s duty of loyalty;	
 
 	•	 	acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law;	
 
 	•	 	under Section 174 of the Delaware General Corporation Law (unlawful dividends); or	
 
 	•	 	any transaction from which the director derives an improper personal benefit.	
Our Amended and Restated Certificate of Incorporation and our Amended and Restated By-laws will require us to indemnify and advance expenses to our directors and officers to the fullest extent not prohibited by the DGCL and other applicable law, except in the case of a proceeding instituted by the director without the approval of our board of directors. Our Amended and Restated Certificate of Incorporation and our Amended and Restated By-laws will provide that we are required to indemnify our directors and officers, to the fullest extent permitted by law, for all judgments, fines, settlements, legal fees and other expenses incurred in connection with pending or threatened legal proceedings because of the director’s or officer’s positions with us or another entity that the director or officer serves at our request, subject to various conditions, and to advance funds to our directors and officers to enable them to defend against such proceedings. To receive indemnification, the director or officer must have been successful in the legal proceeding or have acted in good faith and in what was reasonably believed to be a lawful manner in our best interest and, with respect to any criminal proceeding, had no reasonable cause to believe his or her conduct was unlawful.
Section 102(b)(7) of the DGCL permits a Delaware corporation to include a provision in its certificate of incorporation eliminating or limiting the personal liability of directors to the corporation or its shareholders for monetary damages for breach of fiduciary duty as a director. This provision, however, may not eliminate or limit a director’s liability (1) for breach of the director’s duty of loyalty to the corporation or its shareholders, (2) for acts or omissions not in good faith or involving intentional misconduct or a knowing violation of law, (3) under Section 174 of the DGCL, or (4) for any transaction from which the director derived an improper personal benefit. Our Amended and Restated Certificate of Incorporation will contain such a provision.
 
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Indemnification Agreements
Prior to the closing of the Transactions, we will enter into an indemnification agreement with each of our directors. The indemnification agreement will provide our directors with contractual rights to the indemnification and expense advancement rights provided under our Amended and Restated By-Laws, as well as contractual rights to additional indemnification as provided in the indemnification agreement.
Pursuant to the terms of the Merger Agreement, we have agreed to indemnify (and maintain policies of directors’ and officers’ liability insurance for) certain parties to the Transactions, including all of our past or present directors or officers, for a period of at least six years following the closing of the Merger in respect of acts or omissions relating to the Transactions and occurring at or prior to the consummation of the Merger.
The Employment Agreement and the Consulting and Non-Competition Agreement include indemnification provisions. Under those agreements, we agree to indemnify each of these individuals against claims arising out of events or occurrences related to that individual’s service as our agent or the agent of any of our subsidiaries to the fullest extent legally possible.
Directors’ and Officers’ Liability Insurance
Prior to the closing of the Transactions, we will obtain directors’ and officers’ liability insurance which insures against certain liabilities that our directors and officers may, in such capacities, incur.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
In connection with SpinCo’s incorporation, on July 10, 2013, the registrant issued 100 shares of its common stock, par value $0.01 per share, to International Paper in consideration of an aggregate capital contribution of $1.00 by International Paper. This issuance was exempt from registration under the Securities Act of 1933 pursuant to Section 4(2) thereof because the issuance did not involve any public offering of securities.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 
 	(a)	Exhibits.	
The Exhibits to this Registration Statement on Form S-1 are listed in the Exhibit Index which follows the signature pages to this Registration Statement and is herein incorporated by reference.
 
 	(b)	Financial Statement Schedules.	
No financial statement schedules are included herein. All other schedules for which provision is made in the applicable accounting regulations of the SEC are not required under the related instructions, are inapplicable or the information is included in the consolidated financial statements and has not therefore been omitted here.
ITEM 17. UNDERTAKINGS
 
 	(a)	Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a	
 
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 	court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.	
 
 	(b)	The undersigned registrant hereby undertakes that for the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.	
 
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, xpedx Holding Company has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Memphis, State of Tennessee, on April 4, 2014.

XPEDX HOLDING COMPANY	
		
By:  	 	/s/ Mary A. Laschinger	
	 	Name: Mary A. Laschinger
Title: Chief Executive Officer and President and Chairman of the Board	
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Mary A. Laschinger, C. Cato Ealy and Sharon R. Ryan, and each of them, his or her true and lawful attorneys-in-fact and agents, with full power to act separately and full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration statement and all additional registration statements pursuant to Rule 462(b) of the Securities Act of 1933, as amended, and all post-effective amendments thereto, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-facts and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as they or he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or either of them or his or their substitute or substitutes may lawfully do or cause to be done by virtue hereof.
This Power of Attorney shall not revoke any powers of attorney previously executed by the undersigned. This Power of Attorney shall not be revoked by any subsequent power of attorney that the undersigned may execute, unless such subsequent power of attorney specifically provides that it revokes this Power of Attorney by referring to the date of the undersigned’s execution of this Power of Attorney. For the avoidance of doubt, whenever two or more powers of attorney granting the powers specified herein are valid, the agents appointed on each shall act separately unless otherwise specified.
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed on April 4, 2014 by the following persons in the capacities indicated.

Signature	  	Title	
		
/s/ Mary A. Laschinger	  		
Mary A. Laschinger	  	Chief Executive Officer and President (Principal
Executive Officer) and Chairman of the Board	
		
/s/ Stephen J. Smith	  		
Stephen J. Smith	  	Senior Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)	
		
*	  		
C. Cato Ealy	  	Director	
 
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Signature	  	Title	
		
*	  		
Carol L. Roberts	  	Director	
		
*	  		
Sharon R. Ryan	  	Director	

	 	*By:	 	/s/ Mary A. Laschinger	  		
	 		 	Mary A. Laschinger	  		
	 		 	as Attorney-in-Fact	  		
 
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EXHIBIT INDEX
Note Regarding Reliance on Statements in Our Contracts : In reviewing the agreements included as exhibits to this Registration Statement on Form S-1, please remember that they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about xpedx Holding Company, its subsidiaries or affiliates, or the other parties to the agreements. The agreements contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and (i) should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate; (ii) have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement; (iii) may apply standards of materiality in a way that is different from what may be viewed as material to investors; and (iv) were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments. Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. Additional information about xpedx Holding Company, its subsidiaries and affiliates may be found elsewhere in this Registration Statement on Form S-1.

Exhibit
Number	 	Exhibit Description	
		
  2.1	 	Agreement and Plan of Merger, dated as of January 28, 2014, by and among International Paper Company, xpedx Holding Company, xpedx Intermediate, LLC, xpedx, LLC, UWW Holdings, LLC, UWW Holdings, Inc. and Unisource Worldwide, Inc.	
		
  2.2	 	Form of Transition Services Agreement by and between International Paper Company and xpedx Holding Company	
		
  2.3	 	Form of Tax Receivable Agreement by and among xpedx Holding Company and UWW Holdings, LLC	
		
  2.4	 	Contribution and Distribution Agreement, dated as of January 28, 2014, between International Paper Company, xpedx Holding Company, UWWH and UWW Holdings, LLC	
		
  3.1**	 	Certificate of Incorporation of the Registrant	
		
  3.2**	 	Bylaws of the Registrant	
		
  3.3**	 	Form of Amended and Restated Certificate of Incorporation of the Registrant	
		
  3.4**	 	Form of Amended and Restated Bylaws of the Registrant	
		
  4.1*	 	Form of Common Stock Certificate	
		
  5.1*	 	Opinion of Debevoise & Plimpton LLP	
		
  8.1*	 	Opinion of Debevoise & Plimpton LLP as to certain tax matters	
		
  8.2*	 	Opinion of Kirkland & Ellis LLP as to certain tax matters	
		
10.1**	 	Employee Matters Agreement, dated as of January 28, 2014, by and between International Paper Company, xpedx Holding Company and UWW Holdings, Inc. (previously filed as Exhibit 10.2 to the Registration Statement filed on February 14, 2014)	
		
10.2**	 	Form of Registration Rights Agreement between UWW Holdings, LLC and xpedx Holding Company	
		
10.3**	 	Tax Matters Agreement, dated as of January 28, 2014, by and among International Paper Company, xpedx Holding Company and UWW Holdings, Inc. (previously filed as Exhibit 10.5 to the Registration Statement filed on February 14, 2014)	
		
10.4**	 	Debt Financing Commitment Letter, dated as of January 28, 2014, between xpedx Holding Company, Bank of America, N.A., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Wells Fargo Bank, N.A., SunTrust Bank and SunTrust Robinson Humphrey, Inc. (previously filed as Exhibit 10.6 to the Registration Statement filed on February 14, 2014)	
 
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Exhibit
Number	 	Exhibit Description	
		
10.5*	 	Form of Credit Agreement among xpedx LLC, as borrower, the several lenders and financial institutions from time to time parties thereto, Bank of America, N.A., as administrative agent and collateral agent for the lenders party thereto, and the other parties thereto	
		
10.6*	 	Form of Guarantee and Collateral Agreement among xpedx LLC, the Subsidiary Guarantors named therein and SpinCo, in favor of Bank of America, N.A., as administrative agent and collateral agent for the Secured Parties (as defined therein)	
		
10.7†**	 	Employment Agreement, dated as of January 28, 2014, between xpedx Holding Company and
Mary A. Laschinger (previously filed as Exhibit 10.9 to the Registration Statement filed on February 14, 2014)	
		
10.8†**	 	Consulting and Non-Competition Agreement, dated as of January 28, 2014, between UWW Holdings, Inc. and Allan R. Dragone (previously filed as Exhibit 10.10 to the Registration Statement filed on February 14, 2014)	
		
10.9*†	 	Form of Employee Stock Option Agreement	
		
10.10*†	 	Form of xpedx Holding Company Omnibus Incentive Plan	
		
10.11*†	 	Form of Indemnification Agreement to be entered into between xpedx Holding Company and each of its directors	
		
21.1*	 	List of Subsidiaries	
		
23.1	 	Consent of Deloitte and Touche LLP, Independent Registered Public Accounting Firm	
		
23.2	 	Consent of PricewaterhouseCoopers LLP, Independent Accountants	
		
23.3*	 	Consent of Debevoise & Plimpton LLP (included in Exhibits 5.1 and 8.1 hereto)	
		
23.4*	 	Consent of Kirkland & Ellis LLP (included in Exhibit 8.2 hereto)	
		
24.1**	 	Powers of Attorney (contained in signature pages to this registration statement)	
		
99.1**	 	Consent of Allan R. Dragone, Jr., Director of xpedx Holding Company	
		
99.2**	 	Consent of Daniel T. Henry, Director of xpedx Holding Company	
		
99.3**	 	Consent of Tracy A. Leinbach, Director of xpedx Holding Company	
		
99.4**	 	Consent of Seth A. Meisel, Director of xpedx Holding Company	
		
99.5**	 	Consent of William E. Mitchell, Director of xpedx Holding Company	
		
99.6**	 	Consent of Michael P. Muldowney, Director of xpedx Holding Company	
		
99.7**	 	Consent of Charles G. Ward, III, Director of xpedx Holding Company	
		
99.8**	 	Consent of John J. Zillmer, Director of xpedx Holding Company	
		
99.9**	 	Consent of Stephen J. Smith, Senior Vice President and Chief Financial Officer of xpedx Holding Company	
		
99.10**	 	Consent of Elizabeth Patrick, Senior Vice President and Chief Human Resources Officer of xpedx Holding Company	
		
99.11**	 	Consent of Neil Russell, Senior Vice President Corporate Affairs of xpedx Holding Company	
		
99.12	 	Consent of Timothy D. Kutz, Senior Vice President Supply Chain of xpedx Holding Company	
		
99.13	 	Consent of Joseph B. Myers, Senior Vice President Facility Solutions, Strategy and Commercial Excellence of xpedx Holding Company	
		
99.14	 	Consent of Darin W. Tang, Senior Vice President Packaging of xpedx Holding Company	

*	To be filed by amendment.	
**	Previously filed.	
†	Identifies management compensation plan or arrangement.	
 
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Exhibit 2.1
EXECUTION COPY

 
AGREEMENT AND PLAN OF MERGER
by and among
INTERNATIONAL PAPER COMPANY,
XPEDX HOLDING COMPANY,
XPEDX INTERMEDIATE, LLC,
XPEDX, LLC,
UWW HOLDINGS, LLC,
UWW HOLDINGS, INC.
and
UNISOURCE WORLDWIDE, INC.
Dated as of January 28, 2014

 

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 	 	 	  	Page	 	
ARTICLE I DEFINED TERMS	  	 	3	  	
Section 1.1  	 	Defined Terms	  	 	3	  	
		
ARTICLE II THE SEPARATION, THE MERGER AND RELATED MATTERS	  	 	21	  	
Section 2.1	 	The Distribution	  	 	21	  	
Section 2.2	 	The Merger	  	 	21	  	
Section 2.3	 	Closing	  	 	22	  	
Section 2.4	 	Effective Time	  	 	22	  	
Section 2.5	 	Effects of the Merger	  	 	22	  	
Section 2.6	 	Certificate of Incorporation and Bylaws of the Surviving Corporation	  	 	22	  	
Section 2.7	 	Conversion of Capital Stock	  	 	22	  	
Section 2.8	 	Exchange of Shares	  	 	23	  	
		
ARTICLE III CERTAIN ADJUSTMENTS	  	 	24	  	
Section 3.1	 	Estimated Closing Statement	  	 	24	  	
Section 3.2	 	Post-Closing Adjustment.	  	 	24	  	
		
ARTICLE IV SUBSIDIARY MERGER AND RELATED MATTERS	  	 	27	  	
Section 4.1	 	The Subsidiary Merger	  	 	27	  	
Section 4.2	 	Effective Time of the Subsidiary Merger	  	 	27	  	
Section 4.3	 	Effects of the Subsidiary Merger	  	 	27	  	
Section 4.4	 	Certificate of Incorporation and Bylaws of Unisource	  	 	27	  	
Section 4.5	 	Conversion of Capital Stock	  	 	28	  	
		
ARTICLE V REPRESENTATIONS AND WARRANTIES OF IP, SPINCO, XPEDX INTERMEDIATE AND XPEDX	  	 	28	  	
Section 5.1	 	Due Organization, Good Standing, Corporate Power and Subsidiaries	  	 	28	  	
Section 5.2	 	Authorization and Validity of Agreement	  	 	29	  	
Section 5.3	 	Corporate Authority Relative to this Agreement; No Violation	  	 	29	  	
Section 5.4	 	Capitalization	  	 	30	  	
Section 5.5	 	Affiliate Transactions	  	 	31	  	
Section 5.6	 	Spinco Financial Statements	  	 	32	  	
Section 5.7	 	Information to Be Supplied	  	 	32	  	
Section 5.8	 	Assets	  	 	33	  	
Section 5.9	 	Absence of Certain Changes or Events	  	 	34	  	
Section 5.10	 	Actions; Litigation	  	 	34	  	
Section 5.11	 	Compliance with Laws; Certain Licenses	  	 	35	  	
Section 5.12	 	Environmental Matters	  	 	35	  	
Section 5.13	 	Tax Matters	  	 	36	  	
Section 5.14	 	Employee Benefits	  	 	37	  	
Section 5.15	 	Labor and Employment Matters	  	 	39	  	
Section 5.16	 	Intellectual Property	  	 	40	  	
 
i

							
Section 5.17  	 	Material Contracts	  	 	41	  	
Section 5.18	 	Board Approvals; Votes Required	  	 	42	  	
Section 5.19	 	Status of New Spinco Common Stock	  	 	43	  	
Section 5.20	 	Operations of Spinco	  	 	43	  	
Section 5.21	 	Insurance of Spinco	  	 	43	  	
Section 5.22	 	Brokers or Finders; Transaction Bonuses	  	 	43	  	
Section 5.23	 	Bank Accounts	  	 	44	  	
		
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF THE UWWH STOCKHOLDER, UWWH AND UNISOURCE	  	 	44	  	
Section 6.1	 	Due Organization, Good Standing, Corporate Power and Subsidiaries	  	 	44	  	
Section 6.2	 	Authorization and Validity of Agreement	  	 	44	  	
Section 6.3	 	Corporate Authority Relative to this Agreement; No Violation	  	 	45	  	
Section 6.4	 	Capitalization	  	 	45	  	
Section 6.5	 	Affiliate Transactions	  	 	46	  	
Section 6.6	 	UWWH Financial Statements	  	 	46	  	
Section 6.7	 	Information to Be Supplied	  	 	47	  	
Section 6.8	 	Assets	  	 	47	  	
Section 6.9	 	Absence of Certain Changes or Events	  	 	48	  	
Section 6.10	 	Actions; Litigation	  	 	48	  	
Section 6.11	 	Compliance with Laws; Certain Licenses	  	 	49	  	
Section 6.12	 	Environmental Matters	  	 	49	  	
Section 6.13	 	Tax Matters	  	 	50	  	
Section 6.14	 	Employee Benefits	  	 	51	  	
Section 6.15	 	Labor and Employment Matters	  	 	53	  	
Section 6.16	 	Intellectual Property	  	 	54	  	
Section 6.17	 	Material Contracts	  	 	55	  	
Section 6.18	 	Board Approvals; Votes Required	  	 	56	  	
Section 6.19	 	Dividends	  	 	57	  	
Section 6.20	 	Brokers or Finders; Transaction Bonuses	  	 	57	  	
Section 6.21	 	Insurance of UWWH	  	 	57	  	
Section 6.22	 	Bank Accounts	  	 	58	  	
		
ARTICLE VII REPRESENTATIONS AND WARRANTIES OF THE UWWH STOCKHOLDER	  	 	58	  	
Section 7.1	 	No Public Sale or Distribution	  	 	58	  	
Section 7.2	 	Accredited Investor Status	  	 	58	  	
Section 7.3	 	Reliance on Exemptions	  	 	58	  	
Section 7.4	 	Information	  	 	58	  	
Section 7.5	 	No Governmental Review	  	 	59	  	
Section 7.6	 	Transfer or Resale	  	 	59	  	
Section 7.7	 	Due Organization, Good Standing and Corporate Power	  	 	60	  	
Section 7.8	 	Authorization and Validity of Agreement	  	 	60	  	
Section 7.9	 	Company Authority Relative to this Agreement; No Violation	  	 	60	  	
Section 7.10	 	No General Solicitation	  	 	61	  	
 
ii

							
		
ARTICLE VIII COVENANTS	  	 	61	  	
Section 8.1  	  	Conduct of the Spinco Business Pending the Merger	  	 	61	  	
Section 8.2	  	Conduct of the Unisource Business by UWWH Pending the Merger	  	 	66	  	
Section 8.3	  	Directors and Officers of Spinco and the Surviving Corporation	  	 	71	  	
Section 8.4	  	Preparation of Registration Statement and Prospectus	  	 	72	  	
Section 8.5	  	No Solicitation of Acquisition Proposals	  	 	73	  	
Section 8.6	  	Tax Matters	  	 	74	  	
Section 8.7	  	Cooperation	  	 	74	  	
Section 8.8	  	Competition Approvals; IRS Rulings	  	 	75	  	
Section 8.9	  	Stockholders and Member Approvals	  	 	77	  	
Section 8.10	  	Access	  	 	78	  	
Section 8.11	  	Director and Officer Indemnification; Insurance	  	 	79	  	
Section 8.12	  	Material Licenses	  	 	79	  	
Section 8.13	  	Public Announcements	  	 	79	  	
Section 8.14	  	Defense of Litigation	  	 	80	  	
Section 8.15	  	Notification of Certain Events	  	 	80	  	
Section 8.16	  	[Reserved]	  	 	80	  	
Section 8.17	  	Confidentiality	  	 	80	  	
Section 8.18	  	Control of Other Party’s Business	  	 	82	  	
Section 8.19	  	Financing	  	 	82	  	
Section 8.20	  	Non-Solicitation of Employees	  	 	85	  	
Section 8.21	  	Non-Solicitation of Customers	  	 	85	  	
Section 8.22	  	Covenant Not to Compete	  	 	87	  	
Section 8.23	  	Post-Closing Access; Preservation of Records	  	 	89	  	
Section 8.24	  	Payoff Letters; Transaction Expenses	  	 	90	  	
Section 8.25	  	Advisory Agreement	  	 	91	  	
Section 8.26	  	Financial Statements	  	 	91	  	
Section 8.27	  	Required Amendments	  	 	91	  	
Section 8.28	  	Disclosure Controls	  	 	92	  	
Section 8.29	  	Severance	  	 	92	  	
Section 8.30	  	Restructuring	  	 	92	  	
		
ARTICLE IX CONDITIONS OF THE MERGER	  	 	92	  	
Section 9.1	  	Conditions to the Obligations of Each Party	  	 	92	  	
Section 9.2	  	Additional Conditions to the Obligations of IP, Spinco, xpedx Intermediate and xpedx	  	 	94	  	
Section 9.3	  	Additional Conditions to the Obligations of UWWH and Unisource	  	 	95	  	
Section 9.4	  	Frustration of Closing Conditions	  	 	96	  	
		
ARTICLE X TERMINATION, AMENDMENT AND WAIVER	  	 	96	  	
Section 10.1	  	Termination or Abandonment	  	 	96	  	
Section 10.2	  	Effect of Termination	  	 	97	  	
Section 10.3	  	Fees and Expenses	  	 	98	  	
 
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ARTICLE XI GENERAL PROVISIONS	  	 	98	  	
Section 11.1    	 	Non-Survival of Representations and Warranties; Survival of Certain Covenants	  	 	98	  	
Section 11.2	 	Notices	  	 	99	  	
Section 11.3	 	Counterparts; Delivery by Electronic Transmission	  	 	101	  	
Section 11.4	 	No Third Party Beneficiaries	  	 	102	  	
Section 11.5	 	Entire Agreement	  	 	102	  	
Section 11.6	 	Assignment	  	 	102	  	
Section 11.7	 	Governing Law; WAIVER OF JURY TRIAL	  	 	102	  	
Section 11.8	 	Jurisdiction; Service of Process	  	 	103	  	
Section 11.9	 	Severability	  	 	104	  	
Section 11.10	 	Headings	  	 	104	  	
Section 11.11	 	Attorneys’ Fees	  	 	104	  	
Section 11.12	 	Amendment	  	 	104	  	
Section 11.13	 	Extension; Waiver	  	 	104	  	
Section 11.14	 	Interpretation	  	 	105	  	
Section 11.15	 	Specific Performance	  	 	105	  	
Section 11.16	 	Damages Waiver	  	 	106	  	
Section 11.17	 	Reference to Time	  	 	106	  	
Section 11.18	 	No Representations or Warranties	  	 	106	  	
 
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EXHIBITS

Exhibit A	  	Subsidiary Certificate of Incorporation	
Exhibit B	  	Subsidiary Bylaws	
Exhibit C	  	Form of Tax Receivable Agreement	
Exhibit D	  	Form of Registration Rights Agreement	
Exhibit E	  	Form of Transition Services Agreement	
Exhibit F	  	Form of FIRPTA Certificate	
Exhibit G	  	Spinco Commitment Letter	
 
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of January 28, 2014 (this “ Agreement ”), is entered into by and among International Paper Company, a New York corporation (“ IP ”), xpedx Holding Company, a Delaware corporation and a direct, wholly-owned Subsidiary of IP (“ Spinco ”), xpedx Intermediate, LLC, a Delaware limited liability company and a direct, wholly-owned Subsidiary of IP (“ xpedx Intermediate ”), xpedx, LLC, a New York limited liability company and a direct, wholly-owned Subsidiary of IP (“ xpedx ”), UWW Holdings, LLC, a Delaware limited liability company (the “ UWWH Stockholder ”), UWW Holdings, Inc., a Delaware corporation and a direct, wholly-owned Subsidiary of the UWWH Stockholder (“ UWWH ”), and Unisource Worldwide, Inc., a Delaware corporation and a direct, wholly-owned Subsidiary of UWWH (“ Unisource ” and together with IP, Spinco, xpedx Intermediate, xpedx, the UWWH Stockholder and UWWH, the “ Parties ” and each, a “ Party ”).
W I T N E S S E T H
WHEREAS, IP directly and indirectly through its Subsidiaries is engaged in the Spinco Business (as such term, and each other capitalized term used herein and not defined, is defined in ARTICLE I hereof); and
WHEREAS, on or prior to the Separation Date, and subject to the terms and conditions set forth in the Distribution Agreement, IP will (i) consummate the LLC Contribution and (ii) in exchange for the contribution to Spinco, directly or indirectly, of all of the issued and outstanding capital stock and other equity securities of the Spinco Subsidiaries, Spinco will issue to IP the Spinco Common Stock and pay to IP the Special Payment and the Earnout Payment (if applicable and due), all upon the terms and subject to the conditions set forth in the Distribution Agreement; and
WHEREAS, prior to the Effective Time on the Closing Date, IP will distribute to the IP Stockholders (other than with respect to shares of IP Common Stock held in treasury of IP) as of the Record Date (as defined and provided for in the Distribution Agreement) all of the issued and outstanding shares of Spinco Common Stock, as provided for in the Distribution Agreement (the “ Distribution ” and together with the Contributions, the “ Separation ”); and
WHEREAS, concurrently with the execution and delivery of this Agreement, GP is delivering to UWWH and Spinco a covenant and waiver letter in which GP has, on behalf of itself and its Affiliates, consented to the consummation of the Transactions for purposes of any Contract between GP or any of its Affiliates and UWWH or any of its Subsidiaries and waived any rights thereunder it or they may have in connection with or as a result of the Transactions; and
WHEREAS, the UWWH Board of Directors (i) has approved and declared advisable, and in the best interests of UWWH and the UWWH Stockholder, this Agreement and the Transactions, including the Merger, and (ii) has recommended the adoption by the UWWH Stockholder of this Agreement and its approval of the Transactions; and

WHEREAS, the IP Board of Directors has approved and declared advisable, and in the best interests of the IP Stockholders, this Agreement and the Distribution Agreement and the Transactions, including the Separation and the Merger; and
WHEREAS, the Spinco Board of Directors (i) has approved and declared advisable, and in the best interests of Spinco and its sole stockholder, IP, this Agreement and the Distribution Agreement and the Transactions, including the Separation and the Merger, and (ii) has recommended the adoption by IP, as the sole stockholder of Spinco, of this Agreement and its approval of the Transactions; and
WHEREAS, IP, as the sole member and managing member of xpedx Intermediate, has approved and adopted this Agreement and the Transactions, including the Subsidiary Merger; and
WHEREAS, IP, as the sole member and managing member of xpedx, has approved and adopted this Agreement and the Transactions; and
WHEREAS, the Unisource Board of Directors (i) has approved and declared advisable, and in the best interests of Unisource and its sole stockholder, UWWH, this Agreement and the Transactions, including the Subsidiary Merger, and (ii) has recommended the adoption by UWWH, as the sole stockholder of Unisource, of this Agreement and its approval of the Transactions; and
WHEREAS, (i) each of UWWH, IP and Spinco has agreed to effect the Merger and (ii) each of xpedx Intermediate and Unisource has agreed to effect the Subsidiary Merger, in each case, upon the terms and subject to the conditions set forth in this Agreement and in accordance with the Delaware General Corporation Law (the “ DGCL ”) and the Delaware Limited Liability Company Act (the “ DLLCA ”); and
WHEREAS, it is the intention of the Parties that, for U.S. federal income tax purposes, (i) the transactions undertaken in connection with the contribution to Spinco of all of the membership interests in xpedx Intermediate and the Distribution will qualify as a tax-free reorganization within the meaning of Section 368(a)(1)(D) of the Code, (ii) the Distribution will qualify as a distribution of Spinco stock to IP Stockholders eligible for nonrecognition under Sections 355(a) and 361 of the Code; (iii) the Special Payment and Earnout Payment will qualify for nonrecognition under Section 361 of the Code; (iv) the Merger will qualify as a tax-free reorganization within the meaning of Section 368(a)(1)(A) of the Code, (v) the Subsidiary Merger will qualify as a tax-free capital contribution within the meaning of Section 351 of the Code, (vi) no gain or loss will be recognized as a result of such transactions for U.S. federal income tax purposes by any of IP, Spinco, UWWH, their respective Subsidiaries, the UWWH Stockholder (except to the extent of cash received in lieu of fractional shares, as a result of the Tax Receivable Agreement, or as a result of cash received pursuant to Article III) or the IP Stockholders (except to the extent of cash received in lieu of fractional shares); and (vii) this Agreement and the Distribution Agreement together are a “plan of reorganization” within the meaning of Section 1.368-2(g) and 1.368-3(a) of the Treasury Regulations.
 
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NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, the Parties hereby agree as follows:
ARTICLE I
DEFINED TERMS
Section 1.1 Defined Terms . When used in this Agreement, the following terms shall have the respective meanings specified therefor below (such meanings to be equally applicable to both the singular and plural forms of the terms defined).
“ Acceptance Notice ” shall have the meaning set forth in Section 8.22(b)(ii) hereof.
“ Acquired Competing Business ” shall have the meaning set forth in Section 8.22(b)(i) hereof.
“ Action ” shall mean any demand, action, claim, charge, grievance, complaint, arbitration, mediation, proceeding, inquiry, review, audit, hearing, investigation, litigation, suit or countersuit of any nature, whether civil, criminal, administrative, investigative, regulatory or informal, commenced, brought or heard by or before any Governmental Authority.
“ Adjustment Amount ” shall mean an amount (which may be negative) equal to (a) the UWWH Working Capital Adjustment, minus (b) the UWWH Net Debt Adjustment, minus (c) the UWWH Transaction Expenses Amount, in each case as shown on the UWWH Final Closing Statement as finally determined pursuant to Section 3.2(c) hereof.
“ Advisory Agreement ” shall mean the Advisory Agreement by and among UWWH, Unisource and Bain Capital Partners, LLC, a Delaware limited liability company, dated as of November 27, 2002.
“ Affiliate ” shall have the meaning set forth in the Distribution Agreement.
“ Aggregate Merger Consideration ” shall mean a number of shares of Spinco Common Stock equal to ( i ) the aggregate number of shares of Spinco Common Stock issued and outstanding immediately prior to the Effective Time, divided by ( ii ) the xpedx Valuation Percentage, multiplied by ( iii ) the UWWH Valuation Percentage.
“ Agreement ” shall have the meaning set forth in the preamble hereof.
“ Applicable Accounting Principles ” means GAAP as applied in a manner consistent with the GAAP-compliant methodologies, practices, estimation techniques, classifications, judgments, assumptions and principles used in the preparation of the UWWH Audited Balance Sheet and the related audited statements of operations, cash flows and stockholder’s equity for the year ended December 29, 2012, subject to the exceptions, and determined in accordance with the accounting principles and methodologies, set forth in Section 1.1(d) (Applicable Accounting Principles) of the UWWH Disclosure Schedules.
 
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“ Approved Spinco Offer ” shall mean an offer of employment to a new Spinco Group Employee whose hiring is approved by xpedx senior management; provided that if such offer of employment (A) is for a Spinco Group Employee who would, after the Distribution, be an “officer” within the meaning of Rule 16a-1 promulgated under the Securities Exchange Act of 1934, or (B) commits to any severance obligations, or contains any other material elements of compensation or benefits, in each case that are materially more favorable to the employee than to other similarly situated employees, then it shall not be an Approved Spinco Offer unless Spinco shall have notified the UWWH Stockholder reasonably in advance of offering employment to such new Spinco Group Employee of the material terms of such employment offer, and such offer has been approved by the UWWH Stockholder Board of Managers.
“ Asset ” shall have the meaning set forth in the Distribution Agreement.
“ Assignment Agreement ” shall have the meaning set forth in the recitals hereof.
“ Business Day ” shall have the meaning set forth in the Distribution Agreement.
“ Calculation Time ” shall have the meaning set forth in the Distribution Agreement.
“ Cash and Cash Equivalents ” shall have the meaning set forth in the Distribution Agreement.
“ Certificate of Merger ” shall have the meaning set forth in Section 2.4 hereof.
“ Closing ” shall have the meaning set forth in Section 2.3 hereof.
“ Closing Date ” shall have the meaning set forth in Section 2.3 hereof.
“ Code ” shall have the meaning set forth in the Distribution Agreement.
“ Confidential Business Information ” means all Information, data or material (other than Confidential Operational Information), including (i) earnings reports and forecasts, (ii) macro-economic reports and forecasts, (iii) business and strategic plans, (iv) general market evaluations and surveys, (v) litigation presentations and risk assessments, (vi) budgets and (vii) financing and credit-related information.
“ Confidential Information ” means all Confidential Business Information and Confidential Operational Information concerning a Party and/or its Subsidiaries which, prior to or following the Effective Time, has been disclosed by a Party or its Subsidiaries to the other Party or its Subsidiaries, in written, oral (including by recording), electronic or visual form, or otherwise has come into the possession of the other Party, including pursuant to the access provisions or any other provision of this Agreement or any other Transaction Agreement (except to the extent that such information can be shown to have been (i) in the public domain through no action of such Party or its Subsidiaries, (ii) lawfully acquired from other sources by such Party or its Subsidiaries to which it was furnished, (iii) independently developed by a Party or its Subsidiaries after the date hereof without reference to the Confidential Business Information or Confidential Operational Information of the other Party or its Subsidiaries and without a breach of this Agreement or (iv) approved for release by written authorization of the disclosing Party and/or the third-party owner of the disclosed information; provided, however, in the case of clause (ii) that, to the furnished Party’s knowledge, such sources did not provide such information in breach of any confidentiality obligations).
 
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“ Confidential Operational Information ” means all operational Information, data or material including (i) specifications, ideas and concepts for products, services and operations, (ii) quality assurance policies, procedures and specifications, (iii) customer information, (iv) software, (v) training materials and information and (vi) all other know-how, methodologies, procedures, techniques and trade secrets related to design, development and operational processes.
“ Confidentiality Agreement ” shall mean the Amended and Restated Confidentiality Agreement by and between IP and UWWH, dated as of May 17, 2013, as amended.
“ Consumer Packaging Products ” shall mean any paperboard and other consumer packaging products.
“ Contract ” shall mean any written or oral agreement, arrangement, authorization, sale order, purchase order, open bid, commitment, contract, indenture, mortgage, note, bond, instrument, evidence of indebtedness, real estate or other lease, loan, license, obligation, restriction, memorandum of understanding, letter of intent, covenant, or undertaking of any kind or character, or other document to which any Person is a party or that is binding on any Person or its capital stock, assets or business, in each case, whether express or implied, including all amendments, modifications and supplements thereto and waivers and consents thereunder.
“ Contributions” shall have the meaning set forth in the Distribution Agreement.
“ Covered Products ” shall mean (i) offset paper products, (ii) cut-size paper products, (iii) forms and converting paper products and (iv) coated paperboard products. It is understood and agreed that each of the foregoing clauses (i)-(iv) shall be a separate “category” of Covered Product as such term is used herein.
“ Delayed Transfer Assets ” shall have the meaning set forth in the Distribution Agreement.
“ DGCL ” shall have the meaning set forth in the recitals hereof.
“ DLLCA ” shall have the meaning set forth in the recitals hereof.
“ Dispute Resolution Request ” shall have the meaning set forth in Section 3.2(c) hereof.
“ Distribution ” shall have the meaning set forth in the Distribution Agreement.
“ Distribution Agreement ” shall mean the Contribution and Distribution Agreement, dated as of the date hereof, by and between IP, Spinco and UWWH.
“ Distribution Date ” shall have the meaning set forth in the Distribution Agreement.
 
5

“ DOJ ” shall mean the U.S. Department of Justice.
“ Earnout Payment ” shall have the meaning set forth in the Distribution Agreement.
“Effective Time ” shall have the meaning set forth in Section 2.4 hereof.
“ Employee Matters Agreement ” shall mean the Employee Matters Agreement by and between IP, Spinco and UWWH, dated as of the date hereof.
“ Encumbrances ” shall mean all liens (statutory or otherwise), security interests, hypothecations, preferences, priorities, easements, pledges, bailments (in the nature of a pledge or for purposes of security), mortgages, deeds of trusts, covenants, grants of power to confess judgment, charges (including any conditional sale or other title retention agreement or lease in the nature thereof), options, encumbrances or other restrictions of any kind, including restrictions on the use, voting, transfer, receipt of income or other exercise of any attributes of ownership, and all other similar rights of third parties, of any kind or nature.
“ Environmental Claims ” shall mean any Action, notice, letter, demand or request for information (in each case in writing) by any Person or entity alleging potential Liability (including potential Liability for investigatory costs, cleanup costs, governmental response costs, natural resources damages, property damages, personal injuries or penalties) arising out of, based on or resulting from any violation of Environmental Law or the release, emission, discharge, presence or disposal of, or exposure to, any Hazardous Material at any location.
“ Environmental Law ” shall mean any Law or Order relating to pollution or the protection, cleanup or restoration of the environment, or to workplace or public health or safety, including the Federal Clean Air Act, the Federal Clean Water Act, the Federal Resource Conservation and Recovery Act, the Federal Comprehensive Environmental Response, Compensation, and Liability Act and the Federal Toxic Substances Control Act, in each case as in effect on or prior to the date hereof.
“ ERISA ” shall mean the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder.
“ ERISA Affiliate ” shall mean, with respect to any Person, any other Person or any trade or business, whether or not incorporated, that, together with such first Person would be deemed a “single employer” within the meaning of Section 4001(b) of ERISA.
“ Estimated Adjustment Amount ” shall mean an amount (which may be negative) equal to (i) the UWWH Estimated Working Capital Adjustment, minus (ii) the UWWH Estimated Net Debt Adjustment, minus (iii) the UWWH Estimated Transaction Expenses Amount.
“Estimated Adjustment Amount Payment ” shall mean the product of (i) the absolute value of the Estimated Adjustment Amount, multiplied by (ii) the Gross-Up Percentage.
“ Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
 
6

“Excluded Assets” shall have the meaning set forth in the Distribution Agreement.
“FTC ” shall mean the U.S. Federal Trade Commission.
“GAAP ” shall have the meaning set forth in the Distribution Agreement.
“Governmental Authority ” shall have the meaning set forth in the Distribution Agreement.
“ GP ” shall mean Georgia-Pacific LLC, a Delaware limited liability company.
“ GP Sale-Leasebacks ” means any lease between UWWH or any of its Affiliates, on the one hand, and GP or any of its Affiliates, on the other hand, that is accounted for as a capital lease on the balance sheet included in the UWWH Interim Financial Statements.
“Gross-Up Percentage ” means the xpedx Valuation Percentage, divided by the UWWH Valuation Percentage.
“Hazardous Material ” shall mean any material, substance or waste as to which Liability or standards of conduct may be imposed under any Environmental Law.
“HSR Act ” shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.
“Indebtedness ” shall mean, other than as set forth in Section 1.1(a) (Indebtedness) of the IP/Spinco Disclosure Schedules with respect to the Spinco Business, Spinco and its Subsidiaries or Section 1.1(a) (Indebtedness) of the UWWH Disclosure Schedules with respect to UWWH and its Subsidiaries, with respect to any Person at any date, without duplication: (i) all Liabilities of such Person for borrowed money or issued in substitution for or exchange or replacement of indebtedness for borrowed money, including in respect of loans or advances, whether current, short-term or long-term, secured or unsecured, (ii) all Liabilities of such Person evidenced by bonds, debentures, mortgages, notes or other similar instruments or debt securities (including any seller notes, earnout obligations, compensation arrangements, unpaid principal, related expenses, commitment and other fees, reimbursements, indemnities and all other amounts payable in connection therewith), (iii) any commitment by which a Person assures a creditor against loss (including contingent reimbursement obligations with respect to letters of credit and bankers’ acceptances), (iv) all Liabilities under leases or other similar Contracts for real or personal property which have been or must be, in accordance with GAAP, recorded as capital leases, (v) all Liabilities under any sale-leaseback arrangement in accordance with ASC 840-40: Sale-Leaseback Transactions, (vi) all indebtedness related to conditional sales, title retention or similar arrangements, or with respect to any deferred purchase price of assets or services with respect to which a Person is liable, contingently or otherwise, as obligor, guarantor, surety or otherwise, (vii) all deferred compensation obligations that are owed or that are not cancelable by unilateral action by such Person and may become owing by the Surviving Corporation or any of its Subsidiaries under agreements or arrangements existing as of the Effective Time, (viii) all deferred revenue obligations, (ix) any Liabilities with respect to any existing and outstanding incentive equity grants, phantom stock or other equity securities grants or similar arrangements (in each case, to the extent not included as a Transaction Expense), (x) any Liabilities with
 
7

respect to any interest rate cap, hedging or swap agreements, foreign currency exchange agreements or similar arrangements (valued at the termination value thereof), (xi) any Liabilities with respect to unfunded pension obligations that are or would become obligations of the Surviving Corporation or any of its Subsidiaries, in each case other than with respect to those Liabilities specifically related to the UWWH Multiemployer Plans, the UWWH Single Employer Pension Plans and the Spinco Group Employees under the Spinco Multiemployer Plans, (xii) all guarantees, direct or indirect, of such Person in connection with any of the foregoing and any other indebtedness guaranteed in any manner by a Person (including guarantees in the form of an agreement to repurchase or reimburse), but not any items to the extent for which Spinco is entitled to be indemnified pursuant to Section 6.3(b) of the Distribution Agreement and (xiii) all accrued and unpaid interest, prepayment premiums or penalties, or breakage fees related to any of the foregoing; provided, in each case, that GP Sale-Leasebacks shall not constitute Indebtedness.
“Industrial Packaging Products ” shall mean any containerboard, linerboard, corrugated products and other industrial packaging products.
“ Information ” shall have the meaning set forth in the Distribution Agreement.
“Infringes” shall have the meaning set forth in Section 5.16(c) hereof.
“ Intellectual Property ” shall mean, collectively, any U.S. and non-U.S. issued, registered, unregistered and pending: (i) patents and patent applications (including any divisionals, continuations, continuations-in-part, reissues, renewals, re-examinations, extensions, provisional and applications for any of the foregoing), inventor’s certificates, utility model rights and similar rights, petty patents and applications therefor; (ii) works of authorship, mask works, copyrights, and copyright and mask work registrations and applications for registration; (iii) trademarks and service marks (including those which are protected without registration due to their well-known status), trade names, corporate names, domain names, logos, slogans, taglines, trade dress, general intangibles of like nature, and other indicia of source, origin, endorsement, sponsorship or certification, designs, industrial designs, product packaging shape, and other elements of product and product packaging appearance together with all registrations and applications for registration of any of the foregoing and all goodwill related to any of the foregoing; (iv) unpatented inventions (whether or not patentable), trade secrets under applicable law, know-how and confidential or proprietary information, including (in whatever form or medium), discoveries, ideas, compositions, rights in software (including all source and object code related thereto), computer software documentation, database, drawings, designs, plans, proposals, specifications, photographs, samples, models, processes, procedures, data, information, manuals, reports, financial, marketing and business data, pricing and cost information, correspondence and notes; (v) all claims and rights related to any of the foregoing; and (vi) all other intellectual property or proprietary rights.
“IP ” shall have the meaning set forth in the preamble hereof.
“ IP 401(k) Plans ” shall have the meaning set forth in the Employee Matters Agreement.
“IP Ancillary Products ” shall have the meaning set forth in Section 8.22(a) hereof.
 
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“ IP Board of Directors ” shall mean the board of directors of IP.
“ IP Common Stock ” shall have the meaning set forth in the Distribution Agreement.
“ IP Entities ” shall mean IP and each of the IP Subsidiaries (as defined in the Distribution Agreement).
“IP Income Tax Return ” shall have the meaning set forth in the Tax Matters Agreement.
“IP Non-Income Tax Return ” shall have the meaning set forth in the Tax Matters Agreement.
“IP Product Business ” shall have the meaning set forth in Section 8.21 hereof.
“IP/Spinco Disclosure Schedules ” shall mean the disclosure schedules delivered by IP and Spinco to UWWH concurrently herewith.
“IP Stockholders ” shall mean the holders of the IP Common Stock.
“IP Tax Opinion ” shall have the meaning set forth in Section 9.2(e) hereof.
“IRS ” shall mean the U.S. Internal Revenue Service.
“IRS Rulings ” shall have the meaning set forth in Section 8.8(b)(i) hereof.
“IRS Submissions ” shall have the meaning set forth in Section 8.8(b)(ii) hereof.
“Key Spinco Group Employees ” shall mean those Spinco Group Employees set forth on Section 1.1(b) (Key Spinco Group Employees) of the IP/Spinco Disclosure Schedules.
“Key UWWH Employees ” shall mean those UWWH Employees set forth on Section 1.1(b) (Key UWWH Employees) of the UWWH Disclosure Schedules.
“Knowledge ” shall mean (i) with respect to the IP Entities and the Spinco Entities, the actual knowledge of the persons listed on Section 1.1(c) (Knowledge) of the IP/Spinco Disclosure Schedules and (ii) with respect to UWWH and its Subsidiaries, the actual knowledge of the persons listed on Section 1.1(c) (Knowledge) of the UWWH Disclosure Schedules.
“Law ” shall have the meaning set forth in the Distribution Agreement.
“Lender Related Party ” shall mean the Lenders and any former, current and future Affiliates, officers, directors, managers, employees, shareholders, equityholders, members, managers, partners, agents, representatives, successors or assigns of any of the foregoing or any of the Lenders or any of their Affiliates.
“Lenders ” shall mean the lenders party to the Spinco Commitment Letter.
“Liability ” shall have the meaning set forth in the Distribution Agreement.
 
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“ License ” shall mean any license, ordinance, authorization, permit, certificate, right, easement, variance, exemption, consent, franchise or approval from any Governmental Authority, domestic or foreign.
“LLC Contribution” shall have the meaning set forth in the Distribution Agreement.
“Management Consulting Agreement ” shall mean (i) that certain Joint Agreement, dated July 31, 2013, by and among McKinsey & Company, Inc. United States, Unisource and IP, (ii) that certain Phase 1 Confirmation Letter, dated July 31, 2013, by and among McKinsey & Company, Inc. United States, Unisource and IP and (iii) any agreements or memoranda related to and/or executed in connection with the foregoing.
“Merchant Distribution Business ” shall mean the business of purchasing for resale, and reselling, or acting as a broker for the purchase or sale of, products manufactured by third parties; it being understood and agreed that the foregoing does not include (a) trading or bartering products manufactured by third parties for products manufactured by IP or any of its Subsidiaries, (b) outsourcing to any third party the supply of products manufactured by such third party in place of products manufactured by IP or any of its Subsidiaries to the extent IP has curtailed its own production of such products, (c) purchasing, selling or acting as a broker for the purchase or sale of used, waste or reclaimed materials (including, without limitation, old corrugated containers) or (d) selling packaging equipment or machinery of the types sold as of the date hereof in connection with, or which is otherwise ancillary to, the sale of products manufactured by IP or any of its Subsidiaries.
“Merger ” shall have the meaning set forth in Section 2.2(b) hereof.
“ Merger Tax Opinion ” shall have the meaning set forth in Section 8.8(b)(iii) hereof.
“ Multiemployer Plan ” shall mean any “multiemployer plan” within the meaning of Section 3(37) of ERISA.
“ Non-Solicitation Period ” shall have the meaning set forth in Section 8.21(a) hereof.
“ NYSE ” shall mean the New York Stock Exchange, Inc.
“ Order ” shall mean any decision or award, decree, injunction, judgment, order, quasi-judicial decision or award, settlement, ruling, restriction, charge or writ of any Governmental Authority, whether temporary, preliminary or permanent.
“ Paper Products ” shall mean any printing, reprographics, and writing paper products.
“ Party ” and “ Parties ” shall have the meanings set forth in the preamble hereof.
“ Payoff Letters ” shall have the meaning set forth in Section 8.24(a) hereof.
“ Per Share Merger Consideration ” shall have the meaning set forth in Section 2.7(a)(i) hereof.
 
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“ Person ” shall have the meaning set forth in the Distribution Agreement.
“ Proposed Amendment ” shall have the meaning set forth in Section 8.27 hereof.
“ Proposed Sale ” shall have the meaning set forth in Section 8.22(b)(i) hereof.
“ Proposed Sale Notice ” shall have the meaning set forth in Section 8.22(b)(i) hereof.
“ Proposed Sale Price ” shall have the meaning set forth in Section 8.22(b)(i) hereof.
“ Prospectus ” shall mean the prospectus of Spinco to be distributed to the IP Stockholders in connection with the Distribution, including any preliminary prospectus or definitive prospectus filed with the SEC in accordance with the terms and provisions of this Agreement. The Prospectus shall constitute a part of the Registration Statement.
“ Redactable Information ” shall have the meaning set forth in Section 8.8(b)(ii) hereof.
“ Registration Rights Agreement ” shall mean the Registration Rights Agreement by and between the Surviving Corporation and the UWWH Stockholder substantially in the form attached hereto as Exhibit D.
“ Registration Statement ” shall mean the registration statement on Form S-1 to be filed by Spinco with the SEC in connection with the issuance of shares of Spinco Common Stock in connection with the Distribution.
“Related Parties ” shall mean, with respect to any Person, such Person’s present, former and future Representatives and each of their respective heirs, executors, successors and assigns.
“ Released Claim ” shall have the meaning set forth in Section 11.1(b) hereof.
“ Released Party ” shall have the meaning set forth in Section 11.1(b) hereof.
“ Releasing Party ” shall have the meaning set forth in Section 11.1(b) hereof.
“ Representative ” shall have the meaning set forth in the Distribution Agreement.
“ Required Information ” shall have the meaning set forth in Section 8.19(a) hereof.
“ Restricted Business ” shall mean the Merchant Distribution Business with respect to the types of products sold by the Spinco Business as of the date hereof (including (i) Paper Products, Consumer Packaging Products, Industrial Packaging Products, and Towel, Tissue and Foodservice Products, (ii) cleaning products, liners, sanitation products, and other facilities supplies, (iii) cushioning and void fill products, shrink film, stretch film, pallet covering materials, strapping, bags, tape or other packaging materials, and (iv) warehouse supply products), in each case, in North America. In no event will the Restricted Business be deemed to include (i) the sale by IP or any of its Subsidiaries of products manufactured by IP or any of its Subsidiaries, or (ii) any other activities conducted by IP or any of its Subsidiaries as of the date hereof (so long as there is no material expansion thereof after the date hereof), other than the Spinco Business.
 
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“ Restricted Cash ” shall have the meaning set forth in the Distribution Agreement.
“ Restricted Customer ” shall mean those customers set forth on Section 1.1(d) (Restricted Customers) of the IP/Spinco Disclosure Schedules.
“ Restricted Direct Sale Products ” shall mean, with respect to any Restricted Customer, solely the category of Covered Products that are the same as the category of Covered Products manufactured by IP or any of its Subsidiaries that are sold by the Spinco Business to such Restricted Customer as of the date hereof.
“ Restricted Employee ” shall mean any sales manager, outside and inside sales representative, sales specialist, merchandiser, merchandising manager or supply category manager of the Surviving Corporation on the date hereof or on the Closing Date, or any other employee of the Surviving Corporation who participates in the Spinco long-term management incentive equity plan on the Closing Date.
“ Return ” shall have the meaning set forth in the Tax Matters Agreement.
“ Rule 144 ” shall have the meaning set forth in Section 7.6 hereof.
“ SEC ” shall mean the U.S. Securities and Exchange Commission.
“ Securities Act ” shall mean the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“ Separation ” shall have the meaning set forth in the recitals hereof.
“ Separation Date ” shall mean the date and time that the Separation shall become effective.
“ Severance Obligation ” shall mean any obligation to pay severance or any similar payments to any natural person who is an employee, consultant or contractor of UWWH or any of its Affiliates or the Spinco Business.
“ Shared Expenses ” shall mean all fees and expenses incurred in connection with (i) the Spinco Financing, (ii) any consultant retained for or on behalf of the Surviving Corporation, including pursuant to the Management Consulting Agreement, with the agreement of both IP and UWWH and listed on Section 1.1(e) (Shared Expenses) of the IP/Spinco Disclosure Schedule and (iii) any other product or service agreed upon by the Parties in good faith to be obtained or incurred primarily for the benefit of the Surviving Corporation; provided that, notwithstanding the foregoing, all fees and expenses for Debevoise & Plimpton LLP shall be Transaction Expenses of IP, and all fees and expenses for Kirkland & Ellis LLP shall be Transaction Expenses of UWWH.
“ Special Payment ” shall have the meaning set forth in the Distribution Agreement.
 
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“ Spinco ” shall have the meaning set forth in the preamble hereof.
“ Spinco Acquisition Proposal ” shall mean, other than in connection with the Transactions or as otherwise specifically contemplated by this Agreement or the Distribution Agreement, any proposal relating to (i) any merger, consolidation, share exchange, business combination, recapitalization or other similar transaction or series of related transactions with respect to the Spinco Business; (ii) any sale, lease, exchange, transfer or other disposition (including by way of merger, consolidation or exchange), in a single transaction or a series of related transactions, of the assets of the Spinco Business or the Spinco Entities constituting 15% or more of the consolidated assets of the Spinco Business or accounting for 15% or more of the consolidated revenues of the Spinco Business; or (iii) any other similar transaction that would reasonably be expected to prevent or materially impair or delay the consummation of the Transactions.
“ Spinco Assets ” shall have the meaning set forth in the Distribution Agreement.
“ Spinco Audited Balance Sheet ” shall have the meaning set forth in the Distribution Agreement.
“ Spinco Audited Financial Statements ” shall have the meaning set forth in Section 5.6(a)(i) hereof.
“ Spinco Benefit Plans ” shall mean each material “employee benefit plan” (as defined in Section 3(3) of ERISA), and all other material employee benefit, pension, profit-sharing, savings, deferred compensation, bonus, incentive, stock option (or other equity-based), severance, change in control, welfare (including post-retirement medical and life insurance) and fringe benefit plans, programs and arrangements, whether or not subject to ERISA (i) sponsored, maintained or contributed to or required to be contributed to by IP or any of its Subsidiaries (including Spinco or any of the Spinco Subsidiaries) or to which IP or any of its Subsidiaries (including Spinco) is a party and (ii) in which any current or former Spinco Group Employee or current director or consultant is a participant; provided, that such term shall not include any plan, program or arrangement sponsored, maintained or administered by a Governmental Authority or any Spinco Multiemployer Plan.
“ Spinco Board of Directors ” shall mean the board of directors of Spinco.
“ Spinco Business ” shall have the meaning set forth in the Distribution Agreement.
“ Spinco Commitment Letter ” shall mean the debt commitment letter from Bank of America, N.A., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Wells Fargo Bank, N.A., SunTrust Bank and SunTrust Robinson Humphrey, Inc. committing funds to Spinco and/or its Subsidiaries for the Spinco Financing, attached hereto as Exhibit G.
“ Spinco Common Stock ” shall have the meaning set forth in the Distribution Agreement.
“ Spinco Credit Documents ” shall mean the Spinco Commitment Letter and all other documents required to be delivered on or prior to the Closing Date in connection with the Spinco Financing.
 
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“Spinco Group Employee ” shall have the meaning set forth in the Distribution Agreement.
“ Spinco Entities ” shall mean Spinco and each of the Spinco Subsidiaries.
“ Spinco Equity Interests ” shall have the meaning set forth in Section 5.4(a) hereof.
“ Spinco Financing ” shall mean the debt financing incurred by xpedx Intermediate and/or its Subsidiaries to fund (i) the Special Payment and (ii) the refinancing of the Unisource Credit Facility.
“ Spinco Financial Statements ” shall have the meaning set forth in Section 5.6(a)(ii) hereof.
“Spinco Intellectual Property ” shall mean the Intellectual Property Assets, as defined in the Distribution Agreement.
“ Spinco Interim Financial Statements ” shall have the meaning set forth in Section 5.6(a)(ii) hereof.
“ Spinco Liabilities ” shall have the meaning set forth in the Distribution Agreement.
“ Spinco Material Adverse Effect ” shall mean any effect, change or circumstance, individually or in the aggregate, that is, or would reasonably be expected to be, materially adverse to (x) the Spinco Business, the Spinco Entities, IP or any of IP’s Subsidiaries with respect to the Spinco Business, or the financial condition or results of operations of the Spinco Business, taken as a whole, or (y) the ability of IP or the Spinco Entities to consummate the Transactions and to perform their obligations under this Agreement and the Transaction Agreements; provided, however, that none of the following shall be deemed to constitute, and none of the following shall be taken into account in determining whether there has occurred, a Spinco Material Adverse Effect: any adverse effect, change or circumstance, individually or in the aggregate, arising from or relating to (i) general business or economic conditions, including any such conditions as they relate to the Spinco Business and matters generally affecting the industries in which the Spinco Business operates, (ii) national or international political or social conditions, including the engagement by the U.S. in hostilities, whether or not pursuant to the declaration of a national emergency or war, or the occurrence of any military or terrorist attack upon the U.S., or any of its territories, possessions, or diplomatic or consular offices or upon any military installation, equipment or personnel of the U.S., (iii) financial, banking or securities markets, (iv) changes in GAAP, (v) changes in any Laws, (vi) the negotiation or execution of this Agreement or any of the Transaction Agreements, any actions that are required to be taken by this Agreement or the Transaction Agreements, or the pendency or announcement of the Transactions (except that this clause (vi) shall be disregarded for purposes of clause (y) above and as the term “Spinco Material Adverse Effect” is used in Section 5.3 hereof and, to the extent related to Section 5.3 hereof, Section 9.3(a) hereof); provided, that, in the case of clauses (i), (ii), (iii), (iv) and (v), such effects, changes or circumstances shall be taken into account in determining whether a Spinco Material Adverse Effect exists or would reasonably be expected to exist, but only if the Spinco Business, the Spinco Entities or IP or any of IP’s Subsidiaries with respect to the Spinco Business are disproportionately affected thereby compared to other operators in the Spinco Business.
 
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“ Spinco Material Contracts ” shall have the meaning set forth in Section 5.17(a) hereof.
“ Spinco Multiemployer Plans ” means any Multiemployer Plan contributed to or required to be contributed to by IP or any of its Subsidiaries (including Spinco or any of the Spinco Subsidiaries) and in which any Spinco Group Employee is a participant.
“ Spinco Stockholders ” shall mean the Persons holding Spinco Common Stock after the Distribution and immediately prior to the Effective Time.
“ Spinco Stockholder Approval ” shall have the meaning set forth in Section 5.18(b) hereof.
“ Spinco Subsidiaries ” shall have the meaning set forth in the Distribution Agreement.
“ Spin-Off Tax Opinion ” shall have the meaning set forth in Section 8.8(b)(i) hereof.
“ Subsidiary ” shall have the meaning set forth in the Distribution Agreement.
“ Subsidiary Merger ” shall have the meaning set forth in Section 4.1 hereof.
“ Subsidiary Merger Tax Opinion ” shall have the meaning set forth in Section 8.8(b)(iii) hereof.
“ Supply Agreements ” shall have the meaning set forth in the Distribution Agreement.
“ Surviving Corporation ” shall have the meaning set forth in Section 2.2(b) hereof.
“ Surviving Corporation Board of Directors ” shall mean the board of directors of the Surviving Corporation.
“ Tax Matters Agreement ” shall mean the Tax Matters Agreement by and among IP, Spinco and UWWH, dated as of the date hereof.
“ Tax Receivable Agreement ” shall mean the Tax Receivable Agreement by and between the Surviving Corporation and the UWWH Stockholder substantially in the form attached hereto as Exhibit C.
“ Taxable Period ” shall mean any taxable year or any other period that is treated as a taxable year (or other period, or portion thereof, in the case of a Tax imposed with respect to such other period) with respect to which any Tax may be imposed under any applicable Law.
“ Taxes ” shall have the meaning set forth in the Distribution Agreement.
“ Termination Date ” shall have the meaning set forth in Section 10.1(b) hereof.
 
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“ Towel, Tissue and Foodservice Products ” shall mean any tissue, toilet paper, paper towels, paper napkins, plates, utensils, cups, and food containers.
“ Transaction Agreements ” shall mean, collectively, (a) the Distribution Agreement, (b) the Tax Receivable Agreement, (c) the Transition Services Agreement, (d) the Employee Matters Agreement, (e) the Supply Agreements, (f) the Registration Rights Agreement, (g) the Tax Matters Agreement and (h) all other documents required to be delivered on the Closing Date by any Party pursuant to this Agreement.
“ Transaction Bonus Obligation ” shall mean any obligation to pay to any natural person who is an employee, consultant or contractor of UWWH or any of its Affiliates or the Spinco Business any amount (including, but not limited to, a retention bonus or a change of control bonus) as a result of, or within a specified period of time after, or otherwise in connection with the Transactions.
“ Transaction Expenses ” shall mean all costs, fees and expenses incurred in connection with the Transactions (including fees and expenses of legal counsel, accountants, investment bankers and other Representatives and consultants, if any), whether or not paid prior to Closing. For the avoidance of doubt, Shared Expenses shall not be Transaction Expenses of any Party.
“ Transaction Severance/Bonus Obligation ” shall mean (i) any Severance Obligation that arises pursuant to any agreement, policy or plan that is (or any amendment to any agreement, policy or plan, which amendment is) entered into since June 30, 2013 and (ii) any Transaction Bonus Obligation.
“ Transactions ” shall mean, collectively, the transactions contemplated by this Agreement and the other Transaction Agreements, including the Separation, the Merger and the Subsidiary Merger.
“ Transferred Business ” shall have the meaning set forth in Section 8.21(d) hereof.
“ Transition Services Agreement ” shall mean the Transition Services Agreement by and between IP and the Surviving Corporation substantially in the form attached hereto as Exhibit E.
“ Treasury Regulations ” shall have the meaning set forth in the Tax Maters Agreement.
“ Uniform Commercial Code ” shall mean the Uniform Commercial Code of any applicable jurisdiction and, if the applicable jurisdiction shall not have any Uniform Commercial Code, the Uniform Commercial Code as in effect in the State of Delaware.
“ Unisource ” shall have the meaning set forth in the preamble hereof.
“ Unisource Board of Directors ” shall mean the board of directors of Unisource.
“ Unisource Common Stock ” shall mean the common stock of Unisource, $0.01 par value per share.
 
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“ Unisource Credit Facility ” shall mean that certain Credit Agreement, dated March 15, 2011, as amended, by and among Unisource, Bank of America, N.A. and the other parties thereto.
“ Unisource Equity Interests ” shall have the meaning set forth in Section 6.4(b) hereof.
“ Unisource Stockholder Approval ” shall have the meaning set forth in Section 6.18(b) hereof.
“ U.S. Income Taxes ” shall mean Income Taxes imposed by the United States or any jurisdiction therein.
“ UWWH ” shall have the meaning set forth in the preamble hereof.
“ UWWH Acquisition Proposal ” shall mean, other than in connection with the Transactions or as otherwise specifically contemplated by this Agreement, any proposal relating to (i) any merger, consolidation, share exchange, business combination, recapitalization or other similar transaction or series of related transactions with respect to UWWH or its Subsidiaries representing a material portion of UWWH’s business; (ii) any sale, lease, exchange, transfer or other disposition (including by way of merger, consolidation or exchange), in a single transaction or a series of related transactions, of the assets of UWWH or any of its Subsidiaries constituting 15% or more of the consolidated assets of UWWH or accounting for 15% or more of the consolidated revenues of UWWH or (iii) any other similar transaction that would reasonably be expected to prevent or materially impair or delay the consummation of the Transactions.
“ UWWH Audited Balance Sheet ” shall have the meaning set forth in Section 6.6(a)(i) hereof.
“ UWWH Audited Financial Statements ” shall have the meaning set forth in Section 6.6(a)(i) hereof.
“ UWWH Benefit Plans ” shall mean each material “employee benefit plan” (as defined in Section 3(3) of ERISA), and all other material employee benefit, pension, profit-sharing, savings, deferred compensation, bonus, incentive, stock option (or other equity-based), severance, change in control, welfare (including post-retirement medical and life insurance) and fringe benefit plans, programs and arrangements, whether or not subject to ERISA (i) sponsored, maintained or contributed to or required to be contributed to by UWWH or any of its Subsidiaries or to which UWWH or any of its Subsidiaries is a party and (ii) in which any current or former UWWH Employee or current director or consultant is a participant; provided that such term shall not include any plan, program or arrangement sponsored, maintained or administered by a Governmental Authority or any UWWH Multiemployer Plan.
“ UWWH Board of Directors ” shall mean the board of directors of UWWH.
“ UWWH Certificate ” shall have the meaning set forth in Section 2.7(a)(i) hereof.
“ UWWH Closing Balance Sheet ” shall have the meaning set forth in Section 3.2(a) hereof.
 
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“ UWWH Closing Date Net Debt ” shall mean an amount (which may be negative), in each case, determined as of the Calculation Time and without giving effect to the consummation of the Transactions, equal to (i) the Indebtedness of UWWH and its Subsidiaries, less (ii) an amount equal to the Cash and Cash Equivalents of UWWH and its Subsidiaries (other than Restricted Cash), plus (iii) any proceeds received from the sale of any fixed or long-term asset of UWWH and its Subsidiaries from June 30, 2013 to the Distribution Date (net of any costs incurred in selling such asset), other than up to $14.8 million of net proceeds from the sale of the assets set forth on Section 1.1(e) of the UWWH Disclosure Schedules.
“ UWWH Closing Date Working Capital ” shall mean the UWWH Working Capital as of the Calculation Time.
“ UWWH Closing Statement ” shall have the meaning set forth in Section 3.2(a) hereof.
“ UWWH Common Stock ” shall mean the common stock of UWWH, par value $0.01 per share.
“ UWWH Current Assets ” shall mean all Assets of UWWH and its Subsidiaries (other than LIFO inventory reserve, Cash and Cash Equivalents (as defined in the Distribution Agreement), Income Tax Assets and deferred Tax Assets, but including current Non-Income Tax Assets) that are current assets, determined as of the Calculation Time in accordance with the Applicable Accounting Principles.
“ UWWH Current Liabilities ” shall mean all Liabilities (other than any Indebtedness, Transaction Expenses, Shared Expenses, deferred rent, Liabilities set forth on Section 8.29 of the UWWH Disclosure Schedules, Income Tax Liabilities, the GP Sale-Leasebacks and deferred Tax Liabilities, but including Non-Income Tax Liabilities) of UWWH and its Subsidiaries that are current liabilities, determined as of the Calculation Time in accordance with the Applicable Accounting Principles.
“ UWWH Disclosure Schedules ” shall mean the disclosure schedules delivered by UWWH to IP concurrently herewith.
“ UWWH Employee ” shall mean, as of any date, any individual who is an employee of UWWH or its Subsidiaries (including employees who are not actively at work on such date by reason of illness, vacation, leave of absence or short-term disability).
“ UWWH Entities ” shall mean UWWH and each of its Subsidiaries.
“ UWWH Equity Interests ” shall have the meaning set forth in Section 6.4(a) hereof.
“ UWWH Estimated Closing Balance Sheet ” shall have the meaning set forth in Section 3.1(a) hereof.
“ UWWH Estimated Closing Statement ” shall have the meaning set forth in Section 3.1(a) hereof.
 
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“ UWWH Estimated Net Debt Adjustment ” shall have the meaning set forth in Section 3.1(a) hereof.
“ UWWH Estimated Transaction Expenses Amount ” shall have the meaning set forth in Section 3.1(a) hereof.
“ UWWH Estimated Working Capital Adjustment ” shall have the meaning set forth in Section 3.1(a) hereof.
“ UWWH Final Closing Statement ” shall have the meaning set forth in Section 3.2(c) hereof.
“ UWWH Financial Statements ” shall have the meaning set forth in Section 6.6(a)(ii) hereof.
“ UWWH Intellectual Property ” shall have the meaning set forth in Section 6.16(a) hereof.
“ UWWH Interim Financial Statements ” shall have the meaning set forth in Section 6.6(a)(ii) hereof.
“ UWWH Material Adverse Effect ” shall mean any effect, change or circumstance, individually or in the aggregate, that is, or would reasonably be expected to be, materially adverse to (x) UWWH, its Subsidiaries or the financial condition or results of operations of UWWH, taken as a whole, or (y) the ability of UWWH to consummate the Transactions and to perform its obligations under this Agreement and the Transaction Agreements; provided, however, that none of the following shall be deemed to constitute, and none of the following shall be taken into account in determining whether there has occurred, a UWWH Material Adverse Effect: any adverse effect, change or circumstance, individually or in the aggregate, arising from or relating to (i) general business or economic conditions, including any such conditions as they relate to UWWH, and matters generally affecting the industries in which UWWH operates, (ii) national or international political or social conditions, including the engagement by the U.S. in hostilities, whether or not pursuant to the declaration of a national emergency or war, or the occurrence of any military or terrorist attack upon the U.S., or any of its territories, possessions, or diplomatic or consular offices or upon any military installation, equipment or personnel of the U.S., (iii) financial, banking or securities markets, (iv) changes in GAAP, (v) changes in any Laws, (vi) the negotiation or execution of this Agreement or any of the Transaction Agreements, any actions that are required to be taken by this Agreement or the Transaction Agreements or the pendency or announcement of the Transactions (except that this clause (vi) shall be disregarded for purposes of clause (y) above and as the term “UWWH Material Adverse Effect” is used in Section 6.3 hereof and, to the extent related to Section 6.3 hereof, Section 9.2(a) hereof; provided, that, in the case of clauses (i), (ii), (iii), (iv) and (v), such effects, changes or circumstances shall be taken into account in determining whether a UWWH Material Adverse Effect exists or would reasonably be expected to exist, but only if UWWH and its Subsidiaries are disproportionately affected thereby compared to other operators in UWWH’s business.
“ UWWH Material Contracts ” shall have the meaning set forth in Section 6.17(a) hereof.
 
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“ UWWH Multiemployer Plan ” shall mean any Multiemployer Plan contributed to or required to be contributed to by UWWH or any of its Subsidiaries and in which any UWWH Employee is a participant.
“ UWWH Net Debt Adjustment ” shall mean an amount (which can be a positive or negative number) equal to UWWH Closing Date Net Debt minus UWWH Target Net Debt.
“ UWWH Reorganization ” shall mean (i) the merger of 2013 Reorg Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of the UWWH Stockholder (“LLC Merger Sub”), with and into UWWH, pursuant to that certain Agreement and Plan of Merger, by and among UWWH, LLC Merger Sub and the UWWH Stockholder, dated as of January 28, 2014 and (ii) any transactions related thereto, including, without limitation, the issuance of incentive equity of the UWWH Stockholder to certain individuals.
“ UWWH Single Employer Pension Plan ” shall mean any qualified, registered, nonqualified, or nonregistered defined benefit pension plans or arrangements sponsored, maintained or contributed to by UWWH or any of its Subsidiaries for current or former UWWH Employees in the United States and Canada but, in each case, excluding the UWWH Multiemployer Plans.
“ UWWH Stockholder ” shall have the meaning set forth in the preamble hereof.
“ UWWH Stockholder Approval ” shall have the meaning set forth in Section 6.18(b) hereof.
“ UWWH Stockholder Board of Managers ” shall mean the board of managers of the UWWH Stockholder.
“ UWWH Target Net Debt ” shall mean $318,171,831.
“ UWWH Target Working Capital ” shall mean $499,127,049.
“ UWWH Tax Opinion ” shall have the meaning set forth in Section 9.3(e) hereof.
“ UWWH Transaction Expenses Amount ” means the amount of Transaction Expenses allocated to or to be borne by the UWWH Stockholder, UWWH or any of its Subsidiaries pursuant to this Agreement or any of the Transaction Agreements in excess of $15 million that is not paid prior to the Closing.
“ UWWH Valuation Percentage ” shall mean 1 minus the xpedx Valuation Percentage.
“ UWWH Working Capital ” shall mean the sum (which amount may be positive or negative) of the UWWH Current Assets, minus the UWWH Current Liabilities and calculated in accordance with the Applicable Accounting Principles. Section 1.1(f) of the UWWH Disclosure Schedules is an illustrative example of the calculation of UWWH Working Capital.
 
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“ UWWH Working Capital Adjustment ” shall mean an amount (which can be a positive or negative number) equal to UWWH Closing Date Working Capital minus UWWH Target Working Capital.
“ WARN ” shall have the meaning set forth in Section 5.15(c) hereof.
“ xpedx ” shall have the meaning set forth in the preamble hereof.
“ xpedx Equity Interests ” shall have the meaning set forth in Section 5.4(c) hereof.
“ xpedx Intermediate ” shall have the meaning set forth in the preamble hereof.
“ xpedx Intermediate Equity Interests ” shall have the meaning set forth in Section 5.4(b) hereof.
“ xpedx Intermediate Member Approval ” shall have the meaning set forth in Section 5.18(b) hereof.
“ xpedx Intermediate Membership Units ” shall mean the membership units of xpedx Intermediate having the rights, privileges and obligations set forth in xpedx Intermediate’s limited liability company agreement.
“ xpedx Membership Units ” shall mean the membership units of xpedx having the rights, privileges and obligations set forth in xpedx limited liability company agreement.
“ xpedx Valuation Percentage ” shall mean 0.51.
ARTICLE II
THE SEPARATION, THE MERGER AND RELATED MATTERS
Section 2.1 The Distribution . Upon the terms and subject to the conditions of the Distribution Agreement, prior to the Effective Time, IP, Spinco, xpedx Intermediate and xpedx shall each use its respective reasonable best efforts to consummate and make effective the Separation and the other Transactions contemplated by the Distribution Agreement in accordance with its terms.
Section 2.2 The Merger .
(a) Immediately prior to the Effective Time, the issued and outstanding shares of capital stock of Spinco shall consist solely of shares of Spinco Common Stock, all of which shall be owned as of such time directly by the Spinco Stockholders.
(b) Upon the terms and subject to the conditions of this Agreement, after the Separation, UWWH will be merged with and into Spinco (the “ Merger ”) at the Effective Time in accordance with the DGCL and upon the terms set forth in this Agreement. Following the Merger, the separate corporate existence of UWWH will cease, and Spinco will continue as the
 
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surviving corporation (Spinco as the surviving corporation following the Merger is sometimes referred to herein as the “ Surviving Corporation ”) and will succeed to and assume all the rights, powers, privileges and franchises, and be subject to all of the obligations of UWWH in accordance with the DGCL and upon the terms set forth in this Agreement.
Section 2.3 Closing . Unless the transactions contemplated herein shall have been abandoned and this Agreement terminated pursuant to Section 10.1, the closing of the Merger and the other Transactions (the “ Closing ”) will take place at 10:00 a.m., New York time, on a date to be specified by the Parties, which will be no later than the eighth Business Day after the satisfaction or, to the extent permitted by applicable Law, waiver of the conditions set forth in ARTICLE IX hereof (the “ Closing Date ”) at the offices of Debevoise & Plimpton LLP, 919 Third Avenue, New York, New York 10022, unless another date or place is agreed to in writing by the Parties.
Section 2.4 Effective Time . On the Closing Date, Spinco and UWWH will execute and file in the office of the Secretary of State of the State of Delaware a certificate of merger (the “ Certificate of Merger ”) executed in accordance with the DGCL. The Merger will become effective at the time of filing of the Certificate of Merger with the Secretary of State of the State of Delaware in accordance with the DGCL, or at such later time as is agreed upon by the Parties and set forth in the Certificate of Merger (such time as the Merger becomes effective is referred to herein as the “ Effective Time ”).
Section 2.5 Effects of the Merger . The Merger will have the effects set forth in this Agreement, the Certificate of Merger and the DGCL.
Section 2.6 Certificate of Incorporation and Bylaws of the Surviving Corporation .
(a) Certificate of Incorporation . At the Effective Time, the certificate of incorporation of Spinco as in effect immediately prior to the Effective Time (as amended and restated pursuant to the Distribution Agreement) shall be the certificate of incorporation of the Surviving Corporation from and after the Effective Time until amended in accordance with applicable Law and such certificate of incorporation.
(b) Bylaws . At the Effective Time, the bylaws of Spinco as in effect immediately prior to the Effective Time (as amended and restated pursuant to the Distribution Agreement) shall be the bylaws of the Surviving Corporation from and after the Effective Time until amended in accordance with applicable Law, the certificate of incorporation of the Surviving Corporation and such bylaws.
Section 2.7 Conversion of Capital Stock . At the Effective Time, by virtue of the Merger and without any action on the part of any holder of the capital stock of IP, Spinco or UWWH:
 
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(a) Conversion of UWWH Capital Stock .
(i) All shares of UWWH Common Stock issued and outstanding immediately prior to the Effective Time (other than shares to be canceled in accordance with Section 2.7(a)(ii) hereof) shall be automatically converted into (x) the right to receive an aggregate number of duly authorized, validly issued, fully paid and non-assessable shares of Spinco Common Stock equal to the Aggregate Merger Consideration, with each such share of UWWH Common Stock issued and outstanding as of the Effective Time to be converted into the right to receive a number of shares of Spinco Common Stock issued and outstanding equal to (A) the Aggregate Merger Consideration, divided by (B) the aggregate number of shares of UWWH Common Stock issued and outstanding on a fully diluted basis as of immediately prior to the Effective Time (but after giving effect to the UWWH Reorganization) (other than shares canceled in accordance with Section 2.7(a)(ii)) (the “ Per Share Merger Consideration ”), (y) any and all rights provided to UWWH or the UWWH Stockholder under the Tax Receivable Agreement and (z) the right to receive any amounts payable to it pursuant to Article III; provided that any fractional shares of Spinco Common Stock that would otherwise be issued to the UWWH Stockholder, as the sole stockholder of UWWH, shall be aggregated and the UWWH Stockholder shall be issued in respect thereof a number of shares of Spinco Common Stock equal to such aggregate number, rounded to the nearest whole number. Following the Effective Time, all shares of UWWH Common Stock shall no longer be outstanding and shall automatically be canceled and cease to exist, and each certificate previously evidencing any such shares of UWWH Common Stock (a “ UWWH Certificate ”) shall thereafter cease to have any rights with respect thereto, except the right to receive, upon the surrender of such UWWH Certificates in accordance with this Section 2.7(a), the Per Share Merger Consideration, without any interest thereon.
(ii) All shares of UWWH Common Stock held in Spinco’s treasury or owned by any Spinco Entity, IP Entity, UWWH or any wholly-owned Subsidiary of UWWH shall be canceled and extinguished and shall cease to exist, and no shares of Spinco Common Stock or other consideration shall be delivered in exchange therefor.
(b) Spinco Common Stock . Each share of Spinco Common Stock that is issued and outstanding immediately prior to and at the Effective Time shall remain outstanding following the Effective Time.
Section 2.8 Exchange of Shares .
(a) Exchange Procedures . At the Effective Time, Spinco shall distribute to the UWWH Stockholder the number of shares of Spinco Common Stock into which the shares of UWWH Common Stock held by the UWWH Stockholder have been converted in accordance with Section 2.7(a) hereof.
(b) No Further Rights in UWWH Common Stock . All shares of Spinco Common Stock issued upon conversion of shares of UWWH Common Stock in accordance with the terms of this Section 2.8 shall be deemed to have been issued at the Effective Time in full satisfaction of all rights pertaining to such shares of UWWH Common Stock.
(c) Withholding Rights . The parties hereto shall be entitled to deduct and withhold from any consideration otherwise payable pursuant to this Agreement such amounts as may be required to be deducted and withheld with respect to the making of such payment under the Code or under any provision of state, local or foreign Tax Law. To the extent that amounts are so withheld and paid over to the appropriate Tax authority, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Persons with respect to which such deduction and withholding was made.
 
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ARTICLE III
CERTAIN ADJUSTMENTS
Section 3.1 Estimated Closing Statement . Not less than three (but not more than five) Business Days prior to the anticipated Distribution Date, UWWH shall provide IP and Spinco (a) a certificate endorsed by an executive officer of UWWH certifying a statement (in form and substance reasonably satisfactory to IP) (the “UWWH Estimated Closing Statement”) setting forth UWWH’s good faith estimate of (i) the UWWH Transaction Expenses Amount (the “UWWH Estimated Transaction Expenses Amount”), (ii) the UWWH Working Capital Adjustment (the “UWWH Estimated Working Capital Adjustment”) and (iii) the UWWH Net Debt Adjustment (the “UWWH Estimated Net Debt Adjustment”) and (iv) the Estimated Adjustment Payment, including reasonable detail regarding the calculations thereof and (b) an estimated unaudited balance sheet of UWWH and its Subsidiaries as of the Calculation Time (the “UWWH Estimated Closing Balance Sheet”). The UWWH Estimated Closing Balance Sheet and UWWH Estimated Closing Statement (x) shall be prepared in accordance with the Applicable Accounting Principles and (y) shall not give effect to the refinancing of the Unisource Credit Facility. Prior to and after delivering the UWWH Estimated Closing Balance Sheet and UWWH Estimated Closing Statement, UWWH shall give IP and its Representatives access at all reasonable times and on reasonable advance notice to the books, records, properties, working papers and personnel of UWWH and its Subsidiaries (including UWWH’s senior finance and accounting personnel and its accountants) to the extent reasonably required to permit IP to review the UWWH Estimated Closing Balance Sheet and the UWWH Estimated Closing Statement and shall cooperate and provide such information as reasonably requested by IP and its Representatives regarding the calculation of the components thereof and provide such back-up therefor as reasonably requested by IP. If the Estimated Adjustment Amount is positive, the UWWH Stockholder shall be paid by Spinco by wire transfer of immediately available funds an amount equal to the Estimated Adjustment Amount at Closing as payment of the estimated amount due pursuant to Section 2.7(a)(i)(z). If the Estimated Adjustment Amount is negative, the Special Payment payable to IP prior to the Distribution pursuant to Section 2.6 of the Distribution Agreement shall be increased by an amount equal to the Estimated Adjustment Amount Payment pursuant to Section 5.1 of the Distribution Agreement.
Section 3.2 Post-Closing Adjustment.
(a) Within 90 days after the Distribution Date, the Surviving Corporation shall cause to be prepared and delivered to the IP and UWWH Stockholder (a) an unaudited balance sheet of UWWH and its Subsidiaries as of the Calculation Time (the “ UWWH Closing Balance Sheet ”) and (b) a certificate endorsed by an executive officer of the Surviving Corporation certifying a statement (the “ UWWH Closing Statement ”) setting forth the Surviving Corporation’s good faith calculation of (i) the UWWH Transaction Expenses Amount, (ii) the UWWH Working Capital Adjustment, (iii) the UWWH Net Debt Adjustment and (iv) the Adjustment Amount, including reasonable detail regarding the calculations thereof. The UWWH Closing Balance Sheet and the UWWH Closing Statement (x) shall be prepared in accordance with the Applicable Accounting Principles and (y) shall not give effect to the refinancing of the Unisource Credit Facility.
 
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(b) During the 60 day period following IP’s and the UWWH Stockholder’s respective receipt of the UWWH Closing Statement, the Surviving Corporation shall give IP and the UWWH Stockholder and each of their respective Representatives access at all reasonable times and on reasonable advance notice to the books, records, properties, working papers and personnel of the Surviving Corporation (including the Surviving Corporation’s senior finance and accounting personnel and its accountants) to the extent reasonably required to permit IP and the UWWH Stockholder to review the UWWH Closing Balance Sheet and UWWH Closing Statement. Within 60 days after receipt of the UWWH Closing Statement, IP and the UWWH Stockholder shall, in a written notice to the Surviving Corporation and IP or the UWWH Stockholder, as applicable, describe in reasonable detail any proposed adjustments to the items set forth on the UWWH Closing Statement and the reasons therefor (it being agreed that the only permitted reasons for such adjustments shall be mathematical error or the failure to compute items set forth therein in accordance with this Agreement). If the Surviving Corporation shall not have received a notice of proposed adjustments within such 60-day period from the UWWH Stockholder, the UWWH Stockholder will be deemed to have accepted irrevocably the UWWH Closing Statement. If the Surviving Corporation shall not have received a notice of proposed adjustments within such 60-day period from IP, IP will be deemed to have accepted irrevocably the UWWH Closing Statement. During the 30-day period following the delivery by IP or by the UWWH Stockholder of a notice of proposed adjustments to the Surviving Corporation and IP or UWWH, the UWWH Stockholder, IP and the Surviving Corporation, as applicable, shall give IP, the UWWH Stockholder or the Surviving Corporation, as applicable, and each of their respective Representatives access at all reasonable times and on reasonable advance notice to the books, records, properties, working papers and personnel of IP, the UWWH Stockholder or the Surviving Corporation, as applicable, (including senior finance and accounting personnel and their accountants) to the extent reasonably required to permit the UWWH Stockholder, IP or Surviving Corporation to evaluate the proposed adjustments.
(c) The UWWH Stockholder and IP shall negotiate in good faith to resolve any disputes over any proposed adjustments to the UWWH Closing Statement during the 30 days following the Surviving Corporation’s receipt of the proposed adjustments. If UWWH Stockholder and IP are unable to resolve such dispute within such 30-day period, then, at the written request of either such Party (the “ Dispute Resolution Request ”), each such Party shall appoint a knowledgeable, responsible representative to meet in person and negotiate in good faith to resolve the disputed matters. The Parties intend that these negotiations be conducted by experienced business representatives empowered to decide the issues. Such negotiations shall take place during the 30-day period following the date of the Dispute Resolution Request. If the business representatives resolve the dispute, such resolution shall be memorialized in a written agreement (the UWWH Closing Statement, as revised by such negotiations, written agreement or the final decision of the accounting firm referred to below, the “ UWWH Final Closing Statement ”). If the business representatives do not resolve the dispute during the periods described above, then the UWWH Stockholder and IP shall jointly engage KPMG LLP to arbitrate and resolve such disputes, which resolution shall be final, binding and enforceable in accordance with Section 11.15. If KPMG LLP is unable or unwilling to act as arbitrator, a nationally recognized accounting firm shall be selected by lot from among the remaining nationally recognized firms which are not the regular independent auditor firm of the UWWH Stockholder, IP or the Surviving Corporation, and in such event references herein to KPMG LLP shall be deemed to refer to such replacement accounting firm. Within the 30-day period
 
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following its engagement, KPMG LLP shall arbitrate and resolve such dispute based solely on the written submissions provided by UWWH Stockholder, IP and the Surviving Corporation and shall only consider whether the UWWH Closing Statement (and each component thereof) was prepared in accordance with this Agreement and (only with respect to disputed matters submitted to the accounting firm) whether and to what extent the UWWH Closing Statement requires adjustment. In resolving any disputed matter, KPMG LLP shall (i) adhere to the definitions contained in this Agreement and the guidelines and principles of this Section 3.2 and (ii) shall not assign a value to any item higher than the highest value for such item claimed by the UWWH Stockholder and IP or lower than the lowest value claimed by either such Party; provided, however, that to the extent the determination of value of any disputed item affects any other item used in calculating the UWWH Working Capital Adjustment or the UWWH Net Debt Adjustment, such effect may be taken into account by KPMG LLP. The fees and expenses of KPMG LLP shall be shared by the UWWH Stockholder and IP in inverse proportion to the relative amounts of the disputed amount determined in favor of the UWWH Stockholder and IP, respectively.
(d) Upon final determination of the UWWH Final Closing Statement pursuant to Section 3.2(c),
(i) if the Estimated Adjustment Amount was positive,
(A) and the Adjustment Amount exceeds the Estimated Adjustment Amount, the Surviving Corporation shall pay to the UWWH Stockholder an amount equal to such excess, or
(B) and the Estimated Adjustment Amount exceeds the Adjustment Amount, (i) the UWWH Stockholder shall pay to the Surviving Corporation the lesser of (x) the Estimated Adjustment Amount and (y) such excess, and (ii) if the Adjustment Amount is negative, the Surviving Corporation shall pay to IP an amount equal to the product of (x) the Gross Up Percentage and (y) the absolute value of the Adjustment Amount; or
(ii) if the Estimated Adjustment Amount was negative,
(A) and the Estimated Adjustment Amount exceeds the Adjustment Amount, the Surviving Corporation shall pay to IP an amount equal to the product of (x) the Gross Up Percentage and (y) such excess; or
(B) and the Adjustment Amount exceeds the Estimated Adjustment Amount, (i) IP shall pay to the Surviving Corporation an amount equal to the lesser of (x) the product of the Gross Up Percentage and the absolute value of the Estimated Adjustment Amount and (y) the product of the Gross Up percentage and such excess and (ii) if the Adjustment Amount is positive, the Surviving Corporation shall pay to the UWWH Stockholder an amount equal to the Adjustment Amount.
 
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(e) Any payment due pursuant to Section 3.2(d) shall be increased by an amount computed as interest from the Distribution Date through but excluding the date of payment at a rate of 6.0%; which interest shall accrue daily on the basis of a 365 day year calculated for the actual number of days for which payment is due. Any amount payable pursuant to Section 3.2(d) shall be made via wire transfer of immediately available funds within five Business Days after the date upon which the UWWH Closing Statement becomes the UWWH Final Closing Statement.
ARTICLE IV
SUBSIDIARY MERGER AND RELATED MATTERS
Section 4.1 The Subsidiary Merger . On the Closing Date, immediately following the Effective Time, xpedx Intermediate will be merged with and into Unisource (the “ Subsidiary Merger ”) in accordance with the DGCL and the DLLCA and upon the terms set forth in this Agreement. Following the Subsidiary Merger, the separate corporate existence of xpedx Intermediate will cease, and Unisource will continue as the surviving corporation and will succeed to and assume all the rights, powers, privileges and franchises, and be subject to all of the obligations of xpedx Intermediate in accordance with the DGCL and the DLLCA and upon the terms set forth in this Agreement.
Section 4.2 Effective Time of the Subsidiary Merger . On the Closing Date, immediately following the Effective Time, with respect to the Subsidiary Merger, the Parties will execute and file in the office of the Secretary of State of the State of Delaware a certificate of merger executed in accordance with the DGCL and the DLLCA. The Subsidiary Merger will become effective at the time of filing such certificate of merger with the Secretary of State of the State of Delaware in accordance with the DGCL and the DLLCA, or at such later time as is agreed upon by the Parties and as set forth in such certificate of merger.
Section 4.3 Effects of the Subsidiary Merger . The Subsidiary Merger will have the effects set forth in this Agreement, the certificate of merger referenced in Section 4.2 and the DGCL and the DLLCA.
Section 4.4 Certificate of Incorporation and Bylaws of Unisource .
(a) Certificate of Incorporation . Upon the consummation of the Subsidiary Merger, the certificate of incorporation of Unisource as in effect immediately prior to the consummation of the Subsidiary Merger shall be amended and restated in its entirety to read as set forth in Exhibit A hereto, and, as so amended, shall be the certificate of incorporation of Unisource from and after the consummation of the Subsidiary Merger until amended in accordance with the terms thereof and applicable Law.
(b) Bylaws . Upon the consummation of the Subsidiary Merger, the bylaws of Unisource as in effect immediately prior to the consummation of the Subsidiary Merger shall be amended and restated in its entirety to read as set forth in Exhibit B hereto, and, as so amended, shall be the bylaws of Unisource from and after the consummation of the Subsidiary Merger until amended in accordance with applicable Law, the certificate of incorporation of Unisource and such bylaws.
 
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Section 4.5 Conversion of Capital Stock . At the Effective Time, by virtue of the Subsidiary Merger and without any action on the part of any holder of the capital stock of xpedx Intermediate or Unisource:
(a) Conversion of xpedx Intermediate Membership Interests .
(i) All membership interests in xpedx Intermediate outstanding immediately prior to the Effective Time (other than shares to be canceled in accordance with Section 4.5(a)(ii) hereof) shall be automatically converted into the right to receive one fully paid and non-assessable share of Unisource Common Stock. Following the Effective Time, all membership interests in xpedx Intermediate shall no longer be outstanding and shall automatically be canceled and cease to exist, and Spinco shall thereafter cease to have any rights with respect thereto, except the right to receive the share of Unisource Common Stock into which such membership interests have been converted pursuant to this Section 4.5, without any interest thereon.
(ii) All membership interests in xpedx Intermediate owned by any Spinco Entity, IP Entity, UWWH or any wholly-owned Subsidiary of UWWH shall be canceled and extinguished and shall cease to exist, and no shares of Unisource Common Stock or other consideration shall be delivered in exchange therefor.
(b) Unisource Common Stock . Each share of Unisource Common Stock that is issued and outstanding immediately prior to and at the Effective Time shall remain outstanding following the Effective Time.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF IP, SPINCO, XPEDX INTERMEDIATE AND XPEDX
Except as set forth in the IP/Spinco Disclosure Schedules (regardless of whether or not the relevant Section hereof refers to the IP/Spinco Disclosure Schedules), it being understood and agreed that each disclosure set forth in the IP/Spinco Disclosure Schedules shall qualify or modify each of the representations and warranties set forth in this ARTICLE V to the extent the applicability of the disclosure to such representation and warranty is reasonably apparent from the text of the disclosure made, IP, Spinco, xpedx Intermediate and xpedx hereby represent and warrant to UWWH (which, in the case of Section 5.6(d), Section 5.8(b), Section 5.11(b), Section 5.12(a), Section 5.15(a) through (d), Section 5.15(f), Section 5.16(a) and Section 5.16(b)), are made assuming the Distribution has occurred) as follows:
Section 5.1 Due Organization, Good Standing, Corporate Power and Subsidiaries .
(a) Each of IP, Spinco, xpedx Intermediate and xpedx is a corporation or a limited liability company, as applicable, duly organized, validly existing and in good standing under the Laws of its jurisdiction of incorporation or formation. IP and its Subsidiaries have all requisite corporate or limited liability power and authority to own, lease and operate their properties and assets that will be contributed to Spinco and the Spinco Subsidiaries pursuant to the Distribution Agreement and to carry on the Spinco Business as it is now being conducted. Each of IP and its Subsidiaries is duly qualified or licensed to do business and is in good standing (with respect to
 
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jurisdictions which recognize such concept) in each jurisdiction in which the property owned, leased or operated by the Spinco Business that will be contributed to Spinco and the Spinco Subsidiaries pursuant to the Distribution Agreement or the nature of the Spinco Business conducted by it makes such qualification or licensing necessary, except in such jurisdictions where the failure to be so qualified or licensed or to be in good standing has not had or would not reasonably be expected to have, individually or in the aggregate, a Spinco Material Adverse Effect.
(b) All of the outstanding shares of capital stock of, or other equity interests in, each Spinco Subsidiary have been duly authorized and validly issued and are fully paid and non-assessable and are owned directly or indirectly by Spinco, free and clear of all liens other than pursuant to the Spinco Financing.
Section 5.2 Authorization and Validity of Agreement . Each of IP, Spinco, xpedx Intermediate and xpedx has all necessary corporate or limited liability company power and authority to execute and deliver this Agreement and each Transaction Agreement to which it is a party, to perform its obligations hereunder and thereunder and, subject to the receipt of the Spinco Stockholder Approval and xpedx Intermediate Member Approval, to consummate the Transactions. The execution, delivery and performance of this Agreement and the Transaction Agreements by each of IP, Spinco, xpedx Intermediate and xpedx, and the consummation by each of them of the Transactions, have been duly and validly authorized by each of the IP Board of Directors, Spinco Board of Directors, xpedx Intermediate managing member and xpedx managing member, and no other corporate or other action on the part of IP, Spinco, xpedx Intermediate or xpedx is necessary to authorize the execution, delivery and performance of this Agreement and the Transaction Agreements or the consummation of the Transactions (other than the Spinco Stockholder Approval and the xpedx Member Approval). This Agreement and the Transaction Agreements have been duly and validly executed and delivered by each of IP, Spinco, xpedx Intermediate and xpedx, as applicable, and, to the extent it is a party thereto, assuming due and valid authorization, execution and delivery hereof and thereof by each of the UWWH Stockholder, UWWH and Unisource, as applicable, each is a valid and binding obligation of each of IP, Spinco, xpedx Intermediate and xpedx enforceable against each of IP, Spinco, xpedx Intermediate and xpedx in accordance with their terms, except to the extent that its enforceability may be subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar Laws, now or hereinafter in effect, affecting the enforcement of creditors’ rights generally and by general equitable principles.
Section 5.3 Corporate Authority Relative to this Agreement; No Violation . Assuming (a) the filings required under the HSR Act are made and the waiting periods thereunder (if applicable) have been terminated or expired, (b) the approvals set forth in Section 5.3 of the IP/Spinco Disclosure Schedules have been obtained, (c) the applicable requirements of the Securities Act and the Exchange Act are met, (d) the requirements under any applicable state securities or blue sky Laws are met, (e) the requirements of the NYSE in respect of the listing of the shares of Spinco Common Stock to be issued pursuant hereto are met and (f) the filing of the Certificate of Merger and other appropriate Merger documents and Subsidiary Merger documents (including the certificate of merger evidencing such Subsidiary Merger), if any, as required by the DGCL and the DLLCA, is made, the execution and delivery of this Agreement and the Transaction Agreements by IP and Spinco, as applicable, and the consummation by IP,
 
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Spinco, xpedx Intermediate and xpedx of the Transactions, do not and will not: (w) conflict with or result in a breach of any provision of their respective certificates of incorporation or bylaws; (x) violate or conflict in any material respect with any Law or Order of any Governmental Authority applicable to IP, Spinco, xpedx Intermediate or xpedx or by which any of the properties or assets that will be contributed to the Spinco Entities pursuant to the Distribution Agreement may be bound; (y) require any filing with, or License, consent or approval of, or the giving of any notice to, any Governmental Authority, the failure of which to file or receive would be material; or (z) result in a violation or breach of, constitute (with or without due notice or lapse of time or both) a default under, or give rise to any right of termination, cancellation or acceleration, or result in the creation of any Encumbrance upon any of the properties or assets of IP or any of its Subsidiaries that will be contributed to the Spinco Entities pursuant to the Distribution Agreement (including the xpedx Intermediate Membership Units) or give rise to any obligation, right of termination, cancellation, acceleration or increase of any obligation or a loss of a material benefit under, any of the terms, conditions or provisions of any Spinco Material Contract to which IP or its Subsidiaries is a party that will be contributed to the Spinco Entities pursuant to the Distribution Agreement, or by which the Spinco Entities or the properties or assets that will be contributed to the Spinco Entities pursuant to the Distribution Agreement may be bound, excluding in the case of clause (z) above, conflicts, violations, breaches, defaults, rights of payment and reimbursement, terminations, modifications, accelerations and creations and impositions of Encumbrances which have not had or would not reasonably be expected to have, individually or in the aggregate, a Spinco Material Adverse Effect.
Section 5.4 Capitalization .
(a) As of the date hereof, the authorized capital stock of Spinco consists solely of 100 shares of capital stock, all of which shares are classified and designated as Spinco Common Stock. As of the date hereof, 100 shares of Spinco Common Stock (excluding treasury shares) are issued and outstanding. All of the issued and outstanding shares of Spinco Common Stock have been duly authorized and validly issued and are fully paid and non-assessable. As of the date hereof, except for shares issuable pursuant to this Agreement or any equity incentive plan of the Surviving Corporation, (i) there are no outstanding options, warrants, rights, calls, subscriptions, claims of any character, agreements, obligations, convertible or exchangeable securities, or other commitments, contingent or otherwise, relating to Spinco Common Stock or any capital stock equivalent or other nominal interest in Spinco or any Spinco Subsidiary which relate to Spinco or any Spinco Subsidiary (“ Spinco Equity Interests ”) pursuant to which Spinco or any Spinco Subsidiary is or may become obligated to issue shares of its capital stock or other equity interests or any securities convertible into or exchangeable for, or evidencing the right to subscribe for any Spinco Equity Interests and (ii) there are no outstanding obligations of Spinco to repurchase, redeem or otherwise acquire any outstanding securities of Spinco Equity Interests. Except pursuant to this Agreement, the Registration Rights Agreement and any equity incentive plan of the Surviving Corporation, immediately following the Distribution there will be no Contracts or commitments relating to the issuance, sale, transfer or voting of any equity securities or other securities of Spinco.
(b) The equity interests of xpedx Intermediate consist solely of membership interests, all of which will be, as of the Closing, held by Spinco. There are no outstanding options, warrants, rights, calls, subscriptions, claims of any character, agreements, obligations,
 
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convertible or exchangeable securities, or other commitments, contingent or otherwise, relating to xpedx Intermediate Membership Units or any capital stock equivalent or other nominal interest in xpedx Intermediate or any of its Subsidiaries which relate to xpedx Intermediate or any of its Subsidiaries (“ xpedx Intermediate Equity Interests ”) pursuant to which xpedx Intermediate or any of its Subsidiaries is or may become obligated to issue shares of its capital stock or other equity interests or any securities convertible into or exchangeable for, or evidencing the right to subscribe for any xpedx Intermediate Equity Interests. There are no outstanding obligations of xpedx Intermediate to repurchase, redeem or otherwise acquire any outstanding xpedx Intermediate Equity Interests. Except pursuant to this Agreement, immediately following the Distribution there will be no Contracts or commitments relating to the issuance, sale, transfer or voting of any equity securities or other securities of xpedx Intermediate.
(c) The equity interests of xpedx consist solely of membership interests, all of which will be, as of the Closing, held by xpedx Intermediate. There are no outstanding options, warrants, rights, calls, subscriptions, claims of any character, agreements, obligations, convertible or exchangeable securities, or other commitments, contingent or otherwise, relating to xpedx Intermediate Membership Units or any capital stock equivalent or other nominal interest in xpedx or any of its Subsidiaries which relate to xpedx or any of its Subsidiaries (“ xpedx Equity Interests ”) pursuant to which xpedx or any of its Subsidiaries is or may become obligated to issue shares of its capital stock or other equity interests or any securities convertible into or exchangeable for, or evidencing the right to subscribe for any xpedx Equity Interests. There are no outstanding obligations of xpedx to repurchase, redeem or otherwise acquire any outstanding securities of xpedx Equity Interests. Except pursuant to this Agreement, immediately following the Distribution there will be no Contracts or commitments relating to the issuance, sale, transfer or voting of any equity securities or other securities of xpedx.
Section 5.5 Affiliate Transactions . Except for (a) transactions under or in connection with this Agreement or the other Transaction Agreements, (b) commercial transactions entered into in the ordinary course that are limited to customary purchase, commercial service and supply arrangements on quantity, pricing, payment and other material terms consistent with past practice prior to June 30, 2013 and entered into without any intent to manipulate working capital or the other assets or liabilities of Spinco in a manner favorable to IP, and (c) as set forth in Section 5.5 of the IP/Spinco Disclosure Schedules, as of the date hereof, there are no transactions or Contracts between or among (i) any of the Spinco Entities, on the one hand, and (ii) IP or any of its Subsidiaries (other than the Spinco Entities) or Affiliates, on the other hand, of the type that would be required to be disclosed if Spinco were a company subject to Item 404 of Regulation S-K promulgated under the Securities Act and that will remain in effect or result in Liability for or impose obligations on any Spinco Entity following the Distribution. With respect to the Spinco Business, since June 30, 2013 to the date hereof, other than as required to effect the Transactions described herein or in the other Transaction Agreements or as set forth in Section 5.5 of the IP/Spinco Disclosure Schedules, neither IP nor any of the Spinco Entities has, nor have any of their respective Subsidiaries, entered into or amended any Contract or arrangement with any of their respective Affiliates, except in the ordinary course provided such Contract or arrangement is limited to customary purchase, commercial service and supply arrangements on quantity, pricing, payment and other material terms consistent with past practice prior to June 30, 2013 and entered into without any intent to manipulate working capital or the other assets or liabilities of Spinco in a manner favorable to IP.
 
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Section 5.6 Spinco Financial Statements .
(a) The financial statements delivered to UWWH as Section 5.6(a) of the IP/Spinco Disclosure Schedules consist of:
(i) the Spinco Audited Balance Sheet and the audited balance sheet of the Spinco Business for December 31, 2011, and the related audited Statements of Operations and Comprehensive Income, Statements of Cash Flows and Statements of Changes in Parent Company Equity for the years ended December 31, 2012, December 31, 2011 and December 31, 2010, including the notes thereto, in each case, audited by Deloitte & Touche LLP (collectively, the “ Spinco Audited Financial Statements ”); and
(ii) the unaudited interim balance sheet of the Spinco Business as of June 30, 2013, and the related unaudited interim combined statements of operations, as reported, for the 6 months ended June 30, 2013 and June 30, 2012 (collectively, the “ Spinco Interim Financial Statements ” and together with the Spinco Audited Financial Statements, the “Spinco Financial Statements”).
(b) The Spinco Financial Statements were prepared in accordance with GAAP, consistently applied, and present fairly, in all material respects, the financial position of the Spinco Business as of the dates thereof and the results of its operations and changes in cash flows or other information included therein for the periods or as of the dates then ended, in each case, and subject, where appropriate, to normal year-end audit adjustments, as of the dates thereof and for the periods covered thereby; provided that the Spinco Interim Financial Statements were prepared in accordance with GAAP for internal reporting of the Spinco Business as a division and financial reporting segment of IP, and does not include the type of carve-out adjustments required to prepare the Spinco Audited Financial Statements.
(c) As of the date hereof, neither Spinco nor any of the Spinco Subsidiaries is required to file any form, report, registration statement, prospectus or other document with the SEC.
(d) Undisclosed Liabilities . Except as recorded as a Liability or otherwise reserved against in the Spinco Audited Balance Sheet, the Spinco Entities do not have any Liability of any nature (whether accrued, absolute, contingent or otherwise) other than (i) Liabilities incurred in the ordinary course of business since the date of the Spinco Audited Balance Sheet, (ii) Liabilities incurred under or in accordance with this Agreement or in connection with the Transactions and (iii) Liabilities that have not had or would not reasonably be expected to have, individually or in the aggregate, a Spinco Material Adverse Effect.
Section 5.7 Information to Be Supplied . The Registration Statement (and the Prospectus to be included therein) and the other documents required to be filed by IP or Spinco with the SEC in connection with the Transactions will comply as to form, in all material respects, with the requirements of the Securities Act and together with the information supplied or to be supplied by Spinco or IP (which, for the avoidance of doubt, shall not include information
 
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supplied or to be supplied by UWWH) for inclusion in the Prospectus to be included in the Registration Statement will not, (a) on the date of its filing, (b) in the case of the Registration Statement, at the time the Registration Statement becomes effective under the Securities Act or (c) in the case of the Prospectus, on the date(s) on which the Prospectus is mailed to IP Stockholders, contain any untrue statement of material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading.
Section 5.8 Assets .
(a) Except for the assets referred to in clauses (i)-(xi) of the definition of Excluded Assets in the Distribution Agreement, any Delayed Transfer Assets and the items set forth in Section 5.8(a) of the IP/Spinco Disclosure Schedules, after giving effect to the Transactions (including as permitted pursuant to Section 8.1) and the Transaction Agreements, the Spinco Assets, when taken together with the Transition Services being provided under the Transition Services Agreement, will, at the Effective Time, constitute those assets of IP and its Affiliates necessary to operate the Spinco Business in all material respects as it is currently conducted and as it has been conducted from June 30, 2013 through the date hereof (except with respect to changes in the conduct of the Spinco Business as a result of restructurings of the Spinco Business, and other changes in the ordinary course, in each case not implemented with the intent of manipulating the assets or liabilities that would be transferred to Spinco in connection with the transactions contemplated by the Distribution Agreement).
(b) Except for Delayed Transfer Assets, following the Distribution, Spinco or one of the Spinco Subsidiaries will have good and valid title to, or in the case of leased properties and assets, valid leasehold interests in, all of the tangible Spinco Assets, except where the failure to have such good and valid title or valid leasehold interests would not, individually or in the aggregate, reasonably be expected to be materially adverse to Spinco and the Spinco Subsidiaries, taken as a whole, in each case subject to no Encumbrances, except for (i) Encumbrances expressly noted in the Spinco Financial Statements; (ii) Encumbrances consisting of zoning or planning restrictions, (iii) Encumbrances consisting of easements, permits and other restrictions or limitations on the use of real property or irregularities in title thereto which do not materially detract from the value of, or materially impair the use of, such property as it is presently used in connection with the Spinco Business; (iv) Encumbrances for current Taxes, assessments or governmental charges or levies on property not yet due or which are being contested in good faith and for which appropriate reserves in accordance with GAAP are reflected in the Spinco Financial Statements; (v) mechanic’s, materialmen’s and similar Encumbrances arising in the ordinary course of business or by operation of Law; and (vi) any conditions that are shown on the surveys, title policies, deeds or other such documents previously delivered by IP to UWWH with respect to such real property.
(c) Section 5.8(c) of the IP/Spinco Disclosure Schedules lists the material corporate overhead or administrative support services currently provided to any Spinco Entity and/or the Spinco Business, by IP or any of its Affiliates other than the Spinco Entities.
 
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(d) Neither IP, with respect to the Spinco Business, nor any of the Spinco Entities, is a party to any agreement that will remain in effect following the Closing to purchase any material real property.
(e) Section 5.8(e) of the IP/Spinco Disclosure Schedules sets forth the address of each real property to be owned or leased by Spinco or any of the Spinco Subsidiaries following the Distribution which constitutes all of the real property currently used for the Spinco Business. For purposes of this Section 5.8(e), “real property” shall mean all of the warehouses of the Spinco Business. All buildings, structures and improvements located on such real property are in reasonably good condition and repair, ordinary wear and tear excepted, except if the failure to meet such standards would not materially and adversely impair the use of such real property as currently used by the Spinco Business. Except as set forth in Section 5.8(e) of the IP/Spinco Disclosure Schedules, neither IP, with respect to the Spinco Business, nor any of the Spinco Entities have leased or otherwise granted to any Person the right to use or occupy such real property or any material portion thereof.
Section 5.9 Absence of Certain Changes or Events .
(a) Except (i) as specifically contemplated or permitted by this Agreement or the Transaction Agreements, (ii) as set forth in the Spinco Audited Financial Statements and (iii) for changes resulting from the announcement of this Agreement or the Transactions, since January 1, 2013, (A) the Spinco Business has been conducted, in all material respects, in the ordinary course consistent with past practice, and (B) there has not been any event (including any damage, destruction or loss, whether or not covered by insurance) that has had or would reasonably be expected to have, individually or in the aggregate, a Spinco Material Adverse Effect.
(b) Since June 30, 2013 through the date hereof and except as contemplated by the Distribution Agreement with respect to the Distribution (including the Contributions), none of IP, Spinco or any of their respective Subsidiaries has taken any action or failed to take any action, which action or failure, as the case may be, would constitute a breach of Section 8.1 if taken or not taken, as applicable, after the date hereof without UWWH’s consent after the date hereof.
Section 5.10 Actions; Litigation .
(a) No Action against IP, any of its Subsidiaries, any Spinco Entity, the Spinco Business or any of their respective properties is, or in the past three years has been, pending or, to IP’s Knowledge, threatened, except with respect to such Actions the outcome of which has not had or would not reasonably be expected to have, individually or in the aggregate, a Spinco Material Adverse Effect.
(b) There is no, and during the past three years there has been no, Order against IP, any of its Subsidiaries, any Spinco Entity, the Spinco Business or any of their respective properties or otherwise that has had or would reasonably be expected to have, individually or in the aggregate, a Spinco Material Adverse Effect.
 
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Section 5.11 Compliance with Laws; Certain Licenses .
(a) Except with respect to environmental matters, Tax matters, employee benefits matters, labor and employment matters and Intellectual Property matters (which are addressed in Section 5.12, Section 5.13, Section 5.14, Section 5.15 and Section 5.16, respectively), the Spinco Entities are, or on the Distribution Date will be, and have been since January 1, 2011, in compliance, in all material respects, with all Laws and Orders of any Governmental Authority applicable to any of them or their respective operations, except to the extent that such noncompliance has not had or would not reasonably be expected to have, individually or in the aggregate, a Spinco Material Adverse Effect.
(b) Except to the extent they are Delayed Transfer Assets, the Spinco Entities hold all material Licenses that are required for the conduct of the Spinco Business as currently conducted and are in compliance, with the terms of all such Licenses so held, except, in the case of each of the foregoing, as has not had or would not reasonably be expected to have, individually or in the aggregate, a Spinco Material Adverse Effect.
Section 5.12 Environmental Matters .
(a) Except to the extent they are Delayed Transfer Assets, each Spinco Entity has obtained all material Licenses and other authorizations under Environmental Laws required for the conduct and operation of its business and has for the past five years been and is in compliance, in all material respects, with (i) the terms and conditions contained therein and (ii) with all applicable Environmental Laws, except for such failure to obtain or comply as has not had or would not reasonably be expected to have, individually or in the aggregate, a Spinco Material Adverse Effect.
(b) There are no Environmental Claims pending or, to IP’s Knowledge, threatened against any Spinco Entity or with respect to the Spinco Business which, if adversely resolved, would, individually or in the aggregate, reasonably be expected to have a Spinco Material Adverse Effect.
(c) There is no condition (i) on, at or under any property currently or formerly owned, leased or used by, any IP Entity or any Spinco Entity or (ii) created by, any IP Entity’s or any Spinco Entity’s operations that would reasonably be expected to create a Liability for any Spinco Entity or the Spinco Business under applicable Environmental Laws, which Liability has had or would reasonably be expected to have, individually or in the aggregate, a Spinco Material Adverse Effect.
(d) There are no past or present actions, activities, circumstances, events or incidents with respect to any of the Spinco Entities or any predecessors in interest thereto, including IP or any of its Subsidiaries (including any offsite disposal of, or exposure to, any Hazardous Materials), that would reasonably be expected to form the basis of any Environmental Claim, or any Liability under applicable Environmental Laws, in each case which has had or would reasonably be expected to have, individually or in the aggregate, a Spinco Material Adverse Effect.
 
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(e) IP has made available to UWWH all material reports and documents in its or any of its Subsidiaries’ or any Spinco Entity’s possession, custody or control sufficient to disclose any Environmental Claim or Liability under applicable Environmental Laws relating to the Spinco Business and to any properties or assets currently owned, leased, operated or used by, or the conduct of any business or operations by, any IP Entity, Spinco Entity or any predecessor in interest thereto, which Environmental Claims or Liabilities have had or would reasonably be expected to have, individually or in the aggregate, a Spinco Material Adverse Effect.
Section 5.13 Tax Matters . Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Spinco Material Adverse Effect:
(a) Each Return required to be filed by any Spinco Entity or in respect of the Spinco Business for any Taxable Period has been timely filed and each such Return is true, correct and complete in all respects as it relates to the Spinco Business;
(b) All Taxes required to be paid by any Spinco Entity or in respect of the Spinco Business have been paid (whether or not shown on any Return) and appropriate reserves have been recorded in the Spinco Financial Statements in accordance with GAAP for Taxes not yet due and payable;
(c) There is no audit, examination or other administrative or court Action relating to Taxes (i) of any Spinco Entity or (ii) in respect of the Spinco Business in progress or pending, or threatened in writing, nor has a Taxing authority asserted in writing any deficiency or claim for such Taxes or any adjustment to such Taxes, in each case unless such audit, examination, other administrative or court Action, deficiency or claim has been resolved;
(d) All amounts required to be withheld by a Spinco Entity or in respect of the Spinco Business have been withheld and properly deposited with the appropriate Taxing authority, including in connection with any amounts paid or owing to any employee, independent contractor, creditor, stockholder or other third party;
(e) There are no Encumbrances for Taxes on any of the assets of any Spinco Entity other than Taxes that are not yet due and payable or that are being contested in good faith with adequate reserves maintained in accordance with GAAP as reflected in the Spinco Financial Statements;
(f) No written agreement or other document waiving or extending, or having the effect of waiving or extending, the statute of limitations or the period of assessment or collection of Taxes relating to a Spinco Entity has been filed or entered into with a Taxing authority;
(g) No Spinco Entity (A) is or, within the past six years, has been a member of an affiliated, combined, consolidated, unitary, or similar group for purposes of filing Returns or paying Taxes, other than the group of which IP is the common parent or any group that has never contained any Person other than IP and its Subsidiaries and former Subsidiaries, (B) has any Liability for the Taxes of any Person (other than IP and its Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local, or foreign Tax Law), as a transferee or successor, by contract, or otherwise, in each case as a result of events or transactions occurring within the past six years, (C) is a party to or bound by or has any
 
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obligation under any Tax indemnification, separation, sharing or similar agreement or arrangement other than the Tax Matters Agreement or Tax Receivable Agreement entered into outside of the ordinary course of business and within the past six years or (D) has received or applied for a Tax ruling from the IRS (other than in connection with the Transactions) or entered into any “closing agreement” pursuant to Code Section 7121 (or any predecessor provision or any similar provision of state, local, or foreign Law), in each case, that will affect any Spinco Entity after the Closing;
(h) Other than in connection with the Transactions or as contemplated by the IRS Submissions, no Spinco Entity has constituted either a “distributing corporation” or a “controlled corporation” in a distribution of stock qualifying for tax-free treatment under Section 355 of the Code (i) in the two years prior to the date of this Agreement or (ii) in a distribution that could otherwise constitute part of a “plan” or “series of related transactions” (within the meaning of Section 355(e) of the Code) in connection with the Merger;
(i) No Spinco Entity has engaged in any listed transaction within the meaning of the Code; and
(j) Neither Spinco nor any Spinco Entity will be required to include any item of income in, or exclude any item of deduction from, taxable income for any Taxable Period ending after the Closing Date as a result of (i) any change in method of accounting adopted prior to the Closing for a Taxable Period ending on or prior to the Closing Date requiring an adjustment under Section 481(a) of the Code (or any similar provision of state, local or foreign Tax Law) or (ii) any election under Section 108(i) of the Code.
Section 5.14 Employee Benefits .
(a) Section 5.14(a) of the IP/Spinco Disclosure Schedules lists each Spinco Benefit Plan and Spinco Multiemployer Plan. IP has heretofore delivered or made available to UWWH true and complete copies of each Spinco Benefit Plan, any related trust or other funding vehicle, the most recent annual reports or summaries required to be prepared or filed under ERISA or the Code and the most recent determination letter received from the IRS with respect to each such plan intended to qualify under Section 401 of the Code.
(b) Except as set forth on Section 5.14(b) of the IP/Spinco Disclosure Schedules, (i) no Spinco Group Employee is entitled to material payments or benefits under any Spinco Benefit Plans or otherwise for which any Spinco Entity or the Spinco Entities or the Surviving Corporation and its Subsidiaries will have any Liability as of or following the Effective Time and (ii) the consummation of the Transactions shall not result, by itself or in conjunction with any other event, in the payment or acceleration of any amount, the acceleration of any benefit or any increase in any vested interest or entitlement to any benefit or payment by any Spinco Group Employee other than as would not reasonably be expected to become a Liability of the Surviving Corporation or its Subsidiaries.
(c) The Spinco Entities have no Liability under Title IV or Section 302 of ERISA or under Section 412 or 430 of the Code (including on account of any ERISA Affiliate) that is due and owing as of the date hereof, and to the Knowledge of IP or Spinco, no condition exists that
 
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would reasonably be expected to result in any such Liability becoming a payment obligation of any Spinco Entity. Except as set forth on Section 5.14(c) of the IP/Spinco Disclosure Schedules, no Spinco Benefit Plan: (i) is a “defined benefit plan” as defined in Section 3(35) of ERISA or any other plan subject to the funding requirements of Section 412 of the Code or Section 302 of Title IV of ERISA or (ii) provides for retiree or post-employment medical, life insurance or other welfare-type benefits (other than health continuation coverage required by Section 4980B of the Code or similar state Law).
(d) Except as has not had or would not reasonably be expected to have, individually or in the aggregate, a Spinco Material Adverse Effect, each Spinco Benefit Plan has been established, funded, operated and administered in accordance with its terms, the terms of any related contracts or agreements and applicable Law, including, but not limited to, ERISA, the Code and the Laws of any other Governmental Authority. Except as has not had or would not reasonably be expected to have, individually or in the aggregate, a Spinco Material Adverse Effect, (i) there have been no non-exempt “prohibited transactions” (as defined in Section 406 of ERISA or Section 4975 of the Code) with respect to any Spinco Benefit Plan, (ii) Spinco or, to the Knowledge of IP or Spinco, any other “fiduciary” (as defined in Section 3(21) of ERISA) has any Liability for breach of fiduciary duty or any other failure to act or comply in connection with a Spinco Benefit Plan and (iii) no Action with respect to any Spinco Benefit Plan or Spinco Multiemployer Plan (other than routine claims for benefits) is pending or threatened.
(e) Each Spinco Benefit Plan that is a “nonqualified deferred compensation plan” (as defined under Section 409A(d)(1) of the Code) (i) has been operated and administered in good faith compliance with Section 409A of the Code prior to January 1, 2009 and (ii) has been operated and administered in documentary compliance with Section 409A of the Code and the Treasury Regulations and other official guidance promulgated thereunder on or after January 1, 2009. Except as set forth on Section 5.14(e) of the IP/Spinco Disclosure Schedules, (i) except as would not reasonably be expected to become a Liability of the Surviving Corporation or its Subsidiaries, the Transactions will not (either solely as a result thereof or as a result of such Transactions in conjunction with any other event) (A) entitle any Spinco Group Employee to severance pay or any other payment or (B) result in any payment becoming due, accelerate the time of payment or vesting of benefits, or increase the amount of compensation due to any Spinco Group Employee, and (ii) no amount paid or payable (whether in cash, in property, or in the form of benefits) in connection with the Transactions (either solely as a result thereof or as a result of such Transactions in conjunction with any other event) could be an “excess parachute payment” within the meaning of section 280G of the Code, or would constitute an “excess parachute payment” if such amounts were subject to the provisions of section 280G of the Code. Neither Spinco nor any Spinco Entity has any indemnity obligation to any Spinco Group Employee for any Taxes imposed under Section 4999 or 409A of the Code.
(f) Except as set forth on Section 5.14(f) of the IP/Spinco Disclosure Schedules, (i) all contributions and premiums required to have been paid by IP, its Subsidiaries (including Spinco), or its ERISA Affiliates to any Spinco Multiemployer Plan under the terms of any collective bargaining agreement or applicable Law have been paid within the time prescribed by such agreement or applicable Law except for any failures that are not material and (ii) none of IP, its Subsidiaries (including Spinco) or its ERISA Affiliates has any outstanding Liability in connection with a complete or partial withdrawal from any Spinco Multiemployer Plan as of the date of this Agreement, and to the Knowledge of IP, no such Liability is expected to be incurred by IP, its Subsidiaries (including Spinco) or its ERISA Affiliates prior to the Closing Date.
 
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Section 5.15 Labor and Employment Matters .
(a) No Spinco Entity is a party to, or bound by, and no Spinco Group Employee is subject to, any (A) collective bargaining agreement (other than those set forth on Section 5.15(a) of the IP/Spinco Disclosure Schedules) or (B) other Contract with a labor union, labor organization, works council or trade association, nor is any such Contract presently being negotiated;
(b) Except as has not had, and would not reasonably be expected to have, individually or in the aggregate, a Spinco Material Adverse Effect, with respect to any Spinco Group Employee, no Spinco Entity or IP Entity is, or during the prior two year period has been, the subject of any Action asserting that such Spinco Entity or IP Entity, respectively, has committed an unfair labor practice or seeking to compel it to bargain with any labor organization as to wages or conditions of employment, nor, to IP’s Knowledge, is any such Action threatened; and
(c) Except as has not had, and would not reasonably be expected to have, individually or in the aggregate, a Spinco Material Adverse Effect, with respect to the Spinco Group Employees, the Spinco Entities and the IP Entities are in compliance, in all material respects, with their obligations pursuant to the Worker Adjustment and Retraining Notification Act of 1988, as amended, and all similar Laws (“ WARN ”) and all other notification and bargaining obligations arising under any collective bargaining agreement, Law or otherwise.
(d) No strike, work stoppage, lockout or other material labor dispute involving any Spinco Entity or any Spinco Group Employee has occurred during the prior two year period, is pending or, to IP’s Knowledge, threatened.
(e) To the Knowledge of IP, there have been no petitions or campaigns being conducted to solicit cards initiated by any labor organization to represent any Spinco Group Employees not currently represented by a labor organization or employee representative within the past three years, nor, to IP’s Knowledge, are there any campaigns being conducted to solicit cards from employees to authorize representation by any labor organization.
(f) With respect to the Spinco Group Employees, each of IP, Spinco and their respective Subsidiaries is in material compliance with all applicable Laws and Contracts relating to employment practices, terms and conditions of employment, and the employment of former, current and prospective employees, independent contractors and “leased employees” (within the meaning of Section 414(n) of the Code), including all such Laws and Contracts relating to wages, hours, collective bargaining, employment discrimination, immigration, disability, civil rights, human rights, fair labor standards, occupational safety and health, workers’ compensation, pay equity and wrongful discharge, except as has not had or would not reasonably be expected to have, individually or in the aggregate, a Spinco Material Adverse Effect.
(g) Except as has not had or would not reasonably be expected to have, individually or in the aggregate, a Spinco Material Adverse Effect, no IP Entity or Spinco Entity is in material breach of any collective bargaining agreement that applies to any Spinco Group Employee nor, to IP’s Knowledge, is any labor union or labor organization that is party to any such collective bargaining agreement in material default thereunder.
 
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(h) To the Knowledge of IP, no Spinco Group Employee that is an executive officer or Key Spinco Group Employee has expressed to IP or Spinco any present intention to terminate his/her employment with IP or any Spinco Entity (other than, for the avoidance of doubt, those employees who shall terminate employment with IP in connection with the Transactions).
Section 5.16 Intellectual Property .
(a) Set forth on Section 5.16(a) of the IP/Spinco Disclosure Schedules is a list of all patents, pending patent applications, registrations and applications for registration of Intellectual Property and Internet domain names owned or controlled by the IP Entities or the Spinco Entities to carry on the Spinco Business as currently conducted. Except as set forth on Section 5.16(a) of the IP/Spinco Disclosure Schedules, in the conduct of the Spinco Business as currently conducted, no Spinco Entity uses any Intellectual Property owned or controlled by IP or its Affiliates (other than the Spinco Entities).
(b) Following the Separation, the Spinco Entities will own all right, title and interest in and to the Spinco Intellectual Property free of all Encumbrances, except for non-exclusive licenses to Spinco Intellectual Property granted in the ordinary course of business.
(c) Except as has not had, and would not reasonably be expected to have, individually or in the aggregate, a Spinco Material Adverse Effect, no Action or Order is pending, nor to IP’s Knowledge, threatened, (i) alleging that the operation of the Spinco Business, infringes, misappropriates, dilutes or otherwise violates (“ Infringes ”) the Intellectual Property rights of third parties or (ii) challenging the ownership, validity, patentability, enforceability, registrability or use of any Spinco Intellectual Property. Except as has not had, and would not reasonably be expected to have, individually or in the aggregate, a Spinco Material Adverse Effect, with respect to the Spinco Business, neither IP nor any of its Affiliates (including any Spinco Entity) is subject to any outstanding Order or other dispute involving any third-party Intellectual Property and to IP’s Knowledge, no such Order or other dispute is threatened.
(d) Except as has not had, and would not reasonably be expected to have, individually or in the aggregate, a Spinco Material Adverse Effect, to IP’s Knowledge, (i) the operation of the Spinco Business as currently conducted does not Infringe the Intellectual Property rights of another Person and (ii) no Person is Infringing the Spinco Intellectual Property.
(e) IP and its Affiliates (including the Spinco Entities) have taken commercially reasonable actions to maintain the Spinco Intellectual Property and to protect the confidentiality of the trade secrets owned by any of them, in each case that are material to the conduct of the Spinco Business as presently conducted. To IP’s Knowledge, except as has not had, and would not reasonably be expected to have, individually or in the aggregate, a Spinco Material Adverse Effect, no Spinco Intellectual Property that constitutes a trade secret has been disclosed to any third party other than pursuant to a valid written agreement to protect the confidentiality of such trade secret.
 
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Section 5.17 Material Contracts .
(a) Section 5.17(a) of the IP/Spinco Disclosure Schedules sets forth each of the following with respect to the Spinco Business that is in effect as of the date hereof:
(i) any non-competition agreements or any other Contract that materially limits or will materially limit any of the IP Entities or the Spinco Entities from engaging in the Spinco Business or contains exclusivity, non-solicitation or “most favored nation” provisions that materially limit or would materially limit any of the IP Entities or the Spinco Entities from engaging in the Spinco Business;
(ii) any Contract with respect to any partnerships, joint ventures or strategic alliances material to the Spinco Business;
(iii) any Contract pursuant to which any Spinco Entity has or will incur Indebtedness for borrowed money or other material Indebtedness (other than deferred revenue);
(iv) any Contract that provides or will provide for annual payments in excess of $30 million by or to the Spinco Business (other than leases set forth on Section 5.8(e) of the IP/Spinco Disclosure Schedules);
(v) any Contract that provides for annual payments in excess of $30 million by or to any IP Entity or Spinco Entity and contains a “change of control” provision (other than leases set forth on Section 5.8(e) of the IP/Spinco Disclosure Schedules);
(vi) any Contract that is a settlement, conciliation or similar agreement with any Governmental Authority or pursuant to which any Spinco Entity will be required after the date of this Agreement to pay consideration in excess of $1 million;
(vii) any Contract for the employment or engagement of any Spinco Group Employee or other individual on a full-time, part-time, or consulting basis and providing for annual compensation in excess of $250,000 but excluding offer letters with non-binding compensation terms that (A) permit discretionary periodic adjustments to the base rate of compensation and incentive compensation payable thereunder, (B) do not commit to any severance obligations, other than under the generally applicable IP severance policy and (C) do not contain any other material elements of compensation or benefits thereunder other than participation in the applicable IP benefits programs on the same terms as other similarly situated employees;
(viii) any Contract that limits or otherwise restricts the ability of Spinco or any of its Subsidiaries to pay dividends or make distributions to Spinco Stockholders; or
(ix) any license agreement or Contract that is material and primarily related to the Spinco Business under which any IP Entity or Spinco Entity is a licensee or licensor of any Intellectual Property or that is a settlement, royalty, covenant not to sue, consent, concurrent use or other agreement with respect to any Intellectual Property that is material and primarily related to the Spinco Business (in each case other than non-disclosure agreements entered into in the ordinary course of business and licenses and related service agreements for any item of commercially available, unmodified software with an annualized license fee of less than $2.5 million).
 
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The Contracts required to be set forth on Section 5.17(a) of the IP/Spinco Disclosure Schedules, the collective bargaining agreements set forth on Section 5.15(a) of the IP/Spinco Disclosure Schedules, (and any other such Contracts entered into in the ordinary course of business prior to the Closing) and real property leases for facilities in excess of 200,000 rentable square feet (it being understood that such leases as are in effect as of the date hereof are set forth on Section 5.8(e) of the IP/Spinco Disclosure Schedules and are marked with an asterisk) are referred to herein as the “ Spinco Material Contracts ”. IP has provided UWWH with a correct and complete copy of all Spinco Material Contracts in effect as of the date hereof.
(b) Except as has not had, and would not reasonably be expected to have, individually or in the aggregate, a Spinco Material Adverse Effect, each of the Spinco Material Contracts are valid and in full force and effect, against the IP Entity or Spinco Entity which is a party thereto (or will become a party thereto in connection with the Transactions) and, to IP’s Knowledge, the counterparty thereto, and constitute legal, valid and binding obligations of the IP Entity or Spinco Entity which is party thereto and, to IP’s Knowledge, the counterparty thereto, enforceable by the IP Entity or Spinco Entity which is a party thereto in accordance with their terms except to the extent that such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or other similar Laws, now or hereinafter in effect, relating to creditors’ rights generally and general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law) or (ii) Laws relating to the enforcement of employee restrictive covenants.
(c) Neither any IP Entity nor any Spinco Entity is in material breach or default under (and no event has occurred, and neither any IP Entity nor any Spinco Entity has violated any provisions of, or committed or failed to perform any act that, with notice or the passage of time or both would constitute a material breach or default under) any Spinco Material Contract nor, to IP’s Knowledge, is any other party to any Spinco Material Contract in material default thereunder, except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Spinco Material Adverse Effect.
Section 5.18 Board Approvals; Votes Required .
(a) Board Approvals . Each of the IP Board of Directors, the Spinco Board of Directors, the xpedx Intermediate managing member and the xpedx managing member, as applicable, has, in each case, (i) determined that this Agreement, the Transaction Agreements and the Transactions (including the Merger and the Subsidiary Merger), taken together, are advisable, fair and in the best interest of IP, Spinco, xpedx Intermediate and xpedx, respectively, and their respective stockholders or unitholders, as applicable, and (ii) approved this Agreement, the Transaction Agreements and the Transactions (including the Merger and the Subsidiary Merger). The Spinco Board of Directors has approved and declared advisable the issuance of Spinco Common Stock in connection with the Distribution and the Merger.
 
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(b) Votes Required . The only approvals or consents of the holders of any class or series of capital stock necessary to adopt this Agreement and the Transaction Agreements and to approve the Merger and the Transactions is the affirmative vote of IP, as the sole stockholder of Spinco (the “ Spinco Stockholder Approval ”), and the affirmative vote of IP, as the sole member of xpedx Intermediate (“the “ xpedx Intermediate Member Approval ”), which Spinco and xpedx Intermediate shall obtain by written consent pursuant to Section 228 of the DGCL and Section 18-302 of the DLLCA, as applicable, on the date hereof immediately following the execution and delivery of this Agreement. Upon such adoption, the approval of the holders of Spinco Common Stock after the Distribution Date will not be required to effect the Transactions. The approval of IP Stockholders is not required to effect the Transactions, including the issuance of shares of Spinco Common Stock in the Merger, and, other than as set forth in this Section 5.18(b), no other corporate or other proceedings are necessary to adopt or approve this Agreement, the Transaction Agreements or to consummate the Merger or the Transactions.
Section 5.19 Status of New Spinco Common Stock . Subject to the approvals set forth in Section 5.18 above, the Spinco Common Stock being issued at the Effective Time shall have been duly authorized by all necessary corporate action on part of IP and Spinco and such Spinco Common Stock shall have been validly issued and, assuming payment therefore has been made, will be fully paid and non-assessable, and the issuance of such Spinco Common Stock will not be subject to preemptive rights.
Section 5.20 Operations of Spinco . Spinco is a direct, wholly-owned Subsidiary of IP and shall remain a direct wholly-owned Subsidiary of IP until the Distribution.
Section 5.21 Insurance of Spinco . Spinco is insured under insurance policies, Contracts and self-insurance programs, including policies of fire and casualty, liability and other forms of insurance and/or insurance arrangements, in such amounts, with such deductibles and against such risks and losses as are, in each of IP’s and Spinco’s judgment, reasonable for the Spinco Business and the Spinco Entities. Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Spinco Material Adverse Effect, all such policies are in full force and effect, no invoiced premiums are overdue for payment and no notice of cancellation or termination has been received by IP or Spinco or any of their respective Subsidiaries with respect to any such policy which has not been replaced on substantially similar terms prior to the date of such cancellation or termination.
Section 5.22 Brokers or Finders; Transaction Bonuses . Except as set forth in Section 5.22 of the IP/Spinco Disclosure Schedules, neither IP, its Subsidiaries nor any of the Spinco Entities has employed any investment banker, broker, finder or intermediary in connection with the Transactions who might be entitled to any fee or any commission in connection with or upon consummation of the Transactions, and any such fee or commission, and any costs or expenses incurred in connection therewith shall be borne solely by IP. Except as set forth in Section 5.22 of the IP/Spinco Disclosure Schedules, there are no special bonuses or other similar compensation payable to any Spinco Group Employee or any other employee of the Spinco Entities in connection with the Transactions that would reasonably be expected to become a Liability of the Surviving Corporation or its Subsidiaries. IP has provided to UWWH true and complete copies of any agreements set forth in Section 5.22 of the IP/Spinco Disclosure Schedules to the extent any Spinco Entity shall have or will have any Liability thereunder.
 
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Section 5.23 Bank Accounts . Section 5.23 of the IP/Spinco Disclosure Schedules sets forth a true and complete list showing the account name and bank ID of each account, credit line or safety deposit box primarily related to the Spinco Business and the names of responsible Persons authorized to draw thereof or, with respect to safety deposit boxes, have access thereto.
ARTICLE VI
IREPRESENTATIONS AND WARRANTIES OF THE UWWH STOCKHOLDER, UWWH AND UNISOURCE
Except as set forth in the UWWH Disclosure Schedules (regardless of whether or not the relevant Section hereof refers to the UWWH Disclosure Schedules), it being understood and agreed that each disclosure set forth in the UWWH Disclosure Schedules shall qualify or modify each of the representations and warranties set forth in this ARTICLE VI to the extent the applicability of the disclosure to such representation and warranty is reasonably apparent from the text of the disclosure made, the UWWH Stockholder, UWWH and Unisource hereby represent and warrant to IP and Spinco as follows:
Section 6.1 Due Organization, Good Standing, Corporate Power and Subsidiaries .
(a) Each of UWWH and Unisource is a corporation duly organized, validly existing and in good standing under the Laws of the State of Delaware. UWWH and its Subsidiaries have all requisite corporate power and authority to own, lease and operate their properties and assets and to carry on its business as it is now being conducted. Each of UWWH and its Subsidiaries is duly qualified or licensed to do business and is in good standing (with respect to jurisdictions which recognize such concept) in each jurisdiction in which the property owned, leased or operated or the nature of the business conducted by it makes such qualification or licensing necessary, except in such jurisdictions where the failure to be so qualified or licensed or to be in good standing has not had or would not reasonably be expected to have, individually or in the aggregate, a UWWH Material Adverse Effect.
(b) All of the outstanding shares of capital stock of, or other equity interests in, each UWWH Subsidiary have been duly authorized and validly issued and are fully paid and non-assessable and are owned directly or indirectly by UWWH, free and clear of all liens other than pursuant to the Unisource Credit Facility.
Section 6.2 Authorization and Validity of Agreement . Each of UWWH and Unisource has all necessary corporate power and authority to execute and deliver this Agreement and each Transaction Agreement to which it is a party, to perform its obligations hereunder and thereunder and, subject to the receipt of the UWWH Stockholder Approval and the Unisource Stockholder Approval, to consummate the Transactions. The execution, delivery and performance of this Agreement and the Transaction Agreements by UWWH and Unisource and the consummation by UWWH and Unisource of the Transactions, have been duly and validly authorized and unanimously approved by the UWWH Board of Directors and the Unisource Board of Directors, and no other corporate or other action on the part of UWWH or Unisource is necessary to authorize the execution, delivery and performance of this Agreement and the
 
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Transaction Agreements or the consummation of the Transactions (other than the UWWH Stockholder Approval and the Unisource Stockholder Approval). This Agreement and the Transaction Agreements have been duly and validly executed and delivered by each of UWWH and Unisource and, to the extent it is a party thereto, assuming due and valid authorization, execution and delivery hereof and thereof by each of IP, Spinco, xpedx Intermediate and xpedx, as applicable, each is a valid and binding obligation of each of UWWH and Unisource and enforceable against each of UWWH and Unisource in accordance with their terms, except to the extent that its enforceability may be subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar Laws, now or hereinafter in effect, affecting the enforcement of creditors’ rights generally and by general equitable principles.
Section 6.3 Corporate Authority Relative to this Agreement; No Violation . Assuming (a) the filings required under the HSR Act are made and the waiting periods thereunder (if applicable) have been terminated or expired, (b) the approvals set forth in Section 6.3 of the UWWH Disclosure Schedules have been obtained, (c) the applicable requirements of the Securities Act and the Exchange Act are met, (d) the requirements under any applicable state securities or blue sky Laws are met and (e) the filing of the Certificate of Merger and other appropriate Merger documents and Subsidiary Merger documents (including the certificate of merger evidencing such Subsidiary Merger), if any, as required by the DGCL and the DLLCA, is made, the execution and delivery of this Agreement and the Transaction Agreements by UWWH and Unisource, as applicable, and the consummation by UWWH and Unisource of the Transactions, do not and will not: (w) conflict with or result in a breach of any provision of their respective certificates of incorporation or bylaws; (x) violate or conflict in any material respect with any Law or Order of any Governmental Authority applicable to UWWH or Unisource; (y) require any filing with, or License, consent or approval of, or the giving of any notice to, any Governmental Authority, the failure of which to file or receive would be material; or (z) result in a violation or breach of, constitute (with or without due notice or lapse of time or both) a default under, or give rise to any right of termination, cancellation or acceleration, or result in the creation of any Encumbrance upon any of the properties or assets of UWWH or any of its Subsidiaries or give rise to any obligation, right of termination, cancellation, acceleration or increase of any obligation or a loss of a material benefit under, any of the terms, conditions or provisions of any UWWH Material Contract to which UWWH or Unisource is a party, excluding in the case of clause (z) above, conflicts, violations, breaches, defaults, rights of payment and reimbursement, terminations, modifications, accelerations and creations and impositions of Encumbrances which have not had or would not reasonably be expected to have, individually or in the aggregate, a UWWH Material Adverse Effect.
Section 6.4 Capitalization .
(a) The authorized capital stock of UWWH consists solely of 1,000 shares of capital stock, all of which shares are classified and designated as UWWH Common Stock. 1,000 shares of UWWH Common Stock are issued and outstanding. All of the issued and outstanding shares of UWWH Common Stock have been duly authorized and validly issued and are fully paid and non-assessable. There are no outstanding options, warrants, rights, calls, subscriptions, claims of any character, agreements, obligations, convertible or exchangeable securities, or other commitments, contingent or otherwise, relating to UWWH Common Stock or any capital stock equivalent or other nominal interest in UWWH or any of its Subsidiaries which relate to UWWH
 
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(“ UWWH Equity Interests ”) pursuant to which UWWH or any of its Subsidiaries is or may become obligated to issue shares of its capital stock or other equity interests or any securities convertible into or exchangeable for, or evidencing the right to subscribe for, any UWWH Equity Interests. There are no outstanding obligations of UWWH to repurchase, redeem or otherwise acquire any outstanding securities of UWWH Equity Interests. There are no Contracts or commitments to which UWWH is a party relating to the issuance, sale, transfer or voting of any equity securities or other securities of UWWH.
(b) The authorized capital stock of Unisource consists solely of 1,000 shares capital stock, all of which are classified and designated as Unisource Common Stock. 100 shares of Unisource Common Stock are issued and outstanding. All of the issued and outstanding shares of Unisource Common Stock have been duly authorized and validly issued and are fully paid and non-assessable. Except for shares issuable pursuant to this Agreement, there are no outstanding options, warrants, rights, calls, subscriptions, claims of any character, agreements, obligations, convertible or exchangeable securities, or other commitments, contingent or otherwise, relating to Unisource Common Stock or any capital stock equivalent or other nominal interest in Unisource or any of its Subsidiaries which relate to Unisource (“ Unisource Equity Interests ”) pursuant to which Unisource or any of its Subsidiaries is or may become obligated to issue shares of its capital stock or other equity interests or any securities convertible into or exchangeable for, or evidencing the right to subscribe for, any Unisource Equity Interests. There are no outstanding obligations of Unisource to repurchase, redeem or otherwise acquire any outstanding securities of Unisource Equity Interests. There are no Contracts or commitments to which Unisource is a party relating to the issuance, sale, transfer or voting of any equity securities or other securities of Unisource.
Section 6.5 Affiliate Transactions . Except for (a) transactions under or in connection with this Agreement or the other Transaction Agreements, (b) commercial transactions entered into in the ordinary course that are limited to customary purchase, commercial service and supply arrangements on quantity, pricing, payment and other material terms consistent with past practice prior to June 30, 2013 and entered into without any intent to manipulate working capital or the other assets or liabilities of UWWH in a manner favorable to the UWWH Stockholder and (c) as set forth in Section 6.5 of the UWWH Disclosure Schedules, as of the date hereof, there are no transactions or Contracts between or among (i) UWWH or any of its Subsidiaries, on the one hand, and (ii) UWWH’s Affiliates (other than wholly-owned Subsidiaries of UWWH, but including, for the avoidance of doubt, GP and its Affiliates), on the other hand, of the type that would be required to be disclosed if UWWH were a company subject to Item 404 of Regulation S-K promulgated under the Securities Act or result in Liability for or impose obligations on UWWH or any of its Subsidiaries.
Section 6.6 UWWH Financial Statements .
(a) The financial statements delivered to IP and Spinco as Section 6.6(a) of the UWWH Disclosure Schedules consist of:
(i) the audited balance sheets of the business of UWWH as of December 29, 2012 (the “ UWWH Audited Balance Sheet ”), December 31, 2011 and January 1, 2011, and the related audited statements of operations, cash flows and stockholder’s equity for the years ended December 29, 2012, December 31, 2011 and January 1, 2011, including the notes thereto, in each case, audited by PricewaterhouseCoopers LLP (collectively, the “ UWWH Audited Financial Statements ”); and
 
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(ii) the unaudited interim balance sheet of the business of UWWH as of June 30, 2013, and the related unaudited interim consolidated statements of operations for the 6 months ended June 30, 2013 and June 30, 2012 (collectively, the “ UWWH Interim Financial Statements ” and together with the UWWH Audited Financial Statements, the “ UWWH Financial Statements ”).
(b) The UWWH Financial Statements were prepared in accordance with GAAP, consistently applied, and present fairly, in all material respects, the financial position of the business of UWWH as of the dates thereof and the results of its operations and changes in cash flows or other information included therein for the periods or as of the dates then ended, in each case, and subject, where appropriate, to normal year-end audit adjustments, as of the dates thereof and for the periods covered thereby.
(c) As of the date hereof, neither UWWH nor any of its Subsidiaries is required to file any form, report, registration statement, prospectus or other document with the SEC.
(d) Undisclosed Liabilities . Except as recorded as a Liability or otherwise reserved against in the UWWH Audited Balance Sheet, UWWH and its Subsidiaries do not have any Liability of any nature (whether accrued, absolute, contingent or otherwise) other than (i) Liabilities incurred in the ordinary course of business since the date of the UWWH Audited Balance Sheet, (ii) Liabilities incurred under or in accordance with this Agreement or in connection with the Transactions and (iii) Liabilities that have not had or would not reasonably be expected to have, individually or in the aggregate, a UWWH Material Adverse Effect.
Section 6.7 Information to Be Supplied . The information supplied or to be supplied by UWWH for inclusion in the Prospectus to be included in the Registration Statement will not, (a) on the date of its filing, (b) in the case of the Registration Statement, at the time the Registration Statement becomes effective under the Securities Act or (c) in the case of the Prospectus, on the date(s) on which the Prospectus is mailed to IP Stockholders, contain any untrue statement of material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading.
Section 6.8 Assets .
(a) UWWH and its Subsidiaries have good and valid title to, or in the case of leased properties and assets, valid leasehold interests in, all of the tangible assets of UWWH and its Subsidiaries, except where the failure to have such good and valid title or valid leasehold interests would not, individually or in the aggregate, reasonably be expected to be materially adverse to UWWH and its Subsidiaries, taken as a whole, in each case subject to no Encumbrances, except for (i) Encumbrances expressly noted in the UWWH Financial Statements; (ii) Encumbrances consisting of zoning or planning restrictions, (iii) Encumbrances consisting of easements, permits and other restrictions or limitations on the use of real property
 
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or irregularities in title thereto which do not materially detract from the value of, or materially impair the use of, such property as it is presently used in connection with the business of UWWH; (iv) Encumbrances for current Taxes, assessments or governmental charges or levies on property not yet due or which are being contested in good faith and for which appropriate reserves in accordance with GAAP are reflected in the UWWH Financial Statements; (v) mechanic’s, materialmen’s and similar Encumbrances arising in the ordinary course of business or by operation of Law; and (vi) any conditions that are shown on the surveys, title policies, deeds or other such documents previously delivered by UWWH to IP and Spinco with respect to such real property.
(b) Neither UWWH nor any of its Subsidiaries is a party to any agreement that will remain in effect following the Closing to purchase any material real property.
(c) Section 6.8(c) of the UWWH Disclosure Schedules sets forth the address of each real property to be owned or leased by UWWH or any of its Subsidiaries which constitutes all of the real property currently used for the business of UWWH and its Subsidiaries. All buildings, structures and improvements located on such real property are in reasonably good condition and repair, ordinary wear and tear excepted, except if the failure to meet such standards would not materially and adversely impair the use of such real property as currently used by the business of UWWH and its Subsidiaries. For purposes of this Section 6.8(c), “real property” shall mean all of the warehouses of the business of UWWH and its Subsidiaries. Except as set forth in Section 6.8(c) of the UWWH Disclosure Schedules, neither UWWH nor its Subsidiaries have leased or otherwise granted to any Person the right to use or occupy such real property or any material portion thereof.
Section 6.9 Absence of Certain Changes or Events .
(a) Except (i) as specifically contemplated or permitted by this Agreement or the Transaction Agreements, (ii) as set forth in the UWWH Audited Financial Statements and (iii) for changes resulting from the announcement of this Agreement or the Transactions, since January 1, 2013, (A) the business of UWWH has been conducted, in all material respects, in the ordinary course consistent with past practice, and (B) there has not been any event (including any damage, destruction or loss, whether or not covered by insurance) that has had or would reasonably be expected to have, individually or in the aggregate, a UWWH Material Adverse Effect.
(b) Since June 30, 2013 through the date hereof and except with respect to the UWWH Reorganization, UWWH and its Subsidiaries have not taken any action or failed to take any action, which action or failure, as the case may be, would constitute a breach of Section 8.2 if taken or not taken, as applicable, after the date hereof without IP’s consent after the date hereof.
Section 6.10 Actions; Litigation .
(a) No Action against UWWH, any of its Subsidiaries, their business or any of their respective properties is, or in the past three years has been, pending or, to UWWH’s Knowledge, threatened, except with respect to such Actions the outcome of which has not had or would not reasonably be expected to have, individually or in the aggregate, a UWWH Material Adverse Effect.
 
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(b) There is no, and during the past three years there has been no, Order against UWWH, any of its Subsidiaries, its business or its properties or otherwise that has had or would reasonably be expected to have, individually or in the aggregate, a UWWH Material Adverse Effect.
Section 6.11 Compliance with Laws; Certain Licenses .
(a) Except with respect to environmental matters, Tax matters, employee benefits matters, labor and employment matters and Intellectual Property matters (which are addressed in Section 6.12, Section 6.13, Section 6.14, Section 6.15 and Section 6.16, respectively), UWWH and its Subsidiaries are, and have been since January 1, 2011, in compliance, in all material respects, with all Laws and Orders of any Governmental Authority applicable to any of them or their respective operations, except to the extent that such noncompliance has not had or would not reasonably be expected to have, individually or in the aggregate, a UWWH Material Adverse Effect.
(b) UWWH and its Subsidiaries hold all material Licenses that are required for the conduct of their business as currently conducted and are in compliance with the terms of all such Licenses so held, except, in the case of each of the foregoing, as has not had or would not reasonably be expected to have, individually or in the aggregate, a UWWH Material Adverse Effect.
Section 6.12 Environmental Matters .
(a) Each of UWWH and its Subsidiaries has obtained all material Licenses and other authorizations under Environmental Laws required for the conduct and operation of its business and has for the past five years been and is in compliance, in all material respects, with (i) the terms and conditions contained therein and (ii) with all applicable Environmental Laws, except for such failure to obtain or comply as has not had or would not reasonably be expected to have, individually or in the aggregate, a UWWH Material Adverse Effect.
(b) There are no Environmental Claims pending or, to UWWH’s Knowledge, threatened against UWWH or any of its Subsidiaries which, if adversely resolved, would, individually or in the aggregate, reasonably be expected to have a UWWH Material Adverse Effect.
(c) There is no condition (i) on, at or under any property currently or formerly owned, leased or used by UWWH or any of its Subsidiaries or (ii) created by UWWH’s or any of its Subsidiary’s operations that would reasonably be expected to create a Liability for UWWH or any of its Subsidiaries or the business of UWWH under applicable Environmental Laws, which Liability has had or would reasonably be expected to have, individually or in the aggregate, a UWWH Material Adverse Effect.
 
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(d) There are no past or present actions, activities, circumstances, events or incidents with respect to UWWH or any of its Subsidiaries or any predecessors in interest thereto (including any offsite disposal of, or exposure to, any Hazardous Materials) that would reasonably be expected to form the basis of any Environmental Claim, or any Liability under applicable Environmental Laws, in each case which has had or would reasonably be expected to have, individually or in the aggregate, a UWWH Material Adverse Effect.
(e) UWWH has made available to IP all material reports and documents in its or any of its Subsidiaries’ possession, custody or control sufficient to disclose any Environmental Claim or Liability under applicable Environmental Laws relating to any properties or assets currently or formerly owned, leased, operated or used by, or the conduct of any business or operations by, UWWH, any of its Subsidiaries or any predecessor in interest thereto, which Environmental Claims or Liabilities have had or would reasonably be expected to have, individually or in the aggregate, a UWWH Material Adverse Effect.
Section 6.13 Tax Matters. Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a UWWH Material Adverse Effect:
(a) Each Return required to be filed by any UWWH Entity has been timely filed and each such Return is true, correct and complete in all respects;
(b) All Taxes required to be paid by any UWWH Entity have been paid (whether or not shown on any Return) and appropriate reserves have been recorded in the UWWH Financial Statements in accordance with GAAP for Taxes not yet due and payable;
(c) There is no audit, examination or other administrative or court Action relating to Taxes of any UWWH Entity in progress or pending, or threatened in writing, nor has a Taxing authority asserted in writing any deficiency or claim for such Taxes or any adjustment to such Taxes, in each case unless such audit, examination, other administrative or court Action, deficiency or claim has been resolved;
(d) All amounts required to be withheld by a UWWH Entity have been withheld and properly deposited with the appropriate Taxing authority, including in connection with any amounts paid or owing to any employee, independent contractor, creditor, stockholder or other third party;
(e) There are no Encumbrances for Taxes on any of the assets of any UWWH Entity other than Taxes that are not yet due and payable or that are being contested in good faith with adequate reserves maintained in accordance with GAAP as reflected in the UWWH Financial Statements;
(f) No written agreement or other document waiving or extending, or having the effect of waiving or extending, the statute of limitations or the period of assessment or collection of Taxes has been filed or entered into with a Taxing authority;
(g) No UWWH Entity (A) is or, within the past six years, has been a member of an affiliated, combined, consolidated, unitary, or similar group for purposes of filing Returns or paying Taxes, other than the group of which UWWH is the common parent or any group that has never contained any Person other than UWWH and its Subsidiaries and former Subsidiaries, (B) has any Liability for the Taxes of any Person (other than UWWH and its Subsidiaries) under
 
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Treasury Regulation Section 1.1502-6 (or any similar provision of state, local, or foreign Tax Law), as a transferee or successor, by contract, or otherwise, in each case as a result of events or transactions occurring within the past six years, (C) is a party to or bound by or has any obligation under any Tax indemnification, separation, sharing or similar agreement or arrangement other than the Tax Matters Agreement or Tax Receivable Agreement entered into outside of the ordinary course of business and within the past six years or (D) has received or applied for a Tax ruling from the IRS (other than in connection with the Distribution or Merger) or entered into any “closing agreement” pursuant to Code Section 7121 (or any predecessor provision or any similar provision of state, local, or foreign Law), in each case, that will affect any UWWH Entity after the Closing;
(h) No UWWH Entity has constituted either a “distributing corporation” or a “controlled corporation” in a distribution of stock qualifying for tax-free treatment under Section 355 of the Code (i) in the two years prior to the date of this Agreement or (ii) in a distribution that could otherwise constitute part of a “plan” or “series of related transactions” (within the meaning of Section 355(e) of the Code) in connection with the Merger;
(i) No UWWH Entity has engaged in any listed transaction within the meaning of the Code; and
(j) Neither UWWH nor any of its Subsidiaries will be required to include any item of income in, or exclude any item of deduction from, taxable income for any Taxable Period ending after the Closing Date as a result of (i) any change in method of accounting adopted prior to the Closing for a Taxable Period ending on or prior to the Closing Date requiring an adjustment under Section 481(a) of the Code (or any similar provision of state, local or foreign Tax Law) or (ii) any election under Section 108(i) of the Code.
Section 6.14 Employee Benefits .
(a) Section 6.14(a) of the UWWH Disclosure Schedules lists each UWWH Benefit Plan and UWWH Multiemployer Plan. UWWH has heretofore delivered or made available to IP true and complete copies of each UWWH Benefit Plan, any related trust or other funding vehicle, the most recent annual reports or summaries required to be prepared or filed under ERISA or the Code and the most recent determination letter received from the IRS with respect to each such plan intended to qualify under Section 401 of the Code.
(b) Except as set forth on Section 6.14(b) of the UWWH Disclosure Schedules, (i) no UWWH Employee is entitled to material payments or benefits under any UWWH Benefit Plans or otherwise for which UWWH or any of its Subsidiaries or the Surviving Corporation and its Subsidiaries will have any Liability as of or following the Effective Time and (ii) the consummation of the Transactions shall not result, by itself or in conjunction with any other event, in the payment or acceleration of any amount, the acceleration of any benefit or any increase in any vested interest or entitlement to any benefit or payment by any UWWH Employee other than as would not reasonably be expected to become a Liability of the Surviving Corporation or its Subsidiaries.
 
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(c) Neither UWWH nor any of its Subsidiaries has any Liability under Title IV or Section 302 of ERISA or under Section 412 or 430 of the Code (including on account of any ERISA Affiliate) that is due and owing as of the date hereof, and to the Knowledge of UWWH no condition exists that would reasonably be expected to result in any such Liability becoming a payment obligation of UWWH or any of its Subsidiaries. Except as set forth on Section 6.14(c) of the UWWH Disclosure Schedules, no UWWH Benefit Plan: (i) is a “defined benefit plan” as defined in Section 3(35) of ERISA or any other plan subject to the funding requirements of Section 412 of the Code or Section 302 of Title IV of ERISA or (ii) provides for retiree or post-employment medical, life insurance or other welfare-type benefits (other than health continuation coverage required by Section 4980B of the Code or similar state Law).
(d) Except as has not had or would not reasonably be expected to have, individually or in the aggregate, a UWWH Material Adverse Effect, each UWWH Benefit Plan has been established, funded, operated and administered in accordance with its terms, the terms of any related contracts or agreements and applicable Law, including, but not limited to, ERISA, the Code and the Laws of any other Governmental Authority. Except as has not had or would not reasonably be expected to have, individually or in the aggregate, a UWWH Material Adverse Effect, (i) there have been no non-exempt “prohibited transactions” (as defined in Section 406 of ERISA or Section 4975 of the Code) with respect to any UWWH Benefit Plan, (ii) UWWH or, to the Knowledge of UWWH, any other “fiduciary” (as defined in Section 3(21) of ERISA) has any Liability for breach of fiduciary duty or any other failure to act or comply in connection with a UWWH Benefit Plan and (iii) no Action with respect to any UWWH Benefit Plan or UWWH Multiemployer Plan (other than routine claims for benefits) is pending or threatened.
(e) Each UWWH Benefit Plan that is a “nonqualified deferred compensation plan” (as defined under Section 409A(d)(1) of the Code) (i) has been operated and administered in good faith compliance with Section 409A of the Code prior to January 1, 2009 and (ii) has been operated and administered in documentary compliance with Section 409A of the Code and the Treasury Regulations and other official guidance promulgated thereunder on or after January 1, 2009. Except as set forth on Section 6.14(e) of the UWWH Disclosure Schedules, (i) except as would not reasonably be expected to become a Liability of the Surviving Corporation or its Subsidiaries, the Transactions will not (either solely as a result thereof or as a result of such transactions in conjunction with any other event) (A) entitle any UWWH Employee to severance pay or any other payment or (B) result in any payment becoming due, accelerate the time of payment or vesting of benefits, or increase the amount of compensation due to any UWWH Employee, and (ii) no amount paid or payable (whether in cash, in property, or in the form of benefits) in connection with the Transactions (either solely as a result thereof or as a result of such transactions in conjunction with any other event) could be an “excess parachute payment” within the meaning of section 280G of the Code, or would constitute an “excess parachute payment” if such amounts were subject to the provisions of section 280G of the Code. UWWH does not have any indemnity obligation to any UWWH Employee for any Taxes imposed under Section 4999 or 409A of the Code.
(f) Except as set forth on Section 6.14(f) of the UWWH Disclosure Schedules, (i) all contributions and premiums required to have been paid by UWWH, its Subsidiaries, or its ERISA Affiliates to any UWWH Multiemployer Plan under the terms of any collective bargaining agreement or applicable Law have been paid within the time prescribed by such
 
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agreement or applicable Law except for any failures that are not material and (ii) none of UWWH, any of its Subsidiaries, or its ERISA Affiliates has any outstanding Liability in connection with a complete or partial withdrawal from any UWWH Multiemployer Plan as of the date of this Agreement, and to the Knowledge of UWWH, no such Liability is expected to be incurred by UWWH, its Subsidiaries, or its ERISA Affiliates prior to the Closing Date.
Section 6.15 Labor and Employment Matters .
(a) Neither UWWH nor any of its Subsidiaries is a party to, or bound by, and no UWWH Employee is subject to, any (A) collective bargaining agreement (other than those set forth on Section 6.15(a) of the UWWH Disclosure Schedules) or (B) other Contract with a labor union, labor organization, works council or trade association, nor is any such Contract presently being negotiated;
(b) Except as has not had, and would not reasonably be expected to have, individually or in the aggregate, a UWWH Material Adverse Effect, neither UWWH nor any of its Subsidiaries is, or during the prior two year period has been, the subject of any Action asserting that UWWH or any of its Subsidiaries has committed an unfair labor practice or seeking to compel it to bargain with any labor organization as to wages or conditions of employment, nor, to UWWH’s Knowledge, is any such Action threatened; and
(c) Except as has not had, and would not reasonably be expected to have, individually or in the aggregate, a UWWH Material Adverse Effect, UWWH and all of its Subsidiaries are in compliance, in all material respects, with their obligations pursuant to WARN and all other notification and bargaining obligations arising under any collective bargaining agreement, Law or otherwise.
(d) No strike, work stoppage, lockout or other material labor dispute involving UWWH or any of its Subsidiaries has occurred during the prior two year period, is pending or, to UWWH’s Knowledge, threatened.
(e) To the UWWH’s Knowledge, there have been no petitions or campaigns being conducted to solicit cards initiated by any labor organization to represent any UWWH Employees not currently represented by a labor organization or employee representative within the past three years nor, to UWWH’s Knowledge, are there any campaigns being conducted to solicit cards from employees to authorize representation by any labor organization.
(f) UWWH is in material compliance with all applicable Laws and Contracts relating to employment practices, terms and conditions of employment, and the employment of former, current and prospective employees, independent contractors and “leased employees” (within the meaning of Section 414(n) of the Code), including all such Laws and Contracts relating to wages, hours, collective bargaining, employment discrimination, immigration, disability, civil rights, human rights, fair labor standards, occupational safety and health, workers’ compensation, pay equity and wrongful discharge, except as has not had or would not reasonably be expected to have, individually or in the aggregate, a UWWH Material Adverse Effect.
 
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(g) Except as has not had or would not reasonably be expected to have, individually or in the aggregate, a UWWH Material Adverse Effect, neither UWWH nor any of its Subsidiaries is in material breach of any collective bargaining agreement that applies to any UWWH Employee nor, to UWWH’s Knowledge, is any labor union or labor organization that is party to any such collective bargaining agreement in material default thereunder.
(h) To the Knowledge of UWWH, no executive officer or Key UWWH Employee or any of its Subsidiaries has expressed to UWWH or any of its Subsidiaries any present intention to terminate his/her employment with UWWH or any of its Subsidiaries.
Section 6.16 Intellectual Property .
(a) Set forth on Section 6.16(a) of the UWWH Disclosure Schedules is a list of all patents, pending patent applications, registrations and applications for registration of Intellectual Property and Internet domain names owned or controlled by UWWH and its Subsidiaries to carry on the business of UWWH and its Subsidiaries as currently conducted (the “ UWWH Intellectual Property ”).
(b) UWWH or its Subsidiaries own all right, title and interest in and to, the UWWH Intellectual Property, free of all Encumbrances, except for non-exclusive licenses to UWWH Intellectual Property granted in the ordinary course of business.
(c) Except as has not had, and would not reasonably be expected to have, individually or in the aggregate, a UWWH Material Adverse Effect, no Action or Order is pending, nor to UWWH’s Knowledge, threatened, (i) alleging that the operation of UWWH’s business, Infringes the Intellectual Property rights of third parties or (ii) challenging the ownership, validity, patentability, enforceability, registrability or use of any UWWH Intellectual Property. Except as has not had, and would not reasonably be expected to have, individually or in the aggregate, a UWWH Material Adverse Effect, neither UWWH nor any of its Subsidiaries is subject to any outstanding Order or other dispute involving any third-party Intellectual Property and to UWWH’s Knowledge, no such Order or other dispute is threatened.
(d) Except as has not had, and would not reasonably be expected to have, individually or in the aggregate, a UWWH Material Adverse Effect, to UWWH’s Knowledge, (i) the operation of UWWH’s business as currently conducted does not Infringe the Intellectual Property rights of another Person and (ii) no Person is Infringing the UWWH Intellectual Property.
(e) UWWH and its Subsidiaries have taken commercially reasonable actions to maintain the UWWH Intellectual Property and to protect the confidentiality of the trade secrets owned by any of them, in each case that are material to the conduct of UWWH’s business as presently conducted. To UWWH’s Knowledge, except as has not had, and would not reasonably be expected to have, individually or in the aggregate, a UWWH Material Adverse Effect, no UWWH Intellectual Property that constitutes a trade secret has been disclosed to any third party other than pursuant to a valid written agreement to protect the confidentiality of such trade secret.
 
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Section 6.17 Material Contracts .
(a) Section 6.17(a) of the UWWH Disclosure Schedules sets forth each of the following that UWWH or any of its Subsidiaries is a party to or bound by as of the date hereof:
(i) any non-competition agreements or any other Contract that materially limits or will materially limit any of UWWH or its Subsidiaries from engaging in their respective businesses or contains exclusivity, non-solicitation or “most favored nation” provisions that materially limit or would materially limit any of the UWWH or its Subsidiaries from engaging in their respective businesses;
(ii) any Contract with respect to any partnerships, joint ventures or strategic alliances material to UWWH;
(iii) any Contract pursuant to which any of UWWH or its Subsidiaries has or will incur Indebtedness for borrowed money or other material Indebtedness (other than deferred revenue);
(iv) any Contract that provides or will provide for annual payments in excess of $30 million by or to UWWH or any of its Subsidiaries (other than leases set forth on Section 6.8(c) of the UWWH Disclosure Schedules);
(v) any Contract that provides for annual payments in excess of $30 million and contains a “change of control” provision (other than leases set forth on Section 6.8(c) of the UWWH Disclosure Schedules);
(vi) any Contract that is a settlement, conciliation or similar agreement with any Governmental Authority or pursuant to which UWWH or any of its Subsidiaries will be required after the date of this Agreement to pay consideration in excess of $1 million;
(vii) any Contract for the employment or engagement of any UWWH Employee or other individual on a full-time, part-time or consulting basis and providing for annual compensation in excess of $250,000 but excluding offer letters with non-binding compensation terms that (A) permit discretionary periodic adjustments to the base rate of compensation and incentive compensation payable thereunder, (B) do not commit to any severance obligations, other than under the generally applicable UWWH severance policy and (C) do not contain any other material elements of compensation or benefits thereunder other than participation in the applicable UWWH benefits programs on the same terms as other similarly situated employees;
(viii) any Contract that limits or otherwise restricts the ability of UWWH or any of its Subsidiaries to pay dividends or make distributions to the UWWH Stockholder; or
(ix) any license agreement or Contract that is material to UWWH’s business under which UWWH or any of its Subsidiaries is a licensee or licensor of any Intellectual Property or that is a settlement, royalty, covenant not to sue, consent, concurrent use or other agreement with respect to any Intellectual Property that is material to UWWH’s business (in each case other than non-disclosure agreements entered into in the ordinary course of business and licenses and related service agreements for any item of commercially available, unmodified software with an annualized license fee of less than $2.5 million).
 
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The Contracts required to be set forth on Section 6.17(a) of the UWWH Disclosure Schedules, the collective bargaining agreements set forth on Section 6.15(a) of the UWWH Disclosure Schedules (and any other such Contracts entered into in the ordinary course of business prior to the Closing) and real property leases for facilities in excess of 200,000 rentable square feet (it being understood that such leases as are in effect as of the date hereof are set forth on Section 6.8(c) of the UWWH Disclosure Schedules and are marked with an asterisk) are referred to herein as the “ UWWH Material Contracts ”. UWWH has provided IP with a correct and complete copy of all UWWH Material Contracts in effect as of the date hereof.
(b) Except as has not had, and would not reasonably be expected to have, individually or in the aggregate, a UWWH Material Adverse Effect, each of the UWWH Material Contracts are valid and in full force and effect, against UWWH or its Subsidiary which is a party thereto (or will become a party thereto in connection with the Transactions) and, to UWWH’s Knowledge, the counterparty thereto, and constitute legal, valid and binding obligations of UWWH or its Subsidiary which is party thereto and, to UWWH’s Knowledge, the counterparty thereto, enforceable by UWWH or the Subsidiary which is a party thereto in accordance with their terms except to the extent that such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or other similar Laws, now or hereinafter in effect, relating to creditors’ rights generally and general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law) or (ii) Laws relating to the enforcement of employee restrictive covenants.
(c) Neither UWWH nor any of its Subsidiaries is in material breach or default under (and no event has occurred, and neither UWWH nor its Subsidiaries has violated any provisions of, or committed or failed to perform any act that, with notice or the passage of time or both would constitute a material breach or default under) any UWWH Material Contract nor, to UWWH’s Knowledge, is any other party to any UWWH Material Contract in material default thereunder, except as has not had and would not reasonably be expected to have, individually or in the aggregate, a UWWH Material Adverse Effect.
Section 6.18 Board Approvals; Votes Required .
(a) Board Approval . Each of the UWWH Board of Directors and the Unisource Board of Directors has unanimously (i) determined that this Agreement, the Transaction Agreements and the Transactions (including the Merger and the Subsidiary Merger), taken together, are advisable, fair and in the best interest of UWWH and Unisource, respectively, and their respective stockholders and (ii) approved this Agreement, the Transaction Agreements and the Transactions (including the Merger and the Subsidiary Merger).
(b) Votes Required . The only approvals or consents of the holders of any class or series of capital stock necessary to adopt this Agreement and the Transaction Agreements and to approve the Merger and the Transactions is the affirmative vote of the UWWH Stockholder, as the sole stockholder of UWWH (the “ UWWH Stockholder Approval ”) and the affirmative vote of UWWH, as the sole stockholder of Unisource (the “ Unisource Stockholder Approval ”), which
 
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UWWH shall obtain by written consent pursuant to Section 228 of the DGCL on the date hereof immediately following the execution and delivery of this Agreement. Other than as set forth in this Section 6.18(b), no other corporate proceedings are necessary to adopt or approve this Agreement, the Transaction Agreements or to consummate the Merger or the Transactions.
Section 6.19 Dividends . Since June 30, 2013, neither UWWH nor any of its Subsidiaries (i) declared, set aside or paid any dividends or made other distributions on or in respect of any shares of the capital stock or partnership or equity interests of UWWH or any of its Subsidiaries (whether in cash, securities, property or any combination thereof), except for the declaration and payment of cash dividends or distributions paid on or with respect to a class of capital stock or partnership or equity interests, all of which shares of capital stock or partnership or equity interests (with the exception of directors’ qualifying shares and other similarly nominal holdings required by Law to be held by Persons other than UWWH or its wholly-owned Subsidiaries), as applicable, of the applicable corporation, partnership or other entity are owned directly or indirectly by UWWH, or (ii) purchased, repurchased, redeemed or otherwise acquired, or permitted UWWH or any of its Subsidiaries to purchase, repurchase, redeem or otherwise acquire, any of its securities or any securities of any of its Subsidiaries, including shares of UWWH Common Stock, or any option, warrant, instrument or right, directly or indirectly, to acquire any such securities, other than from employees upon termination of employment in the ordinary course of business or (iii) proposed or committed to do any of the foregoing.
Section 6.20 Brokers or Finders; Transaction Bonuses . Except as set forth in Section 6.20 of the UWWH Disclosure Schedules, neither UWWH nor any of its Subsidiaries has employed any investment banker, broker, finder or intermediary in connection with the Transactions who might be entitled to any fee or any commission in connection with or upon consummation of the Transactions and any such fee or commission and any costs or expenses incurred in connection therewith shall be borne solely by UWWH. Except as set forth in Section 6.20 of the UWWH Disclosure Schedules, there are no special bonuses or other similar compensation payable to any UWWH Employee or any other employee of UWWH or any of its Subsidiaries in connection with the Transactions that would reasonably be expected to become a Liability of the Surviving Corporation or its Subsidiaries. UWWH has provided true and complete copies of the agreements set forth in Section 6.20 of the UWWH Disclosure Schedules to IP.
Section 6.21 Insurance of UWWH . UWWH is insured under insurance policies, Contracts and self-insurance programs, including policies of fire and casualty, liability and other forms of insurance and/or insurance arrangements, in such amounts, with such deductibles and against such risks and losses as are, in UWWH’s judgment, reasonable for its business and its Subsidiaries. Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a UWWH Material Adverse Effect, all such policies are in full force and effect, no invoiced premiums are overdue for payment and no notice of cancellation or termination has been received by UWWH or any of its Subsidiaries with respect to any such policy which has not been replaced on substantially similar terms prior to the date of such cancellation or termination.
 
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Section 6.22 Bank Accounts . Section 6.22 of the UWWH Disclosure Schedules sets forth a true and complete list showing the account name and bank ID of each account, credit line or safety deposit box primarily related to UWWH’s or its Subsidiaries’ business and the names of responsible Persons authorized to draw thereof or, with respect to safety deposit boxes, have access thereto.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF THE UWWH STOCKHOLDER
The UWWH Stockholder hereby represents and warrants to IP and Spinco as follows:
Section 7.1 No Public Sale or Distribution . The UWWH Stockholder is acquiring the Spinco Common Stock in the ordinary course of business for its own account and not with a view towards, or for resale in connection with, the public sale or distribution thereof, in whole or in part, except pursuant to sales registered or exempted under the Securities Act, and except as provided in the Registration Rights Agreement, the UWWH Stockholder does not have a present arrangement or agreement to effect any distribution of the Spinco Common Stock to or through any Person; provided, however, that by making the representations herein, the UWWH Stockholder does not agree to hold any of the Spinco Common Stock for any minimum period of time or other specific term and reserves the right to dispose of the Spinco Common Stock at any time in accordance with or pursuant to a registration statement filed pursuant to or an exemption under the Securities Act.
Section 7.2 Accredited Investor Status . The UWWH Stockholder is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D promulgated under the Securities Act.
Section 7.3 Reliance on Exemptions . The UWWH Stockholder understands that the Spinco Common Stock is being offered and issued to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that IP and Spinco are relying in part upon the truth and accuracy of, and the UWWH Stockholder’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of the UWWH Stockholder set forth herein in order to determine the availability of such exemptions and the eligibility of the UWWH Stockholder to acquire the Spinco Common Stock.
Section 7.4 Information . The UWWH Stockholder and its advisors, if any, have been furnished with all materials relating to the Spinco Business, Spinco and the Spinco Subsidiaries and materials relating to the offer and issuance of the Spinco Common Stock which have been requested by the UWWH Stockholder. The UWWH Stockholder and its advisors, if any, have been afforded the opportunity to ask questions of, and the UWWH Stockholder and its advisors have received answers thereto satisfactory to the UWWH Stockholder from, IP, Spinco and the Spinco Subsidiaries relating to the Spinco Business. Neither such inquiries nor any other due diligence investigations conducted by the UWWH Stockholder or its advisors, if any, or its Representatives, shall modify, amend or affect the UWWH Stockholder’s right to rely on the representations and warranties of IP, Spinco, xpedx Intermediate and xpedx contained herein. The UWWH Stockholder understands that its investment in the Spinco Common Stock involves
 
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a high degree of risk and that it is able to afford a complete loss of such investment. The UWWH Stockholder has independently evaluated the merits of its decision to acquire the Spinco Common Stock pursuant to this Agreement, and the UWWH Stockholder confirms that it has not relied on the advice of any other Person and/or Person’s legal counsel in making such decision. The UWWH Stockholder understands that nothing in this Agreement or any other materials presented by or on behalf of IP, with respect to the Spinco Business, Spinco or any of the Spinco Subsidiaries to the UWWH Stockholder in connection with the acquisition of the Spinco Common Stock constitutes legal, tax, accounting or investment advice. The UWWH Stockholder has sought such accounting, legal, investment and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of the Spinco Common Stock.
Section 7.5 No Governmental Review . The UWWH Stockholder understands that no Governmental Authority has passed on or made any recommendation or endorsement of the Spinco Common Stock or the fairness or suitability of the investment in the Spinco Common Stock, nor have such authorities passed upon or endorsed the merits of the offering of the Spinco Common Stock.
Section 7.6 Transfer or Resale . The UWWH Stockholder understands that: (i) the Spinco Common Stock received by it has not been and is not being registered under the Securities Act or any state securities laws, and may not be offered for sale, sold, assigned or transferred unless (A) pursuant to an effective registration statement under the Securities Act, (B) the UWWH Stockholder shall have delivered to the Company an opinion of counsel of recognized standing reasonably acceptable to Spinco, in a generally acceptable form, to the effect that such Spinco Common Stock to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration or (C) the UWWH Stockholder provides Spinco with an opinion of counsel of recognized standing reasonably acceptable to Spinco that such Spinco Common Stock can be sold, assigned or transferred pursuant to Rule 144 (if available) promulgated under the Securities Act (or a successor rule thereto) (“ Rule 144 ”); (ii) any sale of the Spinco Common Stock made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144; and (iii) other than pursuant to the Registration Rights Agreement, none of IP, Spinco or any other Person is under any obligation to register the Spinco Common Stock issued to the UWWH Stockholder under the Securities Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder. Notwithstanding the foregoing, the Spinco Common Stock may be pledged in connection with a bona fide margin account or other loan secured by the Spinco Common Stock and such pledge of Spinco Common Stock shall not be deemed to be a transfer, sale or assignment of the Spinco Common Stock hereunder, and the UWWH Stockholder effecting a pledge of Spinco Common Stock shall not be required to provide Spinco with any notice thereof or otherwise make any delivery to Spinco pursuant to this Agreement or any other Transaction Agreement, including, without limitation, this Section 7.6; provided, that in order to make any sale, transfer or assignment of Spinco Common Stock, the UWWH Stockholder and its pledgee make such disposition in accordance with or pursuant to a registration statement or an exemption under the Securities Act. The UWWH Stockholder acknowledges that the shares of Spinco Common Stock that it receives in the Distribution and Merger are “restricted securities” as defined in Rule 501 of Regulation D promulgated under the Securities Act and will contain the following legend:
 
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“THE SECURITIES REFERENCED HEREIN HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE SURVIVING CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT.”
Section 7.7 Due Organization, Good Standing and Corporate Power . The UWWH Stockholder is a limited liability company duly organized, validly existing and in good standing under the Laws of the State of Delaware. The UWWH Stockholder has all requisite limited liability company power and authority to own, lease and operate its properties and assets and to carry on its business as it is now being conducted. The UWWH Stockholder is duly qualified or licensed to do business and is in good standing (with respect to jurisdictions which recognize such concept) in each jurisdiction in which the property owned, leased or operated or the nature of the business conducted by it makes such qualification or licensing necessary, except in such jurisdictions where the failure to be so qualified or licensed or to be in good standing has not had or would not reasonably be expected to have, individually or in the aggregate, a UWWH Material Adverse Effect.
Section 7.8 Authorization and Validity of Agreement . The UWWH Stockholder has all necessary and required limited liability company power and authority to execute and deliver this Agreement and each Transaction Agreement to which it is a party, to perform its obligations hereunder and thereunder and to consummate the Transactions. The execution, delivery and performance of this Agreement and the Transaction Agreements by the UWWH Stockholder and the consummation by the UWWH Stockholder of the Transactions, have been duly and validly authorized by the UWWH Stockholder Board of Managers, and no other limited liability company action on the part of the UWWH Stockholder is necessary to authorize the execution, delivery and performance of this Agreement and the Transaction Agreements or the consummation of the Transactions. This Agreement and the Transaction Agreements have been duly and validly executed and delivered by the UWWH Stockholder and, to the extent the UWWH Stockholder is a party thereto, each is a valid and binding obligation of the UWWH Stockholder and enforceable against the UWWH Stockholder in accordance with its terms, except to the extent that its enforceability may be subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar Laws, now or hereinafter in effect, affecting the enforcement of creditors’ rights generally and by general equitable principles.
Section 7.9 Company Authority Relative to this Agreement; No Violation . Assuming (a) the filings required under the HSR Act are made and the waiting periods thereunder (if applicable) have been terminated or expired, (b) the approvals set forth in Section 7.9 of the UWWH Stockholder Disclosure Schedules have been obtained, (c) the applicable requirements of the Securities Act and the Exchange Act are met, (d) the requirements under any applicable state securities or blue sky Laws are met and (e) the filing of the Certificate of Merger and other appropriate Merger documents and Subsidiary Merger documents (including the certificate of merger evidencing such Subsidiary Merger), if any, as required by the DGCL and the DLLCA, is made, the execution and delivery of this Agreement and the Transaction
 
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Agreements by the UWWH Stockholder and the consummation by the UWWH Stockholder of the Transactions, do not and will not: (w) conflict with or result in a breach of any provision of its certificate of organization or operating agreement; (x) violate or conflict in any material respect with any Law or Order of any Governmental Authority applicable to the UWWH Stockholder; (y) require any filing with, or License, consent or approval of, or the giving of any notice to, any Governmental Authority, the failure of which to file or receive would be material; or (z) result in a violation or breach of, constitute (with or without due notice or lapse of time or both) a default under, or give rise to any right of termination, cancellation or acceleration, or result in the creation of any Encumbrance upon any of the properties or assets of the UWWH Stockholder or any of its Subsidiaries or give rise to any obligation, right of termination, cancellation, acceleration or increase of any obligation or a loss of a material benefit under, any of the terms, conditions or provisions of any Contract to which the UWWH Stockholder is a party, excluding in the case of clause (z) above, conflicts, violations, breaches, defaults, rights of payment and reimbursement, terminations, modifications, accelerations and creations and impositions of Encumbrances which have not had or would not reasonably be expected to have, individually or in the aggregate, a UWWH Material Adverse Effect.
Section 7.10 No General Solicitation . The UWWH Stockholder is not purchasing the Spinco Common Stock as a result of any advertisement, article, notice or other communication regarding the Spinco Common Stock published in any newspaper, magazine or similar media or broadcast over television or radio or transmitted over the Internet or presented at any seminar or any other general advertisement.
ARTICLE VIII
COVENANTS
Section 8.1 Conduct of the Spinco Business Pending the Merger . Following the date of this Agreement and until the earlier of the Effective Time or the termination of this Agreement, except in connection with the Distribution or as contemplated or permitted by this Agreement or the Transaction Agreements or described in Section 8.1 of the IP/Spinco Disclosure Schedules or to the extent that UWWH shall otherwise consent in writing (which consent shall not be unreasonably withheld, conditioned or delayed), IP and Spinco agree, as to themselves and their respective Subsidiaries, as applicable:
(a) Ordinary Course . Each of IP and Spinco shall, and shall cause their respective Subsidiaries, as applicable, to, conduct the Spinco Business in, and shall not take any action with respect to the Spinco Business except in, the ordinary course of business, consistent with past practice and, with respect to the Spinco Business, shall use reasonable best efforts to preserve intact its current business organization, maintain its material rights and Licenses, keep available the services of its current officers and Key Spinco Group Employees and preserve its relationships with its customers, suppliers and others having business dealings with it in such a manner that its goodwill and ongoing businesses are not impaired in any material respect as of the Effective Time. IP shall, and shall cause its Subsidiaries to, operate their respective businesses (other than the Spinco Business) in the ordinary course of business in their dealings with, and otherwise in respect of, the Spinco Business (including its customers).
 
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(b) Changes in Stock . With respect to the Spinco Business, neither IP nor Spinco shall, nor shall IP or Spinco permit any of their respective Subsidiaries to, nor shall any of the Spinco Entities propose to (in each case whether by merger, consolidation, exchange or otherwise):
(i) split, combine or reclassify any of the capital stock of any of the IP Entities or Spinco Entities or issue or authorize or propose the issuance of any other securities in respect of, in lieu of, or in substitution for, shares of the capital stock of any of the IP Entities or Spinco Entities; or
(ii) amend the terms or change the period of exercisability of, purchase, repurchase, redeem or otherwise acquire, or permit any of the IP Entities or Spinco Entities to amend the terms or change the period of exercisability of, purchase, repurchase, redeem or otherwise acquire, any of Spinco’s securities or any securities of any of the Spinco Subsidiaries, including shares of Spinco Common Stock, or any option, warrant or right, directly or indirectly, to acquire any such securities or propose to do any of the foregoing.
(c) Issuance of Securities . With respect to the Spinco Business, neither IP nor Spinco shall, nor shall they permit any of their respective Subsidiaries, as applicable, to (i) issue, sell, pledge, dispose of or encumber, or authorize the issuance, sale, pledge, disposition or Encumbrance of, (A) any shares of any Spinco Entity’s capital stock of any class or (B) any options, warrants, convertible securities or other rights of any kind to acquire any shares of capital stock, or any other ownership interest, in any Spinco Entity (it being understood that this Section 8.1(c) shall not restrict the issuance of shares of IP Common Stock or other securities convertible into or exercisable or exchangeable for IP Common Stock other than any issuance of any of the foregoing to any Spinco Group Employee (except that shares of IP Common Stock may be issued to any Spinco Group Employee upon exercise of an option for IP Common Stock currently outstanding or the occurrence of a payment event under any of restricted stock units or similar securities with respect to the IP Common Stock currently outstanding)) or (ii) with respect to the Spinco Group Employees, accelerate the timing of payments or vesting under, or otherwise materially amend or supplement, any existing benefit, stock option compensation plan or arrangement (other than as may be required by Law or under an applicable qualified retirement plan), in each case other than pursuant to Section 2.8(a) hereof, as permitted by Section 8.1(h) hereof, as set forth on Section 5.14(b) of the IP/Spinco Disclosure Schedules or as would not result in a Liability to any Spinco Entity. Without limiting the generality of the immediately preceding sentence, nothing in this Section 8.1(c) or elsewhere in this Agreement shall prevent IP or any of its respective agents from amending or operating the IP 401(k) Plans as any such party deems appropriate, in its sole discretion as permitted under such IP 401(k) Plans, with respect to the holding or liquidation of any shares of IP Common Stock (or Spinco Common Stock received in respect of IP Common Stock in the Distribution).
(d) Governing Documents . Neither IP nor Spinco shall amend or propose to amend or otherwise change the certificate of incorporation or bylaws or similar governance documents of Spinco, nor shall IP or Spinco permit any Spinco Subsidiary to amend or propose to amend or otherwise change its certificate of incorporation or bylaws or similar governance documents, in each case, except to the extent required to comply with applicable Law, the provisions of this Agreement or the Transaction Agreements.
 
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(e) Acquisitions . Neither IP, with respect to the Spinco Business, nor Spinco shall, and each shall not permit any of their respective Subsidiaries to, enter into in a single transaction or a series of transactions, acquire or agree to acquire by merging or consolidating with, or by purchasing any equity interest in or the assets of, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof.
(f) Dispositions . Neither IP, with respect to the Spinco Business, nor Spinco shall, and each shall not permit any of their respective Subsidiaries to, enter into a single transaction or a series of related transactions, sell, lease, pledge, encumber, transfer, license or otherwise dispose of, or agree to sell, lease, pledge, encumber, transfer, license or otherwise dispose of, any of its assets (other than Contracts, which are governed by Section 8.1(m) hereof) (excluding the disposition in the ordinary course of business for fair market value of assets having a fair market value not exceeding $500,000 in the aggregate).
(g) Indebtedness . Except for the incurrence of the Spinco Financing, neither IP, with respect to the Spinco Business, nor Spinco shall, and each shall not permit any of their respective Subsidiaries to:
(i) incur any Indebtedness for borrowed money or guarantee or otherwise become contingently liable for any such Indebtedness or issue or sell any debt securities or warrants or rights to acquire any debt securities of any of the Spinco Entities or guarantee any debt securities of others or enter into any material lease other than in connection with operating leases in the ordinary course of business;
(ii) issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for, the obligations of any Person for borrowed money or otherwise;
(iii) make any loans, advances, capital contributions to or investments in any other Person except (A) loans or advances by any Spinco Entity to Spinco or any of its wholly-owned Subsidiaries, (B) investments or capital contributions in any of Spinco’s wholly-owned Subsidiaries, (C) as required by binding Contracts in effect as of the date hereof set forth in Section 8.1(g) of the IP/Spinco Disclosure Schedules or (D) in the ordinary course of business; provided, that the aggregate amount of such loans, advances, capital contributions to or investments in any other Person made in reliance on this clause (D) shall not exceed $100,000;
(iv) authorize material capital expenditures or purchases of fixed assets other than from third parties in the ordinary course of business; or
(v) incur Liabilities secured by an Encumbrance on its assets other than in the ordinary course of business;
which, in the case of clauses (i), (ii), (iii), (iv) or (v) above, would obligate the Surviving Corporation or its Subsidiaries to pay any amounts, or assume any obligations to be performed by the Surviving Corporation or its Subsidiaries, at or after the Effective Time.
 
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(h) Employee Arrangements . Except as set forth on Section 8.1(h) of the IP/Spinco Disclosure Schedules, pursuant to the terms of any collective bargaining agreements in effect as of the date hereof and disclosed on Section 5.15(a) of the IP/Spinco Disclosure Schedules, as contemplated by this Agreement, as set forth in the Employee Matters Agreement or as otherwise required by applicable Law, neither IP, with respect to the Spinco Business, nor Spinco shall, and each shall not permit any of their respective Subsidiaries, as applicable, to:
(i) unless permitted by Section 8.1(h)(iii), grant any material increases in the compensation (including bonus and incentive compensation) or fringe benefits of any Spinco Group Employee, except (A) pursuant to an action that generally applies uniformly to Spinco Group Employees and other similarly situated employees of IP or (B) any increases that would not reasonably be expected to become a Liability of the Surviving Corporation or its Subsidiaries;
(ii) unless permitted by Section 8.1(h)(iii), pay or agree to pay to any Spinco Group Employee any pension, retirement allowance, severance benefit or other material employee benefit not required by any of the existing Spinco Benefit Plans as in effect on the date hereof, except (A) pursuant to an action that generally applies uniformly to Spinco Group Employees and other similarly situated employees of IP, (B) as would not reasonably be expected to result in a Liability of the Surviving Corporation or its Subsidiaries or (C) in connection with an Approved Spinco Offer;
(iii) except (i) in the ordinary course of business or (ii) in connection with an Approved Spinco Offer, enter into any new, or terminate or materially amend any existing collective bargaining agreement or relationship, employment, severance or termination Contract or other arrangement with any Spinco Group Employee or his or her representative; provided, that any such new collective bargaining agreement or any termination of or material amendment to any such existing collective bargaining agreement in the ordinary course of business shall be subject to review by UWWH reasonably in advance of the conclusion of such negotiations and thereafter subject to the approval of xpedx senior management and UWWH shall be informed periodically of the status of negotiations with respect thereto;
(iv) (A) become obligated under any new pension plan, welfare plan, employee benefit plan (including any equity incentive plan), severance plan, benefit arrangement or similar plan or arrangement sponsored or maintained by any Spinco Entity that was not in existence on the date hereof or (B) amend any such plan or arrangement in existence on the date hereof, except in the case of (B) (x) as would not result in a material increase in the annual aggregate cost (based on IP’s historical annual aggregate cost) of maintaining such pension plan, welfare plan, employee benefit plan, severance plan, trust, fund, policy or arrangement or (y) as would not reasonably be expected to result in a Liability of the Surviving Corporation or its Subsidiaries;
(v) grant any equity-based compensation to any Spinco Group Employee or director or independent contractor of any Spinco Entity in respect of the stock of any Spinco Entity, except to the extent UWWH has consented in writing to such grant;
 
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(vi) make any offer for the employment or engagement of any Spinco Group Employee or other individual on a full-time, part-time, or consulting basis providing for an annual compensation in excess of $250,000, other than an Approved Spinco Offer;
(vii) implement any distribution center, facility, warehouse or business unit closing or mass layoff that could implicate WARN; or
(viii) make any loan to (x) any director, officer or member of senior management of a Spinco Entity or (y) except in the ordinary course of business and in compliance with applicable Law, to any other Spinco Group Employee.
(i) No Liquidation or Dissolution . Neither IP, with respect to the Spinco Business, nor Spinco shall, and each shall not permit any of their respective Subsidiaries to, adopt a plan or agreement of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other material reorganization or any other transaction that would preclude or be inconsistent in any material respect with, or hinder or delay in any material respect, consummation of the Transactions.
(j) Accounting Methods . Neither IP nor Spinco shall, and each shall not permit any of their respective Subsidiaries to, make any material change in the methods of accounting or procedures of the Spinco Entities or the Spinco Business in effect at January 1, 2013, except (i) as required by changes in GAAP after providing reasonable prior written notice and an opportunity to provide input to UWWH, (ii) as may be made in response to SEC guidance, in each case, as concurred with in writing by IP’s or Spinco’s independent auditors, (iii) as may be required in connection with the Transactions, so long as any such changes are in accordance with GAAP or (iv) changes permitted by Section 8.1(k), and neither IP nor Spinco shall change Spinco’s fiscal year.
(k) Taxes . Neither IP nor any of its Subsidiaries shall, with respect to the Spinco Business, (i) make, change or rescind any material Tax election, (ii) settle, compromise or abandon any material Action or controversy relating to Taxes, (iii) amend any material Returns, (iv) adopt or change any material method of Tax accounting or change any annual Tax accounting period or (v) consent to any extension or waiver of the limitation period applicable to any material Tax claim or assessment, with respect to the Spinco Business, in filing their respective Returns, in each case without the prior written consent of UWWH, which consent shall not be unreasonably withheld, conditioned or delayed, provided that IP and its Subsidiaries may, without the consent of UWWH, take any of the foregoing actions (A) in the ordinary course of business, (B) with respect to any U.S. Income Taxes or IP Income Tax Return related thereto, (C) if such action would not be binding on Spinco or any of its Subsidiaries after the Effective Time or would not reasonably be expected to result in an increase in Tax Liabilities or decrease in Tax attributes for Spinco or its Subsidiaries after the Effective Time, (D) that is expressly permitted pursuant to the Tax Matters Agreement or (E) as required by Law.
(l) Affiliate Transactions . Neither IP nor Spinco shall, and each shall not permit any of their respective Subsidiaries to, except as contemplated by the Transaction Agreements or for arm’s length commercial arrangements entered into in the ordinary course of business that are limited to customary purchase, commercial service and supply arrangements on quantity, pricing,
 
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payment and other material terms consistent with past practice prior to June 30, 2013 and entered into without any intent to manipulate working capital or the other assets or Liabilities of Spinco in a manner favorable to IP, enter into or amend any Contract or arrangement with respect to the Spinco Business with any of their respective Affiliates, other than among Spinco and its wholly-owned Subsidiaries.
(m) Contracts . Neither IP, with respect to the Spinco Business, nor Spinco shall, and each shall not permit any of their respective Subsidiaries to, except in the ordinary course of business, modify, amend, terminate or enter into any Spinco Material Contract with a third party, or waive, release or assign any material rights or claims of any Spinco Entity or the Spinco Business thereunder, except in connection with an Approved Spinco Offer.
(n) Settlement of Litigation . Neither IP, with respect to the Spinco Business, nor Spinco shall, and each shall not permit any of their respective Subsidiaries to, pay, discharge, satisfy or settle any Action (absolute, accrued, asserted or unasserted, contingent or otherwise), other than any Action in respect of Taxes, which shall be governed exclusively by the Tax Matters Agreement and Section 8.1(k), if such payment, discharge, satisfaction or settlement would (i) require any material payment by Spinco or the Spinco Subsidiaries prior to, or the Surviving Corporation or its Subsidiaries following, the Effective Time or (ii) restrict the Surviving Corporation or any of its Subsidiaries from operating the Spinco Business in any material respect or require the taking of any action by Spinco or any of its Subsidiaries that, in each case, would, or would reasonably be expected to, materially and adversely affect the operation of the Spinco Business or the Surviving Corporation following the Effective Time.
(o) Restrictive Agreements . Neither IP, with respect to the Spinco Business, nor Spinco shall, and each shall not permit any of their respective Subsidiaries to, enter into any Contract or arrangement that limits or otherwise restricts any Spinco Entity in any material respect, or that would or would reasonably be expected to, following the Effective Time, limit or restrict any Spinco Entity in any material respect from engaging in the Spinco Business.
(p) Intellectual Property . Neither IP, with respect to the Spinco Business, nor Spinco shall, and each shall not permit any of their respective Subsidiaries to, sell, transfer, license, abandon, let lapse, encumber or otherwise dispose of any Intellectual Property that is necessary to carry on the Spinco Business substantially as currently conducted, except, in each case, in the ordinary course of business.
(q) Foregoing Actions . Neither IP nor Spinco shall agree or commit, and each shall not permit any of their respective Subsidiaries to agree or commit, to do any of the actions described in clauses (a) through (p) above.
Section 8.2 Conduct of the Unisource Business by UWWH Pending the Merger . Following the date of this Agreement and until the earlier of the Effective Time or the termination of this Agreement, except as contemplated or permitted by this Agreement or the Transaction Agreements or described in Section 8.2 of the UWWH Disclosure Schedules or to the extent that IP shall otherwise consent in writing (which consent shall not be unreasonably withheld, conditioned or delayed), UWWH agrees, as to itself and its Subsidiaries:
 
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(a) Ordinary Course . UWWH shall conduct its business in, and shall cause its Subsidiaries to conduct their businesses in, and UWWH shall not take any action except in, the ordinary course of business, consistent with past practice, and shall use reasonable best efforts to preserve intact its current business organization, maintain its material rights and Licenses, keep available the services of its current officers and Key UWWH Employees and preserve its relationships with its customers, suppliers and others having business dealings with it in such a manner that its goodwill and ongoing businesses are not impaired in any material respect as of the Effective Time.
(b) Dividends; Changes in Stock . UWWH shall not, nor shall it permit any of its Subsidiaries to, nor shall it or any of its Subsidiaries propose to (in each case whether by merger, consolidation, exchange or otherwise):
(i) declare, set aside or pay any dividends on or make other distributions in respect of any shares of the capital stock or partnership or equity interests of UWWH or any of its Subsidiaries (whether in cash, securities, property or any combination thereof), except for the declaration and payment of cash dividends or distributions paid on or with respect to a class of capital stock or partnership or equity interests, all of which shares of capital stock or partnership or equity interests (with the exception of directors’ qualifying shares and other similarly nominal holdings required by Law to be held by Persons other than UWWH or its wholly-owned Subsidiaries), as applicable, of the applicable corporation, partnership or other entity are owned directly or indirectly by UWWH;
(ii) split, combine or reclassify any of the capital stock of UWWH or any of its Subsidiaries or issue or authorize or propose the issuance of any other securities in respect of, in lieu of, or in substitution for, shares of the capital stock of UWWH or any of its Subsidiaries; or
(iii) amend the terms or change the period of exercisability of, purchase, repurchase, redeem or otherwise acquire, or permit UWWH or any of its Subsidiaries to amend the terms or change the period of exercisability of, purchase, repurchase, redeem or otherwise acquire, any of its securities or any securities of any of its Subsidiaries, including shares of UWWH Common Stock, or any option, warrant or right, directly or indirectly, to acquire any such securities or propose to do any of the foregoing.
(c) Issuance of Securities . UWWH shall not, nor shall UWWH permit any of its Subsidiaries, to (i) issue, sell, pledge, dispose of or encumber, or authorize the issuance, sale, pledge, disposition or Encumbrance of, (A) any shares of UWWH’s or any of its Subsidiaries’ capital stock of any class or (B) any options, warrants, convertible securities or other rights of any kind to acquire any shares of capital stock, or any other ownership interest, in UWWH or any of its Subsidiaries or (ii) accelerate the timing of payments or vesting under, or otherwise materially amend or supplement, any existing benefit, stock option compensation plan or arrangement (other than as may be required by Law or under an applicable qualified retirement plan), in each case other than pursuant to Section 2.8(a) hereof, as permitted by Section 8.2(h) hereof, as set forth on Section 6.14(b) of the UWWH Disclosure Schedules.
 
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(d) Governing Documents . UWWH shall not amend or propose to amend or otherwise change the certificate of incorporation or bylaws or similar governance documents of UWWH, nor shall UWWH permit any of its Subsidiaries to amend or propose to amend or otherwise change its certificate of incorporation or bylaws or similar governance documents, in each case, except to the extent required to comply with applicable Law, the provisions of this Agreement or the Transaction Agreements.
(e) Acquisitions . UWWH shall not, nor shall UWWH permit any of its Subsidiaries to, enter into in a single transaction or a series of transactions, acquire or agree to acquire by merging or consolidating with, or by purchasing any equity interest in or the assets of, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof.
(f) Dispositions . UWWH shall not, and shall not permit any of its Subsidiaries to, enter into a single transaction or a series of related transactions, sell, lease, pledge, encumber, transfer, license or otherwise dispose of, or agree to sell, lease, pledge, encumber, transfer, license or otherwise dispose of, any of its assets (other than Contracts, which are governed by Section 8.2(m) hereof) (excluding the disposition in the ordinary course of business for fair market value of assets having a fair market value not exceeding $500,000 in the aggregate).
(g) Indebtedness . Except with respect to the incurrence of Indebtedness under the Unisource Credit Facility in the ordinary course of business, UWWH shall not, and shall not permit any of its Subsidiaries to:
(i) incur any Indebtedness for borrowed money or guarantee or otherwise become contingently liable for any such Indebtedness or issue or sell any debt securities or warrants or rights to acquire any debt securities of UWWH or any of its Subsidiaries or guarantee any debt securities of others or enter into any material lease other than in connection with operating leases in the ordinary course of business;
(ii) issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for, the obligations of any Person for borrowed money or otherwise;
(iii) make any loans, advances, capital contributions to or investments in any other Person except (A) loans or advances by UWWH or any of UWWH’s wholly-owned Subsidiaries to it or any of its wholly-owned Subsidiaries, (B) investments or capital contributions in any of UWWH’s wholly-owned Subsidiaries, (C) as required by binding Contracts in effect as of the date hereof set forth in Section 8.2(g) of the UWWH Disclosure Schedules or (D) in the ordinary course of business; provided, that the aggregate amount of such loans, advances, capital contributions to or investments in any other Person made in reliance on this clause (D) shall not exceed $100,000;
(iv) authorize material capital expenditures or purchases of fixed assets other than from third parties in the ordinary course of business; or
(v) incur Liabilities secured by an Encumbrance on its assets other than in the ordinary course of business;
which, in the case of clauses (i), (ii), (iii), (iv) or (v) above, would obligate the Surviving Corporation or its Subsidiaries to pay any amounts, or assume any obligations to be performed by the Surviving Corporation or its Subsidiaries, at or after the Effective Time.
 
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(h) Employee Arrangements . Except as set forth on Section 8.2(h) of the UWWH Disclosure Schedules, pursuant to the terms of any collective bargaining agreements in effect as of the date hereof and disclosed on Section 6.15(a) of the UWWH Disclosure Schedules, as contemplated by this Agreement, as set forth in the Employee Matters Agreement or as otherwise required by applicable Law, UWWH shall not, nor shall it permit any of its Subsidiaries to:
(i) grant any material increases in the compensation (including bonus and incentive compensation) or fringe benefits of any UWWH Employee except any increases that would not reasonably be expected to become a Liability of the Surviving Corporation or its Subsidiaries;
(ii) pay or agree to pay to any UWWH Employee any pension, retirement allowance, severance benefit or other material employee benefit not required by any of the existing UWWH Benefit Plans as in effect on the date hereof, except as would not reasonably be expected to result in a Liability of the Surviving Corporation or its Subsidiaries;
(iii) except in the ordinary course of business, enter into any new, or terminate or materially amend any existing collective bargaining agreement or relationship, employment, severance or termination Contract or other arrangement with any UWWH Employee or his or her representative, provided, that any such new collective bargaining agreement or any termination of or material amendment to any such existing collective bargaining agreement in the ordinary course of business shall be subject to review by xpedx senior management reasonably in advance of the conclusion of such negotiations, and xpedx senior management shall have been informed periodically of the status of negotiations with respect thereto;
(iv) (A) become obligated under any new pension plan, welfare plan, employee benefit plan (including any equity incentive plan), severance plan, benefit arrangement or similar plan or arrangement sponsored or maintained by UWWH or any of its Subsidiaries that was not in existence on the date hereof, or (B) amend any such plan or arrangement in existence on the date hereof, except in the case of (B) (x) as would not result in a material increase in the annual aggregate cost (based on UWWH’s historical annual aggregate cost) of maintaining such pension plan, welfare plan, employee benefit plan, severance plan, trust, fund, policy or arrangement or (y) as would not reasonably be expected to result in a Liability of the Surviving Corporation or its Subsidiaries;
(v) grant any equity-based compensation to any UWWH Employee or director or independent contractor of UWWH or any of its Subsidiaries;
(vi) make any offer for the employment or engagement of any UWWH Employee or other individual on a full-time, part-time, or consulting basis providing for an annual compensation in excess of $250,000;
(vii) implement any distribution center, facility, warehouse or business unit closing or mass layoff that could implicate WARN; or
 
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(viii) make any loan to (x) any director, officer or member of senior management of UWWH or any of its Subsidiaries or (y) except in the ordinary course of business and in compliance with applicable Law, to any other UWWH Employee.
(i) No Liquidation or Dissolution . UWWH shall not, and shall not permit any of its Subsidiaries to, adopt a plan or agreement of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other material reorganization or any other transaction that would preclude or be inconsistent in any material respect with, or hinder or delay in any material respect, consummation of the Transactions.
(j) Accounting Methods . UWWH shall not, and shall not permit any of its Subsidiaries to, make any material change in the methods of accounting or procedures of UWWH or its business in effect at January 1, 2013, except (i) as required by changes in GAAP after providing reasonable prior written notice and an opportunity to provide input to IP, (ii) as may be made in response to SEC guidance in each case as concurred with in writing by UWWH’s independent auditors or (iii) as may be required in connection with the Transactions, so long as any such changes are in accordance with GAAP or (iv) changes permitted by Section 8.2(k), and UWWH shall not change its fiscal year.
(k) Taxes . Neither UWWH nor any of its Subsidiaries shall (i) make, change or rescind any material Tax election, (ii) settle, compromise or abandon any material Action or controversy relating to Taxes, (iii) amend any material Returns, (iv) adopt or change any material method of Tax accounting or change any annual Tax accounting period or (v) consent to any extension or waiver of the limitation period applicable to any material Tax claim or assessment in filing their respective Returns, in each case without the prior written consent of IP, which consent shall not be unreasonably withheld, conditioned or delayed, provided that UWWH and its Subsidiaries may, without the consent of IP, take any of the foregoing actions (A) in the ordinary course of business, (B) if such action would not be binding on UWWH or any of its Subsidiaries after the Effective Time or would not reasonably be expected to result in an increase in Tax liabilities or decrease in Tax attributes for UWWH or its Subsidiaries after the Effective Time, (C) that is expressly permitted pursuant to the Tax Matters Agreement or (D) as required by Law.
(l) Affiliate Transactions . UWWH shall not, and shall not permit any of its Subsidiaries to, except as contemplated by the Transaction Agreements or for arm’s length commercial arrangements entered into in the ordinary course of business, enter into or amend any Contract or arrangement with any of their respective Affiliates (including, for the avoidance of doubt, GP and its Affiliates), other than with wholly-owned Subsidiaries of UWWH. UWWH shall not, and the UWWH Stockholder shall cause UWWH and its Subsidiaries not to, make any payment to any direct or indirect equity holder of UWWH or any of such equity holders’ respective Affiliates (other than UWWH and its Subsidiaries or their respective employees), including pursuant to or in connection with the Advisory Agreement (including the termination thereof), except as set forth on Section 8.2(l) of the UWWH Disclosure Schedules.
(m) Contracts . UWWH shall not, and shall not permit any of its Subsidiaries to, except in the ordinary course of business, modify, amend, terminate or enter into any UWWH Material Contract with a third party, or waive, release or assign any material rights or claims of UWWH or any of its Subsidiaries thereunder.
 
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(n) Settlement of Litigation . UWWH shall not, and shall not permit any of its Subsidiaries to, pay, discharge, satisfy or settle any Action (absolute, accrued, asserted or unasserted, contingent or otherwise) other than any Action in respect of Taxes, which shall be governed exclusively by the Tax Matters Agreement and Section 8.2(k), if such payment, discharge, satisfaction or settlement would (i) require any material payment by UWWH or any of its Subsidiaries prior to, or the Surviving Corporation or its Subsidiaries following, the Effective Time or (ii) restrict the Surviving Corporation or any of its Subsidiaries from operating their respective businesses in any material respect or require the taking of any action by UWWH or any of its Subsidiaries that, in each case, would, or would reasonably be expected to, materially and adversely affect the operation of the respective businesses of UWWH or the Surviving Corporation following the Effective Time.
(o) Restrictive Agreements . UWWH shall not, and shall not permit any of its Subsidiaries to, enter into any Contract or arrangement that limits or otherwise restricts UWWH or any of its Subsidiaries in any material respect, or that would or would reasonably be expected to, following the Effective Time, limit or restrict UWWH or any of its Subsidiaries in any material respect from engaging in their business.
(p) Intellectual Property . UWWH shall not, and shall not permit any of its Subsidiaries to, sell, transfer, license, abandon, let lapse, encumber or otherwise dispose of any Intellectual Property that is necessary to carry on the business of UWWH and its Subsidiaries as currently conducted, except, in each case, in the ordinary course of business.
(q) Foregoing Actions . UWWH shall not agree or commit, and shall not permit any of its Subsidiaries to agree or commit, to do any of the actions described in clauses (a) through (p) above.
Section 8.3 Directors and Officers of Spinco and the Surviving Corporation . The Spinco Board of Directors immediately prior to the Effective Time (as elected pursuant to the Distribution Agreement) shall be, from and after the Effective Time, the initial members of the Surviving Corporation Board of Directors immediately following the Closing. Section 8.3 of the IP/Spinco Disclosure Schedules (as it may be amended after the date hereof by the written consent of IP and UWWH) shall set forth names of the officers of Spinco immediately prior to the Effective Time that, from and after the Effective Time, shall be the initial officers of the Surviving Corporation; provided, that in the event that, prior to the Distribution Date, any of the individuals set forth on Section 8.3 of the IP/Spinco Disclosure Schedules no longer agree to, or can no longer, serve in their designated capacity as an officer of the Surviving Corporation, the Parties shall cooperate and consult with one another in good faith to determine mutually acceptable replacements for any such individuals. Such directors and officers shall serve until their successors have been duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the Surviving Corporation’s amended and restated certificate of incorporation and amended and restated bylaws. In furtherance of the foregoing, pursuant to the terms of the Distribution Agreement, IP and Spinco shall take all action necessary to obtain the resignations of directors and officers who will not be employed by Spinco after the Distribution Date.
 
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Section 8.4 Preparation of Registration Statement and Prospectus .
(a) Promptly following the execution of this Agreement, IP, Spinco and UWWH shall prepare the Prospectus, and Spinco shall prepare and file with the SEC the Registration Statement, in which the Prospectus shall be included. UWWH shall use its reasonable best efforts to furnish to IP and Spinco all information concerning it as is required by the SEC in connection with the preparation of the Registration Statement (including any financial statements required to be included therein). Without limiting the foregoing, UWWH and Spinco shall each, and IP shall cause Spinco to, provide (i) interim financial statements (including footnotes) that are timely reviewed by UWWH’s or Spinco’s independent auditor, (ii) management’s discussion and analysis of interim and annual financial statements, (iii) the consent of UWWH’s or Spinco’s independent auditor to include annual financial statement reports in the Registration Statement and Prospectus, (iv) information necessary to prepare selected financial data and (v) information necessary to enable Spinco to prepare required pro forma financial statements and related footnotes, in each case, to the extent reasonably necessary to permit Spinco to prepare the Registration Statement and Prospectus. Spinco and UWWH shall use their respective reasonable best efforts to have the Registration Statement declared effective under the Securities Act on a date to be mutually agreed upon by IP and UWWH and to keep the Registration Statement effective as long as is necessary to consummate the Distribution; provided, that such date is no earlier than the date on which the Surviving Corporation would be reasonably able to meet its obligations and requirements as a public company with securities listed on the NYSE and is otherwise reasonably prepared to operate as a standalone entity taking into account all resources available to it under the Transaction Agreements and on commercially reasonable terms from third parties. The Parties shall promptly provide copies, consult with each other and prepare written responses with respect to any written comments received from the SEC with respect to the Prospectus and the Registration Statement, and advise one another of any oral comments received from the SEC with respect to the Prospectus and the Registration Statement. The Parties shall cooperate in preparing and filing with the SEC any necessary amendment or supplement to the Prospectus or the Registration Statement. No amendment or supplement to the Prospectus or Registration Statement shall be filed without the approval of all of the Parties, which approval shall not be unreasonably withheld, conditioned or delayed. IP will use its reasonable best efforts to cause the Prospectus to be mailed to the IP Stockholders promptly after the Registration Statement is declared effective under the Securities Act. The Prospectus and the Registration Statement shall comply as to form in all material respects with the rules and regulations promulgated by the SEC under the Securities Act and the Exchange Act, respectively.
(b) If, at any time after the mailing of the Prospectus, any event should occur that results in the Prospectus or the Registration Statement containing an untrue statement of a material fact or omitting to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they are made, not misleading, or that otherwise should be described in an amendment or supplement to the Prospectus or the Registration Statement, the Parties shall promptly notify the other Parties of the occurrence of such event and then promptly prepare, file and clear with the SEC such amendment or supplement and Spinco shall, as may be required by the SEC, mail to the IP Stockholders each such amendment or supplement.
 
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Section 8.5 No Solicitation of Acquisition Proposals .
(a) From the date of this Agreement and prior to the earlier of the Effective Time or the termination of this Agreement, UWWH agrees that neither it nor any of its Subsidiaries shall, and UWWH shall cause its Representatives, agents and other intermediaries (including any accountants, financial or legal advisors or other consultants) not to, (i) directly or indirectly, solicit, initiate or encourage any inquiry or proposal that constitutes or could reasonably be expected to lead to a UWWH Acquisition Proposal, (ii) provide any non-public information or data to any Person relating to or in connection with a UWWH Acquisition Proposal, (iii) waive, amend or modify any standstill or confidentiality agreement (other than the Confidentiality Agreement or confidentiality agreements with any UWWH Employees) to which it or any of its Subsidiaries is a party in connection with a UWWH Acquisition Proposal, (iv) enter into, maintain or continue any discussions or negotiations concerning a UWWH Acquisition Proposal or (v) otherwise cooperate with, participate in or facilitate any effort or attempt to make or implement a UWWH Acquisition Proposal or approve, agree to, recommend or accept, or propose to approve, recommend, agree to or accept, or execute or enter into, any letter of intent, agreement in principle, merger agreement, acquisition agreement, option agreement or other similar agreement related to any UWWH Acquisition Proposal and UWWH shall request the return of any Confidential Information distributed to any such parties in connection with any such activities, discussions or negotiations. UWWH shall promptly (and, in any event, within 48 hours) notify IP of the receipt of any UWWH Acquisition Proposal or any inquiry, proposal, offer or request for information with respect to, or that could reasonably be expected to result in, a UWWH Acquisition Proposal, indicating, in each case, the identity of the Person or group making such UWWH Acquisition Proposal, inquiry, offer, proposal or request for information and a copy of any UWWH Acquisition Proposal made in writing and the material terms and conditions of a UWWH Acquisition Proposal not made in writing (including, in each case, as applicable, copies of any written requests, proposals or offers, including proposed agreements), and thereafter shall keep IP informed in reasonable detail, on a prompt basis (and, in any event, within forty-eight hours), of the status and terms of any such UWWH Acquisition Proposal, inquiry, offer, proposal or request, including any material developments or modifications to the terms of any such UWWH Acquisition Proposal, inquiry, proposal, offer or request (including amendments thereto).
(b) From the date of this Agreement and prior to the earlier of the Effective Time or the termination of this Agreement, each of IP and Spinco agrees that neither it nor any of their respective Subsidiaries, as applicable, shall, and each of IP and Spinco shall cause its respective Representatives, agents and other intermediaries (including any accountants, financial or legal advisors, or other consultants) not to, (i) directly or indirectly, solicit, initiate or encourage any inquiry or proposal that constitutes or could reasonably be expected to lead to a Spinco Acquisition Proposal, (ii) provide any non-public information or data to any Person relating to or in connection with a Spinco Acquisition Proposal, (iii) waive, amend or modify any standstill or confidentiality agreement (other than the Confidentiality Agreement or confidentiality agreements with any Spinco Group Employees) to which it or any of its Subsidiaries, is a party relating primarily to the Spinco Business in connection with a Spinco Acquisition Proposal, (iv)
 
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enter into, maintain or continue any discussions or negotiations concerning a Spinco Acquisition Proposal or (v) otherwise cooperate with, participate in or facilitate any effort or attempt to make or implement a Spinco Acquisition Proposal or approve, agree to, recommend or accept or propose to approve, recommend, agree to or accept, or execute or enter into, any letter of intent, agreement in principle, merger agreement, acquisition agreement, option agreement or other similar agreement related to any Spinco Acquisition Proposal and each of IP and Spinco shall request the return of any Confidential Information distributed to any such parties in connection with any such activities, discussions or negotiations. IP and Spinco shall promptly (and, in any event, within 48 hours) notify UWWH of the receipt of any Spinco Acquisition Proposal or any inquiry, proposal, offer or request for information with respect to, or that could reasonably be expected to result in, a Spinco Acquisition Proposal, indicating, in each case, the identity of the Person or group making such Spinco Acquisition Proposal, inquiry, offer, proposal or request for information and a copy of any Spinco Acquisition Proposal made in writing and the material terms and conditions of a Spinco Acquisition Proposal not made in writing (including, in each case, as applicable, copies of any written requests, proposals or offers, including proposed agreements), and thereafter shall keep UWWH informed in reasonable detail, on a prompt basis (and, in any event, within forty-eight hours), of the status and terms of any such Spinco Acquisition Proposal, inquiry, offer, proposal or request, including any material developments or modifications to the terms of any such Spinco Acquisition Proposal, inquiry, proposal, offer or request (including amendments thereto).
Section 8.6 Tax Matters . Prior to the Effective Time, none of the Parties will (and each of the Parties will cause its respective Subsidiaries not to) take any action (or refrain from taking any action) which (i) is inconsistent with the facts presented and the representations made in the IRS Submissions with respect to such Party or its Affiliates (in the case of UWWH, the facts presented and representations made with respect to UWWH and its Subsidiaries contained in the redacted versions of the IRS Submissions) or (ii) could reasonably be expected to cause any “Tax-Free Transaction Failure” (as such term is defined in the Tax Matters Agreement).
Section 8.7 Cooperation . The Parties shall use their reasonable best efforts to, together or pursuant to the allocation of responsibility set forth below or otherwise to be agreed upon between them take, or cause to be taken, the following actions:
(a) NYSE and Other Listings . IP shall cause Spinco to prepare and file, and shall use its reasonable best efforts to cause Spinco to have approved prior to the Effective Time, an application for the listing on the NYSE of the Spinco Common Stock to be issued pursuant to the Distribution and the Merger and shares of Spinco Common Stock to be reserved for issuance pursuant to any director or employee benefit plan or arrangement, subject to official notice of issuance prior to the Closing Date.
(b) Blue Sky Filings . IP shall use its reasonable best efforts to cause Spinco to take such action as may be required under state securities or “blue sky” laws in connection with the issuance of shares of Spinco Common Stock pursuant to the Distribution and the Merger; provided that, other than as required pursuant to the Registration Rights Agreement, Spinco shall not be required to (i) qualify as a foreign corporation or other entity or as a dealer in securities in any jurisdiction where it would not otherwise be required to so qualify, (ii) file any general consent to service of process in any such jurisdiction, (iii) subject itself to taxation in any such jurisdiction if it is not otherwise so subject or (iv) amend the Company’s certificate of incorporation or bylaws.
 
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(c) Further Assistance . The Parties shall use their reasonable best efforts to provide such further assistance as any of the other Parties may reasonably request and as may be reasonably necessary or appropriate in connection with the foregoing and in effectuating the provisions of this Agreement.
(d) Cooperation of Third Parties . Where the cooperation of any third parties, such as insurers or trustees, would be necessary in order for any Party to completely fulfill its obligations under this Agreement or any Transaction Agreement, such Party will use its reasonable best efforts to seek the cooperation of such third parties.
Section 8.8 Competition Approvals; IRS Rulings .
(a) Competition Approvals . Subject to the terms and conditions of this Agreement, each of the Parties shall use their reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary under applicable Laws and regulations to consummate and make effective the Transactions, including providing information and using their reasonable best efforts to obtain all necessary exemptions, rulings, consents, authorizations, approvals and waivers to effect all necessary registrations and filings and to lift any injunction or other legal bar to the Transactions, as promptly as practicable, and to take all other actions necessary to consummate the Transactions contemplated hereby in a manner consistent with applicable Law, it being understood that this Section 8.8(a) does not address any filings required under the IRS Rulings (which is addressed in Section 8.8(b)). Without limiting the generality of the foregoing, IP, UWWH and Spinco agree, and shall cause each of their respective Subsidiaries, to cooperate and to use their respective reasonable best efforts to obtain any government clearances required to consummate the Merger, to respond to any government requests for information, and to contest and resist any Action, and to have vacated, lifted, reversed or overturned any Order, that restricts, prevents or prohibits the consummation of the Transactions, including by pursuing all available avenues of administrative and judicial appeal and all available legislative action. The Parties will consult and cooperate with one another (including by permitting the other party to review in advance any communication to be given by it to, and consult with each other in advance of any meeting or material telephone call with, any Governmental Authority), and consider in good faith the views of one another, in connection with any analyses, appearances, presentations, memoranda, briefs, arguments, opinions and proposals made or submitted by or on behalf of any Party in connection with proceedings under or relating to any federal, state or foreign antitrust or fair trade Law, and will provide one another with copies of all material communications from and filings with, any Governmental Authorities in connection with the Transactions contemplated hereby. Any filing fees required to be paid by the Parties under any filing with any Governmental Authority shall be borne one-half by IP and one-half by UWWH. Notwithstanding anything to the contrary set forth above in this Section 8.8(a), none of UWWH, IP, Spinco or any of their respective Affiliates will be required to offer or agree to sell, divest, lease, license, transfer, dispose of or otherwise encumber before or after the Effective Time any assets, Licenses, operations, rights, product lines, business or interests therein of UWWH or IP or any of their respective Affiliates or agree to make any material
 
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changes or restriction on, or other impairment of UWWH’s, IP’s or either of their respective Affiliates’ ability to own, operate or exercise rights in respect of such assets, Licenses, operations, rights, product lines, business or interests therein, where the effect of such sale, divestiture, license, transfer, disposition, encumbrance or other restriction would be materially adverse to the business, financial condition or results of operations of UWWH, IP or any of their respective Affiliates.
(b) IRS Rulings and Opinions .
(i) IP and Spinco shall use their reasonable best efforts to seek, as promptly as practicable, one or more private letter rulings from the IRS, in form and substance reasonably satisfactory to IP (the “ IRS Rulings ”), and an opinion of Debevoise & Plimpton LLP (the “ Spin-Off Tax Opinion ”), (A) to the effect that (I) the transactions that comprise the Distribution will qualify as a “reorganization” within the meaning of Section 368(a)(1)(D) of the Code, (II) IP will recognize no gain or loss under Section 361(c) of the Code upon the Distribution and (III) IP’s stockholders will recognize no gain or loss under Section 355(a) of the Code upon the receipt of Spinco Common Stock in the Distribution and (B) covering any other matters reasonably requested by IP. The IRS Rulings and the Spin-Off Tax Opinion may be based upon customary factual statements, representations and covenants by the Parties, their Subsidiaries and their stockholders. Each of UWWH and the UWWH Stockholder agree to cooperate and use its reasonable best efforts to, and to cause its Subsidiaries to, assist in obtaining the IRS Rulings and the Spin-Off Tax Opinion, including providing such appropriate information and representations as the IRS or Debevoise & Plimpton LLP shall reasonably require in connection with the IRS Rulings or the Spin-Off Tax Opinion.
(ii) IP, in consultation with UWWH, shall be responsible for the preparation and filing of all ruling requests and supplements thereto to be submitted to the IRS in connection with the IRS Rulings (the “ IRS Submissions ”). IP shall provide UWWH with consultation rights and a reasonable opportunity to review and comment on a draft of the IRS Submissions to the extent filed after the date hereof; provided, that such rights shall not result in unreasonable delays in submitting the IRS Submissions to the IRS. Notwithstanding the foregoing, IP may redact from any IRS Submission any information (“ Redactable Information ”) that (y) IP, in its good faith judgment, considers to be Confidential Information or legal analysis/qualifications which in either case are not information about UWWH or its Subsidiaries or the actions that Spinco or its Subsidiaries will take (or refrain from taking) after the Distribution and (z) is not (and is not reasonably expected to become) a part of any other publicly available information. No IRS Submission shall be filed with the IRS after the date hereof unless, prior to such filing, UWWH shall have agreed (which agreement shall not be withheld unreasonably, conditioned or delayed) as to the contents of such IRS Submission, to the extent that such contents include information about UWWH or its Subsidiaries or the actions that Spinco or its Subsidiaries will take (or refrain from taking) after the Distribution. IP shall provide UWWH with copies of each IRS Submission as filed with the IRS promptly following the filing thereof. IP shall use its reasonable best efforts to notify UWWH of any substantive communications with or from the IRS regarding any material issue arising with respect to the IRS Rulings, including, without limitation, the IRS Submissions, provided that IP may redact from such IRS Submission any Redactable Information prior to providing such IRS Submission to UWWH.
 
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(iii) IP and UWWH shall cooperate with each other in obtaining, and shall use their respective reasonable best efforts to obtain (and shall cause their respective Subsidiaries and stockholders to cooperate in obtaining and use their reasonable best efforts to obtain), a written opinion of their respective tax counsel, Kirkland & Ellis LLP, in the case of the UWWH, and Debevoise & Plimpton LLP, in the case of IP and Spinco, in form and substance reasonably satisfactory to UWWH and IP, respectively (each such opinion, a “ Merger Tax Opinion ”), dated as of the Effective Time, to the effect that, on the basis of facts, representations and assumptions set forth in such opinion, the Merger will be treated as a “reorganization” within the meaning of Section 368(a) of the Code; provided, that, if IP obtains an IRS Ruling providing that the Merger will be treated as a “reorganization” within the meaning of Section 368(a)(1)(A) of the Code, then IP may choose in its sole discretion to waive the requirement that it obtain the Merger Tax Opinion by Debevoise & Plimpton LLP and UWWH may choose in its sole discretion to waive the requirement that it obtain the Merger Tax Opinion from Kirkland & Ellis LLP. UWWH shall use its reasonable best efforts to obtain (and shall cause its respective Subsidiaries and stockholders to cooperate in obtaining and use their reasonable best efforts to obtain), and IP shall cooperate with UWWH in obtaining (and shall cause its respective Subsidiaries and stockholders to cooperate in obtaining and use their reasonable best efforts to obtain), a written opinion of Kirkland & Ellis LLP (the “ Subsidiary Merger Tax Opinion ”), in form and substance reasonably satisfactory to UWWH, dated as of the Effective Time, to the effect that, on the basis of facts, representations and assumptions set forth in such opinion, the Subsidiary Merger will qualify as a capital contribution within the meaning of Section 351(a) of the Code; provided, that if IP obtains an IRS Ruling providing that the Subsidiary Merger will qualify as a capital contribution within the meaning of Section 351(a) of the Code, then UWWH may choose in its sole discretion to waive the requirement that it obtain the Subsidiary Merger Tax Opinion by Kirkland & Ellis LLP. Each of the Parties shall deliver, if applicable, to Kirkland & Ellis LLP and Debevoise & Plimpton LLP, for purposes of the Merger Tax Opinions and the Subsidiary Merger Tax Opinion (and shall cause their Subsidiaries and stockholders to deliver) customary representations and covenants reasonably satisfactory in form and substance to Kirkland & Ellis LLP and Debevoise & Plimpton LLP.
Section 8.9 Stockholders and Member Approvals .
(a) Immediately following the execution and delivery of this Agreement, each of IP, Spinco, xpedx Intermediate and xpedx shall take all action necessary to obtain the Spinco Stockholder Approval and the xpedx Intermediate Member Approval and shall promptly (but in any event no later than two Business Days following the date hereof) deliver written documentation of such approvals to UWWH.
(b) Immediately following the execution and delivery of this Agreement, each of the UWWH Stockholder, UWWH and Unisource shall take all action necessary to obtain the UWWH Stockholder Approval and the Unisource Stockholder Approval and shall promptly (but in any event no later than two Business Days following the date hereof) deliver written documentation of such approvals to IP.
 
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Section 8.10 Access .
(a) Subject to Section 8.17 hereof, upon reasonable notice, each of IP, with respect to the Spinco Business, Spinco and UWWH shall, throughout the period prior to the earlier of the Effective Time or the termination of this Agreement, afford to each other and each other’s respective Representatives, reasonable access to its Representatives and, during normal business hours, in a manner that does not unreasonably interfere with business and operations, to its and its Subsidiaries’ and the Spinco Subsidiaries’ officers, properties, Contracts, commitments, books, records (including Returns) and any report, schedule or other document filed or received by it pursuant to the requirements of the federal or state securities Laws, and shall use their respective reasonable best efforts to cause its respective representatives to furnish promptly to the other such additional financial and operating data and other information, including environmental information, as to its and its Subsidiaries’ and the Spinco Subsidiaries’ respective businesses and properties as the other or its duly authorized representatives, as the case may be, may reasonably request, and instruct its employees, legal counsel, financial advisors, auditors and other authorized representatives to reasonably cooperate with the other in such other Party’s investigation; provided, however, that the foregoing shall not permit any Party to conduct any invasive or destructive environmental sampling, testing or analysis (including without limitation any of the nature commonly referred to as a Phase II environmental assessment) on the other Party’s property.
(b) For the purposes of this Section 8.10, all communications, including requests for information or access, pursuant to this Section 8.10, shall only be made by and among representatives of each of IP, Spinco and UWWH, each of whom shall initially be designated in writing by each of IP, Spinco and UWWH, respectively, and may be replaced with a substitute representative by IP, Spinco or UWWH from time to time upon reasonable written notice to the other Parties.
(c) Notwithstanding the foregoing, none of IP, with respect to the Spinco Business, Spinco, UWWH or their respective Subsidiaries, as applicable, shall be required to provide any information to the extent that such information or to the extent that such access would jeopardize the attorney-client privilege or contravene any applicable Law or confidentiality obligation; provided that the Parties shall have used reasonable best efforts to make such disclosure or in a form or manner that would not jeopardize such privilege or violate such Law or confidentiality obligation (including by redacting or otherwise not disclosing any portion thereof the disclosure of which would jeopardize such privilege or entering into a joint defense agreement). Each of UWWH, Spinco and IP will hold, and will cause their respective Subsidiaries to hold, and will direct its and their Representatives to hold, any and all information received from any of the Parties, directly or indirectly, in confidence in accordance with the Confidentiality Agreement and Section 8.17.
(d) Notwithstanding any other provision of this Section 8.10 or the other provisions of this Agreement, IP shall not be required to provide a copy of (or access to) any (i) information with respect to any business conducted by IP, other than the Spinco Business, or (ii) IP Income Tax Return or IP Non-Income Tax Return (other than as required pursuant to the Tax Matters Agreement).
 
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Section 8.11 Director and Officer Indemnification; Insurance .
(a) The Surviving Corporation shall, and shall cause its Subsidiaries to, for a period of at least six years after the Effective Time, indemnify and hold harmless, and provide advancement of expenses (subject to an undertaking to reimburse such advancement if the party receiving such advancement is ultimately determined by an order (that is not subject to appeal) not to be entitled to indemnification for the matter or which such expenses were advanced) to, all past and present directors or officers of IP, Spinco, UWWH and their respective Subsidiaries, and each individual who prior to the Effective Time becomes a director or officer of IP, Spinco, UWWH or their respective Subsidiaries, to the maximum extent allowed under applicable Law in respect of acts or omissions occurring at or prior to the Effective Time (including for acts or omissions occurring in connection with this Agreement or the Transaction Agreements and the consummation of the Transactions).
(b) The Surviving Corporation shall maintain in effect for each of the applicable Persons referred to in clause (a) above for a period of six years after the Effective Time policies of directors’ and officers’ liability insurance and fiduciary liability insurance of at least the same coverage, and containing terms and conditions which are, in the aggregate, no less advantageous to the insured, as the current policies of directors’ and officers’ liability insurance maintained by IP or UWWH, with respect to claims arising from facts or events that occurred on or before the Effective Time; provided that such policies shall be no less favorable than the more favorable policies between those policies held by each of IP and UWWH immediately prior to the Effective Time; provided, further, that the Surviving Corporation may satisfy its obligations under this Section 8.11(b) by purchasing a “tail” policy which (i) has an effective term of six years from the Closing and (ii) covers each person currently covered by IP’s and UWWH’s directors’ and officers’ insurance policy in effect immediately prior to the Effective Time for actions and omissions occurring on or prior to the Closing.
Section 8.12 Material Licenses . IP shall use its reasonable best efforts to deliver to UWWH as soon as reasonably practicable after the date hereof a list setting forth each license agreement or Contract that is in effect as of the date hereof and that is material to the Spinco Business under which any IP Entity or Spinco Entity is a licensee or licensor of any Intellectual Property or that is a settlement, royalty, covenant not to sue, consent, concurrent use or other agreement with respect to any Intellectual Property that is material to the Spinco Business (in each case other than non-disclosure agreements entered into in the ordinary course of business and licenses and related service agreements for any item of commercially available, unmodified software with an annualized license fee of less than $2.5 million).
Section 8.13 Public Announcements . IP, Spinco and UWWH shall consult with each other prior to making any press release or public announcement relating to the Transactions and shall not issue any such press release or make any such public announcement prior to such consultation and without the consent of the other Parties, which consent shall not be unreasonably withheld, delayed or conditioned, except as (i) may be required by applicable Law, Order or by obligations pursuant to any listing agreement with any national securities exchange, in which case the Party proposing to issue such press release or make such public announcement shall use its reasonable best efforts to consult in good faith with, and accept reasonable comment from, the other Party a reasonable time before issuing any such press release or making any such public announcement or (ii) is substantially similar in content to previous written press releases, public disclosures or public statements made jointly by the Parties or in investor conference calls, SEC filings, Q&As or other documents approved by the Parties.
 
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Section 8.14 Defense of Litigation . Each of IP, Spinco and UWWH shall use its reasonable best efforts to defend against all Actions in which such Party is named as a defendant that challenge or otherwise seek to enjoin, restrain or prohibit the Transactions or seek damages with respect to the Transactions. None of IP, Spinco or UWWH shall settle any such Action or fail to perfect on a timely basis any right to appeal any judgment rendered or Order entered against such Party therein without having previously consulted with the other Parties; provided that no Party shall settle any such Action without the prior written consent of the other Parties if (a) such Action involves injunctive or equitable relief or (b) a settlement of such Action would impose Liability on Spinco, UWWH, the Surviving Corporation or any of their respective Subsidiaries. Each of IP, Spinco and UWWH shall use its reasonable best efforts to cause each of its Affiliates, directors and officers to use its reasonable best efforts to defend any such Action in which such Affiliate, director or officer is named as a defendant and which seeks any such relief to comply with this Section 8.14 to the same extent as if such Person was a Party.
Section 8.15 Notification of Certain Events. Each of the Parties shall promptly notify the other Parties of: (a) the occurrence, or nonoccurrence, of any event the occurrence or nonoccurrence of which could reasonably be expected to cause any representation or warranty of such Party in this Agreement to be untrue or inaccurate if the effect thereof would be that the condition to Closing set forth in Section 9.2(a)(i) or (ii) or Section 9.3(a)(i) or (ii) hereof, as applicable, would be incapable of being fulfilled as of the Closing Date; (b) the occurrence, or nonoccurrence, of any event the occurrence or nonoccurrence of which has caused or would reasonably be expected to cause a UWWH Material Adverse Effect or a Spinco Material Adverse Effect, as applicable; (c) the breach by such Party of any covenant or agreement set forth in this Agreement to be performed or complied with by it prior to the Effective Time and, as a result thereof, the condition set forth in Section 9.2(a)(iii) or Section 9.3(a)(iii) hereof, as applicable, would be incapable of being fulfilled as of the Closing Date; and (d) any Action in which such Party is named as a defendant that challenges or otherwise seeks to enjoin, restrain or prohibit the Transactions.
Section 8.16 [Reserved] .
Section 8.17 Confidentiality .
(a) The Parties acknowledge that in connection with the Transactions, the Parties have disclosed and will continue to disclose to each other Information, including Confidential Information.
(b) Subject to Section 8.2 of the Distribution Agreement, which shall govern Privileged Information, the Parties shall hold, and shall cause each of their respective Affiliates that receive Confidential Information or are controlled by the applicable Party to hold, and each of the foregoing shall cause their respective Representatives to hold, in strict confidence, and not to disclose to any other Person (including without limitation by issuing a press release or otherwise making any public statement), use, for any purpose other than as expressly permitted
 
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pursuant to this Agreement, the Distribution Agreement or the other Transaction Agreements, without the prior written consent of the other Party, any and all Confidential Information concerning the other Party or such Party’s Subsidiaries; provided, that the Parties may disclose, or may permit disclosure of, Confidential Information (i) to their respective Representatives who have a need to know such information for auditing and other non-commercial purposes and are informed of their obligation to hold such information confidential to the same extent as is applicable to the Parties and in respect of whose failure to comply with such obligations, the applicable Party will be responsible, (ii) if the Parties or any of their respective Affiliates that receive Confidential Information or are controlled by the applicable Party are requested or required to disclose any such Confidential Information by oral questions, interrogatories, requests for information or other documents in legal proceedings, subpoena, civil investigative demand or any other similar process, or by other requirements of Law or stock exchange rule, (iii) as required in connection with any legal or other proceeding by one Party against any other Party or (iv) as necessary in order to permit a Party to prepare and disclose its financial statements, or other required disclosures required by Law or such applicable stock exchange. Each Party further agrees to take all reasonable best efforts (and to cause each of its Affiliates that receive Confidential Information or are controlled by the applicable Party to take all reasonable best efforts) to safeguard such Confidential Information and to protect it against disclosure, misuse, espionage, loss and theft. Notwithstanding the foregoing, in the event that any demand or request for disclosure of Confidential Information is made pursuant to clause (ii) above, each Party, as applicable, shall provide the other with prompt written notice of any such request or requirement so that the other Party has an opportunity to seek a protective order or other appropriate remedy, which such Parties will cooperate in obtaining. In the event that such appropriate protective order or other remedy is not obtained, the Party whose Confidential Information is required to be disclosed shall or shall cause the other applicable Party or Parties to furnish, or cause to be furnished, only that portion of the Confidential Information that is in the opinion of outside counsel necessary to be disclosed and shall use its reasonable best efforts to ensure confidential treatment is accorded to such disclosed information.
(c) Each Party acknowledges that it and its Affiliates may have in their possession confidential or proprietary information of third parties that was received under confidentiality or non-disclosure agreements or agreements containing confidentiality or non-disclosure provisions that the other Party or its Affiliates entered into with a third party prior to the Effective Time. Such Party will hold, and will cause its Affiliates and their respective Representatives to hold, in strict confidence the confidential and proprietary information of third parties to which they or any of its respective Affiliates has had access, in accordance with the terms of such agreements entered into prior to the Effective Time or, if more restrictive, the terms set forth herein.
(d) If the Merger is not consummated, the other Party shall promptly (i) deliver or cause to be delivered to such requesting Party (and if in electronic format, delete or destroy or cause to be deleted or destroyed) all Confidential Information furnished to it or to any of its Affiliates and (ii) if specifically requested by such requesting Party, destroy any copies of such Confidential Information (including any extracts therefrom), unless such delivery or destruction would violate any Law. Upon the written request of such requesting Party, the other Party shall cause one of its duly authorized officers to certify promptly in writing to such requesting Party that all Confidential Information has been returned, destroyed or deleted as required by the preceding sentence.
 
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(e) IP and UWWH acknowledge that they have previously executed the Confidentiality Agreement, which shall continue in full force and effect in accordance with its terms and that the provisions of this Section 8.17 are in furtherance of, and do not limit the obligations of, IP and UWWH under the Confidentiality Agreement. If the Closing occurs, this Section 8.17 shall terminate on the two year anniversary of the Closing Date.
(f) Notwithstanding anything in this Agreement to the contrary, the provision of Returns and other Information relating to Tax matters shall be exclusively governed by the Tax Matters Agreement and, to the extent applicable, the Distribution Agreement and the Tax Receivable Agreement, and not this Agreement.
Section 8.18 Control of Other Party’s Business . Nothing contained in this Agreement shall give IP or Spinco, directly or indirectly, the right to control or direct UWWH’s operations prior to the Effective Time. Nothing contained in this Agreement shall give UWWH, directly or indirectly, the right to control or direct IP’s or Spinco’s operations prior to the Effective Time. Prior to the Effective Time, each of IP, Spinco and UWWH shall exercise and be responsible for, consistent with the terms and conditions of this Agreement and applicable Law (including the HSR Act), complete control and supervision over their respective operations, including, in the case of IP and Spinco, complete control and supervision of all programs, employees, finances and policies of the Spinco Business.
Section 8.19 Financing .
(a) IP, Spinco and UWWH shall use, and shall cause their respective Subsidiaries and Representatives and advisors to use, their reasonable best efforts to arrange and to consummate the Spinco Financing as soon as reasonably practicable after the date of this Agreement on terms and conditions no less favorable in the aggregate than the terms set forth in the Spinco Commitment Letter (including any market “flex” provisions) as in effect on the date hereof, as it may be amended or replaced in accordance with the terms of this Section 8.19, including using their respective reasonable best efforts, as applicable, to (i) maintain in effect the Spinco Commitment Letter, (ii) satisfy on a timely basis (or obtain the waiver of) all conditions and covenants applicable to IP, Spinco or UWWH, as the case may be, in the Spinco Commitment Letter and such definitive documents to be entered into pursuant to the Spinco Commitment Letter, (iii) negotiate and enter into definitive agreements with respect thereto consistent with the terms and conditions contained in the Spinco Commitment Letter provided on the date of this Agreement (including any market “flex” provisions, if any) or on other terms no less favorable in the aggregate to IP, Spinco or UWWH (in each case, upon written consent of IP and UWWH to enter into such definitive agreements in the event the terms thereof are inconsistent with the terms contained in the Spinco Commitment Letter delivered on the date hereof , as it may be amended or replaced in accordance with this Section 8.19), (iv) in the case of Spinco, comply with its obligations and, in the case of IP and UWWH, cooperate with Spinco to enable Spinco to comply with its obligations under the Spinco Commitment Letter (including, without limitation, in the case of IP, taking such actions as necessary to cause the payment to IP of the Special Payment and in the case of UWWH, the repayment in full of the Unisource Credit Facility in connection with the consummation of the Merger) and (v) cooperate in all aspects necessary or reasonably requested by IP or UWWH in connection with the arrangement and consummation of the Spinco Financing as required by the terms of the Spinco Commitment Letter, including,
 
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without limitation, (A) participation in a reasonable number of meetings, presentations, and meetings with, and presentations to, prospective lenders and rating agencies; (B) assisting with the marketing and due diligence efforts with respect to the Spinco Financing, including the preparation of materials for rating agency presentations, bank information memoranda, lender presentations and other customary marketing materials, including execution and delivery of customary authorization letters (by each of the Persons required by the Lenders to deliver such letters), in each case consistent with the terms required by the Spinco Commitment Letter in connection therewith; (C) furnishing financial and other information regarding UWWH, Spinco and their respective Subsidiaries, as required by the Spinco Commitment Letter (all such information in this clause (C), the “ Required Information ”); (D) using their reasonable best efforts to obtaining legal opinions, appraisals, surveys, title insurance and other documentation and items relating to the Spinco Financing as required by the Spinco Commitment Letter; (E) executing and delivering any pledge and security documents, other definitive financing documents, or other certificates, mortgages, documents and instruments relating to guarantees, or documents, in each case as and when required by the Spinco Commitment Letter (including a certificate of the Chief Financial Officer (or officer of equivalent duties) of Spinco or any Subsidiary with respect to solvency matters (which certificate shall be in the form attached to the Spinco Commitment Letter), all back-up and supporting information, as may be reasonably required by the person signing such certificate to support the conclusions set forth therein) and otherwise facilitating the pledging of collateral and providing of guarantees contemplated by the Spinco Commitment Letter (including cooperation in connection with the pay-off of existing Indebtedness and the release of related liens); (F) using their reasonable best efforts in taking all reasonable actions necessary to (I) permit the prospective persons involved in the Spinco Financing to evaluate UWWH, Spinco and their respective Subsidiaries, including Spinco’s and UWWH’s current assets, cash management and accounting systems, policies and procedures relating thereto for the purposes of establishing collateral arrangements and (II) establish bank and other accounts, blocked account agreements and lock box arrangements in connection with the foregoing as required by the terms of the Spinco Commitment Letter, provided that no such arrangement or agreement shall become effective prior to the Closing Date; (G) using reasonable best efforts to obtain waivers, consents, estoppels and approvals from other parties to material leases, Encumbrances and Contracts to which any Subsidiary of Spinco or UWWH is a party, in each case to the extent required by the terms of the Spinco Commitment Letter; (H) furnishing all documentation and other information concerning such Person under applicable “know your customer” and anti-money laundering rules and regulations, including without limitation the Patriot Act, and (I) using reasonable best efforts to cooperate with the lenders in their efforts to benefit from the existing lending relationships of IP, Spinco or UWWH; provided, however, that nothing herein shall require such cooperation to the extent it would interfere unreasonably with the business or operations of IP, Spinco or UWWH or any of their respective Subsidiaries; provided, further, that for the avoidance of doubt, nothing set forth in this Section 8.19 shall require IP, Spinco or UWWH or any of their respective Subsidiaries to enter into any documentation prior to the Closing Date (other than an authorization letter pursuant to clause (iv)(B) above) or deliver any financial statements except as expressly contemplated by the Spinco Commitment Letter provided on the date of this Agreement. IP, Spinco and UWWH will update any such Required Information in order to ensure that such Required Information does not contain any untrue statement of material fact or omit to state any material fact necessary in order to make the statements contained therein not materially misleading, as and to the extent
 
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required by the terms of the Spinco Commitment Letter. Each of Spinco and UWWH hereby consents to the use of its and its Subsidiaries’ logos in connection with the Spinco Financing provided that such logos are used solely in a manner that is not intended to or reasonably likely to harm or disparage it or its reputation or goodwill or any of its intellectual property rights.
(b) In the event that any portion of the Spinco Financing becomes unavailable on the terms and conditions contemplated in the Spinco Commitment Letter provided on the date of this Agreement (including any market “flex” provisions), IP and Spinco (unless the unavailability of the Spinco Financing is a result of the failure of UWWH to comply with Section 8.19(a)) and UWWH (unless the unavailability of the Spinco Financing is a result of the failure of IP or Spinco to comply with Section 8.19(a)) shall use their reasonable best efforts to obtain alternative financing from the same or alternative sources in an amount sufficient to consummate the transactions contemplated by this Agreement and the other Transaction Agreements as promptly as practicable following the occurrence of such event. The terms of any such alternative financing shall be no less favorable in the aggregate to Spinco and its Subsidiaries and UWWH than the terms of the Spinco Commitment Letter in effect on the date hereof unless otherwise agreed by IP and UWWH (it being understood and agreed that whether such alternative financing is more or less restrictive with respect to payments under the Tax Receivables Agreement than the terms of the Spinco Commitment Letter in effect on the date hereof shall not be taken into account for purposes of determining whether the terms of such alternative financing are less favorable to Spinco, its Subsidiaries and UWWH). IP, Spinco and UWWH shall use their respective reasonable best efforts to cause the terms of any such alternative financing to be no more restrictive with respect to payments under the Tax Receivable Agreement than the terms of the Spinco Commitment Letter in effect on the date hereof.
(c) Spinco shall not, without the prior written consent of IP and UWWH, (i) terminate any Spinco Commitment Letter, unless such Spinco Commitment Letter is replaced by a substitute commitment letter that would be permitted under the following clause (c)(ii) if it were an amendment to the Spinco Commitment Letter, (ii) consent to any amendment or modification to the Spinco Commitment Letter that would change or add to the conditions precedent, delay or prevent the funding under the Spinco Financing, be more restrictive with respect to payments under the Tax Receivable Agreement or otherwise adversely affect in any material respect those terms set forth in the Spinco Commitment Letter provided on the date of this Agreement or result in terms less favorable in the aggregate to IP, Spinco or UWWH or (iii) enter into any definitive documentation with respect to the Spinco Financing in the event the terms thereof are inconsistent with the terms contained in the Spinco Commitment Letter delivered on the date hereof, as it may be amended or replaced in accordance with Section 8.19. In the event that Spinco enters into a substitute commitment letter pursuant to this Section 8.19(b), references in this Agreement to the Spinco Commitment Letter shall be deemed to refer to such substitute commitment letter and references in this Agreement to the Spinco Financing shall be deemed to refer to the debt financing contemplated by such substitute commitment letter.
(d) Each Party shall use its reasonable best efforts to cause its outside auditors to participate in the preparation of any pro forma financial statements necessary or desirable for use in connection with obtaining any Indebtedness incurred under the Spinco Financing.
 
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(e) Each of IP, Spinco and UWWH shall use, and shall cause their respective Subsidiaries and Representatives and advisors to use, their reasonable best efforts to cooperate with each other, and assist in marketing the Surviving Corporation and the Spinco Common Stock to potential investors, IP stockholders and the general investment and capital market communities, including using reasonable best efforts to (i) participate in investor meetings and (ii) take the types of action and provide the types of information described in Section 8.19(a) as are appropriate in connection with such marketing and/or as may be reasonably requested by UWWH, IP or Spinco.
Section 8.20 Non-Solicitation of Employees .
(a) IP agrees that, for a period of 18 months from and after the Closing Date, it shall not, and it shall cause its Subsidiaries not to, without the prior written consent of the Surviving Corporation, directly or indirectly through another Person, (i) approach, solicit, induce or attempt to induce any Restricted Employee of the Surviving Corporation or its Subsidiaries to leave the employ of such Person or (ii) be involved in hiring, or hire, employ or enter into a consulting agreement with, any person who is or was a Restricted Employee, unless such person ceased to be an employee of any Spinco Entity six months prior to, or his or her employment was involuntarily terminated by any Spinco Entity at any time prior to, such action by IP or any of its Subsidiaries (other than Spinco).
(b) The restrictions set forth in the foregoing clause (a)(i) shall not apply to (i) general solicitations (such as advertisements or headhunter searches) for employment placed by IP or any of its Subsidiaries and not specifically targeted at any Restricted Employees or (ii) replying to any Restricted Employee who responds to search firm inquiries (so long as not directed to solicit such person) conducted on behalf of IP or any of its Subsidiaries; it being understood that IP and its Subsidiaries shall continue to be restricted under the foregoing clause (a)(ii) from hiring, employing or entering into a consulting arrangement with any Restricted Employee during such eighteen-month period.
(c) The Surviving Corporation shall notify each Restricted Employee of the restrictions set forth in Section 8.20(a).
Section 8.21 Non-Solicitation of Customers .
(a) IP agrees that, for a period of two years from and after the Closing Date (the “ Non-Solicitation Period ”), it shall not, and shall cause its Subsidiaries not to, without the prior written consent of the Surviving Corporation, directly or indirectly through another Person, solicit any Restricted Customer to purchase directly from IP or any of its Subsidiaries any Covered Products that are, with respect to such Restricted Customer, Restricted Direct Sales Products; provided , however , that nothing set forth in this Section 8.21(a) shall prohibit IP or its Subsidiaries from selling, distributing or otherwise providing any Covered Products to (x) any customer that is not a Restricted Customer, or (y) any Restricted Customer to which IP or its Subsidiaries (other than the Spinco Business) directly sells Covered Products prior to the date hereof, but solely as to the category of Covered Products that IP or its Subsidiaries (other than the Spinco Business) sells to such Restricted Customer prior to the date hereof.
 
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(b) For the avoidance of doubt, the restriction set forth in paragraph (a) shall not prevent IP or its Subsidiaries from responding to unsolicited requests initiated by Restricted Customers for IP to sell, quote or make any other offer to sell Restricted Direct Sale Products, or from selling any Restricted Direct Sale Products in connection with such a request. Notwithstanding the foregoing, in the event that, during the Non-Solicitation Period, any Restricted Customer makes such an unsolicited request of IP or any of its Subsidiaries in connection with seeking bids from two or more suppliers for the sale to such Restricted Customer of any Restricted Direct Sale Product that is then being sold to such Restricted Customer by the Surviving Corporation, IP or such Subsidiary shall, before responding to such solicitation and to the extent not prohibited by any obligation of confidentiality, inform the Surviving Corporation (by email or other written means to one or more contact persons agreed upon by IP and the Surviving Corporation from time to time) of such solicitation and the fact that IP intends to make a proposal in response to it.
(c) With respect to any Restricted Customer to which the Surviving Corporation or any of its Subsidiaries sells any category of Restricted Direct Sales Products (“ IP Product Business ”), the restrictions set forth in paragraphs (a) and (b) of this Section 8.21 shall no longer apply to IP and its Subsidiaries solely with respect to sales of such category of Restricted Direct Sale Products to such Restricted Customer, in the event that the Surviving Corporation or any of its Subsidiaries either (i) has not during the immediately preceding 30 days (or more) sold such category of Restricted Direct Sales Products to the Restricted Customer, and (after receipt of a written inquiry from IP requesting an explanation for such failure to sell) IP and the Surviving Corporation reasonably agree that such failure to sell is due to such Restricted Customer procuring such category of Restricted Direct Sale Products from a supplier other than (x) the Surviving Corporation or its Subsidiaries or (y) if such failure is due to such Restricted Customer procuring such category of Restricted Direct Sale products from IP or its Subsidiaries as a result of IP or its applicable Subsidiary having breached its obligations under Section 8.21 with respect to such Restricted Customer and such category of Restricted Direct Sale Products, IP or its Subsidiaries, or (ii) transfers such IP Product Business for such Restricted Customer away from IP and to another supplier of such products, unless the Surviving Corporation shall have given IP reasonable notice of the price and other terms on which such other supplier is prepared to sell such products at the time of such transfer and IP shall have failed to agree to provide such IP Product Business for such Restricted Customer to the Surviving Corporation on price and other terms that are not less favorable than those offered by the other supplier of such products to which the Surviving Corporation transfers such business.
(d) In the event that all or substantially all of a “Covered Product Category Division” (which term, with respect to any particular category of Covered Products, shall mean the business of IP and its Subsidiaries related to the manufacture and sale of such category of Covered Product) is transferred (whether by merger, sale of stock, or sale of assets) to any Person or Persons other than IP (any such Covered Product Category Division that is transferred, a “ Transferred Business ”), then the obligations in this Section 8.21 shall, and IP shall cause the obligations set forth in this Section 8.21 to, continue to be binding upon such Transferred Business from and after such transfer until the end of the Non-Solicitation Period; provided, for the avoidance of doubt, that the obligations set forth in this Section 8.21 shall not be binding on the acquiring or surviving entity or any of its other subsidiaries or affiliates, or any of their respective assets or businesses, other than the Transferred Business and the Covered Products that are manufactured and sold by such Transferred Business as of the date of such transfer.
 
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Section 8.22 Covenant Not to Compete .
(a) IP hereby acknowledges and agrees that UWWH, Spinco and the Spinco Business would be irreparably damaged if IP or its Subsidiaries were to, directly or indirectly, engage in the Restricted Business and that doing so would result in a significant loss of goodwill and value by Spinco and the Spinco Business. Therefore, in further consideration of the amounts to be paid for the Spinco Common Stock and the goodwill of Spinco, IP covenants and agrees that, for a period of four years from and after the Closing Date, neither IP nor any of its Subsidiaries shall, without the prior written consent of the Surviving Corporation, directly or indirectly, either for itself or for any other Person, own or acquire any interest in, operate, manage, control, or engage in, any business or Person that engages in or owns, invests in, operates, manages or controls any venture or enterprise which directly or indirectly engages, or proposes to engage in, any portion of the Restricted Business; provided , however , that nothing set forth in this Section 8.22 shall prohibit IP or its Subsidiaries from (i) selling, distributing or otherwise providing any products manufactured by third parties that are ancillary to, and sold in connection with, sales of products manufactured by IP or its Affiliates (e.g., polypropylene lids for IP-manufactured food containers) (“ IP Ancillary Products ”) so long as all such IP Ancillary Products in the aggregate (other than polypropylene lids for IP-manufactured food containers) are of a de minimis value in relation to all IP manufactured Covered Products in the aggregate, (ii) selling any products to or performing any services for the Surviving Corporation or any of its Subsidiaries; or (iii) acquiring the assets or capital stock or other equity interests of any other Person engaged in a Restricted Business; provided, that, subject to Section 8.22(b), in the case of clause (iii), IP shall divest or terminate such Restricted Business within 12 months of its acquisition.
(b) The obligation and ability of IP to divest in accordance with the proviso to clause (iii) of Section 8.22(a) above shall be subject to the following:
(i) If prior to the fourth anniversary of the Closing Date, IP or any of its Subsidiaries acquires the assets or capital stock or other equity interests of any other Person engaged in a Restricted Business (which, for the avoidance of doubt will include the Persons listed on Schedule 8.22(b)) (an “ Acquired Competing Business ”), IP shall no later than 20 Business Days after such acquisition notify the Surviving Corporation in writing of such acquisition. IP’s notice to the Surviving Corporation (the “ Proposed Sale Notice ”) shall state IP’s intention to sell all of the Acquired Competing Business (the “ Proposed Sale ”), the price that IP proposes to be paid for such Acquired Competing Business (the “ Proposed Sale Price ”), and the other material terms of the Proposed Sale.
(ii) At any time within 90 days after the date of the receipt by the Surviving Corporation of the Proposed Sale Notice, the Surviving Corporation shall have the right and option (but not the obligation) to purchase all of the Acquired Competing Business covered by the Proposed Sale Notice at the Proposed Sale Price (or, if the Proposed Sale includes any consideration other than cash, then at the equivalent cash price, determined in good faith by IP and the Surviving Corporation) and on the terms and conditions described in the Proposed Sale Notice, by delivering an irrevocable written notice (the “ Acceptance Notice ”) to IP indicating
 
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that the Surviving Corporation (or designee thereof) shall purchase the Acquired Competing Business being offered in the Proposed Sale and designating a date for the closing that is within 90 days after receipt of the Acceptance Notice (subject to any necessary extensions for regulatory or other required approvals to consummate such closing).
(iii) During such 90-day period, for purposes of evaluating the Proposed Sale, IP, with respect to the Acquired Competing Business, shall provide, or cause to be provided to, the Surviving Corporation and its Representatives reasonable access to the Representatives of IP and the Acquired Competing Business during normal business hours and in a manner that does not unreasonably interfere with business and operations of IP and the Acquired Competing Business. Such access shall include access to the Acquired Competing Business’ properties, Contracts, commitments, books, records, financial and operating data and other information, including environmental information, papers, plans and drawings and any report, schedule or other document filed or received by it pursuant to the requirements of the federal or state securities Laws. Notwithstanding the foregoing, none of IP, the Acquired Competing Business or their respective Subsidiaries, as applicable, shall be required to provide any information to the extent that such information or to the extent that such access would constitute a waiver of the attorney-client privilege or violate any law or Contract. The Surviving Corporation will hold, and will cause its respective Subsidiaries to hold, and will direct its and their Representatives to hold, any and all information received from IP or the Acquired Competing Business, directly or indirectly, in confidence.
(iv) The closing will be effected by delivery by wire transfer of immediately available funds (and any such non-cash consideration to be paid) to IP at the principal office of the Surviving Corporation against delivery of certificates or other instruments representing the Acquired Competing Business so purchased, appropriately endorsed by IP (or other conveyance documentation reasonably requested by the purchaser in the case of uncertificated securities or other acquired assets). If at the end of the 90-day period the Surviving Corporation has not delivered an Acceptance Notice, IP may, during the 270 days immediately following such 90-day period, sell the Acquired Competing Business that is the subject of the Proposed Sale to a transferee for consideration having a value of not less than 100% of the Proposed Sale Price and on other terms not materially less favorable in the aggregate to IP than those contained in the Proposed Sale Notice. Promptly after such sale, IP shall notify the Surviving Corporation of the consummation thereof and shall furnish such written evidence of the completion of such sale and of the terms thereof as may reasonably be requested by the Surviving Corporation. If IP is unable to sell the Acquired Competing Business that is the subject of the Proposed Sale during such 270 days in accordance with the terms set forth in this Section 8.22(b), then IP shall offer to sell such Acquired Competing Business to the Surviving Corporation at a price determined by an independent valuation firm mutually selected in good faith by the Parties; provided that, for the avoidance of doubt, in connection with such offer to sell, the Surviving Corporation shall have no obligation to purchase such Acquired Competing Business.
(c) The Parties agree that the covenants included in Section 8.20, Section 8.21 and this Section 8.22 are, taken as a whole, reasonable in their geographic and temporal coverage and are necessary to protect the goodwill of the businesses of the Surviving Corporation and its Subsidiaries and the substantial investment made by the stockholders of the Surviving Corporation, and no Party shall raise any issue of geographic or temporal reasonableness in any
 
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proceeding to enforce such covenant; provided, however, that if the provisions of Section 8.20, Section 8.21 or this Section 8.22 should ever be deemed to exceed the time or geographic limitations or any other limitations permitted by applicable Law in any jurisdiction, then such provisions shall be deemed reformed in such jurisdiction to the minimum extent required by applicable Law to cure such problem and such provisions shall be enforced with such reforms.
(d) The Parties acknowledge and agree that in the event of a breach or threatened breach of the provisions of Section 8.20, Section 8.21 or this Section 8.22, monetary damages shall not constitute a sufficient remedy. Consequently, in the event of any such breach or threatened breach, the non-breaching Party shall have the following rights and remedies, each of which rights and remedies shall be independent of the others and severally enforceable, and each of which is in addition to, and not in lieu of, any other rights and remedies available to the non-breaching Party at law or in equity (including, without limitation, awards of monetary damages):
(i) in the case of Section 8.20, Section 8.21 and this Section 8.22, the right and remedy to have the provisions of Section 8.20, Section 8.21 or this Section 8.22 specifically enforced by a court of competent jurisdiction without the requirement of posting a bond or proving actual damages, it being agreed that any breach or threatened breach of Section 8.20, Section 8.21 or this Section 8.22 would cause irreparable injury to the non-breaching Party and that money damages alone would not provide an adequate remedy to the non-breaching Party.
(ii) in the case of Section 8.21 and this Section 8.22 (and not Section 8.20) and the provisions of the second proviso of Section 8.5 of the Distribution Agreement, the right and remedy to require the breaching Party, on a joint and several basis, to pay to the Surviving Corporation the greater of (x) the amount of any payments, profits or other benefits derived or received directly or indirectly by such Person (determined net of any related costs incurred in such sales, including cost of goods sold) as the result of any actions constituting a breach of the provisions of Section 8.21 or this Section 8.22 and the provisions of the second proviso of Section 8.5 of the Distribution Agreement and (y) the total amount of any damages a court may award to the non-breaching Party for breach of the provisions of Section 8.21 or this Section 8.22, or the provisions of the second proviso in Section 8.5 of the Distribution Agreement.
Section 8.23 Post-Closing Access; Preservation of Records . From and after the Effective Time (a) upon reasonable written notice, IP and the Surviving Corporation will make or cause to be made available to the other Parties, as applicable, and their respective Representatives during regular business hours all information and assistance as is necessary for any reasonable business purpose relating to the Spinco Business, including, financial reporting and accounting matters and in connection with any disclosure obligation or the defense of any Action, and (b) upon reasonable written notice, IP shall (provided the Surviving Corporation reimburses IP for any reasonable out-of-pockets cost) use reasonable best efforts to provide, and shall cause its Affiliates and their respective Representatives to provide, all required financial statement information for any period prior to the Closing Date, in form reasonably requested by the Surviving Corporation, in connection with any financial reporting requirements which the Surviving Corporation or any of its Affiliates is or may subsequently become subject to, including without limitation, comparative interim financial statements for each of the completed quarters prior to the Closing Date and the partial quarter ending on the Closing Date reviewed by IP’s independent accountant and required financial information supporting any SEC filing,
 
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including selected historical financial data, MD&A, guarantor and non-guarantor footnote presentation and segment reporting. Each of IP and the Surviving Corporation shall, and shall cause each of their respective Subsidiaries, successors and assigns to, retain, maintain and preserve all such books, records and other documents (including personnel files) that relate to the Spinco Business for periods prior to the Closing Date for the greater of (i) five years after the Closing Date and (ii) any applicable statutory or regulatory retention period, as the same may be extended and, in each case, shall offer to transfer such records to the other Party at the end of any such period by providing the other Party with not less than 20 days’ written notice of its intention to destroy or dispose of such records so that such other Party may exercise its rights to obtain such records within such 20 day period. Notwithstanding anything in this Agreement to the contrary, information provision and record retention relating to Tax matters shall be exclusively governed by the Tax Matters Agreement and, to the extent applicable, the Distribution Agreement and the Tax Receivable Agreement, and not this Agreement.
Section 8.24 Payoff Letters; Transaction Expenses .
(a) At least three Business Days prior to the Closing Date, (i) IP and Spinco shall deliver to UWWH and (ii) UWWH shall deliver to IP, in each case, the payoff letters and guarantee releases (collectively, the “ Payoff Letters ”) for all Indebtedness set forth in Section 8.24(a) of the IP/Spinco Disclosure Schedules and Section 8.24(a) of the UWWH Disclosure Schedules, respectively, which Payoff Letters shall be in form and substance reasonably satisfactory to the Party to which such Payoff Letters are to be delivered pursuant to this Section 8.24(a) and executed by all Persons required therefor and provide that (i) all Liabilities of the applicable Party under or with respect to such Indebtedness shall be satisfied (other than unmatured contingent indemnification obligations set forth in the written agreements governing such Indebtedness) and all amounts owing thereunder for which any member of the applicable Party is liable shall be repaid upon receipt of the amounts indicated therein, (ii) all Encumbrances and guarantee obligations in respect of such Indebtedness relating to the assets and properties of the applicable Party shall be released and terminated automatically upon, and subject only to, receipt of the payoff amounts indicated therein, (iii) the parties executing such Payoff Letters have all authorizations and power required, without approval of any other Person, to cause the Encumbrance and guarantee releases therein provided on behalf of the lenders for such Indebtedness and (iv) the applicable Party and their respective financing sources shall be entitled to rely thereon.
(b) At least three Business Days prior to the Closing Date, (i) IP and Spinco shall use their reasonable best efforts to deliver to UWWH and (ii) the UWWH Stockholder and UWWH shall use their reasonable best efforts to deliver to IP, in each case, final invoices and/or releases for all its respective Shared Expenses and, in the case of UWWH and the UWWH Stockholder, their Transaction Expenses and those of their respective Affiliates (including, for the avoidance of doubt, GP and its Affiliates) that are to be paid by UWWH, Spinco or any of their respective Subsidiaries, in each case subject to and pursuant to Section 10.3, which final invoices and/or releases shall be in form and substance reasonably satisfactory to the Party to which such invoice and/or release shall be delivered pursuant to this Section 8.24(b), and indicate that all obligations of IP, Spinco or any of their respective Subsidiaries or the UWWH Stockholder, UWWH or any of its Subsidiaries, as applicable, under or with respect to such Shared Expenses and Transaction Expenses shall be satisfied (other than contingent indemnification obligations set forth in the written agreements governing such Transaction Expenses) and all amounts owing thereunder shall be paid in full upon receipt of the amounts indicated therein.
 
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Section 8.25 Advisory Agreement . At or prior to the Effective Time, the Advisory Agreement shall be terminated (except with respect to Sections 6 and 7 thereto) pursuant to an agreement in form and substance reasonably satisfactory to IP.
Section 8.26 Financial Statements .
(a) As soon as available but in any event within 60 days after the end of each fiscal quarter prior to the Closing, on an as-reported basis, and then as soon as available but in any event within 90 days after the end of each such fiscal quarter on a carve-out basis, IP shall deliver, or cause to be delivered, to UWWH an unaudited consolidated balance sheet of the Spinco Business and the related unaudited statement of operations, for the period from the beginning of the fiscal quarter to the end of such fiscal quarter, and all such statements shall be prepared in accordance with GAAP (except for the absence of footnotes and subject to changes resulting from year-end audit adjustments); provided that the as-reported financial statements are prepared in accordance with GAAP for internal reporting of the Spinco Business as a division and financial reporting segment of IP, and do not include the type of carve-out adjustments required to prepare the Spinco Audited Financial Statements.
(b) As soon as available and in any event no later than 120 days after the end of the 2013 fiscal year, IP shall deliver, or cause to be delivered, to UWWH an audited consolidated balance sheet of the Spinco Business as of December 31, 2013 and the related audited statements of operations, cash flows and parent company equity for the year ended December 31, 2013, including the notes thereto, in each case, audited by Deloitte & Touche LLP.
(c) As soon as available but in any event within 60 days after the end of each fiscal quarter prior to the Closing, UWWH shall deliver, or cause to be delivered, to IP an unaudited consolidated balance sheet of UWWH and the related unaudited statements of operations and cash flows for the period from the beginning of the fiscal quarter to the end of such fiscal quarter, and all such statements shall be prepared in accordance with GAAP (except for the absence of footnotes and subject to changes resulting from year-end audit adjustments).
(d) As soon as available and in any event no later than 120 days after the end of the 2013 fiscal year, UWWH shall deliver, or cause to be delivered, to IP an audited consolidated balance sheet of UWWH as of December 31, 2013 and the related audited statements of operations, cash flows and stockholder’s equity for the year ended December 31, 2013, including the notes thereto, in each case, audited by PricewaterhouseCoopers LLP.
Section 8.27 Required Amendments . Notwithstanding anything to the contrary set forth herein or in any other Transaction Agreement, the Parties will cooperate and negotiate in good faith with respect to any amendment to the Transaction Agreements reasonably requested by a Party in order to enable its counsel to deliver the written opinion(s) contemplated by Section 8.8(b)(iii), if required, as the case may be (any such amendment, a “ Proposed Amendment ”). Neither Party will withhold its consent to a Proposed Amendment that (i) does not result in any change in the Aggregate Merger Consideration, (ii) is not adverse to the
 
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interests of any Party or (iii) does not unreasonably impede or delay consummation of the Merger. Any Proposed Amendment that the Parties consent to will be reflected through the execution of appropriate written amendments to the applicable Transaction Agreements.
Section 8.28 Disclosure Controls . Prior to Closing, each of IP, Spinco and UWWH shall use its reasonable best efforts to implement such programs and take such steps as are reasonably necessary to (i) develop a system of internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) intended to ensure that after the Effective Time material information required to be disclosed by Spinco in the reports it files or furnishes under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and regulations and is timely made known to the management of the Surviving Corporation by others within those entities to allow timely decisions regarding required disclosure and to make the certifications required pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act, (ii) cooperate reasonably with each other in preparing for the transition and integration of the financial reporting systems of Spinco and its Subsidiaries with the financial reporting systems of UWWH following the Effective Time and (iii) otherwise enable the Surviving Corporation to maintain compliance with the provisions of Section 404 of the Sarbanes-Oxley Act.
Section 8.29 Severance. The Surviving Corporation shall bear all Severance Obligations and all Transaction Bonus Obligations; provided that (i) any Transaction Severance/Bonus Obligation entered into by IP or any of its Affiliates that is not set forth on Section 8.29 of the IP Disclosure Schedules shall be borne by IP, which shall reimburse the Surviving Corporation for any amounts paid pursuant to such Transaction Severance/Bonus Obligation and (ii) any Transaction Severance/Bonus Obligation entered into by UWWH or any of its Affiliates that is not set forth on Section 8.29 of the UWWH Disclosure Schedules shall be borne by the UWWH Stockholder, which shall reimburse the Surviving Corporation for any amounts paid pursuant to such Transaction Severance/Bonus Obligation. UWWH has provided true and complete copies of the agreements set forth on Section 8.29 of the UWWH Disclosure Schedules to IP and IP has provided true and complete copies of the agreements set forth on Section 8.29 of the IP/Spinco Disclosure Schedules to UWWH, in each case, in effect on the date hereof.
Section 8.30 Restructuring . Prior to the Closing, IP shall continue restructuring activities with respect to the Spinco Business in accordance with and at the direction of xpedx management at a cost of up to $15 million in cash restructuring charges on or prior to the Closing Date.
ARTICLE IX
CONDITIONS OF THE MERGER
Section 9.1 Conditions to the Obligations of Each Party . The respective obligations of each Party to consummate the Merger are subject to the satisfaction as of the Effective Time of the following conditions, any or all of which may be waived, in whole or in part, by each Party to the extent permitted by applicable Law:
 
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(a) The Separation shall have been consummated in accordance with the Distribution Agreement;
(b) Spinco shall have consummated the Spinco Financing on terms entered into in accordance with Section 8.19 and Spinco shall have received the proceeds therefrom in an amount sufficient to pay the Special Payment and consummate the Transactions;
(c) IP shall have received the IRS Rulings in form and substance reasonably satisfactory to IP and UWWH (taking into account any changes pursuant to Section 8.8(b) hereof) and such rulings shall continue to be valid and in full force and effect (and, for the avoidance of doubt, such rulings shall not have been invalidated, modified or otherwise affected by any change in any Law or fact on or after the date such rulings were issued by the IRS); provided, that for purposes of this ARTICLE IX, the IRS Rulings need not conclude that the Merger will qualify as a reorganization under Section 368 of the Code;
(d) The UWWH Stockholder Approval and the Unisource Stockholder Approval shall have been obtained in accordance with applicable Law and in accordance with Section 8.9(b) hereof;
(e) The Spinco Stockholder Approval and the xpedx Intermediate Member Approval shall have been obtained in accordance with applicable Law and in accordance with Section 8.9(a) hereof;
(f) All consents, approvals and authorizations of any Governmental Authority required for the consummation of the Transactions (other than under the HSR Act, the Competition Act of Canada, the Federal Law on Economic Competition of Mexico and the Austrian Cartel Act of 2005) shall have been obtained and shall be in full force and effect at the Effective Time;
(g) The IP Board of Directors shall have received a customary “solvency” and “surplus” opinion of a nationally recognized investment banking or appraisal firm in form and substance reasonably satisfactory to the IP Board of Directors and the UWWH Board of Directors (such opinions to be dated as of the date the IP Board of Directors declares the Distribution and the Distribution Date, the date on which the Spinco Board of Directors declares the Special Payment, and the date on which each such dividend or distribution is paid);
(h) (i) Any applicable waiting period under the HSR Act relating to the Transactions shall have expired or been terminated, (ii) any applicable waiting period under Section 123 of the Competition Act (Canada) relating to the Transactions shall have expired or been terminated, or the obligation to submit a notification relating to the Transactions under Part IX of the Competition Act (Canada) shall have been waived under paragraph 113(c) of such Act, (iii) no stop order shall have been issued under the Federal Law on Economic Competition of Mexico and (iv) any applicable waiting period under Chapter 3 of the Austrian Cartel Act of 2005 relating to the Transactions shall have expired;
(i) (i) The Registration Statement shall have been declared effective in accordance with the Securities Act and neither the Registration Statement nor the Prospectus shall be the subject of any stop Order or Actions initiated or threatened by the SEC seeking a stop Order, and (ii) the shares of Spinco Common Stock to be issued in the Distribution and the Merger and such other shares to be reserved for issuance in connection with the Transactions shall have been approved for listing on the NYSE, subject to official notice of issuance; and
 
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(j) No Order issued by any Governmental Authority of competent jurisdiction or other legal impediment preventing or making illegal the consummation of the Transactions shall be in effect.
Section 9.2 Additional Conditions to the Obligations of IP, Spinco, xpedx Intermediate and xpedx. The obligations of IP, Spinco, xpedx Intermediate and xpedx to consummate the Merger are subject to the satisfaction as of the Effective Time of the following conditions, any or all of which may be waived, in whole or in part, by IP to the extent permitted by applicable Law:
(a) (i) The representations and warranties of the UWWH Stockholder, UWWH and Unisource contained in this Agreement (other than Sections 6.2 (Authorization and Validity of Agreement), 6.4 (Capitalization), 6.18 (Board Approvals; Votes Required), 6.19 (Dividends), 6.20 (Brokers or Finders; Transaction Bonuses), 7.8 (Authorization and Validity of Agreement) and 7.9 (Company Authority Relative to this Agreement; No Violation) hereof) (disregarding all materiality or UWWH Material Adverse Effect qualifications or exceptions) shall be true and correct in all respects, in each case as of the Effective Time as if made as of the Effective Time (except to the extent such representations and warranties address matters as of a particular date, which shall be true and correct as of the specified date), except where the failure to be true and correct has not had or would not, individually or in the aggregate, reasonably be expected to have a UWWH Material Adverse Effect; (ii) the representations and warranties set forth in Sections 6.2 (Authorization and Validity of Agreement), 6.4 (Capitalization), 6.18 (Board Approvals; Votes Required), 6.19 (Dividends), 6.20 (Brokers or Finders; Transaction Bonuses), 7.8 (Authorization and Validity of Agreement) and 7.9 (Corporate Authority Relative to this Agreement; No Violation) hereof shall be true and correct in all respects as of the date of this Agreement and as of the Effective Time as if made as of the Effective Time (except to the extent such representations and warranties address matters as of a particular date, which shall be true and correct as of the specified date); and (iii) the UWWH Stockholder, UWWH and Unisource shall have performed in all material respects their respective covenants and agreements (other than those covenants and agreements in Sections 8.2(b) (Dividends; Changes in Stock), 8.2(c) (Issuance of Securities), 8.2(d) (Governing Documents) and 8.2(g) (Indebtedness), which shall have been performed in all respects) contained in this Agreement required to be performed at or prior to the Effective Time;
(b) UWWH shall have delivered to IP a certificate, dated as of the Effective Time, of an executive officer of UWWH (on UWWH’s behalf and without any personal liability) certifying the satisfaction by the UWWH Stockholder, UWWH and Unisource of the conditions set forth in Section 9.2(a) hereof;
(c) Since June 30, 2013, no UWWH Material Adverse Effect shall have occurred;
(d) IP and Spinco shall have received the Spin-Off Tax Opinion, in form and substance reasonably satisfactory to IP and dated as of the Closing Date;
 
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(e) Unless waived by IP pursuant to Section 8.8(b)(iii), IP and Spinco shall have received an opinion of Debevoise & Plimpton LLP, in form and substance reasonably satisfactory to IP and Spinco and dated as of the Closing Date, on the basis of facts, representations and assumptions set forth in such opinion, to the effect that the Merger will constitute a “reorganization” for federal income tax purposes within the meaning of Section 368(a) of the Code (the “ IP Tax Opinion ”). In rendering such IP Tax Opinion, Debevoise & Plimpton LLP may require and rely upon customary representations contained in certificates of officers of IP, UWWH, Spinco and others;
(f) UWWH and the UWWH Stockholder, as applicable, shall have entered into and delivered to IP and Spinco the Transaction Agreements to which it or any of its Subsidiaries is a party and such agreements shall be in full force and effect and no default thereunder;
(g) The UWWH Stockholder shall have furnished to Spinco a certification in accordance with Treasury Regulations Section 1.1445-2(b) certifying that the UWWH Stockholder is not a “foreign person”, substantially in the form attached hereto as Exhibit F;
(h) The Advisory Agreement shall have been terminated without Liability to Spinco or its Subsidiaries after the Effective Time (except with respect to Sections 6 and 7 thereto) and IP shall have been provided with evidence of such termination reasonably satisfactory to it.
Section 9.3 Additional Conditions to the Obligations of UWWH and Unisource . The obligations of UWWH and Unisource to consummate the Merger are subject to the satisfaction as of the Effective Time of the following conditions, any or all of which may be waived, in whole or in part, by UWWH to the extent permitted by applicable Law:
(a) (i) The representations and warranties of IP, Spinco, xpedx Intermediate and xpedx contained in this Agreement (other than Sections 5.2 (Authorization and Validity of Agreement), 5.4 (Capitalization), Section 5.18 (Board Approvals; Votes Required), 5.19 (Status of New Spinco Common Stock), 5.20 (Operations of Spinco) and 5.22 (Brokers or Finders; Transactions Bonuses) hereof) (disregarding all materiality or Spinco Material Adverse Effect qualifications or exceptions) shall be true and correct in all respects, in each case as of the Effective Time as if made as of the Effective Time (except to the extent such representations and warranties address matters as of a particular date, which shall be true and correct as of the specified date), except where the failure to be true and correct has not had or would not, individually or in the aggregate, reasonably be expected to have a Spinco Material Adverse Effect; (ii) the representations and warranties set forth in Sections 5.2 (Authorization and Validity of Agreement), 5.4 (Capitalization), Section 5.18 (Board Approvals; Votes Required), 5.19 (Status of New Spinco Common Stock), 5.20 (Operations of Spinco) and 5.22 (Brokers or Finders; Transactions Bonuses) hereof shall be true and correct in all respects as of the date of this Agreement and as of the Effective Time as if made as of the Effective Time (except to the extent such representations and warranties address matters as of a particular date, which shall be true and correct as of the specified date); and (iii) IP, Spinco, xpedx Intermediate and xpedx shall have performed in all material respects their respective covenants and agreements (other than those covenants and agreements in Sections 8.1(b) (Changes in Stock), 8.1(c) (Issuance of Securities), 8.1(d) (Governing Documents) and 8.1(g) (Indebtedness), which shall have been performed in all respects) contained in this Agreement required to be performed at or prior to the Effective Time;
 
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(b) IP shall have delivered to UWWH a certificate, dated as of the Closing Date, of an executive officer of IP (on IP’s behalf and without any personal liability) certifying the satisfaction by IP of the conditions applicable to it set forth in Section 9.3(a) hereof;
(c) Spinco shall have delivered to UWWH a certificate, dated as of the Effective Time, of an executive officer of Spinco (on Spinco’s behalf and without any personal liability) certifying the satisfaction by Spinco, xpedx Intermediate and xpedx of the conditions applicable to them set forth in Section 9.3(a) hereof;
(d) Since June 30, 2013, no Spinco Material Adverse Effect shall have occurred;
(e) Unless waived by UWWH pursuant to Section 8.8(b)(iii), UWWH shall have received opinions of Kirkland & Ellis LLP, in form and substance reasonably satisfactory to UWWH and dated as of the Closing Date, on the basis of facts, representations and assumptions set forth in such opinion, to the effect that (i) the Merger will constitute a “reorganization” for federal income tax purposes within the meaning of Section 368(a) of the Code and (ii) the Subsidiary Merger will qualify as a capital contribution within the meaning of Section 351(a) of the Code (collectively, the “ UWWH Tax Opinions ”). In rendering such UWWH Tax Opinion, Kirkland & Ellis LLP may require and rely upon customary representations contained in certificates of officers of IP, UWWH, Spinco and others;
(f) The applicable IP Entities, Spinco, xpedx Intermediate and xpedx, as applicable, shall have entered into and delivered the applicable Transaction Agreements and such agreements shall be in full force and effect and no default thereunder; and
Section 9.4 Frustration of Closing Conditions . None of the Parties may rely, either as a basis for not consummating the Merger, the Subsidiary Merger or the other transactions contemplated by this Agreement or terminating this Agreement and abandoning the Merger or the Subsidiary Merger, on the failure of any condition set forth in Section 9.1, Section 9.2 or Section 9.3, as the case may be, to be satisfied if such failure was caused by such Party’s material breach of any provision of this Agreement.
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
Section 10.1 Termination or Abandonment . Notwithstanding anything contained in this Agreement to the contrary, this Agreement may be terminated and abandoned at any time prior to the Effective Time, whether before or after any approval of the matters presented in connection with the Transactions by any stockholders required to approve the Transactions:
(a) by the mutual written consent of IP and UWWH;
(b) by either IP or UWWH if the Effective Time shall not have occurred on or before January 5, 2015 (the “ Termination Date ”), unless the failure of the Effective Time to have occurred by the Termination Date shall be due to the failure of the Party seeking to terminate this Agreement pursuant to this Section 10.1(b) to perform or otherwise comply with in all material respects the covenants and agreements of such party set forth herein.
 
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(c) by UWWH (so long as UWWH is not then in material breach of any covenant, representation or warranty or other agreement contained herein which breach would cause the Closing conditions of IP or Spinco not to be satisfied if the Closing were to occur at the time of termination), if there has been a material breach by IP or Spinco of any of its representations, warranties, covenants or agreements contained in this Agreement, or any such representation and warranty shall have become untrue in any material respect, in either case such that Section 9.3(a) hereof would be incapable of being satisfied, and such breach or condition has not been cured within 30 Business Days following receipt by IP or Spinco, if applicable, of notice of such breach;
(d) by IP (so long as IP is not then in material breach of any covenant, representation or warranty or other agreement contained herein which breach would cause the Closing conditions of UWWH or the UWWH Stockholder not to be satisfied if the Closing were to occur at the time of termination), if there has been a material breach by UWWH of any of its representations, warranties, covenants or agreements contained in this Agreement, or any such representation and warranty shall have become untrue in any material respect, in either case such that Section 9.2(a) hereof would be incapable of being satisfied, and such breach or condition has not been cured within 30 Business Days following receipt by UWWH of notice of such breach; or
(e) by either IP or UWWH if any Law or Order by any Governmental Authority preventing or prohibiting consummation of the Transactions shall have become final and nonappealable.
The Party desiring to terminate this Agreement pursuant to this Section 10.1 will give written notice of such termination to the other Party, specifying the provision pursuant to which such termination is effected.
Section 10.2 Effect of Termination .
(a) If this Agreement is terminated by IP or UWWH pursuant to Section 10.1 hereof, then this Agreement shall become void and have no effect with no Liability on the part of the Parties, except to the extent that such termination results from the intentional breach by a Party of any of its covenants or agreements set forth in this Agreement; provided, however, that the provisions of the Confidentiality Agreement, this Section 10.2, Section 10.3 and ARTICLE XI shall remain in full force and effect and shall survive any termination of this Agreement.
(b) If this Agreement is terminated pursuant to Section 10.1(d) and (i) a UWWH Acquisition Proposal shall have been commenced, publicly disclosed, publicly proposed, publicly announced or otherwise communicated to UWWH or the UWWH Stockholder prior to such termination and (ii) within 15 months of such termination, UWWH or any of its Subsidiaries or Affiliates enters into any definitive agreement with respect to, or consummates, a UWWH Acquisition Proposal, UWWH shall pay to IP, at or prior to the earlier of the time UWWH, any of its Subsidiaries or Affiliates enters into such agreement with respect to, or consummates, such UWWH Acquisition Proposal, a termination fee equal to $6 million by wire transfer of immediately available funds.
 
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(c) If this Agreement is terminated pursuant to Section 10.1(c) and (i) a Spinco Acquisition Proposal shall have been commenced, publicly disclosed, publicly proposed, publicly announced or otherwise communicated to IP or the IP Stockholders prior to such termination and (ii) within 15 months of such termination, IP or any of its Subsidiaries or Affiliates enters into any definitive agreement with respect to, or consummates, a Spinco Acquisition Proposal, then IP shall pay to UWWH at or prior to the earlier of the time IP, any of its Subsidiaries or Affiliates enters into such agreement with respect to, or consummates, such Spinco Acquisition Proposal, a termination fee equal to $6 million by wire transfer of immediately available funds.
Section 10.3 Fees and Expenses .
(a) General Rule . Except as otherwise provided in this Section 10.3, this Agreement or any other Transaction Agreement, or unless otherwise mutually agreed to by IP and UWWH in writing, all fees and expenses incurred in connection with the Transactions (including all Transaction Expenses) shall be paid by the Party incurring such fees or expenses (it being agreed for clarification that any fees and expenses incurred by Spinco or any of its Subsidiaries on or prior to the Separation shall be deemed to have been incurred by IP).
(b) Shared Expenses. All Shared Expenses shall be borne (i) by the Surviving Corporation if the Merger is consummated or (ii) 50% by IP and 50% by UWWH if the Merger is not consummated. The Surviving Corporation shall reimburse IP or the UWWH Stockholder (on behalf of UWWH or any of its Subsidiaries), as applicable, for any Shared Expenses paid by such Person (or, in the case of the UWWH Stockholder, UWWH or any of its Subsidiaries) in order to give effect to the obligations set forth in subsection (i) of the foregoing sentence. IP and/or UWWH, as applicable, shall reimburse the other for Shared Expenses in order to give effect to the obligations set forth in subsection (ii) of the foregoing sentence.
ARTICLE XI
GENERAL PROVISIONS
Section 11.1 Non-Survival of Representations and Warranties; Survival of Certain Covenants .
(a) Except as provided in any other Transaction Agreement, none of the representations, warranties, covenants or agreements in this Agreement or in any instrument delivered pursuant to this Agreement will survive the Effective Time or termination of this Agreement; provided, however, that the covenants and agreements contained in ARTICLE II, ARTICLE III, ARTICLE IV, ARTICLE VIII, ARTICLE X and this ARTICLE XI (and any related definitions) that by their terms apply or are to be performed in whole or in part after the Effective Time shall survive the Effective Time.
(b) Other than with respect to any claim under Sections 6.3(a)(iii) and 6.3(b)(iii) of the Distribution Agreement, IP and the UWWH Stockholder on behalf of itself and their respective Affiliates, successors, predecessors, partners, members, managers and assigns, and
 
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their respective officers, directors, legal representatives, employees, agents, and attorneys and other professionals, and their respective heirs, executors, administrators, trustees, successors and assigns (each, a “Releasing Party”), hereby irrevocably releases and forever discharges and covenants not to sue (i) the Surviving Corporation and each of their respective Subsidiaries, (ii) each of their respective successors, predecessors, shareholders, partners, members, managers and assigns, and (iii) each of the respective officers, directors, legal representatives, employees, agents or advisors, and their respective heirs, executors, administrators, trustees, successors and assigns, in each case of each Person identified in the foregoing clause (i) or (ii) (each Person described in the foregoing clause (i), (ii) or (iii), a “Released Party”), of and from any and all claims, debts, suits, remedies, liabilities, demands, rights, obligations, damages, expenses, attorneys’ or other professionals’ fees and causes of action whatsoever that arise out of or relate to the Registration Statement or Prospectus (each, a “Released Claim”). Other than with respect to any claim under Section 6.3(a)(iii) and 6.3(b)(iii) of the Distribution Agreement, IP and the UWWH Stockholder shall indemnify, defend and hold harmless each of the Released Parties from and against any Losses relating to or arising from any Released Claim brought by any Releasing Party.
Section 11.2 Notices . All notices, requests, claims, demands and other communications to be given or delivered under or by the provisions of this Agreement shall be in writing and shall be deemed given only (i) when delivered personally to the recipient, (ii) one Business Day after being sent to the recipient by reputable overnight courier service (charges prepaid); provided, that confirmation of delivery is received, (iii) upon machine-generated acknowledgment of receipt after transmittal by facsimile or (iv) five days after being mailed to the recipient by certified or registered mail (return receipt requested and postage prepaid). Such notices, demands and other communications shall be sent to the Parties at the following addresses (or at such address for a Party as will be specified by like notice):
 
 	(a)	if to IP, to:	
International Paper Company
6420 Poplar Avenue
Memphis, TN 38197
Attention: C. Cato Ealy and Sharon R. Ryan
Facsimile No.: (901) 214-0647
with a copy to:
Debevoise & Plimpton LLP
919 Third Avenue
New York, NY 10022
Attention: Jeffrey J. Rosen
Michael A. Diz
Facsimile No.: (212) 909-6836
 
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 	(b)	if to Spinco, xpedx Intermediate or xpedx prior to the Effective Time, to:	
xpedx Holding Company
6420 Poplar Avenue
Memphis, TN 38197
Attention: Mary A. Laschinger
Facsimile No.: (901) 214-1960
with a copy to:
International Paper Company
6420 Poplar Avenue
Memphis, TN 38197
Attention: C. Cato Ealy and Sharon R. Ryan
Facsimile No.: (901) 214-0647
with a copy to:
Debevoise & Plimpton LLP
919 Third Avenue
New York, NY 10022
Attention: Jeffrey J. Rosen
Michael A. Diz
Facsimile No.: (212) 909-6836
 
 	(c)	if to Spinco, xpedx Intermediate or xpedx following the Effective Time, to:	
xpedx Holding Company
6285 Tri-Ridge Boulevard
Loveland, Ohio 45140
Attention: Mary Laschinger
Facsimile No.: (513) 965-2849
with a copy to:
Bain Capital Partners, LLC
200 Clarendon Street
Boston, MA 02116
Attention: Matt Levin
Seth Meisel
Facsimile No.: (617) 516-2010
with a copy to:
Kirkland & Ellis LLP
300 N. LaSalle Street
Chicago, IL 60654
Attention: Matthew E. Steinmetz, P.C.
Jeffrey W. Richards, P.C.
Neal J. Reenan
Facsimile No.: (312) 862-2200
 
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 	(d)	if to UWWH or Unisource, to:	
UWW Holdings, Inc.
6600 Governors Lake Parkway
Norcross, GA 30071
Attention: Chief Financial Officer
General Counsel
Facsimile No.: (770) 659-4618
with a copy to:
Bain Capital Partners, LLC
200 Clarendon Street
Boston, MA 02116
Attention: Matt Levin
Seth Meisel
Facsimile No.: (617) 516-2010
with a copy to:
Kirkland & Ellis LLP
300 N. LaSalle Street
Chicago, IL 60654
Attention: Matthew E. Steinmetz, P.C.
Jeffrey W. Richards, P.C.
Neal J. Reenan
Facsimile No.: (312) 862-2200
Any Party to this Agreement may notify any other Party of any changes to the address or any of the other details specified in this paragraph; provided that such notification shall only be effective on the date specified in such notice or five Business Days after the notice is given, whichever is later. Rejection or other refusal to accept or the inability to deliver because of changed address of which no notice was given shall be deemed to be receipt of the notice as of the date of such rejection, refusal or inability to deliver.
Section 11.3 Counterparts; Delivery by Electronic Transmission . This Agreement may be executed in one or more counterparts each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or portable document format (PDF) shall be as effective as delivery of a manually executed counterpart of any such Agreement.
 
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Section 11.4 No Third Party Beneficiaries . Nothing in this Agreement, express or implied, is intended to or shall confer upon any Person (other than IP, Spinco, xpedx Intermediate, xpedx, UWWH, Unisource, the UWWH Stockholder and their respective successors and permitted assigns) any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement and no Person shall be deemed a third party beneficiary under or by reason of this Agreement, except for Section 11.7(b) and Section 11.7(c) which shall be for the benefit of, among others, the Lenders and the Lender Related Parties and the Lenders, among others, will have the rights provided for therein. In addition, and without limiting the generality of the foregoing, nothing contained in any provision of this Agreement (i) shall be construed to establish, amend or modify any benefit or compensation plan, program, agreement or arrangement or (ii) create any third-party beneficiary rights or obligations in any Spinco Group Employee, UWWH Employee or former employee of the Spinco Group or UWWH, including with respect to (x) any right to employment or continued employment or to a particular term or condition of employment or (y) the ability of IP, Spinco, UWWH or any of their respective Affiliates to amend, modify or terminate any benefit or compensation plan, program, agreement or arrangement at any time established, sponsored or maintained by any of them.
Section 11.5 Entire Agreement . This Agreement, the Exhibits, the IP/Spinco Disclosure Schedules and the UWWH Disclosure Schedules hereto, the Confidentiality Agreement, the other Transaction Agreements and other documents referred to herein and therein shall constitute the entire agreement between the Parties with respect to the subject matter hereof and shall supersede all previous negotiations, commitments and writings with respect to such subject matter (including that certain Non-binding Letter of Intent by and between IP and UWWH, dated as of April 19, 2013).
Section 11.6 Assignment . Neither this Agreement nor any of the rights, benefits or obligations hereunder may be assigned by any of the Parties (whether by operation of law or otherwise) without the prior written consent of the other Parties, and any purported assignment without such consent shall be null and void, except that Spinco or UWWH may assign any or all of its rights, interests under this Agreement without the consent of the other Parties hereto (a) to any Person providing the Spinco Financing pursuant to the terms thereof for purposes of creating a security interest herein or otherwise assign as collateral in respect of such Spinco Financing or (b) to any purchaser of all or substantially all of the assets of such Person; provided , however , that, in each case, no such assignment shall release such Party from any liability or obligation under this Agreement. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the Parties and their respective successors and permitted assigns.
Section 11.7 Governing Law; WAIVER OF JURY TRIAL .
(a) This Agreement and all issues and questions concerning the construction, validity, enforcement and interpretation of this Agreement (and all Schedules and Exhibits hereto) shall be governed by, and construed in accordance with, the Laws of the State of Delaware, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Delaware or any other jurisdiction) that would cause the application of the Laws of any jurisdiction other than the State of Delaware. In furtherance of the foregoing, the internal Laws of the State of Delaware shall control the interpretation and construction of this Agreement (and all Schedules and Exhibits hereto), even though under that jurisdiction’s choice of law or conflict of law analysis, the substantive Law of some other jurisdiction would ordinarily apply.
 
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(b) Notwithstanding the foregoing and without limiting Section 11.7(a), the Parties hereby further agree that, no Party will bring any legal proceeding, whether in Law or in equity, whether in contract or in tort or otherwise, against the Lenders or any Lender Related Party in any way relating to this Agreement or any of the transactions contemplated by this Agreement, including any dispute arising out of or relating in any way to the Spinco Commitment Letter or the performance thereof, in any forum other than the Supreme Court of the State of New York, County of New York, or, if under applicable Law exclusive jurisdiction is vested in the Federal courts, the United States District Court for the Southern District of New York (and appellate courts thereof).
(c) AS A SPECIFICALLY BARGAINED INDUCEMENT FOR EACH OF THE PARTIES TO ENTER INTO THIS AGREEMENT (WITH EACH PARTY HAVING HAD OPPORTUNITY TO CONSULT COUNSEL), EACH OF THE PARTIES EXPRESSLY AND IRREVOCABLY WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING UNDER THIS AGREEMENT OR ANY ACTION OR PROCEEDING ARISING OUT OF THE TRANSACTIONS CONTEMPLATED HEREBY OR ANY OTHER TRANSACTION AGREEMENT OR THE SPINCO FINANCING, REGARDLESS OF WHICH PARTY INITIATES SUCH ACTION OR PROCEEDING, AND ANY ACTION OR PROCEEDING UNDER THIS AGREEMENT OR ANY ACTION OR PROCEEDING ARISING OUT OF THE TRANSACTIONS CONTEMPLATED HEREBY OR ANY OTHER TRANSACTION AGREEMENT OR THE SPINCO FINANCING SHALL BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
Section 11.8 Jurisdiction; Service of Process . ANY ACTION WITH RESPECT TO THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS ARISING HEREUNDER, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT OF THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS ARISING HEREUNDER BROUGHT BY THE OTHER PARTY OR PARTIES OR THEIR SUCCESSORS OR ASSIGNS, IN EACH CASE, SHALL BE BROUGHT AND DETERMINED EXCLUSIVELY IN THE DELAWARE COURT OF CHANCERY AND ANY STATE APPELLATE COURT THEREFROM WITHIN THE STATE OF DELAWARE (OR, IF THE DELAWARE COURT OF CHANCERY DECLINES TO ACCEPT JURISDICTION OVER A PARTICULAR MATTER, ANY STATE OR FEDERAL COURT WITHIN THE STATE OF DELAWARE). EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE, COUNTERCLAIM OR OTHERWISE, IN ANY ACTION WITH RESPECT TO THIS AGREEMENT (I) ANY CLAIM THAT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF THE ABOVE NAMED COURTS FOR ANY REASON OTHER THAN THE FAILURE TO SERVE IN ACCORDANCE WITH THIS SECTION 11.8, (II) ANY CLAIM THAT IT OR ITS PROPERTY IS EXEMPT OR IMMUNE FROM JURISDICTION OF ANY SUCH COURT OR FROM ANY LEGAL PROCESS COMMENCED IN SUCH COURTS (WHETHER THROUGH SERVICE OF NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OF JUDGMENT, EXECUTION OF JUDGMENT OR OTHERWISE) AND (III) TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY CLAIM THAT (A) THE ACTION IN SUCH COURT IS
 
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BROUGHT IN AN INCONVENIENT FORUM, (B) THE VENUE OF SUCH ACTION IS IMPROPER OR (C) THIS AGREEMENT, OR THE SUBJECT MATTER HEREOF, MAY NOT BE ENFORCED IN OR BY SUCH COURTS. EACH OF THE PARTIES FURTHER AGREES THAT NO PARTY TO THIS AGREEMENT SHALL BE REQUIRED TO OBTAIN, FURNISH OR POST ANY BOND OR SIMILAR INSTRUMENT IN CONNECTION WITH OR AS A CONDITION TO OBTAINING ANY REMEDY REFERRED TO IN THIS SECTION 11.8 AND EACH PARTY WAIVES ANY OBJECTION TO THE IMPOSITION OF SUCH RELIEF OR ANY RIGHT IT MAY HAVE TO REQUIRE THE OBTAINING, FURNISHING OR POSTING OF ANY SUCH BOND OR SIMILAR INSTRUMENT. THE PARTIES HEREBY AGREE THAT MAILING OF PROCESS OR OTHER PAPERS IN CONNECTION WITH ANY SUCH ACTION OR PROCEEDING IN THE MANNER PROVIDED IN SECTION 11.2, OR IN SUCH OTHER MANNER AS MAY BE PERMITTED BY LAW, SHALL BE VALID AND SUFFICIENT SERVICE THEREOF AND HEREBY WAIVE ANY OBJECTIONS TO SERVICE ACCOMPLISHED IN THE MANNER HEREIN PROVIDED.
Section 11.9 Severability . If any provision of this Agreement or the application of any such provision to any Person or circumstance shall be declared judicially to be invalid, unenforceable or void, such decision shall not have the effect of invalidating or voiding the remainder of this Agreement, it being the intent and agreement of the Parties that this Agreement shall be deemed amended by modifying such provision to the extent necessary to render it valid, legal and enforceable to the maximum extent permitted while preserving its intent or, if such modification is not possible, by substituting therefor another provision that is valid, legal and enforceable and that achieves the original intent of the Parties.
Section 11.10 Headings . The headings and captions of the Articles and Sections used in this Agreement and the table of contents to this Agreement are for reference and convenience purposes of the Parties only, and will be given no substantive or interpretive effect whatsoever.
Section 11.11 Attorneys’ Fees . If any Action at law or equity, including an Action for declaratory relief, is brought to enforce or interpret any provision of this Agreement, the prevailing party shall be entitled to recover reasonable attorneys’ fees and expenses from the other party, which fees and expenses shall be in addition to any other relief which may be awarded.
Section 11.12 Amendment . This Agreement may be amended by the Parties at any time before or after approval hereof by the Spinco Stockholders, the stockholders of xpedx, the UWWH Stockholder and UWWH; provided, however, that after such stockholder approvals there shall not be made any amendment that by Law requires further approval by the Spinco Stockholders, the stockholders of xpedx, UWWH or the UWWH Stockholder without the further approval of such stockholders. This Agreement may not be amended except by an instrument in writing signed on behalf of each of the Parties.
Section 11.13 Extension; Waiver . At any time prior to the Effective Time, the Parties may (a) extend the time for the performance of any of the obligations or other acts of the other Parties, (b) waive any inaccuracies in the representations and warranties contained in this
 
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Agreement or in any document delivered pursuant to this Agreement or (c) subject to the proviso of the first sentence of Section 11.2, waive compliance with any of the agreements or conditions contained in this Agreement. Any agreement on the part of a Party to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such Party.
Section 11.14 Interpretation . When a reference is made in this Agreement to an Article, Section, Exhibit or Schedule, such reference shall be to an Article, Section, Exhibit or Schedule of this Agreement unless otherwise indicated. The table of contents to this Agreement, and the Article and Section headings contained in this Agreement, are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such terms and any reference to the masculine, feminine or neuter gender shall be deemed to include any gender or all three as appropriate. Unless otherwise specified, any agreement, instrument or statute defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement, instrument or statute as from time to time amended, modified or supplemented, including (in the case of agreements or instruments) by waiver or consent (but only to the extent such waiver or consent is not adverse to any member of the Spinco Entities) and (in the case of statutes) by succession of comparable successor statutes, and including all attachments thereto and instruments incorporated therein. References to a person are also to its permitted successors and assigns. Unless expressly stated to the contrary in this Agreement or in any other Transaction Agreement, all references to “the date hereof,” “the date of this Agreement,” “hereby” and “hereupon” and words of similar import shall all be references to January 28, 2014 (or the date of which the relevant Transaction Agreement is first entered into, as the case may be) regardless of any amendment or restatement hereof (or thereof). The use of the phrase “ordinary course of business” or other derivations thereof shall mean “ordinary course of business consistent with past practice.” Unless the context otherwise requires, “or,” “neither,” “nor,” “any,” “either,” and “or” shall not be exclusive. Wherever and whenever in this Agreement there is a consent right of a Party or a reference to the “satisfaction” or “sole discretion” of a Party, such Party shall be entitled to consider solely its own interests (and not the interests of any other Person) or, at its sole election, any such other interests and factors as such Party desires. The Parties have participated jointly in the negotiation and drafting of this Agreement, and in the event 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 any Party by virtue of the authorship of any provisions of this Agreement.
Section 11.15 Specific Performance . 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 Transaction Agreement, the Party who is, or is to be, thereby aggrieved will have the right to specific performance and injunctive or other equitable relief in respect of its rights under this Agreement or such Transaction Agreement, in addition to any and all other rights and remedies at law or in equity. The Parties agree that the remedies at law for any breach or threatened breach, 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 waived. Any requirements for the securing or posting of any bond with such remedy are waived by each of the Parties.
 
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Section 11.16 Damages Waiver . No Party shall be liable to another Party or any of its Affiliates (or any of their respective Related Parties) for any exemplary damages or punitive damages, or any other damages to the extent not reasonably foreseeable, arising out of or in connection with this Agreement or any Transaction Agreement (in each case, unless any such damages are payable to a third party pursuant to a Third-Party Claim (as such term is defined in the Distribution Agreement)).
Section 11.17 Reference to Time . All references in this Agreement to times of the day shall be to New York City time.
Section 11.18 No Representations or Warranties .
(a) EXCEPT AS EXPRESSLY SET FORTH HEREIN OR IN ANY OTHER TRANSACTION AGREEMENT (INCLUDING THE DISTRIBUTION AGREEMENT), EACH OF IP (ON BEHALF OF ITSELF AND ITS SUBSIDIARIES) AND SPINCO (ON BEHALF OF ITSELF AND ITS SUBSIDIARIES) ACKNOWLEDGES THAT NONE OF THE UWWH STOCKHOLDER, UWWH OR ANY OF ITS SUBSIDIARIES MAKES ANY EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY HEREIN AS TO ANY MATTER WHATSOEVER, INCLUDING ANY IMPLIED WARRANTIES OF MERCHANTIBILITY AND FITNESS FOR A PARTICULAR PURPOSE OR TITLE. EXCEPT TO THE EXTENT OTHERWISE PROVIDED FOR HEREIN OR IN ANY OTHER TRANSACTION AGREEMENT (INCLUDING THE DISTRIBUTION AGREEMENT), EACH OF IP (ON BEHALF OF ITSELF AND ITS SUBSIDIARIES) AND SPINCO (ON BEHALF OF ITSELF AND ITS SUBSIDIARIES) FURTHER ACKNOWLEDGES THAT ALL OTHER REPRESENTATIONS OR WARRANTIES THAT THE UWWH STOCKHOLDER, UWWH OR ANY OF ITS SUBSIDIARIES GAVE OR MIGHT HAVE GIVEN, OR WHICH MIGHT BE PROVIDED OR IMPLIED BY APPLICABLE LAW OR COMMERCIAL PRACTICE, ARE HEREBY EXPRESSLY EXCLUDED, AND THAT NEITHER IP NOR ANY OF ITS SUBSIDIARIES NOR SPINCO NOR ANY OF ITS SUBSIDIARIES HAS RELIED ON ANY SUCH REPRESENTATION OR WARRANTY. NOTHING IN THIS PARAGRAPH SHALL OPERATE TO LIMIT A CLAIM FOR FRAUD.
(b) EXCEPT AS EXPRESSLY SET FORTH HEREIN OR IN ANY OTHER TRANSACTION AGREEMENT (INCLUDING THE DISTRIBUTION AGREEMENT), EACH OF THE UWWH STOCKHOLDER, UWWH (ON BEHALF OF ITSELF AND ITS SUBSIDIARIES) AND SPINCO (ON BEHALF OF ITSELF AND ITS SUBSIDIARIES) ACKNOWLEDGES THAT NONE OF IP OR ANY OF ITS SUBSIDIARIES MAKES ANY EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY HEREIN AS TO ANY MATTER WHATSOEVER, INCLUDING ANY IMPLIED WARRANTIES OF MERCHANTIBILITY AND FITNESS FOR A PARTICULAR PURPOSE OR TITLE. EXCEPT TO THE EXTENT OTHERWISE PROVIDED FOR HEREIN OR IN ANY OTHER TRANSACTION AGREEMENT (INCLUDING THE DISTRIBUTION AGREEMENT), EACH OF THE UWWH STOCKHOLDER, UWWH (ON BEHALF OF ITSELF AND ITS
 
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SUBSIDIARIES) AND SPINCO (ON BEHALF OF ITSELF AND ITS SUBSIDIARIES) FURTHER ACKNOWLEDGES THAT ALL OTHER REPRESENTATIONS OR WARRANTIES THAT IP OR ANY OF ITS SUBSIDIARIES GAVE OR MIGHT HAVE GIVEN, OR WHICH MIGHT BE PROVIDED OR IMPLIED BY APPLICABLE LAW OR COMMERCIAL PRACTICE, ARE HEREBY EXPRESSLY EXCLUDED, AND THAT NONE OF THE UWWH STOCKHOLDER, UWWH OR ANY OF ITS SUBSIDIARIES OR SPINCO OR ANY OF ITS SUBSIDIARIES HAS RELIED ON ANY SUCH REPRESENTATION OR WARRANTY. NOTHING IN THIS PARAGRAPH SHALL OPERATE TO LIMIT A CLAIM FOR FRAUD.
[SIGNATURE PAGE FOLLOWS]
 
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In WITNESS WHEREOF, the Parties have caused this Agreement to be signed by their respective officers thereunto duly authorized, all as of the date first written above.

INTERNATIONAL PAPER COMPANY	
		
By:	 	/s/ C. Cato Ealy	
Name:	 	C. Cato Ealy	
Title:	 	Senior Vice President	
	
XPEDX HOLDING COMPANY	
		
By:	 	/s/ C. Cato Ealy	
Name:	 	C. Cato Ealy	
Title:	 	Vice President	
	
XPEDX INTERMEDIATE, LLC	
		
By:	 	International Paper Company,
its Sole Member	
		
By:	 	/s/ C. Cato Ealy	
Name:	 	C. Cato Ealy	
Title:	 	Senior Vice President	
	
XPEDX, LLC	
		
By:	 	International Paper Company,
its Sole Member	
		
By:	 	/s/ C. Cato Ealy	
Name:	 	C. Cato Ealy	
Title:	 	Senior Vice President	
[Signature Page to
Agreement and Plan of Merger]

			
UWW HOLDINGS, LLC	
		
By:	 	/s/ Seth Meisel	
Name:	 	Seth Meisel	
Title:	 	Authorized Signatory	
	
UWW HOLDINGS, INC.	
		
By:	 	/s/ Allan R. Dragone	
Name:	 	Allan R. Dragone	
Title:	 	Chief Executive Officer	
	
UNISOURCE WORLDWIDE, INC.	
		
By:	 	/s/ Allan R. Dragone	
Name:	 	Allan R. Dragone	
Title:	 	Chief Executive Officer	
[Signature Page to
Agreement and Plan of Merger]

Exhibit A
Subsidiary Certificate of Incorporation

EXHIBIT A
RESTATED CERTIFICATE OF INCORPORATION
OF
UNISOURCE WORLDWIDE, INC.
ARTICLE I
Name
The name of the corporation is Unisource Worldwide, Inc. (the “Corporation”).
ARTICLE II
Registered Office and Registered Agent
The address of the registered office of the Corporation in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of the registered agent of the Corporation at such address is The Corporation Trust Company.
ARTICLE III
Corporate Purpose
The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware (the “ General Corporation Law ”).
ARTICLE IV
Capital Stock
The total number of shares of all classes of stock that the Corporation shall have authority to issue is 1,000, all of which shall be shares of Common Stock, par value $.01 per share.

ARTICLE V
Directors
(1) Elections of directors of the Corporation need not be by written ballot, except and to the extent provided in the By-laws of the Corporation.
(2) To the fullest extent permitted by the General Corporation Law as it now exists and as it may hereafter be amended, no director of the Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director.
ARTICLE VI
Indemnification of Directors, Officers and Others
(1) The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person seeking indemnification did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful.
(2) The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys’ fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner
 
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he reasonably believed to be in or not opposed to the best interests of the Corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery of the State of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of chancery or such other court shall deem proper.
(3) To the extent that a director, officer, employee or agent of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Sections (1) and (2) of this Article VI, or in defense of any claim, issue. or matter therein, he shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by him in connection therewith.
(4) Any indemnification under Sections (1) and (2) of this Article VI (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in such Sections (1) and (2). Such determination shall be made (a) by the Board of Directors of the Corporation by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (b) if such a quorum is not obtainable, or, even if obtainable, a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (c) by the stockholders of the Corporation.
(5) Expenses (including attorneys’ fees) incurred by an officer or director in defending any civil, criminal, administrative or investigative action, suit or proceeding may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Corporation authorized in this Article VI, Such expenses (including attorneys’ fees) incurred by other employees and agents may be so paid upon such terms and conditions, if any, as the Board of Directors of the Corporation deems appropriate.
(6) The indemnification and advancement of expenses provided by, or granted pursuant to, the other sections of this Article VI shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any law, by-law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in an official capacity and as to action in another capacity while holding such office.
 
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(7) The Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising, out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under the provisions of Section 145 of the General Corporation Law.
(8) For purposes of this Article VI, references to “the Corporation” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, employees or agents so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Article VI with respect to the resulting or surviving corporation as he would have with respect to such constituent corporation if its separate existence had continued.
(9) For purposes of this Article VI, references to “other enterprises” shall include employee benefit plans; references to “fines” shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to “serving at the request of the Corporation” shall include any service as a director, officer, employee or agent of the Corporation which imposes duties on, or involves service by, such director, officer, employee or agent with respect to any employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the Corporation” as referred to in this Article VI.
(10) The indemnification and advancement of expenses provided by or granted pursuant to, this Article VI shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.
ARTICLE VII
By-Laws
The directors of the Corporation shall have the power to adopt, amend or repeal by-laws.
 
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ARTICLE VIII
Reorganization
Whenever a compromise or arrangement is proposed between this Corporation and its creditors or any class of them and/or between this Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this Corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for this Corporation under the provisions of section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for this Corporation under the provisions of section 279 of Title 8 of the Delaware Code order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this Corporation as consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of this Corporation, as the case may be, and also on this Corporation.
ARTICLE IX
Amendment
The Corporation reserves the right to amend, alter, change or repeal any provision of this Restated Certificate of Incorporation, in the manner now or hereafter prescribed by Iaw, and all rights conferred on stockholders in this Restated Certificate of Incorporation are subject to this reservation.
 
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Exhibit B
Subsidiary Bylaws

AMENDED AND RESTATED BY-LAWS
OF
UNISOURCE WORLDWIDE, INC.
A Delaware corporation
(Adopted as of January 27, 2003)
ARTICLE I
OFFICES
Section 1. Registered Office . The registered office of the corporation shall be in the City of Wilmington, County of New Castle, State of Delaware. The registered office and/or registered agent of the corporation may be changed from time to time by action of the board of directors.
Section 2. Other Offices . The corporation may also have offices at such other places, both within and without the State of Delaware, as the board of directors may from time to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place and Time of Meetings . An annual meeting of the stockholders shall be held each year within one hundred twenty (120) days after the close of the immediately preceding fiscal year of the corporation for the purpose of electing directors and conducting such other proper business as may come before the meeting. The date, time and place of the annual meeting shall be determined by the chief executive officer of the corporation; provided, that if the chief executive officer does not act, the board of directors shall determine the date, time and place of such meeting.
Section 2. Special Meetings . Special meetings of stockholders may be called for any purpose and may be held at such time and place, within or without the State of Delaware, as shall be stated in a notice of meeting or in a duly executed waiver of notice thereof. Such meetings may be called at any time by the board of directors or the chief executive officer and shall be called by the chief executive officer upon the written request of holders of shares entitled to cast not less than a majority of the votes at the meeting, such written request shall state the purpose or purposes of the meeting and shall be delivered to the chief executive officer.
 
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Section 3. Place of Meetings . The board of directors may designate any place, either within or without the State of Delaware, as the place of meeting for any annual meeting or for any special meeting called by the board of directors. If no designation is made, or if a special meeting be otherwise called, the place of meeting shall be the principal executive office of the corporation.
Section 4. Notice . Whenever stockholders are required or permitted to take action at a meeting, written or printed notice stating the place, date, time, and, in the case of special meetings, the purpose or purposes, of such meeting, shall be given to each stockholder entitled to vote at such meeting not less than ten (10) nor more than sixty (60) days before the date of the meeting. All such notices shall be delivered, either personally or by mail, by or at the direction. of the board of directors, the chief executive officer or the secretary, and if mailed, such notice shall be deemed to be delivered when deposited in the United States mail, postage prepaid, addressed to the stockholder at his, her or its address as the same appears on the records of the corporation. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened.
Section 5. Stockholders List . The officer having charge of the stock ledger of the corporation shall make, at least ten (10) days before every meeting of the stockholders, a complete list of the stockholders entitled to vote at such meeting arranged in alphabetical order, showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present.
Section 6. Quorum . The holders of a majority of the outstanding shares of capital stock, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders, except as otherwise provided by statute or by the certificate of incorporation. If a quorum is not present, the holders of a majority of the shares present in person or represented by proxy at the meeting, and entitled to vote at the meeting, may adjourn the meeting to another time and/or place.
Section 7. Adjourned Meetings . When a meeting is adjourned to another time and place, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting the corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.
 
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Section 8. Vote Required . When a quorum is present, the affirmative vote of the majority of shares present in person or represented by proxy at the meeting and entitled to vote on the subject matter shall be the act of the stockholders, unless the question is one upon which by express provisions of an applicable law or of the certificate of incorporation a different vote is required, in which case such express provision shall govern and control the decision of such question.
Section 9. Voting Rights . Except as otherwise provided by the General Corporation Law of the State of Delaware or by the certificate of incorporation of the corporation or any amendments thereto and subject to Section 3 of Article VI hereof, every stockholder shall at every meeting of the stockholders be entitled to one (1) vote in person or by proxy for each share of common stock held by such stockholder.
Section 10. Proxies . Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for him or her by proxy, but no such proxy shall be voted or acted upon after three (3) years from its date, unless the proxy provides for a longer period. A duly executed proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A proxy may be made irrevocable regardless of whether the interest with which it is coupled is an interest in the stock itself or an interest in the corporation generally. Any proxy is suspended when the person executing the proxy is present at a meeting of stockholders and elects to vote, except that when such proxy is coupled with an interest.and the fact of the interest appears on the face of the proxy, the agent named in the proxy shall have all voting and other rights referred to in the proxy, notwithstanding the presence of the person executing the proxy. At each meeting of the stockholders, and before any voting commences, all proxies filed at or before the meeting shall be submitted to and examined by the secretary or a person designated by the secretary, and no shares may be represented or voted under a proxy that has been found to be invalid or irregular.
Section 11. Action by Written Consent . Unless otherwise provided in the certificate of incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken and bearing the dates of signature of the stockholders who signed the consent or consents, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a
 
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meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the corporation by delivery to its registered office in the state of Delaware, or the corporation’s principal place of business, or an officer or agent of the corporation having custody of the book or books in which proceedings of meetings of the stockholders are recorded. Delivery made to the corporation’s registered office shall be by hand or by certified or registered mall, return receipt requested provided, however, that no consent or consents delivered by certified or registered mail shall be deemed delivered until such consent or consents are actually received at the registered office. All consents properly delivered in accordance with this section shall be deemed to be recorded when so delivered. No written consent shall be effective to take the corporate action referred to therein unless, within sixty (60) days of the earliest dated consent delivered to the corporation as required by this section, written consents signed by the holders of a sufficient number of shares to take such corporate action are so recorded. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders, who have not consented in writing. Any action taken pursuant to such written consent or consents of the stockholders shall have the same force and effect as if taken by the stockholders at a meeting thereof.
ARTICLE III
DIRECTORS
Section 1. General Powers . The business and affairs of the corporation shall be managed by or under the direction of the board of directors.
Section 2. Number, Election and Term of Office . The number of directors that shall constitute the Board of Directors shall be not less than one nor more than fifteen. The first board of directors shall consist of one director. Thereafter, the number of directors shall be established from time to time by resolution of the board. The directors shall be elected by a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote in the election of directors. The directors shall be elected in this manner at the annual meeting of the stockholders, except as provided in Section 4 of this Article III. Each director elected shall hold office until a successor is duly elected and qualified or until his or her earlier death, resignation or removal as hereinafter provided.
Section 3. Removal and Resignation . Any director or the entire board of directorsmay be removed at any time, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors. Whenever the holders of any class or series are entitled to elect one or more directors by the provisions of the corporation’s certificate of incorporation, the provisions of this section shall apply, in respect to the removal without cause of a director or directors so elected, to the vote of the holders of the outstanding shares of that class or series and not to the vote of the outstanding shares as a whole. Any director may resign at any time upon written notice to the corporation.
 
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Section 4. Vacancies . Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director. Each director so chosen shall hold office until a successor is duly elected and qualified or until his or her earlier death, resignation or removal as herein provided.
Section 5. Annual Meetings . The annual meeting of each newly elected board of directors shall be held without other notice than this by-law immediately after, and at the same place as, the annual meeting of stockholders.
Section 6. Other Meetings and Notice . Regular meetings, other than the annual meeting, of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by resolution of the board. Special meetings of the board of directors may be called by or at the request of the chief executive officer on at least twenty-four (24) hours notice to each director, either personally, by telephone, by mail, or by telegraph.
Section 7. Quorum, Required Vote and Adjournment . A majority of the total number of directors shall constitute a quorum for the transaction of business. The vote of a majority of directors present at a meeting at which a quorum is present shall be the act of the board of directors. If a quorum shall not be present at any meeting of the board of directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.
Section 8. Committees . The board of directors may, by resolution passed by a majority of the ‘whole board, designate one or more committees, each committee to consist of one or more of the directors of the corporation, which to the extent provided in such resolution or these by-laws shall have and may exercise the powers of the board of directors in the management and affairs of the corporation except as otherwise limited by law. The-board of directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the board of directors. Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required.
Section 9. Committee Rules . Each committee of the board of directors may fix its own rules of procedure and shall hold its meetings as provided by such rules, except as may otherwise be provided by a resolution of the board of directors designating such committee. Unless otherwise provided in such a resolution, the presence of at least a
 
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majority of the members of the committee shall be necessary to constitute a quorum. In the event that a member and that member’s alternate, if alternates are designated by the board of directors as provided in Section 8 of this Article III, of such committee is or are absent or disqualified, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in place of any such absent or disqualified member.
Section 10. Communications Equipment . Members of the board of directors or any committee thereof may participate in and act at any meeting of such board or committee through the use of a conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and participation in the meeting pursuant to this section shall constitute presence in person at the meeting.
Section 11. Waiver of Notice and Presumption of Assent . Any member of the board of directors or any committee thereof who is present at a meeting shall be conclusively presumed to have waived notice of such meeting except when such member attends for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully Galled or convened. Such member shall be conclusively presumed to have assented to any action taken unless his or her dissent shall be entered in the minutes of the meeting or unless his or her written dissent to such action shall be filed with the person acting as the secretary of the meeting before the adjournment thereof or shall be forwarded by registered mail to the secretary of the corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to any member who voted in favor of such action.
Section 12. Action by Written Consent . Unless otherwise restricted by the certificate of incorporation, any action required or permitted to be taken at any meeting of the board of directors, or of any committee thereof, may be taken without a meeting if all members of the board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the board or committee.
ARTICLE IV
OFFICERS
Section 1. Number . The officers of the corporation shall be elected by the board of directors and shall consist of a chief executive officer, one or more vice-presidents, secretary, a treasurer, and such other officers and assistant officers as may be deemed necessary or desirable by the’ board of directors, Any number of offices. may be held by the same person. In its discretion, the board of directors may choose not to fill any office for any period as it may deem advisable, except that the offices of chief executive officer and secretary shall be filled as expeditiously as possible.
 
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Section 2. Election and Term of Office . The officers of the corporation shall be elected annually by the board of directors at its first meeting held after each annual meeting of stockholders or as soon thereafter as conveniently may be. The chief executive officer shall be elected annually by the board of directors at the first meeting of the board of directors held after each annual meeting of stockholders or as soon thereafter as conveniently may be. The chief executive officer shall appoint other officers to serve for such terms as he or she deems desirable. Vacancies may be filled or new offices created and filled at any meeting of the board of directors. Each officer shall hold office until a successor is duly elected and qualified or until his or her earlier death, resignation or removal as hereinafter provided.
Section 3. Removal. Any officer or agent elected by the board of directors may be removed by the board of directors whenever in its judgment the best interests of the corporation would be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed.
Section 4. Vacancies . Any vacancy occurring in any office because of death, resignation, removal, disqualification or otherwise, may be filled by the board of directors for the unexpired portion of the term by the board of directors then in office.
Section 5. Compensation . Compensation of all officers shall be fixed by the board of directors, and no officer shall be prevented from receiving such compensation by virtue of his or her also being a director of the corporation.
Section 6. The Chief Executive Officer . The chief executive officer shall preside at all meetings of the stockholders and board of directors at which he is present; subject to the powers of the board of directors, shall have general charge of the business, affairs and property of the corporation, and control over its officers, agents and employees; and shall see that all orders and resolutions of the board of directors are carried into effect. The chief executive officer shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the board of directors to some other officer or agent of the corporation. The chief executive officer shall have such authority and perform such other duties as may be prescribed by the board of directors in accordance with these by-laws.
Section 7. Vice-presidents . The vice-president, or if there shall be more than one, the vice-presidents in the order determined by the board of directors or by the chief executive officer, shall, in the absence or disability of the chief executive officer, act with all of the powers and be subject to all the restrictions of the chief executive officer. The vice-presidents shall also perform such other duties and have such other powers as the board of directors, the chief executive officer or these by-laws may, from time to time, prescribe.
 
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Section 8. The Secretary and Assistant Secretaries . The secretary shall attend all meetings of the board of directors, all meetings of the committees thereof and all meetings of the stockholders and record all the proceedings of the meetings in a book or books to be kept for that purpose. Under the chief executive officer’s supervision, the secretary shall give, or cause to be given, all notices required to be given by these by-laws or by law; shall have such powers and perform such duties as the board of directors, the chief executive officer or these by-laws may, from time to time, prescribe; and shall have custody of the corporate seal of the corporation. The secretary, or an assistant secretary, shall have authority to affix the corporate seal to any instrument requiring it and when so affixed, it may be attested by his signature or by the signature of such assistant secretary. The board of directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his signature. The assistant secretary, or if there be more than one, the assistant secretaries in the order determined by the board of directors, shall, in the absence or disability of the secretary, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors, the chief executive officer, or secretary may, from time to time, prescribe.
Section 9. The Treasurer and Assistant Treasurer . The treasurer shall have the custody of the corporate funds and securities; shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation; shall deposit all monies and other valuable effects in the name and to the credit of the corporation as may be ordered by the board of directors; shall cause the funds of the corporation to be disbursed when such disbursements have been duly authorized, taking proper vouchers for such disbursements; and shall render to the chief executive officer and the board of directors, at its regular meeting or when the board of directors so requires, an account of the corporation; shall have such powers and perform such duties as the board of directors, the chief executive officer or these by-laws may, from time to time, prescribe. If required by the board of directors, the treasurer shall give the corporation a bond (which shall be rendered every six (6) years) in such sums and with such surety or sureties as shall be satisfactory to the board of directors for the faithful performance of the duties of the office of treasurer and for the restoration to the corporation, in case of death, resignation, retirement, or removal from office, of all books, papers, vouchers, money, and other property of whatever kind in the possession or under the control of the treasurer belonging to the corporation. The assistant treasurer, or if there shall be more than one, the assistant treasurers in the order determined by the board of directors, shall in the absence or disability of the treasurer, perform the duties and exercise the powers of the treasurer. The assistant treasurers shall perform such other duties and have such other powers as the board of directors, the chief executive officer or treasurer may, from time to time, prescribe.
 
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Section 10. Other Officers, Assistant Officers and Agents . Officers, assistant officers and agents, if any, other than those whose duties are provided for in these by-laws, shall have such authority and perform such duties as may from time to time be prescribed by resolution of the board of directors.
Section 11. Absence or Disability of Officers . In the case of the absence or disability of any officer of the corporation and of any person hereby authorized to act in such officer’s place during such officer’s absence or disability, the board of directors may by resolution delegate the powers and duties of such officer to any other officer or to any director, or to any other person whom it may select.
ARTICLE V
INDEMNIFICATION OF OFFICERS, DIRECTORS AND OTHERS
Section 1. Nature of Indemnity . Each person who was or is made a party or is threatened to be made a party to or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a “proceeding”), by reason of the fact that he, or a person of whom he is the legal representative, is or was a director or officer, of the corporation or is or was serving at the request of the corporation as a director, officer, employee, fiduciary, or agent of another corporation or of a partnership, joint venture, trust or other enterprise, shall be indemnified and held harmless by the corporation to the fullest extent which it is empowered to do so unless prohibited from doing so by the General Corporation Law of the State of Delaware, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the corporation to provide broader indemnification rights than said law permitted the corporation to provide prior to such amendment) against all expense, liability and loss (including attorneys’ fees actually and reasonably incurred by such person in connection with such proceeding) and such indemnification shall inure to the benefit of his heirs, executors and administrators; provided, however, that, except as provided in Section 2 hereof, the corporation shall indemnify any such person seeking indemnification in connection with a proceeding initiated by such person only if such proceeding was authorized by the board of directors of the corporation. The right to indemnification conferred in this Article V shall be a contract right and, subject to Sections 2 and 5 hereof, shall include the right to be paid by the corporation the expenses incurred in defending any such proceeding in advance of its final .disposition. The corporation may, by action of its board of directors, provide indemnification to employees and agents of the corporation with the same scope and effect as the foregoing indemnification of directors and officers.
 
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Section 2. Procedure for Indemnification of Directors and Officers . Any indemnification of a director or officer of the corporation under Section 1 of this Article V or advance of expenses under Section 5 of this Article V shall be made promptly, and in any event within thirty (30) days, upon the written request of the director or officer. If a determination by the corporation that the director or officer is entitled to indemnification pursuant to this Article V is required, and the corporation fails to respond within sixty (60) days to a written request for indemnity, the corporation shall be deemed to have approved the request. If the corporation denies a written request for indemnification or advancing of expenses, in whole or in part, or if payment in full pursuant to such request is not made within thirty (30) days, the right to indemnification or advances as granted by this Article V shall be enforceable by the director or officer in any court of competent jurisdiction. Such person’s costs and expenses incurred in connection with successfully establishing his right to indemnification, in whole or in part, in any such action shall also be indemnified by the corporation. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required undertaking, if any, has been tendered to the corporation) that the claimant has not met the standards of conduct which make it permissible under the General Corporation Law of the State .of Delaware for the corporation to indemnify the claimant for the amount claimed, but the burden of such defense shall be on the corporation. Neither the failure of the corporation (including its board of directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he has met the applicable standard of conduct set forth in the General Corporation Law of the State of Delaware, nor an actual determination by the corporation (including its board of directors, independent legal counsel, or its stockholders) that the claimant has not met such. applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.
Section 3. Article Not Exclusive . The rights to indemnification and the payment of expenses incurred in defending a proceeding in advance of its final disposition conferred in this Article V shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provision of the certificate of incorporation, by-law, agreement, vote of stockholders or disinterested directors or otherwise.
Section 4. Insurance . The corporation may purchase and maintain insurance on its own behalf and on behalf of any person who is or was a director, officer, employee, fiduciary, or agent of the corporation or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him or her and incurred by him or her in any such capacity, whether or not the corporation would have the power to indemnify such person against such liability under this Article V.
 
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Section 5. Expenses . Expenses incurred by any person described in Section 1 of this Article V in defending a proceeding shall be paid by the corporation in advance of such proceeding’s final disposition unless otherwise determined by the board of directors in the specific case upon receipt of an undertaking by or on behalf of the director or officer to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified by the corporation. Such expenses incurred by other employees and agents may be so paid upon such terms and conditions, if any, as the board of directors deems appropriate.
Section 6. Employees and Agents . Persons who are not covered by the foregoing provisions of this Article V and who are or were employees or agents of the corporation, or who are or were ‘serving at the request of the corporation as employees or agents of another corporation, partnership, joint venture, trust or other enterprise, may be indemnified to the extent authorized at any time or from time to time by the board of directors.
Section 7. Contract Rights . The provisions of this Article V shall be deemed to be a contract right between the corporation and each director or officer who serves in any such capacity at any time while this Article V and the relevant provisions of the General Corporation Law of the State of Delaware or other applicable law are in effect, and any repeal or modification of this Article V or any such law shall not affect any rights or obligations then existing with respect to any state of facts or proceeding then existing.
Section 8. Merger or Consolidation. For purposes of this Article V, references to “the corporation” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under this Article V with respect to the resulting or surviving corporation as he or she would have with respect to such constituent corporation if its separate existence had continued.
 
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ARTICLE VI
CERTIFICATES OF STOCK
Section 1. Form . Every holder of stock in the corporation shall be entitled to have a certificate, signed by, or in the name of the corporation by the chief executive officer or a vice-president and the secretary or an assistant secretary of the corporation, certifying the number of shares of a specific class or series owned by such holder in the corporation. If such a certificate is countersigned (1) by a transfer agent or an assistant transfer agent other than the corporation or its employee or (2) by a registrar, other than the corporation or its employee, the signature of any such chief executive officer, vice-president, secretary, or assistant secretary may be facsimiles. In case any officer or officers who have signed, or whose facsimile signature or signatures have been used on, any such certificate or certificates shall cease to be such officer or officers of the corporation whether because of death, resignation or otherwise before such certificate or certificates have been delivered by the corporation, such certificate or certificates may nevertheless be issued and delivered as though the person or persons who signed such certificate or certificates or whose facsimile signature or signatures have been used thereon had not ceased to be such officer or officers of the corporation. All certificates for shares shall be consecutively numbered or otherwise identified. The name of the person to whom the shares represented thereby are issued, with the number of shares and date of issue, shall be entered on the books of the corporation. Shares of stock of the corporation shall only be transferred on the books of the corporation by the holder of record thereof or by such holder’s attorney duly authorized in writing, upon surrender to the corporation of the certificate or certificates for such shares endorsed by the appropriate person or persons, with such evidence of the authenticity of such endorsement, transfer, authorization, and other matters as the corporation may reasonably require, and accompanied by all necessary stock transfer stamps. In that event, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate or certificates, and record the transaction on its books. The board of directors may appoint a bank or trust company organized under the laws of the United States or any state thereof to act as its transfer agent or registrar, or both in connection with the transfer of any class or series of securities of the corporation.
Section 2. Lost Certificates . The board of directors may direct a new certificate or certificates to be issued in place of any certificate or certificates previously issued by the corporation alleged to have been lost, stolen, or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen,, or destroyed. When authorizing such issue of a new certificate or certificates, the board of directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen, or destroyed certificate or certificates, or his or her legal representative, to give the corporation a bond sufficient to indemnify the corporation against any claim that may be made against the corporation on account of the loss, theft or destruction of any such certificate or the issuance of such new certificate.
Section 3. Fixing a Record Date for Stockholder Meetings . In order that the corporation may determine the stockholders entitled to notice of or to vote at arty meeting of stockholders or any adjournment thereof, the board of directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the board of directors, and which record date shall not be more than
 
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sixty (60) nor less than ten (10) days before the date of such meeting. If no record date is fixed by the board of directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be the close of business on the next day preceding the day on which notice is given, or if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the board of directors may fix a new record date for the adjourned meeting.
Section 4. Fixing a Record Date for Action by Written Consent . In order that the corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the board of directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the board of directors, and which date shall not be more than ten (10) days after the date upon which the resolution fixing the record date is adopted by the board of directors. If no record date has been fixed by the board of directors, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the board of directors is required by statute, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the corporation’s registered office shall be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the board of directors and prior action by the board of directors is required by statute, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the day on which the board of directors adopts the resolution ‘ taking such prior action.
Section 5. Fixing a Record Date for Other Purposes . In order that the corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment or any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purposes of any other lawful action, the board of directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty (60) days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the board of directors adopts the resolution relating thereto.
 
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Section 6. Registered Stockholders . Prior to the surrender to the corporation of the certificate or certificates for a share or shares of stock with a request to record the transfer of such share or shares, the corporation may treat the registered owner as the person entitled to receive dividends, to vote, to receive notifications, and otherwise to exercise all the rights and powers of an owner. The corporation shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof.
Section 7. Subscriptions for Stock . Unless otherwise provided for in the subscription agreement, subscriptions for shares shall be paid in full at such time, or in such installments and at such times, as shall be determined by the board of directors. Any call made by the board of directors for payment on subscriptions shall be uniform as to all shares of the same class or as to all shares of the same series. In case of default in the payment of any installment or call when such payment is due, the corporation may proceed to collect the amount due in the same manner as any debt due the corporation.
ARTICLE VII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the corporation, subject to the provisions of the certificate of incorporation, if any, may be declared by the board of directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or any other purpose and the directors may modify or abolish any such reserve in the manner in which it was created.
Section 2. Checks, Drafts or Orders . All checks, drafts, or other orders for the payment of money by or to the corporation and all notes and other evidences of indebtedness issued in the name of the corporation shall be signed by such officer or officers, agent or agents of the corporation, and in such manner, as shall be determined by resolution of the board of directors or a duly authorized committee thereof.
Section 3. Contracts . The board of directors may authorize any officer or officers, or any agent or agents, of the corporation to enter into any contract or to execute and deliver any instrument in the name of and on behalf of the corporation, and such authority may be general or confined to specific instances.
Section 4. Loans . The corporation may lend money to, or guarantee any obligation of, or otherwise assist any officer or other employee of the corporation or of its subsidiary, including any officer or employee who is a director of the corporation or its subsidiary, whenever, in the judgment of the directors, such loan, guaranty or assistance
 
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may reasonably be expected to benefit the corporation. The loan, guaranty or other assistance may be with or without interest, and may be unsecured, or secured in such manner as the board of directors shall approve, including, without limitation, a pledge of shares of stock of the corporation. Nothing in this section contained shall be deemed to deny, limit or restrict the powers of guaranty or warranty of the corporation at common law or under any statute.
Section 5. Fiscal Year . The fiscal year of the corporation shall be fixed by resolution of the board of directors.
Section 6. Corporate Seal . The board of directors shall provide a corporate seal which shall be in the form of a circle and shall have inscribed thereon the name .of the corporation and the words “Corporate Seal, Delaware”: The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. -
Section 7. Voting Securities Owned By Corporation . Voting securities in any other corporation held by the corporation shall be voted by the chief executive officer, unless the board of directors specifically confers authority to vote with respect thereto, which authority may be general or confined to specific instances, upon some other person or officer. Any person authorized to vote securities shall have the power to appoint proxies, with general power of substitution.
Section 8. Inspection of Books and Records . Any stockholder of record, in person or by attorney or other agent, shall, upon written demand under oath stating the purpose thereof, have the right during the usual hours for business to inspect for any proper purpose the corporation’s stock ledger, a list of its stockholders, and its other books and records, and to make copies or extracts therefrom. A proper purpose shall mean any purpose reasonably related to such person’s interest as a stockholder. In every instance where an attorney or other agent shall be the person who seeks the right to inspection, the demand under oath shall be accompanied by a power of attorney or such other writing which authorizes the attorney or other agent to so act on behalf of the stockholder. The demand under oath shall be directed to the corporation at its registered office in the State of Delaware or at its principal place of business.
Section 9. Section Headings . Section headings in these by-laws are for convenience of reference only and shall not be given any substantive effect in limiting or otherwise construing any provision herein.
Section 10. Inconsistent Provisions . In the event that any provision of these by-laws is or becomes inconsistent with any provision of the certificate of incorporation, the General’ Corporation Law of the State of Delaware or any other applicable law, the provision of these by-laws shall not be given any effect to the extent of such inconsistency but shall otherwise be given full force and effect.
 
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ARTICLE VIII
AMENDMENTS
These by-laws may be amended, altered, or repealed and new by-laws adopted at any meeting of the board of directors by a majority vote. The fact that the power to adopt, amend, alter, or repeal the by-laws has been conferred upon the board of directors shall not divest the stockholders of the same powers.
 
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Exhibit C
Form of Tax Receivable Agreement

FORM OF TAX RECEIVABLE AGREEMENT
by and among
XPEDX HOLDING COMPANY
and
UWW HOLDINGS, LLC
Dated as of [                    ]

TABLE OF CONTENTS

 	  	 	  	Page	 	
ARTICLE I	  				
DEFINITIONS	  				
Section 1.01	  	Definitions	  	 	2	  	
		
ARTICLE II	  				
DETERMINATION OF CUMULATIVE REALIZED TAX BENEFIT	  				
Section 2.01	  	NOL Utilization	  	 	6	  	
Section 2.02	  	Tax Benefit Schedule	  	 	6	  	
Section 2.03	  	Procedures, Amendments	  	 	6	  	
		
ARTICLE III	  				
TAX BENEFIT PAYMENTS	  				
Section 3.01	  	Payments	  	 	7	  	
Section 3.02	  	No Duplicative Payments; Intent	  	 	8	  	
		
ARTICLE IV	  				
TERMINATION	  				
Section 4.01	  	Termination and Breach of Agreement	  	 	8	  	
		
ARTICLE V	  				
LATE PAYMENTS	  				
Section 5.01	  	Late Payments by Spinco	  	 	9	  	
Section 5.02	  	Compliance with Indebtedness	  	 	9	  	
		
ARTICLE VI	  				
SPINCO TAX MATTERS; CONSISTENCY; COOPERATION	  				
Section 6.01	  	Representative Participation in Spinco Tax Matters	  	 	9	  	
Section 6.02	  	Consistency	  	 	9	  	
Section 6.03	  	Cooperation	  	 	10	  	
		
ARTICLE VII	  				
MISCELLANEOUS	  				
Section 7.01	  	Notices	  	 	10	  	
Section 7.02	  	Counterparts	  	 	11	  	
Section 7.03	  	Entire Agreement; Third Party Beneficiaries	  	 	11	  	
Section 7.04	  	Governing Law	  	 	12	  	
Section 7.05	  	Severability	  	 	12	  	
Section 7.06	  	Successors; Assignment; Amendments; Waivers	  	 	12	  	
Section 7.07	  	Titles and Subtitles	  	 	13	  	
Section 7.08	  	Resolution of Disputes	  	 	13	  	
Section 7.09	  	Reconciliation	  	 	14	  	
Section 7.10	  	Withholding	  	 	15	  	
Section 7.11	  	Affiliated Corporations; Admission of Spinco into a Consolidated Group	  	 	15	  	
Section 7.12	  	Confidentiality	  	 	15	  	
Section 7.13	  	Representative	  	 	16	  	
Section 7.14	  	Tax Characterization of the Agreement	  	 	17	  	
 
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TAX RECEIVABLE AGREEMENT
This TAX RECEIVABLE AGREEMENT (this “ Agreement ”), dated as of [                    ], is hereby entered into by and among xpedx Holding Company, a Delaware corporation (“ Spinco ”) and UWW Holdings, LLC, a Delaware limited liability company (“ Holdings ”), in its capacity as a Beneficiary (as defined below) and a representative of the Beneficiaries (in such representative capacity, and along with any successor as provided in Section 7.06(a), the “ Representative ”).
RECITALS
WHEREAS, as of the date hereof, the Equity holders listed on Schedule A directly own one-hundred percent (100%) of the issued and outstanding equity interests of Holdings;
WHEREAS, immediately prior to the Merger (as defined below), Holdings directly owned one-hundred percent (100%) of the issued and outstanding stock of UWW Holdings, Inc., a Delaware corporation (“ UWWH ”);
WHEREAS, immediately prior to the Merger, UWWH directly owned one-hundred percent (100%) of the issued and outstanding stock of Unisource Worldwide, Inc., a Delaware corporation (“ Unisource ”);
WHEREAS, as of the date hereof, UWWH will merge with and into Spinco (the “ Merger ”), with Spinco surviving, and the stock of UWWH owned by Holdings will be converted into the right to receive 49% of the issued and outstanding shares of common stock in Spinco and the rights and benefits set forth in the Agreement;
WHEREAS, on the day following the effective time of the Merger, Spinco will be the common parent of an affiliated group of corporations, including Unisource, within the meaning of Section 1504(a) of the Code (the “ Spinco Consolidated Group ”);
WHEREAS, UWWH and its Subsidiaries have generated NOLs (as defined herein) prior to the Merger that Spinco and its Subsidiaries may be able to utilize;
WHEREAS, if utilized, the Pre-Merger NOLs (as defined herein) will reduce the actual liability for Taxes (as defined herein) that Spinco and its Subsidiaries might otherwise be required to pay;
WHEREAS, subject to the completion of the Merger, the parties to this Agreement desire to make certain arrangements with respect to the effect of the Pre-Merger NOLs on the actual liability for Taxes of Spinco and its Subsidiaries;
WHEREAS, this Agreement is intended to provide payments to Holdings and the Permitted Assignees (as defined herein) (Holdings and each such Permitted Assignee referred to herein as a “ Beneficiary ” and collectively, the “ Beneficiaries ”) in an amount equal to eighty-five percent (85%) of the aggregate reduction in Taxes payable realized by Spinco and its Subsidiaries from the utilization of the Pre-Merger NOLs;

NOW, THEREFORE, in consideration of the foregoing and the respective covenants and agreements set forth herein, and intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE XIII
DEFINITIONS
Section 1.01 Definitions .
As used in this Agreement, the terms set forth in this Article I shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined).
“ Advisory Firm ” means any nationally recognized law or accounting firm that is expert in Tax matters that is agreed to by Spinco and the Representative.
“ Advisory Firm Letter ” shall mean a letter from the Advisory Firm stating that the relevant schedule, notice or other information to be provided by Spinco to the Representative and all supporting schedules and work papers were prepared in a manner consistent with the terms of this Agreement and, to the extent not expressly provided in this Agreement, on a reasonable basis in light of the facts and applicable law in existence on the date to which such schedule, notice or other information relates.
“ Affiliate ” means a Person that, directly or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with, a specified Person as of the date on which, or at any time during the period for which, the determination of affiliation is being made. The term “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”), as applied to any Person, means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or other ownership interest, by contract or otherwise.
“ Aggregate Tax Benefit Payment ” is defined in Section 3.01(b) of this Agreement.
“ Agreed Rate ” means a rate per annum equal to one-year LIBOR plus 100 basis points.
“ Agreement ” is defined in the preamble of this Agreement.
“ Amended Schedule ” is defined in Section 2.02(b) of this Agreement.
“ Applicable Percentage ” with respect to any Beneficiary, means the percentage set forth opposite such Beneficiary’s name on Schedule B, as amended from time to time to reflect any Permitted Assignment.
“ Base Payment ” is defined in Section 3.01(b) of this Agreement.
“ Beneficiary ” is defined in the preamble of this Agreement.
“ Board ” means the board of directors of Spinco.
 
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“ Business Day ” means Monday through Friday of each week, except that a legal holiday recognized as such by the government of the United States of America or the State of Delaware shall not be regarded as a Business Day.
“ Code ” means the U.S. Internal Revenue Code of 1986, as amended.
“ Cumulative Actual Tax Liability ” means, as of the end of any Taxable Year, the aggregate liability for Taxes of Spinco and its Subsidiaries for taxable periods (or portions thereof) beginning after the date of the Merger and ending on or before the end of such Taxable Year.
“ Cumulative Non-NOL Tax Liability ” means, as of the end of any Taxable Year, the aggregate liability for Taxes of Spinco and its Subsidiaries for taxable periods (or portions thereof) beginning after the date of the Merger and ending on or before the end of such Taxable Year, applying the applicable Tax rates for each Tax period, and using the same methods, elections, conventions and similar practices used on the relevant Spinco Return for each applicable Tax Period, but assuming that there were no Pre-Merger NOLs.
“ Cumulative Realized Tax Benefit ” means, as of the end of any Taxable Year, the excess (if any) of (i) the Cumulative Non-NOL Tax Liability (as of such time) over (ii) the sum of (A) the Cumulative Actual Tax Liability (as of such time) and (B) the aggregate amount of Base Payments (previously made pursuant to this Agreement as of such time), provided that (x) if, as of such time, there is an unresolved claim, proposed adjustment or similar item by a Taxing Authority that would increase the Cumulative Realized Tax Benefit, the Cumulative Realized Tax Benefit shall be computed as if such Taxing Authority prevailed with respect to such claim, proposed adjustment or similar item and (y) if International Paper Company is entitled to payments from Spinco under Section 2.10 of the Tax Matters Agreement as a result of any step-up in tax basis, the Cumulative Realized Tax Benefit shall be computed as if such step-up did not exist.
“ CPR ” means the International Institute for Conflict Prevention and Resolution.
“ Deconsolidation ” means any event pursuant to which a corporation ceases to be includable in the same affiliated group of corporations, within the meaning of Section 1504(a) of the Code, as Spinco.
“ Deconsolidation Election ” is defined in Section 4.01(b) of the Agreement.
“ Default Rate ” means a rate per annum equal to one-year LIBOR plus 500 basis points.
“ Equity holders ” means the holders of equity of Holdings as of the date hereof listed on Schedule A.
“ Expert ” is defined in Section 7.09 of this Agreement.
“ Fair Market Value Schedule ” is defined in Section 7.14 of this Agreement.
“ Interest Amount ” is defined in Section 3.01(b) of this Agreement.
 
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“ IRS ” means the U.S. Internal Revenue Service.
“ LIBOR ” means for each month (or portion thereof) during any period, an interest rate per annum equal to the rate per annum reported, on the date two days prior to the first day of such month, on the Telerate Page 3750 (or if such screen shall cease to be publicly available, as reported on Reuters Screen page “ LIBO ” or by any other publicly available source of such market rate) for London interbank offered rates for U.S. dollar deposits for such month (or portion thereof).
“ Merger Agreement ” means that certain Agreement and Plan of Merger, dated as of January 28, 2014, by and among International Paper Company, Spinco, Holdings and the other parties thereto.
“ Net Tax Benefit ” is defined in Section 3.01(b) of this Agreement.
“ NOL Payment ” is defined in Section 5.01 of this Agreement.
“ NOLs ” shall mean all net operating losses for U.S. federal and state and Canadian income tax purposes.
“ Objection Notice ” is defined in Section 2.02(a) of this Agreement.
“ Pre-Merger NOLs ” shall mean NOLs generated by UWWH and its Subsidiaries prior to the date of the Merger. If the Taxable Year of UWWH and/or its Subsidiaries includes but does not end on the date of the Merger (a “ Straddle Period ”), such Taxable Year shall be deemed to end on the date of the Merger for purposes of calculating all Pre-Merger NOLs; provided that the amount, if any, of the Pre-Merger NOLs attributable to such Straddle Period shall be reasonably determined by Spinco and the Representative in good faith.
“ Post-Merger NOLs ” shall mean NOLs, if any, generated by Spinco and its Subsidiaries that are not Pre-Merger NOLs.
“ Payment Date ” means any date on which a Tax Benefit Payment is required to be made by Spinco pursuant to this Agreement.
“ Permitted Assignee ” means any Person who receives rights under this Agreement pursuant to a Permitted Assignment.
“ Permitted Assignment ” is defined in Section 7.06(b) of this Agreement.
“ Person ” means an individual, a partnership (including a limited partnership), a corporation, a limited liability company, a trust, a joint stock company, a trust, an association, a joint venture, an unincorporated organization or association, a governmental authority or any other entity of whatever nature.
“ Reconciliation Dispute ” is defined in Section 7.09 of this Agreement.
“ Reconciliation Procedures ” is defined in Section 7.09 of this Agreement.
 
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“ Representative ” is defined in the preamble of this Agreement, and any successor Representative appointed pursuant to Section 7.06(a).
“ Rules ” is defined in Section 7.08(a) of this Agreement.
“Section 336(e) Election” has the meaning set forth in the Tax Matters Agreement.
“ Spinco ” is defined in the preamble of this Agreement.
“ Spinco Consolidated Group ” is defined in the preamble of this Agreement.
“ Spinco Return ” means each U.S. federal and state and Canadian income tax return of Spinco and/or its Subsidiaries filed with respect to Taxes of any Taxable Year.
“ Subsidiary ” means, with respect to any Person, any corporation, partnership, joint venture, limited liability company, trust or estate of which (or in which) more than 50% of (i) the issued and outstanding capital stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency), (ii) the interest in the capital or profits of such limited liability company, partnership or joint venture or (iii) the beneficial interest in such trust or estate is at the time directly or indirectly owned or controlled by such Person and one or more of its other Subsidiaries or by one or more of such Person’s other Subsidiaries. The term “Subsidiary” shall include all Subsidiaries of any Subsidiary.
“ Tax Benefit Payment ” is defined in Section 3.01(b) of this Agreement.
“ Tax Benefit Schedule ” is defined in Section 2.02 of this Agreement.
“Tax Matters Agreement” shall mean the Tax Matters Agreement by and among IP, Spinco and UWWH, dated January 28, 2014.
“ Tax Return ” means any return, report, declaration, form, claim for refund or information return or statement relating to Taxes filed or required to be filed with any Taxing Authority, including any schedule or attachment thereto, and including any amendment thereof.
“ Taxable Year ” means a taxable year of Spinco for U.S. federal income tax purposes, as defined in Section 441(b) of the Code (and, therefore, for the avoidance of doubt, may include a period of less than twelve months for which a Spinco Return is made), ending on or after the date hereof.
“ Taxes ” means any and all U.S. federal, state and Canadian taxes, assessments or similar charges measured with respect to net income or profits and any interest related to such Taxes.
“ Taxing Authority ” means any domestic, foreign, federal, national, state, county or municipal or other local government, any subdivision, agency, commission or authority thereof, or any quasi-governmental body exercising any taxing authority or any other authority exercising regulatory authority with respect to Taxes.
 
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“ Treasury Regulations ” means the final, temporary and proposed regulations under the Code promulgated from time to time (including corresponding provisions and succeeding provisions) as in effect for the relevant taxable period.
ARTICLE II
DETERMINATION OF CUMULATIVE REALIZED TAX BENEFIT
Section 2.01 NOL Utilization . Spinco, on the one hand, and the Beneficiaries, on the other hand, acknowledge that Spinco and its Subsidiaries shall, to the fullest extent permitted by law, claim the Pre-Merger NOLs to reduce the amount of Taxes that Spinco and its Subsidiaries would otherwise be required to pay.
Section 2.02 Tax Benefit Schedule . Within ninety (90) calendar days after the filing of all of the Spinco Returns for any Taxable Year, Spinco shall provide to the Representative a schedule showing, in reasonable detail, (i) the calculation of the Cumulative Realized Tax Benefit as of the end of such Taxable Year, if any and (ii) the calculation of any payment to be made to the Beneficiaries pursuant to Article III as of the end of such Taxable Year and (iii) all supporting information (including work papers and valuation reports) reasonably necessary to support the calculation of such payment (a “Tax Benefit Schedule”). The Tax Benefit Schedule will become final as provided in Section 2.03(a) and may be amended as provided in Section 2.03(b) (subject to the procedures set forth in Section 2.03(a)).
Section 2.03 Procedures, Amendments .
(a) Procedure . Every time Spinco delivers to the Representative a Tax Benefit Schedule under this Agreement, including any Amended Schedule delivered pursuant to Section 2.03(b), Spinco shall also (x) deliver to the Representative schedules, valuation reports, if any, and work papers providing reasonable detail regarding the preparation of the Tax Benefit Schedule and an Advisory Firm Letter with respect to such Tax Benefit Schedule to the extent reasonably requested by the Representative and (y) allow the Representative and its advisors reasonable access (at the Representative’s sole expense) to the appropriate representatives, books, records and work papers at each of Spinco and the Advisory Firm in connection with a review of such Tax Benefit Schedule. The applicable Tax Benefit Schedule shall, subject to Section 2.03(b), become final and binding on all parties unless the Representative, within forty-five (45) calendar days after receiving any Tax Benefit Schedule or amendment thereto, provides Spinco with notice of a material objection to such Tax Benefit Schedule (“ Objection Notice ”) made in good faith. If the parties, for any reason, are unable to successfully resolve the issues raised in any notice within thirty (30) calendar days of receipt by Spinco of such notice, Spinco and the Representative shall employ the Reconciliation Procedures.
(b) Amended Schedule . The Tax Benefit Schedule for any Taxable Year shall be amended by Spinco (i) to correct inaccuracies in such Tax Benefit Schedule after the date such Tax Benefit Schedule was provided to the Representative, (ii) to comply with the Expert’s determination under the Reconciliation Procedures, (iii) to reflect a change (relative to the amounts in the original Tax Benefit Schedule or the prior Amended Schedule) in the Cumulative Realized Tax Benefit as of the end of such Taxable Year attributable to any change in fact or law, including a carryback or carryforward (including, to the extent affecting the Non-NOL Tax
 
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Liability, a hypothetical carryback or carryforward attributable to any Post-Merger NOLs) of a loss or other tax item to such Taxable Year or (iv) to reflect the consequences of a Tax audit or the filing of an amended Tax Return (such Tax Benefit Schedule, an “Amended Schedule”). Spinco shall provide any Amended Schedule to the Representative within thirty (30) calendar days of the occurrence of an event referred to in clauses (i) through (iv) of the preceding sentence (or, to the extent such event occurs in connection with the preparation of a Spinco Return filing described in Section 2.02, concurrently with the delivery of the Tax Benefit Schedule pursuant to Section 2.02) and any such Amended Schedule shall be subject to the approval procedures described in Section 2.03(a); provided , however, that any Amended Schedule provided pursuant to an Expert’s determination under the Reconciliation Procedures as described in clause (ii) of the preceding sentence shall, subject to this Section 2.03(b), be final and binding on all parties hereto and not subject to the approval procedures described in Section 2.03(a).
ARTICLE III
TAX BENEFIT PAYMENTS
Section 3.01 Payments .
(a) Timing of Payments to the Beneficiaries . (i) Within five (5) Business Days of a Tax Benefit Schedule with respect to a Taxable Year becoming final in accordance with Section 2.03(a), Spinco shall pay to the Beneficiaries the Tax Benefit Payments as of the end of such Taxable Year determined pursuant to Section 3.01(b). Each such Tax Benefit Payment shall be made by wire transfer of immediately available funds to the bank accounts previously designated by the Beneficiaries to Spinco or as otherwise agreed by Spinco and the Beneficiaries. For the avoidance of doubt, no Tax Benefit Payment shall be made in respect of estimated tax payments, including, without limitation, estimated U.S. federal, state and Canadian income tax payments. For the avoidance of doubt, no payments shall be required to be made by any Beneficiary to Spinco under this Agreement, except as provided in Section 7.10.
(b) The “ Tax Benefit Payment ” with respect to any Beneficiary means an amount equal to such Beneficiary’s Applicable Percentage of the Aggregate Tax Benefit Payment. The “ Aggregate Tax Benefit Payment ” means, as of the end of a Taxable Year, an amount, not less than zero, equal to eighty-five percent (85%) of the Cumulative Realized Tax Benefit as of the end of such Taxable Year (each such payment, a “ Base Payment ”) and the Interest Amount (as defined below). The “ Interest Amount ” shall equal the interest on any Base Payment calculated at the Agreed Rate from the date that Spinco’s U.S. federal income Tax return is filed, but no later than the due date (without extensions) for filing such Tax return with respect to Taxes for the Taxable Year for which the Aggregate Tax Benefit Payment is being measured until the Payment Date.
(c) Notwithstanding anything to the contrary in this Agreement, for purposes of determining the amount of any Tax Benefit Payments for any Straddle Period that includes the date of the Merger, such Straddle Period shall be treated as two Taxable Years, (i) the first ending on the date of the Merger and (ii) the second starting the day following the date of the Merger. All allocations of taxable items between the two periods shall be done on the basis of an interim closing of the books, as reasonably determined by Spinco and the Representative in good faith.
 
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Section 3.02 No Duplicative Payments; Intent . It is intended that the provisions of this Agreement will not result in duplicative payment of any amount (including interest) required under this Agreement. It is also intended that the provisions of this Agreement provide that eighty-five percent (85%) of Spinco’s Cumulative Realized Tax Benefit and Interest Amount for all years be paid to the Beneficiaries pursuant to this Agreement. Such amount shall be determined using a “ with and without ” methodology. Carryovers or carrybacks of (a) any U.S. federal tax item shall be considered to be subject to the rules of the Code (or any successor U.S. federal income tax statute) and the Treasury Regulations or (b) any state or Canadian tax item, shall be considered subject to the appropriate provisions of Tax law, as applicable, governing the use, limitation and expiration of carryovers or carrybacks of the relevant type. If a carryover or carryback of any Tax item includes a portion that is attributable to the Pre-Merger NOLs and another portion that is not, Spinco’s Cumulative Realized Tax Benefit shall be determined using such “ with and without ” methodology. The provisions of this Agreement shall be construed in the appropriate manner so that such intentions are realized.
ARTICLE IV
TERMINATION
Section 4.01 Termination and Breach of Agreement .
(a) This Agreement shall terminate on the date on which all NOL Payments have been made under this Agreement.
(b) In the event of a Deconsolidation of Unisource from the Spinco Consolidated Group, Spinco shall cause the common parent of the affiliated group of corporations within the meaning of Section 1504(a) of the Code that includes Unisource after such Deconsolidation to enter into a tax receivables agreement with the Representative that is substantially similar to this Agreement with respect to such consolidated group’s use of the Pre-Merger NOLs after the date of such Deconsolidation (with appropriate adjustments). In the event that such common parent and the Representative do enter into such tax receivables agreement, this Agreement shall terminate and Spinco shall not have any further payment obligations under this Agreement, other than any (i) Tax Benefit Payment agreed to by Spinco and the Representative as due and payable but unpaid as of the date of such Deconsolidation and (ii) the Tax Benefit Payment due for the Taxable Year ending prior to, with or including the date of such Deconsolidation.
(c) In the event that Spinco breaches any of its material obligations under this Agreement by operation of law as a result of the rejection of this Agreement in a case commenced under the Bankruptcy Code, then all obligations hereunder shall be accelerated.
 
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ARTICLE V
LATE PAYMENTS
Section 5.01 Late Payments by Spinco . The amount of all or any portion of any Tax Benefit Payment required to be made by Spinco to the Beneficiaries under this Agreement (an “NOL Payment”) not made to the Beneficiaries when due under the terms of this Agreement shall be payable together with any interest thereon, computed at the Default Rate and commencing from the date on which such NOL Payment was due and payable and ending on the date such NOL Payment is made.
Section 5.02 Compliance with Indebtedness . Notwithstanding anything to the contrary provided herein, if, at the time any amounts become due and payable hereunder, Spinco is not permitted, pursuant to the terms of Spinco’s or its direct or indirect subsidiary’s debt documentation to pay such amounts, or Spinco’s direct or indirect subsidiaries are not permitted, pursuant to the terms of Spinco’s or its direct or indirect subsidiary’s debt documentation, to make payments to Spinco to allow Spinco to pay such amounts, then Spinco shall, by notice to the Representative, be permitted to defer the payment of such amounts until the condition described in this Section 5.02 is no longer applicable, in which case such amounts (together with accrued and unpaid interest thereon as described in the immediately following sentence) shall become due and payable immediately. If Spinco defers the payment of any such amounts pursuant to the foregoing sentence, such amounts shall accrue interest at the Agreed Rate per annum, from the date that such amounts originally became due and owing pursuant to the terms hereof to the date that such amounts were paid.
ARTICLE VI
SPINCO TAX MATTERS; CONSISTENCY; COOPERATION
Section 6.01 Representative Participation in Spinco Tax Matters . Except as otherwise provided herein, Spinco shall have full responsibility for, and sole discretion over, all Tax matters concerning Spinco including without limitation the preparation, filing or amending of any Tax Return and defending, contesting or settling any issue pertaining to Taxes, subject to a requirement that Spinco act in good faith in connection with its control of any matter which is reasonably expected to affect the Beneficiaries’ rights and obligations under this Agreement. Notwithstanding the foregoing, Spinco shall notify the Representative of, and keep the Representative reasonably informed with respect to, the portion of any audit of Spinco by a Taxing Authority the outcome of which is reasonably expected to affect the Beneficiaries’ rights and obligations under this Agreement, and shall give the Representative reasonable opportunity to provide information and participate in the applicable portion of such audit.
Section 6.02 Consistency . Except upon the written advice of an Advisory Firm, Spinco, and Representative agree to report and cause to be reported for all purposes, including federal, state, local and foreign tax purposes and financial reporting purposes, all Tax-related items (including without limitation the NOL Payments) in a manner consistent with that specified by Spinco in any Tax Benefit Schedule or statement required to be provided by or on behalf of Spinco under this Agreement or under applicable Tax law. Any dispute concerning such advice shall be subject to the Reconciliation Procedures; provided , however , that only the Representative shall have the right to object to such advice pursuant to this Section 6.02. In the
 
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event that an Advisory Firm is replaced with another firm acceptable to Spinco and the Representative pursuant to the definition of “Advisory Firm,” such replacement Advisory Firm shall be required to perform its services under this Agreement using procedures and methodologies consistent with those used by the previous Advisory Firm, unless otherwise required by law (or Spinco and the Representative agree to the use of other procedures and methodologies).
Section 6.03 Cooperation . Each of Spinco, on the one hand, and the Representative, on the other hand, shall (a) furnish to the other party in a timely manner such information, documents and other materials as the other party may reasonably request for purposes of making or approving any determination or computation necessary or appropriate under this Agreement, preparing any Tax Return or contesting or defending any audit, examination or controversy with any Taxing Authority relating to this Agreement, (b) make itself available to the other party and its representatives to provide explanations of documents and materials and such other information as the requesting party or its representatives may reasonably request in connection with any of the matters described in clause (a) above and (c) reasonably cooperate in connection with any such matter, and the requesting party shall reimburse the other party for any reasonable third-party costs and expenses incurred pursuant to this Section.
ARTICLE VII
MISCELLANEOUS
Section 7.01 Notices . All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be deemed duly given and received (a) on the date of delivery if delivered personally, or by facsimile upon confirmation of transmission by the sender’s fax machine if sent on a Business Day (or otherwise on the next Business Day), (b) on the first Business Day following the date of dispatch if delivered by a recognized next-day courier service or (c) when sent by electronic mail (with hard copy to follow) during a Business Day (or on the next Business Day if sent after the close of normal business hours or on any non-Business Day). All notices hereunder shall be delivered as set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice:
If to Spinco, to:
xpedx Holding Company
6285 Tri-Ridge Boulevard
Loveland, Ohio 45140
Facsimile: (513) 965-2849
Attn: Mary Laschinger
 
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If to the Representative, to:
UWW Holdings, LLC
6600 Governors Lake Parkway
Norcross, GA 30071
Facsimile: (770) 659-4618
Attn:         Chief Executive Officer
                 General Counsel
with a copy (which shall not constitute notice) to:
Bain Capital Partners, LLC
200 Clarendon Street
Boston, MA 02116
Facsimile: (617) 516-2010
Attn:         Matt Levin
                 Seth Meisel
and
Kirkland & Ellis LLP
300 N. LaSalle Street
Chicago, IL 60654
Facsimile: (312) 862-2200
Attn:         Matthew E. Steinmetz, P.C.
                 Jeffrey W. Richards, P.C.
                 Neal J. Reenan
Any party may change its address or fax number by giving the other party written notice of its new address or fax number in the manner set forth above.
Section 7.02 Counterparts . This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart. Delivery of an executed signature page to this Agreement by facsimile or electronic transmission (including by pdf) shall be as effective as delivery of a manually signed counterpart of this Agreement.
Section 7.03 Entire Agreement; Third Party Beneficiaries . This Agreement, together with the Merger Agreement and the agreements and documents referenced therein, constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof (including that certain Non-binding Letter of Intent by and between International Paper Company and UWWH, dated as of April 19, 2013). This Agreement shall be binding upon and inure solely to the benefit of each party hereto and their respective successors and permitted assigns. The parties to this Agreement agree that the Beneficiaries are expressly made third party beneficiaries to this Agreement. Except as otherwise provided in the preceding sentence, nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
 
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Section 7.04 Governing Law . This Agreement shall be governed by, and construed in accordance with, the law of the State of Delaware, without regard to the conflicts of laws provisions thereof.
Section 7.05 Severability . If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any law or public policy, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.
Section 7.06 Successors; Assignment; Amendments; Waivers .
(a) The Representative may, solely in its capacity as Representative, assign this Agreement to any Person without the written consent of Spinco and any such assignee shall be treated as the successor to the Representative, provided that any assignment of rights as a Beneficiary shall be made pursuant to Section 7.06(b). Neither this Agreement nor any of the rights, interests or obligations under this Agreement will be assigned, in whole or in part, by operation of law or otherwise, by or on behalf of Spinco without the prior written consent of the Representative.
(b) Subject to this Section 7.06(b), each Beneficiary may freely assign or transfer its rights under this Agreement without the prior written consent of Spinco to (i) any Equity holder or its affiliates or (ii) any lender as collateral security. If a Beneficiary (including any transferee of any Beneficiary) proposes to transfer any of its rights (a “ Proposed Transferor ”) other than as set forth in the immediately preceding sentence to any Person or Persons, then the Proposed Transferor shall first give written notice (a “ Proposed Transfer Notice ”) to Spinco at least sixty (60) days prior to the proposed transfer setting forth (i) the name of the proposed transferee, (ii) the price (the “ Proposed Price ”), (iii) the other material terms and conditions of such transfer and (iv) any other information about such transfer that is reasonably requested by Spinco. The Proposed Transfer Notice shall contain an irrevocable offer to transfer such rights to Spinco (in the manner set forth below) at the Proposed Price and on the terms and conditions described in the Proposed Transfer Notice. Spinco shall thereafter have the right exercisable by written notice (the “ Acceptance Notice ”) to the Proposed Transferor within thirty (30) days after receipt of the Proposed Transfer Notice to acquire all (but not less than all) such rights at the Proposed Price and on the same terms and conditions as provided in the Proposed Transfer Notice. If at the end of such thirty (30)-day period, Spinco has not delivered an Acceptance Notice, the Proposed Transferor may, during the succeeding sixty (60)-day period (subject to extension to the extent necessary to obtain required governmental or other approvals), transfer its rights covered by the Proposed Transfer Notice to a transferee at the Proposed Price and on the same terms and conditions as provided in the Proposed Transfer Notice. After such transfer, the Proposed Transferor shall notify Spinco of the consummation thereof and shall furnish such evidence of the completion of such transfer and of the terms thereof as may reasonably be requested by Spinco. If, at the end of sixty (60) days following the expiration of the thirty (30)-
 
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day period during which Spinco is entitled hereunder to deliver an Acceptance Notice, the Proposed Transferor has not completed the transfer of such rights as aforesaid, any such transfer by the Proposed Transferor shall again be subject to the provisions of this Section 7.06(b) with respect to a proposed subsequent transfer. Any assignment or transfer of a Beneficiary’s rights meeting the requirements of this paragraph shall be referred to herein as a “ Permitted Assignment ” and Schedule B hereto shall be amended to reflect such Permitted Assignment and the change in the Applicable Percentage of the assignor and assignee.
(c) No provision of this Agreement may be amended unless such amendment is approved in writing by Spinco and the Representative, whereupon the Beneficiaries shall be bound. No provision of this Agreement may be waived unless such waiver is in writing and signed by Spinco or the Representative, as applicable, against whom the waiver is to be effective.
(d) All of the terms and provisions of this Agreement shall be binding upon, shall inure to the benefit of and shall be enforceable by the parties hereto and their respective successors, assigns, heirs, executors, administrators and legal representatives, including any transferee pursuant to a Permitted Assignment. Spinco shall require and cause any direct or indirect successor (whether by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of Spinco, by written agreement, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that Spinco would be required to perform if no such succession had taken place.
Section 7.07 Titles and Subtitles . The titles of the sections and subsections of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.
Section 7.08 Resolution of Disputes .
(a) Other than with respect to any disputes under Section 2.02, 6.02 or 7.14 (which are to be resolved pursuant to Section 7.09), any and all disputes which cannot be settled amicably, including any ancillary claims of any party, arising out of, relating to or in connection with the validity, negotiation, execution, interpretation, performance or non-performance of this Agreement (including the validity, scope and enforceability of this arbitration provision) shall be finally settled by arbitration conducted by a single arbitrator in accordance with the CPR Rules for Non-Administered Arbitration then in effect (the “ Rules ”). The place of arbitration shall be New York, New York. The parties shall jointly select a single arbitrator who shall have the authority to hold hearings and to render a decision in accordance with the Rules. If the parties to the dispute fail to agree on the selection of an arbitrator within thirty (30) calendar days of the receipt of the request for arbitration, the arbitrator shall be selected by the CPR. The arbitrator shall be a former judge. The arbitration shall be governed by the Federal Arbitration Act, 9 U.S.C. Section 1, et seq., and judgment on the award may be entered by any court having jurisdiction thereof. Performance under this Agreement shall continue if reasonably possible during any arbitration proceedings.
(b) Notwithstanding the provisions of paragraph (a), either party may bring an action or special proceeding in any court of competent jurisdiction for the purpose of compelling a party to arbitrate, seeking temporary or preliminary relief in aid of an arbitration hereunder,
 
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and/or enforcing an arbitration award and, for the purposes of this paragraph (b), each Beneficiary (through the Representative) (i) expressly consents to the application of paragraph (c) of this Section 7.08 to any such action or proceeding, and (ii) irrevocably appoints Spinco as its agent for service of process in connection with any such action or proceeding and agrees that service of process upon such agent, who shall promptly advise the Representative of any such service of process, shall be deemed in every respect effective service of process upon all Beneficiaries in any such action or proceeding.
(c) (1) SPINCO AND THE BENEFICIARIES (THROUGH THE REPRESENTATIVE) HEREBY IRREVOCABLY AGREE THAT ANY JUDICIAL PROCEEDING BROUGHT IN ACCORDANCE WITH THE PROVISIONS OF PARAGRAPH (B) OF THIS SECTION 7.08 SHALL BE BROUGHT AND DETERMINED EXCLUSIVELY IN THE DELAWARE COURT OF CHANCERY AND ANY STATE APPELLATE COURT THEREFROM WITHIN THE STATE OF DELAWARE (OR, IF THE DELAWARE COURT OF CHANCERY DECLINES TO ACCEPT JURISDICTION OVER A PARTICULAR MATTER, ANY STATE OR FEDERAL COURT WITHIN THE STATE OF DELAWARE). The parties acknowledge that the forum designated by this paragraph (c) has a reasonable relation to this Agreement and to the parties’ relationship with one another.
(i) The parties hereby waive, to the fullest extent permitted by applicable law, any objection which they now or hereafter may have to personal jurisdiction or to the laying of venue of any such ancillary suit, action or proceeding brought in any court referred to in paragraph (c)(i) of this Section 7.08 and such parties agree not to plead or claim the same.
(ii) AS A SPECIFICALLY BARGAINED INDUCEMENT FOR EACH OF THE PARTIES TO ENTER INTO THIS AGREEMENT (WITH EACH PARTY HAVING HAD OPPORTUNITY TO CONSULT COUNSEL), EACH OF THE PARTIES EXPRESSLY AND IRREVOCABLY WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING UNDER THIS AGREEMENT OR ANY ACTION OR PROCEEDING ARISING OUT OF THE TRANSACTIONS CONTEMPLATED HEREBY, REGARDLESS OF WHICH PARTY INITIATES SUCH ACTION OR PROCEEDING, AND ANY ACTION OR PROCEEDING UNDER THIS AGREEMENT OR ANY ACTION OR PROCEEDING ARISING OUT OF THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
Section 7.09 Reconciliation . Notwithstanding the provisions of Section 7.08, in the event that Spinco and the Representative are unable to resolve a disagreement with respect to the matters governed by Sections 2.02, 6.02 or 7.14 within the relevant period designated in this Agreement (“ Reconciliation Dispute ”), the Reconciliation Dispute shall be submitted for determination to a nationally recognized expert (the “ Expert ”) in the particular area of disagreement mutually acceptable to both parties. The Expert shall be a partner in a nationally recognized accounting firm or a law firm (other than the Advisory Firm), and the Expert shall not, and the firm that employs the Expert shall not, have any material relationship with Spinco or the Representative or other actual or potential conflict of interest. If the parties are unable to agree on an Expert within fifteen (15) calendar days of receipt by the respondent(s) of written notice of a Reconciliation Dispute, the Expert shall be appointed by the International Chamber of
 
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Commerce Centre for Expertise. The Expert shall resolve any matter relating to a Tax Benefit Schedule or an amendment thereto within fifteen (15) calendar days, or as soon thereafter as is reasonably practicable, after the matter has been submitted to the Expert for resolution. Notwithstanding the preceding sentence, if the matter is not resolved before any payment that is the subject of a disagreement is due or any Tax Return reflecting the subject of a disagreement is due, such payment shall be made on the date prescribed by this Agreement and such Tax Return may be filed as prepared by Spinco, subject to adjustment (by an increase or decrease in the amount of subsequent payments otherwise due under this Agreement) or amendment of such Tax Returns upon resolution. The costs and expenses relating to the engagement of such Expert or amending any Tax Return shall be borne by Spinco, except as provided in the next sentence. Each of Spinco and the Representative shall bear its own costs and expenses of such proceeding. Any dispute as to whether a dispute is a Reconciliation Dispute within the meaning of this Section 7.09 shall be decided by the Expert. The Expert shall finally determine any Reconciliation Dispute and the determinations of the Expert pursuant to this Section 7.09 shall be binding on Spinco and all Beneficiaries and may be entered and enforced in any court having jurisdiction. These procedures described in this Section 7.09 shall be referred to as the “Reconciliation Procedures.”
Section 7.10 Withholding . Spinco shall be entitled to deduct and withhold from any amount payable to a Beneficiary pursuant to this Agreement such amounts as Spinco is required to deduct and withhold under the Code or any provision of state, local or foreign tax law, with respect to entering into or making payments under this Agreement. To the extent that amounts are so withheld and paid over to the appropriate governmental authority by Spinco, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Beneficiary in respect of whom such withholding was made. Spinco shall provide evidence of such payment to such Beneficiary. To the extent the amount of any withholding hereunder cannot be finally determined until after such withholding is required to be made, Spinco shall be entitled to deduct and withhold the maximum amount of tax that, in Spinco’s reasonable judgment, may be required to be remitted to the applicable government authority, and after the applicable amount of withholding is finally determined, Spinco shall promptly pay over any excess withheld amounts to the applicable Beneficiary.
Section 7.11 Affiliated Corporations; Admission of Spinco into a Consolidated Group . If Spinco is or becomes a member of an affiliated or consolidated group of corporations that files a consolidated, combined or unitary income tax return pursuant to Sections 1501 et seq. of the Code or any comparable provision of applicable state, local or foreign Tax law: (i) the provisions of this Agreement relating to Spinco shall be applied with respect to the group as a whole; and (ii) Tax Benefit Payments shall be computed with reference to the consolidated taxable income of the group as a whole.
Section 7.12 Confidentiality .
(a) The Representative and the Beneficiaries (through the Representative) and each of its assignees acknowledges and agrees that the information of Spinco is confidential and, except in the course of performing any duties as necessary for Spinco and its Affiliates, as required by law or legal process or to enforce the terms of this Agreement, shall keep and retain in the strictest confidence and not to disclose to any Person all confidential matters, acquired
 
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pursuant to this Agreement, of Spinco or the Beneficiaries. This Section 7.12 shall not apply to (i) any information that has been made publicly available by Spinco or any of its Affiliates, becomes public knowledge (except as a result of an act of a Representative or Beneficiary in violation of this Agreement) or is generally known to the business community and (ii) the disclosure of information to the extent necessary for the Beneficiaries to prepare and file their Tax Returns, to respond to any inquiries regarding the same from any Taxing Authority or to prosecute or defend any action, proceeding or audit by any Taxing Authority with respect to such returns. Notwithstanding anything to the contrary contained in this Section 7.12 or elsewhere in this Agreement, nothing herein shall prohibit, limit or restrict Bain Capital Partners, Inc. and its Affiliates (collectively, “ Bain ”) from communicating in the ordinary course with its Affiliates (other than any of its portfolio companies), limited partners, other Bain investors, Bain employees or prospective limited partners or investors with respect to this Agreement and the transactions contemplated hereby or from monitoring and enforcing its rights or the rights of its Affiliates hereunder.
(b) If the Representative or a Beneficiary or its assignee commits a breach, or threatens to commit a breach, of any of the provisions of this Section 7.12, Spinco shall have the right and remedy to have the provisions of this Section 7.12 specifically enforced by injunctive relief or otherwise by any court of competent jurisdiction without the need to post any bond or other security, it being acknowledged and agreed that any such breach or threatened breach shall cause irreparable injury to Spinco or any of its Subsidiaries and the accounts and funds managed by Spinco and that money damages alone shall not provide an adequate remedy to such Persons. Such rights and remedies shall be in addition to, and not in lieu of, any other rights and remedies available at law or in equity.
Section 7.13 Representative .
(a) Appointment . Without further action of any of Spinco, the Representative or the Beneficiaries, and as partial consideration of the benefits conferred by this Agreement, the Representative is hereby irrevocably constituted and appointed, with full power of substitution, to act in the name, place and stead of each Beneficiary with respect to the taking by the Representative of any and all actions and the making of any decisions required or permitted to be taken by the Representative under this Agreement. The power of attorney granted herein is coupled with an interest and is irrevocable and may be delegated by the Representative. No bond shall be required of the Representative and the Representative shall receive no compensation for their services.
(b) Expenses . If at any time a Representative shall incur out of pocket expenses in connection with the exercise of its duties hereunder, upon written notice to Spinco from the Representative of documented costs and expenses (including fees and disbursements of counsel and accountants) incurred by the Representative in connection with the performance of its rights or obligations under this Agreement and the taking of any and all actions in connection therewith, Spinco shall reduce any future payments (if any) due to the Beneficiaries by the amount of such expenses which it shall instead remit directly to the requesting Representative. In connection with the performance of its rights and obligations under this Agreement and the taking of any and all actions in connection therewith, a Representative shall not be required to expend any of its own funds (though, for the avoidance of doubt, it may do so at any time and from time to time in its sole discretion).
 
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(c) Limitation on Liability . The Representative shall not be liable to the Beneficiaries for any act of the Representative arising out of or in connection with the acceptance or administration of its duties under this Agreement, except to the extent any liability, loss, damage, penalty, fine, cost or expense is actually incurred by such Beneficiary as a direct result of the gross negligence, bad faith or willful misconduct of the Representative (it being understood that any act done or omitted pursuant to the advice of legal counsel shall be conclusive evidence of such good faith and reasonable judgment). The Representative shall not be liable for, and shall be indemnified by the Beneficiaries for, any liability, loss, damage, penalty or fine incurred by the Representative (and any cost or expense incurred by the Representative in connection therewith and herewith and not previously reimbursed pursuant to subsection (b) above) arising out of or in connection with the acceptance or administration of its duties under this Agreement, except to the extent that any such liability, loss, damage, penalty, fine, cost or expense is the direct result of the gross negligence, bad faith or willful misconduct of the Representative (it being understood that any act done or omitted pursuant to the advice of legal counsel shall be conclusive evidence of such good faith and reasonable judgment); provided, however, in no event shall the Beneficiaries be obligated to indemnify the Representative hereunder for any liability, loss, damage, penalty, fine, cost or expense to the extent (and only to the extent) that the aggregate amount of all liabilities, losses, damages, penalties, fines, costs and expenses indemnified by such Beneficiary hereunder is or would be in excess of the aggregate payments under this Agreement actually remitted to such Beneficiary.
(d) Actions of the Representative . A decision, act, consent or instruction of the Representative shall constitute a decision of all Beneficiaries and shall be final, binding and conclusive upon each Beneficiary, and Spinco may rely upon any decision, act, consent or instruction of the Representative as being the decision, act, consent or instruction of each Beneficiary. Spinco is hereby relieved from any liability to any person for any acts done by Spinco in accordance with any such decision, act, consent or instruction of the Representative.
Section 7.14 Tax Characterization of the Agreement . Spinco and Holdings acknowledge and agree that, for U.S. federal income tax purposes, it is intended that the rights received by Holdings under this Agreement: (i) constitute “other property” with respect to the Merger within the meaning of Section 356 of the Code, and (ii) constitute an “installment obligation” as such term is used in Section 453 of the Code. Within one-hundred and twenty (120) calendar days of the Merger, Spinco shall provide to the Representative a schedule showing in reasonable detail the calculation of fair market value, as of the date hereof, of the rights received by Holdings under this Agreement (the “Fair Market Value Schedule”). Spinco and the Representative shall negotiate in good faith to resolve any disputes over the Fair Market Value Schedule during the sixty (60) calendar days following the Representative’s receipt of the schedule. If Spinco and the Representative are unable to resolve such dispute within such 60-day period, Spinco and the Representative shall employ the Reconciliation Procedures. Spinco and Holdings acknowledge and agree that, for U.S. federal income tax purposes, the rights received by Holdings under this Agreement shall have a fair market value as of the date hereof equal to the amount set forth on the Fair Market Value Schedule, as finally determined. Except as required by applicable law, neither Holdings nor Spinco shall take any position inconsistent with the foregoing on any Tax Return.
(Signatures on following pages)
 
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IN WITNESS WHEREOF, Spinco and the Representative have duly executed this Agreement as of the date first written above.

By: UWW HOLDINGS, LLC	
	
/s/	
Name:	
Title:	

By: XPEDX HOLDING COMPANY	
	
/s/	
Name:	
Title:	
Signature Page to Tax Receivable Agreement

Schedule A

Schedule B

Exhibit D
Form of Registration Rights Agreement

 

 
REGISTRATION RIGHTS AGREEMENT
BETWEEN
UWW HOLDINGS, LLC
AND
XPEDX HOLDING COMPANY

Dated as of                     , 2014

 

TABLE OF CONTENTS

 	  	 	  	 	  	Page	 	
1.	  	DEMAND REGISTRATIONS	  	 	1	  	
	  	1.1.	  	Requests for Registration	  	 	1	  	
	  	1.2.	  	Demand Notice	  	 	1	  	
	  	1.3.	  	Short-Form Registrations	  	 	2	  	
	  	1.4.	  	Shelf Registrations	  	 	2	  	
	  	1.5.	  	Priority on Demand Registrations	  	 	2	  	
	  	1.6.	  	Selection of Underwriters	  	 	2	  	
	  	1.7.	  	Other Registration Rights	  	 	3	  	
			
2.	  	RESTRICTIONS ON REGISTRATIONS	  	 	3	  	
	  	2.1.	  	Restrictions on Demand Registrations	  	 	3	  	
	  	2.2.	  	Right to Defer or Suspend Registrations	  	 	3	  	
			
3.	  	PIGGYBACK REGISTRATIONS	  	 	4	  	
	  	3.1.	  	Right to Piggyback	  	 	4	  	
	  	3.2.	  	Priority on Primary Registrations	  	 	5	  	
	  	3.3.	  	Priority on Secondary Registrations	  	 	5	  	
			
4.	  	REGISTRATION AND COORDINATION GENERALLY	  	 	5	  	
	  	4.1.	  	Registration Procedures	  	 	5	  	
	  	4.2.	  	Registration Expenses	  	 	10	  	
	  	4.3.	  	Participation in Underwritten Offerings; Suspension of Dispositions	  	 	11	  	
	  	4.4.	  	Lock-Up Agreements	  	 	11	  	
	  	4.5.	  	Current Information; Rule 144 Reporting	  	 	12	  	
	  	4.6.	  	Shelf Take-Down Procedures	  	 	12	  	
	  	4.7.	  	Right to Terminate Registration	  	 	13	  	
			
5.	  	INDEMNIFICATION	  	 	13	  	
	  	5.1.	  	Indemnification by the Company	  	 	13	  	
	  	5.2.	  	Indemnification by Holders of Investor Registrable Securities	  	 	13	  	
	  	5.3.	  	Procedure	  	 	14	  	
	  	5.4.	  	Entry of Judgment; Settlement	  	 	14	  	
	  	5.5.	  	Contribution	  	 	15	  	
	  	5.6.	  	Other Rights	  	 	16	  	
	  	5.7.	  	Indemnification Payments	  	 	16	  	
	  	5.8.	  	Survival	  	 	16	  	
			
6.	  	DEFINITIONS AND RULES OF CONSTRUCTION	  	 	16	  	
	  	6.1.	  	Definitions	  	 	16	  	
	  	6.2.	  	Rules of Construction	  	 	19	  	
			
7.	  	MISCELLANEOUS	  	 	20	  	
	  	7.1.	  	Term	  	 	20	  	
	  	7.2.	  	No Inconsistent Agreements	  	 	20	  	
 
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	  	7.3.	  	Adjustments Affecting Investor Registrable Securities	  	 	20	  	
	  	7.4.	  	Board of Directors Matters	  	 	20	  	
	  	7.5.	  	Restriction on Acquisitions of Common Stock by the Investor	  	 	20	  	
	  	7.6.	  	Remedies	  	 	20	  	
	  	7.7.	  	Amendment and Waiver	  	 	21	  	
	  	7.8.	  	Successors and Assigns; Permitted Transferees	  	 	21	  	
	  	7.9.	  	Severability	  	 	21	  	
	  	7.10.	  	Counterparts	  	 	21	  	
	  	7.11.	  	Descriptive Headings; No Strict Construction	  	 	21	  	
	  	7.12.	  	Notices	  	 	22	  	
	  	7.13.	  	Electronic Delivery	  	 	23	  	
	  	7.14.	  	Governing Law; Consent to Jurisdiction; WAIVER OF JURY TRIAL	  	 	23	  	
	  	7.15.	  	Exercise of Rights and Remedies	  	 	24	  	
	  	7.16.	  	Dilution	  	 	24	  	
 
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REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this “ Agreement ”) is made as of             , 2014 by and among:
 
 	(i)	xpedx Holding Company, a Delaware corporation (together with its successors and permitted assigns, the “ Company ”); and	
 
 	(ii)	UWW Holdings, LLC, a Delaware limited liability company (the “ Investor ”).	
Unless otherwise noted herein, capitalized terms used herein shall have the meanings set forth in Section 6 .
RECITALS
WHEREAS, the Company and the Investor are parties to that certain Agreement and Plan of Merger, dated [            ], 2014 (the “ Merger Agreement ”), pursuant to which a wholly-owned subsidiary of the Investor will merge with and into the Company and, in connection therewith, the Investor will receive as consideration shares of common stock of the Company, $0.01 par value per share (“ Common Stock ”), in a private placement pursuant to Section 4(2) of the Securities Act; and
WHEREAS, the execution and delivery of this Agreement is a condition to the consummation of the transactions under the Merger Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement hereby agree as follows:
AGREEMENT
1. DEMAND REGISTRATIONS.
1.1. Requests for Registration. Subject to Section 2 and the other terms and conditions of this Agreement, at any time following the date that is 180 days after the Closing Date, the Investor on behalf of holders of the Investor Registrable Securities may initiate (a) up to three (3) registrations of all or part of the Investor Registrable Securities on Form S-1 or any similar or successor long-form registration (“ Long-Form Registrations ”); provided , however , that a registration shall not count as one of the permitted Long-Form Registrations until it has become effective; and (b) if available, an unlimited number of registrations of all or part of the Investor Registrable Securities on Form S-3 or any successor short-form registration (“ Short-Form Registrations ”).
1.2. Demand Notice. All requests for Demand Registrations shall be made only by the Investor giving written notice to the Company (a “ Demand Notice ”). Each Demand Notice shall specify the approximate number of Investor Registrable Securities requested to be registered and the intended methods of disposition. Within seven (7) days after receipt of any such Demand Notice, the Company shall give written notice of such requested registration to all other holders of Investor Registrable Securities and, subject to Section 1.5 , shall include in such registration (and in all related registrations and qualifications under state securities laws or in compliance with other registration requirements and in any related underwriting) all Investor Registrable Securities with respect to which the Company has received written requests for inclusion therein within twenty (20) days after the delivery of the Company’s notice.

1.3. Short-Form Registrations. Demand Registrations shall be Short-Form Registrations whenever the Company is permitted to use Form S-3 or any successor short-form registration. The Company will use its reasonable best efforts to make Short-Form Registrations available for the sale of Investor Registrable Securities.
1.4. Shelf Registrations. Whenever the Company is permitted to use Form S-3 or any successor short-form registration, the Investor on behalf of holders of the Investor Registrable Securities may require the Company to file any Demand Registration with the Securities and Exchange Commission in accordance with and pursuant to Rule 415 under the Securities Act (or any successor rule then in effect) (a “ Shelf Registration ”) for the sale or distribution by the holders of Investor Registrable Securities on a delayed or continuous basis pursuant to Rule 415 of the Securities Act, including by way of an underwritten offering, block sale or other distribution plan, and the Company shall use its reasonable best efforts to cause such registration statement to be filed and declared effective under the Securities Act in accordance with Section 4 hereof. Once effective, the Company shall cause the Shelf Registration to remain effective for a period ending on the date on which all Investor Registrable Securities included in such registration have been sold or distributed pursuant to the Shelf Registration. In connection with a takedown requested by the Investor on behalf of holders of the Investor Registrable Securities pursuant to any Shelf Registration, the Company shall (i) cooperate with the Investor and take all actions reasonably requested by the Investor in connection therewith and (ii) comply with Section 4.6 below.
1.5. Priority on Demand Registrations. The Company shall not include in any Demand Registration any securities which are not Investor Registrable Securities without the prior written consent of the Investor which shall not be unreasonably withheld, conditioned or delayed. In any Underwritten Offering, if the managing underwriter(s) advises the Company in writing that in its opinion the number of Investor Registrable Securities and, if permitted hereunder, other securities requested to be included in such Underwritten Offering exceeds the number of Investor Registrable Securities and other securities, if any, which can be sold therein without adversely affecting the marketability of the offering, then the Company shall include in such registration only such number of shares of Common Stock that in the opinion of the managing underwriter(s) can be sold without adversely affecting the marketability of the offering, which shares shall be included in the following order of priority: (a) first, the Investor Registrable Securities for which registration was requested, pro rata among the holders of such Investor Registrable Securities on the basis of the number of Investor Registrable Securities owned by each such holder, (b) second, any securities proposed to be registered by the Company and (c) third, any other securities proposed to be included in such registration which, in the opinion of the underwriters, can be sold without any such adverse effect.
1.6. Selection of Underwriters. The Investor shall have the right to select the underwriter or underwriters to administer any underwriting offering in connection with a Demand Registration, subject to the Company’s approval which shall not be unreasonably withheld, conditioned or delayed.
 
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1.7. Other Registration Rights. The Company represents and warrants that it is not a party to, or otherwise subject to, any other agreement granting registration rights to any Person with respect to any securities of the Company other than this Agreement.
2. RESTRICTIONS ON REGISTRATIONS.
2.1. Restrictions on Demand Registrations. The Company will not be obligated to file any registration statement with respect to any Demand Registration more than once in any 150-day period or more than two times in any 365-day period. The Company shall not be obligated to effect any Demand Registration unless the reasonably anticipated gross proceeds from the sale of Investor Registrable Securities in such Demand Registration are $40 million in the case of a Long-Form Registration and $15 million in the case of a Short-Form Registration; provided that if the Investor is proposing a Short-Form Registration to sell all of the remaining Investor Registrable Securities (assuming the exercise in full of any over-allotment option), the $15 million minimum Short-Form Registration limit shall not apply. Notwithstanding anything in this Agreement to the contrary, no Investor Registrable Securities may be registered, offered, sold or otherwise transferred under, and the Company shall not be required to maintain the effectiveness of, more than one registration statement with respect to Investor Registrable Securities at any time.
2.2. Right to Defer or Suspend Registrations. The Company may, at its option, (x) defer any registration or offering of Investor Registrable Securities in response to a Demand Notice or Take-Down Notice or (y) require holders to suspend any offering of Investor Registrable Securities, in either case for no more than 120 days in each 360-day period:
(a) if the Company is subject to any of its customary suspension or blackout periods, for all or part of such period;
(b) upon issuance by the Securities and Exchange Commission of a stop order suspending the effectiveness of any registration statement with respect to Investor Registrable Securities or the initiation of proceedings with respect to such registration statement under Section 8(d) or 8(e) of the Securities Act;
(c) if the Company believes that any such registration or offering (i) should not be undertaken because it would reasonably be expected to materially interfere with any material corporate development or plan or (ii) would require the Company, under applicable securities laws and other laws, to make disclosure of material nonpublic information that would not otherwise be required to be disclosed at that time and the Company believes in good faith that such disclosures at that time would not be in the Company’s best interests, provided that this exception (ii) shall continue to apply only during the time that such material nonpublic information has not been disclosed and remains material;
(d) if the Company elects at such time to offer Common Stock or other equity securities of the Company to (i) fund a merger, third-party tender offer or other business combination, acquisition of assets or similar transaction or (ii) meet rating agency and other capital funding requirements; and
 
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(e) if the Company is pursuing a primary underwritten offering of Common Stock pursuant to a registration statement; provided that the Investor shall have Piggyback Registration rights with respect to such primary underwritten offering in accordance with and subject to the restrictions set forth in Section 3 ;
provided that, in the case of a deferral by the Company of a Demand Registration, the Investor will be entitled to withdraw such request and, if such request is withdrawn, such Demand Registration will not count as a Demand Registration and the Company will pay all Registration Expenses in connection with such requested registration. Upon the occurrence of any of the conditions described in (a) through (e) above, the Company shall give prompt notice of such deferral or suspension (a “ Suspension Notice ”) to the Investor or, in the Company’s sole discretion, to each seller of Investor Registrable Securities included in any applicable registration statement. Upon the termination of such condition, the Company shall give prompt notice thereof (a “ Suspension Termination Notice ”) to the Investor and, if applicable, any sellers to whom a Suspension Notice was delivered. The Company shall promptly proceed with any Demand Registration that was suspended pursuant to this Section 2.2 .
3. PIGGYBACK REGISTRATIONS.
3.1. Right to Piggyback. Whenever the Company proposes to register any of its Common Stock (whether or not in combination with any other equity or debt security or otherwise) under the Securities Act (other than pursuant to a Demand Registration or in connection with registration on Form S-4 or Form S-8 or any successor or similar forms, or relating solely to the sale of debt or convertible debt instruments) and the registration form to be used may be used for the registration of Investor Registrable Securities (a “ Piggyback Registration ”), the Company shall give written notice at least 20 days before the anticipated filing date to the Investor on behalf of the holders of the Investor Registrable Securities of its intention to effect such a registration. Each such Company notice shall specify the approximate number of shares of Common Stock to be registered. Subject to Sections 3.2 and 3.3 below, the Company will include in such registration (and in all related registrations or qualifications under blue sky laws and in any related underwriting) all Investor Registrable Securities with respect to which the Company has received from the Investor a written request for inclusion therein within 15 days after the delivery of such Company notice; provided that (i) each seller must sell its Investor Registrable Securities to the underwriter or underwriters selected by the Company in connection with such offering on the same terms and conditions as apply to the Company and (ii) if, at any time after giving notice to the Investor of its intention to effect such registration, the Company shall determine for any reason not to register any of its Common Stock under the Securities Act, the Company shall give notice to the Investor on behalf of such sellers and, thereupon, shall be relieved of its obligation to register any Investor Registrable Securities in connection with such registration and, except for the obligation to pay Registration Expenses pursuant to Section 4.2 , the Company shall have no liability to the holders of Investor Registrable Securities in connection with such termination or withdrawal. The Company shall have the right to select the underwriter or underwriters to administer any underwritten offering in connection with such registration and related offering.
 
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3.2. Priority on Primary Registrations. If a Piggyback Registration is an underwritten primary registration on behalf of the Company and the managing underwriter(s) advises the Company in writing (with a copy to the Investor on behalf of each holder requesting registration of Investor Registrable Securities) that in its opinion the number of securities requested to be included in such registration exceeds the number which can be sold in such offering without adversely affecting the marketability of such offering, the Company will include in such registration only such number of shares of Common Stock that in the opinion of the managing underwriter(s) can be sold without adversely affecting the marketability of the offering, which shares shall be included in the following order of priority: (a) first, the shares of Common Stock the Company proposes to sell, (b) second, the Investor Registrable Securities requested to be included in such registration, pro rata among the holders of such Investor Registrable Securities on the basis of the number of Investor Registrable Securities owned by such holder, and (c) third, any other shares of Common Stock requested to be included in such registration.
3.3. Priority on Secondary Registrations. If a Piggyback Registration is an underwritten secondary registration on behalf of holders of Common Stock (other than the holders of Investor Registrable Securities), and the managing underwriter(s) advises the Company in writing that in its opinion the number of securities requested to be included in such registration exceeds the number which can be sold in such offering without adversely affecting the marketability of the offering, the Company will include in such registration only such number of shares of Common Stock that in the opinion of the managing underwriter(s) can be sold without adversely affecting the marketability of the offering, which shares shall be included in the following order of priority: (a) first, the shares of Common Stock requested to be included therein by the applicable holders requesting registration and the Investor Registrable Securities requested to be included in such registration, pro rata among the holders of such shares of Common Stock and Investor Registrable Securities on the basis of the number of shares owned by each such holder, and (b) second, any other shares of Common Stock requested to be included in such registration.
4. REGISTRATION AND COORDINATION GENERALLY
4.1. Registration Procedures. Whenever the Investor on behalf of holders of Investor Registrable Securities has requested that any Investor Registrable Securities be registered pursuant to this Agreement, the Company will use its reasonable best efforts to effect the registration and the sale of such Investor Registrable Securities in accordance with the intended method of disposition thereof and pursuant thereto the Company will as expeditiously as possible:
(a) prepare and (within sixty (60) days after the end of the period within which a Demand Notice has been received) file with the Securities and Exchange Commission a registration statement, and all amendments and supplements thereto and related prospectuses, with respect to such Investor Registrable Securities and thereafter use its reasonable best efforts to cause such registration statement to become effective (provided that before filing a registration statement or prospectus or any amendments or supplements thereto, the Company will furnish to the counsel selected by the Investor copies of all such documents proposed to be filed, which documents will be subject to review by such counsel);
 
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(b) notify each holder of Investor Registrable Securities of (i) the issuance by the Securities and Exchange Commission of any stop order suspending the effectiveness of any registration statement or the initiation of any proceedings for that purpose, (ii) the receipt by the Company or its counsel of any notification with respect to the suspension of the qualification of the Investor Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose, and (iii) the effectiveness of each registration statement filed hereunder;
(c) prepare and file with the Securities and Exchange Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary (i) to keep such registration statement effective until the holder or holders of Investor Registrable Securities have completed the distribution described in the registration statement relating to such distribution, and (ii) to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement until such time as all of such securities have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof set forth in such registration statement;
(d) furnish to the Investor such number of copies of such registration statement, each amendment and supplement thereto, the prospectus included in such registration statement (including each preliminary prospectus), each Free Writing Prospectus and such other documents as the Investor may reasonably request in order to facilitate the disposition of the Investor Registrable Securities;
(e) use its reasonable best efforts to register or qualify such Investor Registrable Securities under such other securities or blue sky laws of such jurisdictions as any seller reasonably requests (provided that the Company will not be required to (i) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this subsection, (ii) subject itself to taxation in respect of doing business in any such jurisdiction, or (iii) consent to general service of process in any such jurisdiction);
(f) promptly notify each seller of such Investor Registrable Securities, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, upon discovery that, or upon the discovery of the happening of any event as a result of which, the prospectus included in such registration statement contains an untrue statement of a material fact or omits any fact necessary to make the statements therein not misleading in the light of the circumstances under which they were made, and, at the request of any such seller, the Company will prepare and furnish to such seller a reasonable number of copies of a supplement or amendment to such prospectus so that, as thereafter delivered to the prospective purchasers of such Investor Registrable Securities, such prospectus will not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements therein not misleading in the light of the circumstances under which they were made;
 
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(g) cause all such Investor Registrable Securities to be listed or quoted on each securities exchange on which similar securities issued by the Company are then listed or quoted;
(h) provide a transfer agent and registrar for all such Investor Registrable Securities not later than the effective date of such registration statement;
(i) enter into such customary agreements (including underwriting agreements in customary form) and perform the Company’s obligations thereunder and take all such other actions as the Investor or the managing underwriters, if any, reasonably request in order to expedite or facilitate the disposition of such Investor Registrable Securities;
(j) in the case of an Underwritten Offering, make available for inspection by the Investor on behalf of holders of Investor Registrable Securities, any managing underwriter participating in any disposition pursuant to such registration statement and any attorney or accountant retained by such sellers or any managing underwriter, all material financial and other records and pertinent corporate and business documents of the Company as will be reasonably necessary to enable them to exercise their due diligence responsibilities; provided that each such seller, any such managing underwriter, attorney or accountant will enter into a confidentiality agreement satisfactory to the Company;
(k) in the case of an Underwritten Offering, cooperate and participate as reasonably requested by the Investor or the managing underwriter(s) in road show presentations, in the preparation of the registration statement, each amendment and supplement thereto, the prospectus included therein, and other activities as the Investor or the managing underwriter(s) may reasonably request in order to facilitate the disposition of the Investor Registrable Securities;
(l) take all reasonable actions to ensure that any prospectus or Free Writing Prospectus utilized in connection with any Demand Registration or Piggyback Registration hereunder (i) complies in all material respects with the Securities Act, (ii) is filed in accordance with the Securities Act to the extent required thereby and is retained in accordance with the Securities Act to the extent required thereby, (iii) when taken together with the related prospectus, will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and (iv) in the case of such prospectus or Free Writing Prospectus (when taken together with the related prospectus), will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading;
 
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(m) otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the Securities and Exchange Commission, and make available to its security holders, as soon as reasonably practicable, but not later than eighteen (18) months after the effective date of the registration statement, an earnings statement covering the period of at least twelve (12) months beginning with the first day of the Company’s first full calendar quarter after the effective date of the registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;
(n) in the event of the issuance of any stop order suspending the effectiveness of a registration statement, or of any order suspending or preventing the use of any related prospectus or suspending the qualification of any securities included in such registration statement for sale in any jurisdiction, the Company will use its reasonable best efforts to promptly obtain the withdrawal of such order;
(o) use its reasonable best efforts to cause such Investor Registrable Securities covered by such registration statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the sellers thereof to consummate the disposition of such Investor Registrable Securities;
(p) in the case of an Underwritten Offering, use its reasonable best efforts to make available the executive officers of the Company to participate with the Investor and any managing underwriter in any “road shows” or other selling efforts that may be reasonably requested by the Investor in connection with the methods of distribution for the Investor Registrable Securities;
(q) in the case of an Underwritten Offering, use its reasonable best efforts to obtain one or more comfort letters, signed by the Company’s independent public accountants in the then-current customary form and covering such matters of the type customarily covered from time to time by comfort letters as the managing underwriter(s) reasonably requests;
(r) in the case of an Underwritten Offering, use its reasonable best efforts to provide a legal opinion of the Company’s outside counsel, addressed to the managing underwriters, with respect to the registration statement, each amendment and supplement thereto, the prospectus included therein (including the preliminary prospectus) and such other documents relating thereto in the then-current customary form and covering such matters of the type customarily covered from time to time by legal opinions of such nature;
(s) cooperate with the sellers of Investor Registrable Securities covered by the registration statement and the managing underwriter(s), if any, to facilitate the timely preparation and delivery of certificates, if any (not bearing any restrictive legends), representing securities to be sold under the registration statement, and enable such securities to be in such denominations and registered in such names as the managing underwriter(s), if any, or such holders may request;
 
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(t) notify counsel for the Investor on behalf of the sellers of the Investor Registrable Securities included in the registration statement and the managing underwriter(s), if any, promptly, and confirm the notice in writing (i) when the registration statement, or any post-effective amendment to the registration statement, shall have become effective, or any supplement to the prospectus or any amendment prospectus shall have been filed, (ii) of the receipt of any comments from the Securities and Exchange Commission, (iii) of any request of the Securities and Exchange Commission to amend the registration statement or amend or supplement the prospectus or for additional information, and (iv) of the issuance by the Securities and Exchange Commission of any stop order suspending the effectiveness of the registration statement or of any order preventing or suspending the use of any preliminary prospectus, or of the suspension of the qualification of the registration statement for offering or sale in any jurisdiction, or of the institution or threatening of any proceedings for any of such purposes;
(u) use its reasonable best efforts to prevent the issuance of any stop order suspending the effectiveness of the registration statement or of any order preventing or suspending the use of any preliminary prospectus;
(v) in the case of an Underwritten Offering, if requested by the managing underwriter(s) or by the Investor, promptly incorporate in a prospectus supplement or post-effective amendment such information as the managing underwriter(s) or the Investor reasonably requests to be included therein, including, with respect to the number of Investor Registrable Securities being sold by each holder to such underwriter, the purchase price being paid therefor by such underwriter and with respect to any other terms of the underwritten offering of the Investor Registrable Securities to be sold in such offering; and make all required filings of such prospectus supplement or post-effective amendment as soon as practicable after being notified of the matters incorporated in such prospectus supplement or post-effective amendment; and
(w) in the case of an Underwritten Offering, cooperate with the Investor on behalf of the sellers of Investor Registrable Securities and each managing underwriter participating in the disposition of such Investor Registrable Securities and their respective counsel in connection with any filings required to be made with FINRA.
The Company may require the Investor or the holders of Investor Registrable Securities covered by the registration statement to furnish in writing to the Company such information relating to the sellers of Investor Registrable Securities and the sale or registration of the Investor Registrable Securities by such sellers and the distribution thereof as the Company may from time to time reasonably request in writing. In the event of a Piggyback Registration, if within 15 days
 
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of the receipt of a written request from the Company, any such seller fails to provide to the Company any information relating to the such seller that is required by applicable law to be disclosed in any registration statement, the Company may exclude such seller’s Investor Registrable Securities from such registration statement.
If any registration or comparable statement refers to any holder by name or otherwise as the holder of any securities of the Company and if in such holder’s sole and exclusive judgment, such holder is or might be deemed to be an underwriter or a controlling person of the Company, such holder shall have the right to (i) require the insertion therein of language, in form and substance satisfactory to such holder and presented to the Company in writing, to the effect that the holding by such holder of such securities is not to be construed as a recommendation by such holder of the investment quality of the Company’s securities covered thereby and that such holding does not imply that such holder will assist in meeting any future financial requirements of the Company, or (ii) in the event that such reference to such holder by name or otherwise is not required by the Securities Act or any similar federal statute then in force, require the deletion of the reference to such holder; provided , that with respect to this clause (ii), if requested by the Company, such holder shall furnish to the Company an opinion of counsel to such effect, which opinion and counsel shall be reasonably satisfactory to the Company.
4.2. Registration Expenses.
(a) All (i) expenses incident to the Company’s performance of or compliance with this Agreement (including, all registration, qualification and filing fees, fees and expenses of compliance with securities or blue sky laws, printing expenses, messenger and delivery expenses, fees and disbursements of custodians, and fees and disbursements of counsel for the Company and all independent certified public accountants, underwriters (excluding underwriting discounts, selling commissions and transfer taxes applicable to the sale of the Investor Registrable Securities hereunder, which shall be borne by holders of Investor Registrable Securities covered by the registration statement ) and other Persons retained by the Company (all such expenses being herein called “ Registration Expenses ”) and (ii) Selling Expenses will be paid by the Company in respect of each Demand Registration (including any Shelf Offering) and each Piggyback Registration, whether or not it has become effective, including that the Company will pay its internal expenses (including all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit or quarterly review, the expense of any liability insurance and the expenses and fees for listing the securities to be registered on each securities exchange on which similar securities issued by the Company are then listed.
(b) In connection with each Demand Registration (including any Shelf Offering) and each Piggyback Registration, whether or not it has become effective, the Company will pay, and reimburse the holders of Investor Registrable Securities covered by such registration for the payment of, the reasonable fees and disbursements of one counsel selected by Investor and such expenses shall be considered Registration Expenses hereunder.
 
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4.3. Participation in Underwritten Offerings; Suspension of Dispositions. No Person may participate in any registration hereunder which is underwritten unless such Person (i) agrees to sell such Person’s securities on the basis provided in any underwriting arrangements approved by the Person or Persons entitled hereunder to approve such arrangements (including, pursuant to the terms of any over-allotment or “green shoe” option requested by the managing underwriter(s), provided that no holder of Investor Registrable Securities will be required to sell more than the number of Investor Registrable Securities that such holder has requested the Company to include in any registration), (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements and (iii) cooperates with the Company’s reasonable requests in connection with such registration.
(b) Each Person that is participating in any registration hereunder agrees that, upon receipt of any Suspension Notice pursuant to Section 2.2 or any notice from the Company of the happening of any event of the kind described in Section 4.1(f) above, such Person will forthwith discontinue the disposition of its Investor Registrable Securities pursuant to the registration statement until such Person’s receipt of the Suspension Termination Notice as contemplated by Section 2.2 or the copies of a supplemented or amended prospectus as contemplated by such Section 4.1(f) , as the case may be. In the event the Company shall give any such notice, the applicable time period mentioned in Section 4.1(c) during which a registration statement is to remain effective shall be extended by the number of days during the period from and including the date of the giving of such notice pursuant to this paragraph to and including the date when each seller of an Investor Registrable Security covered by such registration statement shall have received the Suspension Termination Notice contemplated by Section 2.2 or the copies of the supplemented or amended prospectus contemplated by Section 4.1(f) .
4.4. Lock-Up Agreements.
(a) The Company shall not effect any public sale or distribution of its Common Stock or any securities convertible into or exchangeable or exercisable for its Common Stock during (a) with respect to any underwritten Demand Registration or any underwritten Piggyback Registration in which Investor Registrable Securities are included, the seven (7) days prior to and the ninety (90)-day period beginning on the effective date of such registration, and (b) upon notice from the Investor on behalf of holders of the Investor Registrable Securities of the intention to effect an Underwritten Offering of Investor Registrable Securities pursuant to a Shelf Registration, the seven (7) days prior to and the ninety (90)-day period beginning on the date of the commencement of such distribution; in each case except as part of such underwritten registration or pursuant to registrations on Form S-4 or Form S-8, and in each case unless the managing underwriter(s) otherwise requires.
 
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(b) No holder of Investor Registrable Securities shall effect any public sale or distribution of any Common Stock or any securities convertible into or exchangeable or exercisable for Common Stock during (a) with respect to any underwritten Demand Registration or any underwritten Piggyback Registration in which Investor Registrable Securities are included, the seven days prior to and the 90-day period beginning on the date of the commencement of such registration, and (b) upon notice from the Company of the commencement of an underwritten distribution of its Common Stock, the seven days prior to and the 90-day period beginning on the date of the commencement of such distribution; in each case except as part of such underwritten registration or pursuant to registrations on Form S-4 or Form S-8, and in each case unless the managing underwriter(s) otherwise requires.
4.5. Current Information; Rule 144 Reporting.
At all times after the date of this Agreement, the Company will use its reasonable best efforts to timely file all reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the Securities and Exchange Commission thereunder at any time when the Company is subject to such reporting requirements, and will take such further action as any holder or holders of Investor Registrable Securities may reasonably request, all to the extent required to enable such holders to sell Investor Registrable Securities pursuant to Securities Act Rule 144.
4.6. Shelf Take-Down Procedures. At any time that a Shelf Registration is effective, if the Investor on behalf of holders of the Investor Registrable Securities delivers a notice to the Company (a “ Take-Down Notice ”) stating that they intend to effect an offering of all or part of the Investor Registrable Securities included on such registration, whether such offering is underwritten or non-underwritten (a “ Shelf Offering ”) and stating the number of the Investor Registrable Securities to be included in the Shelf Offering, then the Company shall amend or supplement such registration as may be necessary in order to enable such Investor Registrable Securities to be distributed pursuant to the Shelf Offering. The Company will not be obligated to effect any Shelf Offering unless the reasonably anticipated aggregate gross proceeds from the sale of Investor Registrable Securities from such Shelf Offering are at least $15 million; provided that if the Investor is proposing a Shelf Offering to sell all of the remaining Investor Registrable Securities (assuming the exercise in full of any over-allotment option), the $15 million minimum Shelf Offering limit shall not apply. In connection with any Shelf Offering that is an underwritten offering, in the event that the managing underwriter(s) advises the Company in writing that in its opinion the number of Investor Registrable Securities to be included in such Shelf Offering exceeds the number of Investor Registrable Securities which can be sold therein without adversely affecting the marketability of the offering, such managing underwriter(s) may limit the number of Investor Registrable Securities which would otherwise be included in such Shelf Offering in the same manner as is described in Section 1.5 . The Company shall deliver the Take-Down Notice to all other holders of Investor Registrable Securities included on such Shelf Registration and permit each such holder to include its Investor Registrable Securities included on such registration in the Shelf Offering if such holder notifies the Investor and the Company within five (5) days after delivery of the Take-Down Notice to such holder.
 
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4.7. Right to Terminate Registration. The Investor shall have the right to terminate or withdraw any registration initiated under Section 1 prior to the effectiveness of such registration and, for purposes of this Agreement, such terminated or withdrawn registration shall not count as one of the Investor’s Demand Registrations. The Registration Expenses of any such terminated or withdrawn registration shall be borne by the Company in accordance with Section 4.2 hereof.
5. INDEMNIFICATION.
5.1. Indemnification by the Company. The Company agrees to indemnify and hold harmless, to the fullest extent permitted by law, the Investor and each holder of Investor Registrable Securities and, as applicable, their respective officers, directors, trustees, employees, unitholders, holders of beneficial interests, members, general and limited partners, agents and representatives and each Person who controls the Investor or such holder (within the meaning of the Securities Act) (collectively, “ Investor Indemnitees ”) against any and all losses, claims, actions, damages, liabilities and expenses (including reasonable attorney’s fees and expenses), to which the Investor or any such holder or Investor Indemnitee may become subject under the Securities Act or otherwise, insofar as such losses, claims, actions, damages, liabilities or expenses (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of, result from or are based upon (a) any untrue or alleged untrue statement of material fact contained in any registration statement of the Company under the Securities Act that covers any Investor Registrable Securities pursuant to this Agreement, or prospectus or preliminary prospectus or any amendment thereof or supplement thereto relating to the Investor Registrable Securities, together with any documents incorporated therein by reference, or (b) any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading. In addition, the Company will reimburse the Investor and each such holder and Investor Indemnitee for any legal or any other expenses, including any amounts paid in any settlement effected with the consent of the Company, which consent will not be unreasonably withheld or delayed, incurred by them in connection with investigating or defending any such loss, claim, liability, action or proceeding; provided , however , that the Company shall not be liable in any such case to the extent that any such loss, claim, action, damage, liability or expense (or action or proceeding in respect thereof) arises out of, results from or is based upon an untrue statement or alleged untrue statement, or omission or alleged omission, made in such registration statement, any such prospectus or preliminary prospectus or any amendment or supplement thereto, in reliance upon, and in conformity with, written information prepared and furnished to the Company by or on behalf of such holder expressly for use therein.
5.2. Indemnification by Holders of Investor Registrable Securities. In connection with any registration statement in which a holder of Investor Registrable Securities is participating, each such holder will furnish to the Company in writing such information as the Company reasonably requests for use in connection with any such registration statement or prospectus and, to the extent permitted by law, will indemnify and hold harmless the Company and its officers, directors, employees, agents, representatives, trustees and each Person who controls the Company (within the meaning of the Securities Act) (collectively, the “ Company Indemnitees ”) against any losses, claims, damages, liabilities and expenses (including reasonable attorney’s fees and expenses) to which the Company or any such Company Indemnitee may
 
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become subject under the Securities Act or otherwise, insofar as such losses, claims, damages, liabilities and expenses (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of, result from or are based upon (a) any untrue or alleged untrue statement of material fact contained in any registration statement of the Company under the Securities Act that covers any Investor Registrable Securities pursuant to this Agreement, or prospectus or preliminary prospectus or any amendment thereof or supplement thereto relating to the Investor Registrable Securities, together with any documents incorporated therein by reference, or (b) any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but, in the case of each of (a) and (b), only to the extent that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, any such prospectus or preliminary prospectus or any amendment thereof or supplement thereto, together with any documents incorporated therein by reference, in reliance upon and in conformity with written information prepared and furnished to the Company by or on behalf of such holder expressly for use therein. In addition, such holder will reimburse the Company and each such Company Indemnitee for any legal or any other expenses including any amounts paid in any settlement effected with the consent of such holder, which consent will not be unreasonably withheld or delayed, incurred by them in connection with investigating or defending any such loss, claim, liability, action or proceeding; provided , however , that the obligation to indemnify will be individual (and not join and several) to each holder and will be limited to the net amount of proceeds received by such holder from the sale of Investor Registrable Securities pursuant to such registration statement, less any other amounts paid by such holder in respect of such untrue statement, alleged untrue statement, omission or alleged omission.
5.3. Procedure. Any Person entitled to indemnification hereunder will (a) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided, that the failure of any indemnified party to give such notice shall not relieve the indemnifying party of its obligations hereunder, except to the extent that the indemnifying party is actually prejudiced by such failure to give such notice), and (b) unless in such indemnified party’s reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such defense is assumed, the indemnifying party will not be subject to any liability for any settlement made by the indemnified party without its consent (but such consent will not be unreasonably withheld). An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim will not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim.
5.4. Entry of Judgment; Settlement. The indemnifying party shall not, except with the approval of each indemnified party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof, the giving by the claimant or plaintiff to each indemnified party of a release from all liability in respect to such claim or litigation without any payment or consideration provided by such indemnified party.
 
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5.5. Contribution. If the indemnification provided for in this Section 5 is, other than expressly pursuant to its terms, unavailable to or is insufficient to hold harmless an indemnified party under the provisions above in respect of any losses, claims, damages, liabilities or expenses referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities or expenses (a) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the sellers of Investor Registrable Securities and any other sellers participating in the registration statement on the other hand from the sale of Investor Registrable Securities pursuant to the registered offering of securities as to which indemnity is sought, or (b) if the allocation provided by clause (a) above is not permitted by applicable law, in such proportion as is appropriate to reflect the relative benefits referred to in clause (a) above but also the relative fault of the Company on the one hand and of the sellers of Investor Registrable Securities and any other sellers participating in the registration statement on the other hand in connection with the statement or omissions which resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand, and the sellers of Investor Registrable Securities and any other sellers participating in the registration statement on the other hand, shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) to the Company bear to the total net proceeds from the offering (before deducting expenses) to the sellers of Investor Registrable Securities and any other sellers participating in the registration statement. The relative fault of the Company on the one hand, and of the sellers of Investor Registrable Securities and any other sellers participating in the registration statement on the other hand, shall be determined by reference to, among other things, whether the untrue or alleged statement or omission to state a material fact relates to information supplied by the Company or by the sellers of Investor Registrable Securities or other sellers participating in the registration statement and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.
The Company and the sellers of Investor Registrable Securities agree that it would not be just and equitable if contribution pursuant to this Section 5 were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an indemnified party as a result of the losses, claims, damages, liabilities and expenses referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 5 , no seller of Investor Registrable Securities shall be required to contribute any amount in excess of the net proceeds received by such seller from the sale of Investor Registrable Securities covered by the registration statement filed pursuant hereto, less any other amounts paid by such seller in respect of such untrue statement, alleged untrue statement, omission or alleged omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.
 
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5.6. Other Rights. The indemnification and contribution by any such party provided for under this Agreement shall be in addition to any other rights to indemnification or contribution which any indemnified party may have pursuant to law or contract and will remain in full force and effect regardless of any investigation made or omitted by or on behalf of the indemnified party or any officer, director or controlling Person of such indemnified party and will survive the transfer of Investor Registrable Securities and the termination or expiration of this Agreement.
5.7. Indemnification Payments.
The indemnification required by this Section 5 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills or invoices relating thereto are received or liability is incurred, subject to refund if the party receiving such payments is subsequently found not to have been entitled thereto hereunder.
5.8. Survival.
The indemnification provided for under this Agreement will remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, agent or employee and each other Person who participates as an underwriter in the offering or sale of such securities and each other Person, if any, who controls (within the meaning of the Securities Act) such indemnified party, and will survive the transfer of securities.
6. DEFINITIONS AND RULES OF CONSTRUCTION.
6.1. Definitions.
“ Affiliate ” of any particular Person shall mean any other Person controlling, controlled by or under common control with such particular Person, where “control” means the possession, directly or indirectly, of the power to direct the management and policies of a Person whether through the ownership of voting securities, by contract or otherwise.
“ Board ” shall mean the Board of Directors of the Company.
“ Business Day ” shall mean any day, other than a Saturday, Sunday or one on which banks are authorized by Law to close in New York, New York.
“ Closing Date ” shall have the meaning set forth in the Merger Agreement.
“ Common Stock ” shall have the meaning set forth in the recitals hereof.
“ Demand Registrations ” shall mean Long-Form Registrations and Short-Form Registrations requested pursuant to Section 1.1 .
“ Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended from time to time.
 
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“ FINRA ” means the Financial Industry Regulatory Authority (or any successor thereto).
“ Free Writing Prospectus ” shall mean a free-writing prospectus, as defined in Rule 405.
“ Investor Registrable Securities ” shall mean (a) all shares of Common Stock issued to the Investor pursuant to the Merger Agreement and (b) any equity securities of the Company issued or issuable directly or indirectly with respect to the foregoing securities referred to in clause (a) immediately above, in each case, by way of stock dividend or stock split or in connection with a combination or exchange of shares, recapitalization, merger, consolidation or other reorganization. As to any particular shares constituting Investor Registrable Securities, such shares will continue to be Investor Registrable Securities in the hands of any Permitted Transferee thereof, and such shares will cease to be Investor Registrable Securities (i) when they have been effectively registered or qualified for sale by prospectus filed under the Securities Act and disposed of in accordance with the registration statement covering them, (ii) when they have been sold to the public pursuant to Securities Act Rule 144 or other exemption from registration under the Securities Act, (iii) when they have been repurchased by the Company or a subsidiary of the Company or (iv) when the aggregate number of Investor Registrable Securities held by the Investor and its Affiliates cease to equal at least 3% of (X) the outstanding shares of Common Stock and (Y) any equity securities of the Company issued or issuable directly or indirectly with respect to the foregoing securities referred to in clause (X) immediately above by way of stock dividend or stock split or in connection with a combination or exchange of shares, recapitalization, merger, consolidation or other reorganization.
“ Person ” shall mean any individual, partnership, corporation, company, association, trust, joint venture, limited liability company, unincorporated organization, entity or division, or any government, governmental department or agency or political subdivision thereof.
 
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“ Permitted Transferee ” shall mean (i) any Affiliate of the Investor, (ii) any successor entity or with respect to an investor organized as a trust, any successor trustee or co-trustee of such trust or (iii) any direct or indirect partner, investor or member of the Investor or any Affiliate of the Investor; provided that, in each case described in clauses (i), (ii) and (iii), only to the extent such transferee agrees to be bound by the terms of this Agreement in accordance with the provisions hereof (it being understood that any Transfer not made in accordance with the terms hereof shall be deemed not a Transfer to a Permitted Transferee). In addition, any Person shall be a Permitted Transferee of the Permitted Transferees of itself.
“ Rule 144 ” shall mean Securities and Exchange Commission Rule 144 under the Securities Act, as Rule 144 may be amended from time to time, or any similar successor rule that may be issued by the Securities and Exchange Commission.
“ Rule 405 ” shall mean Securities and Exchange Commission Rule 405 under the Securities Act, as Rule 405 may be amended from time to time, or any similar successor rule that may be issued by the Securities and Exchange Commission.
“ Securities Act ” shall mean the Securities Act of 1933 and the rules promulgated thereunder, in each case as amended from time to time.
“ Securities and Exchange Commission ” includes any governmental body or agency succeeding to the functions thereof.
“ Securities Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended from time to time, or any successor federal law then in force.
“ Selling Expenses ” means all transportation and other expenses incurred by or on behalf of the Company or any underwriters, or their representatives, in connection with “roadshow” presentations and the holding of meetings with potential investors to facilitate the distribution and sale of the Investor Registrable Securities.
 
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“ Transfer ” shall mean any sale, pledge, assignment, encumbrance or other transfer or disposition of any Investor Registrable Securities (or any voting or economic interest therein) to any other Person, whether directly, indirectly, voluntarily, involuntarily, by operation of law, pursuant to judicial process or otherwise.
“ Underwritten Offering ” shall mean a broadly distributed bona fide underwritten registered public offering of any Investor Registrable Securities.
6.2. Rules of Construction.
Capitalized terms used in this Agreement that are not defined in Section 6.1 have the meanings specified elsewhere in this Agreement. Defined terms used in this Agreement in the singular shall import the plural and vice versa. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. All references herein to Sections shall be deemed to be references to Sections of this Agreement unless the context shall otherwise require. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. Any statute or laws defined or referred to herein shall include any rules, regulations or forms promulgated thereunder from time to time and as from time to time, amended, amended and restated, modified or supplemented, including by succession of comparable rules, regulations or forms. Unless otherwise expressly provided herein, any agreement, instrument or statute defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement, instrument or statute as from time to time amended, amended and restated, modified or supplemented, including (in the case of agreements or instruments) by waiver or consent and (in the case of statutes) by succession of comparable successor statutes and references to all attachments thereto and instruments incorporated therein. Any reference to the number of shares of capital stock of the Company means such shares of capital stock of the Company as appropriately adjusted to give effect to any share combinations or exchanges, restructuring or other recapitalizations of the Company or its capital structure. Any reference herein to the holder of a particular class or series of capital stock of the Company shall be a reference to such Person solely in its capacity as a holder of that particular class or series of such capital stock of the Company. For purposes of this Agreement, the obligation of a party to use its “reasonable best efforts” to achieve a particular result may require such party to expend resources, incur costs or expenses, or pay amounts, in each case to the extent such expenditures, costs, expenses or payments, together with all other actions to be taken by such party in pursuit of such result, would constitute the exercise of such party’s “reasonable best efforts”.
 
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7. MISCELLANEOUS.
7.1. Term. This Agreement will be effective as of the date hereof and will continue in effect thereafter until the earliest of (a) its termination by the written consent of the parties hereto or their respective successors in interest, (b) the date on which no Investor Registrable Securities remain outstanding and (c) the dissolution, liquidation or winding up of the Company.
7.2. No Inconsistent Agreements. The Company will not hereafter enter into any agreement with respect to its securities which violates the rights granted to the holders of Investor Registrable Securities in this Agreement.
7.3. Adjustments Affecting Investor Registrable Securities. The Company will not take any action, or permit any change to occur, with respect to its securities which would materially and adversely affect the ability of any holder of Investor Registrable Securities to include its Investor Registrable Securities in a registration undertaken pursuant to this Agreement.
7.4. Board of Directors Matters.
Upon the Investor and its Affiliates in the aggregate ceasing to hold at least 3% of (i) the outstanding shares of Common Stock and (ii) any equity securities of the Company issued or issuable directly or indirectly with respect to the foregoing securities referred to in clause (i) immediately above by way of stock dividend or stock split or in connection with a combination or exchange of shares, recapitalization, merger, consolidation or other reorganization, any individual nominated to the Board by the Investor shall promptly tender his or her resignation to the Board and, unless a majority of the Board affirmatively votes not to accept such director’s resignation, such director shall no longer remain a director of the Company.
7.5. Restriction on Acquisitions of Common Stock by the Investor.
Commencing on the Closing Date and ending on the second anniversary thereof (immediately upon which, the restrictions set forth in this Section 7.5 will be of no further force or effect with respect to the Investor or any other holder of Investor Registrable Securities), the Investor will not acquire any shares of Common Stock, other than shares of Common Stock issued in respect of outstanding shares of Common Stock by way of stock dividend or stock split or in connection with a combination or exchange of shares, recapitalization, merger, consolidation or other reorganization. In the event that the Investor desires to Transfer to a Permitted Transferee prior to the second anniversary of the Closing Date, such Permitted Transferee shall, as a condition to such Transfer, enter into an agreement with the Company to be bound by this Section 7.5 (it being understood that any Transfer prior to the second anniversary of the Closing Date not made in accordance with the terms hereof shall be deemed not a Transfer to a Permitted Transferee).
7.6. Remedies. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that, in addition to any other rights and remedies at law or in equity existing in its favor, any party shall be entitled to specific performance and/or other injunctive relief from any court of law or equity of competent jurisdiction (without posting any bond or other security) in order to enforce or prevent violation of the provisions of this Agreement.
 
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7.7. Amendment and Waiver. This Agreement may be amended, modified, extended, terminated or waived (an “ Amendment ”), and the provisions hereof may be waived, only by an agreement in writing signed by the Company and the Investor; provided that the admission of new parties pursuant to the terms of Section 7.8 shall not constitute an amendment of this Agreement for the purposes of this Section 7.7 . Each such Amendment shall be binding upon each party hereto. In addition, each party hereto may waive any right hereunder, as to itself, by an instrument in writing signed by such party. The failure of any party to enforce any provisions of this Agreement shall in no way be construed as a waiver of such provisions and shall not affect the right of such party thereafter to enforce each and every provision of this Agreement in accordance with its terms. To the extent the Amendment of any Section of this Agreement would require a specific consent pursuant to this Section 7.7 , any Amendment to the definitions used in such Section as applied to such Section shall also require the same specified consent.
7.8. Successors and Assigns; Permitted Transferees. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors and assigns. Investor Registrable Securities shall cease to be Investor Registrable Securities after any Transfer to any Person other than a Permitted Transferee. Prior to the Transfer of any Investor Registrable Securities to any Permitted Transferee, and as a condition thereto, the Investor shall cause such Permitted Transferee to deliver to the Company its written agreement, in form and substance reasonably satisfactory to the Company, to be bound by the terms and conditions of this Agreement.
7.9. Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or the effectiveness or validity of any provision in any other jurisdiction, and this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.
7.10. Counterparts. This Agreement may be executed in separate counterparts (including by means of facsimile or electronic transmission in portable document format ( i . e ., pdf)), each of which shall be an original and all of which taken together shall constitute one and the same Agreement.
7.11. Descriptive Headings; No Strict Construction. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement. The parties hereto agree that they have been represented by counsel during the negotiation and execution of this Agreement and have participated jointly in the drafting of this Agreement and, therefore, waive the application of any law, holding or rule of construction providing that ambiguities in an agreement or other document will be construed against the party drafting such agreement or document.
 
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7.12. Notices. Any notices and other communications required or permitted in this Agreement shall be effective if in writing and (a) delivered personally, (b) sent by facsimile, or (c) sent by overnight courier, in each case, addressed as follows:
The Company :
[Spinco, Inc .]
[            ]
[            ]
Attention: [            ]
Facsimile No.: [            ]
with copies to (which shall not constitute notice) :
Debevoise & Plimpton LLP
919 Third Avenue
New York, NY 10022
 	Attention:	Michael Diz	
 	    	Peter J. Loughran	
Facsimile No.: (212) 909-6836
and
Kirkland & Ellis LLP
300 N. LaSalle Street
Chicago, IL 60654
 	Attention:	Matthew E. Steinmetz, P.C.	
 	    	Jeffrey W. Richards, P.C.	
 	    	Neal J. Reenan	
Facsimile No.: (312) 862-2200
The Investor :
UWW Holdings, LLC
c/o Bain Capital Partners, LLC
200 Clarendon Street
Boston, MA 02116
 	Attention:	Matt Levin	
 	    	Seth Meisel	
Facsimile No.: (617) 516-2010
with a copy to (which shall not constitute notice) :
Bain Capital Partners, LLC
200 Clarendon Street
Boston, MA 02116
Attention: Matt Levin
Seth Meisel
Facsimile No.: (617) 516-2010
 
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and
Kirkland & Ellis LLP
300 N. LaSalle Street
Chicago, IL 60654
 	Attention:	Matthew E. Steinmetz, P.C.	
 	    	Jeffrey W. Richards, P.C.	
 	    	Neal J. Reenan	
Facsimile No.: (312) 862-2200
If to any other Person, to it at the address set forth in the records of the Company.
Notice to the holder of record of any capital stock shall be deemed to be notice to the holder of such shares for all purposes hereof.
Unless otherwise specified herein, such notices or other communications shall be deemed effective (x) on the date received, if personally delivered, (y) on the date received if delivered by facsimile on a Business Day, or if not delivered on a Business Day, on the first Business Day thereafter, and (z) two Business Days after being sent by overnight courier. Each of the parties hereto shall be entitled to specify a different address by giving notice as aforesaid to each of the other parties hereto.
7.13. Electronic Delivery. This Agreement and any signed agreement or instrument entered into in connection herewith or contemplated hereby, and any amendments hereto or thereto, to the extent signed and delivered by means of a facsimile machine or electronic mail, shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. At the request of any party hereto or to any such agreement or instrument, each other party hereto or thereto shall re-execute original forms thereof and deliver them to all other parties. No party hereto or to any such agreement or instrument shall raise the use of a facsimile machine or electronic mail to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of a facsimile machine or electronic mail as a defense to the formation or enforceability of a contract and each such party forever waives any such defense.
7.14. Governing Law; Consent to Jurisdiction; WAIVER OF JURY TRIAL.
(a) All issues and questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware. In furtherance of the foregoing, the internal law of the State of Delaware shall control the interpretation and construction of this Agreement, even though under that jurisdiction’s choice of law or conflict of law analysis, the substantive law of some other jurisdiction would ordinarily apply.
 
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(b) The Parties agree that jurisdiction and venue in any action brought by any Party pursuant to this Agreement shall properly (but not exclusively) lie in the Court of Chancery of the State of Delaware (or, if such court lacks subject matter jurisdiction, in any appropriate state or federal court in the State of Delaware) and any federal or state court located in the State of Delaware from which appeal therefrom validly lies. By execution and delivery of this Agreement, each Party irrevocably submits to the jurisdiction of such courts for itself and in respect of its property with respect to such action. The Parties irrevocably agree that venue would be proper in such court, and hereby waive any objection that such court is an improper or inconvenient forum for the resolution of such action. The Parties further agree that the mailing by certified or registered mail, return receipt requested, of any process required by any such court shall constitute valid and lawful service of process against them, without necessity for service by any other means provided by statute or rule of court.
(c) AS A SPECIFICALLY BARGAINED INDUCEMENT FOR EACH OF THE PARTIES TO ENTER INTO THIS AGREEMENT (WITH EACH PARTY HAVING HAD OPPORTUNITY TO CONSULT COUNSEL), EACH OF THE PARTIES EXPRESSLY AND IRREVOCABLY WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING UNDER THIS AGREEMENT OR ANY ACTION OR PROCEEDING ARISING OUT OF THE TRANSACTIONS CONTEMPLATED HEREBY OR ANY OTHER TRANSACTION DOCUMENT, REGARDLESS OF WHICH PARTY INITIATES SUCH ACTION OR PROCEEDING, AND ANY ACTION OR PROCEEDING UNDER THIS AGREEMENT OR ANY ACTION OR PROCEEDING ARISING OUT OF THE TRANSACTIONS CONTEMPLATED HEREBY OR ANY OTHER TRANSACTION DOCUMENT SHALL BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
7.15. Exercise of Rights and Remedies. No delay of or omission in the exercise of any right, power or remedy accruing to any party as a result of any breach or default by any other party under this Agreement shall impair any such right, power or remedy, nor shall it be construed as a waiver of or acquiescence in any such breach or default, or of any similar breach or default occurring later; nor shall any such delay, omission nor waiver of any single breach or default be deemed a waiver of any other breach or default occurring before or after that waiver.
7.16. Dilution. If, from time to time, there is any change in the capital structure of the Company by way of a split, dividend, combination or reclassification, or through a merger, consolidation, reorganization or recapitalization, or by any other means, appropriate adjustment shall be made in the provisions hereof so that the rights and privileges granted hereby shall continue.
* * * * *
[Signature Pages Follow]
 
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IN WITNESS WHEREOF, the undersigned have caused this Registration Rights Agreement to be executed as of the date first written above.

XPEDX HOLDING COMPANY	
		
By:	 	 	
Name:	 		
Its:	 		
	
UWW HOLDINGS, LLC	
		
By:	 	 	
Name:	 		
Its:	 		

Exhibit E
Form of Transition Services Agreement

FORM OF TRANSITION SERVICES AGREEMENT
THIS AGREEMENT (this “ Agreement ”) is made as of [•], between International Paper Company, a New York corporation (“ IP ”), and xpedx Holding Company, a Delaware corporation (“ Spinco ” and, together with IP, the “ Parties ”).
WHEREAS, IP, Spinco and UWW Holdings, Inc., a Delaware corporation, have entered into the Contribution and Distribution Agreement, dated as of January 28, 2014 (the “ Contribution and Distribution Agreement ”), pursuant to which, among other things, certain assets and liabilities constituting the Spinco Business will be transferred to Spinco and its Subsidiaries, and all of the outstanding shares of Spinco Common Stock will be distributed to IP’s stockholders;
WHEREAS, the Spinco Business uses certain services provided by IP or by third parties under contract to IP, and Spinco desires to obtain the use of these services for the purpose of enabling it to manage an orderly transition;
WHEREAS, Spinco acknowledges that IP is not in the business of providing such services to third parties; and
WHEREAS, capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Contribution and Distribution Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows:
1. DEFINITIONS; INTERPRETATION
1.1 Definitions . The following terms shall have the respective meanings set out below and grammatical variations of such terms shall have corresponding meanings:
“ Additional Services ” has the meaning set forth in Section 2.11 .
“ Agreement ” has the meaning set forth in the preamble.
“ Contribution and Distribution Agreement ” has the meaning set forth in the recitals.
“ Distribution Date ” means the date of closing of the transactions contemplated by the Contribution and Distribution Agreement.
“ Excluded Services ” are those services set forth on Schedule II hereto.
“ First Extension Period ” means the period of time from and including the 13th month following the Distribution Date through and including the 18th month following the Distribution Date.

“ Intellectual Property ” means, collectively, any U.S. and non-U.S. issued, registered, unregistered and pending: (i) patents and patent applications (including any divisionals, continuations, continuations-in-part, reissues, renewals, re-examinations, extensions, provisional and applications for any of the foregoing), inventor’s certificates, utility model rights and similar rights, petty patents and applications therefor; (ii) works of authorship, mask works, copyrights, and copyright and mask work registrations and applications for registration; (iii) trademarks and service marks (including those which are protected without registration due to their well-known status), trade names, corporate names, domain names, logos, slogans, taglines, trade dress, general intangibles of like nature, and other indicia of source, origin, endorsement, sponsorship or certification, designs, industrial designs, product packaging shape, and other elements of product and product packaging appearance together with all registrations and applications for registration of any of the foregoing and all goodwill related to any of the foregoing; (iv) unpatented inventions (whether or not patentable), trade secrets under applicable law, know-how and confidential or proprietary information, including (in whatever form or medium), discoveries, ideas, compositions, rights in software (including all source and object code related thereto), computer software documentation, database, drawings, designs, plans, proposals, specifications, photographs, samples, models, processes, procedures, data, information, manuals, reports, financial, marketing and business data, pricing and cost information, correspondence and notes; (v) all claims and rights related to any of the foregoing; and (vi) all other intellectual property or proprietary rights.
“ Licensee ” has the meaning set forth in Section 16 .
“ Licensor ” has the meaning set forth in Section 16 .
“ Losses ” means any damage, loss, liability, expense, lost profits or diminution in value (including reasonable expenses of investigation, enforcement and collection and reasonable attorneys’ and accountants’ fees and expenses), but shall not include liability to another Party or any of its Affiliates (or any of their respective Related Parties (as defined in the Contribution and Distribution Agreement) for any exemplary damages or punitive damages, or any other damages to the extent not reasonably foreseeable, arising out of or in connection with this Agreement or any Transaction Agreement (in each case, unless any such damages are payable to a third party pursuant to a Third-Party Claim).
“ Materials ” has the meaning set forth in Section 15.1 .
“ Merger Agreement ” has the meaning set forth in the Contribution and Distribution Agreement.
“ Migration ” means the transition or migration from the provision of a particular Service by Service Provider to Service Recipient under this Agreement to performance of such Service by Service Recipient or a third party designated by Service Recipient.
“ Migration Services ” has the meaning set forth in Section 5.2 .
“ Omitted Services ” has the meaning set forth in Section 2.9 .
 
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“ Party ” means either IP or Spinco, as the context requires, and “ Parties ” means both of them, as the context requires.
“ Post-Term Invoice ” has the meaning set forth in Section 3.9 .
“ Project Manager ” has the meaning set forth in Section 14.1 .
“ Providing Party ” has the meaning set forth in Section 11 .
“ Receiving Party ” has the meaning set forth in Section 11 .
“ Reference Period ” means the 2013 calendar year.
“ Reverse Transition Services ” means each service specified in Part B of Schedule I hereto to be provided from Spinco to IP.
“ Sales and Service Taxes ” has the meaning set forth in Section 3.7 .
“ Second Extension Period ” means the period of time from and including the 19th month following the Distribution Date through and including the 24th month following the Distribution Date.
“ Schedules ” shall mean Schedule I , Schedule II , Schedule III and any Supplemental Schedule.
“ Security Policies ” has the meaning set forth in Section 2.5 .
“ Service ” means, as the context requires, one or more Transition Services and/or one or more Reverse Transition Services.
“ Service Delivery Environment ” means the equipment, software, systems, databases, communications networks and connectivity, and facilities used by Service Provider to provide the Services.
“ Service Fees ” has the meaning set forth in Section 3.1 .
“ Service Provider ” means, in the case of Transition Services, IP and any of its Affiliates providing Transition Services hereunder, and, in the case of Reverse Transition Services, Spinco and any of its Subsidiaries to the extent that they are providing Reverse Transition Services hereunder.
“ Service Provider Fiscal Month ” means a month during Service Provider’s fiscal year, as determined by Service Provider for accounting purposes.
“ Service Provider Indemnitees ” has the meaning set forth in Section 6.2 .
“ Service Recipient ” means, in the case of Transition Services, Spinco and any of its Affiliates receiving Transition Services hereunder, and, in the case of Reverse Transition Services, IP and any of its Subsidiaries to the extent that they are receiving Reverse Transition Services hereunder.
 
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“ Service Recipient Data ” means all the data owned and provided solely by Service Recipient, or created by Service Provider solely on behalf, or for the benefit, of Service Recipient, that is used by Service Provider solely in relation to the provision of the Services, including employee information, customer information, product details and pricing information.
“ Service Recipient Indemnitees ” has the meaning set forth in Section 6.1 .
“ Supplemental Schedule ” has the meaning set forth in Section 2.1 .
“ Term ” has the meaning set forth in Section 2.1 .
“ Transition Period ” means the period from the Distribution Date until all of the Terms for all of the Services have expired or otherwise terminated in accordance with Section 12 , and no further Services are being provided in connection with the Migration; provided that in no event shall the Transition Period exceed a period of time of one year or, if extended by Service Recipient pursuant to Section 2.12 , up to two years, after the Distribution Date.
“ Transition Service ” means each service specified in Part A of Schedule I hereto to be provided by IP to Spinco.
1.2 Interpretation . When a reference is made in this Agreement to a Section or Schedule, such reference shall be to a Section or Schedule of this Agreement unless otherwise indicated. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Unless the context requires otherwise, references to an agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof, and by this Agreement. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. Unless the context requires, “or,” “neither,” “nor,” “any,” and “either,” shall not be exclusive. All terms defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein. The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as the feminine and neuter genders of such terms. When a reference is made in this Agreement to “Service Provider” or “Service Recipient,” such reference shall be to the provider or recipient of either Transition Services or Reverse Transition Services as the context requires with reference to the particular Transition Service or Reverse Transition Service at issue. Notwithstanding that each of IP and Spinco, and their respective Affiliates, may act under this Agreement in the capacity of both a Service Provider and a Service Recipient, the rights, duties, obligations or liabilities of a Service Provider or Service Recipient set forth in this Agreement shall be limited as the context requires to the rights, duties, obligations or liabilities of the Party acting in the capacity of Service Provider or Service Recipient with reference to the
 
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particular Services, rights, duties, obligations or liabilities at issue. For purposes of this Agreement, the obligation of a Party to use its “reasonable best efforts” to achieve a particular result may require such Party to expend resources, incur costs or expenses, or pay amounts, in each case to the extent such expenditures, costs, expenses or payments, together with all other actions to be taken by such Party in pursuit of such result, would constitute the exercise of such Party’s “reasonable best efforts”.
2. TERM AND PROVISION OF SERVICES
2.1 Subject to Section 12 , the term of this Agreement shall be for the Transition Period. Subject to Section 12 , each Service shall be provided for the period of time following the Distribution that is indicated on the Schedules for such Service and each Additional Service, Omitted Service or Migration Service, if any, shall be provided for the period of time as specified in a supplemental written schedule (i) mutually agreed upon by the Parties acting reasonably and in good faith, in the case of Additional Services or Migration Services, or (ii) subject to prior confirmation in good faith by Service Provider acting reasonably, delivered by Service Recipient, in the case of Omitted Services (each such supplemental written schedule, a “ Supplemental Schedule ”) setting forth the terms of such Additional Service, Omitted Service or Migration Service to be provided (any such period of time with respect to a Service, an Additional Service, an Omitted Service or a Migration Service, including any extension period agreed to by the Parties pursuant to Section 2.12 , a “ Term ”); provided that in no event shall any Term exceed a period of time of one year or, if extended by Service Recipient pursuant to Section 2.12 , up to two years, after the Distribution Date.
2.2 During the Transition Period, but subject to Section 12 , the applicable Term and the provisions set forth in this Agreement, Service Provider shall provide to Service Recipient (or cause to be provided by its Affiliates or third parties to Service Recipient) each Service set forth on Schedule I hereto, which Schedule I shall also include the scope of such Service and fees associated with such Service. For the avoidance of doubt, any Supplemental Schedule shall be deemed to be part of Schedule I hereto.
2.3 Except as otherwise expressly provided in the Schedules, Service Provider shall provide each Service to Service Recipient (i) in at least substantially the same manner, scope and nature, at substantially the same level of professionalism, workmanship and quality, with substantially equal priority and substantially equal treatment as such Service was provided, or caused to be provided, by Service Provider or any of its Affiliates to the Spinco Business, in the case of a Transition Service, and to the IP Business, in the case of a Reverse Transition Service, during the Reference Period and (ii) in compliance with all applicable Laws; provided , that, in the case of clause (i) above, for the purposes of determining the manner, scope, nature, professionalism, workmanship, quality and priority of any Service during the Reference Period, appropriate and reasonable modifications in manner of delivery may be made for security, confidentiality, and data integrity so long as such modifications do not adversely affect the scope, nature, professionalism, workmanship, quality or priority to the Service Recipient of the Services delivered hereunder in any material respect.
 
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2.4 Service Provider and Service Recipient shall, and shall cause their respective Affiliates to, comply with applicable privacy and data security Laws in the provision or receipt of Services.
2.5 Service Recipient shall comply with all of Service Provider’s security policies, procedures and requirements relating to the Service Delivery Environment that have been, from time to time, previously provided in writing to Service Recipient (including those adopted after the date hereof to the extent so provided) in connection with its access and use of the Services (the “ Security Policies ”), and shall not tamper with, compromise or circumvent any security or audit measures employed by Service Provider.
2.6 Service Provider shall limit access to the Service Delivery Environment to Service Provider personnel who are specifically authorized to have such access, and shall take such measures to prevent unauthorized access, use, destruction, alteration or loss of Spinco Business data and other information contained therein as employed with respect to IP Business data. Service Recipient shall access and use only that portion of the Service Delivery Environment for which Service Recipient has been granted the right to access and use; provided, however, that Service Provider shall not unreasonably limit the grant of such access and use by authorized personnel. Neither Party shall establish any type of external network connectivity into the other Party’s systems or network, including WAN or Internet connectivity, without the prior written consent of the other Party. Service Recipient shall limit access of its personnel to the Service Delivery Environment to those personnel who are specifically authorized to have such access and shall cause such personnel to comply with the Security Policies in accessing the Service Delivery Environment in accordance with the terms of Section 2.5 .
2.7 If, at any time, a Party determines that (a) any of its personnel has sought to circumvent, or has circumvented, the Security Policies, (b) any unauthorized personnel of such Party has accessed the Service Delivery Environment, or (c) any of its personnel has engaged in activities that may reasonably be expected to lead to the unauthorized access, use, destruction, alteration or loss of data, information or software, such Party shall promptly terminate such personnel’s access to the Service Delivery Environment and promptly notify the other Party in writing. In addition, Service Provider shall have the right to deny personnel of Service Recipient access to the Service Delivery Environment upon at least 24 hours’ written notice to Service Recipient in the event that Service Provider reasonably believes that such personnel have engaged in any of the activities set forth in this Section 2.7 or otherwise pose a security concern. Each Party will reasonably cooperate with the other Party in investigating any apparent unauthorized access to or use of the Service Delivery Environment.
2.8 The Parties acknowledge that, subject to Section 2.3 , the manner, means, and resources to provide the Services are in the reasonable discretion of Service Provider; provided that Service Provider shall in good faith discuss and consider any reasonable suggestions of Service Recipient with respect to the foregoing that are consistent with the terms of this Agreement.
2.9 If any services (other than Excluded Services) that either (i) were previously provided to or for the benefit of either Party or their respective Subsidiaries, or caused to be provided to or for the benefit of either Party or their respective Subsidiaries, in each case by the
 
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other Party or its Subsidiaries, or (ii) are not of the type described in clause (i) but that Spinco reasonably believes are necessary for Spinco to operate the Spinco Business as currently conducted, have been omitted from Schedule I hereto (“ Omitted Services ”), then at the request of Service Recipient (in the case of clause (i), made within one year after the Distribution Date, and in the case of clause (ii), made within six months after the Distribution Date), (A) in the case of services pursuant to the foregoing clause (i), Service Provider shall provide such services, or cause such services to be provided, as promptly as reasonably practicable, pursuant to a Supplemental Schedule and (B) in the case of services pursuant to the foregoing clause (ii), so long as (x) Service Provider has the capability and existing capacity to provide such services, (y) Service Provider has provided such services to any of its other businesses within six months prior to the date of such request and (z) Service Recipient is unable to secure such services from a third party on commercially reasonable terms, Service Provider shall use its reasonable best efforts to provide such services, or cause such services to be provided, as promptly as reasonably practicable, pursuant to a Supplemental Schedule; provided , in each case, that the obligations of Service Provider to provide any Omitted Services shall be subject to Service Recipient’s use of its reasonable best efforts to cooperate with Service Provider in the provision of such services, and to the extent that changes to the systems, operations or business of Service Recipient implemented in connection with the transactions contemplated by the Contribution and Distribution Agreement or Merger Agreement or after the Distribution Date require alterations in the means of providing any such service, Service Provider shall be obligated only to use its reasonable best efforts to make such alterations. Service Recipient shall use its reasonable best efforts to cooperate with Service Provider in the provision of such services. Any Omitted Service that is provided or caused to be provided by Service Provider pursuant to this Section 2.9 shall be a “Transition Service” or a “Reverse Transition Service”, as applicable, for the purposes of this Agreement (other than as specifically indicated herein).
2.10 Subject to the service level requirements set forth in Section 2.3 , Service Provider may use third parties to provide some or all of the Services. Service Provider agrees that, to the extent such third-party Services are provided to Service Recipient pursuant to contracts between Service Provider and the third-party service provider, Service Provider will (i) to the extent such contracts allow Service Provider to take such actions for the benefit of Service Recipient (after the use by Service Provider of its reasonable best efforts to obtain consent to do so, if applicable), pass-through or grant to Service Recipient any license to Intellectual Property granted to Service Provider to the extent such license is necessary for Service Recipient to receive or utilize the Services; and (ii) enforce its rights and remedies, including indemnification obligations and obligations of the third-party service provider to comply with specified service levels and warranties, against any such third parties relating to the Services to the extent it would otherwise enforce such rights and remedies on behalf of itself or any of its Affiliates under similar circumstances relating to similar matters. Any reasonable and out-of-pocket costs incurred by Service Provider in pursuing remedies on Service Recipient’s behalf and at Service Recipient’s direction and request, to the extent associated with a failure to provide Services hereunder, shall be invoiced to Service Recipient as Service Fees. Unless specifically agreed in writing by the Parties, Service Recipient will be responsible for incremental costs incurred and associated with third-party contracts initiated during the Transition Period by Service Provider, subject to Section 3.3 ; provided , that Service Provider shall use its reasonable best efforts to minimize such incremental costs. Service Provider will consult with and obtain the prior written
 
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consent of (such consent to be provided within five (5) Business Days and not to be unreasonably withheld) Service Recipient prior to retaining any third party to provide Services where such third party (a) is not also providing substantially similar services to Service Provider for Service Provider’s business, or (b) did not provide the Services (or substantially similar services) to the Spinco Business, in the case of Transition Services, or to the IP Business, in the case of Reverse Transition Services, as applicable, prior to Distribution. Notwithstanding any such use of third parties, Service Provider shall remain fully obligated for the provision of such Services to the Service Recipient in accordance with the terms hereof; provided , however , if (i) Service Provider elects to use a third-party service provider for all or substantially all of its and its Subsidiaries’ requirements and/or needs and (ii) Service Provider is able to assign, and has assigned, to Service Recipient, Service Provider’s rights and remedies against such third-party service provider, such that Service Recipient may pursue such rights and remedies directly, Service Provider shall have no liability to Service Recipient in connection with a failure to perform by such third party that is not caused by the action or inaction of Service Provider.
2.11 In the event that Service Recipient requires any additional services (excluding any Excluded Services and other than Omitted Services or Migration Services, which shall be governed by Sections 2.9 and 5.2 , respectively) (“ Additional Services ”), Service Recipient may submit a written request describing such services to Service Provider’s Project Manager, and the Project Managers of each of Service Recipient and Service Provider shall meet to discuss such request. Service Provider shall act reasonably and in good faith in determining whether to provide such additional services. Any Additional Service that is provided or caused to be provided by Service Provider pursuant to this Section 2.11 shall be a “Transition Service” of “Reverse Transition Service”, as applicable, for the purposes of this Agreement (other than as specifically indicated herein).
2.12 In the event that any Service is required beyond its Term, Service Recipient shall provide Service Provider with a written notice of extension no later than forty-five (45) days prior to the expiration of the Term of such Service. Such notice shall indicate the period during which Service Recipient wishes to receive such Service after the date of expiration of the Term for such Service; provided that such period shall not extend beyond the date which is two years from the Distribution Date. Subject to obtaining any necessary third-party consents, Service Provider shall provide, or cause to be provided, the Service to Service Recipient for such period, it being understood and agreed that the fees for each applicable Service shall be increased by (i) 10% during the First Extension Period and (ii) 20% during the Second Extension Period. Service Recipient will reimburse Service Provider for any reasonable and documented incremental fees charged by third-party service providers in connection with granting any consent or otherwise extending the Service, in each case, solely with respect to an extension beyond the Term.
2.13 Service Provider shall not be required to provide a Service to the extent the provision of such Service by Service Provider materially conflicts with any contract or agreement to which Service Provider is a party prior to the date hereof or the rights of any third party with respect thereto or violates any applicable Law. The Service Provider shall use reasonable best efforts to obtain any consents from third-parties that Service Provider reasonably believes are necessary in order for Service Provider to provide the Services. In the event that Service Provider is unable to obtain any such consent, the Parties shall work together to agree upon, and Service Provider shall use its reasonable best efforts (and Service Recipient will cooperate with Service Provider) to implement, a commercially reasonable alternative arrangement.
 
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2.14 Notwithstanding anything to the contrary that may be set forth or implied elsewhere in this Agreement or in the Contribution and Distribution Agreement, Service Provider shall not, and shall be under no obligation to, provide any Excluded Services after the Distribution Date.
2.15 Unless otherwise provided for in this Agreement, the Parties shall use their reasonable best efforts to cooperate with each other in all matters relating to the provision and receipt of the Transition Services and the Reverse Transition Services. Such cooperation shall include exchanging information, providing electronic access to systems used in connection with the Transition Services and Reverse Transition Services and obtaining all consents, licenses, sublicenses or approvals necessary (including the payment of any reasonable fees or expenses) to permit each Party to perform its obligations hereunder, in each case, subject to the restrictions of Section 11 . Each Party shall cooperate with the other Party in determining the extent to which any Tax is due and owing with respect to any of the Transition Services or Reverse Transition Services, as applicable, and in providing and making available appropriate documentation or information reasonably requested by the other Party including, but not limited to, applicable resale and/or exemption certificates.
3. PRICING, BILLING AND PAYMENT
3.1 With respect to each Service, Service Recipient shall pay to Service Provider those amounts determined in accordance with the rates and charges, including any set-up or one-time costs, set forth in the Schedule for such Service, and in addition, Service Recipient shall pay Service Provider all reasonable incidental costs and expenses reasonably incurred by Service Provider in providing the Services, including air fare (coach class), lodging, meals, mileage, parking and ground transportation, in each case in accordance with Service Provider’s standard policies with respect to such incidental costs and expenses (collectively, the “Service Fees”). Service Fees for Migration Services shall be at the rate of $200 per hour, plus all reasonable incidental costs and expenses reasonably incurred by Service Provider in providing the Migration Services.
3.2 Service Fees (if any) for Omitted Services and Additional Services shall be developed in good faith by the Parties pursuant to the following guidelines:
(a) with respect to internal resources of Service Provider or its Affiliates used in delivering the Service, together with any third-party products or services used or consumed in the ordinary course of delivering the Service that are not pass-through costs or reimbursable expenses, Service Fees shall be based on a good faith allocation of Service Provider’s centralized costs associated with the Service consistent with Service Provider’s recent historical practices over the Reference Period for allocating such costs among its lines of business, plus all reasonable incidental costs and expenses reasonably incurred by Service Provider in providing the Services; and
 
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(b) with respect to any Services provided by third-party service providers, Service Fees shall be based on the reasonable and documented actual cost paid by Service Provider to the third-party service provider for the products or services furnished by the third-party service provider for the benefit of Service Recipient, plus all reasonable incidental costs and expenses reasonably incurred by Service Provider in providing the Services.
3.3 In the event that any Service is terminated by Service Recipient in accordance with Section 12.3 , the Service Fees shall automatically be adjusted downward (by the associated fee for such Service set forth on the respective Schedule from and after the first day of the month following termination of such Service). To the extent that such Service is provided to Service Provider by a third-party service provider, Service Provider may at any time increase the charges for any Service upon written notice to Service Recipient provided such increase is only to the extent of the amount of increase charged by such third-party service provider.
3.4 Not later than twenty-one (21) days after the last day of each calendar month, Service Provider shall provide to Service Recipient an itemized invoice for the preceding month’s Service Fees. The amount stated in such invoice (to the extent such amount is not the subject of a good faith dispute in accordance with the terms set forth in Section 3.10 ) shall be paid by Service Recipient in full within thirty (30) days of the date of Service Recipient’s receipt of the invoice (or the next Business Day following such date, if such thirtieth (30th) day is not a Business Day) through payment to an account designated by Service Provider. To protect confidential or competitively sensitive information, Service Provider may aggregate the Service Fees with respect to some or all of the Services included in such invoice; provided , that Service Provider shall, and shall cause its Affiliates to, cooperate and provide such information as reasonably requested by Service Recipient and provide such back-up therefor as reasonably requested by Service Recipient in connection therewith to the extent reasonably required to permit Service Recipient and its Representatives to review and evaluate the amounts set forth in such invoice and verify such amounts. If any such review reveals any overpayment by Service Recipient, Service Provider shall promptly refund the amount of such overpayment to Service Recipient (including any interest accrued daily on such overpayment at an annual interest rate equal to 6% and reimburse, to the extent any such review reveals an overpayment of 10% or more, Service Recipient for its reasonable and documented out-of-pocket costs and expenses incurred in connection with such review. Any dispute regarding overpayment shall be resolved by engaging KPMG LLP to arbitrate and resolve such dispute, which shall be resolved in accordance with the processes and procedures set forth in Section 5.2(c) of the Contribution and Distribution Agreement. If KPMG LLP is unable or unwilling to act as arbitrator, a nationally recognized accounting firm shall be selected by lot from among the remaining nationally recognized firms which are not the regular independent auditor firm of IP or the Spinco, and in such event references herein to KPMG LLP shall be deemed to refer to such replacement accounting firm.
3.5 Without prejudice to Service Provider’s other rights and remedies, in the event any sum due (other than those subject to dispute in good faith) to Service Provider pursuant to the terms of this Agreement remains unpaid ten (10) Business Days after the applicable due date, interest shall accrue daily, from the due date until the date of actual payment, at an annual interest rate equal to 6%.
 
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3.6 The cost of each Service is a monthly cost, and the full monthly cost of each Service (applying the volume level, if applicable, of such Service at the beginning of a Service Provider Fiscal Month) shall apply in respect of such Service until such Service is terminated in its entirety as provided in Section 12.3 .
3.7 All payments due to Service Provider pursuant to the terms of this Agreement shall be exclusive of any sales, service, value-added or other similar Tax or levy imposed upon the Transition Services or Reverse Transition Services, as applicable, provided pursuant to this Agreement (“ Sales and Service Taxes ”), which shall be payable by Service Recipient unless (for the avoidance of doubt) the applicable Law provides that the relevant Sales and Service Taxes are levied directly on the Service Provider; in such case the Service Provider will pay the relevant Sales and Service Tax directly to the Taxing authority in accordance with applicable Law and Service Recipient shall reimburse Service Provider for such relevant Sales and Services Taxes. In connection with the Transition Services or Reverse Transition Services, as applicable, provided pursuant to this Agreement, each Party shall be responsible for, and shall withhold or pay or both (or cause to be withheld or paid or both), as may be required by Law, all Taxes pertaining to the employment of its personnel, agents, servants or designees. Each of Service Provider and Service Recipient shall pay and be responsible for their own Taxes based on their own income or profits or assets.
3.8 Payments for Services or other amounts due under this Agreement shall be made net of withholding Taxes; provided , however , that if Service Provider reasonably believes that a reduced rate of withholding Tax applies or Service Provider is exempt from withholding Tax, Service Provider shall provide Service Recipient with appropriate and customary documentation to Service Recipient that Service Provider qualifies for a reduction to or exemption from withholding under applicable Law.
3.9 With respect to any Service Fees that accrue or are incurred by Service Provider or its Affiliates during the Transition Period but that are not billed by Service Provider in a monthly invoice, or of which Service Provider does not become aware until after the Transition Period, Service Provider shall set forth such fees in an invoice or invoices submitted to Service Recipient following the end of the Transition Period (each, a “ Post-Term Invoice ”). Subject to Section 3.10, and so long as such Post-Term Invoice is received by Service Recipient as promptly as practicable and in any event within one (1) year following the Transition Period, Service Recipient shall remit payment under any such Post-Term Invoice to Service Provider within thirty (30) days after its receipt of such invoice.
3.10 In connection with Section 3.3 or 3.9 , in the event of an invoice dispute of which Service Recipient is aware, Service Recipient shall deliver a written statement to Service Provider no later than ten (10) days prior to the date payment is due on the disputed invoice listing all disputed items and providing a reasonably detailed description of each disputed item. Amounts not in dispute amongst the Parties shall be deemed accepted and shall be paid, notwithstanding disputes on other items, within the period set forth in Section 3.3 or 3.9 , as applicable. The Parties shall use their reasonable best efforts to resolve all such other disputes expeditiously and in good faith with Service Provider continuing to perform the Services in accordance with this Agreement pending resolution of any dispute. When the disputed amount has been resolved, either by mutual agreement of the Parties or in accordance with the processes
 
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and procedures set forth in Section 5.2(c) of the Contribution and Distribution Agreement, any Party owing an amount to another Party as a result of such resolution shall pay such amount owed to such other Party within ten (10) Business Days following such resolution. This Section 3.10 (including any resolution of a dispute in accordance with this Section 3.10 ) shall not relieve Service Provider of its obligations to perform the Services.
3.11 Each of the Parties hereby acknowledges that it shall have no right under this Agreement to offset any amounts owed (or to become due or owing) to the other Party, whether under this Agreement, the Contribution and Distribution Agreement, the Merger Agreement or otherwise, against any other amount owed (or to become due or owing) to it by the other Party.
4. ACCESS
The Service Provider and Service Recipient shall, and shall cause their respective Affiliates to, provide to each other and their respective agents and vendors reasonable access (during normal business hours (when appropriate with respect to physical access), upon reasonable notice and supervised by the appropriate personnel of the Parties or as otherwise agreed by the Parties) to the information, personnel, and systems necessary for the efficient and accurate administration, provision, receipt or use of each of the Services and to avoid the duplication of any expenses or benefits thereunder; provided that all such information shall be shared subject to the confidentiality obligations set forth in Section 11 , and any Party or third-party vendor receiving such information shall agree to be bound by such obligations prior to the provision of any such information. All Services provided will be based upon reasonably timely, accurate and complete information from Service Recipient, which Service Recipient shall use its reasonable best efforts to provide, and Service Provider shall be released from its obligations to provide or cause to be provided reasonably timely, accurate and complete Services to the extent (but only to the extent) Service Recipient fails to provide timely, accurate and complete information to Service Provider reasonably necessary for the provision of such Services. Service Recipient’s failure to perform or delay in performing any of its obligations hereunder will not constitute grounds for termination by Service Provider of this Agreement except as provided in Section 12.2 ; provided , however , that Service Provider’s nonperformance of its obligations under this Agreement shall be excused if and to the extent (i) such Service Provider’s nonperformance results from Service Recipient’s failure to perform its obligations hereunder and (ii) Service Provider provides Service Recipient with written notice of such nonperformance.
5. TRANSITION
5.1 The Parties acknowledge and agree that the Services to be provided hereunder are transitional in nature and are intended to provide Service Recipient with reasonable time to develop the internal resources and capacities (or to arrange for third-party providers) to provide such Services. No later than 90 days after the Distribution Date, the Parties shall consult for the purpose of agreeing upon the terms of and a plan for the Migration of all Services. Service Recipient will have the primary responsibility for planning and carrying out the Migration of Services prior to the expiration of the Transition Period. Subject to Section 5.2 below and the other terms of this Agreement, Service Provider will provide reasonable cooperation and assistance as requested to support the Service Recipient’s Migration efforts.
 
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5.2 To the extent that Service Recipient requires reasonable support, assistance and other services to effect an orderly Migration without interruption to the Services subject to the Migration (“ Migration Services ”), Service Recipient shall submit a written request describing such Migration Services to Service Provider’s Project Manager, and upon at least ten (10) days’ written notice to Service Provider, the Parties shall meet to discuss and agree, each Party acting reasonably and in good faith, on the scope of such Migration Services. Service Provider will then provide such Migration Services and assistance on the timing schedule that is reasonably and mutually established by the Parties in good faith; provided that the Parties’ intent is that Migration Services shall include only such services that Service Provider is capable of providing. Service Provider agrees to cooperate with and assist Service Recipient with training of its personnel, including making its personnel and facilities available to train an agreed number of Service Recipient’s personnel in connection with the Migration during the Transition Period to permit Service Recipient to provide the Services for itself after the Transition Period. For any Migration Services, Service Recipient will pay to Service Provider the rate set forth in Section 3.1 . Any Migration Service that is provided or caused to be provided by Service Provider pursuant to this Section 5.2 shall be a “Transition Service” or a “Reverse Transition Service”, as applicable, for the purposes of this Agreement (other than as specifically indicated herein).
6. INDEMNITY
6.1 Service Provider shall indemnify Service Recipient and its Affiliates and its and their respective officers, directors, employees, partners, managers or persons acting in a similar capacity, agents, consultants, financial and other advisors, accountants, attorneys and other representatives (the “ Service Recipient Indemnitees ”) in respect of, and hold such Service Recipient Indemnitees harmless from and against, any and all Losses incurred or suffered by Service Recipient Indemnitees in connection with the receipt of the Services to the extent that such Losses result from (i) the gross negligence or willful misconduct of Service Provider, any of its Affiliates or any of its or their respective officers, directors or employees, (ii) the violation of any applicable Law by Service Provider with respect to this Agreement or (iii) Service Provider’s breach of this Agreement; provided , that, notwithstanding anything in this Agreement to the contrary (including the definition of Losses), Service Recipient Indemnitees shall be entitled to indemnification hereunder if, and only to the extent, such negligence, misconduct, violation or breach remains uncured after a twenty (20) calendar day period (a “ Notice Period ”) following receipt by Service Provider of written notice from the applicable Service Recipient Indemnitee or Service Recipient Indemnitees describing such negligence, misconduct, violation or breach in reasonable detail.
6.2 The Service Recipient shall indemnify Service Provider and its Affiliates and its and their respective officers, directors, employees, partners, managers or persons acting in a similar capacity, agents, consultants, financial and other advisors, accountants, attorneys and other representatives (the “ Service Provider Indemnitees ”) in respect of, and hold Service Provider Indemnitees harmless from and against, any and all Losses incurred or suffered by Service Provider Indemnitees in connection with the provision of the Services to the extent that such Losses result from (i) the gross negligence or willful misconduct of Service Recipient, any of its Affiliates or any of its or their respective officers, directors or employees, (ii) the violation of any applicable Law by Service Recipient with respect to this Agreement or such Services or (iii) Service Recipient’s breach of this Agreement; provided , that, notwithstanding anything in
 
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this Agreement to the contrary (including the definition of Losses), Service Provider Indemnitees shall be entitled to indemnification hereunder if, and only to the extent, such negligence, misconduct, violation or breach remains uncured after a Notice Period following receipt by Service Recipient of written notice from the applicable Service Provider Indemnitee or Service Provider Indemnitees describing such negligence, misconduct, violation or breach in reasonable detail.
6.3 Each of the Parties agrees to use its reasonable best efforts to mitigate its respective Losses upon and after becoming aware of any event or condition that would reasonably be expected to give rise to any Losses that are indemnifiable hereunder.
6.4 The procedures specified in Article VI of the Contribution and Distribution Agreement shall apply with respect to any indemnification claims under this Section 6 .
7. LIMITED WARRANTY; LIMITATION ON DAMAGES
NOTWITHSTANDING ANY PROVISION TO THE CONTRARY, UNLESS EXPRESSLY SET FORTH HEREIN, THE SERVICE PROVIDER REPRESENTS AND WARRANTS ONLY THAT THE SERVICES SHALL BE IN CONFORMITY WITH THIS AGREEMENT (INCLUDING SECTION 2.3). THE ABOVE-STATED LIMITED WARRANTY IS THE SERVICE PROVIDER’S SOLE AND EXCLUSIVE WARRANTY WITH RESPECT TO ANY SERVICES PROVIDED UNDER THIS AGREEMENT. THE SERVICE PROVIDER DOES NOT MAKE ANY OTHER WARRANTIES, WHETHER EXPRESS, IMPLIED OR STATUTORY AND SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTIES, WHETHER OF MERCHANTABILITY, SUITABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR OTHERWISE FOR SUCH SERVICES; PROVIDED THAT THIS SECTION 7 SHALL NOT LIMIT, ALTER OR OTHERWISE CHANGE THE RIGHTS AND OBLIGATIONS OF THE PARTIES PURSUANT TO ANY OTHER TRANSACTION AGREEMENT, INCLUDING THE CONTRIBUTION AND DISTRIBUTION AGREEMENT. ANY REPRESENTATION OR WARRANTY IN RESPECT OF ANY SUCH SERVICE SHALL BE INCLUDED IN THE WRITTEN AGREEMENT SETTING FORTH THE TERMS OF SUCH SERVICE.
IN NO EVENT SHALL ANY PARTY OR SUCH PARTY’S AFFILIATES, OR ANY OF ITS OR THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES, BE LIABLE FOR SPECIAL, PUNITIVE, EXEMPLARY, CONSEQUENTIAL OR INDIRECT DAMAGES, WHETHER BASED ON CONTRACT, TORT, STRICT LIABILITY, OTHER LAW OR OTHERWISE, EXCEPT, IN THE CASE OF SPECIAL, CONSEQUENTIAL OR INDIRECT DAMAGES, TO THE EXTENT REASONABLY FORESEEABLE AND ARISING AS A RESULT OF SUCH PARTY’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, AND IN ALL CASES EXCEPT TO THE EXTENT PAYABLE TO A THIRD PARTY. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, THE LIABILITY OF SERVICE PROVIDER WITH RESPECT TO SERVICES PROVIDED PURSUANT TO THIS AGREEMENT, WHETHER IN CONTRACT, TORT OR OTHERWISE, SHALL NOT EXCEED THE FEES RECEIVED BY SERVICE PROVIDER PURSUANT TO THIS AGREEMENT, EXCEPT FOR DAMAGES ARISING AS A RESULT OF SUCH PARTY’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
 
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8. OBLIGATION TO PROVIDE SERVICES
The Parties acknowledge that notwithstanding any delegation of their respective responsibilities under this Agreement to a third party, except as provided in the proviso in Section 2.10, such delegating Party shall remain responsible for the provision of the Services which such Party is obligated to provide and any third-party’s compliance with the performance and standard of performance set forth herein.
9. FORCE MAJEURE
9.1 Service Provider shall not be responsible for failure or delay in delivery of any Service that it has responsibility for providing hereunder, if and to the extent caused by an act of God or public enemy, war, government acts, regulations or orders, fire, flood, embargo, quarantine, epidemic, labor stoppages or disruptions, unusually severe weather or other similar cause beyond the control of Service Provider (a “ Force Majeure Event ”), provided that Service Provider shall have, promptly after knowledge of the beginning of a Force Majeure Event, notified Service Recipient of such a Force Majeure Event, the reason therefor, and the estimated probable duration and consequence thereof. The Parties acknowledge and agree that such estimation shall not be considered binding in any way, and Service Provider shall not incur liability of any kind if such estimation proves to be inaccurate. Service Provider shall use its reasonable best efforts to restore provision of the Services in accordance with this Agreement as soon as reasonably practicable following the commencement of a Force Majeure Event.
9.2 In the event that Service Provider is excused from supplying a Service pursuant to this Section 9 , Service Recipient shall be free to acquire replacement services from a third party at Service Recipient’s expense, and without liability to Service Provider, for the period and to the extent reasonably necessitated by such non-performance.
10. INSURANCE
Each Party shall, throughout the term of this Agreement, carry appropriate insurance with a reputable insurance company covering property damage, business interruptions and general liability insurance (including contractual liability) to protect its own business and property interests. To the extent either Party insures, in whole or in part, through a plan of self-insurance, the Parties acknowledge that such self-insurance shall be acceptable for purposes of this Agreement. In the case of any conflict between the terms of this Section 10 and the terms of the Contribution and Distribution Agreement, the Contribution and Distribution Agreement shall control.
11. CONFIDENTIALITY OF INFORMATION
Except as provided below, all data and information disclosed between Service Provider and Service Recipient pursuant to this Agreement, including information relating to or received from third parties and any Service Recipient Data, are deemed Confidential Information (as
 
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defined in the Contribution and Distribution Agreement, subject, for the avoidance of doubt, to the limitations set forth in such definition). A Party receiving Confidential Information (the “ Receiving Party ”) shall not use such information for any purpose other than for which it was disclosed by the party providing such information (the “ Providing Party ”) and, except as otherwise permitted by this Agreement, shall not disclose to third parties any Confidential Information for a period of five (5) years from the termination or expiration of this Agreement or, with respect to any trade secrets, indefinitely. The obligations of the Receiving Party and the Providing Party with regard to Confidential Information shall be governed by and set forth in Section 8.5 of the Contribution and Distribution Agreement, which shall be deemed incorporated by reference herein. In addition, nothing herein shall be deemed to limit or restrict a Party from disclosing any Confidential Information in any action or proceeding by such Party to enforce any rights which such Party may have against the other Party; provided, that such Party shall, to the extent reasonable and not prejudicial to such Party’s rights, cooperate with the other Party to protect the confidentiality of such Confidential Information, whether by means of a protective order, production under seal or otherwise.
12. TERMINATION
12.1 This is a master agreement and shall be construed as a separate and independent agreement for each and every Service provided under this Agreement. Any termination of this Agreement with respect to any Service shall not terminate this Agreement with respect to any other Service then being provided pursuant to this Agreement.
12.2 Upon thirty (30) days’ prior written notice, Service Provider may, at its option, terminate this Agreement with respect to any or all Services it provides hereunder or suspend performance of its obligations with respect thereto, in either case solely in the event of the failure of Service Recipient to pay any invoice within sixty (60) days of the receipt of such invoice, unless Service Recipient is disputing the invoice in good faith pursuant to Section 3.10 .
12.3 If at any time during the applicable Term, Service Recipient wishes to terminate a Transition Service or a Reverse Transition Service, as the case may be, Service Recipient shall provide a written request of termination to Service Provider at least thirty (30) days prior to the proposed effective date of termination. If Service Provider determines, in good faith, that the termination of such Service will, or is reasonably likely to, result in Service Provider’s inability to provide any remaining Services in accordance with this Agreement (taking into account any interdependencies of the proposed terminated Service and the remaining Services), including with respect to the quality standards, or result in a Party’s inability to maintain the confidentiality of data and information disclosed between Service Provider and Service Recipient pursuant to this Agreement, then Service Provider shall notify Service Recipient thereof in writing and the Parties shall negotiate in good faith to determine an alternative solution to enable Service Provider to maintain the ability to provide all other Services not subject to such written request of termination provided in the first sentence of this Section 12.3 ; provided that in the event the Parties fail to mutually agree upon an alternative solution, Service Recipient shall have the right, in its sole discretion, to cancel and withdraw all or part of such written request of termination and thereafter such cancelled request shall be of no further force or effect or if Service Recipient does not cancel or withdraw all or part of such request, then such Service shall be terminated effective as of the last day of the month following the thirty (30)-day notice period. Within thirty (30)
 
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days after the effective date of termination of the applicable Services and receipt of an invoice, Service Recipient shall pay all accrued, undisputed (any such dispute to be in good faith) and unpaid charges for such Services that are due and payable and set forth in such invoice. Service Recipient will reimburse Service Provider for incremental fees charged by third-party service providers in connection with the termination of Services; provided, that Service Provider will use its reasonable best efforts to minimize such incremental fees.
12.4 Upon termination or expiration of this Agreement for any reason, Service Provider shall, upon the written request of Service Recipient, deliver to Service Recipient or destroy (provided such destruction is promptly confirmed in writing by Service Provider if requested by Service Recipient), at Service Provider’s option, all data, records and other information provided to Service Provider by Service Recipient and pertaining to any matters for which Service Provider was providing Transition Services or Reverse Transition Services, as applicable, hereunder; provided , however , Service Provider may retain copies of such data, records and information to the extent necessary for accounting, tax reporting, compliance with Service Provider’s document retention policies or other legitimate business purposes, subject to the requirements of Section 11 hereof.
13. RELATIONSHIP OF PARTIES
In providing the Services, Service Provider is acting as and shall be considered an independent contractor. This Agreement is not intended to create and shall not be construed as creating between Service Provider and Service Recipient any relationship other than an independent contractor and purchaser of contract services. The Parties specifically acknowledge that they are not, and this Agreement is not intended to and shall not be construed to make them, affiliates of one another and that no principal and agent, joint venture, partnership or similar relationship, or any other relationship, that imposes or implies any fiduciary duty, including any duty of care or duty of loyalty exists between the Parties. Except as expressly set forth herein, no Party has the authority to, and each Party agrees that it shall not, directly or indirectly contract any obligations of any kind in the name of or chargeable against the other Party without such other Party’s prior written consent.
14. PROJECT MANAGERS
14.1 Service Provider and Service Recipient will each assign one person to act as that Party’s project manager (the “ Project Manager ”) for each area of service listed on Schedule III hereto (and other categories, as may be agreed by the Parties). The Project Managers will (a) represent and act for their respective Party for matters related to the applicable Service, and (b) meet and/or confer on a regular basis (at mutually agreed times and locations) to review the activities under this Agreement and to discuss the status and progress of such activities. All disputes or issues arising hereunder will be referred to the applicable Project Managers for resolution. In the event any such dispute or issue is not resolved in a timely manner, such matter will be referred to senior management representatives, with appropriate decision making authority for prompt resolution of the matter. If still not resolved, the issue will be escalated to Service Recipient’s lead representative and Service Provider’s lead representative for resolution. The names and contact information for each of Service Recipient’s and Service Provider’s lead representative with regard to an issue or dispute arising out of or relating to the Transition
 
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Services and Reverse Transition Services shall be set forth on Scheduled III hereto. Either Party may designate a different individual as its lead representative with respect to the Transition Services or the Reverse Transition Services at any time by delivering prior written notice to the other Party. The foregoing shall not in any way limit the rights of the Parties to pursue any other legal and equitable remedies available to them hereunder in the event of a breach of this Agreement. No Project Manager or lead representative for a Party shall have any authority to amend this Agreement.
14.2 Service Provider will promptly notify Service Recipient of any reassignments or changes in contact information of the Project Manager or other key personnel identified in the Schedules hereto.
14.3 The Parties agree to use good faith efforts to resolve any controversy or claim arising out of this Agreement, the interpretation of any of the provisions hereof, or the actions of the Parties hereunder. In the event of a breach of this Agreement, or a dispute as to the meaning of this Agreement or any of its terms which the Parties cannot resolve by themselves amicably, the following provisions shall apply (which provisions shall be in addition to, and not a limitation of, the Parties’ remedies under Section 6 , Section 20.6 or, to the extent referred to pursuant to the terms of this Agreement, the dispute resolution mechanisms available under Section 5.2(c) of the Contribution and Distribution Agreement):
(a) The Parties shall endeavor to resolve the dispute as contemplated in Section 14.1 .
(b) If within thirty (30) days after one Party notifies the other in writing of the existence of a dispute, either Party may, at its option, provide written notice of the intent to arbitrate. In the event the Party that is the recipient of such notice agrees to arbitrate, arbitration shall be according to the rules of the American Arbitration Association, except as herein modified by the Parties or otherwise as agreed to by the Parties. Within ten (10) days of the agreement of the Parties to arbitrate, each Party will select an arbitrator, and notify the other Party of its selection. Within fifteen (15) days after receipt of such notice, the respective arbitrators will select a third arbitrator. All such arbitrators shall have experience in the respective businesses of the Parties. A hearing by the arbitration panel must be held within thirty (30) days after the selection of a chairman and a majority decision of the panel and resolution must be reached within thirty (30) days of such hearing. Decisions of the panel must be in writing and will be final and binding upon the Parties, and judgment may be entered thereon by any court having jurisdiction.
(c) The arbitration proceedings will be held in New York, New York, unless the Parties agree to a different location. All negotiation and arbitration proceedings will be confidential and will be treated as compromise and settlement negotiations for purpose of all rules of evidence. Each Party shall bear its own cost of presenting its case, and one-half of the cost incurred by the arbitration panel, or any mediation or alternative dispute resolution procedure, as the case may be, unless the arbitration panel determines otherwise.
 
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14.4 Nothing in this Section 14 shall supersede the notice/cure and termination rights of the Parties otherwise set forth in this Agreement. This Section 14 shall apply without prejudice to any Party’s right to seek equitable remedies or injunctive relief to which such Party may be entitled at any time.
15. RECORDS
15.1 Service Provider shall retain, for a period of three (3) years following the Distribution Date, all books, records, files, databases or computer software or hardware (including current and archived copies of computer files) (the “ Materials ”) with respect to matters relating to the Services provided to Service Recipient hereunder that are in a form and contain a level of detail substantially consistent with the records maintained by Service Provider in providing similar services to the Spinco Business or the IP Business, as applicable, prior to the Distribution Date (unless any such Materials have been delivered to Service Recipient or Service Recipient otherwise other has a copy of such information). Each Party agrees to use its reasonable best efforts to provide the other Party with notice of material modifications to its record retention policies in a timely manner. As promptly as practicable following the expiration of the applicable duration (or earlier termination) of each Service, Service Provider will use its reasonable best efforts to furnish to Service Recipient in the form reasonably requested by Service Recipient, and assist in the transition of, the Materials belonging to Service Recipient and relating to such Service as clearly identified by Service Recipient. If at any time during the three (3) year period following the Distribution Date Service Recipient reasonably requests in writing that certain of such Materials be delivered to Service Recipient, Service Provider promptly shall arrange for the delivery of the requested Materials in a form reasonably requested by Service Recipient to a location specified by, and at the expense of, Service Recipient (unless any such Materials have been delivered to Service Recipient or Service Recipient otherwise other has a copy of such information).
15.2 The Service Recipient Data shall be and shall remain the property of Service Recipient and, to the extent reasonably practicable, shall be promptly provided to Service Recipient by Service Provider upon Service Recipient’s request. The Service Provider shall use Service Recipient Data solely to provide the Services to Service Recipient as set forth herein and for no other purpose whatsoever.
15.3 Notwithstanding anything herein to the contrary and subject to Section 11, Service Provider may retain copies of the Materials and Service Recipient Data in accordance with policies and procedures implemented by Service Provider in order to comply with applicable Law, professional standards or reasonable business practice, including document retention policies as in effect from time to time and in accordance with past practices.
16. INTELLECTUAL PROPERTY
Unless otherwise specifically provided herein, this Agreement shall not transfer ownership of any Intellectual Property Assets from either Party to the other Party or to any third party. Ownership of any Intellectual Property Assets created by a Service Provider in connection with providing a Service to a Service Recipient under this Agreement shall be retained by such Service Provider, unless based on Service Recipient’s Confidential Information. If Service
 
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Provider creates any Intellectual Property in connection with providing a Service based on Service Recipient’s Confidential Information, then the creation of such Intellectual Property that is primarily related to or arising from the Spinco Business shall be considered a “work made for hire” under applicable Law and shall be owned by Service Recipient. If such creation is not considered a “work made for hire” under applicable Law, then Service Provider hereby irrevocably assigns, and shall assign, to Service Recipient, without further consideration, all of Service Provider’s worldwide right, title, and interest in and to such Intellectual Property. Solely to the extent required for the provision or receipt of the Services in accordance with this Agreement, each Party (the “ Licensor ”), for itself and on behalf of its Affiliates, hereby grants to the other (the “ Licensee ”) (and the Licensee’s Affiliates) a non-exclusive, revocable (solely as expressly provided in this Agreement), non-transferable (other than pursuant to Section 17), non-sublicensable (except to third parties as required for the provision or receipt of Services, but not for their own independent use), royalty-free, worldwide license during the term of this Agreement to use Intellectual Property of the Licensor in connection with this Agreement, but only to the extent and for the duration necessary for the Licensee to provide or receive the applicable Service under this Agreement. Subject to the rights and licenses granted to Licensee under any other agreement to which the Parties are party, upon the expiration of such term, or the earlier termination of such Service in accordance with this Agreement, the license to the relevant Intellectual Property will terminate and Licensee shall cease use of such Intellectual Property; provided, that all licenses granted hereunder shall terminate immediately upon the expiration or earlier termination of this Agreement in accordance with the terms hereof and upon such expiration or termination, Licensee shall cease use of the Intellectual Property licensed hereunder. The foregoing license is subject to any licenses granted by others with respect to Intellectual Property not owned by the Parties or their respective Affiliates.
17. ASSIGNMENT AND DELEGATION
This Agreement and all of the provisions hereof shall be binding upon and shall inure to the benefit of the Parties hereto and their respective successors and permitted assigns. Except as set forth in Section 2.10 , neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned or delegated, directly or indirectly, in whole or in part, including by operation of law, by any Party hereto without the prior written consent of the other Party hereto, which consent shall not be unreasonably withheld; provided , however , that either Party may assign this Agreement to any of its Affiliates without the consent of the other Party or delegate its rights or obligations hereunder, in whole or in part, to any of its Affiliates; provided , further , that Spinco may assign any or all of its rights or interests under this Agreement without the consent of IP (a) to any Person providing the Special Payment Financing pursuant to the terms thereof for purposes of creating a security interest herein or otherwise assign as collateral in respect of such Special Payment Financing or (b) to any purchaser of all or substantially all of the assets of such Person. No assignment by any Party shall relieve such Party of any of its obligations hereunder; provided that to the extent full performance or payment is made in full by an Affiliate or Affiliates of Service Provider or Service Recipient with respect to an obligation of Service Provider or Service Recipient, as applicable, hereunder, such obligation shall be in full satisfaction of such obligation of such Person hereunder.
 
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18. NOTICES
The procedures specified in Section 10.2 (Notices) of the Contribution and Distribution Agreement shall apply with respect to all notices, requests, claims, demands and other communications under this Agreement.
19. SURVIVAL
The Parties’ rights and obligations under Sections 3 , 6 , 7 , 8 , 11 and 14 through 20 shall survive expiration or termination of this Agreement.
20. GENERAL PROVISIONS
20.1 Severability . If any provision of this Agreement or the application of any such provision to any Person or circumstance shall be declared judicially to be invalid, unenforceable or void, such decision shall not have the effect of invalidating or voiding the remainder of this Agreement, it being the intent and agreement of the Parties that this Agreement shall be deemed amended by modifying such provision to the extent necessary to render it valid, legal and enforceable while preserving its intent or, if such modification is not possible, by substituting therefor another provision that is valid, legal and enforceable and that achieves the original intent of the Parties.
20.2 Counterparts . This Agreement may be executed in one or more counterparts each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or portable document format (PDF) shall be as effective as delivery of a manually executed counterpart of any such Agreement.
20.3 Entire Agreement . This Agreement and the Schedules hereto together with the other Transaction Agreements and any schedules and exhibits thereto, shall constitute the entire agreement between the Parties with respect to the subject matter hereof and shall supersede all previous negotiations, commitments and writings with respect to such subject matter. In the case of any conflict between the terms of this Agreement and the terms of any other Transaction Agreement regarding the subject matter hereof, the terms of this Agreement shall control. In the case of any ambiguity between the terms and condition of the main body of this Agreement and a Schedule to this Agreement, or with respect to an Omitted Service or an Additional Service, the terms and conditions of the main body of this Agreement shall control.
20.4 Amendments; Waivers . This Agreement may not be amended except by an instrument in writing signed by both Parties. No failure or delay by either Party in exercising any right hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right hereunder. Any agreement on the part of either Party to any such waiver shall be valid only if set forth in an instrument in writing signed on behalf of such Party.
 
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20.5 No Third Party Beneficiaries . Nothing in this Agreement, express or implied, is intended to or shall confer upon any Person (other than IP, Spinco and UWWH and their respective successors and permitted assigns who are express intended third-party beneficiaries) any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement, and, except with regard to and as provided in Section 6 , no Person shall be deemed a third party beneficiary under or by reason of this Agreement.
20.6 Specific Performance . Notwithstanding anything to the contrary contained herein or in any other Transaction Agreement, in the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement, the Party who is, or is to be, thereby aggrieved will have the right to specific performance and injunctive or other equitable relief in respect of its rights under this Agreement, in addition to any and all other rights and remedies at law or in equity. The Parties agree that the remedies at law for any breach or threatened breach, 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 waived. Any requirements for the securing or posting of any bond with such remedy are waived by each of the Parties to this Agreement.
20.7 Waiver of Jury Trial . AS A SPECIFICALLY BARGAINED INDUCEMENT FOR EACH OF THE PARTIES TO ENTER INTO THIS AGREEMENT (WITH EACH PARTY HAVING HAD OPPORTUNITY TO CONSULT COUNSEL), EACH OF THE PARTIES EXPRESSLY AND IRREVOCABLY WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING UNDER THIS AGREEMENT OR ANY ACTION OR PROCEEDING ARISING OUT OF THE TRANSACTIONS CONTEMPLATED HEREBY OR ANY OTHER TRANSACTION AGREEMENT, REGARDLESS OF WHICH PARTY INITIATES SUCH ACTION OR PROCEEDING, AND ANY ACTION OR PROCEEDING UNDER THIS AGREEMENT OR ANY ACTION OR PROCEEDING ARISING OUT OF THE TRANSACTIONS CONTEMPLATED HEREBY OR ANY OTHER TRANSACTION AGREEMENT SHALL BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
20.8 Jurisdiction; Service of Process. ANY ACTION WITH RESPECT TO THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS ARISING HEREUNDER, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT OF THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS ARISING HEREUNDER BROUGHT BY THE OTHER PARTY OR PARTIES OR THEIR SUCCESSORS OR ASSIGNS, IN EACH CASE, SHALL BE BROUGHT AND DETERMINED EXCLUSIVELY IN THE DELAWARE COURT OF CHANCERY AND ANY STATE APPELLATE COURT THEREFROM WITHIN THE STATE OF DELAWARE (OR, IF THE DELAWARE COURT OF CHANCERY DECLINES TO ACCEPT JURISDICTION OVER A PARTICULAR MATTER, ANY STATE OR FEDERAL COURT WITHIN THE STATE OF DELAWARE). EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE, COUNTERCLAIM OR OTHERWISE, IN ANY ACTION WITH RESPECT TO THIS AGREEMENT (I) ANY CLAIM THAT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF THE ABOVE NAMED COURTS FOR ANY REASON OTHER THAN THE FAILURE TO SERVE IN ACCORDANCE WITH THIS SECTION 20.8, (II) ANY CLAIM THAT IT OR ITS PROPERTY IS EXEMPT OR IMMUNE FROM JURISDICTION OF ANY SUCH COURT OR FROM ANY LEGAL PROCESS COMMENCED IN SUCH COURTS (WHETHER THROUGH SERVICE OF
 
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NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OF JUDGMENT, EXECUTION OF JUDGMENT OR OTHERWISE) AND (III) TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY CLAIM THAT (A) THE ACTION IN SUCH COURT IS BROUGHT IN AN INCONVENIENT FORUM, (B) THE VENUE OF SUCH ACTION IS IMPROPER OR (C) THIS AGREEMENT, OR THE SUBJECT MATTER HEREOF, MAY NOT BE ENFORCED IN OR BY SUCH COURTS. EACH OF THE PARTIES FURTHER AGREES THAT NO PARTY TO THIS AGREEMENT SHALL BE REQUIRED TO OBTAIN, FURNISH OR POST ANY BOND OR SIMILAR INSTRUMENT IN CONNECTION WITH OR AS A CONDITION TO OBTAINING ANY REMEDY REFERRED TO IN THIS SECTION 20.8 AND EACH PARTY WAIVES ANY OBJECTION TO THE IMPOSITION OF SUCH RELIEF OR ANY RIGHT IT MAY HAVE TO REQUIRE THE OBTAINING, FURNISHING OR POSTING OF ANY SUCH BOND OR SIMILAR INSTRUMENT. THE PARTIES HEREBY AGREE THAT MAILING OF PROCESS OR OTHER PAPERS IN CONNECTION WITH ANY SUCH ACTION OR PROCEEDING IN THE MANNER PROVIDED IN SECTION 20.8, OR IN SUCH OTHER MANNER AS MAY BE PERMITTED BY LAW, SHALL BE VALID AND SUFFICIENT SERVICE THEREOF AND HEREBY WAIVE ANY OBJECTIONS TO SERVICE ACCOMPLISHED IN THE MANNER HEREIN PROVIDED.
20.9 Governing Law . This Agreement and all issues and questions concerning the construction, validity, enforcement and interpretation of this Agreement (and all Schedules hereto) shall be governed by, and construed in accordance with, the Laws of the State of Delaware, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Delaware or any other jurisdiction) that would cause the application of the Laws of any jurisdiction other than the State of Delaware. In furtherance of the foregoing, the internal Laws of the State of Delaware shall control the interpretation and construction of this Agreement (and all Schedules hereto), even though under that jurisdiction’s choice of law or conflict of law analysis, the substantive Law of some other jurisdiction would ordinarily apply.
20.10 Other Agreements . Nothing herein is intended to modify, limit or otherwise affect the representations, warranties, covenants, agreements and indemnifications contained in the other Transaction Agreements, and such representations, warranties, covenants, agreements and indemnifications shall remain in full force and effect in accordance with the terms of such agreements, as applicable.
[SIGNATURES ON THE FOLLOWING PAGE]
 
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IN WITNESS WHEREOF, the Parties have caused this Transition Services Agreement to be executed and delivered by their duly authorized representatives as of the date first above written.

INTERNATIONAL PAPER COMPANY	
		
By:	 	 	
	 	Name:	
	 	Title:	
	
XPEDX HOLDING COMPANY	
		
By:	 	 	
	 	Name:	
	 	Title:	
Transition Services Agreement—Signature Page

Exhibit F
Form of FIRPTA Certificate

FIRPTA CERTIFICATE
Section 1445 of the Internal Revenue Code provides that a transferee of a U.S. real property interest must withhold tax if the transferor is a foreign person. For U.S. tax purposes (including section 1445), the owner of a disregarded entity (which has legal title to a U.S. real property interest under local law) will be the transferor of the property and not the disregarded entity. To inform xpedx Holding Company, a Delaware corporation (“Transferee”), that withholding of tax is not required upon the disposition of a U.S. real property interest by UWW Holdings, LLC, a Delaware limited liability company (“Transferor”), the undersigned hereby certifies the following on behalf of Transferor:
1. Transferor is not a foreign person, foreign corporation, foreign partnership, foreign trust, or foreign estate (as those terms are defined in the Internal Revenue Code and Income Tax Regulations);
2. Transferor is not a disregarded entity as defined in Treasury Regulations section 1.1445-2(b)(2)(iii);
3. Transferor’s U.S. employer identification number is [            ]; and
4. Transferor’s office address is:

UWW Holdings, LLC	

		

	 	 	
Transferor understands that this certification may be disclosed to the Internal Revenue Service by Transferee and that any false statement contained herein could be punished by fine, imprisonment, or both.
Under penalties of perjury I declare that I have examined this certification and to the best of my knowledge and belief it is true, correct, and complete, and I further declare that I have authority to sign this document on behalf of Transferor.
Date:             , 2014

UWW Holdings, LLC	

Name:	 	 	
Title:	 	 	

List of Omitted Schedules
The following schedules to the Agreement and Plan of Merger, dated as of January 28, 2014, by and among International Paper Company, xpedx Holding Company, xpedx Intermediate, LLC, xpedx, LLC, UWW Holdings, LLC, UWW Holdings, Inc. and Unisource Worldwide, Inc. have not been provided herein:
IP/Spinco Disclosure Schedules

Section 1.1(a)	    	Indebtedness	
Section 1.1(b)	    	Key Spinco Group Employees	
Section 1.1(c)	    	Knowledge	
Section 1.1(d)	    	Restricted Customers	
Section 1.1(e)	    	Shared Expenses	
Section 5.3	    	Corporate Authority Relative to this Agreement; No Violation	
Section 5.5	    	Affiliate Transactions	
Section 5.6	    	Spinco Financial Statements	
Section 5.8	    	Assets	
Section 5.9	    	Absence of Certain Changes or Events	
Section 5.10	    	Actions; Litigation	
Section 5.13	    	Tax Matters	
Section 5.14	    	Employee Benefits	
Section 5.15	    	Labor Matters	
Section 5.16	    	Intellectual Property	
Section 5.17	    	Material Contracts	
Section 5.22	    	Brokers or Finders; Transaction Bonuses	
Section 5.23	    	Bank Accounts	
Section 8.1	    	Conduct of the Spinco Business Pending the Merger	
Section 8.3	    	Officers of Spinco and the Surviving Corporation	
Section 8.22(b)	    	Certain Acquired Competing Businesses	
Section 8.24	    	Payoff Letters; Transaction Expenses	
Section 8.29	    	Change in Control and Severance Amounts	
	
UWWH Disclosure Schedules	
		
Section 1.1(a)	    	Indebtedness	
Section 1.1(b)	    	Key UWWH Employees	
Section 1.1(c)	    	Knowledge	
Section 1.1(d)	    	Applicable Accounting Principles	
Section 1.1(e)	    	UWWH Closing Date Net Debt	
Section 1.1(f)	    	UWWH Working Capital Example	
Section 6.3	    	Approvals	
Section 6.5	    	Affiliate Transactions	
Section 6.6(a)	    	Financial Statements	

			
Section 6.6(d)	    	Undisclosed Liabilities	
Section 6.8(b)	    	Real Property Purchases	
Section 6.8(c)	    	Real Property	
Section 6.9	    	Absence of Certain Changes or Events	
Section 6.10(a)	    	Litigation	
Section 6.10(b)	    	Actions	
Section 6.11	    	Compliance with Laws; Certain Licenses	
Section 6.12	    	Environmental Matters	
Section 6.13	    	Tax Matters	
Section 6.14(a)	    	Benefit Plans	
Section 6.14(b)	    	Accelerated Payments	
Section 6.14(c)	    	Defined Benefit Plans and Multiemployer Plans	
Section 6.14(d)	    	Actions	
Section 6.14(e)	    	Excess Parachute Payments	
Section 6.14(f)	    	Multiemployer Plans Contributions, Premiums and Solvency	
Section 6.15(a)	    	Collective Bargaining Agreements	
Section 6.15(b)	    	Unfair Labor Practice Actions	
Section 6.15(c)	    	WARN Act Compliance	
Section 6.15(d)	    	Labor Disputes	
Section 6.15(e)	    	Union Organizing Activity	
Section 6.15(f)	    	Employment-related Compliance	
Section 6.15(g)	    	Compliance with Collective Bargaining Agreements	
Section 6.15(h)	    	Intention to Terminate Employment	
Section 6.16	    	Intellectual Property	
Section 6.17(a)	    	UWWH Material Contracts	
Section 6.17(c)	    	No Violation of Material Contracts	
Section 6.19	    	Dividends	
Section 6.20	    	Brokers or Finders; Transaction Bonuses	
Section 6.21	    	Insurance of UWWH	
Section 6.22	    	Bank Accounts	
Section 8.2	    	Conduct of the Unisource Business by UWWH Pending the Merger	
Section 8.24(a)	    	Payoff Letters	
Section 8.29	    	Transaction Severance/Bonus Obligations	
UWWH Stockholder Disclosure Schedules
Section 7.9            Company Authority Relative to this Agreement; No Violation
The Registrant hereby undertakes to furnish supplementally a copy of any omitted schedule to the Securities and Exchange Commission upon request.

Exhibit 2.2
FORM OF TRANSITION SERVICES AGREEMENT
THIS AGREEMENT (this “ Agreement ”) is made as of [ — ], between International Paper Company, a New York corporation (“ IP ”), and xpedx Holding Company, a Delaware corporation (“ Spinco ” and, together with IP, the “ Parties ”).
WHEREAS, IP, Spinco and UWW Holdings, Inc., a Delaware corporation, have entered into the Contribution and Distribution Agreement, dated as of January 28, 2014 (the “ Contribution and Distribution Agreement ”), pursuant to which, among other things, certain assets and liabilities constituting the Spinco Business will be transferred to Spinco and its Subsidiaries, and all of the outstanding shares of Spinco Common Stock will be distributed to IP’s stockholders;
WHEREAS, the Spinco Business uses certain services provided by IP or by third parties under contract to IP, and Spinco desires to obtain the use of these services for the purpose of enabling it to manage an orderly transition;
WHEREAS, Spinco acknowledges that IP is not in the business of providing such services to third parties; and
WHEREAS, capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Contribution and Distribution Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows:
 
1.	DEFINITIONS; INTERPRETATION	
1.1 Definitions . The following terms shall have the respective meanings set out below and grammatical variations of such terms shall have corresponding meanings:
“ Additional Services ” has the meaning set forth in Section 2.11 .
“ Agreement ” has the meaning set forth in the preamble.
“ Contribution and Distribution Agreement ” has the meaning set forth in the recitals.
“ Distribution Date ” means the date of closing of the transactions contemplated by the Contribution and Distribution Agreement.
“ Excluded Services ” are those services set forth on Schedule II hereto.
“ First Extension Period ” means the period of time from and including the 13th month following the Distribution Date through and including the 18th month following the Distribution Date.
“ Intellectual Property ” means, collectively, any U.S. and non-U.S. issued, registered, unregistered and pending: (i) patents and patent applications (including any divisionals,

continuations, continuations-in-part, reissues, renewals, re-examinations, extensions, provisional and applications for any of the foregoing), inventor’s certificates, utility model rights and similar rights, petty patents and applications therefor; (ii) works of authorship, mask works, copyrights, and copyright and mask work registrations and applications for registration; (iii) trademarks and service marks (including those which are protected without registration due to their well-known status), trade names, corporate names, domain names, logos, slogans, taglines, trade dress, general intangibles of like nature, and other indicia of source, origin, endorsement, sponsorship or certification, designs, industrial designs, product packaging shape, and other elements of product and product packaging appearance together with all registrations and applications for registration of any of the foregoing and all goodwill related to any of the foregoing; (iv) unpatented inventions (whether or not patentable), trade secrets under applicable law, know-how and confidential or proprietary information, including (in whatever form or medium), discoveries, ideas, compositions, rights in software (including all source and object code related thereto), computer software documentation, database, drawings, designs, plans, proposals, specifications, photographs, samples, models, processes, procedures, data, information, manuals, reports, financial, marketing and business data, pricing and cost information, correspondence and notes; (v) all claims and rights related to any of the foregoing; and (vi) all other intellectual property or proprietary rights.
“ Licensee ” has the meaning set forth in Section 16 .
“ Licensor ” has the meaning set forth in Section 16 .
“ Losses ” means any damage, loss, liability, expense, lost profits or diminution in value (including reasonable expenses of investigation, enforcement and collection and reasonable attorneys’ and accountants’ fees and expenses), but shall not include liability to another Party or any of its Affiliates (or any of their respective Related Parties (as defined in the Contribution and Distribution Agreement) for any exemplary damages or punitive damages, or any other damages to the extent not reasonably foreseeable, arising out of or in connection with this Agreement or any Transaction Agreement (in each case, unless any such damages are payable to a third party pursuant to a Third-Party Claim).
“ Materials ” has the meaning set forth in Section 15.1 .
“ Merger Agreement ” has the meaning set forth in the Contribution and Distribution Agreement.
“ Migration ” means the transition or migration from the provision of a particular Service by Service Provider to Service Recipient under this Agreement to performance of such Service by Service Recipient or a third party designated by Service Recipient.
“ Migration Services ” has the meaning set forth in Section 5.2 .
“ Omitted Services ” has the meaning set forth in Section 2.9 .
“ Party ” means either IP or Spinco, as the context requires, and “ Parties ” means both of them, as the context requires.
 
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“ Post-Term Invoice ” has the meaning set forth in Section 3.9 .
“ Project Manager ” has the meaning set forth in Section 14.1 .
“ Providing Party ” has the meaning set forth in Section 11 .
“ Receiving Party ” has the meaning set forth in Section 11 .
“ Reference Period ” means the 2013 calendar year.
“ Reverse Transition Services ” means each service specified in Part B of Schedule I hereto to be provided from Spinco to IP.
“ Sales and Service Taxes ” has the meaning set forth in Section 3.7 .
“ Second Extension Period ” means the period of time from and including the 19th month following the Distribution Date through and including the 24th month following the Distribution Date.
“ Schedules ” shall mean Schedule I , Schedule II , Schedule III and any Supplemental Schedule.
“ Security Policies ” has the meaning set forth in Section 2.5 .
“ Service ” means, as the context requires, one or more Transition Services and/or one or more Reverse Transition Services.
“ Service Delivery Environment ” means the equipment, software, systems, databases, communications networks and connectivity, and facilities used by Service Provider to provide the Services.
“ Service Fees ” has the meaning set forth in Section 3.1 .
“ Service Provider ” means, in the case of Transition Services, IP and any of its Affiliates providing Transition Services hereunder, and, in the case of Reverse Transition Services, Spinco and any of its Subsidiaries to the extent that they are providing Reverse Transition Services hereunder.
“ Service Provider Fiscal Month ” means a month during Service Provider’s fiscal year, as determined by Service Provider for accounting purposes.
“ Service Provider Indemnitees ” has the meaning set forth in Section 6.2 .
“ Service Recipient ” means, in the case of Transition Services, Spinco and any of its Affiliates receiving Transition Services hereunder, and, in the case of Reverse Transition Services, IP and any of its Subsidiaries to the extent that they are receiving Reverse Transition Services hereunder.
 
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“ Service Recipient Data ” means all the data owned and provided solely by Service Recipient, or created by Service Provider solely on behalf, or for the benefit, of Service Recipient, that is used by Service Provider solely in relation to the provision of the Services, including employee information, customer information, product details and pricing information.
“ Service Recipient Indemnitees ” has the meaning set forth in Section 6.1 .
“ Supplemental Schedule ” has the meaning set forth in Section 2.1 .
“ Term ” has the meaning set forth in Section 2.1 .
“ Transition Period ” means the period from the Distribution Date until all of the Terms for all of the Services have expired or otherwise terminated in accordance with Section 12 , and no further Services are being provided in connection with the Migration; provided that in no event shall the Transition Period exceed a period of time of one year or, if extended by Service Recipient pursuant to Section 2.12 , up to two years, after the Distribution Date.
“ Transition Service ” means each service specified in Part A of Schedule I hereto to be provided by IP to Spinco.
1.2 Interpretation . When a reference is made in this Agreement to a Section or Schedule, such reference shall be to a Section or Schedule of this Agreement unless otherwise indicated. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Unless the context requires otherwise, references to an agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof, and by this Agreement. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. Unless the context requires, “or,” “neither,” “nor,” “any,” and “either,” shall not be exclusive. All terms defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein. The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as the feminine and neuter genders of such terms. When a reference is made in this Agreement to “Service Provider” or “Service Recipient,” such reference shall be to the provider or recipient of either Transition Services or Reverse Transition Services as the context requires with reference to the particular Transition Service or Reverse Transition Service at issue. Notwithstanding that each of IP and Spinco, and their respective Affiliates, may act under this Agreement in the capacity of both a Service Provider and a Service Recipient, the rights, duties, obligations or liabilities of a Service Provider or Service Recipient set forth in this Agreement shall be limited as the context requires to the rights, duties, obligations or liabilities of the Party acting in the capacity of Service Provider or Service Recipient with reference to the particular Services, rights, duties, obligations or liabilities at issue. For purposes of this Agreement, the obligation of a Party to use its “reasonable best efforts” to achieve a particular result may require such Party to expend resources, incur costs or expenses, or pay amounts, in
 
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each case to the extent such expenditures, costs, expenses or payments, together with all other actions to be taken by such Party in pursuit of such result, would constitute the exercise of such Party’s “reasonable best efforts”.
 
2.	TERM AND PROVISION OF SERVICES	
2.1 Subject to Section 12 , the term of this Agreement shall be for the Transition Period. Subject to Section 12 , each Service shall be provided for the period of time following the Distribution that is indicated on the Schedules for such Service and each Additional Service, Omitted Service or Migration Service, if any, shall be provided for the period of time as specified in a supplemental written schedule (i) mutually agreed upon by the Parties acting reasonably and in good faith, in the case of Additional Services or Migration Services, or (ii) subject to prior confirmation in good faith by Service Provider acting reasonably, delivered by Service Recipient, in the case of Omitted Services (each such supplemental written schedule, a “ Supplemental Schedule ”) setting forth the terms of such Additional Service, Omitted Service or Migration Service to be provided (any such period of time with respect to a Service, an Additional Service, an Omitted Service or a Migration Service, including any extension period agreed to by the Parties pursuant to Section 2.12 , a “ Term ”); provided that in no event shall any Term exceed a period of time of one year or, if extended by Service Recipient pursuant to Section 2.12 , up to two years, after the Distribution Date.
2.2 During the Transition Period, but subject to Section 12 , the applicable Term and the provisions set forth in this Agreement, Service Provider shall provide to Service Recipient (or cause to be provided by its Affiliates or third parties to Service Recipient) each Service set forth on Schedule I hereto, which Schedule I shall also include the scope of such Service and fees associated with such Service. For the avoidance of doubt, any Supplemental Schedule shall be deemed to be part of Schedule I hereto.
2.3 Except as otherwise expressly provided in the Schedules, Service Provider shall provide each Service to Service Recipient (i) in at least substantially the same manner, scope and nature, at substantially the same level of professionalism, workmanship and quality, with substantially equal priority and substantially equal treatment as such Service was provided, or caused to be provided, by Service Provider or any of its Affiliates to the Spinco Business, in the case of a Transition Service, and to the IP Business, in the case of a Reverse Transition Service, during the Reference Period and (ii) in compliance with all applicable Laws; provided , that, in the case of clause (i) above, for the purposes of determining the manner, scope, nature, professionalism, workmanship, quality and priority of any Service during the Reference Period, appropriate and reasonable modifications in manner of delivery may be made for security, confidentiality, and data integrity so long as such modifications do not adversely affect the scope, nature, professionalism, workmanship, quality or priority to the Service Recipient of the Services delivered hereunder in any material respect.
2.4 Service Provider and Service Recipient shall, and shall cause their respective Affiliates to, comply with applicable privacy and data security Laws in the provision or receipt of Services.
 
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2.5 Service Recipient shall comply with all of Service Provider’s security policies, procedures and requirements relating to the Service Delivery Environment that have been, from time to time, previously provided in writing to Service Recipient (including those adopted after the date hereof to the extent so provided) in connection with its access and use of the Services (the “ Security Policies ”), and shall not tamper with, compromise or circumvent any security or audit measures employed by Service Provider.
2.6 Service Provider shall limit access to the Service Delivery Environment to Service Provider personnel who are specifically authorized to have such access, and shall take such measures to prevent unauthorized access, use, destruction, alteration or loss of Spinco Business data and other information contained therein as employed with respect to IP Business data. Service Recipient shall access and use only that portion of the Service Delivery Environment for which Service Recipient has been granted the right to access and use; provided, however, that Service Provider shall not unreasonably limit the grant of such access and use by authorized personnel. Neither Party shall establish any type of external network connectivity into the other Party’s systems or network, including WAN or Internet connectivity, without the prior written consent of the other Party. Service Recipient shall limit access of its personnel to the Service Delivery Environment to those personnel who are specifically authorized to have such access and shall cause such personnel to comply with the Security Policies in accessing the Service Delivery Environment in accordance with the terms of Section 2.5 .
2.7 If, at any time, a Party determines that (a) any of its personnel has sought to circumvent, or has circumvented, the Security Policies, (b) any unauthorized personnel of such Party has accessed the Service Delivery Environment, or (c) any of its personnel has engaged in activities that may reasonably be expected to lead to the unauthorized access, use, destruction, alteration or loss of data, information or software, such Party shall promptly terminate such personnel’s access to the Service Delivery Environment and promptly notify the other Party in writing. In addition, Service Provider shall have the right to deny personnel of Service Recipient access to the Service Delivery Environment upon at least 24 hours’ written notice to Service Recipient in the event that Service Provider reasonably believes that such personnel have engaged in any of the activities set forth in this Section 2.7 or otherwise pose a security concern. Each Party will reasonably cooperate with the other Party in investigating any apparent unauthorized access to or use of the Service Delivery Environment.
2.8 The Parties acknowledge that, subject to Section 2.3 , the manner, means, and resources to provide the Services are in the reasonable discretion of Service Provider; provided that Service Provider shall in good faith discuss and consider any reasonable suggestions of Service Recipient with respect to the foregoing that are consistent with the terms of this Agreement.
2.9 If any services (other than Excluded Services) that either (i) were previously provided to or for the benefit of either Party or their respective Subsidiaries, or caused to be provided to or for the benefit of either Party or their respective Subsidiaries, in each case by the other Party or its Subsidiaries, or (ii) are not of the type described in clause (i) but that Spinco reasonably believes are necessary for Spinco to operate the Spinco Business as currently conducted, have been omitted from Schedule I hereto (“ Omitted Services ”), then at the request of Service Recipient (in the case of clause (i), made within one year after the Distribution Date, and
 
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in the case of clause (ii), made within six months after the Distribution Date), (A) in the case of services pursuant to the foregoing clause (i), Service Provider shall provide such services, or cause such services to be provided, as promptly as reasonably practicable, pursuant to a Supplemental Schedule and (B) in the case of services pursuant to the foregoing clause (ii), so long as (x) Service Provider has the capability and existing capacity to provide such services, (y) Service Provider has provided such services to any of its other businesses within six months prior to the date of such request and (z) Service Recipient is unable to secure such services from a third party on commercially reasonable terms, Service Provider shall use its reasonable best efforts to provide such services, or cause such services to be provided, as promptly as reasonably practicable, pursuant to a Supplemental Schedule; provided , in each case, that the obligations of Service Provider to provide any Omitted Services shall be subject to Service Recipient’s use of its reasonable best efforts to cooperate with Service Provider in the provision of such services, and to the extent that changes to the systems, operations or business of Service Recipient implemented in connection with the transactions contemplated by the Contribution and Distribution Agreement or Merger Agreement or after the Distribution Date require alterations in the means of providing any such service, Service Provider shall be obligated only to use its reasonable best efforts to make such alterations. Service Recipient shall use its reasonable best efforts to cooperate with Service Provider in the provision of such services. Any Omitted Service that is provided or caused to be provided by Service Provider pursuant to this Section 2.9 shall be a “Transition Service” or a “Reverse Transition Service”, as applicable, for the purposes of this Agreement (other than as specifically indicated herein).
2.10 Subject to the service level requirements set forth in Section 2.3 , Service Provider may use third parties to provide some or all of the Services. Service Provider agrees that, to the extent such third-party Services are provided to Service Recipient pursuant to contracts between Service Provider and the third-party service provider, Service Provider will (i) to the extent such contracts allow Service Provider to take such actions for the benefit of Service Recipient (after the use by Service Provider of its reasonable best efforts to obtain consent to do so, if applicable), pass-through or grant to Service Recipient any license to Intellectual Property granted to Service Provider to the extent such license is necessary for Service Recipient to receive or utilize the Services; and (ii) enforce its rights and remedies, including indemnification obligations and obligations of the third-party service provider to comply with specified service levels and warranties, against any such third parties relating to the Services to the extent it would otherwise enforce such rights and remedies on behalf of itself or any of its Affiliates under similar circumstances relating to similar matters. Any reasonable and out-of-pocket costs incurred by Service Provider in pursuing remedies on Service Recipient’s behalf and at Service Recipient’s direction and request, to the extent associated with a failure to provide Services hereunder, shall be invoiced to Service Recipient as Service Fees. Unless specifically agreed in writing by the Parties, Service Recipient will be responsible for incremental costs incurred and associated with third-party contracts initiated during the Transition Period by Service Provider, subject to Section 3.3 ; provided , that Service Provider shall use its reasonable best efforts to minimize such incremental costs. Service Provider will consult with and obtain the prior written consent of (such consent to be provided within five (5) Business Days and not to be unreasonably withheld) Service Recipient prior to retaining any third party to provide Services where such third party (a) is not also providing substantially similar services to Service Provider for Service Provider’s business, or (b) did not provide the Services (or substantially similar
 
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services) to the Spinco Business, in the case of Transition Services, or to the IP Business, in the case of Reverse Transition Services, as applicable, prior to Distribution. Notwithstanding any such use of third parties, Service Provider shall remain fully obligated for the provision of such Services to the Service Recipient in accordance with the terms hereof; provided , however , if (i) Service Provider elects to use a third-party service provider for all or substantially all of its and its Subsidiaries’ requirements and/or needs and (ii) Service Provider is able to assign, and has assigned, to Service Recipient, Service Provider’s rights and remedies against such third-party service provider, such that Service Recipient may pursue such rights and remedies directly, Service Provider shall have no liability to Service Recipient in connection with a failure to perform by such third party that is not caused by the action or inaction of Service Provider.
2.11 In the event that Service Recipient requires any additional services (excluding any Excluded Services and other than Omitted Services or Migration Services, which shall be governed by Sections 2.9 and 5.2 , respectively) (“ Additional Services ”), Service Recipient may submit a written request describing such services to Service Provider’s Project Manager, and the Project Managers of each of Service Recipient and Service Provider shall meet to discuss such request. Service Provider shall act reasonably and in good faith in determining whether to provide such additional services. Any Additional Service that is provided or caused to be provided by Service Provider pursuant to this Section 2.11 shall be a “Transition Service” of “Reverse Transition Service”, as applicable, for the purposes of this Agreement (other than as specifically indicated herein).
2.12 In the event that any Service is required beyond its Term, Service Recipient shall provide Service Provider with a written notice of extension no later than forty-five (45) days prior to the expiration of the Term of such Service. Such notice shall indicate the period during which Service Recipient wishes to receive such Service after the date of expiration of the Term for such Service; provided that such period shall not extend beyond the date which is two years from the Distribution Date. Subject to obtaining any necessary third-party consents, Service Provider shall provide, or cause to be provided, the Service to Service Recipient for such period, it being understood and agreed that the fees for each applicable Service shall be increased by (i) 10% during the First Extension Period and (ii) 20% during the Second Extension Period. Service Recipient will reimburse Service Provider for any reasonable and documented incremental fees charged by third-party service providers in connection with granting any consent or otherwise extending the Service, in each case, solely with respect to an extension beyond the Term.
2.13 Service Provider shall not be required to provide a Service to the extent the provision of such Service by Service Provider materially conflicts with any contract or agreement to which Service Provider is a party prior to the date hereof or the rights of any third party with respect thereto or violates any applicable Law. The Service Provider shall use reasonable best efforts to obtain any consents from third-parties that Service Provider reasonably believes are necessary in order for Service Provider to provide the Services. In the event that Service Provider is unable to obtain any such consent, the Parties shall work together to agree upon, and Service Provider shall use its reasonable best efforts (and Service Recipient will cooperate with Service Provider) to implement, a commercially reasonable alternative arrangement.
 
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2.14 Notwithstanding anything to the contrary that may be set forth or implied elsewhere in this Agreement or in the Contribution and Distribution Agreement, Service Provider shall not, and shall be under no obligation to, provide any Excluded Services after the Distribution Date.
2.15 Unless otherwise provided for in this Agreement, the Parties shall use their reasonable best efforts to cooperate with each other in all matters relating to the provision and receipt of the Transition Services and the Reverse Transition Services. Such cooperation shall include exchanging information, providing electronic access to systems used in connection with the Transition Services and Reverse Transition Services and obtaining all consents, licenses, sublicenses or approvals necessary (including the payment of any reasonable fees or expenses) to permit each Party to perform its obligations hereunder, in each case, subject to the restrictions of Section 11 . Each Party shall cooperate with the other Party in determining the extent to which any Tax is due and owing with respect to any of the Transition Services or Reverse Transition Services, as applicable, and in providing and making available appropriate documentation or information reasonably requested by the other Party including, but not limited to, applicable resale and/or exemption certificates.
 
3.	PRICING, BILLING AND PAYMENT	
3.1 With respect to each Service, Service Recipient shall pay to Service Provider those amounts determined in accordance with the rates and charges, including any set-up or one-time costs, set forth in the Schedule for such Service, and in addition, Service Recipient shall pay Service Provider all reasonable incidental costs and expenses reasonably incurred by Service Provider in providing the Services, including air fare (coach class), lodging, meals, mileage, parking and ground transportation, in each case in accordance with Service Provider’s standard policies with respect to such incidental costs and expenses (collectively, the “ Service Fees ”). Service Fees for Migration Services shall be at the rate of $200 per hour, plus all reasonable incidental costs and expenses reasonably incurred by Service Provider in providing the Migration Services.
3.2 Service Fees (if any) for Omitted Services and Additional Services shall be developed in good faith by the Parties pursuant to the following guidelines:
(a) with respect to internal resources of Service Provider or its Affiliates used in delivering the Service, together with any third-party products or services used or consumed in the ordinary course of delivering the Service that are not pass-through costs or reimbursable expenses, Service Fees shall be based on a good faith allocation of Service Provider’s centralized costs associated with the Service consistent with Service Provider’s recent historical practices over the Reference Period for allocating such costs among its lines of business, plus all reasonable incidental costs and expenses reasonably incurred by Service Provider in providing the Services; and
(b) with respect to any Services provided by third-party service providers, Service Fees shall be based on the reasonable and documented actual cost paid by Service Provider to the third-party service provider for the products or services furnished by the third-party service provider for the benefit of Service Recipient, plus all reasonable incidental costs and expenses reasonably incurred by Service Provider in providing the Services.
 
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3.3 In the event that any Service is terminated by Service Recipient in accordance with Section 12.3 , the Service Fees shall automatically be adjusted downward (by the associated fee for such Service set forth on the respective Schedule from and after the first day of the month following termination of such Service). To the extent that such Service is provided to Service Provider by a third-party service provider, Service Provider may at any time increase the charges for any Service upon written notice to Service Recipient provided such increase is only to the extent of the amount of increase charged by such third-party service provider.
3.4 Not later than twenty-one (21) days after the last day of each calendar month, Service Provider shall provide to Service Recipient an itemized invoice for the preceding month’s Service Fees. The amount stated in such invoice (to the extent such amount is not the subject of a good faith dispute in accordance with the terms set forth in Section 3.10 ) shall be paid by Service Recipient in full within thirty (30) days of the date of Service Recipient’s receipt of the invoice (or the next Business Day following such date, if such thirtieth (30th) day is not a Business Day) through payment to an account designated by Service Provider. To protect confidential or competitively sensitive information, Service Provider may aggregate the Service Fees with respect to some or all of the Services included in such invoice; provided , that Service Provider shall, and shall cause its Affiliates to, cooperate and provide such information as reasonably requested by Service Recipient and provide such back-up therefor as reasonably requested by Service Recipient in connection therewith to the extent reasonably required to permit Service Recipient and its Representatives to review and evaluate the amounts set forth in such invoice and verify such amounts. If any such review reveals any overpayment by Service Recipient, Service Provider shall promptly refund the amount of such overpayment to Service Recipient (including any interest accrued daily on such overpayment at an annual interest rate equal to 6% and reimburse, to the extent any such review reveals an overpayment of 10% or more, Service Recipient for its reasonable and documented out-of-pocket costs and expenses incurred in connection with such review. Any dispute regarding overpayment shall be resolved by engaging KPMG LLP to arbitrate and resolve such dispute, which shall be resolved in accordance with the processes and procedures set forth in Section 5.2(c) of the Contribution and Distribution Agreement. If KPMG LLP is unable or unwilling to act as arbitrator, a nationally recognized accounting firm shall be selected by lot from among the remaining nationally recognized firms which are not the regular independent auditor firm of IP or the Spinco, and in such event references herein to KPMG LLP shall be deemed to refer to such replacement accounting firm.
3.5 Without prejudice to Service Provider’s other rights and remedies, in the event any sum due (other than those subject to dispute in good faith) to Service Provider pursuant to the terms of this Agreement remains unpaid ten (10) Business Days after the applicable due date, interest shall accrue daily, from the due date until the date of actual payment, at an annual interest rate equal to 6%.
3.6 The cost of each Service is a monthly cost, and the full monthly cost of each Service (applying the volume level, if applicable, of such Service at the beginning of a Service Provider Fiscal Month) shall apply in respect of such Service until such Service is terminated in its entirety as provided in Section 12.3 .
 
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3.7 All payments due to Service Provider pursuant to the terms of this Agreement shall be exclusive of any sales, service, value-added or other similar Tax or levy imposed upon the Transition Services or Reverse Transition Services, as applicable, provided pursuant to this Agreement (“ Sales and Service Taxes ”), which shall be payable by Service Recipient unless (for the avoidance of doubt) the applicable Law provides that the relevant Sales and Service Taxes are levied directly on the Service Provider; in such case the Service Provider will pay the relevant Sales and Service Tax directly to the Taxing authority in accordance with applicable Law and Service Recipient shall reimburse Service Provider for such relevant Sales and Services Taxes. In connection with the Transition Services or Reverse Transition Services, as applicable, provided pursuant to this Agreement, each Party shall be responsible for, and shall withhold or pay or both (or cause to be withheld or paid or both), as may be required by Law, all Taxes pertaining to the employment of its personnel, agents, servants or designees. Each of Service Provider and Service Recipient shall pay and be responsible for their own Taxes based on their own income or profits or assets.
3.8 Payments for Services or other amounts due under this Agreement shall be made net of withholding Taxes; provided , however , that if Service Provider reasonably believes that a reduced rate of withholding Tax applies or Service Provider is exempt from withholding Tax, Service Provider shall provide Service Recipient with appropriate and customary documentation to Service Recipient that Service Provider qualifies for a reduction to or exemption from withholding under applicable Law.
3.9 With respect to any Service Fees that accrue or are incurred by Service Provider or its Affiliates during the Transition Period but that are not billed by Service Provider in a monthly invoice, or of which Service Provider does not become aware until after the Transition Period, Service Provider shall set forth such fees in an invoice or invoices submitted to Service Recipient following the end of the Transition Period (each, a “ Post-Term Invoice ”). Subject to Section 3.10 , and so long as such Post-Term Invoice is received by Service Recipient as promptly as practicable and in any event within one (1) year following the Transition Period, Service Recipient shall remit payment under any such Post-Term Invoice to Service Provider within thirty (30) days after its receipt of such invoice.
3.10 In connection with Section 3.3 or 3.9 , in the event of an invoice dispute of which Service Recipient is aware, Service Recipient shall deliver a written statement to Service Provider no later than ten (10) days prior to the date payment is due on the disputed invoice listing all disputed items and providing a reasonably detailed description of each disputed item. Amounts not in dispute amongst the Parties shall be deemed accepted and shall be paid, notwithstanding disputes on other items, within the period set forth in Section 3.3 or 3.9 , as applicable. The Parties shall use their reasonable best efforts to resolve all such other disputes expeditiously and in good faith with Service Provider continuing to perform the Services in accordance with this Agreement pending resolution of any dispute. When the disputed amount has been resolved, either by mutual agreement of the Parties or in accordance with the processes and procedures set forth in Section 5.2(c) of the Contribution and Distribution Agreement, any Party owing an amount to another Party as a result of such resolution shall pay such amount
 
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owed to such other Party within ten (10) Business Days following such resolution. This Section 3.10 (including any resolution of a dispute in accordance with this Section 3.10 ) shall not relieve Service Provider of its obligations to perform the Services.
3.11 Each of the Parties hereby acknowledges that it shall have no right under this Agreement to offset any amounts owed (or to become due or owing) to the other Party, whether under this Agreement, the Contribution and Distribution Agreement, the Merger Agreement or otherwise, against any other amount owed (or to become due or owing) to it by the other Party.
 
4.	ACCESS	
The Service Provider and Service Recipient shall, and shall cause their respective Affiliates to, provide to each other and their respective agents and vendors reasonable access (during normal business hours (when appropriate with respect to physical access), upon reasonable notice and supervised by the appropriate personnel of the Parties or as otherwise agreed by the Parties) to the information, personnel, and systems necessary for the efficient and accurate administration, provision, receipt or use of each of the Services and to avoid the duplication of any expenses or benefits thereunder; provided that all such information shall be shared subject to the confidentiality obligations set forth in Section 11 , and any Party or third-party vendor receiving such information shall agree to be bound by such obligations prior to the provision of any such information. All Services provided will be based upon reasonably timely, accurate and complete information from Service Recipient, which Service Recipient shall use its reasonable best efforts to provide, and Service Provider shall be released from its obligations to provide or cause to be provided reasonably timely, accurate and complete Services to the extent (but only to the extent) Service Recipient fails to provide timely, accurate and complete information to Service Provider reasonably necessary for the provision of such Services. Service Recipient’s failure to perform or delay in performing any of its obligations hereunder will not constitute grounds for termination by Service Provider of this Agreement except as provided in Section 12.2 ; provided , however , that Service Provider’s nonperformance of its obligations under this Agreement shall be excused if and to the extent (i) such Service Provider’s nonperformance results from Service Recipient’s failure to perform its obligations hereunder and (ii) Service Provider provides Service Recipient with written notice of such nonperformance.
 
5.	TRANSITION	
5.1 The Parties acknowledge and agree that the Services to be provided hereunder are transitional in nature and are intended to provide Service Recipient with reasonable time to develop the internal resources and capacities (or to arrange for third-party providers) to provide such Services. No later than 90 days after the Distribution Date, the Parties shall consult for the purpose of agreeing upon the terms of and a plan for the Migration of all Services. Service Recipient will have the primary responsibility for planning and carrying out the Migration of Services prior to the expiration of the Transition Period. Subject to Section 5.2 below and the other terms of this Agreement, Service Provider will provide reasonable cooperation and assistance as requested to support the Service Recipient’s Migration efforts.
5.2 To the extent that Service Recipient requires reasonable support, assistance and other services to effect an orderly Migration without interruption to the Services subject to the
 
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Migration (“ Migration Services ”), Service Recipient shall submit a written request describing such Migration Services to Service Provider’s Project Manager, and upon at least ten (10) days’ written notice to Service Provider, the Parties shall meet to discuss and agree, each Party acting reasonably and in good faith, on the scope of such Migration Services. Service Provider will then provide such Migration Services and assistance on the timing schedule that is reasonably and mutually established by the Parties in good faith; provided that the Parties’ intent is that Migration Services shall include only such services that Service Provider is capable of providing. Service Provider agrees to cooperate with and assist Service Recipient with training of its personnel, including making its personnel and facilities available to train an agreed number of Service Recipient’s personnel in connection with the Migration during the Transition Period to permit Service Recipient to provide the Services for itself after the Transition Period. For any Migration Services, Service Recipient will pay to Service Provider the rate set forth in Section 3.1 . Any Migration Service that is provided or caused to be provided by Service Provider pursuant to this Section 5.2 shall be a “Transition Service” or a “Reverse Transition Service”, as applicable, for the purposes of this Agreement (other than as specifically indicated herein).
 
6.	INDEMNITY	
6.1 Service Provider shall indemnify Service Recipient and its Affiliates and its and their respective officers, directors, employees, partners, managers or persons acting in a similar capacity, agents, consultants, financial and other advisors, accountants, attorneys and other representatives (the “ Service Recipient Indemnitees ”) in respect of, and hold such Service Recipient Indemnitees harmless from and against, any and all Losses incurred or suffered by Service Recipient Indemnitees in connection with the receipt of the Services to the extent that such Losses result from (i) the gross negligence or willful misconduct of Service Provider, any of its Affiliates or any of its or their respective officers, directors or employees, (ii) the violation of any applicable Law by Service Provider with respect to this Agreement or (iii) Service Provider’s breach of this Agreement; provided , that, notwithstanding anything in this Agreement to the contrary (including the definition of Losses), Service Recipient Indemnitees shall be entitled to indemnification hereunder if, and only to the extent, such negligence, misconduct, violation or breach remains uncured after a twenty (20) calendar day period (a “ Notice Period ”) following receipt by Service Provider of written notice from the applicable Service Recipient Indemnitee or Service Recipient Indemnitees describing such negligence, misconduct, violation or breach in reasonable detail.
6.2 The Service Recipient shall indemnify Service Provider and its Affiliates and its and their respective officers, directors, employees, partners, managers or persons acting in a similar capacity, agents, consultants, financial and other advisors, accountants, attorneys and other representatives (the “ Service Provider Indemnitees ”) in respect of, and hold Service Provider Indemnitees harmless from and against, any and all Losses incurred or suffered by Service Provider Indemnitees in connection with the provision of the Services to the extent that such Losses result from (i) the gross negligence or willful misconduct of Service Recipient, any of its Affiliates or any of its or their respective officers, directors or employees, (ii) the violation of any applicable Law by Service Recipient with respect to this Agreement or such Services or (iii) Service Recipient’s breach of this Agreement; provided , that, notwithstanding anything in this Agreement to the contrary (including the definition of Losses), Service Provider Indemnitees shall be entitled to indemnification hereunder if, and only to the extent, such negligence,
 
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misconduct, violation or breach remains uncured after a Notice Period following receipt by Service Recipient of written notice from the applicable Service Provider Indemnitee or Service Provider Indemnitees describing such negligence, misconduct, violation or breach in reasonable detail.
6.3 Each of the Parties agrees to use its reasonable best efforts to mitigate its respective Losses upon and after becoming aware of any event or condition that would reasonably be expected to give rise to any Losses that are indemnifiable hereunder.
6.4 The procedures specified in Article VI of the Contribution and Distribution Agreement shall apply with respect to any indemnification claims under this Section 6 .
 
7.	LIMITED WARRANTY; LIMITATION ON DAMAGES	
NOTWITHSTANDING ANY PROVISION TO THE CONTRARY, UNLESS EXPRESSLY SET FORTH HEREIN, THE SERVICE PROVIDER REPRESENTS AND WARRANTS ONLY THAT THE SERVICES SHALL BE IN CONFORMITY WITH THIS AGREEMENT (INCLUDING SECTION 2.3). THE ABOVE-STATED LIMITED WARRANTY IS THE SERVICE PROVIDER’S SOLE AND EXCLUSIVE WARRANTY WITH RESPECT TO ANY SERVICES PROVIDED UNDER THIS AGREEMENT. THE SERVICE PROVIDER DOES NOT MAKE ANY OTHER WARRANTIES, WHETHER EXPRESS, IMPLIED OR STATUTORY AND SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTIES, WHETHER OF MERCHANTABILITY, SUITABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR OTHERWISE FOR SUCH SERVICES; PROVIDED THAT THIS SECTION 7 SHALL NOT LIMIT, ALTER OR OTHERWISE CHANGE THE RIGHTS AND OBLIGATIONS OF THE PARTIES PURSUANT TO ANY OTHER TRANSACTION AGREEMENT, INCLUDING THE CONTRIBUTION AND DISTRIBUTION AGREEMENT. ANY REPRESENTATION OR WARRANTY IN RESPECT OF ANY SUCH SERVICE SHALL BE INCLUDED IN THE WRITTEN AGREEMENT SETTING FORTH THE TERMS OF SUCH SERVICE.
IN NO EVENT SHALL ANY PARTY OR SUCH PARTY’S AFFILIATES, OR ANY OF ITS OR THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES, BE LIABLE FOR SPECIAL, PUNITIVE, EXEMPLARY, CONSEQUENTIAL OR INDIRECT DAMAGES, WHETHER BASED ON CONTRACT, TORT, STRICT LIABILITY, OTHER LAW OR OTHERWISE, EXCEPT, IN THE CASE OF SPECIAL, CONSEQUENTIAL OR INDIRECT DAMAGES, TO THE EXTENT REASONABLY FORESEEABLE AND ARISING AS A RESULT OF SUCH PARTY’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, AND IN ALL CASES EXCEPT TO THE EXTENT PAYABLE TO A THIRD PARTY. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, THE LIABILITY OF SERVICE PROVIDER WITH RESPECT TO SERVICES PROVIDED PURSUANT TO THIS AGREEMENT, WHETHER IN CONTRACT, TORT OR OTHERWISE, SHALL NOT EXCEED THE FEES RECEIVED BY SERVICE PROVIDER PURSUANT TO THIS AGREEMENT, EXCEPT FOR DAMAGES ARISING AS A RESULT OF SUCH PARTY’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
 
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8.	OBLIGATION TO PROVIDE SERVICES	
The Parties acknowledge that notwithstanding any delegation of their respective responsibilities under this Agreement to a third party, except as provided in the proviso in Section 2.10 , such delegating Party shall remain responsible for the provision of the Services which such Party is obligated to provide and any third-party’s compliance with the performance and standard of performance set forth herein.
 
9.	FORCE MAJEURE	
9.1 Service Provider shall not be responsible for failure or delay in delivery of any Service that it has responsibility for providing hereunder, if and to the extent caused by an act of God or public enemy, war, government acts, regulations or orders, fire, flood, embargo, quarantine, epidemic, labor stoppages or disruptions, unusually severe weather or other similar cause beyond the control of Service Provider (a “ Force Majeure Event ”), provided that Service Provider shall have, promptly after knowledge of the beginning of a Force Majeure Event, notified Service Recipient of such a Force Majeure Event, the reason therefor, and the estimated probable duration and consequence thereof. The Parties acknowledge and agree that such estimation shall not be considered binding in any way, and Service Provider shall not incur liability of any kind if such estimation proves to be inaccurate. Service Provider shall use its reasonable best efforts to restore provision of the Services in accordance with this Agreement as soon as reasonably practicable following the commencement of a Force Majeure Event.
9.2 In the event that Service Provider is excused from supplying a Service pursuant to this Section 9 , Service Recipient shall be free to acquire replacement services from a third party at Service Recipient’s expense, and without liability to Service Provider, for the period and to the extent reasonably necessitated by such non-performance.
 
10.	INSURANCE	
Each Party shall, throughout the term of this Agreement, carry appropriate insurance with a reputable insurance company covering property damage, business interruptions and general liability insurance (including contractual liability) to protect its own business and property interests. To the extent either Party insures, in whole or in part, through a plan of self-insurance, the Parties acknowledge that such self-insurance shall be acceptable for purposes of this Agreement. In the case of any conflict between the terms of this Section 10 and the terms of the Contribution and Distribution Agreement, the Contribution and Distribution Agreement shall control.
 
11.	CONFIDENTIALITY OF INFORMATION	
Except as provided below, all data and information disclosed between Service Provider and Service Recipient pursuant to this Agreement, including information relating to or received from third parties and any Service Recipient Data, are deemed Confidential Information (as defined in the Contribution and Distribution Agreement, subject, for the avoidance of doubt, to the limitations set forth in such definition). A Party receiving Confidential Information (the “ Receiving Party ”) shall not use such information for any purpose other than for which it was
 
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disclosed by the party providing such information (the “ Providing Party ”) and, except as otherwise permitted by this Agreement, shall not disclose to third parties any Confidential Information for a period of five (5) years from the termination or expiration of this Agreement or, with respect to any trade secrets, indefinitely. The obligations of the Receiving Party and the Providing Party with regard to Confidential Information shall be governed by and set forth in Section 8.5 of the Contribution and Distribution Agreement, which shall be deemed incorporated by reference herein. In addition, nothing herein shall be deemed to limit or restrict a Party from disclosing any Confidential Information in any action or proceeding by such Party to enforce any rights which such Party may have against the other Party; provided, that such Party shall, to the extent reasonable and not prejudicial to such Party’s rights, cooperate with the other Party to protect the confidentiality of such Confidential Information, whether by means of a protective order, production under seal or otherwise.
 
12.	TERMINATION	
12.1 This is a master agreement and shall be construed as a separate and independent agreement for each and every Service provided under this Agreement. Any termination of this Agreement with respect to any Service shall not terminate this Agreement with respect to any other Service then being provided pursuant to this Agreement.
12.2 Upon thirty (30) days’ prior written notice, Service Provider may, at its option, terminate this Agreement with respect to any or all Services it provides hereunder or suspend performance of its obligations with respect thereto, in either case solely in the event of the failure of Service Recipient to pay any invoice within sixty (60) days of the receipt of such invoice, unless Service Recipient is disputing the invoice in good faith pursuant to Section 3.10 .
12.3 If at any time during the applicable Term, Service Recipient wishes to terminate a Transition Service or a Reverse Transition Service, as the case may be, Service Recipient shall provide a written request of termination to Service Provider at least thirty (30) days prior to the proposed effective date of termination. If Service Provider determines, in good faith, that the termination of such Service will, or is reasonably likely to, result in Service Provider’s inability to provide any remaining Services in accordance with this Agreement (taking into account any interdependencies of the proposed terminated Service and the remaining Services), including with respect to the quality standards, or result in a Party’s inability to maintain the confidentiality of data and information disclosed between Service Provider and Service Recipient pursuant to this Agreement, then Service Provider shall notify Service Recipient thereof in writing and the Parties shall negotiate in good faith to determine an alternative solution to enable Service Provider to maintain the ability to provide all other Services not subject to such written request of termination provided in the first sentence of this Section 12.3 ; provided that in the event the Parties fail to mutually agree upon an alternative solution, Service Recipient shall have the right, in its sole discretion, to cancel and withdraw all or part of such written request of termination and thereafter such cancelled request shall be of no further force or effect or if Service Recipient does not cancel or withdraw all or part of such request, then such Service shall be terminated effective as of the last day of the month following the thirty (30)-day notice period. Within thirty (30) days after the effective date of termination of the applicable Services and receipt of an invoice, Service Recipient shall pay all accrued, undisputed (any such dispute to be in good faith) and unpaid charges for such Services that are due and payable and set forth in such invoice. Service
 
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Recipient will reimburse Service Provider for incremental fees charged by third-party service providers in connection with the termination of Services; provided , that Service Provider will use its reasonable best efforts to minimize such incremental fees.
12.4 Upon termination or expiration of this Agreement for any reason, Service Provider shall, upon the written request of Service Recipient, deliver to Service Recipient or destroy (provided such destruction is promptly confirmed in writing by Service Provider if requested by Service Recipient), at Service Provider’s option, all data, records and other information provided to Service Provider by Service Recipient and pertaining to any matters for which Service Provider was providing Transition Services or Reverse Transition Services, as applicable, hereunder; provided , however , Service Provider may retain copies of such data, records and information to the extent necessary for accounting, tax reporting, compliance with Service Provider’s document retention policies or other legitimate business purposes, subject to the requirements of Section 11 hereof.
 
13.	RELATIONSHIP OF PARTIES	
In providing the Services, Service Provider is acting as and shall be considered an independent contractor. This Agreement is not intended to create and shall not be construed as creating between Service Provider and Service Recipient any relationship other than an independent contractor and purchaser of contract services. The Parties specifically acknowledge that they are not, and this Agreement is not intended to and shall not be construed to make them, affiliates of one another and that no principal and agent, joint venture, partnership or similar relationship, or any other relationship, that imposes or implies any fiduciary duty, including any duty of care or duty of loyalty exists between the Parties. Except as expressly set forth herein, no Party has the authority to, and each Party agrees that it shall not, directly or indirectly contract any obligations of any kind in the name of or chargeable against the other Party without such other Party’s prior written consent.
 
14.	PROJECT MANAGERS	
14.1 Service Provider and Service Recipient will each assign one person to act as that Party’s project manager (the “ Project Manager ”) for each area of service listed on Schedule III hereto (and other categories, as may be agreed by the Parties). The Project Managers will (a) represent and act for their respective Party for matters related to the applicable Service, and (b) meet and/or confer on a regular basis (at mutually agreed times and locations) to review the activities under this Agreement and to discuss the status and progress of such activities. All disputes or issues arising hereunder will be referred to the applicable Project Managers for resolution. In the event any such dispute or issue is not resolved in a timely manner, such matter will be referred to senior management representatives, with appropriate decision making authority for prompt resolution of the matter. If still not resolved, the issue will be escalated to Service Recipient’s lead representative and Service Provider’s lead representative for resolution. The names and contact information for each of Service Recipient’s and Service Provider’s lead representative with regard to an issue or dispute arising out of or relating to the Transition Services and Reverse Transition Services shall be set forth on Scheduled III hereto. Either Party may designate a different individual as its lead representative with respect to the Transition Services or the Reverse Transition Services at any time by delivering prior written notice to the
 
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other Party. The foregoing shall not in any way limit the rights of the Parties to pursue any other legal and equitable remedies available to them hereunder in the event of a breach of this Agreement. No Project Manager or lead representative for a Party shall have any authority to amend this Agreement.
14.2 Service Provider will promptly notify Service Recipient of any reassignments or changes in contact information of the Project Manager or other key personnel identified in the Schedules hereto.
14.3 The Parties agree to use good faith efforts to resolve any controversy or claim arising out of this Agreement, the interpretation of any of the provisions hereof, or the actions of the Parties hereunder. In the event of a breach of this Agreement, or a dispute as to the meaning of this Agreement or any of its terms which the Parties cannot resolve by themselves amicably, the following provisions shall apply (which provisions shall be in addition to, and not a limitation of, the Parties’ remedies under Section 6 , Section 20.6 or, to the extent referred to pursuant to the terms of this Agreement, the dispute resolution mechanisms available under Section 5.2(c) of the Contribution and Distribution Agreement):
(a) The Parties shall endeavor to resolve the dispute as contemplated in Section 14.1 .
(b) If within thirty (30) days after one Party notifies the other in writing of the existence of a dispute, either Party may, at its option, provide written notice of the intent to arbitrate. In the event the Party that is the recipient of such notice agrees to arbitrate, arbitration shall be according to the rules of the American Arbitration Association, except as herein modified by the Parties or otherwise as agreed to by the Parties. Within ten (10) days of the agreement of the Parties to arbitrate, each Party will select an arbitrator, and notify the other Party of its selection. Within fifteen (15) days after receipt of such notice, the respective arbitrators will select a third arbitrator. All such arbitrators shall have experience in the respective businesses of the Parties. A hearing by the arbitration panel must be held within thirty (30) days after the selection of a chairman and a majority decision of the panel and resolution must be reached within thirty (30) days of such hearing. Decisions of the panel must be in writing and will be final and binding upon the Parties, and judgment may be entered thereon by any court having jurisdiction.
(c) The arbitration proceedings will be held in New York, New York, unless the Parties agree to a different location. All negotiation and arbitration proceedings will be confidential and will be treated as compromise and settlement negotiations for purpose of all rules of evidence. Each Party shall bear its own cost of presenting its case, and one-half of the cost incurred by the arbitration panel, or any mediation or alternative dispute resolution procedure, as the case may be, unless the arbitration panel determines otherwise.
14.4 Nothing in this Section 14 shall supersede the notice/cure and termination rights of the Parties otherwise set forth in this Agreement. This Section 14 shall apply without prejudice to any Party’s right to seek equitable remedies or injunctive relief to which such Party may be entitled at any time.
 
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15.	RECORDS	
15.1 Service Provider shall retain, for a period of three (3) years following the Distribution Date, all books, records, files, databases or computer software or hardware (including current and archived copies of computer files) (the “ Materials ”) with respect to matters relating to the Services provided to Service Recipient hereunder that are in a form and contain a level of detail substantially consistent with the records maintained by Service Provider in providing similar services to the Spinco Business or the IP Business, as applicable, prior to the Distribution Date (unless any such Materials have been delivered to Service Recipient or Service Recipient otherwise other has a copy of such information). Each Party agrees to use its reasonable best efforts to provide the other Party with notice of material modifications to its record retention policies in a timely manner. As promptly as practicable following the expiration of the applicable duration (or earlier termination) of each Service, Service Provider will use its reasonable best efforts to furnish to Service Recipient in the form reasonably requested by Service Recipient, and assist in the transition of, the Materials belonging to Service Recipient and relating to such Service as clearly identified by Service Recipient. If at any time during the three (3) year period following the Distribution Date Service Recipient reasonably requests in writing that certain of such Materials be delivered to Service Recipient, Service Provider promptly shall arrange for the delivery of the requested Materials in a form reasonably requested by Service Recipient to a location specified by, and at the expense of, Service Recipient (unless any such Materials have been delivered to Service Recipient or Service Recipient otherwise other has a copy of such information).
15.2 The Service Recipient Data shall be and shall remain the property of Service Recipient and, to the extent reasonably practicable, shall be promptly provided to Service Recipient by Service Provider upon Service Recipient’s request. The Service Provider shall use Service Recipient Data solely to provide the Services to Service Recipient as set forth herein and for no other purpose whatsoever.
15.3 Notwithstanding anything herein to the contrary and subject to Section 11 , Service Provider may retain copies of the Materials and Service Recipient Data in accordance with policies and procedures implemented by Service Provider in order to comply with applicable Law, professional standards or reasonable business practice, including document retention policies as in effect from time to time and in accordance with past practices.
 
16.	INTELLECTUAL PROPERTY	
Unless otherwise specifically provided herein, this Agreement shall not transfer ownership of any Intellectual Property Assets from either Party to the other Party or to any third party. Ownership of any Intellectual Property Assets created by a Service Provider in connection with providing a Service to a Service Recipient under this Agreement shall be retained by such Service Provider, unless based on Service Recipient’s Confidential Information. If Service Provider creates any Intellectual Property in connection with providing a Service based on Service Recipient’s Confidential Information, then the creation of such Intellectual Property that is primarily related to or arising from the Spinco Business shall be considered a “work made for hire” under applicable Law and shall be owned by Service Recipient. If such creation is not considered a “work made for hire” under applicable Law, then Service Provider hereby
 
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irrevocably assigns, and shall assign, to Service Recipient, without further consideration, all of Service Provider’s worldwide right, title, and interest in and to such Intellectual Property. Solely to the extent required for the provision or receipt of the Services in accordance with this Agreement, each Party (the “ Licensor ”), for itself and on behalf of its Affiliates, hereby grants to the other (the “ Licensee ”) (and the Licensee’s Affiliates) a non-exclusive, revocable (solely as expressly provided in this Agreement), non-transferable (other than pursuant to Section 17), non-sublicensable (except to third parties as required for the provision or receipt of Services, but not for their own independent use), royalty-free, worldwide license during the term of this Agreement to use Intellectual Property of the Licensor in connection with this Agreement, but only to the extent and for the duration necessary for the Licensee to provide or receive the applicable Service under this Agreement. Subject to the rights and licenses granted to Licensee under any other agreement to which the Parties are party, upon the expiration of such term, or the earlier termination of such Service in accordance with this Agreement, the license to the relevant Intellectual Property will terminate and Licensee shall cease use of such Intellectual Property; provided , that all licenses granted hereunder shall terminate immediately upon the expiration or earlier termination of this Agreement in accordance with the terms hereof and upon such expiration or termination, Licensee shall cease use of the Intellectual Property licensed hereunder. The foregoing license is subject to any licenses granted by others with respect to Intellectual Property not owned by the Parties or their respective Affiliates.
 
17.	ASSIGNMENT AND DELEGATION	
This Agreement and all of the provisions hereof shall be binding upon and shall inure to the benefit of the Parties hereto and their respective successors and permitted assigns. Except as set forth in Section 2.10 , neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned or delegated, directly or indirectly, in whole or in part, including by operation of law, by any Party hereto without the prior written consent of the other Party hereto, which consent shall not be unreasonably withheld; provided , however , that either Party may assign this Agreement to any of its Affiliates without the consent of the other Party or delegate its rights or obligations hereunder, in whole or in part, to any of its Affiliates; provided , further , that Spinco may assign any or all of its rights or interests under this Agreement without the consent of IP (a) to any Person providing the Special Payment Financing pursuant to the terms thereof for purposes of creating a security interest herein or otherwise assign as collateral in respect of such Special Payment Financing or (b) to any purchaser of all or substantially all of the assets of such Person. No assignment by any Party shall relieve such Party of any of its obligations hereunder; provided that to the extent full performance or payment is made in full by an Affiliate or Affiliates of Service Provider or Service Recipient with respect to an obligation of Service Provider or Service Recipient, as applicable, hereunder, such obligation shall be in full satisfaction of such obligation of such Person hereunder.
 
18.	NOTICES	
The procedures specified in Section 10.2 (Notices) of the Contribution and Distribution Agreement shall apply with respect to all notices, requests, claims, demands and other communications under this Agreement.
 
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19.	SURVIVAL	
The Parties’ rights and obligations under Sections 3 , 6 , 7 , 8 , 11 and 14 through 20 shall survive expiration or termination of this Agreement.
 
20.	GENERAL PROVISIONS	
20.1 Severability . If any provision of this Agreement or the application of any such provision to any Person or circumstance shall be declared judicially to be invalid, unenforceable or void, such decision shall not have the effect of invalidating or voiding the remainder of this Agreement, it being the intent and agreement of the Parties that this Agreement shall be deemed amended by modifying such provision to the extent necessary to render it valid, legal and enforceable while preserving its intent or, if such modification is not possible, by substituting therefor another provision that is valid, legal and enforceable and that achieves the original intent of the Parties.
20.2 Counterparts . This Agreement may be executed in one or more counterparts each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or portable document format (PDF) shall be as effective as delivery of a manually executed counterpart of any such Agreement.
20.3 Entire Agreement . This Agreement and the Schedules hereto together with the other Transaction Agreements and any schedules and exhibits thereto, shall constitute the entire agreement between the Parties with respect to the subject matter hereof and shall supersede all previous negotiations, commitments and writings with respect to such subject matter. In the case of any conflict between the terms of this Agreement and the terms of any other Transaction Agreement regarding the subject matter hereof, the terms of this Agreement shall control. In the case of any ambiguity between the terms and condition of the main body of this Agreement and a Schedule to this Agreement, or with respect to an Omitted Service or an Additional Service, the terms and conditions of the main body of this Agreement shall control.
20.4 Amendments; Waivers . This Agreement may not be amended except by an instrument in writing signed by both Parties. No failure or delay by either Party in exercising any right hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right hereunder. Any agreement on the part of either Party to any such waiver shall be valid only if set forth in an instrument in writing signed on behalf of such Party.
20.5 No Third Party Beneficiaries . Nothing in this Agreement, express or implied, is intended to or shall confer upon any Person (other than IP, Spinco and UWWH and their respective successors and permitted assigns who are express intended third-party beneficiaries) any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement, and, except with regard to and as provided in Section 6 , no Person shall be deemed a third party beneficiary under or by reason of this Agreement.
 
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20.6 Specific Performance . Notwithstanding anything to the contrary contained herein or in any other Transaction Agreement, in the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement, the Party who is, or is to be, thereby aggrieved will have the right to specific performance and injunctive or other equitable relief in respect of its rights under this Agreement, in addition to any and all other rights and remedies at law or in equity. The Parties agree that the remedies at law for any breach or threatened breach, 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 waived. Any requirements for the securing or posting of any bond with such remedy are waived by each of the Parties to this Agreement.
20.7 Waiver of Jury Trial . AS A SPECIFICALLY BARGAINED INDUCEMENT FOR EACH OF THE PARTIES TO ENTER INTO THIS AGREEMENT (WITH EACH PARTY HAVING HAD OPPORTUNITY TO CONSULT COUNSEL), EACH OF THE PARTIES EXPRESSLY AND IRREVOCABLY WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING UNDER THIS AGREEMENT OR ANY ACTION OR PROCEEDING ARISING OUT OF THE TRANSACTIONS CONTEMPLATED HEREBY OR ANY OTHER TRANSACTION AGREEMENT, REGARDLESS OF WHICH PARTY INITIATES SUCH ACTION OR PROCEEDING, AND ANY ACTION OR PROCEEDING UNDER THIS AGREEMENT OR ANY ACTION OR PROCEEDING ARISING OUT OF THE TRANSACTIONS CONTEMPLATED HEREBY OR ANY OTHER TRANSACTION AGREEMENT SHALL BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
20.8 Jurisdiction; Service of Process . ANY ACTION WITH RESPECT TO THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS ARISING HEREUNDER, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT OF THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS ARISING HEREUNDER BROUGHT BY THE OTHER PARTY OR PARTIES OR THEIR SUCCESSORS OR ASSIGNS, IN EACH CASE, SHALL BE BROUGHT AND DETERMINED EXCLUSIVELY IN THE DELAWARE COURT OF CHANCERY AND ANY STATE APPELLATE COURT THEREFROM WITHIN THE STATE OF DELAWARE (OR, IF THE DELAWARE COURT OF CHANCERY DECLINES TO ACCEPT JURISDICTION OVER A PARTICULAR MATTER, ANY STATE OR FEDERAL COURT WITHIN THE STATE OF DELAWARE). EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE, COUNTERCLAIM OR OTHERWISE, IN ANY ACTION WITH RESPECT TO THIS AGREEMENT (I) ANY CLAIM THAT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF THE ABOVE NAMED COURTS FOR ANY REASON OTHER THAN THE FAILURE TO SERVE IN ACCORDANCE WITH THIS SECTION 20.8, (II) ANY CLAIM THAT IT OR ITS PROPERTY IS EXEMPT OR IMMUNE FROM JURISDICTION OF ANY SUCH COURT OR FROM ANY LEGAL PROCESS COMMENCED IN SUCH COURTS (WHETHER THROUGH SERVICE OF NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OF JUDGMENT, EXECUTION OF JUDGMENT OR OTHERWISE) AND (III) TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY CLAIM THAT (A) THE ACTION IN SUCH COURT IS BROUGHT IN AN INCONVENIENT FORUM, (B) THE VENUE OF SUCH ACTION IS IMPROPER OR (C) THIS AGREEMENT, OR THE
 
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SUBJECT MATTER HEREOF, MAY NOT BE ENFORCED IN OR BY SUCH COURTS. EACH OF THE PARTIES FURTHER AGREES THAT NO PARTY TO THIS AGREEMENT SHALL BE REQUIRED TO OBTAIN, FURNISH OR POST ANY BOND OR SIMILAR INSTRUMENT IN CONNECTION WITH OR AS A CONDITION TO OBTAINING ANY REMEDY REFERRED TO IN THIS SECTION 20.8 AND EACH PARTY WAIVES ANY OBJECTION TO THE IMPOSITION OF SUCH RELIEF OR ANY RIGHT IT MAY HAVE TO REQUIRE THE OBTAINING, FURNISHING OR POSTING OF ANY SUCH BOND OR SIMILAR INSTRUMENT. THE PARTIES HEREBY AGREE THAT MAILING OF PROCESS OR OTHER PAPERS IN CONNECTION WITH ANY SUCH ACTION OR PROCEEDING IN THE MANNER PROVIDED IN SECTION 20.8, OR IN SUCH OTHER MANNER AS MAY BE PERMITTED BY LAW, SHALL BE VALID AND SUFFICIENT SERVICE THEREOF AND HEREBY WAIVE ANY OBJECTIONS TO SERVICE ACCOMPLISHED IN THE MANNER HEREIN PROVIDED.
20.9 Governing Law . This Agreement and all issues and questions concerning the construction, validity, enforcement and interpretation of this Agreement (and all Schedules hereto) shall be governed by, and construed in accordance with, the Laws of the State of Delaware, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Delaware or any other jurisdiction) that would cause the application of the Laws of any jurisdiction other than the State of Delaware. In furtherance of the foregoing, the internal Laws of the State of Delaware shall control the interpretation and construction of this Agreement (and all Schedules hereto), even though under that jurisdiction’s choice of law or conflict of law analysis, the substantive Law of some other jurisdiction would ordinarily apply.
20.10 Other Agreements . Nothing herein is intended to modify, limit or otherwise affect the representations, warranties, covenants, agreements and indemnifications contained in the other Transaction Agreements, and such representations, warranties, covenants, agreements and indemnifications shall remain in full force and effect in accordance with the terms of such agreements, as applicable.
[SIGNATURES ON THE FOLLOWING PAGE]
 
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IN WITNESS WHEREOF, the Parties have caused this Transition Services Agreement to be executed and delivered by their duly authorized representatives as of the date first above written.

INTERNATIONAL PAPER COMPANY	
		
By:	 	 	
	 	Name:	
	 	Title:	
	
XPEDX HOLDING COMPANY	
		
By:	 	 	
	 	Name:	
	 	Title:	
Transition Services Agreement - Signature Page

List of Omitted Schedules
The following schedules to the Form of Transition Services Agreement by and between International Paper Company and xpedx Holding Company have not been provided herein:
Schedule I

Part A	  	Transition Services	
Part B	  	Reverse Transition Services	

Schedule II	  	Excluded Services	
		
Schedule III	  	Lead Representatives	
The Registrant hereby undertakes to furnish supplementally a copy of any omitted schedule to the Securities and Exchange Commission upon request.

Exhibit 2.3
FORM OF TAX RECEIVABLE AGREEMENT
by and among
XPEDX HOLDING COMPANY
and
UWW HOLDINGS, LLC
Dated as of [                    ]

TABLE OF CONTENTS

 	 	 	  	Page	 	
	
ARTICLE I
DEFINITIONS	  

Section 1.01	 	Definitions	  	 	2	  	
	
ARTICLE II	  	
DETERMINATION OF CUMULATIVE REALIZED TAX BENEFIT	  	
			
Section 2.01	 	NOL Utilization	  	 	5	  	
Section 2.02	 	Tax Benefit Schedule	  	 	5	  	
Section 2.03	 	Procedures, Amendments	  	 	6	  	
	
ARTICLE III	  	
TAX BENEFIT PAYMENTS	  	
			
Section 3.01	 	Payments	  	 	6	  	
Section 3.02	 	No Duplicative Payments; Intent	  	 	7	  	
	
ARTICLE IV	  	
TERMINATION	  	
			
Section 4.01	 	Termination and Breach of Agreement	  	 	7	  	
	
ARTICLE V	  	
LATE PAYMENTS	  	
			
Section 5.01	 	Late Payments by Spinco	  	 	8	  	
Section 5.02	 	Compliance with Indebtedness	  	 	8	  	
	
ARTICLE VI	  	
SPINCO TAX MATTERS; CONSISTENCY; COOPERATION	  	
			
Section 6.01	 	Representative Participation in Spinco Tax Matters	  	 	8	  	
Section 6.02	 	Consistency	  	 	8	  	
Section 6.03	 	Cooperation	  	 	9	  	
	
ARTICLE VII	  	
MISCELLANEOUS	  	
			
Section 7.01	 	Notices	  	 	9	  	
Section 7.02	 	Counterparts	  	 	10	  	
Section 7.03	 	Entire Agreement; Third Party Beneficiaries	  	 	10	  	
Section 7.04	 	Governing Law	  	 	10	  	
Section 7.05	 	Severability	  	 	10	  	
Section 7.06	 	Successors; Assignment; Amendments; Waivers	  	 	11	  	
Section 7.07	 	Titles and Subtitles	  	 	12	  	
Section 7.08	 	Resolution of Disputes	  	 	12	  	
 
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Section 7.09	 	Reconciliation	  	 	13	  	
Section 7.10	 	Withholding	  	 	13	  	
Section 7.11	 	Affiliated Corporations; Admission of Spinco into a Consolidated Group	  	 	13	  	
Section 7.12	 	Confidentiality	  	 	14	  	
Section 7.13	 	Representative	  	 	14	  	
Section 7.14	 	Tax Characterization of the Agreement	  	 	15	  	
 
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TAX RECEIVABLE AGREEMENT
This TAX RECEIVABLE AGREEMENT (this “ Agreement ”), dated as of [                    ], is hereby entered into by and among xpedx Holding Company, a Delaware corporation (“ Spinco ”) and UWW Holdings, LLC, a Delaware limited liability company (“ Holdings ”), in its capacity as a Beneficiary (as defined below) and a representative of the Beneficiaries (in such representative capacity, and along with any successor as provided in Section 7.06(a), the “ Representative ”).
RECITALS
WHEREAS, as of the date hereof, the Equity holders listed on Schedule A directly own one-hundred percent (100%) of the issued and outstanding equity interests of Holdings;
WHEREAS, immediately prior to the Merger (as defined below), Holdings directly owned one-hundred percent (100%) of the issued and outstanding stock of UWW Holdings, Inc., a Delaware corporation (“ UWWH ”);
WHEREAS, immediately prior to the Merger, UWWH directly owned one-hundred percent (100%) of the issued and outstanding stock of Unisource Worldwide, Inc., a Delaware corporation (“ Unisource ”);
WHEREAS, as of the date hereof, UWWH will merge with and into Spinco (the “ Merger ”), with Spinco surviving, and the stock of UWWH owned by Holdings will be converted into the right to receive 49% of the issued and outstanding shares of common stock in Spinco and the rights and benefits set forth in the Agreement;
WHEREAS, on the day following the effective time of the Merger, Spinco will be the common parent of an affiliated group of corporations, including Unisource, within the meaning of Section 1504(a) of the Code (the “ Spinco Consolidated Group ”);
WHEREAS, UWWH and its Subsidiaries have generated NOLs (as defined herein) prior to the Merger that Spinco and its Subsidiaries may be able to utilize;
WHEREAS, if utilized, the Pre-Merger NOLs (as defined herein) will reduce the actual liability for Taxes (as defined herein) that Spinco and its Subsidiaries might otherwise be required to pay;
WHEREAS, subject to the completion of the Merger, the parties to this Agreement desire to make certain arrangements with respect to the effect of the Pre-Merger NOLs on the actual liability for Taxes of Spinco and its Subsidiaries;
WHEREAS, this Agreement is intended to provide payments to Holdings and the Permitted Assignees (as defined herein) (Holdings and each such Permitted Assignee referred to herein as a “ Beneficiary ” and collectively, the “ Beneficiaries ”) in an amount equal to eighty-five percent (85%) of the aggregate reduction in Taxes payable realized by Spinco and its Subsidiaries from the utilization of the Pre-Merger NOLs;
NOW, THEREFORE, in consideration of the foregoing and the respective covenants and agreements set forth herein, and intending to be legally bound hereby, the parties hereto agree as follows:

ARTICLE I
DEFINITIONS
Section 1.01 Definitions .
As used in this Agreement, the terms set forth in this Article I shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined).
“ Advisory Firm ” means any nationally recognized law or accounting firm that is expert in Tax matters that is agreed to by Spinco and the Representative.
“ Advisory Firm Letter ” shall mean a letter from the Advisory Firm stating that the relevant schedule, notice or other information to be provided by Spinco to the Representative and all supporting schedules and work papers were prepared in a manner consistent with the terms of this Agreement and, to the extent not expressly provided in this Agreement, on a reasonable basis in light of the facts and applicable law in existence on the date to which such schedule, notice or other information relates.
“ Affiliate ” means a Person that, directly or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with, a specified Person as of the date on which, or at any time during the period for which, the determination of affiliation is being made. The term “ control ” (including, with correlative meanings, the terms “ controlled by ” and “ under common control with ”), as applied to any Person, means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or other ownership interest, by contract or otherwise .
“ Aggregate Tax Benefit Payment ” is defined in Section 3.01(b) of this Agreement.
“ Agreed Rate ” means a rate per annum equal to one-year LIBOR plus 100 basis points.
“ Agreement ” is defined in the preamble of this Agreement.
“ Amended Schedule ” is defined in Section 2.02(b) of this Agreement.
“ Applicable Percentage ” with respect to any Beneficiary, means the percentage set forth opposite such Beneficiary’s name on Schedule B, as amended from time to time to reflect any Permitted Assignment.
“ Base Payment ” is defined in Section 3.01(b) of this Agreement.
“ Beneficiary ” is defined in the preamble of this Agreement.
“ Board ” means the board of directors of Spinco.
“ Business Day ” means Monday through Friday of each week, except that a legal holiday recognized as such by the government of the United States of America or the State of Delaware shall not be regarded as a Business Day.
“ Code ” means the U.S. Internal Revenue Code of 1986, as amended.
 
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“ Cumulative Actual Tax Liability ” means, as of the end of any Taxable Year, the aggregate liability for Taxes of Spinco and its Subsidiaries for taxable periods (or portions thereof) beginning after the date of the Merger and ending on or before the end of such Taxable Year.
“ Cumulative Non-NOL Tax Liability ” means, as of the end of any Taxable Year, the aggregate liability for Taxes of Spinco and its Subsidiaries for taxable periods (or portions thereof) beginning after the date of the Merger and ending on or before the end of such Taxable Year, applying the applicable Tax rates for each Tax period, and using the same methods, elections, conventions and similar practices used on the relevant Spinco Return for each applicable Tax Period, but assuming that there were no Pre-Merger NOLs.
“ Cumulative Realized Tax Benefit ” means, as of the end of any Taxable Year, the excess (if any) of (i) the Cumulative Non-NOL Tax Liability (as of such time) over (ii) the sum of (A) the Cumulative Actual Tax Liability (as of such time) and (B) the aggregate amount of Base Payments (previously made pursuant to this Agreement as of such time), provided that (x) if, as of such time, there is an unresolved claim, proposed adjustment or similar item by a Taxing Authority that would increase the Cumulative Realized Tax Benefit, the Cumulative Realized Tax Benefit shall be computed as if such Taxing Authority prevailed with respect to such claim, proposed adjustment or similar item and (y) if International Paper Company is entitled to payments from Spinco under Section 2.10 of the Tax Matters Agreement as a result of any step-up in tax basis, the Cumulative Realized Tax Benefit shall be computed as if such step-up did not exist .
“ CPR ” means the International Institute for Conflict Prevention and Resolution.
“ Deconsolidation ” means any event pursuant to which a corporation ceases to be includable in the same affiliated group of corporations, within the meaning of Section 1504(a) of the Code, as Spinco.
“ Deconsolidation Election ” is defined in Section 4.01(b) of the Agreement.
“ Default Rate ” means a rate per annum equal to one-year LIBOR plus 500 basis points.
“ Equity holders ” means the holders of equity of Holdings as of the date hereof listed on Schedule A.
“ Expert ” is defined in Section 7.09 of this Agreement.
“ Fair Market Value Schedule ” is defined in Section 7.14 of this Agreement.
“ Interest Amount ” is defined in Section 3.01(b) of this Agreement.
“ IRS ” means the U.S. Internal Revenue Service.
“ LIBOR ” means for each month (or portion thereof) during any period, an interest rate per annum equal to the rate per annum reported, on the date two days prior to the first day of such month, on the Telerate Page 3750 (or if such screen shall cease to be publicly available, as reported on Reuters Screen page “ LIBO ” or by any other publicly available source of such market rate) for London interbank offered rates for U.S. dollar deposits for such month (or portion thereof).
“ Merger Agreement ” means that certain Agreement and Plan of Merger, dated as of January 28, 2014, by and among International Paper Company, Spinco, Holdings and the other parties thereto.
 
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“ Net Tax Benefit ” is defined in Section 3.01(b) of this Agreement.
“ NOL Payment ” is defined in Section 5.01 of this Agreement.
“ NOLs ” shall mean all net operating losses for U.S. federal and state and Canadian income tax purposes.
“ Objection Notice ” is defined in Section 2.02(a) of this Agreement.
“ Pre-Merger NOLs ” shall mean NOLs generated by UWWH and its Subsidiaries prior to the date of the Merger. If the Taxable Year of UWWH and/or its Subsidiaries includes but does not end on the date of the Merger (a “ Straddle Period ”), such Taxable Year shall be deemed to end on the date of the Merger for purposes of calculating all Pre-Merger NOLs; provided that the amount, if any, of the Pre-Merger NOLs attributable to such Straddle Period shall be reasonably determined by Spinco and the Representative in good faith.
“ Post-Merger NOLs ” shall mean NOLs, if any, generated by Spinco and its Subsidiaries that are not Pre-Merger NOLs.
“ Payment Date ” means any date on which a Tax Benefit Payment is required to be made by Spinco pursuant to this Agreement.
“ Permitted Assignee ” means any Person who receives rights under this Agreement pursuant to a Permitted Assignment.
“ Permitted Assignment ” is defined in Section 7.06(b) of this Agreement.
“ Person ” means an individual, a partnership (including a limited partnership), a corporation, a limited liability company, a trust, a joint stock company, a trust, an association, a joint venture, an unincorporated organization or association, a governmental authority or any other entity of whatever nature.
“ Reconciliation Dispute ” is defined in Section 7.09 of this Agreement.
“ Reconciliation Procedures ” is defined in Section 7.09 of this Agreement.
“ Representative ” is defined in the preamble of this Agreement, and any successor Representative appointed pursuant to Section 7.06(a).
“ Rules ” is defined in Section 7.08(a) of this Agreement.
“ Section 336(e) Election ” has the meaning set forth in the Tax Matters Agreement.
“ Spinco ” is defined in the preamble of this Agreement.
“ Spinco Consolidated Group ” is defined in the preamble of this Agreement.
“ Spinco Return ” means each U.S. federal and state and Canadian income tax return of Spinco and/or its Subsidiaries filed with respect to Taxes of any Taxable Year.
 
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“ Subsidiary ” means, with respect to any Person, any corporation, partnership, joint venture, limited liability company, trust or estate of which (or in which) more than 50% of (i) the issued and outstanding capital stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency), (ii) the interest in the capital or profits of such limited liability company, partnership or joint venture or (iii) the beneficial interest in such trust or estate is at the time directly or indirectly owned or controlled by such Person and one or more of its other Subsidiaries or by one or more of such Person’s other Subsidiaries. The term “ Subsidiary ” shall include all Subsidiaries of any Subsidiary.
“ Tax Benefit Payment ” is defined in Section 3.01(b) of this Agreement.
“ Tax Benefit Schedule ” is defined in Section 2.02 of this Agreement.
“ Tax Matters Agreement ” shall mean the Tax Matters Agreement by and among IP, Spinco and UWWH, dated January 28, 2014.
“ Tax Return ” means any return, report, declaration, form, claim for refund or information return or statement relating to Taxes filed or required to be filed with any Taxing Authority, including any schedule or attachment thereto, and including any amendment thereof.
“ Taxable Year ” means a taxable year of Spinco for U.S. federal income tax purposes, as defined in Section 441(b) of the Code (and, therefore, for the avoidance of doubt, may include a period of less than twelve months for which a Spinco Return is made), ending on or after the date hereof.
“ Taxes ” means any and all U.S. federal, state and Canadian taxes, assessments or similar charges measured with respect to net income or profits and any interest related to such Taxes.
“ Taxing Authority ” means any domestic, foreign, federal, national, state, county or municipal or other local government, any subdivision, agency, commission or authority thereof, or any quasi-governmental body exercising any taxing authority or any other authority exercising regulatory authority with respect to Taxes.
“ Treasury Regulations ” means the final, temporary and proposed regulations under the Code promulgated from time to time (including corresponding provisions and succeeding provisions) as in effect for the relevant taxable period.
ARTICLE II
DETERMINATION OF CUMULATIVE REALIZED TAX BENEFIT
Section 2.01 NOL Utilization . Spinco, on the one hand, and the Beneficiaries, on the other hand, acknowledge that Spinco and its Subsidiaries shall, to the fullest extent permitted by law, claim the Pre-Merger NOLs to reduce the amount of Taxes that Spinco and its Subsidiaries would otherwise be required to pay.
Section 2.02 Tax Benefit Schedule . Within ninety (90) calendar days after the filing of all of the Spinco Returns for any Taxable Year, Spinco shall provide to the Representative a schedule showing, in reasonable detail, (i) the calculation of the Cumulative Realized Tax Benefit as of the end of such Taxable Year, if any and (ii) the calculation of any payment to be made to the Beneficiaries pursuant to Article III as of the end of such Taxable Year and (iii) all supporting information (including work papers and valuation reports) reasonably necessary to support the calculation of such payment (a “Tax Benefit Schedule”). The Tax Benefit Schedule will become final as provided in Section 2.03(a) and may be amended as provided in Section 2.03(b) (subject to the procedures set forth in Section 2.03(a)).
 
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Section 2.03 Procedures, Amendments .
(a) Procedure . Every time Spinco delivers to the Representative a Tax Benefit Schedule under this Agreement, including any Amended Schedule delivered pursuant to Section 2.03(b), Spinco shall also (x) deliver to the Representative schedules, valuation reports, if any, and work papers providing reasonable detail regarding the preparation of the Tax Benefit Schedule and an Advisory Firm Letter with respect to such Tax Benefit Schedule to the extent reasonably requested by the Representative and (y) allow the Representative and its advisors reasonable access (at the Representative’s sole expense) to the appropriate representatives, books, records and work papers at each of Spinco and the Advisory Firm in connection with a review of such Tax Benefit Schedule. The applicable Tax Benefit Schedule shall, subject to Section 2.03(b), become final and binding on all parties unless the Representative, within forty-five (45) calendar days after receiving any Tax Benefit Schedule or amendment thereto, provides Spinco with notice of a material objection to such Tax Benefit Schedule (“ Objection Notice ”) made in good faith. If the parties, for any reason, are unable to successfully resolve the issues raised in any notice within thirty (30) calendar days of receipt by Spinco of such notice, Spinco and the Representative shall employ the Reconciliation Procedures.
(b) Amended Schedule . The Tax Benefit Schedule for any Taxable Year shall be amended by Spinco (i) to correct inaccuracies in such Tax Benefit Schedule after the date such Tax Benefit Schedule was provided to the Representative, (ii) to comply with the Expert’s determination under the Reconciliation Procedures, (iii) to reflect a change (relative to the amounts in the original Tax Benefit Schedule or the prior Amended Schedule) in the Cumulative Realized Tax Benefit as of the end of such Taxable Year attributable to any change in fact or law, including a carryback or carryforward (including, to the extent affecting the Non-NOL Tax Liability, a hypothetical carryback or carryforward attributable to any Post-Merger NOLs) of a loss or other tax item to such Taxable Year or (iv) to reflect the consequences of a Tax audit or the filing of an amended Tax Return (such Tax Benefit Schedule, an “ Amended Schedule ”). Spinco shall provide any Amended Schedule to the Representative within thirty (30) calendar days of the occurrence of an event referred to in clauses (i) through (iv) of the preceding sentence (or, to the extent such event occurs in connection with the preparation of a Spinco Return filing described in Section 2.02, concurrently with the delivery of the Tax Benefit Schedule pursuant to Section 2.02) and any such Amended Schedule shall be subject to the approval procedures described in Section 2.03(a); provided , however, that any Amended Schedule provided pursuant to an Expert’s determination under the Reconciliation Procedures as described in clause (ii) of the preceding sentence shall, subject to this Section 2.03(b), be final and binding on all parties hereto and not subject to the approval procedures described in Section 2.03(a).
ARTICLE III
TAX BENEFIT PAYMENTS
Section 3.01 Payments .
(a) Timing of Payments to the Beneficiaries . (i) Within five (5) Business Days of a Tax Benefit Schedule with respect to a Taxable Year becoming final in accordance with Section 2.03(a), Spinco shall pay to the Beneficiaries the Tax Benefit Payments as of the end of such Taxable Year determined pursuant to Section 3.01(b). Each such Tax Benefit Payment shall be made by wire transfer of immediately available funds to the bank accounts previously designated by the Beneficiaries to Spinco or as otherwise agreed by Spinco and the Beneficiaries. For the avoidance of doubt, no Tax Benefit Payment shall be made in respect of estimated tax payments, including, without limitation, estimated U.S. federal, state and Canadian income tax payments. For the avoidance of doubt, no payments shall be required to be made by any Beneficiary to Spinco under this Agreement, except as provided in Section 7.10.
 
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(b) The “ Tax Benefit Payment ” with respect to any Beneficiary means an amount equal to such Beneficiary’s Applicable Percentage of the Aggregate Tax Benefit Payment. The “ Aggregate Tax Benefit Payment ” means, as of the end of a Taxable Year, an amount, not less than zero, equal to eighty-five percent (85%) of the Cumulative Realized Tax Benefit as of the end of such Taxable Year (each such payment, a “ Base Payment ”) and the Interest Amount (as defined below). The “ Interest Amount ” shall equal the interest on any Base Payment calculated at the Agreed Rate from the date that Spinco’s U.S. federal income Tax return is filed, but no later than the due date (without extensions) for filing such Tax return with respect to Taxes for the Taxable Year for which the Aggregate Tax Benefit Payment is being measured until the Payment Date.
(c) Notwithstanding anything to the contrary in this Agreement, for purposes of determining the amount of any Tax Benefit Payments for any Straddle Period that includes the date of the Merger, such Straddle Period shall be treated as two Taxable Years, (i) the first ending on the date of the Merger and (ii) the second starting the day following the date of the Merger. All allocations of taxable items between the two periods shall be done on the basis of an interim closing of the books, as reasonably determined by Spinco and the Representative in good faith.
Section 3.02 No Duplicative Payments; Intent . It is intended that the provisions of this Agreement will not result in duplicative payment of any amount (including interest) required under this Agreement. It is also intended that the provisions of this Agreement provide that eighty-five percent (85%) of Spinco’s Cumulative Realized Tax Benefit and Interest Amount for all years be paid to the Beneficiaries pursuant to this Agreement. Such amount shall be determined using a “ with and without ” methodology. Carryovers or carrybacks of (a) any U.S. federal tax item shall be considered to be subject to the rules of the Code (or any successor U.S. federal income tax statute) and the Treasury Regulations or (b) any state or Canadian tax item, shall be considered subject to the appropriate provisions of Tax law, as applicable, governing the use, limitation and expiration of carryovers or carrybacks of the relevant type. If a carryover or carryback of any Tax item includes a portion that is attributable to the Pre-Merger NOLs and another portion that is not, Spinco’s Cumulative Realized Tax Benefit shall be determined using such “ with and without ” methodology. The provisions of this Agreement shall be construed in the appropriate manner so that such intentions are realized.
ARTICLE IV
TERMINATION
Section 4.01 Termination and Breach of Agreement .
(a) This Agreement shall terminate on the date on which all NOL Payments have been made under this Agreement.
(b) In the event of a Deconsolidation of Unisource from the Spinco Consolidated Group, Spinco shall cause the common parent of the affiliated group of corporations within the meaning of Section 1504(a) of the Code that includes Unisource after such Deconsolidation to enter into a tax receivables agreement with the Representative that is substantially similar to this Agreement with respect to such consolidated group’s use of the Pre-Merger NOLs after the date of such Deconsolidation (with appropriate adjustments). In the event that such common parent and the Representative do enter into such tax receivables agreement, this Agreement shall terminate and Spinco shall not have any further payment obligations under this Agreement, other than any (i) Tax Benefit Payment agreed to by Spinco and the Representative as due and payable but unpaid as of the date of such Deconsolidation and (ii) the Tax Benefit Payment due for the Taxable Year ending prior to, with or including the date of such Deconsolidation.
 
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(c) In the event that Spinco breaches any of its material obligations under this Agreement by operation of law as a result of the rejection of this Agreement in a case commenced under the Bankruptcy Code, then all obligations hereunder shall be accelerated.
ARTICLE V
LATE PAYMENTS
Section 5.01 Late Payments by Spinco . The amount of all or any portion of any Tax Benefit Payment required to be made by Spinco to the Beneficiaries under this Agreement (an “ NOL Payment ”) not made to the Beneficiaries when due under the terms of this Agreement shall be payable together with any interest thereon, computed at the Default Rate and commencing from the date on which such NOL Payment was due and payable and ending on the date such NOL Payment is made.
Section 5.02 Compliance with Indebtedness . Notwithstanding anything to the contrary provided herein, if, at the time any amounts become due and payable hereunder, Spinco is not permitted, pursuant to the terms of Spinco’s or its direct or indirect subsidiary’s debt documentation to pay such amounts, or Spinco’s direct or indirect subsidiaries are not permitted, pursuant to the terms of Spinco’s or its direct or indirect subsidiary’s debt documentation, to make payments to Spinco to allow Spinco to pay such amounts, then Spinco shall, by notice to the Representative, be permitted to defer the payment of such amounts until the condition described in this Section 5.02 is no longer applicable, in which case such amounts (together with accrued and unpaid interest thereon as described in the immediately following sentence) shall become due and payable immediately. If Spinco defers the payment of any such amounts pursuant to the foregoing sentence, such amounts shall accrue interest at the Agreed Rate per annum, from the date that such amounts originally became due and owing pursuant to the terms hereof to the date that such amounts were paid.
ARTICLE VI
SPINCO TAX MATTERS; CONSISTENCY; COOPERATION
Section 6.01 Representative Participation in Spinco Tax Matters . Except as otherwise provided herein, Spinco shall have full responsibility for, and sole discretion over, all Tax matters concerning Spinco including without limitation the preparation, filing or amending of any Tax Return and defending, contesting or settling any issue pertaining to Taxes, subject to a requirement that Spinco act in good faith in connection with its control of any matter which is reasonably expected to affect the Beneficiaries’ rights and obligations under this Agreement. Notwithstanding the foregoing, Spinco shall notify the Representative of, and keep the Representative reasonably informed with respect to, the portion of any audit of Spinco by a Taxing Authority the outcome of which is reasonably expected to affect the Beneficiaries’ rights and obligations under this Agreement, and shall give the Representative reasonable opportunity to provide information and participate in the applicable portion of such audit.
Section 6.02 Consistency . Except upon the written advice of an Advisory Firm, Spinco, and Representative agree to report and cause to be reported for all purposes, including federal, state, local and foreign tax purposes and financial reporting purposes, all Tax-related items (including without limitation the NOL Payments) in a manner consistent with that specified by Spinco in any Tax Benefit Schedule or statement required to be provided by or on behalf of Spinco under this Agreement or under applicable Tax law. Any dispute concerning such advice shall be subject to the Reconciliation Procedures; provided , however , that only the Representative shall have the right to object to such advice pursuant to this Section 6.02. In the event that an Advisory Firm is replaced with another firm acceptable to Spinco and the
 
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Representative pursuant to the definition of “ Advisory Firm, ” such replacement Advisory Firm shall be required to perform its services under this Agreement using procedures and methodologies consistent with those used by the previous Advisory Firm, unless otherwise required by law (or Spinco and the Representative agree to the use of other procedures and methodologies).
Section 6.03 Cooperation . Each of Spinco, on the one hand, and the Representative, on the other hand, shall (a) furnish to the other party in a timely manner such information, documents and other materials as the other party may reasonably request for purposes of making or approving any determination or computation necessary or appropriate under this Agreement, preparing any Tax Return or contesting or defending any audit, examination or controversy with any Taxing Authority relating to this Agreement, (b) make itself available to the other party and its representatives to provide explanations of documents and materials and such other information as the requesting party or its representatives may reasonably request in connection with any of the matters described in clause (a) above and (c) reasonably cooperate in connection with any such matter, and the requesting party shall reimburse the other party for any reasonable third-party costs and expenses incurred pursuant to this Section.
ARTICLE VII
MISCELLANEOUS
Section 7.01 Notices . All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be deemed duly given and received (a) on the date of delivery if delivered personally, or by facsimile upon confirmation of transmission by the sender’s fax machine if sent on a Business Day (or otherwise on the next Business Day), (b) on the first Business Day following the date of dispatch if delivered by a recognized next-day courier service or (c) when sent by electronic mail (with hard copy to follow) during a Business Day (or on the next Business Day if sent after the close of normal business hours or on any non-Business Day). All notices hereunder shall be delivered as set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice:
If to Spinco, to:
xpedx Holding Company
6285 Tri-Ridge Boulevard
Loveland, Ohio 45140
Facsimile: (513) 965-2849
			
Attn:	  	Mary Laschinger	
If to the Representative, to:
UWW Holdings, LLC
6600 Governors Lake Parkway
Norcross, GA 30071
Facsimile: (770) 659-4618
			
Attn:	  	Chief Executive Officer	
	  	General Counsel	
with a copy (which shall not constitute notice) to:
Bain Capital Partners, LLC
200 Clarendon Street
Boston, MA 02116
Facsimile: (617) 516-2010
			
Attn:	  	Matt Levin	
	  	Seth Meisel	
 
9

and
Kirkland & Ellis LLP
300 N. LaSalle Street
Chicago, IL 60654
Facsimile: (312) 862-2200
			
Attn:	  	Matthew E. Steinmetz, P.C.	
	  	Jeffrey W. Richards, P.C.	
	  	Neal J. Reenan	
Any party may change its address or fax number by giving the other party written notice of its new address or fax number in the manner set forth above.
Section 7.02 Counterparts . This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart. Delivery of an executed signature page to this Agreement by facsimile or electronic transmission (including by pdf) shall be as effective as delivery of a manually signed counterpart of this Agreement.
Section 7.03 Entire Agreement; Third Party Beneficiaries . This Agreement, together with the Merger Agreement and the agreements and documents referenced therein, constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof (including that certain Non-binding Letter of Intent by and between International Paper Company and UWWH, dated as of April 19, 2013). This Agreement shall be binding upon and inure solely to the benefit of each party hereto and their respective successors and permitted assigns. The parties to this Agreement agree that the Beneficiaries are expressly made third party beneficiaries to this Agreement. Except as otherwise provided in the preceding sentence, nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
Section 7.04 Governing Law . This Agreement shall be governed by, and construed in accordance with, the law of the State of Delaware, without regard to the conflicts of laws provisions thereof.
Section 7.05 Severability . If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any law or public policy, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.
 
10

Section 7.06 Successors; Assignment; Amendments; Waivers .
(a) The Representative may, solely in its capacity as Representative, assign this Agreement to any Person without the written consent of Spinco and any such assignee shall be treated as the successor to the Representative, provided that any assignment of rights as a Beneficiary shall be made pursuant to Section 7.06(b). Neither this Agreement nor any of the rights, interests or obligations under this Agreement will be assigned, in whole or in part, by operation of law or otherwise, by or on behalf of Spinco without the prior written consent of the Representative.
(b) Subject to this Section 7.06(b), each Beneficiary may freely assign or transfer its rights under this Agreement without the prior written consent of Spinco to (i) any Equity holder or its affiliates or (ii) any lender as collateral security. If a Beneficiary (including any transferee of any Beneficiary) proposes to transfer any of its rights (a “ Proposed Transferor ”) other than as set forth in the immediately preceding sentence to any Person or Persons, then the Proposed Transferor shall first give written notice (a “ Proposed Transfer Notice ”) to Spinco at least sixty (60) days prior to the proposed transfer setting forth (i) the name of the proposed transferee, (ii) the price (the “ Proposed Price ”), (iii) the other material terms and conditions of such transfer and (iv) any other information about such transfer that is reasonably requested by Spinco. The Proposed Transfer Notice shall contain an irrevocable offer to transfer such rights to Spinco (in the manner set forth below) at the Proposed Price and on the terms and conditions described in the Proposed Transfer Notice. Spinco shall thereafter have the right exercisable by written notice (the “ Acceptance Notice ”) to the Proposed Transferor within thirty (30) days after receipt of the Proposed Transfer Notice to acquire all (but not less than all) such rights at the Proposed Price and on the same terms and conditions as provided in the Proposed Transfer Notice. If at the end of such thirty (30)-day period, Spinco has not delivered an Acceptance Notice, the Proposed Transferor may, during the succeeding sixty (60)-day period (subject to extension to the extent necessary to obtain required governmental or other approvals), transfer its rights covered by the Proposed Transfer Notice to a transferee at the Proposed Price and on the same terms and conditions as provided in the Proposed Transfer Notice. After such transfer, the Proposed Transferor shall notify Spinco of the consummation thereof and shall furnish such evidence of the completion of such transfer and of the terms thereof as may reasonably be requested by Spinco. If, at the end of sixty (60) days following the expiration of the thirty (30)-day period during which Spinco is entitled hereunder to deliver an Acceptance Notice, the Proposed Transferor has not completed the transfer of such rights as aforesaid, any such transfer by the Proposed Transferor shall again be subject to the provisions of this Section 7.06(b) with respect to a proposed subsequent transfer. Any assignment or transfer of a Beneficiary’s rights meeting the requirements of this paragraph shall be referred to herein as a “ Permitted Assignment ” and Schedule B hereto shall be amended to reflect such Permitted Assignment and the change in the Applicable Percentage of the assignor and assignee.
(c) No provision of this Agreement may be amended unless such amendment is approved in writing by Spinco and the Representative, whereupon the Beneficiaries shall be bound. No provision of this Agreement may be waived unless such waiver is in writing and signed by Spinco or the Representative, as applicable, against whom the waiver is to be effective.
(d) All of the terms and provisions of this Agreement shall be binding upon, shall inure to the benefit of and shall be enforceable by the parties hereto and their respective successors, assigns, heirs, executors, administrators and legal representatives, including any transferee pursuant to a Permitted Assignment. Spinco shall require and cause any direct or indirect successor (whether by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of Spinco, by written agreement, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that Spinco would be required to perform if no such succession had taken place.
Section 7.07 Titles and Subtitles . The titles of the sections and subsections of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.
 
11

Section 7.08 Resolution of Disputes .
(a) Other than with respect to any disputes under Section 2.02, 6.02 or 7.14 (which are to be resolved pursuant to Section 7.09), any and all disputes which cannot be settled amicably, including any ancillary claims of any party, arising out of, relating to or in connection with the validity, negotiation, execution, interpretation, performance or non-performance of this Agreement (including the validity, scope and enforceability of this arbitration provision) shall be finally settled by arbitration conducted by a single arbitrator in accordance with the CPR Rules for Non-Administered Arbitration then in effect (the “ Rules ”). The place of arbitration shall be New York, New York. The parties shall jointly select a single arbitrator who shall have the authority to hold hearings and to render a decision in accordance with the Rules. If the parties to the dispute fail to agree on the selection of an arbitrator within thirty (30) calendar days of the receipt of the request for arbitration, the arbitrator shall be selected by the CPR. The arbitrator shall be a former judge. The arbitration shall be governed by the Federal Arbitration Act, 9 U.S.C. Section 1, et seq., and judgment on the award may be entered by any court having jurisdiction thereof. Performance under this Agreement shall continue if reasonably possible during any arbitration proceedings.
(b) Notwithstanding the provisions of paragraph (a), either party may bring an action or special proceeding in any court of competent jurisdiction for the purpose of compelling a party to arbitrate, seeking temporary or preliminary relief in aid of an arbitration hereunder, and/or enforcing an arbitration award and, for the purposes of this paragraph (b), each Beneficiary (through the Representative) (i) expressly consents to the application of paragraph (c) of this Section 7.08 to any such action or proceeding, and (ii) irrevocably appoints Spinco as its agent for service of process in connection with any such action or proceeding and agrees that service of process upon such agent, who shall promptly advise the Representative of any such service of process, shall be deemed in every respect effective service of process upon all Beneficiaries in any such action or proceeding.
(c) (i) SPINCO AND THE BENEFICIARIES (THROUGH THE REPRESENTATIVE) HEREBY IRREVOCABLY AGREE THAT ANY JUDICIAL PROCEEDING BROUGHT IN ACCORDANCE WITH THE PROVISIONS OF PARAGRAPH (B) OF THIS SECTION 7.08 SHALL BE BROUGHT AND DETERMINED EXCLUSIVELY IN THE DELAWARE COURT OF CHANCERY AND ANY STATE APPELLATE COURT THEREFROM WITHIN THE STATE OF DELAWARE (OR, IF THE DELAWARE COURT OF CHANCERY DECLINES TO ACCEPT JURISDICTION OVER A PARTICULAR MATTER, ANY STATE OR FEDERAL COURT WITHIN THE STATE OF DELAWARE). The parties acknowledge that the forum designated by this paragraph (c) has a reasonable relation to this Agreement and to the parties’ relationship with one another.
(ii) The parties hereby waive, to the fullest extent permitted by applicable law, any objection which they now or hereafter may have to personal jurisdiction or to the laying of venue of any such ancillary suit, action or proceeding brought in any court referred to in paragraph (c)(i) of this Section 7.08 and such parties agree not to plead or claim the same.
(iii) AS A SPECIFICALLY BARGAINED INDUCEMENT FOR EACH OF THE PARTIES TO ENTER INTO THIS AGREEMENT (WITH EACH PARTY HAVING HAD OPPORTUNITY TO CONSULT COUNSEL), EACH OF THE PARTIES EXPRESSLY AND IRREVOCABLY WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING UNDER THIS AGREEMENT OR ANY ACTION OR PROCEEDING ARISING OUT OF THE TRANSACTIONS CONTEMPLATED HEREBY, REGARDLESS OF WHICH PARTY INITIATES SUCH ACTION OR PROCEEDING, AND ANY ACTION OR PROCEEDING UNDER THIS AGREEMENT OR ANY ACTION OR PROCEEDING ARISING OUT OF THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
 
12

Section 7.09 Reconciliation . Notwithstanding the provisions of Section 7.08, in the event that Spinco and the Representative are unable to resolve a disagreement with respect to the matters governed by Sections 2.02, 6.02 or 7.14 within the relevant period designated in this Agreement (“ Reconciliation Dispute ”), the Reconciliation Dispute shall be submitted for determination to a nationally recognized expert (the “ Expert ”) in the particular area of disagreement mutually acceptable to both parties. The Expert shall be a partner in a nationally recognized accounting firm or a law firm (other than the Advisory Firm), and the Expert shall not, and the firm that employs the Expert shall not, have any material relationship with Spinco or the Representative or other actual or potential conflict of interest. If the parties are unable to agree on an Expert within fifteen (15) calendar days of receipt by the respondent(s) of written notice of a Reconciliation Dispute, the Expert shall be appointed by the International Chamber of Commerce Centre for Expertise. The Expert shall resolve any matter relating to a Tax Benefit Schedule or an amendment thereto within fifteen (15) calendar days, or as soon thereafter as is reasonably practicable, after the matter has been submitted to the Expert for resolution. Notwithstanding the preceding sentence, if the matter is not resolved before any payment that is the subject of a disagreement is due or any Tax Return reflecting the subject of a disagreement is due, such payment shall be made on the date prescribed by this Agreement and such Tax Return may be filed as prepared by Spinco, subject to adjustment (by an increase or decrease in the amount of subsequent payments otherwise due under this Agreement) or amendment of such Tax Returns upon resolution. The costs and expenses relating to the engagement of such Expert or amending any Tax Return shall be borne by Spinco, except as provided in the next sentence. Each of Spinco and the Representative shall bear its own costs and expenses of such proceeding. Any dispute as to whether a dispute is a Reconciliation Dispute within the meaning of this Section 7.09 shall be decided by the Expert. The Expert shall finally determine any Reconciliation Dispute and the determinations of the Expert pursuant to this Section 7.09 shall be binding on Spinco and all Beneficiaries and may be entered and enforced in any court having jurisdiction. These procedures described in this Section 7.09 shall be referred to as the “Reconciliation Procedures.”
Section 7.10 Withholding . Spinco shall be entitled to deduct and withhold from any amount payable to a Beneficiary pursuant to this Agreement such amounts as Spinco is required to deduct and withhold under the Code or any provision of state, local or foreign tax law, with respect to entering into or making payments under this Agreement. To the extent that amounts are so withheld and paid over to the appropriate governmental authority by Spinco, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Beneficiary in respect of whom such withholding was made. Spinco shall provide evidence of such payment to such Beneficiary. To the extent the amount of any withholding hereunder cannot be finally determined until after such withholding is required to be made, Spinco shall be entitled to deduct and withhold the maximum amount of tax that, in Spinco’s reasonable judgment, may be required to be remitted to the applicable government authority, and after the applicable amount of withholding is finally determined, Spinco shall promptly pay over any excess withheld amounts to the applicable Beneficiary.
Section 7.11 Affiliated Corporations; Admission of Spinco into a Consolidated Group . If Spinco is or becomes a member of an affiliated or consolidated group of corporations that files a consolidated, combined or unitary income tax return pursuant to Sections 1501 et seq. of the Code or any comparable provision of applicable state, local or foreign Tax law: (i) the provisions of this Agreement relating to Spinco shall be applied with respect to the group as a whole; and (ii) Tax Benefit Payments shall be computed with reference to the consolidated taxable income of the group as a whole.
 
13

Section 7.12 Confidentiality .
(a) The Representative and the Beneficiaries (through the Representative) and each of its assignees acknowledges and agrees that the information of Spinco is confidential and, except in the course of performing any duties as necessary for Spinco and its Affiliates, as required by law or legal process or to enforce the terms of this Agreement, shall keep and retain in the strictest confidence and not to disclose to any Person all confidential matters, acquired pursuant to this Agreement, of Spinco or the Beneficiaries. This Section 7.12 shall not apply to (i) any information that has been made publicly available by Spinco or any of its Affiliates, becomes public knowledge (except as a result of an act of a Representative or Beneficiary in violation of this Agreement) or is generally known to the business community and (ii) the disclosure of information to the extent necessary for the Beneficiaries to prepare and file their Tax Returns, to respond to any inquiries regarding the same from any Taxing Authority or to prosecute or defend any action, proceeding or audit by any Taxing Authority with respect to such returns. Notwithstanding anything to the contrary contained in this Section 7.12 or elsewhere in this Agreement, nothing herein shall prohibit, limit or restrict Bain Capital Partners, Inc. and its Affiliates (collectively, “ Bain ”) from communicating in the ordinary course with its Affiliates (other than any of its portfolio companies), limited partners, other Bain investors, Bain employees or prospective limited partners or investors with respect to this Agreement and the transactions contemplated hereby or from monitoring and enforcing its rights or the rights of its Affiliates hereunder.
(b) If the Representative or a Beneficiary or its assignee commits a breach, or threatens to commit a breach, of any of the provisions of this Section 7.12, Spinco shall have the right and remedy to have the provisions of this Section 7.12 specifically enforced by injunctive relief or otherwise by any court of competent jurisdiction without the need to post any bond or other security, it being acknowledged and agreed that any such breach or threatened breach shall cause irreparable injury to Spinco or any of its Subsidiaries and the accounts and funds managed by Spinco and that money damages alone shall not provide an adequate remedy to such Persons. Such rights and remedies shall be in addition to, and not in lieu of, any other rights and remedies available at law or in equity.
Section 7.13 Representative .
(a) Appointment . Without further action of any of Spinco, the Representative or the Beneficiaries, and as partial consideration of the benefits conferred by this Agreement, the Representative is hereby irrevocably constituted and appointed, with full power of substitution, to act in the name, place and stead of each Beneficiary with respect to the taking by the Representative of any and all actions and the making of any decisions required or permitted to be taken by the Representative under this Agreement. The power of attorney granted herein is coupled with an interest and is irrevocable and may be delegated by the Representative. No bond shall be required of the Representative and the Representative shall receive no compensation for their services.
(b) Expenses . If at any time a Representative shall incur out of pocket expenses in connection with the exercise of its duties hereunder, upon written notice to Spinco from the Representative of documented costs and expenses (including fees and disbursements of counsel and accountants) incurred by the Representative in connection with the performance of its rights or obligations under this Agreement and the taking of any and all actions in connection therewith, Spinco shall reduce any future payments (if any) due to the Beneficiaries by the amount of such expenses which it shall instead remit directly to the requesting Representative. In connection with the performance of its rights and obligations under this Agreement and the taking of any and all actions in connection therewith, a Representative shall not be required to expend any of its own funds (though, for the avoidance of doubt, it may do so at any time and from time to time in its sole discretion).
(c) Limitation on Liability . The Representative shall not be liable to the Beneficiaries for any act of the Representative arising out of or in connection with the acceptance or
 
14

administration of its duties under this Agreement, except to the extent any liability, loss, damage, penalty, fine, cost or expense is actually incurred by such Beneficiary as a direct result of the gross negligence, bad faith or willful misconduct of the Representative (it being understood that any act done or omitted pursuant to the advice of legal counsel shall be conclusive evidence of such good faith and reasonable judgment). The Representative shall not be liable for, and shall be indemnified by the Beneficiaries for, any liability, loss, damage, penalty or fine incurred by the Representative (and any cost or expense incurred by the Representative in connection therewith and herewith and not previously reimbursed pursuant to subsection (b) above) arising out of or in connection with the acceptance or administration of its duties under this Agreement, except to the extent that any such liability, loss, damage, penalty, fine, cost or expense is the direct result of the gross negligence, bad faith or willful misconduct of the Representative (it being understood that any act done or omitted pursuant to the advice of legal counsel shall be conclusive evidence of such good faith and reasonable judgment); provided, however, in no event shall the Beneficiaries be obligated to indemnify the Representative hereunder for any liability, loss, damage, penalty, fine, cost or expense to the extent (and only to the extent) that the aggregate amount of all liabilities, losses, damages, penalties, fines, costs and expenses indemnified by such Beneficiary hereunder is or would be in excess of the aggregate payments under this Agreement actually remitted to such Beneficiary.
(d) Actions of the Representative . A decision, act, consent or instruction of the Representative shall constitute a decision of all Beneficiaries and shall be final, binding and conclusive upon each Beneficiary, and Spinco may rely upon any decision, act, consent or instruction of the Representative as being the decision, act, consent or instruction of each Beneficiary. Spinco is hereby relieved from any liability to any person for any acts done by Spinco in accordance with any such decision, act, consent or instruction of the Representative.
Section 7.14 Tax Characterization of the Agreement . Spinco and Holdings acknowledge and agree that, for U.S. federal income tax purposes, it is intended that the rights received by Holdings under this Agreement: (i) constitute “other property” with respect to the Merger within the meaning of Section 356 of the Code, and (ii) constitute an “installment obligation” as such term is used in Section 453 of the Code. Within one-hundred and twenty (120) calendar days of the Merger, Spinco shall provide to the Representative a schedule showing in reasonable detail the calculation of fair market value, as of the date hereof, of the rights received by Holdings under this Agreement (the “Fair Market Value Schedule”). Spinco and the Representative shall negotiate in good faith to resolve any disputes over the Fair Market Value Schedule during the sixty (60) calendar days following the Representative’s receipt of the schedule. If Spinco and the Representative are unable to resolve such dispute within such 60-day period, Spinco and the Representative shall employ the Reconciliation Procedures. Spinco and Holdings acknowledge and agree that, for U.S. federal income tax purposes, the rights received by Holdings under this Agreement shall have a fair market value as of the date hereof equal to the amount set forth on the Fair Market Value Schedule, as finally determined. Except as required by applicable law, neither Holdings nor Spinco shall take any position inconsistent with the foregoing on any Tax Return.
(Signatures on following pages)
 
15

IN WITNESS WHEREOF, Spinco and the Representative have duly executed this Agreement as of the date first written above.

By: UWW HOLDINGS, LLC	
	
/s/	
		
Name:	 		
Title:	 		
	
By: XPEDX HOLDING COMPANY	
	
/s/	
		
Name:	 		
Title:	 		
Signature Page to Tax Receivable Agreement

List of Omitted Schedules
The following schedules to the Form of Tax Receivable Agreement by and between xpedx Holding Company and UWW Holdings, LLC have not been provided herein:

Schedule A	  	List of Equity Holders of UWW Holdings, LLC	
		
Schedule B	  	Applicable Percentage	
The Registrant hereby undertakes to furnish supplementally a copy of any omitted schedule to the Securities and Exchange Commission upon request.

Exhibit 2.4
EXECUTION COPY
CONTRIBUTION AND DISTRIBUTION AGREEMENT
AMONG
INTERNATIONAL PAPER COMPANY,
XPEDX HOLDING COMPANY,
UWW HOLDINGS, INC.
AND,
S OLELY FOR PURPOSES OF ARTICLE VI AND ARTICLE X,
UWW HOLDINGS, LLC
DATED AS OF January 28, 2014

TABLE OF CONTENTS

 	 	 	  	Page	 	
ARTICLE I DEFINITIONS	  	 	6	  	
Section 1.1	 	General	  	 	6	  	
Section 1.2	 	Construction	  	 	23	  	
Section 1.3	 	References to Time	  	 	24	  	
		
ARTICLE II THE CONTRIBUTIONS	  	 	24	  	
Section 2.1	 	Transfers of Spinco Assets and Spinco Liabilities	  	 	24	  	
Section 2.2	 	Delayed Transfers; Misallocated Assets and Liabilities	  	 	26	  	
Section 2.3	 	Conveyancing and Assumption Agreements	  	 	28	  	
Section 2.4	 	Shared Contracts	  	 	29	  	
Section 2.5	 	Certain Resignations	  	 	29	  	
Section 2.6	 	Payments	  	 	29	  	
Section 2.7	 	Shared Locations	  	 	30	  	
		
ARTICLE III CONDITIONS	  	 	30	  	
Section 3.1	 	Conditions to the Distribution	  	 	30	  	
Section 3.2	 	Waiver of Conditions	  	 	30	  	
		
ARTICLE IV THE DISTRIBUTION	  	 	30	  	
Section 4.1	 	Record Date and Distribution Date	  	 	30	  	
Section 4.2	 	Spinco Reclassification; Charter and Bylaws	  	 	31	  	
Section 4.3	 	The Agent	  	 	31	  	
Section 4.4	 	Delivery of Shares to the Agent	  	 	31	  	
Section 4.5	 	The Distribution	  	 	31	  	
		
ARTICLE V CERTAIN ADJUSTMENTS	  	 	32	  	
Section 5.1	 	Estimated Closing Statement	  	 	32	  	
Section 5.2	 	Post-Closing Adjustment	  	 	32	  	
Section 5.3	 	Earnout Payment	  	 	35	  	
		
ARTICLE VI INDEMNIFICATION	  	 	39	  	
Section 6.1	 	Survival; Exclusive Remedy	  	 	39	  	
Section 6.2	 	Mutual Release	  	 	39	  	
Section 6.3	 	Indemnification	  	 	40	  	
Section 6.4	 	Procedures for Indemnification of Third-Party Claims	  	 	41	  	
Section 6.5	 	Reductions for Insurance Proceeds	  	 	43	  	
Section 6.6	 	Direct Claims	  	 	43	  	
Section 6.7	 	Joint Defense and Cooperation	  	 	44	  	
		
ARTICLE VII ADDITIONAL COVENANTS	  	 	44	  	
Section 7.1	 	Intercompany Agreements	  	 	44	  	
Section 7.2	 	Assignment of Employee Restrictive Covenant Agreements	  	 	45	  	
Section 7.3	 	Guarantee Obligations and Liens	  	 	45	  	
Section 7.4	 	Insurance	  	 	46	  	
 
i

							
Section 7.5	 	Further Assurances	  	 	48	  	
Section 7.6	 	Use of Names	  	 	49	  	
Section 7.7	 	Board Members and Committee Members	  	 	50	  	
Section 7.8	 	Auditors	  	 	50	  	
Section 7.9	 	Sufficiency of Assets	  	 	51	  	
Section 7.10	 	Supply Agreements	  	 	51	  	
		
ARTICLE VIII ACCESS TO INFORMATION	  	 	51	  	
Section 8.1	 	Provision of Information	  	 	51	  	
Section 8.2	 	Privileged Information	  	 	53	  	
Section 8.3	 	Production of Witnesses	  	 	54	  	
Section 8.4	 	Retention of Information	  	 	54	  	
Section 8.5	 	Confidentiality	  	 	55	  	
Section 8.6	 	Cooperation with Respect to Government Reports and Filings	  	 	56	  	
		
ARTICLE IX NO REPRESENTATIONS OR WARRANTIES	  	 	57	  	
Section 9.1	 	No Representations or Warranties	  	 	57	  	
		
ARTICLE X MISCELLANEOUS	  	 	58	  	
Section 10.1	 	Expenses	  	 	58	  	
Section 10.2	 	Notices	  	 	58	  	
Section 10.3	 	Interpretation	  	 	60	  	
Section 10.4	 	Headings	  	 	60	  	
Section 10.5	 	Attorneys’ Fees	  	 	60	  	
Section 10.6	 	Severability	  	 	61	  	
Section 10.7	 	Assignment	  	 	61	  	
Section 10.8	 	No Third Party Beneficiaries	  	 	61	  	
Section 10.9	 	Entire Agreement	  	 	61	  	
Section 10.10	 	Governing Law	  	 	61	  	
Section 10.11	 	Counterparts	  	 	62	  	
Section 10.12	 	Amendments; Waivers	  	 	62	  	
Section 10.13	 	Termination	  	 	62	  	
Section 10.14	 	Waiver of Jury Trial	  	 	62	  	
Section 10.15	 	Jurisdiction; Service of Process	  	 	62	  	
Section 10.16	 	Specific Performance	  	 	63	  	
Section 10.17	 	Damages Waiver	  	 	64	  	
 
ii

			
Exhibits	  		
Exhibit A-1	  	Form of Sublease	
Exhibit A-2	  	Form of Lease Assignment	
Exhibit A-3	  	Form of Gross Lease Agreement	
Exhibit B	  	Form of Spinco Certificate of Incorporation	
Exhibit C	  	Form of Spinco Bylaws	
 
iii

CONTRIBUTION AND DISTRIBUTION AGREEMENT
This CONTRIBUTION AND DISTRIBUTION AGREEMENT (this “ Agreement ”), dated as of January 28, 2014, is entered into by and between International Paper Company, a New York corporation (“ IP ”), xpedx Holding Company, a Delaware corporation and a wholly-owned subsidiary of IP (“ Spinco ”), and UWW Holdings, Inc., a Delaware corporation (“ UWWH ”), and, solely for purposes of ARTICLE VI and ARTICLE X, UWW Holdings, LLC, a Delaware limited liability company (the “ UWWH Stockholder ” and, together with IP, Spinco and UWWH, the “ Parties ”).
RECITALS
WHEREAS, Spinco is a newly-formed, wholly-owned, direct Subsidiary of IP;
WHEREAS, IP, Spinco, UWWH, xpedx Intermediate, LLC, a Delaware limited liability company and a direct, wholly-owned Subsidiary of IP (“ xpedx Intermediate ”), and the other Persons party thereto have entered into an Agreement and Plan of Merger, of even date herewith (as such agreement may be amended from time to time, the “ Merger Agreement ”), pursuant to which (i) at the Effective Time, UWWH will merge with and into Spinco, with Spinco continuing as the surviving corporation (the “ Parent Company Merger ”), and (ii) immediately thereafter, xpedx Intermediate will merge with and into Unisource Worldwide, Inc., a Delaware corporation (“ Unisource Sub ”), with Unisource Sub continuing as the surviving corporation and a wholly-owned subsidiary of Spinco (the “ Operating Company Merger ”);
WHEREAS, this Agreement and the other Transaction Agreements (as defined herein) set forth certain transactions that are conditions to consummation of the Parent Company Merger;
WHEREAS, prior to the Distribution (as defined herein) upon the terms and subject to the conditions set forth in this Agreement, subject to Section 2.1(b), IP will, pursuant to a series of restructuring transactions, ( a ) cause to be directly or indirectly transferred to and assumed by a Luxembourg entity to be formed as an indirect, wholly owned Subsidiary of IP (“ xpedx Foreign Sub ”) all of the non-U.S. Spinco Assets (as defined herein) and non-U.S. Spinco Liabilities (as defined herein), except for those non-U.S. Spinco Assets directly or indirectly held, or non-U.S. Spinco Liabilities directly or indirectly owed, by xpedx International, Inc., in accordance with Section 1.1(i) of the Disclosure Letter, ( b ) contribute 100% of the equity interests of xpedx Foreign Sub and xpedx International, Inc. and the Spinco Assets not directly or indirectly held by xpedx Foreign Sub (after giving effect to the foregoing clause (a)) or xpedx International, Inc. or any of its Subsidiaries to xpedx, LLC, a New York limited liability company and a wholly owned Subsidiary of IP (“ xpedx ”), ( c ) cause the Spinco Liabilities (other than those of xpedx Foreign Sub or any of its Subsidiaries (after giving effect to the foregoing clause (a)) to be assumed by xpedx or any Subsidiary of xpedx, ( d ) cause each member of the Spinco Group not to hold any Assets that are not Spinco Assets or be liable for any Liabilities that are not Spinco Liabilities, and (e) contribute all of the membership interest in xpedx to xpedx Intermediate, in each case as of immediately prior to the Distribution (the foregoing clauses (b)-(e) are collectively referred to as the “ LLC Contribution ”);

WHEREAS, following the LLC Contribution, upon the terms and subject to the conditions set forth in this Agreement, IP will contribute to Spinco all of the membership interests in xpedx Intermediate;
WHEREAS, following the contribution to Spinco of all of the membership interests in xpedx Intermediate, upon the terms and subject to the conditions set forth in this Agreement, xpedx will engage in certain debt financing transactions as contemplated by and pursuant to the provisions of the Merger Agreement and distribute all or a portion of the proceeds thereof to xpedx Intermediate, which will distribute all or a portion of the proceeds thereof to Spinco and, in exchange for the contribution of all the membership interests in xpedx Intermediate to Spinco, Spinco will issue Spinco Common Stock (as defined herein) to IP and pay to IP the Special Payment and Earnout Payment (if applicable and due) (the transactions described in this recital and in the immediately preceding recital shall be subject to the terms, conditions and limitations set forth in this Agreement and are collectively referred to as the “ Spinco Contribution ” and the Spinco Contribution and the LLC Contribution are collectively referred to as the “ Contributions ”);
WHEREAS, following the Contributions, upon the terms and subject to the conditions set forth in this Agreement, IP will distribute (the “ Distribution ”) all of the issued and outstanding shares of common stock, par value $.01 per share, of Spinco (“ Spinco Common Stock ”) to the holders as of the Record Date (as defined herein) of the outstanding shares of common stock, par value $1.00 per share, of IP (“ IP Common Stock ”);
WHEREAS, immediately following the Distribution, the Parent Company Merger will be consummated and, immediately thereafter, the Operating Company Merger will be consummated, in each case as contemplated by the Merger Agreement;
WHEREAS, the Parties to this Agreement intend that ( i ) the Spinco Contribution, together with the Distribution, qualify as a tax-free reorganization under Section 368(a)(1)(D) of the Code; ( ii ) the Distribution qualify as a distribution of Spinco stock to IP stockholders eligible for nonrecognition under Sections 355(a) and 361 of the Code; ( iii ) the Special Payment and the Earnout Payment qualify for nonrecognition under Section 361(b)(1)(A) of the Code, ( iv ) the Parent Company Merger qualify as a tax-free reorganization pursuant to Section 368(a)(1)(A) of the Code; ( v ) the Operating Company Merger qualify as a tax-free capital contribution under Section 351 of the Code; and ( vi ) no gain or loss be recognized as a result of such transactions for federal income tax purposes by any of IP, Spinco, UWWH, their respective Subsidiaries, the UWWH stockholders (except to the extent of cash received in lieu of fractional shares, as a result of the Tax Receivable Agreement, or as a result of cash received pursuant to ARTICLE III of the Merger Agreement) or the IP stockholders (except to the extent of cash received in lieu of fractional shares); and
WHEREAS, the Parties to this Agreement intend that, except as set forth in Section 2.5 hereof or the Employee Matters Agreement, throughout the internal restructurings taken in contemplation of this Agreement, the Contributions and the Distribution, the Spinco Group Employees shall maintain uninterrupted continuity of employment, compensation and benefits, and also for union-represented employees, uninterrupted continuity of representation for purposes of collective bargaining and uninterrupted continuity of coverage under their collective bargaining agreements, in each case as contemplated by and provided in the Employee Matters Agreement.
 
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NOW, THEREFORE, in consideration of these premises, and of the representations, warranties, covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
ARTICLE I
Definitions
Section 1.1 General . The preamble and recitals set forth above are integral to this Agreement and are incorporated in and made a part of this Agreement. As used in this Agreement, if not otherwise defined herein, the following terms shall have the following meanings:
“ Affiliate ” means a Person that, directly or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with, a specified Person as of the date on which, or at any time during the period for which, the determination of affiliation is being made. The term “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”), as applied to any Person, means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or other ownership interest, by contract or otherwise; provided , however , that for purposes of this Agreement, from and after the Distribution Date, no member of either Group shall be deemed an Affiliate of any member of the other Group.
“ Agent ” means the distribution agent agreed upon by IP and UWWH, to be appointed by IP to distribute the shares of Spinco Common Stock pursuant to the Distribution.
“ Agreement ” has the meaning set forth in the Preamble.
“ Applicable Accounting Principles ” means GAAP as applied in a manner consistent with the GAAP-compliant methodologies, practices, estimation techniques, classifications, judgments, assumptions and principles used in the preparation of the Spinco Audited Balance Sheet and the related audited statements of operations, cash flows and parent company equity for the year ended December 31, 2012, subject to the exceptions, and determined in accordance with the accounting principles and methodologies, set forth on Section 1.1(j) of the Disclosure Letter.
“ Asset ” means any and all assets, properties and rights, wherever located, whether real, personal or mixed, tangible or intangible, current or long-term.
 
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“ Business Day ” means a day, other than Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by applicable Law to close.
“ Calculation Time ” means 11:59 p.m., New York time, on the Distribution Date.
“ Cash and Cash Equivalents ” means, as of any date of determination, all cash and cash equivalents, including certificates of deposit or bankers’ acceptances maturing within six months from the date of acquisition thereof, and marketable direct obligations issued by, or unconditionally guaranteed by, the United States government or an agency thereof, and investments in money market funds and all deposited but uncleared bank deposits.
“ Claims Made Policies ” has the meaning set forth in Section 7.4(a).
“ Closed Facilities ” means the real property listed on Section 1.1(a) of the Disclosure Letter.
“ Closing ” has the meaning set forth in the Merger Agreement.
“ Closing Date ” has the meaning set forth in the Merger Agreement.
“ Code ” means the Internal Revenue Code of 1986, as amended from time to time.
“ Confidential Business Information ” means all Information, data or material (other than Confidential Operational Information), including (i) earnings reports and forecasts, (ii) macro-economic reports and forecasts, (iii) business and strategic plans, (iv) general market evaluations and surveys, (v) litigation presentations and risk assessments, (vi) budgets and (vii) financing and credit-related information.
“ Confidential Information ” means all Confidential Business Information and Confidential Operational Information concerning a Party and/or its Subsidiaries which, prior to or following the Effective Time, has been disclosed by a Party or its Subsidiaries to the other Party or its Subsidiaries, in written, oral (including by recording), electronic or visual form, or otherwise has come into the possession of the other Party, including pursuant to the access provisions or any other provision of this Agreement or any other Transaction Agreement (except to the extent that such information can be shown to have been (i) in the public domain through no action of such Party or its Subsidiaries, (ii) lawfully acquired from other sources by such Party or its Subsidiaries to which it was furnished, (iii) independently developed by a Party or its Subsidiaries after the date hereof without reference to the Confidential Business Information or Confidential Operational Information of the other Party or its Subsidiaries and without a breach of this Agreement or (iv) approved for release by written authorization of the disclosing Party and/or the third-party owner of the disclosed information; provided , however , in the case of clause (ii) that, to the furnished Party’s knowledge, such sources did not provide such information in breach of any confidentiality obligations).
 
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“ Confidential Operational Information ” means all operational Information, data or material including (i) specifications, ideas and concepts for products, services and operations, (ii) quality assurance policies, procedures and specifications, (iii) customer and supplier information, (iv) software, (v) training materials and information and (vi) all other know-how, methodologies, procedures, techniques and trade secrets related to design, development and operational processes.
“ Confidentiality Agreement ” means the Amended and Restated Confidentiality Agreement by and between IP and UWWH, dated as of May 17, 2013, as amended.
“ Contract ” means any contract, agreement or binding arrangement or understanding, whether written or oral and whether express or implied, including all amendments, modifications and supplements thereto and waivers and consents thereunder.
“ Contributions ” has the meaning set forth in the Recitals.
“ Current Assets ” means all Assets (other than LIFO inventory reserve, Excluded Assets, Cash and Cash Equivalents, Income Tax Assets other than Mexican/Dutch Income Tax Assets and deferred Tax Assets, but including current Non-Income Tax Assets and current Mexican/Dutch Income Tax Assets) that are primarily used or held for use in, or that primarily arise from or primarily relate to, the conduct of the Spinco Business that are current assets, determined as of the Calculation Time in accordance with the Applicable Accounting Principles.
“ Current Liabilities ” means all Liabilities (other than Excluded Liabilities, Income Tax Liabilities other than Mexican/Dutch Income Taxes, deferred Tax Liabilities, Transaction Expenses, Shared Expenses, deferred rent, Liabilities set forth on Section 8.29 of the IP/Spinco Disclosure Schedules and any Indebtedness, but including current Liabilities for Non-Income Taxes and Mexican/Dutch Income Taxes, in each case, that are Spinco Taxes (as defined in the Tax Matters Agreement)) to the extent relating to or arising from the conduct of the Spinco Business that are current liabilities, determined as of the Calculation Time in accordance with the Applicable Accounting Principles.
“ Dataroom ” means the electronic data room established by Intralinks on behalf of IP located at https://services.intralinks.com/ui/flex/CIX.html under code name “Project Unicorn.”
“ Delayed Transfer Assets ” means any Assets (other than Excluded Assets) contemplated by Section 2.1 not transferred on or prior to the Distribution Date.
“ Delayed Transfer Liabilities ” means any Liabilities (other than Excluded Liabilities) contemplated by Section 2.1 not transferred on or prior to the Distribution Date.
“ Disclosure Letter ” means the schedule prepared and delivered by IP to Spinco and UWWH as of the date of this Agreement.
 
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“ Dispute Resolution Request ” has the meaning set forth in Section 5.2(c).
“ Distribution ” has the meaning set forth in the Recitals.
“ Distribution Date ” means the date that the Distribution shall become effective.
“ Dutch Transferred Entity ” has the meaning set forth in the Tax Matters Agreement.
“ Earnout Payment ” has the meaning set forth in Section 5.3.
“ Effective Time ” has the meaning set forth in the Merger Agreement.
“ EM xpedx ” means EM xpedx, S.A. De C.V.
“ Employee Matters Agreement ” means the Employee Matters Agreement entered into among IP, Spinco and UWWH on the date hereof, as such agreement may be hereafter amended from time to time.
“ Encumbrances ” means all liens (statutory or otherwise), security interests, hypothecations, preferences, priorities, easements, pledges, bailments (in the nature of a pledge or for purposes of security), mortgages, deeds of trusts, covenants, grants of power to confess judgment, charges (including any conditional sale or other title retention agreement or lease in the nature thereof), options, encumbrances or other restrictions of any kind, including restrictions on the use, voting, transfer, receipt of income or other exercise of any attributes of ownership, and all other similar rights of third parties, of any kind or nature.
“ Environmental Law ” shall mean any Law relating to pollution or the protection, cleanup or restoration of the environment, or to workplace or public health or safety as such relates to releases of hazardous substances, including without limitation the Federal Clean Air Act, the Federal Clean Water Act, the Federal Resource Conservation and Recovery Act, the Federal Comprehensive Environmental Response, Compensation, and Liability Act and the Federal Toxic Substances Control Act, and the state, local and foreign counterparts thereto.
“ Estimated Adjustment Amount ” has the meaning set forth in the Merger Agreement.
“ Estimated Adjustment Amount Payment ” has the meaning set forth in the Merger Agreement.
“ Exchange Act ” has the meaning set forth in the Merger Agreement.
 
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“ Excluded Assets ” means, subject to Section 2.1(c), collectively, all of the right, title and interest of IP and its Subsidiaries in all Assets held by them other than those described in the definition of Spinco Assets, it being acknowledged that Excluded Assets include, collectively:
(i) all Retained Contracts;
(ii) Cash and Cash Equivalents (other than Restricted Cash and other than the amount of any Cash and Cash Equivalents included in the calculation of the Spinco Net Debt Adjustment, as finally determined pursuant to Section 5.2(c));
(iii) the capital stock of each IP Subsidiary;
(iv) all defenses and counterclaims relating to any Excluded Liability;
(v) all claims, causes of action and rights (or any share thereof) to the extent related to or arising from any other Excluded Asset or Excluded Liability;
(vi) without limiting the rights of Spinco pursuant to Section 7.4, all Policies;
(vii) all rights of any member of the IP Group under the Transaction Agreements;
(viii) all Closed Facilities and any ownership interests in Shared Locations;
(ix) all other Assets of any member of the IP Group to the extent specifically assigned to or agreed to be retained by any member of the IP Group pursuant to this Agreement or any other Transaction Agreement (including the Tax Matters Agreement and the Employee Matters Agreement);
(x) any Assets set forth on Section 1.1(b) of the Disclosure Letter; and
(xi) IP’s interest as tenant (including its right to any security deposit delivered by IP) under each Lease relating to each Leased Real Property subleased from IP to Spinco pursuant to Section 2.2(c) (until such time as such sublease is terminated and such Lease is assigned from IP to Spinco pursuant to Section 2.2(d), at which time IP’s interest as tenant (including its right to any security deposit delivered by IP) shall be a Spinco Asset).
“ Excluded Environmental Liabilities ” means all Liabilities arising at any time under any Environmental Law (including those associated with personal injury or property damage claims, exposure to asbestos or other hazardous substances, onsite or off-site environmental, health or safety conditions, vapor intrusion conditions, off-site waste management or disposal facilities, and environmental, health and safety regulatory compliance violations) with respect to (i) the IP Business, (ii) the Closed Facilities, (iii) any facility or property at any time prior to the Distribution Date owned, leased, operated or used in connection with or as part of the Spinco Business, other than the Transferred Real Properties or Shared Locations, which for the avoidance of doubt shall be governed under clause (iv) of this definition, and (iv) Shared Locations except to the extent Liabilities at such Shared Locations arise as a result of the operation of the Spinco Business.
 
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“ Excluded Liabilities ” means, subject to Section 2.1(c), collectively:
(i) all Liabilities of IP or any of its Subsidiaries (including any Liabilities of Spinco and the Spinco Subsidiaries) not expressly constituting Spinco Liabilities, including those relating to or arising from the IP Business and the Liabilities of or allocated to IP or any of the IP Subsidiaries under the Transaction Agreements;
(ii) all Liabilities under the Shared Contracts except to the extent assumed by Spinco pursuant to Section 2.4;
(iii) all Liabilities in respect of or arising from Retained Contracts;
(iv) all Liabilities relating to or arising from any Spinco Guarantee;
(v) all Liabilities relating to or arising from any Excluded Asset, other than (in each case to the extent relating to or arising from the Spinco Business) Liabilities relating to Shared Locations, Delayed Transfer Assets or any other Excluded Assets the benefit of which continues to be provided to Spinco after the Closing Date;
(vi) Excluded Environmental Liabilities;
(vii) Encumbrances relating to or arising from any Excluded Liability; and
(viii) indebtedness for borrowed money, other than, for the avoidance of doubt, the Special Payment Financing.
“ Financial Instruments ” means credit facilities, guarantees, commercial paper, interest rate swap agreements, foreign currency forward exchange contracts, letters of credit, surety bonds and similar instruments.
“ GAAP ” means United States generally accepted accounting principles.
“ Governmental Authority ” means any foreign, federal, state or local court, administrative agency, official board, bureau, governmental or quasi-governmental entities having competent jurisdiction over IP, Spinco or UWWH, any of their respective Subsidiaries and any other tribunal or commission or other governmental department, authority or instrumentality or any subdivision, agency, mediator, commission or authority of competent jurisdiction.
 
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“ Group ” means the IP Group or the Spinco Group, as the case may be.
“ Income Tax ” has the meaning set forth in the Tax Matters Agreement.
“ Indebtedness ” has the meaning set forth in the Merger Agreement.
“ Indemnifiable Losses ” means all Losses, judgments or settlements of any nature or kind, including all costs and expenses (legal, accounting or otherwise) that are reasonably incurred relating thereto, suffered by an Indemnitee, including any costs or expenses of enforcing any indemnity hereunder, any costs of collection and all Taxes resulting from indemnification payments hereunder.
“ Indemnifying Party ” means, with respect to a matter, a Person that is obligated under this Agreement to provide indemnification with respect to such matter.
“ Indemnitee ” means, with respect to a matter, a Person that may seek indemnification under this Agreement with respect to such matter.
“ Information ” means all lists of customers, records pertaining to customers and accounts, copies of Contracts, personnel records, lists and records pertaining to customers, suppliers and agents, and all accounting and other books, records, ledgers, files and business records, data and other information of every kind (whether in paper, electronic, microfilm, computer tape or disc, magnetic tape or any other form).
“ Intellectual Property ” has the meaning set forth in the Merger Agreement.
“ Intellectual Property Assets ” means all Transferred Patents, Transferred Trademarks and Transferred Intellectual Property, together with all income, royalties, damages and payments relating thereto due or payable as of the Closing Date or thereafter (including damages and payments for past, present or future infringements or misappropriations thereof), the right to sue and recover for past infringements or misappropriations thereof, and any and all corresponding rights, claims and remedies that, now or hereafter, may be secured throughout the world.
“ IPAD ” means International Paper Asia Distribution Limited.
“ IP ” has the meaning set forth in the Preamble.
“ IP Business ” means all of the businesses and operations conducted by IP and the IP Subsidiaries, other than the Spinco Business, at any time, whether prior to, on or after the Distribution Date.
“ IP Common Stock ” has the meaning set forth in the Recitals.
“ IP/Spinco Disclosure Schedules ” has the meaning set forth in the Merger Agreement.
 
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“ IP Estimated Closing Statement ” has the meaning set forth in Section 5.1.
“ IP Group ” means IP and the IP Subsidiaries.
“ IP Guarantees ” has the meaning set forth in Section 7.3(a).
“ IP Indemnitees ” mean IP, each member of the IP Group, in each case, from and after the Effective Time, and each of their respective present, former and future Representatives and each of the heirs, executors, successors and assigns of any of the foregoing.
“ IP Subsidiaries ” means all direct and indirect Subsidiaries of IP other than Spinco and the Spinco Subsidiaries.
“ Law ” means any federal, state, local or foreign law (including common law), statute, code, ordinance, rule, regulation, judgment, order, injunction, decree, arbitration award, agency requirement, license, treaty or permit of any Governmental Authority.
“ Lease ” has the meaning set forth in Section 2.2(c).
“ Leased Real Property ” means all leasehold or subleasehold estates and other similar rights of IP or its Affiliates to use or occupy any land, buildings or structures that are currently used primarily in the conduct of the Spinco Business, including the properties listed on Section 1.1(c) of the Disclosure Letter.
“ Liability ” or “ Liabilities ” means all debts, liabilities, obligations, Losses, interest and penalties of any kind or nature whatsoever, whether asserted or unasserted, absolute or contingent, matured or unmatured, liquidated or unliquidated, accrued or unaccrued, known or unknown, whenever arising.
“ Litigation Matters ” means all demands, actions, claims, charges, grievances, complaints, arbitrations, mediations, proceedings, inquiries, reviews, audits, hearings, pending or threatened litigation, investigations, suits, countersuits or other legal matters of any nature, whether civil, criminal, administrative, investigative, regulatory or informal, commenced, brought or heard by or before any Governmental Authority, in the case of each of the foregoing, that have been or may be asserted against, or otherwise adversely affect, IP or Spinco (or members of either Group).
“ LLC Contribution ” has the meaning set forth in the Recitals.
“ Losses ” means any and all damages, judgments, awards, liabilities, losses (including lost profits, lost revenue and diminution in value), obligations, claims of any kind or nature, fines and costs and expenses (including interest, penalties, reasonable fees and expenses of attorneys, auditors, consultants and other agents and all amounts paid in investigation, defense or settlement of any of the foregoing and the enforcement of any rights hereunder).
 
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“ Merger Agreement ” has the meaning set forth in the Recitals.
“ Mexican/Dutch Income Taxes ” means Income Taxes of each Mexican Transferred Entity and Dutch Transferred Entity.
“ Mexican Transferred Entity ” has the meaning set forth in the Tax Matters Agreement.
“ Non-Income Tax ” has the meaning set forth in the Tax Matters Agreement.
“ Occurrence Basis Policies ” has the meaning set forth in Section 7.4(a).
“ Operating Company Merger ” has the meaning set forth in the Recitals.
“ Owned Real Property ” means all land that is owned by IP or its Affiliates and currently used primarily in the conduct of the Spinco Business, including the properties listed on Section 1.1(d) of the Disclosure Letter, together with all buildings, structures, improvements and fixtures located thereon, subject to all easements and other rights and interests appurtenant thereto, including existing third party rights and interests, other than Closed Facilities.
“ Patents ” means any U.S. and non-U.S. patents and patent applications (including any continuations, continuations in part, divisional, reissues, renewals, re-examinations, extensions, provisional and applications for any of the foregoing), inventor’s certificates, utility model rights and similar rights, petty patents and applications therefor.
“ Parent Company Merger ” has the meaning set forth in the Recitals.
“ Parties ” has the meaning set forth in the Preamble.
“ Person ” or “ person ” means a natural person, corporation, company, joint venture, individual business trust, trust association, partnership, limited partnership, limited liability company or other entity, including a Governmental Authority.
“ Policies ” means all insurance policies, insurance Contracts and claim administration Contracts of any kind of IP and its Subsidiaries (including members of the Spinco Group) and their predecessors which were or are in effect at any time at or prior to the Distribution Date.
“ Preliminary Earnout Payment Calculation ” has the meaning set forth in Section 5.3(a).
“ Privileged Information ” means with respect to either Group, Information regarding a member of such Group or any of its operations, Assets or Liabilities (whether in documents or stored in any other form (electronic or tangible) or known to its employees, Representatives or agents) that is or may be protected from disclosure pursuant to the attorney-client privilege, the work product doctrine or another applicable privilege, that a member of the other Group may come into possession of or obtain access to pursuant to this Agreement, any other Transaction Agreement or otherwise.
 
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“ Reclassification ” has the meaning set forth in Section 4.2(a).
“ Record Date ” means the close of business on the date to be determined by the Board of Directors of IP as the record date for determining stockholders of IP entitled to participate in the Distribution, which date shall be the Business Day preceding the Distribution Date.
“ Registration Statement ” has the meaning set forth in the Merger Agreement.
“ Related Parties ” means, with respect to any Person, such Person’s present, former and future Representatives and each of their respective heirs, executors, successors and assigns.
“ Representative ” means, with respect to any Person, any of such Person’s directors, managers or persons acting in a similar capacity with such Person’s approval on its behalf, officers, employees, agents, consultants, financial and other advisors, accountants, attorneys and other representatives.
“ Restricted Cash ” means cash in escrow accounts or which is otherwise subject to any other restriction, whether contractual, statutory or pursuant to applicable Law, on the ability of such Person to freely transfer or use such cash for any lawful purpose.
“ Retained Contract ” means those Contracts listed in Section 1.1(e) of the Disclosure Letter.
“ Shared Contracts ” means Contracts to which IP or any of its Affiliates is a party pursuant to which the counterparty currently provides products, services or intellectual property to both the Spinco Business and the IP Business, but excluding Retained Contracts and Contracts under which products or services provided to the Spinco Business are charged directly or indirectly to the Spinco Business as corporate overhead.
“ Shared Expenses ” has the meaning set forth in the Merger Agreement.
“ Shared Locations ” means real property set forth on Section 2.7 of the Disclosure Letter.
“ Shared Location Leases ” has the meaning set forth in Section 2.7.
“ Special Payment ” means an amount as determined by IP, which shall not exceed $400,000,000, subject to adjustment pursuant to Section 5.1 and Section 5.2.
“ Special Payment Financing ” has the meaning set forth in Section 2.6(a).
 
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“ Spinco ” has the meaning set forth in the Preamble; provided that, with respect to any period following the Effective Time, all references to Spinco herein shall be deemed to be references to the Surviving Corporation.
“ Spinco Assets ” means, subject to Section 2.1(c), collectively, all of the right, title and interest of IP and its Affiliates as of immediately prior the Distribution in all Intellectual Property Assets and all other Assets that are primarily used or held for use in, or that primarily arise from, the operation or conduct of the Spinco Business or that are produced by the Spinco Business for use in or sale by the Spinco Business, including all of the right, title and interest of IP and its Affiliates in and to:
(i) each of the Assets, properties, goodwill and rights of any member of the IP Group or the Spinco Group to the extent held on the Distribution Date (x) reflected in the Spinco Audited Balance Sheet, plus (y) those acquired by any member of the IP Group or the Spinco Group after the date of the Spinco Audited Balance Sheet that, in the case of this clause (y), are primarily used or held for use in, or that primarily arise from, the operation or conduct of the Spinco Business or that are produced by the Spinco Business for use in or sale by the Spinco Business;
(ii) all Restricted Cash and the amount of any Cash and Cash Equivalents included in the calculation of the Spinco Net Debt Adjustment, as finally determined pursuant to Section 5.2(c);
(iii) all Current Assets;
(iv) all Owned Real Property and all Leased Real Property (“ Transferred Real Property ”);
(v) all products, supplies, parts and other inventories owned by any member of the IP Group or the Spinco Group (including any rights of any member of the IP Group of rescission, replevin and reclamation relating thereto) (“ Inventory ”) that immediately prior to the Contributions are located on the Transferred Real Property, other than Inventory of any IP Business that is held by the Spinco Business pursuant to an inventory management arrangement, and all other Inventory immediately prior to the Contributions (including products returned following the occurrence of the Contributions), in each case, that are primarily used or held for use in, or that primarily arise from, the operation or conduct of the Spinco Business or produced by the Spinco Business for use in or sale by the Spinco Business;
(vi) all other personal property and interests therein owned by any member of the IP Group or the Spinco Group (including all leasehold improvements, trade fixtures, computers and related software, machinery, equipment, furniture, furnishings, tools, office supplies, production supplies and other supplies, spare parts, other miscellaneous supplies and other tangible property of any kind and vehicles owned by any member of the IP Group or the
 
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Spinco Group) located immediately prior to the Contributions on any Transferred Real Property or any real property of any customer of the Spinco Business and all other personal property that is primarily used or held for use in, or primarily arise from, the operation or conduct of the Spinco Business, in each case, other than any such personal property that is used or held for use exclusively in the IP Business;
(vii) Contracts (other than Shared Contracts) that are used primarily in or related primarily to or arise primarily from the Spinco Business;
(viii) those rights in the Shared Contracts as are allocated to Spinco as contemplated by Section 2.4;
(ix) prepaid expenses, prepaid property taxes (if any), prepaid sales and use taxes (if any), security deposits, credits, deferred charges, advanced payments, in each case, to the extent related to or arising from the Spinco Business (other than (without limiting the obligation in Section 7.4(b)) prepaid insurance premiums, deposits, security or other prepaid amounts in connection with workers’ compensation and other Policies);
(x) licenses, permits, registrations, authorizations and certificates or other rights issued or granted by any Governmental Authority (including the rights of IP and its Affiliates to all data and records held by such Governmental Authority in connection therewith) and all pending applications therefor that are, in each case, used primarily in, or held primarily for the benefit of, or arising primarily from, the Spinco Business;
(xi) trade accounts and notes receivable and other amounts receivable arising from the sale or other disposition of goods, or the performance of services, by the Spinco Business;
(xii) the capital stock of, or equity or other ownership interest in, each Spinco Subsidiary;
(xiii) all other Assets of Spinco and the Spinco Subsidiaries to the extent specifically assigned to any member of the Spinco Group pursuant to any other Transaction Agreement;
(xiv) all claims, causes of action, rights, refunds, credits, choices in action, rights of recovery and rights of set-off of any kind (or any share thereof) to the extent related to or arising from any other Spinco Asset or Spinco Liability;
(xv) subject to Section 8.1 hereof or Section 2.2 of the Employee Matters Agreement, all books, records and other documents (including all books of account, ledgers, general, financial, accounting and personnel records, files, invoices, customers’ and suppliers’ lists, other distribution lists, operating, production and other manuals, manufacturing and quality control records and
 
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procedures, billing records, sales and promotional literature) (in all cases, in any form or medium) owned by any member of the IP Group or the Spinco Group (“ Records ”) that are used or held for use primarily in, or that relate primarily to or arise primarily out of, the conduct or operation of the Spinco Business;
(xvi) all rights of Spinco or any other member of the Spinco Group under this Agreement or any other Transaction Agreement (including the Tax Matters Agreement and the Employee Matters Agreement);
(xvii) all rights and interests in and to bank accounts used or held for use exclusively in the Spinco Business, exclusive of any Cash and Cash Equivalents (other than Restricted Cash); and
(xviii) all other properties, Assets and rights owned by any member of the IP Group or the Spinco Group or that any member of the IP Group or the Spinco Group has an interest, in each case, that immediately prior to the Contributions are used or held for use primarily in, or that arise primarily out of or that relate primarily to, the conduct or operation of the Spinco Business and that are not otherwise Excluded Assets;
provided that the purchasing, holding, managing, distributing, selling or other use by the Spinco Business of products of the IP Business shall not be taken into account in determining whether Intellectual Property related to such products meets the definition of “Intellectual Property Assets” (including any defined terms used in the definition of such term, including “Transferred Patents,” “Transferred Trademarks,” and “Transferred Intellectual Property” and the defined terms used in the definition of such terms).
“ Spinco Audited Balance Sheet ” means the audited balance sheet of the Spinco Business as of December 31, 2012.
“ Spinco Audited Financial Statements ” has the meaning set forth in the Merger Agreement.
“ Spinco Business ” means the business segment of IP and its Affiliates referred to in IP’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012 as “xpedx”, which includes the businesses described in the definition of Restricted Business, as such term is defined in the Merger Agreement; provided that “Spinco Business” shall not include IPAD and, except as the term “Spinco Business” is used in connection with financial statements, xpedx Canada and EM xpedx.
“ Spinco Closing Balance Sheet ” has the meaning set forth in Section 5.2(a).
“ Spinco Closing Date Net Debt ” means an amount (which may be negative), in each case, determined as of the Calculation Time and without giving effect to the consummation of the Transactions, equal to (i) the Indebtedness of the Spinco Group, (including the Special Payment Financing), other than the LLC Contribution, less (ii) an
 
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amount equal to the Cash and Cash Equivalents of the Spinco Group (other than Restricted Cash), plus (iii) any proceeds received from the sale of any fixed or long-term Spinco Asset from June 30, 2013 to the Distribution Date (net of any costs incurred in selling such asset).
“ Spinco Closing Date Working Capital ” means Spinco Working Capital as of the Calculation Time.
“ Spinco Closing Statement ” has the meaning set forth in Section 5.2(a).
“ Spinco Common Stock ” has the meaning set forth in the Recitals.
“ Spinco Contribution ” has the meaning set forth in the Recitals.
“ Spinco Estimated Closing Balance Sheet ” has the meaning set forth in Section 5.1.
“ Spinco Estimated Net Debt Adjustment ” has the meaning set forth in Section 5.1.
“ Spinco Estimated Working Capital Amount ” has the meaning set forth in Section 5.1.
“ Spinco Final Closing Statement ” has the meaning set forth in Section 5.2(c).
“ Spinco Group ” means Spinco and the Spinco Subsidiaries prior to the Effective Time.
“ Spinco Group Employees ” has the meaning set forth in the Employee Matters Agreement.
“ Spinco Guarantees ” has the meaning set forth in Section 7.3(b).
“ Spinco Indemnitees ” means any member of the Spinco Group, UWW Holdings, LLC and its members and Affiliates, in each case, from and after the Effective Time, and each of their respective present, former and future Representatives and each of the respective heirs, executors, successors and assigns of any of the foregoing.
“ Spinco Liabilities ” means, subject to Section 2.1(c), collectively:
(i) all Liabilities of IP or any of its Subsidiaries (including Spinco and the Spinco Subsidiaries) to the extent relating to or arising from the Spinco Business, including the Liabilities set forth on the Spinco Audited Balance Sheet (to the extent not satisfied in the operation of the Spinco Business in the ordinary course prior to the Distribution Date) and the Liabilities of or allocated to Spinco or any of the Spinco Subsidiaries under the Transaction Agreements;
(ii) all Current Liabilities;
 
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(iii) all Liabilities to the extent relating to or arising from any Spinco Assets (that are not Excluded Liabilities);
(iv) those Liabilities under Contracts that are Spinco Assets and Shared Contracts to the extent allocated to Spinco pursuant to Section 2.4 (“ Assumed Contracts ”);
(v) all Liabilities to the extent relating to or arising from any IP Guarantee; and
(vi) all Liabilities set forth on Section 1.1(f) of the Disclosure Letter; provided that Spinco Liabilities shall not include any Liabilities that are not specifically included in clauses (i) - (vi) of this definition or that are specifically included in clauses (i) - (viii) of the definition of Excluded Liabilities.
“ Spinco Net Debt Adjustment ” means an amount (which may be negative) equal to Spinco Closing Date Net Debt minus Spinco Target Net Debt.
“ Spinco Subsidiaries ” means xpedx Intermediate, xpedx Foreign Sub and each of their respective Subsidiaries, and any other Subsidiary of Spinco. For the avoidance of doubt, “Spinco Subsidiaries” shall include xpedx International, Inc. and shall not include IPAD, xpedx Canada or EM xpedx.
“ Spinco Target Net Debt ” means $5,850,483.
“ Spinco Target Working Capital ” means $661,251,790.
“ Spinco Working Capital ” means the sum (which amount may be positive or negative) of the Current Assets, minus the Current Liabilities, calculated in accordance with the Applicable Accounting Principles. Set forth on Section 1.1(k) of the Disclosure Letter is an illustrative example of the calculation of Spinco Working Capital.
“ Spinco Working Capital Adjustment ” means an amount (which may be a positive or negative number) equal to Spinco Closing Date Working Capital minus Spinco Target Working Capital.
“ Subsidiary ” means, with respect to any Person (but subject to the proviso in the definition of Affiliate), a corporation, partnership, association, limited liability company, trust or other form of legal entity in which such Person, a Subsidiary of such Person or such Person and one or more Subsidiaries of such Person, directly or indirectly, has either ( i ) a majority ownership in (A) the equity or (B) the interest in the capital or profits thereof, ( ii ) the power to elect, or to direct the election of, a majority of the board of directors or other analogous governing body of such entity, or ( iii ) the title or function of general partner or manager, or the right to designate the Person having such title or function.
 
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“ Supply Agreements ” means supply agreements in form and substance reasonably acceptable to IP and UWWH and having terms and conditions contemplated in the term sheets set forth on Section 1.1(l) of the Disclosure Letter to be entered into by Spinco and IP at the time of the Distribution.
“ Surviving Corporation ” has the meaning set forth in the Merger Agreement.
“ Tax ” or “ Taxes ” means ( i ) all taxes, charges, fees, duties, levies, imposts, required deposits, rates or other assessments or governmental charges of any kind imposed by any federal, state, local or foreign Taxing Authority, including income, gross receipts, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including Taxes under Section 59A of the Code), custom duties, property (including real, personal or intangible), sales, use, license, capital stock, transfer, franchise, registration, payroll, withholding, social security (or similar), unemployment, disability, value added, alternative or add-on minimum or other taxes, whether disputed or not, and including any interest, penalties or additions attributable thereto; ( ii ) Liability for the payment of any amount of the type described in clause (i) above 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 (including pursuant to U.S. Treasury Regulation § 1.1502-6); and ( iii ) Liability for the payment of any amount of the type described in clauses (i) or (ii) above as a result of any express or implied contract or obligation to indemnify or otherwise assume or succeed to the Liability of any other Person.
“ Tax Matters Agreement ” means the Tax Matters Agreement entered into on the date hereof, among IP, Spinco and UWWH, as such agreement may be amended from time to time.
“ Tax Receivable Agreement ” means the Tax Receivable Agreement, dated as of the Closing Date, among Spinco and UWW Holdings, LLC, a Delaware limited liability company, as such agreement may be amended from time to time.
“ Third-Party Claim ” means any Litigation Matter by or before any Governmental Authority asserted by a Person who or which is neither a Party nor a controlled or jointly controlled Affiliate of a Party.
“ Third-Party Landlord ” means the applicable third-party landlord under each of the Leases.
“ Total IP Shares ” means the total number of issued and outstanding shares of IP Common Stock as of the Record Date.
“ Trademarks ” means any U.S. and non-U.S. registered and unregistered trademarks and service marks (including those which are protected without registration due to their well-known status), trade dress, trade names, corporate names, logos, slogans, taglines, domain names, general intangibles of like nature, and other indicia of source, origin, endorsement, sponsorship or certification, designs, industrial designs, product packaging shape, and other elements of product and product packaging appearance together with all registrations and applications for registration of any of the foregoing and all goodwill related to any of the foregoing.
 
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“ Transaction Agreements ” means this Agreement, the Merger Agreement, the Employee Matters Agreement, Transition Services Agreement, Supply Agreements, Tax Receivable Agreement, the Consulting Agreement, the Registration Rights Agreement, the Tax Matters Agreement and all other documents required to be delivered by any party on the Closing Date pursuant to this Agreement and/or the Merger Agreement or otherwise delivered by any party on or about the Closing Date to effectuate the Transactions (including any bills of sale, assignments and assumptions, certificates of title and all other instruments of sale, transfer, assignment, conveyance and delivery that are delivered in connection with the consummation of the Transactions).
“ Transaction Expenses ” has the meaning set forth in the Merger Agreement.
“ Transactions ” has the meaning set forth in the Merger Agreement.
“ Transferred Intellectual Property ” means all (i) unpatented inventions (whether or not patentable), trade secrets under applicable law, know-how and confidential or proprietary information, including but not limited to (in whatever form or medium), discoveries, ideas, compositions, formulas, computer programs (including source and object codes), computer software documentation, database, drawings, designs, plans, proposals, specifications, photographs, samples, models, processes, procedures, data, information, manuals, reports, financial, marketing and business data, information, manuals, reports and pricing and cost information, correspondence and notes; (ii) works of authorship, mask-works, copyrights, copyrightable works and copyright and mask work registrations and applications for registration; (iii) all other intellectual property and proprietary rights; and (iv) all claims and rights related to any of the foregoing, in each case of (i), (ii), (iii) and (iv), to the extent used, held for use in, or arising from the conduct of the Spinco Business, provided , however , that Patents and Trademarks are not included in Transferred Intellectual Property.
“ Transferred Patents ” means all Patents primarily used in or arising from the Spinco Business, including the Patents set forth on Section 1.1(g) of the Disclosure Letter.
“ Transferred Trademarks ” means all Trademarks primarily used in or arising from the Spinco Business, including the Trademarks set forth on Section 1.1(h) of the Disclosure Letter.
“ Transition Services Agreement ” means the Transition Services Agreement entered into on the Closing Date, among IP and Spinco.
“ Unisource Sub ” has the meaning set forth in the Recitals.
“ UWWH ” has the meaning set forth in the Recitals.
 
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“ UWWH Common Stock ” means the common stock, par value $0.01 per share, of UWWH.
“ UWWH Stockholder ” has the meaning set forth in the Merger Agreement.
“ xpedx Canada ” means IP Canadian Packaging Operations Inc.
“ xpedx Foreign Sub ” has the meaning set forth in the Recitals.
“ xpedx Intermediate ” has the meaning set forth in the Recitals.
Section 1.2 Construction . When a reference is made in this Agreement to an Article, Section, Exhibit or Schedule, such reference shall be to an Article, Section, Exhibit or Schedule of this Agreement unless otherwise indicated. The table of contents to this Agreement, and the Article and Section headings contained in this Agreement, are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such terms and any reference to the masculine, feminine or neuter gender shall be deemed to include any gender or all three as appropriate. Unless otherwise specified, any agreement, instrument or statute defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement, instrument or statute as from time to time amended, modified or supplemented, including (in the case of agreements or instruments) by waiver or consent (but only to the extent such waiver or consent is not adverse to any member of the Spinco Group) and (in the case of statutes) by succession of comparable successor statutes, and including all attachments thereto and instruments incorporated therein. References to a person are also to its permitted successors and assigns. Unless expressly stated to the contrary in this Agreement or in any other Transaction Agreement, all references to “the date hereof,” “the date of this Agreement,” “hereby” and “hereupon” and words of similar import shall all be references to January 28, 2014 (or the date of which the relevant Transaction Agreement is first entered into, as the case may be) regardless of any amendment or restatement hereof (or thereof). The use of the phrase “ordinary course of business” or other derivations thereof shall mean “ordinary course of business consistent with past practice.” Unless the context otherwise requires, “or,” “neither,” “nor,” “any,” “either,” and “or” shall not be exclusive. Wherever and whenever in this Agreement there is a consent right of a Party or a reference to the “satisfaction” or “sole discretion” of a Party, such Party shall be entitled to consider solely its own interests (and not the interests of any other Person) or, at its sole election, any such other interests and factors as such Party desires. For purposes of this Agreement, the obligation of a Party to use its “reasonable best efforts” to achieve a particular result may require such Party to expend resources, incur costs or expenses, or pay amounts, in each case to the extent such expenditures, costs, expenses or payments, together with all other actions to be taken by such Party in pursuit of such result, would constitute the exercise of such Party’s “reasonable best efforts”.
 
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Section 1.3 References to Time . All references in this Agreement to times of the day shall be to New York City time.
ARTICLE II
The Contributions
Section 2.1 Transfers of Spinco Assets and Spinco Liabilities .
(a) Subject to Section 2.1(b) and Section 2.2 and, in the case of Information, ARTICLE VIII, effective on or prior to the Distribution Date, and in any event prior to the Distribution, IP shall ( i ) cause all of the non-U.S. Spinco Assets and all of the non-U.S. Spinco Liabilities to be directly or indirectly transferred, assigned, delivered and conveyed to or assumed by xpedx Foreign Sub, except for those non-U.S. Spinco Assets directly or indirectly held, or non-U.S. Spinco Liabilities directly or indirectly owed, by xpedx International, Inc., ( ii ) cause 100% of the equity interests in xpedx Foreign Sub and the Spinco Assets not directly or indirectly held by xpedx Foreign Sub (after giving effect to the foregoing clause (i)) to be transferred, assigned, delivered and conveyed to xpedx Intermediate or a wholly owned Subsidiary of xpedx Intermediate, ( iii ) cause the Spinco Liabilities (other than those of xpedx Foreign Sub or any of its Subsidiaries (after giving effect to the foregoing clause (i)) to be assumed by xpedx Intermediate or any Subsidiary of xpedx Intermediate, ( iv ) cause each Spinco Subsidiary not to hold any Assets that are not Spinco Assets or be liable for any Liabilities that are not Spinco Liabilities, in each case as of immediately prior to the Distribution, and ( v ) transfer, assign, deliver and convey to Spinco all of the membership interests in xpedx Intermediate. Spinco shall, and shall cause the Spinco Subsidiaries to, timely pay, perform and discharge, when and as due, all of the Spinco Liabilities. For the avoidance of doubt, the obligation of IP to transfer the Leased Real Property will be satisfied by IP and Spinco entering into, as of the Distribution Date, a sublease or lease assignment in the form of one of Exhibits B-1, B-2, B-3 and B-4, as applicable, with such changes as a Third-Party Landlord may reasonably request and which changes are approved by UWWH, and if such changes adversely affect IP, approved by IP. Prior to receipt of any required Third-Party Landlord consents to such lease assignment and/or sublease, following the Contributions, such Leased Real Property and the related Lease will be a Delayed Transfer Asset subject to Section 2.2. IP shall use its reasonable best efforts to obtain any Third-Party Landlord consent to any lease assignment or sublease pertaining to Leased Real Property, which is required in order to effect the transactions contemplated herein; provided that, neither IP nor Spinco shall enter into or otherwise agree to any modification of the terms of any Lease that is required in order to effect the transactions contemplated herein (it being understood and agreed that the terms of Exhibits B-1, B-2, B-3 and B-4 as agreed by IP and UWWH do not constitute a modification to the terms of any Lease) that would adversely affect Spinco or any other member of the Spinco Group (including due to an increase in rent or other incremental cost to any member of the Spinco Group under such Lease) without the prior written consent of UWWH.
 
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(b) Notwithstanding Section 2.1(a), IP may, if it deems necessary or desirable, change the timing or manner by which the direct or indirect transfer to, and assumption by, Spinco of the Spinco Assets and the Spinco Liabilities is effected, so long as, (i) immediately prior to the Distribution, all of the Spinco Assets and Spinco Liabilities, and no other Assets or Liabilities, are held by xpedx Intermediate or one or more Subsidiaries thereof and (ii) any such change would not (A) have any actual or potential adverse economic (including Tax) impact on Spinco or any other member of the Spinco Group, unless IP agrees to fully indemnify such member of the Spinco Group therefor, (B) be inconsistent with the intended tax-free treatment of the transactions contemplated herein or compromise the ability to obtain the IRS Ruling (as defined in the Tax Matters Agreement), (C) make the restrictions under Section 6.02 of the Tax Matters Agreement any more onerous to Spinco or (D) cause any member of the Spinco Group to own or hold or otherwise incur Liability in respect of any Excluded Liability, unless IP agrees to fully indemnify such member of the Spinco Group therefor. In the event of any such change, references in this Agreement to “Contributions” shall be deemed to refer to the Contributions as so changed. Notwithstanding the foregoing, IP shall (x) give notice to Spinco and UWWH of any material change to (1) the structure of the Contributions or (2) the internal restructuring transactions contemplated in the preamble hereto, (y) consult with Spinco and UWWH in good faith to determine whether such changes are permitted under this Section 2.1(b) and (z) indemnify each member of the Spinco Group and UWWH and its Subsidiaries for any Losses incurred by any of them arising out of or related to any such changes or as a result of any actions or omissions by IP (or, prior to the Closing, the Spinco Group) in reliance on this Section 2.1(b).
(c) Except for certain of the matters addressed in ARTICLE V and the defined terms used therein and for purposes of determining the amount of Indemnifiable Losses, the rights and obligations of the Parties with respect to Taxes shall be governed exclusively by the Tax Matters Agreement and, to the extent applicable, the Merger Agreement and the Tax Receivable Agreement. Accordingly, assets and liabilities relating to Taxes shall not be treated as Assets or Liabilities for purposes of, or otherwise be governed by, this Agreement. In the event of any inconsistency between this Agreement and the Tax Matters Agreement, the Merger Agreement or the Tax Receivable Agreement, the terms of the Tax Matters Agreement, the Merger Agreement or the Tax Receivable Agreement, as the case may be, shall control.
(d) Each of Spinco and UWWH hereby waives IP’s and the IP Group’s compliance with the requirements and provisions of the “bulk-sale” or “bulk-transfer” Laws of any jurisdiction that may otherwise be applicable with respect to the transfer, assignment, delivery, conveyance or sale of any or all of the Spinco Assets or Spinco Liabilities to any member of the Spinco Group.
(e) Prior to the Distribution Date, IP and Spinco shall use their respective reasonable best efforts to obtain any third-party consent or approval of a Governmental Authority required in connection with the Contributions or any other transactions contemplated by this Agreement.
 
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Section 2.2 Delayed Transfers; Misallocated Assets and Liabilities .
(a) Notwithstanding anything in this Agreement to the contrary, this Agreement shall not constitute an agreement to assign, directly or indirectly, any Asset or assume any Liability if, but solely to the extent, an attempted direct or indirect assignment or assumption thereof, without the consent of a third party or approval of a Governmental Authority, would constitute a breach, default, violation or other contravention of the rights of such third party or Governmental Authority or of applicable Law until such time as the necessary consent or approval is obtained. If any direct or indirect transfer or assignment by any member of the IP Group to any member of the Spinco Group or, in the case of any Excluded Asset or Excluded Liability, by any member of the Spinco Group to any member of the IP group, or any direct or indirect acquisition or assumption by any member of the Spinco Group or of the IP Group, as applicable, of, any interest in, or Liability, obligation or commitment under, any Spinco Asset or Spinco Liability as contemplated by this Agreement requires the consent of a third party or approval of a Governmental Authority, then (subject to Section 2.2(c) in the case of Leased Real Property) such transfer or assignment or assumption shall be made subject to such consent of a third party or approval of a Governmental Authority being obtained. For the avoidance of doubt, IP shall use its reasonable best efforts to obtain any third-party consent or approval of a Governmental Authority that is required in order to effect the transactions contemplated herein; provided that, in connection with obtaining any such third-party consent or approval of a Governmental Authority, neither IP nor Spinco shall enter into or otherwise agree to any modification of the terms of any Contract that is required in order to effect the transactions contemplated herein that would adversely affect Spinco or any other member of the Spinco Group (including due to an increase in payment or other incremental cost to any member of the Spinco Group under such Contract) without the prior written consent of UWWH.
(b) If any third-party consent or approval of a Governmental Authority referred to in this Section 2.2 is not obtained prior to the Distribution Date, the Distribution shall, subject to the satisfaction of the conditions set forth in ARTICLE III, nonetheless take place on the terms set forth herein and, thereafter, IP shall use reasonable best efforts (and Spinco shall cooperate with IP) to establish arrangements under which, following the Distribution Date, (i) the Spinco Group shall obtain (without infringing upon the legal rights of any third party or Governmental Authority or violating any applicable Law) the economic claims, rights and benefits under the Spinco Asset or Spinco Liability with respect to which the third-party consent or approval of a Governmental Authority has not been obtained in accordance with this Agreement and (ii) from and after the Distribution Date, the Spinco Group shall assume the economic burden with respect to the Spinco Asset or Spinco Liability with respect to which the third-party consent or approval of a Governmental Authority has not been obtained in accordance with this Agreement, in each case, as closely as possible with the use of reasonable best efforts to that which would be applicable to the Spinco Group if the consent had been obtained and the Spinco Asset or Spinco Liability transferred.
 
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(c) Notwithstanding the foregoing, and solely with respect to the Leased Real Property, IP shall use reasonable best efforts to obtain from the applicable Third-Party Landlords their respective consents to an assignment from IP to Spinco of each lease, sublease or other agreement governing such Leased Real Property (each, a “ Lease ”) to the extent such Lease requires such consent. For each Lease with respect to which such Third-Party Landlord consent to assignment is granted on or prior to the Distribution Date or is not required, the applicable Leased Real Property shall be assigned from IP to Spinco on the Distribution Date pursuant to an Assignment and Assumption Agreement substantially in the form attached hereto as Exhibit A-2, with such changes as may be reasonably requested by such Third-Party Landlord and approved by UWWH, and if such changes adversely affect IP, approved by IP. For each Lease with respect to which such landlord consent for an assignment is required but not obtained on or prior to the Distribution Date, IP shall use reasonable best efforts to obtain from the applicable Third-Party Landlord its consent to a sublease of the applicable Leased Real Property to the extent such Lease requires such consent. For each Lease with respect to which such Third-Party Landlord consent for a sublease is granted on or prior to the Distribution Date or is not required, the applicable Leased Real Property shall be subleased from IP to Spinco on the Distribution Date pursuant to a Sublease Agreement substantially in the form attached hereto as Exhibit A - 1, with such changes as may be reasonably requested by the Third-Party Landlord and approved by UWWH, and if such changes adversely affect IP, approved by IP. For each Lease with respect to which the Third-Party Landlord does not consent to either an assignment or sublease on or prior to the Distribution Date but such consents are required, Section 2.2(b) shall govern the arrangements with respect to the applicable Leased Real Property from and after the Distribution Date (which shall include, with respect to Leased Real Property, IP’s continuing reasonable best efforts (and Spinco’s cooperation with IP) to obtain the applicable Third-Party Landlord consent to an assignment and, if assignment is not achieved using reasonable best efforts, a sublease). For any Leased Real Property for which a sublease is executed between IP and Spinco, Section 2.2(d) shall apply from and after the Distribution Date, such that upon obtaining any Third-Party Landlord consent to an assignment of a Lease and effectuating such assignment pursuant to an Assignment and Assumption Agreement substantially in the form attached hereto as Exhibit A-2, with such changes as may be reasonably requested by the Third-Party Landlord and approved by UWWH, and if such changes adversely affect IP, approved by IP, the corresponding sublease shall be terminated.
(d) If and when any such third-party consent or approval of a Governmental Authority is obtained after the Distribution, the assignment of the Spinco Asset or assumption of the Spinco Liability to which such third-party consent or approval of a Governmental Authority relates shall be promptly effected in accordance with the terms of this Agreement without the payment of additional consideration. IP shall, and shall cause its respective Subsidiaries to, use reasonable best efforts (and Spinco shall, and shall cause its respective Subsidiaries to, cooperate with IP) to obtain such third-party consents and/or approvals of Governmental Authorities as promptly as practicable; provided that, in connection with obtaining any such third-party consent or approval of a Governmental Authority, neither IP nor Spinco shall enter into or otherwise agree to any modification of the terms of any Contract that is required in order to effect the
 
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transactions contemplated herein that would adversely affect Spinco or any other member of the Spinco Group (including due to an increase in payment or other incremental cost to any member of the Spinco Group under such Contract) without the prior written consent of UWWH. IP shall bear any and all third-party fees and out-of-pocket expenses (including attorneys’ fees) that may be reasonably required in connection with obtaining, whether before or after the Distribution, any such third-party consents and approvals of Governmental Authorities. The Parties shall use their respective reasonable best efforts to cooperate in minimizing all such fees and expenses.
(e) In the event that at any time prior to the Cut-off Date, a member of the IP Group becomes aware (including by request of Spinco) that it possesses any Spinco Asset or Spinco Liability, IP shall cause the prompt transfer of such Spinco Assets to Spinco or assumption of such Spinco Liability by Spinco or any member of the Spinco Group, and Spinco shall, or shall cause a member of the Spinco Group to, accept and assume such Spinco Asset or Spinco Liability (except as otherwise contemplated by the Transaction Agreements), in each case, without further consideration. Prior to any such transfer, IP shall hold such Spinco Assets in trust for Spinco and pay over to Spinco as promptly as practicable any amounts or benefits received by the IP Group with respect to such Spinco Assets following the Distribution Date. In the event that at any time, a member of the Spinco Group becomes aware that it possesses any Excluded Assets or Excluded Liability (except as otherwise contemplated by the Transaction Agreements), the Spinco Group shall cause the prompt transfer of such Excluded Assets to IP or a member of the IP Group or assumption of such Excluded Liability by IP or a member of the IP Group, and IP shall, or shall cause a member of the IP Group to, accept and assume such Excluded Asset (including any Cash and Cash Equivalents (other than Restricted Cash and other than the amount of any Cash and Cash Equivalents included in the calculation of the Spinco Net Debt Adjustment, as finally determined pursuant to Section 5.2(c))) or Excluded Liability, in each case, without further consideration. Prior to any such transfer, the Spinco Group shall hold such Excluded Assets in trust for IP and pay over to IP as promptly as practicable any amounts or benefits received with respect to such Excluded Assets following the Distribution Date.
Section 2.3 Conveyancing and Assumption Agreements . In connection with the transfer of the Spinco Assets and the assumption of the Spinco Liabilities contemplated by this ARTICLE II, IP and Spinco shall execute, or cause to be executed by the appropriate entities, notices and conveyancing and assumption instruments as IP may deem necessary or desirable (including the Form of Assignment and Assumption Agreement attached hereto as Exhibit A-2 (with respect to Leased Real Property that is being assigned), the form of sublease attached hereto as Exhibit A-1 (with respect to Leased Real Property that is not being assigned and for which a sublease is permitted) and one of the forms of Lease attached hereto as Exhibit A-3 or A-4 (with respect to certain Shared Locations, in such form of Lease as will be identified on Section 2.7 of the Disclosure Letter), in each case in accordance with the terms and conditions of Sections 2.2 and 2.7); provided that such instruments shall not impose obligations on either IP or Spinco or grant rights, through representations or otherwise, beyond those set forth in this Agreement (but shall merely implement the obligations herein), other than customary obligations with respect to due execution, title and similar matters.
 
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Section 2.4 Shared Contracts . IP will use its reasonable best efforts (and Spinco will cooperate with IP) to separate the Shared Contracts into separate Contracts effective as of the Distribution so that from and after the Distribution Spinco will have the sole benefit and Liabilities with respect to each Shared Contract to the extent related to the Spinco Business and the IP Group will have the sole benefit and Liabilities with respect to each Shared Contract to the extent not related to the Spinco Business. Upon such separation of a Shared Contract, the separated Contract that is related to the Spinco Business will be a Spinco Asset and the other separated Contract will be an Excluded Asset. The obligations to separate any Shared Contracts set forth in this Section 2.4 will terminate on the date that is eighteen months following the Distribution Date. If any Shared Contract is not separated prior to the Distribution Date, then such Shared Contract shall be governed under Section 2.4, including IP agreeing to use reasonable best efforts (and the Spinco agreeing to cooperate with IP) to establish arrangements under which the Spinco Group shall continue to receive the benefits and assume the obligations, in each case, that it received or assumed prior to the Distribution Date, until such Shared Contract expires in accordance with its terms. IP shall bear any and all third party fees and out-of-pocket expenses (including attorneys’ and other third party fees) that may be reasonably required in connection with obtaining, whether before or after the Distribution, any such separation of a Shared Contract. IP will use its reasonable best efforts to deliver a list of the Shared Contracts to UWWH as soon as practicable after the date hereof.
Section 2.5 Certain Resignations . At or prior to the Distribution Date, except as otherwise agreed between IP and UWWH in writing prior to the Distribution Date, IP shall cause each employee and director of IP and its Subsidiaries who will not be employed by Spinco or a Spinco Subsidiary after the Distribution Date to resign, effective not later than the Distribution Date, from all boards of directors or similar governing bodies of Spinco or any Spinco Subsidiary on which they serve, and from all positions as officers of Spinco or any Spinco Subsidiary in which they serve; it being understood that only Mary Laschinger will remain on the board of directors of Spinco, which will be comprised as of the Effective Time of the Persons set forth on Section 7.7 of the Disclosure Letter. At or prior to the Distribution Date, Spinco will cause each employee and director of Spinco and its Subsidiaries who will not be employed by IP or an IP Subsidiary after the Distribution Date to resign, effective not later than the Distribution Date, from all boards of directors or similar governing bodies of IP, any IP Subsidiary or any other Person in which IP holds any equity interest on which they serve, and from all positions as officers of IP, any IP Subsidiary or any other Person in which IP holds any equity interest in which they serve.
Section 2.6 Payments .
(a) On the Distribution Date, Spinco shall cause xpedx to ( i ) enter into one or more debt financing transactions immediately prior to the Distribution, in accordance with the applicable provisions of the Merger Agreement (collectively, the “ Special Payment Financing ”) and ( ii ) distribute some of the proceeds therefrom to Spinco for use by Spinco to pay the Special Payment to IP. Immediately prior to the Distribution, Spinco shall pay the Special Payment to IP in exchange for the contribution of all the membership interests in xpedx Intermediate to Spinco.
 
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(b) The rights and obligations of the Parties in respect of pursuing and obtaining the Special Payment Financing are set forth in the Merger Agreement, and, except as set forth in ARTICLE IV and Section 10.16 with respect to such obligations, no additional rights or obligations shall be deemed to arise under this Agreement in connection therewith.
(c) Subject to the terms and conditions of Section 5.3, Spinco shall cause the Earnout Payment to be made to IP if and when due under Section 5.3.
Section 2.7 Shared Locations . Notwithstanding anything to the contrary contained herein, on the Distribution Date, IP and Spinco shall enter into a lease, sublease or other occupancy agreement governing each Shared Location (each, a “ Shared Location Lease ”) in accordance with the terms of Section 2.7 of the Disclosure Letter. To the extent that the consent of a Third-Party Landlord is necessary for a Shared Location Lease and such consent is not obtained, such Shared Location shall be subject to Section 2.2 and Section 2.3.
ARTICLE III
Conditions
Section 3.1 Conditions to the Distribution . The obligations of IP pursuant to this Agreement to effect the Distribution shall be subject to the substantially simultaneous consummation of the transactions contemplated by Section 2.6 and the satisfaction (or waiver by (i) IP, in the case of the conditions set forth in Section 9.2 of the Merger Agreement or (ii) IP and UWWH, in the case of the conditions set forth in Section 9.1 of the Merger Agreement) on or prior to the Distribution Date (other than those conditions that, by their nature, are to be satisfied contemporaneously with the Closing, but subject to the satisfaction (or waiver by (x) IP, in the case of the conditions set forth in Section 9.2 of the Merger Agreement or (y) IP and UWWH, in the case of the conditions set forth in Section 9.1 of the Merger Agreement) of such conditions at the Closing) of each of the conditions set forth in Sections 9.1 and 9.2 of the Merger Agreement (except the consummation of the Contributions and the Distribution); provided that, notwithstanding anything set forth in this ARTICLE III to the contrary, the Parties agree that the Distribution Date shall occur on the same date as the Closing Date, as determined in accordance with the terms and conditions of the Merger Agreement.
Section 3.2 Waiver of Conditions . The condition set forth in Section 3.1 hereof, may be waived, in whole or in part, to the extent permitted by applicable Law, in the sole discretion of IP. The condition set forth in Section 3.1 is for the sole benefit of IP and shall not give rise to or create any duty on the part of IP to waive or not waive such condition.
ARTICLE IV
The Distribution
Section 4.1 Record Date and Distribution Date . Subject to the satisfaction, or to the extent permitted by applicable Law, waiver, in whole or in part, of the conditions set forth in Section 3.1, the Board of Directors of IP in consultation with UWWH, consistent with the
 
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Merger Agreement and New York law, shall establish the Record Date and the Distribution Date and any necessary or appropriate procedures in connection with the Distribution; provided that IP shall provide UWWH written notice no fewer than two Business Days prior to IP’s announcement of the Record Date to its stockholders.
Section 4.2 Spinco Reclassification; Charter and Bylaws .
(a) Immediately prior to the Distribution Date, IP and Spinco shall take all actions necessary to issue to IP such number of shares of Spinco Common Stock, including, if applicable, by reclassifying the outstanding shares of Spinco Common Stock or by declaring a dividend payable to IP in shares of Spinco Common Stock (the “ Reclassification ”), for the purpose of increasing the outstanding shares of Spinco Common Stock such that, immediately prior to the Distribution Date, Spinco will have an aggregate number of shares of Spinco Common Stock to be determined by IP, Spinco and UWWH prior to the Distribution Date, all of which will be held by IP.
(b) On or prior to the Distribution Date, Spinco and IP shall cause Spinco’s Certificate of Incorporation to be amended and restated in the form set forth on Exhibit B and Spinco’s By-laws to be amended and restated in the form set forth on Exhibit C.
Section 4.3 The Agent . Prior to the Distribution Date, IP shall enter into an agreement with the Agent on terms reasonably satisfactory to Spinco and UWWH providing for, among other things, the distribution to the holders of IP Common Stock in accordance with this ARTICLE IV of the shares Spinco Common Stock to be distributed in the Distribution.
Section 4.4 Delivery of Shares to the Agent . At or prior to the Distribution Date, IP shall authorize the book-entry transfer by the Agent of all of the outstanding shares of Spinco Common Stock to be distributed in connection with the Distribution.
Section 4.5 The Distribution . Upon the terms and subject to the conditions of this Agreement, following consummation of the Reclassification, IP shall declare and pay the Distribution to each holder of issued and outstanding shares of IP Common Stock as of the Record Date (excluding treasury shares held by IP and any other shares of IP Common Stock otherwise held by a member of the IP Group), such that each such holder will receive a number of shares of Spinco Common Stock equal to the percentage of the total number of shares of Spinco Common Stock outstanding as of the time of the Distribution as is equal to a fraction, (a) the numerator of which is the total number of issued and outstanding shares of IP Common Stock held by such holder as of the Record Date and (b) the denominator of which is the number of Total IP Shares (excluding treasury shares held by IP and any other shares of IP Common Stock otherwise held by a member of the IP Group). Promptly after the Distribution, the Agent shall distribute by book-entry transfer in respect of the outstanding shares of IP Common Stock held by holders of record of IP Common Stock on the Record Date (excluding treasury shares held by IP and any other shares of IP Common Stock otherwise held by a member of the IP Group) all of the shares of Spinco Common Stock distributed in the Distribution. The Agent shall make cash payments in lieu of any fractional shares resulting from the issuance of Spinco Common Stock in the Distribution to any holder of shares of IP Common Stock after aggregating the total number of fractional shares of Spinco Common Stock that would otherwise be issued to such holder and other holders of shares of IP Common Stock, and selling such shares in the public securities markets.
 
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ARTICLE V
Certain Adjustments
Section 5.1 Estimated Closing Statement . Not less than three (but not more than five) Business Days prior to the anticipated Distribution Date, IP shall provide Spinco and UWWH (a) a certificate endorsed by an executive officer of IP certifying a statement (in form and substance reasonably satisfactory to UWWH) (the “ Spinco Estimated Closing Statement ”) setting forth IP’s good faith estimate of (i) the Spinco Working Capital Adjustment (the “ Spinco Estimated Working Capital Adjustment ”) and (ii) the Spinco Net Debt Adjustment (the “ Spinco Estimated Net Debt Adjustment ”), including reasonable detail regarding the calculations thereof and (b) an estimated unaudited balance sheet of the Spinco Business as of the Calculation Time (the “ Spinco Estimated Closing Balance Sheet ”). The Spinco Estimated Closing Balance Sheet and Spinco Estimated Closing Statement (x) shall be prepared in accordance with the Applicable Accounting Principles and (y) shall not give effect to the Special Payment to IP contemplated by Section 2.6, the Distribution and/or the Special Payment Financing. Prior to and after delivering the Spinco Estimated Closing Balance Sheet and Spinco Estimated Closing Statement, IP and Spinco shall give UWWH and its Representatives access at all reasonable times and on reasonable advance notice to the books, records, properties, working papers and personnel of Spinco and IP (including Spinco and IP’s respective senior finance and accounting personnel and their accountants) to the extent reasonably required to permit UWWH to review the Spinco Estimated Closing Balance Sheet and Spinco Estimated Closing Statement and shall cooperate and provide such information as reasonably requested by UWWH and its Representatives regarding the calculation of the components thereof and provide such back-up therefor as reasonably requested by UWWH. The amount of the Special Payment shall be (1) (x) increased by an amount equal to the Spinco Estimated Working Capital Adjustment, if such amount is positive, or (y) decreased by the absolute value of such amount, if such amount is negative; (2) decreased by an amount equal to the Spinco Estimated Net Debt Adjustment if such amount is positive, or (y) increased by the absolute value of such amount, if such amount is negative; and (3) if the Estimated Adjustment Amount is negative, increased by the Estimated Adjustment Amount Payment.
Section 5.2 Post-Closing Adjustment .
(a) Within 90 days after the Distribution Date, the Surviving Corporation shall cause to be prepared and delivered to IP (a) an unaudited balance sheet of the Spinco Business as of the Calculation Time (the “ Spinco Closing Balance Sheet ”) and (b) a certificate endorsed by an executive officer of the Surviving Corporation certifying a statement (the “ Spinco Closing Statement ”) setting forth the Surviving Corporation’s good faith calculation of (i) the Spinco Working Capital Adjustment, and (ii) the Spinco Net Debt Adjustment, including reasonable detail regarding the calculations thereof. The Spinco Closing Balance Sheet and the Spinco Closing Statement (x) shall be prepared in accordance with the Applicable Accounting Principles and (y) shall not give effect to the Special Payment to IP contemplated by Section 2.6, the Distribution and/or the Special Payment Financing.
 
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(b) Prior to delivery of the Spinco Closing Balance Sheet and Spinco Closing Statement, IP shall give the Surviving Corporation and each of its Representatives access at all reasonable times and on reasonable advance notice to the books, records, properties, working papers and personnel of IP (including IP’s senior finance and accounting personnel and its accountants) to the extent reasonably required to permit the Surviving Corporation to prepare the Spinco Closing Balance Sheet and Spinco Closing Statement. During the 60 day period following IP’s receipt of the Spinco Closing Statement, the Surviving Corporation shall give IP and each of its respective Representatives access at all reasonable times and on reasonable advance notice to the books, records, properties, working papers and personnel of the Surviving Corporation (including the Surviving Corporation’s senior finance and accounting personnel and its accountants) to the extent reasonably required to permit IP to review the Spinco Closing Balance Sheet and Spinco Closing Statement. Within 60 days after receipt of the Spinco Closing Statement, IP shall, in a written notice to the Surviving Corporation, describe in reasonable detail any proposed adjustments to the items set forth on the Spinco Closing Statement and the reasons therefor (it being agreed that the only permitted reasons for such adjustments shall be mathematical error or the failure to compute items set forth therein in accordance with this Agreement). If the Surviving Corporation shall not have received a notice of proposed adjustments within such 60-day period, IP will be deemed to have accepted irrevocably the Spinco Closing Statement. During the 30-day period following IP’s delivery of a notice of proposed adjustments to the Surviving Corporation, IP or the Surviving Corporation, as applicable, shall give the Surviving Corporation or IP, as applicable, and each of their respective Representatives access at all reasonable times and on reasonable advance notice to the books, records, properties, working papers and personnel of IP or the Surviving Corporation, as applicable, (including senior finance and accounting personnel and their accountants) to the extent reasonably required to permit the Surviving Corporation or IP to evaluate the proposed adjustments.
(c) IP and the Surviving Corporation shall negotiate in good faith to resolve any disputes over any proposed adjustments to the Spinco Closing Statement, during the 30 days following the Surviving Corporation’s receipt of the proposed adjustments. If IP and the Surviving Corporation are unable to resolve such dispute within such 30-day period, then, at the written request of either such Party (the “ Dispute Resolution Request ”), each such Party shall appoint a knowledgeable, responsible representative to meet in person and negotiate in good faith to resolve the disputed matters. The Parties intend that these negotiations be conducted by experienced business representatives empowered to decide the issues. Such negotiations shall take place during the 30-day period following the date of the Dispute Resolution Request. If the business representatives resolve the dispute, such resolution shall be memorialized in a written agreement (the Spinco Closing Statement, as revised by such negotiations, written agreement or the final decision of the accounting firm referred to below, the “ Spinco Final Closing Statement ”). If the business representatives do not resolve the dispute
 
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during the periods described above, then the UWWH Stockholder and IP shall jointly engage KPMG LLP to arbitrate and resolve such disputes, which resolution shall be final, binding and enforceable in accordance with Section 10.16. If KPMG LLP is unable or unwilling to act as arbitrator, a nationally recognized accounting firm shall be selected by lot from the remaining nationally recognized accounting firms that are not the regular independent auditor firm of the UWWH Stockholder, IP or the Surviving Corporation, and in such event references herein to “KPMG LLP” shall be deemed to refer to such replacement accounting firm. Within the 30-day period following its engagement, KPMG LLP shall arbitrate and resolve such dispute based solely on the written submission provided by IP and the Surviving Corporation and shall only consider whether the Spinco Closing Statement (and each component thereof) was prepared in accordance with this Agreement and (only with respect to disputed matters submitted to the accounting firm) whether and to what extent the Spinco Closing Statement requires adjustment. In resolving any disputed matter, KPMG LLP shall (i) adhere to the definitions contained in this Agreement and the guidelines and principles of this Section 5.2 and (ii) shall not assign a value to any item higher than the highest value for such item claimed by either of IP or the Surviving Corporation or lower than the lowest value claimed by either such Party; provided , however , that to the extent the determination of value of any disputed item affects any other item used in calculating the Spinco Working Capital Adjustment or the Spinco Net Debt Adjustment, such effect may be taken into account by KPMG LLP. The fees and expenses of KPMG LLP shall be shared by the Surviving Corporation and IP in inverse proportion to the relative amounts of the disputed amount determined in favor of the Surviving Corporation and IP, respectively.
(d) Upon final determination of the Spinco Final Closing Statement pursuant to this Section 5.2, the following payments (if any) shall be made in accordance with Section 5.2(e):
(i) (x) if the Spinco Working Capital Adjustment, as set forth in the Spinco Final Closing Statement, is greater than the Spinco Estimated Working Capital Adjustment, the Surviving Corporation shall pay to IP an amount equal to such excess and (y) if the Spinco Working Capital Adjustment, as set forth in the Spinco Final Closing Statement, is less than the Spinco Estimated Working Capital Adjustment, IP shall pay to the Surviving Corporation an amount equal to such deficit; and
(ii) (x) if the Spinco Net Debt Adjustment, as set forth in the Spinco Final Closing Statement, is greater than the Spinco Estimated Net Debt Adjustment, IP shall pay to the Surviving Corporation an amount equal to such excess and (y) if the Spinco Net Debt Adjustment, as set forth in the Spinco Final Closing Statement, is less than the Spinco Estimated Net Debt Adjustment, the Surviving Corporation shall pay to IP an amount equal to such deficit.
(e) Notwithstanding the foregoing, the aggregate of the respective amounts to be paid (if any) by IP, on the one hand, and the Surviving Corporation, on the other hand, under Section 5.2(d) shall be netted against each other and the Party with the positive net
 
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payment obligation shall pay such net obligation amount, which shall be increased by an amount computed as interest from the Distribution Date through but excluding the date of payment at a rate of 6% which interest shall accrue daily on the basis of a 365 day year calculated for the actual number of days for which payment is due. Any amount payable pursuant to this Section 5.2(e) shall be made via wire transfer of immediately available funds within five Business Days after the date upon which the Spinco Closing Statement becomes a Spinco Final Closing Statement.
(f) To the extent that IP makes any payment of an amount which constitutes a Current Liability between the Distribution Date and the date any payment is due under Section 5.2(e), then IP shall have a right to offset the aggregate of all such amounts against the amount, if any, payable to the Surviving Corporation under Section 5.2(e); provided that IP has provided the Surviving Corporation evidence reasonably satisfactory to the Surviving Corporation of the payment of such amounts prior to making any offset. To the extent that the Surviving Corporation makes any payment of an amount which constitutes an Excluded Liability between the Distribution Date and the date any payment is due under Section 5.2(e), then the Surviving Corporation shall have a right to offset the aggregate of all such amounts against the amount, if any, payable to IP under Section 5.2(e); provided that the Surviving Corporation has provided IP evidence reasonably satisfactory to IP of the payment of such amounts prior to making any offset.
Section 5.3 Earnout Payment . UWWH and the Surviving Corporation acknowledge that the obligations of the Surviving Corporation set forth in this Section 5.3 are an integral part of the consideration to be received by IP in connection with the Transactions. Subject to Section 5.3(a) and Section 5.3(h), following the Closing, the Surviving Corporation shall make a payment, if any, to IP to be calculated and distributed in accordance with this Section 5.3 and Section 5.3 of the Disclosure Letter (the “ Earnout Payment ”).
(a) Within 30 days after the completion of the Surviving Corporation’s audited financial statements for each of its 2017, 2018 and 2019 fiscal years, the Surviving Corporation shall prepare and deliver a certificate endorsed by an executive officer of the Surviving Corporation certifying a statement (with respect to each such fiscal year, such year’s “ Yearly Earnout Statement ”) setting forth the Surviving Corporation’s good faith calculation of the Actual EBITDA and Target EBITDA (including any Monthly LTM EBITDA) for such fiscal year and each of the components thereof and attaching reasonable supporting documentation; provided that the Yearly Earnout Statement with respect to the Surviving Corporation’s 2019 fiscal year shall also include the Surviving Corporation’s good faith calculation (the “ Preliminary Earnout Payment Calculation ”) of the amount of the Earnout Payment, if any, owed to IP. IP shall, no more than 90 days after its receipt of the Yearly Earnout Statement for the Surviving Corporation’s 2019 fiscal year, notify the Surviving Corporation of IP’s good faith calculation of the amount of the Earnout Payment, if any, owed to IP, if different from the Preliminary Earnout Payment Calculation, or that IP agrees with Preliminary Earnout Payment Calculation. If such notice states that IP agrees with the Preliminary Earnout Payment Calculation or if IP does not deliver such notice within such 90-day period, then such amount shall be final. If such notice states that IP disagrees with
 
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Preliminary Earnout Payment Calculation, a nationally recognized independent public accounting firm shall be jointly selected to arbitrate and resolve such dispute, and shall make a final determination of the Earnout Payment, in accordance with the applicable procedures, principles and provisions set forth in Section 5.2(c). The fees and expenses of such accounting firm shall be paid in accordance with Section 5.2(c). The determination made pursuant to this Section 5.3, whether by agreement of the Surviving Corporation and IP or determination of such accounting firm, shall be final and binding on the Parties. No later than 10 Business Days after the final determination of the Earnout Payment, subject to Section 5.3(j), the Surviving Corporation shall pay to IP the Earnout Payment (if any) due and owing in accordance with this Section 5.3.
(b) The Earnout Payment shall be calculated as follows:
(i) If the Actual EBITDA is less than the Target EBITDA, then the Earnout Payment shall be equal to $0.
(ii) If the Actual EBITDA is greater than the Target EBITDA, then the Earnout Payment shall equal the product of (x) the difference of (i) the Actual EBITDA, minus (ii) the Target EBITDA, multiplied by (y) 4/3; provided that , in no event shall the Earnout Payment exceed $100,000,000.
For illustrative purposes, if (1) the Actual EBITDA equals $75 million and the Target EBITDA equals $15 million, then the Earnout Payment would equal $80 million (($75 million - $15 million) x 4/3); or (2) the Actual EBITDA equals $105 million and the Target EBITDA equals $15 million, then the Earnout Payment would equal $100 million (($105 million - $15 million) x 4/3 = $120 million, but the Earnout Payment would be capped at $100 million).
For the avoidance of doubt, if no Earnout Payment is due and owed under this Section 5.3, then IP shall have no further rights, and the Surviving Corporation shall have no further obligations, with respect to this Section 5.3.
(c) If any Person or group of Persons directly or indirectly acquires a majority of the outstanding voting power of the Surviving Corporation’s capital stock at any time, or a majority of the assets of the Surviving Corporation and its Subsidiaries is acquired (by merger, consolidation, acquisition of stock or assets or otherwise), prior to the final determination of whether any payment of the Earnout Payment is required pursuant to this Section 5.3, the Surviving Corporation and such Person or group of Persons shall reasonably agree in writing to IP that through the end of the Measurement Period (i) the collective business activities of the Surviving Corporation as of immediately prior to such acquisition shall thereafter continue to be operated and accounted for separately from any other business activities and operations, (ii) complete and accurate books of account and records covering all transactions relating to the computation of the Earnout Payment will be maintained and (iii) the Surviving Corporation shall (x) remain an SEC registrant or (y) if the Surviving Corporation will not be an SEC registrant, provide IP with unaudited quarterly and audited annual financial statements and financial data of the type and on the timetable as required to be filed by the SEC pursuant to Regulation S-X and Regulation
 
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S-K under the Securities Act. If the Surviving Corporation and the acquirer do not provide IP with such reasonable written agreement prior to the closing of such acquisition, and such acquisition occurs prior to the end of the Measurement Period, then the Earnout Payment shall be deemed to have been earned in an amount equal to $100,000,000 (subject to Section 5.3(h) below) and shall be due and payable to IP at or prior to the closing of such acquisition.
(d) Within 30 days after the occurrence of any Applicable Closing Date, the Surviving Corporation shall prepare and deliver to IP a certificate endorsed by an executive officer of the Surviving Corporation certifying a statement (with respect to any Acquisition or Divestiture, an “ Acquired/Divested EBITDA Statement ”) setting forth the Surviving Corporation’s good faith calculation of the Monthly LTM EBITDA with respect to the applicable Acquired Business or Divested Business and each of the components thereof.
(e) From and after January 1, 2017 (or, if earlier, the date on which an Acquired/Divested EBITDA Statement is required to be delivered), in the case of clause (i) of this Section 5.3(e), and after March 31, 2020, in the case of clause (ii) of this Section 5.3(e), the Surviving Corporation shall (i) cooperate and provide such information as reasonably requested by IP and its Representatives and provide such back-up supporting information therefor as reasonably requested by IP to the extent reasonably required to permit IP to review the Yearly Earnout Statements and any Acquired/Divested EBITDA Statements and to verify computations of the Earnout Payment, Actual EBITDA, Target EBITDA, any Monthly LTM EBITDA and each of the components thereof, and (ii) in connection with the foregoing, give IP and its Representatives access at all reasonable times and on reasonable advance notice to the books, records, properties, working papers and personnel of the Surviving Corporation and its Subsidiaries (including its senior finance and accounting personnel and accountants).
(f) Notwithstanding anything in this Agreement to the contrary, and for purposes of clarification, from and after the date hereof and until the payment of all amounts owed pursuant to Section 5.2 and this Section 5.3, the Parties agree that none of the Parties shall take any action or omit to take any action with the specific intent or purpose of (and not merely the effect of) increasing or decreasing any amounts payable under Section 5.2 or this Section 5.3.
(g) Subject to Section 5.3(h), prior to the second anniversary of the Closing Date, the Surviving Corporation shall not declare or pay any dividend on, or make any payment on account of, or set apart assets for a sinking or other analogous fund for, the purchase, redemption, defeasance, retirement or other acquisition of, any of its capital stock, whether now or hereafter outstanding, or make any other distribution in respect thereof, either directly or indirectly, whether in cash or property or in obligations of the Surviving Corporation or any of its Subsidiaries, except, in the case of dividends, for regular quarterly cash dividends out of consolidated net income for the applicable quarter.
 
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(h) Notwithstanding anything in this Section 5.3 to the contrary, at any time prior to the date on which the Earnout Payment is paid in accordance with Section 5.3(a) and Section 5.3 of the Disclosure Letter, or on which the Earnout Payment is paid in full pursuant to Section 5.3(c), the Surviving Corporation, in its sole discretion, may elect to make a payment to IP in full satisfaction of the Surviving Corporation’s obligations under this Section 5.3 (other than Section 5.3(g), subject to the last sentence of this paragraph) in an amount equal to the present value of $100,000,000 on the date of payment assuming a discount rate of 6%, which amount would be calculated by dividing (i) $100,000,000 by (ii) 1.06 to the power of ((x) the number of days between and including the date of payment to IP by the Surviving Corporation under this Section 5.3(h) and June 15, 2020, divided by (y) 365). For illustrative purposes, if the Surviving Corporation were to elect to make a payment to IP pursuant to this Section 5.3(h) on July 1, 2016, the amount of such payment would be equal to ($100,000,000/(1.06^(1,445/365))), which equals $79,399,269.36. For the avoidance of doubt, any payment elected to be made by the Surviving Corporation to IP pursuant to and in accordance with this Section 5.3(h) shall be deemed to be a payment in full of the Earnout Payment and upon the payment of such amount to IP, IP shall have no further rights, and the Surviving Corporation shall have no further obligations, with respect to this Section 5.3, other than Section 5.3(g), which, with respect to dividends, shall continue in full force and effect until January 1, 2016, and, with respect to all other restrictions, shall continue in full force and effect until the second anniversary of the Closing Date.
(i) Notwithstanding anything herein to the contrary, (i) the right of IP to receive any amounts pursuant to Section 5.3 is solely a contractual right and is not a security for purposes of any federal or state securities Laws (and shall confer upon IP only the rights of a general unsecured creditor under applicable Law), (ii) will not be represented by any form of certificate or instrument, (iii) does not give IP any voting rights, liquidation rights, preemptive rights or other rights common to holders of the Surviving Corporation’s equity securities, (iv) is not redeemable, (v) shall not earn interest, and (vi) may not be sold, assigned, pledged, gifted, conveyed, transferred or otherwise disposed of (a “ Transfer ”) (and any purported Transfer in violation of this Section 5.3(i) shall be null and void).
(j) The Surviving Corporation shall be entitled to deduct and withhold from the Earnout Payment payable pursuant to this Agreement such amounts as may be required to be deducted and withheld with respect to the making of such payment under the Code or under any provision of state, local or foreign Tax Law. To the extent that amounts are so withheld and deducted pursuant to this Section 5.3(j), such withheld amounts shall be treated for all purposes of this Agreement as having been paid to such Person in respect of which such deduction and withholding was made.
 
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ARTICLE VI
Indemnification
Section 6.1 Survival; Exclusive Remedy . The covenants, obligations and agreements contained herein to be performed (a) prior to the Effective Time shall survive for, and a claim may be brought with respect to any breach thereof any time prior to one year following the Effective Time and (b) following the Effective Time shall survive, and a claim may be brought with respect to any breach thereof, after the Effective Time in accordance with their respective terms, if specified, and otherwise, indefinitely; provided that, without limiting the foregoing, no claim may be asserted by any Spinco Indemnitee under this ARTICLE VI arising from any failure to transfer any Spinco Asset to Spinco unless such claim is asserted, if at all, prior to the date that is two years from the Distribution Date (such date, the “ Cut-off Date ”), except for claims (x) of which IP has been notified in writing by the Surviving Corporation prior to the Cut-off Date or (y) relating to or arising from any breach of any covenants, obligations and agreements to be performed after the Distribution Date. The Parties hereby agree that the sole and exclusive remedy for any claim (whether such claim is framed in tort, contract or otherwise) arising out of a breach of this Agreement (other than with respect to any claim arising as a result of fraud) shall be asserted pursuant to this ARTICLE VI, Section 10.16 or, with respect to Losses incurred in connection with any Spinco Guarantees or IP Guarantees (as the case may be) on or after the Effective Time, Section 7.3; provided that, the Parties shall not be entitled to indemnity under this ARTICLE VI with respect to any Current Assets and Current Liabilities solely to the extent of the amount of such items as were expressly and specifically included in Spinco Closing Working Capital or the Spinco Closing Net Debt. For the avoidance of doubt, to the extent any provision in this Agreement is deemed to be a representation or warranty, such provision shall not survive the Effective Time or termination of this Agreement. Notwithstanding anything to the contrary in this Agreement or the Merger Agreement, (x) the representations and warranties of IP set forth in Section 5.7 (“ Information to be Supplied ”) of the Merger Agreement, (y) the representations and warranties of UWWH set forth in Section 6.7 (“ Information to be Supplied ”) of the Merger Agreement, and (z) the covenant of IP set forth in Section 7.9 (“ Sufficiency of Assets ”) of this Agreement, shall survive the Effective Time, and a claim may be brought with respect to any breach thereof, during the two (2) year period immediately following the Effective Time. After the end of the applicable period set forth in this Section 6.1, no claim for breach of such representations, warranties, covenants, obligations or agreements may be brought, and no action with respect thereto may be commenced, and no party shall have any liability or obligation with respect thereto, unless the Indemnitee gave written notice to the Indemnifying Party, specifying in reasonable detail to the extent known the breach of the representation, warranty, covenant, obligation or agreement claimed, on or before the expiration of such period, as applicable, in which case the right of the party providing such written notice to assert its right to indemnification as to the matters so noticed shall not expire until the dispute is fully resolved and/or any applicable obligation to remedy such breach has been fully satisfied.
Section 6.2 Mutual Release . Effective as of the Effective Time and except as otherwise specifically set forth in the Transaction Agreements, each of IP, on behalf of itself and each of the IP Subsidiaries, on the one hand, and Spinco, on behalf of itself and each of the Spinco Subsidiaries, on the other hand, hereby releases and forever discharges the other Party
 
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and its Subsidiaries, and its and their respective officers, directors, managers or other persons acting in a similar capacity, agents, record and beneficial security holders (including trustees and beneficiaries of trusts holding such securities), advisors and Representatives (in each case, in their respective capacities as such) and their respective heirs, executors, administrators, successors and assigns, of and from all debts (including intercompany cash balances and accounts and notes payable), demands, actions, causes of action, suits, accounts, covenants, contracts, agreements, damages, claims and other Liabilities whatsoever of every name and nature, both in law and in equity, which the releasing party has or ever had or ever will have, which exist or arise out of or relate to events, circumstances or actions taken by such other party occurring or failing to occur or any conditions existing at or prior to the Effective Time whether or not known at the Effective Time; provided that the foregoing general release shall not apply to any Liabilities, Losses or other obligations under this Agreement or the other Transaction Agreements or any Contracts contemplated hereby or thereby (including the Liabilities, Losses, obligations and Contracts contemplated by Section 7.1), or assumed, transferred, assigned, allocated or arising under any of this Agreement or the other Transaction Agreements or any Contract contemplated thereby, in each case subject to the terms thereof, or any Person’s right to enforce this Agreement or the other Transaction Agreements or the Contracts contemplated thereby in accordance with their terms. Each Party agrees, for itself and each member of its Group, not to make any claim or demand or commence any Litigation Matter or assert any claim or demand, including any claim of contribution or any indemnification, against any member of the other Party’s Group with respect to the Liabilities released pursuant to this Section 6.2.
Section 6.3 Indemnification .
(a) From and after the Effective Time, Spinco and UWWH shall, on a joint and several basis, indemnify, defend and hold harmless the IP Indemnitees from and against all Indemnifiable Losses relating to or arising from (i) the Spinco Liabilities (including, subject to Section 2.2(e), any Delayed Transfer Liabilities that would otherwise be Spinco Liabilities if transferred on the Distribution Date), (ii) any breach by (A) UWWH or any or its Subsidiaries of any obligations, covenants or agreements to be performed by UWWH or its Subsidiaries pursuant to this Agreement, the Merger Agreement or the other Transaction Agreements prior to and/or subsequent to the Effective Time and (B) any member of the Spinco Group of any obligations, covenants or agreements to be performed by such Persons subsequent to the Effective Time pursuant to this Agreement, the Merger Agreement or the other Transaction Agreements, in the case of each of clauses (A) and (B), in accordance with the applicable survival period(s) set forth therein and (iii) any breach of the representation and warranty of UWWH set forth in Section 6.7 of the Merger Agreement (“ Information to be Supplied ”).
(b) From and after the Effective Time, IP shall indemnify, defend and hold harmless the Spinco Indemnitees from and against all Indemnifiable Losses relating to or arising from (i) the Excluded Liabilities, (ii) any breach by any member of (A) the IP Group of any obligations, covenants or agreements to be performed by such Persons pursuant to this Agreement, the Merger Agreement or the other Transaction Agreements prior to and/or subsequent to the Effective Time and (B) the Spinco Group of any obligations, covenants or agreements to be performed by such Persons pursuant to this
 
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Agreement, the Merger Agreement or the other Transaction Agreements (other than the Supply Agreements) prior to the Effective Time, in the case of each of clauses (A) and (B) in accordance with the applicable survival period(s) set forth therein and (iii) any breach of the representations and warranties of IP set forth in Section 5.7 of the Merger Agreement (“Information to be Supplied”).
(c) From and after the Effective Time, the UWWH Stockholder shall indemnify, defend and hold harmless the Spinco Indemnitees from and against all Indemnifiable Losses relating to or arising from any breach of the covenants of UWWH set forth in Section 8.2(h)(i) (“Employee Arrangements”) or Section 8.29 (“Severance”) of the Merger Agreement.
(d) Notwithstanding anything to the contrary set forth herein, indemnification relating to any arrangements between any member of the IP Group and any member of the Spinco Group for the provision after the Effective Time of goods and services in the ordinary course (including under the Supply Agreements) shall be governed by the terms of such arrangements and not by this Section or as otherwise set forth in this Agreement and the other Transaction Agreements.
(e) Indemnification for matters subject to the Tax Matters Agreement is governed by the terms, provisions and procedures of the Tax Matters Agreement and not by this ARTICLE VI.
Section 6.4 Procedures for Indemnification of Third-Party Claims .
(a) IP shall, and shall cause the other IP Indemnitees to, notify Spinco in writing promptly after learning of any Third-Party Claim for which any IP Indemnitee intends to seek indemnification from Spinco under this Agreement. Spinco shall, and shall cause the other Spinco Indemnitees to, notify IP in writing promptly after learning of any Third-Party Claim for which any Spinco Indemnitee intends to seek indemnification from IP under this Agreement. The failure of any Indemnitee to give such notice shall not relieve any Indemnifying Party of its obligations under this ARTICLE VI, except to the extent (and only to the extent) that such Indemnifying Party is actually prejudiced by such failure to give notice. Such notice shall (i) describe such Third-Party Claim in reasonable detail considering the information provided to the Indemnitee, (ii) indicate, to the extent determinable, the estimated amount of the Indemnifiable Loss that has been claimed against or may be sustained by such Indemnitee and the nature of the claim and (iii) contain a reference to the provisions of this Agreement in respect of which such right of indemnification is claimed or arises.
(b) Except as otherwise provided in Section 6.4(c), an Indemnifying Party may, by notice to the Indemnitee within 30 days after receipt by such Indemnifying Party of such Indemnitee’s notice of a Third-Party Claim, undertake (itself or through another member of the Group of which the Indemnifying Party is a member) the defense or settlement of such Third-Party Claim, at such Indemnifying Party’s own expense and by counsel reasonably satisfactory to the Indemnitee; provided that the Indemnitee shall be
 
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entitled to have sole control over the defense and settlement of any Third-Party Claim (i) seeking an injunction or other equitable relief against the Indemnitee, (ii) involving any criminal or quasi-criminal Litigation Matter, allegation or indictment to which the Indemnitee is a party, (iii) which the Indemnifying Party has failed or, in the reasonable determination of the Indemnitee, is failing to defend or otherwise prosecute diligently or (iv) involving a material supplier, material customer or other material business relationship of the Indemnitee or any of its Affiliates, in the case of each of clauses (i) through (iii), at the cost and expense of the Indemnifying Party. If an Indemnifying Party undertakes the defense of any Third-Party Claim, such Indemnifying Party shall control the investigation and defense or settlement thereof, and the Indemnitee may not settle or compromise such Third-Party Claim without the prior written consent of the Indemnifying Party. In any event, the Indemnifying Party shall not (x) require any Indemnitee, without its prior written consent, to take or refrain from taking any action in connection with such Third-Party Claim, or make any public statement or refrain from doing so, that would be in violation of Law, or (y) without the prior written consent of the Indemnitee and of IP, if the Indemnitee is an IP Indemnitee, or the Indemnitee and of Spinco, if the Indemnitee is a Spinco Indemnitee, consent to any settlement that does not include as a part thereof an unconditional release of the relevant Indemnitees from Liability with respect to such Third-Party Claim or that requires the Indemnitee or any of its Representatives or Affiliates to make any payment that is not fully indemnified by the Indemnifying Party under this Agreement or to be subject to any non-monetary remedy. Subject to the Indemnifying Party’s control rights, as specified herein, the Indemnitees may participate in such investigation and defense, at their own expense. Following the provision of notices to the Indemnifying Party, until such time as an Indemnifying Party has undertaken the defense of any Third-Party Claim as provided herein, such Indemnitee shall control the investigation and defense or settlement thereof, without prejudice to its right to seek indemnification hereunder and any fees and expenses of the Indemnitee that are incurred in connection therewith prior to the date the Indemnifying Party has undertaken the defense shall be borne by the Indemnifying Party.
(c) If an Indemnitee reasonably determines that there may be legal defenses available to it that are different from or in addition to those available to its Indemnifying Party which make it inappropriate for the Indemnifying Party to undertake the defense or settlement thereof, then such Indemnifying Party shall not be entitled to undertake the defense or settlement of such Third-Party Claim, and counsel for the Indemnifying Party shall be entitled to conduct the defense of such Indemnifying Party and counsel for the Indemnitee (selected by the Indemnitee) shall be entitled to conduct the defense of such Indemnitee, in which case the reasonable fees, costs and expenses of such counsel for the Indemnitee (but not more than one separate firm of attorneys (in addition to reasonably necessary local counsel(s), if any) reasonably satisfactory to the Indemnifying Party) shall be paid by such Indemnifying Party, it being understood that both such counsel shall cooperate with each other to conduct the defense or settlement of such Third-Party Claim as efficiently as possible.
 
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(d) In no event shall an Indemnifying Party be liable for the fees and expenses of more than one separate firm of attorneys for all Indemnitees (in addition to reasonably necessary local counsel(s) and its own counsel, if any) in connection with any one Litigation Matter, or separate but similar or related Litigation Matters, in the same jurisdiction arising out of the same general allegations or circumstances.
(e) If the Indemnifying Party undertakes the defense or settlement of a Third-Party Claim, (x) the Indemnifying Party shall keep the Indemnitee reasonably informed of the status of, and all material developments related to or in connection with, such Third-Party Claim and shall provide the Indemnitee with reasonable access to all written, and summaries of all oral, correspondence, drafts of settlements agreements, court filings and all other notices and documents received or transmitted by the Indemnifying Party relating to such Third-Party Claim and (y) the Indemnitee shall make available to the Indemnifying Party and its counsel all information and documents reasonably available to it which relate to any Third-Party Claim, and otherwise cooperate as may reasonably be required in connection with the investigation, defense and settlement thereof, subject to the terms and conditions of a mutually acceptable joint defense agreement. In the event the Indemnitee is undertaking the defense or settlement of a Third-Party Claim, the Indemnifying Party shall make available to the Indemnitee and its counsel all information and documents reasonably available to it which relate to any Third-Party Claim, and otherwise cooperate as may reasonably be required in connection with the investigation, defense and settlement thereof, subject to the terms and conditions of a mutually acceptable joint defense agreement.
Section 6.5 Reductions for Insurance Proceeds . The amount that any Indemnifying Party is or may be required to pay to any Indemnitee pursuant to this ARTICLE VI shall be reduced (retroactively or prospectively, as applicable) by any insurance proceeds in respect of the related Indemnifiable Losses (net of all costs of recovery, including deductibles, co-payments or other payment obligations) solely to the extent actually received by the Indemnitee. The existence of a claim or a potential claim by an Indemnitee for insurance in respect of any Indemnifiable Loss shall not, however, delay or reduce any payment pursuant to the indemnification provisions contained herein and otherwise determined to be due and owing by an Indemnifying Party. Notwithstanding any other provisions of this Agreement, it is the intention of the Parties hereto that no insurer shall be (x) entitled to a benefit it would not be entitled to receive in the absence of the foregoing indemnification provisions or (y) relieved of the responsibility to pay any claims for which it is obligated. If an Indemnitee shall have received the payment required by this Agreement from an Indemnifying Party in respect of any Indemnifiable Losses and shall subsequently actually receive insurance proceeds in respect of such Indemnifiable Losses, then such Indemnitee shall hold such insurance proceeds in trust for the benefit of such Indemnifying Party and shall pay to such Indemnifying Party a sum equal to the amount of such insurance proceeds actually received (net of all costs of recovery, including deductibles, co-payments or other payment obligations and without interest), up to the aggregate amount of any payments received from such Indemnifying Party pursuant to this Agreement in respect of such Indemnifiable Losses.
Section 6.6 Direct Claims . Any claim on account of an Indemnifiable Loss that does not result from a Third-Party Claim shall be asserted by written notice given by the Indemnitee to the Indemnifying Party. Such Indemnifying Party shall have a period of 30 days after the
 
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receipt of such notice within which to respond thereto. If such Indemnifying Party does not respond within such 30-day period, such Indemnifying Party shall be deemed to have refused to accept responsibility to make such payment. If such Indemnifying Party does not respond in such 30-day period or rejects such claim in whole or in part, the Indemnitee shall be free to pursue such remedies as may be available to such party as contemplated by this Agreement and the other Transaction Agreements.
Section 6.7 Joint Defense and Cooperation . With respect to any Third-Party Claim in which both IP and Spinco are, or reasonably may be expected to be, named as parties, or that otherwise implicates both IP and Spinco in a material fashion, the Parties shall reasonably cooperate with respect to such Third-Party Claim and if the Parties agree, maintain a joint defense in a manner that will preserve applicable privileges.
ARTICLE VII
Additional Covenants
Section 7.1 Intercompany Agreements . Except for the Transaction Agreements (including, for the avoidance of doubt, the Supply Agreements), payment obligations outstanding as of the Distribution Date with respect to ordinary course commercial transactions, agreements entered into after the date hereof that are expressly permitted under, or entered into with the prior written consent of UWWH pursuant to, Section 8.1(l) of the Merger Agreement, or as set forth on Section 7.1 of the Disclosure Letter, any agreements entered into pursuant to any Contract or other arrangement, formal and informal (including with respect to intercompany cash balances and accounts and notes payable), between any member of the IP Group, on the one hand, and any member of the Spinco Group, on the other hand, in existence as of the Distribution Date, (i) in the case of commercial arrangements, shall be terminable by IP or Spinco at any time after the Distribution on reasonable prior written notice and (ii) in the case of any other arrangements, shall terminate as of the close of business on the day prior to the Distribution Date. No such terminated Contract or arrangement (including any provision thereof that purports to survive termination) shall be of any further force or effect after the Distribution Date and, subject to the exceptions in clauses (i) and (ii) of the following sentence, all parties thereto shall be released from all Liabilities thereunder. From and after the Distribution Date, no member of either Group shall have any rights or Liabilities under any such terminated Contract or arrangement with any member of the other Group, except (i) as specifically provided herein or in the other Transaction Agreements and (ii) any Liability of a member of either Group arising out of a breach by such member prior to the date of termination of any arm’s length commercial Contract or arrangement (it being understood that the remedies for such a breach of the commercial arrangements that, after the Closing Date, will be the subject of the Supply Agreements shall be governed by the remedies provisions of the Supply Agreements). On or prior to the date that is 30 days after the Closing Date, each of IP and Spinco shall pay all intercompany payables in respect of commercial transactions that exist as of the Closing Date. Notwithstanding anything herein to the contrary, (x) the total amount that will be owed by Spinco to IP (and the corresponding amount of the Spinco payable to be included in Spinco Closing Date Working Capital) in respect of all inventory delivered to Spinco by IP at any time prior to the Distribution shall be equal to the amount of inventory purchased by the Spinco Business from IP in the 30 days prior to the
 
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Distribution, multiplied by 21/30, and (y) the total amount that will be owed by IP to Spinco (and the corresponding amount of the Spinco receivable to be included in Spinco Closing Date Working Capital) in respect of all inventory delivered to IP by Spinco at any time prior to the Distribution shall be equal to the amount of inventory purchased by IP from the Spinco Business in the 30 days prior to the Distribution.
Section 7.2 Assignment of Employee Restrictive Covenant Agreements . Prior to the Distribution Date, IP shall execute a form of global assignment reasonably satisfactory to UWWH with respect to the assignment to Spinco or another member of the Spinco Group designated by UWWH of all of the agreements to which a Spinco Group Employee is a party and that contain restrictive covenants related to confidentiality, ownership of intellectual property, non-competition or non-solicitation (each, a “ Restrictive Covenant Agreement ”), which form of global assignment will provide that (i) all references to the assigning party under each Restrictive Covenant Agreement shall be deemed to be references to the assignee and (ii) the assigning party waives any and all rights it may have against the Spinco Group Employee that are subject to such Restrictive Covenant Agreement.
Section 7.3 Guarantee Obligations and Liens .
(a) IP and Spinco shall, upon IP’s or UWWH’s request, cooperate, and shall cause their respective Groups to cooperate and use their respective reasonable best efforts to: ( x ) terminate, or to cause Spinco, or the appropriate member of the Spinco Group, to be substituted in all respects for IP or the applicable member of the IP Group in respect of, all obligations of any member of the IP Group under any Spinco Liabilities identified by IP for which such member of the IP Group may be liable, as guarantor, original tenant, primary obligor or otherwise (including Spinco Liabilities under any Financial Instrument) (“ IP Guarantees ”), and ( y ) terminate, or to cause reasonably comparable substitute Spinco Assets to be substituted in all respects for any Excluded Assets in respect of, any liens or Encumbrances identified by IP on Excluded Assets which are securing any Spinco Liabilities. If such a termination or substitution is not effected by the Distribution Date, without the prior written consent of IP, from and after the Distribution Date, Spinco shall not, and shall not permit any member of the Spinco Group to, renew or extend the term of, increase its obligations under, or transfer to a third party, any loan, lease, contract or other obligation for which a member of the IP Group is or may be liable or for which any Excluded Asset is or may be encumbered unless all obligations of the IP Group and all Encumbrances on any Excluded Asset with respect thereto are thereupon terminated by documentation reasonably satisfactory in form and substance to IP. Notwithstanding anything to the contrary herein, any action contemplated by this Section 7.3(a) and taken at IP’s request, shall be taken at IP’s sole cost and expense and IP shall reimburse Spinco for any reasonable out-of-pocket costs and expenses incurred by it or any member of the Spinco Group following the Effective Time in connection with the release of IP Guarantees contemplated by this Section 7.3(a). Spinco further agrees that to the extent IP or any of its Affiliates incurs any Losses in connection with such IP Guarantees on or after the Distribution Date, Spinco shall indemnify, defend and hold harmless IP against, and reimburse IP for, any and all Losses, including costs or expenses in connection with such IP Guarantees, including IP’s
 
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expenses in maintaining such IP Guarantees, whether or not any such IP Guarantee is drawn upon or required to be performed, and shall in any event promptly reimburse IP to the extent any IP Guarantee is called upon and IP or any of its Affiliates incurs any Losses in connection with the IP Guarantees; provided that, the foregoing indemnity shall not apply with respect to any out-of-pocket cost or expense to be borne by IP, as described in this Section 7.3(a).
(b) IP and Spinco shall, upon Spinco’s or UWWH’s request, cooperate, and shall cause their respective Groups to cooperate and use their respective reasonable best efforts to: ( x ) terminate, or to cause a member of the IP Group to be substituted in all respects for any member of Spinco Group in respect of, all obligations of any member of the Spinco Group under any Excluded Liabilities for which such member of the Spinco Group may be liable, as guarantor, original tenant, primary obligor or otherwise (including Excluded Liabilities under any Financial Instrument) (“ Spinco Guarantees ”), and ( y ) terminate, or to cause reasonably comparable substitute Excluded Assets to be substituted in all respects for any Spinco Assets in respect of, any liens or Encumbrances on Spinco Assets which are securing any Excluded Liabilities. Notwithstanding anything to the contrary herein, all actions contemplated by this Section 7.3(b) shall be taken at IP’s sole cost and expense. IP further agrees that to the extent Spinco or any of its Affiliates incurs any Losses in connection with such Spinco Guarantees on or after the Effective Time, IP shall indemnify, defend and hold harmless Spinco against, and reimburse Spinco for, any and all Losses, and shall in any event promptly reimburse Spinco to the extent any Spinco Guarantee is called upon and Spinco or any of its Affiliates incurs any Losses in connection with the Spinco Guarantees.
(c) Following the date hereof, (i) IP will use its reasonable best efforts (and Spinco will cooperate with IP) to identify to UWWH and Spinco any items described in clauses (x) and (y) of each of Section 7.3(a) and Section 7.3(b) for purposes of termination or substitution of such items, and (ii) IP shall not, and shall cause each member of the IP Group and the Spinco Group not to, enter into any additional IP Guarantees or Spinco Guarantees, in each case, without UWWH’s prior written consent, after disclosure of the terms and conditions thereof to UWWH or the Surviving Corporation (as the case may be), and provided that any such IP Guarantees or Spinco Guarantees shall be subject to the terms of this Section 7.3; provided , however , that the foregoing prohibition shall not apply to any new Lease or any amendment or modification of any existing Lease entered into following the date hereof in accordance with the terms of the Merger Agreement.
Section 7.4 Insurance .
(a) Notwithstanding any other provision of this Agreement, from and after the Distribution Date, Spinco and the Spinco Subsidiaries will have no rights with respect to any Policies, except that ( i ) IP will use its reasonable best efforts, at Spinco’s request, to assert, maintain or settle claims on behalf of Spinco and the Spinco Subsidiaries for any Loss, Liability or damage identified by Spinco with respect to the Spinco Business, Spinco Assets or Spinco Liabilities under Policies with third-party insurers or, in the case
 
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of auto liability insurance and general liability insurance, IP’s captive insurance subsidiary, which are “occurrence basis” insurance policies (“ Occurrence Basis Policies ”) arising out of insured incidents occurring from the date coverage thereunder first commenced until the Distribution to the extent that the terms and conditions of any such Occurrence Basis Policies and agreements relating thereto so allow and ( ii ) IP will use reasonable best efforts to assist Spinco to pursue and settle claims with respect to the Spinco Business, Spinco Assets or Spinco Liabilities that were reported to third-party insurers according to the terms and conditions of Policies written on a “claims-made” basis (“ Claims Made Policies ”) prior to the Distribution; provided that ( A ) all of IP’s and each IP Subsidiary’s reasonable out-of-pocket costs and expenses incurred in connection with the foregoing are promptly paid by Spinco (it being agreed that IP will not incur material expenditures above reasonable amounts specified by Spinco unless authorized by Spinco; provided further that IP shall not be required to take any action referred to in this Section 7.4(a) until it has received such authorization and agreed the amounts are reasonable), ( B ) IP and the IP Subsidiaries may, at any time, without liability or obligation to Spinco or any Spinco Subsidiary, amend, commute, terminate, buy out, extinguish liability under or otherwise modify any Occurrence Basis Policies (and such claims shall be subject to any such amendments, commutations, terminations, buy-outs, extinguishments and modifications), in each case provided that such modifications are not discriminatory with respect to the Spinco Assets or Spinco Liabilities and ( C ) any such claim will be subject to all of the terms and conditions of the applicable Policy.
(b) In the event that after the Distribution Date, IP or any IP Subsidiary proposes to amend, commute, terminate, buy-out, extinguish liability under or otherwise modify any Policies under which Spinco has rights to assert claims pursuant to Section 7.4(a) in a manner that would adversely affect to a material degree any such rights of the Spinco Group, IP will (i) give Spinco prior written notice thereof (it being understood that the decision to take any such action will be in the sole discretion of IP) and (ii) pay to Spinco its equitable share (which shall be determined by IP and Spinco in good faith based on the amount of premiums paid or allocated to the Spinco Business in respect of the applicable Policy) of any net proceeds actually received by IP from the insurer under the applicable Policy as a result of such action by IP (after deducting IP’s reasonable costs and expenses incurred in connection with such action).
(c) This Agreement is not intended as an attempted assignment of any policy of insurance or as a contract of insurance and shall not be construed to waive any right or remedy of any member of the IP Group in respect of any insurance policy or any other contract or policy of insurance.
(d) IP’s obligation to use its reasonable best efforts to assist the Spinco Group in asserting claims under applicable Policies will include using reasonable best efforts in assisting Spinco to establish its right to coverage under such Policies (including, submitting such claim on behalf of the Spinco Group, acting as the direct contact with the applicable insurer and using its reasonable best efforts to obtain the written consent of each of its insurance companies, in each case, as necessary or reasonably requested by the Spinco Group in connection with the exercise of its rights under this Section 7.4). IP
 
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agrees to use its reasonable best efforts to recover Losses or to assist Spinco in connection with any efforts by the Spinco Group to recover Losses, as the case may be, under any Policy with respect to the Spinco Business for incidents occurring prior to the Distribution Date; provided that all of IP’s reasonable out-of-pocket costs and expenses incurred in connection with the foregoing are promptly paid by Spinco and it being agreed that IP will not incur material expenditures above reasonable amounts specified by Spinco unless authorized by Spinco.
(e) Except as otherwise agreed under Section 8.11 of the Merger Agreement, if an extended reporting period for any Claims Made Policies issued by any third-party insurer is available for IP to purchase for insured incidents occurring prior to the Distribution, IP will give Spinco prompt written notice thereof, which notice shall include a summary of the terms under which such extended reporting period can be purchased, and Spinco shall have twenty (20) Business Days after delivery of such notice to request that such extended reporting period be purchased. Unless IP receives such a request from Spinco during such twenty-Business Day period, IP shall not cause to be purchased an extended reporting period with respect to such insurance for the benefit of Spinco and the Spinco Subsidiaries as insureds and IP shall have no further responsibility with respect to any extended reporting period with respect to such insurance.
(f) The obligations of IP and its Subsidiaries under this Section 7.4 shall terminate on the date that is 18 months after the Effective Time.
(g) Nothing in this Section 7.4 will be construed to limit or otherwise alter in any way the indemnity obligations of the Parties to this Agreement, including those created by this Agreement or the other Transaction Agreements, by operation of Law or otherwise. For the avoidance of doubt, without limiting any obligations under the Employee Matters Agreement, this Section 7.4 is not intended to create any obligation of any Party in respect of any Policy maintained by any member of the IP Group to satisfy claims for benefits under any Spinco Benefit Plans (as defined in the Merger Agreement).
Section 7.5 Further Assurances . In addition to the actions specifically provided for elsewhere in this Agreement, the Parties shall use their respective reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things reasonably necessary, proper or advisable under applicable Laws, regulations and agreements to consummate and make effective the transactions contemplated by this Agreement (including all actions contemplated to be taken from time to time after the Distribution Date, which shall be taken at the expense of the Party taking such action and for no further consideration from any other Party or its Affiliates (except as otherwise expressly provided in this Agreement)). Without limiting the foregoing, the Parties shall cooperate with the other Parties, and execute and deliver, or use their respective reasonable best efforts to cause to be executed and delivered, all instruments, and to make all filings with, and to obtain all consents, approvals or authorizations of, any Governmental Authority or any other Person under any permit, license, agreement, indenture or other instrument, and take all such other actions as a Party (as the case may be) may reasonably be requested to take by another Party from time to time, consistent with the terms of this Agreement and the other Transaction Agreements, in order to effectuate the provisions and purposes of this
 
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Agreement, including, in the case of (a), at the expense of IP and in the case of (b), (c) and (d), at the expense of Spinco: (a) to evidence the assignment of all right, title, and interest in and to Intellectual Property Assets to Spinco or a Spinco Subsidiary, as appropriate, in a recordable form for filing with any Governmental Authority and otherwise reasonably acceptable to Spinco; (b) to assist in the preparation and prosecution of any application for registration, or any application for renewal of a registration, relating to any of the Intellectual Property Assets; (c) to assist in the prosecution or defense of any interference, opposition, infringement, or other proceedings that may arise in connection with any of the Intellectual Property Assets; and (d) to assist Spinco or a Spinco Subsidiary, as appropriate, in obtaining any additional protection relating to Intellectual Property Assets that Spinco may reasonably deem appropriate that may be secured under applicable Laws.
Section 7.6 Use of Names .
(a) Except as otherwise provided herein or in any of the other Transaction Agreements, after the Distribution Date, neither IP nor any Subsidiary of IP ( i ) shall use any material showing any affiliation or connection of IP or any member of the IP Group with Spinco or any member of the Spinco Group, including any Transferred Trademarks or any translations, transliterations, adaptations, derivations, acronyms, variations, insignias, designations, or combinations of any Transferred Trademark or any name likely to cause confusion with or dilute any of the Transferred Trademarks or (ii) shall represent to third parties that any of them is affiliated or connected with Spinco or any member of the Spinco Group. The restrictions contained in this Section 7.6(a) shall not apply to filings, reports and other documents required by applicable Law or regulations of securities exchanges to be filed or made publicly available.
(b) Except as otherwise provided herein or in any of the other Transaction Agreements, after a period of nine months following the Distribution Date, neither Spinco nor any Subsidiary of Spinco (i) shall use any material showing any affiliation of Spinco or any member of the Spinco Group with IP or any member of the IP Group, including any Trademarks owned at such time by IP or any member of the IP Group or any translations, transliterations, adaptations, derivations, acronyms, variations, insignias, designations, or combinations of any such Trademark or any name likely to cause confusion with or dilute any of such Trademarks or (ii) shall represent to third parties that any of them is affiliated with IP or any member of the IP Group. The restrictions contained in this Section 7.6(b) shall not apply to filings, reports and other documents required by applicable Law or regulations of securities exchanges to be filed or made publicly available. Without limiting the generality of the foregoing, prior to the Distribution Date, Spinco shall change the names of all of the Spinco Subsidiaries to remove the name IP.
(c) The Parties agree that, for a period of nine months from and after the Distribution Date (the “ Sell-off Period ”), Spinco, its Subsidiaries and the Spinco Business shall be entitled to continue to use all Trademarks or other source identifiers owned by IP or any of its Affiliates (the “ IP Trademarks ”) to the extent that such IP Trademarks are contained as of the Distribution Date on any business cards, schedules,
 
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stationery, displays, signs, promotional materials, manuals, forms, computer software or other material used in the Spinco Business, without any obligation on the part of Spinco or its Subsidiaries to pay royalties or similar fees to IP or any of its Affiliates during the Sell-off Period; provided that , notwithstanding the Sell-off Period or anything else in this Agreement to the contrary, Spinco and its Subsidiaries shall be entitled to continue to use all such IP Trademarks to the extent that such IP Trademarks are contained as of the Distribution Date on any Inventory that is a Spinco Asset until such time as such Inventory is sold, used or consumed in the operation of the Spinco Business in the ordinary course. Subject to the proviso of the preceding sentence, Spinco agrees that, upon termination of the Sell-off Period, Spinco and its Subsidiaries shall cease and desist from all further use of the IP Trademarks except to the extent that such use is a “ fair use ” as a matter of Law or as otherwise agreed by the Parties.
(d) In furtherance of the foregoing obligations set forth in this Section 7.6, as promptly as practicable following the Distribution Date, the Surviving Corporation shall cease printing (and/or requesting to be printed on its behalf) any business cards, schedules, stationery, displays, signs, promotional materials, manuals, forms, computer software or other material used in the Spinco Business, in each case, that contain any IP Trademarks.
Section 7.7 Board Members and Committee Members . Immediately prior to the Distribution Date, IP and Spinco shall cause the individuals set forth in Section 7.7(a) of the Disclosure Letter to be elected as, and constitute, the only members of the board of directors of Spinco, as set forth on Section 7.7(a) of the Disclosure Letter. Such Persons shall serve until their successors have been duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with Spinco’s Certificate of Incorporation and By-laws. IP and UWWH intend that the Spinco corporate governance guidelines will contain the provisions related to director resignation set forth on Section 7.7(b) of the Disclosure Letter. IP and UWWH intend that the members and chairperson of each of the Compensation Committee, Audit Committee and Nominating and Corporate Governance Committee of Spinco will be as set forth on Section 7.7(c) of the Disclosure Letter. The Registration Statement will name such persons as the initial members and chairperson of each of the Compensation Committee, Audit Committee and Nominating and Corporate Governance Committee of Spinco. In the event that, prior to the Distribution Date, any of the individuals set forth on Section 7.7(a) of the Disclosure Letter or Section 7.7(c) of the Disclosure Letter no longer agree to, or can no longer, serve in their designated capacity as a member of the board of directors and/or applicable committee, the Parties shall cooperate and consult with one another in good faith to determine mutually acceptable replacements for any such individuals.
Section 7.8 Auditors . Unless otherwise determined by the board of directors of Spinco or the Surviving Corporation, Deloitte & Touche LLP shall be the auditors of Spinco and the Surviving Corporation.
 
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Section 7.9 Sufficiency of Assets . If the failure to schedule an asset (excluding any asset that constitutes services, or is used in the provision of services and is not otherwise directly used in the Spinco Business, or constitutes the right to receive services, each of which shall be governed by the Transition Services Agreement and not this Section 7.9) on Section 5.8(a) of the IP/Spinco Disclosure Schedules causes IP to be in breach of the representation in Section 5.8(a) of the Merger Agreement as of the Closing (as if, and irrespective of whether, such representation survives the Closing Date) (such asset, a “ Missing Asset ”), IP shall, as promptly as practicable, (a) pay over to the Surviving Corporation any payments received by the IP Group directly generated by such Missing Asset following the Distribution Date, but only to the extent such Missing Asset relates to the Spinco Business and only if such Missing Asset directly generated (or is of the same type of asset that directly generated) revenue reflected in the unaudited interim combined statement of operations of the Spinco Business for the 9 months ended September 30, 2013 and (b) (i) transfer such Missing Asset to the Surviving Corporation, (ii) provide the Surviving Corporation use of such Missing Asset, to the same extent that such Missing Asset was used prior to the Distribution by the Spinco Business or (iii) provide the Surviving Corporation with an asset, which in the Surviving Corporation’s reasonable determination is a reasonably comparable replacement for such Missing Asset. The Surviving Corporation shall pay for such Missing Asset, use or replacement asset at a cost substantially equivalent to the historical cost allocated to the Spinco Business for the Spinco Business’ use of such Missing Asset in order that Spinco shall, consistent with past practice, receive the benefits and bear the economic burdens of such Missing Asset as closely as possible to historical practice. The selection of any of the remedies set forth in the foregoing clauses (b)(i) - (iii) shall be in IP’s discretion, subject to the Surviving Corporation’s consent (not to be unreasonably withheld, conditioned or delayed, taking into account (without limitation) the efficacy of the remedy selected by IP as compared to that of the other remedies). Notwithstanding anything herein, in the event that the Parties mutually determine in good faith that any of the remedies set forth in the foregoing clauses (i) - (iii) would be reasonably impracticable for IP to achieve, then such asset shall be governed under Section 2.2(b), including IP agreeing to use reasonable best efforts (and Spinco agreeing to cooperate with IP) to establish arrangements under which the Surviving Corporation shall continue to receive the benefits and assume the obligations, in each case, that the Spinco Group received or assumed prior to the Distribution Date. For the avoidance of doubt, other than IP’s compliance with this Section 7.9, IP shall have no Liability with respect to a breach of Section 5.8(a) of the Merger Agreement.
Section 7.10 Supply Agreements . From the date hereof through the Closing Date, UWWH, Spinco and IP shall cooperate in good faith to prepare and negotiate the Supply Agreements; provided that prior to the Closing Date the terms of the Supply Agreements shall not be disclosed to GP (as defined in the Merger Agreement) or any employee of UWWH or UWWH Stockholder who is not an attorney with “clean team” access to the Dataroom.
ARTICLE VIII
Access to Information
Section 8.1 Provision of Information . Notwithstanding anything herein to the contrary, the Parties agree that the obligation of IP to deliver Information that is part of the Spinco Assets to Spinco from and after the Distribution will be governed by this ARTICLE VIII. Subject to the terms of this Article VIII:
 
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(a) Prior to or as promptly as practicable following the Distribution Date, IP shall deliver to Spinco at the address specified for notices to UWWH in Section 10.2 below (or to such other address in the continental United States as may be designated by UWWH to IP no less than ten days prior to the Distribution Date), ( i ) complete copies of the Information constituting Spinco Assets that are continuing property records, ( ii ) accurate copies of the Information constituting Spinco Assets that is contained in the Dataroom and which UWWH has had access prior to the date hereof, together with such other information to be made available between the date hereof and the Distribution Date in the electronic data room, and such additional Information constituting Spinco Assets that is in the same general categories as the existing Information in such data room and is added to the data room by IP (using reasonable best efforts to do so) immediately prior to the Distribution Date and ( iii ) minute books and organizational documents of Spinco and the Spinco Subsidiaries.
(b) Following the Distribution Date until the sixth anniversary thereof and except in connection with any dispute among IP and any of its Subsidiaries, on the one hand, and Spinco and any of its Subsidiaries, on the other hand (which shall be governed by such discovery rules as may be applicable thereto), IP shall deliver or make available to Spinco from time to time, upon the request of Spinco, Information in IP’s possession and not provided pursuant to Section 8.1(a) relating directly or primarily to the Spinco Assets, the Spinco Business, or the Spinco Liabilities including, in each case, all: ( i ) Contracts, ( ii ) litigation files and ( iii ) all other Information that constitutes Spinco Assets or relates directly to any Spinco Liability, in each case to the extent they are material to the conduct of the Spinco Business following the Distribution Date. IP also will cooperate with Spinco to accommodate Spinco’s reasonable requests from time to time following the Distribution Date for other Information relating directly or primarily to the Spinco Assets, the Spinco Business or the Spinco Liabilities. Subject to Section 8.5, IP may retain complete and accurate copies of such Information. IP shall maintain all such Information consistently with IP’s ordinary course document retention policies except to the extent that any such Information has already been provided to the Surviving Corporation or has been offered to and declined by the Surviving Corporation and in accordance with 8.4 following the Distribution Date. The out of pocket costs and expenses incurred in the identification, isolation and provision of Information to the Spinco Group (and in the case of any Information provided pursuant to the second sentence of this paragraph, a reasonable internal cost allocation) shall be paid for (i) by the Spinco Group if incurred after the Effective Time and (ii) by IP if incurred prior to the Effective Time. Information shall be provided as promptly as practicable upon request, with due regard for other commitments of IP personnel and the materiality of the information to Spinco (including the need to comply with any legal or regulatory requirement of any Governmental Authority).
(c) Notwithstanding anything in this Agreement to the contrary, ( x ) the provision of returns and other Information relating to Tax matters shall be governed by the Tax Matters Agreement and to the extent applicable, the Merger Agreement and the Tax Receivable Agreement, and not this Agreement, and ( y ) the provision of Information relating to personnel and personnel matters will be governed by the Employee Matters Agreement and, to the extent applicable, the Merger Agreement, and not this Agreement unless (and to the extent) explicitly provided for in the Employee Matters Agreement.
 
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Section 8.2 Privileged Information .
(a) Each Party acknowledges that: ( i ) each of IP and Spinco (and the members of the IP Group and the Spinco Group, respectively) has or may obtain Privileged Information; ( ii ) there are or may be a number of Litigation Matters affecting each or both of IP and Spinco; ( iii ) both IP and Spinco have a common legal interest in Litigation Matters, in the Privileged Information and in the preservation of the confidential status of the Privileged Information, in each case relating to the pre-Distribution Spinco Business or IP Business or, in the case of the Spinco Group, relating to or arising in connection with the relationship among IP and its Subsidiaries on or prior to the Distribution Date; and ( iv ) both IP and Spinco intend that the transactions contemplated hereby and by the Merger Agreement and the other Transaction Agreements and any transfer of Privileged Information in connection therewith shall not operate as a waiver of any potentially applicable privilege.
(b) Each of IP and Spinco agrees, on behalf of itself and each member of the Group of which it is a member, not to disclose or otherwise waive any privilege attaching to any Privileged Information relating to the pre-Distribution Spinco Business or IP Business, as applicable, or, in the case of the Spinco Group, relating to or arising in connection with the relationship among IP and its Subsidiaries on or prior to the Distribution Date, without providing prompt written notice to and obtaining the prior written consent of the other Party, which consent shall not be unreasonably withheld, conditioned or delayed and shall not be withheld, conditioned or delayed if the other Party certifies that such disclosure is to be made in response to a likely threat of suspension or debarment or similar action; provided , that Spinco and IP shall not be required to give any such notice or obtain any such consent and may make such disclosure or waiver with respect to Privileged Information if such Privileged Information relates solely to the pre-Distribution Spinco Business or IP Business, respectively. In the event of a disagreement between any member of the IP Group and any member of the Spinco Group concerning the reasonableness of withholding such consent, no disclosure shall be made prior to a resolution of such disagreement by a court of competent jurisdiction, provided that the limitations in this sentence shall not apply in the case of disclosure required by Law and so certified as provided in the first sentence of this paragraph.
(c) Upon any member of the IP Group or any member of the Spinco Group receiving any subpoena or other compulsory disclosure notice from a court or other Governmental Authority which requests disclosure of Privileged Information, in each case relating to pre-Distribution Spinco Business or IP Business, as applicable, or, in the case of the Spinco Group, relating to or arising in connection with the relationship among IP and its Subsidiaries on or prior to the Distribution Date, the recipient of the notice shall (to the extent consent is required in connection with the disclosure of such Privileged Information under paragraph (b) of this Section) as promptly as practicable
 
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provide to the other Group (following the notice provisions set forth herein) a copy of such notice, the intended response, and all materials or information relating to the other Group that might be disclosed and the proposed date of disclosure. In the event of a disagreement as to the intended response or disclosure, unless and until the disagreement is resolved as provided in paragraph (b) of this Section, the Parties shall cooperate to assert all defenses to disclosure claimed by either such Party’s Group, and shall not disclose any disputed documents or information until all legal defenses and claims of privilege have been finally determined, except as otherwise required by a court order requiring such disclosure.
Section 8.3 Production of Witnesses . Subject to Section 8.2, after the Distribution Date, each of IP and Spinco shall, and shall cause each member of its Group to, make available to Spinco or IP or any member of the Spinco Group or of the IP Group, as the case may be, upon reasonable prior written request, such Group’s directors, managers or other persons acting in a similar capacity, officers, employees and agents as witnesses to the extent that any such Person may reasonably be required in connection with any Litigation Matters, administrative or other proceedings in which the requesting Party may from time to time be involved and relating to the pre-Distribution Spinco Business or the IP Business, as applicable, or, in the case of the Spinco Group, relating to or in connection with the relationship among IP and its Subsidiaries on or prior to the Distribution Date. The out-of-pocket costs and expenses incurred in the provision of such witnesses shall be paid by the Party requesting the availability of such persons; provided , the out of pocket costs and expenses incurred in the provision of such witnesses to the Spinco Group (including a reasonable internal cost allocation) shall be paid for by the Spinco Group.
Section 8.4 Retention of Information . Except as otherwise agreed in writing, or as otherwise provided in the other Transaction Agreements, each of IP and Spinco shall, and shall cause each member of its Group to, retain all Information (including any Confidential Information) in such Party’s Group’s possession or under its control, relating directly or primarily to the pre-Distribution business, Assets or Liabilities of the other Party’s Group (such information “ Retained Information ”) for so long as such Information is retained pursuant to such Party’s ordinary course document retention policies as of such time or such later date as may be required by Law, except that if, prior to the expiration of such period, any member of either Party’s Group wishes to destroy or dispose of any such Retained Information that is at least five years old, prior to destroying or disposing of any of such Retained Information, (a) the Party whose Group is proposing to dispose of or destroy any such Retained Information shall provide no less than 30 days’ prior written notice to the other Party, specifying the Retained Information proposed to be destroyed or disposed of, and (b) if, prior to the scheduled date for such destruction or disposal, the other Party requests in writing that any of the Retained Information proposed to be destroyed or disposed of be delivered to such other Party, the Party whose Group is proposing to dispose of or destroy such Retained Information promptly shall arrange for the delivery of the requested Retained Information to a location specified by, and at the expense of, the requesting Party. This Section 8.4 shall not apply to Information referred to in clauses (x) and (y) of Section 8.1(c).
 
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Section 8.5 Confidentiality .
(a) The Parties acknowledge that in connection with the Transactions, the Parties have disclosed and will continue to disclose to each other Information, including Confidential Information. The Parties agree that, after the Effective Time, Information that constitutes a Spinco Asset, together with any information disclosed to IP, or to which IP or any of its Representatives are given access, pursuant to Section 5.3 (“ Earnout Information ”) shall be Information of Spinco for purposes of this Section 8.5 and IP shall be deemed a receiving party of such Information for purposes of this Section 8.5; provided, that the obligations set forth in this Section 8.5 shall automatically terminate solely with respect to Earnout Information on the date that is two years following the last day of the Measurement Period.
(b) Subject to Section 8.2, which shall govern Privileged Information, the Parties shall hold, and shall cause each of their respective controlled Affiliates to hold, and each of the foregoing shall cause their respective Representatives to hold, in strict confidence, and not to disclose to any other Person (including without limitation by issuing a press release or otherwise making any public statement), use, for any purpose other than as expressly permitted pursuant to this Agreement, the Merger Agreement or the other Transaction Agreements, without the prior written consent of the other Party, any and all Confidential Information concerning the other Party or such Party’s Subsidiaries; provided , that the Parties may disclose, or may permit disclosure of, Confidential Information (i) to their respective Representatives who have a need to know such information for auditing and other non-commercial purposes and are informed of their obligation to hold such information confidential to the same extent as is applicable to the Parties and in respect of whose failure to comply with such obligations, the applicable Party will be responsible, (ii) if the Parties or any of their respective controlled Affiliates are requested or required to disclose any such Confidential Information by oral questions, interrogatories, requests for information or other documents in legal proceedings, subpoena, civil investigative demand or any other similar process, or by other requirements of Law or stock exchange rule, (iii) as required in connection with any legal or other proceeding by one Party against any other Party or (iv) as necessary in order to permit a Party to prepare and disclose its financial statements, or other required disclosures required by Law or such applicable stock exchange; provided further , that IP shall not, and shall cause each of its controlled Affiliates not to, directly or indirectly use Spinco’s or any of its Subsidiaries’ Confidential Information first obtained prior to the Distribution (other than any Confidential Information of the same type as is routinely made available to IP in the ordinary course of business from other distributors of IP manufactured products that are non-Affiliates of IP, it being understood that the type of information described by this parenthetical will in no event be deemed to include the following information regarding Spinco and its Subsidiaries: prices and other terms on which product is sold to Spinco customers, Spinco margins, and any dataset, directory, or other compiled list of Spinco customer information) to identify or solicit any customers, clients, or accounts of Spinco or any of its Subsidiaries or otherwise for the purpose of, directly or indirectly, competing with Spinco or any of its Subsidiaries. Spinco and IP further agree to use reasonable best efforts (and to cause each of their respective
 
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controlled Affiliates to use reasonable best efforts) to safeguard such Confidential Information and to protect it against disclosure, misuse, espionage, loss and theft. Notwithstanding the foregoing, in the event that any demand or request for disclosure of Confidential Information is made pursuant to clause (ii) above, the Party subject to such demand or request, as applicable, shall provide the other with prompt written notice of any such request or requirement so that the other Party has an opportunity to seek a protective order or other appropriate remedy, which such Parties will cooperate in obtaining. In the event that such appropriate protective order or other remedy is not obtained, the Party whose Confidential Information is required to be disclosed shall or shall cause the other applicable Party or Parties to furnish, or cause to be furnished, only that portion of the Confidential Information that is in the opinion of outside counsel necessary to be disclosed and shall use its reasonable best efforts to ensure confidential treatment is accorded to such disclosed information.
(c) If the Merger is not consummated, each Party shall promptly (i) deliver or cause to be delivered to any requesting Party (and if in electronic format, delete or destroy or cause to be deleted or destroyed) all Confidential Information furnished to it or to any of its Affiliates by such requesting Party and (ii) if specifically requested by such requesting Party, destroy any copies of such Confidential Information (including any extracts therefrom), unless such delivery or destruction would violate any Law. Upon the written request of such requesting Party, the Party subject to such request shall cause one of its duly authorized officers to certify promptly in writing to such requesting Party that all Confidential Information has been returned, destroyed or deleted as required by the preceding sentence.
(d) IP and UWWH acknowledge that they have previously executed the Confidentiality Agreement, which shall continue in full force and effect in accordance with its terms and that the provisions of this Section 8.5 are in furtherance of, and do not limit the obligations of, IP and UWWH under the Confidentiality Agreement.
(e) Notwithstanding anything to the contrary herein, this Section 8.5 shall not apply to (i) Information referred to in clauses (x) and (y) of Section 8.1(c) or (ii) any non-controlled Affiliate of either Party except to the extent such non-controlled Affiliate receives Confidential Information with respect to Spinco, IP, or any of their respective Subsidiaries’, as applicable.
Section 8.6 Cooperation with Respect to Government Reports and Filings . IP, on behalf of itself and each member of the IP Group, agrees to provide any member of the Spinco Group, and Spinco, on behalf of itself and each member of the Spinco Group, agrees to provide any member of the IP Group, with such cooperation and Information (in each case, with respect to the Spinco Business only) as may be reasonably requested by the other in connection with the preparation or filing of any government report or other government filing contemplated by this Agreement or in conducting or responding to any other government proceeding relating to the pre-Distribution business of the IP Group or the Spinco Group, Assets or Liabilities of either Group or relating to or in connection with the relationship between the Groups on or prior to the Distribution Date. Such cooperation and Information shall include promptly forwarding copies
 
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of appropriate notices, forms and other communications received from or sent to any Governmental Authority that relate to the IP Group, in the case of the Spinco Group, or the Spinco Group, in the case of the IP Group. All cooperation provided under this section shall be provided at the expense of the Party requesting such cooperation; provided that, any such expense of Spinco (or any other member of the Spinco Group) incurred prior to the Effective Time shall be borne by IP. Each Party shall make its employees and facilities available during normal business hours and on reasonable prior notice to provide explanation of any documents or Information provided hereunder. This Section 8.6 shall not apply to Information referred to in clauses (x) and (y) of Section 8.1(c).
ARTICLE IX
No Representations or Warranties
Section 9.1 No Representations or Warranties . EXCEPT AS EXPRESSLY SET FORTH HEREIN OR IN ANY OTHER TRANSACTION AGREEMENT (INCLUDING THE MERGER AGREEMENT), EACH OF SPINCO (ON BEHALF OF ITSELF AND MEMBERS OF THE SPINCO GROUP) AND UWWH (ON BEHALF OF ITSELF AND MEMBERS OF THE UWWH GROUP) ACKNOWLEDGES THAT NONE OF IP OR ANY MEMBER OF THE IP GROUP MAKES ANY EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY HEREIN AS TO ANY MATTER WHATSOEVER, INCLUDING ANY REPRESENTATION OR WARRANTY WITH RESPECT TO: (A) THE CONDITION OR THE VALUE OF ANY SPINCO ASSET OR THE AMOUNT OF ANY SPINCO LIABILITY, (B) THE FREEDOM FROM ANY SECURITY INTEREST OF ANY SPINCO ASSET, (C) THE ABSENCE OF DEFENSES OR FREEDOM FROM COUNTERCLAIMS WITH RESPECT TO ANY CLAIM TO BE CONVEYED TO SPINCO OR HELD BY A MEMBER OF THE SPINCO GROUP; OR (D) WITH RESPECT TO ANY IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE OR TITLE. EXCEPT TO THE EXTENT OTHERWISE PROVIDED FOR HEREIN OR IN ANY OTHER TRANSACTION AGREEMENT (INCLUDING THE MERGER AGREEMENT), EACH OF SPINCO (ON BEHALF OF ITSELF AND MEMBERS OF THE SPINCO GROUP) AND UWWH (ON BEHALF OF ITSELF AND MEMBERS OF THE UWWH GROUP) FURTHER ACKNOWLEDGES THAT ALL OTHER REPRESENTATIONS OR WARRANTIES THAT IP OR ANY MEMBER OF THE IP GROUP GAVE OR MIGHT HAVE GIVEN, OR WHICH MIGHT BE PROVIDED OR IMPLIED BY APPLICABLE LAW OR COMMERCIAL PRACTICE, ARE HEREBY EXPRESSLY EXCLUDED, AND THAT NO MEMBER OF THE SPINCO GROUP HAS RELIED ON ANY SUCH REPRESENTATION OR WARRANTY. EXCEPT TO THE EXTENT OTHERWISE PROVIDED HEREIN OR IN ANY OTHER TRANSACTION AGREEMENT (INCLUDING THE MERGER AGREEMENT), ALL ASSETS TO BE TRANSFERRED TO SPINCO (AND ALL OF THE SPINCO ASSETS HELD BY THE SPINCO ENTITIES) WILL BE TRANSFERRED WITHOUT ANY COVENANT, REPRESENTATION OR WARRANTY (WHETHER EXPRESS OR IMPLIED) AND ARE HELD “AS IS, WHERE IS”. NOTWITHSTANDING ANYTHING IN THIS SECTION 9.1 TO THE CONTRARY, NOTHING HEREIN SHALL LIMIT ANY CLAIM BY ANY OF THE PARTIES RELATING TO OR ARISING FROM FRAUD.
 
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ARTICLE X
Miscellaneous
Section 10.1 Expenses . All fees and expenses and any other costs incurred by the Parties in connection with the transactions contemplated hereby and by the Transaction Agreements shall be paid as set forth in Section 10.3 of the Merger Agreement, provided that Spinco shall reimburse IP for and indemnify IP against, all out-of-pocket costs invoiced by a financial printer in connection with the preparation and filing of the Information Statement, including all amendments thereto and any Current Report on Form 8-K that shall be filed by Spinco which shall include the Information Statement as an exhibit thereto, and all out-of-pocket costs of preparing, printing and delivering the Information Statement to IP’s record and beneficial stockholders (other than attorneys’ fees and fees of other advisors to IP). If the Distribution occurs, to the extent that invoices from IP for such costs, fees and expenses are provided by IP to the Surviving Corporation following the Distribution Date, the Surviving Corporation shall reimburse IP for such costs within ten Business Days following receipt of such invoices from IP. If the Distribution occurs, to the extent that invoices from the Surviving Corporation for costs, fees and expenses to be borne by IP pursuant to Section 10.3 of the Merger Agreement are provided by the Surviving Corporation to IP following the Distribution Date, IP shall reimburse the Surviving Corporation for such costs within ten Business Days following receipt of such invoices from the Surviving Corporation.
Section 10.2 Notices . All notices, requests, claims, demands and other communications to be given or delivered under or by the provisions of this Agreement shall be in writing and shall be deemed given only (a) when delivered personally to the recipient, (b) one Business Day after being sent to the recipient by reputable overnight courier service (charges prepaid), provided that confirmation of delivery is received, (c) upon machine-generated acknowledgment of receipt after transmittal by facsimile or (d) five days after being mailed to the recipient by certified or registered mail (return receipt requested and postage prepaid). Such notices, demands and other communications shall be sent to the Parties at the following addresses (or at such address for a Party as will be specified by like notice):
If to IP or, prior to the Effective Time, Spinco:
International Paper Company
6400 Poplar Avenue
Memphis, Tennessee 38197
Facsimile:           (901) 214-0647
Attention:            Sharon R. Ryan, Senior Vice President,
                             General Counsel and Corporate Secretary
 
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with a copy (which shall not constitute notice) to:
Debevoise & Plimpton LLP
919 Third Avenue
New York, New York 10022
Facsimile:         (212) 909-6836
Attention:           Jeffrey J. Rosen
                             Michael A. Diz
If to Spinco or the UWWH Stockholder, after the Effective Time:
xpedx Holding Company
6285 Tri-Ridge Boulevard
Loveland, OH 45140
Facsimile:             (513) 965-2849
Attention:             Mary A. Laschinger
with a copy (which shall not constitute notice) to:
Bain Capital Partners, LLC
200 Clarendon Street
Boston, MA 02116
Facsimile:             (617) 516-2010
Attention:             Matt Levin Seth Meisel
and
Kirkland & Ellis LLP
300 N. LaSalle Street
Chicago, IL 60654 Facsimile: (312) 862-2200
Attention:             Matthew E. Steinmetz, P.C.
                             Jeffrey W. Richards, P.C.
                             Neal J. Reenan
If to UWWH or to the UWWH Stockholder, prior to the Effective Time:
UWW Holdings, Inc.
6600 Governors Lake Parkway
Norcross, GA 30071
Facsimile:             (770) 659-4618
Attention:             Chief Executive Officer
                               General Counsel
 
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with a copy (which shall not constitute notice) to:
Bain Capital Partners, LLC
200 Clarendon Street
Boston, MA 02116
Facsimile:           (617) 516-2010
Attention:           Matt Levin Seth Meisel
and
Kirkland & Ellis LLP
300 N. LaSalle Street
Chicago, IL 60654
Facsimile:        (312) 862-2200
Attention:         Matthew E. Steinmetz, P.C.
                           Jeffrey W. Richards, P.C.
                           Neal J. Reenan
Any Party to this Agreement may notify any other Party of any changes to the address or any of the other details specified in this paragraph; provided that such notification shall only be effective on the date specified in such notice or five Business Days after the notice is given, whichever is later. Rejection or other refusal to accept or the inability to deliver because of changed address of which no notice was given shall be deemed to be receipt of the notice as of the date of such rejection, refusal or inability to deliver. Any notice to IP will be deemed notice to all members of the IP Group, and any notice to Spinco will be deemed notice to all members of the Spinco Group.
Section 10.3 Interpretation . The Parties have participated jointly in the negotiation and drafting of this Agreement, and in the event 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 any Party by virtue of the authorship of any provisions of this Agreement.
Section 10.4 Headings . The headings and captions of the Articles and Sections used in this Agreement and the table of contents to this Agreement are for reference and convenience purposes of the Parties only, and will be given no substantive or interpretive effect whatsoever.
Section 10.5 Attorneys’ Fees . If any Litigation Matter at law or equity, including any Litigation Matter for declaratory relief, is brought to enforce or interpret any provision of this Agreement, the prevailing party shall be entitled to recover reasonable attorneys’ fees and expenses from the other party, which fees and expenses shall be in addition to any other relief which may be awarded.
 
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Section 10.6 Severability . If any provision of this Agreement or the application of any such provision to any Person or circumstance shall be declared judicially to be invalid, unenforceable or void, such decision shall not have the effect of invalidating or voiding the remainder of this Agreement, it being the intent and agreement of the Parties that this Agreement shall be deemed amended by modifying such provision to the extent necessary to render it valid, legal and enforceable to the maximum extent permitted while preserving its intent or, if such modification is not possible, by substituting therefor another provision that is valid, legal and enforceable and that achieves the original intent of the Parties.
Section 10.7 Assignment . Neither this Agreement nor any of the rights, benefits or obligations hereunder may be assigned by any of the Parties (whether by operation of law or otherwise) without the prior written consent of the other Parties, and any purported assignment without such consent shall be null and void, except that Spinco or UWWH may assign any or all of its rights, interests under this Agreement without the consent of the other Parties hereto (a) to any Person providing the Special Payment Financing pursuant to the terms thereof for purposes of creating a security interest herein or otherwise assign as collateral in respect of such Special Payment Financing or (b) to any purchaser of all or substantially all of the assets of such Person; provided , however , that, in each case, no such assignment shall release such Party from any liability or obligation under this Agreement. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the Parties and their respective successors and permitted assigns.
Section 10.8 No Third Party Beneficiaries . Nothing in this Agreement, express or implied, is intended to or shall confer upon any Person (other than the Parties and their respective successors and permitted assigns) any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement, and, except as provided in ARTICLE VI relating to certain indemnitees and the release of certain Liabilities, no Person shall be deemed a third party beneficiary under or by reason of this Agreement.
Section 10.9 Entire Agreement . This Agreement, the Exhibits and the Disclosure Letter hereto, the Confidentiality Agreement, the other Transaction Agreements and other documents referred to herein shall constitute the entire agreement between the Parties with respect to the subject matter hereof and shall supersede all previous negotiations, commitments and writings with respect to such subject matter (including that certain Non-binding Letter of Intent by and between IP and UWWH, dated as of April 19, 2013). In the case of any conflict between the terms of this Agreement and the terms of any other Transaction Agreement, the terms of such other Transaction Agreement shall control.
Section 10.10 Governing Law . This Agreement and all issues and questions concerning the construction, validity, enforcement and interpretation of this Agreement (and all Schedules and Exhibits hereto) shall be governed by, and construed in accordance with, the Laws of the State of Delaware, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Delaware or any other jurisdiction) that would cause the application of the Laws of any jurisdiction other than the State of Delaware. In furtherance of the foregoing, the internal Laws of the State of Delaware shall control the interpretation and construction of this Agreement (and all Schedules and Exhibits hereto), even though under that jurisdiction’s choice of law or conflict of law analysis, the substantive Law of some other jurisdiction would ordinarily apply.
 
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Section 10.11 Counterparts . This Agreement may be executed in one or more counterparts each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or portable document format (PDF) shall be as effective as delivery of a manually executed counterpart of any such Agreement.
Section 10.12 Amendments; Waivers . This Agreement may not be amended except by an instrument in writing signed by each of the Parties. No failure or delay by any Party in exercising any right hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right hereunder. Any agreement on the part of any Party to any such waiver shall be valid only if set forth in an instrument in writing signed on behalf of such Party.
Section 10.13 Termination . Notwithstanding any provision hereof, in the event of termination of the Merger Agreement before the Effective Time, this Agreement may be terminated and the Distribution abandoned at any time prior to the Distribution by and in the sole discretion of IP; provided , however , in the event IP chooses not to terminate this Agreement, UWWH and its Affiliates (including, for the avoidance of doubt, the UWWH Stockholder) shall have no Liability or obligations with respect to this Agreement, and this Agreement shall be of no further force or effect with respect to UWWH and its Affiliates. In the event of such termination, no Party or any party to any other Transaction Agreement or any of their respective Representatives or Affiliates shall have any Liability to any Person by reason of this Agreement or any other Transaction Agreement (other than the Merger Agreement to the extent provided therein).
Section 10.14 Waiver of Jury Trial . AS A SPECIFICALLY BARGAINED INDUCEMENT FOR EACH OF THE PARTIES TO ENTER INTO THIS AGREEMENT (WITH EACH PARTY HAVING HAD OPPORTUNITY TO CONSULT COUNSEL), EACH OF THE PARTIES EXPRESSLY AND IRREVOCABLY WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING UNDER THIS AGREEMENT OR ANY ACTION OR PROCEEDING ARISING OUT OF THE TRANSACTIONS CONTEMPLATED HEREBY OR ANY OTHER TRANSACTION AGREEMENT, REGARDLESS OF WHICH PARTY INITIATES SUCH ACTION OR PROCEEDING, AND ANY ACTION OR PROCEEDING UNDER THIS AGREEMENT OR ANY ACTION OR PROCEEDING ARISING OUT OF THE TRANSACTIONS CONTEMPLATED HEREBY OR ANY OTHER TRANSACTION AGREEMENT SHALL BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
Section 10.15 Jurisdiction; Service of Process . ANY ACTION WITH RESPECT TO THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS ARISING HEREUNDER, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT OF THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS ARISING HEREUNDER BROUGHT BY THE OTHER PARTY OR PARTIES OR THEIR SUCCESSORS OR ASSIGNS, IN EACH CASE, SHALL BE BROUGHT AND DETERMINED EXCLUSIVELY IN THE DELAWARE COURT OF CHANCERY AND ANY STATE APPELLATE COURT THEREFROM WITHIN THE STATE OF DELAWARE (OR, IF THE DELAWARE COURT
 
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OF CHANCERY DECLINES TO ACCEPT JURISDICTION OVER A PARTICULAR MATTER, ANY STATE OR FEDERAL COURT WITHIN THE STATE OF DELAWARE). EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE, COUNTERCLAIM OR OTHERWISE, IN ANY ACTION WITH RESPECT TO THIS AGREEMENT (I) ANY CLAIM THAT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF THE ABOVE NAMED COURTS FOR ANY REASON OTHER THAN THE FAILURE TO SERVE IN ACCORDANCE WITH THIS Section 10.15, (II) ANY CLAIM THAT IT OR ITS PROPERTY IS EXEMPT OR IMMUNE FROM JURISDICTION OF ANY SUCH COURT OR FROM ANY LEGAL PROCESS COMMENCED IN SUCH COURTS (WHETHER THROUGH SERVICE OF NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OF JUDGMENT, EXECUTION OF JUDGMENT OR OTHERWISE) AND (III) TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY CLAIM THAT (A) THE ACTION IN SUCH COURT IS BROUGHT IN AN INCONVENIENT FORUM, (B) THE VENUE OF SUCH ACTION IS IMPROPER OR (C) THIS AGREEMENT, OR THE SUBJECT MATTER HEREOF, MAY NOT BE ENFORCED IN OR BY SUCH COURTS. EACH OF THE PARTIES FURTHER AGREES THAT NO PARTY TO THIS AGREEMENT SHALL BE REQUIRED TO OBTAIN, FURNISH OR POST ANY BOND OR SIMILAR INSTRUMENT IN CONNECTION WITH OR AS A CONDITION TO OBTAINING ANY REMEDY REFERRED TO IN THIS Section 10.15 AND EACH PARTY WAIVES ANY OBJECTION TO THE IMPOSITION OF SUCH RELIEF OR ANY RIGHT IT MAY HAVE TO REQUIRE THE OBTAINING, FURNISHING OR POSTING OF ANY SUCH BOND OR SIMILAR INSTRUMENT. THE PARTIES HEREBY AGREE THAT MAILING OF PROCESS OR OTHER PAPERS IN CONNECTION WITH ANY SUCH ACTION OR PROCEEDING IN THE MANNER PROVIDED IN Section 10.2, OR IN SUCH OTHER MANNER AS MAY BE PERMITTED BY LAW, SHALL BE VALID AND SUFFICIENT SERVICE THEREOF AND HEREBY WAIVE ANY OBJECTIONS TO SERVICE ACCOMPLISHED IN THE MANNER HEREIN PROVIDED. NOTWITHSTANDING THIS Section 10.15, ANY DISPUTE REGARDING THE SPINCO CLOSING STATEMENT SHALL BE RESOLVED IN ACCORDANCE WITH ARTICLE V; PROVIDED THAT THE TERMS OF ARTICLE V MAY BE ENFORCED BY EITHER PARTY IN ACCORDANCE WITH THE TERMS OF THIS SECTION 10.15.
Section 10.16 Specific Performance . 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 other Transaction Agreement, the Party who is, or is to be, thereby aggrieved will have the right to specific performance and injunctive or other equitable relief in respect of its rights under this Agreement or such Transaction Agreement, in addition to any and all other rights and remedies at law or in equity, subject to Section 6.1. The Parties agree that the remedies at law for any breach or threatened breach, 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 waived. Any requirements for the securing or posting of any bond with such remedy are waived by each of the Parties to this Agreement.
 
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Section 10.17 Damages Waiver . No Party shall be liable to another Party or any of its Affiliates (or any of their respective Related Parties) for any exemplary damages or punitive damages, or any other damages to the extent not reasonably foreseeable, arising out of or in connection with this Agreement or any Transaction Agreement (in each case, unless any such damages are payable to a third party pursuant to a Third-Party Claim).
[SIGNATURE PAGE FOLLOWS]
 
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the date first above written.

INTERNATIONAL PAPER COMPANY	
		
By:	 	/s/ C. Cato Ealy	
Name:	 	C. Cato Ealy	
Title:	 	Senior Vice President	

XPEDX HOLDING COMPANY	
		
By:	 	/s/ C. Cato Ealy	
Name:	 	C. Cato Ealy	
Title:	 	Vice President	

 

UWW HOLDINGS, INC.	
		
By:	 	/s/ Allan R. Dragone	
Name:	 	Allan R. Dragone	
Title:	 	Chief Executive Officer	

 
			
Solely for purposes of ARTICLE VI and
ARTICLE X,
 
UWW HOLDINGS, LLC	
		
By:	 	/s/ Seth Meisel	
Name:	 	Seth Meisel	
Title:	 	Authorized Signatory	

Exhibit A-1
Form of Sublease

SUBLEASE AGREEMENT
This Sublease Agreement (this “Sublease”) is made this             day of             , 2014 between INTERNATIONAL PAPER COMPANY , a New York corporation (“Sublandlord”), and [SPINCO] , a Delaware corporation (“Subtenant”).
R E C I T A L S
[LANDLORD NAME], a                             (“Landlord”), as landlord and Sublandlord, as tenant, did enter into that certain [NAME OF LEASE DOCUMENT] (as amended and modified from time to time, the “Lease”), a copy of which (including all amendments and modifications thereof) is attached hereto as Exhibit A , dated [DATE OF LEASE], for the lease by Sublandlord of certain space located at [SITE ADDRESS], [CITY], County of [COUNTY], [STATE] (“Building”). The space leased by Sublandlord pursuant to the Lease is hereinafter referred to as the “Premises.”
Sublandlord and Subtenant have entered into that certain Contribution and Distribution Agreement dated as of             , 2014 (as amended, supplemented or otherwise modified from time to time, the “Contribution Agreement”), pursuant to which, among other things, Sublandlord agreed to enter into a sublease with Subtenant with respect to the Premises. Sublandlord and Subtenant desire to enter into this Sublease, pursuant to the terms of which Subtenant will sublease from Sublandlord and Sublandlord will sublease to Subtenant the Premises.
NOW THEREFORE, for and in consideration of Ten and No/100 Dollars ($10.00) and the mutual covenants and obligations set forth in this Sublease, Sublandlord and Subtenant do hereby agree as follows:
1. Subleased Premises . Sublandlord does hereby sublease to Subtenant, and Subtenant subleases and rents from Sublandlord, the Premises (the “Subleased Premises”).
2. Term .
(a) Subject to the terms of Section 17 below, the term of this Sublease (the “Sublease Term”) shall begin on the Distribution Date (as defined in the Contribution Agreement) (hereinafter, “Commencement Date”) and shall expire at 12:00 midnight on [EXPIRATION DATE] (the “Expiration Date”) unless the Lease or this Sublease is sooner terminated or extended in accordance with the terms and conditions set forth therein or herein.
(b) Notwithstanding the foregoing, this Sublease will terminate automatically if the Lease is assigned to Subtenant pursuant to a written assignment and assumption agreement, executed by Sublandlord and Subtenant.

(c) Subtenant shall have no right to exercise any right of renewal or extension set forth in the Lease, nor shall Subtenant shall have the right or authority to negotiate directly with Landlord for any other extension or renewal of the Lease.
(d) Subtenant shall use commercially reasonable efforts to deliver at least thirty (30) days’ prior written notice to Sublandlord if Subtenant intends to vacate the Subleased Premises prior to the originally scheduled Expiration Date of the Sublease Term; provided, however, nothing herein shall be deemed to release Subtenant of its obligations hereunder prior to such Expiration Date.
(e) In the event Subtenant remains in possession of the Subleased Premises for any period of time following the Expiration Date, Subtenant’s continued possession shall be on the basis of a tenancy at sufferance of Sublandlord, and Subtenant shall be liable for all amounts due and/or damages arising under the Lease as a result thereof in the same manner and to the same extent as Sublandlord is liable to Landlord.
3. Rent .
(a) Subtenant shall pay to Sublandlord as base rent (“Base Rent”) all amounts of “Minimum Rent” or “Base Rent” (or such other similar terms as may be defined in the Lease) accruing from and after the date of this Sublease for which Sublandlord is obligated to pay the Landlord pursuant to the terms of the Lease, including, without limitation, all tax when due with regard to such Rent pursuant to the laws of the state in which the Premises is located, as applicable, excluding Landlord’s income tax and other similar taxes. The Base Rent shall be payable by Subtenant to Sublandlord or, at Sublandlord’s option, directly to Landlord, in advance in monthly installments due on or before the first day of each calendar month during the Sublease Term with appropriate prorations for partial months.
(b) In addition to the Base Rent, Subtenant shall also pay to Sublandlord as additional rent (“Additional Rent”) any “Taxes”, “Insurance”, “Common Area Charges” or “Operating Expenses” (or such other similar terms as may be defined in the Lease) and any other amounts due under the Lease accruing from and after the date of this Sublease pursuant to the terms of the Lease. All Additional Rent shall be payable by Subtenant to Sublandlord at the time and in the same manner such payments are due by Sublandlord under the Lease.
(c) Base Rent and Additional Rent are referred to collectively, in this Sublease as “Rent”.
4. Relationship to Lease .
(a) This Sublease and all of Subtenant’s rights hereunder are expressly subject to and subordinate to all of the terms of the Lease. Subtenant acknowledges that any termination of the Lease shall result in a termination of the Sublease. Subtenant hereby acknowledges that it has received copies of the Lease and has read all of the terms and conditions thereof.

(b) Subtenant hereby agrees to assume all Liabilities, except for Excluded Liabilities (each as defined in the Contribution Agreement) with respect to the Subleased Premises. All of the terms and conditions of the Lease are hereby incorporated into this Sublease by reference as if fully set forth herein except that “Landlord” shall be read as “Sublandlord” and “Tenant” shall be read as “Subtenant”; provided, however, that Subtenant hereby acknowledges that Subtenant shall look solely to Landlord for the performance of all the Landlord’s obligations under the Lease and that Sublandlord shall not be obligated to provide any services to Subtenant or otherwise perform any obligations in connection with this Sublease; and provided further, however, that in no event shall Subtenant have the right (through the exercise of an option or right in the Lease or otherwise) to exercise any option to expand, contract and/or relocate the Premises, extend or reduce the demised term of the Lease, or be entitled to any tenant improvement allowances, free or abated rent or any other concession provided to Sublandlord in such Lease.
(c) In the event that any event occurs or condition arises at the Subleased Premises that would either (i) fall under the responsibility of Landlord pursuant to the Lease, or (ii) trigger a contractual requirement to notify Landlord pursuant to the terms of the Lease, then in either event, Subtenant shall promptly provide written notice to Sublandlord, and Sublandlord shall (a) provide written notice to Landlord and (b) exercise all available remedies available to Sublandlord in order to cause Landlord to comply with the terms of the Lease. Notwithstanding the foregoing to the contrary, in the event of an emergency, Subtenant shall be required to simultaneously notify Landlord and Sublandlord and, to the extent permitted under the terms of the Lease, undertake such emergency repairs as reasonably necessary to prevent immediate harm to property or persons.
(d) Sublandlord shall not, without the prior written consent of Subtenant, modify or amend the Lease in any manner.
5. Use . Subtenant shall use the Subleased Premises in accordance with the “Use” provision set forth in the Lease, and Subtenant shall not be permitted to operate the Subleased Premises for any other purpose without the prior written consent of Landlord and Sublandlord, such consent by Sublandlord not to be unreasonably withheld, conditioned or delayed.
6. Default .
(a) Any act or omission by Subtenant that would constitute a default under the Lease shall, subject to the same notice and cure provisions provided in the Lease, be deemed a default by Subtenant under this Sublease; provided, however, that the notice and cure periods provided in the Lease for any monetary defaults shall be deemed to be two (2) business days less for the purposes of this Sublease (but in no event less than two (2) business days total), and the notice and cure periods provided in the Lease for any non-monetary defaults shall be deemed to be three (3) business days less for the purposes of this Sublease (but in no event less than three (3) business days total). For instance, where Sublandlord would have a five (5) business day period to cure a non-payment of Base Rent under the Lease, Subtenant shall only have a three (3) business day period to cure a non-payment of Base Rent hereunder. Any such default by Subtenant shall entitle Sublandlord to (a) exercise any and all remedies available to Landlord

under the Lease or any other remedies available at law or in equity under the laws of the state in which the Premises is located, and/or (b) at its option, Sublandlord may cure such default on Subtenant’s behalf upon providing Subtenant with written notice of its intention to cure at least three (3) business day prior to curing. In the event that Sublandlord takes any action on Subtenant’s behalf in accordance herewith, the reasonable costs of such performance, repair or replacements shall be charged to Subtenant as Additional Rent and shall become due and payable by Subtenant with the monthly installment of Base Rent next due hereunder. Further, if Sublandlord exercises any of the remedies provided to Sublandlord under this Sublease as a result of Subtenant’s failure to comply with its obligations hereunder, or if Sublandlord brings any action to enforce its rights under this Sublease, Subtenant shall be obligated to reimburse Sublandlord, on demand, for all reasonable costs and expenses, including reasonable attorneys’ fees and court costs, incurred in connection therewith.
(b) In the event that Sublandlord receives notice of default of the Lease from Landlord, Sublandlord must provide Subtenant with a copy of any such notice within two (2) business day of Sublandlord’s receipt.
7. Quiet Enjoyment . Provided there is no event of default under this Sublease and Subtenant has performed its obligations hereunder, Subtenant shall have the quiet enjoyment of the Subleased Premises without interference by Sublandlord or anyone claiming by, through or under Sublandlord. Sublandlord will use reasonable efforts to enforce Landlord’s obligations under the Lease, but if Sublandlord chooses not to pursue an action to enforce any of Landlord’s obligations but Subtenant desires to enforce such obligations, Sublandlord will assign its rights to Subtenant and will cooperate with Subtenant’s efforts to enforce such obligations so long as such enforcement efforts are at Subtenant’s sole expense and Subtenant indemnifies Sublandlord from any damages, claims or expenses resulting from such enforcement effort or Sublandlord’s cooperation therewith.
8. Insurance and Indemnities . Subtenant hereby agrees to indemnify and hold Sublandlord and Landlord harmless, with regard to its subleasing and use of Subleased Premises, to the same extent that Sublandlord is required under the Lease to indemnify and hold Landlord harmless with respect to the Premises. Likewise, Subtenant hereby agrees to obtain and provide certificates of insurance to Sublandlord and Landlord, on or before the Commencement Date of this Sublease, that Subtenant is carrying (1) property insurance coverage for one hundred percent (100%) of the full replacement value of all of Subtenant’s personal property, trade fixtures and equipment contained within the Subleased Premises, with such policies naming Sublandlord as an additional insured, (2) commercial general liability insurance (“CGLI”) equal to the greater of (a) the amounts required under the Lease to be carried by Sublandlord with regard to the Premises, or (b) $1 million per occurrence, with a $2 million annual aggregate limit for such CGLI policy, and an additional umbrella and/or excess commercial liability policy with a single or combined limit of $3 million under such policy, with such CGLI policies naming Sublandlord as an additional insured, (3) workers’ compensation insurance in the minimum amounts as required by the applicable statutes in the state in which the Premises is located, regardless of the number of employees, (4) Automobile Liability insurance for owned, non-owned, and hired vehicles in a minimum amount of $1,000,000 bodily injury and property damage combined single limit per occurrence, and (5) as to all coverages, no less than the same amounts and of the same types required under the Lease to be carried by Sublandlord with regard to the Premises.

9. Subleasing and Assignment . Subtenant shall have no further right to sublease, assign or in any way transfer its rights under this Sublease or its rights with regard to all or any portion of the Subleased Premises without the prior written consent of Sublandlord and, to the extent applicable, the Landlord. For purposes herein, any change in control of Subtenant resulting from a merger, consolidation, stock transfer or asset sale shall be considered an assignment or transfer which requires Sublandlord’s prior written consent. Sublandlord shall be permitted to assign its rights under this Sublease, or its rights with regard to the Subleased Premises without the prior consent of Subtenant, so long as Sublandlord has otherwise satisfied the terms and conditions of the Lease with respect to any such assignment.
10. Condition of Subleased Premises .
(a) Subtenant shall maintain and repair the Subleased Premises in a manner consistent with Sublandlord’s obligations under the Lease. Sublandlord shall have the right to enter the Subleased Premises from time to time upon reasonable prior notice to Subtenant, during normal business hours and escorted by Subtenant (if Subtenant makes such escort reasonably available). Sublandlord’s right of entry shall include the right of inspection to confirm that Subtenant is in compliance with all applicable maintenance and repair obligations set forth in the Lease. In the event that Sublandlord determines, in Sublandlord’s reasonable opinion, that Subtenant is in default of any maintenance and/or repair obligation set forth in the Lease, and such default may incur liability to Sublandlord upon the surrender of the Subleased Premises upon the expiration or earlier termination of the Lease (a “Required Repair Item”), then Sublandlord shall have the right to notify Subtenant of any such Required Repair Items. Subtenant shall be obligated to cure such Required Repair Items within thirty (30) days of such notice from Sublandlord, or, if such Required Repair Items cannot be reasonably completed in such thirty (30) day period, such longer period as reasonably necessary to cure such Required Repair Items, so long as Subtenant has commenced such cure and diligently pursues such cure to completion. In no event shall Sublandlord’s rights hereunder impose any additional and/or greater repair or maintenance standards from those set forth in the Lease. In the event Subtenant fails to cure such Required Repair Items as set forth above, then such failure shall be deemed a default under this Sublease, entitling Sublandlord to exercise any of its rights and remedies herein, including, without limitation, the self help rights set forth in Section 6(b) above.
(b) Upon the expiration or earlier termination of this Sublease, Subtenant shall (i) return the Subleased Premises to Sublandlord in the condition required by the Lease, normal wear and tear and damage by casualty or condemnation excepted, and (ii) in accordance with the terms of the Lease, remove all personal property and equipment (other than fixtures but including trade fixtures) from the Subleased Premises required to be removed from the Subleased Premises in accordance with the Lease. Upon such expiration, Sublandlord and Subtenant shall schedule a walk-through of the Subleased Premises to determine whether Subtenant has complied with its obligation to surrender as set forth above. Sublandlord shall notify Subtenant of any perceived noncompliance at the time of the walk-through, or Sublandlord shall be estopped from attempting to charge Subtenant for the same at a later date.

Sublandlord may forthwith re-enter the Subleased Premises following notice to Subtenant and repossess itself thereof and remove all persons and effects therefrom, using such force as may be reasonably necessary without being guilty of forcible entry, detainer, trespass or other tort. Subtenant’s obligation to observe or perform these covenants shall survive the expiration or other termination of the Sublease Term.
11. Notices . Notices by Sublandlord and Subtenant shall be given to each other in the same manner provided by the Lease:

	 	Sublandlord:	  	International Paper Company	
	 		  	6400 Poplar Avenue	
	 		  	Memphis, TN 38197	
	 		  	Attention: Corporate Real Estate Department	
			
	 	With a copy to:        	  	International Paper Company	
	 		  	c/o SRS CRESA Lease Administration, LLC	
	 		  	15660 Dallas Parkway, Suite 1200	
	 		  	Dallas, Texas, 75248	
			
	 	Subtenant:	  		
	 		  	_______________________	
	 		  	_______________________	
	 		  	_______________________	
	 		  	Attention:                                 	
	 		  	Telephone:                                 	
	 		  	Facsimile:                                 	
			
	 	With a copy to:	  		
	 		  	_______________________	
	 		  	_______________________	
	 		  	_______________________	
	 		  	Attention:                                 	
	 		  	Telephone:                                 	
	 		  	Facsimile:                                 	
Either party to this Sublease may, by notice given in accordance with this Section 11, specify a new address for notices under this Sublease.
12. Brokers . Each party represents to the other that it has not dealt with any real estate broker, sales person or finder in connection with this Sublease. Each party hereby agrees to indemnify and hold the other harmless from and against any liabilities and claims for commissions and fees due or claimed to be due by any party claiming to have dealt with the indemnifying party in connection with this Sublease.

13. Environmental.
(a) Subtenant represents, warrants and covenants to Sublandlord that it and its agents, servants, employees, contractors and anyone acting on its behalf will not use, store, generate or dispose of “Hazardous Materials” (as hereinafter defined) in, on, under or about the Premises, except as done so in connection with the ordinary course of Subtenant’s business operations. Subtenant shall give Sublandlord prompt notice of the existence or discovery of the presence of Hazardous Materials in, on or about the Premises, if unrelated to the ordinary course of Subtenant’s business operations, or contamination of the Premises with Hazardous Materials. In the event that Subtenant or any of its agents, servants, employees, contractors or anyone acting on its behalf caused such contamination to the Premises or is responsible for the presence of Hazardous Materials unrelated to the ordinary course of Subtenant’s business operations, Subtenant shall indemnify, defend and hold Sublandlord harmless from and against any and all damages, claims, injuries, cost and liability arising therefrom or related thereto, including all costs of clean-up. Such clean-up and disposal of such Hazardous Materials by Subtenant, including required air monitoring and documentation, shall be performed by Subtenant at its sole cost and expense and shall be performed in accordance with all applicable laws, rules, regulations and ordinances. Sublandlord shall have the right, but not the obligation, to review and monitor any such clean-up and disposal by Subtenant. Within forty-five (45) days following the clean-up of any Hazardous Materials for which Subtenant is responsible in accordance with the requirements set forth herein, Subtenant shall furnish to Sublandlord Hazardous Materials manifests and records which document transport and disposal of such material.
(b) In the event that Sublandlord or any of its agents, servants, employees, contractors or anyone acting on its behalf caused such contamination to the Premises or is responsible for the presence of Hazardous Materials unrelated to the ordinary course of Subtenant’s business operations, Subtenant shall indemnify, defend and hold Subtenant harmless from and against any and all damages, claims, injuries, cost and liability arising therefrom or related thereto, including all costs of clean-up.
(c) Subtenant shall notify Sublandlord and provide to Sublandlord a copy or copies of the following environmental entitlement or inquiries related to the Premises which are received or filed by Subtenant: notices of violation, notices to comply, citations, inquiries and reports filed pursuant to self-reporting requirements. In the event of a release of any Hazardous Materials into the environment, Subtenant shall furnish to Sublandlord a copy of any documents not privileged or confidential relating to the Premises.
(d) Sublandlord shall have access to the Premises during normal business hours and upon two (2) business day’s prior notice to Subtenant in order to conduct inspections and tests of Hazardous Materials or suspected Hazardous Materials in, on, under or about the Premises.
(e) If Subtenant shall breach any representation, warranty or covenant or shall fail to take any action required hereunder within the time permitted, Sublandlord, without being under any obligation to do so and without waiving any default or its rights hereunder, may take such action and/or remedy such other default for the account of Subtenant, and may enter the Premises for such purpose, and Subtenant shall thereupon be obligated, and hereby agrees, to pay Sublandlord upon demand all costs, expenses, and disbursements incurred in taking such remedial action.

(f) As used herein, the term “Hazardous Material(s)” means any chemical, substance or material or combination thereof, which (i) is defined as a hazardous substance, hazardous material, hazardous waste, pollutant, toxic material, or contaminant under any Environmental Law (as defined below), (ii) is a petroleum hydrocarbon, including crude oil or any fraction thereof, (iii) is hazardous to human health or safety or the environment due to its toxicity, corrosivity, flammability, explosivity, infectiousness, radioactivity, carcinogenicity or reproductive toxicity, or (iv) is regulated pursuant to any Environmental Law.
(g) As used herein, the term “Environmental Law” shall include local, state and federal laws, judgments, ordinance, rules, regulations, codes and other governmental restrictions.
[(h) Within thirty (30) days after the termination of this Sublease, Sublandlord, its agents, employees or consultants may conduct an environmental inspection of the Premises. In the event the inspection shall reveal a breach of Subtenant’s representations or obligations hereunder, then (i) Sublandlord shall be entitled to remedies as set forth herein and (ii) the cost of the environmental inspection shall be at the sole cost and expense of Subtenant.] 1
(i) The provisions of this Section 13 shall survive the expiration or other termination of the Lease Term.
14. Authority . Sublandlord represents to Subtenant that Sublandlord has full corporate power and authority to execute and deliver this Sublease and that Sublandlord has obtained all necessary consents required for the execution and delivery of this Sublease. Subtenant represents to Sublandlord that Subtenant has full corporate power and authority to execute and deliver this Sublease and that Subtenant has obtained all necessary consents required for the execution and delivery of this Sublease.
15. Attorneys Fees . In the event that either party brings a legal proceeding to enforce the provisions of this Sublease, the party prevailing in any such proceeding shall be entitled to recover from the non-prevailing party all costs, expenses and charges, including reasonable attorneys’ fees, incurred in addition to such other damages occasioned by the breach of the Sublease.
16. Miscellaneous . This Sublease shall be governed by the laws of the state in which the Subleased Premises are located. Time shall be of the essence with regard to the obligations under this Sublease. This Sublease and the Contribution Agreement supersedes all prior discussions and agreements with respect to the Subleased Premises between the parties and incorporates their entire agreement. Any term used in this Sublease that begins with initial capital letters and is not defined herein shall have the same meaning attributable to that term in the Lease. Nothing in this Sublease shall be deemed to supersede, enlarge or modify any of the provisions of the Contribution Agreement, all of which shall survive the execution and delivery

1  	Only applicable to non-office sites.	

of this Sublease as provided in, and subject to the limitations set forth in, the Contribution Agreement. If any conflict exists between the terms of this Sublease and the terms of the Contribution Agreement, the terms of the Contribution Agreement shall govern and control.
[Signatures Commence on Following Page]

IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and seals, the day and year first above written.

SUBLANDLORD:
 	
INTERNATIONAL PAPER COMPANY, a New York corporation
 	
By:	 	 	
Name:	 	 	
Title:	 	 	
 
SUBTENANT:
 	
[SPINCO], a Delaware corporation
 	
By:	 	 	
Name:	 	 	
Title:	 	 	

EXHIBIT A
LEASE

Exhibit A-2
Form of Lease Assignment

ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (this “ Agreement ”) is made as of             , 2014 (the “ Effective Date ”), by and between INTERNATIONAL PAPER COMPANY, a New York corporation, as assignor (“ Assignor ”), and [SPINCO], a Delaware corporation, as assignee (“ Assignee ”).
RECITALS:
A. WHEREAS, pursuant to that certain Contribution and Distribution Agreement between Assignor and Assignee, dated as of             , 2014 (the “ Contribution Agreement ”), Assignor has agreed to sell and assign to Assignee, and Assignee has agreed to purchase and assume from Assignor, for the consideration and upon the terms and conditions set forth in the Contribution Agreement, all of Assignor’s right, title and interest in and to the Leased Real Property.
B. WHEREAS, a list of the Leased Real Property being assigned hereunder is attached hereto as Exhibit A (such Leased Real Property, the “ Assigned Real Property ”).
C. WHEREAS, Assignor desires to deliver to Assignee such instruments of sale, transfer, conveyance, assignment and delivery as are required to vest in Assignee all of Assignor’s right, title and interest in and to the Assigned Real Property; and
D. WHEREAS, Assignee desires to deliver to Assignor such instruments as are required in order to effectuate and evidence the assumption by Assignee of the liabilities and obligations in connection with the Assigned Real Property.
AGREEMENT:
NOW, THEREFORE, pursuant to the Contribution Agreement and in consideration of the premises and the mutual covenants therein contained, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto do hereby agree as follows:
 
 	1.	Each capitalized term used but not defined in this Agreement shall have the meaning ascribed to it in the Contribution Agreement.	
 
 	2.	Effective as of the Effective Date, Assignor hereby sells, transfers, assigns, conveys and delivers to Assignee, and Assignee hereby accepts the sale, transfer, assignment, conveyance and delivery of, all of Assignor’s right, title and interest in, to and under all of the Assigned Real Property.	

 	3.	Assignee hereby assumes and agrees to undertake, assume, perform, pay, become liable for and discharge when due, all Liabilities with respect to the Assigned Real Property, other than Excluded Liabilities.	
 
 	4.	Nothing in this Agreement shall be deemed to supersede, enlarge or modify any of the provisions of the Contribution Agreement, all of which shall survive the execution and delivery of this Agreement as provided in, and subject to the limitations set forth in, the Contribution Agreement. If any conflict exists between the terms of this Agreement and the terms of the Contribution Agreement, the terms of the Contribution Agreement shall govern and control.	
 
 	5.	This Agreement shall be binding upon and inure to the benefit of Assignor, Assignee, and their respective permitted successors and assigns.	
 
 	6.	This Agreement shall be governed by and construed in accordance with the laws of the State of (the state in which the property is located), without giving effect to any of the conflict of law rules thereof.	
 
 	7.	This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument.	
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
 
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IN WITNESS WHEREOF, Assignor and Assignee have each executed this Agreement as of the day and year first above written.

INTERNATIONAL PAPER COMPANY, a New York corporation
 	
By:	 	 	
Name:	 	 	
Title:	 	 	
 
[SPINCO], a Delaware corporation
 	
By:	 	 	
Name:	 	 	
Title:	 	 	
 
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EXHIBIT A
Schedule of Assigned Real Property

Exhibit A-3
Form of Gross Lease Assignment

INTERNATIONAL PAPER COMPANY
GROSS LEASE
Location:                                                      
DEFINED TERMS/SPECIAL PROVISIONS
“Contribution Agreement”
That certain Contribution and Distribution Agreement by and between Lessor and Lessee dated as of             , 2013 (as amended, supplemental or otherwise modified from time to time.

“Lessor”
International Paper Company, a New York corporation with its principal place of business at 6400 Poplar Avenue, Memphis, Tennessee 38197.

“Lessee”
[SPINCO], a Delaware corporation, with its principal place of business at             .

“Leased Premises”
            , containing             square feet of space and more particularly described in Exhibit “A” attached hereto and incorporated herein by reference.

“Term”
The Term shall be             (    ) years, beginning on the Distribution Date (as defined in the Contribution Agreement) (hereinafter the “Commencement Date”), and ending on             (the “Expiration Date”), unless this Lease is sooner terminated or extended in accordance with the terms and conditions set forth herein.

“Rent”
During the Term, monthly Rent shall be $            . Which amount shall be due and payable on the first day of each calendar month during the Term [subject to adjustment as set forth in Article             ]. In the event the Commencement Date and/or the Expiration Date fall on any day other than the first or last day of a calendar month, the Rent for such calendar month shall be prorated accordingly.

 
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ARTICLE I
Lease of Premises
Lessor does hereby lease to Lessee the Leased Premises as described and referred to above for the Term and at the Rent above set forth upon the following provisions, each of which shall be both covenants and conditions, and Lessor and Lessee hereby covenant and agree to abide by and perform each and every provision hereof. The Rent shall be due and payable on the first day of each calendar month and remitted to Lessor’s address above set forth or to such other address as Lessor may from time to time hereafter direct by written notice to Lessee in accordance with Article XVIII hereof. In additional to Lessor’s remedies for the non-payment of Rent set forth in Article XIV, Lessee shall also be obligated to pay a late charge equal to five percent (5%) of such unpaid amount in the event any amount due hereunder is not paid within five (5) days following written notice from Lessor, and interest shall accrue on all unpaid amounts from the date past due until paid at the lower of eighteen percent (18%) per annum or the highest rate permitted by applicable law
ARTICLE II
Gross Basis Lease
Except as provided herein to the contrary, it is intended that the Rent provided for in this Lease shall be the absolute payment to Lessor for the Term and for any extensions or renewals thereof, and including any expenses or charges whatsoever with respect to the Leased Premises, including, but not in limitation of the foregoing, all insurance premiums, all taxes, and all repairs, replacements and betterments to the Leased Premises and the building of which the Leased Premises are a part, including the roof, gutters, downspouts, electrical, plumbing and HVAC systems, floors, structural portions and exterior walls of the building on the Leased Premises, landscaping, utility lines running outside of the exterior walls and roof, and to the drives, walks and parking areas of the Leased Premises, each of which shall be the responsibility of Lessor under Article IX, Section 1.
ARTICLE III
Use of Leased Premises
The Leased Premises may be used for the operation of [a distribution center, warehouse], office use and/or ancillary uses related thereto. In no event shall the Leased Premises be used for any manufacturing purposes. The Leased Premises shall not be used for any illegal purpose, nor in violation of any valid regulation of any governmental body, nor in any manner to create any nuisance or trespass, nor in any manner to violate the insurance or increase the rate of insurance on the Leased Premises
 
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ARTICLE IV
Utility Charges
Lessee shall pay and be liable for all charges for fuel, electricity, water, gas, telephone service, sewage, janitorial, security and similar services to be furnished to the Leased Premises during the Term of this Lease. All utilities shall be separately metered and shall not be combined with any other leased premises.
ARTICLE V
Taxes
Lessor covenants and agrees to pay or cause to be paid, in addition to all other sums required to be paid by Lessor under the provisions of this Lease, all taxes, including, but not limited to, all sewer use fees or charges for utilities, which may be levied or imposed by the United States, or the state, county or municipality in which the Leased Premises are located, or by any subdivision or department thereof, upon all or any part of the Leased Premises, upon any buildings, structures, fixtures or improvements now or hereafter located thereon or arising in respect of the occupation, use or possession of the Leased Premises or any estate, right, title or interest of the owner of the fee or of Lessor as the owner of a leasehold. Notwithstanding the foregoing to the contrary, Lessee shall be obligated to pay all tax due with regard to the Rent pursuant to the laws of the state in which the Leased Premises are located, as applicable, excluding Lessor’s income tax and other similar taxes.
ARTICLE VI
Insurance
Section 1. Lessee agrees, at Lessee’s expense, to procure and maintain in force and effect continuously during the entire Term and any extensions or renewals thereof, a policy or policies of commercial general liability insurance in a company or companies authorized to do business in the state in which the Leased Premises are located, insuring Lessor, as an additional insured for occurrences arising out of Lessee’s use and occupancy of the Leased Premises, in an amount of One Million Dollars ($1,000,000.00) combined single limit bodily injury/property damage per occurrence and Two Million Dollars ($2,000,000.00) in the aggregate and an additional umbrella and/or excess commercial liability policy with a single or combined limit of Three Million Dollars ($3,000,000.00) Lessee agrees to provide certificates of insurance for such policies on or prior to the Commencement Date and all renewals thereof to Lessor prior to expiration of such policies.
Section 2. At all times during the Term, Lessor shall, at Lessor’s expense, keep or cause to be kept all buildings and improvements at any time constituting the Leased Premises, insured against fires and all perils included within full standard extended coverage insurance, in good
 
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and responsible insurance companies, authorized to do business in the state in which the Leased Premises are located, in an amount not less than One Hundred percent (100%) of the insurable value of the building erected or to be erected on the Leased Premises or One Hundred percent (100%) of its replacement cost, whichever shall be less, said insurance to be for the benefit of Lessor and the mortgagee of the Leased Premises, if any, as their interests appear.
Section 3. At all times during the Term, Lessee shall, at Lessee’s expense, keep or cause to be kept all of Lessee’s personal property, fixtures and equipment located at, on or in the Leased Premises, insured against fires and all perils included within full standard extended coverage insurance, in good and responsible insurance companies, authorized to do business in the state in which the Leased Premises are located, in an amount not less than One Hundred percent (100%) of the replacement cost of such personal property, said insurance to be for the benefit of Lessee.
Section 4 . At all times during the Term, Lessee shall, at Lessee’s expense, procure and maintain in full force and effect Workers’ Compensation insurance in the minimum amounts as required by the applicable statutes in the state where the Leased Premises are located, regardless of the number of employees, and Automobile Liability insurance for owned, non-owned, and hired vehicles in a minimum amount of $1,000,000 bodily injury and property damage combined single limit per occurrence.
ARTICLE VII
Indemnity
Section 1. Subject to the limitation set forth in Section 2 of this Article VII, Lessee shall remain liable for any and all claims and demands for agrees to indemnify and hold Lessor harmless from and against any and all claims and demands for, or in connection with, (i) any accident, injury or damage whatsoever caused to any person or property arising, directly or indirectly, out of the business conducted in the Leased Premises or occurring in, or about the Leased Premises, and (ii) any negligent act, omission or willful misconduct by Lessee or Lessee’s officers, employees, agents, invitees or servants.
Section 2. Notwithstanding anything in Section 1 of this Article VII to the contrary, Lessor shall remain liable for any and all claims and demands for, or in connection with, any accident, injury or damage whatsoever caused to any person or property arising, directly or indirectly, from any negligent act, omission or willful misconduct by Lessor or Lessor’s officers, employees, agents or servants occurring in, on or about the Leased Premises or any part thereof.
 
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ARTICLE VIII
Damage or Destruction of Leased Premises
Section 1. If, during the Term, twenty-five percent (25%) or less of the insurable value of the buildings and improvements, now existing or hereafter erected by the Lessor upon the Leased Premises, shall be destroyed by fire, explosion, the elements, an act of God or any other casualty (each, a “Casualty Event”), Lessor shall promptly rebuild and restore the same as nearly as possible to the condition existing prior to the damage. Rent payments shall be reduced proportionately from the date of such loss until the Leased Premises are restored to the condition which existed prior to the damage.
Section 2. If, during the Term, more than twenty-five percent (25%) of the insurable value of the building or improvements upon the Leased Premises shall be damaged or destroyed by a Casualty Event, Lessor or Lessee shall have the option to terminate the Lease upon providing written notice to the other party within thirty (30) days following such Casualty Event. In the event either party elects to terminate this Lease in accordance with the foregoing, then the Lease shall terminate on or before the date which is thirty (30) days following such termination notice and Rent shall be accounted for as between Lessor and Lessee as of that date. In the event neither party elects to terminate the Lease within such period, Lessor shall promptly provide Lessee with a calendar date (the “Restoration Date”) prior to which Lessor reasonably expects to complete restoration of the Leased Premises to the condition existing prior to the date of the Casualty Event. Lessor shall thereafter promptly commence to restore or rebuild the building or improvements and shall diligently pursue the same, with Rent abated from the date of destruction and throughout the period of repair and reconstruction during which Lessee is deprived of the use of the Leased Premises; provided however, that if Lessor fails to complete the restoration of the Leased Premises to the condition existing prior to the date of the Casualty Event within sixty (60) days following the Restoration Date, Lessee may terminate the Lease, such termination effective immediately, by providing written notice to Lessor. In no event shall Lessor be obligated to expend funds in excess of available insurance proceeds in order to restore the Leased Premises.
Section 3. If, during the Term, a Casualty Event shall occur, irrespective of the insurable value of the building or improvements upon the Leased Premises which are thereby affected, but which results in Lessee’s inability to effectively conduct its operations in the Leased Premises, to be determined by Lessee within its reasonable discretion, Lessee shall have the option to terminate the Lease upon providing written notice to the other party within thirty (30) days following such Casualty Event.
 
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ARTICLE IX
Maintenance of Leased Premises
Section 1. Lessor’s Obligations. During the Term, Lessor agrees to maintain the Leased Premises, other than as required by Lessee under Section 2 of this Article IX, and to promptly make all repairs and replacements which become necessary within the Leased Premises, , and to promptly pay all expenses or charges whatsoever with respect to the Leased Premises as such become due, including, but not in limitation of the foregoing, all insurance premiums, all taxes, and all repairs, replacements and betterments to the Leased Premises, together with the structure and exterior of the building of which the Leased Premises are a part, including the roof, gutters, downspouts, electrical, plumbing and HVAC systems, floors, structural portions and exterior walls of the building on the Leased Premises, landscaping, utility lines running outside of the exterior walls and roof, and to the drives, walks and parking areas of the Leased Premises.
Section 2. Lessee’s Obligations. During the Term, Lessee shall not be responsible to make any repairs or replacements which become necessary within the Leased Premises, except to the extent that such required repair or replacement is (i) expressly stated herein as the obligation of the Lessee or (ii) a result of Lessee’s negligent act or omission, or wilful misconduct. To the extent Lessee is obligated to make any repairs, replacements or renewals in the Leased Premises, Lessor does hereby assign to Lessee all manufacturers’ and contractors’ warranties and guarantees covering the building and any other improvements on the Leased Premises that may be in effect during the Term.
Section 3. Lessor Inspection. Lessor reserves the right to cause an inspection of the Leased Premises from time to time, but no more than once annually, to confirm Lessee’s compliance with Section 2 above. Lessor shall have the right to submit any deficiencies in such obligations to Lessee in writing, following which, Lessee shall have thirty (30) days to commence correcting such deficiencies or be deemed in default of this Lease in accordance with Article XIV herein.
ARTICLE X
Waiver of Claims for Damages to Real and Personal Property
Section 1. Lessor and Lessee, for themselves and for their respective insurers, agree to and do hereby mutually release each other of and from any and all claims, demands, actions and causes of action that each may have or claim to have against the other for loss of or damage to the property of the other, both real and personal, caused by or resulting from fire, tornado and all other casualties or perils of the type and character covered by fire and extended coverage insurance, notwithstanding that any such loss or damage may be due to or result from the negligence of either of the parties hereto or their respective officers, employees or agents. Lessor and Lessee will each secure an appropriate clause in, or endorsement on, any fire and extended coverage insurance policy covering their respective real and personal property, pursuant to which the respective insurance companies waive subrogation; provided, however, that a failure on the part of either party to secure such appropriate clause in, or endorsement on, any fire and extended coverage insurance policy covering their respective real and personal property, pursuant to which the respective insurance companies waive subrogation, shall not, in any manner, affect or restrict the provisions of the above and foregoing mutual releases.
 
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Section 2. Lessee, for itself and for its respective insurers, if any, does hereby agree that all personal property on the Leased Premises shall be at the risk of the Lessee only, and Lessor shall not be or become liable for any damage to said personal property or to Lessee or to any other persons for damage whatsoever done or occasioned by or from any boiler, plumbing, gas, water, steam or other pipes or any fixtures or appurtenances whatsoever, or arising by reason of the use of, said building, fixtures or appurtenances therein, or by damage caused in any other manner whatsoever, other than damage resulting from the gross negligence or wilful misconduct of Lessor, its agents and assigns.
ARTICLE XI
Mechanic’s Liens
Except for work or material which is the responsibility of Lessor under this Lease, Lessee agrees to pay promptly for any work done or material furnished in the Leased Premises after the commencement of the Term and not to suffer or permit any lien to attach to the Leased Premises, and Lessee further agrees promptly to cause any such lien or claims therefor to be released; provided, however, that in the event Lessee contests any such claim, Lessee agrees to indemnify and secure Lessor to the reasonable satisfaction of Lessor. Notice is hereby given that no mechanic’s, materialman’s or other lien sought to be taken or vested on the Leased Premises shall in any manner affect the right, title or interest of the Lessor therein, and that Lessee shall have no authority from Lessor to permit or create such lien. In the event that any such lien shall be filed upon the Leased Premises by reason of any act or omission (or alleged act or omission) of Lessee or any sublessee, and Lessee shall not, within thirty (30) days from and after notice to Lessee of the filing thereof, have caused the same to be released or have indemnified and secured Lessor to the reasonable satisfaction of Lessor, then in such event, Lessor may, but shall not be obligated to, cause the same to be discharged; and if Lessor does so, Lessee agrees to reimburse Lessor promptly upon demand for all costs, expenses and other sums of money expended by Lessor in connection therewith.
ARTICLE XII
Eminent Domain
Section 1. If the whole or any part of the land or building constituting the Leased Premises shall be taken by any public authority under the power of eminent domain, and if the portion of such land or building remaining after such taking shall not constitute sufficient space for the maintenance and operation of Lessee’s business in an economically feasible and profitable manner, as determined by Lessee within its reasonable discretion, then the Term shall cease as of the date possession is delivered by Lessee, and Lessee shall pay Rent up to that date with an appropriate refund by Lessor of such Rent as may have been paid in advance for a period subsequent to the date of taking. Lessor agrees at its sole cost and expense to promptly make all repairs, construction, additions or alterations that may be necessary or requisite for the making of the remainder of the Leased Premises a complete architectural and operating unit, and suitable for the business and operations of Lessee in an economically feasible and profitable manner; provided, however, in no event shall Lessor be required to expend funds in excess of any awards received by Lessor for such taking .
 
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Section 2. All compensation awarded for any taking under the power of eminent domain, whether for the whole or a part of the Leased Premises, shall be the property of Lessor, whether such damages shall be awarded as compensation for diminution in the value of, or loss of, the fee of the Leased Premises, and Lessee hereby assigns to Lessor all of Lessee’s right, title and interest in and to any and all such compensation; provided, however, that Lessee shall be entitled to seek a separate award for the cost of removal of fixtures, stock, inventory and other personal property of Lessee, or for any other expenses or losses of Lessee connected with or resulting from any such taking, including the value of the leasehold estate, or any other awards, reimbursements or payments that may be made, awarded or granted to Lessee directly under applicable law; provided, however, in no event shall such awards reduce the amount otherwise owed to Lessor.
ARTICLE XIII
Quiet Enjoyment
Provided that no event of default under this Lease has occurred, and remains uncured after any applicable cure period, and Lessee has performed its obligations hereunder, Lessor covenants that Lessee shall peaceably and quietly have, hold and enjoy the Leased Premises for the Term without interference by Lessor or anyone claiming by, through or under Lessor.
ARTICLE XIV
Default
Section 1. Subject to the provisions of this Article XIV, this Lease is made upon the express condition that Lessee shall faithfully and punctually perform and observe all the agreements, covenants and conditions herein set forth to be performed by Lessee, and that if (i) at any time any Rent, insurance premiums, utilities charges or any other amounts required to be paid by Lessee hereunder, or any part thereof, shall be in arrears and unpaid for a period of five (5) days after the due date, or (ii) if defaults shall be made or suffered in the performance or observance of any of the other covenants or conditions of this Lease, and if Lessee fails to cure such default within twenty (20) days after notice in writing thereof shall have been given by Lessor to Lessee, or (iii) if such default cannot be corrected within such twenty (20) day period, if Lessee does not commence to correct such default within said twenty (20) day period and thereafter diligently prosecute the correction of same to completion within a reasonable time, but in no event exceeding a total of (60) days unless Lessor agrees to extend such sixty (60) day period, which Lessor shall agree to extend from time to time if Lessee is diligently prosecuting the correction of same, but is unable to complete the correction due to circumstances outside of Lessee’s reasonable control, Lessor shall have the right, at its election, to exercise the remedies set forth below:
 
30

(a) Terminate this Lease by giving Lessee notice of termination, in which event this Lease shall expire and terminate on the date specified in such notice of termination and all rights of Lessee under this Lease and in and to the Premises shall terminate. Lessee shall remain liable for all obligations under this Lease arising up to the date of such termination, and Lessee shall surrender the Premises to Lessor on the date specified in such notice; or
(b) Terminate this Lease as provided above and recover from Lessee all damages Lessor may incur by reason of Lessee’s default, including, without limitation, an amount which, at the date of such termination, is calculated as follows: (1) the value of the excess, if any, of (A) the Rent and all other sums which would have been payable hereunder by Lessee for the period commencing with the day following the date of such termination and ending with the Expiration Date had this Lease not been terminated (the “Remaining Term”), over (B) the aggregate reasonable rental value of the Premises for the Remaining Term (which excess, if any shall be discounted to present value at a commercially reasonable discount rate for the Remaining Term); plus (2) the costs of recovering possession of the Premises and all other expenses incurred by Lessor due to Lessee’s default, including, without limitation, reasonable attorney’s fees; plus (3) the unpaid Rent earned as of the date of termination plus any interest and late fees due hereunder, plus other sums of money and damages owing on the date of termination by Lessee to Lessor under this Lease or in connection with the Premises. Notwithstanding the foregoing, the amount as calculated above shall not include consequential, special or punitive damages. The amount as calculated above shall be deemed immediately due and payable. The payment of the amount calculated herein shall not be deemed a penalty but shall merely constitute payment of liquidated damages, it being understood and acknowledged by Lessor and Lessee that actual damages to Lessor are extremely difficult, if not impossible, to ascertain. In determining the aggregate reasonable rental value pursuant to subparagraph (B) above, the parties hereby agree that, at the time Lessor seeks to enforce this remedy, all relevant factors should be considered, including, but not limited to, (a) the length of time remaining in the Term, (b) the then current market conditions in the general area in which the Building is located, (c) the likelihood of reletting the Premises for a period of time equal to the remainder of the Term, (d) the net effective rental rates then being obtained by landlords for similar type space of similar size in similar type buildings in the general area in which the Building is located, (e) the vacancy levels in the general area in which the Building is located, (f) current levels of new construction that will be completed during the remainder of the Term and how this construction will likely affect vacancy rates and rental rates and (g) inflation; or
(c) without terminating this Lease, declare immediately due and payable the sum of the following: (1) the present value (calculated using a commercially reasonable discount rate) of all Rent due and coming due under this Lease for the entire remaining Term (as if by the terms of this Lease they were payable in advance), plus (2) the cost of recovering and reletting the Premises and all other expenses incurred by Lessor in connection with Lessee’s default, plus (3) any unpaid Rent and other rentals, charges, assessments and other sums owing by Lessee to Lessor under this Lease or in connection with the Premises as of the date this provision is invoked by Lessor, plus (4) interest on all such amounts from the date due at the interest rate
 
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chargeable under Article I hereof, and Lessor may immediately proceed to distrain, collect, or bring action for such sum, or may file a proof of claim in any bankruptcy or insolvency proceedings to enforce payment thereof; provided, however, that such payment shall not be deemed a penalty or liquidated damages, but shall merely constitute payment in advance of all Rent payable hereunder throughout the Term, and provided further, however, that upon Lessor receiving such payment, Lessee shall be entitled to receive from Lessor all rents received by Lessor from other assignees, tenants and subtenants on account of said Premises during the remainder of the Term (provided that the monies to which Lessee shall so become entitled shall in no event exceed the entire amount actually paid by Lessee to Lessor pursuant to this subparagraph (iii)), less all costs, expenses and attorneys’ fees of Lessor incurred but not yet reimbursed by Lessee in connection with recovering and reletting the Premises; or
(d) Without terminating this Lease, in its own name but as agent for Lessee, enter into and upon and take possession of the Premises or any part thereof. Any property remaining in the Premises may be removed and stored in a warehouse or elsewhere at the cost of, and for the account of, Lessee without Lessor being deemed guilty of trespass or becoming liable for any loss or damage which may be occasioned thereby unless caused by Lessor’s negligence. Thereafter, Lessor may, but shall not be obligated to, lease to a third party the Premises or any portion thereof as the agent of Lessee upon such terms and conditions as Lessor may deem necessary or desirable in order to relet the Premises. The remainder of any rentals received by Lessor from such reletting, after the payment of any indebtedness due hereunder from Lessee to Lessor, and the payment of any costs and expenses of such reletting, shall be held by Lessor to the extent of and for application in payment of future rent owed by Lessee, if any, as the same may become due and payable hereunder. If such rentals received from such reletting shall at any time or from time to time be less than sufficient to pay to Lessor the entire sums then due from Lessee hereunder, Lessee shall pay any such deficiency to Lessor. Notwithstanding any such reletting without termination, Lessor may at any time thereafter elect to terminate this Lease for any such previous default provided same has not been cured; or
(e) Without terminating this Lease, and with or without notice to Lessee, enter into and upon the Premises and, without being liable for prosecution or any claim for damages therefor, maintain the Premises and repair or replace any damage thereto or do anything or make any payment for which Lessee is responsible hereunder. Lessee shall reimburse Lessor immediately upon demand for any actual expenses which Lessor incurs in thus effecting Lessee’s compliance under this Lease and Lessor shall not be liable to Lessee for any damages with respect thereto; or
(f) Without liability to Lessee or any other party and without constituting a constructive or actual eviction, suspend or discontinue furnishing or rendering to Lessee any property, material, labor, utilities or other service, wherever Lessor is obligated to furnish or render the same so long as an event of default exists, and remains uncured after any applicable cure period, under this Lease; or
(g) With or without terminating this Lease, allow the Premises to remain unoccupied and collect rent from Lessee as it comes due; or
 
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(h) Pursue such other remedies as are available at law or equity.
(i) If this Lease shall terminate as a result of or while there exists an Event of Default hereunder, any funds of Lessee held by Lessor may be applied by Lessor to any damages payable by Lessee (whether provided for herein or by law) as a result of such termination or default.
Neither the commencement of any action or proceeding, nor the settlement thereof, nor entry of judgment thereon shall bar Lessor from bringing subsequent actions or proceedings from time to time, nor shall the failure to include in any action or proceeding any sum or sums then due be a bar to the maintenance of any subsequent actions or proceedings for the recovery of such sum or sums so omitted. No agreement to accept a surrender of the Premises and no act or omission by Lessor or Lessor’s agents during the Term shall constitute an acceptance or surrender of the Premises unless made in writing and signed by Lessor. No re-entry or taking possession of the Premises by Lessor shall constitute an election by Lessor to terminate this Lease unless a written notice of such intention is given to Lessee. No provision of this Lease shall be deemed to have been waived by either party unless such waiver is in writing and signed by the party making such waiver. Lessor’s acceptance of Rent in full or in part following an Event of Default hereunder shall not be construed as a waiver of such Event of Default. No custom or practice which may grow up between the parties in connection with the terms of this Lease shall be construed to waive or lessen either party’s right to insist upon strict performance of the terms of this Lease, without a written notice thereof to the other party.
Section 3. If, after the commencement of the Term, (a) Lessee shall be adjudicated a bankrupt or adjudged to be insolvent; (b) a receiver or trustee shall be appointed for Lessee’s property and affairs; (c) Lessee shall make an assignment for the benefit of creditors or shall file a petition in bankruptcy or insolvency or for reorganization or debtor’s arrangement or shall make application for the appointment of a receiver, or (d) any execution or attachment shall be issued against Lessee or any of Lessee’s property, whereby the Leased Premises or any building or buildings or any improvements thereon shall be taken or occupied or attempted to be taken or occupied by someone other than Lessee, except as may be herein permitted, and such adjudication, appointment, assignment, petition, application, execution or attachment shall not be set aside, vacated, discharged or bonded within thirty (30) days after the issuance of the same, then an event of default hereunder shall become effective, and Lessor shall have the rights and remedies provided for herein.
Section 4. This Lease is also made upon the express condition that Lessor shall faithfully and punctually perform and observe all the agreements, covenants and conditions set forth herein to be performed by Lessor. If any default shall be made or suffered in the performance or observance of any of the covenants or conditions of this Lease to be performed by Lessor, and if Lessor fails to cure such default within thirty (30) days after notice in writing thereof shall have been given by Lessee to Lessor, or, if such default cannot be corrected within such thirty (30) day period, if Lessor does not commence to correct such default within said thirty (30) day period and thereafter diligently prosecute the correction of same to completion within a reasonable time, Lessee shall have the right, at its election, to pursue any and all remedies available to Lessee at law or equity.
 
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Section 5 . Lessee waives all claims against Lessor under this Lease based on or for the loss of business or profits or other consequential damages or for punitive or special damages of any kind, regardless of the cause, and, except as specifically provided in this Lease, Lessee waives all rights to terminate this Lease. Lessor’s obligations and liability with respect to this Lease shall be limited solely to Lessor’s interest in the Leased Premises, as such interest is constituted from time to time, and neither Lessor, nor any partner or member of Lessor, nor any officer, director, shareholder or employee of Lessor, its partners and/or members, shall have any personal liability whatsoever with respect to this Lease. No owner of the Leased Premises, whether or not named herein, shall have liability hereunder to the extent arising or accruing after it ceases to hold title to the Leased Premises.
ARTICLE XV
Surrender of Premises
Section 1. Upon the end of the Term, Lessee shall quit and surrender the Leased Premises, and all improvements located therein in good condition and repair (depreciation, wear and tear, and damage resulting from a casualty or condemnation excepted). Lessee shall, upon or before the end of the Term, remove from the Leased Premises all its personal property, including by way of illustration the furniture, fixtures, equipment and trade fixtures referred to above which may be removed without material damage to the Leased Premises and repair all damage caused by such removal. All property not so removed shall be deemed abandoned by Lessee.
Section 2. It is understood that all movable furniture, fixtures, equipment and all trade fixtures of every kind, character and description, placed in or upon the Leased Premises or owned by Lessee shall remain the property of Lessee, and may be removed by Lessee at any time.
Section 3 . At the expiration or earlier termination of this Lease, Lessor and Lessee shall schedule a walk-through of the Leased Premises to determine whether Lessee has complied with its obligation to surrender the Leased Premises in accordance with Section 1 above.
Section 4. Upon the expiration or the earlier termination of the Lease, Lessor may forthwith re-enter the Leased Premises and repossess itself thereof and remove all persons and effects therefrom, using such reasonable force as may be necessary without being guilty of forcible entry, detainer, trespass or other tort. Lessee’s obligation to observe or perform these covenants shall survive the expiration or other termination of the Term.
 
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ARTICLE XVI
Holding Over
If Lessee should remain in possession of the Leased Premises after the expiration of the Term, as renewed or extended, and without executing a new lease, then such holding over shall be construed as a tenancy from month to month, subject to all the conditions, provisions and obligations of this Lease insofar as the same are applicable to a month-to-month tenancy, and Rent computed as one hundred and fifty percent (150%) of the Rent hereinabove provided and shall continue and apply to such extended tenancy. In addition to the foregoing, Lessee shall be liable for all damages, direct and consequential, incurred by Lessor as a result of such holdover. No receipt of money by Lessor from Lessee after the termination of this Lease or Lessee’s right of possession of the Leased Premises shall reinstate, continue or extend the Term or Lessee’s right of possession.
ARTICLE XVII
Compliance With Laws
Section 1. Lessee agrees to use the Leased Premises in a manner which shall be in compliance with all applicable laws, rules and regulations, orders and ordinances which relate specifically to, or which are imposed by reason of, its particular use of the Leased Premises, and further agrees not to suffer or permit the Leased Premises to be used for any unlawful purpose, and to protect Lessor and save it and the Leased Premises harmless from any and all fines and penalties that may result from or be due to any infractions of or noncompliance with the said laws, rules, regulations, orders and ordinances.
Section 2. Lessor shall be responsible for compliance with all laws including but not limited to the requirements of the Americans With Disabilities Act (ADA) 1991, as the same are applicable with respect to the Leased Premises as of the Commencement Date.
 
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ARTICLE XVIII
Notices
Section 1. Any notice herein provided to be given to Lessor shall be given by registered or certified United States mail or nationally recognized overnight courier service, postage prepaid, addressed to Lessor as follows:
If to Lessor:
International Paper Company
Attn: Corporate Real Estate Department
6400 Poplar Avenue
Memphis, TN 38197
with required copy to:
International Paper Company
SRS Cresa Lease Administration LLC
15660 Dallas Parkway, Suite 1200
Dallas, TX 75248-3330
Section 2. Any notice herein provided to be given to Lessee shall be given by registered or certified United States mail or nationally recognized overnight courier service, postage prepaid, and shall be addressed as follows:
If to Lessee:
______
______
______
______
with required copy to:
______
______
______
______
Section 3. Any and all notices given, as above provided, shall be deemed to be given when received by the addressee.
Section 4. Each party shall have the right to specify, in lieu of its above-specified address, any other address in the United States of America by giving to the other party at least fifteen (15) days prior written notice of such change of address sent in accordance with Section 1 or 2 above.
 
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ARTICLE XIX
Non-Waiver; Rights and Remedies Cumulative
No requirement of this Lease shall be deemed waived or varied, nor shall either party’s acceptance of any payment with knowledge of any default or either party’s failure or delay to take advantage of any default constitute a waiver of such party’s rights hereunder or of any subsequent or continued breach of any requirement of this Lease. All rights and remedies of either party hereunder or in connection with this Lease shall be in addition to, and not in substitution for, any rights or remedies otherwise available to such party.
ARTICLE XX
Successors and Assigns
All covenants, agreements, conditions, limitations, exceptions and undertakings contained in this Lease shall extend to, and inure to the benefit of, and be binding upon, the respective heirs, executors, administrators, legal representatives, and permitted successors and assigns of Lessee and Lessor. The parties hereto further agree that all of the covenants, agreements, conditions, limitations, exceptions and undertakings contained in this Lease shall be binding upon the parties hereto and shall be construed to be covenants running with the land.
ARTICLE XXI
Access to Premises
Lessee shall have access to the Leased Premises 24 hours per day, 7 days per week, 365 days per year.
Lessee agrees that Lessor, its agents, servants or employees, or any person authorized by Lessor, may enter the Leased Premises during usual business hours (i) upon two (2) business days’ prior written notice to inspect the condition of the same and to make such repairs as Lessor may be required or permitted to make under the provisions of this Lease, (i) at any time without prior notice (but Landlord shall use commercially reasonable efforts to provide prior notice if possible), to exhibit the same to prospective purchasers of the Leased Premises, and, (iii) within ninety (90) days prior to the termination of this Lease, or any extensions thereof, to exhibit the Leased Premises to prospective tenants and to place in and upon the premises at such places as Lessor may determine “For Rent” signs or notices; provided, however, that such signs or notices shall not be placed in positions in which they would unreasonably interfere with the continued conduct of Lessee’s business or obstruct Lessee’s own signs as then erected. Nothing herein contained, however, shall be deemed or construed to impose upon Lessor any obligation or liability whatever for care, supervision, repair, improvement, addition, change or alteration of the Leased Premises or the building or improvements thereon other than as expressly provided in this Lease.
 
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ARTICLE XXII
Assignment and Subletting
Other than as contemplated by the Transaction Agreements (as defined in the Contribution Agreement), Lessee shall have no further right to sublease, assign or in any way transfer its rights under this Lease or its rights with regard to all or any portion of the Leased Premises without the prior written consent of Lessor, not to be unreasonably withheld, conditioned or delayed. For purposes herein and other than as contemplated by the Transaction Agreements (as defined in the Contribution Agreement), any change in control of Lessee resulting from a merger, consolidation, stock transfer or asset sale shall be considered an assignment or transfer which requires Lessor’s prior written consent ( not to be unreasonably withheld, conditioned or delayed)
ARTICLE XXIII
Modification/Construction
No oral statement or written matter bearing date prior to the date hereof shall have any force or effect in connection with the interpretation of this agreement or otherwise. Lessee and Lessor agree that they are not relying on any representations or agreements other than those contained in this Lease. No agreement shall be held as changing or in any manner modifying, adding to, or detracting from, any of the terms or conditions of this Lease unless such agreement shall be in writing and duly executed by the parties hereto. Lessor and Lessee acknowledge that this Lease constitutes their mutual work product and agree that no inferences shall be drawn based upon this Lease being drafted either by Lessor or by Lessee.
ARTICLE XXIV
Signage; Parking
Lessee shall be permitted to erect signs that comply with all applicable zoning laws and regulations now or hereafter in effect contingent to Lessor’s prior written approval of such signage, not to be unreasonably withheld, conditioned or delayed. Lessor shall cooperate with Lessee in obtaining approval from the appropriate state and local authorities to install such signage on behalf of Lessee, located as shown on the site plan attached hereto as Exhibit B. Lessee shall bear all costs associated with obtaining said approvals.
Lessee shall have access on a non-exclusive basis to the parking spaces as identified on Exhibit “B” hereto. [CONFORM PER PROPERTY]
 
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ARTICLE XXV
Alterations and Additions
Lessee shall not make or allow to be made any alterations, additions or improvements to or of the Premises or any part thereof, which alteration costs in excess of $25,000, without first obtaining the written consent of Lessor, which shall not be unreasonably withheld, conditioned or delayed. Any alteration made to the Leased Premises below the above-referenced threshold amount shall not require Lessor’s prior written consent but shall require written notice from Lessee to Lessor. Any approval by Lessor of, or consent by Lessor to, any plans, specifications or other items to be submitted to and/or reviewed by Lessor pursuant to this Lease shall be deemed to be strictly limited to an acknowledgment of approval or consent by Lessor thereto, and such approval or consent shall not constitute the assumption by Lessor of any responsibility for the accuracy, sufficiency or feasibility of any plans, specifications or other such items and shall not imply any acknowledgment, representation or warranty by Lessor that the design is safe, feasible, structurally sound or will comply with any legal or governmental requirements, with Lessee being responsible for all of the same. Any alterations, physical additions or improvements shall at once become the property of Lessor; provided, however, that within ten (10) business days following Lessee’s request, Lessor shall provide written notice to Lessee (each notice, a “Removal Notice”) whether upon the expiration or earlier termination of the Lease, Lessee shall be required to remove such alteration, addition or improvement (and/or any cabling installed by or on behalf of Lessee) in order to restore the Leased Premises to the condition existing on the Commencement Date; provided, however, that Lessor’s failure to provide Lessee with the Removal Notice within the required time period as set forth herein shall be deemed a waiver by Lessor of its right to require Lessee to remove such alteration, addition or improvement (and/or any cabling installed by or on behalf of Lessee) from the Leased Premises upon the expiration or earlier termination of the Lease. Nothing herein shall be deemed to waive Lessor’s right to require any such alterations, additions or improvements to be removed from the Leased Premises if such alterations, additions or improvements were made by Lessee without Lessor’s consent thereto. All costs of any such alterations, additions or improvements shall be borne by Lessee including any reasonable third-party construction management fees incurred by Lessor in connection therewith. All alterations, additions or improvements must be made in a good, workmanlike manner and in a manner that does not disturb other occupants (i.e., any loud work must be performed during non-business hours) and Lessee must maintain appropriate liability and builder’s risk insurance throughout the construction. Lessee does hereby indemnify and hold Lessor harmless from and against all claims for damages or death of persons or damage or destruction of property arising out of the performance of any such alterations, additions or improvements made by or on behalf of Lessee, except to the extent that such claims result from the negligence or wilful misconduct of Lessor or its agents.
 
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ARTICLE XXVI
Subordination and Acknowledgements; Estoppels
Section 1 . At the option of the Lessor or the applicable mortgagee, chargee or trustee (as the case may be), this Lease shall be subject and subordinate to any and all mortgages, charges and deeds of trust (and instruments supplemental thereto), which may now affect the Leased Premises. Lessee acknowledges and agrees that any such mortgagee, chargee or trustee may unilaterally postpone and subordinate its mortgage, charge or deed of trust to this Lease and any renewals, modifications, consolidations, replacements or extensions thereof to the intent that this Lease and all right, title and interest of Lessee in the Leased Premises shall be prior to the rights of such mortgagee, chargee or trustee as fully as if such Lease had been executed and registered before the registration of the mortgage, charge or deed of trust, as applicable. On request at any time and from time to time of Lessor or of the mortgagee, chargee or trustee under any such mortgage, charge or deed of trust, Lessee shall promptly, at no cost to the Lessor or mortgagee, chargee or trustee:
(a) attorn to such mortgagee, chargee or trustee and become its tenant of the Leased Premises or the tenant of the Leased Premises of any purchaser from such mortgagee, chargee or trustee in the event of an exercise of any permitted power of sale contained in any such mortgage, charge or deed of trust for the then unexpired residue of the Term on the terms herein contained; and/or
(b) subordinate this Lease to such mortgage, charge or deed of trust to the intent that this Lease and all right, title and interest of Lessee in the Leased Premises shall be subject to the rights of such mortgagee, chargee or trustee as fully as if such mortgage, charge or deed of trust had been executed and registered and the money thereby secured had been advanced before the execution of this Lease (and notwithstanding any authority or consent of such mortgagee, or trustee, express or implied, to the making of this Lease).
Section 2 . Lessee shall, within not more than ten (10) business days’ written request therefor, execute and return to Lessor or its mortgagee as required by Lessor from time to time and without cost to Lessor or such mortgagee, a statement in writing certifying that this Lease is unmodified and in full force and effect (or if modified, stating the modifications and that the Lease is in full force and effect as modified), the amount of the annual Rent then being paid hereunder, the dates to which the same, by instalment or otherwise, and other charges hereunder have been paid, whether or not, to the best of Lessee’s knowledge, there is any existing default on the part of Lessor of which Lessee has notice, and any other information reasonably required.
Section 3 . At any time and from time to time either party, upon request of the other party, will execute, acknowledge and deliver an instrument, stating, if the same be true, that this Lease, a copy of which will be attached to the instrument, is a true and exact copy of the Lease between the parties hereto, that there are no amendments hereof (or stating what amendments there may be), that the Lease is then in full force and effect and that, to the best of its knowledge, there are no offsets, defenses or counterclaims with respect to the payment of Rent reserved hereunder or in the performance of the other terms, covenants and conditions hereof on the part of Lessee or Lessor, as the case may be, to be performed, and that as of such date no default has been declared hereunder by either party or, if facts constituting a default are known, specifying the same. Such instrument will be executed by the other party and delivered to the requesting party within fifteen (15) days of receipt.
 
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ARTICLE XXVII
Environmental
(a) Lessee represents, warrants and covenants to Lessor that it and its agents, servants, employees, contractors and anyone acting on its behalf will not use, store, generate or dispose of “Hazardous Materials” (as hereinafter defined) in, on, under or about the Leased Premises, except as done so in connection with the ordinary course of Lessee’s lawful business operations and in compliance with all applicable laws and regulations regarding the use of such Hazardous Materials. Lessee shall give Lessor prompt notice of the existence or discovery of the presence of Hazardous Materials in, on or about the Leased Premises, if unrelated to the ordinary course of Lessee’s business operations, or contamination of the Leased Premises with Hazardous Materials. In the event that Lessee or any of its agents, servants, employees, contractors or anyone acting on its behalf is responsible for the presence of Hazardous Materials at, on, in our under the Leased Premises, Lessee shall indemnify, defend and hold Lessor harmless from and against any and all damages, claims, injuries, cost and liability arising therefrom or related thereto, including all costs of clean-up. Such clean-up and disposal of such Hazardous Materials by Lessee, including required air monitoring and documentation, shall be performed by Lessee at its sole cost and expense and shall be performed in accordance with all applicable laws, rules, regulations and ordinances. Lessor shall have the right, but not the obligation, to review and monitor any such clean-up and disposal by Lessee. Within forty-five (45) days following the clean-up of any Hazardous Materials for which Lessee is responsible in accordance with the requirements set forth herein, Lessee shall furnish to Lessor Hazardous Materials manifests and records which document transport and disposal of such material.
(b) Notwithstanding the foregoing, in no event shall Lessee have any responsibility or liability to Lessor for the presence or Hazardous Materials caused by Lessor, its agents, servants, employees, or contractors, and Lessor shall be solely responsible for any such contamination.
(c) Lessee shall notify Lessor and provide to Lessor a copy or copies of the following environmental entitlement or inquiries related to the Leased Premises which are received or filed by Lessee: notices of violation, notices to comply, citations, inquiries and reports filed pursuant to self-reporting requirements. In the event of a release of any Hazardous Materials into the environment, Lessee shall furnish to Lessor a copy of any documents not privileged or confidential relating to the Leased Premises.
(d) Lessor shall have access to the Leased Premises during normal business hours and upon two (2) business day’s prior notice to Lessee in order to conduct inspections and tests of Hazardous Materials or suspected Hazardous Materials in, on, under or about the Leased Premises.
(e) If Lessee shall breach any representation, warranty or covenant or shall fail to take any action required hereunder within the time permitted, Lessor, without being under any obligation to do so and without waiving any default or its rights hereunder, may take such action
 
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and/or remedy such other default for the account of Lessee, and may enter the Leased Premises for such purpose, and Lessee shall thereupon be obligated, and hereby agrees, to pay Lessor upon demand all costs, expenses, and disbursements incurred in taking such remedial action.
(f) As used herein, the term “Hazardous Material(s)” means any chemical, substance or material or combination thereof, which (i) is defined as a hazardous substance, hazardous material, hazardous waste, pollutant, toxic material, or contaminant under any Environmental Law (as defined below), (ii) is a petroleum hydrocarbon, including crude oil or any fraction thereof, (iii) is hazardous to human health or safety or the environment due to its toxicity, corrosivity, flammability, explosivity, infectiousness, radioactivity, carcinogenicity or reproductive toxicity, or (iv) is regulated pursuant to any Environmental Law.
(g) As used herein, the term “Environmental Law” shall include local, state and federal laws, judgments, ordinance, rules, regulations, codes and other governmental restrictions.
[(h) Within thirty (30) days after the termination of this Lease, Lessor, its agents, employees or consultants may conduct an environmental inspection of the Leased Premises. In the event the inspection shall reveal a breach of Lessee’s representations or obligations hereunder, then (i) Lessor shall be entitled to remedies as set forth herein and (ii) the cost of the environmental inspection shall be at the sole cost and expense of Lessee.] 2
(i) The provisions of this Article XXVII shall survive the expiration or other termination of the Lease Term.
ARTICLE XXVIII
Lessee Financing
Lessor hereby waives any contractual, statutory or other Lessor’s lien on Lessee’s property or on the Lessee’s interest created by this Lease. In no event shall Lessee grant or assign any mortgage or other security interest in Lessee’s interest in this Lease.
ARTICLE XXIX
Broker
Lessor and Lessee warrant that no broker was involved in this Lease or the transactions contemplated hereby. Each party agrees to indemnify the other party from claims for real estate commissions or fees arising out of any acts or negotiations of the indemnifying party with any broker, realtor or finder.

2  	Only applicable to non-office sites.	
 
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ARTICLE XXX
Confidentiality
Each party agrees to treat all information contained in the Lease (including the name of the other party) as strictly confidential and shall not disclose any information about the Lease or the other party to anyone not an agent of said party, and if then only on a “need to know” basis and with the requirement that said agent treat the Lease and the terms hereof as strictly confidential. Neither party shall make any marketing or press release regarding the Lease without the prior written consent of the other party, which consent may be withheld in said party’s sole and absolute discretion. Notwithstanding anything herein to the contrary, either party may disclose information regarding the Lease under proper authority of court.
ARTICLE XXXI
Public Recordation of Lease
Each party agrees that neither party shall have the right to record and/or cause or permit this Lease, or any memorandum of this Lease, to be recorded publicly without prior written consent of the other party.
ARTICLE XXXII
Miscellaneous
Section 1. This Lease may be executed simultaneously in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
Section 2. In the event that either party brings a legal proceeding to enforce the provisions of this Lease, the party prevailing in any such proceeding shall be entitled to recover from the non-prevailing party all costs, expenses and charges, including reasonable attorneys’ fees, incurred in addition to such other damages occasioned by the breach of this Lease.
Section 3. Lessor represents to Lessee that Lessor has full corporate power and authority to execute and deliver this Lease and that Lessor has obtained all necessary consents required for the execution and delivery of this Lease. Lessee represents to Lessor that Lessee has full corporate power and authority to execute and deliver this Lease and that Lessee has obtained all necessary consents required for the execution and delivery of this Lease.
Section 4. This Lease shall be governed by the laws of the State in which the Leased Premises are located. Time shall be of the essence with regard to the obligations under this Lease. This Lease and the Contribution Agreement supersedes all prior discussions and agreements with respect to the Leased Premises between the parties and incorporates their entire
 
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agreement. Any term used in this Lease that begins with initial capital letters and is not defined herein shall have the same meaning attributable to that term in the Contribution Agreement. Nothing in this Lease shall be deemed to supersede, enlarge or modify any of the provisions of the Contribution Agreement, all of which shall survive the execution and delivery of this Lease as provided in, and subject to the limitations set forth in, the Contribution Agreement. If any conflict exists between the terms of this Lease and the terms of the Contribution Agreement, the terms of the Contribution Agreement shall govern and control.
[ The remainder of this page intentionally left blank. Signature page follows. ]
 
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IN WITNESS WHEREOF, Lessor and Lessee have executed this Lease as of the day and year first above written.

LESSOR:
 	
INTERNATIONAL PAPER COMPANY	
		
By:	 	 	
Name:	 	 	
Title:	 	 	
	
LESSEE:	
	
[SPINCO], a Delaware corporation	
		
By:	 	 	
Name:	 	 	
Title:	 	 	
 
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EXHIBIT A
DESCRIPTION OF LEASED PREMISES
 
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EXHIBIT B
SITE PLAN
 
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Exhibit B
Form of Spinco Certificate of Incorporation

AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
xpedx Holding Company
FIRST . Name . The name of the corporation is xpedx Holding Company (the “ Corporation ”).
SECOND . Registered Office and Agent . The Corporation’s registered office in the State of Delaware is at [Address], in the City of [City], County of [County], [Zip Code]. The name of its registered agent at such address is [            ].
THIRD . Purpose . The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware (as amended from time to time, the “ DGCL ”).
FOURTH . Perpetual Existence . The Corporation is to have perpetual existence.
FIFTH . Capital Stock . The total number of shares of stock which the Corporation shall have authority to issue is [            ], consisting of (x) [            ] shares of common stock, par value $[0.01] per share (the “ Common Stock ”), and (y) [            ] shares of preferred stock, par value $[0.01] per share (the “ Preferred Stock ”), issuable in one or more series as hereinafter provided.
(a) Common Stock . Except as otherwise provided (i) by the DGCL, (ii) by Section (b) of this Article FIFTH or (iii) by resolutions, if any, of the Board of Directors of the Corporation (the “ Board of Directors ”) fixing the powers, designations, preferences and the relative, participating, optional or other rights of the Preferred Stock, or the qualifications, limitations or restrictions thereof, the entire voting power of the shares of the Corporation for the election of directors and for all other purposes shall be vested exclusively in the Common Stock. Each holder of Common Stock shall be entitled to one vote for each share of Common Stock held of record by such holder upon all matters to be voted on by the holders of the Common Stock; provided , however , that, except as otherwise required by law or by the terms of any series of Preferred Stock, holders of Common Stock shall not be entitled to vote on any amendment to this Certificate of Incorporation (including any certificate of designation relating to any series of Preferred Stock) that relates solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together with the holders of one or more other such series, to vote thereon pursuant to this Amended and Restated Certificate of Incorporation (including any certificate of designation relating to any series of Preferred Stock) or pursuant to the DGCL. Each holder of Common Stock shall be entitled to participate equally in all dividends payable with respect to the Common Stock and to share equally, subject to any rights and preferences of the Preferred Stock (as fixed by resolutions, if any, of the Board of Directors), in the assets of the Corporation available for distribution, in the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, or upon any distribution of the assets of the Corporation.

(b) Preferred Stock . Subject to the provisions of this Amended and Restated Certificate of Incorporation, the Board of Directors is authorized to provide for the issuance of shares of Preferred Stock in one or more series and to fix from time to time by resolution or resolutions the number of shares of any series of Preferred Stock, and to determine the designation, voting powers, preferences and relative, participating, optional or other special rights, and the qualifications, limitations and restrictions thereof, of any such series. The authority of the Board of Directors with respect to each series shall include, but not be limited to, determination of the following:
(i) The number of shares constituting that series which the Board may thereafter (except where otherwise provided in the resolution or resolutions) increase or decrease (but not below the number of shares then outstanding) and the designation of that series;
(ii) The dividend rate or rates on the shares of that series, if any, the terms and conditions upon which and the periods in respect of which dividends shall be payable, whether dividends shall be cumulative, and, if so, from which date or dates, and the relative rights of priority, if any, of payment of dividends on shares of that series;
(iii) Whether the holders of that series shall have voting rights, in addition to the voting rights provided by applicable law, and, if so, the terms of such voting rights;
(iv) Whether that series shall have conversion or exchange privileges, and, if so, the terms and conditions of such conversion, including provision for adjustment of the conversion or exchange rate in such events as the Board of Directors shall determine;
(v) Whether or not the shares of that series shall be redeemable, and, if so, the terms and conditions of such redemption, including the date or dates upon or after which they shall be redeemable, and the amount per share payable in the event of redemption, which amount may vary under different conditions and at different redemption dates;
(vi) Whether that series shall have a sinking fund for the redemption or purchase of shares of that series, and, if so, the terms and amount of such sinking fund;
(vii) The rights of the shares of that series in the event of voluntary or involuntary liquidation, distribution of assets, dissolution or winding up of the Corporation, and the relative rights of priority, if any, of payment of shares of that series; and
(viii) Any other relative rights, powers and preferences, and the qualifications, limitations and restrictions thereof, of that series.
SIXTH . Board of Directors . The following provisions are inserted for the management of the business and for the conduct of the affairs of the Corporation and for the purpose of creating, defining, limiting and regulating the powers of the Corporation and its Board of Directors and stockholders:
 
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(a) Number of Directors . The number of directors initially shall be 9. Subject to the special rights of the holders of any class or series of stock to elect directors, the precise number of directors shall be fixed exclusively pursuant to a resolution adopted by the Board of Directors.
(b) Election; Term of Office; Vacancies and Newly Created Directorships . Except as otherwise provided by applicable law, the Board of Directors shall be elected at the annual meeting of stockholders to serve one-year terms until successors shall have been duly elected and shall have qualified.
Subject to the rights of the holders of any one or more series of Preferred Stock then outstanding, newly created directorships resulting from any increase in the authorized number of directors or any vacancies in the Board of Directors resulting from death, resignation, retirement, disqualification, removal from office or other cause shall be filled solely by the affirmative vote of a majority of the remaining directors then in office, even though less than a quorum of the Board of Directors. Any director so chosen shall hold office until the next annual meeting and until his successor shall be elected and qualified. No decrease in the number of directors shall shorten the term of any incumbent director.
Except for such additional directors, if any, as are elected by the holders of any series of Preferred Stock as provided for or fixed pursuant to the provisions of Article FIFTH hereof, any director, or the entire Board of Directors, may be removed from office at any time, but only (i) for cause by an affirmative vote of the holders of at least a majority of the Voting Stock or (ii) at any special meeting of the stockholders called by the Board of Directors or by the chairman of the Board of Directors for this purpose.
During any period when the holders of any series of Preferred Stock have the right to elect additional directors as provided for or fixed pursuant to the provisions of Article FIFTH hereof, then upon commencement and for the duration of the period during which such right continues: (i) the then otherwise total authorized number of directors of the Corporation shall automatically be increased by such specified number of directors, and the holders of such Preferred Stock shall be entitled to elect the additional directors so provided for or fixed pursuant to said provisions, and (ii) each such additional director shall serve until such director’s successor shall have been duly elected and qualified, or until such director’s right to hold such office terminates pursuant to said provisions, whichever occurs earlier, subject to his earlier death, disqualification, resignation or removal. Except as otherwise provided by the Board of Directors in the resolution or resolutions establishing such series, whenever the holders of any series of Preferred Stock having such right to elect additional directors are divested of such right pursuant to the provisions of such stock, the terms of office of all such additional directors elected by the holders of such stock, or elected to fill any vacancies resulting from the death, resignation, disqualification or removal of such additional directors, shall forthwith terminate and the total authorized number of directors of the Corporation shall be reduced accordingly.
(c) Corporate Power and Authority . All corporate powers and authority of the Corporation (except as at the time otherwise provided by applicable law, by this Amended and Restated Certificate of Incorporation or by the bylaws of the Corporation) shall be vested in and exercised by the Board of Directors.
(d) Election . Elections of directors need not be by written ballot unless the bylaws of the Corporation shall so provide.
 
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SEVENTH . Indemnification .
(a) Limitation of Liability .
(i) To the fullest extent permitted by the DGCL as it now exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader exculpation rights than permitted prior thereto), a director of the Corporation shall not be liable to the Corporation or its stockholders for monetary damages arising from a breach of fiduciary duty as a director.
(ii) Any repeal or modification of subparagraph (i) of this Section (a) of Article SEVENTH shall not adversely affect any right or protection of a director existing hereunder with respect to any act or omission occurring at or prior to the time of such repeal or modification.
(b) Right to Indemnification . Each person who was or is made a party or is threatened to be made a party to or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a “ proceeding ”), by reason of the fact that he or she or a person of whom he or she is the legal representative is or was or has agreed to become a director or an officer of the Corporation or, while serving as a director or officer, is or was serving or has agreed to serve at the request of the Corporation as a director, officer, employee, agent or trustee of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to an employee benefit plan (hereinafter an “ indemnitee ”), whether the basis of such proceeding is action alleged to have been taken or omitted in an official capacity as a director or officer, or in any other capacity while serving or having agreed to serve as a director, officer, employee, agent or trustee, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the DGCL, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than such law permitted the Corporation to provide prior to such amendment), against all expense, liability and loss (including, without limitation, attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by such indemnitee in connection therewith; provided , however , that, except as provided in Section (d) of this Article SEVENTH with respect to proceedings to enforce rights to indemnification, the Corporation shall indemnify any such indemnitee in connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was authorized by the Board of Directors.
(c) Right to Advancement of Expenses . In addition to the right to indemnification conferred in Section (b) of this Article SEVENTH, an indemnitee shall to the fullest extent not prohibited by the DGCL have the right to be paid by the Corporation the expenses (including attorneys’ fees) incurred in defending any such proceeding in advance of its final disposition (hereinafter an “ advancement of expenses ”); provided , however , that, if the DGCL requires, an advancement of expenses shall be made only upon delivery to the Corporation of an undertaking (hereinafter an “ undertaking ”), by or on behalf of such indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal (hereinafter a “ final adjudication ”) that such indemnitee is not entitled to be indemnified for such expenses under this Section (c) of Article SEVENTH or otherwise.
 
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(d) Procedure for Indemnification . Any claim for indemnification or advancement of expenses (including attorneys’ fees, costs and charges) under Sections (b) and (c) of this Article SEVENTH shall be made promptly, and in any event within forty-five days (or, in the case of an advance of expenses, twenty days, provided that the undertaking contemplated by Section (c) of this Article SEVENTH, if required, has been delivered to the Corporation), upon the written request of the indemnitee. If any claim for indemnification is not paid in full within 45 days or any claim for advancement of expenses is not paid in full within 20 days, the indemnitee shall thereupon (but not before) be entitled to file suit to recover the unpaid amount of the claim in the Court of Chancery (as defined in Section (m) of this Article SEVENTH). Such indemnitee’s costs and expenses incurred in connection with successfully establishing his or her right to indemnification, in whole or in part, in any such action shall also be indemnified by the Corporation. It shall be a defense to any action by an indemnitee for indemnification or the advance of expenses (other than an action brought to enforce a claim for the advance of expenses where the undertaking required pursuant to Section (c) of this Article SEVENTH, if any, has been tendered to the Corporation) that the claimant has not met the standards of conduct which make it permissible under the DGCL for the Corporation to indemnify the claimant for the amount claimed, but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its Board of Directors, independent legal counsel or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because such person has met the applicable standard of conduct set forth in the DGCL, nor an actual determination by the Corporation (including its Board of Directors, independent legal counsel or its stockholders) that the claimant has not met such applicable standard of conduct, shall create a presumption that the claimant has not met the applicable standard of conduct.
(e) Insurance . The Corporation may purchase and maintain insurance on its own behalf and on behalf of any person who is or was or has agreed to become a director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, limited liability company, trust, association or other enterprise against any expense, liability or loss asserted against him or her and incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power to indemnify such person against such expenses, liability or loss under the DGCL.
(f) Service for Subsidiaries . Any director or officer serving, or who has served, as a director, officer, trustee or employee of another corporation or of a partnership, joint venture, limited liability company, trust, association or other enterprise, at least 50% of whose equity interests or assets are owned, directly or indirectly, by the Corporation (a “ subsidiary ” for this Article SEVENTH) shall be conclusively presumed to be, or to have been, serving in such capacity at the request of the Corporation.
 
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(g) Reliance . Persons who after the date of the adoption of this provision become or remain directors or officers of the Corporation or who, while a director or officer of the Corporation, become or remain a director, officer, employee or agent of a subsidiary, shall be conclusively presumed to have relied on the rights to indemnity, advancement of expenses and other rights contained in this Article SEVENTH in entering into or continuing such service. The rights to indemnification and to the advance of expenses conferred in this Article SEVENTH shall apply to claims made against an indemnitee arising out of acts or omissions which occurred or occur both prior and subsequent to the adoption hereof.
(h) Nature of Rights . The rights conferred upon indemnitees in this Article SEVENTH shall be contract rights and such rights shall continue as to an indemnitee who has ceased to be a director, officer or trustee and shall inure to the benefit of the indemnitee’s heirs, executors and administrators. Any amendment, alteration or repeal of this Article SEVENTH that adversely affects any right of an indemnitee or its successors shall be prospective only and shall not limit or eliminate any such right with respect to any proceeding involving any occurrence or alleged occurrence of any action or omission to act that took place prior to such amendment or repeal.
(i) Other Rights; Continuation of Right to Indemnification . The provisions of this Article SEVENTH shall be in addition to and not in limitation of any other rights, indemnities, or limitations of liability to which any director or officer may now or in the future be entitled, as a matter of law or under any by-law, agreement, vote of stockholders or disinterested directors or otherwise. All rights to indemnification under this Article SEVENTH shall be deemed to be a contract between the Corporation and each person entitled to indemnification under Section (b) of this Article SEVENTH at any time while this Article SEVENTH is in effect. Any repeal or modification of this Article SEVENTH or any repeal or modification of relevant provisions of the DGCL or any other applicable laws shall not in any way diminish any rights to indemnification and advancement of expenses of such person entitled to indemnification under Section (b) of this Article SEVENTH or the obligations of the Corporation arising hereunder with respect to any actual or threatened action, suit or proceeding arising out of, or relating to, any actions, transactions or facts occurring prior to the final adoption of such repeal or modification.
(j) Savings Clause . If this Article SEVENTH or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify and advance expenses to each person entitled to indemnification under this Article SEVENTH as to all expense, liability and loss (including attorneys’ fees and related disbursements, judgments, fines, ERISA excise taxes and penalties, penalties and amounts paid or to be paid in settlement) actually and reasonably incurred or suffered by such person and for which indemnification or advancement of expenses is available to such person pursuant to this Article SEVENTH to the fullest extent permitted by any applicable portion of this Article SEVENTH that shall not have been invalidated.
(k) Indemnification of Employees and Agents of the Corporation . The Corporation may, to the extent authorized from time to time by the Board of Directors, grant rights to indemnification and to the advancement of expenses to any employee or agent of the Corporation to the fullest extent of the provisions of this Article SEVENTH with respect to the indemnification and advancement of expenses and of the Corporation.
 
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(l) Definition . For purposes of this Article SEVENTH, references to the “Corporation” shall include, in addition to the Corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger, including without limitation, prior to (or, in the case of an entity specifically designated in a resolution of the Board of Directors, after) the adoption of this Certificate of Incorporation and which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under this Article SEVENTH with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued.
(m) The Court of Chancery of the State of Delaware (the “ Court of Chancery ”) shall have exclusive jurisdiction to hear and determine all actions for indemnification or advancement of expenses brought with respect to this Article SEVENTH, and the Court of Chancery may summarily determine the Corporation’s obligation to advance expenses (including attorneys’ fees) under this Article SEVENTH.
EIGHTH . Meetings of Stockholders .
(a) Action by Written Consent . Any action which may be taken at any meeting of stockholders may be taken without a meeting and without prior notice if a consent in writing setting forth the action so taken is (i) initiated by holders of no less than twenty percent (20%) of the total votes entitled to be cast by the holders of all the outstanding capital stock of the Corporation entitled to vote generally in an election of directors (the “ Voting Stock ”), (ii) signed by the holders having not less than the minimum number of votes necessary to authorize or take such action at a meeting at which all shares of the Corporation’s stock entitled to vote thereon were present and voted and (iii) delivered to the Corporation to its registered office in the State of Delaware, the Corporation’s principal place of business or the secretary of the Corporation. Every written consent shall bear the date of signature of each stockholder who signs the consent and no written consent shall be effective to take the corporate action referred to therein unless, within sixty (60) days of the date the earliest dated consent is delivered to the Corporation, a written consent or consents signed by a sufficient number of holders to take such action are delivered to the Corporation by delivery to the Corporation’s registered office in the State of Delaware, the Corporation’s principal place of business or the secretary of the Corporation. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing and who, if the action had been taken at a meeting, would have been entitled to notice of the meeting if the record date for notice of such meeting had been the date that written consents signed by a sufficient number of holders were delivered to the Corporation as provided for in this Article EIGHTH.
 
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(b) Special Meetings of Stockholders . Subject to the special rights of the holders of any series of Preferred Stock and to the requirements of applicable law, special meetings of the stockholders of the Corporation for any purpose or purposes may be called at any time only by (i) the chairman of the Board of Directors, (ii) the Board of Directors pursuant to a resolution of the Board of Directors adopted by a majority of the total number of directors then in office or (iii) the holders of no less than twenty percent (20%) of the Voting Stock, and may not be called by any other person, persons or entity. Except as otherwise required by law, the business conducted at a special meeting of stockholders of the Corporation shall be limited exclusively to the business set forth in the Corporation’s notice of meeting, and the individual or group calling such meeting shall have exclusive authority to determine the business included in such notice. Any special meeting of the stockholders shall be held either within or without the State of Delaware, at such place, if any, and on such date and time, as shall be specified in the notice of such special meeting.
NINTH . Business Opportunities . To the fullest extent permitted by Section 122(17) of the DGCL (or any successor provision) and except as may be otherwise expressly agreed in writing by the Corporation and any of UWW Holdings, LLC, Bain Capital Fund VII, L.P. and their respective affiliates (each, an “ Investor ” and together, the “ Investors ”), the Corporation, on behalf of itself and its subsidiaries, renounces and waives any interest or expectancy of the Corporation and its subsidiaries in, or in being offered an opportunity to participate in, directly or indirectly, any potential transactions, matters or business opportunities (including, without limitation, any business activities or lines of business that are the same as or similar to those pursued by, or competitive with, the Corporation or any of its subsidiaries) that are from time to time presented to any of the Investors or any of their respective officers, directors, members, partners or employees (each, an “ Investor Party ” and together, the “ Investor Parties ”), even if the transaction, matter or opportunity is one that the Corporation or its subsidiaries might reasonably be deemed to have pursued or had the ability or desire to pursue if granted the opportunity to do so and, to the fullest extent permitted by law, no such Investor Party shall be liable to the Corporation or any of its subsidiaries or Affiliates for breach of any fiduciary or other duty, as a director or officer or otherwise, by reason of the fact that such person pursues, acquires or participates in such business opportunity, directs such business opportunity to another person or fails to present such business opportunity, or information regarding such business opportunity, to the Corporation or its subsidiaries, in each case provided that such business opportunity was not presented or offered to the Investor or an Investor Party initially in its, his or her capacity as a director, officer, employee or agent of the Corporation. Any person or entity purchasing or otherwise acquiring any interest in any shares of stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Article NINTH. Neither the alteration, amendment or repeal of this Article NINTH, nor the adoption of any provision of this Amended and Restated Certificate of Incorporation inconsistent with this Article NINTH, nor, to the fullest extent permitted by Delaware law, any modification of law, shall eliminate or reduce the effect of this Article NINTH in respect of any business opportunity first identified or any other matter occurring, or any cause of action, suit or claim that, but for this Article NINTH, would accrue or arise, prior to such alteration, amendment, repeal, adoption or modification. If any provision or provisions of this Article NINTH shall be held to be invalid, illegal or unenforceable as applied to any circumstance for any reason whatsoever: (a) the validity, legality and enforceability of such provisions in any other
 
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circumstance and of the remaining provisions of this Article NINTH (including, without limitation, each portion of any paragraph of this Article NINTH containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and (b) to the fullest extent possible, the provisions of this Article NINTH (including, without limitation, each such portion of any paragraph of this Article NINTH containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to permit the Corporation to protect its directors, officers, employees and agents from personal liability in respect of their good faith service to or for the benefit of the Corporation to the fullest extent permitted by law. This Article NINTH shall not limit any protections or defenses available to, or indemnification or advancement rights of, any director or officer of the Corporation under this Amended and Restated Certificate of Incorporation, the bylaws of the Corporation or applicable law.
TENTH . Interested Stockholder Transactions.
(a) Section 203 of the DGCL . The Corporation elects not to be governed by Section 203 of the DGCL, “Business Combinations With Interested Stockholders”, as permitted under and pursuant to subsection (b)(3) of Section 203 of the DGCL.
(b) Interested Stockholder Transactions . Notwithstanding any other provision in this Amended and Restated Certificate of Incorporation to the contrary, the Corporation shall not engage in any Business Combination (as defined hereinafter) with any Interested Stockholder (as defined hereinafter) for a period of three (3) years following the time that such stockholder became an Interested Stockholder, unless:
(i) prior to such time the Board of Directors approved either the Business Combination or the transaction which resulted in such stockholder becoming an Interested Stockholder; or
(ii) upon consummation of the transaction which results in such stockholder becoming an Interested Stockholder, such stockholder owned at least eighty-five percent (85%) of the Voting Stock of the Corporation outstanding at the time the transaction commenced, excluding for purposes of determining the Voting Stock outstanding (but not the outstanding Voting Stock owned by such Interested Stockholder) those shares owned (i) by Persons (as defined hereinafter) who are directors and also officers of the Corporation and (ii) employee stock plans of the Corporation in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or
(iii) at or subsequent to such time as the Business Combination is approved by the Board of Directors and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding Voting Stock which is not owned by such Interested Stockholder.
 
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(c) Exceptions to Prohibition on Interested Stockholder Transactions . The restrictions contained in this ARTICLE TENTH shall not apply if:
(i) a stockholder becomes an Interested Stockholder inadvertently and (A) as soon as practicable divests itself of ownership of sufficient shares so that the stockholder ceases to be an Interested Stockholder; and (B) would not, at any time within the three (3) year period immediately prior to a Business Combination between the Corporation and such stockholder, have been an Interested Stockholder but for the inadvertent acquisition of ownership.
(ii) the Business Combination is proposed prior to the consummation or abandonment of and subsequent to the earlier of the public announcement or the notice required hereunder of a proposed transaction which (A) constitutes one (1) of the transactions described in the second sentence of this Section (c)(ii) of ARTICLE TENTH; (B) is with or by a Person who either was not an Interested Stockholder during the previous three (3) years or who became an Interested Stockholder with the approval of the Board of Directors; and (C) is approved or not opposed by a majority of the directors then in office (but not less than one (1)) who were directors prior to any Person becoming an Interested Stockholder during the previous three (3) years or were recommended for election or elected to succeed such directors by a majority of such directors. The proposed transactions referred to in the preceding sentence are limited to (x) a merger or consolidation of the Corporation (except for a merger in respect of which, pursuant to Section 251(f) of the DGCL, no vote of the stockholders of the Corporation is required); (y) a sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions), whether as part of a dissolution or otherwise, of assets of the Corporation or of any direct or indirect majority-owned subsidiary of the Corporation (other than to any direct or indirect wholly-owned subsidiary or to the Corporation) having an aggregate market value equal to fifty percent (50%) or more of either the aggregate market value of all of the assets of the Corporation determined on a consolidated basis or the aggregate market value of all the outstanding Stock (as defined hereinafter) of the Corporation; or (z) a proposed tender or exchange offer for fifty percent (50%) or more of the outstanding Voting Stock of the Corporation. The Corporation shall give not less than 20 days’ notice to all Interested Stockholder prior to the consummation of any of the transactions described in clause (x) or (y) of the second sentence of this Section (c)(ii) of ARTICLE TENTH.
(d) Definitions . As used in this ARTICLE TENTH only, and unless otherwise provided by the express terms of this ARTICLE TENTH, the following items shall have the meanings ascribed to them as set forth in this ARTICLE TENTH.
(i) “ Affiliate ” means a Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, another Person;
(ii) “ Associate ,” when used to indicate a relationship with any Person, means: (A) any corporation, partnership, unincorporated association or other entity of which such Person is a director, officer or partner or is, directly or indirectly, the owner of twenty percent (20%) or more of any class of Voting Stock; (B) any trust or other estate in which such Person has at least a twenty percent (20%) beneficial interest or as to which such Person serves as trustee or in a similar fiduciary capacity; and (C) any relative or spouse of such Person, or any relative of such spouse, who has the same residence as such Person;
 
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(iii) “ Business Combination ” means:
(A) any merger or consolidation of the Corporation or any direct or indirect majority-owned subsidiary of the Corporation with (I) an Interested Stockholder, or (II) with any Person if the merger or consolidation is caused by an Interested Stockholder and as a result of such merger or consolidation Section (c) of ARTICLE TENTH is not applicable to the surviving entity;
(B) any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions), except proportionately as a stockholder of the Corporation, to or with an Interested Stockholder, whether as part of a dissolution or otherwise, of assets of the Corporation or of any direct or indirect majority-owned subsidiary of the Corporation which assets have an aggregate market value equal to ten percent (10%) or more of either the aggregate market value of all the assets of the Corporation determined on a consolidated basis or the aggregate market value of all the outstanding Stock of the Corporation;
(C) any transaction which results in the issuance or transfer by the Corporation or by any direct or indirect majority-owned subsidiary of the Corporation of any Stock of the Corporation or of such subsidiary to an Interested Stockholder, except: (I) pursuant to the exercise, exchange or conversion of securities exercisable for, exchangeable for or convertible into Stock of the Corporation or any such subsidiary which securities were outstanding prior to the time that such Interested Stockholder became such; (II) pursuant to a merger under Section 251(g) or Section 253 of the DGCL; (III) pursuant to a dividend or distribution paid or made, or the exercise, exchange or conversion of securities exercisable for, exchangeable for or convertible into Stock of the Corporation or any such subsidiary which security is distributed, pro rata to all holders of a class or series of Stock of the Corporation subsequent to the time an Interested Stockholder became such; (IV) pursuant to an exchange offer by the Corporation to purchase Stock made on the same terms to all holders of such Stock; or (V) any issuance or transfer of Stock by the Corporation;  provided , however , that in no case under items (III)-(V) of this Section (d)(iii)(C) of ARTICLE TENTH shall there be a related increase in an Interested Stockholder’s proportionate share of the Stock of any class or series of the Corporation or of the Voting Stock of the Corporation;
(D) any transaction involving the Corporation or any direct or indirect majority-owned subsidiary of the Corporation which has the effect, directly or indirectly, of increasing the proportionate share of the Stock of any class or series, or securities convertible into the Stock of any class or series, of the Corporation or of any such subsidiary which is owned by an Interested Stockholder, except as a result of immaterial changes due to fractional share adjustments or as a result of any purchase or redemption of any shares of Stock not caused, directly or indirectly, by the Interested Stockholder; or
 
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(E) any receipt by an Interested Stockholder of the benefit, directly or indirectly (except proportionately as a stockholder of the Corporation), of any loans, advances, guarantees, pledges or other financial benefits (other than those expressly permitted in Sections (d)(iii)(A)-(D) of ARTICLE TENTH) provided by or through the Corporation or any direct or indirect majority-owned subsidiary of the Corporation;
(iv) “ Control ,” including the terms “controlling,” “controlled by” and “under common control with,” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of the Corporation, whether through the ownership of Voting Stock, by contract or otherwise. A Person who is the owner of twenty percent (20%) or more of the outstanding Voting Stock of any corporation, partnership, unincorporated association or other entity shall be presumed to have control of such entity, in the absence of proof by a preponderance of the evidence to the contrary. Notwithstanding the foregoing, a presumption of control shall not apply where such person holds Voting Stock, in good faith and not for the purpose of circumventing this Article TENTH, as an agent, bank, broker, nominee, custodian or trustee for one or more owners who do not individually or as a group have control of such entity;
(v) “ Interested Stockholder ” means any Person (other than the Corporation and any direct or indirect majority-owned subsidiary of the Corporation) that (A) is the owner of fifteen percent (15%) or more of the outstanding Voting Stock of the Corporation, or (B) is an Affiliate or Associate of the Corporation and was the owner of fifteen percent (15%) or more of the outstanding Voting Stock of the Corporation at any time within the three (3) year period immediately prior to the date on which it is sought to be determined whether such Person is an Interested Stockholder, and the Affiliates and Associates of such Person. Notwithstanding anything in this ARTICLE TENTH to the contrary, the term “Interested Stockholder” shall not include: (x) Bain Capital Fund VII, L.P., Georgia-Pacific LLC or any of their respective Affiliates or Associates, including any investment funds managed by the investment advisor to Bain Capital Fund VII, L.P., or any other Person with whom any of the foregoing are acting as a group or in concert for the purpose of acquiring, holding, voting or disposing of shares of Stock of the Corporation, so long as a majority of the Voting Stock owned by all Persons in such group, before and after giving effect to any Business Combination involving such group, is owned by one or more of the foregoing; or (y) any Person whose ownership of shares in excess of the fifteen percent (15%) limitation set forth herein is the result of action taken solely by the Corporation,  provided , that for purposes of this clause (y), such Person shall be an Interested Stockholder if thereafter such Person acquires additional shares of Voting Stock of the Corporation, except as a result of further action by the Corporation not caused, directly or indirectly, by such Person;
(vi) “ Person ” means any individual, corporation, partnership, limited liability company, unincorporated association or other entity; and
(vii) “ Stock ” means, with respect to any corporation, capital stock and, with respect to any other entity, any equity interest.
 
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ELEVENTH . Amendments to the Amended and Restated Certificate of Incorporation and Bylaws .
(a) Amendment of Amended and Restated Certificate of Incorporation . The Corporation reserves the right at any time, and from time to time, to amend, alter or repeal any provision contained in this Amended and Restated Certificate of Incorporation in the manner now or hereafter prescribed by the DGCL, and all rights herein conferred upon stockholders or directors are granted subject to this reservation; provided , however , that any amendment, alteration or repeal of Article SEVENTH, shall not adversely affect any right or protection existing under this Amended and Restated Certificate of Incorporation immediately prior to such amendment, alteration or repeal, including any right or protection of a director thereunder in respect of any act or omission occurring prior to the time of such amendment, modification or repeal. Notwithstanding anything to the contrary contained in this Amended and Restated Certificate of Incorporation, and notwithstanding that a lesser percentage may be permitted from time to time by applicable law, no provision of Articles FIFTH, SIXTH, SEVENTH, EIGHTH, NINTH, TENTH this Article ELEVENTH and Article TWELFTH may be altered, amended or repealed in any respect (including by merger, consolidation or otherwise), nor may any provision or bylaw inconsistent therewith be adopted, unless in addition to any other vote required by this Amended and Restated Certificate of Incorporation or otherwise required by law, such amendment, alteration or repeal is approved by the affirmative vote of the holders of at least a majority of the outstanding Voting Stock.
(b) Adoption, Amendment and Repeal of the Bylaws . The Board of Directors is expressly authorized to amend, alter or repeal the bylaws of the Corporation. Any amendment, alteration or repeal of the bylaws of the Corporation by the Board of Directors shall require the approval of a majority of the Board of Directors then in office. In addition to any other vote otherwise required by applicable law, the stockholders of the Corporation may amend, alter or repeal the bylaws of the Corporation,  provided , that any such action shall require the affirmative vote of the holders of at least a majority of the outstanding Common Stock.
TWELFTH . Exclusive Jurisdiction for Certain Actions . Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for (a) any derivative action or proceeding brought on behalf of the Corporation, (b) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Corporation to the Corporation or the Corporation’s stockholders, (c) any action asserting a claim against the Corporation or any director, officer, employee or agent of the Corporation arising pursuant to any provision of the DGCL or the Corporation’s Amended and Restated Certificate of Incorporation or bylaws (as either may be amended from time to time) or (d) any action asserting a claim against the Corporation governed by the internal affairs doctrine, except, as to each of (a) through (d) above, for any claim as to which the Court of Chancery determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination), which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery, or for which the Court of Chancery does not have subject matter jurisdiction. Any person or entity purchasing or otherwise acquiring or holding any interest in shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Article TWELFTH.
 
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Exhibit C
Form of Spinco Bylaws

XPEDX HOLDING COMPANY
AMENDED AND RESTATED BYLAWS
As amended and restated effective [            ], 201[     ]
ARTICLE I
STOCKHOLDERS
Section 1.01.  Annual Meetings . The annual meeting of the stockholders of xpedx Holding Company (the “ Corporation ”) for the election of directors (each, a “ Director ”) and for the transaction of such other business as properly may come before such meeting shall be held each year, either within or without the State of Delaware, at such place, if any, and on such date and at such time, as may be fixed from time to time by resolution of the board of directors of the Corporation (the “ Board of Directors ”) and set forth in the notice or waiver of notice of meeting. The Board of Directors may postpone, adjourn, recess, reschedule or cancel any annual meeting of stockholders previously scheduled by the Board of Directors.
Section 1.02.  Special Meetings . Special meetings of the stockholders of the Corporation may be called only in the manner set forth in the amended and restated certificate of incorporation of the Corporation (the “ Certificate of Incorporation ”). Notice of every special meeting of the stockholders of the Corporation shall state the purpose or purposes of such meeting. Except as otherwise required by applicable law, the business conducted at a special meeting of stockholders of the Corporation shall be limited exclusively to the business set forth in the Corporation’s notice of meeting, and the individual or group calling such meeting shall have exclusive authority to determine the business included in such notice. Any special meeting of the stockholders shall be held either within or without the State of Delaware, at such place, if any, and on such date and time, as shall be specified in the notice of such special meeting.
Section 1.03.  Participation in Meetings by Remote Communication . The Board of Directors, acting in its sole discretion, may establish guidelines and procedures in accordance with applicable provisions of the General Corporation Law of the State of Delaware, as amended from time to time (the “ DGCL ”), and any other applicable law for the participation by stockholders and proxyholders in a meeting of stockholders by means of remote communications, and may determine that any meeting of stockholders will not be held at any place but will be held solely by means of remote communication. Stockholders and proxyholders complying with such procedures and guidelines and otherwise entitled to vote at a meeting of stockholders shall be deemed present in person and entitled to vote at a meeting of stockholders, whether such meeting is to be held at a designated place or solely by means of remote communication.

Section 1.04.  Notice of Meetings; Waiver .
(a) Unless otherwise required by law, the Secretary or any Assistant Secretary shall cause notice of each meeting of stockholders to be given in a manner permitted by the DGCL not less than 10 nor more than 60 days prior to the meeting, to each stockholder of record entitled to vote at such meeting, subject to such exclusions as are then permitted by the DGCL. The notice shall specify (i) the record date for determining the stockholders entitled to vote at the meeting (if such date is different from the record date of stockholders entitled to notice of the meeting), (ii) the place, if any, date and time of such meeting of the stockholders, (iii) the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, (iv) in the case of a special meeting, the purpose or purposes for which such meeting is called and (v) such other information as may be required by applicable law or as may be deemed appropriate by the Board of Directors, the Chief Executive Officer or the Secretary of the Corporation. If the stockholder list referred to in Section 1.07 of these Bylaws is made accessible on an electronic network, the notice of meeting shall indicate how the stockholder list can be accessed. If a stockholder meeting is to be held solely by means of electronic communications, the notice of such meeting must provide the information required to access such stockholder list.
(b) A written waiver of notice of meeting signed by a stockholder, or a waiver by electronic transmission by a stockholder, whether given before or after the meeting, is deemed equivalent to notice. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in a waiver of notice. The attendance of any stockholder at a meeting of stockholders is a waiver of notice of such meeting, except when the stockholder attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business at the meeting on the ground that the meeting is not lawfully called or convened.
Section 1.05.  Quorum . Except as otherwise required by law, by the Certificate of Incorporation or these Bylaws, the presence in person or by proxy of the holders of record of one-third of the voting power of the shares entitled to vote at a meeting of stockholders shall constitute a quorum for the transaction of business at such meeting;  provided ,  however , that where a separate vote by a class or series is required, the holders of a majority in voting power of all issued and outstanding stock of such class or series entitled to vote on such matter, present in person or represented by proxy, shall constitute a quorum entitled to take action with respect to such matter. In the absence of a quorum, the stockholders so present may, by a majority in voting power thereof, adjourn the meeting from time to time in the manner provided in Section 1.08 of these Bylaws until a quorum shall attend.
Section 1.06.  Voting . Except as otherwise provided in the Certificate of Incorporation or by law, every holder of record of shares entitled to vote at a meeting of stockholders shall be entitled to one vote for each such share outstanding in his or her name on the books of the Corporation at the close of business on the record date for such vote. If no record date has been fixed for a meeting of stockholders, then every holder of record of shares entitled to vote at a meeting of stockholders shall be entitled to 1 vote (unless otherwise provided by the Certificate of Incorporation or by applicable law) for each such share of stock outstanding in his or her name on the books of the Corporation at the close of business on the day next preceding the day on which notice of the meeting is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. Except as otherwise required by law, the Certificate of Incorporation, these Bylaws, the rules and regulations of any stock exchange
 
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applicable to the Corporation or pursuant to any other rule or regulation applicable to the Corporation or its securities, the vote of the holders of a majority in voting power of the shares of stock entitled to vote at a meeting of stockholders on the subject matter in question represented in person or by proxy at any meeting at which a quorum is present shall be sufficient for the transaction of any business at such meeting. The stockholders do not have a right to cumulate their votes for the election of directors.
Section 1.07.  Voting Lists . The officer of the Corporation who has charge of the stock ledger of the Corporation shall prepare, at least 10 days before every meeting of the stockholders (and before any adjournment thereof for which a new record date has been set), a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order and showing the address of each stockholder and the number of shares registered in the name of each stockholder. This list, which may be in any format including electronic format, shall be open to the examination of any stockholder prior to and during the meeting for any purpose germane to the meeting in the manner required by the DGCL and other applicable law. The stock ledger shall be the only evidence as to who are the stockholders entitled by this section to examine the list required by this section or to vote in person or by proxy at any meeting of stockholders.
Section 1.08.  Adjournment . Any meeting of stockholders may be adjourned from time to time, by the presiding person of the meeting or by the vote of a majority in voting power of the shares of stock present in person or represented by proxy at the meeting, to reconvene at the same or some other place, and notice need not be given of any such adjourned meeting if the place, if any, and date and time thereof (and the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting) are announced at the meeting at which the adjournment is taken unless the adjournment is for more than 30 days or a new record date is fixed for the adjourned meeting after the adjournment, in which case notice of the adjourned meeting in accordance with Section 1.04 of these Bylaws shall be given to each stockholder of record entitled to vote at the meeting. At the adjourned meeting, the Corporation may transact any business that might have been transacted at the original meeting.
Section 1.09.  Proxies . Any stockholder entitled to vote at any meeting of the stockholders or to express consent to or dissent from corporate action in writing without a meeting may authorize another person or persons to act for such stockholder by proxy. No proxy may be voted or acted upon after the expiration of three years from the date of such proxy, unless such proxy provides for a longer period. Every proxy is revocable at the pleasure of the stockholder executing it unless the proxy states that it is irrevocable and applicable law makes it irrevocable. A stockholder may revoke any proxy which is not irrevocable by attending the meeting and voting in person or by delivering a revocation of the proxy or a new proxy bearing a later date with the Secretary.
Section 1.10.  Organization; Procedure; Inspection of Elections.
(a) At every meeting of stockholders the presiding person shall be the Chairman of the Board or, in the event of his or her absence or disability, the Chief Executive Officer or, in the event of his or her absence or disability, a presiding person chosen by resolution of the Board
 
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of Directors or in the absence of such designation, by a presiding person chosen at the meeting. The Secretary, or in the event of his or her absence or disability, the Assistant Secretary, if any, or if there be no Assistant Secretary, in the absence of the Secretary, an appointee of the presiding person, shall act as secretary of the meeting. The Board of Directors may adopt by resolution such rules or regulations for the conduct of meetings of stockholders as it shall deem necessary, appropriate or convenient. Subject to any such rules and regulations, the presiding person of any meeting shall have the right and authority to convene and to recess and/or adjourn the meeting, to prescribe rules, regulations and procedures for such meeting and to take all such actions as in the judgment of the presiding person are appropriate for the proper conduct of such meetings. Such rules, regulations or procedures, whether adopted by the Board of Directors or prescribed by the presiding person of the meeting, may include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) rules and procedures for maintaining order at the meeting and the safety of those present; (iii) limitations on attendance at or participation in the meeting to stockholders or records of the Corporation, their duly authorized and constituted proxies or such other persons as the presiding person of the meeting shall determine; (iv) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (v) limitations on the time allotted to questions or comments by participants. The presiding person at any meeting of stockholders, in addition to making any other determinations that may be appropriate to the conduct of the meeting, shall, if the facts warrant, determine and declare to the meeting that a matter or business was not properly brought before the meeting and if such presiding person should so determine, such presiding person shall so declare to the meeting and any such matter of business not properly brought before the meeting shall not be transacted or considered. Unless and to the extent determined by the Board of Directors or the person presiding over the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.
(b) Preceding any meeting of the stockholders, the Board of Directors may, and when required by law shall, appoint one or more persons to act as inspectors of elections, and may designate one or more alternate inspectors. If no inspector or alternate so appointed by the Board of Directors is able to act, or if no inspector or alternate has been appointed and the appointment of an inspector is required by law, the person presiding at the meeting shall appoint one or more inspectors to act at the meeting. No Director or nominee for the office of Director shall be appointed as an inspector of elections. Each inspector, before entering upon the discharge of the duties of an inspector, shall take and sign an oath to execute faithfully the duties of inspector with strict impartiality and according to the best of his or her ability. The inspectors shall discharge their duties in accordance with the requirements of applicable law.
Section 1.11. Stockholder Action by Written Consent . Except as otherwise provided in the Certificate of Incorporation, stockholders may not take any action by written consent in lieu of action at an annual or special meeting of stockholders.
 
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Section 1.12.  Notice of Stockholder Proposals and Nominations .
(a) Annual Meetings of Stockholders.
(i) Nominations of persons for election to the Board of Directors and the proposal of business to be considered by the stockholders may be made at an annual meeting of stockholders only (A) pursuant to the Corporation’s notice of meeting (or any supplement thereto), (B) by or at the direction of the Board of Directors or a Committee appointed by the Board for such purpose or (C) by any stockholder of the Corporation who is entitled to vote at the meeting, who complies with the notice procedures set forth in clauses (ii) and (iii) of this Section 1.12(a)  and who is a stockholder of record at the time such notice is delivered and at the date of the meeting. For the avoidance of doubt, the foregoing clause (C) shall be the exclusive means for a stockholder to make nominations or propose business (other than business included in the Corporation’s proxy materials pursuant to Rule 14(a)-8 under the Securities Exchange Act of 1934, as amended (such act, and the rules and regulations promulgated thereunder, the “ Exchange Act ”)) at an annual meeting of stockholders.
(ii) For nominations or other business to be properly brought before an annual meeting by a stockholder pursuant to subclause (C) of Section 1.12(a)(i)  of these Bylaws, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation and any such proposed business other than nominations must constitute a proper matter for stockholder action under the DGCL. To be timely, a stockholder’s notice shall be received by the Secretary of the Corporation at the principal executive offices of the Corporation not later than 90 days nor earlier than 120 days prior to the first anniversary of the date on which the Corporation first mailed its proxy materials for the preceding year’s annual meeting of stockholders;  provided , that if the date of the annual meeting is advanced by more than 30 days or delayed by more than 70 days from such anniversary date of the preceding year’s annual meeting, or if no annual meeting was held in the preceding year, notice by the stockholder to be timely must be so received not earlier than 120 days prior to such annual meeting and not later than the close of business on the later of the 90th day prior to such annual meeting or the 10 th day following the day on which public announcement of the date of such meeting is first made by the Corporation. Such stockholder’s notice shall set forth (A) as to each person whom the stockholder proposes to nominate for election or re-election as a Director, all information relating to such person that is required to be disclosed in solicitations of proxies for election of Directors, or is otherwise required, in each case pursuant to and in accordance with Section 14(a) of the Exchange Act and the rules and regulations promulgated thereunder, including such person’s written consent to being named in the proxy statement as a nominee and to serving as a Director if elected; (B) as to any other business that the stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting (including the text of any resolution proposed for consideration and if such business includes proposed amendments to the Bylaws, the text of the proposed amendments), the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and of any beneficial owner on whose behalf the proposal is made; and (C) as to the stockholder giving the notice and any beneficial owner, if any, on whose behalf the nomination or proposal is made (I) the name and address of such stockholder, as they appear on the Corporation’s books, and of such beneficial owner, (II) the class or series and number of shares of the Corporation which are owned beneficially and of record by such stockholder and such beneficial owner, (III) a representation that the stockholder is a holder of record of stock of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to propose such business or nomination and (IV) a representation whether the
 
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stockholder or the beneficial owner, if any, intends or is part of a group which intends (x) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Corporation’s outstanding capital stock required to approve or adopt the proposal or elect the nominee and/or (y) otherwise to solicit proxies from stockholders in support of such proposal or nomination. Notice of a stockholder nomination or proposal shall also set forth, as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (A) a description of any agreement, arrangement or understanding between or among such stockholder and any such beneficial owner, any of their respective affiliates or associates, and any other person or persons (including their names) in connection with the proposal of such nomination or other business; (B) a description of any agreement, arrangement or understanding (including, regardless of the form of settlement, any derivative, long or short positions, profit interests, forwards, futures, swaps, options, warrants, convertible securities, stock appreciation or similar rights, hedging transactions and borrowed or loaned shares) that has been entered into by or on behalf of, or any other agreement, arrangement or understanding that has been made, the effect or intent of which is to create or mitigate loss to, manage risk or benefit of share price changes for, or increase or decrease the voting power of, such stockholder or any such beneficial owner or any such nominee with respect to the Corporation’s securities (a “ Derivative Instrument ”); (C) to the extent not disclosed pursuant to the immediately preceding clause (B), the principal amount of any indebtedness of the Corporation or any of its subsidiaries beneficially owned by such stockholder or by any such beneficial owner, together with the title of the instrument under which such indebtedness was issued and a description of any Derivative Instrument entered into by or on behalf of such stockholder or such beneficial owner relating to the value or payment of any indebtedness of the Corporation or any such subsidiary; and (D) any other information relating to such stockholder and any such beneficial owner required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for, as applicable, the proposal and/or for the election of Directors in an election contest pursuant to and in accordance with Section 14(a) of the Exchange Act and the rules and regulations promulgated thereunder. The foregoing notice requirements shall be deemed satisfied by a stockholder if the stockholder has notified the Corporation of his or her intention to present a proposal at an annual meeting in compliance with Rule 14a-8 (or any successor thereof) promulgated under the Exchange Act, and such stockholder’s proposal has been included in a proxy statement that has been prepared by the Corporation to solicit proxies for such annual meeting. The Corporation may require any proposed nominee to furnish such other information as it may reasonably require to determine the eligibility of such proposed nominee to serve as a Director of the Corporation. In addition, a stockholder seeking to bring an item of business before the annual meeting shall promptly provide any other information reasonably requested by the Corporation.
(iii) Notwithstanding anything in the second sentence of Section 1.12(a)(ii)  of these Bylaws to the contrary, in the event that the number of Directors to be elected to the Board of Directors is increased and there is no public announcement naming all of the nominees for Director or specifying the size of the increased Board of Directors made by the Corporation at least 70 days prior to the first anniversary of the preceding year’s annual meeting, a stockholder’s notice under this Section 1.12(a)  shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary of the Corporation at the principal executive offices of the Corporation not later than the close of business on the 10 th day following the day on which such public announcement is first made by the Corporation.
 
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(b)  Special Meetings of Stockholders . Only such business as shall have been brought before the special meeting of the stockholders pursuant to the Corporation’s notice of meeting shall be conducted at such meeting. Nominations of persons for election to the Board of Directors may be made at a special meeting of stockholders at which Directors are to be elected pursuant to the Corporation’s notice of meeting (i) by or at the direction of the Board of Directors or a Committee appointed by the Board for such purpose or (ii) provided that the Board of Directors has determined that the Directors shall be elected at such meeting, by any stockholder of the Corporation who is entitled to vote at the meeting, who complies with the notice procedures set forth in this Section 1.12(b)  and who is a stockholder of record at the time such notice is delivered to the Secretary of the Corporation. In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more Directors of the Corporation, any stockholder entitled to vote at such meeting may nominate a person or persons, as the case may be, for election to such position(s) as specified by the Corporation, if the stockholder’s notice as required by Section 1.12(a)(ii)  of these Bylaws shall be delivered to the Secretary of the Corporation at the principal executive offices of the Corporation not earlier than the 120 days prior to such special meeting and not later than the close of business on the later of the 90th day prior to such special meeting or the 10 th day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting.
(c)  General .
(i) Except as otherwise provided by applicable law, the Certificate of Incorporation or these Bylaws, the presiding person of a meeting of stockholders shall have the power and duty (A) to determine whether a nomination or any business proposed to be brought before the meeting was made in accordance with the procedures set forth in this Section 1.12 (including whether the stockholder or beneficial owner, if any, on whose behalf the nomination or proposal is made, solicited (or is part of a group which solicited) or did not so solicit, as the case may be, proxies in support of such stockholder’s nominee or proposal in compliance with such stockholder’s representation as required by clause (a)(ii)(C)(4) of this Section 1.12 ), and (B) if any proposed nomination or business is not in compliance with this Section 1.12 , to declare that such defective nomination shall be disregarded or that such proposed business shall not be transacted.
(ii) Notwithstanding the foregoing provisions of this Section 1.12 , if the stockholder (or a qualified representative of the stockholder) making a nomination or proposal under this Section 1.12 does not appear at a meeting of stockholders to present such nomination or proposal, the nomination shall be disregarded and/or the proposed business shall not be transacted, as the case may be, notwithstanding that proxies in favor thereof may have been received by the Corporation. For purposes of this Section 1.12 , to be considered a qualified representative of the stockholder, a person must be authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the meeting of stockholders and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the meeting of stockholders.
 
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(iii) For purposes of this Section 1.12 , “public announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.
(iv) Notwithstanding the foregoing provisions of this Section 1.12 , a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 1.12 . Nothing in this Section 1.12 shall be deemed to affect any rights of (A) stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act or (B) the holders of any series of preferred stock to elect Directors pursuant to any applicable provisions of the Certificate of Incorporation or of the relevant preferred stock certificate of designation.
(v) The announcement of an adjournment or postponement of an annual or special meeting does not commence a new time period (and does not extend any time period) for the giving of notice of a stockholder nomination or a stockholder proposal as described above.
ARTICLE II
BOARD OF DIRECTORS
Section 2.01.  General Powers . Except as may otherwise be provided by applicable law, by the Certificate of Incorporation or by these Bylaws, the business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors and the Board of Directors may exercise all the powers and authority of the Corporation.
Section 2.02.  Election of Directors . At each annual meeting of the stockholders, the successors of the Directors whose terms expire at that meeting shall be elected.
Section 2.03.  Annual and Regular Meetings: Notice .
(a) The annual meeting of the Board of Directors for the purpose of electing officers and for the transaction of such other business as may come before the meeting shall be held as soon as possible following adjournment of the annual meeting of the stockholders either (i) at the place of such annual meeting of the stockholders, in which event notice of such annual meeting of the Board of Directors need not be given or (ii) at such other time and place as shall have been specified in advance notice given to members of the Board of Directors of the date, place and time of such meeting. Any such notice shall be given at least 24 hours in advance if provided to each Director by facsimile, by telephone or by electronic transmission, or delivered to him or her personally, or at least 5 days in advance, if notice is mailed to each Director, addressed to him or her at his or her usual place of business or other designated address. Any
 
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such notice need not be given to any Director who attends such meeting without protesting the lack of notice to him or her, prior to or at the commencement of such meeting, or to any Director who submits a signed waiver of notice (including by Approved Electronic Transmission), whether before or after such meeting.
(b) The Board of Directors from time to time may by resolution provide for the holding of regular meetings. Regular meetings of the Board of Directors shall be held at the place (if any), on the date and at the time as shall have been established by the Board of Directors and publicized among all Directors. A notice of a regular meeting, the date of which has been so publicized, shall not be required.
Section 2.04.  Special Meetings; Notice . Special meetings of the Board of Directors shall be held whenever called by (i) the Chairman of the Board of Directors, (ii) the Chief Executive Officer of the Corporation or (iii) any two members of the Board of Directors, at such place (within or without the State of Delaware), date and time as may be specified in the respective notices or waivers of notice of such meetings. Special meetings of the Board of Directors may be called on (i) 24 hours’ notice, if such notice is provided by facsimile, by telephone or by electronic transmission to each Director or delivered to him or her personally or (ii) 5 days’ notice, if such notice is mailed to each Director, addressed to him or her at his or her usual place of business or other designated address. Notice of any special meeting need not be given to any Director who attends such meeting without protesting the lack of notice to him or her, prior to or at the commencement of such meeting, or to any Director who submits a signed waiver of notice (including by electronic transmission), whether before or after such meeting. Any business may be conducted at a special meeting of the Board of Directors.
Section 2.05.  Quorum . A quorum for meetings of the Board of Directors shall consist of a majority of the total number of Directors then in office.
Section 2.06.  Voting . Except as otherwise required by law, the Certificate of Incorporation or these Bylaws, the vote of a majority of the Directors present at any meeting at which a quorum is present shall be the act of the Board of Directors.
Section 2.07.  Action Without a Meeting . Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting if all members of the Board of Directors consent thereto in writing or by electronic transmission, and such writing or writings or electronic transmissions are filed with the minutes of proceedings of the Board of Directors. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.
Section 2.08.  Regulations; Manner of Acting . To the extent consistent with applicable law, the Certificate of Incorporation and these Bylaws, the Board of Directors may adopt such rules and regulations for the conduct of meetings of the Board of Directors and for the management of the business and affairs of the Corporation as the Board of Directors may deem appropriate. In addition to the election of the Chairman of the Board, the Board may elect one or more vice-chairpersons or lead Directors to perform such other duties as may be designated by the Board.
 
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Section 2.09.  Action by Telephonic Communications . Members of the Board of Directors may participate in a meeting of the Board of Directors by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear and speak with each other, and participation in a meeting pursuant to this provision shall constitute presence in person at such meeting.
Section 2.10.  Removal; Resignation . Directors may only be removed as set forth in the Certificate of Incorporation. Any Director may resign at any time by submitting an electronic transmission or by delivering a written notice of resignation to the Chairman of the Board, the Chief Executive Officer or the Secretary. Such resignation shall take effect upon delivery unless the resignation specifies a later effective date or an effective date determined upon the happening of a specified event.
Section 2.11.  Director Fees and Expenses . The amount, if any, which each Director shall be entitled to receive as compensation for his or her services shall be fixed from time to time by the Board of Directors. The Directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors or paid a stated salary or paid other compensation as Directors. No such payment shall preclude any Director from serving the Corporation in any other capacity and receiving compensation therefor. Members of standing or special committees may be allowed compensation for attending committee meetings.
Section 2.12.  Reliance on Accounts and Reports, etc . A Director, or a member of any Committee designated by the Board of Directors shall, in the performance of his or her duties, be fully protected in relying in good faith upon the records of the Corporation and upon information, opinions, reports or statements presented to the Corporation by any of the Corporation’s officers or employees, or Committees designated by the Board of Directors, or by any other person as to the matters the member reasonably believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation.
ARTICLE III
COMMITTEES
Section 3.01.  General . The Board of Directors may from time to time designate committees of the Board of Directors, with such lawfully delegable powers and duties as it thereby confers, to serve at the pleasure of the Board of Directors and shall, for those committees and any others provided for herein, elect a Director or Directors to serve as the member or members, designating, if it desires, other Directors as alternate members who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of any member of any committee and any alternate member in his or her place, the member or members of the committee present at the meeting and not disqualified from voting, whether or not he or she or they constitute a quorum, may by unanimous vote appoint another member of the Board of Directors to act at the meeting in the place of the absent or disqualified member.
 
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Section 3.02. How Constituted . The Board of Directors shall have a Compensation Committee, an Audit Committee, a Nominating and Corporate Governance Committee and such other committees as the Board of Directors may determine (each, a “ Committee ” and collectively, the “ Committees ”). Each Committee shall consist of such number of Directors, with such qualifications, as may be required by applicable laws, regulations or stock exchange rules, or as from time to time may be fixed by a majority of the total number of Directors which the Corporation would have if there were no vacancies on the Board of Directors. Any Committee may be abolished or re-designated from time to time by the Board of Directors. Each member of any such Committee (whether designated at an annual meeting of the Board of Directors or to fill a vacancy or otherwise) shall hold office until his or her successor shall have been designated or until he or she shall cease to be a Director, or until his or her earlier death, resignation or removal.
Section 3.03.  Powers . To the extent permitted by law, each Committee shall have such powers and responsibilities as the Board of Directors may from time to time authorize and, each Committee, except as otherwise provided in this Section 3.03 , shall have and may exercise such powers of the Board of Directors as may be provided by resolution or resolutions of the Board of Directors, which authorization shall include all such powers and authority as may be required by applicable laws, regulations or stock exchange rules. No Committee shall have the power or authority:
(a) to amend the Certificate of Incorporation (except that a Committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the Board of Directors as provided in Section 151(a) of the DGCL, fix the designations and any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the Corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the Corporation or fix the number of shares of any series of stock or authorize the increase or decrease of the shares of any series);
(b) to adopt an agreement of merger or consolidation or a certificate of ownership and merger;
(c) to approve, adopt or recommend to the stockholders the sale, lease or exchange of all or substantially all of the Corporation’s property and assets;
(d) to approve, adopt or recommend to the stockholders a dissolution of the Corporation or a revocation of a dissolution; or
(e) to adopt, amend or repeal these Bylaws of the Corporation.
Any Committee may be granted by the Board of Directors, power to authorize the seal of the Corporation to be affixed to any or all papers which may require it.
 
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Section 3.04.  Proceedings . Each Committee may fix its own rules of procedure and may meet at such place (within or without the State of Delaware), at such time and upon such notice, if any, as it shall determine from time to time;  provided , that the Board of Directors may adopt other rules and regulations for the governance of any Committee not inconsistent with the provisions of these Bylaws. Each such Committee shall keep minutes of its proceedings and shall report such proceedings to the Board of Directors at the meeting of the Board of Directors following any such proceedings.
Section 3.05.  Quorum and Manner of Acting . Except as may be otherwise provided in the resolution creating a Committee, at all meetings of any Committee the presence of members constituting a majority of the total authorized membership of such Committee shall constitute a quorum for the transaction of business. The act of the majority of the members of a Committee present at any meeting at which a quorum is present shall be the act of such Committee. Any action required or permitted to be taken at any meeting of any Committee may be taken without a meeting, if all members of such Committee shall consent to such action in writing or by electronic transmission, and such writing or writings or electronic transmission or transmissions are filed with the minutes of the proceedings of the Committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form. The members of any Committee shall act only as a Committee, and the individual members of such Committee shall have no power as such.
Section 3.06.  Action by Telephonic Communications . Members of any Committee designated by the Board of Directors may participate in a meeting of such Committee by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this provision shall constitute presence in person at such meeting.
Section 3.07.  Resignations . Any member of any Committee may resign from such Committee at any time by submitting an electronic transmission or by delivering a written notice of resignation to the Chairman of the Board, the Chief Executive Officer or the Secretary. Unless otherwise specified therein, such resignation shall take effect upon delivery.
Section 3.08.  Removal . Any member of any Committee may be removed from his or her position as a member of such Committee at any time, either for or without cause, by resolution adopted by a majority of the number of Directors then in office.
Section 3.09.  Vacancies . If any vacancy shall occur in any Committee, by reason of disqualification, death, resignation, removal or otherwise, the remaining members shall continue to act (assuming a quorum is present), and any such vacancy may be filled by the Board of Directors subject to Section 3.02 of these Bylaws.
 
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ARTICLE IV
OFFICERS
Section 4.01.  Number . The officers of the Corporation shall be chosen by the Board of Directors and, subject to the last sentence of this Section 4.01 , shall be a Chairman of the Board, a Chief Executive Officer, a Chief Financial Officer, one or more Vice Presidents and a Secretary. The Board of Directors may also designate as officers a President, one or more Assistant Secretaries, a Treasurer, one or more Assistant Treasurers, and such other officers and agents as it shall deem necessary. The Board of Directors from time to time may by resolution also empower the Chief Executive Officer (and one or more Vice Presidents) to appoint and remove subordinate officers and to prescribe their respective rights, terms of office, authorities and duties to the extent not prescribed by the Board of Directors. Each officer shall hold office until his or her successor is elected and qualified or until his or her earlier resignation or removal. Any number of offices may be held by the same person, except that one person may not concurrently hold both the office of Chief Executive Officer and Secretary. The Board may determine that the Chairman of the Board will not be an officer of the Corporation. The Chairman of the Board (whether or not an officer) shall be a Director, but no other officer need be a Director.
Section 4.02.  Election . Unless otherwise determined by the Board of Directors and except as otherwise provided in these Bylaws, the officers of the Corporation shall be elected by the Board of Directors at the annual meeting of the Board of Directors, and shall be elected to hold office until the next succeeding annual meeting of the Board of Directors at which his or her successor has been elected and qualified. In the event of the failure to elect officers at such annual meeting, officers may be elected at any regular or special meeting of the Board of Directors. Each officer shall hold office until his or her successor has been elected and qualified, or until his or her earlier death, resignation or removal.
Section 4.03.  Salaries . The salaries and other compensation of all officers and agents of the Corporation shall be fixed by the Board or duly appointed Committee or in the manner established by the Board or duly appointed Committee.
Section 4.04.  Removal and Resignation; Vacancies . Any officer may be removed for or without cause at any time by the Board of Directors or by the Chief Executive Officer as permitted pursuant to Section 4.07 . Any officer may resign at any time by delivering notice of resignation, either in writing signed by such officer or by electronic transmission, to the Chairman of the Board, the Chief Executive Officer or the Secretary. Unless otherwise specified therein, such resignation shall take effect upon delivery. Any vacancy occurring in any office of the Corporation by death, resignation, removal or otherwise, shall be filled by the Board of Directors, or, if the Chief Executive Officer has been delegated authority pursuant to Section 4.07 of these Bylaws to fill such office, then by the Chief Executive Officer subject to the terms of such delegation pursuant to Section 4.07 of these Bylaws or by the Board of Directors.
Section 4.05.  Authority and Duties of Officers . The officers of the Corporation shall have such authority and shall exercise such powers and perform such duties as may be specified in these Bylaws or in a resolution of the Board of Directors, except that in any event each officer shall exercise such powers and perform such duties as may be required by law. The Board of Directors may from time to time delegate the powers or duties of any officer to any other officer or agent, notwithstanding any provision hereof.
 
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Section 4.06.  Chairman of the Board . The Chairman of the Board shall preside at all meetings of the Board of Directors and stockholders at which he or she is present and shall have such other powers and duties as prescribed by these Bylaws and the Certificate of Incorporation and as may from time to time be assigned by the Board of Directors.
Section 4.07.  Chief Executive Officer . The Chief Executive Officer shall have, subject to the supervision, direction and control of the Board of Directors, the general powers and duties of supervision, direction, and management of the business and affairs of the Corporation, including, without limitation, all powers necessary to direct and control the organizational and reporting relationships within the Corporation. The Chief Executive Officer shall see that all orders and resolutions of the Board of Directors are carried into effect. In addition, the Chief Executive Officer shall have such other powers and perform such other duties as may be delegated to him or her by the Board of Directors or as are set forth in the Certificate of Incorporation or these Bylaws. If the Board of Directors has not elected or appointed a President or the office of the President is otherwise vacant, and no officer otherwise functions with the powers and duties of the President, then, unless otherwise determined by the Board of Directors, the Chief Executive Officer shall also have all the powers and duties of the President.
Section 4.08.  President . The President, if there is such an officer and the Board of Directors so directs, shall serve as chief operating officer and have the powers and duties customarily and usually associated with the office of chief operating officer unless the Board of Directors provides for another officer to serve as chief operating officer (or to have the powers and duties of chief operating officer). The President shall have such other powers and perform such other duties as may be delegated to him or her from time to time by the Board of Directors or the Chief Executive Officer. If the Board of Directors has not elected or appointed a Chief Executive Officer or the office of Chief Executive Officer is otherwise vacant, then, unless otherwise determined by the Board of Directors, the President shall also have all the powers and duties of the Chief Executive Officer.
Section 4.09.  Vice President . Each Vice President shall have the powers and duties delegated to him or her by the Board of Directors or the President. One Vice President may be designated by the Board of Directors to perform the duties and exercise the powers of the President in the event of the President’s absence or disability.
Section 4.10.  Secretary and Assistant Secretaries . The Secretary shall issue all authorized notices for, and shall keep minutes of, all meetings of the stockholders and the Board of Directors. He or she shall have charge of the corporate books and shall perform other duties as the Board of Directors may from time to time prescribe. Any Assistant Secretary, if there is such an officer, shall perform such duties and possess such powers as the Board of Directors, the Chief Executive Officer, President or the Secretary may from time to time prescribe. In the event of the absence, inability or refusal to act of the Secretary, the Assistant Secretary (or if there shall be more than one, the Assistant Secretaries in the order determined by the Board of Directors), shall perform the duties and exercise the powers of the Secretary.
 
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Section 4.11.  Chief Financial Officer, Treasurer and Assistant Treasurers . The Chief Financial Officer shall keep or cause to be kept the books of account of the Corporation in a thorough and proper manner and shall render statements of the financial affairs of the Corporation in such form and as often as required by the Board of Directors, the Chief Executive Officer or the President. The Chief Financial Officer, subject to the order of the Board of Directors, shall have the custody of all funds and securities of the Corporation. The Chief Financial Officer shall perform other duties commonly incident to such office and shall also perform such other duties and have such other powers as the Board of Directors, the Chief Executive Officer or the President shall designate from time to time. The Chief Executive Officer or President may direct the Treasurer or any Assistant Treasurer, if there is such an officer, to assume and perform the duties of the Chief Financial Officer in the absence or disability of the Chief Financial Officer, and each Treasurer and Assistant Treasurer shall perform other duties commonly incident to such office and shall also perform such other duties and have such other powers as the Board of Directors, the Chief Executive Officer or the President shall designate from time to time.
Section 4.12.  Security . The Board of Directors may require any officer, agent or employee of the Corporation to provide security for the faithful performance of his or her duties, in such amount and of such character as may be determined from time to time by the Board of Directors.
Section 4.13.  Action with Respect to Securities of Other Companies . Unless otherwise directed by the Board of Directors, the Chief Executive Officer, the President, or any officer of the Corporation authorized thereby, shall have power to vote and otherwise act on behalf of the Corporation, in person or by proxy, at any meeting of stockholders or equityholders of, or with respect to any action of, stockholders or equityholders of any other entity in which the Corporation may hold securities and otherwise to exercise any and all rights and powers which the Corporation may possess by reason of its ownership of securities in such other entity.
ARTICLE V
CAPITAL STOCK
Section 5.01.  Certificates of Stock, Uncertificated Shares . The shares of the Corporation shall be represented by certificates, except to the extent that the Board of Directors has provided by resolution or resolutions that some or all of any or all classes or series of the stock of the Corporation shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation. Every holder of stock in the Corporation represented by certificates shall be entitled to have, and the Board of Directors may in its sole discretion permit a holder of uncertificated shares to receive upon request a certificate signed by the appropriate officers of the Corporation, representing the number of shares registered in certificate form. Such certificate shall be in such form as the Board of Directors may determine, to the extent consistent with applicable law, the Certificate of Incorporation and these Bylaws.
 
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Section 5.02.  Signatures; Facsimile . All signatures on the certificates referred to in Section 5.01 of these Bylaws may be in facsimile, engraved or printed form, to the extent permitted by law. In case any officer, transfer agent or registrar who has signed, or whose facsimile, engraved or printed signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he or she were such officer, transfer agent or registrar at the date of issue.
Section 5.03.  Lost, Stolen or Destroyed Certificates . A new certificate may be issued in place of any certificate theretofore issued by the Corporation alleged to have been lost, stolen or destroyed, only upon delivery to the Corporation of an affidavit of the owner or owners (or their legal representatives) of such certificate, setting forth such allegation and a bond or undertaking as may be satisfactory to a financial officer of the Corporation to indemnify the Corporation against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of any such new certificate.
Section 5.04.  Transfer of Stock . Upon surrender to the Corporation or the transfer agent of the Corporation of a certificate representing shares, duly endorsed or accompanied by appropriate evidence of succession, assignment or authority to transfer, the Corporation shall issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Transfers of uncertificated shares shall be made on the books of the Corporation as provided by applicable law. Within a reasonable time after the transfer of uncertificated stock, the Corporation shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to Sections 151, 156, 202(a) or 218(a) of the DGCL. Subject to applicable law and the provisions of the Certificate of Incorporation and these Bylaws, the Board of Directors may prescribe such additional rules and regulations as it may deem appropriate relating to the issue, transfer and registration of shares of the Corporation.
Section 5.05.  Registered Stockholders . Prior to due surrender of a certificate for registration of transfer, or due delivery of instructions for the registration of transfer of uncertificated shares, and to the fullest extent permitted by law, the Corporation may treat the registered owner as the person exclusively entitled to receive dividends and other distributions, to vote, to receive notice and otherwise to exercise all the rights and powers of the owner of the shares represented by such certificate, and the Corporation shall not be bound to recognize any equitable or legal claim to or interest in such shares on the part of any other person, whether or not the Corporation shall have notice of such claim or interests;  provided , that if a transfer of shares shall be made for collateral security, and not absolutely, this fact shall be so expressed in the entry of the transfer if, when the certificates are presented to the Corporation for transfer or uncertificated shares are requested to be transferred, both the transferor and transferee request the Corporation to do so.
Section 5.06.  Transfer Agent and Registrar . The Board of Directors may appoint one or more transfer agents and one or more registrars, and may require all certificates representing shares to bear the signature of any such transfer agents or registrars.
 
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ARTICLE VI
INDEMNIFICATION
Section 6.01.  Limitation of Liability .
(a) To the fullest extent permitted by the DGCL as it now exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader exculpation rights than permitted prior thereto), a director of the Corporation shall not be liable to the Corporation or its stockholders for monetary damages arising from a breach of fiduciary duty as a director.
(b) Any repeal or modification of subparagraph (a) of this Section 6.01 of Article VI shall not adversely affect any right or protection of a director existing hereunder with respect to any act or omission occurring at or prior to the time of such repeal or modification.
Section 6.02.  Right to Indemnification . Each person who was or is made a party or is threatened to be made a party to or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a “ proceeding ”), by reason of the fact that he or she or a person of whom he or she is the legal representative is or was or has agreed to become a director or an officer of the Corporation or, while serving as a director or officer, is or was serving or has agreed to serve at the request of the Corporation as a director, officer, employee, agent or trustee of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to an employee benefit plan (hereinafter an “ indemnitee ”), whether the basis of such proceeding is action alleged to have been taken or omitted in an official capacity as a director or officer, or in any other capacity while serving or having agreed to serve as a director, officer, employee, agent or trustee, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the DGCL, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than such law permitted the Corporation to provide prior to such amendment), against all expense, liability and loss (including, without limitation, attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by such indemnitee in connection therewith; provided , however, that, except as provided in Section 6.04 of this Article VI with respect to proceedings to enforce rights to indemnification, the Corporation shall indemnify any such indemnitee in connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was authorized by the Board of Directors.
Section 6.03.  Right to Advancement of Expenses . In addition to the right to indemnification conferred in Section 6.02 of this Article VI , an indemnitee shall to the fullest extent not prohibited by the DGCL have the right to be paid by the Corporation the expenses (including attorneys’ fees) incurred in defending any such proceeding in advance of its final disposition (hereinafter an “ advancement of expenses ”); provided, however, that, if the DGCL requires, an advancement of expenses shall be made only upon delivery to the Corporation of an undertaking (hereinafter an “ undertaking ”), by or on behalf of such indemnitee, to repay all
 
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amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal (hereinafter a “ final adjudication ”) that such indemnitee is not entitled to be indemnified for such expenses under this Section 6.03 of Article VI or otherwise.
Section 6.04.  Procedure for Indemnification . Any claim for indemnification or advancement of expenses (including attorneys’ fees, costs and charges) under Sections 6.02 and 6.03 of this Article VI shall be made promptly, and in any event within forty-five days (or, in the case of an advance of expenses, twenty days, provided that the undertaking contemplated by Section 6.03 of this Article VI , if required, has been delivered to the Corporation), upon the written request of the indemnitee. If any claim for indemnification is not paid in full within 45 days or any claim for advancement of expenses is not paid in full within 20 days, the indemnitee shall thereupon (but not before) be entitled to file suit to recover the unpaid amount of the claim in the Court of Chancery (as defined in Section 6.13 of this Article VI ). Such indemnitee’s costs and expenses incurred in connection with successfully establishing his or her right to indemnification, in whole or in part, in any such action shall also be indemnified by the Corporation. It shall be a defense to any action by an indemnitee for indemnification or the advance of expenses (other than an action brought to enforce a claim for the advance of expenses where the undertaking required pursuant to Section 6.03 of this Article VI , if any, has been tendered to the Corporation) that the claimant has not met the standards of conduct which make it permissible under the DGCL for the Corporation to indemnify the claimant for the amount claimed, but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its Board of Directors, independent legal counsel or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because such person has met the applicable standard of conduct set forth in the DGCL, nor an actual determination by the Corporation (including its Board of Directors, independent legal counsel or its stockholders) that the claimant has not met such applicable standard of conduct, shall create a presumption that the claimant has not met the applicable standard of conduct.
Section 6.05.  Insurance . The Corporation may purchase and maintain insurance on its own behalf and on behalf of any person who is or was or has agreed to become a director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, limited liability company, trust, association or other enterprise against any expense, liability or loss asserted against him or her and incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power to indemnify such person against such expenses, liability or loss under the DGCL.
Section 6.06.  Service for Subsidiaries . Any director or officer serving, or who has served, as a director, officer, trustee or employee of another corporation or of a partnership, joint venture, limited liability company, trust, association or other enterprise, at least 50% of whose equity interests or assets are owned, directly or indirectly, by the Corporation (a “ subsidiary ” for this Article VI ) shall be conclusively presumed to be, or to have been, serving in such capacity at the request of the Corporation.
 
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Section 6.07.  Reliance . Persons who after the date of the adoption of this provision become or remain directors or officers of the Corporation or who, while a director or officer of the Corporation, become or remain a director, officer, employee or agent of a subsidiary, shall be conclusively presumed to have relied on the rights to indemnity, advancement of expenses and other rights contained in this Article VI in entering into or continuing such service. The rights to indemnification and to the advance of expenses conferred in this Article VI shall apply to claims made against an indemnitee arising out of acts or omissions which occurred or occur both prior and subsequent to the adoption hereof.
Section 6.08.  Nature of Rights . The rights conferred upon indemnitees in this Article VI shall be contract rights and such rights shall continue as to an indemnitee who has ceased to be a director, officer or trustee and shall inure to the benefit of the indemnitee’s heirs, executors and administrators. Any amendment, alteration or repeal of this Article VI that adversely affects any right of an indemnitee or its successors shall be prospective only and shall not limit or eliminate any such right with respect to any proceeding involving any occurrence or alleged occurrence of any action or omission to act that took place prior to such amendment or repeal.
Section 6.09.  Other Rights; Continuation of Right to Indemnification . The provisions of this Article VI shall be in addition to and not in limitation of any other rights, indemnities, or limitations of liability to which any director or officer may now or in the future be entitled, as a matter of law or under any by-law, agreement, vote of stockholders or disinterested directors or otherwise. All rights to indemnification under this Article VI shall be deemed to be a contract between the Corporation and each person entitled to indemnification under Section 6.02 of this Article VI at any time while this Article VI is in effect. Any repeal or modification of this Article VI or any repeal or modification of relevant provisions of the DGCL or any other applicable laws shall not in any way diminish any rights to indemnification and advancement of expenses of such person entitled to indemnification under Section 6.02 of this Article VI or the obligations of the Corporation arising hereunder with respect to any actual or threatened action, suit or proceeding arising out of, or relating to, any actions, transactions or facts occurring prior to the final adoption of such repeal or modification.
Section 6.10 Savings Clause . If this Article VI or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify and advance expenses to each person entitled to indemnification under this Article VI as to all expense, liability and loss (including attorneys’ fees and related disbursements, judgments, fines, ERISA excise taxes and penalties, penalties and amounts paid or to be paid in settlement) actually and reasonably incurred or suffered by such person and for which indemnification or advancement of expenses is available to such person pursuant to this Article VI to the fullest extent permitted by any applicable portion of this Article VI that shall not have been invalidated.
Section 6.11 Indemnification of Employees and Agents of the Corporation . The Corporation may, to the extent authorized from time to time by the Board of Directors, grant rights to indemnification and to the advancement of expenses to any employee or agent of the Corporation to the fullest extent of the provisions of this Article VI with respect to the indemnification and advancement of expenses and of the Corporation.
 
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Section 6.12 Definition . For purposes of this Article VI , references to the “Corporation” shall include, in addition to the Corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger, including without limitation, prior to (or, in the case of an entity specifically designated in a resolution of the Board of Directors, after) the adoption of these Bylaws and which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under this Article VI with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued.
Section 6.13 Jurisdiction . The Court of Chancery of the State of Delaware (the “ Court of Chancery ”) shall have exclusive jurisdiction to hear and determine all actions for indemnification or advancement of expenses brought with respect to this Article VI , and the Court of Chancery may summarily determine the Corporation’s obligation to advance expenses (including attorneys’ fees) under this Article VI .
ARTICLE VII
OFFICES
Section 7.01.  Registered Office . The registered office of the Corporation in the State of Delaware shall be located at the location provided in the Certificate of Incorporation.
Section 7.02.  Other Offices . The Corporation may maintain offices or places of business at such other locations within or without the State of Delaware as the Board of Directors may from time to time determine or as the business of the Corporation may require.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.01.  Execution of Instruments . Except as otherwise provided by law or the Certificate of Incorporation, the Board of Directors may authorize the Chief Executive Officer or any other officer or agent to enter into any contract or execute and deliver any instrument in the name and on behalf of the Corporation. Any such authorization may be general or limited to specific contracts or instruments.
Section 8.02.  Fiscal Year . The fiscal year of the Corporation shall be fixed from time to time by resolution of the Board of Directors. In the absence of such resolution, the fiscal year of the Corporation shall be the calendar year beginning January 1 and ending December 31.
 
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Section 8.03.  Books and Records . Except to the extent otherwise required by law, the books and records of the Corporation shall be kept at such place or places within or without the State of Delaware as may be determined from time to time by the Board of Directors.
Section 8.04.  Electronic Transmission . “ Electronic transmission ”, as used in these Bylaws, means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process.
ARTICLE IX
AMENDMENT OF BYLAWS
Section 9.01.  Amendment . Subject to the provisions of the Certificate of Incorporation, the Board of Directors is expressly authorized to make, alter, amend and repeal these Bylaws subject to the power of the stockholders of the Corporation to alter, amend and repeal these Bylaws. Any amendment, alteration or repeal of these Bylaws by the Board of Directors shall require the approval of a majority of the Board of Directors then in office. In addition to any other vote otherwise required by applicable law, the stockholders of the Corporation may amend, alter or repeal these Bylaws, provided, that any such action shall require the affirmative vote of the holders of at least a majority of the outstanding common stock of the Corporation.
ARTICLE X
CONSTRUCTION
Section 10.01.  Construction . In the event of any conflict between the provisions of these Bylaws as in effect from time to time and the provisions of the Certificate of Incorporation as in effect from time to time, the provisions of such Certificate of Incorporation shall be controlling.

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List of Omitted Schedules
The following schedules to the Contribution and Distribution Agreement, dated as of January 28, 2014, by and among International Paper Company, xpedx Holding Company, UWW Holdings, Inc. and, solely for purposes of Article VI and Article X, UWW Holdings, LLC have not been provided herein:
Disclosure Letter

Section 1.1(a)	    	Closed Facilities	
Section 1.1(b)	    	Excluded Assets	
Section 1.1(c)	    	Leased Real Property	
Section 1.1(d)	    	Owned Real Property	
Section 1.1(e)	    	Retained Contracts	
Section 1.1(f)	    	Spinco Liabilities	
Section 1.1(g)	    	Transferred Patents	
Section 1.1(h)	    	Transferred Trademarks	
Section 1.1(i)	    	Foreign Subsidiary Restructuring	
Section 1.1(j)	    	Applicable Accounting Principles	
Section 1.1(k)	    	Working Capital Example	
Section 1.1(l)	    	Supply Agreement Term Sheets	
Section 2.7	    	Shared Locations	
Section 5.3	    	Earnout Payment	
Section 7.1	    	Intercompany Arrangements	
Section 7.7(a)	    	Spinco Board Members	
Section 7.7(b)	    	Director Resignation	
Section 7.7(c)	    	Spinco Committee Members	
The Registrant hereby undertakes to furnish supplementally a copy of any omitted schedule to the Securities and Exchange Commission upon request.

Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
We consent to the use in this Registration Statement of xpedx Holding Company on Amendment No. 1 to Form S-1 of our report dated April 4, 2014 related to the combined financial statements of the xpedx business of International Paper Company (which report expresses an unqualified opinion and includes an explanatory paragraph referring to allocations of certain corporate costs from International Paper Company) as of December 31, 2013 and 2012 and for the three years in the period ended December 31, 2013, appearing in the prospectus, which is part of this Registration Statement.
We also consent to the reference to us under the heading “Experts” in such prospectus.
/s/ Deloitte & Touche LLP
Memphis, Tennessee
April 4, 2014

Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in this Amendment No. 1 to the Registration Statement on Form S-1 of xpedx Holding Company, of our report dated March 28, 2014, relating to the financial statements of UWW Holdings, Inc. and Subsidiaries, which appears in such Registration Statement. We also consent to the reference to us under the heading “Experts” in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Atlanta, Georgia
April 4, 2014

Exhibit 99.12
Consent of Executive Officer Designee
xpedx Holding Company
6400 Poplar Avenue
Memphis, TN 38197
In connection with the Registration Statement on Form S-1 (the “Registration Statement”) of xpedx Holding Company (the “Company”), the undersigned hereby consents to being named and described as an executive officer designee in the Registration Statement and any amendment or supplement to any prospectus included in such Registration Statement, and any amendment to such Registration Statement, and to the filing or attachment of this consent with such Registration Statement and any amendment or supplement thereto.
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IN WITNESS WHEREOF, the undersigned has executed this consent as of April 3, 2014.

By:	 	/s/ Timothy D. Kutz	
	 	Timothy D. Kutz	
[Signature Page to Consent]

Exhibit 99.13
Consent of Executive Officer Designee
xpedx Holding Company
6400 Poplar Avenue
Memphis, TN 38197
In connection with the Registration Statement on Form S-1 (the “Registration Statement”) of xpedx Holding Company (the “Company”), the undersigned hereby consents to being named and described as an executive officer designee in the Registration Statement and any amendment or supplement to any prospectus included in such Registration Statement, and any amendment to such Registration Statement, and to the filing or attachment of this consent with such Registration Statement and any amendment or supplement thereto.
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IN WITNESS WHEREOF, the undersigned has executed this consent as of April 3, 2014.

By:	 	/s/ Joesph B. Meyers            	
	 	Joseph B. Myers	
[Signature Page to Consent]

Exhibit 99.14
Consent of Executive Officer Designee
xpedx Holding Company
6400 Poplar Avenue
Memphis, TN 38197
In connection with the Registration Statement on Form S-1 (the “Registration Statement”) of xpedx Holding Company (the “Company”), the undersigned hereby consents to being named and described as an executive officer designee in the Registration Statement and any amendment or supplement to any prospectus included in such Registration Statement, and any amendment to such Registration Statement, and to the filing or attachment of this consent with such Registration Statement and any amendment or supplement thereto.
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IN WITNESS WHEREOF, the undersigned has executed this consent as of April 3, 2014.

By:	 	/s/ Darin W. Tang	
	 	Darin W. Tang	
[Signature Page to Consent]