Common use of Protective Section 336(e) Election Clause in Contracts

Protective Section 336(e) Election. Pursuant to Treasury Regulation Sections 1.336-2(h)(1)(i) and 1.336-2(j), B/E and KLX agree that B/E shall have the option to make a timely protective election under Section 336(e) of the Code and the Regulations issued thereunder for KLX and each KLX Subsidiary as identified by B/E with respect to the Distribution (a “Section 336(e) Election”). It is intended that a Section 336(e) Election will have no effect unless the Distribution is a “qualified stock disposition,” as defined in Treasury Regulation Section 1.336-1(b)(6), either because (a) the Distribution is not a transaction described in Treasury Regulation Section 1.336-1(b)(5)(i)(B) or (b) Treasury Regulation Section 1.336-1(b)(5)(ii) applies to the Distribution. If B/E decides to make a Section 336(e) Election, (i) B/E shall notify KLX in writing within 180 days after the Distribution Date, the Companies shall enter into a binding, written agreement and KLX shall cooperate with B/E in making the Section 336(e) Election, including filing any statements, amending any Tax Returns or such other action B/E determines is reasonably necessary to carry out the Section 336(e) Election, and (ii) if the Section 336(e) Election becomes effective, no member of the KLX Group shall take any position inconsistent with the Section 336(e) Election except as may be required by a Final Determination. If and to the extent that a Section 336(e) Election is made by B/E and there is a failure of one or more of the Distribution, Contribution or Debt Repayment to qualify (in whole or in part) for the Tax-Free Status, and the resulting Taxes (including any Taxes attributable to the Section 336(e) Election) are borne by B/E (rather than KLX because of KLX’s indemnification obligations under this Agreement or otherwise), then, to that extent, B/E shall be entitled to quarterly payments from KLX equal to 85 percent of the actual Tax savings if, as and when realized (using the principles of Section 6.1) arising from the step up in Tax basis resulting from the Section 336(e) Election, determined on a “with and without” basis (treating any deductions or amortization attributable to the step up in tax basis resulting from the Section 336(e) Election as the last items claimed for any taxable year, including after the utilization of any available net operating loss carryforwards), and less a reasonable charge for administrative expenses and other reasonable out-of-pocket expenses necessary to secure the Tax savings.

Protective Section 336(e) Election. Pursuant to Treasury Regulation Sections 1.336-2(h)(1)(i2(h) and 1.336-2(j), B/E Distributing and KLX Splitco agree that B/E Distributing shall have the option to make (or cause to be made) a timely protective election under Section 336(e) of the Code and the U.S. Treasury Regulations issued thereunder for KLX Communications (and each KLX any Subsidiary as identified by B/E thereof and any election under Section 754 of the Code for any Subsidiary thereof) with respect to the Distribution PR Spin-Off (a “Section 336(e) Election”). It is intended that a Section 336(e) Election will have no effect unless the Distribution PR Spin-Off is a “qualified stock disposition,” as defined in Treasury Regulation Section 1.336-1(b)(6), either because (a) the Distribution PR Spin-Off is not a transaction described in Treasury Regulation Section 1.336-1(b)(5)(i)(B) or (b) Treasury Regulation Section 1.336-1(b)(5)(ii) applies to the DistributionPR Spin-Off. If B/E Distributing decides to make a Section 336(e) Election, (i) B/E Distributing shall notify KLX Splitco in writing within 180 days after the Distribution Date, the Companies shall enter into a binding, written agreement and KLX Splitco (and members of its Group) shall cooperate with B/E Distributing in making the Section 336(e) Election, including filing any statements, amending any Tax Returns or such other action B/E Distributing determines is reasonably necessary to carry out the Section 336(e) Election, and (ii) if the Section 336(e) Election becomes effective, no member of the KLX Splitco Group shall take any position inconsistent with the Section 336(e) Election except as may be required by a Final Determination. If and to the extent that a Section 336(e) Election is made by B/E Distributing and there is a failure of one or more the PR Spin-Off fails to qualify as tax-free transactions under Section 355 of the Distribution, Contribution or Debt Repayment to qualify Code (in whole or in partincluding as a result of the application of Section 355(e) for of the Tax-Free StatusCode), and the resulting Taxes (including any Taxes attributable to the Section 336(e) Election) are borne by B/E allocated to Distributing pursuant to Article II (rather than KLX because of KLXallocated Splitco under Article II together with Splitco’s indemnification obligations for such Taxes under this Agreement or otherwiseAgreement), then, to that extent, B/E Distributing shall be entitled to quarterly payments from KLX Splitco equal to 85 100 percent of the any actual Tax savings if, as and when realized (using the principles of Section 6.1) reduction in Taxes payable in cash arising from the step up in Tax basis resulting from the Section 336(e) Election, determined computed on a “with and without” basis (treating any deductions or amortization attributable to the step up in tax basis resulting from the Section 336(e) Election as the last items claimed for any taxable yearbasis, including after first using any Tax Benefits of the utilization Splitco Group regardless of any available net operating loss carryforwards)the Tax Year in which the Tax Benefits arose, and less a reasonable charge for administrative expenses and other reasonable out-of-pocket expenses necessary to secure the Tax savings.

Protective Section 336(e) Election. Pursuant to Treasury Regulation Sections 1.336-2(h)(1)(i) and 1.336-2(j), B/E and KLX agree that B/E shall have the option to make a timely protective election under Section 336(e) of the Code and the Regulations issued thereunder for KLX and each KLX Subsidiary as identified by B/E with respect to the Distribution (a “Section 336(e) Election”). It is intended that a Section 336(e) Election will have no effect unless the Distribution is a “qualified stock disposition,” as defined in Treasury Regulation Section 1.336-1(b)(61.336(e)-1(b)(6), either because (a) the Distribution is not a transaction described in Treasury Regulation Section 1.336-1(b)(5)(i)(B) or (b) Treasury Regulation Section 1.336-1(b)(5)(ii) applies to the Distribution. If B/E decides to make a Section 336(e) Election, (i) B/E shall notify KLX in writing within 180 days after the Distribution Date, the Companies shall enter into a binding, written agreement and KLX shall cooperate with B/E in making the Section 336(e) Election, including filing any statements, amending any Tax Returns or such other action B/E determines is reasonably necessary to carry out the Section 336(e) Election, and (ii) if the Section 336(e) Election becomes effective, no member of the KLX Group shall take any position inconsistent with the Section 336(e) Election except as may be required by a Final Determination. If and to the extent that a Section 336(e) Election is made by B/E and there is a failure of one or more of the Distribution, Contribution or Debt Repayment to qualify (in whole or in part) for the Tax-Free Status, and the resulting Taxes (including any Taxes attributable to the Section 336(e) Election) are borne by B/E (rather than KLX because of KLX’s indemnification obligations under this Agreement or otherwise), then, to that extent, B/E shall be entitled to quarterly payments from KLX equal to 85 percent of the actual Tax savings if, as and when realized (using the principles principle of Section 6.1) arising from the step up in Tax basis resulting from the Section 336(e) Election, determined on a “with and without” basis (treating any deductions or amortization attributable to the step up in tax basis resulting from the Section 336(e) Election as the last items claimed for any taxable year, including after the utilization of any available net operating loss carryforwards), and less a reasonable charge for administrative expenses and other reasonable out-of-pocket expenses necessary to secure the Tax savings.