CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
grant
non-exclusive
sub-licenses
to certain third parties, but otherwise the agreement contains
sub-licensing
and assignment restrictions. We and RRD also agree not to disclose confidential data to third parties except in specific circumstances.
Software, Copyright and Trade Secret Assignment and License Agreement
We entered into a Software, Copyright and Trade Secret Assignment and License Agreement with RRD that provides for licensing and other
arrangements regarding the ownership of certain copyrights that we use in our business, the trade secrets that we and RRD use in conducting our businesses, and for ownership, licensing and other arrangements regarding certain software that we and
RRD use in conducting our businesses.
This agreement assigned rights with respect to certain copyrights and software to us. We
and RRD granted licenses to one another to use certain software and trade secrets in connection with our respective businesses. The licenses are generally perpetual and royalty-free. In certain circumstances, we and RRD have a limited right to grant
nonexclusive
sub-licenses
to certain third parties, but otherwise the agreement contains sublicensing and assignment restrictions. We and RRD also agree not to disclose each others trade secrets to third
parties except in specific circumstances.
Transition Services Agreements
We entered into agreements relating to transition services with RRD under which, in exchange for the fees specified in such agreements,
RRD agrees to provide certain services to us, and we agree to provide certain services to RRD, including, but not limited to, such areas as tax, IT, treasury, internal audit, human resources, accounting, purchasing, communications, security and
compensation and benefits. LSC and RRD, as parties receiving services under the agreements, agreed to indemnify the party providing services for losses (including reasonably foreseeable consequential damages, but excluding special, consequential,
indirect, punitive damages, other than special, consequential, indirect, punitive damages awarded to any third party against an indemnified party) incurred by such party that arise out of or are otherwise in connection with the provision by such
party of services under the agreement, except to the extent that such losses result from the providing partys gross negligence, willful misconduct or bad faith. Similarly, each party providing services under the agreement agreed to indemnify
the party receiving services for losses incurred by such party where such losses result from gross negligence, willful misconduct or bad faith of the party providing such services. The terms for each transition service are set forth in the
applicable transition services agreement, but do not exceed 24 months from the date of the Separation.
Other Arrangements and Agreements with RRD
We have also entered into a number of commercial and other arrangements with RRD and its subsidiaries. These include, among other things,
arrangements for the provision of services, including logistics and premedia services, and access to technology. In addition, following the Separation, LSC continues to provide sales support services to RRDs Asia and Mexico print and graphics
management businesses in order to facilitate the importing of books and related manipulatives to the U.S. RRD also provides us certain global outsourcing, technical support and other services. The terms of such commercial arrangements are
15-24
months from the date of the Separation, depending on the services, except for certain runoff work involving existing customer contracts, which will run for the terms of such underlying customer
contracts. We and RRD are providing each other with standard commercial indemnification.
CERTAIN
RELATIONSHIPS AND POTENTIAL CONFLICTS OF INTEREST; RELATED PARTY TRANSACTION APPROVAL POLICY
The Company has a written policy
relating to approval or ratification of all transactions involving an amount in excess of $120,000 in which the Company is a participant and in which a related person has or will have a direct or indirect material interest, including without
limitation any financial transaction, arrangement or relationship (including any indebtedness or guarantee of indebtedness) or any series of similar transactions, arrangements or relationships, subject to certain enumerated exclusions. Under the
policy, such related person transactions must be approved or ratified by (i) the Corporate Responsibility & Governance Committee or (ii) if the Corporate Responsibility & Governance Committee determines that the approval
or ratification of such transaction should be considered by all of the disinterested members of the Board, such disinterested members of the Board by a majority vote. Related persons include any of our directors, certain executive officers, certain
of our stockholders and their immediate family members.
In considering whether to approve or ratify any related person
transaction, the Corporate Responsibility & Governance Committee or such disinterested members of the Board, as applicable, may consider all factors that they deem relevant to
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LSC COMMUNICATIONS, INC.
| 2018 Proxy Statement