Contract
Exhibit
99.2
SECOND TAX MATTERS AGREEMENT (this
“Agreement”),
dated as of November 16, 2009, by and between TIME WARNER INC., a Delaware
corporation (“TWX”), and AOL INC.,
a Delaware corporation (“AOL”, and together
with TWX, the “Companies”).
W I T N E
S S E T H:
WHEREAS AOL is a wholly-owned
Subsidiary of TWX;
WHEREAS the Companies are parties to
the Tax Matters Agreement dated as of April 13, 2006 (the “Old AOL
TMA”);
WHEREAS, pursuant to the Separation
Agreement, the Companies have agreed to effect the Transactions;
WHEREAS the Companies intend, with
respect to: (i) the Existing AOL Inc. Name Change, that it qualifies
for non-recognition of gain and loss under Sections 354 and 368(a)(1)(F) of
the Code; (ii) the AOL Conversion, that it qualifies for non-recognition of gain
and loss under Sections 354 and 368(a)(1)(F) of the Code; (iii) the
TWA Conversion, that it qualifies for non-recognition of gain and loss under
Sections 332 and 337 of the Code; (iv) the Asset Distribution, that it is
disregarded for U.S. Federal income tax purposes; (v) the AOL Online Transfer
(if it occurs), that it qualifies for non-recognition of gain and loss under
Section 351 of the Code and that Section 367(a) of the Code does not
apply to it; (vi) the AOL LLC Name Change, that it is disregarded for U.S.
Federal income tax purposes; (vii) the First AOL LLC Distribution, that it will
result in the recognition of gain (or loss) under Sections 311 and 1001 of the
Code and will be taken into account consistent with the principles of
Section 1.1502-13 of the Regulations with respect to assets owned by AOL
LLC at the time of the First AOL LLC Distribution (including the TWX Retained
Assets); (viii) the Second AOL LLC Distribution, that it is disregarded for
U.S. Federal income tax purposes; (ix) the Internal Distribution, that it
is disregarded for U.S. Federal income tax purposes; (x) the
Recapitalization, that it qualifies for non-recognition of gain and loss under
Sections 368(a)(1)(E) and/or 1036 of the Code; and (xi) the
Distribution, that it qualifies for non-recognition of gain and loss under
Section 355 of the Code; in the case of each of clauses (i), (ii), (iii),
(v), (x) and (xi), other than income or gain arising from any imputed income or
other adjustment to TWX, AOL or their Subsidiaries if and to the extent that the
Separation Agreement or the Ancillary Agreements are determined to have terms
that are not at arm’s length (the “Intended Tax
Treatment”);
WHEREAS the Companies desire to
terminate the Old AOL TMA and memorialize certain new agreements and
understandings relating to the Transactions.
NOW,
THEREFORE, in consideration of the mutual covenants and agreements contained
herein, the Companies hereby agree as follows:
ARTICLE
I
Definitions
SECTION
1.01. Definition of
Terms. The following terms shall have the following meanings
(such meanings to apply equally to both the singular and the plural forms of the
terms defined). All Section and Article references are to
this Agreement unless otherwise stated. Terms used but not defined in
this Agreement shall have the meanings ascribed to them in the Separation
Agreement.
“Agreement” has the
meaning set forth in the preamble.
“AOL” has the meaning
set forth in the preamble.
“AOL Indemnified
Taxes” shall mean any Ordinary Taxes of AOL or its Affiliates other than,
without duplication, (i) Consolidated Income Taxes for any Pre-Distribution Tax
Period and (ii) Contribution Agreement Taxes.
“AOL Prepared Tax
Return” has the meaning set forth in Section 3.01(b).
“AOL Tax Package” has
the meaning set forth in Section 3.01(c).
“AOL Tax
Representations” shall mean any representations made by AOL or its
Affiliates in Representation Letters that serve as a basis for the Tax
Opinion.
“Business Day” shall
mean any day on which the New York Stock Exchange, or its successor, is open for
trading.
“Code” shall mean the
Internal Revenue Code of 1986, as amended.
“Companies” has the
meaning set forth in the preamble.
“Consolidated Group”
shall mean (i) an affiliated group of corporations (within the meaning of
Section 1504(a) of the Code), including any predecessors and successors to
such corporations, that files consolidated U.S. Federal income tax returns and
(ii) a group of corporations, including any predecessors and successors to such
corporations, that files state or local income tax returns on a combined,
consolidated, unitary or similar basis.
“Contribution
Agreement” shall mean the Contribution Agreement dated March 24, 2006,
among TWX, Google Inc. and America Online, Inc.
“Contribution Agreement
Taxes” shall mean Taxes arising solely as a result of the transactions
described in Article I, Section 2.01, Section 2.02(a),
Section 2.02(b), Section 2.02(c), Section 7.01, Section 7.02
or Section 7.04 of the Contribution Agreement.
2
“Consolidated Income
Taxes” shall mean any Income Taxes of a TWX Consolidated Group that are
(i) imposed by the United States of America or any state or local jurisdiction
in the United States of America and (ii) determined on a consolidated, combined,
unitary or similar basis.
“Determination” shall
mean (i) any final determination of liability in respect of a Tax that,
under applicable Law, is not subject to further appeal, review or modification
through proceedings or otherwise (including the expiration of a statute of
limitations or period for the filing of claims for refunds, amended tax returns
or appeals from adverse determinations), including a “determination” as defined
in Section 1313(a) of the Code or execution of an IRS Form 870AD or
(ii) the payment of Tax by TWX or AOL or any of their respective
Subsidiaries, whichever is responsible for payment of such Tax under applicable
Law, with respect to any item disallowed or adjusted by a Taxing Authority;
provided, however, that such
responsible Company determines that no action should be taken to recoup such
payment and the other Company agrees.
“Income Taxes” shall
mean any income and franchise Taxes, and any similar Taxes primarily based upon,
measured by, or calculated with respect to gross income, net income, gross
receipts, net receipts, capital or profits (including any capital gains Taxes
and minimum Taxes), but excluding any sales, use, withholding or payroll Taxes,
other similar Taxes and Transaction Taxes.
“Indemnifying Party”
shall mean a Company that has any obligation to indemnify an Indemnitee pursuant
to the Separation Agreement or any Ancillary Agreement.
“Indemnitee” shall
mean a Company entitled to indemnification pursuant to the Separation Agreement
or any Ancillary Agreement.
“Indemnity Payment”
shall mean a payment from an Indemnifying Party to an Indemnitee pursuant to the
Separation Agreement or any Ancillary Agreement.
“Intended Tax
Treatment” has the meaning set forth in the recitals.
“IRS” shall mean the
U.S. Internal Revenue Service.
“Old AOL TMA” has the
meaning set forth in the recitals.
“Ordinary Taxes” shall
mean Taxes other than Transaction Taxes.
“Pre-Distribution Tax
Period” shall mean any taxable period (or portion thereof) that ends on
or before the Distribution Date.
“Records” has the
meaning set forth in Section 6.01.
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“Regulations” shall
mean the Treasury regulations promulgated under the Code.
“Representation
Letters” shall mean letters setting forth reasonable and customary
representations (that are true and correct) regarding certain facts in existence
at the applicable time.
“Separation Agreement”
shall mean the Separation Agreement dated as of November 16, 2009, by and
between TWX and AOL.
“Tax Attribute” has
the meaning set forth in Section 2.05.
“Taxes” shall mean all
forms of taxation or duties imposed, or required to be collected or withheld,
including charges, together with any related interest, penalties or other
additional amounts.
“Taxing Authority”
shall mean any Governmental Authority imposing Taxes.
“Tax Opinion” shall
mean the written opinion of Cravath, Swaine & Xxxxx LLP issued to TWX to the
effect that the Transactions will qualify for the Intended Tax Treatment, which
opinion is in form and substance satisfactory to TWX in its sole discretion;
provided, however, that such
opinion may rely on the Tax Representations.
“Tax Representations”
shall mean the TWX Tax Representations and the AOL Tax
Representations.
“Transaction Tax
Contest” shall mean an audit, review, examination or any other
administrative or judicial proceeding, in each case by any Taxing Authority,
with the purpose or effect of determining or redetermining Transaction
Taxes.
“Transaction Taxes”
shall mean all (i) Taxes resulting from the failure of the Transactions to
qualify for the Intended Tax Treatment, (ii) Taxes and any other liability
of any third party for which TWX, AOL or any of their respective
Subsidiaries or Affiliates is or becomes liable for any reason, which Taxes or
liabilities result from the failure of the Transactions to qualify for the
Intended Tax Treatment and (iii) reasonable, out-of-pocket legal,
accounting and other advisory and court fees incurred in connection with
liability for Taxes described in clause (i) or (ii).
“TWA Conversion Stockholder
Consent” shall mean the consent of an authorized TWX representative to
effect the TWA Conversion.
“25% Ownership Change”
shall mean one or more persons acquiring, directly or indirectly, an interest in
the relevant Company representing (i) 25% of “the total combined voting
power of all classes of stock entitled to vote” (within the meaning of
Section 355(d)(4) of the Code) or (ii) 25% of “the total value of
shares of all classes of stock” (within the meaning of Section 355(d)(4) of
the Code).
4
“TWX” has the meaning
set forth in the preamble.
“TWX Consolidated
Group” shall mean any Consolidated Group of which (i) TWX or any of its
Affiliates is a member and (ii) AOL or any of its Affiliates is also a
member.
“TWX Consolidated
Return” shall mean (i) any consolidated U.S. Federal income tax return of
a TWX Consolidated Group and (ii) any combined, consolidated, unitary or
similar state or local income tax return of a TWX Consolidated
Group.
“TWX Prepared Tax
Return” has the meaning set forth in Section 3.01(a).
“TWX Tax
Representations” shall mean any representations made by TWX or its
Affiliates in Representation Letters that serve as a basis for the Tax
Opinion.
ARTICLE
II
Termination
of Old AOL TMA; Allocation of Tax Liabilities and Benefits
SECTION
2.01. Effectiveness; Termination
of Old AOL TMA. This Agreement shall become effective at the
time the Distribution occurs. At that time, the Old AOL TMA shall be
terminated and shall have no further force or effect.
SECTION
2.02. Indemnification. (a) TWX
shall be liable for, and shall indemnify and hold AOL and its Subsidiaries
harmless from, without duplication, any (i) Consolidated Income Taxes for
any Pre-Distribution Tax Period, (ii) Contribution Agreement Taxes and
(iii) Transaction Taxes other than Transaction Taxes for which AOL is
liable under Section 2.02(b)(ii).
(b) AOL
shall be liable for, and shall indemnify and hold TWX and its Subsidiaries
harmless from, any (i) AOL Indemnified Taxes and (ii) Transaction
Taxes attributable to (A) the failure of any representation made by AOL or
its Affiliates in the AOL Tax Representations to be true when made or deemed
made or (B) except as otherwise expressly required by the Separation
Agreement or any Ancillary Agreement, any other action or omission by AOL or its
Affiliates.
SECTION
2.03. Refunds, Credits and
Offsets. (a) If AOL or its Affiliates receives (i)
any refund, credit or offset of any Taxes for which TWX is responsible under
Section 2.02(a) or (ii) any refund of Taxes other than state and local indirect
Taxes that at the time of the Distribution is anticipated to be received within
60 Business Days after the Distribution Date, AOL shall pay to TWX the
entire amount of the refund or the economic benefit of the credit or offset
(including interest) within 10 Business Days of receipt or accrual; provided, however, that TWX,
upon the request of AOL, shall repay the amount paid to TWX in the event AOL is
required to repay such refund, credit or offset.
(b) If
TWX or its Affiliates receives any refund, credit or offset of any Taxes for
which AOL is responsible under Section 2.02(b), other than any refund described
in clause (ii) of Section 2.03(a), TWX shall pay to AOL the entire amount
of the refund or the economic benefit of the credit or offset (including
interest) within 10 Business Days of receipt or accrual; provided, however, that AOL,
upon the request of TWX, shall repay the amount paid to AOL in the event TWX is
required to repay such refund, credit or offset.
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SECTION
2.04. Straddle
Periods. In the case of any taxable period that includes (but
does not end on) the Distribution Date, Income Taxes for the Pre-Distribution
Tax Period shall be computed as if such taxable period ended as of the close of
business on the Distribution Date.
SECTION
2.05. Carrybacks. If
a tax return of AOL or its Affiliates for any taxable period ending after the
Distribution Date reflects any net operating losses, net capital losses, excess
tax credits or other tax attributes (a “Tax Attribute”) that
is carried back to a TWX Consolidated Return, whether or not AOL or its
Affiliates waives the right to carry back any such Tax Attribute to a TWX
Consolidated Return, no payment with respect to such carryback shall be due to
AOL or its Affiliates from TWX. In the event that AOL or its
Affiliates receives any refund, credit or offset of any Taxes in connection with
a carryback of a Tax Attribute of any Company to a TWX Consolidated Return, AOL
shall promptly pay the full amount of such refund or the economic benefit of the
credit or offset (including interest) to TWX.
ARTICLE
III
Procedural
Matters for Ordinary Taxes
SECTION
3.01. Tax
Returns. (a) TWX shall have exclusive and sole
responsibility for the preparation and filing of (i) any TWX Consolidated
Returns (including requests for extensions thereof) and (ii) any other tax
returns of TWX or its Affiliates, other than tax returns of AOL LLC that relate
to AOL Indemnified Taxes for a Pre-Distribution Tax Period (a “TWX Prepared Tax
Return”).
(b) AOL shall have exclusive
and sole responsibility for the preparation and filing of the tax returns of AOL
and its Affiliates to the extent such responsibility has not been allocated to
TWX under Section 3.01(a) (an “AOL Prepared Tax
Return”).
(c) AOL shall provide to TWX
(in the format determined by TWX) all information requested by TWX as reasonably
necessary to prepare any TWX Consolidated Returns (the “AOL Tax
Package”). The AOL Tax Package shall be provided to TWX on a
timely basis consistent with the current practices of the TWX Consolidated
Groups in preparing tax returns. AOL shall also provide to TWX
information reasonably required to determine estimated tax payments, current
taxable income, current and deferred tax liabilities, tax reserve items and any
additional current or prior information required by TWX to comply with its
obligations under this Agreement.
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SECTION
3.02. Audits, Refund Claims,
Litigation. (a) If any AOL Prepared Tax Return
becomes the subject of litigation in any court or examination by any Taxing
Authority, the conduct and settlement of the litigation or examination shall be
exclusively controlled by AOL; provided, however, that TWX and
AOL shall share joint control with respect to the conduct and settlement of any
litigation or examination that reasonably could be expected to cause a payment
obligation to, or a refund claim for, TWX.
(b) If any TWX Prepared Tax
Return becomes the subject of litigation in any court or examination by any
Taxing Authority, the conduct and settlement of the litigation or examination
shall be exclusively controlled by TWX; provided, however, that TWX and
AOL shall share joint control with respect to the conduct and settlement of any
litigation or examination that reasonably could be expected to cause a payment
obligation to, or a refund claim for, AOL.
(c) Notwithstanding
Sections 3.02(a) and (b), no settlement relating to any matter that would
cause a payment obligation for an Indemnifying Party under this Agreement shall
be accepted or entered into by the Indemnitee without the consent of the
Indemnifying Party (which consent shall not be unreasonably withheld or
delayed).
(d) AOL shall assist and
cooperate with TWX during the course of any examination or litigation described
in Section 3.02(b). Within 10 Business Days of the commencement
of any such proceeding, TWX shall give AOL notice of, and consult with AOL with
respect to, any issues relating to AOL Indemnified Taxes; provided, however, that AOL
shall not be relieved of any obligation to make payments under this Agreement if
TWX fails to timely deliver the notice described in this Section 3.02(d)
except, and only to the extent that, AOL is actually prejudiced
thereby.
(e) TWX shall assist and
cooperate with AOL during the course of any examination or litigation described
in Section 3.02(a). Within 10 Business Days of the commencement
of any such proceeding, AOL shall give TWX notice of, and consult with TWX with
respect to, any issues relating to Consolidated Income Taxes for any
Pre-Distribution Period; provided, however, that TWX
shall not be relieved of any obligation to make payments under this Agreement if
AOL fails to timely deliver the notice described in this Section 3.02(e)
except, and only to the extent that, TWX is actually prejudiced
thereby.
(f) This Section 3.02
shall not apply to Transaction Taxes or to Article V, which shall govern
procedural matters relating to Transaction Taxes.
SECTION 3.03. Expenses. (a) AOL
shall bear the cost of its own expenses and shall reimburse TWX for all
reasonable out-of-pocket expenses (including, without limitation, legal,
consulting and accounting fees) in the course of proceedings described in
Section 3.02 to the extent such expenses are reasonably attributable to AOL
Indemnified Taxes.
7
(b) TWX shall bear the cost
of its own expenses and shall reimburse AOL for all reasonable out-of-pocket
expenses (including, without limitation, legal, consulting and accounting fees)
in the course of proceedings described in Section 3.02 to the extent such
expenses are reasonably attributable to Taxes for which TWX is responsible
pursuant to this Agreement.
SECTION
3.04. Rulings. AOL shall
assist and cooperate with TWX and take all actions reasonably requested by
TWX in connection with any ruling requests submitted by TWX to the
IRS.
SECTION
3.05. Short
Period Election. TWX and AOL shall jointly make a timely
election under Section 1.1502-76(b)(2)(ii)(D) of the Regulations or any
comparable provision or state or local law to allocate items ratably between the
final Pre-Distribution Tax Period (TWX Consolidated Return) and the AOL short
taxable period beginning after the Distribution Date (AOL separate tax
return).
SECTION
3.06. Tax
Treatment of Payments Paid Pursuant to the EMA. Any Federal,
state and local income tax deduction arising as a result of amounts paid
pursuant to the EMA shall be claimed (if and when permitted by applicable law)
by the Company (or its applicable Affiliate) that pays such amount in the first
instance; provided, however, that with
respect to amounts (i) for which reimbursement is paid pursuant to Article XV of
the EMA, such deduction shall be claimed (if and when permitted by applicable
law) by the Company that pays such reimbursement, (ii) settled pursuant to
Article VIII of the EMA, such deduction shall be claimed by TWX or (iii) settled
pursuant to Article XII of the EMA, such deduction shall be claimed by TWX;
provided, however, that if a
deduction claimed by TWX pursuant to this Section 3.06(iii) is disallowed
by a Taxing Authority for any reason, AOL shall amend its applicable tax return
to claim such deduction and shall pay to TWX an amount equal to the tax benefit
actually realized by AOL resulting from such deduction.
ARTICLE
IV
Tax
Matters Relating to the Separation
SECTION
4.01. Mutual
Representations. Except
as otherwise expressly required or permitted by the Separation Agreement or any
Ancillary Agreement, neither Company has any plan or intention to take any
action inconsistent with the qualification of the Transactions for the Intended
Tax Treatment.
SECTION
4.02. Mutual
Covenants. (a) The Companies agree to take, and to
cause their respective Affiliates to take, any reasonable actions necessary or
advisable in order for the Transactions to qualify for the Intended Tax
Treatment. Except as otherwise expressly required or permitted by the
Separation Agreement or any Ancillary Agreement, neither Company shall take or
fail to take, or permit their respective Affiliates to take or fail to take, any
action, if such action or omission would be inconsistent with its respective Tax
Representations.
8
(b) Subject
to Section 4.02(c), during the period beginning on the date of the
Distribution and ending on and including the last day of the 30-month period
following the date of the Distribution, each Company shall notify the other
Company within 10 Business Days after entering into a binding contract (or other
agreement or understanding that has been publicly disclosed by such Company)
with respect to a transaction that, if completed (whether or not it would
constitute a “plan (or series of related transactions)” within the meaning of
Section 355(e) of the Code with the Distribution) alone or together with
other transactions (excluding, for these purposes, the transactions described in
clauses (i) through (iv) of Section 4.02(c)), would result in a 25%
Ownership Change of such Company and shall provide the other Company with
complete details (and additional information as such other Company shall
reasonably request) regarding such transaction and other transactions, if any;
provided, however, that in no
case shall either Company be obligated to provide to the other Company any
material non-public information.
(c) For
purposes of Section 4.02(b), a “binding contract (or other agreement or
understanding that has been publicly disclosed by such Company)” shall not
include (i) the adoption by a Company of a shareholder rights plan that
meets the requirements of IRS Revenue Ruling 90-11, 1990-1 C.B. 10,
(ii) transfers on an established market of the stock of a Company described
in Safe Harbor VII of Section 1.355-7(d)(7) of the Regulations,
(iii) issuances of stock of a Company pursuant to an employee stock
purchase agreement or equity compensation plan in accordance with Safe Harbor
VIII of Section 1.355-7(d)(8) of the Regulations or (iv) issuances of
stock of a Company described in Safe Harbor IX of Section 1.355-7(d)(9) of
the Regulations.
SECTION
4.03. Tax
Opinion. The Companies shall use their reasonable best efforts
to cause the Tax Opinion to be issued, including by executing any Representation
Letters reasonably requested by Cravath, Swaine & Xxxxx LLP.
SECTION
4.04. Reporting. (a) AOL and
TWX each (i) shall timely file the appropriate information and
statements (including as required by Section 1.355-5 of the Regulations) to
report the Transactions as qualifying for the Intended Tax Treatment and
(ii) absent a change of Law or a Determination of a Transaction Tax
Contest, shall not take any position on any tax return that is inconsistent with
the Transactions qualifying for the Intended Tax Treatment.
(b) With respect to the AOL
Online Transfer, AOL and TWX each shall comply with the relevant rules regarding
gain recognition agreements contained in Section 1.367(a)-8 of the
Regulations, including by entering into a new gain recognition agreement upon
the Distribution in accordance with Section 1.367(a)-8(j)(5) of the
Regulations.
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ARTICLE
V
Procedural
Matters for Transaction Taxes
SECTION
5.01. Notice. (a) Within
30 Business Days after a Company becomes aware of the existence of a Transaction
Tax Contest, such Company shall promptly notify the other Company of the
Transaction Tax Contest, and thereafter shall promptly forward or make available
to the other Company copies of notices and communications with a Taxing
Authority relating to such Transaction Tax Contest.
(b) A failure by the
Indemnitee to timely provide the notice described in Section 5.01(a) shall
not affect the Indemnifying Party’s indemnification obligations under this
Agreement except, and only to the extent that, the Indemnifying Party shall have
been actually prejudiced as a result of such failure.
SECTION
5.02. Control of Transaction Tax
Contests. (a) Both Companies shall have the right
to control jointly the defense, compromise or settlement of any such Transaction
Tax Contest.
(b) No
Indemnitee shall settle or compromise or consent to entry of any judgment with
respect to any Transaction Tax Contest without the prior written consent of the
Indemnifying Party (which consent may be withheld in the Indemnifying Party’s
sole discretion).
(c) Notwithstanding
Sections 5.02(a) and (b), a Company shall be entitled to control
exclusively the defense, compromise or settlement of any Transaction Tax Contest
if such Company notifies the other Company that (notwithstanding the rights and
obligations of the Companies in Article IV or Article V) it agrees to
pay (and indemnify such other Company against) any liability for all Transaction
Taxes resulting from such Transaction Tax Contest; provided, however, that no
settlement, compromise or consent to entry of any judgment that fails to give
the Company indemnified under this Section 5.02(c) full release of
liability or that would impose any material obligations on that Company shall be
made without the prior written consent of that Company.
SECTION
5.03. Indemnification
Payments. An Indemnitee shall be entitled to make a claim for
payment with respect to Transaction Taxes pursuant to this Agreement when the
Indemnitee determines that it is entitled to such payment and the amount of such
payment. The Indemnitee shall provide to the Indemnifying Party
notice of such claim within 60 Business Days of the date on which it first so
becomes entitled to claim such payment, and such notice shall include a
description of such claim and a detailed calculation of the amount of the
indemnification payment that is claimed; provided, however, that no
delay on the part of the Indemnitee in notifying the Indemnifying Party shall
relieve the Indemnifying Party from any obligation hereunder except, and only to
the extent that, the Indemnifying Party shall have been actually prejudiced
thereby as a result of such failure. The Indemnifying Party shall
make the claimed payment to the Indemnitee within 30 Business Days after
receiving such notice, unless the Indemnifying Party reasonably disputes its
liability for, or the amount of, such payment.
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SECTION
5.04. Cooperation. TWX
and AOL shall cooperate, and shall cause their Affiliates to cooperate, with all
reasonable requests from the other Company in connection with Transaction Tax
Contests.
Procedural
Matters for Ordinary Taxes and Transaction Taxes
SECTION
6.01. Document Retention, Access
to Records and Use of Personnel. Until the expiration of
the relevant statute of limitations (including extensions), each of TWX and
AOL shall (i) retain records, documents, accounting data, computer
data and other information (the “Records”) necessary
for the preparation, filing, review, audit or defense of
all tax returns relevant to an obligation, right or liability of either Company
under this Agreement; and (ii) give each other reasonable access to such
Records and to its personnel (ensuring their cooperation) and premises to the
extent relevant to an obligation, right or liability of either Company under
this Agreement. Prior to disposing of any such Records, each of
TWX and AOL shall notify the other Company in writing of such
intention and afford the other Company the opportunity to take possession or
make copies of such Records at its discretion.
SECTION
6.03. Access to
Information. TWX and AOL agree to provide to the
other Company any information reasonably required to complete tax returns or to
compute the amount of any payment contemplated by this Agreement.
SECTION
6.04. Indemnity
Payments. (a) Any Indemnity Payment (other than a
payment that represents interest accruing after the date of the Distribution)
shall be treated by AOL and TWX for all Tax purposes as a distribution from
AOL to TWX immediately prior to the Distribution (if made by
AOL to TWX) and as a contribution from TWX to AOL immediately
prior to the Distribution (if made by TWX to AOL).
(b) The
amount of any Indemnity Payment described in Section 6.04(a) shall be
(i) reduced to take into account any Tax benefit actually realized by the
Indemnitee resulting from the incurrence of the Liability in respect of which
the Indemnity Payment was made and (ii) increased to take into account any
Tax cost actually realized by the Indemnitee resulting from the receipt of the
Indemnity Payment (including Tax cost arising from such Indemnity Payment having
resulted in income or gain to either Company (for example, under
Section 1.1502-19 of the Regulations) and Tax cost imposed on additional
amounts payable pursuant to this Section 6.04(b)(ii)).
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ARTICLE
VII
Miscellaneous
Provisions
SECTION
7.01. Confidentiality. The
Confidential Information provision of the Separation Agreement shall apply with
respect to this Agreement.
SECTION
7.02. Successors. This
Agreement shall be binding upon and inure to the benefit of the Companies, their
Affiliates, their legal representatives and any successor to either of the
Companies, by merger, acquisition of assets or otherwise, to the same extent as
if the successor had been an original party to the Agreement, and in such event,
all references herein to a Company shall refer instead to the successor of such
Company. Nothing in this Agreement, express or implied, is intended
to confer upon any Person other than the Companies or their respective
successors or assigns or, to the extent provided by this Agreement, their
Affiliates, any rights or remedies under or by reason of this
Agreement.
SECTION
7.03. Failure to Pursue
Remedies. The failure of a Company to seek redress for breach
of, or to insist upon the strict performance of, any provision of this Agreement
shall not prevent a subsequent act, which would have originally constituted a
breach, from having the effect of an original breach.
SECTION
7.04. Cumulative
Remedies. The rights and remedies provided by this Agreement
are cumulative and the use of any one right or remedy by a Company shall not
preclude or waive its right to use any or all other remedies. Said
rights and remedies are given in addition to any other rights the Companies may
have by Law or otherwise.
SECTION
7.05. Entire
Agreement. This Agreement contains the entire agreement
between the Companies with respect to the subject matter hereof, supersedes all
previous agreements, negotiations, discussions, writings, understandings,
commitments and conversations with respect to such subject matter and there are
no agreements or understandings between the Companies with respect to the
subject matter hereof other than those set forth or referred to
herein.
SECTION
7.06. Absence of
Presumption. The Companies 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 Companies and no presumption or burden of proof
shall arise favoring or disfavoring either Company by virtue of the authorship
of any of the provisions of this Agreement. Notwithstanding the
foregoing, the purposes of Articles IV and V are to ensure the Intended Tax
Treatment and, accordingly, the Companies agree that the language thereof shall
be interpreted in a manner that serves this purpose to the greatest extent
possible.
12
SECTION
7.07. Governing Law; Waiver of
Jury Trial. This Agreement shall be governed by and construed
in accordance with the Laws of the State of New York, regardless of the laws
that might otherwise govern under applicable principles of conflicts of laws
thereof, except to the extent the Laws of Delaware or any other jurisdiction are
mandatorily applicable. Each of the Companies irrevocably agrees that
any legal action or proceeding arising out of this Agreement or any transaction
contemplated hereby shall be brought only in the State or United States Federal
courts located in the State of New York. Each Company irrevocably
consents to the service of process outside the territorial jurisdiction of such
courts in any such action or proceeding by the mailing of such documents by
registered United States mail, postage prepaid, to the respective address set
forth in Section 7.13. EACH COMPANY HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT, ANY AGREEMENT ENTERED INTO IN CONNECTION
WITH THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR
THEREBY.
SECTION
7.08. Headings. The
article, section and paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION
7.09. 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 Company and delivered to the other
Company.
SECTION
7.10. Interpretation. Any
reference in this Agreement to the Separation Agreement, the Ancillary
Agreements or the Contribution Agreement shall in each case include references
to any exhibits, schedules and amendments thereto. If, and to the
extent, the provisions of this Agreement conflict with the Separation Agreement,
or any Ancillary Agreement, the provisions of this Agreement shall
control.
SECTION
7.11. Assignability. Neither
this Agreement nor any of the rights, interests or obligations under this
Agreement shall be assigned, in whole or in part, by operation of law or
otherwise by either Company without the prior written consent of the other
Company. Any purported assignment without such consent shall be
void. Subject to the preceding sentences, this Agreement will be
binding upon, inure to the benefit of, and be enforceable by the Companies and
their respective successors and assigns. Notwithstanding the
preceding sentence, either Company may assign this Agreement without consent in
connection with (a) a merger transaction in which such Company is not the
surviving entity and the surviving entity acquires or assumes all or
substantially all of such Company’s Assets or (b) upon the sale of all or
substantially all of such Company’s Assets; provided, however, that the
assignee expressly assumes in writing all of the obligations of the assigning
Company under this Agreement, and the assigning Company provides written notice
and evidence of such assignment and assumption to the non-assigning
Company. No assignment permitted by this Section 7.11 shall release
the assigning Company from liability for the full performance of its obligations
under this Agreement.
13
SECTION
7.12. Third
Party Beneficiaries. The provisions of this Agreement are
solely for the benefit of the Companies and are not intended to confer upon any
Person except the Companies any rights or remedies hereunder. There
are no third party beneficiaries of this Agreement and this Agreement shall not
provide any third person with any remedy, claim, liability, reimbursement, cause
of action or other right in excess of those existing without reference to this
Agreement.
SECTION
7.13. Notices. Any
payments, notices, requests, claims, demands and other communications under this
Agreement shall be provided in accordance with the Notices provision of the
Separation Agreement. In addition, copies of all documents mentioned
in the preceding sentence shall also be sent to the address set forth below (or
at such other address as one Company may specify by notice to the other
Company):
|
If
to TWX:
One
Time Xxxxxx Xxxxxx
Xxx
Xxxx, XX 00000
Attention: Xxxxxxxxx Xxxxxxx,
Esq.
Senior Vice President—Tax
Fax: (000)
000-0000
|
|
|
and
with copies to:
|
|
|
Cravath,
Swaine & Xxxxx LLP
Worldwide
Plaza
000
Xxxxxx Xxxxxx
Xxx
Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx,
Esq.
Xxxxxx
Xxxxxxxxx, Esq.
Fax: (000)
000-0000
|
|
|
If
to AOL:
AOL
Inc.
000
Xxxxxxxx
Xxx
Xxxx, XX 00000
Attention: Xxxxx
Xxxxxxxx
Vice President—Tax
Fax: (000)
000-0000
|
14
SECTION
7.14. Severability. If
any provision of this Agreement or the application thereof to any Person or
circumstance is determined by a court of competent jurisdiction to be invalid,
void or unenforceable, the remaining provisions hereof, or the application of
such provision to Persons or circumstances or in jurisdictions other than those
as to which it has been held invalid or unenforceable, shall remain in full
force and effect and shall in no way be affected, impaired or invalidated
thereby, so long as the economic or legal substance of the transactions
contemplated hereby, as the case may be, is not affected in any manner
materially adverse to either Company. Upon any such determination,
the Companies shall negotiate in good faith in an effort to agree upon a
suitable and equitable provision to effect the original intent of the
Companies.
SECTION
7.15. Force
Majeure. Neither Company shall be deemed in default of this
Agreement to the extent that any delay or failure in the performance of its
obligations under this Agreement results from any cause beyond its reasonable
control and without its fault or negligence, such as acts of God, acts of civil
or military authority, embargoes, epidemics, war, riots, insurrections, fires,
explosions, earthquakes, floods, unusually severe weather conditions, labor
problems or unavailability or parts, or, in the case of computer systems, any
failure in electrical or air conditioning equipment. In the event of
any such excused delay, the time for performance shall be extended for a period
equal to the time lost by reason of the delay.
SECTION
7.16. Termination. The
Agreement shall remain in force and be binding so long as the applicable period
of assessments (including extensions) remains unexpired for any Taxes
contemplated by the Agreement.
SECTION
7.17. Successor
Provisions. Any reference herein to any provisions of the Code
or Regulations shall be deemed to include any amendments or successor provisions
thereto as appropriate.
SECTION
7.18. Compliance by
Affiliates. TWX and AOL shall cause their Affiliates to comply
with the terms of this Agreement.
SECTION
7.19. Survival. Except
as expressly set forth in this Agreement, any covenants, representations or
warranties contained in this Agreement and any liabilities for the breach of any
obligation contained in this Agreement shall survive each of the Separation and
Distribution and shall remain in full force and effect.
SECTION
7.20. Amendments. No
provisions of this Agreement shall be deemed waived, amended, supplemented or
modified by either Company, unless such waiver, amendment, supplement or
modification is in writing and signed by the authorized representative of the
Company against whom it is sought to enforce such waiver, amendment, supplement
or modification.
15
IN WITNESS WHEREOF, the Companies have
caused this Agreement to be executed by their duly authorized representatives as
of the date first written above.
| TIME WARNER INC., | |||
|
|
By:
|
/s/ Xxxx X. Xxxxxx, Xx. | |
| Name: Xxxx X. Xxxxxx, Xx. | |||
| Title:
Executive Vice President and Chief Financial Officer |
|||
| AOL INC., | |||
|
|
By:
|
/s/ Xxx X. Xxxxxx | |
| Name: Xxx X. Xxxxxx | |||
|
Title:
Executive Vice President, Corporate
Secretary
and General Counsel
|
|||
