Exhibit 10.2
TAX ALLOCATION AGREEMENT
This TAX ALLOCATION AGREEMENT is dated as of June 30, 1998, between
COGNIZANT CORPORATION, a Delaware corporation (the "Corporation") and IMS HEALTH
INCORPORATED, a Delaware corporation ("IMS HEALTH") (collectively, the
"Parties").
WHEREAS, the Corporation acting through its direct and indirect
subsidiaries, currently conducts a number of businesses, including, without
limitation, providing television audience measurement services (the "Xxxxxxx
Media Research Business");
WHEREAS, the Board of Directors of the Corporation has determined that it
is appropriate, desirable and in the best interests of the holders of shares of
common stock, par value $0.01 per share, of the Corporation (the "Cognizant
Common Stock"), as well as of the Corporation and its businesses, to reorganize
the Corporation to separate from the Corporation all businesses currently
conducted by the Corporation other than the Xxxxxxx Media Research Business and
to cause such businesses to be owned and conducted, directly or indirectly, by
IMS HEALTH;
WHEREAS, in order to effect the separation, the Board of Directors of the
Corporation has determined that it is appropriate, desirable and in the best
interests of the holders of Cognizant Common Stock, as well as of the
Corporation and its businesses, for the Corporation (i) to take certain steps to
reorganize the Corporation's Subsidiaries (as defined herein) and businesses,
including prior to the Distribution (as defined herein) merging I.M.S.
International, Inc. and IMS America, Inc. with and into IMS HEALTH and (ii) upon
the completion of such reorganization to distribute to the holders of the
Cognizant Common Stock all the outstanding shares of common stock of IMS HEALTH
(the "IMS HEALTH Common Shares"), together with the associated Rights;
WHEREAS, as of the date hereof, the Corporation is the common parent of an
affiliated group of domestic corporations within the meaning of Section 1504(a)
of the Code (as defined herein), including members of the IMS HEALTH Group (as
defined herein), and the members of the affiliated group have heretofore joined
in filing consolidated federal Income Tax Returns (as defined herein);
WHEREAS, as a result of the Distribution, the IMS HEALTH Group will not be
included in the consolidated federal Income Tax Return of the Corporation for
the portion of the year following the Distribution and in future years; and
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WHEREAS, the Corporation and IMS HEALTH desire to allocate the Tax (as
defined herein) burdens and benefits of transactions which occurred on or prior
to the Distribution Date (as defined herein) and to provide for certain other
Tax matters, including the assignment of responsibility for the preparation and
filing of Tax Returns (as defined herein), the payment of Taxes, and the
prosecution and defense of any Tax controversies.
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained in this Agreement, the Parties hereby agree as follows:
ARTICLE DEFINITIONS
SECTION General. Capitalized terms used in this Agreement and not defined
herein shall have the meanings that such terms have in the Distribution
Agreement. As used in this Agreement, the following terms shall have the
following meanings:
"Code" shall mean the Internal Revenue Code of 1986, as amended, and the
Treasury regulations promulgated thereunder, including any successor
legislation.
"Combined Returns" shall mean all state Income Tax Returns with respect to
which the Corporation files on a combined or unitary basis with some or all of
its Subsidiaries for taxable periods beginning November 1, 1996, January 1, 1997
and January 1, 1998.
"Consolidated Returns" shall mean all consolidated federal Income Tax
Returns of the affiliated group of which the Corporation is the common parent
for taxable periods beginning November 1, 1996, January 1, 1997 and January 1,
1998.
"Controlled Entity" shall mean any corporation, partnership or other entity
of which another entity (i) owns, directly or indirectly, ownership interests
sufficient to elect a majority of the Board of Directors (or persons performing
similar functions) (irrespective of whether at the time any other class or
classes of ownership interests of such corporation, partnership or other entity
shall or might have such voting power upon the occurrence of any contingency) or
(ii) is a general partner or an entity performing similar functions (e.g., a
trustee).
"D&B Tax Allocation Agreement" shall mean the Tax Allocation Agreement
dated October 28, 1996 among The Dun & Bradstreet Corporation, the Corporation
and ACNielsen Corporation.
"Deferred Compensation Deduction" shall mean any deduction with respect to
(i) compensation payments made by any member of the IMS HEALTH Group or the NMR
Group,
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as the case may be, if such deduction is disallowed for any member of the
payor's group and may be claimed by any member of the other group and/or (ii)
the exercise of stock options in IMS HEALTH or the Corporation, as the case may
be, by any former employee of the Pre-Distribution Cognizant Group if such
deduction is disallowed for any member of the IMS HEALTH Group or the NMR Group,
as the case may be, and may be claimed by any member of the other group.
"Distribution" shall mean the distribution on the Distribution Date to
holders of record of shares of Cognizant Common Stock as of the Distribution
Record Date of the IMS HEALTH Common Shares owned by the Corporation on the
basis of one IMS HEALTH Common Share for each outstanding share of Cognizant
Common Stock.
"Distribution Agreement" shall mean the distribution agreement, dated as of
June 30, 1998, between the Corporation and IMS HEALTH.
"Distribution Date" shall mean June 30, 1998.
"Final Determination" shall mean the final resolution of liability for any
Tax for any taxable period, including any related interest or penalties, by or
as a result of: a final and unappealable decision, judgment, decree or other
order by any court of competent jurisdiction; a closing agreement or accepted
offer in compromise under Section 7121 or 7122 of the Code, or comparable
agreement under the laws of other jurisdictions which resolves the entire Tax
liability for any taxable period; any allowance of a refund or credit in respect
of an overpayment of Tax, but only after the expiration of all periods during
which such refund may be recovered by the jurisdiction imposing the Tax; or any
other final disposition, including by reason of the expiration of the applicable
statute of limitations.
"Franchise Tax Returns" shall mean all franchise Tax Returns of the
Pre-Distribution Cognizant Group or any member thereof for taxable periods
beginning November 1, 1996, January 1, 1997, January 1, 1998 and, solely for
purposes of Sections 2.1(a) and 2.2(a), on or the day after the Distribution
Date.
"Governmental Authority" shall mean any federal, state, local, foreign or
international court, government, department, commission, board, bureau, agency,
official or other regulatory, administrative or governmental authority.
"IMS HEALTH Business" shall mean each and every business conducted at any
time by the Corporation or any Subsidiary of the Corporation prior to the
Effective Time, including, without limitation, (i) providing
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information and decision support services to the pharmaceutical and healthcare
industries (the "IMS Business"), (ii) providing software-based administrative
and analytical solutions to the managed care industry (the "ERISCO Business"),
(iii) making venture capital investments in emerging healthcare businesses (the
"Enterprises Business"), (iv) supplying research and analysis to the information
technology industry (the "Gartner Business") and (v) providing software
applications and development services specializing in Year 2000 conversion
services (the "Technology Solutions Business"), but excluding the NMR Business.
"IMS HEALTH Group" shall mean IMS HEALTH and each Business Entity (other
than any member of the NMR Group) that is a Subsidiary of the Corporation
immediately prior to the Effective Time.
"Included Party" shall have the meaning as defined in Section 2.3.
"Income Tax Return" shall mean any Tax Return relating to Income Taxes.
"Income Taxes" shall mean any federal, state or local Taxes determined by
reference to income or imposed in lieu of income Taxes, such as Taxes based on
net worth or gross receipts.
"Indemnifying Party" shall have the meaning as defined in Section 3.5(c).
"Indemnitee" shall have the meaning as defined in Section 3.5(c).
"IRS" shall mean the Internal Revenue Service.
"NMR" shall mean Xxxxxxx Media Research, Inc., a Delaware corporation.
"NMR Assets" shall have the same meaning as such term has in the
Distribution Agreement.
"NMR Business" shall mean (i) the Xxxxxxx Media Research Business, (ii) the
businesses of the members of the NMR Group, (iii) any other business conducted
by the Corporation or any Subsidiary of the Corporation primarily through the
use of the NMR Assets, (iv) the businesses of any Business Entity acquired or
established by or for NMR or any of its Subsidiaries after the date of this
Agreement and (v) the business of the Corporation from and after the Effective
Time.
"NMR Group" shall mean NMR, each Business Entity which is contemplated to
remain or become a
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Subsidiary of the Corporation or NMR hereunder, which shall include those
identified as such on Schedule 1.1(au)(i) to the Distribution Agreement, and the
Corporation from and after the Effective Time.
"Non-Combined Returns" shall mean all state and local Income Tax Returns
(other than Combined Returns and any foreign Tax Returns), of the
Pre-Distribution Cognizant Group or any member thereof for taxable periods
beginning November 1, 1996, January 1, 1997, January 1, 1998 and, solely for
purposes of Sections 2.1(a) and 2.2(a), on or the day after the Distribution
Date.
"Nonperforming Party" shall have the meaning as defined in Section 5.2.
"Other Taxes" shall mean all Taxes other than Taxes covered by a
Consolidated Return, a Combined Return, a Non-Combined Return or a Franchise Tax
Return.
"Parties" shall have the meaning as defined in the recitals hereto.
"Person" shall mean any natural person, corporation, business trust, joint
venture, association, company, partnership or government, or any agency or
political subdivision thereof.
"Post-Distribution Expense Deduction" shall mean any deduction with respect
to an expense or indemnity paid by a member of the IMS HEALTH Group or the NMR
Group after the Distribution Date if such deduction is disallowed or not
allowable for any member of the payor's group and may be claimed by any member
of the other group.
"Pre-Distribution Cognizant Group" shall mean the Corporation and all of
its Subsidiaries (direct and indirect, domestic and foreign) prior to the
Distribution.
"Preparing Party" shall have the meaning as defined in Section 2.3.
"Reorganization Tax Payment" shall mean the payment of any Tax for which
IMS HEALTH is liable pursuant to Section 3.3(a) of this Agreement.
"Reorganizations" shall mean the series of contributions and distributions
of Controlled Entities and assets, transfers and assumptions of liabilities, and
other transactions whereby the NMR Group and the IMS HEALTH Group are formed and
all other Controlled Entities of the Corporation prior to the Distribution are
placed under the control of the appropriate parent corporation(s) in preparation
for the Distribution.
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"Subsidiary" shall mean any entity of which another entity's ownership
satisfies the 80-percent voting and value test defined in Section 1504(a)(2) of
the Code, whether directly or indirectly.
"Tax" or "Taxes" whether used in the form of a noun or adjective, shall
mean taxes on or measured by income, franchise, gross receipts, sales, use,
excise, payroll, personal property, real property, ad-valorem, value-added,
leasing, leasing use or other taxes, levies, imposts, duties, charges or
withholdings of any nature. Whenever the term "Tax" or "Taxes" is used
(including, without limitation, regarding any duty to reimburse another Party
for indemnified taxes or refunds or credits of taxes) it shall include
penalties, fines, additions to tax and interest thereon.
"Tax Benefit" shall mean the sum of the amount by which the Tax liability
(after giving effect to any alternative minimum or similar Tax) of a corporation
or group of affiliated corporations to the appropriate taxing authority is
reduced (including, without limitation, by deduction, entitlement to refund,
credit or otherwise, whether available in the current taxable year, as an
adjustment to taxable income in any other taxable year or as a carryforward or
carryback, as applicable) plus any interest from such government or jurisdiction
relating to such Tax liability.
"Tax Item" shall mean any item of income, capital gain, net operating loss,
capital loss, deduction, credit or other Tax attribute relevant to the
calculation of a Tax liability.
"Tax Matters Partner" shall mean the tax matters partner as defined in
section 6231(a)(7) of the Code.
"Tax Returns" shall mean all reports or returns (including information
returns) required to be filed or that may be filed for any period with any
taxing authority (whether domestic or foreign) in connection with any Tax or
Taxes (whether domestic or foreign).
SECTION References; Interpretation. References in this Agreement to any
gender include references to all genders, and references to the singular include
references to the plural and vice versa. The words "include", "includes" and
"including" when used in this Agreement shall be deemed to be followed by the
phrase "without limitation". Unless the context otherwise requires, references
in this Agreement to Articles, Sections, Exhibits and Schedules shall be deemed
references to Articles and Sections of, and Exhibits and Schedules to, such
Agreement. Unless the context otherwise requires, the words "hereof", "hereby"
and "herein" and words of similar
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meaning when used in this Agreement refer to this Agreement in its entirety and
not to any particular Article, Section or provision of this Agreement.
ARTICLE PREPARATION AND FILING OF TAX RETURNS
SECTION Predistribution Tax Returns.
IMS HEALTH (or its relevant Controlled Entity) shall prepare, and the
Corporation (or its relevant Controlled Entity) shall file, (i) all Consolidated
Returns, Combined Returns, Non-Combined Returns, and Franchise Tax Returns that
are not filed prior to the Distribution Date and (ii) any Tax Returns of any
partnership (other than NMR Licensing Associates LP) of which the Corporation or
any Subsidiary is the Tax Matters Partner if a distributive share of partnership
income or loss is included in any such Return.
All Tax Returns for Other Taxes for periods beginning prior to the
Distribution Date that are not subject to the D&B Tax Allocation Agreement shall
be prepared and filed by IMS HEALTH if they relate to any member of the IMS
HEALTH Group and, otherwise, by the Corporation.
SECTION Post-Distribution Tax Returns.
The filing of all Tax Returns for periods beginning on or after the
Distribution Date (other than Non-Combined Returns and Franchise Tax Returns
covered by Section 2.1(a)) shall be the responsibility of the Corporation if
they relate to the NMR Group or any member thereof and shall be the
responsibility of IMS HEALTH if they relate to the IMS HEALTH Group or any
member thereof.
In the case of any partnership in which a member of the Pre-Distribution
Cognizant Group is the designated Tax Matters Partner, such entity shall
continue to be responsible for the preparation and filing of such partnership's
Tax Returns.
SECTION Manner of Preparation.
To the extent any Tax Return includes Taxes relating to a Party (or any of
its Subsidiaries) other than the Party preparing such Tax Return (the "Preparing
Party"), the Party not responsible for preparing the Tax Return (the "Included
Party"), shall prepare and deliver to the Preparing Party, at least 120 days
prior to the due date (including extensions) of such Tax Return, a true and
correct accounting of all relevant Tax Items relating to the Included Party (and
any of its Subsidiaries) for the taxable period.
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All Tax Returns filed on or after the Distribution Date shall be prepared
on a basis that is consistent with the rulings obtained from the IRS or any
other Governmental Authority in connection with the Reorganizations or
Distribution (in the absence of a controlling change in law or circumstances)
and shall be filed on a timely basis (including pursuant to extensions) by the
Party responsible for such filing under this Agreement. In the absence of a
controlling change in law or circumstances and unless deviation from past
practice would have no adverse effect on the other Party, all Tax Returns filed
within three years after the Distribution Date shall be prepared on a basis
consistent with the elections, accounting methods, conventions, assumptions and
principles of taxation used for the most recent taxable periods for which Tax
Returns involving similar Tax Items have been filed; provided, however, that a
Party preparing any Tax Return that does not conform to such past practices
shall not be liable for any additional Tax liability imposed, in whole or in
part, as a result of such deviation from past practice if: (i) 30 days prior to
the filing of such Tax Return, the Party preparing such Tax Return notifies the
other Party if such other Party may be adversely affected; and (ii) the Party
preparing such Tax Return establishes that conformity with past practice
involves a significant risk of the imposition of a penalty. Subject to the
provisions of this Agreement, all decisions relating to the preparation of Tax
Returns shall be made in the sole discretion of the Party responsible under this
Agreement for its preparation; provided, however, that the "Included Party"
shall have the right to review and comment on such Tax Return prior to the
filing thereof in the following manner:
The Preparing Party shall submit any part of such Tax Return relating to
the Included Party (or any of its Subsidiaries) to the Included Party at least
28 days prior to the date on which such Tax Return is due (including
extensions). The Included Party shall submit its comments to the Preparing Party
within 14 days of receipt of the relevant portions of such Tax Return. The
Preparing Party shall alter such Tax Return to reflect the reasonable comments
of the Included Party unless the Preparing Party reasonably believes that such
alteration would have an adverse impact upon the Preparing Party.
Unless otherwise required by the IRS, any Governmental Authority or a
court, the Parties hereby agree to file all Tax Returns, and to take all other
actions, in a manner consistent with the position that the Distribution Date is
the last day on which any member of the IMS HEALTH Group was included in the
Pre-Distribution Cognizant Group. For any period that includes but does not end
on the Distribution Date, to the extent permitted by law or administrative
practice, the taxable year of each member of
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the Pre-Distribution Cognizant Group and any group of such members shall be
treated as ending on the Distribution Date.
ARTICLE PAYMENT OF TAXES
SECTION Predistribution Taxes
The Party responsible for the filing of any Tax Return pursuant to Sections
2.1 and 2.2 shall pay to the relevant taxing authority all Taxes due or payable
in connection therewith; provided, that if, pursuant to this Article III, one
Party is liable for any Taxes relating to a Tax Return filed by the other Party,
such non-filing Party shall pay the filing Party the amount of such Taxes at
least 5 days prior to the due date (including extensions) of such Tax Return.
With respect to any Consolidated Return, Combined Return, Non-Combined
Return or Franchise Tax Return for a taxable period ending before January 1,
1998 that is not filed prior to the Distribution Date, IMS HEALTH shall be
liable for all Taxes payable with such Return and shall be entitled to any
refund or credit for an overpayment of Taxes shown on such Return. With respect
to any Consolidated Return, Combined Return, Non-Combined Return or Franchise
Tax Return for a taxable period beginning on or after January 1, 1998, IMS
HEALTH (i) shall only be liable for Taxes payable with such Return that are
attributable to the portion of such taxable period up to and including the
Distribution Date and that exceed the amount of Taxes paid in respect of such
taxable period (as estimated Taxes or otherwise) on or prior to the Distribution
Date and (ii) shall be entitled to any refund or credit of Taxes to the extent
Taxes paid in respect of such taxable period (as estimated Taxes or otherwise)
on or prior to the Distribution Date exceed the amount of Taxes attributable to
the portion of the period up to and including the Distribution Date. The
determination of the amount of Taxes attributable to the portion of such taxable
period up to and including the Distribution Date shall be done on a closing of
the books basis, except that Tax Items calculated on an annual basis shall be
apportioned on a time basis.
In the event of any Final Determination adjusting the amount of any Taxes
that are the subject of a Consolidated Return, Combined Return, Non-Combined
Return or Franchise Tax Return, IMS HEALTH shall be liable for its share of any
increases in Taxes and shall be entitled to its share of any refunds or credits
of Taxes, and the Corporation shall be liable for all other increases in Taxes
and shall be entitled to all other refunds or credits of Taxes. IMS HEALTH's
share of any Taxes, credits or refunds shall be determined in accordance with
the following principles:
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(i) IMS HEALTH shall be liable for any increase in Taxes, and shall be
entitled to all refunds or credits of Taxes, that are attributable to a Tax
Return that relates solely to the IMS HEALTH Business; and
(ii) In the case of any Tax Return that relates to both the IMS HEALTH
Business and the NMR Business, IMS HEALTH's share of any increase in Taxes, or
refunds or credits of Taxes, shall be determined on a pro forma basis as if IMS
HEALTH filed a separate Tax Return for the taxable period that (i) included only
(x) the Tax Items attributable to the IMS HEALTH Business otherwise included in
the Tax Return and (y) an appropriate allocation of Tax Items not specifically
attributable to either the IMS HEALTH Business or the NMR Business (including,
without limitation, corporate overhead) and (ii) credits IMS HEALTH with its
share of Taxes previously paid by the Corporation or IMS HEALTH with respect to
such taxable period;
provided, that, in the case of a Consolidated Return, Combined Return,
Non-Combined Return or Franchise Tax Return, IMS HEALTH shall be liable for and
shall pay all increases in Taxes, and shall be entitled to receive all refunds
or credits of Taxes, that result from a Tax Item or position determined by the
corporate office.
The Corporation shall be liable for all Other Taxes that are attributable
to the NMR Business and IMS HEALTH shall be liable for all Other Taxes that are
attributable to the IMS HEALTH Business.
In the case of any Consolidated Return, Combined Return, Non-Combined
Return or Franchise Tax Return with respect to which IMS HEALTH has
responsibility for any Taxes or is entitled to any refunds or credits of Taxes
pursuant to Section 3.1(c) above, IMS HEALTH shall have the right to prepare an
amended Tax Return. The Corporation shall have the right to review any such
amended Tax Return and shall be required to sign and file any such amended Tax
Return unless it reasonably determines that the filing of such amended Tax
Return would create a significant risk of a material increase in the Taxes
payable by the NMR Group or any member thereof for any taxable period beginning
on or after the Distribution Date. IMS HEALTH shall be entitled to any refunds
or credits of Taxes relating to any such amended Tax Return.
If the Corporation is liable for any Taxes or entitled to any refunds or
credits of Taxes pursuant to the D&B Tax Allocation Agreement, such Taxes,
refunds or credits shall be allocated between the Corporation and IMS HEALTH in
accordance with the principles of this Section 3.1.
Notwithstanding any statement herein to the contrary, any Taxes covered by
Section 2.1(j)(i) of the
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Distribution Agreement shall be governed by Schedule 2.1(j)(i) to the
Distribution Agreement.
SECTION Post-Distribution Taxes. Unless otherwise provided in this
Agreement:
The Corporation shall pay all Taxes and shall be entitled to receive and
retain all refunds of Taxes attributable to the NMR Group or any member thereof:
(i) with respect to a Consolidated Return, Combined Return,
Non-Combined Return or Franchise Tax Return for a taxable period that
begins prior to the Distribution Date and includes but does not end on
the Distribution Date to the extent such Taxes or refunds are
attributable to the portion of such period after the Distribution Date;
and
(ii) with respect to periods beginning on or after the
Distribution Date.
IMS HEALTH shall pay all Taxes and shall be entitled to receive and retain
all refunds of Taxes with respect to periods beginning on or after the
Distribution Date that are attributable to the IMS HEALTH Group or any member
thereof.
SECTION Restructuring Taxes.
Notwithstanding any statement to the contrary in this Agreement and except
as otherwise provided in the Distribution Agreement, to the extent that any
Taxes are found to arise out of the Reorganizations, then any such Tax liability
incurred by the Parties (or any of their Subsidiaries) shall be the
responsibility of IMS HEALTH; provided, however, that to the extent specific
cash allocations for such Taxes are made in connection with the Distribution,
IMS HEALTH shall be relieved of its liability for such Taxes to the extent
covered by such cash.
Notwithstanding any statement herein to the contrary, any Taxes relating to
or arising out of the Distribution shall be governed by Section 2.10 of the
Distribution Agreement.
SECTION Gain Recognition Agreements. IMS HEALTH shall assume all of the
Corporation's responsibilities with respect to gain recognition agreements
pursuant to the D&B Tax Allocation Agreement.
SECTION Indemnification.
Indemnification by the Corporation. The Corporation shall indemnify, defend
and hold harmless IMS HEALTH (and its affiliates) from and against any and all
Tax liabilities allocated to the Corporation by this Agreement.
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Indemnification by IMS HEALTH. IMS HEALTH shall indemnify, defend and hold
harmless the Corporation (and its affiliates) from and against any and all Tax
liabilities allocated to IMS HEALTH by this Agreement.
Indemnity Payments.
To the extent that one Party (the "Indemnifying Party") owes money to
another Party (the "Indemnitee") pursuant to this Section 3.5, the Party (the
"Notifying Party") having knowledge of such obligation shall notify the other
Party and shall provide such other Party with its calculations of such
obligation (as specified in Article II and Article III). The other Party, within
14 days after receiving the Notifying Party's calculations, shall submit to the
Notifying Party such other Party's calculations of the amount required to be
paid pursuant to this Section 3.5, showing such calculations in sufficient
detail so as to permit the Notifying Party to understand the calculations. The
Indemnifying Party shall pay the Indemnitee, no later than the later of 5 days
prior to the due date (including extensions) of the relevant Tax Returns and 14
days after the Notifying Party receives the other Party's calculations, the
amount for which the Indemnifying Party is required to pay or indemnify the
Indemnitee under this Section 3.5. The Indemnifying Party shall have the right
to disagree with the Indemnitee's calculations. Any dispute regarding such
calculations shall be resolved in accordance with Section 5.4 of this Agreement.
All indemnity payments shall be calculated on a pre-Tax basis and shall be
treated as contributions to capital and/or reductions of assets previously
contributed and/or dividends immediately prior to the Distribution.
ARTICLE TAX ATTRIBUTES AND REORGANIZATION TAX PAYMENTS
SECTION Carrybacks. In the event of the realization of any deduction, loss
or credit by a Party for any taxable period beginning on or after the
Distribution Date, the Party realizing such deduction, loss or credit may, in
its sole discretion, and to the extent permitted under applicable Tax law, elect
to either carry back or carry forward such deduction, loss or credit. Any refund
attributable to such carryback shall be allocable to such Party. In the event
both Parties elect to carry back an amount to the same taxable period beginning
prior to the Distribution Date, any refund shall be apportioned between the
Parties based on the relative carryback amounts.
SECTION Reorganization Tax Payments, Deferred Compensation Deductions and
Post-Distribution Expense Deductions.
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If an audit or other examination of any federal, state or local Tax Return
for any taxable period shall result (by settlement or otherwise) in a Deferred
Compensation Deduction or Post-Distribution Expense Deduction in favor of the
NMR Group or any member thereof or if any Reorganization Tax Payment is made by
IMS HEALTH, then:
If necessary, IMS HEALTH shall notify the Corporation and shall provide the
Corporation with adequate information so that it can reflect on the appropriate
Tax Returns any resulting increases in deductions, losses or Tax credits or
decreases in income, gains or recapture of Tax credits;
The Corporation shall pay IMS HEALTH the amount of any Tax Benefit that
relates to any adjustments arising from or connected with such Reorganization
Tax Payment or that results from such Deferred Compensation Deduction or
Post-Distribution Expense Deduction within 30 days of the date such Tax Benefits
are realized;
Notwithstanding the foregoing, the Corporation shall only be required to
take steps to obtain such Tax Benefit or to pay IMS HEALTH if, in the opinion of
the Corporation's Tax counsel, which counsel shall be reasonably acceptable to
IMS HEALTH, the reporting of such Tax Benefit shall not subject the Corporation
to the imposition of a penalty unless IMS HEALTH agrees to indemnify the
Corporation for such penalty.
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If an audit or other examination of any federal, state or local Tax Return
for any taxable period shall result (by settlement or otherwise) in a Deferred
Compensation Deduction or Post-Distribution Expense Deduction in favor of the
IMS HEALTH Group or any member thereof, then:
If necessary, the Corporation shall notify IMS HEALTH and shall provide IMS
HEALTH with adequate information so that it can reflect on the appropriate Tax
Returns any resulting increases in deductions, losses or Tax credits or
decreases in income, gains or recapture of Tax credits;
IMS HEALTH shall pay the Corporation the amount of any Tax Benefit that
results from such Deferred Compensation Deduction or Post-Distribution Expense
Deduction within 30 days of the date such Tax Benefits are realized;
Notwithstanding the foregoing, IMS HEALTH shall only be required to take
steps to obtain such Tax Benefit or to pay the Corporation if, in the opinion of
IMS HEALTH's Tax counsel, which counsel shall be reasonably acceptable to the
Corporation, the reporting of such Tax Benefit shall not subject IMS HEALTH to
the imposition of a penalty unless the Corporation agrees to indemnify IMS
HEALTH for such penalty.
Realization of Tax Benefits.
For purposes of this Section 4.2, a Tax Benefit shall be deemed to have
been realized at the time any refund of Taxes is received or applied against
other Taxes due, or at the time of filing of a Tax Return (including any Tax
Return relating to estimated Taxes) on which a loss, deduction or credit is
applied in reduction of Taxes which would otherwise be payable; provided,
however, that where a Party has other losses, deductions, credits or similar
items available to it, such deductions, credits or similar items may be applied
prior to the use of any adjustments relating to a Reorganization Tax Payment or
any Deferred Compensation Deduction or Post-Distribution Expense Deduction.
Either Party may, at its election, pay the amount of any Tax Benefit to the
other Party rather than filing amended returns or otherwise reflecting
adjustments or taking positions on its Tax Returns. If such an election is made,
the Party will be treated as having realized a Tax Benefit at the time it would
have realized a Tax Benefit had it chosen to file amended returns or otherwise
to reflect adjustments or to take positions on its Tax Returns.
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Tax Benefits Subsequently Denied. If any Tax Benefit realized pursuant to
Section 4.2(b)(i) is subsequently denied, then IMS HEALTH or the Corporation, as
the case may be, shall refund the amount of any payment for such Tax Benefit
within 30 days of its notification by the other Party that a Final Determination
has been reached denying the claimed Tax Benefit.
SECTION Competent Authority Relief. If as a result of any audit of a
taxable period beginning prior to the Distribution Date, a Party (or Subsidiary)
is required to adjust its income, deductions, credits or allowances under
Section 482 of the Code or under similar principles in a foreign jurisdiction,
and the payment of additional Taxes in accordance with such a determination
allows the other Party (or Subsidiary) to obtain competent authority relief as a
result thereof, then the Party eligible to obtain such relief shall: execute or
cause to be executed any powers of attorney or other documents necessary to
enable the other Party to pursue such relief at its own expense; and cooperate
with the other Party and the competent authorities in seeking such relief.
ARTICLE TAX AUDITS, TRANSACTIONS AND OTHER MATTERS
SECTION Tax Audits and Controversies. In the case of any audit, examination
or other proceeding ("Proceeding") brought against a Party (or Subsidiary) with
respect to Taxes for which the other Party is or may be liable pursuant to this
Agreement, the Party subject to such Proceeding shall promptly inform such other
Party and shall execute or cause to be executed any powers of attorney or other
documents necessary to enable the other Party to take all actions desired with
respect to such Proceeding to the extent such Proceeding may affect the amount
of Taxes for which the other Party is liable pursuant to this Agreement. Each
Party shall have the right to control, at its own expense, the portion of any
such Proceeding that relates to Taxes for which such Party is or may be liable
pursuant to this Agreement; provided, however, that such Party shall consult
with the other Party with respect to any issue that may affect the other Party
(or Subsidiary). The Party in control of such Proceeding or any part thereof
shall not enter into any final settlement or closing agreement that may
adversely affect the other Party (or Subsidiary) without the consent of such
other Party, which consent may not unreasonably be withheld. Where consent to
any final settlement or closing agreement is withheld, the Party withholding
consent shall continue or initiate further proceedings, at its own expense, and
the liability of the Party in control of such Proceeding shall not exceed the
liability that would have resulted from the proposed closing agreement or final
settlement (including interest, additions to Tax and penalties which have
accrued at that time).
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SECTION Cooperation. The Corporation and IMS HEALTH shall cooperate with
each other in the filing of any Tax Returns and the conduct of any audit or
other proceeding and each shall execute and deliver such powers of attorney and
other documents and make available such information and documents as are
necessary to carry out the intent of this Agreement. To the extent such
cooperation involves the services of officers, directors, employees, or agents
of a Party, such services shall be made available in accordance with Section 2.9
of the Distribution Agreement. Each Party agrees to notify the other Party of
any audit adjustment that does not result in Tax liability but can reasonably be
expected to affect Tax Returns of the other Party or any of its Subsidiaries.
Notwithstanding any other provision of this Agreement, if a Party (the
"Nonperforming Party") fails to give its full cooperation and use its best
efforts in the conduct of an audit or other proceeding as provided by this
Section 5.2, and such failure results in the imposition of additional Taxes for
the period or periods involved in the audit or other proceeding, the
Nonperforming Party shall be liable in full for such additional Taxes.
SECTION Retention of Records; Access. Beginning on the Distribution Date,
the Corporation and IMS HEALTH shall, and shall cause each of their Controlled
Entities to:
retain adequate records, documents, accounting data and other information
(including computer data) necessary for the preparation and filing of all Tax
Returns required to be filed by any member of the Pre-Distribution Cognizant
Group or any combination of such members and for any audits and litigation
relating to such Tax Returns or to any Taxes payable by any member of the
Pre-Distribution Cognizant Group or any combination of such members; and
give to the other Party reasonable access to such records, documents,
accounting data and other information (including computer data) and to its
personnel and premises, for the purpose of the review or audit of such reports
or returns to the extent relevant to an obligation or liability of a Party under
this Agreement and in accordance with the procedures provided in Article IV of
the Distribution Agreement. The obligations set forth in these paragraphs 5.3(a)
and 5.3(b) shall continue until the final conclusion of any litigation to which
the records and information relate or until expiration of all applicable
statutes of limitations, whichever is longer.
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SECTION Dispute Resolution. Any dispute or claim arising out of, in
connection with, or in relation to the interpretation, performance,
nonperformance, validity or breach of this Agreement or otherwise arising out
of, or in any way related to this Agreement, shall be resolved in the manner set
forth in Article VI of the Distribution Agreement.
SECTION Confidentiality; Ownership of Information; Privileged Information.
The provisions of Article IV of the Distribution Agreement relating to
confidentiality of information, ownership of information, privileged information
and related matters shall apply with equal force to any records and information
prepared and/or shared by and between the Parties in carrying out the intent of
this Agreement.
ARTICLE MISCELLANEOUS
SECTION Complete Agreement; Construction. This Agreement, including the
Exhibits and Schedules, 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 event of any inconsistency between this Agreement and any
Schedule hereto, the Schedule shall prevail.
SECTION 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 such counterparts have been signed by
each of the Parties and delivered to the other Party.
SECTION Survival of Agreements. Except as otherwise provided by this
Agreement, all covenants and agreements of the Parties contained in this
Agreement shall survive the Distribution Date.
A. SECTION Expenses. Except as otherwise set forth in this Agreement, all costs
and expenses in connection with the preparation, execution, delivery and
required implementation of this Agreement shall be charged to and paid by the
Parties in accordance with Section 8.5 of the Distribution Agreement.
SECTION Notices. All notices and other communications hereunder shall be in
writing and hand delivered or mailed by registered or certified mail (return
receipt requested) or sent by any means of electronic message transmission with
delivery confirmed (by voice or otherwise) to the Parties at the following
addresses (or at such other addresses for a Party as shall be specified by like
notice) and will be deemed given on the date on which such notice is received:
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To the Corporation:
Xxxxxxx Media Research, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopy:
Attn: Chief Legal Officer
To IMS HEALTH:
000 Xxxxx Xxxxx
Xxxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attn: General Counsel
and
Vice President - Taxes
SECTION Waivers. The failure of any Party to require strict performance by
any other Party of any provision in this Agreement will not waive or diminish
that Party's right to demand strict performance thereafter of that or any other
provision hereof.
SECTION Amendments. This Agreement may not be modified or amended except by
an agreement in writing signed by each of the Parties hereto.
SECTION Assignment. This Agreement shall not be assignable, in whole or in
part, directly or indirectly, by any Party hereto without the prior written
consent of the other Party hereto, and any attempt to assign any rights or
obligations arising under this Agreement without such consent shall be void.
SECTION Successors and Assigns. The provisions to this Agreement shall be
binding upon, inure to the benefit of and be enforceable by the Parties and
their respective successors and permitted assigns.
SECTION Termination. This Agreement may be terminated, amended, modified or
abandoned at any time prior to the Distribution by and in the sole discretion of
the Corporation without the approval of IMS HEALTH or the stockholders of the
Corporation. In the event of such termination, neither Party shall have any
liability of any kind to the Party or any other person. After the Distribution,
this Agreement may not be terminated except by an agreement in writing signed by
the Parties.
SECTION Controlled Entities. Each of the Parties hereto shall cause to be
performed, and hereby guarantees the performance of, all actions, agreements and
obligations set forth herein to be performed by any Controlled Entity of such
Party or by any entity that is
19
contemplated to be a Controlled Entity of such Party on and after the
Distribution Date.
SECTION Third Party Beneficiaries. This Agreement is solely for the benefit
of the Parties hereto and their respective Subsidiaries and should not be deemed
to confer upon third parties any remedy, claim, liability, reimbursement, claim
of action or other right in excess of those existing without reference to this
Agreement. B. SECTION Title and Headings. Titles and headings to sections herein
are inserted for the convenience of reference only and are not intended to be a
part of or to affect the meaning or interpretation of this Agreement.
SECTION Exhibits and Schedules. The Exhibits and Schedules shall be
construed with and as an integral part of this Agreement to the same extent as
if the same had been set forth verbatim herein.
SECTION GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE
AND TO BE PERFORMED IN THE STATE OF NEW YORK.
SECTION Consent to Jurisdiction. Without limiting the provisions of Section
5.4 hereof, each of the Parties irrevocably submits to the exclusive
jurisdiction of (a) the Supreme Court of the State of New York, New York County,
and (b) the United States District Court for the Southern District of New York,
for the purposes of any suit, action or other proceeding arising out of this
Agreement or any transaction contemplated hereby. Each of the Parties agrees to
commence any action, suit or proceeding relating hereto either in the United
States District Court for the Southern District of New York or if such suit,
action or other proceeding may not be brought in such court for jurisdictional
reasons, in the Supreme Court of the State of New York, New York County. Each of
the Parties further agrees that service of any process, summons, notice or
document by U.S. registered mail to such Party's respective address set forth
above shall be effective service of process for any action, suit or proceeding
in New York with respect to any matters to which it has submitted to
jurisdiction in this Section 6.17. Each of the Parties irrevocably and
unconditionally waives any objection to the laying of venue of any action, suit
or proceeding arising out of this Agreement or the transactions contemplated
hereby in (i) the Supreme Court of the State of New York, New York County, or
(ii) the United States District Court for the Southern District of New York, and
hereby further irrevocably and unconditionally waives and agrees not to plead or
claim in any such court that any such action, suit or proceeding brought in any
such court has been brought in an inconvenient forum.
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SECTION Severability. In the event any one or more of the provisions
contained in this Agreement should be held invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein and therein shall not in any way be affected or
impaired thereby. The Parties shall endeavor in good-faith negotiations to
replace the invalid, illegal or unenforceable provisions with valid provisions,
the economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly
executed as of the day and year first above written.
COGNIZANT CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Chairman and Chief Executive Officer
IMS HEALTH INCORPORATED
By:/s/ Xxxxxxxx X. Xxxx
------------------------------
Name: Xxxxxxxx X. Xxxx
Title: President and Chief Operating Officer
