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EXHIBIT 10.4
TAX SHARING AGREEMENT
THIS TAX SHARING AGREEMENT dated as of [ , 1999] is made and entered
into by Waterhouse Investor Services, Inc. a Delaware corporation ("WISI") and
TD Waterhouse Group, Inc., a Delaware corporation ("TD Waterhouse") and their
Affiliates.
RECITALS
WHEREAS, WISI is the common parent corporation of an affiliated group of
corporations within the meaning of Section 1504(a) of the Internal Revenue
Code of 1986, as amended (the "CODE") and of combined groups as defined under
similar laws of other jurisdictions ("WISI GROUP") and TD Waterhouse and their
Affiliates are members of such groups; and
WHEREAS, the groups of which WISI is the common parent and TD Waterhouse
and their Affiliates are members file or intend to file Consolidated Returns
and Combined Returns; and
WHEREAS, WISI and TD Waterhouse desire to provide for the allocation of
liabilities, procedures to be followed, and other matters with respect to
certain taxes for taxable periods beginning with the first period in which TD
Waterhouse becomes a member of the WISI Group.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
SECTION 1. DEFINITIONS
1.1. "AFFILIATE" means any corporation or other entity directly or
indirectly controlled by WISI or TD Waterhouse which is includible in the WISI
or TD Waterhouse Group.
1.2. "TD WATERHOUSE GROUP" means the affiliated group of corporations as
defined in Section 1504(a) of the Code, or similar group of entities as defined
under similar laws of other jurisdictions, of which TD Waterhouse would be the
common parent if it were not a subsidiary of WISI, and any corporation or other
entity which may be or become a member of such group from time to time.
1.3. "TD WATERHOUSE GROUP COMBINED TAX LIABILITY" means, with respect to
any taxable year, the TD Waterhouse Group's liability for Non-Federal Combined
Taxes as determined under Section 2.3 of this Agreement.
1.4. "TD WATERHOUSE GROUP FEDERAL INCOME TAX LIABILITY" means, with
respect to any taxable year, the TD Waterhouse Group's liability for Federal
Income Taxes as determined under Section 2.2 of this Agreement.
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1.5. "AUDIT" includes any audit, assessment of Taxes, other examination
by any Tax Authority, proceeding, or appeal of such proceeding relating to
Taxes, whether administrative or judicial.
1.6. "COMBINED GROUP" means a group of corporations or other entities
that files a Combined Return.
1.7. "COMBINED RETURN" means any Tax Return with respect to Non-Federal
Taxes filed on a consolidated, combined (including nexus combination, worldwide
combination, domestic combination, line of business combination or any other
form of combination) or unitary basis wherein one or more members of the TD
Waterhouse Group join in the filing of a Tax Return with WISI or a WISI
subsidiary that is not also a member of the TD Waterhouse Group.
1.8. "CONSOLIDATED GROUP" means the affiliated group of corporations
within the meaning of Section 1504(a) of the Code of which WISI is the common
parent and which includes the TD Waterhouse Group.
1.9. "CONSOLIDATED RETURN" means any Tax Return with respect to Federal
Income Taxes filed by the Consolidated Group pursuant to Section 1501 of the
Code.
1.10. "DECONSOLIDATION" means any event pursuant to which TD Waterhouse
and the TD Waterhouse Group cease to be includible in the Consolidated Group or
the Combined Group.
1.11. "DECONSOLIDATION DATE" means the close of business on the day on
which a Deconsolidation occurs. Unless otherwise required by the relevant Tax
Authority or a court of competent jurisdiction, WISI and TD Waterhouse, for
itself and the TD Waterhouse Group, agree to file all Tax Returns, and to take
all other actions, relating to Federal Income Taxes or Non-Federal Combined
Taxes in a manner consistent with the position that TD Waterhouse and the TD
Waterhouse Group are includible in the Consolidated Group and the Combined
Group for all days from the date hereof
through and including a Deconsolidation Date.
1.12. "ESTIMATED TAX INSTALLMENT DATE" means the installment due dates
prescribed in Section 6655(c) of the Code and the applicable dates relevant to
any non-federal Combined Return, including any due date for filing tax returns
(whether a tax return is filed on such date or an extension is filed) .
1.13. "FEDERAL INCOME TAXES" means any tax imposed under Subtitle A of
the Code (including the taxes imposed by Sections 11, 55, 59A, and 1201(a) of
the Code), including any interest, additions to tax, or penalties applicable
thereto, and any other income based United States federal taxes which are
hereinafter imposed upon corporations.
1.14. "FINAL DETERMINATION" means (a) the final resolution of any tax (or
other matter) for a taxable period, including any related interest or
penalties, that, under applicable law, is not subject to further appeal, review
or modification through proceedings or
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otherwise, including (1) by the expiration of a statute of limitations (giving
effect to any extension, waiver or mitigation thereof) or a period for the
filing of claims for refunds, amended returns, appeals from adverse
determinations, or recovering any refund (including by offset), (2) by a
decision, judgment, decree, or other order by a court of competent
jurisdiction, which has become final and unappealable, (3) by a closing
agreement or an accepted offer in compromise under Section 7121 or 7122 of the
Code, or comparable agreements under laws of other jurisdictions, (4) by
execution of an Internal Revenue Service Form 870 or 870AD, or by a comparable
form under the laws of other jurisdictions (excluding, however, any such form
that reserves (whether by its terms or by operation of law) the right of the
taxpayer to file a claim for refund and/or the right of the Taxing Authority to
assert a further deficiency), or (5) by any allowance of a refund or credit,
but only after the expiration of all periods during which such refund or credit
may be recovered (including by way of offset) or (b) the payment of tax by any
member of the Consolidated Group or Combined Group with respect to any item
disallowed or adjusted by a Taxing Authority provided that WISI determines that
no action should be taken to recoup such payment.
1.15. "NON-FEDERAL COMBINED TAXES" means any Non-Federal Taxes with
respect to which a Combined Return is filed.
1.16. "NON-FEDERAL SEPARATE TAXES" means any Non-Federal Tax that is not
a Non-Federal Combined Tax.
1.17. "NON-FEDERAL TAXES" includes all state and local Taxes.
1.18. "OTHER FEDERAL TAXES" includes all Taxes imposed by the Federal
government of the United states, other than Federal Income Taxes.
1.19. "PRE-DECONSOLIDATION PERIOD" means a taxable period ending on or
prior to the Deconsolidation Date.
1.20. "PRO FORMA TD WATERHOUSE GROUP COMBINED RETURN" means a pro forma
non-federal combined tax return or other schedule prepared pursuant to Section
2.3 of this Agreement.
1.21. "PRO FORMA TD WATERHOUSE GROUP CONSOLIDATED RETURN" means a pro
forma consolidated federal income tax return prepared pursuant to Section 2.2
of this Agreement.
1.22. "POST-DECONSOLIDATION PERIOD" means a taxable period beginning
after the Deconsolidation Date.
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1.23. "REDETERMINATION AMOUNT" means, with respect to any taxable year,
the amount determined under Section 3.7 of this Agreement.
1.24. "STRADDLE PERIOD" means a taxable period beginning on or prior to
and ending after the Deconsolidation Date.
1.25. "TAX ASSET" means any net operating loss, net capital loss,
investment tax credit, foreign tax credit, charitable deduction or any other
deduction, credit or tax attribute which could reduce taxes (including without
limitation deductions and credits related to alternative minimum taxes).
1.26. "TAX AUTHORITY" includes the Internal Revenue Service and any
state, local, or other governmental authority responsible for the
administration of any Taxes.
1.27. "TAXES" includes all charges, fees, levies, imposts, duties, or
other assessments of a similar nature, including without limitation, income,
alternative or add-on minimum, gross receipts, excise, employment, sales, use,
transfer, license, payroll, franchise, severance, stamp, occupation, windfall
profits, withholding, Social Security, unemployment, disability, ad valorem,
estimated, highway use, commercial rent, capital stock, paid up capital,
recording, registration, property, real property gains, value added, business
license, custom duties, or other tax or governmental fee of any kind whatsoever,
imposed or required to be withheld by any Tax Authority including any interest,
additions to tax, or penalties applicable thereto.
1.28. "TAX RETURN" means any return, declaration, statement, report,
schedule, certificate, form, information return or any other document (and any
related or supporting information) including an amended tax return required to
be supplied to, or filed with, a Tax Authority with respect to Taxes.
SECTION 2. TAX SHARING
2.1. TD WATERHOUSE LIABILITY FOR FEDERAL INCOME TAXES AND NON-FEDERAL
COMBINED TAXES. Each taxable year, TD Waterhouse shall pay to WISI an amount
equal to the sum of the TD Waterhouse Group Federal Income Tax Liability and the
TD Waterhouse Group Combined Tax Liability for such taxable year. In the event
that the amount determined in the preceding sentence is negative (i.e., the
total value of the Federal and Combined Tax Assets of the TD Waterhouse Group
exceeds the total of the Federal and Combined Tax Liabilities of such group),
then WISI shall pay to TD Waterhouse the value of such net Tax Assets, but only
to the extent that such net Tax Assets were used by WISI to provide a tax
benefit to the WISI Group with respect to the present or any past taxable year
of the WISI Group.
2.2. TD WATERHOUSE GROUP FEDERAL INCOME TAX LIABILITY. (a) IN GENERAL.
With respect to any taxable year, the TD Waterhouse Group Federal Income Tax
Liability shall be the sum, for such taxable year, of (1) the TD Waterhouse
Group's liability for Federal Income Taxes as determined on the Pro Forma TD
Waterhouse Group Consolidated Return, and (2) any interest, penalties and other
additions to such taxes.
(b) PRO FORMA FEDERAL RETURN. Each taxable year, WISI shall prepare or
cause to be prepared (and, as requested by WISI, TD Waterhouse shall cooperate
in preparing) a pro forma consolidated federal income tax return for the TD
Waterhouse Group ("PRO FORMA TD WATERHOUSE GROUP CONSOLIDATED RETURN") as if
the TD Waterhouse Group were not and never were part of the Consolidated Group,
but rather were a separate affiliated group of corporations of which TD
Waterhouse were the common parent filing a consolidated federal income tax
return pursuant to Section 1501 of the Code.
(c) OPERATING RULES. The Pro Forma TD Waterhouse Group Consolidated
Return shall be prepared:
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(1) reflecting the elections, methods of accounting, and positions
with respect to specific items made or used in the Consolidated Return;
(2) taking into account any Tax Assets;
(3) applying the highest applicable tax rate without regard to any
graduated rate of tax; and
(4) transactions with members of the Consolidated Group that are not
also members of the TD Waterhouse Group will be reported pursuant to the
consolidated return regulations promulgated under the Code governing
intercompany transactions (so that intercompany gain will be deferred
until a recognition event occurs). No item (including income, gains,
losses, deductions and credits) of any member of the Consolidated Group
that is not a member of the TD Waterhouse Group shall otherwise be taken
into account).
2.3. TD WATERHOUSE GROUP COMBINED TAX LIABILITY. (a) IN GENERAL. With
respect to any taxable year, the TD Waterhouse Group Combined Tax Liability
shall be the sum, for such taxable year, of (1) the TD Waterhouse Group's
liability for Non-Federal Combined Taxes as determined on the Pro Forma TD
Waterhouse Group Combined Return, and (2) any interest, penalties and other
additions to such taxes
(b) PRO FORMA COMBINED RETURN. Each taxable year, WISI shall prepare or
cause to be prepared (and, as requested by WISI, TD Waterhouse shall cooperate
in preparing) a pro forma combined tax return or other schedule for the TD
Waterhouse Group ("PRO FORMA TD WATERHOUSE GROUP COMBINED RETURN") determined
as if the TD Waterhouse Group were not and never were part of the Combined
Group, but rather were a separate group of which TD Waterhouse were the common
parent filing a combined tax return on the same basis as the WISI Combined
Return is filed.
(c) OPERATING RULES. The Pro Forma TD Waterhouse Group Combined Return
shall be prepared by reference to:
(1) the TD Waterhouse Group's taxable income or loss from Line 28
of the Pro Forma TD Waterhouse Group Consolidated Return, adjusted to
take into account (i) those members of the TD Waterhouse Group which are
included in the Combined Return, (ii) Tax Assets of such members
(but only as allowed under applicable law), and (iii) material adjustments
necessary to reflect the laws of the applicable jurisdiction;
(2) apportionment factors determined by taking into account only
those members of the TD Waterhouse Group which are included in the
Combined Return; and
(3) the highest applicable tax rate without regard to any graduated
rates.
(d) ADDITIONAL OPERATING RULES. The following additional provisions
shall apply in determining the TD Waterhouse Group Combined Tax Liability:
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(1) WISI shall not pay the TD Waterhouse Group for any Tax Asset
relating to any Non-Federal Combined Tax, including any net operating
loss carrybacks or carryovers, not otherwise taken into account on a
Combined Return of the WISI Group;
(2) Notwithstanding paragraph (c)(3) of this sub-section, the
TD Waterhouse Group liability with respect to unemployment
taxes for which a Combined Return is filed shall be the lesser of (i) the
liability for such taxes of the members of the TD Waterhouse Group which
are included in the Combined Return determined utilizing the tax rate
applicable to the Combined Return and (ii) the liability for such taxes
of the members of the TD Waterhouse Group which are included in the
Combined Return determined as if such members of the TD Waterhouse Group
were not and never were part of the Combined Group, but rather were a
separate group filing a combined unemployment tax return.
SECTION 3. PAYMENT OF TAXES AND TAX SHARING AMOUNTS
3.1. FEDERAL INCOME TAXES. WISI shall pay to the Internal Revenue
Service all Federal Income Taxes, if any, of the Consolidated Group (including
the TD Waterhouse Group) due and payable for all Pre-Deconsolidation Periods.
3.2. NON-FEDERAL COMBINED TAXES. WISI shall pay to the appropriate Tax
Authorities all Non-Federal Combined Taxes, if any, of the Combined Group
(including the TD Waterhouse Group) due and payable for all Pre-Deconsolidation
Periods and Straddle Periods.
3.3. NON-FEDERAL SEPARATE TAXES. TD Waterhouse shall pay to the
appropriate Tax Authorities all Non-Federal Separate Taxes, if any, of the TD
Waterhouse Group due and payable for all Pre-Deconsolidation Periods, Straddle
Periods and Post-Deconsolidation Periods. WISI shall pay to the appropriate Tax
Authorities all Non-Federal Separate Taxes, if any, of the WISI Group (other
than any such Non-Federal Separate Taxes attributable to members of the TD
Waterhouse Group) due and payable for all Pre-Consolidation Periods, Straddle
Periods, and Post-Deconsolidation Periods.
3.4. OTHER FEDERAL TAXES. The parties shall each pay to the appropriate
governmental authorities all of their respective other Federal Taxes, if any,
due and payable for all Pre-Deconsolidation Periods, Straddle Periods, and
Post-Deconsolidation Periods, and their respective Federal Income Taxes for all
Post-Deconsolidation Periods.
3.5. TAX SHARING INSTALLMENT PAYMENTS. (a) FEDERAL INCOME TAXES. Not
later than five business days prior to each applicable Estimated Tax
Installment Date with respect to any Pre-Deconsolidation Period or Straddle
Period, WISI shall determine under Section 6655 of the Code the estimated
amount of the related installment of the TD Waterhouse Group Federal Income Tax
Liability. TD Waterhouse shall then pay to WISI not later than two days prior
to such Estimated Tax Installment Date, the amount thus determined.
(b) NON-FEDERAL COMBINED TAXES. Not later than five business days prior
to each applicable Estimated Tax Installment Date with respect to any
Pre-Deconsolidation Period or Straddle Period, WISI shall deliver to TD
Waterhouse an estimate of the related installment of the TD Waterhouse Group
Combined Tax Liability for the taxable year determined
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by using the previous year's apportionment factors. TD Waterhouse shall then
pay to WISI, not later than two days prior to such Estimated Tax Installment
Date, the amount thus determined.
3.6. TAX SHARING TRUE-UP PAYMENTS. (a) FEDERAL INCOME TAXES. Not later
than 30 business days after the Consolidated Return is filed with respect to any
Pre-Deconsolidation Period or Straddle Period, WISI shall deliver to TD
Waterhouse a Pro Forma TD Waterhouse Group Consolidated Return or other
comparable schedule reflecting the TD Waterhouse Group Federal Income Tax
Liability. Not later than 10 business days after the date such pro forma or
other schedule is delivered, TD Waterhouse shall pay to WISI, or WISI shall pay
to TD Waterhouse, as appropriate, an amount equal to the difference, if any,
between the TD Waterhouse Group Federal Income Tax Liability (which amount could
be negative to the extent of the value of any net Federal Income Tax Assets of
the TD Waterhouse Group used by the WISI Group in excess of the Federal Income
Tax Liabilities of the TD Waterhouse Group as determined on a pro forma basis
pursuant to the rules above) for the taxable year and the aggregate amount paid
by TD Waterhouse with respect to such taxable year under Section 3.5(a) of this
Agreement.
(b) NON-FEDERAL COMBINED TAXES. Not later than 30 business days after the
WISI Group Combined Return is filed with respect to any Pre-Deconsolidation
Period or Straddle Period, WISI shall deliver to TD Waterhouse a Pro Forma TD
Waterhouse Group Combined Return or other comparable schedule reflecting the TD
Waterhouse Group Combined Tax Liability for the taxable year. Not later than 10
business days following delivery of such pro forma or other schedule, TD
Waterhouse shall pay to WISI, or WISI shall pay to TD Waterhouse, as
appropriate, an amount equal to the difference, if any, between the TD
Waterhouse Group Combined Tax Liability (which amount could be negative to the
extent of the value of any net Non-Federal Combined Tax Assets of the TD
Waterhouse Group used by the WISI Group in excess of the Non-Federal Combined
Tax Liabilities of the TD Waterhouse Group as determined on a pro forma basis
pursuant to the rules above) for the taxable year and the amount paid by TD
Waterhouse with respect to such taxable year under Section 3.5(b) of this
Agreement.
3.7. REDETERMINATION AMOUNTS. (a) IN GENERAL. In the event of any
redetermination of any item of income, gain, loss, deduction or credit of any
member of the Consolidated Group or Combined Group as a result of a Final
Determination or any settlement or compromise with any Tax Authority (including
any amended tax return or claim for refund filed by WISI), TD Waterhouse shall
pay WISI or WISI shall pay TD Waterhouse, as the case may be, the
Redetermination Amount.
(b) COMPUTATION. The Redetermination Amount shall be the difference, if
any, between all amounts previously determined under Section 2 of this
Agreement and all amounts that would have been determined under Section 2 of
this Agreement taking such redetermination into account (including any
additions to tax or penalties applicable thereto), together with interest for
each day calculated (1) with respect to redeterminations affecting Federal
Income Taxes, at the rate determined, in the case of payment by TD Waterhouse
to WISI, under Section 6621(a)(2) of the Code and, in the case of payment by
WISI to TD Waterhouse, under Section 6621(a)(1) of the Code, and (2) with
respect to redeterminations affecting Non-Federal Combined Taxes, under similar
laws, if any, of other jurisdictions.
(c) PAYMENT. WISI shall deliver to TD Waterhouse a schedule reflecting
the computation of any Redetermination Amount with respect to any taxable year.
Not later than 15 days after the date such schedule is delivered, TD
Waterhouse shall pay WISI, or WISI shall pay TD Waterhouse such Redetermination
Amount.
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3.8. INTEREST. Payments under this Section 3 that are not made within
the prescribed period shall thereafter bear interest at the rate determined
under Section 6621(a)(2) of the Code.
SECTION 4. PROCEDURAL MATTERS
4.1. AGENT; PREPARATION AND FILING OF RETURNS. WISI shall be the sole and
exclusive agent of TD Waterhouse and any member of the TD Waterhouse Group in
any and all matters relating to (a) Federal Income Taxes of the Consolidated
Group and (b) any Non-Federal Combined Taxes for all Pre-Deconsolidation Periods
and Straddle Periods. WISI shall have the sole and exclusive responsibility for
the preparation and filing of any (a) Consolidated Return or (b) Combined Return
for all Pre-Deconsolidation Periods and Straddle Periods. In its sole
discretion, WISI shall have the exclusive right with respect to any such
Consolidated Return or Combined Return (a) to determine (1) the manner in which
such Tax Return shall be prepared and filed, including, without limitation, the
manner in which any item of income, gain, loss, deduction or credit shall be
reported, (2) whether any extensions may be requested, (3) the elections that
will be made by any member of the Consolidated Group or Combined Group, and (4)
whether any amended tax returns should be filed, (b) to control, contest, and
represent the interests of the Consolidated Group and Combined Group in any
Audit and to resolve, settle, or agree to any adjustment or deficiency proposed,
asserted or assessed as a result of any Audit, (c) to file, prosecute,
compromise or settle any claim for refund, and (d) to determine whether any
refunds, to which the Consolidated Group or Combined Group may be entitled,
shall be paid by way of refund or credited against the tax liability of the
Consolidated Group and Combined Group. TD Waterhouse, for itself and its
subsidiaries, hereby irrevocably appoints WISI as its agent and attorney-in-fact
to take such action (including the execution of documents) as WISI may deem
appropriate to effect the foregoing.
4.2. FURNISHING INFORMATION. Each member of the TD Waterhouse Group
shall (a) furnish to WISI in a timely manner such information and documents as
WISI may reasonably request for purposes of (1) preparing any original or
amended Consolidated Return or Combined Return, (2) contesting or defending any
Audit, and (3) making any determination or computation necessary or appropriate
under this Agreement, (b) cooperate in any Audit of any Consolidated Return or
Combined Return, (c) retain and provide on demand books, records, documentation
or other information relating to any tax return until the later of (1) the
expiration of the applicable statute of limitations (giving effect to any
extension, waiver, or mitigation thereof) and (2) in the event any claim is
made under this Agreement for which such information is relevant, until a Final
Determination with respect to such claim, and (d) take such action as WISI may
deem appropriate in connection therewith. WISI shall provide the TD Waterhouse
Group any assistance reasonably required in providing any information requested
pursuant to this Section 4.2.
4.3. EXPENSES. TD Waterhouse shall reimburse WISI for any outside legal
and accounting expenses incurred by WISI in the course of the conduct of any
Audit regarding the tax liability of the Combined Group or Consolidated Group,
and for any other expense incurred by WISI in the course of any litigation
relating thereto, to the extent such costs are reasonably
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attributable to the TD Waterhouse Group and provided WISI has conferred with TD
Waterhouse as to the portion of the Audit relating to the TD Waterhouse Group.
Notwithstanding the foregoing, WISI shall have the sole discretion to control,
contest, represent, file, prosecute, challenge or settle any Audit pursuant to
Section 4.1.
SECTION 5. DECONSOLIDATION
5.1. CONTINUING COVENANTS. TD Waterhouse, for itself and the TD
Waterhouse Affiliates, covenants that on or after a Deconsolidation it will not,
nor will it cause or permit any member of the TD Waterhouse Group to make or
change any tax election, change any accounting method, amend any tax return or
take any tax position on any tax return, take any action, omit to take any
action or enter into any transaction that results in any increased tax liability
or reduction of any Tax Asset of the WISI Group in respect of any
Pre-Deconsolidation Period or Straddle Period. Other than as specifically
contemplated under Section 5.2, below, WISI for itself and the members of the
WISI Group other than TD Waterhouse and the TD Waterhouse Affiliates, covenants
that on or after a Deconsolidation it will not, nor will it cause or permit any
member of the TD Waterhouse Group to make or change any tax election, change any
accounting method, amend any tax return or take any position on any tax return,
take any action, omit to take any action or enter into any transaction that
results in any increased tax liability or reduction of any Tax Asset of the TD
Waterhouse Group in respect of any Pre-Deconsolidation Period or Straddle
Period.
5.2. REATTRIBUTION OF TAX ASSETS. In the event of a Deconsolidation,
WISI may, at its option, elect to reattribute to itself certain Tax Assets of
the TD Waterhouse Group pursuant to Treasury Regulations Section 1.1502-20(g)
or similar provisions of other jurisdictions. If WISI makes such an election,
TD Waterhouse shall comply with any applicable requirements, including those of
Treasury Regulations Section 1.1502-20(g)(5).
5.3. CARRYBACKS. WISI agrees to pay to TD Waterhouse the actual tax
benefit received by the WISI Group (net of applicable expenses) from the use
in any Pre-Deconsolidation Period of a carryback of any Tax Asset of the TD
Waterhouse Group from a Post-Deconsolidation Period. Such benefit shall be
considered equal to the lesser of (a) the amount WISI would have paid TD
Waterhouse had such Tax Asset arisen in a Pre-Deconsolidation Period and (b)
the excess of (1) the amount of Federal Income Taxes imposed on the
Consolidated Group or the amount of Combined Taxes imposed on the Combined
Group, as the case may, that would have been payable by the Consolidated Group
or Combined Group in the absence of such carryback over (2) the amount of
Federal Income Taxes or Combined Taxes, as the case may be, actually paid.
Payment of the amount of such benefit shall be made within 90 days of the
filing of the applicable tax return for the taxable year in which the Tax Asset
is utilized. If subsequent to the payment by WISI to TD Waterhouse of any such
amount, there shall be (a) a Final Determination which results in a
disallowance or a reduction of the Tax Asset so carried back or (b) a reduction
in the amount of the benefit realized by the WISI Group as a result of any
other Tax Asset that arises in a Post-Deconsolidation Period, TD Waterhouse
shall repay to WISI, within 90 days of such event any amount which would not
have been payable to TD Waterhouse pursuant to this Section 5.3 had the amount
of the benefit been determined in light of these events. TD Waterhouse shall
hold WISI harmless for any penalty, addition to tax or interest payable by any
member of the WISI Group as a result of any such event. Any such amount shall
be paid by TD Waterhouse to WISI within 90 days of the payment by WISI or any
member of the Consolidated Group or Combined Group of any such penalty,
addition to tax, or interest. Nothing in this Section 5.3 shall require WISI
to file a claim for refund of Federal Income Taxes or Combined Taxes.
SECTION 6. MISCELLANEOUS
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6.1. TERM. Except as provided in this Section 6.1, this Agreement shall
expire upon the Deconsolidation Date. However, all rights and obligations
arising hereunder with respect to a Pre-Deconsolidation Period or Straddle
Period shall survive until they are fully effectuated or performed. Further,
notwithstanding anything in this Agreement to the contrary, all rights and
obligations arising hereunder with respect to a Post-Deconsolidation Period
shall remain in effect and its provisions shall survive for the full period of
all applicable statutes of limitation (giving effect to any extension, waiver
or mitigation thereof).
6.2. ALLOCATIONS. All computations with respect to the
Pre-Deconsolidation Period ending on the Deconsolidation Date, the immediately
following taxable period of TD Waterhouse and the TD Waterhouse Group and any
Straddle Period shall be made pursuant to the principles of Treasury
Regulations Section 1.1502-76(b), taking into account such elections thereunder
as WISI, in its sole discretion, shall make.
6.3. CHANGES IN LAW. Any reference to a provision of the Code or a
similar law of another jurisdiction shall include a reference to any successor
provision to such provision.
6.4. CONFIDENTIALITY. Each party shall hold and cause its advisors and
consultants to hold in strict confidence, unless compelled to disclose by
judicial or administrative process or, in the opinion of its counsel, by other
requirements of law, all information (other than any such information relating
solely to the business or affairs of such party) concerning the other parties
hereto furnished it by such other party or its representatives pursuant to this
Agreement (except to the extent that such information can be shown to have been
(a) previously known by the party to which it was furnished, (b) in the public
domain through no fault of such party, or (c) later lawfully acquired from
other sources not under a duty of confidentiality by the party to which it was
furnished), and each party shall not release or disclose such information to
any other person, except its auditors, attorneys, financial advisors, bankers
and other consultants who shall be advised of and agree to be bound by the
provisions of this Section 6.4. Each party shall be deemed to have satisfied
its obligation to hold confidential information concerning or supplied by the
other party if it exercises the same care as it takes to preserve
confidentiality for its own similar information.
6.5. SUCCESSORS. This Agreement shall be binding on and inure to the
benefit of any successor, by merger, acquisition of assets or otherwise, to any
of the parties hereto (including any successor of WISI and TD Waterhouse
succeeding to the tax attributes of such party under Section 381 of the Code),
to the same extent as if such successor had been an original party.
6.6. AUTHORIZATION, ETC. Each of the parties hereto hereby represents
and warrants that it has the power and authority to execute, deliver and
perform this Agreement, that this Agreement has been duly authorized by all
necessary corporate action on the part of such party, that this Agreement
constitutes a legal, valid and binding obligation of each such party and that
the execution, delivery and performance of this Agreement by such party does
not contravene or conflict with any provision of law or of its charter or
bylaws or any agreement, instrument or order binding on such party.
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6.7. ENTIRE AGREEMENT. This Agreement contains the entire agreement
among the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements.
6.8. SECTION CAPTIONS. Section captions used in this Agreement are for
convenience and reference only and shall not affect the construction of this
Agreement.
6.9. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without giving effect to
laws and principles relating to conflicts of law.
6.10. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same Agreement.
6.11. WAIVERS AND AMENDMENTS. This Agreement shall not be waived,
amended or otherwise modified except in writing, duly executed by all of the
parties hereto.
6.12. SEVERABILITY. In case any one or more of the provisions in this
Agreement should be invalid, illegal or unenforceable, the enforceability of
the remaining provisions hereof will not in any way be effected or impaired
thereby.
6.13. NO THIRD PARTY BENEFICIARIES. This Agreement is solely for the
benefit of the parties to this Agreement and the other members of the
Affiliated Group and should not be deemed to confer upon third parties any
remedy, claim, liability, reimbursement, claim of action or other rights in
excess of those existing without this Agreement.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed by a duly authorized officer as of the date first above written.
WATERHOUSE INVESTOR SERVICES, INC.
on behalf of itself and its Subsidiaries
By
________________________________
Name:
Title:
TD WATERHOUSE GROUP, INC.
on behalf of itself and its Subsidiaries
By
________________________________
Name:
Title:
