Exhibit 2.4
TAX SHARING AGREEMENT
This TAX SHARING AGREEMENT (the "Agreement") entered into as of
December 19, 2001, by and between AT&T Corp., a New York corporation ("AT&T"),
and AT&T Broadband Corp., a Delaware corporation ("AT&T Broadband"), shall be
effective as of January 1, 2002. Unless otherwise defined in Article I hereof,
capitalized terms used herein shall have the respective meanings assigned to
them in the Separation and Distribution Agreement dated as of December,19, 2001,
by and between AT&T and AT&T Broadband (the "Separation and Distribution
Agreement").
WHEREAS, AT&T Broadband desires that it and its Subsidiaries be
included in the filing of consolidated federal income Tax Returns on behalf of
the AT&T Affiliated Group;
WHEREAS, AT&T and AT&T Broadband and their respective Subsidiaries wish
to allocate and settle among themselves in an equitable manner the consolidated
federal income Tax liability of the AT&T Affiliated Group;
WHEREAS, AT&T Broadband desires that it and its Subsidiaries, to the
extent required by applicable state, local or foreign law, be included in the
combined, consolidated and unitary state, local and foreign Tax Returns filed on
behalf of the AT&T Affiliated Group;
WHEREAS, AT&T and AT&T Broadband and their respective Subsidiaries wish
to allocate and settle among themselves in an equitable manner the state, local
or foreign Tax liability associated with such combined, consolidated and unitary
state, local and foreign Tax Returns;
WHEREAS, AT&T and AT&T Broadband have entered into the Separation and
Distribution Agreement, providing for the separation of the AT&T Broadband Group
from the AT&T Communications Group;
WHEREAS, pursuant to the terms of the Separation and Distribution
Agreement, AT&T will contribute all of the Transferred Assets to AT&T Broadband
and its Subsidiaries and will cause AT&T Broadband and its Subsidiaries to
assume the Transferred Liabilities;
WHEREAS, for federal income Tax purposes, it is intended that the
Separation and Distribution constitute a tax-free reorganization under the
provisions of Sections 355, 361 and 368(a)(1)(D) of the Internal Revenue Code of
1986, as amended (the "Code");
WHEREAS, at the end of the day on which the Distribution occurs, the
taxable year of AT&T Broadband and its Subsidiaries shall close for U.S. federal
income Tax purposes;
WHEREAS, it is appropriate and desirable for AT&T and AT&T Broadband
and their respective Subsidiaries to set forth the principles and
responsibilities of the parties to
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this Agreement regarding future Adjustments with respect to Taxes, Tax
Proceedings and other related Tax matters.
NOW, THEREFORE, the parties, intending to be legally bound, agree as
follows:
1. Definitions. For purposes of this Agreement, the following terms
shall be defined as follows:
1.1. Adjustment shall mean the deemed increase or decrease in a Tax,
determined on an issue-by-issue or transaction-by-transaction basis, as
appropriate, and using the assumptions set forth in the next sentence, resulting
from an adjustment made or proposed by a Governmental Authority with respect to
any amount reflected or required to be reflected on any Tax Return relating to
such Tax. For purposes of determining such deemed increase or decrease in a Tax,
the following assumptions will be used: (a) in the case of any income Tax, the
highest marginal Tax rate or, in the case of any other Tax, the highest
applicable Tax rate, in each case in effect with respect to that Tax for the
taxable period or any portion of the taxable period to which the adjustment
relates will be applied; and (b) such determination shall be made without regard
to whether any actual increase or decrease in such Tax will in fact be realized
with respect to the Tax Return to which such adjustment relates. An "Adjustment"
shall also mean a change in one or more apportionment factors used for
determining any state or local combined, consolidated or unitary income or
franchise Taxes that are required to be reported on a Joint Return.
1.2. Agreement shall have the meaning set forth in the first paragraph
hereof.
1.3. Allocated Taxable Income (Loss) shall mean, with respect to the
AT&T Broadband Group and the AT&T Communications Group, the amount equal to (i)
such Group's contribution to the gross income of the AT&T Affiliated Group, net
of (ii) the aggregate of all losses, deductions and other Tax attributes of such
Group to the extent the same may be used by any member of the AT&T Affiliated
Group. For purposes of the federal alternative minimum Tax ("AMT"), Allocated
Taxable Income (Loss) shall mean, with respect to the AT&T Broadband Group and
the AT&T Communications Group, the amount equal to (i) such Group's contribution
to the gross income for AMT purposes of the AT&T Affiliated Group, net of (ii)
the aggregate of all losses, deductions and other Tax attributes for AMT
purposes of such Group to the extent the same may be used by any member of the
AT&T Affiliated Group. In the case of any state or local combined, consolidated,
or unitary income or franchise Taxes which are required to be reported on a
Joint Return, the amount of Allocated Taxable Income (Loss) of the AT&T
Broadband Group and the AT&T Communications Group shall be equal to the product
of such Group's income (loss) and the apportionment factors (property, payroll,
sales), calculated on a consolidated basis, unless such amount is determined
pursuant to another allocation method that is agreed with or mandated by a
specific jurisdiction. For purposes of the preceding sentence, the apportionment
factors shall be determined for each taxable period. In the case of any federal
income Tax, AMT, or state or local combined, consolidated or unitary income or
franchise Taxes which are required to be reported on a Joint Return, the
Allocated Taxable Income (Loss) of the AT&T Communications Group shall include
any income or loss that cannot be attributed to any one of the Groups under this
Agreement, except as otherwise provided herein or in the Separation and
Distribution Agreement.
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1.4. Associated shall have the meaning set forth in Section 2 hereof.
1.5. AMT shall have the meaning set forth in the definition of
Allocated Taxable Income (Loss).
1.6. AMT NOL shall have the meaning set forth in Section 3.5(b) hereof.
1.7. AMTI shall have the meaning set forth in Section 3.5(a) hereof.
1.8. AMTL shall have the meaning set forth in Section 3.5(a) hereof.
1.9. Associated shall have the meaning set forth in Section 2 hereof.
1.10. AT&T shall have the meaning set forth in the first paragraph
hereof.
1.11. AT&T Affiliated Group shall mean (i) the affiliated group, within
the meaning of Section 1504(a) of the Code, consisting of AT&T and its
Subsidiaries, (ii) any combined, consolidated or unitary group for state, local
or foreign Tax purposes that includes AT&T or any of its Subsidiaries and (iii)
for any taxable period, any True Legal Entity that files Joint Returns for such
taxable period.
1.12. AT&T Broadband shall have the meaning set forth in the first
paragraph hereof.
1.13. AT&T Broadband Group shall mean the Legal Entities that own or
owned the assets, and are or were primarily responsible for the liabilities,
included (or to be included) in the AT&T Broadband Business (as defined in the
Separation and Distribution Agreement).
1.14. AT&T Communications Group shall mean the Legal Entities that own
or owned the assets, and are or were primarily responsible for the liabilities,
of the AT&T Affiliated Group, other than Legal Entities that are members of the
AT&T Broadband Group.
1.15. Broadband Inconsistent Position shall have the meaning set forth
in Section 14.1 hereof.
1.16. Code shall have the meaning set forth in the recitals hereto.
1.17. Combined Return shall mean any combined, consolidated or unitary
state or local income or franchise Tax Return.
1.18. Controlling Party shall mean AT&T or any other member of the AT&T
Communications Group or AT&T Broadband or any other member of the AT&T Broadband
Group, as the case may be, that filed or, if no such Tax Return has been filed,
was required to file, a Tax Return that is the subject of any Tax Proceeding, or
any successor and/or assign of any of the foregoing; provided, however, that (i)
in the case of
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any AT&T Affiliated Group federal consolidated income Tax Return or Combined
Return or Non-Income Tax Return that is a Joint Return for a Pre-Distribution
Taxable Period, AT&T shall be the Controlling Party; and (ii) in the case of a
Separate Return filed or required to be filed by any member of the AT&T
Broadband Group, AT&T Broadband shall be the Controlling Party.
1.19. Designated Rate shall mean the underpayment rate as defined in
Section 6621 of the Code.
1.20. Disputed Adjustment has the meaning set forth in Section 11.6(b)
hereof.
1.21. DIT shall mean any "deferred intercompany transaction" or
"intercompany transaction" within the meaning of Section 1.1502-13 of the
Regulations (or any predecessor or successor provision thereto), and for
purposes of this agreement shall include any excess loss account within the
meaning of Section 1.1502-19 of the Regulations (or any predecessor or successor
provision thereto) and shall exclude Special Tax Items.
1.22. Effective Date shall mean January 1, 2002
1.23. Employee Benefits Agreement shall mean the Employee Benefits
Agreement by and between AT&T Corp. and AT&T Broadband Corp, dated as of
December 19, 2001.
1.24. Federal CNOL shall have the meaning set forth in Section 3.2(b)
hereof.
1.25. Federal Tax Allocation Agreement shall mean the Federal Tax
Allocation Agreement dated as of February 1, 1996, by and among AT&T and each of
its Subsidiaries.
1.26. Final Determination means (i) a decision, judgment, decree or
other order by any court of competent jurisdiction, which has become final and
is either no longer subject to appeal or as to which a determination not to
appeal has been made; (ii) a closing agreement made under Section 7121 of the
Code or any comparable foreign, state, local or other Tax statute; (iii) a final
disposition by any Governmental Authority of a claim for refund with respect to
which no further legal or administrative remedies are being sought; or (iv) any
other written agreement relating to an Adjustment between any Governmental
Authority and any Controlling Party the execution of which is final and
prohibits such Governmental Authority or the Controlling Party from seeking any
further legal or administrative remedies with respect to such Adjustment.
1.27. Governmental Authority shall have the meaning set forth in the
definition of Tax.
1.28. Group shall mean the AT&T Broadband Group or the AT&T
Communications Group.
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1.29. Hypothetical Legal Entity shall mean a hypothetical corporation,
partnership, limited liability company or other legal entity.
1.30. Inconsistent Position shall have the meaning set forth in Section
14.1 hereof.
1.31. Independent Third Party means a nationally recognized law firm or
any of the following accounting firms or their successors: Xxxxxxxx LLP, Xxxxx &
Xxxxx, KPMG Peat Marwick, Deloitte & Touche and PricewaterhouseCoopers LLP.
1.32. Interested Party shall mean AT&T or any other member of the AT&T
Communications Group or AT&T Broadband or any other member of the AT&T Broadband
Group (including any successor and/or assign of any of each of the foregoing),
as the case may be, to the extent (a) such person is not the Controlling Party
with respect to a Tax Proceeding; and (b) such person (i) may be liable for, or
required to make, any indemnity payment, reimbursement or other payment pursuant
to the provisions of this Agreement, or required to make a payment of any Tax,
with respect to such Tax Proceeding; or (ii) may be entitled to receive any
indemnity payment, reimbursement or other payment pursuant to the provisions of
this Agreement, or be entitled to receive a Refund, with respect to such Tax
Proceeding; provided, however, that in no event shall a member of either the
AT&T Broadband Group or the AT&T Communications Group, as the case may be, be an
Interested Party in a Tax Proceeding in which another member of its Group is the
Controlling Party with respect to the Tax Proceeding. For the avoidance of
doubt, (i) in no event shall AT&T or a member of the AT&T Communications Group
be an Interested Party with respect to any Tax Proceeding relating to AT&T
Broadband or a member of the AT&T Broadband Group with respect to a
Post-Distribution Taxable Period and (ii) in no event shall AT&T Broadband or a
member of the AT&T Broadband Group be an Interested Party with respect to any
Tax Proceeding relating to AT&T or a member of the AT&T Communications Group
with respect to a Post-Distribution Taxable Period.
1.33. Interested Party Notice shall have the meaning set forth in
Section 11.6(b) hereof.
1.34. Joint Return shall mean any Tax Return that includes information
related to at least two Legal Entities of which one Legal Entity is a member of
the AT&T Communications Group and the other Legal Entity is a member of the AT&T
Broadband Group.
1.35. Legal Entity shall mean a True Legal Entity or a Hypothetical
Legal Entity.
1.36. Liberty Tax Sharing Agreement shall mean the Tax Sharing
Agreement dated as of March 9, 1999, by and among AT&T, Liberty Media
Corporation, Tele-Communications, Inc., Liberty Ventures Group LLC, Liberty
Media Group LLC, TCI Starz, Inc., TCI CT Holdings, Inc., and each Covered Entity
(as defined therein), as amended.
1.37. Losses shall mean costs, expenses, fees, liabilities, obligations
and losses.
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1.38. Merger Agreement shall mean the Agreement and Plan of Merger
dated as of December 19, 2001 by and among AT&T Corp., Comcast Corporation and
the other parties referred to therein.
1.39. Mixed Entity shall have the meaning set forth in Section 2
hereof.
1.40. Non-Income Taxes shall mean all Taxes other than any Tax which is
based upon, measured by, or calculated with respect to (i) net income or profits
(including, but not limited to, any capital gains, gross receipts, value added
or minimum Tax) or (ii) multiple bases (including, but not limited to, corporate
franchise, doing business or occupation Taxes) if one or more of the bases upon
which such Tax may be based, by which it may be measured, or with respect to
which it may be calculated is described in clause (i) hereof. For the avoidance
of doubt, Non-Income Taxes shall include, but not be limited to, business and
occupation, sales, use, ad valorem property, real property gains, real or
personal property, intangibles, transfer, telecommunications, Telecom Pass
Through Tax or similar Taxes.
1.41. Post-Distribution Taxable Period shall mean (i) a taxable period
that begins after the Distribution Date and (ii) the portion beginning after the
Distribution Date of any taxable period that includes (but does not end) on the
Distribution Date.
1.42. Pre-Distribution Taxable Period shall mean (i) a taxable period
or portion thereof that ends on or prior to the close of the Distribution Date
and (ii) the portion ending at the close of the Distribution Date of any taxable
period that includes (but does not end) on the Distribution Date.
1.43. Pre-Effective Date Taxable Period shall mean (i) any taxable
period that ends, with respect to such entity, on or prior to the close of the
day immediately preceding the Effective Date and (ii) the portion ending at the
close of the day immediately preceding the Effective Date of any taxable period
that includes (but does not end) on the day immediately preceding the Effective
Date.
1.44. QUIPS shall have the meaning set forth in the Merger Agreement.
1.45. R&E shall have the meaning set forth in Section 3.4(c) hereof.
1.46. Refund shall mean any refund of Taxes, including any reduction in
liability for such Taxes by means of a credit, offset or otherwise.
1.47. Regulations shall mean the Treasury Regulations promulgated under
the Code.
1.48. Reporting Standard shall have the meaning set forth in Section
14.1 hereof.
1.49. Separate Return shall mean any Tax Return that is not a Joint
Return.
1.50. Separation and Distribution Agreement shall have the meaning set
forth in the first paragraph hereof.
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1.51. Special Tax Items shall mean any Tax Item attributable to (a) the
transfer of assets (other than cash) from the AT&T Broadband Group to any member
of the AT&T Communications Group; and (b) the sale or other disposition of any
asset after December 31, 2000, but only to the extent that the cash proceeds
thereof were transferred to any member of the AT&T Communications Group, other
than (i) in repayment of existing intercompany debt to the AT&T Communications
Group or third party debt reflected on the AT&T Broadband Balance Sheet dated of
December 31, 2000, or otherwise as permitted by Section 3.02 of the Separation
and Distribution Agreement or (ii) as arm's length consideration for assets,
services or licenses.
1.52. State and Local Income Tax Allocation Agreement shall mean the
State and Local Income Tax Allocation Agreement dated as of the first day of the
combined return taxable year beginning January 1, 1995, by and among AT&T and
each of its subsidiaries.
1.53. State, Local or Foreign CNOL shall have the meaning set forth in
Section 3.3(b) hereof.
1.54. Subsidiary shall mean, with respect to any True Legal Entity, any
other True Legal Entity of which at least (i) 50% of the equity and (ii) 50% of
the voting interests are owned, directly or indirectly, by such first True Legal
Entity.
1.55. Tax shall mean all forms of taxes, fees, imposts, levies or other
assessments whenever created or imposed, and whether of the United States or
elsewhere, and whether imposed by a local, municipal, governmental, state,
foreign, federation or other similar body (a "Governmental Authority"), and,
without limiting the generality of the foregoing, shall include income, gross
receipts, business and occupation, property, sales, use, license, excise,
franchise, capital stock, employment, payroll, unemployment insurance, social
security, stamp, environmental, value added, Telecom Pass Through Tax,
alternative or added minimum, ad valorem, trade, recording, withholding,
occupation or transfer tax, custom or duty or other like governmental assessment
or charge of any kind whatsoever, whether computed on a separate, consolidated,
unitary, combined or any other basis, together with any related interest,
penalties and additions imposed by any Governmental Authority.
1.56. Tax Item shall mean any item of income, gain, loss, deduction,
credit, recapture of credit or any other item which increases or decreases Taxes
(including Non-Income Taxes) paid or payable, including an adjustment under Code
Section 481 resulting from a change in accounting method.
1.57. Tax Proceeding shall mean any Tax audit, examination, controversy
or litigation with or against any Governmental Authority.
1.58. Tax Return shall mean any report, return or other information
(including any attached schedules or any amendments to such report, return or
other information) required to be supplied to or filed with a Governmental
Authority with respect to any Tax, including an information return, claim for
refund, amended return, declaration, or
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estimated Tax return, in connection with the determination, assessment,
collection or administration of any Tax.
1.59. Telecom Pass Through Taxes shall mean federal excise Taxes on
telecommunications services, and those state, local and municipal Taxes which
are passed through to end-user customers, including but not limited to gross
receipts taxes, 911 excise Taxes, utility user Taxes, sales and use Taxes,
street utility business charges, telephone device for deaf and hearing impaired
charges or Taxes and universal lifeline telephone service Taxes, or any other
Taxes, fees or charges imposed by public utility commissions and other similar
governmental agencies.
1.60. True Legal Entity shall mean a corporation, partnership, limited
liability company or other entity under state or other applicable organizational
law.
1.61. TWE shall mean Time Warner Entertainment Company, L.P.
1.62. Ultimate Determination has the meaning set forth in Section
11.7(b)(ii) hereof.
1.63. U.S. West Tax Sharing Agreement shall mean the Tax Sharing
Agreement between U.S. West, Inc. and USW-C, Inc., dated as of June 5, 1998.
1.64. Wireless Tax Sharing Agreement shall mean the Amended and
Restated Tax Sharing Agreement by and among AT&T, AWG LLC, AT&T Wireless
Services, Inc., AT&T Wireless PCS, LLC and certain other signatories, dated as
of May 2, 2000.
2. Treatment of Legal Entities That Would be Members of More Than One
Group. In the event that a True Legal Entity which is a member of the AT&T
Affiliated Group would otherwise be a member of both the AT&T Communications
Group and the AT&T Broadband Group (a "Mixed Entity"): (a) each of the assets
and liabilities (and related Tax attributes) of the True Legal Entity directly
related to the AT&T Broadband Group, if any, shall be assigned to one
Hypothetical Legal Entity; and (b) the remaining assets and liabilities (and
related Tax attributes) of the True Legal Entity, if any, shall be assigned to a
second Hypothetical Legal Entity (such Hypothetical Legal Entities being
referred to herein as the Hypothetical Legal Entities "Associated" with the
Mixed Entity). Each Hypothetical Legal Entity shall be treated as owning the
assets, being primarily responsible for the liabilities, and having the Tax
attributes comparable to those of the Mixed Entity with which the Hypothetical
Legal Entity is Associated. The stock or interests in a Hypothetical Legal
Entity shall be treated as represented by the stock or interests in the Mixed
Entity with which the Hypothetical Legal Entity is Associated. In the event that
an asset, liability or Tax attribute cannot be Associated with the business or
investments of one of the Groups it shall be reasonably allocated between or
among the Hypothetical Legal Entities taking into account the nature of the
asset, liability or Tax attribute.
3. Tax Sharing with respect to Pre-Distribution Taxable Periods.
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3.1. General. Except as otherwise provided herein, in determining a
party's liability and/or obligation to make, or the right to receive, any
indemnity payment, reimbursement or other payment in respect of any Tax under
this Agreement, any taxable period or portion of a taxable period that includes
the Distribution Date shall be deemed to include and end on the Distribution
Date, and no party shall have any liability and/or obligation to make, or right
to receive any indemnity payment, reimbursement or other payment in respect of
any Tax under this Agreement with respect to any Post-Distribution Taxable
Period.
3.2. Federal Income Taxes (other than AMT).
(a) Consolidated Federal Taxable Income. If the AT&T
Affiliated Group has consolidated federal taxable income for a Pre-Distribution
Taxable Period, then (i) if the AT&T Broadband Group has Allocated Taxable
Income, AT&T Broadband shall pay AT&T the federal income Tax on the AT&T
Broadband Group's Allocated Taxable Income for the taxable period; and (ii) if
the AT&T Broadband Group has an Allocated Taxable Loss for the taxable period,
AT&T shall pay AT&T Broadband the amount by which the AT&T Affiliated Group's
federal income Tax is reduced for the taxable period by reason of the AT&T
Broadband Group's Allocated Taxable Loss.
(b) Consolidated Federal Net Operating Loss. If the AT&T
Affiliated Group has a consolidated net operating loss for federal income tax
purposes for a Pre-Distribution Taxable Period ("Federal CNOL"), then (i) if the
AT&T Communications Group and the AT&T Broadband Group both have Allocated
Taxable Losses, the federal income Refund or other Tax benefit arising from the
Federal CNOL shall be shared between the AT&T Communications Group and the AT&T
Broadband Group in proportion to their respective Allocated Taxable Losses for
the taxable period as described in Section 3.2(c) hereof; (ii) if the AT&T
Broadband Group has an Allocated Taxable Loss and the AT&T Communications Group
has Allocated Taxable Income, then AT&T shall pay AT&T Broadband the amount by
which the AT&T Affiliated Group's federal income Taxes for the taxable period
are reduced by reason of the AT&T Broadband Group's Allocated Taxable Loss and
the federal income Refund or other Tax benefit arising from the Federal CNOL
shall be allocated to the AT&T Broadband Group; and (iii) if the AT&T Broadband
Group has Allocated Taxable Income and the AT&T Communications Group has an
Allocated Taxable Loss, then AT&T Broadband shall pay AT&T the amount by which
the AT&T Affiliated Group's federal income Taxes for the taxable period are
reduced by reason of the AT&T Communications Group's Allocated Taxable Loss and
the federal income Refund or other Tax benefit arising from the Federal CNOL
shall be allocated to the AT&T Communications Group.
(c) If Section 3.2(b)(i) applies (i.e., both the AT&T
Communications Group and the AT&T Broadband Group have Allocated Taxable
Losses), then AT&T shall first carry back the Federal CNOL to the extent
permitted by law, and then carry forward such Federal CNOL to any
Pre-Distribution Taxable Period. Such carryback or carryforward, as the case may
be, shall be treated as applied (i) for each applicable taxable period in
proportion to the respective Allocated Taxable Losses of each Group for the
taxable period of the Federal CNOL and (ii) beginning with the earliest taxable
period permitted by applicable law. To the extent AT&T obtains a Refund or other
Tax benefit
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arising from such carryback or carryforward, AT&T shall compensate the AT&T
Broadband Group for the Refund or other Tax benefit received in an amount which
is proportionate to such Group's Allocated Taxable Loss included in the Federal
CNOL so applied with payment made within ten (10) days of AT&T's receipt of such
Refund or within ten (10) days of AT&T's filing the Tax Return with respect to
which it claims such other Tax benefit, whichever is earlier. For the avoidance
of doubt, if AT&T obtains no Refund or other Tax benefit with respect to a
Federal CNOL described in this paragraph, AT&T shall make no payment to AT&T
Broadband in respect of the AT&T Broadband Group's Allocated Taxable Loss for
the taxable period of the CNOL but shall allocate any Tax attribute attributable
to such Allocated Taxable Loss to the AT&T Broadband Group pursuant to Section 6
hereof.
3.3. Consolidated State, Local and Foreign Taxes. With respect to a
Joint Return for a state, local or foreign jurisdiction:
(a) If the AT&T Affiliated Group has combined, consolidated or
unitary taxable income in such jurisdiction for a Pre-Distribution Taxable
Period, then (i) if the AT&T Broadband Group has Allocated Taxable Income, AT&T
Broadband shall pay AT&T the Tax on the AT&T Broadband Group's Allocated Taxable
Income for the taxable period; and (ii) if the AT&T Broadband Group has an
Allocated Taxable Loss for the taxable period, AT&T shall pay AT&T Broadband the
amount by which the AT&T Affiliated Group's Tax is reduced for the taxable
period in such jurisdiction by reason of the AT&T Broadband Group's Allocated
Taxable Loss.
(b) If the AT&T Affiliated Group has a consolidated, combined
or unitary net operating loss in a jurisdiction for a Pre-Distribution Taxable
Period ("State, Local or Foreign CNOL"), then (i) if the AT&T Communications
Group and the AT&T Broadband Group both have Allocated Taxable Losses, the
Refund or other Tax benefit arising from the State, Local or Foreign CNOL shall
be shared between the AT&T Communications Group and the AT&T Broadband Group in
proportion to their respective Allocated Taxable Losses for the taxable period
as described in Section 3.3(c) hereof; (ii) if the AT&T Broadband Group has an
Allocated Taxable Loss and the AT&T Communications Group has Allocated Taxable
Income, then AT&T shall pay AT&T Broadband the amount by which the AT&T
Affiliated Group's Taxes for the taxable period in such jurisdiction are reduced
by reason of the AT&T Broadband Group's Allocated Taxable Loss and the Refund or
other Tax benefit arising from the State, Local or Foreign CNOL shall be
allocated to the AT&T Broadband Group; and (iii) if the AT&T Broadband Group has
Allocated Taxable Income and the AT&T Communications Group has an Allocated
Taxable Loss, then AT&T Broadband shall pay AT&T the amount by which the AT&T
Affiliated Group's Taxes for the taxable period in such jurisdiction are reduced
by reason of the AT&T Communications Group's Allocated Taxable Loss and the
Refund or other Tax benefit arising from the State, Local or Foreign CNOL shall
be allocated to the AT&T Communications Group.
(c) If Section 3.3(b)(i) applies (i.e., both the AT&T
Communications Group and the AT&T Broadband Group have Allocated Taxable
Losses), then AT&T shall first carry back the State, Local or Foreign CNOL to
the extent permitted by law, and then carry forward the State, Local or Foreign
CNOL to any Pre-Distribution Taxable Period.
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Such carryback or carryforward, as the case may be, shall be treated as applied
(i) for each applicable taxable period in proportion to the respective Allocated
Taxable Losses of each Group for the taxable period of the State, Local or
Foreign CNOL and (ii) beginning with the earliest taxable period permitted by
applicable law. To the extent AT&T obtains a Refund or other Tax benefit arising
from such carryback or carryforward, AT&T shall compensate the AT&T Broadband
Group for the Refund or other Tax benefit received in an amount which is
proportionate to such Group's Allocated Taxable Loss included in the State,
Local or Foreign CNOL so applied with payment made within ten (10) days of
AT&T's receipt of such Refund or within ten (10) days of AT&T's filing the Tax
Return with respect to which it claims such other Tax benefit, whichever is
earlier. For the avoidance of doubt, if AT&T obtains no Refund or other Tax
benefit with respect to a State, Local or Foreign CNOL described in this
paragraph, AT&T shall make no payment to AT&T Broadband in respect of the AT&T
Broadband Group's Allocated Taxable Loss for the taxable period of the CNOL but
shall allocate any Tax attribute attributable to such Allocated Taxable Loss to
the AT&T Broadband Group pursuant to Section 6 hereof.
3.4 Consolidated Tax Credits.
(a) General. Except as set forth in Sections 3.4(b) and (c)
and Section 3.5 hereof, Tax credits will be allocated to each of the AT&T
Broadband Group and the AT&T Communications Group contributing to the credit on
a pro rata basis in an amount equal to such Group's contribution to each
consolidated Tax credit determined to be available to the AT&T Affiliated Group
for each taxable period, except to the extent that the Code or Regulations
require a different allocation. The contribution of the AT&T Broadband Group and
the AT&T Communications Group to each consolidated Tax credit generally will be
determined without regard to the amount of Tax credit that would have been
allowed if a Separate Return had been filed. Any Tax credit allocated to the
AT&T Broadband Group or the AT&T Communications Group under Section 3.4 or 3.5
hereof shall be taken into account in determining the amount of any payment to
be made by the AT&T Broadband Group or the AT&T Communications Group, as the
case may be, under Section 3 or Section 4 hereof.
(b) Foreign Tax Credit. The contribution of a Group to the
consolidated foreign Tax credit with respect to income in each of the foreign
Tax credit separate limitation categories (as set forth in Section 904(d) of the
Code and the Regulations thereunder, and hereinafter referred to as "baskets")
for a taxable year will be determined separately, in the following manner,
except to the extent that the Code or Regulations require a different
allocation. If the AT&T Affiliated Group has an excess foreign Tax credit
limitation for a particular basket, a Group that incurs foreign income Taxes
with respect to that basket will be allocated a share of the AT&T Affiliated
Group's foreign Tax credit for that basket equal to its contribution to the
foreign Taxes taken as a credit for the year without regard to the proportion of
the Group's contribution to the income in that basket. If, however, the AT&T
Affiliated Group has an excess foreign Tax credit for a particular basket (i.e.,
not all foreign income Taxes for that basket are allowed as a consolidated
foreign Tax credit in that taxable year or the immediately preceding two taxable
years), the amount of the AT&T Affiliated Group's foreign Tax credit with
respect to that basket to be allocated to a Group shall be limited to the
proportion that such Group's contribution to foreign income Taxes available for
credit with respect to that
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basket bears to both Groups' contributions to foreign income Taxes available for
credit for that basket, multiplied by the foreign Tax credit actually allowed
for that basket.
(c) R&E Tax Credit. In the case of the research and
experimentation ("R&E") Tax credit, however, the total R&E Tax credit utilized
for a taxable period (determined without regard to any carryovers and carrybacks
of R&E tax credits from other taxable periods) shall be allocated pro rata
between the AT&T Broadband Group and the AT&T Communications Group based on the
amount of qualified research expenditures that each such Group makes during such
taxable period and without regard to whether (i) such Group would have generated
an R&E Tax credit on a Separate Return basis; and (ii) such Group would have
been able to utilize an R&E Tax credit on a Separate Return basis.
3.5 Alternative Minimum Tax.
(a) If the AT&T Affiliated Group has a consolidated federal
alternative minimum tax ("AMT") liability for a Pre-Distribution Taxable Period,
then (i) if the AT&T Broadband Group has Allocated Taxable Income for AMT
purposes ("AMTI"), AT&T Broadband shall pay AT&T the federal AMT on the AT&T
Broadband Group's AMTI for the taxable period; and (ii) if the AT&T Broadband
Group has an Allocated Taxable Loss for AMT purposes ("AMTL") for the taxable
period, AT&T shall pay AT&T Broadband the amount by which the AT&T Affiliated
Group's federal AMT is reduced for the taxable period by reason of the AT&T
Broadband Group's AMTL.
(b) If the AT&T Affiliated Group has a net operating loss for
consolidated federal AMT purposes ("AMT NOL") for a Pre-Distribution Taxable
Period, then (i) if the AT&T Communications Group and the AT&T Broadband Group
both have AMTLs, the federal AMT refund or other Tax benefit arising from the
AMT NOL shall be shared between the AT&T Communications Group and the AT&T
Broadband Group in proportion to their respective AMTLs for the taxable period;
(ii) if the AT&T Broadband Group has an AMTL and the AT&T Communications Group
has AMTI, then AT&T shall pay AT&T Broadband the amount, if any, by which the
AT&T Affiliated Group's federal AMT for the taxable period is reduced by reason
of the AT&T Broadband Group's AMTL and the federal AMT refund or other Tax
benefit arising from the AMT NOL shall be allocated to the AT&T Broadband Group;
and (iii) if the AT&T Broadband Group has AMTI and the AT&T Communications Group
has an AMTL, then AT&T Broadband shall pay AT&T the amount, if any, by which the
AT&T Affiliated Group's consolidated federal AMT for the taxable period is
reduced by reason of the AT&T Communications Group's AMTL and the federal AMT
refund or other Tax benefit arising from the AMT NOL shall be allocated to the
AT&T Communications Group.
(c) Any Tax benefit arising from the utilization of a
consolidated federal AMT credit by the AT&T Affiliated Group will be allocated
to the Group that paid (or was responsible under this Agreement for) the AMT
that generated such AMT credit. The AMT credit will be treated as used on a
"FIFO" basis.
(d) The principles set forth in Sections 3.5(a) through 3.5(c)
shall apply, mutatis mutandis, with respect to any Joint Return for a state,
local or foreign jurisdiction that imposes an AMT, unless otherwise agreed with
or mandated by a specific jurisdiction.
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3.6 Non-Income Taxes. In the case of any Joint Return for a
Pre-Distribution Taxable Period with respect to any Non-Income Tax, each Group
included in the Joint Return shall be liable for the Non-Income Tax attributable
to the AT&T Broadband Business or the AT&T Communications Business, as the case
may be. In the event that the portion of the Non-Income Tax attributable to a
particular Group's Business cannot be determined for a Non-Income Tax Return
that is a Joint Return, then the Tax shall be allocated to the AT&T
Communications Group.
3.7 Certain Tax Items for AT&T Broadband Group's Account. Any Tax Item
(other than any Special Tax Item) resulting from, arising out of, relating to,
in the nature of or caused by any asset or other interest related to the AT&T
Broadband Business shall be for the account of the AT&T Broadband Group as
provided hereunder. Without limitation, and for the avoidance of doubt, Tax
Items (other than any Special Tax Item) arising out of or relating to the
following shall be part of the Allocated Taxable Income (Loss) of the AT&T
Broadband Group or, in the case of Non-Income Taxes, shall give rise to a
Non-Income Tax liability for the account of the AT&T Broadband Group: (a) the
actual or deemed disposition of the Broadband Group or of the stock or assets of
any Legal Entity which is a member of the Broadband Group; (b) the actual or
deemed disposition of the shares identified in Schedule 1.23(i) of the
Separation and Distribution Agreement; (c) the QUIPS, including any cancellation
of indebtedness income arising therefrom; (d) the transactions described in
Section 3.3 of the Separation and Distribution Agreement (limited, in the case
of this clause (d) to 50 percent of any such Tax Item); (e) the revised Excite
@Home put arrangement between AT&T and each of Cox Corporation and Comcast
Corporation dated May 18, 2001; (f) transactions with respect to TWE, including
dispositions of interests in TWE; and (g) (1) the Separation (as such term is
defined in the U.S. West Tax Sharing Agreement) failing to qualify as tax free
under the provisions of Sections 355, 361(c) and 368(a)(1)(D) of the Code, or
(2) the shares of U.S. West, Inc. (formerly USW-C, Inc.) failing to qualify as
"qualified property" for purposes of Section 355(c)(2) or 361(c) of the Code by
reason of the application of Section 355(e) of the Code. Notwithstanding
anything in this Section 3.7 to the contrary, no more than AT&T Broadband
Group's Share (as defined below) of all DITs that are required to be taken into
account by the AT&T Affiliated Group as a result of or in connection with the
Separation and Distribution shall be for the AT&T Broadband Group's account.
"AT&T Broadband Group's Share" shall be equal to $2.0915 billion, (i) increased
by 50% of the excess, if any, of the aggregate amount of DITs determined under
the preceding sentence over $2.0915 billion, or (ii) decreased by 50% of the
excess, if any, of $2.0915 billion over the aggregate amount of DITs determined
under the preceding sentence, as the case may be. If the AT&T Broadband Group's
Share exceeds the aggregate amount of all DITs required to be taken into account
by the AT&T Affiliated Group as a result of or in connection with the
Distribution, then the AT&T Communications Group's Allocated Taxable Income
shall be reduced (or its Allocated Taxable Loss shall be increased, as the case
may be) by an amount equal to such excess.
3.8 Certain Items for AT&T Communications Group's Account. Any Tax Item
resulting from, arising out of, relating to, in the nature of or caused by any
asset or other interest related to the AT&T Communications Business shall be for
the account of the AT&T Communications Group as provided hereunder. Without
limitation, and for the
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avoidance of any doubt, Tax Items arising out of or relating to the following
shall be part of the Allocated Taxable Income (Loss) of the AT&T Communications
Group or, in the case of Non-Income Taxes, shall give rise to a Non-Income Tax
liability for the account of the AT&T Communications Group: (a) the actual or
deemed disposition of the AT&T Communications Group or of the stock or assets of
any Legal Entity which is a member of the AT&T Communications Group; (b) any
transfer of assets (including interests in entities) or liabilities to the AT&T
Communications Group or between Legal Entities that are members of the AT&T
Communications Group in a Pre-Distribution Taxable Period; (c) any actual or
deemed disposition of shares of common stock of AT&T Wireless Services, Inc.
held by AT&T; (d) the transactions described in Section 3.3 of the Separation
and Distribution Agreement (limited, in the case of this clause (d) to 50
percent of any such Tax Item); (e) the unwind of the Concert joint venture
between AT&T and British Telecommunications plc.; and (f) any transaction
relating to the shares of AT&T Canada, Inc. Anything in this Article 3 to the
contrary notwithstanding, any Special Tax Item and all DITs that are required to
be taken into account by the AT&T Affiliated Group as a result of or in
connection with the Separation and Distribution for which the AT&T Broadband
Group is not is responsible pursuant to the penultimate sentence of Section 3.7
shall be for the account of the AT&T Communications Group.
3.9 Retained Stock. Any stock of AT&T or stock of AT&T Broadband that
is outstanding for Tax purposes and is held by a Legal Entity that is a member
of the AT&T Broadband Group or the AT&T Communications Group, respectively,
shall be treated as an asset of the AT&T Broadband Group or the AT&T
Communications Group, respectively, for purposes of this Agreement.
3.10 Liability for Spin-Off Disqualification. Notwithstanding anything
in this Agreement to the contrary, the parties' rights and obligations with
respect to indemnification for Tax liabilities and control of Tax Proceedings
related to a "Spin-Off Disqualification" or a "Transaction Disqualification" (as
defined in the Separation and Distribution Agreement) shall be determined
exclusively under the provisions of the Separation and Distribution Agreement.
3.11 Employee Compensation. (a) Except as provided in paragraph (b)
below, the allocation between the AT&T Broadband Group and the AT&T
Communications Group of Tax Items related to employee compensation and employee
benefits shall be determined exclusively under the provisions of the Employee
Benefits Agreement by and between the parties in effect as of the date hereof.
(b) Prior to the Distribution Date, the benefit of federal,
state, and local Tax deductions related to the exercise of an AT&T Option by (x)
any Broadband Employee shall be for the account of the AT&T Broadband Group and
(y) any AT&T Employee shall be for the account of the AT&T Communications Group.
Prior to the Distribution Date, the benefit of federal, state and local Tax
deductions related to the exercise of an AT&T Option by any Former Employees
shall be for the account of the AT&T Communications Group. Defined terms used in
this Section 3.11(b) that are not otherwise defined shall have the meanings
ascribed to them in the Employee Benefits Agreement.
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4. Tax Sharing with Respect to Pre-Effective Date Taxable Periods. The
parties hereto acknowledge that they are parties to the Federal Tax Allocation
Agreement and the State and Local Income Tax Allocation Agreement and that
nothing herein shall affect any existing obligations thereunder; provided,
however, that in the event of an Adjustment with respect to Pre-Effective Date
Taxable Periods, each Group shall be responsible for all Taxes attributable to
such Group as determined under the principles set forth in Section 8 hereof;
provided, further, that such determination shall be made only after first giving
effect to the provisions of (a) the Liberty Tax Sharing Agreement and (b) the
Wireless Tax Sharing Agreement, to the extent applicable to such Pre-Effective
Date Taxable Periods; and provided, further, that the treatment and allocation
of Special Tax Items shall be governed exclusively by this Agreement.
5. Tax Sharing Payments.
5.1. Agent for Payment. Any Tax sharing payment, Refund, indemnity,
reimbursement or other payment required to be made to or by the AT&T
Communications Group pursuant to this Agreement shall be made to or by AT&T as
agent for the AT&T Communications Group. Any tax sharing payment, Refund,
indemnity, reimbursement or other payment required to be made to or by the AT&T
Broadband Group pursuant to this Agreement shall be paid to or by AT&T Broadband
as agent for the AT&T Broadband Group.
5.2. Joint and Several Liability. Every member of the AT&T Broadband
Group shall be jointly and severally liable for all obligations of any member of
the AT&T Broadband Group arising under this Agreement; and every member of the
AT&T Communications Group shall be jointly and severally liable for all
obligations of any member of the AT&T Communications Group arising under this
Agreement.
5.3. Time of Payment. Subject to Sections 5.4 and 5.5, the payments
required pursuant to Sections 3 and 4 hereof shall be made on an estimated basis
no later than the fifth day after the date an estimated Tax payment is due
(including extensions). A true-up payment shall be made no later than sixty (60)
days after the date that the Tax Return for the taxable period is due (including
extensions).
5.4. Final Adjustment of Intercompany Account. Immediately prior to the
Distribution Date, AT&T shall adjust the intercompany account between the AT&T
Broadband Group and the AT&T Communications Group to reflect each party's
liability for or right to receive (as the case may be) any unpaid amount
pursuant to this Agreement, the Federal Tax Allocation Agreement and the State
and Local Income Tax Allocation Agreement with respect to (a) any taxable period
ending on the Distribution Date (such determination to be based on an accrual,
consistent with past practice under Section 3 hereof and taking into account any
estimated payments made pursuant to Section 5.3) and (b) any other
Pre-Distribution Taxable Period; and any resulting balance in the intercompany
account shall be paid.
5.5. Final Post-Distribution Tax-Sharing True-Ups. No later than sixty
(60) days after the date that the Tax Return of the AT&T Affiliated Group for a
taxable period described in Section 5.4(a) hereof is due (including extensions),
(a) AT&T shall determine
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the differences, if any, between the taxable income or loss used to calculate
any amounts described in clause (a) of Section 5.4 hereof and each Group's
Allocated Taxable Income (Loss) determined in connection with filing the
consolidated federal income Tax Return of the AT&T Affiliated Group that
includes such Pre-Distribution Taxable Period; and (b) final Tax sharing true-up
payments shall be made by AT&T to AT&T Broadband or by AT&T Broadband to AT&T,
as the case may be, to reflect the amount of such differences. For the avoidance
of doubt, amounts payable or receivable hereunder shall not include or be
impacted by any amounts treated for financial reporting purposes (e.g., U.S.
GAAP and FAS 109) as a deemed equity transaction in order to reconcile each
Group's Tax liability to the stand alone Tax provision reflected in such Group's
separate company U.S. GAAP financial statements.
6. Apportionment of Tax Attributes. AT&T shall provide to the AT&T
Broadband Group (a) no later than forty five (45) days prior to the due date
(including extensions) for filing the federal income Tax Return of the AT&T
Affiliated Group for the taxable period that includes the Distribution Date, a
schedule setting forth an estimate of all federal, state, or local consolidated
or combined losses, credits and other Tax attributes allocable to the AT&T
Broadband Group for Post-Distribution Taxable Periods, and (b) no later than
ninety (90) days after the due date (including extensions) for filing the
relevant federal income Tax Return, a final copy of such schedule. If, within
sixty (60) days of receiving the final schedule described in the preceding
sentence, AT&T Broadband provides written notice to AT&T that it disagrees with
any item reflected on such schedule, the parties shall, in good faith, confer
with each other to resolve any such disagreement. If, within thirty (30) days of
the receipt by AT&T of the notice from AT&T Broadband described in the preceding
sentence, any disputed items remain unresolved, the parties shall retain an
Independent Third Party to resolve such dispute in a manner consistent with the
principles of Section 11.7. The allocation of Tax attributes set forth in such
final schedule shall be binding on the AT&T Broadband Group and the AT&T
Communications Group and, except as otherwise required pursuant to a Final
Determination, neither AT&T nor AT&T Broadband (or any other member of the AT&T
Communications Group or the AT&T Broadband Group) shall take a position on any
Return for a Post-Distribution Taxable Period that is inconsistent with the
information contained in such schedule. AT&T Broadband shall prepare or cause to
be prepared and file or cause to be filed all income Tax Returns for
Post-Distribution Taxable Periods so as to take into account, to the extent
permitted by applicable law, any Tax attribute apportioned to AT&T Broadband or
any member of the Broadband Group hereunder.
7. Carrybacks. Except to the extent otherwise consented to by AT&T or
prohibited by applicable law, the AT&T Broadband Group shall relinquish, waive
or otherwise forego all carrybacks of a Tax attribute (including, without
limitation, a net operating loss, a net capital loss or a Tax credit) by a
member of the AT&T Broadband Group from a Post-Distribution Taxable Period to a
Pre-Distribution Taxable Period; provided, however, that AT&T will not
unreasonably withhold its consent to a carryback of a significant net operating
loss or capital loss of the AT&T Broadband Group (provided, further, that the
cost associated with claiming any such carryback shall be borne by the AT&T
Broadband Group).
8. Adjustments.
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8.1. General. In the event of any redetermination of the consolidated
federal income Tax liability of the AT&T Affiliated Group for any taxable period
(or of a Tax liability with respect to any Joint Return for any taxable period)
as the result of a Tax Proceeding by the IRS (or the relevant state, local or
foreign Governmental Authority), a claim for Refund or otherwise, the AT&T
Communications Group's and the AT&T Broadband Group's respective shares of the
Taxes of the AT&T Affiliated Group pursuant to this Agreement shall be
recomputed for such taxable period and any prior and subsequent taxable periods
to take into account such redetermination, and payments due pursuant to Sections
3 and 4 hereof shall be appropriately adjusted; provided, however, that such
recomputation shall be made only after first giving effect to the provisions of
(a) the Liberty Tax Sharing Agreement and (b) the Wireless Tax Sharing
Agreement, to the extent applicable to such taxable periods. For purposes of
determining the amount of any payment required to be made pursuant to this
Section, each Group's share of the AT&T Affiliated Group's consolidated federal
income Tax liability (or of a Tax liability with respect to any Joint Return)
shall be determined by comparing (I) each Group's share of such Tax liability
calculated under Sections 3 and 4 hereof before giving effect to such
redetermination and (II) each Group's share of such Tax liability calculated
under Section 3 and 4 hereof after giving effect to such redetermination.
8.2. Special Rules for Combined Returns. In the event of a
redetermination of an income Tax liability reflected on a Combined Return that
is a Joint Return for any taxable period that results from an adjustment to one
or more apportionment factors (whether arising from an adjustment to the factors
of a single Group or more than one Group), the liability of all Groups shall be
recalculated using the revised apportionment factors (property, payroll, sales),
calculated on a consolidated basis, and Tax sharing payments with respect to
such Combined Return shall be appropriately adjusted.
8.3. Payment. Any additional Tax owed by any party to a Governmental
Authority pursuant to a Final Determination shall be paid directly to and within
the time prescribed by the Governmental Authority. Any payment by AT&T to AT&T
Broadband or by AT&T Broadband to AT&T, as the case may be, required as a result
of any adjustment made to any tax sharing payment under this Article 8 shall be
paid within thirty (30) days after receipt of a written notice from the party
that is entitled to receive a payment hereunder; such notice to be issued as
soon as practicable after payment to a Governmental Authority was made in
accordance with the preceding sentence. Notwithstanding the foregoing, any party
receiving a Refund to which another party is entitled pursuant to this Agreement
shall pay the amount to which such other party is entitled (plus any interest
thereon received with respect thereto from the applicable Governmental
Authority) within ten (10) days after the receipt of the Refund. Any indemnity
payment, reimbursement or other payment made to a party pursuant to this
Agreement shall, unless otherwise requested by such party, be made by wire
transfer of immediately available funds to such bank and/or other account of
such party as it shall direct.
8.4. Characterization of Payment. For all Tax purposes, except as
otherwise mandated by applicable law, the parties hereto agree to treat, and to
cause their respective affiliates to treat (a) any payment to a party required
by this Agreement as either a
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contribution by AT&T to AT&T Broadband or a distribution by AT&T Broadband to
AT&T, as the case may be, occurring immediately prior to the Distribution; (b)
any payment of interest (or non-federal income Taxes) by the IRS (or the
relevant state, local or foreign Governmental Authority) as taxable to the party
entitled under this Agreement to retain such payment; and (c) any payment of
interest (or non-federal income Taxes) to the IRS (or the relevant state, local
or foreign Governmental Authority) as deductible to the party required under
this Agreement to make such payment; provided, however, that in the event it is
determined as a result of a Final Determination that any such treatment
described in this Section is not permissible, the payment in question shall be
adjusted to place the parties in the same after-tax position they would have
enjoyed absent such Final Determination.
9. Interest on Unpaid Amounts. In the event that any party fails to pay
any amount owed to another party pursuant to this Agreement on the date when
due, interest shall accrue on any unpaid amount, from the due date until the
date when such amounts are fully paid, at the Designated Rate in effect during
that time.
10. Indemnification.
10.1. By the AT&T Communications Group. From and after the Effective
Date, each Legal Entity that is a member of the AT&T Communications Group shall
indemnify and hold harmless any AT&T Broadband Indemnitee from and against (a)
any Taxes with respect to a Pre-Distribution Taxable Period which such member of
the AT&T Communications Group is required to pay to a Governmental Authority or
in respect of which the AT&T Communications Group is required to make a payment
to AT&T Broadband; and (b) any Losses incurred by any AT&T Broadband Indemnitee
by reason of a breach by any member of the AT&T Communications Group of its
obligations or covenants hereunder. Any indemnity payment required to be made
pursuant to this section shall be net of any amount which the AT&T
Communications Group is entitled to receive from the AT&T Broadband Group
pursuant to this Agreement.
10.2. By the AT&T Broadband Group. From and after the Effective Date,
each Legal Entity that is a member of the AT&T Broadband Group shall indemnify
and hold harmless each AT&T Communications Indemnitee from and against (a) any
Taxes with respect to a Pre-Distribution Taxable Period which such member of the
AT&T Broadband Group is required to pay to a Governmental Authority or in
respect of which the AT&T Broadband Group is required to make a payment to the
AT&T Communications Group; and (b) any Losses incurred by any AT&T
Communications Indemnitee by reason of a breach by any member of the AT&T
Broadband Group of its obligations or covenants hereunder. Any indemnity payment
required to be made pursuant to this section shall be net of any amount which
the AT&T Broadband Group is entitled to receive from the AT&T Communications
Group pursuant to this agreement. For the avoidance of doubt, each Legal Entity
that is a member of the AT&T Broadband Group shall also indemnify and hold
harmless each AT&T Communications Indemnitee from and against any obligation
with respect to Taxes under the U.S. West Tax Sharing Agreement.
10.3. Treatment of Third Party Tax Sharing Payments. The parties hereto
acknowledge that AT&T (a) is a party to the Liberty Tax Sharing Agreement and
the
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Wireless Tax Sharing Agreement and (b) under the terms of such Tax sharing
agreements, may be entitled to receive a Tax sharing payment from one or more
third parties (each an "Existing Indemnitor") in the event of a redetermination
of a federal, state, local or foreign income Tax liability with respect to a
Pre-Effective Date Taxable Period. If, after reasonable efforts to pursue and
collect such Tax sharing payments from an Existing Indemnitor, AT&T is unable to
collect the amount owed to it by an Existing Indemnitor, AT&T Broadband shall
indemnify AT&T for an amount equal to one half of each such uncollectable
payment; provided that AT&T Broadband shall have no indemnity obligation under
this Section 10.3 unless AT&T has (a) provided AT&T Broadband with information
in reasonable detail describing its efforts to pursue and collect such tax
sharing payments and (b) afforded AT&T Broadband the opportunity to take
reasonable efforts, on behalf of AT&T but at the expense of AT&T Broadband, to
pursue and collect such tax sharing payments. The parties hereto further
acknowledge (a) that MediaOne Group, Inc. (formerly U.S. West, Inc.) and U.S.
West, Inc. (formerly USW-C, Inc.) are parties to the U.S. West Tax Sharing
Agreement and (b) that AT&T Broadband shall be (i) entitled to retain all Tax
sharing payments received from any third party pursuant to such agreement, and
(ii) solely responsible for any Tax sharing payments required to be made
pursuant to such agreement.
11. Tax Proceedings.
11.1 Control of Tax Proceedings. The Controlling Party of any Tax
Proceeding shall control all aspects of such Tax Proceeding, including, but not
limited to, executing waivers requested by a Governmental Authority extending
the relevant statute of limitations pursuant to which a Tax Proceeding may be
commenced and/or concluded.
11.2 Notification. The Controlling Party shall notify all Interested
Parties within ten (10) days of (a) the commencement of, or intention to
commence, any Tax Proceeding pursuant to which such Interested Parties may be
required to make or entitled to receive an indemnity payment, reimbursement or
other payment under this Agreement, or required to make a payment of any Tax or
be entitled to receive a Refund; and (b) as required and specified in Section
11.6(a) hereof, any Final Determination made with respect to any Tax Proceeding
pursuant to which such Interested Parties may be required to make or entitled to
receive any indemnity payment, reimbursement or other payment under this
Agreement, or required to make a payment of any Tax or be entitled to receive a
Refund. The failure of a Controlling Party to timely notify any Interested Party
as specified in the preceding sentence shall not relieve any such Interested
Party of any liability and/or obligation which it may have to the Controlling
Party under this Agreement except to the extent that the Interested Party was
prejudiced by such failure, and in no event shall such failure relieve the
Interested Party from any other liability or obligation which it may have to
such Controlling Party.
11.3 Settlement Rights. The Controlling Party shall have the sole right
to contest, litigate, compromise and settle any Adjustment that is proposed or
made in a Tax Proceeding without obtaining the prior consent of any Interested
Party, except to the extent that (a) the Controlling Party and the Interested
Party or Parties have agreed in writing to assign or transfer control of a Tax
Proceeding to a party other than the Controlling Party; and (b) such assignment
or transfer of control of a Tax Proceeding is not prohibited by
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applicable law; provided, however, that unless waived by the parties in writing,
the Controlling Party shall, in connection with any proposed or assessed
Adjustment in a Tax Proceeding for which an Interested Party may be required to
make or entitled to receive an indemnity payment, reimbursement or other payment
under this Agreement, or required to make a payment of any Tax or be entitled to
receive a Refund (i) keep all such Interested Parties informed in a timely
manner of all actions taken or proposed to be taken by the Controlling Party;
and (ii) provide all such Interested Parties with copies of any correspondence
or filings submitted to any Governmental Authority or judicial authority, in
each case in connection with any contest, litigation, compromise or settlement
relating to any such Adjustment in a Tax Proceeding. The failure of a
Controlling Party to take any action as specified in the preceding sentence with
respect to an Interested Party shall not relieve any such Interested Party of
any liability and/or obligation which it may have to the Controlling Party under
this Agreement except to the extent that the Interested Party was prejudiced by
such failure, and in no event shall such failure relieve the Interested Party
from any other liability or obligation which it may have to such Controlling
Party.
11.4 Conduct of Tax Proceedings. Promptly after the Controlling Party
provides the notification described in Section 11.2 hereof, the Controlling
Party shall arrange for a meeting or conference call with the Interested Parties
to plan for the management of a Tax Proceeding. The Controlling Party and the
Interested Party shall in good faith provide such information to each other as
may be necessary or useful with respect to a Tax Proceeding involving any
federal, state or local Tax, in a timely manner and consistent with the
Controlling Party's request and the provisions of Section 13 hereof. The
Controlling Party shall not unreasonably reject any suggestions made by an
Interested Party with respect to any such Tax Proceeding and shall act in good
faith as if it were the only party in interest. The costs of any Tax Proceeding
shall be borne in accordance with Section 18 hereof; provided, however, that an
Interested Party shall bear (x) any costs related to such Interested Party's
attendance at any meeting with a Governmental Authority or hearing or proceeding
before any judicial authority pursuant to Section 11.5 hereof, and (y) the costs
of any legal or other representatives retained by such Interested Party in
connection with any Tax Proceeding that is subject to the provisions of this
Agreement.
11.5 Tax Proceeding Participation. Unless waived by the parties in
writing, the Controlling Party shall provide an Interested Party with written
notice reasonably in advance of, and such Interested Party shall have the right
to attend, any meetings with Governmental Authorities or before any
administrative or judicial authorities in connection with a Tax Proceeding
arising from any proposed or assessed Adjustment pursuant to which such
Interested Party may be required to make or entitled to receive an indemnity
payment, reimbursement or other payment under this Agreement, or required to
make a payment of any Tax or be entitled to receive a refund of any Tax. In
addition, unless waived by the parties in writing, the Controlling Party shall
provide each such Interested Party with draft copies of any correspondence or
filings to be submitted to any Governmental Authority or administrative or
judicial authority with respect to such Adjustment for such Interested Party's
review and comment. The Controlling Party shall provide such draft copies
reasonably in advance of the date that they are to be submitted to the
Governmental Authority or judicial authority and the Interested Party shall
provide its comments, if any, with respect thereto within a reasonable time
before such submission. The failure of a Controlling Party to provide any
notice, correspondence or filing as
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specified in this Section 11.5 to an Interested Party shall not relieve any such
Interested Party of any liability and/or obligation which it may have to the
Controlling Party under this Agreement except to the extent that the Interested
Party was prejudiced by such failure, and in no event shall such failure relieve
the Interested Party from any other liability or obligation which it may have to
such Controlling Party.
11.6 Tax Proceeding Waiver.
(a) Notice by Controlling Party. The Controlling Party shall
promptly provide written notice, sent postage prepaid by United States mail,
certified, return receipt requested, to all Interested Parties in a Tax
Proceeding (i) that a Final Determination has been made with respect to a Tax
Proceeding conducted by any federal, state, local or foreign Governmental
Authority; and (ii) enumerating the amount of the Interested Party's share of
each Adjustment reflected in such Final Determination of the Tax Proceeding for
which such Interested Party may be required to make or entitled to receive an
indemnity payment, reimbursement or other payment under this Agreement, or
required to make a payment of any Tax or be entitled to receive a Refund.
(b) Notice by Interested Party. Within ninety (90) days after
an Interested Party receives the notice described in Section 11.6(a) hereof from
the Controlling Party, such Interested Party shall execute a written statement
giving notice to the Controlling Party (i) that the Interested Party agrees with
its share of each Adjustment enumerated in the notice described in Section
11.6(a) hereof except with respect to those Adjustments (and/or its share
thereof) that the Interested Party, in good faith, disagrees with and as to
which it has specifically identified the Adjustment(s) (or its share(s)
thereof), including the amount related to each such Adjustment or share, in a
written statement to the Controlling Party (each such disagreed Adjustment
(and/or share thereof) hereinafter is referred to as a "Disputed Adjustment");
and (ii) that the Interested Party waives its right to a determination by an
Independent Third Party pursuant to the provisions of Section 11.7 hereof with
respect to all Adjustments to which it agrees (hereinafter referred to as the
"Interested Party Notice"). The failure of an Interested Party to provide the
notice described in this Section 11.6(b) to the Controlling Party within the
ninety (90) day period specified shall be deemed to indicate that such
Interested Party agrees with its share of all the Adjustments identified in the
notice described in Section 11.6(a) hereof and that such Interested Party waives
its right to a determination by an Independent Third Party with respect to all
the Adjustments (and its share thereof) pursuant to Section 11.7 hereof.
(c) Good Faith Resolution. During the ninety (90) day period
immediately following the Controlling Party's receipt of the Interested Party
Notice described in Section 11.6(b) above, the Controlling Party and the
Interested Party shall, in good faith, confer with each other to resolve any
disagreement over each Disputed Adjustment specifically identified in the
Interested Party Notice. At the end of the ninety (90) day period, unless
otherwise extended in writing by mutual consent of the parties, the Interested
Party shall be deemed to agree with all Disputed Adjustments that were
specifically enumerated in the Interested Party Notice and to waive its right to
a determination by an Independent Third Party pursuant to Section 11.7 hereof
with respect to all such Disputed Adjustments unless, and to the extent, that at
any time during such
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ninety (90) day (or extended) period, either the Controlling Party or the
Interested Party has given the other party written notice that it is seeking or
intends to seek a determination by an Independent Third Party pursuant to
Section 11.7 hereof regarding any such Disputed Adjustment.
11.7 Dispute Resolution.
(a) Selection of Independent Third Party. In the event that
either a Controlling Party or an Interested Party has given the other party
written notice as required in Section 11.6(c) hereof that it is seeking a
determination by an Independent Third Party pursuant to this Section 11.7 with
respect to any Disputed Adjustment identified in an Interested Party Notice,
then the parties shall, within ten (10) days after a party has received such
notice, jointly select an Independent Third Party to make such determination. In
the event that the parties cannot jointly agree on an Independent Third Party to
make such determination within such ten (10) day period, then the Controlling
Party and the Interested Party shall each immediately select an Independent
Third Party and the Independent Third Parties so selected by the parties shall
jointly select, within ten (10) days of their selection, another Independent
Third Party to make such determination.
(b) Procedure for Independent Third Party. In making its
determination as to the propriety of any Disputed Adjustment, the Independent
Third Party selected pursuant to section 11.7(a) above shall assume that the
Interested Party is not required or entitled under applicable law to be a member
of any consolidated return. In addition, the Independent Third Party shall make
its determination according to the following procedure:
(i) The Independent Third Party shall first analyze each
Disputed Adjustment for which a determination is sought pursuant to this Section
11.7 on a stand-alone basis to determine whether the actual outcome reached with
respect to such Disputed Adjustment as reflected in the Final Determination of
the Tax Proceeding was fair and appropriate taking into account the following
exclusive criteria: (A) the facts relating to such Adjustment; (B) the
applicable law, if any, with respect to such Adjustment; (C) the position of the
applicable Governmental Authority with respect to the compromise, settlement or
litigation of such Adjustment; (D) the strength of the factual and legal
arguments made by the Controlling Party in reaching the outcome with respect to
such Adjustment as reflected in the Final Determination of the Tax Proceeding;
and (E) the strength of the factual and legal arguments being made by the
Interested Party for the alternative outcome being sought by such Interested
Party (including the availability of facts, information and documentation to
support such alternative outcome.) Based on this analysis, the Independent Third
Party shall determine what is the fair and appropriate outcome with respect to
each such Disputed Adjustment.
(ii) The Independent Third Party shall then determine what is
the fair and appropriate outcome (hereinafter referred to as the "Ultimate
Determination") to the Interested Party with respect to each such Disputed
Adjustment in the context of the entire Tax Proceeding as it relates to the
Interested Party. In making this determination, the Independent Third Party
shall consider the Disputed Adjustment as if it were raised in an independent
audit of the Interested Party by the appropriate Governmental Authority and
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the Independent Third Party shall take into account and give appropriate weight
in its sole discretion to the following exclusive criteria: (A) the strength of
the legal and factual support for other potential, non-frivolous Adjustments
with respect to matters that were actually raised and contested by the
applicable Governmental Authority in the Tax Proceeding for which the Interested
Party could have been liable under this Agreement but which were eliminated or
reduced as a result of the Controlling Party agreeing to the Disputed Adjustment
as reflected in the Final Determination of the Tax Proceeding; (B) the effect of
the actual outcome reached with respect to the Disputed Adjustment on other
Taxable periods and on other positions taken or proposed to be taken in Returns
filed or proposed to be filed by the Interested Party; (C) the realistic
possibility of avoiding examination of potential, non-frivolous issues for which
the Interested Party could be liable under this Agreement and that were
contemporaneously identified by the party or parties during the course of the
Tax Proceeding but which had not been raised and contested by the applicable
Governmental Authority in the Tax Proceeding; and (D) the benefits to the
Interested Party in reaching a Final Determination, and the strategy and
rationale with respect to the Interested Party's Disputed Adjustment that the
Controlling Party had for agreeing to such Disputed Adjustment in reaching the
Final Determination, in each case that were contemporaneously identified by the
party or parties during the course of the Tax Proceeding.
(iii) In the case of any Disputed Adjustment that amounts to
less than $50,000,000, the Interested Party shall only be entitled to
modification of its share of the Disputed Adjustment under this Section 11.7 if
either (A) the amount that would be paid by the Interested Party under the
Ultimate Determination with respect to such Disputed Adjustment is less than 80%
of the amount that would be paid by the Interested Party with respect to such
Disputed Adjustment under the actual outcome reached with respect to such
Disputed Adjustment; or (B) the amount that would be received by the Interested
Party under the Ultimate Determination with respect to such Disputed Adjustment
is more than 120% of the amount that the Interested Party would receive with
respect to such Disputed Adjustment under the actual outcome reached with
respect to such Disputed Adjustment.
(iv) In the case of any Disputed Adjustment that amounts to
$50,000,000 or more, the Interested Party shall only be entitled to modification
of its share of the Disputed Adjustment under this Section 11.7 if either (A)
the amount that would be paid by the Interested Party under the Ultimate
Determination with respect to such Disputed Adjustment is less than 90% of the
amount that would be paid by the Interested Party with respect to such Disputed
Adjustment under the actual outcome reached with respect to such Disputed
Adjustment; or (B) the amount that would be received by the Interested Party
under the Ultimate Determination with respect to such Disputed Adjustment is
more than 110% of the amount that the Interested Party would receive with
respect to such Disputed Adjustment under the actual outcome reached with
respect to such Disputed Adjustment.
(v) If an Interested Party is entitled to modification of its
share of any Disputed Adjustment under either of paragraphs (iii) or (iv) above,
the amount the Interested Party is entitled to receive, or is required to pay,
as the case may be, with respect to such Disputed Adjustment shall be equal to
the amount of the Ultimate Determination of
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such Disputed Adjustment. The Independent Third Party will provide notice to the
Controlling Party and the Interested Party stating whether the Interested Party
is entitled to a modification of its share of the Disputed Adjustment pursuant
to such paragraph and, if the Interested Party is entitled to such modification,
the amount as determined under this Section 11.7(b) that the Interested Party is
entitled to receive from, or required to pay to, the Controlling Party with
respect to such Disputed Adjustment.
(c) Determination or Notice by Independent Third Party. Any
determination made or notice given by an Independent Third Party pursuant to
this Section 11.7 shall be (i) in writing; (ii) made within sixty (60) days
following the selection of the Independent Third Party as set forth in Section
11.7(a) of this Agreement unless such period is otherwise extended by mutual
consent of the parties; and (iii) final and binding upon the parties. The costs
of any Independent Third Party retained pursuant to this Section 11.7 shall be
shared equally by the parties. The Controlling Party and the Interested Party
shall promptly provide the Independent Third Party, jointly selected pursuant to
Section 11.7(a) hereof, with such information or documentation as may be
appropriate or necessary in order to enable such Independent Third Party to make
the determination requested of it within the specified time. Immediately upon
issuance of an Independent Third Party's notice under Section 11.7(b)(iii) or
(iv), the Controlling Party or the Interested Party, as the case may be, shall
pay the amount, if any, of the Disputed Adjustment to the appropriate party.
11.8 Payment. Except as otherwise provided in this Section 11, payments
required to be made following a Tax Proceeding or Final Determination shall be
made in accordance with the provisions of Section 8.3 of this Agreement.
12. Tax Returns.
12.1. Tax Returns for Pre-Distribution Taxable Periods. AT&T, as agent
for the AT&T Affiliated Group, shall prepare and file all consolidated federal
income Tax Returns and Combined Returns that are Joint Returns for each
Pre-Distribution Taxable Period and shall make any election or application or
take any action in connection with any such Tax Return on behalf of the AT&T
Affiliated Group or the group filing a Joint Return consistent with the terms of
this Agreement.
12.2. Refund Claims. If the AT&T Broadband Group or the AT&T
Communications Group desires to file a claim for a Refund with respect to
consolidated federal income Tax Return or Combined Returns that are Joint
Returns for a Pre-Distribution Taxable period, each shall prepare its own claim
for Refund and a statement specifying the date on which the statute of
limitations for filing the Refund claim will expire. AT&T will file the Refund
claim as soon as practicable after all such Refund claims with respect to a
particular Pre-Distribution Taxable Period have been prepared but in no event
later than forty-five (45) days after the first such Refund claim is prepared.
AT&T will take any other appropriate action at the request of AT&T Broadband
necessary to secure the Refund.
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12.3. Separate Returns. Each Group shall be responsible for preparing
and filing or causing to be prepared and filed each of its Separate Returns,
including exemption certificates, and paying the Tax liability due with respect
to such Separate Returns.
13. Cooperation, Exchange of Information. The parties shall cooperate
with one another in all matters relating to Taxes. Without limiting the
provisions contained in Section 11.4(a) hereof relating to Tax Proceedings, the
AT&T Broadband Group shall, at its sole cost and expense, provide AT&T with such
cooperation and information as is necessary in connection with Tax Returns and
Tax Proceedings with respect to Pre-Distribution Taxable Periods. Such
cooperation and information by the AT&T Broadband Group shall include (a) making
available its respective knowledgeable employees during normal business hours;
(b) providing the information required by the AT&T Affiliated Group's customary
Tax and accounting practices, including questionnaires (at the times and in the
format requested by AT&T); (c) providing complete Tax Return work papers and
supporting documentation prepared in a manner that is consistent with past
practice of the AT&T Affiliated Group; (d) maintaining such books and records
and providing such information as may be necessary or useful in the filing of
Joint Returns and Separate Returns; (e) retaining any powers of attorney
executed on behalf of AT&T with respect to any Pre-Distribution Taxable Period
in order to facilitate communication with Governmental Authorities; and (f)
executing any documents and taking any actions which AT&T may reasonably request
in connection with any Pre-Distribution Taxable Period. With respect to any Tax
Return for a Pre-Distribution Taxable Period, the AT&T Broadband Group shall
provide the information required hereunder no later than 120 days after the
earlier of (i) the last day of such taxable period or (ii) the Distribution
Date. In connection with the request for the Supplemental Ruling referred to in
Section10.01(j) of the Merger Agreement, the Parties agree to seek IRS approval
to determine the value of the Parent shares received in the Merger in accordance
with the methodology used in Section 4.04 of the Merger Agreement.
14. Consistent Positions.
14.1. In the event the AT&T Broadband Group desires to take any
position on a Joint Return for a Pre-Distribution Taxable Period with respect to
a specific Tax Item that is directly inconsistent with a position taken on a
previously filed Tax Return of or which included a member of the AT&T Broadband
Group for a Pre-Distribution Taxable Period (an "Inconsistent Position") it
shall notify AT&T accordingly. If the Inconsistent Position solely relates to
the AT&T Broadband Group's line of business and is not relevant to the AT&T
Communications Group (a "Broadband Inconsistent Position"), the AT&T Broadband
Group shall provide to AT&T, at least ninety (90) days prior to the due date
(with extensions) of the relevant Joint Return, information sufficient to
establish that such Broadband Inconsistent Position would have a likelihood of
success under the law that is at least 33-1/3 percent (the "Reporting
Standard"). Within thirty (30) business days of receipt of such information,
AT&T shall notify the AT&T Broadband Group in writing (a) if such information is
not reasonably satisfactory to AT&T or (b) if AT&T, in its sole discretion,
determines that the Broadband Inconsistent Position could reasonably be expected
to have an adverse effect on AT&T. The item will be reported by AT&T on the
relevant Joint Return in accordance with past practice of the AT&T Affiliated
Group, unless within ten (10) business days of receipt of the written notice
described in clause (a)
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of the preceding sentence, the Broadband Group provides AT&T Communications with
an opinion by a nationally recognized law firm confirming, in form and substance
reasonably satisfactory to AT&T Communications, that the Broadband Inconsistent
Position would meet the Reporting Standard. Any expenses related to obtaining
such an opinion shall be borne by the Broadband Group. For the avoidance of
doubt, if the AT&T Broadband Group requests that AT&T take an Inconsistent
Position (which is not a Broadband Inconsistent Position) on a Joint Return,
with respect to an AT&T Broadband Group Tax Item, AT&T may determine in its sole
discretion (and without regard to the procedures in this Section 14.1) whether
to report any AT&T Broadband Group Tax Item which is an Inconsistent Position
(and not a Broadband Inconsistent Position) in accordance with the request of
the AT&T Broadband Group.
14.2. In any Tax Return for a Post-Distribution Taxable Period, the
AT&T Broadband Group agrees to act in good faith in reporting its Tax Items and
not to claim any deduction, refund or credit which has been claimed (or which in
accordance with past practice will be claimed) on a Tax Return of or which
included a member of the AT&T Broadband Group for a Pre-Distribution Taxable
Period, except as may be required pursuant to a Final Determination
14.3. AT&T, at its election and expense, shall be permitted to retain
an Independent Third Party to review the information provided by the AT&T
Broadband Group pursuant to Section 13 or 14.1, as the case may be, for
completeness and accuracy, and to determine whether such information is
consistent with AT&T's past practice or, to the extent it relates to a Broadband
Inconsistent Position, sufficient to satisfy the Reporting Standard. The AT&T
Broadband Group shall cooperate fully with such third party review and shall
make available any of the information described in Sections 13 or 14.1, as the
case may be, as reasonably requested by AT&T or its representatives.
15. Resolution of Disputes. Any dispute concerning the calculation or
basis of a determination of any payment provided for hereunder shall be resolved
by the Independent Third Party selected under the principles of Section 11.7(a),
whose judgment shall be conclusive and binding upon the parties, in the absence
of mathematical error.
16. Binding Effect; Successors and Assigns. This Agreement shall be
binding upon AT&T and AT&T Broadband. This Agreement shall inure to the benefit
of, and be binding upon, any successors or assigns of the parties hereto
(including, without limitation, any Subsidiary that becomes a party hereto
pursuant to Section 25). AT&T, AT&T Broadband, and each other party hereto may
assign their right to receive payments under this Agreement but may not assign
or delegate their obligations hereunder.
17. Interpretation. This Agreement is intended to calculate and
allocate certain federal, state, local and foreign Tax liabilities of the
members of the AT&T Affiliated Group, the AT&T Communications Group, and the
AT&T Broadband Group, and any situation or circumstance concerning such
calculation and allocation that is not specifically contemplated hereby or
provided for herein shall be dealt with in a manner consistent with the
underlying principles of calculation and allocation in this Agreement.
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18. Legal and Accounting Fees. Except as otherwise provided herein, any
fees or expenses for legal, accounting or other professional services rendered
in connection with the preparation of a Joint Return or the conduct of any Tax
Proceeding, including, without limitation, any Dispute Resolution pursuant to
Section 11.7, shall be borne by the party incurring such fees or expenses.
19. Effect of the Agreement. This Agreement shall determine the
liability of AT&T, AT&T Broadband and the members of their respective Groups to
each other as to the matters provided for herein as of the Effective Date,
whether or not such determination is effective for purposes of the Code or of
state, local or foreign Tax laws, or for financial reporting purposes or for any
other purposes.
20. Entire Agreement; Termination; Amendments; Waiver.
20.1. This Agreement embodies the entire understanding among the
parties relating to its subject matter. Any and all prior correspondence,
conversations and memoranda are merged herein and shall be without effect
hereon. No promises, covenants or representations of any kind, other than those
expressly stated herein, have been made to induce either party to enter into
this Agreement.
20.2. This Agreement shall apply as of the Effective Date and shall
remain in effect unless the parties agree in writing to terminate this
Agreement. Notwithstanding any such termination, this Agreement shall continue
in effect with respect to any payment or indemnification due for all taxable
periods prior to termination during which this Agreement was in effect.
20.3. This Agreement, including this provision against oral
modification, shall not be amended, supplemented, modified or terminated except
by a writing duly signed by each of the parties hereto, and no waiver of any
provisions of this Agreement shall be effective unless in a writing duly signed
by the party sought to be bound.
21. Prior Agreements. As of the Effective Date, this Agreement
supersedes and terminates all prior agreements as to the allocation of Tax
liabilities between the parties, including, but not limited to, the Federal Tax
Allocation Agreement and the State and Local Income Tax Allocation Agreement;
provided, however, that (a) except as otherwise provided in Section 4 hereof,
the Federal Tax Allocation Agreement and the State and Local Income Tax
Allocation Agreement shall remain fully in effect for any Pre-Effective Taxable
Period with respect to all Legal Entities that are members of the AT&T Broadband
Group or the AT&T Communications Group; (b) the Liberty Tax Sharing Agreement
shall remain fully in effect; (c) the Wireless Tax Sharing Agreement shall
remain fully in effect; (d) the Separation and Distribution Agreement dated as
of June 4, 2001, by and between AT&T and AT&T Wireless Services, Inc. shall
remain fully in effect; and (e) the Separation and Distribution Agreement shall
remain fully in effect.
22. Code References. Any references to the Code or Regulations shall be
deemed to refer to the relevant provisions of any successor statute or
regulation and shall refer to such provisions as in effect from time to time.
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23. Notices. All notices or other communications under this Agreement
shall be in writing (including telecopy communication) and shall be mailed,
telecopied or delivered:
If to AT&T, to: AT&T Corp.
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxx Xxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Fax: (000) 000-0000
with a copy to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxxxx
Xxxxxxxxx X. Xxxxxxxx
Fax: (000) 000-0000
If to AT&T Broadband, to: AT&T Broadband Corp.
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxx Xxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Fax: (000) 000-0000
with a copy to:
AT&T Broadband Corp.
000 Xxxxxxxxx Xxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Senior Vice President
and Chief Counsel
Fax: (000) 000-0000
and:
Comcast Corporation
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: General Counsel
Fax: (000) 000-0000
and:
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Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Fax: (000) 000-0000
Any party may, by written notice to the other party, change the address
to which such notices are to be given. All such notices and communications shall
be effective when received.
24. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
25. New Members. Each of the parties to this Agreement recognizes that
from time to time new Subsidiaries of AT&T or AT&T Broadband may be added to the
AT&T Communications Group or the AT&T Broadband Group. Each of the parties
agrees that any such new Subsidiary shall, without the express written consent
of the other parties, become a party to this Agreement for all purposes of this
Agreement with respect to taxable periods ending after such Subsidiary is added
to the relevant Group.
26. Nature of Obligations. Each of AT&T and AT&T Broadband acknowledges
and agrees that its respective obligations under this Agreement shall not be
affected by any impossibility, illegality, impracticability, frustration of
purpose, force majeure, act of government, bankruptcy or insolvency of any party
to this Agreement, failure or refusal of any party to this Agreement to perform
its obligations hereunder, dispute, setoff or counterclaim, change in amount,
composition or terms of the assets, liabilities or equity of AT&T or AT&T
Broadband or any other party to this Agreement, or any other defense or right
which AT&T or AT&T Broadband or any other party to this Agreement has or may
have that might have the effect of releasing AT&T or AT&T Broadband or any other
party to this Agreement, as the case may be, from such obligations.
27. Severability. Any provision or the application of such provision
hereof which is invalid, illegal or unenforceable in any jurisdiction will be
ineffective only to the extent of such invalidity or unenforceability, without
affecting in any way the remaining provisions hereof. The parties will negotiate
in good faith to replace any provision so held to be invalid or unenforceable so
as to implement most effectively the transactions contemplated by such
provisions in accordance with the parties' original intent.
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IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be executed by its respective duly authorized officer as of the
date first set forth above.
AT&T Corp.
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President -- Law
and Secretary
AT&T Broadband Corp.
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President
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