EXHIBIT 10.39
TAX MATTERS AGREEMENT
This Tax Matters Agreement (the "AGREEMENT") is entered into as of
December 22, 2006, by and among News Corporation, a Delaware corporation
("PARENT"), and Liberty Media Corporation, a Delaware corporation ("LMC").
RECITALS
WHEREAS, as of the date hereof, Parent is the common parent of an
affiliated group of domestic corporations within the meaning of Section 1504(a)
of the Code, and the members of the affiliated group have heretofore joined in
filing consolidated federal income Tax Returns;
WHEREAS, pursuant to the Share Exchange Agreement, dated as of
December 22, 2006 (the "SHARE EXCHANGE AGREEMENT"), by and between Parent and
LMC, as of the Closing Date, (a) the assets of Greenlady Corp., a newly formed
Delaware corporation ("SPLITCO"), will consist solely of (i) all issued and
outstanding equity interests of each Transferred Subsidiary, (ii) the DTV Shares
and (iii) the Cash Amount and (b) Parent will own all of the Splitco Shares;
WHEREAS, on the Closing Date, Parent will transfer the Splitco Shares
to the Stockholders in exchange for the LMC Parent Shares;
WHEREAS, the obligation of LMC to consummate the Exchange is
conditioned, among other things, upon the receipt of the LMC Exchange Ruling and
the LMC Tax Opinion, and the obligation of Parent to consummate the Exchange is
conditioned, among other things, upon the receipt of the Parent Exchange Ruling,
the Parent Restructuring Ruling and the Parent Tax Opinion;
WHEREAS, the Parties to this Agreement intend that the Exchange
qualify as a tax-free exchange under Section 355(a) of the Code and this
Agreement together with the Share Exchange Agreement constitute a "plan of
reorganization," as defined in Section 368 of the Code; and
WHEREAS, in anticipation of the Exchange, the Parties desire to enter
into this Agreement to provide for certain Tax matters, including the assignment
of responsibility for the preparation and filing of Tax Returns, the payment of
and indemnification for Taxes (including Taxes with respect to the Exchange and
the Parent Restructuring), entitlement to refunds of Taxes, and the prosecution
and defense of any Tax Contest;
NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained in this Agreement, the Parties hereby agree as follows:
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ARTICLE I
DEFINITIONS
Section 1.1 GENERAL. Capitalized terms used in this Agreement and not
defined herein shall have the meanings that such terms have in the Share
Exchange Agreement. As used in this Agreement, the following terms shall have
the following meanings:
"ACQUISITION TRANSACTIONS" shall mean the acquisition by the LMC
Entities, Liberty Media LLC or their respective predecessors or Affiliates of
LMC Parent Shares or stock (or ADSs) of The News Corporation Limited (now known
as News Holdings Limited) in each of the Domestication and the Merger
Transactions.
"ACTION" shall have the meaning specified in the Share Exchange
Agreement.
"AFFILIATE" shall have the meaning specified in the Share Exchange
Agreement.
"AGREEMENT" shall have the meaning specified in the preamble.
"ANCILLARY AGREEMENTS" shall have the meaning specified in the Share
Exchange Agreement.
"BUSINESS DAY" shall have the meaning specified in the Share Exchange
Agreement.
"CLOSING" shall have the meaning specified in the Share Exchange
Agreement.
"CLOSING DATE" shall have the meaning specified in the Share Exchange
Agreement.
"CLOSING OF THE BOOKS METHOD" means the apportionment of items between
portions of a Taxable period based on a closing of the books and records as of
the end of the day on the Closing Date (as if the Closing Date were the end of
the Taxable period), provided that any items not susceptible to such
apportionment shall be apportioned pro rata on the basis of elapsed days during
the relevant portion of the Taxable period.
"CODE" shall have the meaning specified in the Share Exchange
Agreement.
"DAMAGES" shall have the meaning specified in the Share Exchange
Agreement.
"DISCLOSING PARTY" shall have the meaning specified in Section 8.3.
"DTV SHARES" shall have the meaning specified in the Share Exchange
Agreement.
"DOMESTICATION" means the "Proposed Transaction" as defined in the
Information Memorandum.
"EXCHANGE" shall have the meaning specified in the Share Exchange
Agreement.
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"EXCHANGE TAXES" means all Taxes (including any United States federal,
state, local or foreign Taxes, but excluding Transfer Taxes) resulting from the
Exchange or the Parent Restructuring.
"FINAL DETERMINATION" means a determination within the meaning of
Section 1313 of the Code or any similar provision of state or local Law.
"FOX SPORTS AGREEMENTS" means (i) the Parents' Agreement, dated as of
July 15, 1999, by and among Liberty Media Corporation (now known as Liberty
Media LLC) and The News Corporation Limited (now known as News Holdings
Limited), and (ii) the Agreement and Plan of Merger, dated as of July 15, 1999,
by and among Liberty Media Corporation (now known as Liberty Media LLC), LMC
Newco U.S., Inc., New LMC KBL, Inc., New LMC Bay Area, Inc., New LMC Chicago,
Inc., New LMC Northwest, Inc., New LMC Upper Midwest, Inc., The News Corporation
Limited (now known as News Holdings Limited), and News Publishing Australia
Limited.
"GM AGREEMENTS" means (i) the Stock Purchase Agreement, dated April 9,
2003, as amended, by and among General Motors Corporation, Xxxxxx Electronics
Corporation and The News Corporation Limited (now known as News Holdings
Limited), and (ii) the Agreement and Plan of Merger, dated April 9, 2003, as
amended, between Xxxxxx Electronics Corporation, The News Corporation Limited
(now known as News Holdings Limited), and GMH Merger Sub, Inc.
"GM TRANSACTION" means the transactions effected by GM Agreements.
"GOVERNMENTAL AUTHORITY" shall have the meaning specified in the Share
Exchange Agreement.
"INFORMATION MEMORANDUM" means the information memorandum of The News
Corporation Limited (now known as News Holdings Limited), dated September 15,
2004, relating to the U.S. reincorporation and certain acquisitions from Xxxxxxx
family interests.
"INTEREST RATE" means LIBOR, as adjusted as of each Interest Rate
Determination Date, plus 2%. Interest will be calculated at the applicable
Interest Rate based upon the number of days elapsed in each year of 365/366
days.
"INTEREST RATE DETERMINATION DATE" means the Closing Date and each
March 31, June 30, September 30 and December 31 thereafter.
"INTERNAL RESTRUCTURING" means the "Post-Transaction Internal
Restructuring" as defined in the Information Memorandum.
"IRS" shall have the meaning specified in the Share Exchange
Agreement.
"IRS SUBMISSION" shall mean the Ruling Request and any supplemental
materials submitted to the IRS relating thereto.
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"JOINT RULING REQUEST" means any ruling request submitted jointly by
Parent and LMC to the IRS for (x) the Rulings, and (y) any other ruling in
connection with the Exchange or the Parent Restructuring that Parent and LMC
deem to be appropriate.
"LIBERTY NEWCO INTERNATIONAL AGREEMENT" shall mean the Agreement and
Plan of Merger, dated as of December 3, 2001, by and among Liberty Media
Corporation (now known as Liberty Media LLC), Liberty Newco International, Inc.,
The News Corporation Limited (now known as News Holdings Limited), and News
Publishing Australia Limited.
"LIBOR" means, with respect to each period between two consecutive
Interest Rate Determination Dates (an "interest period"), a rate determined at
approximately 11:00 a.m., London time, two London business days before the
applicable Interest Rate Determination Date (the "determination time") on the
following basis: (A) the rate appearing on Telerate Page 3750 (or on any
successor or substitute page of such service, or any successor to or substitute
for such service, providing rate quotations comparable to those currently
provided on such page of such service, as determined by LMC from time to time,
for purposes of providing quotations of interest rates applicable to dollar
deposits in the London interbank market) at the determination time as the rate
for dollar deposits with a maturity comparable to such interest period, and (B)
if such rate is not available at such time for any reason, then the arithmetic
mean (rounded upward, if necessary, to the nearest 1/16 of 1%) of the offered
rates for deposits in U.S. dollars, for a period comparable to such interest
period and in an amount approximately equal to the aggregate outstanding
principal amount as to which the interest period applies, quoted at the
determination time, as such rates appear on the display designated as page
"LIBO" on the Reuters Monitor Money Rates Service (or such other page as may
replace the "LIBO" page on that service for the purpose of displaying London
interbank offered rates of major banks). If neither rate is available at such
time for any reason, then "LIBOR" with respect to such interest period shall be
the average (rounded upward, if necessary, to the next higher 1/16 of 1%) of the
respective rates per annum at which dollar deposits of $5,000,000 and for a
maturity comparable to such interest period are offered by the principal London
office of JPMorgan Chase Bank at the determination time.
"LMC" shall have the meaning specified in the preamble.
"LMC ENTITIES" mean LMC and the Stockholders.
"LMC EXCHANGE RULING" shall have the meaning specified in the Share
Exchange Agreement.
"LMC INDEMNITEES" shall have the meaning specified in the Share
Exchange Agreement.
"LMC MATERIALS" shall have the meaning specified in Section 5.2(b).
"LMC PARENT SHARES" shall have the meaning specified in the Share
Exchange Agreement.
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"LMC RULING REQUEST" means any ruling request submitted by LMC to the
IRS for (x) the LMC Exchange Ruling, and (y) any other ruling in connection with
the Exchange or the Parent Restructuring that Parent and LMC deem to be
appropriate.
"LMC TAX OPINION" shall have the meaning specified in the Share
Exchange Agreement.
"LMC TAX OPINION REPRESENTATIONS" shall have the meaning specified in
the Share Exchange Agreement.
"MERGER TRANSACTIONS" shall mean each of the transactions effected by
the TVGIA Agreement, the UVSG Agreement, the Liberty Newco International
Agreement, and the Fox Sports Agreements.
"PARENT" shall have the meaning specified in the preamble.
"PARENT EXCHANGE RULING" shall have the meaning specified in the Share
Exchange Agreement.
"PARENT INDEMNITEES" shall have the meaning specified in the Share
Exchange Agreement.
"PARENT MATERIALS" shall have the meaning specified in Section 5.2(a).
"PARENT RESTRUCTURING" shall have the meaning specified in the Share
Exchange Agreement.
"PARENT RESTRUCTURING RULING" shall have the meaning specified in the
Share Exchange Agreement.
"PARENT RULING REQUEST" means any ruling request submitted by Parent
to the IRS for (x) the Parent Exchange Ruling, (y) the Parent Restructuring
Ruling, and (z) any other ruling in connection with the Exchange or the Parent
Restructuring that Parent and LMC deem to be appropriate.
"PARENT TAX OPINION" shall have the meaning specified in the Share
Exchange Agreement.
"PARENT TAX OPINION REPRESENTATIONS" shall have the meaning specified
in the Share Exchange Agreement.
"PARTY" means any of Parent or LMC, as the case may be.
"PERSON" shall have the meaning specified in the Share Exchange
Agreement.
"POST-EXCHANGE PERIOD" means any Taxable year or other Taxable period
beginning after the Closing Date and, in the case of any Taxable year or other
Taxable period
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that begins on or before and ends after the Closing Date, that part of the
Taxable year or other Taxable period that begins at the beginning of the day
after the Closing Date.
"PRE-EXCHANGE PERIOD" means any Taxable year or other Taxable period
that ends on or before the Closing Date and, in the case of any Taxable year or
other Taxable period that begins on or before and ends after the Closing Date,
that part of the Taxable year or other Taxable period through the end of the day
on the Closing Date.
"PRE-EXCHANGE TAX RETURN" means any Tax Return that is required to be
filed with respect to any Transferred Subsidiary for a Taxable period ending on
or before the Closing Date.
"RECEIVING PARTY" shall have the meaning specified in Section 8.3.
"RULING REQUEST" shall mean the Joint Ruling Request, if permitted to
be filed by the IRS, and if the IRS does not permit a Joint Ruling Request to be
filed, the Parent Ruling Request and the LMC Ruling Request.
"RULINGS" shall have the meaning specified in the Share Exchange
Agreement.
"SHARE EXCHANGE AGREEMENT" shall have the meaning specified in the
recitals.
"SPLITCO" shall have the meaning specified in the recitals.
"SPLITCO SHARES" shall have the meaning specified in the Share
Exchange Agreement.
"STOCKHOLDERS" shall have the meaning specified in the Share Exchange
Agreement.
"STRADDLE PERIOD" means any Taxable period commencing on or prior to,
and ending after, the Closing Date.
"STRADDLE RETURN" means a Tax Return that is required to be filed with
respect to any Transferred Subsidiary for a Straddle Period.
"SUBSIDIARY" shall have the meaning specified in the Share Exchange
Agreement.
"TAX" or "TAXES" shall have the meaning specified in the Share
Exchange Agreement.
"TAXING AUTHORITY" means any Governmental Authority or any
quasi-governmental or private body having jurisdiction over the assessment,
determination, collection, or imposition of any Tax (including the IRS).
"TAX CONTEST" shall have the meaning specified in Section 6.5.
"TAX-FREE STATUS OF THE TRANSACTIONS" means no Exchange Taxes will be
imposed upon Parent, LMC or any of their respective Affiliates.
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"TAX MATERIALS" shall have the meaning specified in Section 3.1.
"TAX OPINION REPRESENTATIONS" shall have the meaning specified in the
Share Exchange Agreement.
"TAX OPINIONS" shall have the meaning specified in the Share Exchange
Agreement.
"TAX RETURNS" shall have the meaning specified in the Share Exchange
Agreement.
"TAX SHARING AGREEMENTS" means all existing agreements or arrangements
(whether or not written) between or among Parent or any of its Affiliates (other
than any of the Transferred Subsidiaries), on the one hand, and any of the
Transferred Subsidiaries, on the other hand, including any such agreements or
arrangements where a third party is also a party, that provide for the
allocation, apportionment, sharing, assignment or indemnification of any Tax
liability or benefit, or the transfer or assignment of income, revenues,
receipts or gains for the purpose of determining any Person's Tax liability,
other than the Ancillary Agreements (including this Agreement) and the Share
Exchange Agreement.
"TRANSFER TAXES" means all U.S. federal, state, local or foreign
sales, use, privilege, transfer, documentary, gains, stamp, duties, recording,
and similar Taxes and fees (including any penalties, interest or additions
thereto) imposed upon any Party in connection with the Exchange or the Parent
Restructuring.
"TRANSFERRED BUSINESS" shall have the meaning specified in the Share
Exchange Agreement.
"TRANSFERRED SUBSIDIARIES" shall have the meaning specified in the
Share Exchange Agreement.
"TREASURY REGULATIONS" shall have the meaning specified in the Share
Exchange Agreement.
"TVGIA AGREEMENT" shall mean the Agreement and Plan of Merger, dated
as of November 27, 2001, by and among Liberty Media Corporation (now known as
Liberty Media LLC), Liberty TVGIA, Inc., The News Corporation Limited (now known
as News Holdings Limited) and News Publishing Australia Limited.
"UVSG AGREEMENT" shall mean the Agreement and Plan of Merger, dated as
of May 2, 2001, by and among Liberty Media Corporation (now known as Liberty
Media LLC), Liberty UVSG, Inc., The News Corporation Limited (now known as News
Holdings Limited) and News Publishing Australia Limited.
Section 1.2 REFERENCES; INTERPRETATION. References in this Agreement
to any gender include references to all genders, and references to the singular
include references to the plural and vice versa. The word "including" when used
in this Agreement shall be deemed to be followed by the phrase "without
limitation". Unless the context otherwise requires, references in
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this Agreement to Articles, Sections, Exhibits and Schedules shall be deemed
references to Articles and Sections of, and Exhibits and Schedules to, such
Agreement. Unless the context otherwise requires, the words "hereof", "hereby",
and "herein" and words of similar meaning when used in this Agreement refer to
this Agreement in its entirety and not to any particular Article, Section or
provision of this Agreement.
ARTICLE II
PREPARATION OF TAX RETURNS; ALLOCATION AND PAYMENT OF TAXES
Section 2.1 PREPARATION OF TAX RETURNS.
(a) PRE-EXCHANGE TAX RETURNS.
(i) CONSOLIDATED AND COMBINED RETURNS FOR PRE-EXCHANGE
PERIODS. Where required or permitted by applicable Law, Parent shall include the
Transferred Subsidiaries in, or cause the Transferred Subsidiaries to be
included in, and shall prepare and file or cause to be prepared and filed, (A)
the United States consolidated federal income Tax Returns of Parent for the
Taxable periods (or portions thereof) of the Transferred Subsidiaries ending on
or prior to the Closing Date and (B) all other consolidated, combined or unitary
Tax Returns for the Taxable periods (or portions thereof) of the Transferred
Subsidiaries ending on or prior to the Closing Date. Parent shall pay any and
all Taxes due with respect to the Tax Returns referred to in clause (A) or (B)
of this Section 2.1(a)(i).
(ii) SEPARATE RETURNS FOR PRE-EXCHANGE PERIODS. In addition
to the Tax Returns described in Section 2.1(a)(i), Parent shall prepare (or
cause to be prepared) (A) all Tax Returns required to be filed by any of the
Transferred Subsidiaries on or prior to the Closing Date (taking into account
any applicable extensions), and (B) all Tax Returns required to be filed by any
of the Transferred Subsidiaries after the Closing Date (taking into account any
applicable extensions) for a Pre-Exchange Period (other than a Pre-Exchange
Period that is part of a Straddle Period). With respect to Tax Returns described
in clause (A) of this Section 2.1(a)(ii), Parent shall cause the applicable
Transferred Subsidiary to file such Tax Returns and Parent shall pay any and all
Taxes shown due thereon. With respect to Tax Returns described in clause (B) of
this Section 2.1(a)(ii), provided that the applicable Transferred Subsidiary has
received such Tax Returns from Parent not less than five days prior to the due
date for filing such Tax Returns (taking into account any applicable extensions)
along with the amount of any and all Taxes shown as due thereon, LMC shall cause
the applicable Transferred Subsidiary to execute and timely file such Tax
Returns and timely remit such Taxes.
(iii) PROVISION OF TAX INFORMATION. After the Closing, LMC
shall cause the Transferred Subsidiaries to furnish Tax information to Parent as
reasonably requested in order to permit Parent to prepare and timely file the
Pre-Exchange Tax Returns described in Section 2.1(a)(i) and (ii).
(b) OTHER TAX RETURNS. All Tax Returns of the Transferred
Subsidiaries other than those Tax Returns described in Section 2.1(a), shall be
prepared and timely filed by LMC. LMC shall timely pay or cause to be paid all
Taxes shown on such Tax Returns.
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(c) STRADDLE RETURNS. With respect to any Straddle Return, LMC
shall deliver, at least 20 days prior to the due date for filing such Straddle
Return (taking into account any applicable extensions), to Parent a statement
setting forth the amount of Tax that Parent owes pursuant to clause (i) of
Section 6.2, including the allocation of Taxes under Section 6.4, and copies of
such Straddle Return and related work-papers. Parent shall have the right to
review such Straddle Return and related work-papers and liability for Taxes and
to suggest to LMC any reasonable changes to such Straddle Return no later than
10 days prior to the date for the filing of such Straddle Return. Parent and LMC
agree to consult and to attempt to resolve in good faith any issue arising as a
result of the review of such Straddle Return and related work-papers and
allocation of liability for Taxes and mutually to consent to the filing as
promptly as possible of such Straddle Return. Not later than five days before
the due date for the payment of Taxes with respect to such Straddle Return
(taking into account any applicable extensions), Parent shall pay to LMC an
amount equal to the Taxes as agreed to by LMC and Parent as being owed by Parent
pursuant to Sections 6.2 and 6.4 with respect to such Straddle Return. If LMC
and Parent cannot agree on the amount of Taxes owed by Parent with respect to a
Straddle Return, Parent shall pay to LMC the amount of Taxes reasonably
determined using the mid-point of LMC's and Parent's determination of the amount
of Taxes to be owed by Parent in respect of such Straddle Return pursuant to
Sections 6.2 and 6.4. Within 10 days after such payment, Parent and LMC shall
refer the matter to an independent nationally recognized accounting firm agreed
to by LMC and Parent to arbitrate the dispute. Parent and LMC shall equally
share the fees and expenses of such accounting firm and its determination as to
the amount owing by Parent pursuant to Sections 6.2 and 6.4 with respect to a
Straddle Return shall be binding on both parties. Within five days after the
determination by such accounting firm, if necessary, the appropriate Party shall
pay the other Party any amount which is determined by such accounting firm to be
owed plus interest from the due date for the payment of Taxes with respect to
such Straddle Return (taking into account any applicable extensions) at the
Interest Rate.
Section 2.2 MANNER OF PREPARATION. All Tax Returns that include any of
the Transferred Subsidiaries, Parent, LMC, the Stockholders, or any of their
respective Affiliates, or otherwise relate to the Transferred Business or the
ownership of the DTV Shares shall be prepared in a manner that is consistent
with the Ruling Request, the Rulings, and the Tax Opinions. To the extent that
the items reported on any Tax Return of or with respect to any Transferred
Subsidiary that is prepared by a Party or its Affiliates is likely to increase
any Tax liability or Tax indemnity obligation under this Agreement of the other
Party or its Affiliates, such Tax Return shall be prepared in accordance with
Tax accounting and other practices used by such Transferred Subsidiary or Parent
with respect to the relevant Tax Returns filed prior to the date hereof (unless
such past practices are not permissible under applicable Law), and to the extent
any items are not covered by past practices (or in the event such past practices
are not permissible under applicable Law), in accordance with reasonable
practices selected by the Party (or its Affiliate) responsible for filing such
Tax Return hereunder with the consent, not to be unreasonably withheld or
delayed, of the other Party. Unless otherwise required by applicable Law,
neither Party nor any of their respective Affiliates will make, change or revoke
(or cause to be made, changed, or revoked) any Tax election with respect to the
Transferred Subsidiaries that is likely to increase materially any Tax liability
(or Tax indemnity obligation under this Agreement) of the other Party or its
Affiliates without the consent, not to be unreasonably withheld or delayed, of
the other Party.
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Section 2.3 REFUNDS, CREDITS OR OFFSETS.
(a) Except as otherwise contemplated by this Section 2.3 or
Section 2.4, (i) any refunds, credits or offsets with respect to Taxes of any
Transferred Subsidiaries or that otherwise relate to the Transferred Business or
the ownership of the DTV Shares for a Pre-Exchange Period shall be for the
account of Parent, and (ii) any refunds, credits or offsets with respect to
Taxes of any Transferred Subsidiaries or that otherwise relate to the
Transferred Business or the ownership of the DTV Shares for a Post-Exchange
Period shall be for the account of LMC.
(b) Notwithstanding Section 2.3(a), (i) any refunds, credits or
offsets with respect to Exchange Taxes allocated to, and actually paid by,
Parent pursuant to this Agreement shall be for the account of Parent, and (ii)
any refunds, credits or offsets with respect to Exchange Taxes allocated to, and
actually paid by, LMC pursuant to this Agreement shall be for the account of
LMC.
(c) Any such refunds, credits or offsets shall be allocated
between the Pre-Exchange Period and the Post-Exchange Period in a manner
consistent with the principles of Section 6.4. LMC shall forward to Parent, or
reimburse Parent, for any such refunds, credits or offsets, plus any interest
received thereon, for the account of Parent within 10 days from receipt thereof
by LMC or any of its Affiliates. Parent shall forward to LMC, or reimburse LMC,
for any refunds, credits or offsets, plus any interest received thereon, for the
account of LMC within 10 days from receipt thereof by Parent or any of its
Affiliates. Any refunds, credits or offsets, plus any interest received thereon,
or reimbursements not forwarded or made within the 10 day period specified above
shall bear interest from the date received by the refunding or reimbursing party
(or its Affiliate) at the Interest Rate. If, subsequent to a Taxing Authority's
allowance of a refund, credit or offset, such Taxing Authority reduces or
eliminates such allowance, any refund, credit or offset, plus any interest
received thereon, forwarded or reimbursed under this Section 2.3 shall be
returned to the party who had forwarded or reimbursed such refund, credit or
offset and interest upon the request of such forwarding party in an amount equal
to the applicable reduction, including any interest received thereon.
Section 2.4 CARRYBACKS. To the extent permitted by Law, LMC and its
Affiliates shall waive the right to carryback any Tax attribute of the
Transferred Subsidiaries arising in a Post-Exchange Period to a Pre-Exchange
Period. If and to the extent that LMC or any of its Affiliates are not permitted
by applicable Law to elect to forego such carryback and LMC requests in writing
that Parent or any of its Affiliates obtain a refund, credit or offset of Taxes
with respect to such carryback, and provided that Parent or any of its
Affiliates would not otherwise be required to forego a refund, credit or offset
of Taxes for its own account or otherwise be adversely affected as a result of
such carryback, then (i) Parent (or its Affiliate) shall take all reasonable
measures to obtain a refund, credit or offset of Tax with respect to such
carryback (including by filing an amended Tax Return), and (ii) to the extent
that Parent or any of its Affiliates receives any refund, credit or offset of
Taxes attributable (on a last dollar basis) to such carryback, Parent shall pay
such refund, credit or offset, plus any interest net of Taxes received thereon,
to LMC within 10 days from receipt thereof by Parent or any of its Affiliates;
provided, that Parent shall be entitled to reduce the amount of any such refund,
credit or offset for its reasonable costs and expenses; and provided further
that LMC, upon the request of Parent,
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agrees to repay such refund, credit or offset, plus any interest net of Taxes
received thereon, to Parent in the event, and to the extent, that Parent is
required to repay such refund, credit or offset, plus any interest net of Taxes
received thereon, to a Governmental Authority.
Section 2.5 AMENDED RETURNS. Any amended Tax Return or claim for Tax
refund, credit or offset with respect to any Transferred Subsidiary may be made
only by the Party (or its Affiliates) responsible for preparing the original Tax
Return with respect to such Transferred Subsidiary pursuant to Section 2.1. Such
Party (or its Affiliates) shall not, without the prior written consent of the
other Party, which consent shall not be unreasonably withheld or delayed, file,
or cause to be filed, any such amended Tax Return or claim for Tax refund,
credit or offset to the extent that such filing, if accepted, is likely to
change the Tax liability of, or give rise to a payment under this Agreement by,
such other Party (or any Affiliate of such other Party) for any Taxable period
(or portion thereof).
Section 2.6 ALLOCATION OF EXCHANGE TAXES.
(a) Except as otherwise provided in this Section 2.6, any
Exchange Taxes imposed on Parent, the Transferred Subsidiaries or on any
Affiliate of Parent shall be allocated to Parent, and any Exchange Taxes imposed
on the LMC Entities or on any Affiliate of the LMC Entities (other than the
Transferred Subsidiaries) shall be allocated to LMC.
(b) LMC shall be allocated any Exchange Taxes imposed on Parent,
the Transferred Subsidiaries or any Affiliate of Parent that result from (i) any
of the representations and warranties of LMC in this Agreement not being true
and correct when made or deemed made, (ii) any breach or nonperformance of any
covenant or agreement made or to be performed by LMC in this Agreement, or (iii)
any other action (x) by LMC or any of its Affiliates (other than the Transferred
Subsidiaries) or (y) by, after the Closing, the Transferred Subsidiaries.
(c) Parent shall be allocated any Exchange Taxes imposed on the
LMC Entities or any Affiliate of the LMC Entities that result from (i) any of
the representations and warranties of Parent in this Agreement not being true
and correct when made or deemed made, (ii) any breach or nonperformance of any
covenant or agreement made or to be performed by Parent in this Agreement, or
(iii) any other action (x) by Parent or any of its Affiliates (other than the
Transferred Subsidiaries) or (y) by, prior to the Closing, the Transferred
Subsidiaries.
Section 2.7 TRANSFER TAXES. All Transfer Taxes imposed by a U.S.
federal, state or local Taxing Authority shall be allocated one-half to LMC and
one-half to Parent. All Transfer Taxes imposed by a foreign Taxing Authority
shall be allocated to Parent. LMC, on the one hand, or Parent, on the other
hand, whichever is required under applicable Law, shall file all necessary
documentation with respect to such Transfer Taxes on a timely basis.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to LMC as of the date hereof and as of the
Closing that:
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Section 3.1 THE RULING REQUEST AND THE RULINGS. Parent (i) has
examined (A) the Ruling Request and each other IRS Submission, (B) the Rulings,
and (C) any other materials delivered in connection with the issuance of the
Rulings (collectively, the "TAX MATERIALS"), and (ii) the facts presented and
representations made therein, to the extent descriptive of or otherwise relating
to Parent, the Transferred Subsidiaries or any of their respective Affiliates
are true, correct, and complete in all material respects. This representation is
made as of the Closing Date and not as of the date hereof.
Section 3.2 PARENT TAX OPINION AND PARENT TAX OPINION REPRESENTATIONS.
(a) As of the date hereof, none of Parent or its Affiliates has
taken or agreed to take any action, has failed to take any action or knows after
consultation with Tax counsel, of any fact, agreement, plan or other
circumstance, that is reasonably likely, directly or indirectly, in whole or in
part, to (i) jeopardize the receipt of any of the Rulings or the Tax Opinions,
or (ii) adversely affect the Tax-Free Status of the Transactions.
(b) The Parent Tax Opinion Representations are true, correct and
complete in all respects and are incorporated herein by this reference. This
representation is made as of the Closing Date and not as of the date hereof.
(c) Parent does not have any plan or intention to take any
action, or to fail to take any action, which action or omission would be
inconsistent with the Parent Tax Opinion Representations.
(d) As of the date hereof, Parent expects the Parent Tax Opinion
Representations to be true, correct and complete in all respects as of the
Closing Date.
Section 3.3 REPRESENTATIONS RELATED TO THE TRANSFERRED SUBSIDIARIES.
The representations and warranties set forth in Sections 4.20.6, 4.20.10, and
4.20.11 of the Share Exchange Agreement are true, correct and complete in all
respects and are incorporated herein by this reference. For purposes of the
representation made by this Section 3.3 as of the Closing Date, the
representations and warranties set forth in Sections 4.20.6, 4.20.10, and
4.20.11 of the Share Exchange Agreement shall be deemed to have been made again
as of the Closing Date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF LMC
LMC represents and warrants to Parent as of the date hereof and as of the
Closing that:
Section 4.1 THE RULING REQUEST AND THE RULINGS. LMC (i) has examined
the Tax Materials, and (ii) the facts presented and representations made
therein, to the extent descriptive of or otherwise relating to the LMC Entities
or any of their respective Affiliates, are true, correct, and complete in all
material respects, subject to the limitations described in the next sentence.
With respect to any facts or representations related to the application of
Section 355(d) of the Code to the Exchange, LMC is permitted to assume, and has
assumed, all matters it is expressly permitted to assume pursuant to Section 4.3
(subject to the limitations set forth in such section). This representation is
made as of the Closing Date and not as of the date hereof.
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Section 4.2 LMC TAX OPINION AND LMC TAX OPINION REPRESENTATIONS.
(a) As of the date hereof, none of LMC or its Affiliates has
taken or agreed to take any action, has failed to take any action or knows,
after consultation with Tax counsel, of any fact, agreement, plan or other
circumstance, that is reasonably likely, directly or indirectly, in whole or in
part, to (i) jeopardize the receipt of any of the Rulings or the Tax Opinions,
or (ii) adversely affect the Tax-Free Status of the Transactions.
(b) The LMC Tax Opinion Representations are true, correct and
complete in all respects and are incorporated herein by this reference. This
representation is made as of the Closing Date and not as of the date hereof.
(c) LMC does not have any plan or intention to take any action,
or to fail to take any action, which action or omission would be inconsistent
with the LMC Tax Opinion Representations.
(d) As of the date hereof, LMC expects the LMC Tax Opinion
Representations to be true, correct and complete in all respects as of the
Closing Date.
Section 4.3 SECTION 355(d). For purposes of Section 355(d) of the
Code, immediately after the Exchange, no person (determined after applying
Section 355(d)(7) of the Code) will hold stock possessing 50 percent or more of
the total combined voting power of all classes of Splitco stock entitled to
vote, or 50 percent or more of the total value of shares of all classes of
Splitco stock, that was attributable to distributions on Parent stock that was
acquired by "purchase" (within the meaning of Section 355(d) of the Code) during
the five-year period (determined after applying Section 355(d)(6) of the Code)
ending on the date of the Exchange; provided, however, that for purposes of
making this representation, LMC is permitted to assume that:
(a) for U.S. federal income tax purposes, (i) the Domestication
constituted a transfer of property governed by Section 351 of the Code pursuant
to which an amount of stock in The News Corporation Limited (now known as News
Holdings Limited), a South Australia corporation, that meets the requirements of
Section 1504(a)(2) of the Code was acquired, and (ii) each of the Merger
Transactions constituted a reorganization within the meaning of Section 368(a)
of the Code;
(b) each of the Acquisition Transactions was not, in and of
itself, a "purchase" within the meaning of Section 355(d)(5)(A) and (B) of the
Code, as such provisions are interpreted by Treasury Regulations Section
1.355-6(d), and as such provisions would apply without regard to any other
provision of Section 355(d) of the Code or the Treasury Regulations thereunder
(including, for the avoidance of doubt, the application of Section 355(d)(5)(C)
of the Code and Treasury Regulations Section 1.355-6(e));
(c) neither Parent nor any of its Affiliates has taken any action
at any time that did not, directly or indirectly, involve any of the LMC
Entities, Liberty Media LLC or any of their respective predecessors or
Affiliates, which action would cause any of the Acquisition Transactions to
constitute a "purchase" within the meaning of Section 355(d) of the Code and the
Treasury Regulations thereunder; and
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(d) the Internal Restructuring did not result in a "purchase,"
within the meaning of Section 355(d) of the Code and the Treasury Regulations
thereunder, of any stock by any Person.
Notwithstanding the foregoing, the assumptions set forth in Section 4.3(a) and
(b) shall not apply to the extent that any of the LMC Entities, Liberty Media
LLC or any of their respective predecessors or Affiliates has taken any action
at any time inconsistent with such assumptions.
ARTICLE V
COVENANTS AND AGREEMENTS
Section 5.1 PREPARATION AND FILING OF IRS SUBMISSIONS.
(a) As soon as reasonably practicable after the date of this
Agreement, the Ruling Request shall be submitted to the IRS. Parent and LMC
shall use reasonable best efforts to cause the IRS to accept a Joint Ruling
Request; provided, however, that if the IRS does not permit a Joint Ruling
Request to be submitted, then Parent shall submit the Parent Ruling Request and
LMC shall submit the LMC Ruling Request. The Joint Ruling Request and any other
IRS Submissions relating thereto shall be prepared by Parent and submitted to
the IRS jointly on behalf of Parent and LMC. If a Joint Ruling Request is not
permissible, then Parent shall prepare the Parent Ruling Request and any other
IRS Submissions relating thereto. The LMC Ruling Request shall be prepared in a
form substantially similar to the Parent Ruling Request, except to the extent
reasonably necessary or appropriate to reflect the fact that such LMC Ruling
Request will be filed by LMC (including with respect to any rulings requested),
and other IRS Submissions relating to the LMC Ruling Request shall be prepared
in a form substantially similar to any corresponding IRS Submission relating to
the Parent Ruling Request, except to the extent reasonably necessary or
appropriate to reflect the fact that such IRS Submission will be filed by LMC.
Parent shall provide LMC with a reasonable opportunity to review and comment on
each IRS Submission to be filed by Parent prior to the filing of such IRS
Submission with the IRS, and LMC shall provide Parent with a reasonable
opportunity to review and comment on each IRS Submission to be filed by LMC
prior to the filing of such IRS Submission with the IRS. Each of Parent and LMC
will designate certain representatives to be listed on the power of attorney
delivered to the IRS in connection with any Ruling Request.
(b) No IRS Submission shall be filed by Parent with the IRS
unless, prior to such filing, LMC shall have agreed as to the contents of such
IRS Submission to the extent that the IRS Submission (i) includes statements or
representations relating to facts that are or will be under the control of LMC
or any of its Affiliates or (ii) is relevant to, or creates, any actual or
potential obligations of, or limitations on, LMC or any of its Affiliates
(including any of the Transferred Subsidiaries for periods after the Exchange),
including any such obligations of, or limitations on, LMC or its Affiliates
under the Share Exchange Agreement and other documents related to the Exchange;
provided, however, that if the IRS requests same-day filing of an IRS Submission
that does not include any material issue or statement, then Parent is required
only to make a good faith effort to notify LMC's representatives and to give
such representatives an opportunity to review and comment on such IRS Submission
prior to filing it with the IRS. No IRS Submission shall be filed by LMC with
the IRS unless, prior to such filing, Parent shall have agreed as to the
contents of such IRS Submission to the extent that the
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IRS Submission (i) includes statements or representations relating to facts that
are or will be under the control of Parent or any of its Affiliates or (ii) is
relevant to, or creates, any actual or potential obligations of, or limitations
on, Parent or any of its Affiliates (including any of the Transferred
Subsidiaries for periods prior to the Exchange), including any such obligations
of, or limitations on, Parent or its Affiliates under the Share Exchange
Agreement and other documents related to the Exchange; provided, however, that
if the IRS requests same-day filing of an IRS Submission that does not include
any material issue or statement, then LMC is required only to make a good faith
effort to notify Parent's representatives and to give such representatives an
opportunity to review and comment on such IRS Submission prior to filing it with
the IRS. Each Party shall provide the other Party with copies of each IRS
Submission filed with the IRS promptly following the filing thereof. Neither
Party nor their representatives shall conduct any substantive communications
with the IRS regarding any material issue arising with respect to the Ruling
Request, including meetings or conferences with IRS personnel, whether
telephonically, in person or otherwise, without first notifying the other Party
(or their representatives) and giving the latter Party (or their
representatives) a reasonable opportunity to participate, and a reasonable
number of each Party's representatives shall have an opportunity to participate
in all conferences or meetings with IRS personnel that take place in person,
regardless of the nature of the issues expected to be discussed. Each Party
shall copy the other Party (or their representatives) on all written
correspondence of such Party (or their representatives) to the IRS, and shall
promptly provide the other Party (or their representatives) with copies of any
correspondence received by such Party (or their representatives) from the IRS.
Section 5.2 COMPLIANCE WITH TAX MATERIALS.
(a) Parent hereby confirms and agrees to (and to cause its
Affiliates to) comply and otherwise act in a manner consistent with any and all
representations, statements, covenants and agreements in (i) the Tax Materials
applicable to Parent or any of its Affiliates (other than the Transferred
Subsidiaries), and (ii) the Parent Tax Opinion, the Parent Tax Opinion
Representations, and any other materials delivered or deliverable by Parent or
any of its Affiliates in connection with the rendering of the Tax Opinions
(collectively, the material described in clause (ii), the "PARENT MATERIALS").
Prior to the Exchange, Parent will cause the Transferred Subsidiaries to comply
and otherwise act in a manner consistent with any and all representations,
statements, covenants and agreements in the Tax Materials and the Parent
Materials applicable to the Transferred Subsidiaries.
(b) LMC hereby confirms and agrees to (and to cause its
Affiliates to) comply and otherwise act in a manner consistent with any and all
representations, statements, covenants and agreements in (i) the Tax Materials
applicable to LMC or any of its Affiliates (other than the Transferred
Subsidiaries), and (ii) the LMC Tax Opinion, the LMC Tax Opinion
Representations, and any other materials delivered or deliverable by LMC or any
of its Affiliates in connection with the rendering of the Tax Opinions
(collectively, the material described in clause (ii), the "LMC MATERIALS").
After the Exchange, LMC will cause the Transferred Subsidiaries to comply and
otherwise act in a manner consistent with any and all representations,
statements, covenants and agreements in the Tax Materials and the LMC Materials
applicable to the Transferred Subsidiaries.
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Section 5.3 ADDITIONAL COVENANTS.
(a) None of Parent, LMC or their respective Affiliates will take
or permit to be taken any action at any time that is reasonably likely, directly
or indirectly, in whole or in part, to (i) jeopardize the receipt of any of the
Rulings or the Tax Opinions or (ii) adversely affect the Tax-Free Status of the
Transactions.
(b) Parent, LMC, and their respective Affiliates will use
reasonable best efforts to take or cause to be taken any action reasonably
necessary (i) to ensure the receipt of, as well as the continued validity and
applicability of, the Rulings and the Tax Opinions and (ii) to preserve the
Tax-Free Status of the Transactions.
(c) Parent shall not modify the steps of the Parent Restructuring
set forth on Schedule C to the Share Exchange Agreement in a manner that would
be reasonably likely, directly or indirectly, in whole or in part, to (x)
jeopardize the receipt of any of the Rulings or the Tax Opinions or (y)
adversely affect the Tax-Free Status of the Transactions.
Section 5.4 TAX SHARING AGREEMENTS. Parent shall cause all Tax Sharing
Agreements to which any of the Transferred Subsidiaries is a party or may be
subject and all obligations thereunder to terminate as to such Transferred
Subsidiaries on or prior to the Closing, and after the Closing, none of the
Transferred Subsidiaries shall be bound by such Tax Sharing Agreements or have
any liability or rights thereunder.
Section 5.5 ACTIONS BETWEEN SIGNING AND CLOSING. From the date hereof
until the Closing Date, Parent will not, and will not permit its respective
Affiliates to (i) make, change or revoke any material Tax election relating
primarily to any of the Transferred Subsidiaries, (ii) change materially any
method of accounting relating primarily to any of the Transferred Subsidiaries
with respect to Taxes, (iii) consent to any extension or waiver of the
limitations period applicable to any material Tax claim or assessment relating
primarily to any of the Transferred Subsidiaries, (iv) settle or compromise any
material Tax liability relating primarily to any of the Transferred
Subsidiaries, (v) enter into any material agreement relating primarily to Taxes
of the Transferred Subsidiaries with any Taxing Authority or (vi) make any
material change in any Tax practice or policy relating primarily to any of the
Transferred Subsidiaries; except, in each case, (A) as consented to or approved
in advance by LMC, which consent shall not be unreasonably withheld or delayed,
(B) as otherwise required because of a change in Law or a Final Determination or
(C) if such actions would not affect material Taxes of or with respect to the
Transferred Subsidiaries due for any Post-Exchange Period.
Section 5.6 SECTION 355(e). For a period of six months from the
Closing Date, none of LMC, its Affiliates, or any of their respective officers,
directors or authorized agents will enter into any agreement, understanding or
arrangement or any substantial negotiations with respect to any transaction or
series of transactions, including any issuance or transfer of an option (within
the meaning of Section 355(e) of the Code), that is for purposes of Section
355(e) of the Code and any proposed, temporary or final Treasury Regulations
thereunder, part of a plan or series of related transactions with the Exchange
pursuant to which one or more Persons acquire (other than pursuant to the
Exchange), directly or indirectly, stock possessing fifty percent or
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more of the total combined voting power of all classes of stock of Splitco
entitled to vote or stock possessing fifty percent or more of the total value of
all classes of stock of Splitco.
ARTICLE VI
SURVIVAL; INDEMNIFICATION
Section 6.1 SURVIVAL. The representations and warranties contained (or
incorporated by reference, including, for the avoidance of doubt, Sections
4.20.6, 4.20.10, and 4.20.11 of the Share Exchange Agreement) in this Agreement
shall, for purposes of this Agreement, survive the Closing until the date that
is 60 calendar days following the expiration of the statute of limitations
applicable to actions with respect thereto. Except as otherwise specified to the
contrary herein, all covenants and agreements of each Party contained in this
Agreement shall, for purposes of this Agreement, survive the Closing, unless
specified to the contrary herein.
Section 6.2 PARENT INDEMNITY. Parent hereby indemnifies each LMC
Indemnitee against and agrees to hold each of them harmless (without
duplication), from any and all (i) Taxes of the Transferred Subsidiaries or that
otherwise relate to the Transferred Business or the ownership of the DTV Shares
for any Pre-Exchange Period (consistent with the principles of Section 6.4),
(ii) liabilities of any Transferred Subsidiary for Taxes of any Person (other
than any of the Transferred Subsidiaries) as a result of such Transferred
Subsidiary being, or having been, on or before the Closing Date, a member of an
affiliated, consolidated, combined or unitary group, pursuant to Treasury
Regulations Section 1.1502-6 or any other provision of federal, state, local or
foreign Law, (iii) liabilities for Taxes of any Transferred Subsidiary under any
Tax Sharing Agreement, (iv) liabilities for Taxes of any Person (other than any
of the Transferred Subsidiaries) imposed on any of the Transferred Subsidiaries
as a result of their becoming, prior to the Closing, a transferee or successor
to any other Person's liabilities, (v) Taxes and Damages arising out of or based
upon any of the representations and warranties of Parent in this Agreement not
being true and correct when made or deemed made, (vi) Taxes and Damages arising
out of or based upon any breach or nonperformance of any covenant or agreement
made or to be performed by Parent in this Agreement, (vii) Transfer Taxes
allocated to Parent pursuant to Section 2.7, (viii) Exchange Taxes allocated to
Parent pursuant to Section 2.6, (ix) liabilities of Parent or any of its
Affiliates for Taxes of any Person arising out of the GM Transaction or under
the GM Agreements, and (x) reasonable out-of-pocket legal, accounting and other
advisory and court fees incurred in connection with the items described in
clauses (i) through (ix); provided, however, that notwithstanding clauses (i),
(ii), (iv), (v) and (vi) of this Section 6.2, Parent shall not be responsible
for (x) Exchange Taxes allocated to LMC pursuant to Section 2.6, (y) Taxes
arising out of or based upon any of the representations and warranties of LMC in
this Agreement not being true and correct when made or deemed made, or (z) Taxes
arising out of or based upon any breach or nonperformance of any covenant or
agreement made or to be performed by LMC in this Agreement.
Section 6.3 LMC INDEMNITY. LMC hereby indemnifies each Parent
Indemnitee against and agrees to hold each of them harmless (without
duplication), from any and all (i) Taxes of the Transferred Subsidiaries or that
otherwise relate to the Transferred Business or the ownership of the DTV Shares
for any Post-Exchange Period (consistent with the principles of Section 6.4),
(ii) Taxes and Damages arising out of or based upon any of the representations
17
and warranties of LMC in this Agreement not being true and correct when made or
deemed made, (iii) Taxes and Damages arising out of or based upon any breach or
nonperformance of any covenant or agreement made or to be performed by LMC in
this Agreement, (iv) Transfer Taxes allocated to LMC pursuant to Section 2.7,
(v) Exchange Taxes allocated to LMC pursuant to Section 2.6, and (vi) reasonable
out-of-pocket legal, accounting and other advisory and court fees incurred in
connection with the items described in clauses (i) through (v); provided,
however, that notwithstanding clauses (i), (ii) and (iii) of this Section 6.3,
LMC shall not be responsible for (x) Exchange Taxes allocated to Parent pursuant
to Section 2.6, (y) Taxes arising out of or based upon any of the
representations and warranties of Parent in this Agreement not being true and
correct when made or deemed made, or (z) Taxes arising out of or based upon any
breach or nonperformance of any covenant or agreement made or to be performed by
Parent in this Agreement.
Section 6.4 ALLOCATION OF TAXES BETWEEN PRE-EXCHANGE AND POST-EXCHANGE
PERIODS. In the case of Taxes that are attributable to a Straddle Period, such
Taxes shall be allocated between the portion of the Straddle Period that is a
Pre-Exchange Period and the portion of the Straddle Period that is a
Post-Exchange Period based on a Closing of the Books Method. Notwithstanding the
foregoing provisions of this Section 6.4 or Treasury Regulations Section
1.1502-76(b)(1)(ii)(B), Taxes attributable to any transaction or action taken by
or with respect to any Transferred Subsidiary out of the ordinary course of
business before the Closing on the Closing Date shall be allocated to the
Pre-Exchange Period, and Taxes attributable to any transaction or action taken
by or with respect to any Transferred Subsidiary out of the ordinary course of
business after the Closing on the Closing Date shall be allocated to the
Post-Exchange Period.
Section 6.5 NOTICE OF TAX CONTESTS. Each Party shall promptly notify
the other Party of a written communication from any Taxing Authority with
respect to any pending or threatened audit, dispute, suit, action, proposed
assessment, or other proceeding, concerning any Tax, or any other adjustment or
claim (each a "TAX CONTEST") (i) which could reasonably give rise to an
indemnification liability or indemnification payment of the other Party pursuant
to this Agreement or (ii) which could reasonably be expected to affect the Tax
consequences of the Exchange to either Party or its Affiliates; provided,
however, that failure to give such notification shall not affect the
indemnification provided hereunder except, and only to the extent that, the
indemnifying party shall have been actually prejudiced as a result of such
failure. Thereafter, the indemnified party shall deliver to the indemnifying
party such additional information with respect to such Tax Contest in its
possession that the indemnifying party may reasonably request.
Section 6.6 INDEMNIFICATION PROCEDURES.
(a) In the case of a Tax Contest, the indemnified party shall be
entitled to exercise full control of the defense, compromise or settlement of
any Tax Contest unless the indemnifying party within a reasonable time after the
giving of notice of such Tax Contest by the indemnified party (i) delivers a
written confirmation to such indemnified party that the indemnification
provisions of this Agreement are applicable to such Tax Contest and that the
indemnifying party will indemnify such indemnified party in respect of such Tax
Contest pursuant to the applicable indemnification provisions of this Agreement,
(ii) notifies such indemnified party in writing of the indemnifying party's
intention to assume the defense thereof
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and (iii) retains legal counsel reasonably satisfactory to such indemnified
party to conduct the defense of such Tax Contest, in which case the indemnifying
party shall be entitled to exercise full control of the defense, compromise or
settlement of such Tax Contest.
(b) If the indemnifying party so assumes the defense of any such
Tax Contest in accordance herewith, then such indemnified party shall cooperate
with the indemnifying party in any manner that the indemnifying party reasonably
may request in connection with the defense, compromise or settlement thereof. If
the indemnifying party so assumes the defense of any such Tax Contest, the
indemnified party shall have the right to employ separate counsel and to
participate in (but not control) the defense, compromise or settlement thereof,
but the fees and expenses of such counsel shall be the expense of such
indemnified party. If such indemnified party shall have been advised by outside
counsel that there may be one or more legal defenses available to it that are
different from or additional to those available to the indemnifying party or
that a conflict of interest between the indemnifying party and the indemnified
party in the conduct of the defense of such Tax Contest would reasonably be
expected, then (i) the indemnifying party shall not have the right to control
the defense, compromise or settlement of such Tax Contest on behalf of the
indemnified party, (ii) the indemnifying and indemnified party shall have the
right to control jointly the defense, compromise or settlement of such Tax
Contest, and (iii) the reasonable fees and expenses of the indemnified party's
separate counsel shall be borne by the indemnifying party. No indemnified party
shall settle or compromise or consent to entry of any judgment with respect to
any such Tax Contest for which it is entitled to indemnification hereunder
without the prior consent of the indemnifying party, which shall not be
unreasonably withheld, unless the indemnifying party shall have failed, after
reasonable notice thereof, to undertake control of such action in the manner
provided above in this Section 6.6 to the extent the indemnifying party was
entitled to do so pursuant to this Section 6.6. If the indemnifying party
assumes the defense of a Tax Contest, the indemnified party shall agree to any
settlement, compromise or discharge of a Tax Contest that the indemnifying party
may recommend and as to which the indemnifying party acknowledges in writing its
obligation to make payment in full; provided that such settlement, compromise or
discharge of such Tax Contest would not otherwise materially and adversely
affect the indemnified party.
(c) Notwithstanding the foregoing, in the case of a Tax Contest
relating to the Tax-Free Status of the Transactions, both the indemnifying party
and the indemnified party shall have the right to control jointly the defense,
compromise or settlement of any such Tax Contest. No indemnified party shall
settle or compromise or consent to entry of any judgment with respect to any
such Tax Contest without the prior consent of the indemnifying party, which
consent may be withheld in the indemnifying party's sole discretion.
Section 6.7 PAYMENTS. Except as otherwise provided herein, payments
due under this Agreement shall be made no later than ten (10) Business Days
after (i) the receipt or crediting of a refund, (ii) the realization of a Tax
benefit for which the other Party is entitled to reimbursement, or (iii) the
delivery of notice of payment of a Tax for which the other Party is responsible
under this Agreement, in each case by wire transfer of immediately available
funds to an account designated by the Party entitled to such payment. Payments
due hereunder, but not made within such period, shall bear interest at the
Interest Rate.
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Section 6.8 TREATMENT OF PAYMENTS; AFTER TAX BASIS. Notwithstanding
anything to the contrary contained herein or in the Share Exchange Agreement,
the Parties agree that (i) following the Closing and subject to LMC's consent,
which consent shall not be unreasonably withheld or delayed, any amounts owing
between the Parties and their respective Affiliates pursuant to this Agreement
or the Share Exchange Agreement shall be settled by making payments by or to
Splitco instead of LMC, and (ii) any payments made between the Parties or their
Affiliates pursuant to this Agreement or the Share Exchange Agreement (other
than interest accruing on payments not timely made under such agreements) with
respect to a Pre-Exchange Period or as a result of an event or action occurring
in a Pre-Exchange Period shall be treated, to the extent permitted by law, for
all Tax purposes as a distribution from or a capital contribution to Splitco
made immediately prior to the Exchange. If the receipt or accrual of any such
payment results in Taxable income (including an increase in the amount of any
gain or other income realized on the Exchange) to the recipient thereof, such
payment shall be increased so that, after the payment of any Taxes with respect
to the payment, the recipient thereof shall have realized the same net amount it
would have realized had the payment not resulted in Taxable income. To the
extent that Taxes for which one Party (the indemnifying Party) is required to
pay the other Party (the indemnified party) pursuant to this Agreement (the
"INDEMNIFIED TAXES") may be deducted or credited in determining the amount of
any other Taxes required to be paid by the indemnified Party (for example, state
Taxes which are permitted to be deducted in determining federal Taxes), the
amount of any payment made to the indemnified Party by the indemnifying Party
shall be decreased by taking into account any resulting reduction in other Taxes
of the indemnified Party. If such a reduction in Taxes of the indemnified Party
occurs following the payment made to the indemnified Party with respect to the
relevant Indemnified Taxes, the indemnified Party shall promptly repay the
indemnifying Party the amount of such reduction when actually realized. If the
Tax benefit arising from the foregoing reduction of Taxes described in this
Section 6.8 is subsequently decreased or eliminated, then the indemnifying Party
shall promptly pay the indemnified Party the amount of the decrease in such Tax
benefit.
ARTICLE VII
COOPERATION
Section 7.1 GENERAL. Parent, LMC and their respective Affiliates shall
cooperate with each other and with each other's agents, including accounting
firms and legal counsel, in connection with (a) Tax matters relating to the
Transferred Subsidiaries and their assets and operations, including (i)
preparation and filing of Tax Returns, (ii) determining the liability and amount
of any Taxes due, the right to and amount of any refund, credit or offset of
Taxes and the amount of any Tax attributes allocable to the Transferred
Subsidiaries, (iii) obtaining any refund, credit or offset of Taxes, (iv)
examinations of Tax Returns, and (v) any administrative or judicial proceeding,
or other Tax Contest, in respect of Taxes assessed or proposed to be assessed,
and (b) the defense of any Tax Contest involving the Exchange or the Parent
Restructuring. Each Party shall also make available to the other Party, as
reasonably requested and available, personnel (including officers, directors,
employees and agents) responsible for preparing, maintaining, and interpreting
information and providing information or documents in connection with any
administrative or judicial proceedings relating to Taxes.
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Section 7.2 CONSISTENT TREATMENT. Unless and until there has been a
Final Determination to the contrary, each Party agrees (a) to treat the Exchange
as a tax-free exchange under Section 355(a) of the Code, and (b) not to take any
position on any Tax Return, in connection with any Tax Contest, or otherwise for
Tax purposes (in each case, excluding any position taken for financial
accounting purposes) that is inconsistent with (i) the allocation of Taxes and
Tax benefits hereunder, (ii) the Rulings, (iii) the Tax Opinions, or (iv) the
Tax-Free Status of the Transactions.
ARTICLE VIII
RECORDS; ACCESS
Section 8.1 DELIVERY OF TAX RECORDS. At or before the Closing, Parent
shall provide to LMC (to the extent not previously provided or held by any
Transferred Subsidiary at Closing) copies of (A) the separate Tax Returns of any
Transferred Subsidiaries, (B) the relevant portions of any other Tax Returns
with respect to any Transferred Subsidiaries, and (C) other existing Tax records
(or the relevant portions thereof) reasonably necessary to prepare and file any
Tax Returns of, or with respect to, the Transferred Subsidiaries, or to defend
or contest Tax matters relevant to the Transferred Subsidiaries, including in
each case, all Tax records related to Tax attributes of the Transferred
Subsidiaries and any and all communications or agreements with, or rulings by,
any Taxing Authority with respect to any Transferred Subsidiary.
Section 8.2 RETENTION OF RECORDS; ACCESS. The Parties shall (a) retain
all Tax Returns, schedules and work papers and all other records, documents,
accounting data, and other information (including computer data) necessary for
the preparation and filing of all Tax Returns in respect of Taxes of the
Transferred Subsidiaries for any Taxable period, or for any Tax Contests
relating to such Tax Returns, and (b) give to the other Party reasonable access
to such records, documents, accounting data, and other information (including
computer data) and to its personnel (insuring their cooperation) and premises,
for the purpose of the review or audit of such Tax Returns to the extent
relevant to an obligation or liability of a Party under this Agreement or for
purposes of the preparation or filing of any such Tax Return, the conduct of any
Tax Contest or any other matter reasonably and in good faith related to the Tax
affairs of the requesting Party.
Section 8.3 CONFIDENTIALITY; OWNERSHIP OF INFORMATION; PRIVILEGED
INFORMATION. Each Party hereby agrees that it will hold, and shall use its
reasonable best efforts to cause its officers, directors, employees,
accountants, counsel, consultants, advisors and agents to hold, in confidence
all records and information prepared and shared by and among the Parties in
carrying out the intent of this Agreement, unless disclosure is compelled by a
Governmental Authority. Information and documents of one Party (the "DISCLOSING
PARTY") shall not be deemed to be confidential for purposes of this Section 8.3
to the extent such information or document (i) is previously known to or in the
possession of the other party (the "RECEIVING PARTY") and is not otherwise
subject to a requirement to keep confidential, (ii) becomes publicly available
by means other than unauthorized disclosure under this Agreement or the Share
Exchange Agreement by the Receiving Party or (iii) is received from a third
party without, to the knowledge of the Receiving Party after reasonable
diligence, a duty of confidentiality owed to the Disclosing Party.
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Section 8.4 CONTINUATION OF RETENTION OF INFORMATION, ACCESS
OBLIGATIONS. The obligations set forth above in Section 8.2 shall continue until
the longer of (a) the time of a Final Determination of any controversy with
respect to such Taxable period and until the final determination of any payments
that may be required with respect to such Taxable period under this Agreement,
or (b) expiration of all applicable statutes of limitations (including any
extensions thereof) of the Taxable period to which the records and information
relate. For purposes of the preceding sentence, each Party shall assume that no
applicable statute of limitations has expired unless such Party has received
notification or otherwise has actual knowledge that such statute of limitations
has expired.
ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9.1 TERMINATION. This Agreement will automatically terminate
upon termination of the Share Exchange Agreement pursuant to the terms thereto.
In the event of the termination of this Agreement pursuant to this Section 9.1,
this Agreement, except for the provisions of (i) Section 8.3 relating to the
obligation of the parties to keep confidential certain information obtained by
them and (ii) Article IX, which shall, in each case, remain in full force and
effect, shall become void and have no effect, without any liability on the part
of any party hereto or its directors, officers or stockholders. Notwithstanding
the foregoing, nothing in this Section 9.1 shall relieve any party hereto of
liability for a willful breach of any of its obligations under this Agreement.
Section 9.2 COMPLETE AGREEMENT; CONSTRUCTION. This Agreement and the
Share Exchange Agreement (including the Schedules and Exhibits attached hereto
or thereto or delivered in connection herewith or therewith) shall constitute
the entire agreement among the Parties with respect to the matters covered
hereby and thereby and supersedes all previous written, oral or implied
understandings, among them with respect to such matters. Notwithstanding
anything to the contrary contained in this Agreement or the Share Exchange
Agreement, in the event of any conflict or inconsistency between any provision
of this Agreement and any provision of the Share Exchange Agreement, the
applicable provision of this Agreement shall govern.
Section 9.3 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original agreement, but all of
which together shall constitute one and the same instrument.
Section 9.4 JOINT AND SEVERAL LIABILITY. Following the Exchange,
Splitco and the Stockholders shall be jointly and severally liable for any
liability or obligation of LMC under this Agreement.
Section 9.5 NOTICES. All notices or other communications required or
permitted hereunder shall be in writing and shall be delivered personally, by
facsimile (with confirming copy sent by one of the other delivery methods
specified herein), by overnight courier or sent by certified, registered or
express air mail, postage prepaid, and shall be deemed given when so delivered
personally, or when so received by facsimile or courier, or, if mailed,
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three (3) calendar days after the date of mailing, as follows:
If to Parent: News Corporation
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: General Counsel
with a copy to: Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxx X. Xxxxx
Xxxxxx X. Xxxxx
J. Xxxxxxx Xxxxx
If to LMC: Liberty Media Corporation
00000 Xxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: General Counsel
with a copy to: Xxxxx Xxxxx L.L.P.
00 Xxxxxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxxxx X. XxXxxxx
or to such other address and with such other copies as any Party hereto shall
notify the other Parties hereto (as provided above) from time to time.
Section 9.6 WAIVERS. The failure of any Party to require strict
performance by the other Party of any provision in this Agreement will not waive
or diminish that Party's right to demand strict performance thereafter of that
or any other provision hereof.
Section 9.7 AMENDMENT AND MODIFICATION. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
Parties hereto.
Section 9.8 ASSIGNMENT; SUCCESSORS AND ASSIGNS; NO THIRD PARTY RIGHTS.
This Agreement may not be assigned by any Party hereto without the prior written
consent of the other Parties hereto, and any attempted assignment shall be null
and void; PROVIDED, HOWEVER, that following the Closing LMC will be permitted to
assign its rights hereunder, without
23
obtaining the consent of Parent, to any Person to which ownership of one hundred
percent (100%) of the shares of capital stock of Splitco are or have been
transferred in connection with any spin off, split off or other distribution of
the securities of such transferee in which holders of LMC capital stock
immediately prior thereto are entitled to, or have the opportunity to,
participate in such distribution. This Agreement shall be binding upon and inure
to the benefit of the Parties hereto and their respective successors and
permitted assigns. This Agreement shall be for the sole benefit of the Parties
hereto, and their respective successors and permitted assigns, and is not
intended, nor shall be construed, to give any Person, other than the Parties
hereto and their respective successors and permitted assigns any legal or
equitable right, benefit, remedy or claim hereunder.
Section 9.9 NO STRICT CONSTRUCTION. Parent and LMC each acknowledge
that this Agreement has been prepared jointly by the Parties hereto and shall
not be strictly construed against any Party hereto.
Section 9.10 TITLES AND HEADINGS. The headings and table of contents
in this Agreement are for reference purposes only, and shall not in any way
affect the meaning or interpretation of this Agreement.
Section 9.11 GOVERNING LAW; CONSENT TO JURISDICTION. This Agreement
shall be governed by, and construed in accordance with, the internal Laws of the
State of Delaware, without reference to the choice of law principles thereof.
Each of the Parties hereto irrevocably submits to the exclusive jurisdiction of
the courts of the State of Delaware and the United States District Court for any
district within such state for the purpose of any Action or judgment relating to
or arising out of this Agreement or any of the transactions contemplated hereby
and to the laying of venue in such court. Service of process in connection with
any such Action may be served on each Party hereto by the same methods as are
specified for the giving of notices under this Agreement. Each Party hereto
irrevocably and unconditionally waives and agrees not to plead or claim any
objection to the laying of venue of any such Action brought in such courts and
irrevocably and unconditionally waives any claim that any such Action brought in
any such court has been brought in an inconvenient forum.
Section 9.12 SEVERABILITY. If any term, provisions, covenant, or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, or unenforceable, the remainder of the
terms, provisions, covenants, and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired, or invalidated
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any Party. Upon such
determination, the Parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the Parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby are consummated as originally contemplated to the fullest extent
possible.
Section 9.13 WAIVER OF JURY TRIAL. EACH PARTY HERETO ACKNOWLEDGES AND
AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO
INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND, THEREFORE, EACH SUCH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY
24
APPLICABLE LAW, ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT TO
ANY ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
EACH PARTY HERETO CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT
OR ATTORNEY OF ANY OTHER PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF SUCH ACTION, SEEK TO ENFORCE
THE FOREGOING WAIVER, (B) EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE
IMPLICATIONS OF THIS WAIVER, (C) EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY,
AND (D) EACH SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.13.
Section 9.14 EQUITABLE REMEDIES. Neither rescission, set-off nor
reformation of this Agreement shall be available as a remedy to any of the
parties hereto. The parties hereto agree that irreparable damage would occur in
the event any of the provisions of this Agreement were not to be performed in
accordance with the terms hereof and that the parties shall be entitled to
specific performance of the terms hereof in addition to any other remedies at
Law or in equity.
[remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
NEWS CORPORATION
By: /s/ Xxxx X. Xxxxxx
------------------------------------
Name: Xxxx X. Xxxxxx
Title: Executive Vice President &
Deputy CFO
LIBERTY MEDIA CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President & CEO
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