1
EXHIBIT 10.21
TAX MATTERS AGREEMENT
THIS TAX MATTERS AGREEMENT (this "Agreement") is entered into as
of July 31, 1996, by and among LUCENT TECHNOLOGIES INC., a Delaware corporation
("Lucent"), AT&T PARADYNE CORPORATION, a Delaware corporation and a wholly-owned
subsidiary of Lucent ("Paradyne"), PARADYNE PARTNERS, L.P., a Delaware limited
partnership (the "Partnership"), PARADYNE ACQUISITION CORP., a Delaware
corporation and a wholly-owned subsidiary of the Partnership ("PAC"), RENTAL
ACQUISITION CORP., a Delaware corporation and a wholly-owned subsidiary of the
Partnership ("RentalCo"), CAP ACQUISITION CORP., a Delaware corporation and a
wholly-owned subsidiary of the Partnership ("CAPCo"), and LEASE ACQUISITION
CORP., a Delaware corporation and a wholly-owned subsidiary of PAC ("LeaseCo").
The Partnership, PAC, RentalCo, CAPCo and LeaseCo are sometimes referred to
collectively in this Agreement as the "Acquisition Entities." Certain other
capitalized terms used in this Agreement are defined in Exhibit A. Capitalized
terms which are not defined in this Agreement or in Exhibit A shall have the
meanings ascribed to them in the Purchase Agreement.
RECITALS
A. Pursuant to the Purchase Agreement, RentalCo, CAPCo and
LeaseCo are purchasing certain assets from Paradyne, CAPCo is purchasing certain
assets from Lucent, and PAC is purchasing all of the outstanding capital stock
of Paradyne (the "Paradyne Shares") from Lucent.
B. Lucent, Paradyne and the Acquisition Entities desire to set
forth herein their mutual agreements with respect to certain Tax matters,
including the allocation of responsibility for the payment of federal, state,
local and foreign Taxes.
AGREEMENT
The Parties agree as follows:
SECTION 1. Liability for Taxes
1.1 (a) Except as otherwise provided in Section 4.3, Lucent
shall be liable for all Taxes (i) imposed on Lucent and its Affiliates, other
than Taxes imposed on the Acquired Companies or for which the Acquired Companies
may otherwise be liable, for any taxable year, (ii) imposed on the Acquired
Companies, or for which the Acquired Companies may otherwise be liable, solely
as a result of being members of the Lucent Group (which for purposes of this
sentence includes the Acquired Companies) pursuant to Treasury Regulations
Section 1.1502-6 or analogous state, local or foreign laws for any taxable year,
or (iii) imposed on the Acquired Companies, or for which the Acquired Companies
may otherwise be liable, for any Pre-Closing Tax Period, including any Code
Section 481 adjustments resulting from a change of accounting method by the
Acquired Companies prior to the close of the Closing Date.
1
2
(b) Lucent shall be entitled to any refund of Taxes for
which it is liable pursuant to this Section 1.1.
1.2 (a) Paradyne shall be liable for all Taxes imposed on the
Acquired Companies, or for which the Acquired Companies may otherwise be liable,
for any Post-Closing Tax Period.
(b) Paradyne shall be entitled to any refund of Taxes for
which it is liable pursuant to this Section 1.2.
1.3 For purposes of this Agreement, whenever it is necessary to
determine the liability for Taxes of the Acquired Companies for a portion of any
Straddle Period, the determination of the Taxes of the Acquired Companies for
the portion of the Straddle Period ending on and including, and the portion of
the Straddle Period beginning after, the Closing Date shall be determined by
assuming that the Straddle Period consisted of two taxable years or periods, one
of which ended at the close of the Closing Date and the other of which began at
the beginning of the day following the Closing Date, and items of income, gain,
deduction, loss or credit of the Acquired Companies for the Straddle Period
shall be allocated between such two taxable years or periods on a "closing of
the books" basis by assuming that the books of the Acquired Companies were
closed as of the close of the Closing Date: provided, however, that exemptions,
allowances or deductions that are calculated on an annual basis shall be
apportioned between such two taxable years or periods on a daily basis.
SECTION 2. Asset Sales
2.1 RentalCo has purchased or will purchase assets from Paradyne
in accordance with Section 1.1 of the Purchase Agreement. The Parties have
agreed to allocate the purchase price set forth in Section 1.1(b) of the
Purchase Agreement among the corresponding assets in the manner set forth in
Section 1.1(d) of the Purchase Agreement. RentalCo, Paradyne and Lucent shall
cooperate in the preparation of Treasury Form 8594 for timely filing with each
of their respective federal income tax returns and any comparable foreign, state
or local tax filings.
2.2 CAPCo has purchased or will purchase assets from Paradyne and
Lucent, Paradyne and Lucent have or will enter into assignment and assumption
agreements with CAPCo as to certain liabilities, in each case in accordance with
Section 1.3 of the Purchase Agreement. CAPCo, Lucent and Paradyne have agreed to
allocate the purchase price set forth in Sections 1.3(b) and 1.3(d) of the
Purchase Agreement among the corresponding assets in the manner set forth in
Section 1.3(f) of the Purchase Agreement. CAPCo, Paradyne and Lucent shall
cooperate in the preparation of Treasury Form 8594 for timely filing with each
of their respective federal income tax returns and any comparable foreign, state
or local tax filings.
2.3 LeaseCo has purchased or will purchase assets from Paradyne
in accordance with Section 1.2 of the Purchase Agreement. LeaseCo and Paradyne
have agreed to allocate the purchase price set forth in Section 1.2(b) of the
Purchase Agreement among the corresponding assets in the manner set forth in
Section 1.2(c) of the Purchase Agreement. LeaseCo, Paradyne and Lucent shall
cooperate in the preparation of Treasury Form 8594 for
2
3
timely filing with each of their respective federal income tax returns and any
comparable foreign, state or local tax filings.
SECTION 3. Section 338 Election
3.1 PAC and Lucent shall join in an election to have the
provisions of Section 338(h)(10) of the Code and similar provisions of foreign,
state or local law ("Section 338 Elections") apply to the acquisition of the
Paradyne Shares and the shares of Ark Electronic Products, Inc, ("ARK"). PAC and
Lucent shall timely prepare and file Treasury Form 8023-A, together with any
schedules or attachments thereto, and any other forms, returns, statements or
documents required to be submitted to any foreign, federal, state or local
Taxing Authority in connection with the Section 338 Elections. To the extent
that AT&T is required to execute any such form as the parent of the Lucent
Group, which for purposes of this sentence includes the Acquired Companies,
Lucent shall cause AT&T to execute such form(s).
3.2 The allocation of the purchase price (the "Stock
Purchase Price") specified in Section 1.5(b) of the Purchase Agreement among the
Residual Assets of Paradyne and the assets of ARK shall be made in the manner
set forth in Section 1.5(d) of the Purchase Agreement.
3.3 Lucent shall be responsible for and shall pay any
income, franchise or similar taxes based on net revenue (and shall be entitled
to the benefit of any losses) arising as a result of the Section 338 Elections.
SECTION 4. Tax Covenants
4.1 The Acquisition Entities covenant that they will not
cause or permit any of the Acquired Companies (i) to take any action on the
Closing Date, other than in the ordinary course of business or otherwise
specified in the Purchase Agreement, that could give rise to any Tax liability
of Lucent or the Lucent Group, (ii) to make any election or deemed election
under Section 338 of the Code with respect to the Acquired Companies other than
as specified in this Agreement, or (iii) to make or change any Tax election,
amend any Tax Return or take any position on any Tax Return, take any action,
omit to take any action or enter into any transaction that results in any
increased Tax liability or reduction of any Tax Asset of Lucent or the Lucent
Group in respect of any Pre-Closing Tax Period. The Acquisition Entities agree
that Lucent and the Lucent Group are to have no liability for any Tax resulting
from a breach of the covenants contained in the preceding sentence, and the
Acquisition Entities agree to indemnify and hold harmless Lucent and the Lucent
Group against any such Tax or reduction in a Tax Asset. Lucent agrees to give
prompt notice to the Partnership of the assertion of any claim, or the
commencement of any action or proceeding arising from any such breach and in
respect of which indemnification may be sought under this Section 4.1. The
Partnership or the applicable Acquisition Entity may participate in and assume
the defense of any such suit, action or proceeding at its own expense. If the
Partnership or the applicable Acquisition Entity assumes such defense, Lucent
shall have the right (but not the duty) to participate in the defense thereof
and to employ counsel, at its own expense, separate from the counsel employed by
the Partnership or the applicable Acquisition Entity. Whether or not Lucent
chooses to defend or prosecute any claim, the Parties shall cooperate in the
defense or prosecution thereof.
3
4
4.2 The Acquisition Entities shall promptly pay or shall
cause prompt payment to be made to Lucent of all refunds of Taxes and interest
thereon received by any of the Acquisition Entities or the Acquired Companies
attributable to Taxes paid by Lucent or the Acquired Companies (or any
predecessor or Affiliate of Lucent) with respect to any Pre-Closing Tax Period.
4.3 Except as provided in the Purchase Agreement or the
Additional Agreements, no transfer, documentary, sales, use, stamp,
registration, withholding or other similar Taxes (including any penalties and
interest) incurred in connection with the transactions contemplated by Sections
1.1, 1.2, 1.3, 1.4 and 1.5 of the Purchase Agreement and the Section 338
Elections shall be borne or required to be paid by Lucent. Except as provided in
the Purchase Agreement or the Additional Agreements, the Acquisition Entities
will, at their own expense, file all necessary Tax Returns and other
documentation with respect to the Taxes enumerated in the preceding sentence,
and, if required by applicable law, Lucent will, and will cause its Affiliates
to, join in the execution of any such Tax Returns and other documentation. The
purchase prices set forth in the Purchase Agreement will not be reduced by any
of the Taxes enumerated in this Section 4.3.
4.4 If Lucent shall determine after the Closing that it is
desirable to file an amended Tax Return for any of the Acquired Companies with
respect to any Pre-Closing Tax Period, Lucent shall prepare and submit to PAC
the amended Tax Return, other than a return included in the Acquired Companies
ultimate parent corporation's consolidated federal or unitary state filing, and
PAC shall cause such return to be filed within thirty (30) days after receipt
thereof. PAC agrees not to permit the Acquired Companies to file any amended Tax
Return with respect to a Pre-Closing Tax Period without the express, prior
written consent of Lucent.
4.5 PAC shall give written notice to Lucent of any
notification of audit of a Tax Return for any of the Acquired Companies for any
Pre-Closing Tax Period or proposed adjustments to any items included in such a
return promptly after receipt of notification of the audit or adjustments.
Lucent shall be entitled, at its expense, to participate in all conferences,
meetings and proceedings with Taxing Authorities, or in appearances before any
court, pertaining to such audit or adjustments, and, subject to Section 6.4, to
direct the manner in which all claims, audits, adjustments or proceedings are
conducted and resolved by settlement or otherwise. PAC shall cause the Acquired
Companies to cooperate with Lucent and take such action and execute such
agreements and documents as Lucent shall reasonably request in order to carry
out the foregoing. Except with the prior written consent of Lucent, PAC shall
not permit the Acquired Companies to enter into any agreement after the date
hereof extending the statute of limitations or settling any asserted adjustments
with respect to or affecting any Pre-Closing Tax Period.
SECTION 5. Cooperation on Tax Matters
5.1 The Acquisition Entities and Lucent agree to furnish or
cause to be furnished to each other, upon request, as promptly as practicable,
such information (including access to books and records) and assistance relating
to any of the Acquired Companies as is reasonably necessary for the filing of
any Tax Return, for the preparation for any audit, and for
4
5
the prosecution or defense of any claim, suit or proceeding relating to any
proposed adjustment. Except as otherwise provided in this Agreement, the
Acquisition Entities and Lucent shall cooperate with each other in the conduct
of any audit or other proceedings involving any of the Acquired Companies for
any Tax purposes (but only to the extent such audit or other proceeding will
impact the Tax liability of the other Party) and each shall execute and deliver
such powers of attorney and other documents as are necessary to carry out the
intent of this subsection. The Acquisition Entities and Lucent agree to retain
or cause to be retained all relevant books and records pertinent to the Acquired
Companies until the applicable period for Tax assessment under applicable law
(giving effect to any and all extensions or waivers) has expired, and to abide
by or cause the abidance with all record retention agreements entered into with
any Taxing Authority. The Acquisition Entities and Lucent each agree to give the
other reasonable notice prior to discarding or destroying any such books and
records relating to Tax matters and, if a Party so requests, the Party proposing
to discard or destroy such records shall allow the other Party to take
possession of such books and records. Notwithstanding the foregoing provisions
of this Section 5.1, the Parties shall have no obligation to retain books and
records pertinent to the Acquired Companies for more than ten (10) years or to
notify the other Party prior to discarding and destroying books and records
which are ten (10) years old or older.
5.2 The Acquisition Entities and Lucent further agree, upon
request, to provide the other Party with all information that such Party may be
required to report pursuant to Section 6043 of the Code and all Treasury
Department Regulations promulgated thereunder.
5.3 Each of the Parties shall keep confidential, and shall
cause its Affiliates and Representatives to keep confidential, and shall not use
or disclose and shall cause its Affiliates and Representatives not to use or
disclose, to any other Person, any non-public document or other non-public
information provided to such Party pursuant to this Agreement; provided,
however, that each of the Parties may use the information provided to it
pursuant to this Agreement for the purposes set forth in the first sentence of
Section 5.1.
SECTION 6. Indemnification
6.1 Lucent shall indemnify and hold harmless the Acquisition
Entities against (a) any and all Taxes for which Lucent is liable pursuant to
Sections 1.1 and 3.3 of this Agreement ("Lucent's Taxes"), (b) any and all
Damages from the breach by Lucent of any representation, warranty or covenant of
Lucent contained in this Agreement, and (c) any interest and penalties and
reasonable attorneys' fees, accountants' fees and other expenses arising out of
or incident to the failure of Lucent to pay Lucent's Taxes, or otherwise fulfill
the obligations of Lucent, in accordance with the provisions of this Agreement.
6.2 The Partnership shall indemnify and hold harmless Lucent
and its Affiliates against (a) any and all Taxes for which Paradyne or any of
the Acquisition Entities are liable pursuant to Section 1.2 of this Agreement
(the "Partnership's Taxes"), (b) any and all Taxes for which Lucent is to have
no liability under Section 4.3 of this Agreement, (c) any and all Damages from
the breach by any of the Acquisition Entities of any representation, warranty or
covenant of the Acquisition Entities (or any of them) contained in this
Agreement, and (d) any interest and penalties and reasonable attorneys' fees,
accountants' fees and other expenses arising out of or incident to the failure
of the Acquisition Entities to pay the Partnership's Taxes,
5
6
or otherwise fulfill the obligations of the Acquisition Entities, in accordance
with the provisions of this Agreement.
6.3 A Party ("Indemnitee") seeking indemnification under
this Section 6 shall notify the other Party ("Indemnitor") in writing of the
estimated amount of the indemnification obligation together with a reasonably
detailed explanation of the Tax liability to which it relates. Except as
otherwise provided in this Agreement, Indemnitor shall make payment to
Indemnitee or the applicable Taxing Authority (as determined by Indemnitee) of
such estimated amount on or before the later of (a) thirty (30) days prior to
the date such Taxes are due and payable by Indemnitee or its Affiliate, which
date shall be stated in the written notification to Indemnitor, or (b) thirty
(30) days following the date of receipt by Indemnitor of such written notice.
6.4 (a) If any assessment, adjustment, claim, demand, suit,
action, litigation, proceeding or audit ("Claim or Demand") for Taxes in respect
of which indemnification may be sought pursuant to this Section 6 is asserted in
writing against a Party or any of its Affiliates, Indemnitee shall notify
Indemnitor of such Claim or Demand within thirty (30) days of receipt thereof,
or such earlier time that would allow Indemnitor to timely respond to such Claim
or Demand, and shall give Indemnitor such information with respect thereto as
Indemnitor may reasonably request. The failure of Indemnitee to provide timely
notice to Indemnitor of a Claim or Demand in accordance with this Section 6.4(a)
shall not serve to eliminate or limit Indemnitor's obligations under this
Section 6 unless such failure materially prejudices Indemnitor. Indemnitor may
discharge, at any time, its indemnification obligation under this Section 6 by
paying to Indemnitee or the applicable Taxing Authority (as determined by
Indemnitee) the amount of the Taxes, together with any interest and penalties
and any other amounts due under this Section 6, calculated on the date of such
payment.
(b) Indemnitor may, at its own expense, participate
in and, upon notice to Indemnitee, assume the defense of any Claim or Demand. If
Indemnitor assumes such defense, Indemnitor shall have no obligation to make a
payment under this Section 6 until a final determination has been made and all
rights of appeal have expired. If Indemnitor assumes such defense, Indemnitor
shall have the right to control such defense in all respects; provided that
Indemnitee shall have the right (but not the duty) to participate in the defense
thereof and to employ counsel, at its own expense, separate from the counsel
employed by Indemnitor. If Indemnitor assumes such defense, Indemnitor shall
consult with Indemnitee regarding significant decisions related to the defense,
but Indemnitor shall have the sole and exclusive right to make such decisions.
If Indemnitor assumes such defense (as indicated by written notice to
Indemnitee), neither Indemnitee nor its Affiliates shall pay such Taxes until
(a) a final determination has been made and all rights of appeal have expired,
or (b) Indemnitor has consented to such payment. Whether or not Indemnitor
chooses to defend or prosecute any claim, all of the Parties shall cooperate in
the defense or prosecution thereof.
(c) Notwithstanding anything in this Agreement to the
contrary, Indemnitor shall not settle or compromise any Claim or Demand without
the consent of Indemnitee unless (A) such settlement or compromise involves no
finding or admission of any violation or breach by Indemnitee of any right of
any other Person or any Legal Requirement (other than a violation or breach by
any Acquired Company on or before the Closing Date of any
6
7
Legal Requirements relating to Taxes), (B) such settlement or compromise has no
material effect on any other claims which are pending against Indemnitee or
likely will be brought against Indemnitee in the future, and (C) the sole relief
provided in connection with such settlement or compromise is a monetary payment
that is paid in full by Indemnitor.
6.5 If Indemnitor fails to provide written notice to
Indemnitee of Indemnitor's assumption of the defense of any Claim or Demand
within twenty (20) days after written notice of such Claim or Demand from
Indemnitee, Indemnitee may pay such Tax or otherwise settle such Claim or Demand
and obtain indemnification from Indemnitor for such liability in accordance with
this Section 6.
6.6 A Party shall not be liable under this Agreement for any
Tax (i) which was paid without such Party's prior written consent or otherwise
in accordance with the provisions of this Agreement, (ii) which was the subject
of any settlements effected without the prior written consent of such Party or
otherwise in accordance with the provisions of this Agreement, or (iii)
resulting from any Claim or Demand in which such Party was not permitted an
opportunity to defend or participate in the manner provided in this Agreement.
6.7 So long as the period for filing an amended Tax Return
remains open, any payment by one Party to another Party under this Agreement
will be deemed to be an adjustment to the Purchase Price unless, under
applicable law, such payment is not treated as received by such other Party. In
all other cases, such payments shall be treated by the Parties under applicable
principles of Tax law.
SECTION 7. Miscellaneous Provisions
7.1 Notices
Any notice or other communication required or permitted to be delivered
to any Party shall be in writing and shall be deemed properly delivered, given
and received when delivered (by hand, by registered mail, by courier or express
delivery service or by facsimile) to the address or facsimile telephone number
set forth beneath the name of such Party below (or to such other address or
facsimile telephone number as such Party shall have specified in a written
notice given to the other Parties):
if to Lucent:
00 Xxxxxxxxxxxx Xxxxxxxxx
Xxxxxx, Xxx Xxxxxx 00000
Attention: Xx. Xxxxxxx Osl, Jr.
Fax: (000) 000-0000
with a copy to:
Room A2046
000 Xxxxxxxxxx Xxxx
Xxxxxxx Xxxxx, Xxx Xxxxxx 00000
7
8
Attention: W. Xxxxxxx Xxxxxxxx, Esq.
Fax: (000) 000-0000
if to Paradyne, the Partnership or the Acquisition
Entities:
000 Xxxx Xxxxxx
Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Fax: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
7.2 Headings
The bold-faced section headings contained in this Agreement are for
convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
7.3 Counterparts
This Agreement may be executed in several counterparts, each of which
shall constitute an original and all of which, when taken together, shall
constitute one agreement.
7.4 Governing Law; Venue
This Agreement shall be construed in accordance with, and governed in
all respects by, the internal laws of the State of New York (without giving
effect to principles of conflicts of laws).
7.5 Successors and Assigns
Except as otherwise provided in this Agreement, this Agreement shall be
binding upon and shall inure to the benefit of the Parties and their respective
successors and assigns (if any). Lucent may not assign its rights and delegate
its obligations under this Agreement without the prior written consent of the
Partnership. Each of the Acquisition Entities may freely assign any or all of
its rights under this Agreement, in whole or in part, to any Person without
obtaining the consent or approval of any other Party or of any other Person.
7.6 Amendments
This Agreement may not be amended, modified, altered or supplemented
other than by means of a written instrument duly executed and delivered on
behalf of all of the Parties.
7.7 Entire Agreement
This Agreement and the other agreements referred to herein set forth
the entire understanding of the Parties relating to the subject matter hereof
and thereof and supersede all prior agreements and understandings among or
between any of the Parties relating to the subject matter hereof and thereof.
Nothing contained in this Agreement shall limit the rights or
8
9
obligations of any party under the Purchase Agreement or any of the Additional
Agreements nor shall any right or obligation of any Party under this Agreement
be limited by any provision of the Purchase Agreement or any of the Additional
Agreements.
7.8 Construction
(a) For purposes of this Agreement, whenever the context
requires: the singular number shall include the plural, and vice versa; the
masculine gender shall include the feminine and neuter genders; the feminine
gender shall include the masculine and neuter genders; and the neuter gender
shall include the masculine and feminine genders.
(b) The Parties agree that any rule of construction to the
effect that ambiguities are to be resolved against the drafting Party shall not
be applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and
"including," and variations thereof, shall not be deemed to be terms of
limitation, but rather shall be deemed to be followed by the words "without
limitation."
(d) Except as otherwise indicated, all references in this
Agreement to "Sections" and "Exhibits" are intended to refer to Sections of this
Agreement and Exhibits to this Agreement.
7.9 Survival
Notwithstanding anything in this Agreement to the contrary, the
provisions of this Agreement shall survive for the full period of all statutes
of limitations (giving effect to any waiver, mitigation or extension thereof).
9
10
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed and delivered as of the date first above written.
LUCENT TECHNOLOGIES INC.
a Delaware corporation
By: W.F. OSL, JR.
-------------------------------------
Xxxxxxx X. Osl, Jr.
Vice President
AT&T PARADYNE CORPORATION
a Delaware corporation
By: W.F. OSL, JR.
-------------------------------------
Xxxxxxx X. Osl, Jr.
Authorized Agent
PARADYNE PARTNERS, L.P.
a Delaware limited partnership
By: Paradyne GenPar Corp.,
a Texas corporation, its
sole general partner
By: XXXXX XXXXXXX
-------------------------------------
Xxxxx Xxxxxxx
President
PARADYNE ACQUISITION CORP.,
a Delaware corporation
By: XXXXX XXXXXXX
-------------------------------------
Xxxxx Xxxxxxx
President
11
RENTAL ACQUISITION CORP.,
a Delaware corporation
By: XXXXX XXXXXXX
-------------------------------------
Xxxxx Xxxxxxx
President
CAP ACQUISITION CORP.,
a Delaware corporation
By: XXXXX XXXXXXX
-------------------------------------
Xxxxx Xxxxxxx
President
LEASE ACQUISITION CORP.,
a Delaware corporation
By: XXXXX XXXXXXX
-------------------------------------
Xxxxx Xxxxxxx
President
12
Exhibit A
CERTAIN DEFINITIONS
For purposes of this Agreement, the following definitions shall
apply.
AFFILIATE. "Affiliate" shall mean with respect to any Person, any
Person directly or indirectly controlling, controlled by, or under common
control with, such other Person.
ASSET SALES. "Asset Sales" shall mean the asset sales
contemplated by Sections 1.1, 1.2 and 1.3 of the Purchase Agreement.
CODE. "Code" means the United States Internal Revenue Code of
1986, as amended.
GOVERNMENTAL BODY. "Governmental Body" shall mean any: (a)
nation, state, commonwealth, province, territory, county, municipality, district
or other jurisdiction of any nature; (b) federal, state, local, municipal,
foreign or other government; or (c) governmental or quasi-governmental authority
of any nature (including any governmental division, department, agency,
commission, instrumentality, official, organization, unit, body or entity and
any court or other tribunal).
LUCENT GROUP. "Lucent Group" means, with respect to federal
income Taxes, the affiliated group of corporations (as defined in Section
1504(a) of the Code) of which Lucent is a member and, with respect to state
income or franchise taxes, the consolidated, combined or unitary group of which
Lucent or any of its Affiliates is a member. For purposes of this Agreement, the
Lucent Group shall not include the Acquired Companies.
PARTY OR PARTIES. "Party" or "Parties" refers to Lucent, Paradyne
and the Acquisition Entities or any one of them.
POST-CLOSING TAX PERIOD. "Post-Closing Tax Period" means (i) with
respect to net income taxes, or franchise taxes based on net income, including
alternative or add-on minimum tax, any tax period ending after the close of the
Closing Date, (ii) with respect to any Straddle Period, that portion that
portion of the Straddle Period beginning after the close of the Closing Date,
and (ii) with respect to all other Taxes, any period after the close of the
Closing Date.
PRE-CLOSING TAX PERIOD. "Pre-Closing Tax Period" means (i) with
respect to net income taxes, or franchise taxes based on net income, including
alternative or add-on minimum tax, any tax period ending on or before the close
of the Closing Date, (ii) with respect to any Straddle Period, that portion of
the Straddle Period ending at the close of the Closing Date, and (iii) with
respect to all other Taxes, any period before the close of the Closing Date.
PURCHASE AGREEMENT. "Purchase Agreement" shall mean the Purchase
Agreement, dated June 18, 1996, made by and among Lucent, Paradyne and the
Acquisition Entities, as amended.
i
13
RESIDUAL ASSETS. "Residual Assets" shall mean the assets of
Paradyne remaining after the Asset Sales, related distributions by Paradyne to
Lucent and the distribution of promissory notes contemplated by Section 1.4 of
the Purchase Agreement.
STRADDLE PERIOD. "Straddle Period" means any tax period beginning
on or before the Closing Date and ending after the close of the Closing Date.
TAX OR TAXES. "Tax" or "Taxes" shall mean any tax (including any
income tax, franchise tax, capital gains tax, gross receipts tax, value-added
tax, surtax, excise tax, ad valorem tax, transfer tax, stamp tax, sales tax, use
tax, property tax, business tax, withholding tax or payroll tax), levy
assessment, tariff, duty (including any customs duty), deficiency or fee, and
any related charge or amount (including any fine, penalty or interest), imposed,
assessed or collected by or under the authority of any Governmental Body.
TAX ASSET. "Tax Asset" means any net operating loss, net capital
loss, investment tax credit, foreign tax credit, charitable deduction, basis
increase or any other credit or tax attribute which could reduce Taxes
(including, without limitation, deductions and credits related to alternative
minimum taxes).
TAXING AUTHORITY. "Taxing Authority" means any Governmental Body
charged with the duty or authority to administer or collect any Tax.
TAX RETURN. "Tax Return" shall mean any return (including any
information return), report, statement, declaration, estimate, schedule, notice,
notification, form, election, certificate or other document or information filed
with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection
or payment of any Tax or in connection with the administration, implementation
or enforcement of or compliance with any legal requirement relating to any Tax.
ii
