Tax Matters Agreement - AOL Time Warner Inc. and Time Warner Cable Inc.
FORM OF TAX MATTERS AGREEMENT
THIS TAX MATTERS AGREEMENT (the "Agreement"), dated as of
[Date], is entered into between AOL Time Warner Inc., a Delaware corporation
("AOL Time Warner"), and Time Warner Cable Inc., a New York corporation,
("TWC").
RECITALS
A. AOL Time Warner is the common parent corporation of an
affiliated group of corporations within the meaning of Section 1504(a) of the
Internal Revenue Code of 1986, as amended (the "Code"), that has elected to
file consolidated federal income tax returns, and TWC is a member of such
group.
B. AOL Time Warner and TWC desire to set forth in the Agreement
their agreement as to certain matters relating to the inclusion of the TWC
Consolidated Group (as defined below) in the AOL Time Warner Consolidated
Group, including the allocation of tax liabilities for years in which TWC is so
included, and certain other matters relating to taxes.
The parties agree as follows:
1. DEFINITIONS.
"Adjustment" shall have the meaning set forth in Section 8 of
this Agreement.
"Agreement Year" shall have the meaning set forth in Section
2 of this Agreement.
"AOL Time Warner" shall have the meaning set forth in the
Preamble to this Agreement.
"AOL Time Warner Consolidated Group" shall mean any
affiliated group of corporations electing to file consolidated federal income
tax returns of which AOL Time Warner is a member.
"AOL Time Warner Consolidated Return" shall have the meaning
set forth in Section 2 of this Agreement.
"Code" shall have the meaning set forth in the Recitals.
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"Determination" shall mean a settlement, compromise, or other
agreement with the IRS or the relevant state, local or foreign taxing
authority, whether contained in an Internal Revenue Service Form 870 or other
comparable form, or otherwise, or such procedurally later event, such as a
closing agreement with the IRS or the relevant state, local or foreign taxing
authority, an agreement contained in an IRS Form 870-D or other comparable
form, an agreement that constitutes a determination under Section 1313(a)(4) of
the Code, a deficiency notice with respect to which the period for filing a
petition with the Tax Court or the relevant state, local or foreign tribunal
has expired or a decision of any court of competent jurisdiction that is not
subject to appeal or as to which the time for appeal has expired.
"Estimated Tax Payments" shall have the meaning set forth in
Section 4 of this Agreement.
"IRS" shall mean the Internal Revenue Service.
"Group" shall mean either the Parent Group or the TWC
Consolidated Group.
"Parent Group" shall mean the affiliated group of
corporations (including any predecessors and successors thereto) within the
meaning of Section 1504(a) of the Code, of which AOL Time Warner is the common
parent, excluding any corporation that is a member of the TWC Consolidated
Group.
"Post-Consolidation Year" shall have the meaning set forth in
Section 5 of this Agreement.
"Pro Forma TWC Return" shall have the meaning set forth in
Section 3 of this Agreement.
"Records" shall have the meaning set forth in Section 8 of
this Agreement.
"Regulations" shall mean the Treasury regulations promulgated
under the Code.
"TWC" shall have the meaning set forth in the Preamble to
this Agreement.
"TWC Consolidated Group" shall mean TWC or TWC and the
affiliated group of corporations (including any predecessors and successors
thereto) within the meaning of Section 1504(a) of the Code, of which TWC would
be the common parent if it were not included in the AOL Time Warner
Consolidated Group.
"TWC Return Items" shall have the meaning set forth in
Section 8 of this Agreement.
"TWC Tax Package" shall have the meaning set forth in Section
7 of this Agreement.
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2. FILING OF CONSOLIDATED RETURNS AND PAYMENT OF
CONSOLIDATED TAX LIABILITY.
For all taxable years in which AOL Time Warner files
consolidated federal income tax returns (any such return of the AOL Time Warner
Consolidated Group for any taxable year, an "AOL Time Warner Consolidated
Return") and is entitled to include the TWC Consolidated Group in such returns
under Sections 1501-1504, or successor provisions, of the Code, AOL Time Warner
shall include the TWC Consolidated Group in the consolidated federal income tax
returns it files as the common parent corporation of the AOL Time Warner
Consolidated Group. AOL Time Warner, TWC, and the other members of the AOL Time
Warner Consolidated Group shall file any and all consents, elections or other
documents and take any other actions necessary or appropriate to effect the
filing of such federal income tax returns. For all taxable years in which the
TWC Consolidated Group is included in the AOL Time Warner Consolidated Group,
AOL Time Warner shall pay the entire federal income tax liability of the AOL
Time Warner Consolidated Group and shall indemnify and hold harmless TWC
against any such liability; provided, however, that TWC shall make payments to
AOL Time Warner or receive payments from AOL Time Warner as provided in the
Agreement for any taxable year (which term shall throughout the Agreement
include any short taxable year) during which the TWC Consolidated Group is
included in the AOL Time Warner Consolidated Group (an "Agreement Year").
3. PRO FORMA RETURNS.
For each Agreement Year, AOL Time Warner shall prepare a pro
forma federal income tax return for the TWC Consolidated Group (a "Pro Forma
TWC Return") and the Parent Group (a "Pro Forma Parent Return"). The Pro Forma
TWC Return shall be prepared based on the corresponding TWC Tax Package
provided pursuant to Section 7 hereof. Except as otherwise provided herein, the
Pro Forma TWC Return and Pro Forma Parent Return for each Agreement Year shall
be prepared as if TWC filed a consolidated return on behalf of the TWC
Consolidated Group for such taxable year, and no member of one Group was a
member of the other Group. The Pro Forma Return for each Group shall reflect
any carryovers of net operating losses, net capital losses, excess tax credits,
or other tax attributes from prior Pro Forma Returns for such Group which could
have been utilized by such Group if the TWC Consolidated Group had never been
included in the AOL Time Warner Consolidated Group and all Pro Forma Returns
for the relevant Group had been actual returns. The Pro Forma Return for each
Group shall be prepared in a manner that reflects all elections, positions, and
methods used in the AOL Time Warner Consolidated Return that must be applied on
a consolidated basis and otherwise the Pro Forma Parent Return shall be
prepared in a manner consistent with the AOL Time Warner Consolidated Return
and the Pro Forma TWC Return shall be prepared in a manner consistent with past
practices of the Time Warner cable group. The provisions of the Code that
require consolidated computations, such as Sections 861, 1201-1212 and 1231,
shall be applied separately to each Group as if such Group and the other Group
were separate affiliated groups,
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except that: (a) the Pro Forma TWC Return prepared for the last taxable year,
or portion thereof, during which the TWC Consolidated Group is included in the
AOL Time Warner Consolidated Return shall also include any income, gains or
losses of the members of the TWC Consolidated Group on transactions within the
TWC Consolidated Group that must be taken into account pursuant to Section
1.1502-13 of the Regulations and any income of the members of the TWC
Consolidated Group that must be taken into account pursuant to Section
1.1502-19 of the Regulations and, in each case, reflected on the AOL Time
Warner Consolidated Return when the TWC Consolidated Group ceases to be
included in the AOL Time Warner Consolidated Return; and (b) transactions
between the TWC Consolidated Group, on the one hand, and any member of the
Parent Group, on the other hand, shall not be taken into account until the
first taxable year in which such transaction is required to be taken into
account pursuant to Regulations promulgated under Section 1502. For purposes
of the Agreement, all determinations made as if the TWC Consolidated Group had
never been included in the AOL Time Warner Consolidated Group and as if all Pro
Forma TWC Returns were actual returns shall reflect any actual short taxable
years resulting from the TWC Consolidated Group joining or leaving the AOL Time
Warner Consolidated Group.
4. TAX PAYMENTS.
(a) Estimated Tax Payments.
(i) For each Agreement Year, TWC shall
make periodic payments ("Estimated Tax Payments") to AOL Time
Warner in such amounts as determined by AOL Time Warner (in
good faith and in accordance with the principles of Section 3
hereof) based upon the estimated tax payments that would be
due from the TWC Consolidated Group if it were not included
in the AOL Time Warner Consolidated Group no later than the
dates on which payments of estimated tax would be due from
the TWC Consolidated Group if it were not included in the AOL
Time Warner Consolidated Group. AOL Time Warner shall notify
TWC of any amounts due from TWC to AOL Time Warner pursuant
to this Section 4(a)(i) no later than 5 business days prior
to the date such payments would be due from the TWC
Consolidated Group if it were not included in the AOL Time
Warner Consolidated Group and any such payments shall not be
considered due until the later of the due date described
above or the fifth day from the notice from AOL Time Warner.
(ii) For each Agreement Year, AOL Time
Warner shall make Estimated Tax Payments to TWC in an amount
equal to the excess, if any of (x) the estimated tax payments
that would be due from the Parent Group for the relevant
period if the Parent Group filed its own consolidated tax
return, determined by AOL Time Warner in good faith and in
accordance with the principles of Section 3 hereof, over (y)
the actual estimated tax payments due from the AOL Time
Warner Consolidated Group for such period, no later than the
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dates on which payments of estimated tax are due from the AOL
Time Warner Consolidated Group.
(b) Payments Based on Pro Forma Returns.
(i) Payments Based on Pro Forma TWC
Return. TWC shall pay to AOL Time Warner no later than the
date on which an AOL Time Warner Consolidated Return for any
Agreement Year is filed an amount equal to the excess of (x)
the sum of (A) the federal income tax liability shown on the
corresponding Pro Forma TWC Return prepared for the Agreement
Year, plus (B) an amount equal to the additions to tax, if
any (under Section 6655 of the Code, or otherwise) that would
have been imposed on the TWC Consolidated Group (treating the
amount due to AOL Time Warner under (A) above as its federal
income tax liability and treating any Estimated Tax Payments
to AOL Time Warner pursuant to clause (a) as estimated
payments for purposes of Section 6655 of the Code) as a
result of the inaccuracy of any information provided by TWC
to AOL Time Warner pursuant to Section 7 hereof or from the
failure of TWC to provide any requested information, up to
the total amount of the additions to tax, if any (under
Section 6655 of the Code, or otherwise) that are imposed on
the AOL Time Warner Consolidated Group for such Agreement
Year plus (C) any interest that would be due under the Code
if the Estimated Tax Payments were actual payments of tax,
over (y) the aggregate amount of Estimated Tax Payments paid
by TWC to AOL Time Warner, during such year. If the aggregate
amount of TWC's Estimated Tax Payments to AOL Time Warner for
any Agreement Year exceed the amount of its liability, as
determined under clause (x) of the preceding sentence, AOL
Time Warner shall refund such excess, plus interest (accruing
from each date with respect to which there was an overpayment
of Estimated Tax Payments) to TWC no later than the fifth
business day following the filing of the AOL Time Warner
Consolidated Return. AOL Time Warner shall notify TWC of any
amounts due from TWC to AOL Time Warner pursuant to this
Section 4(b) no later than 5 business days prior to the date
such payments are due and any such payment due from TWC to
AOL Time Warner shall not be considered due until the later
of the due date described above or the fifth day from the
notice from AOL Time Warner.
(ii) Payments Based on Pro Forma Parent
Returns. AOL Time Warner shall pay to TWC no later than the
date on which an AOL Time Warner Consolidated Return for any
Agreement Year is filed an amount equal to the excess of (x)
(A) the federal income tax liability shown on the
corresponding Pro Forma Parent Return prepared for the
Agreement Year, plus (B) any interest that would be due under
the Code if the Estimated Tax Payments were actual payments
of tax, minus (C) the actual federal income tax liability for
the AOL Time Warner Consolidated Group for such taxable year
over (y) the aggregate
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amount of Estimated Tax Payments paid by AOL Time Warner to
TWC during such year. If the aggregate amount of AOL Time
Warner's Estimated Tax Payments to TWC for any Agreement Year
exceed the amount of its liability, as determined under
clause (x) of the preceding sentence, TWC shall refund such
excess to AOL Time Warner, plus interest (accruing from each
date with respect to which there was an overpayment of
Estimated Tax Payments) no later than the fifth business day
following the filing of the AOL Time Warner Consolidated
Return.
(c) For purposes of the Agreement, the term
"federal income tax liability" includes the tax imposed by
Sections 11, 55 and 59A of the Code, or any successor
provisions to such Sections.
5. PAYMENTS FOR TAXABLE YEARS IN THE EVENT OF
DECONSOLIDATION.
(a) Payments By TWC To AOL Time Warner. If for
any taxable year after the TWC Consolidated Group ceases to
be included in the AOL Time Warner Consolidated Group (a
"Post-Consolidation Year"), (i) the federal income tax
liability of the TWC Consolidated Group is less than the
federal income tax liability that would have been imposed
with respect to the same period if the TWC Consolidated Group
had not been included in the AOL Time Warner Consolidated
Group for any Agreement Year and all Pro Forma TWC Returns
had been actual returns for such years, or (ii) the federal
income tax liability of the AOL Time Warner Consolidated
Group is greater than the federal income tax liability that
would have been imposed with respect to the same period if
the TWC Consolidated Group had not been included in the AOL
Time Warner Consolidated Group for any Agreement Year and all
Pro Forma TWC Returns had been actual returns for such years,
then, to the extent that TWC has not already made a payment
to AOL Time Warner for utilization of the tax attributes that
gave rise to the decrease or increase described in (i) or
(ii), TWC shall pay to AOL Time Warner an amount equal to
such decrease or increase within 10 days of the filing of TWC
Post-Consolidation Year return. In the event that there is
both a decrease and an increase described in (i) and (ii),
respectively, of the previous sentence for any
Post-Consolidation Year, then TWC shall make a payment to AOL
Time Warner in an amount equal to the sum of such decrease
and increase, unless such decrease and increase (or any
portion thereof) result from utilization of the same tax
attribute(s), in which case the amount of the payment will be
reduced accordingly.
(b) Payments By AOL Time Warner To TWC. If for
any Post-Consolidation Year (i) the federal income tax
liability of the TWC Consolidated Group is greater than the
federal income tax liability that would have been
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imposed with respect to the same period if the TWC
Consolidated Group had not been included in the AOL Time
Warner Consolidated Group for any Agreement Year and all Pro
Forma TWC Returns had been actual returns for such years, or
(ii) the federal income tax liability of the AOL Consolidated
Group is less than the federal income tax liability that
would have been imposed with respect to the same period if
the TWC Consolidated Group had not been included in the AOL
Time Warner Consolidated Group for any Agreement Year and all
Pro Forma TWC Returns had been actual returns for such years,
then, to the extent that AOL Time Warner has not already made
a payment to TWC for utilization of the tax attributes that
gave rise to the increase or decrease described in (i) or
(ii), AOL Time Warner shall pay to TWC an amount equal to
such increase or decrease within 10 days of notification by
TWC to AOL Time Warner of the filing of TWC
Post-Consolidation Year return. In the event that there is
both an increase and a decrease described in (i) and (ii),
respectively, of the previous sentence for any
Post-Consolidation Year, then AOL Time Warner shall make a
payment to TWC in an amount equal to the sum of such increase
and decrease, unless such increase and decrease (or any
portion thereof) result from utilization of the same tax
attribute(s), in which case the amount of the payment will be
reduced accordingly.
(c) Documentation. Prior to the payment of any
amounts due pursuant to this Section 5, the parties shall
exchange such information and documentation as is reasonably
satisfactory to each of them in order to substantiate the
amounts due pursuant to this Section 5. Any disputes as to
such amounts and documentation which cannot be resolved prior
to the date a payment is due shall be referred to an
independent accounting firm whose fees shall paid one half by
TWC and one half by AOL Time Warner.
(d) Post-Consolidation Year Carrybacks.
(i) If a TWC Consolidated Group
federal income tax return for any Post-Consolidation Year
reflects a net operating loss, net capital loss, excess tax
credits, or any other tax attribute, whether or not TWC
waives the right to carryback any such attribute to an AOL
Time Warner Consolidated Return, no payment with respect to
such carrybacks shall be due from AOL Time Warner.
(ii) If an AOL Time Warner Consolidated
Return for any Post-Consolidation Year reflects a net
operating loss, net capital loss, excess tax credits, or any
other tax attribute, such attribute may be carried back to an
AOL Time Warner Consolidated Return for an Agreement Year,
and AOL Time Warner shall be entitled to retain (without any
obligation to reimburse TWC) the full amount of any refund
received in connection therewith. In the event that TWC (or
any other member of the TWC Consolidated Group) receives any
refund
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with respect to an Agreement Year issued in connection with a
carryback of an AOL Time Warner Consolidated Group tax
attribute from a Post-Consolidation Year to an AOL Time
Warner Consolidated Return for an Agreement Year, TWC shall
promptly pay the full amount of such refund to AOL Time
Warner.
(e) No Duplication of Payment. Notwithstanding
anything to the contrary herein, neither Section 5(a) nor
Section 5(b) shall require TWC or AOL Time Warner, as the
case may be, to make any payment pursuant to such section to
the extent that the payment is attributable to a tax
attribute for which payment has previously been made pursuant
to Section 4.
6. CARRYBACK OF TAX ATTRIBUTES. To the extent that AOL
Time Warner elects to carryback a net operating loss, net capital loss, excess
tax credits or any other tax attribute of the TWC Consolidated Group or the
Parent Group in any Agreement Year to an AOL Time Warner Consolidated Return
for any earlier Agreement Year, an adjustment shall be made to the
corresponding Pro Forma TWC Return or Pro Forma Parent Return, as applicable,
to reflect the utilization of such carryback, and all calculations of payments
made pursuant to Sections 4 and 5 of this Agreement shall be recomputed to
reflect the effect of such carryback on the relevant Pro Forma TWC Return or
Pro Forma Parent Return. Within 30 days after the date on which the AOL Time
Warner Consolidated Return reflecting utilization of such attribute is filed,
TWC or AOL Time Warner, as appropriate, shall make additional payments to the
other party reflecting the recomputation described in the preceding sentence.
7. PREPARATION OF TAX PACKAGE AND OTHER FINANCIAL
REPORTING INFORMATION.
TWC shall provide to AOL Time Warner in a format determined
by AOL Time Warner all information requested by AOL Time Warner as reasonably
necessary to prepare the AOL Time Warner Consolidated Return and the Pro Forma
TWC Return (the "TWC Tax Package"). The TWC Tax Package with respect to any
taxable year shall be provided to AOL Time Warner on a basis consistent with
current practices of the AOL Time Warner Consolidated Group. TWC shall also
provide to AOL Time Warner information required to determine the Estimated Tax
Payments, current federal taxable income, current and deferred tax liabilities,
tax reserve items, and any additional current or prior information required by
AOL Time Warner on a timely basis consistent with current practices of the AOL
Time Warner Consolidated Group.
8. RETURNS, AUDITS, REFUNDS, AMENDED RETURNS,
LITIGATION, ADJUSTMENTS AND RULINGS.
(a) Returns. AOL Time Warner shall have
exclusive and sole responsibility for the preparation and
filing of the AOL Time Warner Consolidated Returns (including
requests for extensions thereof) and any other returns,
amended returns and other documents or statements required to
be filed
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with the IRS in connection with the determination of the
federal income tax liability of the AOL Time Warner
Consolidated Group.
(b) Audits; Refund Claims. AOL Time Warner will
have exclusive and sole responsibility and control with
respect to the conduct and settlement of IRS examinations of
the returns filed by the AOL Time Warner Consolidated Group
and any refund claims with respect thereto; provided,
however, that no settlement relating to any matter that would
cause a payment obligation for TWC under this Agreement shall
be accepted or entered into by AOL Time Warner without the
consent of TWC (which consent shall not unreasonably be
withheld or delayed). If TWC does not respond to AOL Time
Warner's request for consent within 30 days, TWC shall be
deemed to have consented. TWC shall assist and cooperate with
AOL Time Warner during the course of any such proceeding.
Within 10 days of the commencement of any such proceeding,
AOL Time Warner shall give TWC notice of and consult with TWC
with respect to any issues relating to items of income, gain,
loss, deduction or credit of TWC (any such items, "TWC Return
Items"); provided, that, TWC shall not be relieved of any
obligation to make additional payments under this Agreement
if AOL Time Warner fails to timely deliver the notice
described above except to the extent that TWC is actually
prejudiced thereby. Notwithstanding the foregoing, AOL Time
Warner shall have the right in its sole discretion to have
TWC pay any disputed taxes and sue for a refund in the forum
of AOL Time Warner's choice. AOL Time Warner shall act in
good faith with respect to the matters described in this
Section 8(b).
(c) Litigation. If the federal income tax
liability of the AOL Time Warner Consolidated Group becomes
the subject of litigation in any court, the conduct and
settlement of the litigation shall be controlled exclusively
by AOL Time Warner; provided, however, that no settlement
relating to any matter that would cause a payment obligation
for TWC under this Agreement shall be accepted or entered
into by AOL Time Warner without the consent of TWC (which
consent shall not unreasonably be withheld or delayed). If
TWC does not respond to AOL Time Warner's request for consent
within 30 days, TWC shall be deemed to have consented. TWC
shall assist and cooperate with AOL Time Warner during the
course of litigation, and AOL Time Warner shall consult with
TWC regarding any issues relating to TWC Return Items. AOL
Time Warner shall act in good faith with respect to the
matters described in this Section 8(c).
(d) Expenses. TWC shall reimburse AOL Time
Warner for all reasonable out-of-pocket expenses (including,
without limitation, legal, consulting and accounting fees) in
the course of proceedings described in paragraphs (b) and (c)
of this Section to the extent such expenses are reasonably
attributable to TWC Return Items for any Agreement Year.
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(e) Recalculation Of Payments To Reflect
Adjustments. To the extent that there is a Determination with
respect to an AOL Time Warner Consolidated Return for any
year, or a TWC Consolidated Group return for a
Post-Consolidation Year, that results in an additional
payment of tax (including a payment of tax made preliminary
to commencing a refund claim or litigation) or a refund of
tax (including a refund of a preliminary payment referred to
in the preceding parenthetical) (any such additional payment
or refund, an "Adjustment") relating to the AOL Time Warner
Consolidated Return for an Agreement Year, a corresponding
adjustment shall be made to the corresponding Pro Forma TWC
Return or Pro Forma Parent Return, as applicable.
All calculations of payments made pursuant to Sections 4, 5
and 6 of the Agreement shall be recomputed to reflect the
effect of any Adjustments on (i) the relevant Pro Forma TWC
Return or Pro Forma Parent Return, and (ii) the liability of
TWC or AOL Time Warner for a Post-Consolidation Year;
provided, that, any such payment recomputation shall also
take into account any previous adjusted payments made in
connection with an Adjustment resulting from a prior
Determination. Within 5 days after any such Adjustment, TWC
or AOL Time Warner, as appropriate, shall make additional
payments or refund payments to the other party reflecting
such Adjustment, plus interest pursuant to Section 9 of the
Agreement, calculated as if payments by and to TWC pursuant
to Sections 4, 5 and 6 of the Agreement and this Section 8
were payments and refunds of federal income taxes. TWC shall
further pay to AOL Time Warner, on an after-tax basis, the
amount of any penalties or additions to tax incurred by the
AOL Time Warner Consolidated Group in connection with any
adjustment to any TWC Return Item for an Agreement Year, but
only if such penalties or additions to tax result from the
inaccuracy of any information provided by TWC to AOL Time
Warner pursuant to Section 7 hereof or from the failure of
TWC to provide any requested information.
(f) Rulings. TWC shall assist and cooperate
with AOL Time Warner and take all actions reasonably
requested by AOL Time Warner in connection with any ruling
requests submitted by AOL Time Warner to the IRS.
(g) Applicability With Respect To All
Consolidated Returns. The provisions of Section 8(a), (b) and
(c) above shall apply to AOL Time Warner Consolidated Returns
and TWC Return Items for all taxable years in which TWC is
includable in the AOL Time Warner Consolidated Group.
(h) Document Retention, Access To Records & Use
Of Personnel. Until the expiration of the relevant statute of
limitations (including extensions), each of AOL Time Warner
and TWC shall (i) retain records, documents, accounting data,
computer data and other information (collectively, the
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"Records") necessary for the preparation, filing, review,
audit or defense of all tax returns relevant to an
obligation, right or liability of either party under the
Agreement; and (ii) give each other reasonable access to such
Records and to its personnel (insuring their cooperation) and
premises to the extent relevant to an obligation, right or
liability of either party under the Agreement. Prior to
disposing of any such Records, each of AOL Time Warner and
TWC shall notify the other party in writing of such intention
and afford the other party the opportunity to take possession
or make copies of such Records at its discretion.
9. INTEREST.
Interest required to be paid pursuant to the Agreement shall,
unless otherwise specified, be computed at the rate and in the manner provided
in the Code for interest on underpayments and overpayments, respectively, of
federal income tax for the relevant period. Any payments required pursuant to
the Agreement which are not made within the time period specified in the
Agreement shall bear interest at a rate equal to two hundred basis points above
the average interest rate on the senior bank debt of AOL Time Warner.
10. FOREIGN, STATE AND LOCAL INCOME TAXES.
(a) In the case of foreign, state or local
taxes based on or measured by the net income of the AOL Time
Warner Consolidated Group, or any combination of members
thereof (other than solely with respect to the TWC
Consolidated Group or members of the Parent Group) on a
combined, consolidated or unitary basis, the provisions of
the Agreement shall apply with equal force to such foreign,
state or local tax for each Agreement Year whether or not the
TWC Consolidated Group is included in the AOL Time Warner
Consolidated Group for federal income tax purposes; provided,
however, that interest pursuant to the first sentence of
Section 9 of the Agreement shall be computed at the rate and
in the manner provided under such foreign, state or local law
for interest on underpayments and overpayments of such tax
for the relevant period and references to provisions of the
Code throughout the Agreement shall be deemed to be
references to analogous provisions of state, local, and
foreign law.
(b) For any Agreement Year, AOL Time Warner
shall have the sole and exclusive control of (a) the
determination of whether a combined, consolidated or unitary
tax return should be filed for any foreign, state or local
tax purpose.
(c) TWC shall be responsible for filing tax
returns relating to payroll, sales and use, property,
withholding, capital stock, net worth and similar taxes
attributable to members of the TWC Consolidated Group and
shall be responsible for the payment of such taxes.
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(d) For all taxable years that TWC is a member
of the AOL Time Warner Consolidated Group, TWC shall have the
sole and exclusive responsibility for all taxes based on or
measured by net income that are determined solely by the
income of the TWC Consolidated Group (or any combination of
the members thereof, including the predecessors and
successors of such members) on a combined, consolidated,
unitary or separate company basis.
11. CONFIDENTIALITY.
Each of AOL Time Warner and TWC agrees that any information
furnished pursuant to the Agreement is confidential and, except as and to the
extent required by law or otherwise during the course of an audit or litigation
or other administrative or legal proceeding, shall not be disclosed to other
persons. In addition, each of AOL Time Warner and TWC shall cause its
employees, agents and advisors to comply with the terms of this Section 11.
12. SUCCESSORS AND ACCESS TO INFORMATION.
The Agreement shall be binding upon and inure to the benefit
of any successor to any of the parties, by merger, acquisition of assets or
otherwise, to the same extent as if the successor had been an original party to
the Agreement, and in such event, all references herein to a party shall refer
instead to the successor of such party. If for any taxable year TWC is no
longer included in the AOL Time Warner Consolidated Group, AOL Time Warner and
TWC agree to provide to the other party any information reasonably required to
complete tax returns for taxable periods beginning after TWC is no longer
included in an AOL Time Warner Consolidated Return, and each of AOL Time Warner
and TWC will cooperate with respect to any audits or litigation relating to any
AOL Time Warner Consolidated Return.
13. GOVERNING LAW.
The Agreement shall be governed by and construed in
accordance with the laws of New York excluding (to the greatest extent
permissible by law) any rule of law that would cause the application of the
laws of any jurisdiction other than the State of New York.
14. HEADINGS.
The headings in the Agreement are for convenience only and
shall not be deemed for any purpose to constitute a part or to affect the
interpretation of the Agreement.
15. COUNTERPARTS.
The Agreement may be executed simultaneously in two or more
counterparts, each of which will be deemed an original, and it shall not be
necessary in making proof of the Agreement to produce or account for more than
one counterpart.
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16. NOTICES.
Any payment, notice or communication required or permitted to
be given under the Agreement shall be in writing (including telecopy
communication) and mailed, telecopied or delivered:
If to AOL Time Warner:
AOL Time Warner
75 Rockefeller Plaza
New York, NY 10019
Attention: Annaliese Kambour
Senior Vice-President, Tax
Fax: (212) 258-3027
Attention: Executive Vice President
and General Counsel
Fax: (212) 258-3172
If to TWC:
Attn:
or to any other address as AOL Time Warner or TWC shall furnish in writing to
one another. All such notices and communications shall be effective when
received.
17. SEVERABILITY.
If any provision of the Agreement is held to be unenforceable
for any reason, it shall be adjusted rather than voided, if possible, in order
to achieve the intent of the parties to the maximum extent practicable. In any
event, all other provisions of the Agreement shall be deemed valid, binding,
and enforceable to their full extent.
18. TERMINATION.
The Agreement shall remain in force and be binding so long as
the applicable period of assessments (including extensions) remains unexpired
for any taxes contemplated by the Agreement; provided, however, that neither
AOL Time Warner nor TWC shall have any liability to the other party with
respect to tax liabilities for taxable years in which TWC is not
<PAGE>
14
included in the AOL Time Warner Consolidated Returns except as provided in
Sections 5 and 10 of this Agreement.
19. SUCCESSOR PROVISIONS.
Any reference herein to any provisions of the Code or
Treasury Regulations shall be deemed to include any amendments or successor
provisions thereto as appropriate.
20. COMPLIANCE BY SUBSIDIARIES
AOL Time Warner and TWC each agrees to cause all members of
the Parent Group and the TWC Consolidated Group (including predecessors and
successors to such members) to comply with the terms of the Agreement.
IN WITNESS WHEREOF, each of the parties of the Agreement has
caused the Agreement to be executed by its duly authorized officer on this date
of , 200[_].
AOL TIME WARNER INC.
By:
----------------------------------------
Name:
Title:
TIME WARNER ENTERTAINMENT Inc.
By:
----------------------------------------
Name:
Title: