Tax Sharing and Indemnification Agreement - Equifax Inc. and ChoicePoint Inc.
TAX SHARING AND INDEMNIFICATION AGREEMENT
THIS TAX SHARING AND INDEMNIFICATION AGREEMENT ("Agreement") is
entered into as of July __, 1997, by and between Equifax Inc., a Georgia
corporation ("Equifax"), and ChoicePoint Inc., a Georgia corporation
("Controlled").
WHEREAS, Equifax is the common parent and Controlled is currently a
member of an "affiliated group", as that term is defined in Section 1504 of the
Code, which currently files consolidated federal income tax returns; and
WHEREAS, Controlled is a holding company and a wholly-owned
subsidiary of Equifax; and
WHEREAS, Controlled owns or will own prior to the Distribution 100% of
the stock of Equifax Services Inc., a Georgia corporation ("Services"), which
carries on the business, primarily throughout the United States and the United
Kingdom, of compiling various underwriting, claims, and other information for
inclusion in reports sold primarily to life and health, property and casualty,
and commercial insurance customers; and
WHEREAS, that certain Distribution Agreement Plan of Reorganization
and Distribution, dated July __, 1997, by and between Equifax and Controlled,
and any exhibits thereto (the "Plan"), provides for the distribution to the
holders of Equifax common stock all of the outstanding shares of the common
stock of Controlled; and
WHEREAS, as a consequence of the Distribution, Controlled will no
longer be a subsidiary of Equifax and will no longer be a member of Equifax's
affiliated group; and
WHEREAS, pursuant to Treas. Reg. Section 1.1502-6, Equifax and each
subsidiary which was a member of Equifax's affiliated group during any part of
a consolidated return year is severally liable for the consolidated federal
income tax liability of that group for such year; and
WHEREAS, the Equifax Group and the Controlled Group desire to set
forth their rights and obligations with respect to foreign, federal, state and
local taxes due for periods both before and after the Distribution and with
respect to certain tax and other liabilities that may be asserted in connection
with the Distribution;
NOW THEREFORE, Equifax on behalf of itself and members of the Equifax
Group and Controlled, on behalf of itself and members of the Controlled Group,
in consideration of the mutual covenants contained herein, agree as follows:
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ARTICLE I
DEFINITIONS
For purposes of this Agreement, the following definitions shall apply:
1.1 Affiliated Group means an affiliated group of corporations within
the meaning of Section 1504(a) (determined without regard to the exceptions
contained in Section 1504(b)) of the Code for the taxable period in question.
1.2 Code means the Internal Revenue Code of 1986, as amended from
time to time.
1.3 Consolidated Returns means the consolidated United States federal
income tax returns of the affiliated group of which Equifax is the common
parent for consolidated return years beginning before the Date of Distribution
and any consolidated, combined or similar state income tax returns of any
members of the Equifax Group for taxable years beginning before the Date of
Distribution (including, in each case, any amendments thereto).
1.4 Controlled Group means (i) with respect to any period prior to the
Date of Distribution, Controlled, Services, PRC Corporation, Inc., Osborn
Laboratories, Inc. ("Osborn"), Professional Test Administrators, Inc., Equifax
Government and Special Systems, Inc., ChoicePoint Ltd. and each of Osborn's
wholly owned subsidiaries, and (ii) with respect to any period on or after the
Date of Distribution, the Affiliated Group of which Controlled or any successor
of Controlled is the common parent.
1.5 Date of Distribution or Distribution Date means the date Equifax
ceases to own 80% of the vote and value of the stock of Controlled within the
meaning of Section 1504 of the Code.
1.6 Distribution shall mean the distribution by Equifax of all of the
stock of Controlled to Equifax shareholders pursuant to the Plan.
1.7 Effective Time means 5:00 p.m. EDT on July 31, 1997.
1.8 Equifax Group means, for each taxable period, the Affiliated Group
of which Equifax or any successor of Equifax is the common parent, provided,
however, Equifax Group shall not include the Controlled Group.
1.9 Expenses means out-of-pocket expenses and shall not include any
overhead or indirect costs.
1.10 Fifty Percent Acquisition or 50% Acquisition means an acquisition
by 1 or more persons of fifty percent or more of the vote or value of the stock
of either Equifax or Controlled where the Parties fail to prove that such
acquisition is not part of the same
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overall plan or series of related transactions that includes the Distribution;
provided, however, that an acquisition shall constitute a 50% Acquisition only
if such acquisition causes the nonacquired Party to be taxed under subsequently
enacted legislation. For purposes of determining whether a 50% Acquisition has
occurred, an acquisition of assets of Equifax or Controlled (e.g., pursuant to
a reorganization described in subparagraphs (A), (C) or (D) of section
368(a)(1) of the Code) shall be treated as an acquisition of stock to the
extent provided by subsequently enacted legislation.
1.11 Final Determination means the final resolution of liability for
any Tax for a taxable period (i) by IRS Form 870 or 870-AD (or any successor
forms thereto), on the date of acceptance by or on behalf of the IRS, or by a
comparable form under the laws of other jurisdictions, except that a Form 870
or 870-AD, successor form, or comparable form that reserves the right of the
taxpayer to file a claim for refund and/or the right of the Taxing Authority to
assert a further deficiency shall not constitute a Final Determination; (ii) by
a decision, judgment, decree, or other order by a court of competent
jurisdiction which has become final and unappealable; (iii) by a closing
agreement or offer in compromise under Section 7121 or 7122 of the Code or any
subsequently enacted corresponding provisions of the Code, or comparable
agreements under the laws of other jurisdictions; (iv) by an allowance of a
refund or credit in respect of an overpayment of Tax, but only after the
expiration of all periods during which such refund may be recovered (including
by way of offset) by the Tax imposing jurisdiction; or (v) by any other final
disposition by reason of the expiration of the applicable statute of
limitations.
1.12 IRS means the Internal Revenue Service.
1.13 Party means either of the parties to this Agreement.
1.14 Plan is defined in the recitals to this Agreement.
1.15 Restructuring Taxes means any Taxes incurred in connection with
(i) the contribution of the stock of Services, the stock of EGSS, the stock of
Osborn and certain other assets to Controlled, including the assumption of
liabilities related thereto (the "Contribution"), or (ii) the distribution of
the stock of Controlled pursuant to the Plan including, without limitation, any
transfer Taxes or any Tax imposed pursuant to or as a result of Section 311 of
the Code. If the Distribution otherwise qualifies under Section 355 of the Code
and, following the Distribution, a Party enters into a 50% Acquisition, then
any Taxes imposed upon the other Party shall constitute "Restructuring Taxes."
1.16 Tainting Act means any breach, caused by one or more members of
the Controlled Group (or their less than wholly-owned subsidiaries), of any
written representation or other statement given in connection with an IRS
letter ruling or legal opinion obtained by Equifax (relating to the
Contribution or Distribution) or contained in Section 2.6.
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1.17 Tax or Taxes means all forms of taxation, whenever created or
imposed, whether domestic or foreign, and whether imposed by a nation,
locality, municipality, government, state, federation, or other body (a "Taxing
Authority"), and without limiting the generality of the foregoing shall include
net income, alternative or add-on minimum tax, gross income, sales, use,
franchise, gross receipts, value added, ad valorem, profits, license, payroll,
withholding, social security, unemployment insurance, employment, property,
transfer, recording, excise, severance, stamp, occupation, premium, windfall
profit, custom duty, or other tax, governmental fee or other like assessment or
charge of any kind whatsoever, together with any related interest, penalties or
other additions to tax, or additional amounts imposed by any such Taxing
Authority. For purposes of this Agreement, Taxes are "attributable" to a member
of the Controlled Group or the Equifax Group if such Taxes are imposed as a
result of, or in connection with, the income, assets, employees, or business
operations of such member. The fact that a member of the Controlled Group or
the Equifax Group prepared or filed a return with respect to any Taxes is not
relevant in determining whether such Taxes are "attributable" to such member.
1.18 Tax Benefit means any Tax Item which decreases Taxes paid or
payable.
1.19 Tax Controversy means any audit, examination, dispute, suit,
action, litigation or other judicial or administrative proceeding by or against
the IRS or any other Taxing Authority.
1.20 Tax Item means any item of income, gain, loss, deduction, credit,
recapture of credit or any other item, including, but not limited to, an
adjustment under Code Section 481 resulting from a change in accounting method,
which increases or decreases Taxes paid or payable.
1.21 Tax Returns means all reports, estimates, declarations of
estimated tax, information statements, returns or other documents required or
permitted to be filed with a Taxing Authority in connection with any Taxes,
including but not limited to requests for extensions of time, information
statements and reports, claims for refund, and amended returns.
ARTICLE II
PRE-EFFECTIVE TIME, POST-EFFECTIVE TIME, AND OTHER TAX LIABILITIES
2.1 Equifax Group.
(a) Current and Prior Periods. Except as otherwise provided in this
Agreement, Equifax shall pay, on a timely basis, all Taxes attributable to the
Equifax Group that are imposed for the portion of the taxable year 1997 that
includes and precedes the Effective Time (the "1997 Equifax Taxes") and for all
periods ending prior to the Effective Time. Equifax hereby assumes all such
liability and shall indemnify and hold harmless Controlled and any member of
the Controlled Group from and against any share
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or amount of the 1997 Equifax Taxes and all Taxes attributable to the Equifax
Group that are imposed for periods ending on or prior to the Effective Time.
(b) Future Periods. Except as otherwise provided in this Agreement,
Equifax shall pay, on a timely basis, all Taxes attributable to the Equifax
Group that are imposed for any period beginning after the Effective Time (and,
to the extent not already included in this sentence, all Taxes attributable to
the Equifax Group that are imposed for the portion of the taxable year 1997
following the Effective Time), and shall indemnify and hold harmless Controlled
and any member of the Controlled Group from and against all such Taxes.
(c) NonCalendar Years. If a taxable year of a member of the
Equifax Group with respect to a particular Tax is not the calendar year, then
all Taxes attributable to such member imposed for calendar year 1996 and 1998
shall be included in subsections 2.1(a) and 2.1(b), respectively, to the extent
not already included in those subsections.
2.2 Controlled Group.
(a) Current and Prior Periods. Except as otherwise provided
in this Agreement, Controlled shall pay, on a timely basis, all Taxes
attributable to the Controlled Group that are imposed for the portion of the
taxable year 1997 that includes and precedes the Effective Time (the "1997
Controlled Taxes") and for all periods ending on or prior to the Effective
Time. Controlled hereby assumes all such liability and shall indemnify and hold
harmless Equifax and any member of the Equifax Group from and against any share
or amount of the 1997 Controlled Taxes and all Taxes attributable to the
Controlled Group that are imposed for periods ending on or prior to the
Effective Time.
(b) Future Periods. Controlled shall pay, on a timely basis,
all Taxes attributable to the Controlled Group that are imposed for any period
beginning on or after the Effective Time (and, to the extent not already
included in this sentence, all Taxes attributable to the Controlled Group that
are imposed for the portion of the taxable year 1997 following the Effective
Time), and shall indemnify and hold harmless Equifax and any member of the
Equifax Group from and against all such Taxes.
(c) Indemnification for Basket Amount and Amount in Excess of
Basket. Notwithstanding anything contained in subsection 2.2(a) to the
contrary, Equifax shall indemnify and hold Controlled harmless for any
additional Taxes paid by Controlled, including additional 1997 Controlled
Taxes, in excess of the Basket Amount resulting from an examination by a Taxing
Authority, where such Taxes are attributable to the Controlled Group and are
imposed for any period that precedes the Effective Time. If, for any reason,
any such additional Taxes are paid to the Taxing Authority by Equifax,
Controlled agrees to indemnify and hold Equifax harmless for any such Taxes
(minus any Tax Benefit received by Equifax resulting from such payments, plus
any additional Taxes resulting from such indemnification) up to the Basket
Amount. For purposes of this subsection 2.2(c) only, the terms "Taxes" and
"1997 Controlled Taxes" as defined in this
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Agreement shall not include net income, sales, use, or alternative minimum
taxes. In no event shall the sum of any such additional Taxes paid by
Controlled and any indemnity payments made by Controlled under this subsection
2.2(c) exceed the Basket Amount. In determining the amount, if any, of an
indemnification obligation by Controlled under this subsection 2.2(c) in the
case where both Equifax and Controlled pay a portion of such additional Taxes,
the additional Taxes paid by Controlled shall be considered and applied against
the Basket Amount first. The Basket Amount in each case shall be $2 million
plus the Tax Benefit, if any, allowable to Controlled resulting from such
payments, reduced by any Taxes incurred as a result of the receipt by
Controlled of indemnification pursuant to this subsection 2.2(c). Payments
required to be made pursuant to this subsection 2.2(c) shall be made in
immediately available funds within thirty (30) days after written demand
therefor from the other Party.
(d) NonCalendar Years. If a taxable year of a member of the
Controlled Group with respect to a particular Tax is not the calendar year,
then all Taxes attributable to such member imposed for calendar year 1996 and
1998 shall be included in subsections 2.1(a) and 2.1(b), respectively, to the
extent not already included in those subsections.
2.3 Restructuring Taxes.
(a) Generally. Except as otherwise provided in subsections
(b), (c), or (d) hereof, Equifax shall pay, and shall indemnify and hold
harmless Controlled and any member of the Controlled Group from and against,
any and all Restructuring Taxes.
(b) Payment/Indemnification for Tainting Acts. Anything in
this Article II to the contrary notwithstanding, Controlled shall pay, and
shall indemnify and hold Equifax harmless from and against, (i) any
Restructuring Taxes, (ii) any liability resulting from a decision that Equifax
is liable to Equifax's or Controlled's shareholders because of a Final
Determination that the Distribution is taxable, and (iii) any additional Taxes
described in Section 7.4 and related Expenses payable by Equifax by reason of
the receipt of a payment from (or the payment by) Controlled described in this
subsection 2.3(b), but in any case only to the extent such Restructuring Taxes
or liability to shareholders is due exclusively to a Tainting Act.
(c) Payment/Indemnification for Combined Breach. Anything in
this Article II to the contrary notwithstanding, in the event of a Final
Determination that Restructuring Taxes are due to a Taxing Authority and such
Restructuring Taxes are caused by both a Tainting Act, and a breach, caused
solely by any member of the Equifax Group, of any written representation or
statement given in connection with an IRS letter ruling or legal opinion
obtained by Equifax or contained in Section 2.6 of this Agreement, or,
alternatively, such Restructuring Taxes are caused in part by one or more
members of the Equifax Group and in part by one or more members of the
Controlled Group (or their less than wholly-owned subsidiaries), then the
liability of Equifax and Controlled for any Restructuring Taxes arising from
such Final Determination and any liability to
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shareholders arising from such Final Determination shall be borne fifty percent
(50%) by Equifax and fifty percent (50%) by Controlled. Each Party, jointly and
severally with its Affiliated Group, agrees to pay and to indemnify and hold
the other Party harmless from and against the amount of Restructuring Taxes and
liability to shareholders allocated to such first Party under this subsection
2.3(c).
(d) Payment/Indemnification Absence of Any Breach. Anything
in this Article II to the contrary notwithstanding, in the event of a Final
Determination that Restructuring Taxes are due to a Taxing Authority and such
Restructuring Taxes are not caused by (i) a Tainting Act, (ii) a breach, caused
by any member of the Equifax Group, of any representation given in connection
with an IRS letter ruling obtained by Equifax or contained in Section 2.6 of
this Agreement, or (iii) a combined breach described in subsection 2.3(c), then
the liability of Equifax and Controlled for any Restructuring Taxes arising
from such Final Determination and any liability to shareholders arising from
such Final Determination shall be borne ninety percent (90%) by Equifax and ten
percent (10%) by Controlled. Each Party, jointly and severally with its
Affiliated Group, agrees to pay and to indemnify and hold the other Party
harmless from and against the amount of Restructuring Taxes and liability to
shareholders allocated to such first Party under this subsection 2.3(d).
2.4 Payment of 1997 Controlled Estimated Tax Liabilities. Controlled
shall pay to Equifax an amount equal to the estimated aggregate amount of Taxes
that would be owed by the Controlled Group for taxable year 1997 where such
Taxes must be paid by Equifax as part of a Consolidated Return (the "1997
Controlled Estimated Tax Liabilities"). Such estimated amount shall be computed
in a manner consistent with the intercompany allocation of consolidated federal
and state tax liabilities applied in prior periods. Notwithstanding the above,
such estimated amount shall not include amounts related to separate returns
filed on a combined unitary basis, except to the extent consistent with how the
tax liabilities on such returns were allocated in prior years. Payment of the
1997 Controlled Estimated Tax Liabilities is due on or before the tenth (10th)
day after receipt by Controlled of the applicable computations prepared by
Equifax.
2.5 Adjustment of 1997 Controlled Estimated Tax Liabilities. Upon the
filing of the Equifax Group's 1997 Consolidated Returns, the 1997 Controlled
Estimated Tax Liabilities as of the Distribution Date shall be restated and
adjusted by Equifax based upon information then available. An adjusting payment
shall be made by Equifax or Controlled as is required by any restatement or
adjustment of the 1997 Controlled Estimated Tax Liabilities. Such payment is
due on or before the tenth (10th) day after receipt by Controlled of the
applicable computations prepared by Equifax.
2.6 Representations and Covenants. Each of Equifax and Controlled
represents to the other that neither it nor its representatives have knowingly
misstated or omitted a material fact in connection with Equifax obtaining an
IRS letter ruling or a legal opinion relating to the Distribution or
Contribution. In addition, each of Equifax and Controlled represents to the
other that (i) it is not currently engaged in any negotiations
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involving a transaction that, if consummated, would constitute a 50%
Acquisition, and (ii) it will neither engage in negotiations nor consummate a
business combination that constitutes a 50% Acquisition. Each of Equifax and
Controlled represents to the other that it has not and will not do anything
that would cause the Distribution or the Contribution to be taxable under
federal or state income tax laws. Further, Controlled agrees that, for two
years following the Distribution, it will not issue any Controlled stock,
options to acquire Controlled stock or any other equity instrument until it has
received an opinion of counsel to the effect that such issuance will not
adversely affect the ruling or opinion regarding the Distribution or
Contribution obtained by Equifax and the board of directors of Controlled has
approved of such issuance. In approving of such an issuance, the board of
directors of Controlled will consider relevant factors, including
representations made to the IRS to obtain the ruling, the actual IRS ruling
issued, and current IRS policy regarding Revenue Procedure 96-39, 1996-1 I.R.B.
33.
ARTICLE III
REFUNDS OF TAXES
Each Party shall be entitled to retain or be paid all refunds of Tax
received, whether in the form of payment, credit or otherwise, from any Taxing
Authority with respect to any Tax Returns filed or to be filed by such Party in
accordance with Article V of this Agreement, provided, however, Controlled
shall be entitled to retain or be paid all such refunds with respect to any
Taxes to the extent such Taxes exclusively pertain to property or operations of
the Controlled Group. Notwithstanding anything contained in this Article III to
the contrary, Equifax shall be entitled to be paid and to retain, and
Controlled shall not be entitled to retain and shall be required to pay over to
Equifax, any refunds of Tax received to the extent (i) Equifax indemnified
Controlled for the Taxes attributable to such refunds, or (ii) Equifax paid to
the Taxing Authority the Taxes attributable to such refunds and Equifax has not
been indemnified by Controlled.
ARTICLE IV
CARRYBACKS FROM SEPARATE RETURN YEARS
4.1 General. Anything herein to the contrary notwithstanding, with the
prior written consent of Equifax, which consent may not be unreasonably
withheld, the Controlled Group may elect to carry back to any taxable period
beginning before the Date of Distribution any tax attribute, including without
limitation, any net operating or other loss or credit, arising in any taxable
period beginning after the Date of Distribution which the Controlled Group may
properly elect to carry back for federal income tax purposes or combined state
tax purposes to a Consolidated Return. With respect to any such carryback,
Equifax agrees to file such claims for refund and other returns as may be
required to claim the tax refunds attributable to such carryback items and to
pay promptly after receipt to Controlled the cash amount of any refunds of
Taxes, including the cash amount of any interest resulting from the utilization
of such attributes, after taking into consideration any resulting increase or
decrease in the Tax liability of any member of the
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Equifax Group. To the extent authorized by law, Equifax shall act as collection
agent for the Controlled Group with respect to any such refund.
4.2 Review and Expenses. The amount of any carryback by the Controlled
Group shall be reviewed and approved (on the basis of tax information contained
in Controlled's tax return) by Equifax's certified public accountants as to the
amount and validity of such carryback. Controlled agrees to reimburse Equifax
for its reasonable Expenses incurred in reviewing, filing and securing any
Controlled refund claims hereunder.
4.3 Subsequent Disallowance. In the event that any tax attribute for
which Equifax has made a payment pursuant to Section 4.1 is subsequently
reduced or disallowed, Controlled shall indemnify Equifax and hold it harmless
from any Tax liability, including interest and penalties, incurred by reason of
such reduction or disallowance.
ARTICLE V
TAX RETURN PREPARATION
5.1 Consolidated Returns.
(a) Equifax shall prepare and timely file all Consolidated
Returns. Controlled shall have a reasonable period under the circumstances to
review the 1996 and 1997 Consolidated Returns. The Consolidated Returns shall
be prepared and filed by Equifax in compliance with applicable tax laws and on
a basis that is consistent with any IRS letter ruling or legal opinion obtained
by Equifax in connection with the Distribution or Contribution and, subject to
the foregoing, consistent with Equifax's prior Consolidated Returns.
(b) Controlled shall be responsible for preparing all
information relating to the Controlled Group necessary for Equifax to prepare
and file the Consolidated Returns. Such information shall include the annual
federal and state, if any, tax work preparation package, necessary to enable
Equifax to prepare the Consolidated Returns, completed and delivered to Equifax
on or before the same deadline imposed upon other Equifax business units. Such
information shall be used as the basis for Equifax's preparation of the
Consolidated Returns.
(c) Controlled and the Controlled Group shall agree to any
election or consent reasonably requested by Equifax in connection with such
Consolidated Returns and further agree not to elect to be excluded from any
such return.
(d) Controlled and the Controlled Group agree to cooperate
with Equifax, at Equifax's expense, in the preparation of any valuation studies
or other reports which are appropriate or necessary for the preparation of the
Consolidated Returns.
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5.2 Other Pre-Distribution Returns. All other Tax Returns of any
member of the Equifax Group or the Controlled Group for periods beginning
before the Distribution Date shall be filed by Equifax, except that any such
Tax Returns pertaining exclusively to property or operations of the Controlled
Group shall be filed by Controlled. Notwithstanding anything contained in this
Section 5.2, Equifax shall continue to file all Tax Returns of the members of
the Controlled Group for periods beginning before the Distribution Date if the
Tax Return for such period is required to be filed on or prior to the Date of
Distribution. Controlled shall have a reasonable period under the circumstances
to review each such return.
5.3 Post-Distribution Returns. All Tax Returns of any member of the
Controlled Group for periods beginning on or after the Distribution Date shall
be filed by Controlled, and all Tax Returns of any member of the Equifax Group
for periods beginning on or after the Distribution Date shall be filed by
Equifax.
5.4 Cooperation; Exchange of Information. Each Party shall be
responsible for the timely submission to the other Party of information of
which it has knowledge regarding any Tax Item which may properly be included in
any Tax Return to be filed by the other Party, and shall provide any and all
other information and documentation (including, but not by way of limitation,
working papers and schedules) reasonably requested by the other Party for use
in connection with the preparation and filing of any Tax Returns.
ARTICLE VI
TAX CONTROVERSIES AND RECORDS.
6.1 Tax Controversies.
(a) Except as otherwise provided in this Article VI, Equifax
shall have full responsibility in handling, settling or contesting any Tax
Controversy involving a Tax Return for which it has filing responsibility
hereunder (and, in any event, shall have full responsibility in handling,
settling or contesting any Tax Controversy involving (i) Restructuring Taxes,
or (ii) Taxes for which Equifax could be liable pursuant to subsection 2.2(c)
hereof) and, except as provided in this subsection 6.1(a), Controlled shall
have full responsibility in handling, settling or contesting any Tax
Controversy involving a Tax Return for which it has filing responsibility, and
any costs incurred in handling, settling or contesting any Tax Controversy
shall be borne by the Party having full responsibility therefor. For purposes
of this subsection 6.1(a), Equifax shall be treated as potentially liable for
Taxes pursuant to subsection 2.2(c), notwithstanding the fact that the amount
of such Taxes involved in the controversy is or becomes less than the Basket
Amount.
(b) The Party responsible for any Tax Controversy shall use
all reasonable efforts (taking into consideration all relevant facts and
circumstances known to
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the Party) to resist any deficiency assertions by any Taxing Authority
regardless of which Party is ultimately responsible for any such Tax under this
Agreement.
(c) Each Party shall give prompt notice to the other of any
communication with the IRS or other Taxing Authority which may affect any Tax
Item attributable to the other Party. Each Party shall give prompt notice to
the other of any communication with the IRS or other Taxing Authority which
relates to a Tax Controversy for which the other Party is responsible
hereunder. Equifax shall notify Controlled promptly of any communication with
the IRS or other Taxing Authority relating in whole or in part to (i)
Restructuring Taxes for which Controlled could be liable pursuant to Section
2.3 hereof, or (ii) Taxes for which Controlled could be liable pursuant to
Section 2.2 hereof (any proposed adjustment described in subsection 6.1(c)(i)
and (ii) referred to as a "Controlled Indemnity Issue"). Controlled shall
notify Equifax promptly of any communication with the IRS or other Taxing
Authority relating in whole or in part to (iii) Taxes described in subsection
2.2(c) hereof (whether or not the amount of such Taxes exceeds the Basket
Amount), (iv) any Restructuring Taxes (whether or not it is alleged that a
member of the Equifax Group is at fault or is partially at fault), or (v) any
Taxes for which Equifax could be liable pursuant to subsections 2.1(a) and
2.1(b) (each item described in subsection 6.1(c)(iii) through (v) referred to
as an "Equifax Issue").
(d) Controlled shall have 30 days after receipt of such
notice from Equifax within which to object to the proposed adjustment relating
to a Controlled Indemnity Issue (that is not an Equifax Issue). If Controlled
does not notify Equifax within such 30 day period that it objects to the
proposed adjustment, then Equifax shall have exclusive control over all stages
of the Tax Controversy, including full authority to determine whether and in
what manner to contest or compromise the issue, unless and until Controlled so
notifies Equifax.
(e) If Controlled notifies Equifax that it objects to the
proposed adjustment relating to a Controlled Indemnity Issue (that is not an
Equifax Issue), then Equifax shall not thereafter consent to the adjustment or
compromise of such Controlled Indemnity Issue without the consent of
Controlled, but shall cooperate with Controlled to resolve the Controlled
Indemnity Issue on a basis acceptable to Controlled. Prior to the issuance of a
notice of proposed adjustment or similar stage in the proceedings, however,
Equifax shall be responsible for the conduct of the audit, including matters
pertaining to such Controlled Indemnity Issue. Equifax shall notify Controlled
in advance of any conferences, meetings, and proceedings pertaining to the
audit and, at its own expense, Controlled shall have the right to attend all
such proceedings with any Taxing Authority, the subject matter of which is or
includes such Controlled Indemnity Issue.
(f) Upon the issuance of a notice of proposed adjustment or
similar stage in the proceedings, Controlled shall assume the conduct of all
further proceedings, with counsel selected by it, at Controlled's sole expense,
insofar as the proceedings relate to a Controlled Indemnity Issue (that is not
an Equifax Issue), and thereafter Controlled
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and Equifax shall jointly be responsible for the conduct of proceedings to
contest such Controlled Indemnity Issue.
(g) In the event that Equifax receives a notice of deficiency
from the IRS, or a similar notice from any other Taxing Authority, and such
notice relates exclusively to one or more Controlled Indemnity Issues (none of
which are Equifax Issues) and does not relate to an Equifax Issue then:
(i) Upon receiving a written request from Controlled, given
no later than a date reasonably necessary to permit preparation and timely
filing of a petition in the United States Tax Court for redetermination of the
deficiency, or a court of similar jurisdiction with respect to Taxes imposed by
any other Taxing Authority, Equifax shall timely file such petition (at
Controlled's sole expense); or
(ii) If (1) Controlled does not request Equifax to file a
petition for redetermination of the deficiency pursuant to subsection 6.1(g)(i)
hereof, (2) Controlled requests that Equifax file a claim for refund, and (3)
Controlled provides Equifax with sufficient funds to pay the deficiency
relating to the Controlled Indemnity Issue, then Equifax (at Controlled's sole
expense) shall file a claim for refund thereof and, if the claim is denied,
bring an action in a court of competent jurisdiction seeking such refund.
(iii) In the event that a judgment of the United States Tax
Court or other court of competent jurisdiction results in an adverse
determination with respect to the Controlled Indemnity Issue, then Controlled
shall have the right to cause Equifax to appeal from such adverse determination
at Controlled's sole expense.
(iv) Controlled and its representatives, at Controlled's
sole expense, shall be entitled to participate in (1) all conferences,
meetings, or proceedings with any Taxing Authority, the subject matter of which
is a Controlled Indemnity Issue (that is not an Equifax Issue), and (2) all
appearances before any court, the subject matter of which is a Controlled
Indemnity Issue (that is not an Equifax Issue).
(h) The right to participate referred to in subsection 6.1(g)(iv)
hereof shall include the submission and content of documentation, memoranda of
fact and law and briefs, the conduct of oral arguments or presentations, the
selection of witnesses, and the negotiation of stipulations of fact with
respect to a Controlled Indemnity Issue (that is not an Equifax Issue).
(i) If the proposed adjustment relating to a Controlled Indemnity
Issue is also an Equifax Issue (or if the proposed adjustment relates solely to
an Equifax Issue that is not a Controlled Indemnity Issue), then Equifax shall
be fully responsible for the conduct of the Tax Controversy, including matters
pertaining to any Controlled Indemnity Issue, but Equifax shall use reasonable
efforts to involve Controlled in the conduct of the Tax Controversy insofar as
it relates to any Controlled Indemnity Issue. Equifax shall
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notify Controlled in advance of any such proceedings and, at its own expense,
Controlled shall attend all conferences, meetings, or proceedings with any
Taxing Authority, the subject matter of which is or includes any Controlled
Indemnity Issue. Controlled shall use all reasonable efforts to assist Equifax
in resisting any deficiency assertions by any Taxing Authority relating to any
such Controlled Indemnity Issue.
6.2 Cooperation. Equifax and Controlled agree to afford full
cooperation to one another and to their respective representatives, if any, in
any Tax Controversy involving:
(a) any Tax Return filed or required to be filed by or for any member
of the Equifax Group or the Controlled Group for any pre-
Distribution period, or
(b) any item or issue affecting Equifax or Controlled's potential
liability hereunder.
Such cooperation shall include, but not by way of limitation:
(i) preparing responses to information requests by any Taxing
Authority;
(ii) making available books, records and other
documentation (including, but not by way of limitation,
working papers and schedules) relevant to such proceeding,
and systems support for documentation furnished in electronic
form;
(iii) making directors, officers or employees available to appear
in person for interview or for testimony;
(iv) making employees available on a mutually convenient basis to
provide additional information and explanation of materials
provided hereunder;
(v) executing powers of attorney, tax information authorizations
and any other necessary or appropriate authorizations;
(vi) executing agreements with the Taxing Authority or other
documents reasonably necessary or appropriate for the
settlement or pursuit of the contest of such issue; and
(vii) doing whatever is reasonable in the circumstances to assist
the other Party in proving that an acquisition does not
constitute a 50% Acquisition.
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6.3 Record Retention. The Parties, on behalf of themselves and the
members of their respective Affiliated Groups, agree to retain all books,
records, returns, schedules, documents and all material papers or relevant
items of information for periods prior to the Date of Distribution for the
later of (i) seven (7) years or (ii) the full period of the applicable statute
of limitations, including any extensions thereof. If, under legislation enacted
after the date of this Agreement, the statute of limitations with respect to a
transaction does not begin to run until the IRS or other Taxing Authority is
notified of the transaction, then the statute of limitations for purposes of
subsection 6.3(ii) shall also not begin to run until such notification is
given.
ARTICLE VII
PAYMENTS
7.1 Payments in General. Any amount required to be paid by one Party
to the other pursuant to this Agreement (other than the payments described in
Sections 2.4 and 2.5 and subsections 2.2(c) and 6.1(g)(ii)) shall be paid in
immediately available funds within thirty (30) days after written demand
therefor from the other Party given after a Final Determination of the amount
thereof.
7.2 Interest on Late Payments. Any amount payable under this Agreement
by one Party to another Party shall, if not paid within ten (10) business days
after the due date specified in this Agreement, bear interest from such due
date until the date paid at the applicable Federal short term rate as defined
in Section 6621 of the Code in effect on the due date.
7.3 Notice. Equifax and Controlled shall give each other prompt
notice of any payment that may be due under this Agreement.
7.4 Tax Items. Except to the extent already provided for in this
Agreement, the amount of any indemnification payment required hereunder shall
take into account the Tax Benefit, if any, allowable to the indemnified Party
resulting from the event giving rise to such indemnification payment and
additional Taxes, if any, incurred by the indemnified Party resulting from such
indemnification and any additional indemnification payment required by this
section. The Parties will cooperate with each other to determine the amounts
described in this section. This Section 7.4 shall not apply to subsection
2.2(c).
ARTICLE VIII
ADMINISTRATIVE PROVISIONS
8.1 Interest. Except as expressly provided herein, no obligation to
pay or right to collect interest or other amounts shall arise by virtue of this
Agreement.
8.2 Agency. It is understood and acknowledged that in accordance with
Treas. Reg. Section 1.1502-77, Equifax, as the common parent, is the agent for
the members of the affiliated group of which Equifax is the common parent
(including all members of the
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group with respect to taxable years beginning before the Date of Distribution)
with respect to all matters referred to therein.
8.3 Expenses. Each party to this Agreement hereby agrees to be
responsible for all of the Expenses which it may incur in carrying out its
duties hereunder.
ARTICLE IX
DISPUTE RESOLUTION
Either Party may give the other written notice of any controversy or
claim between the Parties arising out of or relating to this Agreement, or the
breach hereof ("Claim") not resolved in the normal course of business. Within
10 days after delivery of the notice of a Claim, the receiving Party shall
submit to the other a written response. The notice and response shall include a
statement of such Party's position and a summary of arguments supporting that
position and the name and title of the executive who will represent that Party
and of any other person who will accompany such executive in resolving the
Claim. Within twenty (20) days after delivery of the first notice, the
executives of both Parties shall meet at a mutually acceptable time and place,
and thereafter as often as they reasonably deem necessary, and shall negotiate
in good faith to attempt to resolve the Claim. All reasonable requests for
information made by one Party to the other will be honored.
Claims not resolved through negotiation between executives within
sixty (60) days after the delivery of the first notice described above shall be
submitted, upon application of either Party, for resolution by binding
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association (the "Rules"). Arbitration shall be by a single
arbitrator experienced in the matters that are at issue with respect to the
Claim, which arbitrator shall be selected by the Parties in accordance with the
Rules. The arbitration shall be conducted in Atlanta, Georgia (or at any other
place agreed upon by the Parties and the arbitrator). The decision of the
arbitrator shall be final and binding as to all matters at issue with respect
to the Claim; provided, however, if necessary such decision may be enforced by
either Party in any court of law having jurisdiction over the Parties or the
subject matter of the Claim. Unless the arbitrator shall assess the costs and
expenses of the arbitration proceeding and of the Parties differently, each
Party shall pay its costs and expenses incurred in connection with the
arbitration proceeding, and the costs and expenses of the arbitrator shall be
shared equally by the Parties.
All Claims shall be resolved only in accordance with the provisions of
this Article IX; provided, however, that nothing contained herein shall
preclude either Party from seeking or obtaining (i) injunctive relief to
prevent an actual or threatened breach of any of the provisions of this
Agreement, or (ii) equitable or other judicial relief to enforce the provisions
of this Article IX hereof or to preserve the status quo pending resolution of
Claims hereunder.
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ARTICLE X
MISCELLANEOUS
10.1 Enforceability. In case any one or more of the provisions
contained in this Agreement should be invalid, illegal or unenforceable, the
enforceability of the remaining provisions contained herein shall not in any
way be affected or impaired thereby.
10.2 Modification of Agreement. No modification, amendment or waiver
of any provision of this Agreement shall be effective unless the same shall be
in writing, and signed by each of the Parties hereto, and then such
modification, amendment or waiver shall be effective only in the specific
instance and for the purpose for which given.
10.3 Successors and Assigns. Except to the extent provided by
operation of law or as provided herein, neither this Agreement nor any rights
hereunder shall be assignable or transferable by either Party hereto, without
the prior written consent of the other Party hereto. Each Party hereby
guarantees the performance of all actions, covenants, agreements and
obligations provided under this Agreement of each of its subsidiaries. Each
Party shall, upon the written request of the other Party, cause any of its
subsidiaries to formally execute this Agreement. This Agreement shall be
binding upon, and shall inure to the benefit of, the successors and assigns of
each Party. If one or more persons acquires all or substantially all of the
assets of Equifax or Controlled, Equifax and Controlled each agree that, as a
condition to the closing of such acquisition, such person or persons must agree
to indemnify the nonacquired Party for any Restructuring Taxes incurred by that
Party as a result of such acquisition.
10.4 Term. This Agreement shall commence on the date of execution
indicated above and shall continue in effect until otherwise agreed to in
writing by the Parties or their successors and assigns.
10.5 Rights Confined to Parties. Nothing expressed or implied herein
is intended or shall be constructed to confer upon or to give to any person,
firm or corporation (other than the Parties hereto, members of their Affiliated
Groups, and their successors and assigns) any right, remedy or claim under or
by reason of this Agreement or of any term, covenant or condition hereof. All
terms, covenants, conditions, promises and agreements contained herein shall be
for the sole and exclusive benefit of the Parties hereto, the members of their
Affiliated Groups, and their successors and assigns.
10.6 Notices. All demands, notices and communications under this
Agreement shall be in writing and shall be deemed to have been duly given if
personally delivered or sent by certified or registered United States Mail,
postage prepaid, to:
(a) in the case of Equifax:
Equifax Inc.
1600 Peachtree Street, N.W.
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Atlanta, Georgia 30309
Attn:
--------------------------------
(b) in the case of Controlled:
-------------------------------------
1000 Alderman Drive
Alpharetta, Georgia 30202
Attn:
--------------------------------
10.7 Effect of Headings. The paragraph headings herein are for
convenience only and shall not affect the construction hereof.
10.8 Governing Law. The provisions of this Agreement, and all rights
and obligations of the Parties hereunder shall be governed by the laws of the
State of Georgia.
10.9 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall, when so executed, be considered an original
and all of which, taken together, shall be considered one document.
10.10 Prior Tax Sharing Agreements. This Agreement shall supersede
any and all tax sharing and indemnification (or similar) agreements between any
of the members of the Equifax Group, on the one hand, and any of the members
of the Controlled Group, on the other hand.
EQUIFAX INC.
By:
---------------------------------
Title:
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CHOICEPOINT INC.
By:
---------------------------------
Title:
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