EXHIBIT 10.3
TAX DISAFFILIATION AGREEMENT
THIS TAX DISAFFILIATION AGREEMENT (this "Agreement"), dated as of
_______, is by and among Fidelity National Financial, Inc. ("FNF"), a Delaware
corporation, Fidelity National Title Group, Inc. ("FNT"), a Delaware
corporation, and Fidelity National Information Services Inc. ("FIS"), a Georgia
corporation.
WHEREAS, as set forth in the Securities Exchange and Distribution
Agreement dated as of June 25, 2006 by and between FNF and FNT (the
"Distribution Agreement"), FNF will transfer to FNT certain assets and
liabilities and then distribute all of the shares of FNT Class A Common Stock it
holds on the date specified in the Distribution Agreement (the "Distribution
Date") in a transaction (the "Distribution") designed to qualify as a tax-free
reorganization and distribution pursuant to sections 368(a)(1)(D) and 355 of the
Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, FNF is, and will be until the Distribution is effective, the
common parent of the affiliated group of corporations within the meaning of
section 1504(a) of the Code that includes FNT and its eligible subsidiary
corporations;
WHEREAS, immediately after the Distribution, FNT and FNF will no longer
be members of the same affiliated group;
WHEREAS, after the Distribution, FNF will merge with and into FIS in a
transaction designed to qualify under section 368(a)(1)(A) (the "Merger") and
FNF will cease its separate corporate existence; and
WHEREAS, in connection with the Distribution and the Merger the parties
hereto desire to enter into this Agreement, setting forth their agreement with
respect to certain Tax matters from and after the Distribution Date.
NOW THEREFORE, in consideration of the mutual covenants and promises
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1.1 In General. As used in this Agreement, the following capitalized terms
shall have the following meanings:
"Acquisition" means any acquisition of FNT stock or FIS stock,
as applicable (including without limitation a stock redemption) or
issuance of FNT stock or FIS stock, as applicable, excluding (a) the
issuance of stock by FIS in connection with the acquisition of the
assets of FNF in the Merger; (b) the distribution of FNT stock in the
Distribution; (c) any acquisition of stock that qualifies under section
1.355-7(d)(7) of the Treasury Regulations or any successor thereto,
section 1.355-7(d)(8) of the Treasury Regulations or any successor
thereto or section 1.355-7(d)(9) of the Treasury Regulations or any
successor thereto; (d) any acquisition of FIS stock held by an existing
shareholder
of FIS prior to the effective time of the Merger, including, without
limitation, any sale of such FIS stock by such a shareholder pursuant to
the exercise of registration rights by such shareholder; (e) any vesting
of FIS restricted stock that is granted or issued in connection with the
Distribution or the Merger; and (f) any acquisition of FIS stock
pursuant to the exercise of any option to acquire FIS stock that is
granted in connection with the Distribution or the Merger.
"Adverse Consequences" means damages, penalties, fines, costs,
expenses (including professional fees and expenses), amounts paid in
settlement, liabilities, obligations, liens, and losses, including any
such amounts arising out of or related to claims asserted against FNF,
FIS or FNT by any shareholder participating in the Distribution, or the
Service, or any other Tax Authority that ultimately is successful in
seeking recourse against FNF, FIS or FNT; provided that Adverse
Consequences shall not include any indirect, special, consequential, or
punitive damages, except for indirect, special, consequential or
punitive damages paid or awarded with respect to a Third-Party Claim.
"After-Tax Basis" means that, for purposes of determining the
amount of the Indemnified Liability, the amount of any Taxes, Tax
Losses, or Adverse Consequences shall be determined net of any Tax
Benefit derived by the Indemnitee as the result of sustaining such Tax,
Tax Loss, and Adverse Consequences and increased by the amount of any
Tax Detriment incurred by the Indemnitee as the result of its receipt,
or right to receive, such indemnification payment, so that the
Indemnitee is put in the same net after-Tax economic position as if it
had not incurred such Tax, Tax Loss, or Adverse Consequences.
"Affiliated Company" means any and every corporation that has a
common parent that holds directly or indirectly 80% or more of the
voting power and value of such corporation within the meaning of section
1504(a) of the Code.
"Agreement" has the meaning set forth in the Preamble hereto.
"Arbitrator" has the meaning set forth in Section 8.5(c) of this
Agreement.
"Audit" includes any audit, assessment of Taxes or other
examination by any Tax Authority, proceeding, or appeal of such a
proceeding relating to Taxes, whether administrative or judicial,
including proceedings relating to competent authority determinations.
"Business Day" means any day that is not a Saturday, Sunday or
other day on which commercial banks in New York are required or
authorized by law to close.
"Code" has the meaning set forth in the Recitals to this
Agreement.
"Combined Group" means a group of one or more companies that
files a Combined Return.
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"Combined Return" means any Tax Return with respect to Combined
State/Local Tax filed on a consolidated, combined, unitary or other
similar basis wherein any member of the FIS Group joins in the filing of
such Tax Return (for any Taxable Period) with any member of the FNF
Legacy Group or the FNT Group.
"Combined State/Local Tax" means the state or local Tax
liability determined on a consolidated, combined or unitary basis.
"Combined Tax Allocation Statement" has the meaning set forth in
Section 2.4(b).
"Consolidated Federal Tax" means the Federal Income Tax
liability of a Consolidated Group determined on a consolidated basis.
"Consolidated Group" means a group of one or more Affiliated
Companies that files a Consolidated Return.
"Consolidated Return" means any Tax Return with respect to
Federal Income Taxes filed on a consolidated basis pursuant to Section
1501 of the Code.
"Consolidated Tax Allocation Statement" has the meaning set
forth in Section 2.4(b).
"Contemplated Action" means any action contemplated by the
Distribution Agreement or any other agreement entered into in connection
with the Distribution or the Merger, any vesting of FIS restricted stock
that is granted or issued in connection with the Distribution or the
Merger, including FIS restricted stock issued in respect of FNF
restricted stock, and any acquisition of FIS stock pursuant to the
exercise of any option to acquire FIS stock that is granted in
connection with the Distribution or the Merger, including FNF options
assumed by FIS pursuant to the Merger.
"Contest" means any Audit or claim for refund involving any
Taxes with respect to a Pre-Distribution Period.
"Control" means stock representing a 50% or greater interest
within the meaning of Section 355(e) of the Code, taking into account
the principles of section 355(e)(3)(B).
"Controlling Party" has the meaning set forth in Section 6.2(d)
of this Agreement.
"Cross-Indemnity Agreement" means the cross indemnification
agreement signed and executed by FNT and FIS pursuant to Section 2.3(f)
of the Distribution Agreement.
"Dispute" has the meaning set forth in Section 8.5(a) of this
Agreement.
"Distribution" has the meaning set forth in the Recitals to this
Agreement.
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"Distribution Agreement" has the meaning set forth in the
Recitals to this Agreement.
"Distribution Date" has the meaning set forth in the Recitals to
this Agreement.
"Effective Date" has the meaning set forth in Section 8.1 of
this Agreement.
"Federal Income Tax" means any Tax imposed under Subtitle A of
the Code (including the Taxes imposed by Section 11, 55, and 1201(a) of
the Code), and any interest, addition to Tax, or penalties applicable or
related thereto, and any other income-based U.S. federal tax which is
hereinafter imposed upon corporations.
"Filing Group" means either (a) the FNT Group, if the Filing
Party is either FNF or a member of the FNT Group, or (b) the FIS Group,
if the Filing Party is a member of the FIS Group.
"Filing Party" means, (a) with respect to any Consolidated
Return or Combined Return, the party that is required to file such a Tax
Return under Section 2.2 of this Agreement, and (b) with respect to any
Separate Return, the party that is required to file such Tax Return
under applicable law.
"Final Determination" means with respect to any issue (a) a
decision, judgment, decree or other order by the United States Tax Court
or any other court of competent jurisdiction that has become final and
unappealable, (b) a closing agreement under section 7121 of the Code or
a comparable provision of any state, local, or foreign Tax law that is
binding against the Service or any other Taxing Authority, (c) any other
final settlement with the Service or other Taxing Authority, or (d) the
expiration of an applicable statute of limitations.
"FIS" has the meaning set forth in the Preamble to this
Agreement.
"FIS Acquisition Process" has the meaning set forth in Section
5.2(b) of this Agreement.
"FIS Combined Returns" means any Combined Return with respect to
which FIS or any member of the FIS Group is the common parent of the
Combined Group.
"FIS Consolidated Returns" means any Consolidated Return with
respect to which FIS is the common parent of the Consolidated Group,
except for any Consolidated Return in which FNF will be the common
parent of the Consolidated Group until the Merger.
"FIS Group" means FIS and any Affiliated Company of which FIS is
the common parent corporation, and any corporation which may be, or may
become, a member of such group from time to time, excluding FNF.
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"FNF" has the meaning set forth in the Preamble to this
Agreement.
"FNF Consolidated Return" means any Consolidated Return with
respect to which FNF is the common parent of the Consolidated Group,
including any Consolidated Return for which FNF will be the common
parent until the Merger and for which FIS will be the common parent
after the Merger.
"FNF Legacy Group" includes FNF and any other member of the FNF
Group prior to the Distribution, other than any member of the FIS Group
or any member of the FNT Group prior to the Distribution.
"FNF Legacy Group Combined Return" means any Combined Return
with respect to which a member of the FNF Legacy Group is the common
parent of the Combined Group.
"FNT" has the meaning set forth in the Preamble to this
Agreement.
"FNT Acquisition Process" has the meaning set forth in Section
5.2(c) of this Agreement.
"FNT Combined Return" means any Combined Return with respect to
which FNT or any member of the FNT Group is the common parent of the
Combined Group.
"FNT Consolidated Return" means any Consolidated Return with
respect to which FNT is the common parent of the Consolidated Group.
"FNT Group" means FNT and any Affiliated Company of which FNT is
the common parent corporation and any corporation which may be, or may
become, a member of such group from time to time.
"Hypothetical Tax" has the meaning set forth in Paragraph 1 of
Schedule 1.
"Indemnified Liability" means any liability which is imposed
upon or incurred by an Indemnitee against which such Indemnitee is
indemnified and held harmless under this Agreement.
"Indemnifying Party" means any person that is required to
indemnify and hold harmless any Indemnitee under this Agreement.
"Indemnitee" means person that incurs a liability that is
subject to indemnification under this Agreement.
"Merger" has the meaning set forth in the Recitals to this
Agreement.
"Non-Controlling Party" has the meaning set forth in Section
6.2(d)(i) of this Agreement.
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"Non-Filing Group" means either the FIS Group, if the Filing
Party is a member of the FNT Group, or the FNT Group if the Filing Party
is a member of the FIS Group.
"Non-Filing Party" means either FIS, if the Filing Party is a
member of the FNT Group, or FNT, if the Filing Party is a member of the
FIS Group.
"NTI-NY" means National Title Insurance of New York, Inc., a New
York insurance company.
"Opinion Documents" means the Tax Opinion and representation
letters referred to therein.
"Other Tax Group" means either the FNT Group if the FIS Group is
the Tax Group or the FIS Group if the FNT Group is the Tax Group.
"Post-Distribution Period" means any Taxable Period or portion
thereof beginning after the Distribution Date.
"Pre-Distribution Period" means any (a) Taxable Period ending on
or prior to the Distribution Date or (b) with respect to any Taxable
Period beginning prior to the Distribution Date and ending after the
Distribution Date, the portion of such Taxable Period that ends on the
Distribution Date.
"Private Letter Ruling" means the private letter ruling issued
by the Service to FNF that addresses, inter alia, the tax consequences
of the Distribution and Merger.
"Referee" has the meaning set forth in Section 8.5(c) of the
Agreement.
"Ruling Documents" means the Private Letter Ruling, plus all of
the materials submitted to the Service in connection with obtaining such
ruling.
"Regulated Tax Sharing Agreement" means any written Tax Sharing
Agreement between an insurance company and FNF, FNT, or FIS filed with a
state insurance commissioner, for the period that Tax Sharing Agreement
remains in effect.
"Section 355(e) Liability" has the meaning set forth in Section
5.2(f) of this Agreement.
"Section 355 Tax Treatment" has the meaning set forth in Section
5.1(a)(i) of this Agreement.
"Separate Return" means any Tax Return, filed by any entity,
that is not part of a Consolidated Return or a Combined Return.
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"Separate Tax" means any Tax incurred by an entity that is not a
Federal Income Tax required to be shown on a Consolidated Return and is
not a Combined State/Local Tax required to be shown on a Combined
Return.
"Service" means the Internal Revenue Service.
"Steering Committee" has the meaning set forth in Section 8.5(a)
of this Agreement.
"Tax" means any net income, gross income, gross receipts,
alternative or add-on minimum, sales, use, ad valorem, franchise,
profits, license, withholding, payroll, employment, excise, transfer,
recording, severance, stamp, occupation, premium, property,
environmental, estimated, custom duty, or other tax, governmental fee or
other like assessment or charge of any kind whatsoever, together with
any interest and any penalty, addition to Tax or additional amount
imposed by a Tax Authority.
"Tax Authority" means any governmental authority or any
subdivision, agency, commission or authority thereof or any
quasi-governmental or private body having jurisdiction over the
assessment, determination, collection, or imposition of any Tax
(including the Service).
"Tax Benefit" means a decrease in the Tax liability of a
taxpayer (or of the consolidated, combined, or unitary group of which it
is a member) for any Taxable Period. Except as otherwise provided in
this Agreement, a Tax Benefit shall be deemed to have been realized or
received from a Tax Item in a Taxable Period only if and to the extent
that the Tax liability of the taxpayer (or of the consolidated,
combined, or unitary group of which it is a member) for such period,
after taking into account the effect of the Tax Item on the Tax
liability of such taxpayer (or of the consolidated, combined, or unitary
group of which it is a member) in the current period and all prior
periods, is less than it would have been if such Tax liability were
determined on a consistent basis without regard to such Tax Item, taking
into account the principles of Schedule I.
"Tax Detriment" means an increase in the Tax liability of a
taxpayer (or of the consolidated, combined, or unitary group of which it
is a member) for any Taxable Period. Except as otherwise provided in
this Agreement, a Tax Detriment shall be deemed to have been realized or
received from a Tax Item in a Taxable Period only if and to the extent
that the Tax liability of the taxpayer (or of the consolidated,
combined, or unitary group of which it is a member) for such period,
after taking into account the effect of the Tax Item on the Tax
liability of such taxpayer (or of the consolidated, combined, or unitary
group of which it is a member) in the current period and all prior
periods, is more than it would have been if such Tax liability were
determined on a consistent basis without regard to such Tax Item, taking
into account the principles of Schedule I.
"Tax Group" means either the FNT Group or the FIS Group, as the
context dictates.
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"Tax Group Parent" means either FNT, if the FNT Group is the Tax
Group, or FIS, if the FIS Group is the Tax Group.
"Tax Item" means any item of income, gain, loss, deduction or
credit, or other attribute that may have the effect of increasing or
decreasing any Tax.
"Tax Losses" means all fees and costs (including reasonable
outside professional fees and costs incurred in connection with a
contest) that directly result from, or relate to, Taxes.
"Tax Opinion" means the tax opinion that Deloitte Tax LLP will
deliver pursuant to Section 6.3(e) of the Distribution Agreement.
"Tax Return" means any return, report, certificate, form or
similar statement or document (including any related or supporting
information or schedule attached thereto and any information return,
amended Tax return, claim for refund or declaration of estimated Tax)
supplied to, or filed with, a Tax Authority in connection with the
determination, assessment, or collection of any Tax or the
administration of any laws, regulations, or administrative requirements
relating to any Tax, including where permitted or required any Tax
return filed on a consolidated, combined, unitary or other similar
basis.
"Tax Settlement" shall have the meaning set forth in Section
6.4(b) of this Agreement.
"Tax Sharing Agreement" means any tax sharing agreements,
arrangements, policies or guidelines, formal or informal, express or
implied, which may exist between the members of an affiliated group.
"Taxable Period" means, with respect to any Tax, the period for
which the Tax is reported as provided under the Code or any other
applicable Tax laws.
"Third-Party Claim" means the assertion of any claim or the
commencement of any action by a person (other than a Tax Authority) who
is not a member of (i) the FNT Group; (ii) the FIS Group; or (iii) the
FNF Legacy Group, in each case only if Adverse Consequences resulting
from such claim or action would be subject to indemnification under this
Agreement.
"Treasury Regulations" means the final and temporary Tax
regulations promulgated under the Code, as such regulations may be
amended from time to time (including corresponding provisions of
successor regulations).
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SECTION 2. TAX RETURNS, TAX SHARING PAYMENTS AND GENERAL TAX
ADMINISTRATIVE MATTERS.
2.1 Agent for the FNF Group. Prior to the Merger, to the extent reasonably
possible, (i) FNF will designate FNT as the agent for all matters
subject to agency with respect to the FNF Consolidated Return for the
2006 and 2005 Taxable Periods in accordance with Section 1.1502-77(d) of
the Treasury Regulations and will obtain IRS approval for such
designation, (ii) FNF, in its sole discretion, will designate another
appropriate member of the FNT Group as such agent for all other Taxable
Periods for which the statute of limitations on assessment under Section
6501 of the Code has not expired and will obtain IRS approval for such
designation, and (iii) FNF will make conforming designations with
respect to all FNF Legacy Group Combined Returns and will obtain
approval from the appropriate Tax Authority.
2.2 Filing of Returns.
(a) FNT shall accurately prepare (or cause to be prepared) in a
manner consistent with past practice and shall timely file (or
cause to be timely filed) all (i) FNF Consolidated Returns,
except as provided in Section 2.2(f) of this Agreement, (ii) FNT
Consolidated Returns, (iii) FNT Combined Returns, (iv) FNF
Legacy Group Combined Returns that FNT or any other member of
the FNT Group is otherwise required to file under applicable
state law, and (v) any Tax Return, other than one described in
this Section 2.2(a)(i) through (iv), that includes FNF and at
least one other member of the FNF Legacy Group or the FNT Group
but no member of the FIS Group.
(b) FIS shall accurately prepare (or cause to be prepared) in a
manner consistent with past practice and timely file (or cause
to be timely filed) (i) all FIS Consolidated Returns; (ii) all
FIS Combined Returns; and (iii) all FNF Legacy Group Combined
Returns that FIS or any member of the FIS Group is required to
file under applicable state law.
(c) FIS shall accurately prepare (or cause to be prepared) in a
manner consistent with past practice and shall timely file (or
cause to be filed) all Separate Returns that are required to be
filed by any FIS Group company, including all NTI-NY Tax
Returns. FNT shall accurately prepare (or cause to be prepared)
in a manner consistent with past practice and shall timely file
(or cause to be timely filed) all Separate Returns that are
required to be filed by any FNT Group company and all Separate
Returns that are required to be filed by any FNF Legacy Group
company, other than NTI-NY Tax Returns.
(d) At least 45 days before the due date (including extensions) of
any Filing Party Consolidated Return or any Filing Party
Combined Return that includes any Non-Filing Group company and
from time to time as reasonably requested thereafter, the
Non-Filing Party shall provide to the Filing Party all
information relating to the Non-Filing Group necessary to
prepare the Tax Returns described in this
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Section 2.2. Such information will be prepared in a manner
consistent with past practices at the expense of the Non-Filing
Party. At least 2 weeks prior to filing, such Filing Party
Consolidated Return or Filing Party Combined Return shall be
provided to the Non-Filing Party for review and approval, which
approval shall not be unreasonably withheld. If the Non-Filing
Party proposes an adjustment to any Non-Filing Party item on any
Filing Party Consolidated Return or Filing Party Combined
Return, and the Filing Party declines to accept such proposal,
then the parties shall resolve their disagreement in accordance
with Section 8.5 of this Agreement; provided, however, that if
such dispute is not settled prior to the filing date of such
return, then the return may be filed without taking the
Non-Filing Party's proposal into account but the amount payable
pursuant to this Agreement pending the determination under
Section 8.5 will be determined as if such proposal was accepted;
provided further, that if it is ultimately concluded that the
Filing Party was reasonable in rejecting such proposal, the
Non-Filing Party shall promptly pay with interest, as provided
in Section 4.3, all amounts not yet paid that would have been
required to be paid had the amounts required to be paid been
calculated without taking such proposal into account.
(e) Any disagreements with regard to any matters covered by this
Section 2.2 shall be resolved in accordance with Section 8.5 of
this Agreement.
(f) Notwithstanding anything to the contrary in this Agreement, in
the event that the Merger constitutes a reverse acquisition as
defined in section 1.1502-75(d)(3) of the Treasury Regulations,
FIS shall accurately prepare (or cause to be prepared) in a
manner consistent with past practice and shall timely file (or
cause to be filed) the FNF Consolidated Return for the Taxable
Period in which the Merger occurs.
2.3 Amended Returns.
(a) The Filing Party shall not file (or cause to be filed), without
the prior written consent of the Non-Filing Party (which consent
shall not be unreasonably withheld), any amended Consolidated
Return or amended Combined Return which includes any member of
the Non-Filing Group if such return would result in a Tax
Detriment to any member of the Non-Filing Group for any Taxable
Period. The consent of the Non-Filing Party shall not be
required if the Filing Party reimburses the Non-Filing Party for
any such Tax Detriment. In the event of disagreement over
whether consent is required or is being unreasonably withheld,
the parties shall resolve their disagreement in accordance with
Section 8.5 of this Agreement.
(b) The Filing Party, upon receipt of a written request by the
Non-Filing Party, shall file an amended Consolidated Return or
amended Combined Return which includes any member of the
Non-Filing Group if such return would result in a Tax Benefit to
any member of the Non-Filing Group for any Taxable Period;
provided, however, that if such amended Consolidated Return or
such amended Combined Return results in a Tax Detriment to any
member of the Filing Group,
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it shall be filed only upon the written consent of the Filing
Party (which consent shall not be unreasonably withheld) unless
the Non-Filing Party agrees to reimburse the Filing Group for
any such Tax Detriment. In the event of disagreement over
whether consent is required or is being unreasonably withheld,
the parties shall resolve their disagreement in accordance with
Section 8.5 of this Agreement.
2.4 Payment of Taxes.
(a) FIS shall pay (or cause to be paid) to the appropriate Tax
Authority all Taxes, if any, for which it is required to file
Consolidated Returns or Combined Returns pursuant to Sections
2.2(b), 2.2 (c), and 2.2(f) of this Agreement. FNT shall pay (or
cause to be paid) to the appropriate Tax Authority all Taxes, if
any, for which it is required to file Consolidated Returns or
Combined Returns pursuant to Section 2.2(a) and 2.2(c) of this
Agreement.
(b) No later than 20 Business Days prior to the due date (including
extensions) of any Consolidated Return or Combined Return, the
Filing Party shall prepare or cause to be prepared, taking into
account Schedule I, a statement (the "Consolidated Tax
Allocation Statement" or the "Combined Tax Allocation
Statement," as the case may be) setting forth the amount of the
unpaid or overpaid portion of the Non-Filing Group's allocable
share of the total Consolidated Federal Tax liability or
Combined State/Local Tax liability, if any, taking into account
any applicable Tax payments (including estimated tax payments)
previously made by the Non-Filing Party or any other member of
the Non-Filing Group to any member of the Filing Group or to any
Tax Authority, and shall provide such statement, or cause such
statement to be provided, to the Non-Filing Party. No later than
the due date (including any extensions), of any Consolidated
Return or Combined Return including both FIS Group companies and
FNT Group companies, the Filing Party shall pay to the
Non-Filing Party any overpayment or the Non-Filing Party shall
pay to the Filing Party any underpayment shown on the
Consolidated Tax Allocation Statement or the Combined Tax
Allocation Statement, as the case may be. In the event of
disagreement over the Non-Filing Group's allocable share of the
total Tax liability shown on the Consolidated Tax Allocation
Statement or Combined Tax Allocation Statement, as the case may
be, the parties shall resolve their disagreement in accordance
with Section 8.5 of this Agreement.
2.5 Treatment of Prior Tax Sharing Agreements.
(a) Except as otherwise provided in this Agreement, any Tax Sharing
Agreements that may exist between any FNF Group company, on the
one hand, and any FNT Group company, on the other hand, shall
terminate, and any obligations under any such agreements or
arrangements shall be cancelled, as of the Effective Date,
without any payment by any party thereto.
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(b) Notwithstanding any other provision in this Agreement, the
Regulated Tax Sharing Agreements of all insurance companies
shall remain in effect, and shall govern all allocations of
Taxes among the companies that are parties to those Agreements
(in lieu of Section 2.4(b) of this Agreement). FNT will take all
steps, as quickly as is reasonably possible, to amend all
existing Regulated Tax Sharing Agreements to substitute FNT for
FNF as a party to the agreements, to make all required
regulatory filings, and to obtain all necessary approvals.
2.6 Consistent with Private Letter Ruling and Tax Opinion. All Tax Returns
filed pursuant to this Section 2 after the Distribution Date shall be
prepared on a basis consistent with the rulings obtained from the
Service in the Private Letter Ruling and the Tax Opinion (in the absence
of a relevant change in law or circumstances).
SECTION 3. ALLOCATION OF CERTAIN TAX ITEMS.
3.1 Carryforwards and Carrybacks.
(a) The Filing Party shall notify the Non-Filing Party of any
consolidated or combined carryover item which may be partially
or totally attributed to and carried over by any member of the
Non-Filing Group and will notify the Non-Filing Party of
subsequent adjustments which may affect such carryover item.
(b) Notwithstanding any other provision of this Agreement, the
Non-Filing Party shall not be required to make any election
under Section 172(b)(3) of the Code, or any similar provision of
any state or local Tax Law, to relinquish any right to carryback
net operating losses. Upon a request by the Non-Filing Party,
the Filing Party shall be required to include on an amended FNF
Consolidated Return or Combined Return that includes any member
of the Non-Filing Group any net operating losses of any such
member of the Non-Filing Group arising in a Post-Distribution
Period to the extent allowed under the Tax Law; and the
Non-Filing Party shall receive any payment with respect to such
carryforward or carryback; provided, however, that if the Filing
Party incurs a Tax Detriment related to the inclusion of such
net operating losses on the Consolidated Return or Combined
Return, the Non-Filing Party shall indemnify the Filing Party
for the amount of such Tax Detriment.
3.2 Refunds. Any refund of Taxes resulting from an adjustment made to a Tax
Return that includes one or more FIS Group companies on the one hand,
and FNT Group companies on the other, shall be allocated in a manner
such that a party responsible for indemnification of a tax liability for
a particular Taxable Period pursuant to either Section 4 or Section 5
will be entitled to any refunds with respect to such Tax for such
Taxable Period, except as provided in Section 3.1.
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SECTION 4. INDEMNIFICATION PROVISIONS
4.1 General Indemnification.
(a) After the Distribution Date, FNT shall indemnify and hold
harmless, on an After-Tax Basis, FIS and each other member of
the FIS Group against any and all (i) Taxes with respect to any
FNF Consolidated Return for any Pre-Distribution Period; (ii)
Taxes with respect to any FIS Combined Return or any FNF Legacy
Group Combined Return to the extent that any FNF Legacy Group
company or any member of the FNT Group caused an increase in the
Tax liability on the Tax Return; (iii) Taxes with respect to any
Separate Return filed by FNF or any FNT Group company; (iv)
Taxes with respect to any FNF Legacy Group company or any FNT
Group company for which any FIS Group company may be liable
under Section 1.1502-6 of the Treasury Regulations, or any
successor provision thereto, or any provision of state or local
law comparable thereto; (v) Taxes with respect to any Tax
Return, other than one described in Section 4.1(a)(i) through
(iv) above, that includes FNF and at least one other member of
the FNF Legacy Group or the FNT Group, but no member of the FIS
Group; and (vi) Taxes and Adverse Consequences resulting from
any failure of the Merger to qualify as a reorganization under
Section 368(a) of the Code.
(b) FIS will indemnify and hold harmless on an After-Tax Basis FNT
and each other member of the FNT Group against any and all Taxes
(i) with respect to any FNF Consolidated Return for any
Post-Distribution Period; (ii) with respect to any FNF Legacy
Group Combined Return or any FNT Combined Return, to the extent
that any member of the FIS Group caused an increase in the Tax
liability on the Tax Return; (iii) with respect to any Separate
Return filed by any FIS Group company; and (iv) with respect to
any FIS Group company for which any FNT Group company or any FNF
Legacy Group company may be liable under Section 1.1502-6 of the
Treasury Regulations or any provision of state or local law
comparable thereto.
(c) i. In the case of Taxes arising in a Taxable Period that
includes, but does not end on, the Distribution Date, the
allocation of Taxes between the Pre-Distribution Period and the
Post-Distribution Period shall be governed by Paragraph 4 of
Schedule I.
ii. The determination of whether a company caused an increase in
the Tax liability of a Consolidated Return or Combined Return
shall be governed by Schedule I.
(d) If a party is entitled to indemnification for Taxes under this
Section 4.1, such party shall also be entitled to
indemnification for any Tax Losses incurred in connection with
any such Taxes.
13
(e) Notwithstanding the above, indemnification for denial of the
Section 355 Tax Treatment shall not be under this Section, but
shall be covered by Section 5 of this Agreement.
4.2 Indemnity Payments.
(a) Except as otherwise provided under this Agreement, to the extent
that any party has an indemnification or payment obligation to
another party pursuant to this Agreement, the Indemnitee shall
provide the Indemnifying Party with its calculation of the
amount of such obligation. Such calculation shall provide the
Indemnifying Party sufficient detail to permit the Indemnifying
Party to reasonably understand the calculations and the
existence and correct amount of the Indemnified Liability. All
indemnification payments shall be made to such Indemnitee within
thirty (30) days after delivery by the Indemnitee to the
Indemnifying Party of written notice of a payment, or, if such
Indemnified Liability is contested pursuant to Section 6.2 of
this Agreement, within thirty (30) days of the incurrence of
such an amount based on a Final Determination, together with a
computation of the amounts due. Any disputes with respect to
indemnification payments shall be resolved in accordance with
Section 8.5 of this Agreement. In the event of such dispute, any
payment of an Indemnified Liability shall be made within thirty
(30) days of the date of the resolution of such dispute under
Section 8.5 of this Agreement.
(b) Any payment required under this Agreement in an amount in excess
of one million dollars ($1,000,000) shall be made by electronic
funds transfer of immediately available funds.
(c) Notwithstanding any other provision of this Agreement, no
payment of an Indemnified Liability shall be required under this
Section 4 to the extent it is duplicative of any payment made
pursuant to any other provision of this Agreement and any such
payment shall be made as required by such other provision.
4.3 Interest. Payments pursuant to this Agreement that are not made within
the period prescribed shall bear interest for the period from and
including the date immediately following the last date of the prescribed
period through and including the date of payment at a per annum rate
equal to the rate provided under Section 6621(c) of the Code. Such
interest will be payable at the same time as the payment to which it
relates and will be calculated on the basis of a year of 365 days and
the actual number of days for which due.
14
SECTION 5. DISTRIBUTION TAX TREATMENT
5.1 Section 355 Tax Treatment.
(a) Representations, Covenants, and Agreements.
i. The parties expressly agree for all purposes to treat
the Distribution as a tax-free distribution under
Section 355 and related sections of the Code, including
Section 361(c) of the Code ("Section 355 Tax
Treatment."). Each of FNT and FIS also expressly agrees
(A) to comply (and to cause each of its Affiliated
Companies to comply) with the representations set forth
in the Ruling Documents and the Opinion Documents to the
extent that the representations made therein are
descriptive of such party (which, for the avoidance of
doubt, in the case of FIS shall not include
representations relating to FNF), (B) not to take (and
to cause each of its Affiliated Corporations not to
take) any action within its control that would cause the
Section 355 Tax Treatment not to apply (except where
such action is required by law), and (C) to take (and to
cause each of its Affiliated Companies to take) any and
all actions reasonably available to such party (or
Affiliated Company), and to cooperate with the other
parties, to support and defend the Section 355 Tax
Treatment; provided, however, that FIS shall be
permitted to take any Contemplated Action.
ii. FNF and FNT have reviewed the information and
representations made in the Ruling Documents and the
Opinion Documents, and to their knowledge, all of such
information and representations are true, correct, and
complete in all material respects.
(b) Notwithstanding anything to the contrary in Section 4 of this
Agreement:
i. Except as set forth in paragraph (ii) of this Section
5.1(b), if there is a Final Determination that results
in the disallowance, in whole or in part, of the Section
355 Tax Treatment (other than Section 355(e) Liability,
which is addressed by Section 5.2 of this Agreement),
then FNT shall be liable for, and shall indemnify and
hold each FIS Group member harmless for, any Taxes or
Adverse Consequences that would not have occurred but
for such disallowance.
ii. If there is a Final Determination that results in the
disallowance, in whole or in part, of the Section 355
Tax Treatment (other than Section 355(e) Liability,
which is addressed by Section 5.2) and any FIS Group
company has breached Section 5.1(a) which breach results
in such disallowance, then FIS shall be liable for, and
shall indemnify and hold each FNT Group member harmless
for, any Taxes or Adverse Consequences that would not
have occurred but for such breach.
15
5.2 Section 355(e).
(a) Unless, for each Acquisition of an interest in FIS, the FIS
Acquisition Process is first satisfied at FIS' expense, FIS
shall not take any action within its control, and shall cause
its Affiliated Companies to refrain from taking any action
within their control, which would result in a direct or indirect
Acquisition (taking into account the stock aggregation and
attribution rules of section 355(e)) by one or more persons in
the two-year period following the Distribution Date.
(b) As used herein with reference to any Acquisition of an interest
in FIS, the "FIS Acquisition Process" shall be satisfied if all
the following requirements are satisfied:
i. FIS notifies FNT of the proposed Acquisition;
ii. FIS obtains either (A) an opinion of a nationally
recognized law firm or accounting firm to the effect
that such Acquisition would not cause the Section 355
Tax Treatment to be disallowed by reason of the
application of Section 355(e) of the Code or (B) the
written consent of FNT's General Counsel or senior tax
officer; and
iii. FIS provides a copy of the opinion or consent described
in Section 5.2(b)(ii) of this Agreement to FNT.
(c) Unless, for each Acquisition of an interest in FNT, the FNT
Acquisition Process is first satisfied at FNT's expense, FNT
shall not take any action within its control, and shall cause
its Affiliated Companies to refrain from taking any action
within their control, which would result in a direct or indirect
Acquisition (taking into account the stock aggregation and
attribution rules of section 355(e)) by one or more persons in
the two-year period following the Distribution Date.
(d) As used herein with reference to any Acquisition of an interest
in FNT, the "FNT Acquisition Process" shall be satisfied if all
the following requirements are satisfied:
i. FNT notifies FIS of the proposed Acquisition;
ii. FNT obtains either (A) an opinion of a nationally
recognized law firm or accounting firm to the effect
that such Acquisition would not cause the Section 355
Tax Treatment to be disallowed by reason of the
application of Section 355(e) of the Code or (B) the
written consent of FIS's General Counsel or senior tax
officer; and
iii. FNT provides a copy of the opinion or consent described
in Section 5.2(d)(ii) of this Agreement to FIS.
16
(e) If,by reason of an action within the control of FIS or one of
its Affiliated Companies (other than a Contemplated Action),
Section 355(e) of the Code is applicable to the Distribution
because the Distribution was part of a plan (or series of
related transactions) pursuant to which one or more persons
acquired directly or indirectly FIS stock representing Control
(within the meaning of Section 355(e) of the Code) of FNF or any
successor to FNF (including FIS) in the Distribution, FIS shall
pay and be liable for, and shall indemnify FNT against any
liability for, on an After-Tax Basis, any resulting Taxes and
other Adverse Consequences that would not have occurred but for
such action, regardless of whether the FIS Acquisition Process
has been satisfied.
(f) Except as provided in Section 5.2(e), FNT shall pay and be
liable for, and shall indemnify and hold each FIS Group member
harmless from, on an After-Tax Basis, any Taxes and Adverse
Consequences that occur by reason of the application of Section
355(e) of the Code to the Distribution (the "Section 355(e)
Liability").
5.3 Indemnification Payments. Any indemnification required under this
Section 5 shall be paid in accordance with the terms of Sections 4.2 and
4.3 of this Agreement.
SECTION 6. AUDITS AND CONTEST RIGHTS.
6.1 Notice. If, after the Effective Date, any member of a Tax Group receives
written notice of, or relating to, an Audit from a Tax Authority that
asserts, proposes or recommends a deficiency, claim or adjustment that,
if sustained, could result in Taxes for which any member of the Other
Tax Group is responsible under this Agreement, then the Tax Group Parent
of the Tax Group receiving such notice shall provide or cause to be
provided a copy of such notice to the Other Tax Group promptly
thereafter, but, in any case, within ten (10) Business Days of receipt
thereof. Each Tax Group Parent shall forward or cause to be forwarded to
the Other Tax Group relevant portions of any reports or other
communications which relate to such matters.
6.2 Contests.
(a) Except as otherwise provided in this Agreement, the respective
Filing Party shall have the right to control, contest, and
represent the interest of any FNF Legacy Group company, any FNT
Group company or any FIS Group company in any Contest relating
to any Tax Return described in Section 2.2 or 2.3 of this
Agreement (other than a Tax Return described in Section 6.2(b)
or (c) of this Agreement) and, subject to Section 6.4(b) of this
Agreement, to resolve, settle or agree to any deficiency, claim
or adjustment proposed, asserted or assessed in connection with
or as a result of any such Contest. The Filing Party's rights
shall extend to any matter pertaining to the management and
control of an Audit, including execution of waivers, choice of
forum, scheduling of conferences and the resolution of any Tax
Item.
17
(b) Except as otherwise provided herein, after the date of execution
of this Agreement, in the case of a Contest that relates to a
Tax Return for a Taxable Period beginning before the
Distribution Date (or any item relating thereto or reported
thereon) which would give rise to an Indemnification Liability
under this Agreement, of an Indemnifying Party that is not the
Filing Party with respect to such Tax Return, the Indemnifying
Party shall have the right at its expense to participate in and
control the conduct of such Contest. If the Indemnifying Party
does not assume the defense of any such Contest for a
Pre-Distribution Period, the Filing Party may defend the same in
such manner as it may deem appropriate, including, but not
limited to, settling such Contest after giving ten (10) Business
Days' prior written notice to the Indemnifying Party setting
forth the terms and conditions of settlement. In the event of a
Contest covered by the first sentence of this paragraph, that
involves issues (i) relating to a potential adjustment for which
the Indemnifying Party has liability and (ii) that are required
to be dealt with in a proceeding that also involves separate
issues relating to a potential adjustment for which any
Indemnitee would be liable, the Indemnitee shall have the right
at its expense to control the Contest but only with respect to
the latter issues.
(c) With respect to a Contest involving an issue for which both (i)
any FNT Group company and (ii) any FIS Group company could be
liable, both parties may participate in the Contest, and the
Contest may be controlled by that party which would bear the
burden of the greater portion of the sum of the adjustment and
any corresponding adjustments that may reasonably be anticipated
for future Taxable Periods. The principle set forth in the
immediately preceding sentence shall govern also for purposes of
deciding any issue that must be decided jointly (including,
without limitation, choice of judicial forum) in situations in
which separate issues are otherwise controlled under this
Section 6.2 by FNT or by FIS.
(d) The party that is controlling any Contest pursuant to Sections
6.2(b) and (c) of this Agreement (the "Controlling Party"):
(i) in the case of any material correspondence or filing
submitted to the Tax Authority or any judicial authority
that relates to the merits of the deficiency, claim or
adjustment that is the subject of such Contest shall (A)
reasonably in advance of such submission, but subject to
applicable time constraints imposed by such Tax
Authority or judicial authority, provide the other party
(the "Non-Controlling Party") with a draft copy of the
portion of such correspondence or filing that relates to
such deficiency, claim or adjustment, (B) incorporate,
subject to applicable time constraints imposed by such
Tax Authority or judicial authority, the Non-Controlling
Party's reasonable comments and changes on such draft
copy of such correspondence or filing, and (C) provide
the Non-Controlling Party with a final copy of the
portion of such correspondence or filing that relates
such deficiency, claim or adjustment; and
18
(ii) shall provide the Non-Controlling Party with notice
reasonably in advance of, and the Non-Controlling Party
shall have the right to attend, any meetings with the
Tax Authority (including meetings with examiners) or
hearings or proceedings before any judicial authority to
the extent they relate to the deficiency, claim or
adjustment that is the subject of such Contest.
6.3 Judicial Appeals. 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 a matter described in Sections 6.2(b) and
(c) of this Agreement, then, subject to Section 6.4(b):
(a) In the case of an appeal of an adverse determination, which
involves no material issues other than matters for which the
Non-Filing Party would be the Indemnifying Party pursuant to
this Agreement, the Non-Filing Party shall have the right to
cause the Filing Party to appeal from such adverse
determination.
(b) In the case of an appeal of any other adverse determination
which involves material issues other than those for which the
Non-Filing Party would be the Indemnifying Party pursuant to
this Agreement and the Filing Party determines not to appeal
such adverse determination, the Non-Filing Party shall have the
right to cause the Filing Party to appeal from such adverse
determination if the Non-Filing Party delivers to the Filing
Party an opinion from an independent tax counsel or accountant
selected by the Non-Filing Party and reasonably acceptable to
the Filing Party that it is more likely than not that such
appeal will succeed and the amount in controversy exceeds
$100,000. The Filing Party shall give written notice to the
Non-Filing Party of its determination of whether to appeal an
adverse determination pursuant to this Section 6.3(b) not less
than 20 days prior to any applicable filing deadline.
(c) In the case of an adverse determination which involves matters
for which the Filing Party would be the Indemnifying Party
pursuant to this Agreement and, within such determination,
material matters for which the Non-Filing Party would be the
Indemnifying Party pursuant to this Agreement were favorably
disposed, the Non-Filing Party shall have the right to prevent
the Filing Party from appealing from such adverse determination
unless the Filing Party delivers to the Non-Filing Party an
opinion from an independent tax counsel selected by the Filing
Party and reasonably acceptable to the Non-Filing Party that it
is more likely than not that such appeal will succeed.
(d) If the Non-Filing Party causes the Filing Party to appeal any
adverse determination pursuant to this Section 6.3, the
Non-Filing Party shall pay the reasonable costs, including legal
fees, of the Filing Party incurred in such appeal.
19
6.4 Limitations.
(a) The Non-Filing Party shall have a right to contest any
deficiency, claim or adjustment in accordance with Section 6.2
of this Agreement only if:
(i) within thirty (30) Business Days of a reasonable request
by the Filing Party, the Non-Filing Party shall deliver
to the Filing Party a written opinion of a nationally
recognized tax attorney or tax accountant that is a
member of a recognized law firm or accounting firm, to
the effect that the Non-Filing Party's position with
respect to such deficiency, claim or adjustment is
supported by a reasonable basis (within the meaning of
Section 1.6662-3(b)(3) of the Treasury Regulations);
provided that this Section 6.4(a)(i) shall not apply to
with respect to positions relating to the Tax
consequences of the Distribution and Merger.
(ii) the Non-Filing Party shall have agreed to be bound by a
Final Determination of such deficiency, claim or
adjustment;
(iii) the Non-Filing Party shall have agreed to pay, and shall
be currently paying, all reasonable costs and expenses
incurred by the Filing Party to contest such deficiency,
claim or assessment including reasonable outside
attorneys', accountants' and investigatory fees and
disbursements to the extent such costs relate to the
issue being contested by the Non-Filing Party;
(iv) the Non-Filing Party shall have advanced to the Filing
Party, on an interest-free basis (and with no additional
net after-tax cost to the Filing Party), the amount of
Tax in controversy (but not in excess of the lesser of
(A) the amount of Tax for which the Non-Filing Party
could be liable under this Agreement or (B) the amounts
actually expended by the Filing Party for this item) to
the extent necessary for the contest to proceed in the
forum selected by the Controlling Party; and
(v) the Non-Filing Party shall have provided to the Filing
Party all documents and information, and shall have made
available employees and officers of the Non-Filing
Party, as have been reasonably requested by the Filing
Party in contesting such deficiency, claim or
adjustment.
(b) The Filing Party shall not settle, compromise or otherwise
resolve any Tax matter relating to Taxes with respect to a
Pre-Distribution Period (a "Tax Settlement") without the prior
written consent of the Non-Filing Party (which consent shall not
be unreasonably withheld) if such Tax Settlement is reasonably
likely to materially increase the Tax paid by the Non-Filing
Party with respect to any Tax not subject to indemnification
under this Agreement; provided, however, that in the event that
the Non-Filing Party does not consent and the Filing Party
reasonably believes that the withholding of consent was
unreasonable, or the
20
Filing Party reasonably believes that no consent of the
Non-Filing Party is required, the parties shall resolve their
disagreement in accordance with Section 8.5 of this Agreement.
(c) Notwithstanding any other provision of this Section 6.4, the
Filing Party may resolve, settle, or agree to any deficiency,
claim or adjustment for any Taxable Period if the Filing Party
waives its right to indemnity with respect to such Tax Item. In
such event, the Filing Party shall promptly reimburse the
Non-Filing Party for all amounts previously advanced by the
Non-Filing Party to the Filing Party in connection with such
deficiency, claim or adjustment under Section 6.4(a)(iv) of this
Agreement. In addition, except with respect to settlements
described in Section 6.4(b) above, the Filing Party shall
reimburse the Non-Filing Party for any Tax Detriment that
directly results from the settlement of such deficiency, claim
or adjustment. No waiver by the Filing Party under this Section
6.4(c) with respect to any deficiency, claim or adjustment
relating to any single Tax Item, position, issue or transaction
or relating to any single Tax for any one Taxable Period shall
operate as a waiver with respect to any other deficiency, claim
or adjustment.
6.5 Failure to Notify. The failure of the Filing Party promptly to notify
the Non-Filing Party of any matter relating to a particular Tax for a
Taxable Period or to take any action specified in Section 6.2 of this
Agreement shall not relieve the Non-Filing Party of any liability and/or
obligation which it may have to the Filing Party under this Agreement
with respect to such Tax for such Taxable Period except to the extent
that the Non-Filing Party's rights hereunder are materially prejudiced
by such failure and in no event shall such failure relieve the
Non-Filing Party of any other liability and/or obligation which it may
have to the Filing Party.
6.6 Remedies. Except as otherwise provided in this Agreement, the parties
hereby agree that the sole and exclusive remedy for a breach by the
Filing Party of the Filing Party's obligations to the Non-Filing Party
with respect to a deficiency, claim or adjustment relating to the
redetermination of a Tax Item of the Non-Filing Party for a Taxable
Period shall first be a reduction in the amount that would otherwise be
payable by the Non-Filing Party for such Taxable Period and then an
increase in amount that would otherwise be payable by the Filing Party
for such Taxable Period, in either case because of the breach. The
parties further agree that no claim against the Filing Party and no
defense to the Non-Filing Party's liabilities to the Filing Party under
this Agreement shall arise from the resolution by the Filing Party of
any deficiency, claim or adjustment relating to the redetermination of
any Tax Item of the Filing Party.
SECTION 7. COOPERATION.
7.1 Provision of Information and Documents. FNT and FIS shall cooperate and
provide each other with all documents and information, and provide
access to employees and officers of any member of the FNT Group or the
FIS Group, respectively, as reasonably requested by the other party, on
a mutually convenient basis during normal business hours (and promptly
reimburse the other party for any out-of-pocket costs incurred by a
party in providing such cooperation),
21
documents and information, and access to the requesting party) to aid
the other party in preparing any Tax Return described in Section 2.2 or
2.3 of this Agreement or to contest any Audit of any such Tax Return or
to obtain any opinion referred to in Section 5.2, including, without
limitation, the making of representations (to the extent such
representations are true) in connection with obtaining any such opinion.
Such cooperation shall include, without limitation:
(a) the retention and provision on reasonable request of any and all
information including all books, records, documentation or other
information, any necessary explanations of information, and
access to personnel, until the expiration of the applicable
statute of limitation for additional assessments of Tax for the
Taxable Period for which such document or other information
arises (giving effect to any extension, waiver, or mitigation
thereof);
(b) within the limits otherwise set forth herein, the execution by
such party of any document that is relevant and may be necessary
or helpful in connection with any Tax Return or in connection
with any Contest; and
(c) the use of the parties' reasonable best efforts to obtain any
documentation from a governmental authority or a third party
that may be necessary or helpful in connection with the
foregoing.
(d) informing the other parties on a timely basis as to the status
and progress of all matters related in a reasonably material way
to a contest of a Tax under Section 6. Each party shall provide
the other parties, within 10 days of the receipt thereof, with
copies of all written communications received from any Tax
Authority relating to any such Tax contest, appropriately
redacted for any unrelated issues also discussed therein.
7.2 Special Rules Regarding Information Required for Tax Return Preparation.
The Non-Filing Party will provide to employees or representatives of the
Filing Party responsible for preparing its Tax Returns with access to
any relevant information, including any Ruling Documents or Tax Opinion,
not in the possession of the Filing Party, as it relates to the Filing
Party or any member of the Filing Group, and will provide the Filing
Party with a copy of such relevant information to the extent that the
issues discussed therein are relevant to the Filing Party or any member
of the Filing Group within a reasonable time thereafter, but, in any
case, not later than five (5) Business Days after the receipt of a
written request therefor.
7.3 Consultations With Regard to Tax Items. FNT and FIS shall advise and
consult with each other with respect to any Tax election or the Tax
treatment of any item (including the treatment of any item that would be
affected by a proposed Tax adjustment relating to a Consolidated Return
or Combined Return which is the subject of an Audit or investigation, or
is the subject of any proceeding or litigation) which could affect any
Tax attribute of the other party or the Other Tax Group (including, but
not limited to, basis in an asset or the amount of earnings and
profits).
22
7.4 Limitations on Cooperation. In the event that a Filing Party determines
that the provision of any information to any member of the Other Tax
Group could be commercially detrimental, violate any law or agreement,
or waive any privilege that may be asserted under applicable law
including any privilege arising under or relating to the attorney-client
relationship (including the attorney-client and work product
privileges), the parties shall take reasonable measures to permit the
compliance with such obligations in a manner that avoids any such harm
or consequence.
SECTION 8. MISCELLANEOUS.
8.1 Effectiveness. This Agreement shall become effective as of the
Distribution Date ("Effective Date").
8.2 Notices. All notices and other communications hereunder shall be in
writing and hand delivered or mailed by registered or certified mail
(return receipt requested) or sent by any means of electronic message
transmission with delivery confirmed (by voice or otherwise) to the
parties at the following addresses (or at such other addresses for a
party as shall be specified by like notice) and will be deemed given on
the date on which such notice is received:
TO FNF:
Fidelity National Financial, Inc.
Attention: Xxxxxxx Xxxx
Chief Accounting Officer
000 Xxxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
With a copy to the General Counsel at the above address
TO FIS:
Fidelity National Information Services, Inc.
Attention: Xxxxxxx Xxx
Senior Vice President -- Corporate Tax Director
000 Xxxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
With a copy to the General Counsel at the above address
23
TO FNT:
Fidelity National Title Group, Inc.
Attention: Xxxxxxx Xxx
Senior Vice President - Corporate Tax Director
000 Xxxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
With a copy to the General Counsel at the above address
And to such other persons or places as each party may from time to time
designate by written notice sent as aforesaid.
8.3 Changes in Law.
(a) Any reference to a provision of the Code or any other Tax Law
shall include a reference to any applicable successor provision
or law.
(b) If, due to any change in applicable law or regulations or their
interpretation by any court of law or other governing body
having jurisdiction subsequent to the Effective Date,
performance of any provision of this Agreement or any
transaction contemplated thereby shall become impracticable or
impossible, the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to
achieve the same or substantially the same result as that
contemplated by such provision.
8.4 Consent. Whenever this Agreement specifies that consent is not to be
unreasonably withheld, the determination shall take into account, among
other things, the relative amount of potential Tax exposure or refund
involved for FNT Group companies on the one hand and the FIS Group
companies on the other hand, and if the consent relates to bringing
proceedings in one venue rather than another, the impact on such
decision on such interests of each group. Any controversy over refusal
of consent shall be resolved pursuant to Section 8.5 of this Agreement.
8.5 Dispute Resolution.
(a) Amicable Resolution. FIS and FNT mutually desire that friendly
collaboration continue between them. Accordingly, they will try,
and they will cause their respective group members to try, to
resolve in an amicable manner all disagreements and
misunderstandings connected with their respective rights and
obligations under this Agreement. In furtherance thereof, in the
event of any dispute or disagreement (a "Dispute") between any
FIS Group member and any FNT Group member as to the
interpretation of any provision of this Agreement (or the
performance of obligations hereunder), the matter, upon written
request of either party, will be referred for resolution to a
steering committee established pursuant to Section 3.3(a) of the
Cross-Indemnity Agreement (the "Steering Committee"). The
Steering Committee will have two members, one of whom will be
appointed by FIS and the other of whom will be appointed by FNT,
and each
24
of whom shall be a senior executive of the party appointing the
member. The Steering Committee will make a good faith effort to
promptly resolve all Disputes referred to it. Steering Committee
decisions will be unanimous and will be binding on FIS and FNT.
If the Steering Committee does not agree to a resolution of a
Dispute within 30 days after the reference of the matter to it,
then the parties will be free to exercise the remedies available
to them under applicable law, subject to Sections 8.5(b) and
8.5(c).
(b) Mediation. If the Steering Committee is unable to resolve any
Dispute as contemplated by Section 8.5(a), either FIS or FNT may
demand mediation of the Dispute by written notice to the other
in which case the two parties will select a mediator within 14
days after the demand. Neither party may unreasonably withhold
consent to the selection of the mediator. Each of FIS and FNT
will bear its own costs of mediation but both parties will share
the costs of the mediator equally.
(c) Arbitration. In the event that the Dispute is not resolved in an
amicable manner as set forth in Section 8.5(a) or through
mediation pursuant to Section 8.5(b), the latter within 30 days
of the submission of the Dispute to mediation, either party
involved in the Dispute may submit the dispute to binding
arbitration pursuant to this Section 8.5(c). All Disputes
submitted to arbitration pursuant to this Section 8.5(c) shall
be resolved in accordance with the Commercial Arbitration Rules
of the American Arbitration Association, unless either party
involved elects to utilize an independent referee ("Referee")
mutually acceptable to the parties, in which event all
references herein to the American Arbitration Association shall
be deemed modified accordingly. Expedited rules shall apply
regardless of the amount at issue. Arbitration proceedings
hereunder may be initiated by either party making a written
request to the American Arbitration Association, together with
any appropriate filing fee, at the office of the American
Arbitration Association in Orlando, Florida. The arbitration
shall be by a single qualified arbitrator ("Arbitrator")
experienced in the matters at issue, such Arbitrator to be
mutually agreed upon by FIS and FNT. If the parties fail to
agree on an Arbitrator within 30 days after notice of
commencement of arbitration, the American Arbitration
Association shall, upon the request of any party to the dispute
or difference, appoint the Arbitrator. All arbitration
proceedings shall be held in the city of Jacksonville, Florida
in a location to be specified by the Arbitrator (or any place
agreed to by the parties and the Arbitrator). Any order or
determination of the arbitral tribunal shall be final and
binding upon the parties to the arbitration as to matters
submitted and may be enforced by any party to the Dispute in any
court having jurisdiction over the subject matter or over any of
the parties. The parties agree that the length of time to be
provided in any arbitration action to conduct discovery shall be
limited to 90 days, the length of time to conduct the
arbitration hearing shall be limited to ten days (with each
party having equal time) and that the Arbitrator shall be
required to render his or her decision within 30 days of the
completion of the arbitration hearing. All costs and expenses
incurred by the Arbitrator shall be shared equally by the
parties. Each
25
party shall bear its own costs and expenses in connection with
any such arbitration proceeding. The use of any alternative
dispute resolution procedures hereunder will not be construed
under the doctrines of laches, waiver or estoppel to affect
adversely the rights of either party.
(d) Non-Exclusive Remedy.
i. Nothing in this Section 8.5 shall prevent either FIS or
FNT from commencing formal litigation proceedings or
seeking injunctive or similar relief if any delay
resulting from efforts to mediate such Dispute could
result in serious and irreparable injury to FIS, FNT or
any member of either party's group.
ii. Nothing in this Section 8.5 shall prevent either FIS or
FNT from immediately seeking injunctive or interim
relief in the event of any actual or threatened breach
of any confidentiality provisions of the Cross-Indemnity
Agreement. If an arbitral tribunal has not been
appointed with respect to any Dispute at the time of
such actual or threatened breach, then either party may
seek such injunctive or interim relief from any court
with jurisdiction over the matter. If an arbitral
tribunal has been appointed with respect to any Dispute
at the time of such actual or threatened breach, then
the parties agree to submit to the jurisdiction of the
state and federal courts of Xxxxx County, Florida,
pursuant to Section 3.2 of the Cross-Indemnity
Agreement, with respect to such matter.
(e) Commencement of Dispute Resolution Procedure. Notwithstanding
anything to the contrary in this Agreement, FIS and FNT are the
only members of their respective group entitled to commence a
dispute resolution procedure under this Agreement, whether
pursuant to this Section 8.5 or otherwise, and each party will
cause its respective group members not to commence any dispute
resolution procedure other than through such party as provided
in this Section 8.5(e).
8.5 Third-Party Claims. In the event of the assertion of any Third-Party
Claim, claim procedures will be governed by the provisions of Section
2.3 of the Cross-Indemnity Agreement.
8.6 Authorization. Each of the parties hereto hereby represents and warrants
(a) that it has the power and authority to execute, deliver and perform
this Agreement, (b) that this Agreement has been duly authorized by all
necessary corporate action on the part of each such party, (c) that this
Agreement constitutes a legal, valid and binding obligation of each such
party and (d) that the execution, delivery and performance of this
Agreement by such party does not contravene or conflict with any
provision of law or of its charter or bylaws or any agreement,
instrument or order binding on such party.
8.7 Successors. The provisions to this Agreement shall be binding upon,
inure to the benefit of and be enforceable by the parties and their
respective successors and permitted assigns.
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8.8 Assignment. Except for assignments or transfers by operation of law,
this Agreement shall not be assignable, in whole or in part, directly or
indirectly, by any party hereto without the prior written consent of the
other party hereto, which consent will not be unreasonably withheld, and
any attempt to assign any rights or obligations arising under this
Agreement without such consent shall be void.
8.9 Entire Agreement. This Agreement contains the entire agreement between
the parties hereto with respect to the subject matter hereof and shall
supersede all previous negotiations, commitments and writings with
respect to such subject matter.
8.10 Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York applicable
to contracts made and to be performed in the State of New York.
8.11 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more such counterparts
have been signed by each of the parties and delivered to the other
parties.
8.12 Severability. In the event any one or more of the provisions contained
in this Agreement should be held invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired
thereby. The parties shall endeavor in good-faith negotiations to
replace the invalid, illegal or unenforceable provisions with valid
provisions, the economic effect of which comes as close as possible to
that of the invalid, illegal or unenforceable provisions.
8.13 No Third Party Beneficiaries. Except as otherwise provided herein, this
Agreement is solely for the benefit of FNF, each member of FNT Group and
each member of the FIS Group. This Agreement should not be deemed to
confer upon third parties any remedy, claim, liability, reimbursement,
claim of action or other rights in excess of those existing without
reference to this Agreement.
8.14 Waivers. The failure of any party to require strict performance by any
other party of any provision in this Agreement will not waive or
diminish that party's right to demand strict performance thereafter of
that or any other provision hereof.
8.15 Setoff. All payments to be made by any party under this Agreement may be
netted against payments due to such party under this Agreement, but
otherwise shall be made without setoff, counterclaim or withholding, all
of which are hereby expressly waived.
8.16 Amendments. This Agreement may not be modified or amended except by an
agreement in writing signed by each of the parties hereto.
8.17 Schedules. Schedule I shall be construed with and as an integral part of
this Agreement to the same extent as if the same had been set forth
verbatim herein.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed by a duly authorized officer as of the date first above written.
FIDELITY NATIONAL FINANCIAL, INC.
By:
----------------------------------
Name:
Title:
Date:
FIDELITY NATIONAL INFORMATION
SERVICES, INC.
By:
----------------------------------
Name:
Title:
Date:
FIDELITY NATIONAL TITLE GROUP, INC.
By:
----------------------------------
Name:
Title:
Date:
28
Schedule I
1. Any Federal Income Tax to be allocated to a Consolidated Group or to any
member thereof in accordance with this Agreement shall be allocated on
the basis of the Hypothetical Tax of the Consolidated Group or of the
relevant member thereof.
(a) For purposes of this Agreement, the "Hypothetical Tax" of the
Consolidated Group or any member thereof for any Taxable Period
shall be the Federal Income Tax liability that the Consolidated
Group or any member thereof would have had for such Taxable
Period if the Consolidated Group or any member thereof had filed
its own Consolidated Return or Separate Return for such Taxable
Period, taking into account any carryovers to, or carrybacks
from, other Taxable Periods of the Consolidated Group or any
member thereof that are available in such Taxable Period of the
Consolidated Group or any member thereof, or would have been so
available (after taking into account Paragraph 1(b)(i) of this
Schedule I), if the Consolidated Group or any member thereof had
filed its own Consolidated Return or Separate Return,
respectively, for such other Taxable Periods, and the
Consolidated Group or any member thereof was subject to Tax on
all of its taxable income at the applicable maximum rate
specified in the Code but without the benefit of any surtax
exemption.
(b) In computing the Hypothetical Tax of the Consolidated Group or
any member thereof:
(i) In the case of any item of income, gain, loss, deduction
or credit that is computed or subject to a limitation
only on a consolidated basis, including but not limited
to, charitable contributions, capital losses, foreign
tax credits, research and experimentation credit and
Section 1231 gains and losses ("Consolidated Items"),
such Consolidated Items shall be taken into account by
the Consolidated Group or any member thereof only if,
and to the extent that, a Consolidated Item is taken
into account and actually affects the amount of the Tax
liability of the Consolidated Group;
(ii) In the case of the treatment of an item subject to an
election made only on a consolidated basis, the
treatment will be governed by the election made by agent
of the group on the Consolidated Return, and
(iii) All intercompany transactions (as defined in Section
1.1502-13(b)(1) of the Treasury Regulations) between and
among members of the Consolidated Group will be taken
into account in computing the Hypothetical Tax of the
Consolidated Group or any
29
member thereof at the time when such transactions are
required to be taken into account by the Consolidated
Group under Section 1.1502-13 of the Treasury
Regulations, and any Consolidated item not initially
taken into account in computing the tax of the
Consolidated Group or any member thereof shall be taken
into account by the Consolidated Group or any member
thereof in the Taxable Period, and to the extent, that
such Consolidated item is taken into account by the
Consolidated Group.
2. Combined State/Local Taxes shall be allocated between members of the
Filing Group and members of the Non-Filing Group first on the basis of,
and to the extent that, the receipts, income, capital or net worth of a
member of the Filing Group or of the Non-Filing Group resulted in, or
increased, such Taxes, with any remaining Combined State/Local Taxes
allocated among the members on the basis which each member's relative
attribute (positive or negative) was taken into account in determining
the amount of such Taxes.
3. If a Consolidated Federal Tax, Combined State/Local Tax, or Separate Tax
liability is assessed after the Distribution Date pursuant to a Final
Determination, such amount shall be allocated under the principles of
paragraphs 1 and 2.
4. All Tax allocations relating to Taxable Periods that include, but do not
end on, the Distribution Date, shall be made, between the
Pre-Distribution Period and Post-Distribution Period on the basis of an
interim closing of the books as if such Taxable Period ended as of the
close of business on the Distribution Date. Any real or personal
property Tax, or similar Tax, determined on an annual or periodic basis
shall be attributed to the Pre-Distribution Period on the basis of the
number of days in such Pre-Distribution Period to the total number of
days in the entire Taxable Period. Any adjustment required by Section
481 of the Code (including adjustments for marking receivables to
market) shall be attributable to the deductions or credits (or lack
thereof) giving rise to the Section 481 adjustment.
30
