EXHIBIT: 10.9
EXECUTION COPY
TAX MATTERS AGREEMENT
THIS TAX MATTERS AGREEMENT (the "Agreement"), dated as of
March 31, 2003, is entered into between AOL Time Warner Inc., a Delaware
corporation ("AOL Time Warner"), and Time Warner Cable Inc., a New York
corporation, ("TWC").
R E C I T A L S
A. AOL Time Warner is the common parent corporation of an
affiliated group of corporations within the meaning of Section 1504(a) of the
Internal Revenue Code of 1986, as amended (the "Code"), that has elected to file
consolidated federal income tax returns, and TWC is a member of such group.
B. AOL Time Warner and TWC desire to set forth in the Agreement
their agreement as to certain matters relating to the inclusion of the TWC
Consolidated Group (as defined below) in the AOL Time Warner Consolidated Group,
including the allocation of tax liabilities for years in which TWC is so
included, and certain other matters relating to taxes.
The parties agree as follows:
1. DEFINITIONS.
"Adjustment" shall have the meaning set forth in Section 8 of
this Agreement.
"Agreement Year" shall have the meaning set forth in Section 2
of this Agreement.
"AOL Time Warner" shall have the meaning set forth in the
Preamble to this Agreement.
"AOL Time Warner Consolidated Group" shall mean any affiliated
group of corporations electing to file consolidated federal income tax returns
of which AOL Time Warner is a member.
"AOL Time Warner Consolidated Return" shall have the meaning
set forth in Section 2 of this Agreement.
"Code" shall have the meaning set forth in the Recitals.
"Determination" shall mean a settlement, compromise, or other
agreement with the IRS or the relevant state, local or foreign taxing authority,
whether contained in an Internal Revenue Service Form 870 or other comparable
form, or otherwise, or such procedurally later event, such as a closing
agreement with the IRS or the relevant state, local or foreign taxing
2
authority, an agreement contained in an IRS Form 870-D or other comparable form,
an agreement that constitutes a determination under Section 1313(a)(4) of the
Code, a deficiency notice with respect to which the period for filing a petition
with the Tax Court or the relevant state, local or foreign tribunal has expired
or a decision of any court of competent jurisdiction that is not subject to
appeal or as to which the time for appeal has expired.
"Estimated Tax Payments" shall have the meaning set forth in
Section 4 of this Agreement.
"IRS" shall mean the Internal Revenue Service.
"Group" shall mean either the Parent Group or the TWC
Consolidated Group.
"Parent Group" shall mean the affiliated group of corporations
(including any predecessors and successors thereto) within the meaning of
Section 1504(a) of the Code, of which AOL Time Warner is the common parent,
excluding any corporation that is a member of the TWC Consolidated Group.
"Post-Consolidation Year" shall have the meaning set forth in
Section 5 of this Agreement.
"Pro Forma TWC Return" shall have the meaning set forth in
Section 3 of this Agreement.
"Records" shall have the meaning set forth in Section 8 of
this Agreement.
"Regulations" shall mean the Treasury regulations promulgated
under the Code.
"TWC" shall have the meaning set forth in the Preamble to
this Agreement.
"TWC Consolidated Group" shall mean TWC or TWC and the
affiliated group of corporations (including any predecessors and successors
thereto) within the meaning of Section 1504(a) of the Code, of which TWC would
be the common parent if it were not included in the AOL Time Warner Consolidated
Group.
"TWC Return Items" shall have the meaning set forth in Section
8 of this Agreement.
"TWC Tax Package" shall have the meaning set forth in Section
7 of this Agreement.
3
2. FILING OF CONSOLIDATED RETURNS AND PAYMENT OF
CONSOLIDATED TAX LIABILITY.
For all taxable years in which AOL Time Warner files
consolidated federal income tax returns (any such return of the AOL Time Warner
Consolidated Group for any taxable year, an "AOL Time Warner Consolidated
Return") and is entitled to include the TWC Consolidated Group in such returns
under Sections 1501-1504, or successor provisions, of the Code, AOL Time Warner
shall include the TWC Consolidated Group in the consolidated federal income tax
returns it files as the common parent corporation of the AOL Time Warner
Consolidated Group. AOL Time Warner, TWC, and the other members of the AOL Time
Warner Consolidated Group shall file any and all consents, elections or other
documents and take any other actions necessary or appropriate to effect the
filing of such federal income tax returns. For all taxable years in which the
TWC Consolidated Group is included in the AOL Time Warner Consolidated Group,
AOL Time Warner shall pay the entire federal income tax liability of the AOL
Time Warner Consolidated Group and shall indemnify and hold harmless TWC against
any such liability; provided, however, that TWC shall make payments to AOL Time
Warner or receive payments from AOL Time Warner as provided in the Agreement for
any taxable year (which term shall throughout the Agreement include any short
taxable year) during which the TWC Consolidated Group is included in the AOL
Time Warner Consolidated Group (an "Agreement Year").
3. PRO FORMA RETURNS.
For each Agreement Year, AOL Time Warner shall prepare a pro
forma federal income tax return for the TWC Consolidated Group (a "Pro Forma TWC
Return") and the Parent Group (a "Pro Forma Parent Return"). The Pro Forma TWC
Return shall be prepared based on the corresponding TWC Tax Package provided
pursuant to Section 7 hereof. Except as otherwise provided herein, the Pro Forma
TWC Return and Pro Forma Parent Return for each Agreement Year shall be prepared
as if TWC filed a consolidated return on behalf of the TWC Consolidated Group
for such taxable year, and no member of one Group was a member of the other
Group. The Pro Forma Return for each Group shall reflect any carryovers of net
operating losses, net capital losses, excess tax credits, or other tax
attributes from prior Pro Forma Returns for such Group which could have been
utilized by such Group if the TWC Consolidated Group had never been included in
the AOL Time Warner Consolidated Group and all Pro Forma Returns for the
relevant Group had been actual returns. The Pro Forma Return for each Group
shall be prepared in a manner that reflects all elections, positions, and
methods used in the AOL Time Warner Consolidated Return that must be applied on
a consolidated basis and otherwise the Pro Forma Parent Return shall be prepared
in a manner consistent with the AOL Time Warner Consolidated Return and the Pro
Forma TWC Return shall be prepared in a manner consistent with past practices of
the Time Warner cable group. The provisions of the Code that require
consolidated computations, such as Sections 861, 1201-1212 and 1231, shall be
applied separately to each Group as if such Group and the other Group were
separate affiliated groups, except that: (a) the Pro Forma TWC Return prepared
for the last taxable year, or portion thereof,
4
during which the TWC Consolidated Group is included in the AOL Time Warner
Consolidated Return shall also include any income, gains or losses of the
members of the TWC Consolidated Group on transactions within the TWC
Consolidated Group that must be taken into account pursuant to Section 1.1502-13
of the Regulations and any income of the members of the TWC Consolidated Group
that must be taken into account pursuant to Section 1.1502-19 of the Regulations
and, in each case, reflected on the AOL Time Warner Consolidated Return when the
TWC Consolidated Group ceases to be included in the AOL Time Warner Consolidated
Return; and (b) transactions between the TWC Consolidated Group, on the one
hand, and any member of the Parent Group, on the other hand, shall not be taken
into account until the first taxable year in which such transaction is required
to be taken into account pursuant to Regulations promulgated under Section 1502
.. For purposes of the Agreement, all determinations made as if the TWC
Consolidated Group had never been included in the AOL Time Warner Consolidated
Group and as if all Pro Forma TWC Returns were actual returns shall reflect any
actual short taxable years resulting from the TWC Consolidated Group joining or
leaving the AOL Time Warner Consolidated Group.
4. TAX PAYMENTS.
(a) Estimated Tax Payments.
(i) For each Agreement Year, TWC shall
make periodic payments ("Estimated Tax Payments") to AOL Time
Warner in such amounts as determined by AOL Time Warner (in
good faith and in accordance with the principles of Section 3
hereof) based upon the estimated tax payments that would be
due from the TWC Consolidated Group if it were not included in
the AOL Time Warner Consolidated Group no later than the dates
on which payments of estimated tax would be due from the TWC
Consolidated Group if it were not included in the AOL Time
Warner Consolidated Group. AOL Time Warner shall notify TWC of
any amounts due from TWC to AOL Time Warner pursuant to this
Section 4(a)(i) no later than 5 business days prior to the
date such payments would be due from the TWC Consolidated
Group if it were not included in the AOL Time Warner
Consolidated Group and any such payments shall not be
considered due until the later of the due date described above
or the fifth day from the notice from AOL Time Warner.
(ii) For each Agreement Year, AOL Time
Warner shall make Estimated Tax Payments to TWC in an amount
equal to the excess, if any of (x) the estimated tax payments
that would be due from the Parent Group for the relevant
period if the Parent Group filed its own consolidated tax
return, determined by AOL Time Warner in good faith and in
accordance with the principles of Section 3 hereof, over (y)
the actual estimated tax payments due from the AOL Time Warner
Consolidated Group for such period, no later than the
5
dates on which payments of estimated tax are due from the AOL
Time Warner Consolidated Group.
(b) Payments Based on Pro Forma Returns.
(i) Payments Based on Pro Forma TWC
Return. TWC shall pay to AOL Time Warner no later than the
date on which an AOL Time Warner Consolidated Return for any
Agreement Year is filed an amount equal to the excess of (x)
the sum of (A) the federal income tax liability shown on the
corresponding Pro Forma TWC Return prepared for the Agreement
Year, plus (B) an amount equal to the additions to tax, if any
(under Section 6655 of the Code, or otherwise) that would have
been imposed on the TWC Consolidated Group (treating the
amount due to AOL Time Warner under (A) above as its federal
income tax liability and treating any Estimated Tax Payments
to AOL Time Warner pursuant to clause (a) as estimated
payments for purposes of Section 6655 of the Code) as a result
of the inaccuracy of any information provided by TWC to AOL
Time Warner pursuant to Section 7 hereof or from the failure
of TWC to provide any requested information, up to the total
amount of the additions to tax, if any (under Section 6655 of
the Code, or otherwise) that are imposed on the AOL Time
Warner Consolidated Group for such Agreement Year plus (C) any
interest that would be due under the Code if the Estimated Tax
Payments were actual payments of tax, over (y) the aggregate
amount of Estimated Tax Payments paid by TWC to AOL Time
Warner, during such year. If the aggregate amount of TWC's
Estimated Tax Payments to AOL Time Warner for any Agreement
Year exceed the amount of its liability, as determined under
clause (x) of the preceding sentence, AOL Time Warner shall
refund such excess, plus interest (accruing from each date
with respect to which there was an overpayment of Estimated
Tax Payments) to TWC no later than the fifth business day
following the filing of the AOL Time Warner Consolidated
Return. AOL Time Warner shall notify TWC of any amounts due
from TWC to AOL Time Warner pursuant to this Section 4(b) no
later than 5 business days prior to the date such payments are
due and any such payment due from TWC to AOL Time Warner shall
not be considered due until the later of the due date
described above or the fifth day from the notice from AOL Time
Warner.
(ii) Payments Based on Pro Forma Parent
Returns. AOL Time Warner shall pay to TWC no later than the
date on which an AOL Time Warner Consolidated Return for any
Agreement Year is filed an amount equal to the excess of (x)
(A) the federal income tax liability shown on the
corresponding Pro Forma Parent Return prepared for the
Agreement Year, plus (B) any interest that would be due under
the Code if the Estimated Tax Payments were actual payments of
tax, minus (C) the actual federal income tax liability for the
AOL Time Warner Consolidated Group for such taxable year over
(y) the aggregate
6
amount of Estimated Tax Payments paid by AOL Time Warner to
TWC during such year. If the aggregate amount of AOL Time
Warner's Estimated Tax Payments to TWC for any Agreement Year
exceed the amount of its liability, as determined under clause
(x) of the preceding sentence, TWC shall refund such excess to
AOL Time Warner, plus interest (accruing from each date with
respect to which there was an overpayment of Estimated Tax
Payments) no later than the fifth business day following the
filing of the AOL Time Warner Consolidated Return.
(c) For purposes of the Agreement, the term
"federal income tax liability" includes the tax imposed by
Sections 11, 55 and 59A of the Code, or any successor
provisions to such Sections.
5. PAYMENTS FOR TAXABLE YEARS IN THE EVENT OF
DECONSOLIDATION.
(a) Payments By TWC To AOL Time Warner. If for
any taxable year after the TWC Consolidated Group ceases to be
included in the AOL Time Warner Consolidated Group (a
"Post-Consolidation Year"), (i) the federal income tax
liability of the TWC Consolidated Group is less than the
federal income tax liability that would have been imposed with
respect to the same period if the TWC Consolidated Group had
not been included in the AOL Time Warner Consolidated Group
for any Agreement Year and all Pro Forma TWC Returns had been
actual returns for such years, or (ii) the federal income tax
liability of the AOL Time Warner Consolidated Group is greater
than the federal income tax liability that would have been
imposed with respect to the same period if the TWC
Consolidated Group had not been included in the AOL Time
Warner Consolidated Group for any Agreement Year and all Pro
Forma TWC Returns had been actual returns for such years,
then, to the extent that TWC has not already made a payment to
AOL Time Warner for utilization of the tax attributes that
gave rise to the decrease or increase described in (i) or
(ii), TWC shall pay to AOL Time Warner an amount equal to such
decrease or increase within 10 days of the filing of TWC
Post-Consolidation Year return. In the event that there is
both a decrease and an increase described in (i) and (ii),
respectively, of the previous sentence for any
Post-Consolidation Year, then TWC shall make a payment to AOL
Time Warner in an amount equal to the sum of such decrease and
increase, unless such decrease and increase (or any portion
thereof) result from utilization of the same tax attribute(s),
in which case the amount of the payment will be reduced
accordingly.
(b) Payments By AOL Time Warner To TWC. If for
any Post-Consolidation Year (i) the federal income tax
liability of the TWC Consolidated Group is greater than the
federal income tax liability that would have been imposed with
respect to the same period if the TWC Consolidated Group had
not
7
been included in the AOL Time Warner Consolidated Group for
any Agreement Year and all Pro Forma TWC Returns had been
actual returns for such years, or (ii) the federal income tax
liability of the AOL Consolidated Group is less than the
federal income tax liability that would have been imposed with
respect to the same period if the TWC Consolidated Group had
not been included in the AOL Time Warner Consolidated Group
for any Agreement Year and all Pro Forma TWC Returns had been
actual returns for such years, then, to the extent that AOL
Time Warner has not already made a payment to TWC for
utilization of the tax attributes that gave rise to the
increase or decrease described in (i) or (ii), AOL Time Warner
shall pay to TWC an amount equal to such increase or decrease
within 10 days of notification by TWC to AOL Time Warner of
the filing of TWC Post-Consolidation Year return. In the event
that there is both an increase and a decrease described in (i)
and (ii), respectively, of the previous sentence for any
Post-Consolidation Year, then AOL Time Warner shall make a
payment to TWC in an amount equal to the sum of such increase
and decrease, unless such increase and decrease (or any
portion thereof) result from utilization of the same tax
attribute(s), in which case the amount of the payment will be
reduced accordingly.
(c) Documentation. Prior to the payment of any
amounts due pursuant to this Section 5, the parties shall
exchange such information and documentation as is reasonably
satisfactory to each of them in order to substantiate the
amounts due pursuant to this Section 5. Any disputes as to
such amounts and documentation which cannot be resolved prior
to the date a payment is due shall be referred to an
independent accounting firm whose fees shall paid one half by
TWC and one half by AOL Time Warner.
(d) Post-Consolidation Year Carrybacks.
(i) If a TWC Consolidated Group federal
income tax return for any Post-Consolidation Year reflects a
net operating loss, net capital loss, excess tax credits, or
any other tax attribute, whether or not TWC waives the right
to carryback any such attribute to an AOL Time Warner
Consolidated Return, no payment with respect to such
carrybacks shall be due from AOL Time Warner.
(ii) If an AOL Time Warner Consolidated
Return for any Post-Consolidation Year reflects a net
operating loss, net capital loss, excess tax credits, or any
other tax attribute, such attribute may be carried back to an
AOL Time Warner Consolidated Return for an Agreement Year, and
AOL Time Warner shall be entitled to retain (without any
obligation to reimburse TWC) the full amount of any refund
received in connection therewith. In the event that TWC (or
any other member of the TWC Consolidated Group) receives any
refund with respect to an Agreement Year issued in connection
with a carryback of an AOL Time Warner Consolidated Group tax
attribute from a Post-Consolidation
8
Year to an AOL Time Warner Consolidated Return for an
Agreement Year, TWC shall promptly pay the full amount of such
refund to AOL Time Warner.
(e) No Duplication of Payment.
Notwithstanding anything to the contrary herein, neither
Section 5(a) nor Section 5(b) shall require TWC or AOL Time
Warner, as the case may be, to make any payment pursuant to
such section to the extent that the payment is attributable to
a tax attribute for which payment has previously been made
pursuant to Section 4.
6. CARRYBACK OF TAX ATTRIBUTES. To the extent that AOL
Time Warner elects to carryback a net operating loss, net capital loss, excess
tax credits or any other tax attribute of the TWC Consolidated Group or the
Parent Group in any Agreement Year to an AOL Time Warner Consolidated Return for
any earlier Agreement Year, an adjustment shall be made to the corresponding Pro
Forma TWC Return or Pro Forma Parent Return, as applicable, to reflect the
utilization of such carryback, and all calculations of payments made pursuant to
Sections 4 and 5 of this Agreement shall be recomputed to reflect the effect of
such carryback on the relevant Pro Forma TWC Return or Pro Forma Parent Return.
Within 30 days after the date on which the AOL Time Warner Consolidated Return
reflecting utilization of such attribute is filed, TWC or AOL Time Warner, as
appropriate, shall make additional payments to the other party reflecting the
recomputation described in the preceding sentence.
7. PREPARATION OF TAX PACKAGE AND OTHER FINANCIAL
REPORTING INFORMATION.
TWC shall provide to AOL Time Warner in a format determined by
AOL Time Warner all information requested by AOL Time Warner as reasonably
necessary to prepare the AOL Time Warner Consolidated Return and the Pro Forma
TWC Return (the "TWC Tax Package"). The TWC Tax Package with respect to any
taxable year shall be provided to AOL Time Warner on a basis consistent with
current practices of the AOL Time Warner Consolidated Group. TWC shall also
provide to AOL Time Warner information required to determine the Estimated Tax
Payments, current federal taxable income, current and deferred tax liabilities,
tax reserve items, and any additional current or prior information required by
AOL Time Warner on a timely basis consistent with current practices of the AOL
Time Warner Consolidated Group.
8. RETURNS, AUDITS, REFUNDS, AMENDED RETURNS,
LITIGATION, ADJUSTMENTS AND RULINGS.
(a) Returns. AOL Time Warner shall have
exclusive and sole responsibility for the preparation and
filing of the AOL Time Warner Consolidated Returns (including
requests for extensions thereof) and any other returns,
amended returns and other documents or statements required to
be filed with the IRS in connection with the determination of
the federal income tax liability of the AOL Time Warner
Consolidated Group.
9
(b) Audits; Refund Claims. AOL Time Warner will
have exclusive and sole responsibility and control with
respect to the conduct and settlement of IRS examinations of
the returns filed by the AOL Time Warner Consolidated Group
and any refund claims with respect thereto; provided, however,
that no settlement relating to any matter that would cause a
payment obligation for TWC under this Agreement shall be
accepted or entered into by AOL Time Warner without the
consent of TWC (which consent shall not unreasonably be
withheld or delayed). If TWC does not respond to AOL Time
Warner's request for consent within 30 days, TWC shall be
deemed to have consented. TWC shall assist and cooperate with
AOL Time Warner during the course of any such proceeding.
Within 10 days of the commencement of any such proceeding, AOL
Time Warner shall give TWC notice of and consult with TWC with
respect to any issues relating to items of income, gain, loss,
deduction or credit of TWC (any such items, "TWC Return
Items"); provided, that, TWC shall not be relieved of any
obligation to make additional payments under this Agreement if
AOL Time Warner fails to timely deliver the notice described
above except to the extent that TWC is actually prejudiced
thereby. Notwithstanding the foregoing, AOL Time Warner shall
have the right in its sole discretion to have TWC pay any
disputed taxes and ▇▇▇ for a refund in the forum of AOL Time
Warner's choice. AOL Time Warner shall act in good faith with
respect to the matters described in this Section 8(b).
(c) Litigation. If the federal income tax
liability of the AOL Time Warner Consolidated Group becomes
the subject of litigation in any court, the conduct and
settlement of the litigation shall be controlled exclusively
by AOL Time Warner; provided, however, that no settlement
relating to any matter that would cause a payment obligation
for TWC under this Agreement shall be accepted or entered into
by AOL Time Warner without the consent of TWC (which consent
shall not unreasonably be withheld or delayed). If TWC does
not respond to AOL Time Warner's request for consent within 30
days, TWC shall be deemed to have consented. TWC shall assist
and cooperate with AOL Time Warner during the course of
litigation, and AOL Time Warner shall consult with TWC
regarding any issues relating to TWC Return Items. AOL Time
Warner shall act in good faith with respect to the matters
described in this Section 8(c).
(d) Expenses. TWC shall reimburse AOL Time
Warner for all reasonable out-of-pocket expenses (including,
without limitation, legal, consulting and accounting fees) in
the course of proceedings described in paragraphs (b) and (c)
of this Section to the extent such expenses are reasonably
attributable to TWC Return Items for any Agreement Year.
(e) Recalculation Of Payments To Reflect
Adjustments. To the extent that there is a Determination with
respect to an AOL Time Warner Consolidated
10
Return for any year, or a TWC Consolidated Group return for a
Post-Consolidation Year, that results in an additional payment
of tax (including a payment of tax made preliminary to
commencing a refund claim or litigation) or a refund of tax
(including a refund of a preliminary payment referred to in
the preceding parenthetical) (any such additional payment or
refund, an "Adjustment") relating to the AOL Time Warner
Consolidated Return for an Agreement Year, a corresponding
adjustment shall be made to the corresponding Pro Forma TWC
Return or Pro Forma Parent Return, as applicable.
All calculations of payments made pursuant to Sections 4, 5
and 6 of the Agreement shall be recomputed to reflect the
effect of any Adjustments on (i) the relevant Pro Forma TWC
Return or Pro Forma Parent Return, and (ii) the liability of
TWC or AOL Time Warner for a Post-Consolidation Year;
provided, that, any such payment recomputation shall also take
into account any previous adjusted payments made in connection
with an Adjustment resulting from a prior Determination.
Within 5 days after any such Adjustment, TWC or AOL Time
Warner, as appropriate, shall make additional payments or
refund payments to the other party reflecting such Adjustment,
plus interest pursuant to Section 9 of the Agreement,
calculated as if payments by and to TWC pursuant to Sections
4, 5 and 6 of the Agreement and this Section 8 were payments
and refunds of federal income taxes. TWC shall further pay to
AOL Time Warner, on an after-tax basis, the amount of any
penalties or additions to tax incurred by the AOL Time Warner
Consolidated Group in connection with any adjustment to any
TWC Return Item for an Agreement Year, but only if such
penalties or additions to tax result from the inaccuracy of
any information provided by TWC to AOL Time Warner pursuant to
Section 7 hereof or from the failure of TWC to provide any
requested information.
(f) Rulings. TWC shall assist and cooperate with
AOL Time Warner and take all actions reasonably requested by
AOL Time Warner in connection with any ruling requests
submitted by AOL Time Warner to the IRS.
(g) Applicability With Respect To All
Consolidated Returns. The provisions of Section 8(a), (b) and
(c) above shall apply to AOL Time Warner Consolidated Returns
and TWC Return Items for all taxable years in which TWC is
includable in the AOL Time Warner Consolidated Group.
(h) Document Retention, Access To Records & Use
Of Personnel. Until the expiration of the relevant statute of
limitations (including extensions), each of AOL Time Warner
and TWC shall (i) retain records, documents, accounting data,
computer data and other information (collectively, the
"Records") necessary for the preparation, filing, review,
audit or defense of all tax returns relevant to an obligation,
right or liability of either party under the Agreement; and
(ii) give each other reasonable access to such Records and to
its
11
personnel (insuring their cooperation) and premises to the
extent relevant to an obligation, right or liability of either
party under the Agreement. Prior to disposing of any such
Records, each of AOL Time Warner and TWC shall notify the
other party in writing of such intention and afford the other
party the opportunity to take possession or make copies of
such Records at its discretion.
9. INTEREST.
Interest required to be paid pursuant to the Agreement shall,
unless otherwise specified, be computed at the rate and in the manner provided
in the Code for interest on underpayments and overpayments, respectively, of
federal income tax for the relevant period. Any payments required pursuant to
the Agreement which are not made within the time period specified in the
Agreement shall bear interest at a rate equal to two hundred basis points above
the average interest rate on the senior bank debt of AOL Time Warner.
10. FOREIGN, STATE AND LOCAL INCOME TAXES.
(a) In the case of foreign, state or local taxes
based on or measured by the net income of the AOL Time Warner
Consolidated Group, or any combination of members thereof
(other than solely with respect to the TWC Consolidated Group
or members of the Parent Group) on a combined, consolidated or
unitary basis, the provisions of the Agreement shall apply
with equal force to such foreign, state or local tax for each
Agreement Year whether or not the TWC Consolidated Group is
included in the AOL Time Warner Consolidated Group for federal
income tax purposes; provided, however, that interest pursuant
to the first sentence of Section 9 of the Agreement shall be
computed at the rate and in the manner provided under such
foreign, state or local law for interest on underpayments and
overpayments of such tax for the relevant period and
references to provisions of the Code throughout the Agreement
shall be deemed to be references to analogous provisions of
state, local, and foreign law.
(b) For any Agreement Year, AOL Time Warner
shall have the sole and exclusive control of (a) the
determination of whether a combined, consolidated or unitary
tax return should be filed for any foreign, state or local tax
purpose.
(c) TWC shall be responsible for filing tax
returns relating to payroll, sales and use, property,
withholding, capital stock, net worth and similar taxes
attributable to members of the TWC Consolidated Group and
shall be responsible for the payment of such taxes.
(d) For all taxable years that TWC is a member
of the AOL Time Warner Consolidated Group, TWC shall have the
sole and exclusive responsibility for all taxes based on or
measured by net income that are
12
determined solely by the income of the TWC Consolidated Group
(or any combination of the members thereof, including the
predecessors and successors of such members) on a combined,
consolidated, unitary or separate company basis.
11. CONFIDENTIALITY.
Each of AOL Time Warner and TWC agrees that any information
furnished pursuant to the Agreement is confidential and, except as and to the
extent required by law or otherwise during the course of an audit or litigation
or other administrative or legal proceeding, shall not be disclosed to other
persons. In addition, each of AOL Time Warner and TWC shall cause its employees,
agents and advisors to comply with the terms of this Section 11.
12. SUCCESSORS AND ACCESS TO INFORMATION.
The Agreement shall be binding upon and inure to the benefit
of any successor to any of the parties, by merger, acquisition of assets or
otherwise, to the same extent as if the successor had been an original party to
the Agreement, and in such event, all references herein to a party shall refer
instead to the successor of such party. If for any taxable year TWC is no longer
included in the AOL Time Warner Consolidated Group, AOL Time Warner and TWC
agree to provide to the other party any information reasonably required to
complete tax returns for taxable periods beginning after TWC is no longer
included in an AOL Time Warner Consolidated Return, and each of AOL Time Warner
and TWC will cooperate with respect to any audits or litigation relating to any
AOL Time Warner Consolidated Return.
13. GOVERNING LAW.
The Agreement shall be governed by and construed in accordance
with the laws of New York excluding (to the greatest extent permissible by law)
any rule of law that would cause the application of the laws of any jurisdiction
other than the State of New York.
14. HEADINGS.
The headings in the Agreement are for convenience only and
shall not be deemed for any purpose to constitute a part or to affect the
interpretation of the Agreement.
15. COUNTERPARTS.
The Agreement may be executed simultaneously in two or more
counterparts, each of which will be deemed an original, and it shall not be
necessary in making proof of the Agreement to produce or account for more than
one counterpart.
16. NOTICES.
Any payment, notice or communication required or permitted to
be given
under the Agreement shall be in writing (including telecopy communication) and
mailed, telecopied or delivered:
If to AOL Time Warner:
AOL Time Warner
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Senior Vice-President, Tax
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Executive Vice President
and General Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to TWC:
AOL Time Warner
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Senior Vice-President, Tax
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Executive Vice President
and General Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or to any other address as AOL Time Warner or TWC shall furnish in writing to
one another. All such notices and communications shall be effective when
received.
17. SEVERABILITY.
If any provision of the Agreement is held to be unenforceable
for any reason, it shall be adjusted rather than voided, if possible, in order
to achieve the intent of the parties to the maximum extent practicable. In any
event, all other provisions of the Agreement shall be deemed valid, binding, and
enforceable to their full extent.
18. TERMINATION.
The Agreement shall remain in force and be binding so long as
the applicable period of assessments (including extensions) remains unexpired
for any taxes contemplated by the Agreement; provided, however, that neither AOL
Time Warner nor TWC shall have any liability to the other party with respect to
tax liabilities for taxable years in which TWC is not included in the AOL Time
Warner Consolidated Returns except as provided in Sections 5 and 10 of this
Agreement.
19. SUCCESSOR PROVISIONS.
Any reference herein to any provisions of the Code or Treasury
Regulations shall be deemed to include any amendments or successor provisions
thereto as appropriate.
20. COMPLIANCE BY SUBSIDIARIES
AOL Time Warner and TWC each agrees to cause all members of
the Parent Group and the TWC Consolidated Group (including predecessors and
successors to such members) to comply with the terms of the Agreement.
(Remainder of this page intentionally left blank)
IN WITNESS WHEREOF, each of the parties of the Agreement has
caused the Agreement to be executed by its duly authorized officer on this date
of March 31, 2003.
AOL TIME WARNER INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Senior Vice President
TIME WARNER CABLE INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Executive Vice President,General
Counsel & Secretary
